Friday, 30 May 1986 The PRESIDENT (Senator the Hon. Douglas McClelland) took the chair at 9 a.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled: The humble petition of the undersigned citizens of Australia, respectfully showeth: that the Bill of Rights and the Human Rights and Equal Opportunity Bill: 1. Offer nothing more than is already available under law, 2. deny some Human Rights and do not include others, 3. give dangerously wide powers to an unelected body, and 4. could cause far more damage than they could possibly cure. Your petitioners therefore humbly pray: That the Senate should: completely reject the Bill of Rights and the Human Rights and Equal Opportunity Bill. And your petitioners as in duty bound will ever pray. by Senator Peter Baume (from 16 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The Petition of the undersigned shows: That we urge you to oppose the Australian Bill of Rights Bill because: We get no legally enforceable rights under the Bill The Bill does not guarantee vital rights such as the right not to belong to a trade union, the right to own private property and not be deprived of it without just compensation and the right of choice between Government and non-Government schools. The Bill gives Canberra extra powers to change our Federal system by the back door without a constitutional referendum. The Bill gives dangerous new powers to a Federal Government Commission. Your petitioners ask that the Senate, in Parliament assembled, should vote against the Bill of Rights, support Opposition amendments and seek a genuine public debate and a referendum on the Bill. And your petitioners as in duty bound will ever pray. by Senator Durack (from 193 citizens). To the Honourable the President and members of the Senate in Parliament assembled. This petition shows that the Bill of Rights presently before the Senate has been hastily passed through the House of Representatives without proper public debate. This Bill will give to the Human Rights Commission excessive power and in our opinion will re-allocate power within the Constitution. The Bill does not enhance the rights of the individual as presently enjoyed under our system of law, where rights are open ended. Your petitioners humbly pray that the Senate reject the Bill of Rights as in duty bound how long will ever pray. by Senator Boswell (from 12 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: That the Australian Bill of Rights Bill is a harmful, dangerous and divisive proposal, the provisions of which are authoritarian and anti-democratic. Your petitioners therefore pray: That the Senate rejects this Bill. And your petitioners as in duty bound will ever pray. by Senator Durack (from 23 citizens). To the Honourable the President and the members of the Senate in Parliament assembled The petition of the undersigned citizens of Australia respectfully showeth: That the Australian Bill of Rights is a harmful, dangerous, divisive and unnecessary proposal, the provisions of which are dictatorial, harmful and against the true interest of the people of Australia. Your petitioners pray: That the Senate reject the Bill. And your petitioners as in duty bound will ever pray. by Senator Durack (from 91 citizens). To the Honourable the President and members of the Senate in Parliament assembled This petition of the undersigned citizens of Australia, respectfully showeth that we are seriously concerned that the Australian Bill of Rights is a potentially hazardous document Your petitioners most humbly pray that the Senate in Parliament Assembled reject the Australian Bill of Rights. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 148 citizens). To the Honourable the President and members of the Senate in Parliament Assembled The humble petition of the undersigned citizens of Australia, respectfully showeth: That the proposed Australian Bill of Rights Bill 1985 will endanger the Federal system in Australia, the State and Federal criminal justice systems, the State and Federal Police Force, the State and Federal education systems, the independence of the churches and religious associations, marriage and the family, children, the unborn, the handicapped, the aged and the infirm, employer and employee relationships and Australian society generally. Your petitioners therefore humbly pray: That your Honourable House defer debate on the Bill for twelve months and circulate the Bill for twelve months for the widest possible debate, scrutiny and discussion. And your petitioners as in duty bound will ever pray. by Senator Puplick (from 59 citizens). To the Honourable the President and the members of the Senate in the Parliament assembled. The petition of the undersigned citizens of Australia showeth: That many Australian wage and salary earners and self-employed persons do not enjoy secure retirement incomes provided by superannuation; and That the Government issued in December 1985 Guidelines for the implementation of the proposed productivity decision by the Conciliation and Arbitration Commission and draft Operational Standards for Superannuation schemes. Your petitioners therefore humbly pray that the Government: 1. Guarantees to every employee the right and freedom to select the superannuation scheme of his/her choice. 2. Protects the individual exercising that freedom of choice from any coercion, influence or other pressure which may be applied by any employer, association or trade union. 3. Will recognise only those schemes which provide genuine superannuation and reject those schemes which do not provide for- preservation of benefits to retirement vesting of employer contributions equal employer and employee Trusteeship control to ensure security of investments. And your petitioners as in duty bound will ever pray. by Senator Parer (from 78 citizens). To the Honourable the President and members of the Senate, of the Parliament of Australia assembled. We, the undersigned, plead that Parliament becomes aware that the public has no legal right to influence the settings of Standards for Television Programming, that we deplore the new Standards which came into force on 1st February, and that we call on Parliament to amend the Broadcasting and Television Act 1942, section 16 (2), so that the Australian Broadcasting Tribunal, when determining Television Standards, and screening hours, shall consult with the Australian people: because at present the Tribunal is compelled by law to consult only with television stations on these matters, because the new standards are a result of such consultation, and have already been implemented without public discussion, because the new Standards are ambiguous, and without definition, because the new Standards are composed of modifying terms which circumvent the proscriptions because the media is only motivated by aspirations of pecuniary superiority, because, in contrast, the public is only motivated by their wish to exercise pastoral care over the nurturing home environment of their children, because we believe that the Standards wrongly ascribe extreme importance to ``the storyline'' of a film screened, because we believe that the Standards wrongly ascribe total unimportance to the effects of viewing, especially violent films, on the young, the impressionable, the immature, the unstable, or the socially disadvantaged, because we refuse to accept the media-imposed assessment of community standards, and because we wish to impart our demand to be consulted, our demand to have legal status in decision-making, and the right to counsel those whose decisions so deeply affect our homes. Your petitioners therefore humbly pray that you will give this matter your earnest attention. And your petitioners, as in duty bound, will ever pray. by Senator Cook (from 14 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of certain citizens of New South Wales respectfully showeth: That all legitimate business expenses incurred in earning or producing assessable income should be allowable deductions. That the proposed Capital Gains Tax is an unwarranted burden on the rural sector, which will severely affect its long-term viability. That the delay by the Government in introducing the legislation into Parliament is causing confusion and hindering farmers in the organisation of their affairs. Your petitioners humbly pray that the Government introduces the Capital Gains Tax legislation without delay and that the Australian Democrats join with the Opposition to defeat the proposed legislation. by Senators Brownhill (from 791 citizens) and Chaney (from 97 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of certain citizens of South Australia respectfully showeth: That the capital gains tax is an unwarranted burden on the rural sector, which will severely affect its long term viability. That the delay by the Government in introducing the capital gains tax is causing confusion and hindering farmers in the organisation of their affairs. Your petitioners humbly pray that the government introduce the capital gains tax legislation without delay and that the Australian Democrats join with the Opposition in opposing it. by Senator Messner (from eight citizens). 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 Senators Robertson (from 42 citizens) and Ryan (from 13 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: 1. In this aging Australian society children are our most precious resource. 2. We request that any changes to the Child Care Act should ensure the protection of these children by providing for quality care by mothercraft nurses or other trained child care professionals. 3. We urge that funding provided under the Child Care Act should ensure the maintenance of the present standards of 75 per cent of award wages and conditions for approved child care professionals. 4. We also ask that available child care places be provided according to the needs of the children rather than through restricting access according to the work-related needs of parents. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 97 citizens). To the Honourable the President and members of the Senate in Parliament assembled: The petition of the undersigned citizens of Australia being residents of South Australia respectfully showeth: That the humble petitioners respectfully seek a delay in the new funding arrangements planned for April this year for Subsidised Child Care Centres in Australia; and express total opposition to the cuts in child care which are beginning to have a deleterious effect on children's services in South Australia. Your petitioners therefore pray and urge the instigation of: Urgent discussions with State Governments, peak bodies representing children's services, and the ACTU. That such discussions ensure that funding mechanisms are fully explored and ensure more appropriate funding guidelines. That such discussions examine regulations for the quality assurance of children's services. That such discussions be mindful of the need to retain high quality children's services and trained personnel to work in children's services. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 305 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned shows: Our serious concern that the Child Care Amendment Act 1985 will have serious adverse effects for the future provision of high quality child care services for the pre-school children of this nation. Your petitioners ask that the Senate, in Parliament assembled, should: Repeal the Child Care Amendment Act 1985. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 37 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia shows that the proposed Fringe Benefits Tax recently introduced into the House of Representatives by the Labor Government will increase the costs and inhibit future growth of small business in this great Nation. Your petitioners request that the Senate in Parliament assembled should reject this regressive legislation as a matter of utmost urgency in the interests of the well being of all Australians. And your petitioners as in duty bound will ever pray. by Senator Walters (from 2,574 citizens). To the Honourable the President and members of the Senate assembled. The humble petition of the undersigned citizens of Australia showeth that whereas: We do not believe there are any legitimate grounds for Telecom to increase its charges to the public, most especially in view of its own demonstrated inefficiencies in being unable to provide the basic services to the public for which the existing charges are already excessive. Members of the Australian small business community express concern at the effect the inefficiency of Telecom has on the day to day operation of business in Australia. Any business enterprise in order to justify an increase in charges for its services would need to demonstrate an ability to improve such services. Telecom would need to provide such proof in order to justify its present level of charges. Your petitioners therefore pray that your Honourable Senate will: reject the principle of increased Telecom charges and inefficiency. And your petitioners as in duty bound will ever pray. by Senator Reid (from 165 citizens). Senator LEWIS(Victoria) —by leave-I present to the Senate the following petition, from 217 citizens of Christmas Island, which is not in conformity with the Standing Orders as it is not in the correct form, requesting greater participation in matters affecting Christmas Island: 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. Petitions received. Senator ARCHER(Tasmania) —I give notice that, on the next day of sitting, I shall move: That leave be given to introduce a Bill for an Act relating to the payment of commercial accounts payable by the Commonwealth or by an authority of the Commonwealth. Senator Sir JOHN CARRICK(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the Senate, noting that, following the Chernobyl nuclear reactor disaster, the leaders of the Soviet Union and the United States have called for international safeguards for nuclear power plants- (a) stresses the urgent need for Australia to take an active role in speedily bringing about such safeguards including: (i) the definition and acceptance of an international code of safety for all nuclear reactor operations, (ii) the immediate reporting of all accidents which either release or have the potential to release any additional radioactivity into the atmosphere, and (iii) the universal acceptance and rapid adoption of effective technical inspection and public disclosure; (b) emphasises the importance of upgrading the functions and capacities of the International Atomic Energy Agency so that it can effectively carry out safety surveillance functions as well as its present inspection role within the Nuclear Non-Proliferation Treaty; (c) calls for the frequent publication at international and national levels of factually accurate reports on this whole subject, which neither understate nor exaggerate the dangers and difficulties of the technology and are totally free of partisan political propaganda; and (d) calls upon the Federal Government at the earliest possible date to present to the Parliament an authoritative paper on the nature and extent of the Chernobyl accident, the resultant morbidity, mortality and spread of radioactivity, the long-term security or otherwise of the Soviet encasement of the damaged reactor, and provide for an early full and frank discussion within the Parliament. Senator GILES(Western Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes the re-election of Australia to the United Nations Commission on the Status of Women, of which Australia was a founding member, and election to the United Nations Committee on Economic, Social and Cultural Rights; and (b) expresses satisfaction at this endorsement of Australia's standing in those particular United Nations forums, and in human rights activities generally. Senator COLSTON(Queensland) —I withdraw Notice of Motion No. 189 standing in my name relating to the Queensland economy. Senator ROBERTSON(Northern Territory) —On behalf of Senator Tate, I give notice that, on the next day of sitting, I shall move: That the time for presentation of the Report of the Select Committee on the Human Embryo Experimentation Bill 1985 be extended to 28 August 1986. Senator COONEY(Victoria) —Pursuant to my notice of intention given yesterday, I now withdraw Business of the Senate Notices of Motion Nos 1 and 2 standing in my name for this day of sitting, for the disallowance of Fisheries Notices Nos 158 and 160. I seek leave to make a short statement. Leave granted. Senator COONEY —Yesterday, with the agreement of the Standing Committee on Regulations and Ordinances, I gave notice of intention to withdraw my notices of motion concerning two fisheries notices and a fishery plan. I have this morning withdrawn the notices relating to the fisheries notices only because members of the Committee have reconsidered the fishery plan and have agreed that I should postpone the notice relating to the fishery plan and seek further clarification from the Minister for Primary Industry (Mr Kerin). The clarification concerns the validity of some paragraphs of the plan which may be at variance with the Fisheries Act and may thus either be beyond power or may unduly prejudice certain fishing licence holders. I therefore seek leave to move the postponement of that notice of motion. Leave granted. Senator COONEY —I move: That Business of the Senate, Notice of Motion No. 3 standing in my name for this day, be postponed till 3 June 1986. Question resolved in the affirmative. Motion (by Senator Grimes) agreed to. (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. Motion (by Senator Cooney) agreed to: 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. Bills received from the House of Representatives. Motion (by Senator Grimes) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of the Bills being put in one motion at each stage, and the consideration of such Bills together in Committee of the Whole. Ordered that the Bills may be taken through all their stages without delay. First Readings Motion (by Senator Grimes) proposed: That the Bills be now read a first time. Debate (on motion by Senator Reid) adjourned. Bills received from the House of Representatives. Motion (by Senator Grimes) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of all or several of the Bills being put in one motion at each stage, and the consideration of all or several of such Bills together in Committee of the Whole, and as would prevent the reading of the short titles only on every order for the reading of the Bills. Ordered that the Bills may be taken through all their stages without delay. First Readings Motion (by Senator Grimes) proposed: That the Bills be now read a first time. 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 Grimes) read a first time. Senator GRIMES(Tasmania-Minister for Community Services)(9.12) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- The purpose of this Bill is to amend several Acts, being the Health Insurance Act 1973, the Health Insurance Commission Act 1973, the National Health Act 1953, the States Grants (Nurse Education Transfer Assistance) Act 1985 and the Tuberculosis Act 1948. The major amendments proposed by this Bill are contained in Part II relating to the provision of pathology services. These amendments are designed to improve arrangements for the payment of Medicare benefits for pathology services. As a result of findings by the Joint Parliamentary Committee of Public Accounts in its Report (number 236) on Medical Fraud and Overservicing-Pathology, there has been serious public concern about improper practices in the pathology industry. The amendments in Part II of this Bill are designed to introduce significant new controls over the provision of pathology services and thus greatly reduce the capacity for fraud or overservicing in the pathology industry. The Parliamentary Public Accounts Committee raised a number of particular areas of concern about the provision of pathology services. The Committee said, in part, that: the Medicare Benefit Schedule was too complex and it encouraged pathologists to perform more tests than were necessary; payment was too high for many tests made simple by the introduction of modern laboratory equipment; the prospect of large profits had attracted ``entrepreneurial pathology''; pathology groups were providing ``inducements'' to doctors to order more services than were necessary; pathology groups were encouraging doctors to order unnecessary tests by other means-such as providing request form pads which set out combinations of tests which the laboratories were able to perform automatically; many laboratories were routinely adding to their incomes by performing additional tests not ordered by referring doctors; doctors were found to have financial interests in laboratories which performed their tests. The amendments in Part II of the Bill before the Senate today are designed to meet these concerns and represent the results of an extensive review by the Department of Health and the Health Insurance Commission of the existing arrangements covering the provision of pathology services. Statistics available to the Department of Health show that the number and cost of pathology services have risen sharply in recent years. An estimated 15% of total Commonwealth spending on Medicare benefits is on pathology. In 1984/85 claims processed for Medicare benefits payments totalled $346 million out of a total outlay of $2,280 million. Between 1979 and 1985 there was a 69% increase in pathology services as services rose from 13 million to 22 million over this period. The Government has therefore decided to introduce a package of measures which will affect the provision of pathology services under the current Medicare benefit arrangements. There are at least two fees for most services in the pathology section of the Medicare Benefits Schedule. The circumstances in which the service is performed by an approved pathology practitioner outside a public hospital determines whether the higher or lower fee applies: the higher fee (SP) Specialist Pathology applies when the service is performed by a specialist patho-logist; and the lower fee (OP) Other Pathology (75% of the specialist fee) otherwise applies. It also applies where a specialist pathologist decides that additional tests are necessary without consulting the referring doctor, and in a number of other circumstances. A lower fee (HP) Hospital Pathology (generally about 50% of the specialist fee) applies to a small number (18) of very common tests performed in public laboratories for private patients in public hospitals. Therefore for those 18 tests there are three levels of fees. However, there has been a substantial shift to patient billing at the specialist rate of benefit in recent years. The Parliamentary Accounts Committee noted that the top 25 pathology groups bill virtually all their pathology at the specialist rate, the percentage varying between 94.6% and 99.9%. In addition, during the period 1982/3 to 1984/5 the number of services billed at the specialist rate increased by 41.9% while during the same period the number of services billed at the (OP) Other Patho-logy and (HP) Hospital Pathology rates fell by -18.2% and -29.1% respectively. But the fact is, the increasing volume of services being billed at the highest rate is not being matched by an increasing professional input by specialist pathologists. In fact, the Parliamentary Accounts Committee pointed out: ``The great majority of tests being paid at the highest (specialist) level of benefit are not-and do not have to be-done by a a specialist pathologist but are being carried out by medical scientists/technologists. This can amount to payment of an unwarranted premium in some cases and further encourage overservicing. Virtually all the pathology performed by the top 25 groups is done at the highest (specialist) rate, which is 33% higher than the rate chargeable where a medical practitioner other than a specialist pathologist is employed. It added that there were data showing that at the time they were contacted by a PAC member, few of the top 25 pathology groups in Australia had many full-time specialist pathologists on staff. Part-time specialist pathologists were associated with 60% of them. Thus the specialist fees for those 18 pathology items appear too high, because the professional premium is far more than can be justified by the specialist's professional input. There is also evidence that the fees for the 18 tests, for which there is currently an HP rate, are too high. The costs for some laboratories involved in undertaking these tests is covered by the HP fee which is currently only 50% of the Specialist rate. This means that there is an excessive profit component where they are billed at the Specialist rate. In addition, by international comparison, the current specialist rates for these 18 tests are unreasonably high. When one examines the New Zealand fees for pathology tests, they are considerably less than the Australian fees-sometimes less than 50% of their Australian equivalent. After allowing for the difference in currency valuation, the New Zealand fees fall to an even smaller percentage of the Australian fees. The Government has therefore decided it will reduce the SP rate to the current OP rate for those 18 items. In addition the new OP rate will be 75% of the New SP rate. The HP rate will disappear and services previously charged at this level will now be charged at the new OP rate. The 18 tests involved are generally: high volume and mainly automated; highly profitable because fees have not been adjusted downwards because of more productive technology; generally involve minimum specialist input; and the proposal would maintain the specialist premium but at a lower level and save an estimated $47M pa while involving a 12 1/2% rise in HP fees ($1M) for public hospital pathology services. The proposal outlined will have the effect of: reducing fees for a small number of commonly performed automated tests; having the greatest impact on laboratories that concentrate on tests with high profits; removing a significant financial incentive to excessive servicing and other abuses; and simplifying the Schedule by reducing the number of rates for the 18 tests from three to two. The Government recognises that the proposed fee reductions will have an impact on the profitability of all private laboratories which render these tests. That is to say, whilst commercially oriented laboratories will be hardest hit, the effects of the reduced fees will also be felt by reputable laboratories. However, I need to emphasise that the cost structure for private pathology is much higher than it needs to be. This is because it reflects high competition/expansion cost components which, in turn, is a clear indication of the excessive profit margin in pathology fees. Typically, courier and specimen collection fees account for 25-30 percent of total costs. There is ample scope to reduce expenditure in this area. Overall the Government is confident that private pathologists can satisfactorily rationalise their operations to absorb the effect of the reduced fees in such a way that it does not adversely impact on the delivery of an adequate and professional standard of service. It is also proposed to remove Part 7 (Pathology) from the existing Medicare Benefits Schedule and establish a separate new Schedule for pathology items. The items to be covered in this new Schedule are those contained in Schedule 1 to this Bill. It is intended that the Schedule will come into operation on 1 August 1986. The Bill also provides for the establishment of a Pathology Services Advisory Committee to oversight movements within the new Schedule. The functions of the Committee are to review pathology items and fee levels, to consider related matters and make recommendations to the Minister for Health on such matters. The Minister may determine principles to be applied in the performance of the Committee's functions-the Minister has undertaken to consult the Australian Medical Association and the Royal College of Pathologists of Australasia on the principles. While the Bill provides for the Minister to refer matters to the Committee, which the Committee must consider and make recommendations on to the Minister, it does not limit the capacity of appropriate bodies to raise matters with the Committee. However, in such cases the Committee will decide whether or not it is appropriate to consider the matter. The proposed Committee will consist of 7 members: the Chairperson, a Deputy President of the Conciliation and Arbitration Commission, three members appointed by the Minister for Health after consultation with the Australian Medical Association and the Royal College of Pathologists of Australasia and three others members. The AMA or College nominees will not be restricted from being involved in their own Association or College activities or discussing matters with their respective bodies. Matters of confidentiality will basically be a matter for consideration by the Committee. When established, it is proposed that the first task of the Committee will be to review the current level of pathology fees and the appropriateness of pathology items. This decision by the Government means that from 1 August 1986 pathology items will no longer be subject to medical fee inquiries which has been the case for a number of years. In making this decision the Government considers that the method of updating pathology fees through fee inquiries is inappropriate and fails to take into account productivity changes in the delivery of pathology services. In addition the Medicare Benefits Schedule as currently structured is inflexible both in responding to new technology and the deletion of obsolete tests with regard to pathology services. The functions of the proposed Committee will allow a more rapid and flexible approach to a wide range of fee-related matters including relativity of Schedule items, the value of items and additions to and deletions from the pathology schedule, than is the case under the current arrangement. In conjunction with the reduction in certain pathology fees as already outlined, clause 10 of the Bill provides that the number of self-determined tests that pathologists will be allowed to perform is to be limited. These tests will be determined by the Minister for Health in consultation with the Royal College of Pathologists of Australasia. The Royal College of Pathologists support this measure as the College believes that currently self-determined tests could be a source of abuse by some laboratories. The self-determined test agreed to between the Minister and the College will continue to attract Medicare benefits at the (OP) Other Pathology benefit rate. In addition, the Parliamentary Accounts Committee commented that certain minor procedures, such as the collection of blood for pathology testing, should not attract separate Medicare benefits when they are performed in association with a consultation. It was considered that a separate item provided inappropriate financial incentives which led to the ordering of unnecessary or excessive pathology tests. For these reasons the Government has decided to remove Item 955 which deals with venepuncture and the collection of blood for forwarding to a pathologist from the Medicare Benefits Schedule. The recent increase in fees for general practitioner attendance items also supports this approach. Current legislation provides that request forms held by pathologists are to be produced within 14 days of a request. The Bill provides that, in future, request forms held by pathologists will be required to be produced to officers of the Health Insurance Commission by the end of the day following the making of such a request. A further proposal contained in the Bill is that request forms issued by the pathology laboratories for use by referring doctors are to be approved by the Health Insurance Commission. It is not intended to impose an `approved form' on laboratories but continued approval of forms by the Commission will ensure that any encouragement to medical practitioners to order inappropriate tests should be removed. This proposal should not place undue administrative burdens on the pathologist given that laboratories will continue to be required to keep such requests for 18 months. Advice has been received by the Department of Health that difficulties in the interpretation of section 129aa of the Health Insurance Act have contributed to the lack of success in bringing prosecutions against persons believed to have induced practitioners to order inappropriate tests. The amendments made by clause 47 of the Bill are designed to clarify the provision and also to render it a more effective deterrent to the practice of splitting the amounts of medicare benefit payable in respect of pathology services between the pathology practitioner rendering the services and the practitioner requesting them. In recognising that medical practitioners are often encouraged to request more tests than may be required by the tactics of large laboratories and that practitioners are not always aware of costs of tests or the complex details of laboratory practice, the Government has decided to provide $100,000 per annum for each of the next three financial years to promote an education program directed primarily at medical interns and practitioners. The main aim of the program is to encourage the more appropriate use of pathology services by practitioners. The program would include, for example, assistance to the Royal College of Pathologists and the Royal College of General Practitioners in the development and distribution of educational material to medical practitioners in the community and teaching/seminar programs for medical interns. Under the existing arrangements for the payment of Medicare benefits for pathology services, benefits are only paid where the services are performed by an approved pathology practitioner who is approved for such purposes by the Department of Health. In response to criticism of the administration of this scheme by the Public Accounts Committee, the Government has decided to completely revamp the existing scheme to greatly improve its effectiveness. The main criticisms of the existing scheme by the Public Accounts Committee were that any person or organisation could apply and be approved as an approved pathology practitioner and there is no requirement that tests be performed in an accredited laboratory. In addition, there is often a nexus between the requesting doctor and laboratories which raises the possibility of overservicing. The Committee was also concerned that provisions of the scheme, particularly the current undertaking signed by the practitioner, were not being enforced and was generally of the view that the scheme is open ended and lacks an effective review mechanism. The Bill proposes to change the existing scheme so that only medical practitioners (and the currently approved small number of medical laboratory scientists) will be eligible for approved pathology practitioner status, and approvals will be subject to annual review. Only natural persons can be approved pathology practitioners, a new scheme is introduced for approval of pathology companies, and there is to be greater emphasis upon closer personal supervision by the approved pathology practitioner of the pathology services rendered. Both approved pathology practitioners and approved pathology authorities will be required to sign undertakings. Breaches of these undertakings can be referred by the Minister to the Medicare Participation Review Committees for investigation and determination. These Committees will also be able to investigate cases of excessive pathology servicing either by the practitioner or authority or the initiating practitioner. The existing legislation provides for the making of guidelines to be applied by these Committees in respect of the making of determinations. Under the new arrangements the guidelines will include provision for the Committees, before commencing an inquiry into a breach of an undertaking involving overservicing, to get a report from a specialist body which it sets up to examine the question of fact, namely whether excessive services were provided. Approved pathology practitioners will be permitted to enter contractual arrangements with service laboratories where they do not wish to own, operate or manage their own laboratory. The conditions which apply to approved pathology authorities will also apply to these arrangements. The Bill also introduces a system of accreditation of pathology laboratories. Services rendered by or on behalf of approved pathology practitioners are to be rendered in an accredited pathology laboratory (being services of a kind for which the laboratory is accredited) and under their direct supervision. Under the existing approved pathology practitioner scheme, tests are often performed in laboratories not operated by such a practitioner, and approved pathology practitioners often lend their name to bills for services which are not adequately supervised. These practices will cease under the new arrangements. The Minister for Health will have power to refuse applications for approved pathology practitioner or approved pathology authority status and there will a right of appeal to the Administrative Appeals Tribunal where an application is refused. The proposed new arrangements outlined should when implemented meet the difficulties identified by the Public Accounts Committee and provide better control over the operations of pathology laboratories, companies and pathologists. The Government has given careful consideration to the implementation of arrangements for the accreditation of pathology laboratories throughout Australia. While all States, through meetings of Health Ministers, support the concept of national accreditation, to date only two States, New South Wales and Victoria, have legislation to implement such a program. By accrediting laboratories the quality of health services should be assured and as the States have traditionally accepted responsibility for quality assurance the Commonwealth believes that accreditation of pathology laboratories is a State responsibility. However, in order to complete the package of changes I have outlined above, the Government has decided that it will operate laboratory accreditation arrangements for those States which do not have legislation currently in place. Provisional accreditation will be provided for all laboratories from the date the legislation is proclaimed. Full accreditation must be applied for through the National Association of Testing Authorities prior to seeking approved pathology practitioner/approved pathology authority status and be obtained within the following 2 year period. Two years may appear to be too long for some laboratories to have provisional accreditation arrangements. However, the Government recognises that the National Association of Testing Authorities in conjunction with the Royal College of Pathologists will need some time to inspect and report on all laboratories throughout Australia. Moreover, some laboratories will need time to meet the guidelines as set by the National Pathology Accreditation Advisory Council. It is not proposed to grant provisional accreditation as a matter of course. It will be necessary to apply for provisional status and to provide information relevant to the laboratories operations. It is envisaged that the order in which laboratories