Tuesday, 10 June 1986 The PRESIDENT (Senator the Hon. Douglas McClelland) took the chair at 10 a.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully shows: That we strongly support ``The A.C.T. Smoking and Tobacco Products Advertisements Prohibition Bill'' introduced by Senator Evans, because it represents the first positive national step towards the eventual elimination of widespread serious ill health caused by smoking tobacco. by Senator Vigor (from 75 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 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 Richardson (from 62 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 Senator Reid (from 206 citizens). Petitions received. Senator PUPLICK(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes that on 5 June 1986, when dealing with legislation to impose significant tax increases upon the people of Australia, Senator Siddons, an Australian Democrat Senator for the State of Victoria, was absent for a series of crucial divisions because, in the words of his Deputy-Leader (Senator Haines) he had `wizzed off to a Board meeting of his own company' and `overlooked the small matter of circulating the amendments' for which he was responsible (see Hansard, 5 June 1986, p. 3500); (b) calls upon Senator Siddons to explain to the Senate, to the people of Australia and to his constituents in Victoria his extraordinary allocation of priorities; and (c) condemns Senator Siddons for placing his private interests before his public duty. Senator VALLENTINE(Western Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes the arrival in Melbourne on 9 June 1986 of two United States warships, one of which, the USS Rathburne, is capable of carrying nuclear weapons; (b) recognises that since 23 June 1983, the State of Victoria has been a Nuclear Free Zone; (c) condemns the Federal Government for ignoring the wishes of the people of Victoria by allowing these warships into the port of Melbourne; and (d) calls on the Australian Government to follow the example of New Zealand in banning all nuclear-powered and nuclear-armed ships from our ports. Senator MICHAEL BAUME(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) calls on the Federal Government immediately to adopt as a matter of extreme urgency the Federal Opposition's 5 point plan to rescue Australia from the `hole' that the Treasurer (Mr Keating) now admits the Australian economy is in, which requires: (i) a June mini-Budget to cut Government spending, (ii) abandonment of the 3 per cent productivity claim now before the Conciliation and Arbitration Commission; (iii) a 12 month postponement of the 2.3 per cent national wage case, (iv) abandonment of new taxes on business, including the capital gains tax, the fringe benefits tax and the foreign tax credit scheme, and (v) relaxation of foreign investment controls; and (b) calls on the Prime Minister (Mr Hawke) to announce these measures in his address to the nation on Wednesday, 11 June 1986. Senator COONEY(Victoria) —I give notice that, seven sitting days after today, I shall move: That the Southern Bluefin Tuna Fishery Management Plan (Amendment), as contained in Plan of Management No. 5 of 10 April 1986 and made under the Fisheries Act 1952, be disallowed. Senator GIETZELT(New South Wales-Minister for Veterans' Affairs) —Papers are tabled in accordance with the list circulated to honourable senators. With the concurrence of the Senate, I ask that the list be incorporated in Hansard. Leave granted. The list read as follow- 1. Harkins `Inquiry into Aboriginal Legal Aid'-text of a statement by the Minister for Aboriginal Affairs. 2. Mechanisms for Technology Transfer into Australia-report to the Prime Minister by Astec prepared by the Technology Change Committee-pursuant to sub-section 6 (2) of the Australian Science and Technology Council Act 1978. 3. Taxation Statistics 1983-84-supplement to the 63rd report to Parliament of the Commissioner of Taxation-pursuant to section 14 of the Income Tax Assessment Act 1936 and section 140 of the Taxation Administration Act 1953. 4. Housing Assistance Act 1984-annual report 1984-85-pursuant to section 16 of the Housing Assistance Act 1984. 5. An Investigation of Tasmanian Freight Equalisation Scheme Assistance Rates-Inter-State Commission report-pursuant to section 10 of the Inter-State Commission Act 1975. 6. Aboriginal Hostels Limited-annual report 1984-85. 7. Indigenous Resource Rights and Mining Companies in North America and Australia-report. 8. Building and Construction Industry Long Service Leave Board-annual report 1984-85. 9. River Murray Commission-annual report 1985-pursuant to section 14 of the River Murray Waters Act 1983. Senator WALSH(Western Australia-Minister for Finance) —I table a document relating to Proposed Policy Guidelines for Statutory Authorities and Government Business Enterprises, and I seek leave, Mr President, to make a statement relating thereto and to incorporate the statement in Hansard. Leave granted. The statement read as follows- I present for the information of the Parliament a Document entitled Statutory Authorities and Government Business Enterprises-Proposed Policy Guidelines. In doing so I make a statement regarding the Government's view of the role of its statutory authorities and business enterprises and the principles underlying the proposed guidelines. Introduction The Hawke Government was elected in 1983 on a platform which placed high priority on reforming Government administration. The Government's Policy Discussion Paper on Statutory Authorities and Government Business Enterprises is the fourth in a series which began with Reforming the Australian Public Service and was continued with Budget Reform and Reform of Commonwealth Primary Industry Statutory Marketing Authorities. The Policy Discussion Paper outlines the proposed policy guidelines for the future management, performance and public accountability of Commonwealth statutory authorities and government business enterprises. As with the three previous papers, the Government wishes to encourage wide consultation with the community on the proposals. Owing to the very great diversity in the functions and responsibilities of statutory authorities, the general policy guidelines inevitably will need to be tailored to the circumstances of individual authorities. The purpose of the policy review process of which this Discussion Paper forms a part is to develop a coherent set of principles and mechanisms for application in the review of individual authorities. When work first started on the Policy Discussion Paper, it was not envisaged that its release would coincide with a political debate on privatisation. Unfortunately, the politicisation of the issue has detracted from sensible, balanced discussion. It also has had the damaging effect of polarising opinions. Those at the conservative end have wanted to privatise just about every profitable enterprise, though conspicuously, they are not so enthusiastic about privatising the unprofitable ones. Some at the progressive end seem to favour public ownership at all cost-simply because the conservatives want privatisation. The previous Government displayed antipathy towards statutory authorities and government business enterprises. Through their neglect they starved these organisations of capital, stifled managerial incentive and demoralised the workforce. Now the response of the present Opposition is to privatise-indicating the same lack of concern about efficiency as was evident during their seven years in Government. The intrusion of ideology into the debate has promoted the myth that private ownership equates with competition and the absence of regulation. Too often this has been used simply as a smokescreen behind which proposals have been developed for the liquidation of public assets to fund promised tax cuts or expanding government activity. Many of these proposals have drawn from overseas models, especially from the experiment in privatisation in the United Kingdom. It is therefore most illuminating to look at the United Kingdom Government's record on privatisation. The United Kingdom record shows that privatisation has not led to deregulation; it has not led to deregulation; it has not led to increased competition. Instead, regulation has been maintained with privatisation or even increased. Unwilling to relinquish control, the United Kingdom Government has retained substantial equity or special voting rights in companies it has privatised. For the same reason it has prevented concentration of private ownership, going so far in the case of privatising British Telecom to offer discounts on telephone bills to customers who agreed to hold their shares rather than re-sell them. And quite blatantly the United Kingdom Government has barred competition in markets served by privatised companies and has established watchdog bodies equipped with a whole raft of regulations to control markets in which privatised companies are operating. A long list of academics has observed that the United Kingdom Government has sacrificed de- regulation in favour of privatisation. They have been led to conclude that conflicts will arise between achieving efficiency and obtaining a high price for a government firm, that privatisation, as it turns out in practice, in fact inhibits liberalisation, that when the test comes, it is far from clear that the government's free enterprise instincts are anything like as committed to competition as they are to private ownership and finally, that the conflict between privatisation and liberalisation is no longer a conflict: it is a rout. The titles of these papers are available from the Office of the Minister of Finance. The conflict to which these academics and others have referred stems from the dilemma facing governments wishing to privatise for short-term gain: sale proceeds are maximised by insulating the privatised business from competition through government regulation, so that de-regulation would reduce the price the Government could expect to obtain from privatising the company. The Hawke Labor Government has demonstrated its resolve to remove unnecessary regulation so as to encourage efficiency and with it, sustainable economic growth. Efficiency is the real issue, not private or public ownership. The privatisation dogma has diverted attention from the question of efficiency. The Policy Discussion Paper on Statutory Authorities and Government Business Enterprises attempts to return public discussion to the question of efficiency in government authorities. What are statutory authorities and government business enterprises? A statutory authority is an organisation established by an Act of Parliament to provide services to the community. There are more than 250 Commonwealth statutory authorities. These authorities collectively deliver an enormous range of services, from scientific research to television broadcasting and from compiling national accounts to displaying works of art. Most statutory authorities derive little or no revenue from the services they deliver, relying heavily on the Commonwealth Budget for funding. But there are exceptions in the form of two special types of statutory authorities: statutory marketing authorities (SMAs) and government business enterprises. SMAs are financed through levies paid by growers or from the sale of produce. Government business enterprises sell their services and derive a substantial proportion of their revenue from those sales. Although the absolute amounts of Budget funding for government business enterprises may be large, Budget funding usually represents a much smaller proportion of total funding of government business enterprises than is the case with ordinary statutory authorities. Some government business enterprises, of course, are completely independent of the Budget. Ordinary statutory authorities include many familiar names-the Australian Broadcasting Corporation, the Commonwealth Scientific and Industrial Research Organisation, the Australian Conciliation and Arbitration Commission, the Australian National Gallery, the Australian Bureau of Statistics, the National Parks and Wildlife Service-and some not so well known-the Office of Australian War Graves, the Anglo-Australian Telescope Board and the Oilseeds Research Council. Ten SMAs have been established within the Commonwealth Primary Industry portfolio at the request of primary producers. They co-ordinate the marketing of primary produce. About 80 per cent of rural exports are derived from industries covered by SMAs. There are eighteen major Commonwealth government business enterprises. The biggest and possibly best-known are Telecom, OTC, Australia Post, the Commonwealth Bank, the Australian National Line (ANL), the Australian National Railways Commission (AN), TAA and Qantas. These eight account for well over 90 per cent of all employees in Commonwealth government business enterprises. Some government business enterprises are established as public companies fully owned by the Commonwealth (eg Qantas). Statutory authorities and government business enterprises in our mixed economy A threshold question in reviewing Government policy on statutory authorities and government business enterprises is why we have these organisations. Government departments are the primary mechanism for the implementation of government policy. They are subject to direct ministerial direction. But there are reasons for looking beyond the departmental system for the delivery of some publicly-provided services. In order for commercial and some other services to be delivered effectively and efficiently they must be free of the day-to-day control of Ministers and indeed, of government departments. Yet there is no doubt that governments should have the power to ensure that authorities and government business enterprises comply with Government Policy. In other instances, statutory authorities have grown up through a series of ad hoc government decisions, without prior consideration in detail of the national benefits and costs of their establishment. Ours is a mixed economy, though it is worth pointing out that among the twenty-three Western industrialised countries (the OECD countries) Australia ranks about sixth lowest in terms of the share of the public sector in the national economy. There has been a rather unproductive political debate in Australia and overseas over the optimal size of government. It is asserted in some quarters that Australia has Big Government and that this ought to be reduced to make room for the private sector. Not only is this assertion in conflict with the facts, it is founded on ideological prejudice rather than on any rigorous comparison of the performance of public and private enterprises. Extensive empirical research has been unable to establish any systematic difference in the efficiency of public and private enterprises: excellent performers can be found in both sectors, as can abject failures. Government business enterprises provide infrastructure and services upon which private industry and commerce depend. In addition to providing services on which an economic rate of return on investment legitimately could be expected, government business enterprises often have been assigned by the Commonwealth the responsibility of extending services to remote areas and to disadvantaged groups who otherwise would not have access to them. The fulfilment of these ``community service obligations'' (CSOs) most commonly has been required in the case of natural monopolies. Among the most striking examples of natural monopolies are many of the services provided by Telecom and Australia Post. Where it is Commonwealth Government policy for these services to be extended at reasonable cost to remote areas and disadvantaged groups, the case for a private unregulated company completely disintegrates. Profit maximising private firms would provide virtually no postal or telephone services outside of the cities and major towns. Charges needed to fully recover costs would be so high in country areas as to choke off virtually all demand. Few Australians would accept a system which denied telephones or mail to a significant proportion of the population and about 95 per cent of the country. The privatisers' response to that difficulty has been that the private firm could be subsidised from the Budget in providing unprofitable ser-vices. While that is true, it destroys the purported rationale of privatisation-that the profit motive will induce a lower cost, more efficient service. A privately-owned firm with costs underwritten by government has no profit-related interest in efficiency or cost control. Many of the Commonwealth statutory autho-rities have established a high reputation in the community for the delivery of services. And the return on assets achieved in recent years by government business enterprises such as OTC and Telecom would make many private business managers envious. Australia Post, the Commonwealth Bank, Qantas, TAA, the Australian National Line (ANL) and the Australian National Railways Commission (AN) all have made steady improvements in efficiency under the present Government following years of neglect under the previous Government. To illustrate, new guidelines were issued in May 1984 to the directors of Qantas, giving the company greater freedom and flexibility in managing its commercial activities. The new guidelines complemented other measures taken by the Government to place the operations of Qantas on a surer commercial footing. The company is now trading profitably again after a number of years of losses. TAA also has been given far greater flexibility in management and greater responsibility in its commercial operations. Following an injection of capital in 1983, TAA has returned to profitability, with a net profit of $3.9m in 1983-84 and of $30.0m in 1984-85. The Government has initiated policies that are revitalising ANL. In 1983 ANL was virtually bankrupt. It is now becoming a successful public enterprise as a result of a new commercially oriented legislative charter, restructured top management, a generally responsible approach by employees and their unions, and a strengthening of its capital base. ANL achieved a record operating profit of $41.5m in 1984-85, contrasted with its record operating loss in 1982-83 of $18.8m (though ANL is not out of the woods yet, having accumulated losses of $110m). AN too has been given an updated commercially oriented charter. Over the past three years AN has reduced its call on the taxpayer by 42 per cent in real terms because of improved efficiency. But there is no room for complacency. The development of general policy approach to statutory authorities and government business enterprises not only will help in recognising and acknowledging the fine performance of many of these organisations, it will help identify areas for further improvement and will provide a framework for addressing the problems of those organisations which have not performed well. The alternative-of selling off the good performers and further subsidising the poor performers-is nothing but a formula for running down the stock of public assets. It is an alternative which rewards inefficiently by subsidising it and penalises efficiency by privatising it. General principles underlying the proposed guidelines Statutory authorities and government business enterprises tend to attract attention when they perform badly; good performances usually go unnoticed. This has encouraged conservative, risk-averse management and the imposition of extra controls by government. Shackled with these controls, management often has become demo-ralised and performance has worsened, not improved. In other instances, public organisations, sheltered from market discipline, have grown inefficient and unresponsive to public demands. This sheltering from the market can create opportunities for the dissipation or diversion of government business enterprise surpluses away from consumers and taxpayers. This could allow powerful employee groups to benefit-and allow politically expedient governments to porkbarrel in assisting sensitive electorates and powerful supporters. These organisations also can be milked for revenue, starved of capital or put too far into debt by governments with short time horizons and immediate budgetary problems. A new generally-applicable approach is needed, an approach designed to provide incentive, to enhance efficiency and to improve public accountability. The Government wishes to establish a degree of deregulation and a pattern of public enterprise which will best enhance the productive and distributive performance of the economy as a whole. As part of its general policy of removing unnecessary regulation, the Government proposes to reduce existing direct controls over statutory authorities and government business enterprises where it is satisfied with progress on the performance and public accountability of those organisations. As reflected in its policy measures applied already to a number of key authorities, the Government believes that these organisations should have responsible and enterprising management. Its proposed approach aims to encourage flair and managerial excellence, rather than conservative, unimaginative mediocrity. Consistent with this, the Government wishes to ensure that these organisations are efficient and publicly accountable, and that they comply with government policy. In view of the diversity in assigned responsibilities, structure and funding of statutory authorities, it is appropriate that there be some differences in the policy guidelines for the various types of authorities. Accordingly, proposed guidelines have been developed to apply to ordinary statutory authorities, and special guidelines have been developed for SMAs and government business enterprises. Proposed guidelines for ordinary statutory authorities The Government proposes to make sparing use of statutory authorities when new or upgraded functions relating to the normal business of government are to be performed. It believes that for many purposes Government departments have the decided advantage of making the relevant Minister directly responsible to the community for the effectiveness and efficiency of administration. It also has the cost-saving advantage of making use of long established administrative machinery and procedures, rather than necessitating the establishment of new machinery and procedures each time a new function is to be performed. When establishing or reviewing a statutory authority the Government intends that: The authority's relationship with the responsible Minister, its governing board and other government agencies will be specified clearly in legislation. The authority's charter, its reporting obligations and its procedures for funding and financial management also will be specified clearly in legislation. Ministerial powers of direction, when used, will be in writing, and will be reported in the authority's annual report to Parliament. Financial and reporting arrangements will be standardised. Revised arrangements governing the creation and control of subsidiaries of statutory authorities will be adopted, including requirements for ministerial approval and notification to Parliament. As appropriate to the circumstances of individual bodies, `sunset' provisions will be included in the authorities' enabling legislation. Proposed guidelines for statutory marketing authorities When establishing or reviewing SMAs the Government intends that: Boards will be of workable size (at most nine to eleven members), with all members being selected on merit, and with members serving in the corporate interests of the organisation. Boards generally will comprise a Chairperson and Government Member selected by the Minister, and other members with special expertise selected by a statutory selection committee. Management will be required to adopt corporate planning techniques in order to chart the performance of SMAs, thereby placing the Minister for Primary Industry in a better position to monitor and evaluate their performance. SMAs will be given greater autonomy, with their Boards being authorised to direct their business along commercial lines, free from day-to-day government oversight. Accountability of SMAs to the industries they serve will be strengthened either through Annual General Meetings or formal reporting arrangements to representative industry bodies. Further details of the Government's policy framework for statutory marketing authorities are provided in Chapter IV and in the paper released in January 1986 by the Minister for Primary Industry entitled `Reform of Commonwealth Primary Industry Statutory Marketing Authorities: A Government Policy Statement'. Proposed guidelines for government business enterprises The proposed approach to government business enterprises has three specific components: the preparation of strategic plans including financial performance objectives; a reduction in direct controls over the day-to-day operations of enterprises; and improved quality of information for the assessment of enterprise performance. In the application of this program of efficiency, decontrol and accountability the Government intends that: Existing direct controls will be reduced on the basis of a case-by-case assessment in the context of strategic planning. Controls for possible consideration including contract approval ceilings, purchasing and offsets, and borrowings, including the subjection of enterprises' loan raisings to Loan Council procedures. Enterprises will be expected to provide to the responsible Minister a strategic corporate plan covering fixed periods of three to five years ahead for consideration and approval, in consultation with the Treasurer and the Minister for Finance as necessary of those aspects requiring formal Government approval. The plans will be prepared and revised at intervals not exceeding three years. They will incorporate economic and broad financial objectives, and technical operational targets. Enterprises will work towards a financial target established in advance by the responsible Minister in consultation with the enterprise. The financial target will supplement any other performance monitoring measures considered appropriate for the particular enterprise. In setting financial targets for achieving economic efficiency the Government will have regard for the trading conditions in the industry within which the enterprise operates, for its relative commercial and market strengths and for the extent to which, on the basis of Government policy, it is required to meet any community service obligations and to pursue other non-commercial objectives. Before allowance for the cost of meeting community service obligations the financial performance of enterprises should be sufficient to justify the long-term retention of assets in the enterprise rather than in some alternative use. The Government will be calling for further work by officials (chaired by the Department of the responsible Minister) with a view to translating this guideline into specific targets for individual enterprises. Where an enterprise, consistent with its statutory obligations, is able to generate a financial surplus after meeting all costs and interest charges then dividends should be paid to the Commonwealth. The extent of dividend payments from individual enterprise will depend, among other things, on the requirement of those enterprises to retain earnings to finance capital expansion, reduce borrowings or improve their cash flow position. In most cases it will be appropriate to provide for an enterprise to recommend a dividend payment to the Commonwealth and for the responsible Minister to accept or vary that recommendation. Some enterprises have no Commonwealth equity but instead make a return to the Commonwealth through fixed interest payments: This would need to be taken into account. Annual reports of enterprises will give account of performance against previously established goals, together with assessments of the cost of meeting community service obligations. The Government's guidelines for the form and standard of financial statements of Commonwealth undertakings will continue to be updated, refined and applied. Consultation with the community The Government invites comment on this discussion paper over the next three months. In the light of those comments the Government intends developing a White Paper on the subject, where its more detailed policies for reform will be articulated. Senator WALSH —I move: That the Senate take note of the paper. Senator CHANEY(Western Australia-Leader of the Opposition)(10.06) —I wish to speak to the motion. I have had only limited time to examine the ministerial statement which has been put down by the Minister for Finance (Senator Walsh) and I have not had a chance properly to scan the proposed policy guidelines which he has tabled. Senator Chipp —Frittering away your time at the outset. Senator CHANEY —That is quite true. I have had the statement for two hours, but because of party meetings and other matters, I have not had a chance to examine it in detail. This statement continues the record of the Hawke Government's thoroughly dishonest contribution to debate on important economic issues. I do not suppose we should be surprised at that because the dishonesty started with the National Economic Summit Conference, at which a first class economic debate took place in the parliamentary chamber, and was reduced to a communique which in no way reflected the views expressed by many of the participants in the economic summit. In recent months we have seen a whole series of attempts to debate issues that are of importance to Australia and to our economic future. We have seen tentative admissions by Ministers, including Senator Button, that we need to do something about labour market flexibility, but as soon as the issue is raised by the Opposition it is treated in a total political fashion by the Government, instead of the Government trying to come to grips with the very real problem that Australia faces in its present economic circumstances. What we have today from Senator Walsh is just a rehash of a speech that he gave last February. We were told at that time there was to be a release of these papers in March. We have waited three months and nothing new has been produced in this statement. The supreme irony of the statement is to be found on page 2 where the Minister says: Unfortunately, the politicisation of the issue- he is referring to the issue of privatisation- has detracted from sensible, balanced discussion. If ever there were a case of crocodile tears, it would be in that sentence of the Minister's where he is expressing the idea that it is unfortunate that the issue of privatisation has been politicised, when clearly the issue has been politicised by the Government. One only has to go back to last December to find that the Australian Labor Party is reported as having decided to organise among Public Service unions a campaign of opposition to privatisation policies and a report that the ALP National Secretary, Mr Bob McMullan, had approached one of the largest Federal public service unions and sought the service of a full time official to organise the campaign. It is true that the issue of privatisation has been politicised-against the national interest and the interests of consumers-and those who have politicised it have been the ALP, and not least the leading members of this Government. The debate should be about the benefits that can be provided for Australian consumers and taxpayers. The real issues are as to the extent to which we can promote efficiency in the public sector. But, instead, the ALP has been intruding ideology into the debate and seeking to score cheap political points. That has occurred at both State and Federal levels. In my State of Western Australia in the last State election campaign great use was made of the issue of privatisation by the State Labor Party. Letters were written to every employee of every statutory authority warning people that they would lose their jobs and so on. Within a month of returning to government at the State level in Western Australia, the Labor Party proceeded to allow private interests to be taken up in the Rural and Industries Bank of Western Australia. This Government has taken some steps to reduce the impact of the public sector which have had the support of the Opposition-for example, the sale of the Belconnen Mall. We had the intrusion of the private sector into the war service homes area. On occasions, the Government itself has made motions towards greater use of the private sector and trying to get greater efficiency, but at the political level it has done nothing except try to score points in this debate, which ought to be about how we can best benefit the people of Australia who pay for the greater statutory corporations which are part of the life of this country. What is said in the statement on page 3 is that we have had the intrusion of ideology into the debate and that this has promoted the myth that private ownership equates with competition and the absence of regulation. There is a very heavy burden in this statement which suggests that the Opposition is trying to assert that private ownership of itself is what the privatisation debate is about. The fact of the matter is that the Liberal and National parties consistently in this debate have stressed competition as the essential prerequisite for improvements in efficiency and service. Ownership is an important but, in fact, a second-order condition in the privatisation debate. The principles which have been adopted by the Opposition in this matter make it clear and state: The fundamental principle underlying a policy that returns functions from the public to the private sector is that competition ensures better and more efficient delivery of goals and services to consumers than centralised decision-making. Only last week on behalf of the Opposition I took part in a program on this issue broadcast on the Australian Broadcasting Corporation. I said: I think it is very important to note that the Opposition takes the view that it is really not ownership that determines efficiency, it is whether or not there is competition. That has been central to the statements made by Mr Carlton, who has spoken often on behalf of the Opposition on this subject, and by Mr Howard, who also has spoken often on this subject. We find the Minister saying on page 4 of his statement: A long list of academics has observed that the UK Government has sacrificed deregulation in favour of privatisation. Whatever the truth or falsity of that comment, it bears no relationship to the approach that has been adopted by the Opposition here in Australia. We must be looking at Australia's conditions and Australia's needs. If I may quote John Howard, he said: Privatisation is not an exercise in selling off the family silver in order to reduce expenditure. . . . . . . It is not an exercise in raising money to finance tax cuts. Those statements were made by the Leader of the Opposition in 1985. Those statements are utterly consistent with what has been said over and over again by Opposition spokesmen. It would not be any part of the policy of the Opposition to be selling assets which are owned by the Government of Australia to finance current expenditure. It has been made quite clear that we think that, if there is any transfer of ownership, the proceeds should be used to reduce the excessive and enormous public indebtedness which has so substantially increased under the present Government. Again, on page 4 of the statement the Minister said that efficiency is the real issue, not private or public ownership. As far as the Opposition is concerned this is part of a statement setting up a straw man. Efficiency is the real issue. Competition and the fostering of competition is the real issue if we are to benefit the consumers of Australia. I think that the preliminary concern that I would express about these guidelines which the Minister has tabled here today, and which will be available for public discussion and comment, is that there is nothing in the guidelines for government business enterprises which will ensure real economic efficiency. The major elements of the guidelines are that there will be a reduction in existing direct controls and the provision of strategic corporate plans for periods of three to five years which will incorporate economic and broad financial objectives and that enterprises will work towards a financial target. There is nothing in the guidelines which ensures cost efficiency and better consumer services. The imposition of a financial target by the Government does not improve incentives to be efficient. It could well be that the financial targets are simply met by raising charges or by providing fewer and poorer quality services. In the statement we find the Minister saying that private industry might well envy the return on assets that has been achieved by government business enterprises. On page 9 of the statement the Minister said: . . . the return on assets achieved in recent years by Government business enterprises such as OTC and Telecom would make many private business managers envious. Consumers of the products, the people who use the Overseas Telecommunications Commission and Telecom Australia, might well take the view that the return on assets achieved reflects a very significant increase in the charges that they have had to pay to get those returns for those statutory corporations. My response to the Minister is that the return on assets achieved by bodies such as OTC and Telecom is something that I am sure could be achieved by many private enterprise businesses if they had the monopolies which are enjoyed by Telecom and the OTC and the capacity to impose charges which will give those returns without having to be concerned about competition from some other sector which might cause them to lose customers because of those prices. We say that nothing in the guidelines which have been put down will do anything to ensure cost efficiency and to ensure that, by competition, consumers will get a choice between varied products which meet their requirements. The guidelines which have been put down by the Government could simply permit gross overcharging of consumers to the benefit of the balance sheets of the bodies that are being run by government. It is said at page 8 of the statement: It is asserted in some quarters that Australia has big Government and that this ought to be reduced to make room for the private sector. A little later it is stated: . . . not only is this assertion in conflict with the facts, it is founded on ideological prejudice rather than on any rigorous comparison of the performance of public and private enterprises. It is also stated: Excellent performers can be found in both sectors, as can abject failures. Recently a paper was produced by this Government-not the Opposition-which puts the cost of the burden of regulations on private enterprise in Australia at between $40 billion and $80 billion. The paper sets out the direct cost of government regulation but goes on to give an assessment-this paper was tabled in this place by the Government, not the Opposition-of the cost to the private sector of between $40 billion and $80 billion because of government regulation. Senator Gietzelt —You are not suggesting that that has happened in just three years of a Labor government? Senator CHANEY —I am suggesting that it is totally inconsistent with what is being said in the statement put down by Minister Walsh today that we do not have big government in Australia when the Government itself has put down an estimate of such an enormous cost being imposed by government on the private sector. If one looks at the Hawke Government in terms of whether it is a government that has promoted big government or small government one sees that personal income tax revenue has risen by 5.2 per cent a year in real terms since 1982-83, a much faster rise than the rise which occurred during the Fraser years. We find the selective use of international comparisons by the Hawke Government in terms of what the impact of government is. I simply make the point in this preliminary part of the debate on this statement that this Government, which in this statement is denying the proposition that there is big government in Australia, is a government which has presided over Budgets which have taken the largest share of our gross domestic product for the public sector in the history of Australia. The complaints which are heard about the size of government in Australia are about the excessive degree of regulation which occurs in the Australian economy, regulation which is estimated by this Government in a paper put down in this place to cost in excess of $40 billion per annum, a quite extraordinary figure. That means big government to most people who are complaining. The level of taxation, which has increased very substantially under this Government, is another area of complaint about big government in Australia. The Government also expresses concern in this statement-again, I think the concern is based on its attempts to politicise this issue rather than to deal with its merits-about remote area services. The Opposition has said over and over again that it will not consider changes to the arrangements which will prejudice the communications and other services which are provided for remote parts of Australia. The record of the Liberal and National parties in government has been one of showing very great concern for those Australians who live outside our great metropolitan centres. They are a minority of our population, they produce a great proportion of our national wealth in our exports and they are entitled, as Australians, to fair dealing in the provision of services. We have made it clear that we will not consider changes in the administration of these statutory authorities, for example, which will prejudice people who live in remote areas of Australia. What we have from this Minister is a statement which, as I have said, is just an attempt to politicise this issue. It also tries to suggest that no benefit will be gained in remote areas by applying the principle of competition. I say, in preliminary response to what has been put down in the statement by the Minister this morning, that in the existing arrangements which are used, for example, by the Australian Postal Commission for the provision of services in remote areas, there is already use of the private sector, use of the tender process and use of the principle of competition to try to reduce the cost of services which are provided, often at very great difficulty, in remote parts of Australia. Again, it is just a crude attempt to politicise what ought to be regarded as an important economic debate in the statements which are made about the possible impact on the remoter parts of Australia of any process of regulation reform, privatisation or better control of statutory authorities. In summary, the Opposition, whilst welcoming the preparedness of the Government to see public discussion on those proposed policy guidelines, is really disgusted by the attempt which has been made by the Minister in this statement to obscure the real issues which arise in this area by making political points rather than dealing with the issues of substance. I would like to make it quite clear that the Opposition approaches the issue of privatisation, which has been given such prominence in the Minister's statement, from the point of view of a number of fundamental points which I would like to make now. We believe that we can reduce the cost of the production of goods and the delivery of services if there is competition. We think that consumers benefit where there is competition in providing services for them. We see the provisions of competitive services as being central to improving what is done for consumers in Australia. We are not about creating private monopolies where public monopolies at present exist. We do not see any point in having a mere transfer of ownership; we think it is important that any chance of ownership should be something which facilitates the more competitive provision of services in Australia. If I could take one of the more obvious areas where we have sought to introduce greater competition, it would be in the area of airlines. We believe that the present arrangements reduce the services which are available to Australians and increase the costs of the services available. In our approach to this issue, we undertake to put the interests of consumers and taxpayers first and to ensure, as the Minister himself acknowledges in his statement, that the great statutory corporations which have been created by both Labor and coalition governments are administered not just for the benefit of those who work for them, but for the benefit of the people of Australia. I hope that there will be an opportunity later in this session to have a further look at the statement which has been put down by the Minister this morning and to have a further look at the proposed guidelines. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator SIDDONS(Victoria) —by leave-I wish to make a very brief statement on the Government's policy guidelines for statutory authorities. The Australian Democrats support in principle the efficient management of statutory authorities, statutory marketing authorities and government business enterprise generally. In referring to government businesses, we believe that great steps forward could be made if many of these businesses adopted the principles of participatory democracy, tried to decentralise their control and tried to cellularise their organisational structure so that small groups of people had clearly defined objectives, and the outputs of these groups were measures on a regular basis so that the groups themselves could be self-regulating and self-directing. The Australian Democrats tend not to support privatisation as a major policy initiative. So often the policy of privatisation means that everything the Government runs which is unprofitable should be retained by the Government and be a burden on the taxpayer and that profitable enterprises should be sold off to private enterprise. The deregulation of statutory authorities is a much more complex area than most people are prepared to admit, particularly those who want to deregulate everything. Often a lot of red tape is associated with the regulation of statutory authorities. Without doubt, this red tape should be cut. However, a case can often be made for new regulations for statutory authorities. Telecommunications is a prime example of this. We have in this country made many very effective technological advances in telecommunications which have particular application to South East Asia, China and India. Those advances have not been commercialised by Telecom Australia simply because, under its guidelines, Telecom is concerned with services and not with exporting technology. If Telecom's guidelines were changed, we could develop a very effective export industry by selling this country's telecommunications technology. Debate resumed from 28 May, on motion by Senator Grimes: That the Bill be now read a second time. Senator MESSNER(South Australia)(10.27) —The Superannuation Legislation Amendment Bill 1986 follows debate in the Senate last October when the Opposition, together with the Australian Democrats, defeated Government legislation to change the management of the Superannuation Fund Investment Trust for public servants. The Senate will recall that the main debate at that time centred on whether or not the management of the Investment Trust should be vested in what was substantially a trade union organised and elected body. Certainly, the Opposition had very little doubt that most of the measures in the Bill, apart from that section, had some merit. Indeed, it is time to improve and reform the circumstances under which the management of such vast amounts of money in the Superannuation Fund Investment Trust are handled. We have no real concern about the measures that are incorporated in the Bill now before the Senate, as this Bill excludes the original proposi- tion that management of the Investment Trust itself should be vested substantially in the hands of nominees of the Australian Council of Trade Unions. Just turning to that point, we should remind ourselves that clause 7 of the Bill that was defeated last year required that the Investment Trust be established with five members, one of whom would be a full time principal member nominated in accordance with sub-section (3) by the Minister. We had no particular complaint about that. Clause 7 also provided for a full time member to be nominated in accordance with sub-section (4) by the Australian Council of Trade Unions. It also provided for two part time members to be nominated in accordance with sub-section (4) by the Australian Council of Trade Unions. The last member was to be a part time member nominated by the Minister. So the outcome of all of this was that, of a total of five members of the board, the majority were to be direct nominees of the Australian Council of Trade Unions. The debate on that Bill occurred last October at a time when there was much discussion in the community about the trend towards union controlled superannuation in the community. While the Opposition clearly has no objection to the expansion of superannuation in the community generally, we do object to the way in which superannuation schemes are controlled. That was the core of our opposition to the clause establishing control of the Trust in the way proposed last year. Let me expand a little on the question of superannuation generally. The Liberal and National parties have in their platform at present a clear commitment to the expansion of superannuation to all workers. It is our view that that ought to occur, although not in a way which is imposed by the trade union movement through union action, or indeed by Government fiat following some kind of cosy deal between the trade union movement and the Hawke Labor Government. Rather, the Liberal and National parties see a commitment to personal involvement in superannuation schemes on the part of employees, in conjunction with employers, and of course with the Government assisting by way of allowing taxation deductions for contributions made to schemes and providing tax exemption for income derived from superannuation schemes. We hold that that kind of system is practical, and in fact it has achieved a great deal. Statistics on the expansion of superannuation in the work force speak for themselves. From 1972 until the present time the proportion of the work force actually covered by superannuation schemes has expanded-from around a quarter of the total work force 14 or 15 years ago to around half at this time. That has occurred not through pressure from the trade union movement, not through some kind of cosy deal between the unions and the Government, but through the enhancement of taxation incentives for people to become involved in their own superannuation schemes. I instance as a very real example the so-called section 23 F (2) (b) schemes, introduced by the Fraser Government back in 1980, which provided that people who were not members of employer-sponsored schemes could initiate their own schemes and contribute to them from their own funds if they so wished. They also covered people who were self-employed and who otherwise would have had no access to superannuation schemes. I am informed that the number of people in those kinds of schemes has risen dramatically, to around half a million at this time. They have been an outstanding success in encouraging more and more people in the work force to contribute towards their own long range retirement income fund. That kind of partnership is obviously successful and ought to be encouraged by any government. What we are observing now, though, is a rather radical change in the way in which superannuation in this country is to be set up. The Opposition has raised many times the sorts of pressures being imposed upon the economy by the union push for the use of the so-called productivity case decision for compulsory superannuation contributions to be made for all employees in the work force. We understand the Government is having problems working out how that might apply to public sector employees and to those it puts in what it calls a safety net area, but I will return to that in a moment. To pick up the point about the public sector, which is really the essence of this Bill, the Government has not explained to us in any way how it is that the new superannuation push to which it is party, in conjunction with the trade union movement and through the accord mark 2, will lead to a scheme which will cover people currently covered under Public Service superannuation arrangements. For that reason alone we have very great concern about what it is that the Government intends for public sector employees. I turn to the point in connection with this Bill, having made the point that there are significant pushes at present in the private sector for union-controlled superannuation. The Bill that was defeated last November sought to establish the same kind of union control over public sector superannuation arrangements. That is the reason why we objected to the legislation and the reason that we opposed it. We were joined in that opposition to the legislation by the Australian Democrats and, of course, that led to the defeat of the Bill. This Bill does not provide for the establishment of the Trust to control the superannuation fund in the same way as was provided in that previous legislation. In fact, it seems that the Government has shied away altogether from the question of the membership of that Investment Trust and has not changed the position that obtained prior to the defeat of the legislation last year. What it has done is bring to account several other measures which are of concern to the Liberal and National parties. I shall move to those other measures in a moment, but, firstly, we make the point clear that our general support for this particular Bill is not based on the acceptance of any principle of union based superannuation as it is being pushed in the community at present. Our opposition remains to the concept of having union-based control over and above what we regard to be the most important factor of all-that is, professional and proper managerial control over superannuation funds so that appropriate and proper decisions are made about the investment of those funds. There are several criteria that should be borne in mind in the management of superannuation funds. We know of the very substantial amount of money that is invested by superannuation schemes in the public sector-some $3 billion in this particular Investment Trust, as I understand it-and obviously those who control this fund have vast responsibilities, as well as duties and obligations to their members, to make the right decisions. Opposition senators have said consistently that the decisions ought to be made by people who are well trained and versed in the management techniques of such vast sums of money and that that ought to be the primary criterion in establishing the membership of the Investment Trust, rather than relying upon the kind of trust that would result from control by the trade union membership. That professional approach is fundamental to the success of superannuation funds and brings with it, of course, the very substantial benefit for the taxpayers that if the return to the Trust is maximised, we would lower the impact upon taxpayers of their commitment to meet the requirements of payouts to superannuants when they retire. There are benefits to the taxpayer and to the Government from proper managerial control over the investments that are within this Trust. I return to some of the other aspects of this Bill which give us concern. We note that the new Bill contains a feature that was not present in the previous legislation. This matter deals with the problem that has arisen for the Government in the light of an Administrative Appeals Tribunal case in the matter of a Mr Bewley, who is presently a member of the Fund and an employee of the Commonwealth. I shall go into the facts of his case in a few moments. In handling this matter the Government has sought to override the decision made by the Administrative Appeals Tribunal in the Bewley case in such a way that that decision, which was favourable to Mr Bewley, will be overridden retrospectively to 1 July 1976 in all other cases which could have been subsequently appealed on the basis of the Bewley decision. In other words, the Government has imposed a retrospective provision here which goes back to the commencement of this superannuation fund on 1 July 1976 so as to override the rights of any members of that fund who may have experienced circumstances similar to those of Mr Bewley and who may subsequently have appealed successfully and had their cases treated in the same way as Mr Bewley's. Their rights have been affected retrospectively by this legislation. The Opposition's objection to that retrospectivity is the main issue in this matter and during the Committee stage of the debate we will move to oppose that part of the Bill-clause 2-which imposes retrospectivity in the way I have just outlined. Let me just review the facts of Mr Bewley's case. The question at issue is that Mr Bewley was received into the Commonwealth superannuation scheme upon his joining the Commonwealth Public Service more or less on the basis of a contract, that contract being that he would become a full member of that scheme, notwithstanding any pre-existing illness that may have occurred. I understand from correspondence with Mr Bewley and others that that was his understanding of the original arrangements between the Government and himself when he moved from the Tasmanian Public Service to the Commonwealth Public Service. Subsequent to his taking up his position in the Commonwealth Public Service, Mr Bewley found that the Government, upon examination of his medical record, had discovered that at an earlier stage he had suffered from a melanoma which had been cleared up well before he joined the Commonwealth Public Service. Notwithstanding that, the Commonwealth then issued what is known as a benefit classification certificate against Mr Bewley. This meant that, in the event of his eventually retiring on the grounds of invalidity related to that pre-existing illness of the melanoma, he would not be able to obtain the full invalidity benefits of the superannuation scheme. That benefit classification certificate was subsequently taken up by Mr Bewley in representations to the Minister and then to the Administrative Appeals Tribunal. Eventually the Tribunal upheld Mr Bewley's case and overrode the benefit classification certificate. In other words, Mr Bewley won his case so that, in the event of the melanoma subsequently affecting his ability to continue in his job, his benefits would not be affected when he retired. Perhaps Mr Bewley's case is different from many others in that it appears that he was guaranteed membership of the superannuation scheme by virtue of an arrangement with the Commonwealth when he joined the Commonwealth. It had been proven that the pre-existing illness-the melanoma-was not evident at the time of his joining the scheme because it had been cured. Apparently, it was the technical question of that melanoma subsequently coming to the knowledge of the administrators of the Superannuation Fund which led to the issuing of that certificate. Much has been said in the general community about the question of abuse or otherwise of those so-called benefit classification certificates and about people retiring on grounds of invalidity when that invalidity was not necessarily the basis for their leaving the Public Service. Indeed, the Minister for Finance (Senator Walsh) made statements in this place about the so-called rip-off of the superannuation scheme by people indulging in that kind of activity. That is the rationale for the introduction of the benefit classification certificate. However, the Opposition is convinced that in the case of Mr Bewley, which is the subject of this legislation, Mr Bewley suffered as a result of a breach of contract-the Government breached its arrangement. It does not matter whether the letter or the word of this arrangement was breached; the fact is that the spirit of it was certainly broken by the issuing of that certificate. Subsequently, the court upheld that the decision to issue that certificate should be overturned. The Bill, while seeking to make retrospective its provisions to override the decision in Mr Bewley's case as they apply to all other members of the Superannuation Fund, does seek to protect Mr Bewley. The Bill sets out quite clearly in clause 6 (2) that Mr Bewley's case would not be affected by the retrospective provision. Mr Bewley therefore is protected. We are happy to see that. The problem that the Opposition now faces is that the rights of every other member of the Superannuation Fund will now be affected retrospectively by this legislation. If the Opposition is successful in defeating the Government on clause 2 of the Bill, which we will oppose, Mr Bewley will lose the protection which is set down in the Bill. If the legislation is defeated on that point, one would expect the Government to follow an option that it has and seek a review of the Administrative Appeals Tribunal decision in the Federal Court. That, of course, would involve more expense. The issues involved are most difficult to resolve when one is trying to protect the rights of Mr Bewley who, I think, has been badly treated by this Government. Because of the difficulties in this regard, I wrote to the Minister for Finance, Senator Walsh, some time in April raising the issues as I have just outlined them and making the point that, if an event unfavourable to Mr Bewley were to occur-that is, the passing of our amendment to this Bill, making it difficult for Mr Bewley to be protected-the Minister should seek to protect Mr Bewley separately by making an act of grace payment in the event of Mr Bewley ever being invalided out of the Public Service as a result of his pre-existing illness. The possibility of his being invalidated out is totally unknown, and no one can estimate whether or not that may occur. I suggest, though, that the likelihood is that it will never occur. Nevertheless, in order or protect Mr Bewley in these circumstances, we sought the Government's compassionate consideration of that point. Unfortunately, the Government wrote back via the Minister that it was not able to give me that assurance. I believe that the Government ought to consider this matter more deeply. I believe that there are issues at stake here which are to do not with the principle upon which the legislation is based but with justice in connection with Mr Bewley's case. The facts that I have outlined to the Senate touch on the encouragement, if you like, for Mr Bewley to leave the Tasmanian Public Service, where he would have had no difficulties of the kind that we are now reviewing, and join the Commonwealth Public Service, where he finds himself subject to them, that factor becoming known after his having accepted a position in the Commonwealth Public Service. I think it is unjust to Mr Bewley and that the Government ought to be able to give a clear statement of protection for him in this case. I make the point again that I do not believe that that matter has anything to do with the general principle of the point that we have been making. The legislation which the Government is seeking to push through now will override Mr Bewley's decision at the AAT. Consequently, we are justified in taking our stand in principle on the retrospectivity question and Mr Bewley's case should be considered separately. I hope that that guarantee will be forthcoming from the Minister. During the later stages of the debate on this matter we will be inquiring as to the Minister's intentions. In the meantime, I seek leave to have incorporated in Hansard a copy of the letter dated 5 May 1986 which I have received from the Minister for Finance on the matter of Mr Bewley and which sets out the Government's position at that time. Leave granted. The letter read as follows- Senator the Hon A. J. Messner Senator for South Australia Parliament House CANBERRA A.C.T. 2600 Dear Senator Messner, I refer to your representations of 24 April 1986 on behalf of Mr P. J. Bewley of 313 Bugden Avenue, Fadden, A.C.T. At the outset, I should point out that there is no benefit classification certificate presently in force in relation to Mr Bewley. Thus, there is no basis for consideration of an act-of-grace payment to Mr Bewley in the event that he should retire on invalidity grounds. The decision of 18 October 1985 by the Administrative Appeals Tribunal set aside the decision of the Commissioner for Superannuation to issue, pursuant to sub-section 16 (4) of the Superannuation Act 1976, a benefit classification certificate in respect of Mr Bewley specifying the condition ``History of superficial spreading melanoma''. Sub-section 16 (6), (7) and (8) of the Act provide for the Commissioner for Superannuation to revoke a benefit classification certificate at the contributor's request following further medical examination and where the Commissioner is of the opinion that the contributor is not likely, by reason of or for a reason connected with the condition specified in the certificate, to cease to continue to be a contributor until his or her maximum retiring age. As there is no benefit classification certificate presently in force in relation to Mr Bewley it is not possible for consideration to be given to the application of these provisions to him in the light of the medical standards to which you refer. The Tribunal's decision of 18 October 1985 is contrary to the purpose of the medical classification provisions of the Act which is to protect the Commonwealth against the risk of premature retirement or death caused by a physical or mental condition suffered at the time the person became a contributor to the Commonwealth Superannuation Scheme. It is also at odds with the 1979 decision of the Tribunal in Re Linden which supported the manner in which the Commissioner for Superannuation has applied the provisions. Not only does the decision have serious cost implications but important questions of principle are involved. The amendments to section 16 of the Act contained in sub-clause 6 (1) of the Superannuation Legislation Amendment Bill 1986 which is presently before the Parliament would ensure that the ``real risk'' approach adopted by the Commissioner in the past, and which accords with the purpose of the provisions, is used in the future. The retrospective application of the provisions to 1 July 1976 (sub-clause 2 (1) of the Bill) would clarify that the ``real risk'' approach was also the appropriate and intended approach for past cases. The two sub-clauses would ensure that past and future cases are treated on a common basis. Clearly it would be quite wrong in principle if those in relation to whom benefit classification certificates have been issued in the past were now able to take advantage of the alternative and unintended interpretation of the word ``likely'' and have their benefit classification certificates cancelled. Sub-clause 6 (2) of the Bill would, however, protect Mr Bewley against the effects of the retrospective application of the amendments and ensure that a benefit classification certificate specifying the particular condition cannot be reinstated. Because of the extremely serious general implications of the Tribunal's decision, there was no alternative but for the Commissioner to appeal it to the Federal Court. If the amendments to section 16 with retrospective effect to 1 July 1976 become law, the Commissioner's appeal will be withdrawn. If passage of the amendments with retrospective effect is not achieved, however, there will be no alternative but for the Commissioner to proceed with the appeal. The possible adverse consequences for Mr Bewley of the outcome of the appeal was an important consideration in the Commissioner seeking adjournment of the hearing of the appeal pending the outcome of Parliament's consideration of the Bill. While it must be appreciated that the matter is one of great concern to Mr Bewley, resolution of the serious problems raised by the Tribunal's decision must be paramount. Mr Bewley's mind could, of course, be put at rest very quickly by a speedy passage of the Bill and the consequent statutory protection it will afford him. Yours sincerely PETER WALSH Senator MESSNER —I thank the Senate. The final point that I make is that the Bill is unexceptionable except for the two or three matters that I have mentioned. We agree that improvements need to be made in the controls over the management of superannuation schemes and particularly the management of the Superannuation Fund Investment Trust for public sector employees. We do not agree with any form of union control over the investment practices of those funds and, of course, we demonstrated our support for that principle in voting down the Government's legislation which sought to impose that last October. I understand that the Australian Democrats will be moving an amendment which seeks to put the control of the Superannuation Fund Investment Trust in the hands of members insofar as each member of the Superannuation Fund would get to vote upon the membership of the Trust itself. That sounds fine in theory. It sounds like an admirable and very democratic solution. But I put it to you, Madam Acting Deputy President, that it amounts to the same thing as the Government is proposing because it will mean that the most powerful bodies representing the members of the Fund-the trade unions-will have the most say in making sure that their nominees become the official nominees who are elected by the contributors. I believe that plays into the hands of the Government, which is seeking to do its cosy little deals with the Australian Council of Trade Unions. Consequently, the Opposition does not support the Democrat amendment if it is in the form that I have just outlined, which is very similar to the amendment the Democrats proposed at the time of the defeat of the legislation last year. For those reasons, and subject to the reservations I have outlined, the Opposition will not be opposing the legislation. Senator SIDDONS(Victoria)(10.56) —We are debating the Superannuation Legislation Amendment Bill 1986. As Senator Messner pointed out, this legislation is identical to the legislation that was defeated in the Senate late last year with the exception that the appointment of the trustees of the Superannuation Fund Investment Trust is now to be in the hands of the Government, as it always has been in the past. The Australian Democrats are unhappy about this method of appointment of trustees. We have repeatedly drawn attention to the critical problem surrounding superannuation, which is who should appoint the trustees. The amount of money involved in superannuation-which represents the savings of Australians-is enormous. Already 50 per cent of the money invested on the Australian stock exchanges is invested on behalf of superannuation funds. Once the 55 per cent of the work force that does not enjoy superannuation at the moment receives superannuation as a result of the Government's initiative, the amounts of money invested will at least double in a very short time. Therefore, the appointment of the trustees is vital. In effect, the trustees have the responsibility for investing these enormous amounts of money. It is not an exaggeration to say that whoever controls the superannuation funds of this country controls the Australian industry. So far the Government has not really addressed the question of who should appoint the trustees. It has indicated that it wants this legislation passed before it has defined clearly how the trustees of all superannuation funds-not just the Commonwealth Superannuation Fund-should be appointed. The Australian Democrats' position on this matter is very clear. We believe that there should be equal representation by the two contributors-the employees and the employers. We believe that they should have equal representation on the board of trustees. I stress `equal'. We mean 50 : 50, not with the chairman having a controlling vote. That, in effect, would put enormous power in the hands of one person. Irrespective of a person's credentials one cannot put one person in charge of this enormous flow of the savings of Australians, the enormous flow of money that is involved. We must consider the havoc that wrong investment of superannuation funds could play with our industry and our stock exchanges. Since the Government has not yet issued its guidelines on how the trustees are to be appointed-although the Democrats' position is very clear, as I have just outlined-we are in somewhat of a dilemma. In the Committee stage we will be moving amendments which will give the contributors the right to appoint trustees to the Superannuation Fund by virtue of an election at large. We say as it is very largely the money of the contributors that is being invested they should have a direct say in who the trustees are to be. If the contributors have faith in their union representative and want to appoint him as a trustee, so be it. It is indisputable to us that the contributors should have the final authority about appointing at least half of the trustees to any superannuation fund in this country. There has to be a balance between the two contributors-the employers and the employees. If the trustees representing those two sides cannot agree, there has to be a stalemate and no action should be taken until they can agree. That seems to be the only fair and safe way to go ahead in this area. If the Government does not accept our amendment at the Committee stage, the Democrats will accept the legislation because the Government has given us an assurance that it will address the problem of how trustees are to be appointed. We await the Government's pronouncement on that matter. In the meantime, we have always agreed that there is an urgent need to reform the Commonwealth superannuation legislation. At present it is shackled, it is hide-bound, and the contributors, the Commonwealth public servants, are not receiving the return on their investments they should be receiving. We are prepared to accept pro tem an arrangement whereby the Government continues to appoint the trustees with the assurance that the Government will, in due course, come up with a clear definition of how trustees are to be appointed not only to the Commonwealth Superannuation Fund but to all superannuation funds. I hope that the Government will heed the Democrats' plea that these trustees should be appointed taking into account the wishes of the contributors as well as the employers, and that there is a balance on the Board of Trustees in all cases. Senator Messner spent some time outlining the Bewley case. He claimed that the legislation now applied retrospectively and that, as such, the Opposition would be opposing those parts of the legislation. The Democrats have also received representations from those interested in the Bewley case and from Mr Bewley himself and we have considered the matter very carefully. I believe the Democrats' attitude on any retrospective legislation is well known: We oppose it. We have opposed it; we have stood our ground and have been very consistent in this area. However, on a careful assessment of the Bewley case we believe that, as to the claims that this legislation as it applies to the Bewley case is retrospective, it is retrospective purely on a technical ground. It is really not retrospective because the Government has tightened up the guidelines in the issuing of benefit classification certificates. In fact, these tighter guidelines have applied since the ruling in the Bewley case and before, back in 1976. So neither Mr Bewley nor anybody since or before that case was heard will be disadvantaged, because in fact the Government has been doing what this legislation now says it must do. It has been issuing benefit classification certificates in line with the tighter guidelines so that nobody will be disadvantaged with the passage of this legislation. For this reason we say it is not retrospective. It may be retrospective technically, but it will not disadvantage anybody, and for that reason we believe that the Democrats can allow the passage of the legislation. Senator Messner indicated that the reason the legislation was blocked last year was that the Democrats supported the Opposition in blocking it. I am bound to point out that this legislation as it applied last year, with the majority of the trustees being appointed by the Australian Council of Trade Unions, very nearly passed the Senate. The legislation passed the House of Representatives without members of the Opposition flagging in any way whatsoever the fact that a majority of the trustees were to be appointed by the ACTU. They let it pass through the House of Representatives, they did not move an amendment in that respect, and they did not raise the issue in the debate. The legislation came to the Democrats and it came specifically to my desk. I was told it was a routine piece of legislation. I read it through and found to my horror that the ACTU was to be given the authority to recommend three of the five trustees. That did not seem to me to be a routine piece of legislation, particularly as the trustees were to be in control of $7m a week. We raised the matter with members of the Opposition. Their solution was to say: `No, we can't allow the ACTU to have control of these funds, but we will make the appointments of the trustees on the recommendation of bodies such as merchant bankers, financial institutions, et cetera'. In other words, they were prepared to go to the other extreme. They were prepared to say: `No, we can't let the ACTU recommend the appointment of the trustees, but we can rely on the merchant bankers, et cetera, to recommend the appointment of the trustees'. By and large these are competitors for funds who were to be given the right to recommend the appointment of trustees. So we went from the sublime to the ridiculous, from one extreme to the other, and got nowhere. The Opposition moved its amendments, which we were unable to support, and this Bill was defeated only at the third reading stage because the Opposition very belatedly realised that if it did not support a Democrat amendment in the third reading stage, the Bill would become law, the ACTU would get control of $7m a week, and the Government would have a resounding victory. It was an eleventh hour decision on behalf of the Opposition that this Bill was blocked last year. All I can say is: `Thank goodness'. I do not want to delay the debate. A lot could be said about superannuation; a lot could be said about the Government's inaction so far in trying to tighten up its guidelines; and a lot could be said about the fact that no legislation has yet appeared on superannuation generally. We are waiting patiently for it. Presumably that will be forthcoming in the Budget session. In the meantime, this whole superannuation debate is one of the most critical the Australian Parliament will have to face for many years. I do not believe there is, as yet, full public awareness of the enormous amounts of money that will be involved in the superannuation initiative. Certainly there has not been an informed public debate as to how these funds should be controlled in the interests of contributors and in the interests of Australians generally in the long term. If these funds are imaginatively invested in this country they could contribute enormously to the development of Australia's export potential and the development of the wealth of this country. If they are squandered by investments overseas in places such as Saudi Arabia or wherever a fast buck can be made, the savings of Australians will be squandered and the long term development of this country will be put back many years. We will support the legislation. We do so with reluctance because the Government has not yet faced up to how trustees are to be appointed and what is fair in the long term. However, we believe we cannot be a party to delaying or even amending the legislation because of the urgency of getting the guidelines reformed so that the very considerable funds invested on behalf of the Commonwealth Public Service can be invested in a much more efficient manner and the returns on those funds can be put to the benefit of Commonwealth public servants. Senator MICHAEL BAUME(New South Wales)(11.10) —I rise to support Senator Messner in his opposition to the retrospectivity element of the Superannuation Legislation Amendment Bill, and to seek an act of grace payment to Mr Bewley, as Senator Messner outlined, but also to raise a couple of other points. One relates to delegation, the manner of which in this case appears to be inappropriate. The second point is on a matter of principle relating to the manner in which a Minister of the Crown, the Minister for Finance, Senator Walsh, has endeavoured to lean on independent, quasi- judicial tribunals by making insulting remarks about the merit of their decisions. This Bill seeks to amend the Superannuation Act and, as Senator Siddons said, it does not contain those provisions concerning the composition of the Investment Trust which we opposed when the legislation came to the Senate previously. On the question of retrospectivity, which is dealt with in clause 6 of the Bill, the Australian Democrats, through Senator Siddons, once again have demonstrated a very flexible approach to matters of principle-`flexible' being a polite word-- Senator Peter Baume —Well within the Standing Orders, too. Senator MICHAEL BAUME —As my cousin says, well within the Standing Orders. It is flexible enough that when they do deals with the Government they do not care about retrospectivity, but when they seek not to do a deal with the Government they do. Senator Siddons —Come on! I was explaining that it was a technicality. Senator MICHAEL BAUME —Senator Siddons may regard it as a technicality, but I presume that he has not read the report of the Senate Standing Committee for the Scrutiny of Bills on this matter. If he has not, I suggest that it is extraordinary of him to get up in this place and not mention the detailed report on this issue and make a debating point that is not based on fact. It may well be that he is too busy attending meetings of his company to take much notice of the business of the Senate, but it seems to me to be extraordinary that he should come into this debate and not even mention, when dealing with the question of retrospectivity, a report by a Senate Committee-I am glad to see another member of that Committee present, Senator Cooney-which dealt with this issue. If only to inform the Australian Democrats, apart from the people of Australia, I think that it is important to refer to elements of the report. The Scrutiny of Bills Committee said: Section 16 of the Superannuation Act requires the Commissioner to issue a benefit classification certificate in respect of an eligible employee if, following a medical examination, the Commissioner is of the opinion that the employee `is not likely', by reason of a physical or mental condition, to continue to be an eligible employee until retiring age. Where a benefit classification certificate is in force in respect of a person the person may not be entitled to the full rate of invalidity benefit if the person retires on the grounds of invalidity and the Commissioner is of opinion that the incapacity which was the ground for retirement was caused, or was substantially contributed to, by a physical or mental condition specified in the benefit classification certificate. Clause 6 would alter the test in section 16 so that the Commissioner would be required to issue a benefit classification certificate if, in the opinion of the Commissioner, `there is a real risk' that the person in question will not continue to be an eligible employee until retiring age. By virtue of sub-clause 2 (1) this change will be deemed to have had effect from the commencement of the Act on 1 July 1976. Senator Siddons cannot find that to be a retrospective element, which strikes me as extraordinary. The year 1976 is, for Senator Siddons's benefit, quite some years ago. The Committee further said: Sub-clause 6 (2) will preserve the effect of decisions of the Administrative Appeals Tribunal with respect to the issue of benefit classification certificates made before the day on which the amending bill receives the Royal Assent. That is true. The report continues: The reasons for this retrospectivity are fully set out in the Explanatory Memorandum. Briefly, the Commissioner has always interpreted the `is not likely' test in section 16 as meaning that `there is a real risk' that the person will not continue to be an eligible employee until retiring age. In 1985, however, the Administrative Appeals Tribunal held in Re Bewley that the correct test was whether it was not `more probable than not' that the person would not continue to be an eligible employee until retiring age. The Explanatory Memorandum indicates that the new test is considered much more severe than is appropriate for the issue of benefit classification certificates and that it would render section 16 `almost unworkable'. Nevertheless the effect of the amendments is to change the law as determined by the Administrative Appeals Tribunal with retrospective effect, thus disadvantaging contributors in respect of who a benefit classification certificate has been issued since the inception of the scheme. Surely Senator Siddons cannot disagree with that. The report continues: Accordingly the Committee draws the clause to the attention of Senators in that it may be considered by reason of its retrospective effect to trespass unduly on personal rights and liberties. It is for that specific reason that we are opposing it, and we are also seeking an act of grace payment to Mr Bewley, if this goes through. The other point I want to make about delegation is that the Scrutiny of Bills Committee also is uneasy about clause 19, which, by the way, is in the same form as clause 17 of the Superannuation Legislation Amendment Bill 1985 to which the Committee drew attention in its fourth report of 1985. The Committee states: The clause would insert a new section 39 empowering the principal member to delegate all or any of the principal member's powers under the Act (other than the power of delegation) to `a person'. That can be any person, by the look of that legislation. It continues: In its comment on clause 17 the Committee expressed concern that the new section 39 imposed no limitation, and gave no guidance, as to the attributes of the person to whom a delegation might be made. This appears to be particularly bad law-making, in my view, and certainly in the view of the Scrutiny of Bills Committee. Senator Peter Baume —It could be Abe Saffron. Senator MICHAEL BAUME —It could be, as my cousin says, people of all sorts of repute. The Committee states: In its seventh report in 1985 the Committee recorded a response from the Minister for Finance undertaking to consider the comments made by the Committee in the context of an examination of all of the delegation provisions in the Superannuation Act 1976 with any necessary amendments being made when the Act was next amended. The Committee assumes that this examination of delegation provisions has not yet been completed. However it reaffirms its concern in relation to clause 19. The Committee suggests that it may be appropriate in this case, for example, to restrict the scope of delegation to another member of the Trust or an officer or employee of the Trust as was done in the not dissimilar case of sub-section 90 (2) of the Australian Trade Commission Act 1985. There are the two specific concerns raised by the Scrutiny of Bills Committee. But I am also concerned about a matter of principle relating to the propriety of a Minister of the Crown heavying administrative appeals tribunals or any other quasi-judicial body by referring to their decisions as capricious, irresponsible or in other terms that he has used in some other cases. I wish to deal with both matters. The Minister for Finance is following a procedure which appears to be normal in the State of New South Wales of giving instructions, either covertly or overtly, to courts of law or quasi-judicial bodies. Apparently, this principle is extending beyond the State of New South Wales, where I hope that it will be ending with the change of government there, but I suggest that it is not a course of action that should proceed. When commenting on the Administrative Appeals Tribunal's decision on Bewley, the Minister for Finance said, in response to the remarks of the Scrutiny of Bills Committee, the following: That `it would be quite wrong in principle' if contributors currently subject to benefit classification certificates were now able to take advantage of the alternative and unintended interpretation of the relevant provision to have their benefit classification certificates cancelled, and he says that that is an unintended interpretation. The Minister said: The application of the test as interpreted by the Administrative Appeals Tribunal in Re Bewley would have serious cost implications. At the end of his response the Minister added the following postscript: As I have already stated in the Senate I believe it is essential that capricious and irresponsible decisions by quasi-judicial bodies be overturned by the Parliament. As a prime example of internally illogical and externally contradictory decisions by such bodies, I enclose summaries of two recent Administrative Appeals Tribunal decisions. The decisions that the Minister attached at that point were those in Kingston and Kennison. The Minister's handwritten note on the summary of the Kennison case indicates that he considered the decision to be `180 degrees' from that in Kingston, seemingly because in Kingston the Administrative Appeals Tribunal found that the lack of any sexual or romantic element in the relationship of the two persons living together meant that there was not a quasi-marriage relationship, whereas in Kennison, while there was no evidence of a sexual relationship between the two persons, the AAT found that the two persons were living together as man and wife. In Kingston the applicant was thus able to obtain the aged pension at the higher unmarried rate whereas in Kennison the applicant was held to be entitled to receive additional unemployment benefit in respect of his dependent spouse. It seems to me-certainly, according to advice that the Scrutiny of Bills Committee has received-that the first point that should be made is that both purport to be decisions on the relevant factors before the Tribunal rather than, as in Bewley, turning on the interpretation of the relevant statutory provision. In other words, it appears that the Minister seems to have strayed slightly from reality when pointing to these two cases. The fact that each case was decided on the relevant facts may go some way to explaining why the Department did not appeal against the decision in either case. Of course, the Minister did not mention that at the time. For the Department to have appealed it would have been necessary to allege an error of law, and not merely that the AAT drew the wrong inference from the facts. The summary of Kingston which the Minister attached to his letter is accurate as far as it goes. It was common ground that the applicant and Mrs N had been living together on a bona fide domestic basis at all relevant times. The only question for the Tribunal was whether he was living with her as her husband. If not, he was entitled to obtain the aged pension at the unmarried rate. According to Mr Kingston, there had never been sexual relations between the two parties. The Department's social workers who had intervened in both cases accepted this evidence. That, of course, also was excluded from the Minister's statement, which simply referred to cohabiting. As set out in the summary the Department advanced three pieces of evidence in support of its view that the two persons were living together as man and wife. The Deputy President found that statements made by the applicant in 1970 to this effect did not have the same weight as the applicant's sworn evidence before the Tribunal. He found that no adverse inference could be drawn from the applicant's failure to comment on letters received from the Department in 1975 which referred to Mrs N as his spouse. With regard to the fact that in 1969 he had claimed the dependent spouse rebate in respect of Mrs N, Mr Kingston stated that in other years he had claimed the housekeeper rebate. It was conceded that the amounts involved were roughly the same and the Deputy President concluded that: `At worst it was an attempt to deceive the Taxation Department'. The Deputy President then concluded: Whilst there may well be many `housekeeping' contracts or arrangements which develop into a man and wife relationship it certainly does not follow that all such arrangements acquire that quality merely by reason of their comparative permanence or the strength of the friendships developed. Before such a relationship is converted there must be, as the Tribunal recently observed, some kind of `spark to ignite the tinder of cohabitation into the fire of a quasi marriage relationship'. That might sound a bit exotic, particularly in regard to people aged 80 years and 76 years. Perhaps the spark would be on very dry tinder. The question here was simply one of a determination of matters of fact. The Deputy President continued: In the present case an arrangement which began as one of financial convenience has now developed into an arrangement for mutual support to the best of the physical and financial abilities of each party, but there is no evidence to justify a conclusion that there is a quasi marriage relationship. The view, which the Minister said represented a 180-degree turn by the AAT in the case of Kennison, seems once again to depend simply on matters of fact. Once again, I repeat, there was no appeal by the Department. The summary of the Kennison case which the Minister attached to his letter is equally accurate, but only so far as it goes. Kennison had lived with Miss C from 25 December 1982 to 30 August 1983. He was paid additional benefit in respect of Miss C between 25 December 1982 and 22 May 1983 on the basis that she was a dependent female being a woman living with a man as his wife on a bona fide domestic basis although not legally married to him. The Department of Social Security cancelled the additional benefit on 1 June 1983 with effect from 23 May, having received legal advice that, as Miss C was under the age of consent under the South Australian law, Mr Kennison could not profit from what would be an illegal act. Miss C turned 17 years on 3 August 1983 and the additional benefit was restored from that date. However, the relationship broke up on 30 August 1983. At issue was Mr Kennison's entitlement to receive additional benefit in respect of Miss C as his de facto spouse during the period when she was under the legal age of consent under the relevant State law. The Department argued that because she was under the age of consent Miss C should not be regarded as a `woman'-she was a non-woman-or, alternatively, that Mr Kennison should not be allowed to profit from his illegal acts. The Tribunal considered that no special meaning attached to the word `woman' as used in the Social Security Act 1947. Where the legislature had wished benefits to be restricted to persons of specified age it had said so in other cases, for example, by setting 16 years of age as the minimum for the receipt of unemployment benefits. The requirement, since changed, that a woman be living with a man as his wife was relevant at that time since under the Commonwealth Marriage Act 1961 a woman who has attained the age of 14 years may marry. While the Secretary to the Department, in exercising his powers and discretions under the Act, should have due regard to public policy as set out in Commonwealth, State or Territory laws and should not be seen to authorise acts contrary to public policy, there was no evidence of any relevant public policy as to the payment of benefits to a person living in a bona fide domestic relationship with a person under the age of consent. There was no evidence before the Tribunal. The Tribunal had no jurisdiction to make a finding beyond reasonable doubt that an offence against State criminal law had been committed, nor could it circumvent the criminal standard of proof by reliance on the presumption that persons should not be allowed to profit from their illegal acts. If the Minister says that it was proper that they should not get this benefit because of an illegal act, surely it is essential to establish that the illegal act took place. As I said, there was no evidence-no criminal standard of proof-and as a result the Department did not appeal. If, in a given case, a court of competent jurisdiction had found an offence proved, that would, of course, have been a relevant consideration. However, on the facts before the Tribunal in the instant case it was irrelevant that an offence of unlawful sexual intercourse might have been committed. The Tribunal endorsed the statement of the Social Security Appeals Tribunal which stated: It is well to remember that the purpose of the Act is to relieve poverty and hardship amongst citizens of the Commonwealth. It is not intended as an instrument for enquiring into deviant social behaviour and assigning penalties and rewards. Although the Tribunal had no direct evidence before it as to the existence of a sexual relationship between Mr Kennison and Miss C it concluded that there was sufficient evidence before it, in particular common experience of the behaviour of teenage people, the accommodation the couple had occupied during their relationship-a one-bedroom flat, a caravan, then another one-bedroom flat-and their mutually dependent financial and social arrangements, to be able to establish on the balance of probabilities that the applicant and Miss C had been living together as unmarried husband and wife as required under the Act. The reason I have stated all that is to make quite clear that there does not appear to be any contradictory element in the decision of the Administrative Appeals Tribunal in the matters of Kingston and Kennison. In Kingston the Tribunal found that two elderly people living together for financial and social reasons were not living in a quasi-marriage relationship. On the other hand, in Kennison the Tribunal found that two young people living together were indeed living in a de facto relationship. The possible commission of an offence against State law was a complicating factor in the latter case but the Tribunal had no evidence before it of any finding by any court of competent jurisdiction that such an offence had been committed, nor did it have the jurisdiction itself to make such a finding on the criminal standards of proof. In the absence of such a finding, the Tribunal clearly considered it inappropriate that the young people in question should be punished for the possible breach of law by withholding the additional benefit. To have done otherwise would have been to take into account an irrelevant consideration, a ground for judicial review in itself. This is the point that I think should be made: An unfortunate tendency is prevalent at the moment for the courts to be criticised for having no sense of financial responsibility. However, it is a function of the courts to interpret the laws made by parliament. They are not required to have regard to the budgetary consequences of their interpretations of the law, nor could they do so without usurping the role of the Executive and the Parliament in this regard. It is always open to the Parliament to do so, as is proposed to be done by the Superannuation Legislation Amendment Bill 1986, and to rectify-in this case retrospectively-a defect in the law which has come to light as a result of a court decision. I repeat: It is a defect in the law which has come to light as a result of a court decision. Whether or not this is appropriate in a given case is, of course, a matter for judgment in all the circumstances. I note that Senator Walsh, in his letter to the Scrutiny of Bills Committee, stated: As an indication of the likely costs, it has been estimated that, if no benefit classification certificates had been in force in relation to contributors who retired on invalidity grounds in 1984-85, the capitalised cost of the benefits payable would have increased by $35 million. This rests on the proposition that the change in interpretation would render the requirement useless, and I think that may be a matter of some disagreement. However, I should mention that in the case of Bewley the effect of which way one looks at questions of