are assessed for acreditation purposes will have due regard to applications made for provisional accreditation. For those States with legislation (New South Wales and Victoria) the Commonwealth will accept laboratories accredited under the legislation for the payment of Medicare benefits for services performed. Automatic acceptance by the Commonwealth of accreditation under State legislation will depend on States adopting the National Pathology Accreditation Advisory Council's guidelines and the minimum standards. However, it is expected that these States will comply with these guidelines. Under the proposal: only those pathology services performed in laboratories which are accredited under State legislation or accredited by the Minister for Health will attract Medicare benefits: while the Commonwealth will collect a fee for an application in those States where pathology accreditation does not exist, the charges associated with inspection of premises in States with legislation will be paid by the laboratory direct to the inspecting agency. The chief effects of these accreditation proposals should be to: remove `backyard' laboratories who currently provide poor quality services ensure uniform minimum acceptable standards throughout Australia, and be welcomed by the profession. Substantially, these proposals will provide greater control and supervision over quality and standards for pathology services. The measures provided for in the Bill and which I have outlined i.e. the reduction in certain pathology fees, the revised approved pathology practitioner arrangements and the introduction of the Approved Pathology Authority Scheme, the separation of pathology items from the existing Medicare Benefits Schedule, the removal of Item 955 from the Schedule, the restrictions on self-determined tests, accreditation of laboratories and the other measures announced, substantially implement the recommendations of the Public Accounts Committee's Report 236 on Pathology. There are also a number of minor amendments made by the Bill including amendments to bring health legislation into line with the provisions of the Sex Discrimination Act 1984. I mention, in particular, the amendment of the definition of ``dependant'' in the National Health Act to extend it to de facto spouses. Amongst other amendments, Part III of the Bill amends the Health Insurance Commission Act 1973 to permit moneys held by the Commission, and not immediately required for its Medibank Private functions, to be invested by the Commission or a person or body representing the Commission; and Part V of the Bill amends the States Grants (Nurse Education Transfer Assistance) Act 1985 by raising aggregate amount limits to provide for cost supplementation arrangements determined by the Commonwealth Government and to provide for development grants as part of the transfer assistance offered to the States. Financial Impact Statement When implemented, the new approved pathology practitioner scheme and related measures will provide savings to the Government of approximately $60,000,000 in a full year. $47,000,000 will arise directly from reduced fees for some pathology items in the Medicare Benefits Schedule; up to $10,000,000 from the more restrictive arrangements for self-determined tests; and $2,700,000 from the removal of Item 955 from the Schedule. Figures supplied by the Department of Social Security indicate that the amendment to the definition of ``dependant'' in the National Health Act would result in increased expenditure of approximately $700,000 in the 1986-87 financial year. The amendments to the aggregate amount limits in the States Grants (Nurse Education Transfer Assistance) Act will result in increased expenditure of up to $2,761,000 in 1986-87. I commend the Bill to the Senate. Senator GRIMES —I table the revised explanatory memorandum for the Health Legislation Amendment Bill 1986. Debate (on motion by Senator Reid) adjourned. Debate resumed from 29 May, on motion by Senator Grimes: That the Bills be now read a second time. Senator HILL(South Australia)(9.14) —Before the debate was interrupted last night I was saying how amazing it is that with the economy going into recession, with our trade deficit this year looking as though it will be a figure of about $15 billion, with our inflation rate now twice that of our trading partners and rising when theirs is falling, with interest rates in this country still around record high levels and with the dollar struggling to stand up, we in the Senate are debating yet another new tax. This is only one of a series. Over the next fortnight we will have to debate other new taxes and imposts upon Australian business and upon the Australian economy. It is beyond the belief of the Opposition that, with the economy in such circumstances, this would be the approach of the Government. Last night I was arguing that this additional tax is unwarranted and unnecessary. I argued that if the existing provisions of the Income Tax Assessment Act, particularly section 26 (e), were properly enforced by the Commissioner of Taxation and with the encouragement of this Government, such a tax would be unnecessary. I was arguing that this tax is inflationary. It is a unique tax on employers that will obviously be passed through to consumers in higher prices and higher costs of services. I was arguing that it is enormously complex in its structure and therefore fails one of the basic tenets of any tax system, that is, to aim towards a simple tax system. It will be enormously administratively expensive for business because of its complexity, at a time when we should be looking at ways of restraining the costs of administration upon our business and it is full of anomalies and technical shortcomings. When the Senate went into its adjournment debate last night I was talking particularly about the tax as it relates to motor vehicles, that is, the fringe benefits tax upon motor vehicles provided by employers. I was referring to the enormous administrative difficulties that will face employers. They should be aware that they have to have in place within approximately five weeks their structures, their bookwork and their various registers. I am not sure that that is well appreciated. They will also have to make decisions as to which method they will adopt-whether it will be the statutory formula basis or the operating cost basis. They will have to have vehicle registers prepared and a register of odometer readings. They will have to have in place methods for determining employee private use, or so-called private use, of vehicles. They will have to have in place methods for keeping records of invoices and receipts provided by employees and so on. In the case of the operating costs basis, the keeping of this paper work will be compulsory. In the case of the statutory formula basis it may not be compulsory but, in effect, to comply with the provisions of the legislation, in practice it will be necessary. It will be an enormous additional impost on business for it simply to get on top of the requirements, let alone to keep the records that will be necessary. At the end of each journey-we are talking about people who regularly use their vehicles for business-they will have to keep records of the journey, the kilometres travelled, the purpose of the journey, the identity of the driver, the date of the log book entry, the names of the persons making the entry and so forth. Any reflection on this requirement will indicate just how ridiculous it is, how time consuming it will be and how administratively costly it will be. The other point that should be made is that many people think of this tax in terms of its effect upon fringe benefits only in the form of the provision of cars. But of course that is not so. It will cover loan benefits, housing benefits, board, meals, the waiver of debts, expense payments, living away from home allowances, airline transport and property benefits. The Bill divides property benefits into in-house benefits and external benefits, with different provisions applying in each case. Then, of course, there is a residual benefits provision-an attempt to catch all that may have been otherwise missed out and to provide yet another series of rules and regulations that must be complied with in that regard. So it is not surprising that business is terrified by the administrative complexity of the work involved and also of the cost of meeting such requirements. It is worth noting also that with the countdown only five weeks away and with the need to get books and papers in order for then, in the first nine months, which is referred to as the transitional year, in actual fact the business will have to put in three returns-two statements and one return at the end of the nine months. On even a very superficial glance that indicates the sort of obligation there will be on business immediately upon this Bill coming into law. Time is against me because of the need to debate all the other new tax Bills introduced by this Government. This Bill has everything. First, it has tax creep. The 49 per cent rate will apply from 1 April next year rather than 1 July 1987, as is the case with other company tax provisions. Secondly, it has nonsense provisions. I remind honourable senators that in order to calculate the actual costs of car use one must take the notional interest rate imposed by the Commonwealth Savings Bank on housing loans. If anything indicates the ridiculous nature of this Bill it is the suggestion that to calculate actual rates one should use the notional determination of housing interest rates. Thirdly, this Bill has inconsistencies. For example, a discount of 40 per cent will apply to remote area housing fringe benefits, yet a discount of 50 per cent will apply to remote area holiday travel. Where is the logic of that? There are other provisions for discount rates of 75 per cent and 37 1/2 per cent. There is no logic in these provisions at all. Arguably this legislation has areas of retrospectivity. It has been suggested that it can apply to benefits that have been granted to someone before he became an employee and this will hit a number of family situations. Also the Bill has uncertainty. The Government claims that State property will not be taxed, but what about housing provided to government employees, such as teachers and railway workers, in country areas? There is still uncertainty in that regard. Strictly under the terms of this Bill a farmhouse that is in a company name and of which the farmer is the occupant will be taxed in the hands of the company although the Government now tells us that that will not be so. Administratively the Government may believe that, but the Commissioner of Taxation is an independent statutory authority and what the Government says is certainly not what we are being asked to put into law in this chamber. This is a petty Bill. It includes a calculation on meals in some circumstances down to the value of $1. A tax which necessitates the Commissioner putting out a booklet on how to comply even before the tax has been implemented and which includes 15 errors which must be corrected, indicates that the whole tax is very much in error-- Senator Chaney —Like the Government's declarations of interest. Senator HILL —Yes. This tax should be thrown out. It is my lament that the Australian Democrats will not get off the political fence on this issue and serve a worthwhile purpose to the Australian community by supporting the Opposition in this one instance and throwing out this new tax. Senator WATSON(Tasmania)(9.24) —Australia already has a fringe benefits tax in the current Income Tax Assessment Act. Of course we on this side acknowledge that fringe benefits as such deserve to be taxed and are taxed according to the Federal Income Tax Assessment Act. However, since the Australian Labor Party came into power-more than three years ago now-it has not directed the Australian Taxation Office to enforce the current provisions fully. It is overlooking its own inadequacies in this area and taking the heat off the Taxation Office. Instead it is placing the onus on business. Nowhere else in the world do we see such iniquitous provisions as those that are being presented to this Parliament today by this Government. Honourable senators might say then there is one exception-that is New Zealand, under the Lange Government. However, Prime Minister Lange condemned himself out of his own mouth when he said that 8,000 farmers in New Zealand might be forced off the land this year because of debt problems. I add that those debt problems are due to high interest rates and fringe benefits tax charges on small farmers-people who have to pay taxes on so-called benefits which their families may derive as a result of living in their own homes. This is just the forerunner of what will happen in Australia. We can see what is happening in New Zealand. This Labor Government is determined to press ahead and put Australian business and farmers deeper and deeper into crisis. It is unfortunate that the Australian Taxation Office has not acted under the present Act which could have been refined if need be. It has not attempted to overcome some of the technical difficulties in formulating the requisite criteria of tests to apply to relevant provisions. Instead, it will scrub the lot and start again in a novel way that the rest of the world with the exception of New Zealand will not have a bar of. It is dreadful. Unfortunately we are now finding under this Labor Government that fringe benefits are no longer the preserve of the executives, as the Government tends to suggest. Fringe benefits have now grown to such proportions that they are inbred in a great number of industries. This is unfortunate. We have to acknowledge that the legislation is anti-business. It is enormously bureaucratic and will do great harm to the productive sector of the economy. These are the words of our Leader, John Howard, and how right he is. On election the coalition will repeal the Keating fringe benefits tax. It is economic insanity for the Hawke Government to introduce a wide range of anti-business taxes when this country is in a balance of payments crisis. The Government should be doing everything in its power to encourage investment and export earnings. This country is justifiably outraged by this tax reform package particularly the fringe benefits taxation. Let us look at a few areas. We will start with motor vehicles. Sales have plunged by more than 20 per cent in the first four months this year and are expected to fall to their lowest level since 1972. Industry sources say that workers have already been retrenched in dealerships and spare parts supplies, as have transporters, detailers and those in associated industries. One source has suggested that there may be a loss of 10,000 jobs directly in the next few months. Another has suggested that the flow-on effect could rise to 25,000 jobs. The car industry alone has already been made to suffer because of high increased rates, increased prices due to devaluation of the Australian dollar and the introduction of lead-free petrol. This fringe benefits tax is capable of being the final straw that breaks the back of many successful small businesses. I must say that my sympathies really go out to Senator Button whose views have been totally ignored by his own Party. My disgust is directed at the Australian Democrats who have opted to vote for this legislation. The wheeling and dealing of the Democrats in this fringe benefits tax debate have given them no credibility in the public eye. Their wheeling and dealing, their actions, will be the low watermark of those in that Party so far as their parliamentary careers are concerned. In no way can I support this destructive sort of legislation. We are hearing cries of anguish from the Government and the Australian Council of Trade Unions about the lack of business investment, but who can blame industry for not committing new capital for investment when such uncertainty is created by this tax package? This Government appears to be under the impression that it can impose taxation measures by announcement rather than legislation, taxes which apply from the date of announcement rather than from the date of legislation. In effect, this legislation has an element of retrospectivity. But this practice creates further uncertainty. There is no certainty from the date of announcement. As soon as such measures are announced the Australian Democrats start wheeling and dealing, talking about changes, changing their minds from time to time over perhaps 12 months or more. How can business, from the date of announcement, expect to set up its plans amidst such uncertainty and with such rubbish going on? Uncertainty, misunderstanding and, indeed, fear about future security have been rife in the business community since these fringe benefits taxes were announced. In fact, so many months have now passed since these provisions were originally announced, without any legislation being sighted, that the feeling of uncertainty in the community has been exacerbated. I believe that the fringe benefits tax legislation before the Senate is an extremely poor piece of legislation for about eight reasons, which I will go through. It departs from the basic principle of taxation because it requires the employer to pay tax on the benefits. In effect, it will be a tax on employment, like payroll tax-something we should not be imposing when an economy is in crisis. But unlike payroll tax, it will be a non-deductible tax. It will be imposed on organisations regardless of whether or not they are in a profitable position. Businesses will be committed in the first instance to pay the tax or perhaps breach a contract with their employees. As a result, they will have a limited number of options. They can take the fringe benefits tax into consideration in future salary reviews and perhaps reduce the level of increases. Of course, this will cause problems in the work place between the employee and the management. The second alternative is for businesses to pass these costs on through price increases, which ultimately will lead to inflation and damage their ability to compete in the market-place and against imports. It has been estimated that this fringe benefits tax will also be quite inflationary. It is estimated that in the first year it will add 0.3 per cent to the inflation rate and in the second year, 0.7 per cent-thus adding to the inflation rate a figure approaching one per cent. Also, the tax could reduce the work force as employers attempt to save the cost to them. It will certainly reduce profit margins. It will be anti-business. Further, I suggest that it is middle management that will be under the greatest threat as a result of this legislation. I am sure that there will be a great endeavour by business to subcontract to even a greater extent the number of services rendered to it, rather than carrying full time staff. A partner in the firm of Mann Judd has estimated that the additional cost to business, to employers, could be as high as 32 per cent. These options and costs will do both business and the community great damage. Unfortunately, the Government has not sufficiently analysed the costs and the problems that it will create as a result of these additional taxes. Let me emphasise that they are additional taxes on business and enterprise. They will have a quite dramatic impact on employment within this country. There is also the multiplier effect, because these taxes will flow through to a number of ancillary industries. I am sure that if the Government had done its homework it would have taken into account the increased welfare payments for thousands of families, because thousands of families will now be relegated to a life of poverty and unemployment. The answer to this problem in subsequent years will be quite frightening. As well as being a tax on employment, it is a tax on a business input. The taxes and charges proposed are of a non-deductible nature and the fringe benefits tax fails to distinguish between job facilities and job benefits. The fringe benefits tax is also a tax on enterprise. It will certainly increase business costs, particularly to small business. The combination of the disallowance of entertainment expenses and the fringe benefits tax, scheduled to take effect on 1 July this year, will be devastating to small and medium-size businesses such as advertising agencies and promotional organisations. We have heard nothing of those today. It will also mean additional money out of profits to be paid to the Australian Taxation Office and it will mean additional administrative costs made necessary in order to calculate the required tax and to keep up the plethora of records necessary. The administrative cost of compliance with the proposed tax will certainly be a significant proportion of the amount of money raised. So it will be costly to government and it will be even more costly to business. It will mean additional costs expended to lawyers, accountants and advisers to explain these new laws. The only winners that I can see will be the lawyers and the accountants-and certainly the Government. The documentation requirement of this tax are extremely onerous. Unfortunately, there is no flexibility in this fringe benefits tax with regard to the financial year ending 31 March and this will mean further inconvenience for many companies. The Australian Financial Review has pointed out a further problem-that the tax will also apply to companies in receivership. This means that creditors could finish up paying the tax on behalf of the liquidated companies. Hungerford has intimated that the liquidator would almost certainly inherit unsatisfactory records and would have considerable difficulty contacting past employees to obtain the necessary fringe benefits tax declarations, adding substantially to the costs of the liquidators. Furthermore, the Commissioner of Taxation could take up to five years to issue an assessment notice of the tax, further delaying payments to creditors. This tax is very much anti-business and it cannot be tolerated. Business is suffering under this situation. The President of the New South Wales Chamber of Manufactures said that the added cost to employers could not have come at a worse time for the manufacturing industry. Companies could be forced into a position of again passing on these increased costs. This Australian Labor Party Government is the first government in the history of Australia to tax charities. Churches will be taxed with respect to their welfare and community services as opposed to their traditional clergy work. Is this Government not aware that churches and charities cannot pass on these additional costs to the aged, the disabled, the homeless and the unemployed that they serve? Is this Government not aware that the taxing of these institutions will mean a reduction in services to these disadvantaged groups, the aged, the disabled and so on? Ultimately, in spite of the proposed compensation measures, which may not even come about, the Government will have to pick up the tab for these additional welfare services which will be transferred to it. A number of other voluntary organisations, such as the National Trust, in which my colleague Senator Newman has such an interest, for the first time will be liable to tax. In my State of Tasmania the National Trust manages something like 20 properties of national significance. Most of these properties have what is known as a live-in warden who lives on site virtually free of charge so as to keep down vandalism. These wardens are often quite elderly folk. They are dedicated people who have a vested interest in ensuring that these properties are protected and maintained for the people of this country and for future generations. They are not really employees of the Trust as such. But under this proposed legislation the National Trust will be forced to pay a fringe benefits tax on its employees' subsidised housing. The National Trust, without major fund raising activities, will be unable to meet these commitments. There will be further draws upon Government to finance these sorts of operations. Another fact that I find abhorrent in this legislation is the fact that taxpayers who are adversely affected have no guaranteed right of appeal. If the Australian Taxation Office amends a fringe tax benefit assessment, the taxpayer can only request a reference. There is no time frame within which this review must take place. I believe that this legislation must be rejected. It is anti-business, it is anti-Australian and it is against the poor people of Australia. I believe it must be opposed at all costs. Senator McKIERNAN(Western Australia)(9.41) —Within the time limits we have restricted ourselves to I am going to confine my remarks to the question of equity and justice. The Fringe Benefits Tax Assessment Bill 1986 and the related fringe benefits tax Bills are all about equity and justice. I just want to take up one point on what Senator Watson has said before I get into the main thrust of my arguments. If what Senator Watson has said about the National Trust is correct, obviously I have been misled back in Western Australia. After I received a letter-I suppose every other member of Parliament in Western Australia received this letter-about this matter I was told that the wardens on these properties owned by the National Trust were indeed paid, and that part of the payment they received for looking after the properties was reduced rental or, in some cases, no rental at all. I made representations to the Treasurer (Mr Keating) on behalf of those people but it seems to me that I will have to go back to him because I may have been misled or somebody has been misled unknowingly. I certainly will go back to check that one through. The Fringe Benefits Tax Assessment Bill 1986 is about equity and justice. It is also about the distribution of wealth in this country. I admit very early in this debate, despite the heckling and cackling coming from the other side, that the total tax reform package which this particular set of Bills is part of, really does not go far enough. There will still remain in the tax system in Australia a whole range of lurks and perks that will be untouched and that will be able to be exploited despite the efforts of this reformist Hawke Labor Government. Many distortions within our taxation system will remain untouched and it will be the ordinary pay as you earn taxpayers, who are now paying an unfair proportion of government revenue, who will continue to do so thereafter. We have had to make a number of modifications in the thrust of the whole plan and, unfortunately, even after the substantial adjustments that this Government has engaged in, it will still not be a totally equitable taxation system. The ordinary wage and salary earners of this country have been carrying the nation on their backs for a number of years now. That, unfortunately, will remain. That is remaining in a climate in which wages have been reduced and in which the other half of the tax package is now under threat and may be held up after the promised date of September, perhaps for three months, but hopefully no longer. It is no wonder that the troops, the workers, are getting restless and that tens of thousands of workers this very week are engaged in a national day of protest against the deliberate and protracted delaying tactics engaged in by the employers' group in the national wage case before the Australian Conciliation and Arbitration Commission. Some crocodile tears for the ordinary wage and salary earners have been shed from the other side of the chamber in this particular debate-crocodile tears because a tiny proportion of the ordinary wage and salary earners of this country are receiving some form of fringe benefit on which their employers will have to pay tax. We have had some crocodile tears shed about it, but when they leave this chamber they demand that there be further cuts in wages. Senator Brownhill —It is an alligator tax, though, isn't it? Senator McKIERNAN —Senator Brownhill should not interject as he comes from the National Party and the National Party representsabsolutely nothing any more. The farmers are the ones who are telling members of the National Party that. The majority of the ordinary wage and salary earners have accepted the erosion of their salary levels over the past two or three years. They have accepted it in the interests of the nation, their children and the future. But they have received no credit and no recognition for their unselfish actions from the representatives who sit on the other side of the chamber-nothing at all. The sacrifices that they have made in the interests of the nation, in the interests of the future and in the interests of their children have been taken as a sign of weakness. The calls that have resounded around this chamber and the other place and in the more conservative media outlets of this country have been for further cuts in the wages and salaries of the workers. Not only have the workers been attacked but also the recipients of social welfare have been attacked. Calls have been made for a mini-Budget to attack the welfare side of Government expenditure. This is happening at a time when profits are at an all-time high, and those profits are being distributed disproportionately throughout the community. Among wage and salary earners access to almost the full range of fringe benefits is heavily biased in favour of the most highly paid employees. Overall, the highest paid 11 per cent have about three to seven times more chance of receiving any particular fringe benefit than those 74 per cent of wage and salary earners who earn less than the average weekly wage. High income earners receive some of the following fringe benefits to a disproportionate extent: Holiday expenses, low interest finance, housing, household energy expenses, club fees, entertainment allowances, shares, study leave and children's education expenses. Senator Brownhill —What percentage get that? Senator McKIERNAN —Unfortunately, on this piece of paper I have there is no note about the credit cards that some of our fellow parliamentarians in a different parliament have been receiving. We have heard no contributions from the other side about that, or what the total sums are that have been allocated to those parliamentarians. They have not been taxed. Access to fringe benefits adds significantly to the inequity of wage and salary earners. Untaxed fringe benefits add significantly to the unfairness of the income tax system. The taxation of fringe benefits in which we are engaged now, in a modified form, will enhance both fairness and efficiency by reducing the bias in favour of the complicated packages of goods and services to supplement wage and salary earners. An honourable senator interjected earlier in my contribution asking me about percentages. I will spend a little time referring to percentages. Off the top of my head, the highest paid 11 per cent of wage and salary earners in our community receive some of the following in fringe benefits: A quarter of them are receiving some form of transport fringe benefit. Indeed, I have a letter from one individual connected with BMWs. I would like to be driving around in a BMW as a fringe benefit. Further, more than one-third of all those recipients receive an entertainment allowance. Another quarter of them have a private telephone account and the bill is paid for them. A quarter of them receive a housing employment benefit. A quarter of all recipients in that top 11 per cent receive medical care and medical cost fringe benefits. About one-fifth of them receive holiday related fringe benefits. A third of them have their club fees paid. A quarter of the 11 per cent receive shares in the companies for which they work and, in some cases, other companies. On the other side of the coin-the 74 per cent of workers receiving below average weekly earnings-only one in 20 workers receives any form of private transport; that is, an employer-provided car or whatever. Only one in fifty receives an entertainment allowance. Only one in seventeen have their private telephone costs either paid or subsidised by the employer. Only one in thirty-five enjoys employer-provided or subsidised housing. Again, we are talking about 74 per cent of the work force-the people who receive less than average weekly earnings. Only one in forty of those workers has medical or hospital costs paid or subsidised by the employer. Only one in thirty-three has any form of holiday paid for or subsidised by the employer. Again, only less than one per cent has club fees paid as a fringe benefit. Only one in one hundred receives shares in the employer's firm as an employment benefit. Yesterday, in the other place, in discussion on another element of the taxation package, Mr Jacobi, a member for a South Australian seat, delivered a most eloquent speech, which was reported last night on the Carleton-Walsh show-the `Carwash' show. One of his remarks which I grabbed and I have remembered was a quote from Napoleon: `To tax the poor is safe, to tax the rich is dangerous'. That is what we have been engaged in in this country for quite a number of years now. That has been addressed in an excellent, objective and incisive article by Ross Gittins in the Sydney Morning Herald of Wednesday 28 May. I will quote from the first part of that article and then develop more arguments on it. Ross Gittins stated: The fringe benefits tax is intended to restore the equity between the multitude of ordinary wage-earners-who've been paying tax at the full rate and have been denied even a tax deduction for their bus fares to work-and the relative handful of executives and self-employed business people who've been able to evade tax for years by getting part of their remuneration in the form of fringe benefits such as company cars, subsidised home-loans and so on. . . . . by closing many of the main tax dodges and using the money raised to pay for hefty cuts in the rates of income tax for people earning more than $19,500- That is what we are doing. Unfortunately, the money is not being distributed equally or equitably when it is going back. Ross Gittins in his article reminds us that there has been some furore about these pieces of legislation. He reminds us of the disruption the introduction of the bottom of the harbour legislation caused within the ranks of the Liberal Party back in 1982. Half the members of the Liberal Party wanted the legislation; the other half did not. The argument put forward then was that that legislation would close lots and lots of businesses and put thousands and thousands of people out of work. The legislation went through, and if that happened we have not heard about it. Ross Gittins also reminded us of the decision to require builders to withhold income tax from payments to building sub-contractors from September 1983. Again, in the fear and scare campaign mounted it was said that that would inflate out of all proportion the cost of houses, putting them beyond the reach of people and spreading doom and gloom within the building industry. We need look only at the statistics in the building industry through the remainder of 1983, 1984, 1985 and even this year, 1986, to see that that did not happen. Last September another hoo-ha was mounted over the tax deductibility of business lunches, with estimates of from 10,500 to 80,000 jobs being lost as a consequence. We find that six to eight months later there is still an acute shortage of experienced chefs and waitpersons in that industry. The Australian Financial Review is not a paper that is all the time on the side of the Australian Labor Party. I say that because it is an objective newspaper, one of the quality newspapers which one can quote with confidence as accurate. An editorial leader in that newspaper on 27 May put a case for the fringe benefits tax. Time does not allow me to quote from that editorial, but it put up three examples of the impact of the fringe benefits tax on three separate taxpayers, A, B and C, each earning $80,000 a year. Taxpayer A had a salary package in which 50 per cent of the salary was paid in fringe benefits, taxpayer B received fringe benefits of $20,000, and taxpayer C received no fringe benefits at all. Calculated on 1983-84 rates the average rates of tax on those salaries with those fringe benefit packages included would be, for taxpayer A, 20.2 per cent; for taxpayer B, 33.1 per cent; and for taxpayer C, 48.1 per cent. There is nothing fair or equitable about that. A campaign has been mounted on this topic and taken to great heights, as would be alleged by some Opposition members. Indeed, yesterday Senator Vanstone said her office in South Australia had been flooded with calls opposing this tax. That has not been the case in Western Australia. That confirms the information and analysis in the survey made by the Australian Labor Party about this legislation. We found that fewer than one in 10 people were worried about this tax-fewer than one in 10 people thought that they would be adversely affected by any form of fringe benefits tax. That message is getting through to the community and is causing some concern to Opposition members. Perhaps this is the case for the Waste Watch Committee that from time to time floods this place with all sorts of information. In the West Australian on Tuesday of this week we saw a full-page advertisement costing some $2,000, hopefully paid for out of Liberal Party funds, with the following bold headline: `Mr Hawke-There's nothing left to take!!'