whether it is more probable or whether there is a real or remote possibility or a real risk should be pointed out as being most significant. Mr Bewley had a small melanoma or skin cancer removed from his shoulder. In August 1983 he joined the Commonwealth Public Service and was examined by the Commonwealth Medical Officer, who found that he did not meet the general medical standard because of a history of superficial spreading melanoma. It was agreed by specialists called by Mr Bewley and the Commissioner that there was a better than 90 per cent chance that the cancer would not recur. The Commissioner's experts said that of every 100 people who have a tumour such as Mr Bewley's some two to five could be expected to suffer a recurrence in some other part of the body. Therefore, if one took the view that the word `likely' meant more probably than not it was clearly likely that Mr Bewley would remain an eligible employee until retiring age. On the other hand, if one took the view that the word `likely' meant a real or not remote chance or possibility, it was likely that Mr Bewley would not continue to be an eligible employee until retirement age. In conclusion, clause 6 seeks to change the interpretation by substituting for the `is not likely' test the `there is a real risk' test that the employee will not continue to be an eligible employee until retiring age. Whether or not the latter test is an appropriate one is a question of policy and the Government is quite entitled to do what it likes. However, while recognising-this is in the advice to the Scrutiny of Bills Committee-the Minister's perogative to describe as unintended the interpretation of section 16 adopted regarding Bewley, one may take issue with his description of the decision in that case, by implication, as capricious and irresponsible. I return to the point I made earlier. It is the function of the courts to determine the meaning of the law made in parliament. As Professor Pearce stated at page 185 of his standard work Statutory Interpretation: It must be remembered that judges are men and not machines. One does not feed the legislation together with the rules of interpretation in at one end and have a `correct' reading of the Act come out the other. Merely because judges and courts differ in their interpretation of words or because interpretations change over time does not mean that the courts or quasi-judicial tribunals such as the AAT are acting capriciously. I make a request of the Minister when he is dealing, as he quite properly does, with matters of concern to him and where savings might be made. I commend him in his pursuit of saving government money where it is being improperly spent. Certainly among his colleagues he has no peer in the pursuit of waste, and I congratulate him to that extent. However I am concerned that in his enthusiasm he has quite clearly behaved, I think, in an improper way in relation to quasi-judicial tribunals. He is clearly, by his statements, heavying them to make decisions that are favourable to the Government rather than to judge cases on their merits and to judge the facts as they see them. To that extent I suggest to him that in his quite proper pursuit of waste he should cease heavying the judiciary and semi-judicial bodies. Senator WALSH(Western Australia-Minister for Finance)(11.35) —I understand that Senator Messner raised the matter of Mr Bewley and that he argued that Mr Bewley should be exempt from the scope of the Superannuation Legislation Amendment Bill 1986. Mr Bewley is, in fact, exempt from the scope of this legislation. I made this quite clear in my letter to Senator Messner of 5 May, from which I now quote: . . . I should point out that there is no benefit classification certificate presently in force in relation to Mr Bewley. Thus, there is no basis for consideration of an act-of-grace payment to Mr Bewley in the event that he should retire on invalidity grounds. Mr Bewley has been excluded from this legislation, and I thought that statement would have made that perfectly clear. I also stated in that letter that the decision made by the Administrative Appeals Tribunal in the Bewley case was clearly a reversal of an earlier decision of the AAT, made in 1979 in the Linden case, which had supported the manner in which the Commissioner for Superannuation had applied the provisions. That was also cited in my letter to Senator Messner of 5 May. If the effect of the AAT decision in the Bewley case were allowed to stand without challenge the 66,000 benefit classification certificates already in existence would be effectively cancelled. Even if some people disagree at the margin with that judgment, they cannot guarantee that future absurd decisions by the AAT or some similar bodies might not extend the degree to which they have already been effectively cancelled by the AAT decision in the Bewley case. It is not a question, as Senator Michael Baume asserts, of my trying to heavy tribunals to make decisions which are favourable to governments. What I am trying to establish with this legislation-I have spelt this out publicly on numerous occasions-is the precedent that when courts and tribunals reverse longstanding applications and interpretations of the law in a way that has serious expenditure consequences for which the courts and tribunals have absolutely no responsibility, the Parliament will accept its responsibility to overturn the decisions of the courts and tribunals. That is precisely what this legislation seeks to do. Senator Messner —Yes, but retrospectively. Senator WALSH —Only in the highly technical sense, and I will come to that in a minute. Senator Baume asked why there was no appeal against two other AAT cases-Kennison and, although I have forgotten the name of the other one, I am familiar with the details. An appeal to the Federal Court of Australia is restricted, as Senator Baume said, to a question of law and not to the `facts' as found by the AAT. Since they are unlikely to have significant flow-on effects, there is also the question of an appeal, which is a very expensive operation for the Government to mount. It is good for the lawyers, of course; they never lose out of these sorts of cases-a few lawyers become even richer than they were. However, given the record of the courts, there is no guarantee that the courts will behave any more sensibly than the AAT did. I have argued publicly and I argue again that the proper response by the legislature to this sort of reversal of long term, long-standing application of the law is for the Parliament to legislate to overturn the decisions of the courts and tribunals, and the financial consequences that go with them. This legislation is retrospective only in the most pedantic technical sense; that is, it has application from 1 July 1976, when the existing Commonwealth superannuation scheme came into operation, as a result of which some 66,000 benefit classification certificates have been issued. All that this legislation will do-I say `will do' because I understand that the Democrats will not be supporting the Opposition's proposed amendment-is to continue, with the one-off exception of Bewley, to ensure that the law will continue to be applied in the way in which it has been ever since 1976 and in the way in which the AAT itself in the Linden case in 1979 said it should be. Nobody's expectations will be reduced because of this piece of legislation. It is retrospective only in the highly technical sense. In fact, it continues to apply the law in the way it was intended that the law should be applied and the way it has been applied. I can understand the difficulty into which the Opposition has got itself over this. It is not really concerned about this proposed amendment becoming operative from 1 July 1976; it is concerned that it will be accused on the outside of having supported the principle of retrospectivity. There we get to the nitty-gritty because it could be argued, at least politically, against the Opposition that if it supports the principle of technical retrospectivity in regard to Government outlays, what is the rationale for its continued opposition to retrospectivity in regard to income tax avoided and evaded? That is the nub of the question. That is what the Opposition is really worried about. It is not worried about 66,000 benefit classification certificate holders; it is worried about establishing a precedent which would make it easier for Governments, either this Government or future governments, to get at income tax which has been evaded or avoided. Let us all recognise this spurious, specious argument for what it is. That is what it is all about. Unfortunately, in pursuing what I would suggest is a less than laudable objective, the Opposition is lining itself up as an accessory to all those who want declarations of open season for raids on the Treasury by people who are in a position to harvest windfall gains because of some silly ruling by a court or tribunal. Senator Michael Baume said, if I understood him correctly, that for the AAT to have done other than it did in this case and in a couple of other cases to which it referred would be for the AAT to usurp from the Parliament the power to make laws. I do not accept that at all because, first, it is in conflict with previous AAT decisions and, secondly, precedents which have been established and until now accepted have given, I would argue, the courts and quasi-judicial tribunals the power to extend the interpretation of the law beyond what can legitimately be regarded as interpretation and into the province of law-making. I know very well-I will not embarrass members of the Opposition by naming them-that that view is shared entirely by a number of leading people in the Opposition in the Senate, and probably in the Opposition in the House of Representatives as well. If Senator Michael Baume is concerned about what he misconstrues my argument as being-that is, that the courts and tribunals usurp the power of the legislature-he has left his concern a bit late, because it was asserted in the most unequivocal terms by the Privy Council in its judgment in the banking case in 1949 that the Privy Council had the right to do precisely that. The judgment states: Every case must be judged on its own facts and in its own setting of time and circumstance . . . forget about the legalistic application of the letter of the law- and it may be that in regard to some economic activity and at some stage of social development it might be maintained that prohibition with a view to State mono-poly was the only practical and reasonable manner of regulation, and that inter-State trade commerce and intercourse thus prohibited and thus monopolized remained absolutely free. Leaving aside the piece of blatant doublespeak at the end of that paragraph-that that which is prohibited remains absolutely free-what the Privy Council was asserting was that it arrogates to itself the right to make political decisions about the time and circumstance in which particular pieces of legislation which prohibit certain forms of economic activity are constitutional and when they are not. It has always amazed me that the Australian electorate at the time accepted without question the assertion by a foreign court that it had the right to usurp the political power of the Australian Parliament, which is what it was doing in that paragraph, and the right to make political decisions. But that is almost ancient history. The fact is that there is nothing new about the intrusion of courts and tribunals into the area of policy-making. That, I would argue, is what the AAT has done in this case and what the Federal Court of Australia and the High Court of Australia have done on a number of other occasions in recent times. This legislation is establishing a precedent that when the courts and tribunals act in that way and in a way which has severe financial consequences, the Parliament will accept its duty to overturn those decisions. There is a notion that the courts and tribunals are the protectors of the little people. In matters of civil liberties and personal freedom, I certainly agree that the courts and tribunals have a very strong responsibility in that area. When it comes to questions of expenditure, the belief that courts and tribunals protect the personal liberties of people against the actions of a vin-dictive or nascent totalitarian state may have some validity but the reality is that the victims and the winners game is reversed because on matters of expenditure and insofar as these bodies have a propensity to lean towards the individual, they are not in fact protecting the individuals against victimisation by the state. In making awards which are favourable to individuals and in ways which contradict long-standing applications of the law, they are victimising all the other people in the state because the state is no more than the sum of the individuals who are contained within it. Courts and tribunals can blithely go out handing down decisions which have ultimately cost in some cases hundreds of millions of dollars per annum in outlays and for which they have no responsibility. To quantify it in this case-I think it has been mentioned by some of the Opposition speakers-if this legislation is not passed, over the next 10 years it is probable that around an additional $35m a year in current value terms or in capitalised terms will be paid out under the Commonwealth superannuation scheme. The opposition to the Government's proposals to prevent that comes from the Opposition which incessantly complains about the cost of the Commonwealth superannuation scheme to the taxpayer. But, simultaneously, it proposes a course of action which would add $35m per annum, capitalised cost, to the cost of the Commonwealth superannuation scheme over each of the next 10 years. The reason for that contradiction-I am sure it is not that the Opposition is not capable of recognising that contradiction-is that in a very pedantic, legalistic sense, this legislation is retrospective. The Opposition would be quite happy to support retrospective legislation in this instance, but to do so would expose its unguarded flanks on retrospective legislation with respect to tax evaders and tax avoiders. I understand that the Democrats are propo-sing to move an amendment to seek to change the method by which the Superannuation Fund Investment Trust is appointed. It is a similar amendment to that which the Democrats moved to a similar piece of legislation late last year. The Government, in the legislation which was rejected last year, proposed both to extend the number of people on the Trust and to change the way in which they were appointed. Although there were some sort of strange circumstances, the legislation was effectively rejected by the Senate. In this Bill the Government has decided to leave the clause dealing with the composition of the Trust as it is. I will not go into the arguments against the Democrat amendment at this stage, but the Government will not be accepting it. As I have already indicated, the Opposition has given notice of an amendment to be moved at the Committee stage, the effect of which would be to cancel the 66,000 BCCs already in existence and add a capital cost of about $35m a year for each of the next 10 years to the cost of the Commonwealth superannuation scheme. Obviously the Government will not accept that amendment either because to do so would be to overturn-I do not know whether I should say the major purpose; there are a number of other significant amendments proposed in this legislation-from a financial aspect, the major purpose of this legislation. Question resolved in the affirmative. Bill read a second time. The TEMPORARY CHAIRMAN(Senator Jessop) —Is it the wish of the Committee that the Bill be taken as a whole? Senator Messner-The Liberal and National parties will be dividing in respect of an amendment to clause 2 and we will be discussing clause 9 in detail. Senator Siddons-I would just like to mention that the amendments circulated in the name of the Australian Democrats substantially relate to clause 9. I suggest that the first amendment be debated and the consequential amendments left until we ascertain whether the substantive amendment is to be supported. Clauses 1 to 8-by leave-taken together. Senator MESSNER(South Australia)(11.53) —I move: Page 1, sub-clause 2 (1), leave out `Sub-section 4 (1), section 5 and sub-section 6 (1)', insert `Sub-section 4 (1) and section 5'. The effect of this amendment is to wipe out the retrospective element of the Government's Bill. During the second reading stage we reiterated the points surrounding the case of one Mr Bewley and the action which the Government was taking in order to try to overcome the effects of Mr Bewley's case having been upheld by the Administrative Appeals Tribunal. As the Minister for Finance (Senator Walsh) pointed out during the second reading stage, as a result of this legislation some 66,000 members of the Superannuation Fund Investment Trust would lose their rights to have the circumstances that might pertain in their individual cases upheld in the same way as Mr Bewley was able to have the circumstances applied in his favour as a result of the AAT decision. It is, as the Minister has pointed out, a question of retrospectivity. He does not deny that this is the case, although he seeks to argue that the principle can be watered down in some way. That, of course, is not the view of the Liberal and National parties and we oppose in principle this act of retrospectivity which is incorporated into the Bill. I would like to mention a few points in regard to that. The Minister went on at some length to argue the correctness of his action in seeking retrospectivity in this case. He referred to the effects on the taxpayer of decisions of this kind which, being applied in one single case, flow over and incorporate principles that are applied in vast numbers of cases and therefore add significantly to the cost to the taxpayer. I can well understand his point. However, surely the point remains that a law can be tested in various ways through our legal system and can be found to be a good law or a bad law, depending upon the circumstances. Consequently, when a decision is made, it is made for the benefit of the people generally. Of course, the rather fine point that the Minister was arguing in relation to Parliament having a power to override any decision of a court is absolutely correct. However, in our view, that power certainly should not be applied retrospectively. Indeed, this legislation seeks to correct an understanding of the law which goes right back to the commencement of the superannuation fund on 1 July 1976. Be it a technical point or otherwise, we cannot see that that is a reasonable proposition. I would like to turn to one or two of the arguments the Minister made in that respect a little later. Perhaps the point that ought to be made first is that the continual statement from the Minister that an extra cost to the taxpayer of $35m per annum might arise needs to be put to rest. The Minister continually misstates the figures and misrepresents their meaning by referring to what is the capitalised value of the effect of pensions over a considerable period-that is, the estimated life of the recipient or superannuitant while he draws that pension-as compared with the annual cost. So the capitalised cost might amount to $35m but the annual cost may be only a mere fraction of that-maybe $1m or $2m a year. The Minister, by the extension of some rather twisted arithmetic, then seeks to multiply that figure by 10 and conclude that the cost over 10 years will be $350m. Of course, that is plainly wrong. What we are talking about is the capitalised value of the pension over the life of the recipient. Of course, in annual terms the figure would be much less than the amount the Minister cites. Indeed, it is a total misrepresentation of the position to state, as he has done publicly, in Press releases and in this Parliament, that his point is somehow a legitimate one. It is not a valid point at all. The Government should recognise that and take into account the arguments of the Opposition. I would like to turn to one other point that the Minister made. We also take exception to the line taken by the Minister about the decisions of various arbitral authorities being retrospectively overturned by Parliament and his justification for that. I wonder whether he would apply that logic to the decisions of the Australian Conciliation and Arbitration Commission. Would he apply it to decisions that are made in cases involving particular groups of workers on questions of anomalies or whatever which then flow on through other arbitral processes to the rest of the community? Would he therefore apply retrospectively the principles of wiping out the flow-on of those wage decisions to other members of the community to whom it was not intended the decisions should flow? Such a decision would introduce a new element into the Government's thinking in terms of industrial relations. I wonder whether it would be serious in applying a principle such as that. Certainly the Liberal and National parties would like to see more flexibility in the wage system and we believe it is unfair that wage decisions of the various arbitral authorities are made in respect of particular industries in particular circumstances; but to see those decisions flow over into industries whose circumstances are totally different and which have difficulty meeting their obligations under those decisions is a totally different thing. I would be pleased to hear whether the Minister would be prepared to argue that the decisions of the Australian Conciliation and Arbitration Commission should be overturned on the basis of the principles he outlined earlier. The point at issue in this matter is simple. The Government, to its credit, has sought in this legislation to protect Mr Bewley, who is at the centre of the amendment the Government has brought forward. The problem is that it has also added retrospectivity to overcome the point of principle raised by the decision in Mr Bewley's case. That means that all those people who may or may not ever be affected by that decision, who may or may not ever seek in the future to have applied to their own cases that favourable decision in Bewley's case, are being prohibited now by virtue of the Government's amendment from receiving the benefits of that decision. That is the simple fact, and that is what we oppose. It is purely and simply retrospective legislation, which all parliaments abhor, that takes away benefits that applied under the law to individual persons. That is a principle greater than the one the Minister seeks to argue. He merely seeks to denigrate the point made by the Opposition on the basis that somehow we are seeking to protect tax evaders. That is absolute nonsense. It is nothing to do with taxpayers or taxation legislation at all; this matter is about a benefit that by due process of law has been applied to certain beneficiaries who are members of the Public Service Superannuation Fund but is now to be denied to them by virtue of this legislation. That is the point of principle. We appeal to the Australian Democrats to join with the Liberal and National parties and vote against this legislation to destroy the retrospectivity incorporated in it. I implore the Minister to consider again the circumstances of Mr Bewley. I do not blame the Minister for using Mr Bewley as a kind of pawn in the battle to seek the passage of this legislation with its retrospectivity provision. The Minister is trying to say to us that if we support this legislation, if we let it go through, Mr Bewley's position will be protected; he forgets about all those other members of the Superannuation Fund who will be affected detrimentally as a result of that decision. That is our concern. I believe that Mr Bewley is big enough to see that the principle is bigger than him personally. It is true that, if the legislation goes through, it will protect Mr Bewley. If, on the other hand, it fails, Mr Bewley will be exposed. There is no guarantee that the condition Mr Bewley suffers from, a melanoma, will ever emerge again as a reason for his early retirement on grounds of invalidity. Senator Walsh —If it doesn't, it is irrelevant. Senator MESSNER —If it does not, it is an irrelevant matter and will not apply. If the Government, under this legislation, feels that it has to appeal to the Federal Court of Australia against the decision of the Administrative Appeals Tribunal, that is its own decision, but I believe that in the exact circumstances of Mr Bewley's case, which involve what do appear to be breaches of contract in terms of the conditions of Mr Bewley's employment when he changed over from the Tasmanian Public Service to the Commonwealth Public Service, the Government should give special consideration to his case. In the light of the correspondence the Minister and I have had about this, I note that it is not the Minister's intention to do so. I implore the Minister again to reconsider that so as to give some guarantee, some comfort, to Mr Bewley in a most difficult situation. The decision of the AAT can then be upheld in his case and he can be sure that in the event of his eventually leaving the Public Service he will be protected by act of grace. I see no reason why the Government should not be so magnanimous as to agree to that and to put down in this place a guarantee to that effect. His case is surely a matter for compassion, and such action would not be beyond the Government. Certainly on matters of principle the Government has a perfect right to appeal to a higher court, but I ask it please to consider the circumstances of Mr Bewley because his is not a clear cut case. It is not the case that Mr Bewley has suddenly popped out of the ground with a claim on the Commonwealth which is not beyond doubt. The fact is that he has been asserting a claim in this matter on the basis of what he believed to have been a legitimate arrangement between the Commonwealth and himself, which was that he would have all the protection of the Commonwealth superannuation scheme. In that event I believe the Government should acknowledge that there is a problem, at least half an error, on its side, and should guarantee Mr Bewley's circumstances. Having said that, we can only hope that the Minister does see the light and act compassionately in Mr Bewley's case. I reiterate: The Liberal and National parties will be opposing those references in sub-clause 2 (1) which have the effect of imposing retrospectivity on the beneficiaries of the Superannuation Fund. Senator SIDDONS(Victoria)(12.07) —The Australian Democrats will not be supporting the Opposition's amendments, for reasons I believe I made clear during the debate on the second reading. We believe that the Superannuation Legislation Amendment Bill is retrospective in a very technical sense only, and we stick to that belief. There is no doubt that Mr Bewley was wronged in his dealings with the Government regarding his superannuation rights. However, the situation has since been righted by the Administrative Appeals Tribunal. In addressing Mr Bewley's problem, the Administrative Appeals Tribunal changed the definition of likely future illnesses, used to issue benefit classification certificates. Under this new definition it is virtually impossible for a doctor to issue a benefit classification certificate. If this definition had not been changed back in 1976, many people would have been wronged; but it was changed. The fact of the matter is that nobody-neither Mr Bewley nor anybody else-will be disadvantaged by this legislation. It purely seeks to enshrine in legislation a practice that has existed since 1976. If the Liberals' amendment were to pass, people with illnesses likely to recur would be able to join the Public Service and retire on full benefits when those illnesses recurred. I would have thought that, with the Liberals' great talk about cutting waste and trying to reduce Government expenditure, they would not be seeking to move an amendment which would undoubtedly cost the Government enormous revenue. The precise amount is perhaps open to debate but it is beyond debate that it would be an enormous additional cost. Senator Peter Baume —It is a question of justice; you don't understand. Senator SIDDONS —I was accused by Senator Michael Baume of not reading the legislation. I can assure honourable senators that we have read the legislation. Senator Michael Baume —And the Scrutiny of Bills Committee report? Senator SIDDONS —We have also read the report of the Standing Committee for the Scrutiny of Bills. We have read the correspondence on the Bewley case and we have considered it very carefully. The Democrats can stand here proudly and say that we have a very consistent point of view on retrospective legislation. Of course we considered this legislation very carefully when the accusation was made that it was retrospective. We considered it in great detail and we came to the conclusion, as I have outlined, that it is retrospective purely in a highly technical sense. We believe that the Opposition, which has not been consistent on the question of retrospectivity, is now making great play of this purely for its own political grandstanding. Nobody will be disadvantaged-certainly not Mr Bewley-and we will not support the Liberal amendment. Senator MICHAEL BAUME(New South Wales)(12.11) —I wish to make, very briefly, one little point, and that is that I am concerned that Senator Walsh has said that there is a $35m cost. That cost appears to be based on there being no certificates, if all the outstanding certi-ficates were cancelled, because, as Senator Siddons said, it is virtually impossible to come up with a cost. What concerns me is why we have to assume that a definition change to `more likely than not'-for example, in the case of Bewley, who, as I recall the evidence, was 90 per cent likely not to have a recurrence-would remove certificates for everybody. There is evidence that Bewley was 90 per cent likely not to have a recurrence; but what about those people who would be 40 per cent likely not to have a recurrence? Presumably they would not fall within the new definition. I would like to hear the Minister explain why that change would entirely wipe out all existing certificates and what evidence he has for alleging that when, on the face of it, it seems to me to wipe out only those clearly above 50 per cent likely to have a recurrence. Senator WALSH(Western Australia-Minister for Finance)(12.12) —In response to the last question, the Australian Government Retirement Benefits Office estimate is that 90 per cent of existing benefit classification certificates would be null and void if the Administrative Appeals Tribunal decision in the Bewley case were allowed to stand. That is based on the BCC being valid only in circumstances where it was more likely than not that the same infirmity which had been identified at the time people joined the Public Service led to their premature retirement. There is, of course, the other 10 per cent but the AGRBO view is that the cost of reviewing the whole 66,000 in order to identify those 10 per cent would be so great that it would not be worth it. Let us be quite clear: The Australian Government Retirement Benefits Office has spontaneously-that office has not been leaned on by me or by anybody else-estimated that if this legislation is not passed with clauses 2, 5 and 6 intact, the 66,000 existing BCCs will be cancelled. Even if AGRBO decided to try to cull out the 10 per cent which it believes would still be applicable in a Bewley AAT decision situation, that assumes that some future AAT decision will not wipe them out as well. Likewise, although the Opposition's amendment seeks to apply a particular standard of proof or of probability only to new entrants to the Commonwealth Public Service, what is the Opposition going to do if the AAT subsequently brings in another and new interpretation of law that cancels them as well? There is no workable option other than that of establishing the precedent that when courts and tribunals make those sorts of silly decisions, the Parliament will accept its responsibility and overturn them by legislation. I have just been advised that this morning the AAT handed down a decision on the Dakin case, which is another BCC case, in which the AAT, with different personnel, I presume, overruled the Bewley decision. So where are we now? We have different groupings of the AAT in different parts of the country making decisions which are contradictory with each other. The Government's Superannuation Legislation Amendment Bill 1986-and with the one exception, I am grateful for the support of the Australian Democrats-puts some certainty back into the law, which is what the Opposition has always said it wants in the law. Instead of taking a punt on what one AAT as constituted may do at one time which is different from what another AAT might do at some other time-we have people making highly subjective judgments about alleged facts, but in a way that nobody can predict with any certainty-with this legislation we will put more certainty into the law as it is recorded, and having established the precedent, if the AAT, the Federal Court of Australia or anybody else undermines it again, one would expect that the Government and the Parliament at the time that that happens will do what it ought to do and legislate to overturn those decisions. The Opposition amendment is, in fact, retrospective. The Bill is not retrospective in any real sense. The Opposition amendment is retrospective because, if it was accepted, the 66,000 people who already hold BCCs, or that minority proportion of them who might ultimately be affected by a BCC, would be given a retrospective gain-something to which they did not believe they were entitled and something to which they would have absolutely no reason to believe they were entitled. The Government Bill seeks to preserve the status quo. Cutting through all the specious arguments the Opposition has put up, as I have already said, its real worry about this provision has nothing to do with the Commonwealth superannuation scheme or benefits classification certificates; it is that the Opposition would be voting for legislation which, in the pedantic lawyer's sense, was retrospective; and having done that, the Opposition exposes its flanks on the question of retrospective tax legislation. I note for the record that despite Senator Messner's professed and absolute objection in principle to retrospectivity, in 1982 he voted for retrospective tax legislation. I have not had time to look up what Senator Michael Baume did, but I know that Senator Messner did that, as, of course, a majority of the members of the then Liberal and National Party Government did. They voted for retrospective legislation in 1982, so for whatever the principle is worth-in my view it is a very dubious principle-it is one that is applied in a highly selective manner. On the question of costing, Senator Messner said that if the Opposition amendment was accepted, the additional payout from the CSS in the 1986-87 Budget might only be $2m or $3m. That is probably true. I have not had an estimate on that. It may even be less than that, but he is arguing that that is all one should count. He is arguing that a contingent and accruing liability should be ignored. I must say that I find it extraordinary that somebody who I understand practised as an accountant should put an argument that a contingent and accruing liability ought to be ignored. If we want to follow Senator Messner's line of reasoning down the years, although it may be only $1m in the first year-I do not have an accurate figure for that-one thing on which we can be certain is that at some time in the future the annual cost will be greatly in excess of $35m in 1986 value dollars. I do not know what it would amount to, but my hunch is that it would amount to something more than $100m annual cost at some time down the track. I have not fiddled the figures or anything like that. In a way that is most comprehensible I have tried to present just what the cost of the Opposition amendment would be. It is the cost in the particular year, plus the accruing contingent liability, brought back to a capitalised basis. That cost is around $35m in each of the next 10 years, so it is something like $350m plus. That is what the Opposition amendment seeks to impose upon the taxpayers-something more than an additional $350m cost on the superannuation scheme. Senator Messner tries to present this dispute as if it were only a question of benefits. Certainly, if his amendment prevails some people will get benefits for which they had no expectation prior to the Administrative Appeals Tribunal decision in the Bewley case and to which they have no entitlement. They will receive those benefits at the expense of everyone else. As Senator Siddons has pointed out, if the AAT-Bewley interpretation were allowed to stand in conflict with the AAT-Dakin and the AAT- Linden cases, anyone who had any sort of physical infirmity which was likely to or could induce a premature retirement would be crazy not to try to get into the Commonwealth Public Service. In that way, through the windfall provisions of the invalidity retirement rules, such a person would gain a pension which could be anything up to five or six times the normal social security invalid pension. I would have thought that the Opposition would not want that to happen, but that is one of the likely effects of the proposed amendment, if it were carred. I referred to the Dakin case earlier and to back up what I said I quote from page 34 of the decision: In the result and with due respect to those who have taken that view, we find ourselves unable to agree with the interpretation of sub-section 16 (4) adopted by the Tribunal in Re Bewley and the Commissioner for Superannuation. The members of that Tribunal, a section of the report of which I have just quoted, were, for the record, Mr Justice Neaves, Mr E. Smith, senior member, and Dr D. B. Travers. Thus, we have different components of the AAT running around all over the place producing contradictory decisions. This legislation removes that uncertainty and I commend it to all honourable senators who are not so frightened of exposing themselves to charges of inconsistency with respect to tax legislation which was retrospective. Question put: That the words proposed to be left out (Senator Messner's amendment) be left out. The Committee divided. (The Chairman-Senator D. J. Hamer) Ayes . . . . . . . . . . . 27 Noes . . . . . . . . . . . 33 —— Majority . . . . . . . . . 6 —— Archer, B. R. Jessop, D. S. Baume, Michael Knowles, S. C. Baume, Peter Lewis, A. W. R. Bjelke-Petersen, F. I. Messner, A. J. Boswell, R. L. D. Newman, J. M. Brownhill, D. G. C. Puplick, C. J. G. Carrick, Sir John Sheil, G. (Teller)Chaney, F. M. Teague, B. C. Collard, S. J. Townley, M. Crichton-Browne, N. A. Vanstone, A. E. Durack, P. D. Walters, M. S. Guilfoyle, Dame Margaret Watson, J. O. W. Hamer, D. J. Withers, R. G. Hill, R. Aulich, T. Jones, G. N. (Teller)Black, J. R. McKiernan, J. P. Bolkus, N. Macklin, M. J. Childs, B. K. Maguire, G. R. Chipp, D. L. Morris, J. Coates, J. Ray, RobertColeman, R. N. Richardson, G. F. Colston, M. A. Robertson, E. A. Cooney, B. Ryan, S. M. Crowley, R. A. Sanders, N. K. Devlin, R. Sibraa, K. W. Elstob, R. C. Siddons, J. R. Evans, Gareth Tate, M. C. Foreman, D. J. Vigor, D. B. Georges, G. Walsh, P. A. Gietzelt, A. T. Zakharov, A. O. Giles, P. J. Kilgariff, B. F. Cook, P. F. S. MacGibbon, D. J. Reynolds, M. Parer, W. R. Button, J. M. Alston, R. K. R. Grimes, D. J. Short, J. R. McIntosh, G. D. Reid, M. E. McClelland, Douglas Question so resolved in the negative. Clauses agreed to. Clause 9 (Membership of Trust). Senator SIDDONS(Vic)(12.30) —I move: (1) Page 6, paragraphs 9 (a), (b), (c), (d), (e), (f) and (g), lines 23 to 40, leave out the paragraphs, insert the following paragraphs: `(a) by omitting sub-section (1) and substituting the following sub-section: `(1) The Trust shall consist of 5 members, as follows: (a) a full-time principal member nominated by the Minister; (b) a full-time member nominated, in accordance with sub-section (5), by the Australian Council of Trade Unions; (c) 3 part-time members elected, in accordance with the regulations, by all eligible employees by secret ballot conducted by the Australian Electoral Commission. `(1a) The regulations made for the purpose of paragraph (1) (c) shall prescribe for elections held under that paragraph a system of election which is, as nearly as practicable, the same as the Hare-Clark proportional representation system set out in Schedule 4 of the Electoral Act 1907 of Tasmania.'; (b) by omitting sub-sections (3), (4), (5) and (6) and substituting the following sub-sections: `(3) The members nominated under paragraphs 1 (a) and (b) shall be persons with knowledge and expertise in finance, industrial relations, superannuation and investment. `(4) The members elected under paragraph (1) (c)- (a) shall be nominated by no less than 200 eligible employees; and (b) shall provide, at the time of their nomination, a written statement of their knowledge and expertise in the matters referred to in sub-section (3). `(5) The Australian Council of Trade Unions shall not nominate a person for appointment under sub-section (1) unless the Australian Council of Trade Unions has consulted the relevant industrial organizations in relation to the nomination. `(6) Each member of the Trust shall hold office for 5 years.'';'. There are some consequential amendments which I will not move until I find out what support we have for this substantive amendment. This amendment relates to the appointment of trustees to the Board of the Superannuation Fund Investment Trust. It is, in principle, the same as the amendment that we moved late last year. We maintain our position that there is an overwhelming argument for giving the contributors representation on the board of trustees. We believe that the arguments for doing so are overwhelming. The superannuation funds are totally made up of contributors' payments-the Government puts in no money at all-yet the contributors have no say as to who appoints the trustees, who in turn will have the responsibility for investing those enormous sums. Last year, when we moved this amendment, we had agreement from three public servants' unions, but the Government refused to countenance our idea. It did so, presumably, on the grounds that it considers that employees cannot be responsible or are not responsible enough to make judgments as to who should be elected to control their funds. We believe that this is a fundamental denial of the rights of individuals and of the Government's declared policy of consensus and listening to other people's points of view. Individuals do have a point of view. They should be allowed to exercise a direct vote on this very important issue. The amendment simply proposes: `(1) The Trust shall consist of 5 members, as follows: (a) a full-time principal member nominated by the Minister; (b) a full-time member nominated, in accordance with sub-section (5), by the Australian Council of Trade Unions; (c) 3 part-time members elected, in accordance with the regulations, by all eligible employees by secret ballot conducted by the Australian Electoral Commission. What could be more straightforward than that? Our amendment goes on to say: `(1a) The regulations made for the purpose of paragraph (1) (c)- That is the preceding paragraph- shall prescribe for elections held under that paragraph a system of election which is, as nearly as practicable, the same as the Hare-Clark proportional representation system set out in Schedule 4 of the Electoral Act 1907 of Tasmania.'; The amendment continues: ``(3) The members nominated under paragraphs 1 (a) and (b) shall be persons with knowledge and expertise in finance, industrial relations, superannuation and investment. That is a very necessary requirement. We further say: ``(4) The members elected under paragraph (1) (c)- (a) shall be nominated by no less than 200 eligible employees . . . That is a very important stipulation, because it is necessary that those nominating do have grass roots support. We do not want an election to be conducted wherein any individual can offer himself or herself for election. Our amendment continues: (b) shall provide, at the time of their nomination, a written statement of their knowledge and expertise in the matters referred to in sub-section (3). We believe that members should have knowledge of financial matters, investment procedures, et cetera. On the basis of whatever criteria one likes to apply to this amendment, it seems to the Democrats to be fair on every possible ground. We are unhappy with this legislation. As I said earlier, we are unhappy that the Government, which contributes nothing at all to the superannuation funds, should have the right under the legislation as it now stands to appoint the trustees. That is patently unfair. It is not as it should be. We are comforted nevertheless, because although the Minister for Finance (Senator Walsh) has not referred to the matter in this debate-I hope that he will address it to some degree-we understand that the Government intends to introduce amending legislation when it has decided its overall attitude to the election of trustees to the superannuation funds and that it will apply its principles to the legislation. It is essentially on that understanding that we support the legislation in its entirety, but we do commend this amendment to the Opposition and to the Government as being fair in every way and as having the support of the trade union movement and the contributors. We can see no reason at all why the Government should not support it. Senator MESSNER(South Australia)(12.36) —The Opposition will not support the amendment to clause 9 moved by the Australian Democrats. We debated the point in some part during the second reading debate. I made it clear that we regarded the Democrats' amendment as being tantamount to handing over control to the trade unions in the same way that the Government has chosen under the legislation as it originally stood before it was defeated in November of last year. For that reason, we will not now support the amendment, which is similar to that proposed by the Democrats at that time. Senator Siddons —You do not trust people to exercise a vote responsibly. Senator MESSNER —I do not want to take up the time of the Committee to reargue the case. I think the honourable senator understands the reason why we have taken our position. Turning to clause 9, I would like to hear the views of the Minister for Finance (Senator Walsh) on the situation that will arise by virtue of the inclusion in the Bill of paragraph (e) of clause 9, which seeks to omit sub-section (5) of the principal Act. The principal Act speaks of the appointments of persons as members of a trust. There is a requirement that the Governor-General, who makes those appointments, shall ensure that, as far as is practicable, a person is not appointed unless he has had appropriate experience in matters relating to the investment of moneys or otherwise in matters relating to the management of moneys. This Bill proposes that that provision be deleted. I find that extraordinary in light of the fact that the Government first of all sought to transfer the power of control of the funds into the hands of people who did not have those skills and, having been defeated on that matter, it has resumed its original position as regards appointments but it proposes to remove the requirement on the Governor-General to choose people for those positions on the board of trustees who have skills in management of money. I do not understand that proposal. I do not think the Minister has explained it elsewhere. Unless there are other references to it in the legislation, I fail to understand why the Government has moved in this way, since I am sure that it has views similar to our own, that people with skills in the management area ought to be chosen to serve as the overall trustees of the Superannuation Fund. Perhaps the Minister can demonstrate whether our understanding of the amendment is incorrect. As it reads to me, it seems that, incredibly, it is proposed to wipe out the reference to the need to have people appointed to the Superannuation Fund Investment Trust who have skills in the investment and management of huge sums of money. Senator WALSH(Western Australia-Minister for Finance)(12.39) —I will reply to Senator Messner's remarks first. It is, I concede, a matter of judgment, but the Government's view was that section 30 (5) was a bit too restricted and limiting. Obviously, some expertise is an important consideration and I will certainly take it into account in any appointments that I make to the Superannuation Fund Investment Trust. But the Government's view was that, particularly when there were only three members, as will continue to be the case if the Australian Democrats' amendment is not carried, it was too restrictive to have something as tight as that in the legislation. However, I accept the validity of the argument and it is something that I will take into consideration. I just note for the record that the qualifications for administrators of superannuation schemes are generally not expressed in trust deeds or anything like trust deeds. Although it is probably the custom to have people with some expertise in the trustee positions, it is by no means mandatory-indeed, it is rarely mandatory in the trust deeds for private sector schemes-for that to be the case. In regard to Senator Siddons's amendment, Senator Messner says that this view has been argued before, but I would like to go through the points very briefly again. What he has proposed is superficially attractive-I concede that-but the less superficial one becomes in examining it, I suggest the less attractive it becomes. Conducting an election for the members or trustees of the Superannuation Fund Investment Trust is very different from conducting a national election or a ballot of members in any geographically compact group. It would be a nation-wide election, for which the candidates would be unknown as individuals to a very large number of Fund contributors. I think this is the crucial difference between such an election and parliamentary elections, as almost everybody who is elected to the national parliament is aligned to a party. Even if the individual is not known, the electors know that candidates are aligned to a particular