. Then the message is killed because it contains a picture of Mr Hassell, who is the Western Australian Liberal Party leader. He says: Stop the fringe benefits tax. The proposed fringe benefits tax will hurt all Australians. Then he says: Act now, or it will be too late. The action he is calling for is to get every member of the community in Western Australia to ring his or her Western Australian Labor senators in Perth or in Parliament House. This went out in a full-page newspaper advertisement on Tuesday of this week. Senator Robertson —Paid for by Telecom. Senator McKIERNAN —Paid for by Telecom-I am not sure. It did go out in the West Australian, the largest circulation newspaper in my home State, so many people would have seen it despite the photograph of Hassell at the top of it. The end result-and I am speaking only for myself-is that my office in Perth, on Tuesday and on Wednesday, received a grand total of 15 telephone calls, 13 of which opposed the tax and two of which favoured it. One of the opposing callers picked the wrong time to complain about the fringe benefits that parliamentarians receive. Part of the fringe benefits, as determined by that particular lady caller, was my trips to Canberra. Unfortunately, Tuesday is the worst time in the world-all honourable members could see how cranky Senator Walsh was. I accompanied Senator Walsh on the red eyeball special out of Perth at midnight Monday arriving here at 9.30 a.m. on Tuesday. If that is a fringe benefit, anyone can take it away from me now. People can tax it or do with it what they like; I do not want that type of fringe benefit. This type of legislation, the fear campaign, and the doom, gloom and despair associated with it need to be looked at again. I refer now to an editorial which appeared in the Australian Financial Review, as follows: However, what the entire debate has missed is the fact that New Zealand not only provided the model for our fringe benefits tax-it has successfully introduced one over a year ago. Dire consequences have not followed. Small business has not collapsed and employers have now accepted the wisdom of levying the tax on them, rather than on employees. Senator BJELKE-PETERSEN(Queensland)(10.01) —I rise to speak on the Fringe Benefits Tax Assessment Bill 1986, which aims to introduce a fringe benefits tax. I am concerned at the effect of such Bills on every section of the community. Senator McKiernan has just given us the Australian Labor Party socialist policy, which is to reduce everybody to the same level; that is exactly what it means, and what he has been talking about. What I think he does not realise, and perhaps the Labor Party accepts, is the fact that it is people who have made a little bit of money and who are employers in every sense of the word who provide jobs and job opportunities for people. If the Government is to keep on taxing them with fringe benefits taxes and capital gains taxes it will take away employment and we will end up with no incentive for people to provide jobs and job opportunities. The aim of this fringe benefits tax is to improve the fairness of the system for the majority of Australians-at least, this is what the Government says-by pursuing with resolve the policy of rooting out tax avoidance and evasion practices that have been found to exist on a large scale. I believe that this Government has a fixation about tax evasion, because I feel quite sure that if one looked around one would find only quite a small number of people who are involved in tax evasion. I know that I get my tax return every year and pay; rather unwillingly like everybody else, I suppose; but I think that one has just got to realise that it is only a small percentage who are involved in tax evasion. As a result of this legislation we will see many problems arise for employers in every area with forms that have to be filled in. One has only to read the legislation provided to see just how many problems there will be. Of course, it gives employers the responsibility for declaring and deciding what are the fringe benefits taxes. If this is not done in the right way, goodness only knows what happens to them. I suppose that somebody comes up and checks them out. I am still waiting to find out what would happen then. Employers will need additional clerical staff to help them in relation to this matter. It is bad enough for big business, and bad enough in the car business, but let us think about rural people, who at this point have an average income of only $7,600-and 35 per cent of whom are on a negative income or a zero income. How on earth will they pay fringe benefit taxes? I am blowed if I know. The legislation by which this Government proposes to apply this tax is 150 pages long, extremely complex and bureaucratic in nature, and has been drafted, I feel, without any regard for the nonsensical administrative burden that will be loaded on to business. The matters covered in the Bill largely follow those specified in the announcement made by the Treasurer (Mr Keating) on 19 September 1985. The legislation contains specific rules for valuing the following kinds of fringe benefits provided by employers or associates to employees on or after 1 July 1986, as follows: Provision of motor cars; interest free or low interest loans; waiver of debts; payment of private expenses; free or subsidised residential accommodation; excessive living away from home allowances; free or subsidised board; concessional fares for airline transport; entertainment for tax exempt bodies; free or discounted goods or other property; free or discounted services; and other specified benefits. I consider that the Bill will be a nightmare of administrative procedures, which are being forced upon employers. The cost of administering the tax, I believe, will be enormous. I wonder sometimes whether some employers will be prepared to keep the additional records required or will take the easy way out by paying the fringe benefits tax according to the proposed statutory formulae. In so doing, the employer will be paying more fringe benefits tax than he need to, which is, I suppose, what the Government had in mind in the first place. Likewise the employee, who would normally incur employment related expenses in carrying out a job, might also claim according to the statutory formulae-the easy way-which will result in a lower claim by that employee thereby increasing government revenue even more. As I said earlier, taxpayers in the rural sector will be severely affected by this fringe benefits tax on residential accommodation, board and meals provided to employees. Charitable organisations, which need every dollar of income that they can get, will be required to pay fringe benefits tax on benefits supplied to employees. I believe that this is completely contrary to the previous basic exemption of charities from income tax, sales tax, bank account debit tax, and other levies and taxes. The result of this tax on charities will be counterproductive, because the charities will be forced either to reduce services or approach the Government for additional subsidies. I think there are not too many people who want to give their donations to charities realising that they are helping those charities to pay income tax. The fringe benefits tax is expected to reduce car sales by some 35,000 this year, causing at least 10,000 car industry workers to lose their jobs and reducing the Government's passenger vehicle manufacturing plan to a farce. If one wishes to claim any part of car expenses as business expenses one must maintain a daily log book in which an entry is made for every business trip. According to information provided by my tax accountant the list is endless. I sometimes wonder whether members of the Government have really looked at what has to be supplied in claims for motor vehicle expenses. For instance, one has to provide the date on which the journey began, the date on which it ended, odometer reading at the beginning and end of the journey, number of kilometres travelled in the course of the journey, purpose of the journey, name of the person driving the car, date on which the entry was made and the name of the person making the entry-gracious me! I do not know how people are supposed to keep records like that. As I said earlier, somebody will have to be on the job especially to do that. That is why I say that I think employers, and employees, will probably take the easy way out and pay the larger amount of fringe benefits tax. Treasury has estimated that revenue gained from company car tax will be about $350m a year. However, costs to Federal revenue resulting from a drop in sales will be some $300m; in actual fact the net revenue gain will be only $49m. Total passenger vehicle sales for the first three months of 1986 totalled 133,243 compared with 171,485 for the same period last year-a fall of 22 per cent. Honourable senators will realise that the motor vehicle industry has already been severely hit by the devaluation of the Australian dollar, the introduction of engines which run on lead-free petrol, the increase in sales tax on motor vehicles and the adverse effects of the Government's high interest rates policy. I believe that to add to the industry's difficulties, with this new tax, at severe cost to government revenue, is quite unacceptable. Mr Keating has admitted that it would be better to cut the Commonwealth deficit further than to cut private sector activity, because it is private sector activity which will put in place the investment which will give us a better level of local production to compete with imports. Why is he imposing all of these taxes on so-called fringe benefits-taxes which are, in reality, taxes on incentives? Independent analysis shows that this tax package could mean that employers will pay as much as an extra 32 per cent per employee, at a time when we have massive unemployment, rampant inflation and a huge balance of payments deficit. I sometimes wonder whether the Government sees it as a way to increase employment, because employers must substantiate their claims and expenditure. I wonder whether that means that one must send all of one's receipts to the Australian Taxation Office. If so, honourable senators could imagine the tremendous number of people who would be necessary in the Taxation Office to process those receipts. Of course, more inspectors would be needed to police this measure. I turn to another aspect of the tax which I find extremely worrying-that is, the effects it will have on charities. I realise that certain exemptions will apply to ministers of religion engaged in religious duties. However, what about ministers of religion who are working for charitable and educational institutions? Senator Siddons —We will move an amendment on that, Senator. Senator BJELKE-PETERSEN —That will be very good. I hope that the Government will accept it because it is very important. I feel that these people are just as involved in a religious occupation as is the normal parish minister. I refer, for example, to a chaplain at a hospital or a supervisor at a youth rehabilitation centre. Committed lay persons employed by the churches, although not ordained ministers, exercise the duties of a religious ministry just as effectively as if they were ordained clergy. At the same time they are paid minimum salaries in comparison with those receiving secular wages. I refer to a letter that was written to me by the Superintendent of the Parramatta Regional Mission of the Uniting Church in Australia in which he stated that the church has a Life Line Co-ordinator for the whole western area who is a lay person and who performs several roles which, if undertaken by the Government, would cost three times as much. The mission also employs a lay person who cares for battered and bashed women on a full time basis. If this service were run by the Government, it says, it would cost four times as much. The Superintendent told me that the mission employs a lay person who works for at least 100 hours per week, handling crisis situations which involve counsel- ling, religious understanding and support, and the provision of basic needs. If the Government were to undertake this task, the cost would be four times higher. The Superintendent stated: . . . we believe that the imposition of this tax on such an employing body will result in a lessening of the ability of the Church to assist people of Australia doomed to the added cost burden resulting in our ability to employ needed staff. Also, there is the fact that the cars operated by charities that are taken home by employees will attract as much as $40,000 in tax. This will mean cost cutting in the areas of supervision, education, camps and excursions, and programs which ease the burden of disabled people. Recently I attended a function organised by the Blue Nursing Service in Brisbane. The administration told me that if the cars that the Blue Nurses take home in the evenings in order to start their rounds the next morning are taxed, they will have a tremendous job to raise enough money to meet the cost of the Blue Nursing Service which, of course, is very important to sick people confined to their homes. I think the Government must look very carefully at this area. The Returned Services League has stated: What started out as an attack by the Government on company executives has ended up as an attack on cha- ritable and welfare organisations. These tax exempt non-government bodies, most of which are struggling to make ends meet and to maintain their current level of services, will now be hit by a tax where none existed before. Industry and business will spend vast amounts of money in gathering the tax for the Government. This cost will have to be added to prices and that, of course, will create further inflation and diminish our competitiveness in overseas export markets, which we desperately need to develop. For example, Australia's mining industry, which generates so much of our overseas income, will be hit for millions of dollars per year in tax in regard to the provision of subsidised housing for employers in remote areas. Sir Bruce Watson of MIM Holdings Ltd has stated that it would cost more than $30m a year, which represents 5 per cent of the net profit of the entire mining industry last year. That is a lot of money in anybody's language. The tax on concessional air travel by airline employees will cost employers substantial amounts. It would be naive to think that it will not end up adding to the price of a ticket. The fringe benefits tax will take millions of dollars from State government coffers-no doubt to be replaced by increased State taxes and charges. The Queensland Government says that under section 114 of the Constitution-which I read in the House yesterday-the Federal Government is not able to tax State governments. I received a letter also from a local government council in Queensland which was very concerned about the effect of the proposed fringe benefits tax on its shire, which is only small. It said that the proposed fringe benefits tax would cost approximately one per cent of the shire's rate revenue. These are all problems that are being raised. Public utilities will also be caught in the fringe benefits tax net and hikes will occur in the price of electricity, gas, water, postage, telephones and associated services. Of course, there is no doubt that the effects on farmers and the rural sector generally will most certainly be disastrous. I will not dwell too long on that point because I have mentioned it previously. If an employer provides a residence to a farm worker and the worker's family, the employer will be taxed on the value of that residence. The employer will be taxed on the value of farm produce provided to a farm worker and his family, and also on the value of electricity, gas or fuel supplied to the farm worker's residence. One could go on and on. I doubt very much whether the Government has given enough consideration to all of the problems that will be caused to so many sections of our community. The other day I read in an issue of Dateline News Digest that the Treasurer had sought to reassure the Parliament that the fringe benefits tax would not prove to be unduly harsh on farmers. In light of what I have said, I do not see how he can say that it will not be unduly harsh on them. I think it will be very harsh indeed. It will be a real problem, as I see it. Even residential accommodation provided to employees in remote areas will be subject to the fringe benefits tax. I think the best thing the Government could do would be to abandon this tax altogether. The National Party of Australia believes that this tax will be a major impediment to increased productivity and competitiveness-the very thing that Australia desperately needs to improve its economy and create lasting job opportunities. We certainly remain opposed to this tax, as is also the case in regard to the capital gains tax, the assets test and the 3 per cent superannuation deal with the trade unions. As far as I can see, Labor is trying to drive all incentive and initiative out of Australia's most efficient and industrious innovators-our small business and productive export industries. I certainly find it worrying that the Australian Democrats have only seen fit to try to negotiate with the Government on the effect of this tax on our motor vehicle industry. I believe that they should be doing what the Australian public wants them to do, that is, to oppose the tax outright. I am sure that they have had lots of requests to do that. I feel that the Government is trying to impose on every section of the community a tax that is most unwarranted. The real reason why the Government is trying to find reasons to cut down on its tax cuts is most likely to be the threatening blow-out in the 1985-86 Budget deficit and its inability to hold the economic trilogy promises made in the 1984 election campaign. We all realise that this Government has the greatest deficit of all time-$80 billion-with an interest bill on that of $15 billion a year. In fact 40 per cent of this nation's exports go to paying the interest bill alone. The Business Council of Australia has warned that next year's Budget could blow out to over $6 billion unless the Government changes its economic policy. An independently prepared report by Westpac Banking Corporation and the Melbourne Institute of Applied Economic and Social Research shows that economic activity in Australia fell by 2.3 per cent in February 1986. I believe that a fringe benefits tax will be the last straw that will break the camel's back in very many cases. I include all employers in Australia-big business, small business, rural employers and charities. A fringe benefits tax is certainly not the way to solve our deep economic problems. Senator COOK(Western Australia)(10.21) —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, which are timed to come into force on 1 July. This debate has been canvassed long and strong in the Australian community, starting when this Government grasped the nettle for tax reform-something that had not been addressed under the previous Government-and confronted many of the inequities and anomalies that have been allowed to gather and grow strong and are now believed by several proponents of them to be rights. Nonetheless, they are still anomalies in our tax system. One of the greatest scandals that the Fraser Government bequeathed to Australia is that, during all the time that it occupied the treasury bench, it never generated any enthusiasm in its own ranks for real reform of taxation. It presided over a haemorrhaging of the revenue base of the Government, it blinked at tax avoidance and it acknowledged tax evasion but did little to counter it. The history of the tax story for the Fraser Government provides a very important clue as to why the Australian Labor Party is on the treasury bench. One of the things the people of Australia have come to know about the Fraser Government is that it was a government that tolerated tax avoidance, tolerated inequity, tolerated unfairness, shifted the burden of revenue on to the backs of wage and salary earners and allowed those at the luxury end of the market to escape their tax obligations to the nation while claiming all of the benefits on the expenditure side of the Budget they could put their greasy hands on. That whole expose was well understood and is one of the reasons why the Labor Party is in government. In addressing its mandate as a government it is one of the things we have tackled fully, comprehensively, with great consultation and with a sense of fairness and justice in an effort to redesign a comprehensive taxing regime in Australia that is simple, that is equitable, that is fair, that closes off avoidance and evasion and that is efficient. We have done that by conducting, over the course of last year, a major debate in this country on what the principles of tax reform should be, by culminating that debate in the National Taxation Summit in which all the key players in this field put their cases and by synthesising the argument in that Summit in the form of the legislation that is coming forward now and of which these Bills are a part. No other government in the history of this nation has had the courage to do that. No other government in the history of this nation has had the courage to confront the sacred cows of the taxation system and, where they are wrong and inequitable, identify them, overturn them and bring equity to reign. Whatever else is said in this debate, that point has to be well and truly and fundamentally understood. In many respects for those of us who have been part of this debate over the last 18 months the passage of these Bills to this stage in the Senate is an anticlimax. If the final carriage of this legislation is to be more like a whimper than a bang, I think the whimper we heard from Senator Bjelke-Petersen in her remarks a moment ago epitomise the limp and pathetic arguments of the Opposition. She said-this was the theme of many of the speakers on the other side of the chamber in this debate-that, should these Bills pass, the economy will come to a shuddering halt, all Armageddon will break loose and, as with Chicken Little, the sky will fall in. Let me refer to an independent commentator, the editor of the Australian Financial Review, who on Tuesday, 27 May, in an editorial headlined `The case for the fringe benefit tax', stated: However, what the entire public debate has missed is the fact that New Zealand not only provided the model for our fringe benefit tax-it has successfully introduced one, over a year ago. Dire consequences have not followed. Small business has not collapsed and employers have now accepted the wisdom of levying a tax on them, rather than on employees. Surely, if such a tax works successfully for the kiwis, there is nothing to stop it working even more successfully here. The Australian Financial Review editors conclude: They may be able to beat the pants off us at Rugby and cricket but surely we can at least try for a draw on tax reform. If I can just put real life experience against the hysterical utterings of the Opposition and doom-laden forecasting, as the editors of the Australian Financial Review point out-and that is not a Labor party organ, as everyone who reads it knows-by identifying the New Zealand experience of this tax, what the Opposition is forecasting is just arrant rubbish. People talk about confidence in this economy. At a time when we have a balance of payments problem, which is being addressed by the Government, I suggest that the most positive thing which the Opposition can do is to reach a bipartisan accommodation with this Government, to talk with some confidence about the economy and to get off its carping criticism and start to play a positive role. Let me go back to this debate on tax. As I have said, the most important public event for us was the National Taxation Summit last year from which we synthesised the contributions, debated them and brought forward these Bills. Senator Parer —Do you reckon that was a success? Senator COOK —By exposing the objectives of the Government we run the gauntlet of argument such as we have just heard in that interjection: Do we think that that was a success? This Government has never apologised that it is a government that seeks to find consensus in the community. We do not have the Opposition's complex about being born to rule and knowing what is right ultimately to the last point. We believe in consulting the main players in the community, in taking their views on board, in listening to what they have to say and, on the basis of that community consultation and our mandate, in enacting legislation which reflects the widest possible consensus. I suspect that if the honourable senator ever wants to return to this side of the Senate he should learn from that and listen to the voices in the community. We did it and that is why this legislation is before us. Having exposed our intention on the legislation we did not at that point close off the consultative process. Everyone who is listening to this debate would know that every single interest lobby group has been sprinting up the front steps of Parliament House with their hot little submission about why their particular taxation rort should be protected. We have shown great forbearance in listening to those arguments and, if there is merit in them, in addressing the merit that is being put forward in order to ensure that, while the principle of the tax is protected, its introduction occurs in a way which will cause the least possible economic damage. While I assert strongly, and while it is certainly by any objective argument the case, that the consultation process in which we have engaged represents the broad mass of the community, we have also been sensitive to particular detailed points which those lobbies have brought forward. Senator Parer —Like the charities. Senator COOK —If the honourable senator wishes, I will come to some of his arguments in a minute. I promise him that I will not miss him. He may regret that mindless interjection. The problem we had in addressing the tax scales was, as I have said, that one cannot take this argument piecemeal. Comprehensive surgery is necessary to bring equity and fairness back into the taxation laws of this nation. That is necessary because the Fraser Government bequeathed to us a revenue base that was haemorrhaging, a situation in which wage and salary earners-those who could not escape tax obligations because the tax is deducted from their wages-paid the overwhelming share of taxes and those who had income which enabled them to avoid taxes avoided their obligations. In the end the net effect was that the wealthy could avoid the tax and the wage and salary earners paid it. That might be a Liberal Party of Australia concept of justice but it certainly is not for the rest of the community, and it certainly is not for this Government. One of the major areas of avoidance is the provision of fringe benefits in lieu of income. Under the existing tax legislation I have long held that fringe benefits are taxable and ought to have been taxed. Senator Townley —Why didn't you use the existing taxation laws? Senator COOK —Why did not the previous Government? Senator Townley —Why didn't you use it? You have been in power for three years. Senator COOK —We are about to. If the honourable senator stays in the chamber long enough he will see the vote and see us do it, which is more than can be said for the previous Government's record. We have tackled the rort of a benefit being received not in cash but in kind by taxing that kind of benefit on its value to the receiver of it, but taxing the supplier of it and not the receiver. We have had the rort by which senior company executives are given company cars in lieu of wages, by which the school fees of their children at private schools are paid in lieu of wages, by which all their special expenses-their superannuation benefits and all those other sorts of peculiar pension plans-are paid. Those benefits are given to avoid the payment of wages and salaries but are nonetheless of benefit to an employee, albeit a senior executive, and they will under these Bills now be taxed. That is quite proper. Without it, we would be tolerating an inequity that is certainly not in our mandate; we will not tolerate that. The impact of these proposals is to be revenue neutral. We have not set out to expand the revenue base of the Government. We have set out to rearrange it so that it is equitably spread. One of the greatest furphies that the Opposition has concentrated on putting abroad is that the real debate about taxation ought to be about the amount of government expenditure. That is just so much rubbish. Whatever the level of government expenditure, whether it be our level or what the Opposition believes should be the level, income has to be raised to finance it. That is what this legislation is about. We say that the income levels that are necessary for government expenditure will be raised fairly. The Opposition says: `Reduce the income but leave the unfairness in the system to make sure that those who cannot avoid tax do not and that those who can and who have the wealth to do so can do so'. One of the other major furphies in this debate is that there is no support for the Government in its pursuit of this line of approach. Well, I am advised that a number of research studies have been undertaken. If we take together all of those reports, the main indications coming from them-there are five of them-are that the fringe benefits tax continues to have strong majority support. As many as three in four people think that some form of fringe benefits tax should be introduced. Senator Townley —Where did they learn about it? Senator COOK —Not from Senator Townley. The fringe benefits tax is seen as the best feature of the tax package. In fact it is even more popular than the consequent tax cuts that will flow from it this year and next year. Thirdly, fewer than one in 10 people wanted the fringe benefits tax on cars dropped. That says nothing about the details, such as the rates of tax, et cetera, on cars. Fourthly, approximately one person in 10 thought he would be adversely affected by the fringe benefits tax. That runs directly contrary to the main theme of argument that the Opposition is putting up. Fifthly, the majority response to the tax package was that it would make the tax system fairer, particularly because it would close off abuses of the system, that it would help reduce tax avoidance and would lead to reductions in the income tax rates. On that last point let me just say that the Opposition has taken the soft cop line of argument by generally indicating its support for the tax cuts but by attacking the revenue raising mechanisms necessary to finance them. As I have constantly said in this debate, we are making the system fairer by reducing the burden on pay as you earn taxpayers. The Opposition supports the reduction in income tax but opposes the method of raising the income in order to finance it. That is the glorious irresponsibility of opposition and it is one of the reasons why those opposite will remain in opposition. This debate has risen on the hysteria index the closer we get to the enactment of the legislation. A number of the arguments put by Opposition senators during this debate are best answered not from me but again by another independent economic commentator, this time the economics editor of the Sydney Morning Herald, Ross Gittins. In an article on 28 May under the heading `It's time for a few home truths about the perks tax', he states: I can remember back to the tumultuous days of late 1982, for example, when half the Liberal Party tried to dissuade the other half from using retrospective legislation to collect some of the tax lost in the bottom-of-the-harbour companies. One of the many arguments used at the time was that the tax dodge by people who sold their companies to bottom-of-the-harbour merchants had been ploughed back into their businesses. If the Government went back many years later and demanded the tax, lots of small businesses would have to fold up and lay off all their workers. That had been the proposition put forward in the arguments by Opposition senators. He continued: Well, the recoupment legislation went through and the back taxes were collected, but if lots of firms went bust in the process we never got to hear about it. I can remember all the hoo-ha over the decision to require builders to withhold tax from payments to their sub-contractors from September, 1983. Remember? It was going to cause the price of homes to skyrocket and cause massive unemployment in the building industry? The tax went ahead, but the sky didn't fall in after all. And last September, remember how the removal of tax deductibility for business lunches was going to cause more than 7,000 restaurants to close within the next six months and more than 10,500-or was it 80,000-jobs would be lost? He continues-I will conclude with this paragraph: No doubt some restaurants have closed and no doubt some workers have been laid off. But the long-standing shortage of chefs and experienced waitpersons remains, and employment in the hospitality industry continues to rise. Senator Townley —What about the housing industry? It isn't going very well. Senator COOK —I just want to dwell for a moment on restaurants. According to job vacancies notified to the Commonwealth Employment Service, there is an absolute shortage of labour in the hospitality sector. If the fringe benefits tax on restaurants has had the damaging effect on employment that the Opposition so alarmingly alleged it would have, there would be a surfeit of skilled labour cramming the CES offices around this country in search of jobs. The reverse is true. Senator Bjelke-Petersen talked about this tax being a loss of incentive. She was saying that those who have money to invest are the only ones concerned about incentive. What about the incentive for an ordinary taxpayer who pays his full amount of tax but has to watch blatant avoidance go on? Senator Bjelke-Petersen talked about the huge cost of this tax to the mining industry. She said that the total cost of the tax was $30m. It may well be that she is quite accurate about that. Senator MacGibbon —You wouldn't care, would you? Senator COOK —I do care because I have a special interest in the mining industry. I certainly care. Senator MacGibbon —The industry is broke. Senator COOK —The mining industry is not broke. It is facing a glut of supply from around the world with low commodity prices and therefore it is addressing that problem by volume sales. However, Senator Bjelke-Petersen says that the cost is $30m. She is just looking at one cost. Let us take a comprehensive view of the costs and benefits of this tax to the mining sector. If one refuses to take a more global and comprehensive view and looks at just one corner of the picture, picking out what one wants to see and ignoring the rest, one can make the case that Senator Bjelke-Petersen has made. One can talk about a one dimensional view of the costs. But because this Government reduced the price of oil-and let us single out from the whole mining industry the iron ore sector of the Pilbara-the windfall gain for this reduction was $30m for that sector alone. If one looks at the effect of the devaluation on the iron ore industry in the Pilbara, one sees a windfall gain of $458m. For that industry the cost of this tax will be $16m. I ask the Senate to contemplate the position: What is fair when there are windfall gains of $30m as a result of oil price reductions and $458m as a result of devaluation and a cost incurred of only $16m? Senator Sir John Carrick —What about higher import costs? Senator COOK —Well, there may never be a time when it is appropriate to introduce tax reform but if one is operating in a climate in which those sorts of savings occur, it seems that that is an appropriate time for one to make that reform. I turn to the motor vehicle industry. All the dire predictions about job losses in this industry are based on the belief that companies will not buy cars to provide their employees with a benefit in kind instead of income because employers now must pay the cost of tax on those cars. The Opposition ignores the fact that the Government has reduced that tax quite considerably and it concentrates on the need to keep a log book and other minor matters. These are minor matters. What the Opposition never says and what all the commentators acknowledge is that last year many of the sales that were made on motor vehicles were brought forward from this year and there was record trading in motor vehicles. It is not surprising therefore that this year the pickings have been a bit leaner. It is not surprising either, because of the hysterical lobby that has been mounted and because of the special case of the Australian Democrats making representations to the Government, that many people are waiting for these Bills to pass before they buy cars this year. While Opposition members attack us for driving motor car sales down with this tax, they are gloriously oblivious to or ignore the fact that under the Fraser Government the unleaded petrol conditions were imposed and that has been a cost as well. In summary, these Bills should, and appropriately will, be passed by the Senate. These Bills bring symmetry, fairness and equity, simplicity and efficiency to our taxing system. These Bills are part of a comprehensive review of our taxation system which will provide tax cuts this year and next year to wage and salary earners. These Bills will compensate for those tax cuts by closing off tax shelters and tax avoidance methods used in other parts of the income tax base. For those reasons, these Bills will provide the Government with the ability to meet the obligation imposed by its mandate for tax reform and the basis for an efficient and better taxation system in the future. Senator Sir JOHN CARRICK(New South Wales)(10.46) —The Senate is 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. This tax is in my view-and that of many others-the most mean-minded, the most falsely projected, misrepresented and ill-conceived tax that has ever come before this Parliament. Senator Gareth Evans —You just wish that you had had the guts to do it yourselves. Senator Sir JOHN CARRICK —When I hear Senator Gareth Evans interjecting and when I listen to speeches like the one from Senator Cook I am reminded of Shakespeare, who said that the devil can cite scripture for his purpose. The purpose of a socialist government is to get more and more tax money for its wasteful and gross overexpenditure and to pretend that it is taking that money out of the hides of a small number of affluent people. In the course of this speech I will demonstrate that that is false doctrine and false scripture. Indeed, this tax legislation will harm virtually every person in Australia. This legislation is not aimed at a few; it will be passed on in costs and everyone will suffer. The important thing to keep in mind is that this Bill comes at a time when there is a smell of decay and panic in the ranks of the Australian Labor Party and, indeed, among the Australian Democrats. This is strongly reminiscent of 1975. There are fallouts among Ministers who are quarrelling. We have an impotent Prime Minister who is incapable of asserting any authority, not knowing what is right but very responsive to the Left, and a blustering and bullying Treasurer who, having been built up falsely, is now shown to have feet of clay. This tax, which will do great damage to the economy, must be put in perspective. It can only pass this Senate and this Parliament because seven Australian Democrat senators not only are allowing it to pass, but also are the urgers and the implementers of the legislation. Everyone in Australia who ultimately suffers from this tax must keep in mind that, although members of the Australian Labor Party are the architects of this tax, the Australian Democrats are the implementers. They have put out particularly false and ugly propaganda in order to justify their actions. I will proceed to examine that. Australia is in recession. The Australian Labor Party is the last to be able to argue against that statement because in opposition the Labor Party repeatedly said that the test of recession was two quarters of negative growth. In opposition, the whole of the Labor Party gave us that test. Yet that is exactly what was revealed yesterday. We could also take another test that has been used by the Labor Party in the past. I take joy in reminding myself of the past. A report of the Organisation for Economic Co-operation and Development came out which had some minor comfort in it, but the Labor Party said at the time: `You must not take any notice of that; those OECD reports are written by the governments of the day'. We remember that. We now have the test of recession and the test of what is before us. What do we have? We have had two quarters of negative growth and a devastating slap in the face for the Leader of the Government in the Senate, the Minister for Industry, Technology and Commerce (Senator Button), and the Government itself in the decline in investment in manufacturing industry. On two occasions now the President of the Australian Council of Trade Unions has said that there is no industry policy. Indeed, there has been no response to that. It is no substitute for policy that the Minister smiles his cherubic grin