party and they have some knowledge of the general attitudes and policies of the parties anyway, whereas in this case it is unlikely that that sort of party political situation and the knowledge which goes with it, which is vital to a nation-wide election, would apply. I concede that the Democrats' proposal modifies the conditions which applied when rank and file elections were held prior to 1974 in that it stipulates that it would require 200 members contributing to the Fund, instead of 20, the figure that prevailed before, to sign a nomination form. That certainly is likely to produce ballots in which there are fewer candidates, but it provides no guarantee that there will not be very large numbers of candidates. In the last ballot there were some 28 candidates, only about 40 per cent of the membership voted and, as is usual, the positions on the ballot papers were determined by draw. A former member of the Trust who had a good deal of financial expertise and so on received 15,000 primary votes, but he was at the bottom of the ballot paper and did not get elected, whereas the person whose name was at the top of the ballot paper and who lacked any financial expertise received 12,000 votes and ultimately was elected. Under those circumstances it became more of a lottery than an election. For that reason, the Government will not accept the amendment. It is correct, as Senator Siddons said, that the Public Service and the Public Service unions-certainly the Public Service unions-agreed to that amendment, but that needs to be qualified because it was not the preferred choice of the Public Service unions; it was something which they were willing to trade off, for want of a better expression, in return for some of the other amendments in last year's Bills which they were positively in favour of. Amendment negatived. Senator MESSNER(South Australia)(12.44) —The response of the Minister for Finance to my question about the deletion of sub-section (5) of section 30 of the original Act does not in my opinion answer the point. However, we will not be taking the matter to a division. Clause agreed to. Remainder of Bill-by leave-taken as a whole, and agreed to. Bill reported without amendment; report adopted. Bill (on motion by Senator Walsh) read a third time. Sitting suspended from 12.45 to 2 p.m. Senator BUTTON(Victoria-Leader of the Government in the Senate) —I inform the Senate that the Minister for Employment and Industrial Relations, Mr Willis, left for Geneva, the United Kingdom, the United States and Canada on 6 June. He will return on 23 June. In his absence, the Minister for Immigration and Ethnic Affairs, Mr Hurford, is Acting Minister for Employment and Industrial Relations. The Special Minister of State, Mr Young, left Australia on 8 June for Europe, Japan, China and Hong Kong and will return on 6 July. During his absence, the Minister for Defence, Mr Beazley, will be Acting Special Minister of State. The Minister for Foreign Affairs, Mr Hayden, left Australia on 7 June for Thailand, Cyprus, Greece, Turkey and the Philippines. He will return on 30 June. During his absence, Senator Evans will be the Acting Minister for Foreign Affairs. Senator CHANEY —I refer the Minister representing the Treasurer and Minister representing the Minister for Employment and Industrial Relations to remarks by Mr Simon Crean published yesterday and again today which I quote in part: I accept a reality that further discounting cannot be delivered by the trade union movement. I ask the Minister: Now that Mr Crean has finally and firmly closed the door on any prospect of union agreement to discounting at the next national wage case, does the Minister agree that the Government's hands are tied and that it will be unable to achieve moderation of wage increases to allow for the effects of the continuing devaluation of the Australian currency? If the Minister does not agree with that-- Senator Button —No. Senator CHANEY —Apparently the Leader of the Government does not agree, as he has just said no. If the Minister does not agree, what courses of action are open to the Government to achieve the moderation of wage increases which everyone but the Australian Council of Trade Unions agrees is necessary? Senator WALSH —I did not know Mr Crean had said that. It is a rather pessimistic view. It is a bit premature to be saying that that is the case. The Government's policy, which has been spelt out on many occasions by me and a number of other people with some responsibility in the area, is that we have to have an appropriate mix on the outlays side, on the wages side and on the revenue side. One of the great difficulties we confront is that, when we try to do something on the outlays side, frequently the Opposition sabotages it in the Senate. The Opposition endlessly goes around the country saying that expenditure has to be cut. Apart from a handful of trivial items in the stunts of the Waste Watch Committee, the Opposition has not nominated any area where there can be significant cuts in expenditure. On the contrary, the Leader of the Opposition runs around the country irresponsibly promising an extra $2 billion in outlays and an extra $5 billion added to the deficit through forgone revenue. So, if the Opposition were in government it would finish up with a deficit of about $12 billion-even bigger as a proportion of gross domestic product than the prospective deficit which Mr Howard left behind in 1983 when he was ignominiously booted out of office. Certainly if a government displayed that degree of fiscal irresponsibility, that is, bringing in a Budget deficit under present circumstances of between 5 and 6 per cent of GDP, we would have runaway inflation and runaway interest rates and it would be necessary to transfer the whole burden on to the wages side and get a level of discounting that nobody could hope to deliver. Senator CHANEY —Mr President, I ask a supplementary question. There is not time to debate the Minister's answer to the question. I am sorry that he did not refer to my Press release of yesterday when I pointed out some areas where the Government might cut expenditure and areas where it should not cut expenditure. I ask the Minister: Is it the policy of this Government that there needs to be further moderation of wage increases to take into account the current economic circumstances? If that is the policy of the Government, how does it intend to go about getting further moderation of wage increases in light of the statements made by Mr Crean? Senator WALSH —The objective facts are that changes in Australia's terms of trade over the last 15 months have wiped more than $6 billion off national income. It follows axiomatically that, unless there is to be an increase in overseas borrowings of that size, average living standards or capital expenditures have to fall, the latter of which would not be wise. So, average living standards have to fall. Precisely where those standards fall is a matter, I suppose, for some debate and dispute. But I assert that it is absolutely unrealistic to expect anybody in the work force, and particularly those at the lower end of the pay scale, to accept further cuts in their real wages at the same time as the people for whom the Opposition speaks in this place continue to rip off the tax system by funding their self-indulgences in a tax deductible way. A package has to be put together which shows some equality of sacrifice and spreads the burden equitably across all sections of the community. In regard to the reference by Senator Chaney at the start of his supplementary question to the Press statement he put out yesterday, I am afraid that I have not seen it. I will certainly scrutinise it very carefully. In particular, I will be looking to see which items of the $500m shopping list of political goodies which the National Party of Australia is running around promising the farmers Senator Chaney has repudiated, which of the items on that list he has walked away from. I suspect that I will be disappointed. Senator JONES —I ask the Acting Minister for Foreign Affairs: Has his attention been drawn to a recent report that states: `Waldheim's victory sparks Israeli outrage'? The report further states that the election of Dr Waldheim, former Secretary-General of the United Nations, as President of Austria has caused a wave of indignation across Europe and that Israel has recalled its Ambassador from Austria. In light of these reports, what information is available to the Australian Government? Depending on the information available, is any action pending by the Government in light of the reaction from countries around the world to the alleged claims that Dr Waldheim was involved in criminal wartime atrocities while he was a member of the German Army during World War II? Senator GARETH EVANS —As honourable senators will know, the former United Nations Secretary-General, Dr Kurt Waldheim, was elected to the presidency of Austria, with which country Australia has warm and friendly relations, by an absolute majority of 53.9 per cent in the 8 June presidential election run-off. A total of 87.3 per cent of eligible voters cast a vote in what was clearly a democratically held election. The inauguration is expected to be held early in July. The Government is aware of the reports mentioned in Senator Jones's question. The allegations on which they are based have not yet, however, been tested under any legal process. At this point the Australian Government has no further information regarding the allegations to which the honourable senator refers. Accordingly, we have no further comment to make on the allegations in question. Senator BROWNHILL —My question is directed to the Minister representing the Minister for Employment and Industrial Relations. The Minister would be aware of the industrial problems in Broken Hill which have already resulted in the standing down of 1,100 workers and the possibility of an entire shutdown of the whole mining industry in that city. In view of the possible consequences of this dispute to other centres, such as Port Pirie, and an estimated loss of $300m to export earnings, and in light of the representations made to the Government by the Federal member for Riverina-Darling, Mr Hicks, and the Barrier Industrial Council, what action is the Government taking to bring about a resolution of the conflict? Senator WALSH —I answered a question about Broken Hill very similar to this recently. I put the view then, which I repeat now, that it is very silly of the unions concerned to endanger their livelihood and employment and the national interest to the extent that they have. I do not know what specific measures Mr Willis, who has left the country now, had in the pipeline before he left. I will try to find out. May I give a bit of gratuitous advice to Senator Brownhill as well and say that anything Mr Willis might want to do with the unions at Broken Hill and any form of suasion he wants to use on the miners at Broken Hill are certainly not helped by the fact that the ratbag right leadership of the National Farmers Federation is getting around advocating breaking the law. I would like to see Senator Brownhill's Party express a view publicly on whether it is dissociating itself from the views being put forward in the advocacy of the ratbag right leadership of the National Farmers Federation and, in particular, its President. Senator SIBRAA —Is the Minister for Finance aware that the Premier of Tasmania, Mr Robin Gray, still believes that Tasmania has a right to continued special assistance from the Federal Government? Is he aware that Mr Gray came to Canberra on Friday to hand the Federal Government a specially commissioned report arguing against possible Commonwealth funding cuts in his State? Can the Minister see any conflict between Mr Gray coming to Canberra with his hand out and the Liberal Party's call for cuts in government spending? Senator WALSH —I think the conflict is so self-evident that it needs no further elaboration from me, but I would like to know how the Liberal Party reconciles the conflict. I did hear Mr Gray on AM this morning going through his usual complaining routine and trying to con the Tasmanian electorate into believing that all the problems Tasmania has are made in Canberra, which is, of course, nonsense and always has been. To refute it I just want to put a few facts on the record. In 1985-86, total per capita grants to Tasmania are $2,034 compared to the six-State average of $1,374. That is $660 more per capita that Tasmania has received from the Commonwealth Government in this financial year than the six States on average. If Mr Gray cannot keep house and do his financial housekeeping in a way that enables him to live comfortably within that total, I suggest that is his fault and not the fault of the Commonwealth. One does not have to look very far before one finds one of the major reasons why Mr Gray might have some trouble living within that extremely generous allowance he gets from the Commonwealth Government. As is fairly well known, wage costs comprise between 70 and 80 per cent of State government total expenditure. Wage costs are determined by the level of wages and the number of State government employees. When we look at the number of employees employed by the various State governments, we find that almost 20 per cent of the New South Wales work force is employed by the State Government and its agencies. I dare say that if that figure were quoted in isolation most of the people across the aisle in the Opposition would say that that is an extravagantly high level of State government employment. When we look at Tasmania, we find that 28.3 per cent of the work force is in State government employment, compared to the New South Wales figure of less than 20 per cent. That figure of 28.3 per cent is substantially higher than any other State. That is obviously a major reason why the Tasmanian Government consumes money at a greater per capita rate than any other State. A further qualification is that Tasmania alone, with the limited exception of South Australia, does not have to carry its railway workers on its employment figures. Very foolishly, in my opinion-it is a piece of ancient history-in 1975 the Commonwealth Government took over the Tasmanian railways, and so the Tasmanian railway workers are now recorded as employees of a Commonwealth authority, whereas in any other State, with the limited exception of South Australia, those same people have been recorded as State government employees. Senator Walters —Mr President, I raise a point of order. Anyone would know that a State with a small population must take more public servants per head of population-- The PRESIDENT —Order! There is no point of order. Senator WALSH —If an adjustment were made for the railway work force we would find that there would be about an extra one per cent of the total work force employed by the State Government. The fiscal burden of the Tasmanian railway system is also accepted by the Commonwealth, whereas in any other State, again with the limited exception of South Australia, it is absorbed within the State Government Budget. The Commonwealth Government funds the operating deficit of the Tasmanian railway system, which puts Tasmania at a significant fiscal advantage compared to any other State. If Mr Gray cannot live with an allocation of Commonwealth funding of $660 per capita above the national average, I suggest that there is something wrong with his fiscal housekeeping. Moreover, as a matter for the States generally, the last Premiers Conference policy of increasing in real terms the general purpose payment to the States by 2 per cent has been substantially enhanced by the 2 per cent wage discount which has already happened since that period and the possibility of an additional wage discount. The States' income is tied to the consumer price index, whereas between 70 per cent and 80 per cent of their outlays-that is their wages bill-is tied to the CPI, discounted already by 2 per cent and possibly discounted by something more. Frankly, I was not at all impressed by Mr Gray's complaining this morning. I hope that the Treasurer is similarly unimpressed next Friday. Senator VIGOR —Is the Minister representing the Minister for Science aware that a special meeting of the consultative parties to the Antarctic Treaty was held recently in Hobart to advance the minerals regime to control exploration and exploitation of the mineral resources of Antarctica? At that meeting, it was agreed to proceed rapidly to conclude negotiations on the minerals regime. A completion date for establishing the regime was set for May next year. In view of Australia's declared commitment to ensuring that the Antarctic environment is protected from the danger of extensive damage from mining and oil exploration, what steps is Australia taking to ensure that negotiations for a conservation regime are completed before any mineral exploration or exploitation goes ahead and to ensure that widespread and enforceable monitoring and inspection provisions will be available to monitor any damage caused to the Antarctic environment by mining or oil exploration activities? Senator BUTTON —I am aware that, as described by Senator Vigor, a conference of the consultative parties to the Antarctic Treaty in respect of mineral resources took place in Hobart recently. Insofar as the other parts of the honourable senator's question refer to a series of other matters, I am not able to provide him with an answer. I will refer it to the Minister for Science and obtain an answer as soon as possible. Senator BLACK —Has the Minister for Finance seen an article in the Australian Financial Review regarding the Australian Federation of Employers proposal to cut taxes and expenditure to produce a deficit outcome of less than $4 billion? Can the Minister say whether the AFE's package would produce that deficit outcome and can he indicate any other implications of the proposal? Senator WALSH —No, the measures spelt out by the Australian Federation of Employers would not produce the deficit outcome which the Federation set as a target. I notice that the spearhead for the Federation of Employers is one Andrew Hay, a former staffer to the former Treasurer, Mr Lynch, who produced the famous rubbery figures in the 1977 Budget. In Mr Hay's defence I want to put on the record that he, unlike the Leader of the Opposition, has at least had the decency and the intellectual honesty to name a number of specific areas where he believed expenditure should be cut. I suppose he is doing that in his capacity as one of the growing band of extra-parliamentary pretenders for the Liberal Party leadership. The Liberals, on the other hand, just go on telling Australia how they are going to spend money. I refer to an extra $2 billion of it, plus an extra $5 billion in revenue losses because of their tax promises. But the Federation of Employers proposal suggests that the top marginal tax rate should be reduced to 30c in the dollar. On the present tax scales that would have a revenue cost of about $8 billion in a full year. Against that the reformed tax scales the Government will introduce this year will have a revenue cost of just over $5 billion in a full year. The areas that the Federation of Employers, or Mr Hay, nominated for expenditure cuts were a lower level of rebate under Medicare, tertiary education fees, changes to the family allowance system, cuts in welfare benefits and the scrapping of employment programs. Of these the only one which he costed was scrapping of employment programs, which is around $650m. On the rest of the items that he has put up, he would pick up a few hundred million dollars but not the thousands of millions he would require, adjustments on the outlay side, to produce the deficit outcome that he or his organisation says is desirable. But what Hay would be looking at, if his extra-parliamentary pretensions to the Liberal Party leadership were to become a reality, as well as his top marginal tax rate of 30 per cent would be no fringe benefits tax, no capital gains tax, and an even larger deficit than the one Mr Howard would deliver, taking his assurances and undertakings at face value. Senator ARCHER —I direct my question to the Minister, representing the Treasurer. The Minister recently gave some advice on revised taxation measures applicable to the stud livestock industry. Can he further advise whether changes are to be made where this involves such artificial breeding practices as embryo transfers and/or animal leasing only, or right across the entire industry? In view of the time lapse since he gave that previous advice, has there yet developed a written explanation of the changes and, if not, can he urgently arrange for one to be produced? Senator WALSH —By way of clarification, let me state that the changes affect not only artificial breeding but the stud or bloodstock industry in general. The purpose is to include in trading stock values a substantial proportion of the cost of breeding the stock up to the date of birth, which obviously would have to cover the cost of insemination, whether it is done artificially or naturally. The natural cost would include at least the cost of the sire being used. The precise coverage of those costs will be subject of a statement by the Treasurer before the end of this month, following the consultations which he is either having or is about to have with the industry. Senator COLEMAN —Is the Minister representing the Attorney-General aware that on 23 February 1984, during an unrelated trial in the Supreme Court of South Australia, the then Mr Justice Wells referred to certain reported statements by Mr Justice Kirby about the alleged conduct of Mr Justice Murphy in relation to the possible appointment of a Mr Jegorow to a public office? Is it a fact that this alleged conduct was a subject of investigation by the first Senate committee which reported favourably on Mr Justice Murphy? Is he aware that the alleged conduct may be the subject of inquiry by the present Parliamentary Commission of Inquiry? Is he also aware that the extreme terms in which Mr Justice Wells spoke about judges expressing opinions on the suitability of proposed appointees to public office disqualify him from sitting in judgment on whether such conduct, if proved, constituted misbehaviour by a judge? Did the Hon. W. A. N. Wells inform the Government that he had made this statement before he indicated that he would be prepared to sit on the Commission, or at any time before the Government nominated him to the House of Representatives and the Senate as a member of the Commission? Senator GARETH EVANS —I have had drawn to my attention a few minutes ago a Press report to the effect stated by Senator Coleman that appeared in the Adelaide Advertiser on 24 February 1984, although Mr Justice Wells's comments as there reported are in general terms and, although directed against Mr Justice Kirby, do not squarely or expressly refer to Mr Justice Murphy or the Jegorow matter. I will refer Senator Coleman's question to the Attorney-General for such reply as he might care to make. Senator VANSTONE —I refer the Minister Assisting the Prime Minister on the Status of Women to a question I asked in October last year with respect to the Movement for the Ordination of Women and in particular to her reply, in part, where she said: We have always accepted in our system that the internal decisions taken by religious groups are for them to take and it is not the role of government to become involved in those internal decision making processes but rather to protect individuals against any sort of religious discrimination that may arise. In light of reports in yesterday's Australian of a $5,000 grant from the Office of the Status of Women to the Movement for the Ordination of Women, has the Government now changed its view with respect to interfering in matters of various religious groups? Can the Minister answer the concerns of many Anglicans, both lay and clergy, that the grant represents an attempt to support one view of an internal dispute within the church and as such is interfering in religious matters? Senator RYAN —As Senator Vanstone began her question, I tried to recall the occasion last October when she asked me about the position of women seeking ordination in the Anglican Church. As I recall, that question by Senator Vanstone referred to the sex discrimination legislation. It was in answer to her question as to whether we would seek to have the legislation cover the internal decisions of churches that I made my answer. The decision to make available a grant to a group of churchwomen to advance the status of women as they see it within their organisation is a different matter. It simply gives to those churchwomen the opportunity to develop their ideas and to attempt to persuade their fellow churchmen and women of their point of view. It does not in any way determine what the Anglican Church will decide on that issue. Through grants made available by the Office of the Status of Women, a number of churchwomen from different churches have received grants, sometimes to pursue social issues, sometimes organisational issues. It seems to me that if we were to accept the implication of Senator Vanstone's question-namely, that because there may be disagreement about a particular issue within a particular church, churchwomen should not be eligible for grants-we would be unable to make any grants to churchwomen. Most churches that practise in Australia have a reasonable degree of democracy and therefore there will be a variety of views about particular matters. I would not like to adopt a position where churchwomen as opposed to women involved in any other sort of organisation in our community were not able to apply for government grants in any circumstances. Senator VANSTONE —I ask a supplementary question, Mr President. I accept the Minister's answer, or at least understand it, that a grant is different from a legislative direction, but is the Minister saying that it is acceptable for the Government to support one particular view of a dispute within, in this case, the Anglican Church over a matter pertaining to the rules of that Church as opposed to giving a grant to a section within a church for a policy development that would relate to all members of the community, as in a welfare project that a church may want to put forward of a policy nature? Does she accept that it is acceptable for the Government to support one view with respect to rules governing the running of that religious order or group? Senator RYAN —I have listened carefully to the supplementary question put by Senator Vanstone, and I do not think her description of the Government's intention in making that grant is one I can agree with. It was not the Government's intention to assist one group to operate in a way that was in conflict with other members of that persuasion, but rather the criterion that is used in these grants is that the group that receives the grant needs to be committed to advancing the status of women. It is the view of some women in the Anglican Church and, indeed, women in other churches that their status will be advanced if they can achieve ordination. That achievement has been made in some parts of some churches and not in others. I conclude by saying simply that I think the issue is one of the status of women. It is really not for the Government to judge how a status of women issue can be pursued in a particular church. I hope that the group which has received this grant has advanced the status of women. Even though it may not have achieved its particular aim of ordination, that group may still have raised the issue concerning the status of women in the church and, therefore, our criterion will have been satisfied. Senator DEVLIN —My question is addressed to the Minister representing the Minister for Transport. Recently the Minister answered a question in the Senate on safety aspects relating to marathon runners using the Australian national highway system. The Minister would be aware of the tragic loss of two lives in Bass Strait recently when a rower, attempting to cross the Strait, ran into difficulties. Does the Minister agree that Australian authorities are not sufficiently aware of the danger some of these stunts are to the competitors and to the general public? Senator GIETZELT —To the extent that the Minister for Transport and Minister for Aviation is the Minister responsible for the Federal Sea Safety and Surveillance in Canberra, I suppose it comes somewhat under his jurisdiction to have an interest in the area of sea rescues and other adventures, expeditions and incidents that take place from time to time. It is pretty clear that in the free society in which we live in Australia there is still a sense of adventure among many people and that these people do, from time to time, engage in activities which place at risk not only their own lives but also those who are called on to rescue or save them from unforeseen circumstances. My brief advises me that there is a bigger and bigger responsibility being placed on the Surveillance Centre in Canberra and that 2,500 incidents were reported to it during 1984-85. Some 61 searches were undertaken by the Centre in co-operation with the State and Territory police services. The cost to the taxpayer of those searches exceeded $1.5m. Of course, the difficulty is that sometimes people's sense of adventure leads them to take on tasks that are beyond them. I refer to the incident mentioned by Senator Devlin in which a young rower sought to row himself across Bass Strait. Not only did he lose his own life when he put out a mayday call but also, as a result of the involvement of other persons, one older fisherman, as I recall, lost his life in the rescue operation. I suppose that we are confronted with the difficulty of a division of responsibility between State police forces, which accept responsibility in some areas, and the Commonwealth, which is becoming more and more involved as people's sense of adventure is expressed in the way it has been. There is in fact no clear division of authority between the Commonwealth and the States even though the Commonwealth has accepted some responsibilities in these areas. We have had the recent example of a hoax, again in Senator Devlin's State, which my brief tells me cost the Commonwealth some $62,000 in responding to the call. Therefore, I suppose that when Senator Devlin asks me about the Australian public becoming more aware of their social responsibilities in this matter I must respond positively to that suggestion because I think that when persons set out on some adventure they should have some support system organised for themselves so that in fact other innocents are not involved in the expedition or the adventure which they are undertaking. One can only hope that, on the basis of this recent Tasmanian experience, more care will be exercised. Whilst we do not want to take away the right of citizens to involve themselves in adventure, it is clear that they have some responsibility to make sure that they have some support system organised not only to save themselves but also to avoid losing the lives of other people. Senator CRICHTON-BROWNE —My question is directed to the Minister representing the Minister for Immigration and Ethnic Affairs. In 1984-85 the Labor Government set a target of 4,000 business migrants but achieved a result of only 1,417 such migrants. In 1985-86 the target was raised to 4,500. It is projected that only 1,800 such people will migrate. Why is this so? Senator GRIMES —I do not know off-hand. I will ask the Minister for Immigration and Ethnic Affairs and get an answer as soon as possible. Senator BOLKUS —I draw the attention of the Minister representing the Minister for Territories to an anachronistic piece of legislation known as the Public Health (Sale of Food and Drugs) Regulations-specifically Regulation 27-which operates in the Australian Capital Territory and which prevents Canberra restaurant owners from serving food to customers seated outside their restaurants. Will the Government consider amending this regulation so that Australia's capital city can be brought into line with practices around the world? Senator GIETZELT —I have no doubt that all of us appreciate the civilised eating habits that we have seen when we have had the opportunity of travelling overseas and would like to see them extended to Australia. No doubt, eating outdoors is an attractive way to eat. The National Health and Medical Research Council has produced a model food Act for adoption in all States and Territories to achieve such an objective. However, it is not a matter that can be resolved easily. We have many pests in Australia. Personally, at the top of the list I would put the self-appointed economists who keep telling governments how to run the economy. However, I suppose that the pest which has its application here is the blowfly which has created problems, particularly in the hot climate of Australia, so far as our pure food health Acts are concerned. As the Australian Capital Territory Health Authority has responsibility for public health matters in the Australian Capital Territory it currently is examining the draft model Act that has been prepared by the National Health and Medical Research Council. It is seeking the opinion of those involved in the catering industry with a view to meeting what clearly would be a very desirable objective. However, I am advised that there are difficulties because there have been a large number of complaints about blowflies being found in take-away food. We therefore have to consider the pest problem when we look at liberalising the existing practices. Desirable as that may be, we still have the responsibility of protecting those who will partake of the food. To that extent, every consideration is being given to the model Act. I hope shortly to be in a position to advise Senator Bolkus as to some final consideration of the recommendation of the model Act. The PRESIDENT —Order! Before I call Senator Walters, I draw the attention of honourable senators to the presence in the President's gallery of former Senator O'Byrne, a distinguished senator from Tasmania and also a former distinguished President of the Senate. I extend to Mr and Mrs O'Byrne on behalf of all honourable senators a warm and friendly welcome on their return to Canberra. Honourable senators-Hear, hear! Senator WALTERS —My question is addressed to the Leader of the Government in the Senate. Will the cost of the two different types of membership cards for next month's Australian Labor Party National Conference sent to Australia's top 500 corporations be tax deductible? As the first type of card, which costs $1,100, entitles the owner to breakfast with Senator Button and Mr Keating and as the second type of card, which is called the `extra card' and which costs $1,900, entitles the owner to breakfast with `Bob' and as both cards entitle the owners-according to Mr John Phillips who dreamed up the rort for the Labor Party-`to be briefed and serviced with a secretariat and given the opportunity for contact with people that matter', can the businessmen who fall for this ripoff claim a tax deduction for these based on the need of their businesses for these services? Senator Grimes —She's got it wrong. They're going to have you for breakfast. Senator BUTTON —Quite likely. I will obtain a detailed answer to Senator Walters's tax deductibility questions. As I understand it, an awful lot of people want to come to the breakfast, whether or not it is tax deductible. That is a tribute to the relevance of a National Labor Party Conference as distinct from a conference of the Liberal Party of Australia. I am sure that will not be a question of major concern. I also understand that part of the expenses of the delegates will be financed by the Tasmanian Government. That is something we appreciate, that the Liberal Party has seen fit, through the Tasmanian Government, to contribute to the cost of delegates to the Conference. So the contribution is fairly universal. The recognition of the importance of the Conference is widely acknowledged and we appreciate the support it is getting. As to whether anyone will pay money to have breakfast with me, I can only say to some of my colleagues that they ought to appreciate that some people are prepared to pay for that even if they are not. Senator COOK —Has the attention of the Minister for Finance been drawn to those sections of the leaked aviation policy document of the Liberal Party of Australia covering the privatisation of Australian airlines and the partial privatisation of Qantas Airways Ltd? If so, can he give an indication of the likely realisable value of those assets and the Government's response to the Opposition's justification for disposing of them? Senator WALSH —I have seen the relevant section of the leaked Opposition policy and the Commonwealth investments, which are share capital and reserves, recorded in the balance sheets of the two airlines: They are $372m for Trans Australia Airlines and $136m for Qantas. However, those amounts are not reliable or even indicative measures of realisable values since they are based on historical valuations, not current or market valuations of assets. If those assets or shares were to be offered for sale their value would be affected significantly by the conditions under which they were offered. For example, with the Thatcher privatisation policy, although shares have been offered for sale to the public, very restrictive conditions on the resale of those shares and other restrictions have been generally imposed upon them. I do not know whether this Opposition intends to do that if it should ever get into government. The Opposition is now claiming as a virtue-I find this supremely ironic-that it will end the two-airline agreement and deregulate aviation. Given that only in 1981, before the then Fraser Government and the then Treasurer-the current high priest of privatisation and deregulation; a high priest in opposition-lost control of the Senate in the middle of that year, they bulldozed through legislation effectively to lock up the two-airlines policy until 1990. So someone has travelled to Damascus, or would like us to believe he has travelled to Damascus, since them. The stated reasons for the Opposition proposing to sell off assets is that it would be more efficient and would better deliver a service. That is nonsense, just as it was in the United Kingdom. What the Opposition's privatisation policy is based upon is the desperate need to get money to deliver on some of its irresponsible spending promises which, if honoured, would add $2 billion to government outlays. Its taxation promises would take $5 billion off revenue. What the Opposition's privatisation policy is all about is to flog off public assets and burn the money in current consumption. That is what it is all about, just as is the case in England where the Thatcher Government is flogging off public assets, not deregulating industry, to fund tax cuts for the next election. That is what this Opposition proposes to do here. However, it will have to go much further than TAA and Qantas because, even on market valuations, the total assets of TAA and Qantas are not nearly enough to fund the irresponsible expenditure and taxation promises which the discredited former Treasurer has been running around the country delivering, as he put it, a shopping list of political goodies. To deliver on that promise, the assets that the Opposition would have to flog off are Telecom Australia-- Senator Chaney —Mr President, I raise a point of order. The Minister was asked a question about a specific element of policy. He is now debating the question across a much wider field and I ask you to call him to order. The PRESIDENT —I have been listening to the Minister. He is within the terms of his answer, even though that may be a long way around the track. I ask him to come to the point. Senator WALSH —Certainly, Mr President. I was just making the point, and I was about to close, that the assets of Telecom and Qantas are not nearly large enough to meet the Opposition's requirements. The assets it would have to flog off are Telecom and Australia Post and the trading enterprises which have assets valued at billions of dollars not hundreds of millions of dollars. Senator SHEIL —My question is to the Leader of the Government in the Senate. Since many Ministers listed in the returns of Ministers' interests state that they are paid-up members of unions, could the grants they have made to unions over the past three years be considered a conflict of interest? Senator BUTTON —I do not think so. All the interests are declared, and that is the point, I think. Senator ELSTOB —Can the Minister representing the Minister for Trade say whether Australia's export potential is being inhibited by the belief that we have a poor industrial relations record and virtually no manufacturing industry? If so, to what extent has this situation affected exports? Can the Minister indicate what the Government and the business community are doing to counter this misconception? Senator BUTTON —Of course it would take a very long time to answer that question. Senator Boswell —Try, and try to shorten it. Senator BUTTON —Senator Boswell is encouraging me today and I welcome that. It is true that traditionally this country has been regarded as one which has a poor industrial relations record. In the early months of this year Australia's industrial relations record was the best for 17 years. We had an enormous improvement in the level of industrial disputation. Senator Dame Margaret Guilfoyle —Not in the Melbourne trains. Senator BUTTON —There are always exceptions. Senator Dame Margaret Guilfoyle mentioned the Melbourne trains and earlier today a question was asked about Broken Hill. However, across the board the aggregate figures for industrial disputation are vastly improved throughout Australia and in some industries they have dramatically improved; for example, under this Government the record of industrial peace in the steel industry has been magnificent compared with that of previous years. That does not mean that one has any cause for satisfaction about industrial disputes wherever they occur and for whatever reasons they occur. Plenty of societies which have a better and more sophisticated manufacturing sector than ours, for example, have done it on the basis of having a great degree of beneficial and constructive consultation between employees and management, something that would certainly not happen here under an alternative government and certainly did not happen here under the last Government. We have taken a lot of painstaking measures to try to change attitude towards these issues and I think we are having some success. However, we are making slow progress. The extent to which one's reputation for these things as a country develops overseas and changes overseas is, again, a slow process. There is plenty of recognition that that is taking place. The reputation of this country in respect of those matters is changing for the better overseas. The honourable senator asked me about the belief, apparently articulated in various places, that we do not have a very sophisticated and integrated manufacturing sector. I think that is largely true. It is something which was abandoned in previous years as being unimportant. Again, I think we have a considerable way to go in changing perceptions about that; perceptions which, of course, vary from industry to industry. Some are good performers internationally and have a good reputation internationally; others do not. We have embarked on a series of policies in order to try to get a better integrated and more sophisticated manufacturing sector. I do not wish to refer to that at great length at the moment, but basically it involves trying to do some of the things which successful manufacturing economies have done in the past and providing the right environment of incentives for that. Once again, the reputation issue will, I believe, change gradually, but it is exactly the same as the question which the Government has to address at the moment because of the adverse turn in the terms of trade. It does not represent anything particularly new; it represents something significant in terms of the impact which it has in a country which now has a largely deregulated financial system and a floating dollar. The impact is significant but it does not represent any great change to the underlying factors which have brought about that situation dramatically in Australia in the past few months. Senator Sir JOHN CARRICK —My question is directed to the Leader of the Government in the Senate and refers to the Prime Minister's address to the nation tomorrow night and to the fact that the Parliament in the form of the Senate is sitting at that time. Have arrangements been made for the substance of the speech to be read simultaneously, or as nearly as possible, in this Senate as is the case with Budget Speeches? If not, will the Government ensure that this is done? Since the speech is foreshadowed as being of grave significance to the nation, would it not be contempt of the Senate not to make the speech to a sitting Senate? Would not the mere tabling of the text of the speech, as is done in minor matters, be an indication to the Senate of the true value which the Government places on the substances of the speech and on the Senate? Senator BUTTON —If I might say so, that is a very clever question. Let me give the answer to that typically clever question. The answer to the first part of the question is no, it is not the intention to make the speech available in the Senate. The circumstances to which the honourable senator is referring and in which that is done, such as the Budget, are circumstances in which the Treasurer, the Prime Minister, or some other senior Minister in the House of Representatives makes a statement to that House and, as a courtesy, among other things, to the Senate, it is made in this House at the same time. The House of Representatives is not sitting. The address which the Prime Minister will give tomorrow night is an address to the nation; it is not an address to the Senate. We would make a mistake if in any way we tried to identify the two things because they are not the same. The nation and the Senate are not the same, however much people here might like to think that they are. In doing this, the Prime Minister will not be departing from any precedent, as I understand it, set by previous Prime Ministers in this country. I doubt that the honourable senator can dredge up a circumstance in which an address to the nation was given when the House of Representatives was not sitting and it was recalled, as the shadow Treasurer, Mr Carlton, has asked for. It would not be normal for the Senate to be given a special copy of that address to the nation. That will not be done. It is not contempt of the Senate, as the honourable member suggests. The last part, the particularly clever part, of the honourable senator's question is whether that reveals the true value which the Government puts on the speech. It is not a question of what value the Government puts on the speech; it is a question of what value the people of Australia put on the speech. That will be determined by the people who constitute the nation which is to be addressed. Senator Sir JOHN CARRICK —Mr President, I ask a supplementary question. I am sorry that the Leader of the Government should be so testy. The only clever part of the question was to show-- The PRESIDENT —Order! The honourable senator will ask his question. Senator Sir JOHN CARRICK —As I understand it, the Leader of the Government indicated that this speech will be made tomorrow night while this Senate, doing its duty, will be meeting and that, therefore, if honourable senators are doing their duty they will be here. Is it intended that the speech itself should not be available to the Senate whilst it is sitting? Why is that so? Senator BUTTON —The answer is that the speech will be broadcast by all the media. All senators have access to radio and television and they can go and listen to it or look at it. If they happen to be on their feet in the Senate at the time it is given, undoubtedly there will be replays by popular demand and they can look at the replays. They will not miss out as a result of doing their duty in the Senate, as Senator Sir John Carrick suggests. Senator Sir John Carrick has always been a firm believer in the adage that `he also serves who only stands and waits'. Those who are in the Senate will have to wait for a little while longer. Senator FOREMAN —I direct my question to the Minister representing the Minister for Defence. Does the Dibb Review of Australia's Defence Capabilities take into account the possibility of major weapons platforms being built by Australian manufacturers? If this is so, might it be possible, recognising necessary safeguards, that such a development would lead to a major revitalisation of a manufacturing sector with export potential? Senator GARETH EVANS —Industry policy matters are discussed in part 6 of the Dibb report. The report is consistent with and extends the Government's defence policy for Australian industry of June 1984. It is specific in arguing for increased involvement in two industry areas, that is, the enhancement of electronics, including software capabilities, and increased involvement in through life supportive equipment, particularly for the Air Force. Sector by sector, the Department of Defence's assessment is as follows: So far as electronics and software are concerned, in this industry the Dibb recommendations will involve increased expenditure of $195m. Increased spending of $80m is expected on the Australian developed over the horizon radar in the five-year defence program period. Increased priority is assigned to the mobile tactical air defence radar and ground surveillance equipment, both of which would involve significant local content. As to shipbuilding, the Dibb report assigns high priority to a fleet of light patrol frigates. The fleet of eight smaller ships recommended by Dibb is expected to have high local content. As to aircraft, tactical utility helicopters and helicopters for the light patrol frigates are expected to achieve significant levels of local industry involvement. Largely as a result of substituting higher Australian content projects which result from equipment more specifically suited to Australia's usual strategic and geographical circumstances, the projects with lower Australian content, the recommendations of the Dibb report can be expected to increase the work load for Australian industry. Aircraft, shipbuilding and electronics could, as I say, all be expected to receive additional benefits from the proposals on top of the increases in recent years which have flowed from higher overall expenditures on equipment. I have some further information and specific figures. I know it is unusual for Question Time, but I think it would be helpful to honourable senators in assessing the Dibb report for me to have this information incorporated in Hansard. I seek leave accordingly. Leave granted. The document read as follows- Since 1982-83 the last coalition Budget, this Government has increased annual spending in Australian Defence Industry by approximately $240m. We have strongly pursued Australian industry involvement in major procurement and have increased spending in Australian industry in real terms in each budget. Since 1982-83 an extra $90 million has been devoted to the purchase of new capital equipment in Australia. The Dibb report of course recognises that Australian industry cannot and should not seek to be competitive in all sectors and for all products. Consistent with the Government's industry policy, the emphasis should be on exploiting industrial sectors where Australia has unique requirements or possesses a comparative advantage over competitors. Even if all defence equipment expenditure could be directed to Australian industry this would represent only a relatively small increment to our industrial sector. Assuming that Australian industry seizes the opportunities presented by the Government's policies, and is competitive on world markets, there is every reason to be optimistic about its export potential. However, the Dibb report (P 108) correctly points out that international production and trade in military materiel is characterised by very high non-tariff barriers, government subsidised domestic sales and exports, dumping, international collaborative ventures and counter-trade. The Department of Defence is also currently examining the implications for the viability of Australian Defence industry of Australian controls on the export of defence material. Fear-Year Defence Program 1986-91 Beyond Five-Year Defence Program Total Likely Australian Content ($m) ($m) ($m) ($m)Electronics and Software- OTHR... 80 340 420 high F-111... -240 25 -249 low MTAD radar... 