and says that he is really not responsible because he does not hold with many of the policies of his Government. I remind the Senate that historically washing one's hands is no absolution of guilt. Indeed, what is necessary is to face up to policy itself. We have also had the extreme lesson of the adverse balance of trade. That, taken with these other three matters, is a symptom that we are being costed out of world markets because of our unduly high costs of production. Everything that increases costs of production-and everybody who is interested in the Democrats' actions should understand this-harms Australia. By implementing this legislation the Democrats are harming Australia grossly. This legislation will cause unemployment and very serious hardship. This is a strange tax. The utterly false rhetoric about it by the Australian Labor Party and the Democrats must be understood. They say: `Look, it is a good tax because a handful of rich people are tax dodgers. They get away with it. We will take the money from them and give it back to you'. That is the background, but it is not true. Those tax dodgers will not be touched at all. They will not be asked to pay the tax. They will go on cheerfully tax dodging. Let that be perfectly understood by every Australian. Those tax dodgers are to be protected, because the employer who gives them the benefit by negotiation is to pay the tax. What an extraordinary situation. What humbug. Let nobody believe that the argument put forward by the Labor Party and the Democrats on the fringe benefits tax has any legs to run on. The argument is grossly false. The employer has four opportunities to pay the tax. Incidentally, it is an ugly tax for another reason: It is not tax deductible as a cost. It increases production costs at a time when every such cost, wilfully imposed by governments or the Democrats, damages people. There is no doubt about that. Senator Crichton-Browne —It is an addition to costs. Senator Sir JOHN CARRICK —Yes, and the Australian Labor Party and the Australian Democrats, at a time of 8 per cent unemployment-prospectively growing unemployment-and a threat to the living standards of Australians, are wilfully engaging in a behind the doors compact to increase costs of production. What can an employer do? With those who have the clout, the affluent, he can renegotiate so that they do not suffer. So we will not catch such people. The affluent either go on as they are today and the employer pays or the employer renegotiates and the affluent get the same benefit. That must be absolutely understood by everybody. We go one step further. Of course, the employer can withdraw the benefit. He will do so in many small businesses that cannot afford to pay. What kind of benefits are we talking about? Are we talking about cars or paying children's school fees? Not a bit; we are talking about the assistant in the butcher's shop who gets cheap or free meat. That will be taxed. The employer of the person in a warehouse or shop who gets goods at a discount will be subject to tax. The farmer whose farm is managed by his son and whose son lives at home will have to pay tax on the board and lodging of his son. We can go on. The Salvation Army and other non-clerical people who are the do-gooders of this world, and the hundreds of thousands of small people-the wage earners who Senator Cook pretended would not be touched-will all be touched. We can withdraw cheaper meat for butchers' assistants, discounts for the ordinary employee on low wages in a warehouse and benefits for poor people working for the Salvation Army or elsewhere. Thousands of such incidents have been revealed in this debate. This will not affect the affluent tax dodgers. The people mentioned are not the tax dodgers. All this Government will have done is hurt those who cannot protect themselves. What an employer can do, and what a number of employers have indicated they will do if they are to face the problems of increased costs, is sack their staff. We have all heard of a farmer who has three employees who live in cottages on the farm at no rent or minimal rent and get what is called the run of the knife-some free meat and vegetables and a bit of milk from the jersey cow. He will be required to pay tax for providing the nominal rent on the houses and the free food for the employees. Those poor benighted employees get a very low wage anyhow, about $250. What will the employer do? He will sack one of the three employees. That is the kind of nonsense we are dealing with. If such actions are not resorted to one thing is absolutely certain-every employer facing higher costs will pass them on, right through the costs of production to the product, whether goods or services. Is it the wealthy, the affluent, the fellows who get the motor cars or have their kids' school fees paid who will suffer? Not at all. If the costs are passed on every member of the community-pensioners, fixed income earners, poor people and low income earners alike-will have to pay them. Senator Crichton-Browne —A little old lady who puts her tithe into the collection box at the church to pay for the rent on the manse. Senator Sir JOHN CARRICK —That is right. The legislation is riddled with the most injurious kinds of actions by this Government. I want to dwell forcibly on the fact that this legislation will not rectify the tax injustice of a few wealthy people getting a few lurks because the tax law as it has existed has always enabled this Government and the Commissioner of Taxation to do exactly that. This legislation will protect those wealthy people. They will not have to pay the tax. They will still get all those benefits of cars and so on, because they are the few who have the clout. They cannot be sacked because they are in key positions. They have all the clout in the world, so the employer will pay the tax. The affluent will be entrenched as tax dodgers. If ever a government set out to entrench tax dodging this Government has done so. As I said before, these people can renegotiate. If benefits are withdrawn to save costs, hundreds of thousands of little people on low incomes inevitably will suffer. If in the long run all this tax is passed on in costs, we will have an absolute disaster. Let us look at this matter, because the Democrats' role fascinates me. There is some kind of pay off. First, the Democrats are making a big thing out of the fact that they will rectify something to do with motor cars, not something concerning the Salvation Army, the butcher's assistant or the thousands and thousands of little people. They can go to blazes as far as the Democrats are concerned. The Democrats have picked one instance as a symbol-as a pretence -of what they are doing. The motor car industry says that what the Democrats are doing will not bring relief anyway. The arrangement is most peculiar. As I understand it, the Democrats will agree to the legislation if income taxes are reduced in December. Let us consider that. If the taxes are not reduced in September and the Democrats support that, by negotiating that deal they are punishing every taxpayer. They are saying by negotiating that deal: `We will make a better deal with the Government and we will keep those people on unduly high tax for another three months'. Indeed, many of them will go into a higher tax bracket in that time. What benefit is that? It is a gross detriment. If the Democrats wanted to take the weight off the Government in terms of bargaining for higher wages for higher productivity, they should have done something about it. But fundamentally, the Australian Democrats are doing two things: By letting the fringe benefits tax go through they are saying to the people of Australia: `We do not care a hoot about you, except for a few motor car people, and all you little people can bear the burden. We do not care if this is passed on to everybody, including pensioners'. What is more, it as a result of their little trade the tax cuts do not come through on 1 September but in December, they will have put a burden of tax on everybody. Senator Cook and others have put forward another little bit of false scripture for their purpose. They have said: `Here is an Opposition trying to stop the collection of tax which would enable us to cut taxes'. That is the greatest humbug and nonsense on earth. The fact of the matter is that whenever the people of Australia get this $7 or $8 a week tax cut, at the very best, it will simply be catching up with inflation-and even then not totally. It is no gain at all. It is a belated recognition of the tax creep caused by inflation. In fact, it is a retrospective detriment in itself. The longer the tax cuts are delayed, the longer the people are punished. Let no one say that the Government needs this money to pay tax cuts. If we do our sums we realise that the volume of inflation taxation this Government has reaped in recent years has been necessary to a great extent simply to pay for the tax cuts. Let us not have that type of humbug at all. Basically, we have before us a mean-minded tax which picks on little people. It is mean-minded and falsely projected because the Government pretends that it will hurt the big fellow who gets the benefits when in fact the big fellow's protection will continue to be entrenched, and the employer will pay. It is mean-minded because it attacks the butcher's assistant, the clerk in the warehouse, the worker for the Salvation Army and hundreds of thousands of other people. It is a pretence because the Government says it will take from the rich and give to the poor; it is a pretence because the country's economy at this moment is going downhill. Let us remember what the Treasurer (Mr Keating) has said in recent days and what subsequent events have indelibly underlined. He has said that if we do not take certain actions we will be a banana republic and a Third World country. It is enormously significant that it is a Labor Treasurer, not the Opposition, who has said that we are on the way to becoming a banana republic and a Third World country. If he wants proof of this, of course, an enormous trade deficit has come forward. What does the Government say? It says: `You cannot blame us for the trade deficit because the prices of our primary industry and mining exports have fallen'. The Government forgets to say that offsetting that is the huge increase in the volume of wheat, minerals and coal that we put on the market. The Government does not look at the other side of the ledger. Why do we have a trade deficit? It is because we cannot stop the flood of imports coming into Australia. The two effects of that are that because Australia's costs of production are so outrageously high we have 8 per cent of our population out of work and an advisory body to the Government says that we will have 8 or 9 per cent out of work for the next 10 years. The Government has not denied that. More than 20 per cent of the young in the 15 to 19 and 19 to 25 age groups are permanently out of work. The average period for a person out of work in Australia has risen from roughly 33 weeks a few years ago-which is outrageous anyhow-to over a year. The young face unemployment indefinitely. This is simply because our manufacturing industry has no policies at all. It is simply because we are being costed out of production. We are very keen to observe the advice of the Australian Council of Trade Unions. After all, the only consensus in Australia is in fact an agreement behind the Chair between the Government and the trade unions, and we have a confrontation of those two groups against the rest of the community. A government interested in doing that surely ought to take notice of two things which the ACTU has said in recent days: First, that there is no industry policy-nor there is-and, secondly, that one of the keys to this problem is to have an industry policy that works so that we can get the costs of production down and productivity up. I have not heard this Government talk about costs of production. It runs away from that issue. It talks about the side issues and symptoms. It does not get to the real nub of the problem. If we allow this situation to go on, if we continue to do a damnable thing and index inflation to deliberately maintain or increase our margin of detriment compared with the countries with which we are trading, we will cause a much greater fall in living standards and much greater unemployment. But nobody talks about that at all, only about all sorts of side symptoms. There are two ways of solving this problem. We could do what this Government has done for nearly four years. We could pull the second greatest confidence trick-the fringe benefits tax must be the greatest-that has ever been inflicted on a people by saying that over three years and three months everything is going well and that everything is fine, that we are doing the right thing and rectifying the economy. However of course, this Government disguised the fact that all it has done for three years and three months, having benefited from the wage freeze of the Fraser Government, the coming of rain and a better economic climate including a better American economy, has been negative things. In fact, the Government has institutionalised Australia's detriment as against the rest of the world. It said it would index inflation in Australia, but inflation today is at 9.2 per cent. Not only is this twice the level of that of our trading partners, but the inflation rate for Japan and West Germany and others is virtually zero. Everything we do has the same effect. We put up excise on petrol and thereby put up the consumer price index. The Labor Government has institutionalised the detriment that is now revealed. Let nobody say that we are not in recession, because by the Government's own measure we are. Now along comes something else. At a time when every indication is not to touch costs of production and not to disturb the relationship between employer and employees because we want maximum co-operation, the Government comes along and says it will put a significantly increased cost on every employer, small business and farmer alike, and also on the charitable institutions-in effect, that it will increase costs. The Government pretends that it is attacking the wealthy when in fact it knows that those extra costs will be passed on to the smallest among us, the most humble, the most unprotected, such as pensioners and the like. I know nothing that is more damnably ugly-if honourable senators will pardon the vigour of my speech-and I know nothing that has been more falsely represented in this country than the dogma of the Government. It has been an outrage, and this tax lends itself to it. It is no good Ministers getting up saying: `She'll be right; the J-curve will turn around'. The J-curve has dropped. It is now an economic jay walk of massive proportions. I want to conclude by saying what I said at the beginning of my speech. This legislation is mean-minded because it hurts little people. It is falsely projected because it pretends to do what it does in reverse; it pretends to pick on the big and the affluent and in fact it hurts the little and the unprotected. It is grossly ill-conceived because it comes at a time when Australia needs reductions in costs of production. I repeat what I said at the start. This can happen to Australia only because of seven people. If tax cuts are deferred until December, which is likely, this will be supported by some kind of compact by those seven people. The Australian Democrats have it within their power to stop this legislation. At the outset, one or more of the Australian Democrats who knew how bad the legislation was said that it was bad and they opposed it in total. What has happened has been a falling back for some kind of behind the scenes arrangement. But whatever may happen, this legislation will pass. It is wrong that it should pass. It will do great harm to Australians. The Australian Labor Party is the architect of this legislation; but no one can blame a socialist architect. After all, the failure of socialist architecture has been written in the history books of this world for hundreds of years. It goes on and on in this world in its benign nonsense. But we can blame those who know better and who do worse. I looked up a little quotation by an American named Lyman Beecher 150 years ago. He made a prayer which I make today. He said: O Lord grant that we may not despise our rulers. And grant, O Lord, that they may not act so we can't help it. This Government is acting in a way that will place a great strain on us not to despise it because of the falsity of the projection and the adverse impact of the legislation. Senator CRICHTON-BROWNE(Western Australia)(11.12) —We are debating the Fringe Benefits Tax Assessment Bill 1986 and related Bills. After an absolutely disgraceful delay we now have before us legislation which will impose a tax which was first announced by the Treasurer (Mr Keating) on 19 September 1985-some eight months ago. The Treasurer has had eight months to prepare this legislation which is now before the Senate. This legislation will impose a tax which is to apply from 1 July 1986-but seven weeks away. The Treasurer apparently believes that it is reasonable for him to take eight months to prepare this legislation but he then takes the view that taxpayers need only seven weeks to see the legislation before they begin to incur the liability, to be able to understand this complex legislation and to be in a position to pay the fringe benefits tax. As if the contempt which the Treasurer has shown for employers who will have to pay this tax is not bad enough in itself, it pales into utter insignificance when compared with the contempt which the Government has been prepared to show to employers in the way that the Government has chosen to tackle the issue of the taxing of fringe benefits. Essentially, this Bill will operate by requiring employers to determine the actual value of the fringe benefits which they give to their employees. Once the value is determined the employer becomes liable to pay fringe benefits tax on that value. The tax which the employer is required to pay will initially be 46 per cent of the value of the benefit but ultimately that will rise to 49 per cent of the value of the benefit given to the employees by the employers. One half of the total benefit will be absorbed in taxation. Of course, as Senator Sir John Carrick has said, it is a non-tax deduction. No deduction will be allowed for taxation purposes for the amounts which are paid in fringe benefits tax by the employers. By any standards this Bill is unbelievably complex, it is heavy handed, and it will hit certain industries, in my view, so quickly, so badly and in such a devastating form that it may well cause their immediate collapse. The industries which will be hit hardest will be those which will be unable to pass on the increases in operating costs which this Bill will impose. It just so happens, thanks to the economic incompetence of this Government, that these are the industries that Australia needs now like never before. These are Australia's export industries, its mining industry and its farming industry. Any complex law is a difficult and dangerous thing even when it is being administered by competent legal practitioners. We have here, if I might presume to say, a Bill which is as complex as any which has ever been enacted by this Parliament, yet this Government expects employers, from the Broken Hill Proprietary Co. Ltd down to the scale of the small family butcher who provides free meat to his employees, the farmer who provides assistance by way of accommodation to his employees and the farmer who provides board and lodging to his beloved sons who are employees of the family company, in this complex maze of legislation to make their own assessment of their liability and to pay fringe benefits taxes accordingly. Should any of these small business people make a mistake-I believe that many of them will-they will find themselves in two predicaments: First of all, it is highly likely they will not have the liquidity to pay the tax and, secondly, particularly under this new draconian self-assessment system which this Government is seeking to cast upon the taxpayers, they will find themselves subject to very severe penalties. This Bill represents yet another broken promise by the present Prime Minister, Mr Hawke. The fourth of the nine principles on which the Prime Minister said that taxation reform would be based is: Any reform must lead to a simpler system, which therefore all Australians can easily understand. This Bill is 139 pages long. There are 30 pages of definitions of specialised terms in the definition section of the Bill alone. There are countless other definitions which are to be found throughout the other clauses of the Bill. Some of the absolutely monstrous terms which employers will have to understand include: `Exclusive employee expense payment benefit', `extended travel residual payment benefit', and `in house residual fringe benefit'. The definition of the term `fringe benefit' contains something like 434 words made up of 26 paragraphs, 10 sub-paragraphs and five references to definitions in the Income Tax Assessment Act. This Bill will also require people to keep detailed records. In the case of cars, a firm which is not prepared to have its tax liability determined by the arbitrary statutory formula which has been included in the legislation, it must keep detailed books of every single journey made by a vehicle and a driver. If a firm ever fails to keep a record of one short journey, that journey will be assumed to be a private journey and regarded as taxable. If any employer provides goods to an employee he must maintain records of the lowest price at which the goods were sold. Should an employer have several employees use a house during the one year, he will be required to understand extremely complicated weighted average cost computations. That would probably confuse the brightest of the accountancy profession, never mind the poor little average businessman trying to solve his problems. The administrative difficulties created for business by this tax will, by any standards, be enormous. It seems that this Government just does not understand that the administrative costs associated with this tax represent a very significantly increased cost burden, in addition to the actual tax which will be cast upon the employers. I believe that the enormous tax costs involved in making this tax workable is one of the reasons why the Treasurer is forcing employers to assess their own liability. In this way the Treasurer has achieved the amazing result of requiring employers to pay in order to learn how much tax they have to pay the Government. Of course, the other obvious and cynical reason is that the Government does not have the courage, the fortitude or the commitment to cast the tax-- Senator Button —Do you mean intestinal fortitude? Senator CRICHTON-BROWNE —Any sort of fortitude. To paraphrase what Senator Button is trying to say, the Government does not have the guts. The reason is that it is not prepared to take on the unions. It is not prepared to inflict upon itself the political odium of placing the tax where it ought to be, and that is upon the employees. Its natural constituents are immune. They are quarantined from this tax and from the responsibility of paying it. It is the poor old employers who are going to suffer again another kick from this Government. The Government wonders why we have the economic problems we have now. It just does not seem to understand what it is like to live in the real world. Let us take a look at the effects which the proposed fringe benefits tax will have on the economy in general terms. Now is not a bad time to do that. As a tax levied on the amount of benefits an employer gives to an employee, the most obvious effect of the fringe benefits tax will be on the price of labour. One might very well ask at the outset why a government which is presiding over a 7.9 per cent unemployment rate as a percentage of the labour force-based on the April figures-would even contemplate a measure which would result in increasing the price of labour. The reason escapes me except, of course, that most decisions of the Government of an economic nature seem to be made in a complete vacuum. The effects of this tax deserve more consideration. The tax will add to labour on-costs. These are the costs associated with the employment of labour apart from the actual money wages paid for productive effort. On-costs include annual leave commitments, sick leave, payroll tax, workers' compensation and a number of other non-cash forms of benefits or, as they are known now through this legislation, fringe benefits. This Government has spent much of its time hailing the accord for allegedly containing the growth in direct payment to employees. It has not been prepared to discuss the considerable amounts which employers are paying in on-costs and the fact that this is one area of labour costs which is experiencing faster growth than money wages. That was demonstrated yesterday in the national accounts figures, which showed that total labour costs had increased by 6 per cent. Owing to the very nebulous nature of on-costs, precise statistics are always very difficult to obtain. But at the national wage case in August 1983, three employer groups presented estimates of on-costs as a percentage of direct labour costs. The Confederation of Australian Industry estimated that on-costs represented 35.3 per cent, the Metal Trades Industries Association Inc. estimated them at 38.6 per cent and the Australian Industries Development Association estimated them as being 43.1 per cent. The Confederation of Australian Industry has looked at the question of on-costs more recently. In the December 1985 issue of the Industrial Review the CAI estimated that total on-costs amounted to 36.6 per cent of direct wage payments. From 1983 to 1984, while direct wages increased by 8.5 per cent, on-costs increased by 10 per cent. Not only do these figures indicate that many of the Government's claims about the accord are exaggerated or even spurious, but also they reveal that the area of on-costs already represents a significant cost to business. It is also an area which will be particularly adversely affected by the Government's fringe benefits measure. What is worse is that making the fringe benefits tax fall upon employers will result in enormous union pressure to receive remuneration increases in the form of fringe benefits rather than in cash, because the benefit is worth more in the hand and the responsibility for taxation lies not in the hands of the employee but in the hands of the employer. This is because anyone earning $19,501 per year or more is paying 46c in the dollar for every extra dollar earned. I might also say that average weekly earnings are presently $21,522.80 per year. Obviously there is a significant proportion of the work force with a strong incentive to take future wage rises as fringe benefits rather than as cash. When this occurs the employers will be forced to carry the cost not only of the fringe benefits but also of the 49 per cent tax. The employer will therefore pay almost 150 per cent of any benefit which he is forced to give to employees. Another aspect which is likely to add to this cost pressure, as I have said before, is that fringe benefits are by nature very nebulous. As such, whatever might be the limiting effect of our increasingly irrelevant arbitration system in terms of money wages, it is bound to be even less effective in containing fringe benefit increases. One might well ask what the costs of this tax will be. The best estimates that I have been able to find-perhaps they are only indicative but they were the subject of a survey-indicate that the average increase in the cost of employing labour will be 2 per cent. The survey I refer to covered such industries as pharmaceuticals, retailers, merchant banks, transport, timber, shipping and mining-in other words, a pretty good cross-section. That demonstrates that the additional costs of labour will be in the range of 2 per cent. This 2 per cent rise in labour costs is indicative of the increase that will occur throughout the community. It will, of course, be in addition to the 3 per cent productivity increase and the national wage case increase to be expected, in the area of 2.3 per cent. For a nation which is already thoroughly and hopelessly uncompetitive and which is running a current account deficit which could well exceed $14 billion in one year-this year, under this Government-this tax is a recipe, in my view, for an absolute economic disaster. It is yet another example of this Government being prepared to pursue policies as if it operated, as I said earlier, in a total vacuum, in total isolation. The Government's response, of course, would be to say that employers should simply switch from paying fringe benefits to paying employees in cash. In doing so the Government would again be displaying its utter ignorance of business realities. To do that would be to ignore the kind of union pressure about which I have just spoken. It would also be to ignore totally the regional differences throughout Australia. Pressure to pay fringe benefits taxes will be relatively less in the urban areas where there is ample housing, many community facilities and a large labour force. It will be relatively greater in the remoter parts of the country where there are none of these benefits. The Confederation of Australian Industry indicated in its survey that mining companies paid benefits to their employees equivalent to 14.2 per cent of the amount the employees were paid in wages. Although agriculture was not surveyed by the CAI, it is quite reasonable to expect that it operates in very much the same environment and conditions and that it, too, pays a very significant part of its wages through fringe benefits, relative to the total wage costs. For both agriculture and mining, provision of employee benefits such as housing is not, in my view, the payment of a perk but an absolutely essential precondition for being able to operate. It is an essential precondition for attracting labour into the areas involved, particularly the mining areas, where the employees are required to live in very harsh, isolated, unpleasant and difficult areas. A similar difficulty, of course, impinges on small business and on isolated councils. In this process of attracting employees to remote areas companies have established whole towns and have contributed enormously to remote area development. This is generally, I must say, much to the relief of the treasuries of the various State governments and, of course, the Federal Government, because they have not had to meet any of the infrastructure costs of building in these towns which they might have otherwise been required to do. One has to ask: Where would Port Hedland, Karratha, Dampier, Tom Price, Mount Newman, Pannawonica and Paraburdoo be now? Those towns just would not exist. Senator Messner —They would be in Canberra. Senator CRICHTON-BROWNE —They would be in Canberra, yes. They just would not exist; yet they represent, as part of the mining industry, very nearly 40 per cent of Australia's export earnings. Mining companies such as Western Mining Corporation Ltd have on their books stocks of between 1,600 and 1,700 homes in towns such as Kambalda which just would not be there; the Government could not carry the burden of providing the infrastructure. Senator Button —This is very interesting, Senator, but what is the point you are trying to make? Senator CRICHTON-BROWNE —The point I am trying to make is that the Government is now casting a fringe benefit tax upon mining companies for providing housing accommodation which could not have been afforded in the first place by the employees and least of all by the Government. If they had not built the homes the towns would not be there, the industry would not be there and the export earnings would not be there. Senator Button —That is exactly what you did in government except that you did not have the guts to go on with it-to use your terminology. Senator CRICHTON-BROWNE —That is quite untrue, Senator Button. We did not cast a fringe benefit tax on employees. At one stage in a moment of temporary aberration the then Treasurer flirted with the idea that we might have a modest tax on housing in some of these isolated areas, but he soon learnt the mistake; he soon recanted and retracted. At least he had the courage, the brains and the common sense to recognise the inherent danger of the course he was taking and very quickly withdrew. Common sense prevailed in his case, but the Labor Party crashes on; it carries on; it is going to make a mistake, come hell or high water, and nobody is going to stop it. Despite the contribution of farmers and miners to Australian development, the Government intends to hit them with this fringe benefit tax, this diabolical fringe benefits tax-screw a few more bucks out of the rich multinationals. I suppose that is what it thinks it is doing. In my view such a tax would be inappropriate at any time. At the best of times it is inappropriate, but, of course, the Government is displaying its usual finesse for total insensitivity and is imposing the tax at perhaps the worst time, at a time when the mining industry and the rural industry need all the support they can get, not the impost of further costs. Australia as never before requires a dynamic mining industry and a dynamic agricultural industry. By way of example, in April the nation spent $1,476m more than it earned. It is expected that by the end of this financial year the Government will have presided over a current account deficit of $14 billion or about $888 for every man, woman and child in this country. In 1984-85 the mining and agricultural industries together accounted for 72 per cent of Australia's export earnings. Despite this fact and our obvious present need for export income, the Federal Government intends to hit these sectors with this fringe benefits tax. As I have already said, the mining industry pays the equivalent of 14.2 per cent of wages in the form of benefits. This means that when the 49 per cent tax is imposed, even allowing for the remote area concessions under this Bill, modest as they are, I might say, the tax will still mean a rise in costs equivalent to a 4.2 per cent increase in wages. A 4.2 per cent increase. Not even the present Government would be silly enough to support that before the Australian Conciliation and Arbitration Commission, but through this insidious form of taxation it is prepared to have it cast upon the employers. As average wages paid to mining employees in November 1984 were something in the range of $30,420 per year, the fringe benefits tax could well mean a rise in costs of $1,270 per employee per year. The Government means to access fringe benefits tax on remote area housing based on-of course it always does these things in the most complicated way-a most complicated formula of the percentage of national consumption expenditure on housing applied to average mining wages. As average national expenditure on housing is about 20 per cent and average mining industry wages are something in the range of $30,000 per year, the Government is assuming that the housing is worth about $6,000 to each employee by way of benefit. Even if this is reduced by the intended remote area concession of 40 per cent and the tax rate is applied at 49 per cent, which it will be very shortly, the liability would be, as I say, about $1,764 per house. That is to be incurred by way of fringe benefits tax cast upon the employers; that is, if there is no contribution by the employees of course. Thus, the liability for fringe benefits tax will be cast upon the employers of the mining sector and the agricultural sector in a very onerous way. Of course, the tax comes at a time when the industries are in absolutely no shape to absorb these extra burdens. Both are price takers on world markets. They cannot simply pass on their additional and ever rising costs to their consumers, because they do not control the prices. They are subject to the fluctuations and variations of world supply and demand, which of course dictate world prices and the prices they receive. Senator Button would well know that the mining industry is presently in a very low cycle. Base metal prices are depressed, more depressed probably than they have been for a very long time. Net profit as a percentage of shareholders' funds-- Senator Button —Not as depressed as I am after listening to you for half an hour. Senator CRICHTON-BROWNE —Well, if listening to me and hearing the facts depresses Senator Button, I only hope that, like Saul on the road to Damascus, he repents and repents quickly, and does something about it. Senator Collard —He has to see the light first before he repents. Senator CRICHTON-BROWNE —Well, a burning bush would not change Senator Button, I am quite sure. Senator Messner —Senator Button knows he is wrong. Senator CRICHTON-BROWNE —That is right. He is not Saul and he will not see the burning bush, but he is Pontius Pilate, washing his hands of it. He has obviously learnt a few sins from the Bible-not much virtue but a few sins. The net profit as a percentage of shareholders' funds invested in the mining sector last year was only 5.7 per cent across all the mining sector, and that in itself is indicative of the difficulty that that industry is in. What person would be investing in the mining sector, with a 5.7 per cent return, when under this Government one can go to a bank and get a three-month bank bill at around about 19 per cent? The National Australia Bank indicated in its February monthly summary that foreign investment in-flow into mining had fallen from a peak of $3,024m in 1979-80 and has not been more than $350m in any year since, and is falling. Of course, the fringe benefits tax will be yet another impost by this Government on the Australian farmer. It will be another Hawke Government imposed cost increase which, of course, will lead to farm incomes falling further. Returns on rural investment already have plummeted to minus 6.2 per cent. One only has to look at the difficulties of various sectors of the rural economy to see that this is so. For example, the average wheat farmer now receives minus $7,500 per year by way of income. The Government is asking him to absorb something in the range of another $2,000 in taxes. I ask Senator Button how he thinks farmers will pay that? Surely even Senator Button's arithmetic adds up to the inevitable conclusion that those farmers will not be able to do so. I hope that all honourable senators will remember this measure when the Government attempts to blame all Australia's rural problems on overseas factors-as the Government invariably seems to have done in the past. I have discussed the impact of the fringe benefits tax on the economy generally. In particular I have discussed its impact on the two remote area industries of mining and agriculture on which, I believe, there will be the most dramatic impact. Time does not permit me to go into any detail on the many other areas of the economy on which this tax will have a damaging effect. However, if I did have time I would talk about the motor vehicle industry, which Senator Button seems to have some little knowledge of. The difficulties of that industry, of course, stand out starkly when we see that the new vehicle registration figures for February 1986 