20 20 40 medium Tropo scatter... 0 -41 -41 medium Ground surveillance... 20 05 25 medium -154 349 195 While the FYDP expenditure reduces, the Australian industry share will increase as low content projects are replaced by high local content projects. The electronic sector will also benefit from the higher number of items and higher local content in shipbuilding and aircraft systems and is likely to benefit substantially overall. Shipbuilding- Minesweepers... 30 7 37 high Light Patrol Frigate... 140 1,850 2,000 high HMAS Hobart... -10 -22 -32 medium Patrol Boats... 0 -100 -100 high New Surface Combatant... -210 -1,690 -1,900 high DDG Replacement... 10 10 20 -30 +55 +25 While there is no growth in the FYDP, the large number of smaller ships are likely to have higher local content and to increase industry involvement and competitiveness. Aircraft- Photo survey... -67 0 -67 low Helos for LPF... 100 100 200 medium Navy utility helo... -41 42 0 medium Airborne Surveillance... -222 222 0 medium Tactical utility helos... 390 420 120 medium Transport aircraft... 0 120 120 low 159 904 1,063 The aircraft industry can expect a significant increase in the large production run aircraft. There will be significant flow-on to systems and electronic work. Engineering- Field Artillery... -20 -4 -24 high Although artillery work at Ordnance Factory Bendigo would reduce, high levels of fabrication, gun and other work would flow from shipbuilding. Senator WATSON —I refer the Minister for Industry, Technology and Commerce to his response last week that the Government would reduce the levels of protection to the clothing, textile and footwear industries. Does the Minister have in mind implementing an Industries Assistance Commission recommendation which, in the estimate of the industries, would place at risk 50,000 jobs? Is the abolition of quotas really an equitable or fair alternative, given the wide disparity of wage rates between Australia and some Asian countries? Is the Minister aware that an Australian textile worker going on holiday annually earns more in that time than his counterpart does in China over five full years? Senator BUTTON —I know that Senator Watson is getting agitated about this issue. I suppose that is inevitable, particularly if one comes from Tasmania. But the Government has not responded to the draft report of the Industries Assistance Commission on the future program for the textile, clothing and footwear industries. A number of alternative options are considered in that report-- Senator Lewis —You said on Friday you would lower the level of protection. There is no question about that. You look it up in Hansard, at page 3581. Senator BUTTON —I am grateful to Senator Lewis. He has joined Senator Boswell again in being helpful today. I did say that on Friday. Let me say that it is a matter of Government policy. I do not know whether honourable senators opposite are seriously saying that Australian industry can afford to have levels of protection of 200 per cent, because that is what some of it involves. If they are saying that, I will be very fascinated to hear their views. The Government will, in its approach to the IAC report on textile, clothing and footwear, certainly be lowering levels of protection for these industries. The honourable senator asked me whether I have been softening up the textile, clothing and footwear industries. I have been telling them this for 18 months. They understand it and they are working on means of achieving that result in a sensible way which does not produce the sorts of problems which the honourable senator foreshadowed in the first part of his question. So, of course the Government will be adopting that general approach to the report but I am not in a position to comment on a detailed response to-- Senator Boswell —That is not what you said on Friday. Senator BUTTON —It is said that two heads are better than one. That is certainly true when one of them is the honourable senator's if I can put it in those terms. I ask Senator Boswell to put two and two together-to put together what I said on Friday and what I am saying now. There is no difference. The Government will be adopting a regime in respect of the textiles, clothing and footwear industries which will represent a lowering of the present levels of protection. This is precisely what the Fraser Government did-it is precisely what this Government will do too. Senator Watson has come in here and asked me about a report which the Government has received but has not yet made available. He asked me how we are going to respond to the detailed items in that report, whether 50,000 jobs will be lost and whether there will be abolition of quotas. I am not going to respond to those questions. We will respond to those questions in due course and then we can debate the answer in this chamber or anywhere else he wants. Senator Lewis —Tell the people of Wan- garatta and see how you get on. Senator BUTTON —The honourable senator ought to consult with his Leader about this issue. Is he worried about the people of Wangaratta in respect of some of the policies that he is talking about? I think this is a very healthy question because it flushes out some interesting issues. The answer is, quite frankly, that yes, the Government will be lowering protection. I have been about softening up the industry, if I may use that expression, for 18 months now. I ask the honourable senator to read the speech that I gave to the industry council 18 months ago. Senator Watson —I have. Senator BUTTON —The honourable senator has not asked me questions in the last 18 months or so. The honourable senator is a bit slow-I have been saying it for 18 months. I will make a copy of that speech available to him. It is totally consistent with what I am saying now. Let me say that the industry understands that better than does the honourable senator. We will emerge with a healthy, viable-- Senator Elstob —Competitive industry. Senator BUTTON —More competitive industry. I am not prepared to say, even at the instigation of Senator Elstob, `competitive industry'. I will say `more competitive industry'. That would be a good solution because it would secure a long term future for it. Mr President, I have answered about 18 supplementary questions which were asked by way of interjection. Senator WATSON —I ask a supplementary question. Can the Minister give us an assurance that that program will involve minimum job losses? Senator BUTTON —Yes, it will involve the minimum number of jobs losses consistent with economic and industry realities in the second half of the twentieth century. Senator GARETH EVANS —Further to my reply in the Senate last Friday to a question asked by Senator Tate concerning the detention of the Chairman of the Catholic Commission for Justice and Peace in Zimbabwe, I think it appropriate to complete the record by informing the Senate that Mr Auret was released from detention on the evening of 5 June on the instructions of Prime Minister Mugabe. I understand that release was without charges or conditions. Senator GARETH EVANS —I was asked by Senator Sir John Carrick on 6 June a question about chemical weapons. I have a long and, I hope, informative answer which I seek leave to incorporate in Hansard on that basis. Leave granted. The answer read as follows- Senator Sir John Carrick's question raised a number of issues and I will deal with each in turn. 2. It is accepted by Western countries, including Australia, on the basis of sensitive intelligence information about which it would not be appropriate for me to comment further, that the Soviet Union possesses substantial stocks of chemical weapons. Estimates of the size of the Soviet chemical weapons stockpile vary, but all indicate that it is considerably larger than NATO's. To the Government's knowledge the Soviet Union has never formally admitted possessing chemical weapons and on one occasion recently a Soviet spokesman, Maj General Kuntsevich, actually denied it. The Government is not in a position to confirm reports that the Soviet Union has stockpiled biological weapons although Soviet activities in this area remain a cause for concern. 3. Moreover it is correct that the United States halted production of chemical weapons in 1969 and destroyed its stocks of biological weapons in the early 1970s. The United Kingdom also destroyed its stocks of chemical weapons around the same time. The Government is not aware of any matching response by the Soviet Union. 4. The Government agrees that there is a substantial imbalance in the chemical warfare capabilities of NATO and the Warsaw Pact and that this is a cause for serious concern. The Government is also concerned about chemical weapon capabilities of other countries. As indicated recently in answers to a number of questions on notice on this subject, the stockpiling and development of chemical weapons, and training in chemical warfare, are not constrained under existing international agreements. 5. This is why there is an urgent need for the conclusion of a comprehensive convention which would ban the production, stockpiling and use of all chemical weapons and which would require the destruction of all existing stocks of chemical weapons and their production facilities, together with international monitoring against hidden production or stocks of chemical weapons. 6. Senator Sir John Carrick asks the Government to make its concerns on these issues known to the Australian public and to the Soviet Government. As a matter of fact the Government has frequently expressed its views on these matters publicly and pursued them in official communications with the Soviet Union. 7. Moreover the Government has, in addition, greatly expanded Australia's involvement in efforts to resist the spread of chemical weapons, and to conclude the convention, to the point where foreign commentators have spoken of `Australia's leadership' in this area. 8. Measures taken by the Government since March 1983 include: (i) Increased priority and diplomatic resources for work against chemical weapons (ii) Additional man power and equipment costing nearly $400,000 for the Defence Department's Materials Research Laboratories (MRL) which provides technical support for Australian efforts in this field. (iii) Designation of MRL as an analytical centre available to the UN Secretary General for investigation of evidence of chemical warfare. (iv) Participation of an Australian expert in the 1984 and 1986 UN Secretary General's on site investigations which confirmed Iraq's use of chemical weapons in the Gulf war. (v) Introduction of export controls on chemicals capable of being used for the manufacture of chemical weapons. (vi) Convening consultations amongst 18 countries aimed at improving the effectiveness of such controls. (vii) Increased participation in the chemical weapons negotiations in the Conference on Disarmament in Geneva, with Australia currently chairing one of three working groups. (viii) In co-operation with an Australian chemical company, testing procedures for the inspection of the civilian chemical industry to guard against clandestine production of chemical weapons and to assist the development of such procedures for the convention. (ix) Co-sponsorship of resolutions in the United Nations General Assembly and promotion of statements on the subject in the Security Council. 10 June 1986 The PRESIDENT —I inform the Senate that I have received the following letter, dated 10 June, from Senator Chaney: Dear Mr President, Pursuant to Standing Order 64, I give notice that today I propose to move- `That, in the opinion of the Senate, the following is a matter of urgency: The imperative need for the Government to deliver its promised personal income tax cuts from September 1 to encourage the men and women of Australia to work, save and invest so that the cost of production will be reduced and national productivity increased as the only effective means to national economic recovery'. Yours sincerely, FRED CHANEY Senator for the State of Western Australia Is the proposal supported? More than the number of senators required by the Standing Orders having risen in their places- Senator CHANEY(Western Australia-Leader of the Opposition)(3.07) —I move: That, in the opinion of the Senate, the following is a matter of urgency: The imperative need for the Government to deliver its promised personal income tax cuts from September 1 to encourage the men and women of Australia to work, save and invest so that the cost of production will be reduced and national productivity increased as the only effective means to national economic recovery'. I think the need for this motion was made clear today during Question Time in a number of the answers that were given to us by Government Ministers. I suppose the most instructive of those answers was given by the Minister for Finance, Senator Walsh, who boldly said that the Government sees the position as being one where average living standards in Australia have to fall. The Minister, after a glib reference to changes in the terms of trade and the effect that would have on Australia, has said to the people of Australia that their average living standards have to fall. That is a reality that the Opposition believes that the people of Australia face. We believe that they face the prospect of a reduction in their living standards. We have moved this motion because we believe that one of the contributions which can be made to maintaining the living standard of everyone in Australia is to carry out cuts to the marginal tax rates which have been promised by this Government but the delivery of which has been cast into some doubt. We have moved this motion at a time of economic decision-making. There is a risk that the wage and salary earners of Australia will wind up carrying extra burdens because the Government wants to take the easy way out. The Government may well choose to reduce their living standards simply by continuing to take more and more of their incomes in tax rather than taking action which will enable the economy of Australia and their living standards to grow again. That would involve the Government making much harder decisions about its own expenditure and about the inefficiencies that it has allowed to develop in the Australian economy. Tackling those things will take great courage on the part of the Government. Leaving higher taxes on the people of Australia is, in that sense, the easy option. We have had a number of signs over the last few days and the last few weeks that the Government is proposing to welsh on the very clear promises it has made to the people of Australia. It is important to note that those promises, made in September last year, were made on the basis that the Government was going to impose some new tax burdens on the Australian community, particularly on Australian business. It was going to introduce a great range of new taxes but at the same time it was promising that at some time in the future there would be relief for the people of Australia which would make up-indeed, more than make up-for the new taxes that were being imposed. The Government, through the Treasurer (Mr Keating), promised in September 1985 that cuts would take effect as the extra revenue from the tax reform measures came on stream. Of course, those tax reform measures have all been passed through the Senate. It was promised that personal income tax rate scales would be changed-that the tax free threshold would be increased from $4,595 to $5,100; the 25 per cent marginal rate would be reduced to 24 per cent; the 30 per cent rate would be reduced to 29 per cent; the 46 per cent rate would be reduced to 43 per cent; the 48 per cent rate would be reduced to 46 per cent; and the 60 per cent rate would be reduced to 55 per cent. These changes were to be just the first of two annual instalments which would ultimately see the reduction of all marginal tax rates, with the final position, to be reached in July of 1987, being that the highest rate of personal income tax imposed would be 49c in the dollar. That is still a hefty impost, but a considerable reduction on the rate of 60c in the dollar imposed on many people in Australia who go out and earn extra income, extra wealth, for their good and for the good of the community. The Opposition believes that if we are to return to rising living standards we will have to get people to work harder and be more productive, not impose higher taxes. We believe that it is only by getting people to work, save and invest in a productive way that Australians will be given a better run than they now face under the economic policies of this Government. The signs I referred to in relation to the Government reconsidering its position are signs that have to be taken seriously, because the Government's record of keeping its promises on taxes is very poor. There has been reference over the past weeks of debate in the Senate on the Government's tax package to the fact that the Government made an absolute commitment that there would be no capital gains tax. Of course, it entered into a collusive arrangement with the Australian Democrats-who had come here apparently to keep both sides of politics honest-an arrangement which enabled the Government to break that very clear promise to the people of Australia. There was to be no new capital gains tax; there now is a new capital gains tax, brought in not only by this Government but also by the votes of the Australian Democrats, who supposedly were going to keep the Government honest. There are now hints that the Government will reconsider the tax cuts it promised to the wage and salary earners of Australia, to the non-tax dodgers of Australia. It so likes to draw a distinction between those who have paid their taxes in the past and those who have not. It promised these cuts and now the hints are that they will not be delivered, or will not be delivered on time. Once again, can we in the Opposition look to the Australian Democrats to keep the Government honest, to keep the Government to its promises? No, of course we cannot. We all have copies of a letter from the Prime Minister (Mr Hawke) to Senator Don Chipp, Leader of the Australian Democrats, which makes it clear that once again the Australian Democrats have given the Government room to break the promises it made to the people of Australia. The Prime Minister said to Senator Chipp in a letter of 28 May, following discussions which had been held by the Government and the Australian Democrats: I advise that the Government has made no decision to defer the tax cuts as announced. However, the timing of the tax cuts will be given further consideration by the Government following the meeting of the Advisory Committee on Prices and Incomes in June. That meeting, of course, has since been cancelled. The Prime Minister went on: This consideration has become necessary following the very adverse developments in Australia's terms of trade in recent months. However, I am happy to repeat in writing the Government's unequivocal commitment that the tax cuts will be delivered no later than 1 December 1986. So at that stage, at the end of May, the Prime Minister is saying that the Government might postpone these tax cuts for three months, but he gives an unequivocal commitment to bring them in by 1 December. We have to remember that this is the same Prime Minister who gave an unequivocal assurance to the people of Australia-not in this Parliament but in one of those great addresses to the nation that Senator Button was telling us just a few minutes ago are so important-that there would be no capital gains tax. We all know the worth of that promise. We find today that the newspapers of Australia have referred to the Government's action on these tax cuts. Michelle Grattan reports in this morning's Age: Senior sources said it appeared `most unlikely' that Mr Hawke would be specific tomorrow on the timing for the tax cuts-which are due on 1 September but which were expected to be deferred-except to reassure that they will be given this year. Other sources rated the chances of the Prime Minister being specific on timing as `50/50'. Michelle Grattan, the chief political correspondent for the Age, went on to say: The Government wants to preserve flexibility on the timing of the tax cuts until closer to the budget, if it can. They are also a potential bargaining counter in talks on future wages policy . . . It is the view of the Opposition that these are not a bargaining counter; they are a clear commitment to the people of Australia, and the only commitment consistent with economic recovery in Australia and a return to rising living standards. We do not bring forward the assertion that these tax cuts are important for the economic recovery of Australia solely on the basis of that being our view as an Opposition. The Government went to some trouble to justify the changes to the marginal tax rates that it was proposing in September of 1985. I would like to quote from what the Treasurer had to say at that time, because he adopted totally the view the Opposition is expressing here, and the view we have been expressing over many years, about the effect of income tax on the behaviour of Australian wage and salary earners. In a statement on 19 September 1985, Mr Keating said: . . . I come back to the point that reductions in the higher marginal rates have been, and remain, a prime objective of tax reform. After referring to the fact that high rates provide a major incentive for people to avoid and evade their tax, the Treasurer went on to make the central point of this debate. He said that it was those high marginal personal income tax rates that involve the most severe disincentive to work, to save and to invest. That is the central truth around which this motion is based. The high tax rates we suffer in Australia are the most severe disincentive to work, save and invest. If Australia is to recover its capacity for economic growth, if we are to recover our capacity to compete in the world, it is essential that we become a country which works better and saves and invests more. It is there that our salvation lies; it is there that the maintenance of our living standards lies. We have seen in the answer the Minister for Finance, Senator Walsh, gave to us today that this Government has cravenly accepted that the standard of living of Australians has to fall. That is something which ought not to be accepted by the Government. The only way the Government can ensure that that does not occur is to make sure that Australians work, save and invest, and these tax cuts will play an important part in ensuring that that happens. No one is denying that Australia is facing an economic crisis and that unless there are changes of direction we face a bleak and uncertain future. It is not a situation in which we can be dependent on some stroke of luck to get us out of trouble-the finding of some new reserves of gold or oil or something which will bail us out, as we have been happy to be bailed out of past financial difficulties. If we are to be bailed out in the future it will be by dint of investment in new and productive enterprises, and that means that these tax cuts are centrally important. Mr Keating has described us as heading for banana republic status and Mr Hawke, having panicked in the face of Mr Keating's statement, cancelled the meeting organised by Mr Keating in favour of making an address to the nation-an address that he is not game to bring into this Parliament; an address that he is prepared to make only from behind the safety of a television camera. The reality is that we must allow the people of Australia to get back to work, give them an incentive to get back to work, and these tax cuts are an important part of the overall solution to our crisis. The nature of Australia's present economic difficulties is that we are uncompetitive and are not earning enough to sustain our standard of living. To live as we live in Australia at the moment we must borrow. Our governments have to borrow; we have to borrow as a country. We are simply not producing enough; we are not producing enough efficiently and effectively. We must therefore learn, as a nation, to earn more. What we have had again in Question Time and what we have had over and over from this Government is a pathetic attempt to blame the terms of trade for the decline in living standards which now faces us. Yet if we look at the terms of trade Australia has had, we find that they have been declining ever since the 1950s. The terms of trade reached their peak in the early 1950s when wool prices were at an all-time high and there has been a steady downward slope against Australia ever since that time. That was a fact faced by all previous governments-Liberal and Labor-but it is this Government which now blames that constant which has been with us over the last 30 years as being the reason for declining living standards. I am sorry that one cannot incorporate charts in Hansard because the chart of our terms of trade is instructive. The chart shows how the prices of the things we sell compare with the prices of the things we buy. It went from a peak, on a measure of 100, of about 250 in early 1950s to a negative situation in the early 1970s, it recovered briefly and it returned to a negative situation during the term of the Fraser Government. In other words, the external difficulties on which this Government is currently relying are external difficulties that faced previous governments, including the Fraser Government, but the Fraser Government did not sit around bleating, wringing its hands and blaming the rest of the world. What we have to do is not to concentrate on the things that the world imposes on us, but rather to concentrate on what we can control, and that means our own efficiency and our own productivity in the work place. We can control the incentives there are in Australia to work and produce. This Government, through its tax package that went through the Senate last week, is reducing the incentives to work and produce. It has put new taxes on business and investment, it has imposed capital gains taxes, it has imposed a fringe benefits tax, it has abolished negative gearing and it has abolished deductions for entertainment. Every new tax measure we have put through this Parliament this session, apart from the research and development deductions legislation, which are new deductions, has imposed an additional tax burden on those people who would invest in enterprise in Australia. Given those massive new tax burdens, it is absolutely essential that the personal tax burden be eased and that the easement not be delayed as the easy way out of the Government's present budgetary situation. What we are seeing at the moment in this speculation that the tax cuts will be delayed is a threatening of the Government's supposed quid pro quo for the tax increases it has imposed. The Opposition is totally and finally opposed to any delay in those tax cuts. It needs to be remembered that the Government's own reasoning of September and the reasoning it put forward for the whole tax package was that all of the new taxes would be returned to taxpayers. The Government said that the tax cuts would be delivered in satisfaction of its commitment to continued wage restraint. It told wage and salary earners that it wanted to slow down the rate of wage increases but that it would offer tax cuts in return. We believe that that is a bargain that it made with the wage and salary earners, and it is a bargain which must be kept. In the September tax statement the Government said that average income earners would receive an income tax cut of $9 a week in September this year. It said there would be further cuts, bringing tax cuts to a total of $15.20 by July the following year. It said that none of these tax cuts would be financed by adding to the Government's deficit and that they would be achieved by the most rigorous restraint on public sector outlays. The Government laid down that regime for the Australian people. We believe that it is essential that it retains that regime and that it maintains those tax cuts. But what we have actually had from this Government is none of the restraint it promised in its September statement. What we have had from the Government is simply a consistent attack on the people of Australia through ever-growing government expenditure and ever-growing taxation income. In the course of the life of this Government we have seen a growth in outlays in real terms of around 5 per cent. We have seen a growth of taxation of more than 5 per cent in each year that this Government has been in office. In straight dollar terms, this Government is collecting something like $20,000m more in taxes and is spending that sort of money more than was being collected and spent when it was elected to office. When the Government talks about denying or delaying a couple of billion dollars worth of tax cuts to wage and salary earners, it needs to be remembered that those wage and salary earners are paying tens of billions of dollars of additional taxes to this Government because of its profligacy and because of its increased expenditure. The Opposition believes that there are solutions to the problems of Australia. It believes that there are solutions which do not require what we heard today from the Minister for Finance-acceptance that all Australians are going to have their living standards reduced. We believe that if the Government gives the Australian work force the incentive to work, save and invest, the economy of Australia can continue to grow. We are concerned that in approaching this problem, the Government will do all of the wrong things-it will seek to remove those positive elements from the tax package and it will seek to further destroy the incentive to work, save and invest. Over the recent months of sittings of this Senate, we have seen attempts by the Government to create alibis as to why the tax cuts should not be granted. Senator Walsh, in response to a question from Senator Watson, for example, referred to the fact that there was a possibility that some of the Government's new taxes would be defeated and that that would deny the people the tax cuts that had been promised. Senator Walsh said in the Senate: Let it be known if the taxation package is sabotaged by the Opposition in the Senate to the point where it is impossible to deliver the income tax cuts which the Government has promised, the responsibility for that will rest fairly and squarely with members of the Liberal Party of Australia, the National Party of Australia and the Australian Democrats. The Government now has the additional revenue that it sought to raise through its tax package. It has no alibis. It has vastly increased revenues which have been caused by the fact that, with inflation and higher incomes, people are paying more and more of their incomes in tax. We have reached the point where there is a dramatic need for personal income tax relief. We have reached the point where there is a possibility that the Government will welsh on its clear undertaking to wage and salary earners. The Opposition will not have a bar of that. We believe that the tax cuts are central to our economic recovery and we insist that the Government introduce them on time and as promised. Senator MAGUIRE(South Australia)(3.26) —I rise on behalf of the Government to oppose this motion on taxation moved by Senator Chaney, the Leader of the Opposition in this place. The motion ignores the Government's achievements of obtaining economic recovery in Australia, of reducing production costs for Australian industry, and of taxation reform. In fact, as I will demonstrate during my remarks, this motion clearly underlines the mess the Opposition has got itself into on the whole question of taxation reform. The Opposition is in such a bad mess on tax reform that its taxation spokesman, Senator Messner, is not even participating in the debate this afternoon. The Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) have said that it may not be financially prudent to bring in the taxation reductions in September this year and that it may be desirable that there be some postponement in the delivery of the tax cuts to a later point this year because the country may not be able to afford reductions in personal income tax from September. But it has been made clear time and time again that the tax cuts will occur during 1986-this calendar year. The Government has given that commitment and it is on the record. There has been a severe decline in Australia's terms of trade; that is, that the relationship between the prices we pay for our imports and the prices we receive for our exports has worsened enormously, reducing our real income. That is the major factor that the Government has taken into account in considering delaying these income tax cuts. It is a very substantial reduction in Australia's real income as a result of worsening commodity prices abroad, and that is the basic factor which has led the Government to consider some postponement of its decision. As I said, we will deliver the tax cuts by December this year. We will deliver tax cuts that Mr Howard, in five Budgets from 1978 to 1982, could not deliver. This motion shows the clear hypocrisy and duplicity of the Liberal Party of Australia on taxation. By moving this motion, the Opposition is now saying that it wants income tax cuts in September; not later. It is not prepared to pay any attention to the financial circumstances Australia now faces. It just wants to have tax cuts in September. Let us look at the tax record of the Liberals to date. Let us look at the Opposition's attitude to tax reform over the past couple of years and its attitude to the tax package brought in by this Government. After all, this is a tax package-it is a comprehensive group of tax reforms in line with the nine taxation principles outlined by the Prime Minister, one of which was that there would be no overall increase in the taxation level in relation to Australia's gross domestic product. But the tax package must be financed in some way. Extra revenue must be obtained to redistribute taxes and to give tax cuts. The Prime Minister has indicated that overall there will be no increase in the tax burden on the community. Therefore, some revenue must be obtained if money is to be paid back to the community in the form of comprehensive personal income tax cuts. What have the Liberals done about this tax package? What have they done every time this Government has brought into the Parliament legislation to gather that revenue? On every possible occasion the Liberals have voted to block that legislation. On every possible occasion they have voted to deny this Government the revenue with which to finance the personal income tax reductions for the Australian community. They have done that time and time again. They did it first on the legislation to disallow entertainment expenses, the so-called tax deductible lunch; then they did so on fringe benefits, a major form of tax avoidance in this country; and then as recently as last Thursday evening they did it again on the capital gains tax. The fact is that the legislation brought in by this Government to disallow entertainment expenses-to disallow the tax deductible lunches of a small number of people in this community-will bring in for the Government revenue of $310m next financial year, rising to some $330m in the subsequent financial year, 1987-88. That is a very substantial sum of money and it is one of the key means by which the Government will finance the personal income tax cuts for most Australians which will occur this calendar year. What did the Liberals do? They voted against the legislation to disallow the tax deductible lunch despite the fact that for years they have told the Australian people-as have the gurus that the Liberals have brought in from overseas-that there is no such thing as a free lunch and that economic sacrifices will have to be made. As soon as we brought this legislation before the Parliament, the Liberals voted against it-even though it is one of the key methods of financing the personal income tax cuts which will be produced this year. The Liberals wanted to deny us the revenue, but they want the tax cuts. They acted in this way despite the fact that there is no comparable entertainment allowance in those countries with which we normally compare ourselves. There is no general allowance for lunches and entertainment in Britain or the United States. Yet despite that, the Opposition voted to reject the legislation brought in by this Government-legislation that next financial year will obtain $330m. The Opposition has exercised breath taking hypocrisy-it wants the tax cuts but it does not want to help us pay for them. That is the basic fact of the matter. We then move to the question of fringe benefits. As I indicated, this has been a major area of tax avoidance in Australia in recent years. In some cases top executives have been receiving up to 40 per cent of their remuneration in the form of fringe benefits-not in cash but in non-cash benefits. Clearly this is an avenue designed to take remuneration out of the taxation net in Australia. When we brought in legislation to crack down on this major area of tax avoidance in the country, this escalation of remuneration outside the tax net, what did the Liberals do? They opposed it at every turn and on every possible occasion. This legislation, again was designed to finance the personal income tax cuts which will be delivered to Australians this year; was to be another major financing source for the tax cuts. For the next financial year, beginning on 1 July, the original revenue estimates were that some $320m would be collected through the tax on fringe benefits. Since that time there have been amendments in this place but the original figure was $320m a year, rising to $515m in 1987-88. Those are very substantial amounts of money and very substantial elements with which we could finance personal tax cuts for the bulk of the Australian community. Again, the Liberals wanted to deny us that revenue and they voted against that legislation. Now the Opposition wants the tax cuts, not in December but in September. That is the incredible gall of this Opposition. It is no wonder the Liberals are in opposition and there is no doubt that they will stay there. When we look at those two tax measures together, the disallowance of business lunches and the taxation of fringe benefits, we find that we are talking about very substantial sums of money-$630m in 1986-87 on the original estimates, rising to some $845m in the subsequent financial year. Yet the Opposition blocked and opposed those measures at every turn and every possible opportunity. Now Opposition senators want tax cuts. They want to have it both ways. They do not want to help us raise the revenue but they want to have the credit for getting tax cuts to the community. Last Thursday we had the debate on the capital gains tax-yet another tax with which we hope to finance these personal income tax reductions. We heard some very interesting propositions argued in the debate last week by Senator Messner who is, I believe, the Opposition's spokesman on taxation. Incidentally, he is not participating in this debate this afternoon even though the core of it is taxation. Senator Messner, speaking as Opposition spokesman on taxation, said last Thursday that the capital gains tax would raise very little revenue. He told us that in his speech. Then in almost the next breath he said that we were imposing the highest rate of capital gains tax in the world. How on earth can anyone reconcile those statements? As far as I am concerned, that is the sixty-four dollar question. I invite Senator Messner to enlighten the Senate on how those two statements can go together. It is no wonder that with logic like that-or lack of it-Senator Messner is not participating in this debate this afternoon. It indicates very clearly indeed the sheer mess into which the Opposition has plunged itself by its ducking and weaving on the question of taxation and taxation reform. As I have indicated several times this afternoon, every time we have brought legislation before this Parliament to introduce tax reform in this country the Opposition has voted to block it, even though this legislation would raise the revenue to give the community personal income tax reductions. That sort of behaviour certainly will not fool the Australian public. It will not win office for the Opposition and it certainly will not get Opposition senators on to the treasury bench. The conclusion that one can reach as a result of this is that the Liberals are really saying that what they really want are Labor's taxation rates and schedules. That is the really inescapable conclusion that we can draw from this motion. They want our tax package. They are really saying that our proposed tax rates are better than those that the Liberals could introduce in government. They are saying, in effect, that they prefer Labor tax rates to their own. Basically that is what it comes down to and the reasons for it are clear. It is abundantly clear why the Liberals want our tax schedule to be introduced in September rather than later in the year. Our top marginal tax rate in our tax package will be 49c in the dollar; under the Liberals it was 60c in the dollar. As a result of our tax reform package no wage and salary earner in the community will have to pay more than half of his or her extra income in taxation. That is one of the reasons why the Liberals are desperate for us to introduce our tax package. I also instance the lowest personal income tax bracket in the Government's tax schedules. Under the Hawke Government the lowest rate that will apply in the community will be 24c in the dollar. Under the Liberals the bottom tax rate was 30c in the dollar. That is the big difference. They want us to bring in the tax rates that they could not achieve. They want our tax schedules and they want the tax cuts set in place by September. They want tax schedules that the current Leader of the Opposition, Mr Howard, could not deliver in his five years as Treasurer of this country, from 1978 to 1982. As a result of this tax package it will be abundantly clear to the Australian community that, because under Labor the bottom tax rate will be 24c in the dollar and under the Liberals it was 30c in the dollar, Labor is the low tax Party in Australia. In calling for early tax cuts the Opposition is not looking at Australia's overall financial situation. It is not looking at the overall total revenues available to the Government. Basically, its tactics in moving this motion this afternoon imply that it really wants a larger Budget deficit. That is what it seems to boil down to. Honourable senators opposite want a larger Budget deficit financed by greater government borrowing, with increased pressure on interest rates in the community and spill-over effects on private sector activity in Australia. That is what the motion really adds up to. I find it incredible that Senator Chaney, who was a Minister in the Fraser Government, should move in the Senate today a motion calling for measures to generate economic recovery in Australia, when the present Leader of the Opposition, Mr Howard, as Treasurer, brought the Australian economy to its knees in the early 1980s. That Government used increases in unemployment as a means of regulating the rate of inflation in Australia. That was its policy. It resulted in idle industry, rising unemployment and falling employment, and bankruptcy and receivership were the only growth industries in Australia. The previous Government left Australia with double digit unemployment, standing at 10.4 per cent. It left Australia with double digit inflation, with prices rising at the rate of 11 1/2 per cent a year. Yet, that Government's avowed policy-the corner-stone of its economic philosophy-was, it said: `Fight inflation first'. Under Labor there has been a tremendous recovery in the Australian economy. In the first two financial years that we were in office we had 5 per cent real growth ahead of the inflation rate in the community. Some 670,000 extra jobs have been created in Australia since the National Economic Summit Conference in April 1983. In fact, the number of jobs created under the Labor Government in just three years-670,000-is more than double the number of extra jobs created in the seven years of Fraser-Howard government in Australia. There is record employment in Australia. Most of the new jobs have been created in the private sector, and most of them are full time jobs. This year's Budget provided for growth in employment of some 180,000 extra positions in Australia. In fact, the Budget figures are well out of date and so far during this financial year well over 200,000 extra jobs have been created. Unemployment stood at 10.4 per cent when Labor came to office. It is now down to 7.9 per cent. We do not have double digit inflation, as we did under Mr Fraser and Mr Howard; we have an inflation rate of 9.2 per cent. One of the corner-stones of the economic recovery under Labor, one of the ways in which Australia has been brought back off its knees, has been the fall in production costs. Senator Chaney, in his motion this afternoon, called for measures to be implemented to reduce production costs in Australia. I simply point out that in a number of major areas costs are at their lowest level for many years. I instance the effect of industrial disputes on production and production costs. Industrial disputes in Australia are now at their lowest level for 16 or 17 years. I refer to a question that I put on notice that was answered today by the Minister representing the Minister for Employment and Industrial Relations, the Minister for Finance (Senator Walsh), which shows that during 1984 the number of days lost per employee in Australia was 0.246. That is lower than the figures for Canada and New Zealand, and less than a quarter of the number of days lost due to industrial disputes in Mrs Thatcher's United Kingdom. So our record on industrial disputes and their impact on employers' costs is such that our level of disputes is less than a quarter of the level under Mrs Thatcher's conservative-ruled United Kingdom. Senator Robertson —And better than the Fraser Government's. Senator MAGUIRE —Of course, our figures are infinitely better than those of the Fraser Government. I refer to tables in the 1985 Budget Papers, prepared by Treasury, which show that average real unit labour costs are at their lowest level since the early 1970s. That is a tremendous achievement by this Government. Senator Chaney's motion today called for economic recovery in Australia and measures to assist it, but, of course, he is calling for recovery from the Liberal years-recovery from that period when Australia was brought to its knees by Mr Howard and Mr Fraser. The fact is that now employment is up and unemployment is down. Inflation has come down, and recovery is occurring in Australia. I find the Opposition's position on taxation reform, as shown by this motion, to be breathtaking in its hypocrisy. It shows its double standards. Time and time again it has voted against legislation which we have introduced to raise revenue to be redistributed as personal income tax cuts during this year. There will be personal income tax cuts during 1986, and we will be delivering the tax cuts that the Liberals were unable to introduce in five Budgets. Motion (by Senator Chipp) agreed to: That so much of the Standing Orders be suspended as would prevent the Leader of the Australian Democrats (Senator Chipp) moving an amendment to the motion. Senator CHIPP(Victoria-Leader of the Australian Democrats)(3.46) —The Leader of the Opposition in the Senate (Senator Chaney) has moved: That, in the opinion of the Senate, the following is a matter of urgency: The imperative need for the Government to deliver its promised personal income tax cuts from September 1 to encourage the men and women of Australia to work, save and invest so that the cost of production will be reduced and national productivity increased as the only effective means to national economic recovery. I move the following amendment to the Opposition motion: Leave out ``from September 1'' in the statement of the matter of urgency, insert: ``as soon as is fiscally prudent, but no later than December 1,''. Like Senator Maguire, I find this exercise by the Opposition-I am surprised that the urgency motion was moved by Senator Chaney, for whom I have a high personal regard-an exercise of breathtaking hypocrisy. For the last eight weeks the Liberal Party has passionately, vigorously, used every device of this Senate to oppose the means by which tax cuts can be given. It has opposed everything. With regard to every conceivable reform the Government has put forward, the Opposition has opposed all the nasties. Then it has had the breathtaking hypocrisy to say: `Although we have opposed those proposals, we still want the goodies'. Not one word in Senator Chaney's speech indicated where the revenue to pay for the goodies would come from. One can only assume that it would come from an increased blow-out of the deficit, and God knows how big it is now. An increased deficit means increased government borrowings, which means increased interest rates and all the horrific parts of well-known and documented past Liberal policy. However, it is pleasing to see that the Opposition at last can see the other side of tax reform-the tax cuts. The Opposition is right to say there is a need for tax cuts, and we agree with that part of its motion. Reducing marginal tax rates, in particular the top rate from 60c to 49c and making that the rate for company tax also, will increase people's incentive to work and will reduce the incentive to avoid tax by forming a company in order to pay a lower tax rate. It is refreshing also to see that at last the Opposition has become interested in the pay as you earn taxpayer. For the last six to eight weeks people such as Senator Walters have been championing those who have been ripping off the taxpayer by means of rorts, lurks and perks. For the last eight weeks they have opposed every measure to stop lurks and perks, to stop rorts. The Liberal Party and the National Party have made every endeavour to do that. For the last six to eight weeks they have opposed every measure that has been designed to benefit the pay as you earn taxpayer. In fact, according to the Liberal and National parties, the only people who should bear a tax burden are the PAYE taxpayers. I think it is contemptible and despicable. I think a system under which certain taxpayers-75 to 85 per cent of the taxpayers-whose income is confined to wages or salaries have to bear an extra burden of tax to pay for the 10 to 15 per cent who are engaged in rorts, lurks and perks lacks equity and morality. It is a concept which I dismiss as little short of disgusting. That is exactly what the Liberal Party and the National Party have been on about for the last eight weeks. It is odd that the Opposition, which has done everything to sabotage tax reform and tax cuts, is now pretending to be their great defender. The Opposition has opposed the ending of the free lunch. I do not know what sort of moral compulsion has led the Liberal Party to do that. I cannot see how the kind of Liberal Party I joined 26 years ago would come into this Parliament and say: `The 85 per cent of salary earners who do not get any lurks and perks have to pay extra tax so that businessmen and the wealthy can enjoy their free lunch, free dinners or whatever'. Does not the Liberal Party know that the practice was rampant, that businessmen used to go to expensive up-market restaurants with friends and everybody shared in the bill, but the businessmen would say: `I will put this on my Bankcard but you pay me the cash'? It was going on all over the country. The people who were paying extra tax so that businessmen could have the free lunch or the free dinner were the ordinary wage and salary earners. What about the opposition to the fringe benefits tax? Members of the Opposition have become champions of small business or the business person. They say: `This is destroying small business'. Who started the fringe benefits practice? It was the business people. Why did they do it? It was as simple as this: The accountant or the lawyer would go to a business person and say: `You have a job here. You have to pay $40,000 to get the right person, but I have a lurk to put your way. Do not pay $40,000; offer the person $20,000 in cash and a lurk or a perk for $10,000-a free car, a low interest rate loan or whatever'. The business person would say to the applicant for the job: `This job is worth $30,000. We will pay you only $20,000 in salary but you will be able by this device to escape paying tax on $10,000'. He would say to himself: `I am pretty smart, because I am giving this person $10,000 less than I need pay him'. But who pays the extra tax for that lurk, that fringe benefit? It is the salary earner and the wage earner. Senator Peter Baume —Like us. Senator CHIPP —Like us, indeed. Only people such as Senator Peter Baume are capable of an act of such exquisite masochism, of saying with pride: `We are paying for the lurks and perks of the small business person'. It is a kind of logic that I find difficult to follow. Honourable senators opposite were champions of negative gearing. They thought negative gearing was terrific. Let me explain to the listeners what negative gearing means. A Qantas airline pilot on $100,000 came to my office and said: `Abolition of negative gearing is wicked. I have a block of flats. The interest I pay on that is $80,000 to $100,000 a year. I write the interest payments on that block of flats off against my salary and that allows me to engage in further investment which will allow me to provide rental accommodation for many Australian citizens'. I then said: `Captain, how much income tax have you paid in the last 10 years?'. He smiled and said: `None'. The Liberals opposed the abolition of this practice; yet they have talked in this place about morality and equity. It is a sort of philosophy that I just cannot follow. The Government has locked itself into delivering $6 billion worth of tax cuts by July 1987. It has imposed on itself the restraint of the trilogy, which has been scoffed at by the Liberals but which to me is a commendable effort to restrict government expenditure, government revenue and the size of the domestic deficit. I say and the Australian Democrats say that we must allow the Government of this country that bit of flexibility it needs in the delivery of such promises-one month, two months or three months if it needs them-before introducing the good side of tax reform. Senator Chaney —Thank heavens for John Siddons. He introduced this. Senator CHIPP —We are in the last week of this session. This is the third successive week of sitting and the only reason-a pathetic reason-the Liberals are taking up two hours of the time of the Senate this afternoon is that they are trying to drive a wedge among members of the Australian Democrats. We are very flattered that the once great Liberal Party should descend to such an exercise. We are flattered that the once great Liberal Party should pay the Australian Democrats such a glowing tribute. The Australian economy is in crisis; there is no doubt about that. I have seen terrifying predictions for the future. The terms of trade have turned dramatically against us. It is now a matter of Australia versus the rest of the world. That is how serious the situation is. I have heard of a report, which I cannot authenticate, that unless something drastic is done quickly the value of the Australian dollar could fall to 55c or lower. I just point out the implications of that, although I do not wish to score political points. If that happens, could there be a further run on the dollar? What will happen to Australia then? We may have a visit from those little gnomes in Zurich, the representatives of the International Monetary Fund, who will say: `We will lend you the money to get out of it, but you have to cut your social services by one-third, reduce wages by one-half and stop spending on the States. That means that you are in the situation of a banana republic. It is not rhetoric any more; you are there'. I believe and the Democrats believe that that is how serious the situation is. We believe that in such a circumstance the Government has to have the flexibility to manoeuvre. It has to be able to negotiate with the trade unions-something which, unfortunately, the Liberal Party never could do but which this Government at least has done with the wage discounting and the wages accord, probably one of the great economic achievements of the century. The Opposition now wants the tax cuts it did its best to undermine. The Prime Minister (Mr Hawke) has given me a written guarantee that the tax cuts will be in place on or before 1 December. The current economic crisis confronting Australia is in large part due to the private foreign borrowings undertaken when Mr Fraser was Prime Minister and Senator Sir John Carrick was Minister for Resources and Energy. I hope that when he speaks next he will tell the people of Australia how he could justify himself by talking up the resources boom that never happened. I sat in this Senate day after day when he organised dorothy dixers to talk up the mineral boom. Figures of scores of billions of dollars were mentioned by Senator Sir John Carrick in those days. We are now suffering from the borrowings that were a consequence of his talking up of that resources boom, borrowings which have increased our foreign indebtedness to crisis point. I make an appeal to members of the Liberal Party. This country is in a devastating condition. It is almost academic to say that it is their fault or our fault or whatever. The fact is that we are in trouble, yet all the Liberal Party can do is play petty, vulgar politics at the expense of Australians. Mr Fraser won the 1980 election because he promised us a resources boom. Is Senator Sir John Carrick going to say that on the hustings then he did not talk up the resources boom? Is Senator Sir John Carrick going to say that he never ever promised that in future years there would be scores of billions of dollars of investment and sales of resources? We are now living with the consequences of the fact that that boom was a mirage. What will the Liberal Party do to stop foreign money being used to finance takeovers? What is its policy on that? Its policy is to support foreign money coming into this country. Let me give honourable senators an example. An Australian company, worth $100m, earns $10m in profits a year. Someone borrows $100m from overseas, brings it into Australia and takes over that Australian company. He then pays interest to the overseas lender of $10m a year. The company was earning profits of $10m. So that company now pays no tax. Our overseas debt has increased by $100m, which has to be paid for by exports. This is supported by the Liberal Party. What do we see for it? We see an increase in our overseas debt, a further strain on the dollar and the country being sold out to foreign interests. Sometimes I cannot believe that this is the Party of which I was once a member. It is breathtaking hypocrisy for Liberal Party members to come into this chamber now and say: `Government, we have opposed all the means that are at your disposal to finance these tax cuts, but now we have failed in doing that, you must bring about the tax cuts immediately'. That is an attitude of utter, total irresponsibility. Senator Sir JOHN CARRICK(New South Wales)(4.01) —One would perhaps not think that we were doing so, but we are debating an urgency motion, put forward by the Liberal Party of Australia and the National Party of Australia, that there is an imperative need for the Government to deliver its promised personal income tax cuts from 1 September. One would believe that a government, having given a clear undertaking in its Budget that it would give those income tax cuts, would do so. One would think that the Australian Democrats, who keep saying that they are going to keep us honest, would support our motion because all we are saying is that the Government should keep its Budget promise. Very snidely, neither the speaker for the Australian Labor Party, Senator Maguire, nor the Leader of the Australian Democrats, Senator Chipp, debated the subject at all. Each pretended that, because the Opposition opposed the fringe benefits tax, the entertainment tax and the capital gains tax, there would be less revenue. I make it very clear, not only to the Senate but to every member of the community, that the revenue is now enshrined in legislation. The Labor Party got its legislation because of the Democrats. So there is no decline in revenue at all due to the opposition of the Liberal and National parties. Every time an employee pays higher taxes in the form of the fringe benefits tax which the Democrats have passed on, he should remember that it was seven Australian Democrats who brought it about. Every time people pay more rent for their rented properties-the poor people of Australia-they should remember that it was the seven Australian Democrats who brought about the capital gains tax and the fringe benefits tax. The argument is very simple. The Government said: `On 1 September we will give you tax cuts amounting on average to $9 a week'. It said it would do this by bringing in a series of taxes. It has brought in those taxes. Let nobody believe, from the attempts to deflect the argument, that those taxes have not been brought in. They have been brought in, despite the Opposition's attempt to stop them. The Government made a promise. I put it quite emphatically: The tax cuts ought not to be negotiable. If we are to have good faith between the government of the day and the working community-the pay as you earn taxpayers-it is imperative that there should be a bargain which is kept. The arrangement was very clear. There would be tax cuts from 1 September, tax cuts that were absolutely vital because inflation had harvested far and away more taxes than should have been paid. The tax cuts were to be some kind of reparation for the effects of inflation. The only argument that has been put up by the Government in this debate has been that put up by Senator Maguire, who said: `The Government may have to defer the tax cuts because there has been a fall in the price of primary products'. I quote from the Budget: A marked deterioration in the terms of trade is expected, reflecting primarily the relative weakness of world prices for our commodity based exports. I remind the Senate that the figure given to the Government then by the Bureau of Agricultural Economics for the decline in agricultural prices was what the Budget and the tax cuts were based on. We were fortunate in one respect. As prices went down, the seasons were still bountiful and a larger volume of commodities was available. Let the Government not talk nonsense tomorrow night when it makes its economic statement and say that we have to defer the tax cuts because there is a deterioration in the terms of trade. The Budget and the tax cuts were based on a deterioration in the terms of trade. One thing is clear: Neither the Labor Party nor the Democrats can say that the Government cannot give the tax cuts now because of the terms of trade or because the Government does not have the revenue. The revenue is in place, thanks to the Democrats. The ugliest aspect of the matter is this: There is a very serious recession in Australia. The Labor Party, and presumably the Democrats, are arguing that people will have to take cuts in their living standards. I cannot think of a more negative proposal for the Government to take to the people, after having said for three or four years that everything was rosy. People do not have to take cuts in their living standards if they understand what is happening, if they are given the correct incentives and if management and employees are given help to work more co-operatively. The Government must get off their backs and, fundamentally, tax relief must be given to the employee. The basis of any kind of consensus for the community must be the tax cuts on 1 September. If the Government is to say to the community, at whatever level, be it working people, be it managerial people or others, `You must practise some restraint', the first thing it has to do is to keep good faith itself. The Government has to consider matters such as deferring the productivity case and the superannuation case. The Government is arguing that there should be some discounting of wages. The Australian Council of Trade Unions is saying that it will not put up with any discounting of wages. How can the Government possibly say that wages must be discounted and at the same time put taxes up? What the Democrats and the Labor Party are doing is putting up taxes on 1 September. If the tax cuts are deferred, the Democrats will be taking $9 a week out of every taxpayer's pocket, a little matter of $117 over 13 weeks. But they will do more than that. The Democrats will have put people into higher tax brackets. Let no one misunderstand this. Any deferral of the tax cuts will be because the Democrats have become too expensive for the Australian public to wear any more. It is not just the Labor Party. One expects from the Labor Party a socialist grab. Senator Chaney has pointed out the enormous extra expenditure this Government has indulged in, the enormous extra amount of taxation that has been reaped by this Government. That is to be expected from socialists. What must be understood is that a bargain was made between the Democrats and the Labor Party, a fiddle which went something like this: The Democrats said to the Government: `If you give us a little dance in the sun on a minor matter such as relief for the motor trade, we are willing to punish every taxpayer in Australia'. That was the bargain. `Let us dance in the sun in a glib little way and pretend we have solved the automotive industry's problems', although the automotive industry has said it has done nothing of the kind. The price for that is a letter from the Prime Minister (Mr Hawke). The Government is willing to punish every Australian. For what reason? Not because we have not got the revenue from the fringe benefits tax, the capital gains tax or the entertainment tax, as indeed Senator Maguire and Senator Chipp were trying to imply, and not because the Government has not postulated this Budget on a very seriously deteriorating primary industry-indeed it had postulated it on the precise forecasts from the Bureau of Agricultural Economics. What is the reason behind this? If indeed there is a slippage of tax for three months it means that, instead of the Government having to work to cut expenditure in order to reduce the deficit, the Australian Democrats will have put up the taxes of all the Australian people to fix the deficit. The Democrats, by moving this amendment that no doubt will be carried by the Australian Labor Party today, because they are twin souls, have made a bargain to put up taxes by $9 a week, which will also put many people into higher tax brackets. That is the broad picture. That is against a situation of the Government saying through Senator Maguire: `Look at the wonderful things we have done'. The Government forgot to mention that under the Whitlam Government inflation soared to nearly 20 per cent and wages were put up in 18 months by 37 per cent. The present Prime Minister, who was then the Federal leader of the Labor Party and, indeed, the leader of the ACTU said: `I know that this will put up inflation, but I don't care, I am going to bargain for higher wages'. That is the same person who today is urging restraint from people. This is the same person that the Democrats are supporting. At the moment Australia has a grossly adverse balance of trade, a symptom of too high costs of production. There is a pretence that this is caused solely by a fall in export earnings for primary industry and minerals. That is a nonsense pretence. On the other side of the balance, the costs of production are so high, with devaluation and everything else taken into account, that we cannot resist a flood of imports coming into this country, so we are pouring out our money to pay for imports and we cannot earn as much for exports. That is what is happening. The Government that tried to make a virtue of devaluing the dollar by 30 per cent is the Government that has put up costs in Australia everywhere because of imports being loaded by 30 per cent. The Government is trying to say to the employers now: `Please, we want to help you by a device. We will give you some kind of incentive. We would like you to borrow. Perhaps we will subsidise interest rates'. What a nonsense when at the same time, through Senator Chipp's Australian Democrats' support for the Labor Party, the Government has put imposts onto manufacturing of an enormous kind. It has imposed a fringe benefits tax impost, a capital gains impost and an entertainment tax impost on to the manufacturing people of Australia. That will do two things: Firstly, it will increase costs, which will create unemployment and, secondly, it will drive more imports into Australia and further aggravate the balance of trade. These are the people who are getting up today and saying: `No, we won't support the promise in the Budget'. It is a promise which was perfectly clear. There is no argument about it. It was in two bits. Who knows when the second promise will ever be kept? Senator Chipp says: `I have got it in writing'. Well, I say to Senator Chipp that I have it in printed form in terms of the Budget, and that is the promise that is being broken and that is the promise that Senator Chipp is conniving in breaking. Senator Chipp —You talked up the resources boom. That is in print. Senator Sir JOHN CARRICK —The honourable senator can interrupt as much as he likes. The promise that is being broken is in printed form and Senator Chipp is in fact breaking it. The fact of the matter is that what we are debating today-- Senator Chipp —Deny it. Deny you talked up the resources boom. Senator Sir JOHN CARRICK —I am not going to take these diversions from Senator Chipp. He is interjecting strongly because he cannot deny this. He cannot deny that, by his action, from 1 September every taxpayer in Australia will be denied $9 a week; that is $117 over 13 weeks. Many taxpayers in Australia will be moved into higher tax brackets. Through the fringe benefits tax being passed down to the workers and paid by them they will pay higher taxes. Every sacking because the employer cannot pay is directly due to the bargain made between the Democrats and the Labor Party. The Democrats are the people today who are standing up and saying: `No tax cuts on 1 September; let us have them on 1 December. Let us break our promises'. This is the party that said: `Let's keep them honest'. Goodness gracious, `let's keep them dishonest' should have been their phrase because that is what they have done. I think the saddest thing is the way the Democrats have sold any principles they have had. Senator Chipp —I said `Let's keep the bastards honest', and I was talking about people like you and the resources boom. Senator Sir JOHN CARRICK —I think the honourable senator said: `Let's keep the bastards honest'. Let's keep them honest. When referring to the Budget Speech of the Treasurer (Mr Keating), why should he not be honest? Why should not the honourable senator be honest? The honourable senator supported the Budget Speech. If he wants honesty, I say `First of all, physician, heal thyself'. Senator AULICH(Tasmania)(4.16) —There are few occasions in the Senate when we have genuine surprises and fewer occasions when there is a genuine sense of humour brought into this chamber. I must admit that the motion before us today encompasses both. The first, I guess, in terms of surprises, is that it is surprising indeed to all of us who sit in this chamber that the current Opposition should bring before us today a motion which criticises this Government, of all governments, for tardiness in bringing in tax reform. This comes from an Opposition which when it was in government, when a significant number of people on the other side of the House were Ministers of that Government, was unable to come to grips at all with the massive problem of restructuring tax reform in this country. Senator Chipp —They had a majority in both Houses. Senator AULICH —They had a majority in both Houses, and to the eternal shame of that particular government, of those members of the Liberal-National Party government of the day, they were unable to fulfil any of the promises they made about taxation reform in this country. They were the only ones who had the clear way right through the Senate and the House of Representatives, and they were unable to deliver. Yet they come into this chamber today with all the hypocrisy, and with what I imagine is a sly sense of humour, and put this motion before us, accusing this Government of being tardy because it has taken a financially and fiscally prudent approach towards the Government of this country and the handling of the economy and might delay the promised tax reforms until the end of this year. Let us look at those opposite during the time we have been in government. What have they opposed? They have a great record of opposition. They are very good at opposing. They have opposed everything positive that this Government has brought before the Australian public by way of tax reform. They have opposed a broad based consumption tax. Initially John Howard supported it and then they backed off it. They opposed the Australia Card. Two weeks or so before the Joint Select Committee on an Australia Card brought down its findings, John Howard came out against that card. He did not have the decency or the objectivity to wait until that report had been tabled in this House. He came out and bagged it right from the start-a major component of the tax reform package being brought forward by the Government of this country. When this Government attempted to do something about bottom of the harbour tax avoidance, when this Government attempted to get into the various schemes to prevent all the entrepreneurs in the tax avoidance industry from continuing to have their way, as they have over the last decade or so in this country, what did this Opposition do? The Opposition did nothing. It opposed it on the spurious ground that retrospectivity is a poor principle to bring into any form of legislation. The Opposition has opposed fringe benefit taxes-the broadest types of fringe benefits taxes, ranging from the use of cars to the whole question of free lunches. For whom did Opposition members oppose such taxes? They did it in the interests of industries they supposedly represent. They have opposed the capital gains tax. Everywhere down the line when this Government has attempted to bring in tax reform, Opposition members have opposed it in this place. What was the coalition Government's record when it was in office? It was forced to do something about tax reform-and I use the word `forced' quite deliberately. That happened only after a significant number of reports came before the public at large and before various State and Federal governments to say that nothing was being done about the tax rorts that were becoming endemic. I refer to the McCabe-Lafranchi tax avoidance report, the report of the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union, and numerous reports from within the Auditor-General's Department and the Australian Taxation Office all telling the same story. What was the response? Slothful action on the part of those relevant Ministers; inaction and apathy. That was their record in government. When the previous Government finally did enact some legislation federally, what did we see? We saw a backing off from the proposals that came before this Parliament. Following the Mathews Committee of Inquiry into Inflation and Taxation, what happened to trading stock and valuation adjustment? It was introduced and then dropped. The general avoidance provisions were improved somewhat, and I will give the coalition Government some credit there. The broadly based indexed tax arrangements on which the Australian-Taxation Office reported in favour was quietly dropped by Cabinet, much to John Howard's chagrin. Indexation of personal income tax was introduced and then dropped-more fumbles than St Kilda on a wet day; that is their record in government. Senator Chipp —Steady on, are you talking about the football? Senator AULICH —I am talking about the football team. I can think of no team that would be a better example of the way the Liberal Party handled taxation reform when in government. I turn briefly to the Australian Democrats' amendment and indicate that the Government finds that amendment appropriate for this debate. We find that amendment a fair and objective re-arrangement of the motion and we shall be supporting it. What are this country's problems in regard to taxation reforms? First, there is the question of straight-out, illegal tax evasion, which has been a growth industry since the 1970s. Around $3,000m is lost each year through tax evasion. There has been straight law-breaking, which does not include tax avoidance through minimisation of income in legal ways that slightly alter the spirit of the Income Tax Assessment Act. No effort was made over the years by previous governments to break that vicious circle whereby the tax avoiders increasingly put the burden on other people in the community, especially pay as you earn taxpayers. No effort has been made by previous governments to ensure that ordinary taxpayers do not move into higher levels of marginal tax rates simply because of the effluxion of time and the effort of inflation. Currently some two million of the 5,500,000 full time workers face a tax rate of 46c in the dollar. Within two and a half years that number will have increased by more than one million, unless something is done about it at this stage. That is what this Government's tax reform package is all about. Nothing has been done about the widespread use of the act of incorporation by individuals in business to avoid paying higher tax. I understand that Australia is now one of the most incorporated countries in the world, in that more private individuals in business seek to incorporate themselves as companies to avoid paying the higher rates of personal income tax that prevail. When the company tax is only 46c in the dollar and the top marginal rate in the personal area is about 60c in the dollar, then obviously the motivation to incorporate oneself as a businessman is always there. But the planned cuts to be brought in later this year will bring that tax rate up to 49c in the dollar for companies and bring the highest marginal tax rate for personal taxation down to 49c in the dollar, thus in a sense enduring that the motivation for people to incorporate themselves in future is lessened. This Government has promised a number of tax reforms-major reforms and major structural reforms. I will briefly go through these because they have tended to be lost in the debate that has ensued in the community at large as people have debated particular reforms that have come through. The tax scales themselves will be altered at the end of this year in a way that will bring immediate benefit to all taxpayers in the community and will make it of no value at all, or of little value for people to incorporate themselves in the way in which they have in the past. I shall quickly read some of the changes as outlined by the Government. On 1 September 1986, towards the end of the year, the amount which people can earn tax free-- Senator Chipp —We don't know that yet. Senator AULICH —We can assume that that will be the case. The amount which people can earn tax free will go up from $4,595 to $5,100 per year, and all the tax rates will be cut to bring in a new scale. That scale will move from nil dollars to $5,100 per annum, which will involve nil taxation, through to 55c in the dollar taxation for those on $35,000 and above. The point that many people in the community have forgotten, given the nature of the debate that has been going on, is that in July 1987 the cuts will be completed. The 43c and 46c in the dollar rates will be reduced to 40c and the 55c rate will be cut to 49c. Those are major cuts for people in the middle and higher income brackets, in addition to the cuts that have already been made for those people who have been on the lower income level over the last three years. What else has the Government done? As a Government we have brought in associated fringe benefits tax, and I use that as a generic term. There has been an attack on the system by this Government whereby higher income earners have opted for fringe benefits such as golf club membership, cars, entertainment, holidays in lieu of higher salaries and other forms of benefits in lieu of higher salaries, all of which have left the ordinary pay as you earn taxpayers totally disadvantaged compared with those who have been in a privileged position. There has been a mild capital gains tax, and establishment of the principle that most people in this chamber would share, some in principle and some in practice, that both income and capital should be taxed at some stage or another. In effect that will ensure that the sort of investment that previously went away from the earning of income and in various ways into capital, to make a long term capital gain and not to pay tax on it, will end. In effect, that will ensure that the sort of investment that should go into productive industry, creating jobs and helping our export industries will occur rather than go into areas one would regard as irrelevant to our present economic position. We have looked at the prescribed payments tax that operates in certain industries such as the building, cleaning and transport industries. Those with a responsible tax record can apply to have that rate lowered where appropriate. It can be seen as a major attack on the black or cash economy-a move which has not been made in the past in any effective way. Imputation of company tax is an attempt to overcome the difficulties people face when they have the courage and propensity for risk to invest in companies in this country. Such people will no longer be double taxed as has happened in the past. Those have all been solid taxation reform achievements, coupled with this major change in the tax scales. What is the main aim? It is to ensure that we have a tax system that is fair and equitable, in which we all have confidence, in which a significant number of wealthy people do not absolve themselves of any responsibility in this area, and a tax system that is not a burden on the back of the average Australian taxpayer. As part of that whole process this Government has brought in a concept commonly known as the trilogy, which has not received the discussion it should have received in the community at large, but a part of which is a very important promise that there will be no increase in taxation revenue as a proportion of gross domestic product. That in itself is one of the major promises and policies that can be put into operation by any government. The Liberal and National parties have tended to forget it, for reasons of their own in the last few years. Finally, I turn to the talking up of the economy which occurred in the period 1980-81 and the latter part of 1982. It is significant and rather ironic that Senator Sir John Carrick, who preceded me in this debate, I guess carrying out the brief of the day as the relevant Minister for the Fraser Government, was one of those people very much responsible for talking up the economy. He was very much responsible for indicating that there was to be a resources boom that would lift this country out of the slough of despair and despondency that it was in during the Fraser period. Day after day he answered questions in this House in an effort quietly to talk up the economy. He did it with slightly more aplomb than his rather unimaginative Prime Minister, but he did it nevertheless. What happened? What was the net result? In this country private enterprise went and borrowed off-shore to invest-in many cases in unproductive areas. What else happened? Public enterprise went out and borrowed. There were infrastructure borrowings for dams, roads, ports and all those sorts of areas. What was the net result? Our overseas debt increased dramatically during that period. If we are looking for a cause for the decay of this economy and the structural imbalances of this economy-- Opposition senators interjecting- Senator AULICH —I know that I am hitting the nail right on the head, judging by the reaction from my colleagues opposite. If we are looking for the major cause of the problems that are facing this country now we must look to the irresponsible talking up of the economy that occurred during that period under the leadership of the very people who sit opposite us today and who had the gall to move this motion we are debating this afternoon. For that reason the Government rejects the motion. Senator Dame MARGARET GUILFOYLE(Victoria)(4.32) —Senator Aulich commenced his speech by talking about needing a sense of humour and saying that he had a sense of surprise in regard to the motion put before the Senate today by the Opposition. I must express some surprise at some of the statements made by Senator Aulich, in particular his last comment about the talking up of the economy. We would not be having any public debate on the economy at the moment if the present Treasurer (Mr Keating) had not, in the absence of the Prime Minister (Mr Hawke) in China, brought forward the seriousness of the state of the Australian economy instead of the rhetoric we have been hearing over the past three years about the world's greatest Treasurer and what had been achieved simply by a change of government. In referring to some of the remarks made by Senator Aulich, I have to express surprise at the fact that he took exception to the Opposition's having opposed a capital gains tax. My strong recollection is of the present Prime Minister solemnly assuring the Australian people that there would be no capital gains tax. That statement was made by the Prime Minister for some electoral advantage. It was a statement of electoral opportunism. It should not surprise Senator Aulich that we opposed the capital gains tax because throughout the whole of the last election campaign that opposition was one of the planks of the Opposition's policy. It rests rather oddly with Senator Aulich's understanding of the position not to recall that it was the Prime Minister also who promised that there would be no capital gains tax. Senator Aulich also took exception to the fact that we opposed a broadly-based tax. There is a history in regard to that. When in government the present Opposition looked at that matter and did not proceed with it. Again, I find it somewhat odd that Senator Aulich should not remember that Mr Keating could not get his preferred option through either his Cabinet or his Caucus. Again, it was the Prime Minister who scuttled the Treasurer on the preferred option in regard to a broadly-based tax. That was abandoned by the Government itself, not because of the Opposition's attitude to it. It was a government decision that it was not timely to go ahead with the preferred option of the Treasurer. Senator Aulich —You were part of the community reaction, too. Senator Dame MARGARET GUILFOYLE — We are part of the community reaction. The Prime Minister read the community reaction, scuttled the Treasurer and left him standing without his broadly-based tax. The other matter of surprise in Senator Aulich's remarks to which I take exception concerns the Australia Card. Those of us who have followed the debate and the discussion on this will remember that Senator Aulich could not even get a majority of those who sat on the Joint Select Committee on an Australia Card investigating this matter to agree with him that an Australia Card ought to be introduced in this country. I can understand why the Government has taken the decision to introduce it. This is not because any of the departments that advise the Government have given it positive advice on the matter. I remember that over the five years in which I was Social Security Minister and Minister for Finance I saw plenty of advice on this matter. Therefore, I can understand why the Government will seek to introduce the Australia Card. When putting together the Budget figures, the introduction of an Australia Card would allow a government to say that, of course, expenditure on social security benefits and pensions will be reduced by so many hundreds of millions of dollars and that tax revenues will be increased. With reference to talk earlier about rubbery figures in a Budget, I would challenge any figures, showing either savings in expenditure or increases in revenue, based on the introduction of an Australia Card. Those matters just cannot add positively to the Budget that will have to be brought in this year and to what needs to be done positively in the interests of Australia's economy. I am very pleased that there is a public debate. I await with interest, as I am sure do all Australians, the statement of the Prime Minister tomorrow night. However, the Opposition felt that it was timely to move this motion of urgency concerning the imperative need for the Government to deliver its promised personal income tax cuts by 1 September. The words `work, save and invest' used by the Opposition as part of its motion were used by the present Federal Treasurer when he introduced tax measures in September last year. The words `work, save and invest' probably are the most important words that ought to be addressed in Australia at present. Senator Maguire claimed that Labor is the low tax party in Australia. That statement sits rather oddly, despite the rhetoric, with what the actual figures show. In real terms, tax revenue has increased at an annual rate of 5.4 per cent in the three years of the Hawke Government compared with an annual rate of 3.3 per cent during the seven years of the Fraser Government. If that is a low tax party, it certainly is not giving the results that it claims to give. Tax receipts as a percentage of gross domestic product were budgeted to increase 25 per cent in 1984-85-the highest in post-war history. They have averaged 24.5 per cent under Hawke compared with 23.4 per cent under Fraser. I think those figures speak for themselves. We need also to look at Government expenditure in real terms. Any party that claims to be a low tax party also has to be a low spending party. We have found, however, that Government expenditure has increased in real terms by 4.8 per cent per year under Hawke compared with only 2.1 per cent per year under Fraser. I hope that these figures will be addressed in any statement made by the Government in the light of the present economic crisis. When we find that Government expenditure as a percentage of gross domestic product is budgeted to increase to 29.4 per cent in this Budget year-the highest in post-war history-and we find that it has averaged 29.9 per cent in the three Hawke Government years compared with 27.7 per cent in the seven Fraser Government years, we need to ask where the Government priorities are in dealing with what is undoubtedly a very sick economy. Senator Chipp made some statement about the fiscal effect of the tax cuts. In his amendment he is asking the Government to be fiscally responsible about the date of their introduction. It can be only semantics to believe that there are difficulties in dealing with a promise that tax cuts will be introduced on 1 September and their deferral until 1 December at the latest. It must be recalled that the tax proposal was brought forward as part of a trilogy and to shore up the prices and incomes accord. The introduction of tax cuts on 1 September was in effect to hold the accord. A tax cut of about $9 a week was promised. It was said that none of these tax cuts would be financed by adding to the deficit. The Australian worker and the pay as you earn wage and salary earner, about whom we have been hearing today, must ask why, if the Government promised solemnly as part of the accord that they would not be financed by adding to the deficit, the Government now has to back away and why we cannot have the tax cuts that were promised at the time and in the way in which the Government promised them. I hoped today to have time to talk about some other matters, in particular the foreign debt which has been mentioned by some honourable senators who claim that by talking up an investment boom in this country somehow we added to the foreign debt. It is rather salutary to see that Australia's foreign debt-that is, the amount we owe to foreigners in other countries-has risen dramatically under the Hawke Government and is approaching alarming levels. This Government has been in office for over three years and the foreign debt totalled around $35 billion when it took office in 1983. The latest official figures for September 1985 show that it is at $70 billion; that is, our foreign debt doubled in only 2 1/2 years under the Hawke Government. To put that in figures that people might understand, to completely pay off our foreign debt would require $6,000 to be taken from every man, woman and child in this country. That is the seriousness of the foreign debt and that is the situation in which we find ourselves at present in trying to deal with an economy that has the terms of trade that it has and has the other difficulties that have been mentioned about the balances of payments and other things. I will not have time to discuss those matters now. The general economic conditions are by far the most important to consider. Overshadowing all else are the high and rising production costs which render Australia seriously uncompetitive, whether in seeking to export or in attempting to resist the flood of imports. Many of these costs are caused or influenced by governments. Senator Sir John Carrick has done a great deal of work on these matters; possibly he did not have time to refer to them. However, one of the points that he has made is that, unless all governments are willing conscientiously to examine all costs imposed by them which are impacting on small business and other business and to reduce or eliminate all except those strictly necessary, economic recovery will be severely retarded. It is all very well for Senator Maguire or others to talk about the fall in production costs. No one argues that there may be some containment in production costs, but we are talking about what ought to be competitive costs; not a fall from an all time high, not a fall from something that is uncompetitive but something that was referred to by Mr Charlie Fitzgibbon when he made a submission on these matters and said: . . . it is necessary to keep educating portions of the community to an understanding of the advantages of the material gains inherent in a more co-operative productive society. I do not think anyone would argue about that. Charlie Fitzgibbon continued: It should be understood that an Australian worker does not get greater pay than his German/Japanese or American counterpart, in most cases he gets less and total labour costs per employee are generally less, but it is in the bottom line figure at the end of the day as to productive cost that shows the difference in result per dollar. That is the point that needs to be made: Do not just measure a fall in production costs against our own production costs but rather compare out production costs, out unit costs, with that of any other person with whom we must compete, with that of any other country with which we must compete on the world market, or indeed on the Australian market. I again quote Charlie Fitzgibbon: Since Australian workers can compare with the workers of any country, it might surprise just how much productivity could be improved if the workforce understood that the increase in productivity was going to result in an increase in their security or award while not prejudicing their safety or principle. Surely that is part of the matter that must be addressed as we look at production costs and productivity increases which we seek. I have mentioned that all governments have a responsibility for this. The charges that government makes for electricity, freight, water rates, land taxes, municipal and shire rates, payroll tax and the cost of the Public Service in this country surely must give us reason to be concerned about how we can become more competitive and how our production costs can be reduced. The word `investment' is in our motion of urgency today. I would like to quote the most recent media release of the National Australia Bank, which states: AUSTRALIA MUST IMPROVE INVESTMENT CLIMATE National Australia Bank has warned that unless there is an improvement in Australia's investment climate, firms will take their capital expenditure plans elsewhere. . . . . . . . Australian companies have been rapidly increasing their direct investment in offshore locations. . . . . The Bank says that this reluctance to invest in Australia has occurred despite higher than average economic growth and near doubling of the funds available for investment over the past five years. . . . . The problem of restoring business confidence, the Bank says, is compounded by six-monthly wage indexation which tends to perpetuate boom/bust cycles in economic activity. It suggests that the present system of wage indexation be made more flexible so that changes in trading conditions and award wages can be more closely matched. It is not surprising that the National Australia Bank finishes its media release by stating: Similarly government should not restrict investment, either through ``crowding out'' as a result of deficit spending, or excessive regulation . . . That brings me to the only other point I could make: I express the hope, as does the Opposition, that the Government will address the matters that are of grave importance in the economy and that it will look at ways in which it can give incentives for people to work, to save and to invest. This will be the only way in which, by working together, we can retrieve this country from its severe economic recession. Senator CHILDS(New South Wales)(4.46) —The Opposition, with supreme impudence, has moved this urgency motion, which claims there is a need for the Government to deliver its promised personal income tax cuts from 1 September, which goes on to encourage the men and women of Australia to work, save and invest and which, finally, uses those points to refer to national economic recovery. Senator Maguire has clearly