were 27.6 per cent lower than for February 1985. This is due in part to the high interest rate policy of this Government. In addition Senator Button has been asked on a number of occasions to quantify the various reasons for the decline. On each occasion he chooses to avoid an answer. He knows the answer but he is not prepared to commit himself to the truth. I have not had time to detail other areas of course but I will do so in the Committee stages of this legislation. The ACTING DEPUTY PRESIDENT(Senator Giles) —Order! The honourable senator's time has expired. Senator HAINES(South Australia)(11.42) —Somewhere along the line during this debate on 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 we seem to have lost track of the fact that they correct an inequity, a rort, an anomaly, a hiccup, call it what you like, in the taxation system which has allowed more and more people to avoid paying tax through being recipients of fringe benefits. Those people are, in the main, those on relatively high incomes. Even Mr Howard, as reported in this morning's Australian newspaper, was forced to acknowledge the fact that areas of undoubted abuse exist in relation to certain fringe benefits. If employers and some employees allow fringe benefits to be abused then they have only themselves to blame when governments take some action to correct the problem-the loss of tax revenue and so on, certainly, the loss of equity-that is caused by this. Let us face it, Madam Acting Deputy President nobody-not you, not me, no honourable senator in here and certainly, none of the people out there-likes paying tax. I think that the two things that Australians grizzle about most are paying taxes, which they perceive as being too high, and the way that governments spend that tax revenue when they get it. That is a simple fact of life. We do not like paying taxes. However, more importantly I would say that the person who pays his or her fair share of tax-often that person is not in any position to do otherwise of course-resents very much the fact that there are a percentage of people in this country who are able to get around the tax system one way or another. Senator Button —The Western Australian Liberal Party is full of them. That is why we had so much vehemence from the last senator. Senator Crichton-Browne —Whom does John Horgan work for now? You vilified him two years ago. He works for the Mafia over there now, the Burke State Government. Senator HAINES —I am grateful for the assistance that my colleagues on both sides of the House are giving in this. The point that Senator Button raises is probably partly due at least to the fact that certain honourable senators are protesting too much, shall we say, about some of the legislation that is before us today, some of the legislation that has been before us in past months and legislation which is still to be debated. The fact is that the fringe benefits tax is about equity, pure and simple. If Senator Sir John Carrick believes that the argument that we, the Australian Democrats, have been putting as a reason for supporting this legislation is particularly ugly, which is the term that he used, then I am afraid that that is a problem that he has rather than one that I have. I do not see an argument in support of equity in the taxation system as being particularly ugly. In fact, I see it as being particularly fair. Whatever the whinges of Opposition members and some well-off members of the business community may indicate to the contrary, the general public realises that tax equity is behind all this and supports the legislation in its entirety. A number of people have suggested, I think more in hope than anything else, that I and my colleagues may well lose our seats as a consequence of supporting this legislation. Senator Crichton-Browne —What would we do without you, Senator Haines? Senator HAINES —Senator Crichton-Browne is too kind. I just say that, in the unlikely event of my losing my seat as a consequence of supporting equity in taxation, then I will do so at least knowing that I have done something more useful, moral and right than most honourable senators achieve in this place in more years than I have been here. Senator Button —You won't lose your seat, you will come back with a bigger majority. It is Senator Crichton-Browne who will be in trouble. Senator HAINES —I suspect that the people who ring me up and say that they will never vote for me again have never voted for me in the past. As Senator Button said, I am hardly likely to lose a large percentage of my vote because I am supporting something which is equitable and moral. Unquestionably it is outrageous that the majority of workers who receive remuneration only by way of salary and wages are forced to pay tax on that because they have no means of avoiding or evading that tax while a bunch of reasonably well-off executives or members of senior management can get away with paying limited tax because their remuneration package is part salary, part perk or part fringe benefit. I ask honourable senators to tell people out in the community who are on average weekly earnings or less and who are paying tax on that, in accord with the rules of the tax system, it is equitable for somebody on a salary of $40,000 a year plus a $25,000 car to pay tax only on the cash income, so to speak, of that package. The present system clearly is inequitable and most people are aware of that. Senator Crichton-Browne —What about the mine workers in the Pilbara? The ACTING DEPUTY PRESIDENT(Senator Giles) —Order! I ask Senator Crichton-Browne to cease interjecting. Senator HAINES —Madam Acting Deputy President, the gnat in the background is not causing too much of a problem. If companies do not like paying the tax and if they believe that employees should be paying it, then there is a very simple action that they can take that will put that into effect. The solution is quite simple: Instead of the company giving the employee a car, an overseas trip, a low interest bank loan or writing off debts, or whatever the perk happens to be, it can increase the salary or the wage commensurate with the value of the perk and let the employee purchase the car, pay a reasonable amount on the loan, or buy the overseas trip. In so doing, that employee will then pay a fair and equitable tax on the salary package that he or she has. As far as screams from various sectors to the effect that the new fringe benefits tax will destroy the car industry and, suggestions that it already has, are concerned, let me point out that the drop in motor vehicle registrations in the first months of this year is due almost entirely to the record car sales of last year. If the turn- around in the April figures is anything to go by it indicates that the drop was temporary at that. Anybody who has made any attempt to look at the situation in order to see exactly what impact the threat of the fringe benefits tax may have on the car industry will have discovered that motor vehicle registrations for 1985 were an absolute record. They were a record compared even to the record figures for 1984. Anybody who can add up and who knows how many people buy cars must be able to work out-this applies to even the simple minds in the Liberal Party-that one cannot continue to follow years of record purchases of cars with additional years of record purchases. In fact, though there was a drop in the January figures that was marginal on previous January figures, the motor industry statistics service indicates that there has now been a 14 per cent increase in passenger car sales from March 1986. The pattern of car sales and car registrations going up and down is repeating itself. Senator Michael Baume —It is going down and down. Senator HAINES —No. If the honourable senator will listen, he may let the facts get in the way of a good argument. Senator Michael Baume —You quoted the March figures. The April figures are now out. Senator HAINES —The April figures are 14 per cent up on the March figures. The motor industry statistics service indicates that and I have no doubt that they will continue to rise. If those figures are anything to go by, the impact of the FBT on car sales will be absolutely negligible. Throughout this debate the Australian Democrats' main concerns have been, first of all, with the introduction of equity into the taxation system-something which has been missing for a privileged section of the community for a long time. The second issue was the effect on the Button car plan of the fringe benefits tax levels which the Government originally planned to impose. The effect was to be felt much more in South Australia than in any other State. I am delighted to have received the support of my colleagues from other States on this issue-support that was singularly lacking from Labor senators from South Australia, to say nothing of Labor senators from other States. It is ludicrous for a government to establish a plan over a period of eight years which sets out to introduce some sort of sanity into an industry like the car industry, and for it then part of the way through the plan to inject something which could possibly have an unwarranted impact on it. The changes we have had made to the scales the Government originally planned to impose appear, if industry sources are any indication, to have taken that concern out of their minds. Indeed, in this morning's Australian is a comment by the Executive Director of the Federal Chamber of Automotive Industries, Mr Ian Grigg, who has welcomed the rate structure changes for the tax on company cars. He said: The lessening of the company car tax will help the automotive industry at an appropriate time when sales, particularly of fleet vehicles, have been severely retarded. If one looks at last year's figures, one will see that they have been severely retarded, because of the increased number of sales that occurred in 1985. The other issue we were particularly concerned about was the unwarranted impact that this tax was expected to have on charitable institutions-organisations that aim to provide relief from poverty for those people who are in economic difficulties, organisations which supply services to people with disabilities. Organisations such as the Royal Blind Society of New South Wales, the Australian Council for Rehabilitation of the Disabled, the New South Wales Society for Crippled Children, the Queensland Deaf Society, the Victorian Deaf Society, Bedford Industries in South Australia and various other organisations do not need to be hit any harder by something like a fringe benefits tax. We have prepared an amendment that will exempt charitable organisations, as indeed the Government had already indicated that it would exempt religious organisations. Charitable institutions, those public benevolent institutions that operate in Australia and provide services for people who are in poverty or who are in need in some other way, need have no fear that the fringe benefits tax will affect them in any way at all. Some interesting comments have been passed in the last few days about the effect the tax is likely to have on people in certain religious orders. Certainly this also concerned the Democrats, because it appeared from the way in which the legislation was drafted that the only people who were likely to get any benefit from an exemption were those in the two major religions, namely, the Roman Catholic and Anglican churches. A good deal of concern has been expressed to us-from, for example, the Uniting Church, which does not have ordained clergy and operates very largely through the use of lay preachers, and from the Salvation Army, which again does not ordain its ministers but commissions them-that they would be unduly affected. The First Assistant Commissioner of Taxation has set out in a letter that is probably available to most people that this is not likely to be the case. Inter alia, he said in the letter: 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. He continued: . . . 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. The absurd suggestion made by Senator Crichton- Browne by way of interjection during Senator Sir John Carrick's speech that somehow manses were not to be exempt is a nonsense because they are picked up under the broad exemption for religious organisations. Some National Farmers Federation members have been contacting my office complaining that they will now have to pay tax on their own homes and their own cars. The fact is that they will not have to pay such tax. If they own their homes and if they own their cars, there is no more problem than there is, Mr Acting Deputy President, for you or me owning a home or owning a car. If, however, they have formed some elaborate company structure and it is the company that owns the home and the car, quite likely they will find that that company will pay tax on it, and so it should. If they have gone into some sort of system to avoid paying tax in the past, quite legally avoiding paying that tax, they will be picked up by this equally legal measure which will make those companies face up to the fact that fringe benefits will now no longer be tax exempt. I have also had a number of calls this morning from farmers who are not particularly worried about the fringe benefits tax and, in the main, have said they support tax equity, but they are worried because somebody has told them they will have to pay tax on the eggs their hens produce and the food they provide to their families and themselves. Again, this is a nonsense. Ordinary family farmers will not have to do this. The only people who will are the ones who in the past have been part of an elaborate company structure and have been claiming as tax deductions the food they have eaten or have provided to their families. If they have done this in the past-and it is something that very few families in this country can do-they are quite likely to be hit under this legislation. There have also been allegations that board and lodgings that small business people give to their children working in a family business will be taxed-that the bedroom a son or daughter sleeps in will suddenly become a fringe benefit. I think that I am long past being surprised at the number of people who do not read legislation. However, I would have thought that in this case it would have been sensible to look at just exactly what a fringe benefit comprises before people started making those sorts of statements. The criterion for taxing a benefit is whether or not the possession of that benefit arose out of the recipient's employment. Presumably the bedroom that the son or daughter of a small business person sleeps in is provided because that person is a member of the family and not in the main because that person happens to be working as part of that small business. Therefore, anybody who is going around stirring up trouble in the hearts and minds of people who have their children working for them during the holidays is quite mistaken as far as the effect that that is likely to have on those people is concerned. Senator Sir John Carrick raised what I thought was a particularly interesting point in his speech a little earlier this morning. He pointed out that everyone who damages production in this country damages Australia and the Australian economy. Senator Crichton-Browne went one step further-I think it was he; certainly others have done so-and mentioned the problem that Australia faces with its balance of payments difficulties. I suggest, then, that it ought to be remembered that every person in this country who drives a Rolls Royce, Volvo, Jaguar, BMW or other imported car is damaging Australia's economy-certainly doing so is damaging the production of local cars, and unquestionably it is contributing to the imbalance that we currently see in Australia's balance of payments in our trade deficit. Therefore, I suggest that they look to themselves, that these businessmen who complain about foreign debts, the balance of trade and payments problems look to see exactly what is their contribution in the way of the things that they produce, the cars they drive, the leather coats that they wear, and stop whining about other areas. The point that we ought to be facing today is simply this: A fringe benefit tax is a matter of tax equity-it is that, pure and simple. If our argument that this legislation deserves support because it is equitable is considered ugly by Senator Sir John Carrick-`ugly' was the word he used-I am afraid that I cannot help that. The majority of Australians simply do not agree with him. The majority of Australians-who are on wages and salaries-resent deeply, and quite rightly, that there are some people in this country who are in a position to avoid paying tax and who are able to have a higher standard of living simply because they can make deals and come to arrangements with their employers so that their remuneration package is made up partly of salary on which they pay tax and partly by receiving a car or some other fringe benefit on which they do not pay tax. The argument starts and finishes there with tax equity, and I for one am pleased to be able to support that approach. Senator MICHAEL BAUME(New South Wales)(12.04) —I am glad to follow Senator Haines in this 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. Until she had spoken I could not understand the intellectual processes that went on in the Australian Democrats' minds in the way they had, in fact, decided to take their quaint broking position in the middle and negotiated, clearly, what they thought was to their political advantage in this matter rather than what was in the best interests of the Australian people. I was interested to hear that Senator Haines was clearly basing her view on an inability to understand statistics. She said that there were simply ups and downs in the motor vehicle registration area, for example. I would have thought that Senator Haines, in particular, would have paid greater attention to the concerns of the motor industry as, of course, the South Australian economy, which she is supposed to represent here, is heavily dependent upon that industry. By way of introduction to the burden of what I wish to say, it is worth mentioning that, while Senator Haines concentrated on a slight upturn in the April figures for registration of new motor vehicles, she failed to mention that after taking into account the modest increase in April sales over March sales the overall market for the first four months of 1986 is still 22 per cent down on last year. Therefore, here we have a slight pickup after three disastrous and consecutive falls in the first quarter of 1986-we have a slight hiccup, if you like-and Senator Haines jumps on that as some extraordinary and remarkable piece of evidence to support her view that the motor industry is not being severely damaged, that jobs are not being put at enormous risk, that the industry is not being clobbered, and that everything in the South Australian garden is lovely. In fact, her deliberate exclusion of the facts-particularly the fact that, even taking what she said into account, sales for the first four months were still 22 per cent down on last year's figures-I believe, is quite intolerable. It appears to me to reflect the basis on which the Australian Democrats have been able to come to their curious conclusion that they should support the Government in ramming through this offensive, unfair and, of course, massively unwise tax at a time when the Australian economy is already suffering, without these added disincentives to business. It seems appropriate that, having heard Senator Haines from South Australia, we should then hear what the Labor Premier of South Australia has to say about these matters. Earlier this month Mr Bannon attended in Canberra the Federated Chamber of Automotive Industries annual dinner, which he addressed. I will quote in part what that Labor Premier had to say at that dinner about the impact on the motor industry of this tax package: I had hoped to be able to address you tonight in the knowledge that the Federal Government had accepted the arguments put forward by the automotive industry, unions and various governments to change the proposed fringe benefits tax plans in relation to motor cars. Unfortunately, however, I am addressing you in the knowledge that a decision has been taken which will prove detrimental to the car industry and one which will have severe ramifications for my state in particular. I interpose that that is also Senator Haines's State and, if the evidence she has given today of her concern for her State is reflected in any of her other activities in this chamber, I hope that at the next election the people of South Australia will take a different view of her right to represent them. Mr Bannon continued: I am particularly disappointed that the Federal Government was unable to show the flexibility to change its plans as this was an issue which was not being opposed on purely sectional grounds. Governments, unions and industry itself have all come to the same conclusion; namely, that the fringe benefits tax in its proposed form would have a detrimental effect on the car industry in Australia. The Federal Government had been presented with rational arguments and demonstrable evidence that this was so. This is a strong, well argued case from the Labor Premier of South Australia, who continued later: What made the Federal Government's decision even more disappointing was the fact that at no stage were we opposing the principle of tax reform but rather the method by which it was introduced. The Premier of South Australia is complaining, quite properly, that rational argument and demonstrable evidence were ignored or wiped aside by the Federal Government in its determination to proceed with this tax, which is massively damaging to this particular industry. I also am concerned about the impact that this tax is having on the motor vehicle industry because of its flow-on consequences. As a senator for New South Wales, I am keen to look after the interests of the steel cities of New South Wales-in particular, Wollongong, where I have my office, and Newcastle. I have been conducting some inquiries to establish what will be the impact on our steel industry of the sorts of falls in motor vehicle sales and production that are an inevitable consequence of the damage that is being done, and will continue to be done, to the motor vehicle industry as a result of this tax. We have already seen so far in the first four months of this year a 22 per cent fall in motor vehicle sales-according, of course, to the industry's statistics service, Idaps. This will continue. A Martec (Australia) Limited forecast indicates that vehicle registrations will fall from 700,000 in 1985 to about 598,000 in 1986-about a 15 per cent fall. It is true that this fall will not be due entirely to expectations of reduced sales because of the fringe benefits tax on company cars. It will also be due in part to the sharp increase in motor vehicle prices because of the depreciation of the Australian dollar which, of course, has emerged as a direct result of the Government's economic policies. The interesting thing about these figures is not simply that there will be a 15 per cent fall. Sales of fleet cars to businesses-I refer in particular to Australian made cars such as Commodores and Falcons-are expected to be depressed. Combined registrations of those two models are forecast to fall by approximately 17 per cent during this year. Let us think of the implications of that for the steel industry, because sheet steel demand by motor vehicle companies is expected to fall to 122,500 tonnes in 1986, compared with 140,000 tonnes in 1985. That is a fall of approximately 13 per cent in sheet steel usage, partly as a result of this tax-in fact, largely as a result of this tax along with the devaluation. The situation for local producers of steel is even worse than those figures suggest because imports of sheet steel, which also, of course, are used in car making in Australia, are generally supplied on a fixed quantity basis. This results, of course, in any changes in demand being reflected by more violent fluctuations in the demand for Australian produced steel. I have been supplied with a forecast that shows that sales of locally produced automotive sheet steel will fall by in excess of 20 per cent because of this assault on the Australian motor vehicle industry by this Government through its curious economic policies that have produced this disastrous balance of payment situation but in particular and specifically this fringe benefits tax belting. Senator Messner —How many jobs will that cost? Senator MICHAEL BAUME —Indeed, as Senator Messner says, how many jobs will that cost? I raise this matter as well because there is no doubt that the motor vehicle industry is massively concerned about the impact on jobs. I will deal later with how many jobs are at risk because of this measure. It is of major concern that any falls in the sales of fleet cars-as I said, Commodores and Falcons maintain the highest local steel content-will have a disproportionate impact, a compounding and depressing impact, on sheet steel demand. That is very bad news for Newcastle and Wollongong, and for the Australian steel industry which, as members of the Government no doubt are aware, is still struggling to recover from the depressed conditions which resulted in the creation of a steel industry arrangement and at last some increasing stability in that industry. All those efforts are now being hit by this kind of tax on an industry which has been struggling to restore itself. When people say it does not matter; it is only the motor vehicle industry that is being affected, they do not recognise the flow-on consequences to industries such as the Australian steel industry, which is a basic industry and a major employer in Newcastle and Wollongong. I am becoming more and more convinced that the Government simply has not done its sums on the consequences in other areas of collecting its millions of dollars in the fringe benefits tax on motor cars. Some work has been done which suggests that the net gain for the Government will be very small because of the depressing impact that it will have, for example, on other government revenue. What will happen to sales tax collections on motor vehicles, which go to the government, if its fringe benefits tax substantially reduces the volume of motor vehicle sales-and therefore, of course, the volume of sales tax collected? So we have continuing and widening evidence of the disastrous impact of this measure. A director of the accounting firm of Ibis-Deloitte Haskins and Sells has made some interesting revelations and estimates about the impact of this kind of tax on a whole range of businesses and areas of employment. He stated this week: . . . fringe benefits would cut business profits more than 4 per cent in 1986-87 and more than 6 per cent in 1987-88 . . . most companies would absorb the impact of the legislation rather than diminish the earnings of their managers and executives. Many people might say that it does not matter a darn that company profits should be diminished-perhaps because it has been alleged by this Government that, because companies are enjoying a much improved profit situation, it is quite reasonable to knock off some of this advantage that they are getting. But this is basically a myth. It is a myth that business's share of gross domestic product is at the highest level for 10 years and that business is in good enough shape to absorb these new taxes. It must be remembered that these fringe benefits taxes will be paid by the employer, not the employee. They will be added to the costs of business at a time, of course, when Australia is struggling to hold down its relative costs and at a time when Australia's inflation rate is at a relatively record level compared with those of its trading partners. Let me get back to the impact on profits and this myth that the Government is spreading that the business profit share of gross domestic product is the highest it has been for 10 years. The reality is that, when one combines the after tax profits of companies, unincorporated enterprises and public enterprises, the figure is now much lower, as a share of GDP, than it was in 1980 or 1981. Too often reference is made only to the companies' share, ignoring unincorporated enterprises, whose share has collapsed over the last decade and which will also be seriously affected by this tax. The director of the accounting firm I mentioned, whose name is Mr Adolph Hanich, stated: To compound the problem, reference is usually made to the term gross operating surplus, which equates with gross profits before depreciation, interest and taxes. The net profit picture is vastly different . . . when these other items are taken into account. There is no doubt that business profits have been, and will continue to be, under a fair amount of competitive pressure when all these matters are taken into account. The other point I wanted to make out of Mr Hanich's speech which he is giving around Australia to the many people who are massively concerned about the impact of this tax is that there will be a tendency-this is a serious matter for employment-for many firms to sub-contract a number of services rather than carry full time staff. No doubt this will result in some middle management being sacked to help offset a reduction of profits. Thus we can see a clear indication of rising unemployment as a result of this kind of tax. Mr Hanich also makes the sound point that not all industries will raise prices to cover the effects of a fringe benefits tax, but the impact on inflation if they did raise prices would be about 0.3 per cent next year and about 0.7 per cent in 1987-88. It is interesting to think that at a time when we are already at our relative worst position on inflation compared with that in the rest of the world, the Government is talking about a set of taxes which have a direct inflationary impact of adding 0.7 per cent to our inflation rate which is already 9.2 per cent-according to the consumer price index-in a full year. The other point I think is well worth making is that, while these new taxes will represent in 1987-88 only about 1.5 per cent of the Federal tax revenue, the collection costs and the disruption to business will be very high indeed. That matter has been raised here by many other speakers today. It is on the questions of who will be affected and what inflation impacts there will be that I think it is worth referring to a few other matters, for example, the airline industry. Only a couple of days ago there was a report in a newspaper that the Government has simply failed to respond to a very serious proposition put up by the airline industry which is trying to remove some of the enormous administrative costs that will be incurred by it. The Board of Airline Representatives of Australia, which represents over 40 airlines, has spelt out what will happen if these proposals are implemented. It said that the Treasurer, Mr Keating, had not bothered to communicate with it. The airline group came to the conclusion that the fringe benefit tax among airline employees would probably cost between $10m and $15m a year. Of course out of that amount something between $7m and $10m a year will be paid by two government airlines; that is, the Government will pay from one pocket into another. However, the net amount that the remainder of the industry would be talking about is somewhere between $5m and $7m which will go to the Government. Obviously someone will have to pay that, and no doubt that will be the consumer again, which, of course, will be inflationary. The point I want to make on this matter is that while the tax will raise only about $5m to $7m in tax for the Government, it will cost both the Government and the airlines millions of dollars to collect. This cost of collection is just absurd. That is why the airline organisation stated: And we think that is exactly why our very simple, very fair flat-tax proposal- It is saying that it will pay just $300 a year for each airline employee to the Government rather than have to fill out all the administrative nonsense that will go on. Senator Messner —They could do it with cars too. Senator MICHAEL BAUME —They could do the same with cars, as Senator Messner said. Instead of that, the airlines have this major administrative nonsense which will not only cost the Government a lot, and, of course, increase the volume of public servants-it appears that this Government's greatest approach to resolving unemployment is to put on more public servants-but also involve the industry itself in enormous costs. We have to recognise that with regard to the airlines this is not a tax which will hit rich, fat businessmen who drive their Mercedes. This is one of the arrant pieces of nonsense being spread by the Government and the Australian Democrats. The people who are recipients of the so-called naughty fringe benefits in this case are stewardesses, stewards, hosties-they are not rich people by any means-and ordinary airline employees, clerks and so on. These are the people whose fringe benefits are either at risk or will have to be paid for by the employer which means by the people who buy airline tickets, by the people who travel, by the ordinary people of Australia. There was another report. Even the cost of dying will become more expensive as a result of the fringe benefits tax, according to a Sydney funeral director who said that the fringe benefit tax provisions would add substantial cost to funeral services largely, of course, because of the impact they will have on those employees who are required to provide a 24-hour service and naturally are required to live on the premises. So this tax will have a wide-ranging and disastrous impact. It will have an impact on inflation as I have demonstrated. It will be a major discouragement to investment and growth, as we have seen. It will reduce output in some industries. It will have a huge administrative cost, but before I proceed to that matter I should mention that the fact that anything should be aimed at diminishing investment is totally disastrous at a time when this week we have seen sets of figures showing that investment in Australia has been seriously affected by this Government's economic policies. It is at a time when the Treasurer, only recently in his extraordinary interview with Mr John Laws, at last said truthfully, honestly and earnestly that the Australian economy was in a hole, stressed that it was absolutely vital to cut government spending in order to allow private sector investment to go ahead. Unless private sector investment goes ahead we will not be able to produce the goods in Australia that will allow us to reduce our imports and therefore increase the strength of our balance of payments current account and get us out of the hole that this Government's policies have pushed us into. Yet, in the latest figures we have no evidence of any strength in investment in Australia. On the contrary, this week's statistics showed that after adjusting for inflation and seasonal factors private sector investment declined by 2.1 per cent in the March quarter following its fall of 3.3 per cent in the December quarter. It is not expected there will be any recovery. Last night we saw the astounding national income figures which dramatised even further the disastrous fall in investment in Australia which is continuing and which will keep us heavily in hock. We face all of these problems. We have reduced economic activity as a result of these taxes. The sorts of points that are being made by speakers on the Opposition side who have covered a whole range of industries are, for example, those raised last night by Senator Vanstone who dealt with the impact of the fringe benefit tax on employee accommodation and meals in the hotel and motel industry in Australia. As she pointed out, this tax will have an impact on the nation's hotel and motel tariffs and charges by an average of 9.6 per cent. The motel industry said that 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. We have such examples all around us. The Opposition has made a case covering the whole range of Australian industries. I have pointed out the hidden impact on major industries such as steel. All we hear from the Government is that the tax is necessary because there has been a tax ripoff and it must be ended. In other words, the baby has to go out with the bath water. One must hammer in the tack with an enormous mallet; it does not matter what else one destroys as one hammers down that tack. Clearly, the correct answer is not what the Government has in mind. Clearly, the correct answer is to fix up the whole of the Income Tax Assessment Act. But this Government is not fixing that Act which, with its 1,100 pages, is already far too big. It is adding something like one-third to it in this package of Bills. It is an incredible addition. We are to have a one-third increase in the size of the Act, yet speakers from the Government side have said that this will increase the simplicity of the Act. That is absolute nonsense. What we clearly need is a total review of the whole taxation situation in Australia. I remind the Government that that is what its Treasurer set out to do last year. He was blocked and obstructed, basically by the trade union movement in Australia and by his colleagues. Senator Townley —His colleagues. Senator MICHAEL BAUME —Exactly. As my good friend from Tasmania says, it was his colleagues in particular who blocked the Treasurer's attempts to do what the Opposition is and always has been strongly recommending-a total revision of all the madnesses that have been forced to be developed in the tax Act. To have this sort of piecemeal, nonsensical approach that this Government is taking, which will increase by one-third the number of pages of tax law in an already obese tax Act, is arrant nonsense. The Government is on the wrong track. That explains why it is simply dishonest of members of the Government to say that the Opposition is endeavouring to block this legislation because it is trying to protect tax rip-offs. That is absolute nonsense. One of the reasons the tax Act is 1,100 pages thick is that we have had to keep adding enormous amounts of tax law to it to block evident rip-offs. If this Government were fair dinkum, it would have done what the Treasurer tried to do last year but was blocked from doing, which was to reduce the incidence of direct tax from people's pay and to increase the indirect tax element-which has been Opposition policy for years; in other words, make the tax system fairer and more simple. This Government has not done that in this legislation. It is seeking to hit specific industries to raise money for one simple reason. It has to raise extra money because it does not have the intestinal fortitude to cut its own spending. Mr Keating cannot get his Ministers to reduce their Government spending. As a result of his and the Government's abysmal failure to act responsibly, the Government has to raise more money. Unfortunately, the manner in which it is doing so is seriously hitting industries and employment throughout Australia. The Opposition is strongly resisting this and demands a total review of the extraordinary tax situation which exists in Australia right now. That certainly will be our policy in government. Senator TOWNLEY(Tasmania)(12.33) —We are discussing 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. At the outset I should point out that the net gain from this tax has been calculated to be very small indeed, yet its cost of operation, particularly to the private sector, will be horrendous. I believe it will have a disastrous impact on the costs for small businesses and will thus become a tax on employment. It is obvious to me that most members of the Australian Labor Party, who are either union officials or pedantic academics, have never run a small business. I do not believe they could run a cake stall. If they believe that these taxes will do anything other than destroy the small businesses that are attempting to make a profit in this country, it just shows how senseless many of them are. There are 56 pages in the little book of new rules that has been sent out, incidentally, before we have passed this legislation, to businesses around the country. The legislation is full of difficulties. A tremendous number of forms will have to be filled out and kept. It will lead to a bonanza for accountants. I do not think I have had one letter from accountants about this legislation, because they can see how much it will help them. We will have an accountant-led recovery in this country if this legislation goes through in its present form. Senator Watson —That book would not even be accurate. Senator TOWNLEY —Senator Watson is exactly right. I was just coming to that. The Government could not even get its little book right. It has issued a full page of changes to it. They are not little changes; there are 15 of them. For instance, one of the corrections is the following to paragraph 3.6.1: Replace the words `two thirds' in the third line of page 14 with the words `three quarters'. What kind of dill wrote this stuff and made errors like that? What other errors are there in the book that have not yet been found? Another amendment, to paragraph 9.2.1, states: All references to 52.5% should read 37.5%. They are not just typographical errors; they are errors that no government should allow to get out. If I were employing somebody who put out a book like that, I would sack him. Thank goodness I am not employing the people who are working for the Government. That book, in its present form, should be withdrawn and properly printed, particularly if we make any amendments to the legislation before us today. What is the good in having the book floating around? I wonder how much it cost to send it out to everybody in this country. If honourable senators try to read the book they will find it most time consuming. It is not written in an easy way for people to understand. For argument's sake, the fringe benefits tax on cars takes six full pages to explain, in addition to references to it in other places. When one sees what rubbish has to be detailed, one realises that just what I said earlier is true: this tax was dreamt up by people who have no idea of running a business and, I believe, no idea of reality. The difficulties and annoyance of keeping the tax records, most of which will never be required by the Australian Taxation Office, are immediately obvious. As to the details of the fringe benefits tax on housing, which are on page 23, the booklet states: A taxable housing fringe benefit arises where an employee (including members of the employee's family) is given by an employer the right to use a unit of accommodation as his or her usual place of residence. That is not what Senator Haines said. It refers to the usual place of residence. It continues: This includes the right to share occupation with others. A unit of accommodation includes- a house, flat or apartment; accommodation in a hotel, motel, guesthouse, bunkhouse or other living quarters, in a ship or other vessel or floating structure, or a caravan or mobile home. In Tasmania, as well as in the rest of this country, the motel and hotel business is an important part of our tourist industry. I shall read a telegram sent to me by the Executive Director of Flag Inns. It explains the motel and hotel situation pretty well. It starts off by saying: 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. An average increase of nearly one-tenth will be required in hotel and motel charges. Honourable senators will hear me say further on that it will be worse than that in some cases. The telegram continues: 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 . . . The average accommodation business demands 24-hour, 7-day a week on-site 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 costs. 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. I interpose that, just at a time when many people from the United States are beginning to come to this country instead of going to Europe, we are putting our charges up by about 10 per cent. The telegram goes on: 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 cost of borrowing funds to pay the tax. There are a couple of other paragraphs to that telegram which are in roughly the same vein. Of course, one does not have to be an Einstein to realise that what that gentleman says is correct. Hotel and motel managers need to be on the premises in order to cater for the requirements of people who want to use that accommodation. One would have to be crazy to think otherwise. Some speakers from the Labor benches have said that the Fraser Government left anomalies in the taxation system. The Prime Minister (Mr Hawke) and the Australian Democrats have used abuse to try to justify this legislation. Whenever we have pointed to the horrendous costs that these taxes will cause to businesses which employ so many people around the country we have been abused. I do not think that that is ever a good way of arguing, but it is one that we have seen a lot of recently. The Government has said that it is trying to make the tax equitable. I believe that that is just a smoke-screen to camouflage the terrible effects that this tax will have on so many small businesses and farms around the country. Perhaps big businesses will survive this socialist onslaught. My worry is that small businesses will find it all too time consu- ming, boring and dull and they will just give up altogether. Earlier today Senator Cook said that we predicted that taxes on restaurants would create difficulty. Well, they have and many examples can be given. He also mentioned the housing industry. He said that we had claimed that some of the Government's measures would affect that industry. It may be that the high interest rates prevailing at the moment have had an effect too, but if one looks at the housing industry, one finds that it is not going very well. In fact, everything this Government touches starts going bad. Senator Cook would not answer the point about charities. I tried to get him to commit himself on that but he would not do so. Of course charities will be affected by this ill thought out tax scheme. This was mentioned ably by Senator Sir John Carrick a little while ago. Then Senator Cook said that New Zealand has a tax of this kind. To use New Zealand as an example to justify taxing employers in this way is not a very good idea. The New Zealand economy is a disaster; it has lost its triple A rating in world finance and most probably if it really wanted to it could obtain Third World status. Because of the New Zealand economy and as a result of our open door policy with that country, so many New Zealanders are coming here and it is costing this country more than $60m a year to keep their unemployed on the dole. We pay $60m a year to New Zealanders who have the highest unemployment rate of any sector in this country. I believe it is time that we had a very searching look at that. People in other countries think that we are crazy to support certain groups and allow certain things to happen as we do. I believe the community feels that as well. It is time we set about correcting those anomalies rather than trying to think up new taxes. Debate interrupted. Sitting suspended from 12.45 to 2 p.m. Senator CHANEY —The Leader of the Government in the Senate would no doubt be aware that the Australian Council of Trade Unions executive has indicated that it has rejected deferral of the promised tax cuts and further discounting of wages. Does the Minister agree that if the Government and the ACTU are unable to come to any agreement on tax cuts and on slowing down wage rises, the burden of economic policy aimed at getting Australia out of its current difficulties will have to be borne much more by cuts in government spending and higher interest rates? Senator BUTTON —I am not an expert in these matters but I think that the answer to that question is yes. Senator ZAKHAROV —Can the Minister for Community Services explain to the Senate why the Melbourne Coonac Rehabilitation Centre is to be closed? What arrangements will be made to cater for its clients and staff? When will Coonac effectively close? Senator GRIMES —The provision of rehabilitation services in settings such as Coonac's is contrary to contemporary rehabilitation principles. The principles strongly support the concept of providing services in a way that causes the least restriction to individuals. Wherever possible we want to enable people to obtain those services in their local community. People with disabilities and their representatives accept this principle. The Commonwealth rehabilitation service developed in a vacuum after the Second World War. As a result, established services now are certainly out of keeping with that principle which I have just enunciated and are frequently well away from the people being treated. To give an example in Sydney-which has the best example-the Mount Wilga Rehabilitation Centre is on the far North Shore of Sydney. The other large centre is the Queen Elizabeth II Rehabilitation Centre at Camperdown. Both are well away from the centres of population. As a result people have to travel long distances to these centres. In the case of one centre in Australia, 25 per cent of the cost of rehabilitation goes on transporting people to and from the centre. Studies have indicated that the greatest need for services in Melbourne is in the western and north-western suburbs, not in Toorak where Coonac is located. The closure of Coonac will free financial and staffing resources, resulting in the establishment of four regional office units in Melbourne. These types of units will provide very effective rehabilitation. More clients than before will be seen in the rehabilitation service. They are able to be treated more effectively. In addition, a specialist head injury unit will be established to continue the head injury program which is being conducted at Coonac at the moment. Those few clients who require intensive centre-based services will be offered treatment at the Glen Waverley Rehabilitation Centre. There are also alternative State and private facilities available in Melbourne. Most of the staff will be offered positions at the new rehabilitation units. Some may be offered positions at Glen Waverley. Where suitable positions cannot be provided every effort will be made in consultation with the unions to place staff elsewhere within the Department or within other Commonwealth departments. The closure will be phased. Clients and staff will be transferred to the new rehabilitation units as they are established from June this year. It is anticipated that the last rehabilitation unit will be established at about the end of 1986, making it possible, we hope, to close Coonac by that date. Coonac will be the first rehabilitation centre as such to be closed. We have closed residential centres throughout Australia in recent times, in keeping with demand and in keeping with modern practices, but I have no doubt that Coonac will not be the last centre to be closed. Senator COLLARD —My question is directed to the Leader of the Government in the Senate. Is the Government considering excluding exporters from any superannuation award made by the Australian Conciliation and Arbitration Commission? If so, has the Government had any discussions with the trade union movement about this possibility? Does the Minister see practical difficulties in identifying appropriate employers and isolating them from the superannuation decision? Senator BUTTON —The Government is not specifically considering that matter. I must say the Government is considering lots of matters at the moment, but no specific consideration is being given to the matter to which Senator Collard alluded in his question. I am asked whether, if we did consider that matter, there would be difficulties about it. I am sure there would be technical difficulties, and that is probably one of the reasons why we are not considering it very hard. Senator COLLARD —Mr President, I ask a supplementary question. I draw the Minister's attention to today's Sydney Morning Herald where in a report of an interview with him, under the by-line of Mike Steketee, he alluded to the fact that the Government was studying the possibility of exempting the hard hit export sector from providing the superannuation benefits due to be phased in on 1 July. The PRESIDENT —Order! I do not know whether that is a supplementary question. The honourable senator has made a statement but has not asked a question. Senator BUTTON —I do not mind answering the question because what the Sydney Morning Herald article says, in recording my purported view on a number of matters, is: Export industries `probably' should not have to provide the superannuation benefits due to be phased in from July 1, given the projected national wage increase and the state of the economy outlined in the national accounts. How Senator Collard can base the construction of his supplementary question on that comment I am blowed if I know. Senator ROBERT RAY —My question is directed to the Minister representing the Minister for Foreign Affairs. Was Australia part of the 17-nation war crimes tribunal which entrusted the United Nations with archive reports of 40,000 nazi war criminals? If so, will Australia give its assent to the requests of Israel and Austria for the release of these files? Will the Department of Foreign Affairs review these United Nations archives in view of recent media reports of the presence of nazi war criminals in Australia? Senator GARETH EVANS —Australia was an original member of the 17-nation United Nations War Crimes Commission which was established on 20 October 1943 and which continued its work until its dissolution at the end of March 1984. The UNWCC's archives included periodical lists of about 37,000 war criminals, security suspects and witnesses, as well as other important files. The archives of the UNWCC were passed to the United Nations upon the Commission's dissolution. On 9 May 1986, the Secretary-General of the United Nations wrote to representatives of former members of the War Crimes Commission in New York, conveying a request from Israel that the files of the UNWCC should now be made public. The Secretary-General is thus consulting all the members of the now defunct Commission on the nature of his response to the Israeli request. The Secretary-General has noted that, under the rules of access administered by the United Nations, restrictions are applied to documents `that refer to specified individuals charged or suspected of war crimes'. Access to these files is granted to governments which request them for the purpose of conducting prosecutions of war crimes. In these cases, the documents are provided on condition that they will be handled on the same basis of confidentiality as any other material being used in a criminal investigation. Over the years very few requests for documents have been made by governments. Recently, however, the UN handed 356 files to Israel at its request. The matter of Australia's response to the Secretary-General, which raises important issues, is under active study. We understand that no decision will be made by the Secretary-General until he has consulted all the former members of the Commission. I just add, on behalf of Mr Hayden, that Senator Ray will appreciate that it is beyond the existing resources of the Department of Foreign Affairs to conduct a review of the Archives of the United Nations War Crimes Commission, but the Government could consider other courses of action in the light of its examination of the situation. I am advised that a member of the Australian Permanent Mission to the United Nations has discussed the subject with the United Nations Secretariat in a preliminary fashion. As I have said, further clarifications are required before it becomes clear what the future rules of access may be. The Government is aware of the urgency of the situation and it will be dealt with expeditiously. Senator SANDERS —Can the Minister representing the Minister for Foreign Affairs explain why the non-nuclear weapon states, that are signatories to the Treaty on the Non-Proliferation of Nuclear Weapons, including Australia, should continue to be part of this Treaty when the United States of America has unilaterally withdrawn from SALT II, a measure which is commonly recognised as the most effective nuclear arms control mechanism? Will the Australian Government take immediate steps to inform the United States of its concern at United States repudiation of SALT II? Will the Australian Government now consider withdrawing from the Nuclear Non-Proliferation Treaty and, if not, what other steps will it take? Senator GARETH EVANS —Yesterday I indicated what the Government's attitude was toward the issue of United States compliance with the SALT II Treaty which, of course, it never formally endorsed. The Australian Government attaches great importance to the existing regime of nuclear arms control, including SALT II, and for that reason we are concerned about the United States action. But to suggest, as Senator Sanders just has, that any concern one might reasonable have about the effective demise of SALT II should be responded to by a withdrawal from the Nuclear Non-Proliferation Treaty is an illustration of folly that is extravagant even for the Australian Democrats. It is a classic example of throwing out the baby with what is left of the bath water. Senator Sanders —Are you going to protest? Senator GARETH EVANS —I indicated yesterday what the Government's position will be in relation to SALT II. The nature of the Australian Government's response-a constructive response, it will be hoped-is being very actively considered by the Government at the moment. But the Nuclear Non-Proliferation Treaty has been perhaps the only but certainly the most conspicuously successful of the arms control agreements that have been entered into over the years, in that it has succeeded, much against many people's expectations, in controlling the proliferation of nuclear weapons by virtue of the three-way agreement that was entered into by the nuclear weapon states not to make that technology available to non-weapon states, by the agreement of non-weapon states not to seek to acquire arms technology and by the agreement of all the participants, as we have said often enough, to exchange freely material and technology relating to the peaceful uses of nuclear power. That has been a conspicuously successful arrangement and it has succeeded, by force perhaps of moral example, even if not legal effect, in stopping the proliferation of nuclear weapons even among those states which are not signatory to it. The review conference that took place last year was another demonstration of the inherent power of that Treaty to continue to command the active assent and involvement of a great many nations around the world. To seek now, out of some feeble-minded gesture of emotional protest, to withdraw from that Treaty or to encourage others to do so I think is a demonstration of the extreme irresponsibility that unfortunately we have come to expect from so many who espouse the cause of nuclear disarmament with alleged sincerity in this Parliament. Senator BOLKUS —I ask the Minister for Industry, Technology and Commerce whether he can name those companies importing asbestos into Australia. If he cannot do so, can he explain why not? In particular, can he indicate whether it is because of a private agreement between his Department and the importers or whether there is a legislative provision which prevents such disclosure? Senator BUTTON —Somebody has been kind enough to pass me a bit of paper on which, I hope, is the answer to Senator Bolkus's question. I am advised that information given to the Australian Customs Service about individual importations into Australia is given and held in confidence, and confidential information cannot be disclosed. In the case of asbestos imports, it would be possible to make information available upon request to a Commonwealth agency such as the National Occupational Health and Safety Commission or the Department of Health if the information was to be used by that agency for the purpose of performing its function. That may not be an adequate answer to the question which Senator Bolkus has put to me but I will undertake to see what further information I can obtain, and give it to him as early as possible. Senator MICHAEL BAUME —My question is also addressed to the Leader of the Government in the Senate. In Senator Richardson's interview on AM this morning he characterised the Government as one big Irish family. Can the Leader of the Government in the Senate assure the Senate that the Government's relationships do not compare closely with a Sicilian family and that after yesterday's disastrous economic news Mr Keating's feet are only encased in clay rather than cement? In view of the Treasurer's critical comments last night about the Prime Minister's staff and Mr Hawke's godfatherly defence of his minders on Sydney radio today, can the Minister advise the Senate whether there will be any upcoming political bereavements within the family and, if so, will they emerge in keeping with the Irish or the Sicilian tradition? Senator Walsh —You should go back on the radio. Senator BUTTON —I really cannot contribute much to this. Senator Walsh has suggested that Senator Baume should go back on radio. I do not know what program anyone would have him on. Perhaps he should do that. Irish or Sicilian, the family looks after its own here and one of the first things we will do is fix Senator Michael Baume right up. Senator FOREMAN —Has the Minister representing the Minister for Housing and Construction read an article in the Australian Financial Review of 23 May 1986 entitled `Department would be abolished'? That article on the Opposition's housing policy states that the Opposition wants to renegotiate the Commonwealth-State Housing Agreement to achieve, firstly, elimination of tied grants for public housing; secondly, incorporation of funds from the Government's very successful first home owners scheme; and, thirdly, inclusion of provisions to sell off public housing as well as the introduction of greater needs based assessments for access to public housing. Does the Minister believe that such measures proposed by the Opposition simply show callous disregard for people who need public housing, and are further evidence of the Opposition's failure to come to grips with the necessity of providing public housing? Senator RYAN —The article discussing the housing policy of the Liberal Party of Australia has been drawn to my attention, and I do agree with Senator Foreman that it shows callous disregard for low income families who are in need of public housing. In the section on public housing it is the case that the Opposition shows a clear ignorance of housing problems and the overall housing situation. The Opposition, by proposing to eliminate tied grants, seems not to be aware of the fact that these grants currently go to rental housing for Aboriginals, for crisis accommodation such as women's and youth refuges, for housing provided by local government and community groups, for age pensioners and for persons facing short term mortgage and rent problems. The result of the intention of the Liberals to abolish the tied grants would be the abolition of housing assistance for all of those needy groups. The whole reason for tied grants is to ensure those most needy get priority help. About $140m in this financial year is being devoted to tied grants for the needy, and the Opposition would stop these grants. The Liberals would also incorporate the first home owners scheme in public housing funds for the States, which would effectively abolish the scheme and would force the States to decide to help either first home buyers or those who need public housing, whereas, of course, both groups are helped under our present policies. Their proposal to enable the sale of public housing shows ignorance because such sales can happen already under the Commonwealth-State Housing Agreement with conditions that ensure that, if a dwelling is sold, it is able to be replaced with the proceeds from the sale. Otherwise, of course, public rental stock would be reduced. Any policy that sold off public housing stock without such restrictions would seriously harm the chances of those in need getting help. The policy also states that it would make public housing more needs based but, of course, our public housing policies are already focused on those in the community most in need. About 70 per cent of public tenants are on Commonwealth pensions and benefits, and the remaining 30 per cent are on very low incomes. Liberal policy can only mean that it will force people out of public housing, for example, if they get a job. Of course, the policy contains no indication of funding. Based on the Liberals' record in housing we can only guess what they would do. Their record in public housing was appalling. By 1980-81 the Liberals had cut public housing funding to $264m-only 40 per cent of funding during the last year of the Whitlam Government. In the first year of the Hawke Government we increased public housing by 40 per cent, and there have been significant increases since. I think Australians should be in no doubt that if policies such as this had any chance of being implemented, the impact and public housing and on the people most in need would be catastrophic. Senator NEWMAN —If the Minister representing the Minister for Defence could tear himself away from the racing pages, perhaps-- The PRESIDENT —Order! I ask the honourable senator to ask her question. Senator NEWMAN —Could the Minister representing the Minister for Defence advise the Senate as to what actual progress has been made towards the speedy implementation of the recommendations of the Hamilton report into living conditions for service families? Senator Grimes —Not much progress was ever made when your husband was involved in it. The PRESIDENT —Order! Senator GARETH EVANS —I endorse Senator Grimes's contribution. I have absolutely no idea what has happened to the Hamilton report, about which I have never heard. If the honourable senator will put the question on notice I am sure she will get an answer in due course. Senator McINTOSH —Is the Minister for Veterans' Affairs aware of a study recently published in the New England Journal of Medicine which claims to be the first study which shows a cause and effect relationship between drafted military servicemen in Vietnam and a high risk of suicide? Does the Minister subscribe to the basic conclusion of the study that `the casualties of forced military service may not be limited to those that are counted on the battlefield'? Senator GIETZELT —Yes, I am aware of the report that has been published in the New England Journal of Medicine; the inquiry was directed by a Dr Norman Hearst of the University of California, San Francisco. That report suggests that the conscripted Vietnam veterans are nearly twice as likely to commit suicide as are men in the same age group who did not serve in a war. Dr Hearst believes that the study demonstrates that the experience of being drafted during the Vietnam era has a profound long term effect upon those conscripted. Earlier studies conducted by other eminent persons has found high levels of depression, drug abuse, marital problems, criminal charges and other difficulties among veterans. But that report tended to be deprecated on the basis of its limited survey. Critics had speculated that the draftees had trouble because they were more likely to be poorer or less educated than those who avoided the draft and not because of the lingering effects of military service. The latest study is important because it is based on a review of deaths of 14,145 men born in the United States between 1950 and 1952 and those who died in 1974 to 1983. That survey showed that the likelihood of suicide was 85 per cent higher among those who were drafted to serve in Vietnam and it also showed that the higher risk-53 per cent of fatal car accidents-dropped to normal after the first few years. Nevertheless, the higher suicide rate was maintained. This study specifically removes the bias sample which, it had been suggested, gave rise to incorrect conclusions previously. The reasons suggested by Dr Hearst included physical handicaps-one does not need to conjure up a picture of the use of land mines and so on that would create that sort of problem-social and economic problems after returning to civilian life; susceptibility to and recurring mental illnesses; and familiarity with fire-arms. The conclusions in the study suggest that before sending young men to war those who make the decision should weigh up all the costs and the consequences and remind themselves that the casualties are not necessarily just those that take place on the battlefield. Senator HAMER —My question is addressed to the Minister representing the Treasurer. I refer him to the Australian Bureau of Statistics figures which indicate that investment in manufacturing plant and equipment has fallen sharply in the last quarter. I ask: How long are the expected lead times between new investment in manufacturing plant and equipment and the reflection of this investment in increased exports or import replacement? Is not such investment vital for economic recovery? What explanations does the Government have for the reluctance of manufacturing industry to invest in new plant and equipment, in view of the opportunities opened up by the devalued dollar? Is not new investment dependent on a belief by business that its competitive position will not be ruined by new taxes, high interest rates, increased labour costs and overheads and, as far as exports are concerned, reliable port handling? What is the Government doing to restore business confidence? Senator WALSH —Since this Government came to office the profit share, apart from increasing in percentage terms, has increased by between $6 billion and $7 billion. We have the lowest real unit labour costs and the lowest level of industrial disputes since the late 1960s, and real award wages have fallen over a period of three successive years during which economic growth has been at very high levels by Australian standards. I do not know what more a government can be expected to do for business than that. Certainly, it is more than any government within memory has done for business in Australia. Having put those facts on the record, I must say that the figures on private investment in plant and equipment are disappointing. I do not know the degree to which they may subsequently be revised any more than I can say in any precise way what the lead time ought to be between the growth of the gross domestic product and the recovery of private investment in plant and equipment. As to the reference to new taxes, the fundamental inability of members of the Liberal Party and tory politicians in general to follow a logical train of thought has often astounded me. They simultaneously tell us now that the nation's economy is collapsing, decaying, et cetera; and that the answer to all this is to preserve the free lunch, the fringe benefits tax, the absence of a capital gains tax and all the things which have existed during the period in which, they say, the economy has decayed to a point where it is disintegrating. Their formula for repairing the situation which they say has developed is to keep all the policies under which it developed. Of course, without any doubt, one of the reasons that the Australian economy has performed very poorly over several decades, compared to those countries with which we could reasonably compare ourselves, is the widespread compradore ethos of Australian capitalism manifested in a passionate commitment to the perpetuation of things such as the free lunch, the fringe benefit and the gathering of income from untaxed capital gains instead of through investment and activity in productive endeavour. Senator SIBRAA —I address my question to the Minister representing the Minister for Aviation. As this Government's record of maintaining high rates of investment and growth in the Australian airline industry, both domestically and internationally, is well known, and given that there is some uncertainty on what direction interest rates will take, will the Minister inform the Senate of the future outlook for the industry? Senator GIETZELT —Honourable senators will not need to be reminded of the state of our airline industry, both domestic and overseas, when this Government came to office. It was in a very depressed state. Certainly it was my recollection that Qantas Airways Ltd was losing money, and I think the same could be said of both the government and privately-owned airlines. That is not the position today. There has been a remarkable turnaround in the airline industry. I thank the honourable senator for his question. I appreciate that it probably arises out of his membership and leadership of the aviation sub-committee of the Parliamentary Labor Party. The Government's record in this area of stimulating the economy and the flow-on effects in the airline industry is well known. As a current indicator, for example, international passenger activity has increased by 8 per cent in the December quarter and, overall, by 8.5 per cent during 1985. Annual inward traffic increased by 9.1 per cent and outward traffic by 7.8 per cent. That is in stark contrast to the conditions that existed in 1982-83. The index of published schedule economy fares rose by 3.3 per cent in real terms and the index of minimum fares rose by 1.8 per cent. The recent reduction in the import parity price of local oil comes as a welcome relief to the airline industry. However, because interest rates remain high and there has been a steady decline in exchange rates, both these impact on operating costs and the capacity to maintain growth at appropriate yield. Nevertheless, there has been an increase, as Senator Sibraa suggested, in investments in these areas. That is reflected in the aggregate movements into and out of Australia of about 6 to 7 per cent during the current year of 1986. It is worth recalling that there has been a substantial increase in air freight during the last period. A considerable increase has taken place-a 12 per cent growth last year in international freight charters-and a review of the international air freight policy last year has led to an increase in activity of 20 per cent in scheduled freight services. The outlook is for further growth in imports and moderate growth in exports. That indicates that the Government's economic policies are being reflected in the airline industry, a very important industry from the point of view of moving both freight and passenger traffic. Senator VANSTONE —I direct my question to the Leader of the Government in the Senate. I refer him to today's Press coverage of the South Australian Premier's comments yesterday at a meeting of Labor Premiers, which Mr Wran refused to attend, in which Mr Bannon attacked `political patronage and pork-barrelling' and the potential damage to Australia's submarine project. Firstly, since the South Australian Premier's confident prediction and advertisements of last year that South Australia was up and running on the submarine project, what circumstances have changed to give occasion to this blunt outburst by Mr Bannon? Secondly, can the Leader of the Government assure the Senate that the substantial submarine project is not to be the subject of a special deal engineered by the New South Wales Premier, regarded by some as one of the Prime Minister's little mates? Senator BUTTON —I did not see what Premier Bannon said. I hear from all the Premiers on this issue. They all seem very anxious, and I guess they will be like that until the submarine contract is ultimately let. There is no reason for any heightened level of anxiety among Premiers on the basis of the sort of speculation advanced in Senator Vanstone's question-there is no reason for that at all. Senator MAGUIRE —My question is directed to the Minister representing the Treasurer. Has the Minister's attention been directed to the latest report of the Foreign Investment Review Board published this week? If so, can the Minister indicate any new and significant investment trends reported by the FIRB? Do any of the trends give the Government cause for concern? Senator WALSH —I am aware of some of the information in the most recent report of the Foreign Investment Review Board. Before getting to that matter, I am also aware of concerns expressed by a prominent Queensland businessman, Sir Roderick Proctor, on Australian Broadcasting Corporation radio a couple of weeks ago. I believe that Sir Roderick is still a director of the National Party in Queensland and a close associate of the Premier. Senator Boswell —I rise on a point of order, Mr President. The question clearly has nothing to do with the Minister's answer. The question has nothing to do with Sir Roderick Proctor, or anyone else, and I ask you to rule that the Minister is out of order. The PRESIDENT —There is no point of order. Senator WALSH —I can understand why Senator Boswell does not want Sir Roderick Proctor's remarks to be rebroadcast because he said: The Queensland economy is not in good shape and in some respects at the moment we do not compare well with some of the other States, which just happen to have Labor State governments. The Queensland economy is performing at a level below that of Victoria and New South Wales. Shifting now to the international scene and to the Foreign Investment Review Board report, to which Senator Maguire referred and which is the 1984-85 report, it contains some interesting figures for new investment approved for Australia. This is investment in the economic sense-that is, investment in new projects and not changes of ownership of existing projects or assets. The figures show a slight increase nationally between 1983-84 and 1984-85 of about $20m in round figures. However, the interesting statistic is Queensland's share of that total figure as follows: In 1983-84 Queensland had approved foreign investment of $499m, and in 1984-85 that had fallen to $207m of that portion of total new foreign investment that can be identified with one State. As an explanation of what might appear to be a discrepancy in the figure I am about to quote and the one I have already quoted, I point out that it is not always possible to apportion new foreign investment to a particular State. On the same basis, Queensland's share of foreign investment has been effectively halved; that is, down from 26.6 per cent in 1983-84 to 13.7 per cent in 1984-85. That figure of 13.7 per cent is, of course, significantly lower than Queensland's share of the population, which stands at 16 per cent. For a considerable time Queensland-because of the mineral resources in that