established the basis of national economic recovery under this Government. He has pointed out, I think absolutely correctly, that what is needed is a national economic recovery from the Liberal years of government. I think this urgency motion is a bit impudent because it raises some of the issues, such as work, that it has been the Labor Government's prerogative to deal with after the Fraser years. No Liberal Party member can talk about work when, in that Party's final year, it put 200,000 people on to the scrap heap. The Opposition even used an expression which should be associated with the Australian Labor Party-perhaps the Liberal Party should be prevented from using it-and that is the `men and women of Australia' expression. Gough Whitlam used that expression and made it famous when, after 23 years of conservative rule, he appealed to all Australians to work together to change the system we had in 1972. At every level the Liberal-National Party Opposition has no right to take the credit for the economic prosperity that exists in this country. Of course, the key to that prosperity is the accord between the trade unions and the Government, something that would be impossible for the Opposition to achieve under any circumstances. The contrast we have is between a patriotic and positive government and a patriotic and responsible trade union movement seeking to establish in the national interest the best position for all Australians. The opposition that has been expressed in the debate today came from the sleazy, backsliding Opposition, which faces several directions on a number of issues. I propose to show, as others have shown, that the Opposition faces different ways almost at the same time. Senator Chipp and Senator Aulich have already drawn attention to the contradictions that exist in what the Opposition says and does on so many topics. For a moment I want to talk about integrity because, as I have said, the Opposition has no integrity to bring into this debate; with its record, it has no right even to raise the matters. I want to talk about the integrity of the Government and the trade union movement. I think that integrity has been established. I particularly want to refer to the integrity of the trade union movement because for a moment I almost thought that the Opposition had actually discovered wage and salary earners. It is still not absolutely clear whether it is sympathetic to them because just as Senator Chaney, I think, adverted to them Senator Sir John Carrick reminded us of the preoccupation of the Liberal Party of Australia with the capital gains tax and the fringe benefits tax I refer to the sacrifices which have been made already by wage and salary earners through their organisation, the Australian Council of Trade Unions. The concessions by wage and salary earners included the acceptance of the consumer price index for the March and June quarters of 1983 as the starting point of a new indexation system; the acceptance of the deferral of a 9.1 per cent catch-up claim reflecting the period of the wages freeze; the acceptance and deferral of tax reductions, in the absence of tax indexation, in the 1983-84 Budget; the acceptance of the Medicare-affected CPI figure for wage fixing purposes, involving the reduction of published CPI figures by 2.5 per cent; the acceptance of the accord's no extra claims commitment over the duration of the current centralised system; in the context of the 1983 national wage case decision, the acceptance of prohibition on the productivity claim; and, in the context of the September 1985 ACTU-Government agreement, the acceptance of wage discounting of 1.73 per cent, acceptance of moderation, deferral and phasing-in of the productivity claim, acceptance of the delay from April 1986 to September 1986 of the tax cuts offset and acceptance of six-monthly indexation hearings. These are the actual contributions of wage and salary earners through their trade union movement. That demonstrates the integrity of the trade union movement. I do not know what the results of the negotiations will be between the Government and the trade union movement, but, if there are any concessions by the trade union movement, I am sure they will be based on protecting existing jobs and promoting employment in this country, and that is of no thanks to the discredited Opposition in this chamber. We have a situation in which, but for the co-operation of the trade union movement, the Government would not have the economic success that it has had until this point. To that extent, I acknowledge that the Democrats' amendment is far more effective in dealing with this problem. It allows for the flexibility which one would accept when we, at a national level, have a crisis. Even Senator Chaney said: `Nobody denies that we are facing an economic crisis'. He also referred to getting people back to work. Of course, we cannot help hearing the other things which have been said in the debate. Senator Peter Baume from the Opposition was the one person who agreed with Senator Chipp that the negative gearing proposals which flourished for so long under the Fraser Government were immoral. Senator Chipp was referring to a typically immoral example. Senator Peter Baume —Why don't you be accurate? Senator CHILDS —I am completely accurate because Senator Chipp was saying that he knew of an airline pilot who was using negative gearing and had not paid tax for 10 years. The Opposition fails to take into consideration the fact that people do understand that the Opposition has not put together a package. After all, everybody has talked about a package in the Labor movement. The Government and the trade unions understand that it is difficult to set priorities. This Opposition cannot set priorities. Today's motion reflects that. Senator Chaney had the audacity to refer to ever growing government expenditure. I want to refer to the sorts of things on which Senator Walsh has pinned down the Opposition time and again, and that is the promises of the Opposition to increase government expenditure. The Opposition has to be called to account for its dishonest attitude towards taxation issues and the resulting Budget decisions. Opposition promises, if implemented, would add a further $1.4 billion a year to government spending. When these promises are combined with Opposition taxation policies, it is clear that the overall effect of these promises of the Leader of the Opposition (Mr Howard) and his colleagues would be to double the Budget. I will detail the many Opposition expenditures and taxation promises, showing their full year effects in 1985-86. These particular policies would add in excess of $1.4 billion to outlays and cost revenue approximately $3.7 billion. The net effect would be to increase the Budget deficit by more than $5 billion. It is such a long list that it is difficult to outline in such a short time the full expenditure, but Senator Dame Margaret Guilfoyle has spurred me on by referring to electoral opportunism. The electoral opportunism of this Opposition knows no bounds. For example, the ever-growing expenditure which Senator Chaney referred to would add $600m to the expenditure on tertiary education for unemployment benefit recipients. The additional expenditure on defence would be $234m. the additional expenditure on health would be $167m. The repeal of the assets test would cost $140m. There is the provision of an immediate $100m advance for rural reconstruction for farm carry-on loans at concessional interest rates. There is the $240 per tonne floor price for sugar, which would amount to $75m. The abolition of export inspection charges would amount to $52m. The disallowance of freedom of information charges would amount to $5m. Income splitting-that is the big one for the Opposition-would amount to $1.9 billion, a figure the Opposition is not terribly happy about because it puts its weights up. The abolition of tax on new oil would amount to $480m. The abolition of the non-cash fringe benefits tax would amount to $320m. The reinstitution of the entertainment expenses allowance, which is one we have just dealt with, would amount to $310m. Child care rebates would amount to $180m. The abolition of fuel indexation would amount to $108m. The abolition of tax on lump sum superannuation would amount to $100m; and there is the abolition of sales tax on oils and lubricants. I could go on, but I feel I should finish at that point because my throat is getting sore from listing all the things which the Liberal Party has promised, at a time when it urges restraint on wage and salary earners in a general way, at a time when it has a very bad record, especially in the last couple of weeks, and, as has been said by a number of honourable senators including Senator Chipp, at a time when we were actually dealing with the fringe benefits tax. We have this list of vote buying bribes which the Opposition cynically projects into the community at a time when it is denying this Government the opportunity to have reasonable revenue. I must mention the fringe benefits tax because a number of people have referred to it. It is the key thing. It is the most recent example of the Opposition's failure to give the Government the money which it should have. It did not force people of privilege to pay their fair share of the finance. The editorial, headed `The case for the fringe benefit tax', in the Australian Financial Review-not a radical journal-of Tuesday, 27 May stated: What hard data we have on fringe benefits shows two things: the first is that fringe benefits rise with income; the second is that the number and type of benefits received are closely related to occupational status and industry. Only a small and very select section of the workforce enjoys very substantial fringe benefits. This privileged category largely consists of people who are able to exercise considerable control over their own salary packages- In conclusion, I must support Senator Chipp, who was attacked because he said that the Opposition's lack of credibility was further evidenced by the deficits in the boom years of the early 1980s. At the 1980 Premiers Conference the Loan Council approved, on Mr Fraser's insistence, total infrastructure borrowings over the decade of $4.7 billion to fund the exaggerated resources boom. That is the answer to Senator Sir John Carrick, whose political epitaph will be the massive deficit that existed under the Liberal Party. The DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Senator CHANEY(Western Australia-Leader of the Opposition)(5.01) —The Senate is debating a motion which essentially calls on the Government to honour the very clear promise that it made to wage and salary earners in the last Budget. That is not a promise that was made by the Opposition. The present Government promised the wage and salary earners of Australia-it promised them in the Budget and it promised them in the accord-that in return for some of the concessions that Senator Childs outlined, they would get tax relief. The simple proposition that the Government should keep its word on tax relief does not have the support of the Government and the Australian Democrats. It is a pathetic indication of this Government's intentions that no Minister could rise and speak on this motion because no Minister would, of course, be in a position to give any sort of undertaking as to what tax cuts are going to be delivered to the wage and salary earners of Australia. This has been a pathetic demonstration of the unholy alliance between the Australian Democrats and the Government when it comes to breaking the promises that have been made to the people of Australia on taxes, whether it is breaking promises about the capital gains tax or breaking promises about relief for the wage and salary earners, who are groaning under the heaviest weight of taxation in Australia's history. There is some doubt in my mind about the worth of debating any issue in this chamber, given the lack of regard for the truth which has been shown by Government speakers in this debate. I think it has been one of the most disgraceful exhibitions of untruthfulness that I have ever struck in my time in Parliament. Let me start with Senator Maguire, who, in a lack-lustre and undistinguished contribution to this debate, claimed that the Australian Labor Party was the low tax party. If Senator Maguire believes that Labor is a low tax party, how does he explain his own Government's Budget Papers which show that the last two Budgets of the Labor Party have taken a greater share of gross domestic product than any Budget in Australia's history? It is a pathetic misrepresentation of the facts and Senator Maguire should look at the facts before he makes ridiculous assertions in this place. I found that a number of other contributions-but most of all, I think, Senator Aulich's- showed a total disregard for the truth and for what the facts are. Senator Aulich just made a series of totally wrong allegations in the course of his speech. For example, he claimed that there was instant opposition from us to the broad-based consumption tax in the tax package when in fact we never departed, publicly or privately, from our support for a broadening of the tax base. We disputed the idea that a 12 1/2 per cent consumption tax was a feasible thing to introduce, given the present state of the Australian economy. He said that we bagged the Australia Card before the report of the parliamentary committee was brought down. That is absolutely wrong. He referred to other matters in respect of which he simply paid no regard to the truth. I really found his whole contribution totally unsavoury. Senator Chipp devoted a great deal of his speech to misrepresenting the Opposition's position on the rest of the tax package. Senator Chipp, who I would have thought after his time in this place would have some knowledge of facts, spent most of his time abusing Senator Sir John Carrick over the so-called resources boom. I can only say that if it were not for the investment in resources in the late 1970s and the early 1980s this country would be in very much greater difficulty than it is in today. Australian Bureau of Statistics figures show that from 1981-82 to 1984-85 exports of alumina, coal, iron ore and petroleum increased in value from a little over $5 billion to just under $10 billion. There was nearly a doubling in the value of exports in those areas over a three-year period at a time when the terms of trade were supposedly running against us. The simple point that the Opposition wishes to make is that the people of Australia are entitled to tax cuts which have been promised to them by the Government. After all, it was the Treasurer (Mr Keating) who said, when he promised the tax cuts, that high marginal tax rates involved the most severe disincentive to work, saving and investment. Mr Deputy President, I think the way in which honourable senators vote will show once again the unholy alliance that exists between the Australian Labor Party and the Australian Democrats when it comes to robbing the people of Australia. Question put: That the words proposed to be left out (Senator Chipp's amendment) be left out. The Senate divided. (The President-Senator the Hon. Douglas McClelland) Ayes . . . . . . . . . . . 35 Noes . . . . . . . . . . . 29 —— Majority . . . . . . . . . 6 —— Aulich, T. Jones, G. N. Black, J. R. McClelland, DouglasBolkus, N. McIntosh, G. D. (Teller)Childs, B. K. McKiernan, J. P. Chipp, D. L. Macklin, M. J. Coates, J. Maguire, G. R. Coleman, R. N. Morris, J. Colston, M. A. Ray, RobertCook, P. F. S. Reynolds, M. Cooney, B. Robertson, E. A. Crowley, R. A. Ryan, S. M. Devlin, R. Sanders, N. K. Elstob, R. C. Sibraa, K. W. Foreman, D. J. Siddons, J. R. Georges, G. Tate, M. C. Gietzelt, A. T. Vigor, D. B. Giles, P. J. Zakharov, A. O. Haines, J. Archer, B. R. Knowles, S. C. Baume, Michael Lewis, A. W. R. Baume, Peter Messner, A. J. Bjelke-Petersen, F. I. Newman, J. M. Boswell, R. L. D. Puplick, C. J. G. Brownhill, D. G. C. Reid, M. E. Carrick, Sir John Sheil, G. (Teller)Chaney, F. M. Short, J. R. 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. Hill, R. Withers, R. G. Jessop, D. S. Richardson, G. F. Kilgariff, B. F. Grimes, D. J. MacGibbon, D. J. Evans, Gareth Parer, W. R. Walsh, P. A. Alston, R. K. R. Question so resolved in the affirmative. Amendment agreed to. Original question, as amended, resolved in the affirmative. Senator PETER BAUME(New South Wales)(5.12) —I move: That the Senate take note of the paper. The provision of legal services for Aboriginals is one of the great mechanisms for giving a fair go to Aboriginal people. It is one of the mechanisms for ensuring a chance of representation before the courts. It provides us with one of the few opportunities to give Aboriginals a greater chance for justice, to give them a greater chance of acquittal when they come before the courts. It is well known that those not represented are more likely to be convicted, and Aboriginal legal services, by representing Aboriginals have been able to reduce conviction rates. Aboriginal legal services help to empower Aboriginals. But there are problems with the legal services. First, over the years they have failed to work within the budgets they have been given and have confronted various Ministers with demands for open-ended budgets to continue their work. Secondly, there has been a misuse and an abuse of the power conferred on those who run the Aboriginal legal services-those who accrete power to themselves-and sometimes there has been an abuse of power in that certain Aboriginals have not had legal services made available to them. In my time as Minister for Aboriginal Affairs both kinds of complaints were made known to me by different groups of disaffected Aboriginals. As a result of these kinds of problems the present Minister, Mr Holding, saw fit to commission Mr Joseph Harkins to conduct an inquiry into Aboriginal legal aid. The report of the inquiry is a comprehensive document and I congratulate Mr Harkins on this his latest piece of work carried out on behalf of the Government. He did some work previously, when I was Minister, and that was equally excellent. In the few minutes available I wish to draw attention to several of the recommendations, because they provide guidelines for the way in which Aboriginal legal services might work in the future. Recommendation 8 provides guidelines about which cases should get priority. Since there is not enough money to represent every case for every Aboriginal, Mr Harkins suggests that the legal services should formalise in their guidelines decisions and informal understandings about cases in which legal assistance will not ordinarily be provided, such as Aboriginal versus Aboriginal cases, routine offences attracting routine penalties, or repeated offences. He also refer to the requirement for a merit or means test in special circumstances. That seems to me to be a well-founded and sensible recommendation. Recommendation 10 asks the legal services to concentrate their work on criminal matters and not to address civil cases or, if they do address them, to farm them out. Recommendations 22 and 23 enjoin the legal services to work in close conjunction with other legal aid agencies-something which from my experience of dealing with the legal services they were loth to do. It is something which is obviously necessary in view of the resources available and the size of the task to be carried out. The other recommendation to which I wish to draw the attention of honourable senators is recommendation 26, which suggests that, because any Aboriginal can avail himself or herself of the services of an Aboriginal legal service, consideration should be given to the introduction of a means test with a provision for contributions limited to substantial or costly matters. That is to say, where a very costly matter or one which is likely to be prolonged involves a wealthy or affluent Aboriginal-I remind honourable senators that there is now an emerging Aboriginal middle class in Australia-it is not inappropriate to seek a contribution from that person. Legal services for Aboriginals are important, they are vital, but they do need to be well run. They probably need to be run more efficiently than they have been in the past. I do not want to see a repeat of the circumstances which faced me as Minister when it was my sad task to close down the Aboriginal and Torres Strait Islander Legal Service in Queensland and to reconstitute it as a series of local legal services. That was done because of a misuse of power within the ATSILS as it then existed. I do not want to see the budget confrontation that took place in New South Wales or which, for example, caused the Victorian Aboriginal Legal Service to close its doors rather than meet its budgetary constraints. This report offers some very constructive suggestions. I hope that the Minister for Aboriginal Affairs gives them his careful and sympathetic consideration. Question resolved in the affirmative. Senator VIGOR(South Australia)(5.19) —I move: That the Senate take note of the paper. The Technological Change Committee of the Australian Science and Technology Council identifies five stages of technology transfer: Awareness; evaluation; acquisition; adaptation; and adoption and acceptance. They stress two overriding points: Firstly, we must develop our research and development capacity in Australia and our ability to handle technical information, otherwise we will be sold down the river on a regular basis. Secondly, we must become export oriented and look for opportunities abroad. ASTEC recommends that technology data bases and patent information be used to identify opportunities in a systematic manner, as is done in Japan, France and a number of other countries. For small businesses in particular this is necessary as they cannot rely on the chance reading of journals and do not have time to get the industrial intelligence they need. ASTEC recommends that industry bodies be given funding to perform the gathering, collating and disseminating of information on industrial and technological matters. In Japan quite often a specific company board member is delegated the responsibility of dealing specifically with technological matters and the Japan Information Centre for Science and Technology is responsible for spreading knowledge to the appropriate enterprises in this way. The Swedes have a technical attache system. The French have a Scientific Ambassador Service which obtains information overseas. This may be just another name for industrial espionage, but we must be prepared to grow up in the world and to use industrial intelligence effectively for our own needs. Australia has only five science and technology counsellors. This really is not sufficient to get the information we need abroad and to identify opportunities. I would like to go through the five stages of technology transfer. First, evaluation of new technology should involve looking for export opportunities, and not just defending the existing local market situation, which most of our firms do. Just in Time Manufacturing, for example, was modified through Australian experiences, and was then sold on to Malaysia and Singapore. To do this type of thing properly, enterprises need in-house technical capabilities. Unfortunately, as a percentage of the total work force, our engineers were only 0.65 per cent in 1981, as compared with 1.5 per cent in West Germany in 1980, 1.6 per cent in France in 1982 and 1.8 per cent in the United States of America in 1982. This means that we really do not have the capacity in engineering that we need and that we should be training more engineers or attracting them back to engineering. We probably have sufficient qualified people overall, but they are not being used effectively. Co-operation between non-competing firms may help us to reduce the costs of evaluation of technology. As an example of this, the report lists the hardening of metal surfaces through the Toyota diffusion process, where at least 50 companies were able to benefit from the new techniques at a cost of only about twice what a single company would have had to pay for an evaluation on its own behalf. Given more time, similar things could be said about each of the other stages of technology transfer. However, time is running out, so I summarise: The two vital ingredients for successful technological transfer are, firstly, the availability of an in-house research and development capability in our industrial enterprises, and, secondly, a positive will to export, to seize opportunities and to make export niches. Unless we are willing to commercialise our own research and development opportunities and to take research and development information from overseas and commercialise it, we shall surely become the type of banana republic that our Treasurer (Mr Keating) says we are. Senator ARCHER(Tasmania)(5.23) —I, too, would like to speak to the Australian Science and Technology Council report on mechanisms for technology transfer into Australia. Last time I spoke to an ASTEC report I expressed not dismay but some disappointment that it was a somewhat timid document, and I express the same thing again in this instance. I believe that ASTEC was put together to provide advice to government. If it is going to provide advice, it needs to be a little more daring and forthright. I regret that I again need to express my disappointment about this report. There are not a lot of recommendations in the report but it seems to me that they are just about all heavily qualified by use of the following terms-`commissioning a survey', `to promote the use', `to establish a pilot scheme', `to invite proposals for the organisation of workshops', `establish an award', `continue to seek ways', and `monitor changes'. This is not really the terminology one expects from a body that was established to give advice. It has certainly established the problems, but this is not the first, second or third report that has established the problems. We have a host of reports that very clearly lay the problems out, and it is the solutions we are looking for. In the last 10 or 12 years a number of committee of inquiry reports, White Papers, et cetera, have examined the issue of the dissemination of scientific and technological information. Two years ago the Industrial Property Advisory Committee told this Government that the findings of these reports had shown the need for a national information policy. It further recommended the co-ordination of major Australian repositories of technological information and urged the integration of Australian and foreign databases; yet two years on we have no response to the IPAC report and we have another report which has virtually, albeit half-heartedly, come up with the same recommendations. Even in the area of plant variety rights this report says that we ought to proceed, very gently, with this-it says it in a way to avoid exacerbating government sensitivities, of course-but that it would have the likely effect of increasing the availability of overseas plant varieties to Australian primary producers. That is about the eighth report the Government has had that has said exactly that. We still do not have any legislation and we still do not have very much indication that we are going to get legislation. The report discusses at some length the problems of purchasing, but it does not come up with the solutions that we require. It does not say what the Government ought to be doing. At present the Australian Government contracts out only two per cent of its operations, while in Japan and the United States of America 50 per cent of these activities are contracted out to private industry. The report does not say that is what we ought to do here. It leaves us with the impression that it has recognised the problem but it is leaving it for someone else to make the conclusion. It talks at some length about the restrictive practices in technology agreements. I think we all know about these sorts of practices. It talks about impositions on licensees, what they can or cannot do if they take someone else's development to produce in Australia, which I think should be avoided where possible. But until we are able to make more direct agreements with people overseas that we work more on a reciprocal basis, we will not be able to improve matters very much. We are behind the other countries that we deal with, so there is no reason they will give us things when there is no return. Until we are able to match them on a more even basis, I doubt that we will improve on that. I found the report somewhat disappointing and I regret that it did not go further when that Council certainly has the capacity. I have admiration for the people on the Council, but I think they could have done a lot better. Senator COONEY(Victoria)(5.28) —Several people want to talk about the Australian Science and Technology Council report on Mechanisms for Technology Transfer into Australia, so in those circumstances I will confine my remarks. Paragraph 2 (1) of this report contains the following sentences: New technology is a key ingredient for economic growth. Australia produces only a small fraction of the total technology developed world wide. I think it is important to keep in mind the very central part that technology plays in the growth of industry, particularly when we tend to concentrate on monetary and fiscal policies as they affect industry in Australia. It is generally accepted now that, with commodity prices falling, industry is largely the way out for Australia. At times we tend too much to think in terms of cutting wages or, on the other side, cutting prices, rather than looking at the deeper problems that are inherent in our society as far as the economy goes, and that is the lack of research and development, the lack of technological change, and the adaptation of that in a way that will enable us to export. It seems to me that it is a tragedy that we keep looking at matters which, although important, tend to cloak our very desperate need to develop research and development. Senator Archer pointed out that much of the development takes place overseas. That is a real problem because we are a country that imports a lot of technology. People overseas are reluctant-quite understandably so-to allow us to export goods in return that depend upon their technology. In other words, if a country or a company overseas gives us technology, limitations are usually attached to the use we can make of that, and our exports are therefore truncated because no matter what price we reduce them to, the country or company which has given us these technological means and facilities will not allow us to use them to export products. This is a problem and it is a matter we should look at very carefully. It is very much a matter of developing our education systems and developing in Australia a cultural approach which enables research and development to take place. The development of ideas which will lead to production and the export of this production is absolutely essential. Other than that we will have a truncated development-that is, a development which continues only from what others have given us-and, as I have already pointed out, that is bad for the country as a whole. Those are the two main points that I wish to make: First, that a lot of the debate about our exports is too confined to our fiscal and monetary policies rather than encompassing the central issue of what we can properly export; and, secondly, too much of our technology comes from overseas and thus so confines us that we cannot use it to develop our exports as we should. Senator PUPLICK(New South Wales)(5.31) —I have had the opportunity to read and study all the reports that have gone to the Government from the Australian Science and Technology Council. This report, `Mechanisms for technology transfer into Australia', is the first report which I find thoroughly and totally disappointing from beginning to end. It is a negative document which does not do anything to advance substantially the debate about technology transfer in Australia. To demonstrate that, let me quote paragraph 2.4: Australia's dependence on overseas technology is, of necessity, high and very little can or should be done about this situation. I think that is an absolutely disgraceful comment to be made by a body such as ASTEC. First, a great deal can be done and, secondly, a great deal should be done. For ASTEC to advise the Government that very little can or should be done about this dependence on overseas technology is entirely reprehensible. Technology transfer into Australia is a matter of enormous significance. The other day we debated the industrial research and development grants scheme in which we and the Australian Democrats combined to ensure that expenses incurred in the process of technology transfer would fall within the financial support given under that scheme because of the importance that we attach to it. It is true that the majority of science and research work will be done overseas and it is important to have the mechanisms to transfer the benefit of that overseas discovery, research and technology into Australia and make effective use of it. Senator Cooney was quite correct in drawing attention to the fact that a number of situations exist in which limitations and restrictions are put into licensing agreements which are signed by Australian companies with overseas firms. At paragraph 5.17 the report indicates: The danger remains however that companies find themselves locked into a position where export is made impossible. There are a number of areas-and my colleague Senator Archer identified the area of scientific instrumentation, for example-where Australian scientists and technologists are well placed to develop a niche in the international market which would be extremely valuable for Australia, not only in reducing costs for our own industry, particularly given the declining value of the Australian dollar and therefore the increased cost of importing scientific instruments, but also in that it would provide a very valuable export industry for this country. It is true, as the report points out, that there is still a degree of technological cringe in Australia. The report indicates that overseas technology is more highly regarded by Australian firms and consumers than our locally developed products and processes. It is certainly true that we need to overcome this technological cringe because there is no reason to believe that Australian-produced goods in this area are any less valuable or useful than those which are brought from overseas. Senator Button —What do you think about the horticultural cringe? Senator PUPLICK —I am more concerned about the continuing ministerial cringe in addressing these significant matters. As Senator Archer has pointed out, it is amazing that the Australia Card report can be responded to in about 10 days but the Industrial Property Advisory Committee report, which actually deals with millions of dollars of industrial research and development in this country, cannot be responded to in under two years by this Government. It is not just the companies whose cringe is deleterious for Australian industry, but this whole Government's cringe in making up its mind about significant questions of science and technology. This report also draws attention to the reform which is needed in the Australian patent system, which I have mentioned on a number of occasions, and again there are outstanding recommendations. The Industrial Property Advisory Committee report on patent innovation and competition in Australia given to the Minister for Science (Mr Barry Jones) in August 1984 has not yet been responded to. I find this report very disappointing; its recommendations are essentially meaningless, but I hope that it will serve to stimulate some degree of debate on the question of technology transfer into Australia because once again we are missing the boat. The Government is missing the boat and on this occasion ASTEC is doing absolutely nothing to help us advance our position, either in Australia or in the competitive international market-place. Senator CROWLEY(South Australia)(5.36) —I suppose the first thing I must comment on is the Opposition's disappointment and the way in which Opposition senators have selectively picked from this report, `Mechanisms for technology transfer into Australia', to make rather tedious points. If Senator Puplick wishes to read more closely what is in chapter two of the report, he will see that the ASTEC Technological Change Committee makes some good sense before it concludes that little can or should be done. In other words, the report points out that, as our population is a mere 2 per cent of the total population of North America, Japan and the European Economic Community countries, one can assume that an overwhelming majority of the technology in use in Australia has its origins overseas and that this situation will continue. In other words, the Australian industry should not compete where it cannot compete favourably. I suppose that the complaints of the Opposition must be noted. Unlike Senator Puplick, I have not had the advantage of reading every report that this Committee has put out, but I was very interested to read this one and would disagree with honourable senators opposite that its recommendations are pointless. For a start, its recommendations address the areas of major difficulty. The interesting thing is that Opposition senators have not picked up the report's comments on the failure of management in this country to acquire overseas technology. Senator Vigor started off by saying that the report was structured around five stages of technology transfer, the first of which was awareness. It is interesting to pick up the lack of awareness of Australian management in many areas. Managers are not even aware of, much less able to proceed to the evaluation or acquiring of, overseas technology. The report actually spells this out. It says: On the contrary, ASTEC is concerned at the steady decline in private capital expenditure in the manufacturing sector and other evidence of a slow rate of innovation over the last two decades. This decline is reflected in an ageing of capital stock and obsolescence of its associated technology. Honourable senators opposite were in government for seven years and this report points to a 20-year lag. It is well and good to tell the Minister for Industry, Technology and Commerce, Senator Button, that he is not sharp off the mark. I do not agree with that assessment and I sincerely hope that Senator Button will speak up on his own behalf at some stage. Senator Peter Baume —He has had only three years. Senator CROWLEY —Indeed, he has and I think that anyone who looks at the car industry or the steel industry will know that Senator Button has not been sitting around doing nothing, which is more than can be said for the previous Government. I also wish to draw attention to the comments in the report about the importance of the link between a firm's research and development and engineering capability and its ability to transfer technology effectively from overseas. The report not only urges us to look at acquiring overseas technology, but also points out that local research and development will make better use of that, will increase awareness of it and will allow a firm or an industry to know its capacity to adapt to or accept the overseas technology. This Government must be commended on one step that it has taken-and that is its recent legislation on research and development tax concessions, a very important point which goes very much to encouraging local research and development. That is very critical, as this report points out. I also believe that the tedious complaints of Senator Archer about selected programs and encouraging management missed the substance of the recommendations. One recommendation in particular-No. 1.17-is: That the Minister for Industry, Technology and Commerce in consultation . . . invite proposals . . . for the organisation of workshops for managers to provide training in the skills of negotiating technology agreements. This report deals in large part with encouraging skills with management, and I think it has to be commended for that, but I do not really believe that it is the Government's business to tell managers how to manage. It may provoke, it may legislate and it may encourage or exhort, but essentially managing is managers' business. I can just imagine the Opposition's complaints if in fact this Government started to determine how management should do its work. Screams of `nationalisation' would be heard across the length and breadth of the Senate. I rather suspect that honourable senators opposite should read the report with more understanding of what it does suggest-that is, the most effective combination of public and private information, support, encouragement and processes by which the optimal outcome for Australian industry can be derived. I think the report is very interesting. It is very provocative indeed, and it is well worth the Senate's reading. Senator JESSOP(South Australia)(5.41) —I wish to comment briefly on the report of the Australian Science and Technology Council entitled `Mechanisms for Technology Transfer into Australia'. I agree with what my colleagues have suggested, because of all the ASTEC reports that I have examined this report seems to be rather negative in its thrust. I recall that in 1979 the Standing Committee on Science and the Environment, of which I was Chairman, presented a report on industry research and development in Australia. I believe that it was a constructive report. It drew attention to the need to develop an information policy. I think Senator Archer made reference to that need in his short speech. The Committee drew attention to the disparity between public expenditure on research and development and the lack of expenditure by private enterprise. It seemed that private enterprise had lost its entrepreneurial drive in developing research initiatives in Australia. We drew attention to several initiatives of which industry in Australia had failed to take advantage, which could have increased our export earning capacity. I believe that the idea behind the establishment of ASTEC, which was initiated by the Fraser Government to provide advice to the Department of the Prime Minister and Cabinet, was very important. It was important not for the Department of Science, for industrial development or for the Minister for Industry, Technology and Commerce (Senator Button), who is at the table, but for the Prime Minister (Mr Hawke) so that he could act upon the initiatives suggested by ASTEC. I believe that it is quite important that Australia does develop its initiatives. We have over- protected industry. We have not encouraged it to become more entrepreneurial by providing incentives. We have not provided it with sufficient capacity to work with the government research facilities that are available. I believe that that approach ought to be addressed more aggressively by this Government in the interests of industrial development in Australia and in the spirit of increasing our export earnings. The DEPUTY PRESIDENT —The time allotted for the consideration of Government Papers has expired. Senator SIDDONS(Victoria) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator ARCHER(Tasmania) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator ARCHER(Tasmania) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator JESSOP(South Australia) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator TATE(Tasmania) —On behalf of the Standing Committee on Constitutional and Legal Affairs, I present a report on the High Court of Australia annual report for 1984-85. Ordered that the report be printed. Senator TATE(Tasmania)(5.45) —by leave-I move: That the Senate take note of the report. In May of last year the Constitutional and Legal Affairs Committee reported on the 1983-84 annual report of the High Court of Australia. In that report the Committee noted its intention to pay particular attention to the question of costs and delays in its 1986 report on the High Court's next annual report. The annual report of the High Court of Australia was furnished in accordance with section 47 of the High Court of Australia Act. That section requires that the High Court `shall report upon matters relating to the administration of the affairs of the Court'. The High Court has chosen to interpret this requirement very narrowly. Consequently, it has provided only a minimum of information about the operations of the Court in its annual report. It is the Committee's view that section 47, if not actually requiring the provision of information about costs and delays, should be viewed as establishing the minimum requirements of the contents of the annual report, not the maximum requirements. In February of this year, I wrote to the Clerk of the High Court on behalf of the Constitutional and Legal Affairs Committee. In my letter I pointed out to the Clerk: . . . members of this Committee and presumably other members of Parliament have been approached at various times by persons and organisations expressing a concern about High Court litigation and the time taken to hear cases and deliver judgments etc. I also pointed out to the Clerk that the Committee recognised: . . . some of this information is in fact published by the High Court as for example in the biennial `State of the Judicature' by the Chief Justice. However, the Committee is of the view that this information should be formally presented to the Parliament. The Clerk provided a detailed letter in response to the Committee's request. In his letter, which is published as an appendix to the Committee's report, he provided to the Committee much of the information which the Committee had asked that he include in the Court's annual report. But he prefaced this information with the statement: The Court considers that it would not be appropriate to deal in its annual reports with questions of costs and delay not only because such questions are outside the ambit of matters referred to in s. 47 of the High Court of Australia Act 1979, but also because of the independent position which the Constitution secures to the Court in its exercise of judicial power. The Committee remains firmly of the view that some information about the cost of litigating in the High Court, and the time taken for any such litigation, should be included in each annual report by the High Court of Australia. In particular, it recommends that future annual reports by the High Court of Australia should contain information about matters such as the expenses incurred by the Court in maintaining chambers in the various States, and by travelling to and hearing cases in the various States; the time taken between filing proceedings in the Court and the hearing of applications for special leave; the time taken between granting special leave for appeal and hearing cases; and the time taken between hearing cases and the handing down of judgments. I have already referred to information about matters such as the expenses incurred in maintaining chambers in the various States. It is the Committee's view that there is a clear distinction to be drawn between judicial independence, which it in no way wishes to undermine, and the accountability of institutions, be they administrative, legislative or judicial, which are funded by the public moneys. Consequently, the Committee remains of the view that the provision of information about costs and delays would not in any way trench upon the independence of the judiciary. The Committee requests that this information should be included in the High Court's annual report, so as to dispel any misconceptions as to the efficient functioning of this distinguished Court. Mr Acting Deputy President, in the absence of any other member of the Committee wishing to speak at this time, I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator MAGUIRE(South Australia) —I present the 248th report from the Joint Committee of Public Accounts, entitled `Report of the Auditor-General-April 1985'. Ordered that the report be printed. Senator MAGUIRE(South Australia) —by leave-The 248th report of the Public Accounts Committee examines the report of the Auditor-General of April 1985. Honourable senators will be aware that each year the Committee examines recently published reports of the Auditor-General. Following the tabling of the Auditor-General's report for April 1985, the Committee sought written submissions from 10 departments and five statutory authorities in respect of 22 items. Further information and clarification by way of supplementary submissions was sought from six departments and one statutory authority. Report 248 is a departure from the usual practice of the Committee. Due to an increasing work load, the Committee decided that Parliament's attention should be drawn to the salient features of the Auditor-General's report. Consequently, the principal matters on which the Committee sought comment from departments and authorities were addressed but public hearings were not held on any of the matters raised. This report comments upon the responses of the departments and authorities to the criticisms raised by the Auditor-General. Conclusions drawn by the Committee reflect remedial action taken or proposed to be taken in addressing those criticisms. In particular, there are three matters that the Committee wished to bring to the notice of honourable senators: The Department of Employment and Industrial Relations' wage pause program, the Department of Territories' administration of the Commissioner for Housing loans, and the financial statements of the Australian National University. I seek leave to have the remainder of my comments incorporated in Hansard. Leave granted. The statement read as follows- The Special Employment-related Programs Act 1982 provided for the expenditure of up to $200m through a wage pause program of public sector job creation. The money partly represented the expected savings from the 12 month suspension of salary increases for Commonwealth employees under the salaries and wages pause legislation. Under the established guidelines the States were required to submit employment projects to the Department of Employment and Industrial Relations and, if considered suitable, details were forwarded to the Minister for Finance for approval. Projects which were to receive consideration for approval were required to be labour intensive and promote greater equality of opportunity, particularly for the long term unemployed. The audit review of the