State and the propensity of mineral resource development to be associated with the investment of new foreign capital-attracted a larger than proportional share of foreign investment. Indeed, that fact caused the Premier, along with conservative politicians in general, to boast and pride themselves on their ability to attract foreign investment. The latest figures show that the international business community lacks confidence in the Queensland economy and the Bjelke-Petersen Government. Senator REID —My question is directed to the Minister for Education. Has consideration been given to the transfer of the Australian Capital Territory Apprenticeship Board from the Minister's Department to the Department of Territories? If it has, can she outline the reason for that action being considered? Does this also mean that the colleges of technical and further education in the Australian Capital Territory will also be transferred from her Department to the Department of Territories? Senator RYAN —Consideration is being given to the transfer of the Apprenticeship Board to the Department of Territories. Consideration is not being given to the transfer of the TAFE colleges to the Department of Territories. We consider it appropriate to keep the TAFE colleges as part of the tertiary sector, and therefore administered by the Commonwealth Department of Education, although we may well find a new structure of administration when we finish reviewing higher education and tertiary education in the Australian Capital Territory. In the case of the Apprenticeship Board, a strong argument has been put that it is very much a local matter of supervising local apprentices, that the Board comprises trades people working in the local industry and it is more appropriately dealt with at a local level. The matter has not yet been finished, but that is the direction in which it is heading. Senator REID —Mr President, I ask a supplementary question. In light of the Minister's answer, while appreciating the local nature of the Board, in view of its close relationship with the TAFE colleges and the significant role they play together, is it not very significant that that relationship should be taken into account and the Board be kept under the same department as the colleges? Senator RYAN —All of the relevant aspects are being considered and I will take Senator Reid's views into account. Senator VALLENTINE —I address my question to the Minister representing the Minister for Defence. Is the Government aware of the fact that, despite the re-entry of nuclear-powered warships into Australian ports in 1976, there are no adequate port safety plans to deal with a nuclear reactor accident in Western Australia-and probably the same applies in other States as well? Is the Government aware that the November 1984 draft of the port safety scheme-the most recent document, which is not available to the public-makes no mention of decontamination procedures, and that three significant areas dealing with evacuation plans, the issuing of potassium iodate tablets and public information plans are still to be prepared? Does not the Government, which invites or allows nuclear-powered warships into Australian ports, have a duty to ensure that the State's port safety plans are completed and operative after a 10-year period? Does the Government not also have a responsibility to the public to ensure that citizens are informed about emergency procedures in the case of an accident? Finally, will any of the warships being invited to join the Royal Australian Navy's 75th anniversary celebrations be nuclear-powered? Senator GARETH EVANS —Port safety plans are the responsibility of the relevant State or Territory governments. Public release of those plans is likewise a matter for State and Territory governments. The Commonwealth Government, for its part, supports and encourages these governments in moves to release information about their emergency planning. Because Senator Vallentine referred to a Western Australian document, the Government is not in a position at this stage to comment on the status of the reported November 1984 draft of the port safety scheme which she appears to have obtained; nor to comment in detail on the allegations she made about it. As to the last part of the question, no nuclear-powered warship visits are planned for the RAN's 75th anniversary review in Sydney in October 1986. Senator ARCHER —Has the Leader of the Government in the Senate seen a report showing that the Australian Council of Trade Unions regarded its recent national day of protest as a great success? Has the Minister also seen reports that the effects of that stoppage included, firstly, a loss of domestic production totalling millions of dollars and, secondly, a loss of millions of dollars in export earnings at a time when Australia has a record trade deficit? Did it further prejudice Australia's reputation as a reliable and prompt supplier of such exports? Does he not agree that the ACTU support for the stoppage raises doubts as to the economic responsibility of the ACTU, particularly in light of the fact that it will have ample opportunity to air its views at the forthcoming meeting of the Advisory Committee on Prices and Incomes? Senator BUTTON —I guess the stoppage took place because of the delay in the hearing of the national wage case. That was the stated reason. The national wage case, of course, is dealing with the consumer price index figures for the December quarter last year. There have been considerable delays in passing on the wage increase following the CPI increase in any particular quarter. The fact is that this year there will have been one wage increase in Australia of the order of 3.7 per cent. Senator Archer —When we can't afford it. Senator BUTTON —Whether or not we can afford it is another argument. Having said that, I do not think the ACTU's endorsing or invoking of the so-called national stoppage yesterday was a good idea. I think it was not a very smart idea at all. I hope that the ACTU can be encouraged to persuade its constituents to be patient a little longer in respect of the current national wage case because I think that in the current economic climate it is very important that it does so. However, let me repeat that there have been enormous changes in attitudes to these questions in the trade union movement. Those changes should be encouraged rather than any slight breakdown in the process of change being seized on as some useful political weapon in the Senate or something of that kind. Senator COOK —Is the Minister representing the Treasurer concerned about continuing calls to evade the payment of Federal Government taxes? Can the Minister explain why so many of these calls emanate from his home town in Perth? Senator Townley —Mr President, I raise a point of order. That question is out of order because it relates to a matter before the Senate. Senator Cook —On the point of order: My question refers to the payment of Federal Government taxes as a generality. I do not think it is out of order. The PRESIDENT —Order! I will allow the first part of the question, but the second part of the question is very vague and far removed from the Minister's immediate responsibility to this House. I ask the Minister, in answering, to remember that there is legislation before this chamber which will be debated immediately after Question Time. Senator WALSH —Yes, Mr President. Obviously this question is more specific than the question of any particular Bill levying a tax, because it entails calls by people in responsible positions to break the law of the land. There was a most unfortunate rash of that sort of irresponsible activity one week, when the ratbag Right, personified by people such as Ian McLachlan, the Leader of the Opposition in Western Australia and, unfortunately, a recent addition to the ratbag Right, Mr Bob Ansett, were calling for people to break the law of the land and refuse to pay taxes which would be levied by the Parliament according to constitutional processes. While I am on this subject, I think I ought to clear up a matter which was raised by Senator Chaney in Question Time last Wednesday, when he took a point of order and said: . . . Mr Hassell made it quite clear that he is not advocating breaches of the law. It is true that in a statement reported in last Tuesday's West Australian Mr Hassell backed away from his earlier call. However, for the record, I quote from the West Australian of Monday, 26 May: The Leader of the West Australian Opposition, Mr Hassell, said that four immediate, practical steps could be taken by West Australian business representatives. The article gives four points, the second of which is to refuse to pay the tax. Later in the article Mr Hassell is quoted directly as saying: In Western Australia I commit the Liberal Party to lead the tax revolt. That is to defy the law of the land, to repudiate the rule of law. It is true-I again say to Senator Chaney's credit-that on Monday of this week he was quoted as unequivocally rejecting that call and the call from other members of the ratbag Right to whom I have referred. It is to his credit that he had the courage to stand out, even in the Western Australian branch of the Liberal Party, and to say that those sorts of calls copied the tactics of the most lawless elements of the trade union movement as, I suppose, personified by the Builders Labourers Federation in the south-eastern States. I agree entirely with the honourable senator in that assessment and I admire him for having the courage and the decency to say so. But the fact remains that the State Liberal Party Leader, with the implicit support of the temporarily ruling clique of the Liberal Party in Western Australia, at Mr Hassell's-- Senator Button —That Crichton-Browne will be up to his ears in that. Senator WALSH —Yes, Senator Crichton-Browne, Mr Payne, Mr Hassell and the rest of that gang. Mr Hassell said that the business community should refuse to pay the tax and said: In Western Australia I commit the Liberal Party to lead the tax revolt. Certainly by Tuesday he had backed away from that. But the significant point is that he showed his mind before he had a chance to curb his tongue. His mind is a lawless mind. To repudiate the law of the land, repudiate the rule of law generally, is to behave as one would expect a member of the ratbag Right to behave. Senator MESSNER —Has the attention of the Minister representing the Treasurer been drawn to an article in today's Age that indicated that the Commissioner of Taxation is intending to raise 10,000 assessments against taxpayers involved with so-called bottom of the harbour tax avoidance schemes? Can the Minister confirm that report? If so, can the Minister advise on what basis such assessments will be raised? Are these assessments likely to be based on the same grounds as was the Hawke Labor Government's unreasonable legislation which has already been twice rejected by the Senate? Senator WALSH —I have not looked at the Age today and I have not seen that report, but I accept Senator Messner's statement that what he claims to have been reported was reported. I am very grateful to Senator Messner for raising this question because it is an opportune time to have a quick look back at the bottom of the harbour legislation and the claims that were made about it at the time. I remember quite clearly that there were a number of hysterically exaggerated claims from assorted members of the then Government parties-the Liberal Party of Australia and the National Party of Australia-asserting that these bottom of the harbour operators did not have the money to pay the tax anyway. Those were the members of the Liberal Party who were opposing their own Government's legislation. They said that the bottom of the harbour operators did not have the money to pay the tax anyway because they had all invested it back in their businesses to generate employment for the workers and that really they were philanthropists. They said that they were not frauds, cheats and thieves at all but philanthropists who had just constructively used this money they had evaded in taxation by putting it back into the business for productive investment to provide jobs for the workers and goods and services for the community. It was further asserted that, if those people were forced to pay the tax that they ought to have paid years before, the businesses would be bankrupted and would have to close down, unemployment would explode and chaos would hit the land. Of course, what actually happened was that the very time that the collection of that tax in any volume commenced-that is, in the autumn and winter of 1983-just happened to be the time that the economy started pulling out of recession and employment was growing, as it has continued to grow at a very high rate right up to the most recent employment figures available. The relevance of that little bit of history, of course, is that exactly the same people use exactly the same sorts of false arguments in defence of tax evaders every time a taxation Bill is introduced. They have been proved wrong on every occasion. I do not know the grounds on which the Commissioner has issued these assessments but I will ask the Treasurer whether he can supply the information. Senator BLACK —My question is directed to the Minister representing the Minister for Employment and Industrial Relations. Has he seen a report in yesterday's Brisbane Courier-Mail in which a Gold Coast based company was alleged to have used a system of fines to discipline employees who committed offences such as being late for meetings, saying anything negative and fraternising with employees of the opposite sex? Can the Minister say whether abuses of power such as this would be more prevalent under the coalition's industrial relations policy as it includes a system of individual agreements which would be virtually impossible to police? Senator WALSH —My attention has been drawn to that report but I am not in a position to say whether it is accurate. It is conceivable that the types of practices referred to in the report could have occurred. It is a matter of common sense that, if there is a multiplicity of possibly thousands of individual agreements, it is more likely that malpractices of that nature will occur. Senator Black mentioned the difficulty of policing, say, several thousand individual agreements; and that is self-evident. The reality is that the industrial relations policy of the Liberal Party of Australia will not be implemented because the Liberal Party will not be in government to implement it-or at least, the Howard-led Liberal Party will not be in government to implement it. That is a statement of reality which an increasing number of people in the Liberal Party realise to be true. In the hypothetical case of such a policy being implemented, I find it somewhat ironical that the party that has said it is for small government, a small bureaucracy, low government expenditure and all that sort of thing, could contemplate a policy which to police effectively would require, as Senator Black suggests, the commitment of enormous resources. I will see whether I can get any further information about whether the allegations of malpractice, as reported, are correct. Senator WATSON —I ask the Minister representing the Treasurer why the Commissioner of Taxation is issuing more than one assessment in respect of the same items of income? Does not this practice result in one assessment being inconsistent with the other and also in double taxation? Senator WALSH —I was not aware of that fact, if indeed it is a fact. If the Commissioner is issuing more than one assessment for the same income, I cannot imagine why he is doing so, unless he has decided to send two assessments to members of the former Liberal Party Finance Committee on the ground that he might be able to get them to pay some tax now; they did not pay any in the past because most of them were involved in bottom of the harbour operations. I will inquire about that matter. Senator GILES —My question is to the Minister for Community Services. What progress has been achieved in the development of a procedure to deal with complaints from patients and residents in nursing homes and hostels and clients of other Federal Government funded or subsidised services which are conducted by non-governmental organisations or private enterprise? Senator GRIMES —As Senator Giles well knows, the Senate Select Committee on Private Hospitals and Nursing Homes of which she was chairperson recommended the establishment of a mechanism for complaints and disputes for clients of government establishments or establishments funded by the Government, such as nursing homes, hostels, refuges, et cetera. In the nursing homes and hostels review we pointed out that the Attorney-General and I have established a task force to examine the various options which might be available to the Commonwealth in this area. The task force has submitted an interim report and it is preparing a final report which will cover the issue of a special and particular complaints body. The interim report covers all Commonwealth subsidised programs in the Department of Community Services and not just nursing homes. It points out the need for co-operation in this area between the Commonwealth and the States as well as between the service providers and the users. It also emphasises that an effective mechanism, apart from having a special complaints body, will involve the development of measures such as increased information for prospective residents, minimum standards of care, greater user participation and greater knowledge generally by the people in those residences and their relatives. The task force considered that the potential for major disputes could be lessened by the development of such measures and also recognised that, while implementing all the necessary changes will be a long process, there is no simple solution. Nevertheless, a number of significant advances have been made and a variety of measures have already been implemented in the Department of Community Services. We established an Office for the Aged and an Office of Disability, and they have been consulting consumer groups throughout the country. The Department has developed a draft discussion document on the quality of care in nursing homes. The first part includes a section on residents' rights relating to aspects such as self-determination, religious and ethnic observances, risk taking, financial affairs and such matters. The section also urges nursing homes to establish residents' committees so that residents can plan and manage some aspects of their care and give advice on others. The manual also outlines minimum standards and there has been considerable development in this area with the co-operation of operators as well as users. The most important criterion in the development of a complaints mechanism such as this is that it does not become overbureaucratic and an easy source of trouble-making by people who want to make vexatious complaints. It also should recognise that many of the differences can be resolved by people discussing them and gaining greater knowledge of each other's problems. The New South Wales Government has started developing a complaints mechanism of this type. We want to ensure that we are not just duplicating what that State or other States will do. I expect that in the next few months we will be much further down the track and that I will then be able to give the Senate and the Parliament a fuller report on the advances we have made. Senator CRICHTON-BROWNE(Western Australia) —by leave-During Question Time Senator Walsh claimed that, by implicit support, I had supported calls by others to break a law which does not exist. I presume he was referring to the proposed fringe benefits tax legislation. I have not at any time uttered a view one way or the other on that matter. Senator Walsh's claim was made in response to a question by Senator Cook. Senator Walsh —You're dumping Hassell as well. Senator CRICHTON-BROWNE —I remind Senator Walsh that I am making a personal explanation. On 1 October 1979 Senator Cook said: `We believe that one of the ways to show how ridiculous this law is is to systematically break it'. He was referring to section 54 of the Police Act of Western Australia to break the law-and the penalty for breaking the law was gaol. The PRESIDENT —Order! The honourable senator is entitled to make a personal explanation. I ask him to restrict his remarks to it. Senator CRICHTON-BROWNE —Thank you, Mr President. I shall only repeat that I have neither explicitly nor implicitly made any statement on whether this law ought to be broken. I have certainly made my position very clear as to whether the law ought to be passed; that is, that it certainly ought not. Senator COOK(Western Australia) —Mr President, I seek leave to make a personal explanation. Leave granted. Senator Crichton-Browne —Don't deny you said it. Senator COOK —I am enjoined by way of an interjection not to deny that I advocated the breaking of a law, section 55b of the Western Australian Police Act, which holds as law that, if three people gather together in a public place without police permission and discuss matters of public importance, they do so illegally and can be arrested and gaoled because of it. I found, and still find, that law reprehensible and I am absolutely unrepentant for advocating the breaking of it. However, I am not a hypocrite. This is still a democracy, even though Court's laws will not prevail. Unlike Mr Hassell, I have not gone around this country grandstanding that I am the upholder of every single law on the statute books and pretending-- The PRESIDENT —Order! The honourable senator is entitled to make a personal explanation. I ask him to confine his remarks to that aspect, for which he was given leave. Senator COOK —Thank you, Mr President. And advocating-- The PRESIDENT —Order! I ask the honourable senator to confine his remarks to his personal explanation, or I shall ask him to resume his seat. Senator COOK —Thank you, Mr President; I am doing that. I do not deny in the sense of the accusation made that I advocated breaking that law, and I stand by that. However, I have not been hypocritical, pretending that I do not do that, whereas Mr Hassell pretends to uphold the rule of law and now denies it. The PRESIDENT —Order! The honourable senator is extending beyond the personal explanation. Senator Dame MARGARET GUILFOYLE(Victoria) —Mr President, I present the 251st report of the Joint Parliamentary Committee of Public Accounts entitled `Advance to the Minister for Finance (1982-83)-Response' which contains the Department of Finance minute on the Committee's 228th report. Ordered that the report be printed. Senator Dame MARGARET GUILFOYLE — by leave-Report 251 of the Joint Parliamentary Committee of Public Accounts considers the Department of Finance minute relating to the Committee's 228th report on the Advance to the Minister for Finance 1982-83. The Advance to the Minister for Finance is a provision authorised by the annual Appropriation Acts and made available to the Minister. In 1982-83 amounts of $125m, $100m and $50m respectively were provided for this purpose in Appropriation Acts Nos 1, 2 and 3. As a general principle, the only amounts which should remain a charge to the appropriations for the Advance to the Minister for Finance at the end of the financial year are urgent and unforeseen expenditures which arise between the time of preparation of the additional Appropriation Bills and the close of the financial year. In its examination, the Committee seeks to ascertain whether or not expenditure from the Advance conforms to this general principle. The Committee received statements relating to 111 items of expenditure. Supplementary material was obtained concerning 10 items. Three items were selected for public inquiry: Department of Aviation-office requisites and equipment; Department of Defence-pay and allowances for the Army Reserve and cadets; and Department of Transport-fuel, light and power. As a result of its public inquiry into the management and control by the Department of Defence of payments to the Citizen Military Forces, Regular Army Emergency Reserve and Officers of Cadets of the Australian Cadet Corps, the Committee found some disturbing deficiencies. Overuse of the training day allocation arose because responsible officers were not able to line up actual training days worked and payments made or due with the overall planned number of training days per head. The control problems which permitted the excessive use of training days arose from, and were aggravated by, the lack of adequate and timely information on expenditure trends. The recently computerised pay system facilitated prompt payments of amounts due, resulting in a faster than expected rate of payment, but did not provide management with information for estimating purposes. The Committee notes that since its inquiry a number of actions have been taken to improve management and control, and that the item continues to receive close scrutiny. I recommend the report to honourable senators. Senator McINTOSH(Western Australia) —On behalf of the Senate Standing Committee on Foreign Affairs and Defence I present the first report on the acquisition of land by the Army in New South Wales. Ordered that the report be printed. Senator McINTOSH —by leave-I move: That the Senate take note of the report. The Senate Standing Committee on Foreign Affairs and Defence has been inquiring into a proposal by the Department of Defence to acquire a large manoeuvre and live-firing area of approximately one million hectares at Cobar in western New South Wales and a site of some 73,000 hectares for a co-located infantry and artillery schools complex. The Committee's terms of reference also required it to consider the process of acquisition of land by the Commonwealth. The Committee has deferred consideration of that part of the reference until the proposed amendments to the Commonwealth Land Acquisition Act 1955 are available for public scrutiny. The first report of the Committee concentrates on the proposed manoeuvre area at Cobar. The schools proposal, which was deferred in April 1986, is discussed briefly in the report. The Committee's principal recommendations are: That no further consideration be given to the Cobar proposal as a site for a manoeuvre area; That no change be made to the existing location of the Infantry Centre at Singleton, New South Wales; That the School of Artillery remain at North Head in the medium term; and That the Army's user requirement for the School of Artillery be revised extensively before any future proposal for relocation is considered. I would like to mention the enormous interest shown in the inquiry by people in areas likely to be affected by the possible acquisition of land for the Army. On the very day the terms of reference were announced, two lobby groups from countryside New South Wales were in King's Hall wanting to see me and other Committee members. In the weeks that followed, the Committee received many detailed submissions from different individuals and directly interested groups. Clearly, a lot of research and thought went into these submissions. This should not be surprising. People in these areas had lived in a condition of uncertainty since the possible acquisition of land was mooted in 1982 by the then Minister for Defence. Concerns were different in different areas. People in the town of Singleton were obviously concerned that a relocation of the Army training area would have a negative impact on their economy. Landowners in mooted areas were worried about possible negative effects on their livelihood. Take, for instance, the case of a farmer with two properties, one inside the proposed area and one outside. The viability of his farm was in question if he was to loose access to one of the properties. A whole variety of similar problems were presented to the Committee. I should also point out that people who were opposed to the land acquisition made it quite clear that they would willingly make the necessary sacrifices in a time of emergency. But in present peacetime circumstances, they did not appreciate the long-standing uncertainties they were faced with and did have doubts about the strategic value of acquiring land in that part of Australia. I believe that the people most likely to be affected by the possible acquisition do feel that they have been given every opportunity to have their views heard. I would like to compliment these people for the dedicated and considerate way in which they have presented their views to the Committee, and I would especially like to compliment the staff of the Committee which had the onerous task of working through the large amount of material that was put before the Committee. I seek leave to continue my remarks later. Leave granted; debate adjourned. Debate resumed. Senator TOWNLEY(Tasmania)(3.15) —As the Clerk has just said, we are discussing the Fringe Benefits Tax Assessment Bill 1986 and associated fringe benefits tax Bills. I was speaking on this matter just before lunch. Senator Cook —Are you going to incite people to break the law? Senator TOWNLEY —I pointed out at that time that only academics or unionists such as Senator Cook, the union urger who is interjecting at the moment, would agree to this kind of tax being imposed. I believe that gradually the effect of this tax is sinking into the community. The cost of it is becoming visible because the Australian Taxation Office has been holding some seminars to try to explain this very complicated piece of legislation to those people who are interested in it and whom it will affect. In today's Mercury was a letter from a Mr J. T. Piper, who said: Having attended a seminar on the proposed fringe benefits tax, I have become aware of the cost implications of this tax on my company, as well as the inflationary effect on Australia's economy as a whole. This comes at a time when the economy needs positive support, not hindrance, and I therefore feel such legislation should not be passed by the Federal Parliament. That was in today's Mercury and it is an indication, I think, that people are starting to recognise that this is not something that applies just to tall poppies-it is going to apply a lot of pressure to small businesses within Australia. The net gain of this tax has been calculated to be very small, yet the cost of operating it is quite horrendous. I believe it will have a disastrous impact on the cost of operating small businesses, so it is obviously a tax on employment. I mentioned before lunch that the Taxation Office had brought out a 56-page booklet which it sent to different businesses around the country to give them some indication of how to manage their affairs to obey this tax. It had many errors in it. It will be out of date if this Parliament makes any alterations to the tax Bills that are before us. It was put out without this Parliament having approved the legislation, which is something that I think should never happen. I do not think people in government departments can presume ever that legislation which hits this place will go through it unchanged. I mentioned also the cost of this taxation to the tourism industry via the expenses that will be applied to hotel and motel operators. I read from a telegram I had received from one of the motel associations which had anticipated that motels would have to put up their tariffs by just under 10 per cent to compensate for the requirements of this legislation. We were told earlier by one of the Australian Labor Party senators that New Zealand had used this method of raising money. I pointed out that New Zealand has not a very good economy to watch because it has lost its triple A rating within the international financial markets. A lot of people are leaving New Zealand to come to this country. The fact that so many people are coming here and going on the dole is costing this country some $60m a year. That is why I find it quite amazing to use New Zealand as an example. In today's Sydney Morning Herald there was an article which was headed: `Kiwis led the way with tax, but many say it has failed'. I believe it is going to fail in this country. That article stated: The New Zealand Government introduced a tax on fringe benefits on April 1, 1985. It was aimed mainly at those with company cars and cheap finance, although a long list of other `extras' were included . . . The tax was expected to collect about $A154m within nine months but in fact it took just over half of that. The Inland Revenue Department said only 8 per cent of the country's estimated 140,000 employers had been found liable for the tax while the other 92 per cent maintained that their employees did not receive benefits covered by the Government's definition of a perk. Critics of the scheme were quick to use these statistics to brand the tax as a flop. `It was ill-conceived and badly instituted'-- one gentleman from a group of accountants said-- `By being too wide-ranging it became unenforceable and invited thousands of small businessmen to hold back and to break the law.' I shall speak about this matter of breaking the law in a moment, as it is something that I do not agree with. Today I received a letter about this tax from a group that has recognised just what an effect it is going to have on them. The letter, dated 29 May, which I opened just a few minutes ago, comes from the Australian Parents Council Incorporated. I would like to read some of that letter to the Senate because I think it is of some interest. Under the heading `Fringe benefits tax', it states: While supporting the principle that the burden of taxation should be equitably borne by the community, the Australian Parents Council believes that the fringe benefits tax is unnecessarily harsh and burdensome on non-government school communities. I see Senator Teague nodding-he would agree with that entirely. He has taken a great interest in education. Senator Teague —I spoke with them on Monday in Sydney and I believe that we should amend the Bill. Senator TOWNLEY —I believe that the Bill should be amended, and Senator Teague says that because of this implication he believes that the Bill should be amended, and in fact that is what is asked for at the end of the letter. The letter goes on to say: The community recognises the special services rendered by non-government schools to Australian children and their families. The community also recognises that these non-profit educational institutions spend all their scarce resources on the education of children. To assist them to do so the Commonwealth Government exempts them from income tax and sales tax on purchases. Logically and in justice, the Commonwealth should exempt them from the operation of the fringe benefits tax. To subject non-government schools to the fringe benefits tax would impose on them a continual and growing administrative burden of record-keeping and documentation as well as subjecting them to complex and detailed self-assessment procedures. It seems that school authorities- this points to the craziness of some of this legislation- will have to keep records of suppers, lunches and dinners served at a range of routine school activities which their employees, the teachers, attend. Tax will have to be paid by the school on this assumed consumption of food although the teachers' attendance is required at these functions as part of their normal duties. That is crazy. Who is going to work out what the value of these meals is? Further, with self-assessment, if an error is made, we do not really know how far back the Taxation Office will go. One might make an error and the Taxation Office will go back through the school's assessment for four or five years. Senator Puplick —And the Democrats are going to support this nonsense, too. Senator TOWNLEY —I believe so. I will get on to them in a moment. I thank Senator Puplick. The Democrats are going to support this legislation. I think we should remind the people of Australia that just the thought of this tax coming in is having a profound effect on the steel industry, on car production and on other things around the country, as well as on small businesses due to these seminars which the Taxation Office is having to hold-and I congratulate it for this-because of the complexity of the thing. It sent out a book, and as Senator Watson told me earlier, the book is not correct. It is out of date. It has 15 corrections, some of which are quite sizable corrections. If a person did not make the corrections, his or her calculations would not be right at all. I should finish by quoting from this letter that the Australian Parents Council Incorporated has been good enough to send me. It goes on to say: Examples of school functions at which suppers and other meals are served and at which teachers must be present are: parent/teacher nights, concerts, prize givings, committee meetings, end of year activities, excursions, fetes and other well-known and accepted school activities designed to provide better education for children. I would bet that a lot of the teachers would love not to have to go to all those things, but it is a requirement of their employment, and now the schools are going to have to pay tax on it-- Senator Teague —It will put higher fees on the parents. Senator TOWNLEY —Higher fees will obviously be coming in. Then we get on to boarding schools. The letter says: Boarding schools will also be taxed for the provision of accommodation to critically important live-in teachers and supervisors. Can honourable senators imagine what a school boarding house would be like if it did not have someone living there to control the children? Senator Crichton-Browne —Oh! Senator TOWNLEY —I do not want Senator Crichton-Browne to describe it. We all know that such a situation would be a disaster. This legislation is crazy. It could be brought in only by academics who have their heads in the clouds or by union urgers who do not like small business. That is about what is happening in this case. I will get on to the anti-small business attitude of this Government in just a moment. Finally, the letter says: To impose such administrative burdens and taxes on non-government schools would divert scarce resources away from teaching children. It will also penalise the efforts of the parent-teacher community working for the improvement of children's education. I think that I have read enough of that letter to indicate just how crazy this legislation is. I always choose my words very carefully-and `crazy' is the word that should be applied to the people who dreamt this stuff up. It is mad. We bring this legislation in at a time when the economic sky in Australia is falling in. Some of us have been pointing that out for quite a while. We have pointed out that Australia is more in debt than are many of the countries that many people think are badly in debt. The only way out for Australia-at last recognised by Mr Keating-is for business to improve. In particular, I refer to small business, which is the major employer of people in this country. If small business can be expanded and exports can be increased, thus reducing the cost of government services as a percentage of gross domestic product, maybe that is the way that this country can come out of the mess into which it is heading. I refer to an article a few days ago by Mr Warwick Costin headed `Depression coming unless we export more'. He does not say `recession', which I notice was mentioned in several newspapers today. He says `depression'. He says: The dynamics of framing Australia's future budgets have swung squarely on to the fact that the nation must export to survive. To export, we must have little businesses that produce exports. If we do not, we will go down the gurgler and become the banana republic about which we have spoken before in this place. Senator Puplick —The only J-curve in sight. Senator TOWNLEY —I think the J-curve is more like a ski slope; one goes up for a little while but then one falls in a heck of a mess at the bottom of the hill. That is the way the economy of this country is going. I think this article by Mr Costin is worthy of quoting in one other area. It states: Australia's trade performance, in terms of its ranking as a world exporter, has drifted damagingly downwards-from eighth place in 1953, to 12th in 1964 and to 23rd by 1984. During the past 20 years, the standard of living for Australians has fallen from the fifth highest in the world to about 20th. How is that? That is a very serious situation. It is something that I am surprised to see the Australian Democrats supporting. We are up to our neck in debt in this country. We need to get business going to get out of that debt. However, the Australian Democrats are supporting this legislation which I believe quite directly will damage the economy further. Senator Watson —It will throw people out of work. Senator TOWNLEY —It certainly will. If I were a member of the Australian Labor Party-thank goodness I am not, in light of the way people are starting to wake up to this legislation-I would be hoping that it was defeated. Senator Crichton-Browne —How would you like to be a Democrat? Senator TOWNLEY —I will not go into that because I do not have time. However, I believe that there will be a reaction in the community once all the effort and paper work necessary to comply with this tax become apparent. One important point that we have to remember is that we do not need the legislation. Existing legislation could give the Australian Taxation Office perfectly adequate methods of collecting this tax if it wanted to. Therefore, it is unnecessary, as well as being burdensome. The economy is on that slide that I mentioned. Investment is down. We are in a recession. Our overseas debts are huge. Our standard of living is going down. I believe that this tax will add directly to a further economic retardation. As I mentioned a moment ago, this Government obviously has an anti-small business attitude. It likes to deal with big business and big unions. It does not want the little businesses. Senator Watson —Big debts. Senator TOWNLEY —Big debts? We will get on to that on another day. I want to know where he will spend this money. We have no guarantee that Mr Hawke will bring in those tax reductions later on. Would honourable senators trust him? I would not trust him with 10c, let alone all this tax money. We trusted him not to apply the assets test to elderly pensioners. But what has happened? He applied it. We trusted him not to bring in the capital gains tax. What did he do about that? He brought that in. I do not think we can trust him to bring in the tax cuts. It is another political promise. A political promise is something which goes in one year and out the other. I feel that that is what will happen with this political promise. Why are the Bills not to guarantee the tax deductions before us today as a part of this package? Why are they not here? We know why there are not here. The Government will use any excuse it can to weasel out of those tax reductions. It is doing it already. It has put them off for three months, it will be another three months and then it will be: `Goodnight, nurse'. We will not get them. If we do not get them, the Democrats will be responsible. Senator Vigor —We have a letter from the Prime Minister. Senator TOWNLEY —My goodness! I can recall a Labor member once standing up in the House of Representatives saying that there were no spies in Australia, and he said: `We have a letter here from the Russian Ambassador saying so'. Do honourable senators remember that? It might even have been from the Russian capital. `We have a letter'-I ask you! I do not believe we will get those tax cuts. Before I close, I want to say that I do not think that the way to tackle this tax is the way advocated by some people. If it becomes law it is up to us to obey that law whether we like it or not. Mr Hawke has won two elections and the way to change the law is through the ballot box. I ask people who do not like this law to do what they can to get rid of this Government, this Government that is taxing us out of existence and ruining small businesses, and to get rid of it as soon as they possibly can. Senator VIGOR(South Australia)(3.32) —As Senator Townley has said, the items taxable by the fringe benefits tax are already taxed under the existing income tax legislation. However, the tax is currently difficult to collect because employers are not obliged to notify the Australian Taxation Office of fringe benefits paid to each employee. A number of people are exploiting this situation. The simplest and most effective way of solving the difficulties with the present tax is simply to amend the existing Act to require employers to enter on an employee's group certificate the value and category of fringe benefits supplied. However, it is a current fact of life that many people fail to declare the fringe benefits they receive. This is the problem that is leading to our current situation, and the failure of the Taxation Office adequately to enforce the existing tax has resulted in encouragement to many otherwise honest Australians to defraud the Taxation Office and the people of Australia. Any law which discourages honesty and which encourages dishonesty is a bad law. The Australian Democrats are agreed that the existing provisions for fringe benefits tax must be changed. They are also agreed that exemption of fringe benefits from taxation would only increase the temptation to dishonesty. Indeed, that is no solution. Rorts and exploitation of the tax system are rampant in tax avoidance through the fringe benefits area. Such rorts grow in value with a taxpayer's taxable income. For example, the provision of loans at minuscule rates of interest with repayment terms set so that the loan is effectively a gift is a way of increasing remuneration while avoiding completely the responsibility to pay tax on the moneys so collected. Certain large employers, such as banks, use such fringe benefits to squeeze employees and make certain that their pay and conditions are effectively lower than they otherwise would be. Luxury houses, boats and private school education expenses are other rorts indulged in by the already wealthy to avoid taxes that are increasingly falling on pay as you earn employees. Executives of large companies are largely to blame for all these rorts, which allow them to increase their own wealth. Senator Messner —What a load of rubbish. The honourable senator has not even read the Bill. Senator VIGOR —This is not at the expense of their company, because they would probably consider that to be fraudulent, but at the expense of the Australian taxpayer; yet they accept this as being an acceptable thing. Similarly-Senator Messner should listen to this-it is the same executives of large companies, together with their overseas counterparts, who are responsible for what are probably the three largest tax avoidance rorts in Australia-transfer pricing, inter-company transfer of negative gearing deductions, and off-shore tax haven transfers of income. We have a problem of company loyalty overriding the individual's own principles, and that problem needs to be solved. By removing the temptation for such executives to be dishonest on their own behalf through the fringe benefits tax, we can free them to stand firmly on their principles to ensure that their companies do not indulge in these other horrendous rorts. If the Government is dinkum about stopping dishonest tax rorts it will move quickly to close down those rorts of big business as well as attacking individual Australians, the easy quarry. The fringe benefits tax proposal establishes a new principle of taxing people who are not direct beneficiaries. I believe that this matter needs to be looked at closely. I consider this to be yet another instance of extra pressure on business, and on small business in particular. Senator Newman —Why support it? Senator VIGOR —I am just telling the honourable senator. If she listens to me she might find out. Small business in particular will find the extra paper work necessary to handle fringe benefits for its employees a large, and possibly unbearable, burden. The result will be that small business will increasingly move away from providing such fringe benefits and will return to the principle of rewarding employees for their work and value directly-in money. However, we must also free the wage setting and industrial and conciliation system to help small business face this change. Certain fringe benefits are, however, essential to enable employees to perform their work adequately, or to attract employees to work in places that most people would consider to be unfavourable. As the Democrats spokesman on local government, I have been particularly concerned with the effect of the new fringe benefits provisions on local government in remote areas. Senator Puplick —That is why you sold them out. Senator VIGOR —I did not sell them out. If the honourable senator listens, he will see how we have actually supported them. Most of them will be happy. It is not easy to attract highly qualified people to work in such remote areas. Large centres of population, with their educational, health, recreational and social facilities, are much more attractive to people with young and growing families. Housing is often unattractive and below normal city standards, difficult to rent and very expensive to build. Relatives and aging parents may be far away, and telephone calls may be expensive. In addition, all living expenses have an added cost of transport. The sum total makes recruitment to remote areas very difficult. I believe in decentralisation, as do the Australian Democrats. We must not centralise our population by default activities such as the fringe benefits tax proposals as they were before we approached the Government and negotiated a better deal. We must not preclude rural and remote areas from gaining access to the talents of the best staff available in this country. Senator Newman interjecting- Senator VIGOR —I am just telling Senator Newman what she wants to know. I thank her for asking that question. To place the extra burden of fringe benefits taxes on houses, cars and travel expenses on local government in remote areas is currently most unrealistic. Farmers and rural businessmen are already in dire financial straits. Prices for rural commodities on export markets are tumbling and Australia's export earnings for rural commodities this year could well be halved-and this is on top of the drop already experienced. Rural dwellers can absorb no more taxes. For these reasons the Australian Democrats have persuaded the Government to incorporate into the Bill a number of such allowances for remote areas. However, the Government has not gone far enough. We asked it to exempt travel. It exempted only travel which is part of an industrial agreement. This would have left local government people who do not have such industrial agreements with their staff in a position of having to pay the new benefits. We will move in the Committee stage-and the Government will, I understand, accept these amendments-to exempt travel to a centre of population if it is a customary feature of fringe benefits for that industry in that remote area. We have achieved more through our negotiations than has the Opposition through opposition. We have actually produced a better tax. Senator Puplick —You are going to tax everybody for these weasel sell-outs of yours. Senator VIGOR —Senator Puplick should listen. As well as local government in remote areas, most employers remote from towns provide housing, transport and often food for some of their employees. As the Democrats' spokesman on trade, I am conscious of the essential and largely unrecognised contribution to Australia made by our rural producers and small businesses, and also by employers in such remote areas. The Australian Democrats will therefore move amendments which will decrease the fringe benefits tax payable by such people to less than they currently pay. If members of the Opposition had studied the Bill, they would see that this matter is quite important. Currently, most farmers and small business owners pay tax on their estimated private use of cars at a rate of 20 per cent to 30 per cent of the total use of such cars. Senator Parer —If they are paying already, why have this? Senator VIGOR —That is exactly it. Amendments to the fringe benefits tax to relate estimated private use of vehicles to the total mileage they run will mean that, under the Democrats' proposals, country people whose vehicles always travel more than 40,000 kilometres, which is nothing for somebody in the country, will be able to estimate the private component of such use as only 6 per cent of total use. The actual tax they will pay will be below 3 per cent of the value of the car to them. They will therefore pay tax on their vehicle at the rate of only 6 per cent rather than the 20 per cent and 30 per cent which is presently the case-if they have been honest. Honest people will get benefits. The Democrats are offering tax cuts through this proposal to honest people, as is the Government. We are planning to move-- Senator Puplick —And a tax imposition on every other honest person in the country. Senator VIGOR —Does Senator Puplick support dishonest people? We plan to move an amendment to exempt from taxation housing provided to employees who are employed on a caretaker basis in hotels or who are required to live on the job. Already the Bill provides that tax will be payable on the market value of residential accommodation provided to employees. However, we have been assured that the valuation will be handled sensitively by the Australian Taxation Office. Senator Vanstone —Do you believe the Taxation Commissioner? Senator VIGOR —Yes, I believe the Commissioner. I seek leave to incorporate in Hansard a letter from the First Assistant Commissioner. Leave granted. The letter read as follows- 28 May 1986 Mr Greg Smith, Treasurer's Office, Parliament House, Canberra, A.C.T. 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 worker's 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 VIGOR —I thank the Senate. That will become part of the public record. Those people in remote areas can use the information in this letter to show that the Commissioner has agreed to sensitively handle the valuations of their houses. The market value of houses far from population centres, built for the specific purpose of housing employees, is very low compared with the value of accommodation for tourist or tenancy rental. Together, these provisions will result in housing in rural areas being valued for taxation purposes at such low rates that the tax, where applicable, will be negligible. Finally, the Democrats expect to move an amendment that charitable and overseas aid organisations be exempt from paying the fringe benefits tax. We see no reason why the Government should give with one hand and take away with the other. Collecting money and then handing it out again is a very costly business. When all the amendments are taken together, I feel confident that most of the problems inherent in the current fringe benefits tax will have been solved. In particular, honest taxpayers who have been paying tax on the private use of business cars as a fringe benefit will be much better off. Those who have been avoiding tax will still be better off than they would have been under the proposed fringe benefits tax which would have been collected if the legislation had not been amended. Senator Vanstone —What about the situation of car manufacturers in your State of South Australia? Senator VIGOR —Senator Vanstone says that I have been elected to represent South Australia. I am very keen on taking up her point. We have fought hard for the proposition which the car industry put forward on the fringe benefits tax. That is what we have actioned and I think the car industry is happy with us. Employers will be encouraged to pay directly to their employees in money and employees will have the freedom to spend this money as they choose, rather than to accept a car which may not be completely to their liking. Also executives will now be completely answerable to their company and their shareholders for the benefits provided. It may well be that the extra savings to the company from lifting the veil of accounting secrecy about the real cost of salaries and wages may outweigh many times the extra cost incurred in paying the tax. The continued patchwork, patch upon patch, of the existing tax system is killing Australian business. The paperwork grows mountainous, the overheads are horrendous. Each extra employee carries an overhead of cost which grows more and more as the burden of collecting taxes is shifted on to the employee. I am not arguing that the costs should not be borne by organisations. I am addressing these remarks to the Government. I am supporting the Opposition in this, in that I am arguing that at a time of high unemployment, at a time of increasing automation, it is very shortsighted to make employment more costly. Tax on labour is a disincentive to employ, a disincentive to work. I would like to see a complete reform of the tax system and the removal of all taxes on labour and instead our taxing the use of non-renewable resources and imported goods and capital. I, personally, believe this, and the Australian Democrats are voting right now on a new set of tax proposals to propose ways in which we can collect revenue in a more effective and fair way without distorting business operations. Australia's trade deficit is growing. Honourable senators interjecting- Senator VIGOR —No wonder we have a problem when we have a government that puts forward this type of tax that we have had to patch and patch and an Opposition that yells like a load of monkeys. We really do have a problem in this Parliament. Australia's trade deficit is growing exponentially. We are importing more and more and getting less and less in return for our exports. We are borrowing more overseas and spending it unproductively on takeovers. Opposition senators interjecting- Senator VIGOR —The Opposition had its chance when it was in government. We are borrowing more from overseas and spending it unproductively on takeovers and refinancing our existing debts. High interest rates are discouraging real investment in productive enterprises. That is the real reason why Australian taxpayers are having to haul in their belts to support more victims being put out of work and more of our young-the life blood of our future-who cannot work just because of all these taxes. A tax on money leaving the country would discourage borrowing from overseas, would discourage imports of goods that could otherwise be made here and would discourage the flood of money being shunted in to and out of the country to meet local requirements for audit here and overseas, which completely upsets the interest rate balance. This type of corporate window dressing and short term money market sharkery is determining our future under the current Government's inaction. The simultaneous lowering of our interest rates would also help to discourage international speculation on Australia's dollar value and would enable local business to finance productive investment and employment. Any accompanying fall in our exchange rate would help to make our exports more competitive and establish the true competitiveness of Australia's labour and capital on world markets. We should bite the bullet of tax reform while we still have a chance to come out of our economic nosedive without undergoing the traumas facing Brazil, Mexico and other Latin American countries which like ourselves relied on the types of solutions put in place by both the previous and present governments, such as exporting raw materials to finance governments' local borrowings. After the amendments by the Australian Democrats and the Opposition, I will support the Bill-not because I think it is a good Bill but because, as amended, it will contribute to a fair tax system that will benefit honest citizens and restore the equity that was removed from the tax system by the exploitation of the fringe benefit loopholes in our ailing tax system-a system set up and propped up by successive governments. Senator WALSH(Western Australia-Minister for Finance)(3.52) —I have not heard a great deal of the debate but I think I can take for granted the course that it took. As usual the Liberal Party of Australia is vigorously supporting a privileged minority of people who have been the beneficiaries for many years of rorts in the taxation system. It is squealing because the rorts that the Liberal Party has supported are now to be ended. The Liberal Party has picked yet another lemon. It went in passionately to protect the free lunch. But, of course, the reality is that the 90 per cent of Australians who either buy their lunch or take their lunch to work in a brown paper bag were heartily sick of subsidising the self-indulgence of a small minority of people and so they were entirely behind the Government's legislation to end the free lunch. Likewise, the clear majority, indeed the vast majority, of Australian people have shown that they are in favour of closing off this other tax rort that has imposed burdens on the rest of the taxpayers. I want to clean up a couple of specific points later but I want to make one thing very clear. As is usual when the lackeys of privileged minorities which have been the beneficiaries of rorts in the system are presenting a case or a pseudo-case, they claim to be concerned about the effects of the ending of the rort on other people instead of the effects on themselves of the ending of the rort. We have seen this-indeed, I referred to it earlier in Question Time today-with respect to the bottom of the harbour tax legislation introduced by the Fraser Government. We were told repeatedly by those members of the Liberal Party who opposed their own Government's legislation that the tax that the bottom of the harbour tax evaders had evaded could not be collected because those people did not have the money. We were told that they had sunk all the money into productive investment, generating employment for the workers. Indeed, one could summarise that argument as an assertion that the tax evaders were really philanthropists in disguise who were interested not in feathering their own nests but, in true philanthropic style, in providing jobs for the workers. It was further asserted that if the legislation were passed and the tax collected there would be bankruptcies by the hundreds or the thousands and retrenchments by the hundreds of thousands because businesses would have to close. What happened of course was that, at the very time the money started to be collected, employment began to grow again and it has continued to grow right up until the time of issue of the lastest available employment statistics. I understand that Senator Button wishes to introduce a Bill, so I seek leave to continue my remarks later. Leave granted; debate adjourned. Motion (by Senator Button) agreed to: That leave be given to introduce a Bill for an Act to provide income tax concessions for expenditure on research and development, and for related purposes. Bill presented by Senator Button, and read a first time. Standing Orders suspended. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(3.57) —I move: That the Bill be now read a second time. I seek leave to continue my remarks later. Leave granted; debate adjourned. Debate resumed. Senator WALSH(Western Australia-Minister for Finance)(3.58) —I do not intend to speak for very much longer but I think it would be remiss of me in closing this debate not to draw attention to an excellent article on this very subject written by Ross Gittins and published in the Sydney Morning Herald last Wednesday. I wish to quote a few passages from it. The article refers to the bottom of the harbour legislation of which I have been speaking. Mr Gittins says: I can remember back to the tumultuous days of late 1982, for example, when half the Liberal Party tried to dissuade the other half from using retrospective legislation to collect some of the tax lost in bottom-of-the-harbour companies. One of the many arguments used at the time was that the tax dodged by the people who sold their companies to bottom-of-the-harbour merchants had been ploughed back into their businesses. If the Government went back many years later and demanded the tax, lots of small businesses would have to fold up and lay off all their workers. Well, the recoupment legislation went through and the back taxes were collected, but if lots of firms went bust in the process we never got to hear about it. I can remember all the hoo-ha over the decision to require builders to withhold income tax from payments to their sub-contractors from September, 1983. Remember? It was going to cause the price of homes to skyrocket and cause massive unemployment in the building industry? The tax went ahead but the sky didn't fall in after all. And last September, remember how the removal of tax deductibility for business lunches was going to cause more than 7,000 restaurants to close within the next six months and more than 10,500-or was it 80,000-jobs would be lost? And so on and so on. All those spurious and specious arguments were used in the first instance by half the Liberal Party and in the later instances by all the Liberal Party against all those tax reform measures. On every occasion the Liberals sought to preserve a lax tax system which was not only unjust but also contained severe and significant distortions of economic efficiency. Finally, I must put on the record the fact that employers are not the innocent victims which the opponents of this legislation have purported them to be. Employers who were eroding the tax base through the use of this method were rorting the system by paying income in kind, thereby avoiding the tax on that income. They cheated taxpayers in general and then split the gains among themselves and the employees with by far the greater part going to themselves. If these people genuinely claim that the burden on the private sector of administering this tax is too onerous-I have heard ridiculous figures as high as $400m for the cost of implementing it-they have the remedy in their hands. They can cash out the benefits, as they should always have done-withdraw the benefits, increase the salary paid to the employee and have the employee pay the tax. That option is open to every employer who has been providing fringe benefits, to every employer who for years has been rorting the system by paying income in kind and thereby evading tax on it in the hands of either the employer or the employee. As I mentioned in Question Time the other day, the additional benefit is that the more employers cash out these benefits and have them taxed in the hands of the employees, as they always should have been, the fewer resources the Government will have to devote to enforcing the tax. I note today that after an attempt to retain some semblance of responsibility the Leader of the Opposition (Mr Howard) has felt it necessary, in order to prop up his shaky leadership, to go along with pressures from within the Liberal Party and promise to repeal this tax if the Liberals are ever returned to government. It is important to note for the record that that would add an extra $500m or $600m to the national deficit which the Liberal Party has already chalked up and which arises because of its promises to increase expenditure by $2 billion and its pre-existing promises to reduce taxation revenue by about $5 billion. That would increase the deficit by $7 billion. If the Opposition proceeded with the latest promise inflicted on Mr Howard about another $600m would be added to that. I will not say anything more about the specifics of the amendments. That will be considered in the Committee stage. A number of concessions have been negotiated by the Government, not always-indeed, rarely-with the agreement of the Government. Nevertheless the Government has accepted and agreed to a number of concessions and modifications to secure the major parts of this Bill and the revenue which goes with it, which will be required to deliver the tax cuts in 1986 and 1987. If this legislation were not passed it would not be possible to deliver in 1986 and 1987 the tax cuts which have been on the record for nine months. Question put: That the Bills be now read a second time. The Senate divided. (The President-Senator the Hon. Douglas McClelland) Ayes . . . . . . . . . . . 35 Noes . . . . . . . . . . . 28 —— Majority . . . . . . . . . 7 —— Aulich, T. McClelland, DouglasBlack, J. R. McKiernan, J. P. Bolkus, N. Macklin, M. J. Button, J. N. Maguire, G. R. Coleman, R. N. Mason, C. V. J. Colston, M. A. Morris, J. Cook, P. F. S. Ray, RobertCooney, B. Reynolds, M. Crowley, R. A. Robertson, E. A. Devlin, R. Ryan, S. M. Elstob, R. C. Sanders, N. K. Evans, Gareth Sibraa, K. W. Foreman, D. J. Siddons, J. R. Gietzelt, A. T. Tate, M. C. Giles, P. J. Vigor, D. B. Grimes, D. J. Walsh, P. A. Haines, J. Zakharov, A. O. Jones, G. N. (Teller) Alston, R. K. R. Hill, R. Archer, B. R. Knowles, S. C. Baume, Michael MacGibbon, D. J. Baume, Peter Messner, A. J. Bjelke-Petersen, F. I. Newman, J. M. Boswell, R. L. D. Parer, W. R. Brownhill, D. G. C. Puplick, C. J. G. Carrick, Sir John Reid, M. E. (Teller)Chaney, F. M. Sheil, G. Collard, S. J. Teague, B. C. Crichton-Browne, N. A. Townley, M. Durack, P. D. Vanstone, A. E. Guilfoyle, Dame Margaret Walters, M. S. Hamer, D. J. Watson, J. O. W. Coates, J. Kilgariff, B. F. Childs, B. K. Jessop, D. S. Maguire, G. R. Short, J. R. Richardson, G. F. Withers, R. G. Chipp, D. L. Lewis, A. W. R. Question so resolved in the affirmative. Bills read a second time. Senator Walters —Mr President, I take a point of order. I believe that Senator Sanders was not in the House during the division and he does not have a pair. Does that mean that his vote- The PRESIDENT —Order! There is no point of order. Ordered that consideration of the Bill in Committee of the Whole be an Order of the Day for the next day of sitting. Senate adjourned at 4.11 p.m. The following papers were tabled: Lands Acquisition Act-Statement by the Minister describing land acquired by agreement under sub-section 7 (1) of the Act, for specified public purposes. Public Service Act-Determinations 1986 Nos 27, 34, 35, 36. The following answers to questions were circulated: (Question No. 814) Senator Mason asked the Minister for Resources and Energy, upon notice, on 12 February 1986: (1) How many statutory authorities currently exist under the auspices of the Minister's Department. (2) What are the names of these authorities. (3) What appeal mechanisms, if any, exist for the general public to lodge a complaint against these authorities. (4) If it is proved that any member of staff of any of these authorities is guilty of incompetence, what action, if any, could be taken by a member of the public to sue the authority for compensation; if it is not possible to sue the authority, why is that the case. (5) How many cases concerning these authorities are currently before the Administrative Appeals Tribunal, and what is the delay at present between the listing of a case and its hearing before the Tribunal. (6) If any statutory authority under the Minister's Department cannot be sued, will the Minister consider amending the relevant legislation to make this possible. Senator Gareth Evans —The answer to the honourable senator's question is as follows: (1) There are five statutory authorities within the administrative arrangements for the Resources and Energy portfolio. (2) Australian Atomic Energy Commission; Joint Coal Board; River Murray Commission; Snowy Mountains Hydro-electric Authority; The Pipeline Authority. The River Murray Commission is an intergovernmental authority established under the River Murray Waters Agreement (1982) between four Governments and as such is distinct from Commonwealth authorities which have direct responsibilities to the Minister for Resources and Energy. The Joint Coal Board is an authority constituted under an arrangement between the Governor-General and the Governor of New South Wales pursuant to the Coal Industry Act 1946 of the Commonwealth and the Coal Industry Act 1946 of the State of New South Wales. (3) There are no formal appeal mechanisms incorporated in the Acts which constitute the statutory authorities or in the River Murray Waters Agreement. Members of the public may, however, seek redress against any of the statutory authorities by way of the same channels as other Commonwealth bodies-e.g., the Administrative Appeals Tribunal, and the Commonwealth Ombudsman. (4) The Attorney-General's Department has advised that, unless an authority is statutorily protected, it is liable for the torts of servants committed in the course of their duty. Where employees acting in the course of their duty are incompetent and, as a consequence, loss is suffered by a member of the public, it will commonly be found that the act or omission which was seen as incompetent was also tortious. In the absence of a denial of liability, the negligent giving of erroneous advice is tortious where the advice is given by a person having a duty of care to one who suffers foreseeable damage as a result of reasonably relying on that advice. Many other forms of incompetence would also be tortious, but each case would need to be considered on its own facts. With the exception of the River Murray Commission, the statutory authorities listed in part (2) of this answer are, as provided in their respective constituent Acts, either bodies corporate or (in the case of the Snowy Mountains Hydro-electric Authority) a corporation sole, and capable of suing and being sued in their own names. These authorities are not statutorily protected against liability in tort. The River Murray Commission cannot be sued, as it is not an incorporated body. A member of the public may sue the individual Commissioners of the River Murray Commission or members of its staff. (5) None. (6) The question of incorporating the River Murray Commission, and hence rendering it liable to be sued, was considered by the four participating Governments in 1982, but it was found impracticable to give the River Murray Commission corporate status at that time. (Question No. 976) Senator Vigor asked the Minister representing the Prime Minister, upon notice, on 13 March 1983: (1) What Aboriginal Bicentennial projects have been approved to date. (2) When were these projects approved. (3) Has the Central Zone Remote Commercial Television Service project proposed by Imparja been dealt with any differently from other projects; if so, what differences have occurred and why. (4) If the Australian Broadcasting Tribunal grants the licence for the Central Zone Remote Commercial Television Service to Imparja what level of support will be forthcoming under the Australian Bicentennial Authority's Aboriginal program. Senator Ryan —The Minister Assisting the Prime Minister for the Bicentennial has provided the following answer to the honourable senator's question: (1) Two Aboriginal Bicentennial projects have been approved to date by the Board of the Australian Bicentennial Authority (ABA) from within the funds set aside by the Authority for its Aboriginal and Torres Strait Islander Program for 1988. They are: (i) a publication by the Australian Institute of Aboriginal Studies, titled ``After 200 Years''; and (ii) an Aboriginal and Torres Strait Islander Education Resource Book proposed by the National Aboriginal Education Committee. (2) (i) ``After 200 Years'' was approved by the Board at its meeting on 15-16 August 1985. (ii) The Aboriginal and Torres Strait Islander Education Resource Book was approved by the Board at its meeting on December 1985, subject to the availability of funds from the National Aboriginal and Torres Strait Islander Program. (3) Procedures for assessing projects under the ABA's National Aboriginal and Torres Strait Islander Program have been developed over time. In December 1985 the ABA established an Assessment Panel to make recommendations to the ABA Board on the various projects seeking funding. The process allows for comment to be made by the Minister for Aboriginal Affairs and his Department. The Assessment Panel had not been established at the time the two projects, ``After 200 Years'' and the Education Resource Book, were initially considered. The proposal from the Central Australian Aboriginal Association/Imparja was considered by the Assessment Panel on 6th and 7th February 1986, together with a number of other applications for funds. The panel recommended support for the CAAMA/Imparja application on the condition that the advice of the Minister for Aboriginal Affairs be sought separately to the other proposals and prior to consideration by the Board of the ABA. This recommendation reflected the recognition by the panel that in order for Imparja to be a successful applicant for the Central Zone Remote Commercial Television Licence, decisions were required which were beyond the sphere of the ABA. (4) $2.5 million. (Question No. 1015) Senator Bolkus asked the Minister for Resources and Energy, upon notice, on 10 April 1986: (1) What has been the annual expenditure on uranium mining by way of Federal and State Government subsidies in the last 10 financial years. (2) What was the revenue raised through royalties to the States, company tax and elsewhere from uranium mines during this period. Senator Gareth Evans —The answer to the honourable senator's question is as follows: (1) No subsidies on uranium mining have been paid by the Commonwealth in the last ten years. I am not aware of any subsidies having been paid by State Governments. (2) Royalty Payments: Energy Resources of Australia Ltd and Queensland Mines Ltd* To N.T. Govt To ABTA Total $'000 1980-81... 923 1,845 2,768 1981-82... 1,175 3,084 4,259 1982-83... 3,723 11,677 15,400 1983-84... 4,404 13,741 18,145 1984-85... 4,116 12,947 17,063 (all other years, nil) *Paid to the Commonwealth then disbursed to the Northern Territory Government and the Aboriginals Benefit Trust Account (ABTA) MARY KATHLEEN URANIUM LTD+ $'000 1980... 1,125 1981... 664 1982... 234 1983... 387 1984... 511 1985... 106 (all other years, nil) +Paid to Queensland Government. Company Tax Information on individual company tax payments is confidential. The following data were obtained from annual reports. ENERGY RESOURCES OF AUSTRALIA LTD $'000 1984-85... 15,634 (all other years, nil) QUEENSLAND MINES LTD pre-1980, nil post-1980, not available as accounts are consolidated with parent company, Pioneer Concrete Services Ltd MARY KATHLEEN URANIUM LTD $'000 1983... 11,794 1984... 10,950 1985... 5,122 (all other years, nil) Duty paid under Customs Tariff (Uranium Concentrate Export Duty) Act 1980. ENERGY RESOURCES OF AUSTRALIA LTD AND QUEENSLAND MINES LTD $'000 1980-81... 61 1981-82... 209 1982-83... 339 1983-84... 370 1984-85... 366 (all other years, nil)