scheme sought to establish whether procedures introduced to administer the program within the area of Commonwealth responsibilities were consistent with the aims and objectives. The Committee was disturbed by the administrative difficulties which developed following hasty implementation of the wage pause program, and, in particular, from the inadequacy of interdepartmental co-ordination. In view of this concern and the fact that this program ceased in mid-1984, the Committee sought supplementary submissions from both Employment and Industrial Relations and Finance with respect to another similar employment program, the community employment program. Whilst this program was not subject to audit, the committee considered it important to assess the administrative arrangements governing it. From the respective departmental submissions it is clear that the administrative and financial arrangements for the community employment program differ quite markedly from those which applied the wage pause program. The Minister for Finance has limited executive responsibilities and the Minister for Employment and Industrial Relations clearly has carriage of the legislation and program administration. Clearer working guidelines and funding through annual appropriations has, to a large degree, clarified the obligations and responsibilities of agencies concerned. Under the Housing Ordinance 1982 the Commissioner for Housing may, subject to the control of the Minister for Territories, administer schemes for providing or assisting in providing dwellings in the Australian Capital Territory. On 10 September 1984 the Minister for Finance, pursuant to concern expressed by Cabinet about the management of funds in the scheme, requested the Auditor-General to perform an audit of the recent operations of the scheme in the light of recent over-commitment of funds. Audit findings were that: The Housing Trust Account was over-expended from 4 July 1984 to 18 July in breach of s.34 of the Audit Act. There were deficiencies in the system for controlling commitments. The estimated shortfall of $7.9m in funds was unreliable. The Committee was informed that the department has now instituted amended procedures and practices in order to eliminate any future problems with over- commitment of funds. Further, the department has implemented a range of measures to improve the financial and administrative procedures and staffing arrangements of the Housing Branch. These amended procedures and arrangements implement many of the recommendations of the joint review of the scheme by the Public Service Board and the Department, conducted during September 1984, and of the Fisher Review, conducted during the first half of 1985. The Steering Committee for Housing Loans is continuing to meet on a regular basis to implement the longer term recommendations of the joint review report and will continue to do so until all recommendations are satisfactorily implemented. The Committee notes Audit's comment that these amended systems and procedures should eliminate future problems. However, the Committee will continue to monitor the Department's operation of the scheme and may subject the scheme to further review. The Auditor-General also reported on an inspection of the accounts and records of financial transactions of the Australian National University for the year ended 31 December 1983. Among other things, Audit noted serious deficiencies existed in the supporting documentation for the university's 1983 draft financial statements, both in their original form and in the revised draft submitted some months later. Audit was concerned that, in some respects, the university's accounting practices were at variance with those prescribed in the `Guidelines on the Form and Standard of Financial Statements of Commonwealth Undertakings', issued by the Minister for Finance in May 1983. The Committee notes that the university has significantly reformed its financial administration and that this reform process is continuing. The Committee anticipates continued improvement in the university's financial administration, particularly with reference to its financial statements. The Auditor-General now reports twice each year on audits undertaken. In addition separate reports are made throughout the year on efficiency audits performed by the Auditor-General, and annual reports on the Financial Statements and his activities. During the currency of the examination of the Auditor-General's Report of April 1985 the Auditor-General presented an annual report for 1984-85 on his operations. This was the first time the Auditor-General had reported in this manner. The report referred to, amongst other things, a number of issues concerning the role and proper function of the Auditor-General, particularly his relationship with the executive. The Committee looks forward to discussions with the Auditor-General on these matters. I commend this report to honourable senators. Senator GRIMES(Tasmania-Minister for Community Services) —I table the first volume of the report of the Commission of Inquiry into Compensation arising from Social Security Conspiracy Prosecutions and seek leave to make a brief statement. Leave granted. Senator GRIMES —The first report of the commission of inquiry conducted by Dame Roma Mitchell into the so-called social security conspiracy case involving the Greek community in Sydney makes certain recommendations. The Government has considered the report and decided to implement these recommendations. It will offer compensation worth approximately $10m to 471 people of Greek origin who were affected by the case. This group consists of those who were charged, some of those who were not charged but whose pensions were affected and whose compensation has been assessed by a committee established in Sydney of Greek social workers and others in conjunction with the Department of Social Security, and some of the doctors involved in the case. In offering the compensation, the Government recognises the extreme and unjustified suffering of the victims of the case and their families over many years. The actions of a few people in authority in 1978 were based on very little more than prejudice and carried out with scant regard for the legal rights that Australians expect to enjoy. Justice Mitchell's terms of reference were limited to the appropriateness of payments to the victims of the social security case. Senator Peter Baume —How many people will get the compensation? Senator GRIMES —About 471. This limitation of the terms of reference was essential to accelerate compensation where it was due. The report does not, therefore, go into the heart of the alleged conspiracy. It does not canvass the evidence on which the Commonwealth Police and the Department of Social Security acted at the time. It does not go into the manner of the arrests nor the unsavoury offer of a reward to an informer who had already been given immunity. It does not go into the knowledge or otherwise of various members of the Government at the time of the case. I hope that these matters will be given thorough attention in the future by historians. However, I hope this offer brings to a close at least one chapter in this sorry case, which has cost the taxpayers of this country more than $20m. The second volume of the report has not yet been released at the request of the Commissioner, because it lists the names and the amounts of compensation to be offered. Until the people have been notified, it would not be appropriate to release the second volume. However, as soon as that is possible, the Government will release it. Senator PETER BAUME(New South Wales)(5.54) —by leave-I move: That the Senate take note of the report and statement. The Opposition has had in its hands for only some hours the report of the Hon. Dame Roma Mitchell on the Commission of Inquiry into Compensation arising from Social Security Conspiracy Prosecutions. We do not wish to canvass, challenge or in any way enter into discussion about the appropriateness of the Government's decision. It is a matter which rests with executive government. We note that the Government has determined to accept the recommendations and that it will be making payments to some 470 people. In the short time we have had the report we have been able to look at the matters covered by the Commissioner, and we understand why Volume 2 is yet to be released. It will be released later when people have been approached and have entered into appropriate agreements with the Commonwealth. Some matters within the report bear bringing to the notice of the public, as they would otherwise not be known. I turn first to page 49 of the report and the section headed `Evidence of dishonesty in dealings with the Department of Social Security not resulting in a conviction'. It is important to read this section because, while it appears clear that the bringing of conspiracy charges was the cause of the problems, and that may have been an inappropriate course to follow, and while the compensation is being paid because conspiracy charges were brought, that in no way makes it clear that there was no dishonest behaviour going on or that frauds were not in fact being conducted against the Department of Social Security by a number of people. I quote from page 49 the Commissioner's first words under the heading I have just given: The files of the Australian Federal Police contain statements and other documentary evidence which infer that some of the claimants, who were not convicted of offences, may have been guilty of dishonesty in relation to their dealings with the Department of Social Security. She says later that, although there are statements and there is other documentary evidence, these in themselves do not amount to a conviction. The Commissioner goes on to raise the question whether those people against whom evidence was held should share in the compensation payment. She says: . . . it seemed inappropriate that a person who had behaved dishonestly in his-- or her-- dealings with the Department but who had fortuitously escaped conviction should receive undiminished compensation in relation to the conspiracy proceedings. She discusses that matter and then gives her conclusions as to whether compensation should be offered to those against whom there appeared to be no evidence as well as to those against whom there appeared to be some evidence in the hands of the police. She went on to say: I acknowledge that a consequence of this approach- that is, her decision that everyone should get compensation- is that, as between the claimants, those who were convicted of offences or in respect of whom offences were found proved will receive less compensation than some others who may well have been guilty of conduct as grave as or more grave than that in respect of which convictions were recorded. Honourable senators should be aware that there may well be an element of injustice as between different people in terms of the amount of compensation they will receive because information in the hands of the police which indicated that some other people may have been guilty was not followed up. One of the canards which has been put about in relation to this whole affair is that it was all a beat-up, that there was no substance to it, that there was no guilt, that it was in some way an attack directed against a particular ethnic community, and that the people who conducted the whole exercise were, as it were, guilty of some kind of racist or ethnically based behaviour. It is instructive, in the light of those beliefs, to go further and to examine some later pages of this first volume of the report by Dame Roma Mitchell. She makes the following point at page 115: Ten persons who were charged with conspiracy in the matter have not been included in the Terms of Reference. These comprise 7 persons against whom criminal charges have not been finalised, 2 persons, including one deceased person, who are alleged to have been involved in matters which are still before the courts, and one person who was a police informer. So we should know that there are a number of matters incomplete. But in relation to the matters which were completed, there is a schedule at the end of the report-from page 125 on-which actually identifies different classes of people. The Minister was kind enough to tell me, in response to an interjection, that 471 people-that is, the vast majority-would share in the compensation. However, the first list in the Commissioner's schedule names people who were charged with conspiring to defraud the Commonwealth but against whom conspiracy charges were withdrawn and no substantive charges preferred. A second list names persons who were convicted of conspiring to defraud the Commonwealth. There were three such persons. So let us not say that there were no convictions. Three persons were convicted of conspiring to defraud the Commonwealth. Another list names persons charged with conspiring to defraud the Commonwealth, against whom conspiracy charges were withdrawn and substantive charges preferred and who were convicted or had an offence found proved against them in respect of one or more substantive charge. There are 32 such persons listed. There are other categories. Category (g) comprises persons charged with conspiring to defraud the Commonwealth and conspiring to defraud divers insurance companies who were convicted of conspiring to defraud divers insurance companies. There are two people in that category. So it is important, in setting the events in balance in one's mind, in acknowledging that a case for compensation has been made by the Commissioner and in acknowledging that the Government has determined to grant compensation, to acknowledge also that out of this exercise, however disastrous it was, there have ensued 40 or more convictions of attempting to defraud either insurance companies or the Commonwealth. To keep the matter in balance, while a number of innocent people appear to have been treated very harshly, a number of people who were found in the courts to be guilty have also been picked up and convicted. I come back to the first point I made. Dame Roma Mitchell acknowledges that the way she has constructed the compensation may result in some inequity because some people who were guilty may get compensation which they may not have received had they been among the group against whom charges were proved. Senator GRIMES(Tasmania-Minister for Community Services)(6.02) —I do not wish to enter into a long debate on this matter. I was involved in this matter from 1978 onwards. Having tabled the report of the Commission of Inquiry into Compensation arising from Social Security Conspiracy Prosecutions, I merely repeat that the Government has accepted the recommendations of the report and will pay the compensation. Senator Peter Baume has said that he wishes to put some things into perspective. I also wish to put some things into perspective and give another side to the story. Senator Baume says that a canard has been put about that what happened was that some people in authority-public servants or members of government, perhaps-indulged in an exercise which was racially aimed and which involved actions taken against one racial group in particular with little substance. Senator Baume has pointed out that some 40 people, some of whom pleaded guilty very early in the piece, have been convicted. I wish to point out that all those people are of Greek origin. The 471 people who are to be compensated are of Greek origin. The 170-odd people who were arrested are of Greek origin. Many of them, despite denials made in this place, had their photographs taken with a placard in front of them with the word `Greece' written on it. The inspector in charge of the case at the time, Detective Inspector Thomas, said on public television and radio, having invited the Press along when the raids were conducted, that not only were 170 people arrested but also 1,200 people were to be arrested, all found guilty and all put away. It seems to me that there is a fair bit of evidence, to say the least, that this was aimed at the Greek community. The Greek community suffered great stress at the time. This Government has apologised to the Greek community on behalf of Australians for what happened to them at the time. I wish the previous Government had done the same. A second matter which is worth raising is that, far from it being a canard, at the time large numbers of people-as has been frequently pointed out-who were charged with conspiracy to defraud the Department of Social Security, who were in the courts charged with conspiring against the Department of Social Security and against the Government, say, to receive invalid pensions were, while they were under charge in the courts, still receiving invalid pensions and were judged by the Department as being able to receive them on just grounds. That was commented on as being an extraordinary set of circumstances, and I agree that it was. I suggest that honourable senators also read the magistrate's report of the extraordinary circumstances whereby a person who had been given immunity from charges was offered a reward to give evidence in the case. Neither the magistrate nor anyone else was notified until the very end that the person concerned had been offered that reward. The Minister of the day knew about the reward and knew the circumstances of that case. Sure, a small number of people have been convicted of substantive offences. But a very large number of people were charged with conspiracy. A whole community was pilloried in the Press and the taxpayer of this country has paid well over $20m for this dreadful affair. The only people who have benefited from this affair have been the Queen's counsel involved in the case, in particular, the QC who was chosen to prosecute the case, who has received over $1m for his conduct of this affair, which has come to nothing. All that has happened is that this Government will pay some $10m in compensation to the Greek community of this country to overcome gradually the very real difficulties which they and their doctors faced in the few sad years after this case came to light. As I said, although giving the Greek community some compensation will close one chapter of the case, I hope that the public authorities and we in the Parliament learn some lessons from it. I hope that we learn that, just as we could not arrest in dawn raids, as I said at the time, even 20 people from Pymble, Toorak, South Yarra or Sandy Bay on some conspiracy charge of this type-say, conspiring to overcome the gaming laws-we should not be able to arrest 170 members of a community with the Press fanfare and high publicity seen at the time and think we can get away with it because it happens to be a minority ethnic group in the community. The people who have come out of this affair with greatest credit are the members of the Greek community because they were willing to stand up for their own, to stand up for justice and to use the system of justice to overcome the very real difficulties they faced. The system of justice in our courts has also come out relatively untarnished, although certainly not the system of justice before one reaches our courts. When one considers the huge cost to the community in dollars and in the disgrace which resulted from this affair, we should all try to learn a lesson from it. It is only too easy, in the atmosphere that exists in the community now, in which people are willing to exaggerate wildly the extent of social security fraud, to look for scapegoats. In this case the scapegoat was the Greek community. The Greek community overcame the problem. One wonders whether other communities, perhaps smaller communities less used to defending themselves, would have come off as well. As Senator Peter Baume says, I hope that the people concerned feel that the compensation is adequate and accept it so that we can learn our lesson, rather than have this affair drawn out in the protracted way it has been over the last few years. Question resolved in the affirmative. Motion (by Senator Grimes)-by leave-agreed to: That, in accordance with the provisions of the Australian National University Act 1946, the Senate elects Senators Colston and Peter Baume to be members of the Council of the Australian National University from 18 July 1986 for a period of up to, and including, 17 July 1989. Debate resumed from 30 May, on motion by Senator Grimes: That the Bill be now read a second time. Senator PETER BAUME(New South Wales)(6.11) —The story is told of the vicar's wife who wanted to give the young curate a treat, so she offered him a boiled egg. It was not particularly good. She asked him whether his egg was good and, not knowing how to respond and tell her it was no good, he said to her: `Well, ma'am, it is very good in parts'. That is the tale of the curate's egg. The Health Legislation Amendment Bill is, as it were, a curate's egg. It is a Bill that is very good in parts. The Opposition will not be opposing it. I want to go through some of the main sections of the Bill indicating those areas where we do and do not have some concerns. First of all, the Bill does a number of things which are only loosely related, and I will go through them. Firstly, it contains some new proposals for approved pathology providers or approved pathology authorities, a new scheme for these matters. It involves the giving of undertakings and the provision of sanctions in relation to these matters. The Opposition supports these proposals. The approved pathology provider scheme was actually recommended by the Pathology Services Advisory Committee as far back as July 1976. It was introduced in practice without a legislative base in 1977; that is, in the time of the previous Government. It was the intention of the designers that the approved pathology provider scheme was interim until the accreditation of pathology laboratories could be introduced. This Bill introduces needed provisions and controls to the scheme. The Opposition has no difficulty at all with those proposals of the Government, although I have a couple of questions for the Minister for Community Services (Senator Grimes) in the Committee Stage. Secondly, there is the question of the accreditation of pathology laboratories. This Bill introduces the concept of an accredited pathology laboratory and it limits payment of a Medicare benefit to pathology services performed in accredited laboratories. There are certain tests which could be performed by general practitioners and they will still be covered by Medicare outside an accredited laboratory. The Opposition supports these recommendations. The pathologists in practice in Australia have been calling for this action for some nine years. There is still some difficulty in prescribing the accreditation process; nevertheless, the idea is one which is supported. I understand that New South Wales and Victoria have enabling legislation. It is intended to accept the actions of those States as being suitable for accreditation. Where the States have no such process we hope that the Government has an adequate system in mind. We understand that the laboratories will be deemed accredited for Medicare purposes if they meet and pass the standards and inspections of the National Association of Testing Authorities in association with the appropriate learned college. The Opposition supports this recommendation by the Government. Thirdly, there are moves by the Government to prohibit fee splitting. The Opposition supports these moves. There are a number of procedures which the Government proposes to try to make illegal-certain practices which have been going on and which have involved fee splitting and kick-backs. The Opposition supports these procedures and I understand that pathologists generally support them as well. These provisions, in conjunction with the approved provider schemes and the accreditation of laboratories, really lie at the heart of moves to try to overcome medical fraud as it affects pathology and to overcome abuse in the pathology services area. They are supported by pathologists in practice and they are certainly supported by the Opposition. We next come to that part of the Bill to establish a new committee called the Pathology Services Advisory Committee, which will carry out certain tasks in setting fees. The Opposition will be withholding its judgment on this matter. We understand what the Government is doing. We are also aware of considerable disquiet from people whom we do not regard as fringe operators. I will be coming back later to this question of who are fringe operators and who are mainstream ethical providers. The concerns we are getting are from the mainstream ethical providers of pathology services. They believe this is not necessarily a good idea. They are prepared to give it a try; we are prepared to see how it goes, but we will withhold judgment until we know whether or not it is going to work. Currently pathology procedures and the setting of appropriate rebates to pathology services have been carried out and reviewed by the pathology sub-committee of the Medical Benefits Schedule Revision Committee; there is a committee already doing this job. The Government now proposes to split it off as a separate committee, and we remain to be convinced-although we are not going to the barricades on this-that it will necessarily help or overcome any of the problems that exist in this area. The Australian Medical Association, other medical authorities and people we have spoken to believe that some of the technical knowledge which will be necessary to make this Committee work may be lacking and that there may be some difficulties in a committee only a portion of whose membership has expertise and expert knowledge. The Opposition withholds its judgment for the present in relation to the Pathology Services Advisory Committee. We would like to see in a year or a year and a half whether that Committee is working. I will be asking the Minister later for certain assurances about the immediate referral to that Committee of certain items which are the subject of the other main provisions of the Bill; that is, items where the rebate is proposed to be cut back by 25 per cent. I hope the Minister will be able to give me the assurances that the first task of this new Committee will be to examine those 18 items, for reasons I will set out later. The other group of provisions of this Bill is a series of minor amendments to which the Opposition does not object. Before I go on to discuss the proposal to reduce certain fees, I want to say something about the private practice of pathology in Australia. Private pathologists, that is, non-government pathologists, people working in the private pathology industry, are the backbone of much of the pathology service for Australia. They provide a vital service. They fill a gap which would otherwise not be filled. They service many of the areas of Australia which could not be serviced if they were not there. They service many of the public hospitals where government cannot undertake that role. The private pathologists provide a flexible, responsive and rapid service. I draw attention to the situation in some of the more centralised States, particularly the State of Western Australia where 90 per cent of the population live in the Perth conurbation. It is private pathology that has a significant role in providing services outside that area. In my own State of New South Wales, where so much of our population lives in the great conurbation between Wollongong and Newcastle, the enormous Sydney area, it is private pathology which provides much of the service to outlying practices and outlying rural areas. In the State of Queensland, though it is slightly more decentralised, private pathologists provide an absolutely essential service. I understand that there are two large practices in Queensland which, because they operate an efficient system of collection of blood specimens and other pathology material, because they have an efficient transport system- Senator Boswell —One million services a year between the two of them. Senator PETER BAUME —Senator Boswell says one million services a year between the two. They are the backbone of much of the provision of services in that State. It is rapid, flexible and of very high quality. Most of the people who provide private pathology in Australia are people of high ethical standards; they are honest, well qualified and give a service to the public. Each one of us is a winner from what they do. They help us get services we need, which government is unable to provide because government services are inherently slower to react. It is the flexibility of the private services which often is very important. In common with several other speakers in this debate, I am medically qualified and during my time as a consultant physician I used private pathology services every day of my life. If I phoned a private pathologist and said `I have a problem; I have a patient who may be going overseas in a couple of days, and it is necessary to turn yourselves upside down to get the results for me quickly', they would do so. The pathologists would try to accommodate themselves to the needs of the patient. The hospital with which I dealt offered first class services, but it was less rapid. Of course I used the hospital and the private practitioners. Each had a part to play. Because they were ethical, well qualified, honest and had the public interest at heart, they were giving the public a service it needed. They are dedicated, and they are very hurt and upset at the messages they have been receiving from government. They are a self-assessed and self-monitored profession and operate through a learned college. They maintain their standards; they place a high premium on continuing education; their training is rigorous. They are people whom we should be applauding and praising. As a doctor, I found most of them to be an essential component for the protection of patients. The private pathologists are upset. First, they are hurt at the rhetoric, even if not at the substance, which has been flowing from many Labor politicians and which suggests that pathologists in private practices are profiteers, or crooks, or in some way less than honest, dedicated people. That is unfair to them, and they are hurt by this kind of language. They do not like to be told that they are fat cats. They are often operating very high cost practices. I know some of them whose incomes have been cut back regularly over the last few years. They believe that from the Labor Government they are receiving no recognition for the positive, essential service they are giving to the public. If Labor senators taking part in this debate want to criticise them, I ask them in so doing to acknowledge what the pathologists are doing to help Australians remain well, and to help them become well if they are ill. Secondly, the pathologists in private practice are dismayed at what they see as a unilateral, arbitrary action by government in determining that for 18 procedures the rebate to be paid to the patients will be reduced by 25 per cent. The pathologists do not believe they were consulted. They believe that the Government is wrong factually in relation to some of the tests, but they are not even sure whether there was a factual base for the selection of these 18 tests. People say that it is the common tests, which have been automated, the cost of performing which tests has dropped. If that is so, let the Government produce the evidence in relation to each of the tests that that is the case, because the Government is asking a group of people who are providing a very expensive service in relation to these tests to take a 25 per cent cut in the rebate that government offers. It is incumbent on the Government to make the case for each of these tests. I said that the private pathologists believe the Government is wrong in fact. Let me say that one of the groups of tests relates to the cross-matching of blood. Cross-matching of blood, pathologists advise me, is not automated; it is not done by machine. It is done manually. There has been no technological advance in the cross-matching of blood. Senator Grimes —Compared with when you and I were boys? Fair go! Senator PETER BAUME —Senator Grimes says compared with when he and I were boys-there probably has, but there has been no automation that I have been able to discover from the pathologists which would warrant these tests being put in the category that reduces their benefits. But more than that: The cross-matching of blood is often an emergency procedure carried out after hours; in the middle of the night a woman suddenly has a miscarriage, she bleeds, she is in danger of losing her life, she needs a blood transfusion, and a pathologist or technician must come out of their bed, must come in and must cross-match blood at any hour of the day or night. Senator Walters —Absolutely vital. Senator PETER BAUME —Absolutely vital, as my colleague says. If it is still manual and if the pathologists believe it is no longer something they can do, and avoid losing money, perhaps what the Government would like them to do is to withdraw from the cross-matching of blood. Maybe that is what is suggested. Maybe they should withdraw because they believe that on that test alone the Government has got it wrong. But all they have asked that we put to the Government is that because there is a difference of opinion, let us get this new independent committee to examine the facts and let us see in relation to the 18 tests where the merit lies. Is there any objection to that? I understand that the Minister for Health, Dr Blewett, is well disposed to this, and I would ask Senator Grimes to indicate when he replies to the debate whether these tests will be referred to the new Pathology Services Advisory Committee as one of its first tasks. I make the point again that our society as at present structured-with the medical services it has, with the number of people living in small communities which themselves cannot support a pathology service-cannot cope if the pathologists in private practice cease to offer the services they do now. They offer the services to many of the government public hospitals which cannot support their own pathology service. They support the private hospitals which are so vital in the system of health care. I said that the pathologists are hurt and dismayed; but they are also fearful. They are fearful, first, for their good name. They ask that if the Government is attacking the crooks in any industry, it should not try to smear the entire industry in so doing. They are fearful as well for their own survival, as well they may be. The Government has proposed to reduce the rebates payable for 18 common tests. I make it quite clear that we in government would not have done this without having carried out an investigation first through the committee. It is being done now. We ask the Government to get the report, and if the report suggests that any one of those tests is inappropriately included in the lower schedule, the Government should look sympathetically at correcting such an error. Sitting suspended from 6.30 to 8 p.m. Senator PETER BAUME —The Senate is discussing the Health Legislation Amendment Bill. I made the point before the dinner suspension that the Opposition is not opposing the Bill and that many of the provisions of the legislation are supported by us because we think they are things that we would have done. However, the area of concern is that certain pathology fees are to be altered. Our concern relates not just to the pathologists but also to the effect that may flow through to the public which depends on pathologists. I want to reiterate the point I was making earlier, which is that we believe that the people in private pathology practice in general provide a high quality, high-class, and dedicated service to the public, that they undertake many years of training before they can undertake that practice and that their practices are very expensive to run but that they often make available to the public an extensive network of collection and a rapid turnaround of results and offer a service which governments do not and cannot provide. The Government has determined that fees for 18 tests are to be reduced by 25 per cent. It is claimed by the Minister for Health that these are high volume, highly automated and highly profitable tests. The Government has estimated that this will save $47m in a year; that is to say, $47m less will flow through to private pathologists. It is worth pointing out that I know of no other professional area and no other area of medical practice in which the Government, by fiat, has determined that people will accept a 25 per cent fee reduction. By the way, the pathologists tell me that some of these tests are highly automated and that, in fact, technology has altered some of them. However, they say that that is not so for all the tests and they believe that the Government has got it wrong. The Opposition is seeking from the Government some assurances in relation to the tests for which the fees are being reduced. The Government has established a new committee, the Pathology Services Advisory Committee, which is to look at appropriate matters concerning the fees to be paid for pathology services. We want to make sure that the fees for these 18 tests are the first things referred to that Committee. After all, if the Committee determines that for all those services the fee reduction is appropriate, that will reassure the Opposition. It will certainly help the pathologists, especially if they have a chance to put their case. They have had no chance to put their case. As the pathologists see it at this stage, this is an ex parte decision of the Government. That is not to say that it is wrong. However, it is a decision which the pathologists want to have tested. If the Government gives us this assurance, that will help us. The other point is that we think the powers of referral of particular matters to the new Committee are fairly narrow. We want to know whether the Government is willing to consider a wider possible reference of powers. For example, it has been suggested that the Parliament may wish to have the power to refer certain fee matters to the Committee. After all, all the Committee does is make findings and recommendations to the Government; it does not actually determine fees. Some of the pathologists have put to us that they are concerned about what has happened and what this may presage for the future. I conclude by making the point once again that this country cannot operate its medical care without the services operated and offered by pathologists in private practice. That they operate very capital intensive, high investment practices, in the end, really operates to the benefit of the public of Australia. When I was a doctor it certainly was my patients who were getting the benefit of what the pathologists had to offer. What we in the Opposition want to see is a reasonable and a reasoned provision of services. We do so against the background of a medical system that is in disarray at present: There are long hospital waiting lists and a public hospital system in my State of New South Wales which is in total disarray, where the morale of the system is shot, where hospital boards are being sacked and where hospital services are being reduced. My hospital-the Royal North Shore Hospital of Sydney-has had to close something like 100 beds because the Government has determined that those beds are not to be opened and filled. Right across the State is a hospital system that in the last three or four years has gone down hill and is in disarray. People are losing their confidence. We do not want them to lose their confidence in one sector of medical care provision. Private pathologists are at least offering a service. In every area of human activity there are some bad apples. There certainly are in the area of pathology provision. If the Government-through its accreditation procedures, through the new approved pathology provider system and through the new sanctions which are written into this legislation-can do anything to reduce the activities of these bad apples, the pathologists, the Royal College of Pathologists of Australia, and the various academic authorities will be delighted. I know that the private pathologists to whom I talk will be delighted. They do not like having these people in their midst. However, I observe that we have no great confidence that the changes in this legislation will have that effect. We think the entrepreneurial pathology specialists are too clever. They will read the new law, they will operate within it and they will continue to abuse the system. I make a final point: If we have things to say about the bad operators in the pathology service let us say them without broad brushing the whole practice and profession of private pathology. It does not deserve it. Having said that, we will not oppose the legislation. I have a couple of questions to ask the Minister at the Committee stage. Senator CROWLEY(South Australia)(8.07) —I am pleased to support the Health Legislation Amendment Bill 1986. I start by commending the Government and the Minister for Health, Dr Blewett, for introducing this legislation. I would also like to take the opportunity of commending those people in the Department of Health who have worked on these changes. Very often the back-up within the Department is not necessarily acknowledged and I think in this case it ought be. The Department has had to deal with the difficulties of the Joint Committee of Public Accounts inquiry and-I say this to Senator Peter Baume-it has taken a fair serve about its efficiency or otherwise. I note for the record that Senator Baume did not feel it necessary to defend those departmental officers who have been picked up in some of the criticism in this area. I would certainly like to place on record my support for those departmental people, particularly those who have had a very active role to play in producing to the Minister and the Government the documentation which has allowed this piece of legislation to emerge. The changes are very far-reaching and they will ensure-I am happy to assure Senator Baume of this-the continuation of the quality pathology services this country expects and will go a long way to removing the less than adequate pathology services that are referred to in the Joint Committee of Public Accounts report on `Medical Fraud and Overservicing-Pathology'. I think it is unnecessary nitpicking of Senator Baume to suggest that this Government and Australian Labor Party senators get stuck into the medical profession in an indiscriminate way. I am absolutely sure that Senator Walters will say exactly that when she speaks; she invariably does. I am a little disappointed that Senator Baume said that. Those of us on this side, and in particular those of us who come from the medical area, are at pains to acknowledge the good and to try to highlight where the problems are. It is not as though the Labor Government has picked up on the problems in the pathology area. That had been a matter of considerable deliberation well before any Labor government people got to make any comments about it. I remind honourable senators that there was a Public Accounts Committee inquiry into this whole area well before we had anything to say about it and that that Committee quite clearly highlighted the very significant problems of overservicing and fraud in the area of pathology services, as well as the other comments it had to make. As well as the legislation addressing the continuation of good quality pathology in this country and removing some of the less than adequate services, I think it will go towards providing considerable cost savings to the Government. The Minister spelt them out very well in his second reading speech. He said: 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. I will comment on that in a minute. The costs of pathology are very considerable. It is estimated that 15 per cent of the total Commonwealth spending on Medicare benefits goes on pathology. In real terms, in 1984-85 claims, that payment totalled $346m out of a total outlay of $2,280m. Between 1979 and 1985 there was a 69 per cent increase in pathology services as services rose from $13m to $22m over this period. So it is not as though we are talking about a small expense to government or a small service to the country; we are talking about a very significant matter, both in terms of the outlay and in terms of the services provided. The rescheduling of fees for the 18 items mentioned at length by Senator Peter Baume not only addresses the possibility of overservicing-I will refer again to the Minister's figures in this matter-but also, I think, acknowledges the importance and proper place of the hospital pathology services. I noticed that Senator Peter Baume concentrated his comments on private pathology services and I think that is to miss the considerable contribution by pathology through our hospital system and/or our related public pathology provisions. In regard to the fee rearrangement, it is interesting that Senator Baume kept talking about a 25 per cent cut in those fees for the 18 services mentioned. That is within the bounds of accuracy, but only just. There is to be a 25 per cent reduction in the specialist pathology fees. There is to be a 25 per cent reduction in other pathology services, but that is 25 per cent of 75 per cent of the specialist pathology service, so in real terms it is a lesser amount, and the arrangements proposed will increase the hospital pathology service to become equivalent to the other pathology service. For a number of these services as provided through the hospital system there will be an increase in the return. I think that those needed to have been spelt out. I am somewhat disappointed that Senator Baume did not care to do that. His manner of addressing this Bill was to defend the private pathology services and not go to the examination of the complete system which the Government is proposing in the area of those 18 services. I certainly hope that that significant increase and the increased return to pathology services provided by hospitals will go a small way to redressing the real imbalance that has occurred and the rundown of hospital pathology services which we have seen over the last number of years. Not only has pathology been taken out of hospitals to a considerable degree, but also pathologists have been leaving. The reason pathologists have been leaving hospital pathology services is the inducement of very significant fees. I wonder whether fees of $100,000 or more per annum would seem to be a reasonable return to a specialist pathologist. I know of many general practitioners in my State of South Australia who would not be unhappy to be earning anything like $100,000 a year. If a service can support private pathologists at that kind of return, I suggest that there is a reason for saying they are getting a reasonable return on the pathology work they are doing. The point I would particularly like to make is that I hope that this rearrangement will go a long way towards encouraging more pathology work to be done in hospitals. In my State I know of no disreputable pathology services provided through hospitals or through the Institute of Medical and Veterinary Science, which does the majority of the pathology work for the Royal Adelaide Hospital and for other people requiring that service. I will come to that later because I had the experience of working at the IMVS for some time and I can speak of pathology with some real experience, albeit a few years ago. Senator Peter Baume seemed to suggest that we should not be looking at a 25 per cent reduction in the specialist pathology fee. It is interesting that the Minister for Health said in his second reading speech in the other place: The Public Accounts Committee noted that the top 25 pathology groups billed virtually all pathology at the specialist rate, the percentage varying . . . between 94.6 per cent and 99.9 per cent. In addition, during the period 1982-83 to 1984-85 the number of services billed at the specialist rate increased by 41.9 per cent while during the same period the number of services billed at the . . . other pathology and . . . hospital pathology rates fell by -18.2 per cent and -29.1 per cent respectively. It is very interesting to take up the points that were raised by Senator Peter Baume about whether or not these costs could be contained. There is absolutely no difference in the cost to a pathologist, whether the tests are carried out by a specialist or a non-specialist-that is a technician. In fact, the tests referred to are mostly done by technicians. For example, the cross-matching of blood, the haemoglobin, the red blood cell count, the white cell count, the packages of biochemistry, particularly those tests that are highly automated, are in large part done by technicians or the scientists in this area. There is very little difference in the cost of the tests to the laboratory, whether the tests are done by technicians or a specialist pathologist, the only difference, of course, being the fee or the salary being paid to the specialist pathologist. We know from the figures I have just read that these tests have largely been transferred to specialist pathology. I think that is a matter of grave concern. I think there is really very good reason to question why suddenly those tests have become specialist services when for years they were not. I think that that drift towards specialist charges for those services is a matter which the Minister for Health very rightly and properly took into account when he came up with this rearranged schedule of fees for the 18 tests. Senator Baume also made the point that the tests were not necessarily highly automated. The Minister never insisted that they were highly automated. What he said is that they belong with a package of descriptions, that they are high volume and mainly automated. They are highly profitable because the fees have not been adjusted downwards as a consequence of productive technology and they generally involve minimum specialist input-a point to which I have already alluded. To suggest, as the honourable senator did, that because a couple of tests are not automated, others that are should not be considered or that they are high volume and almost invariably never occur as individual tests but are part of a bracket or group of tests I think suggests that his analysis of the reasons the Government and the Minister have taken into account is insufficient. In fact, those tests are more and more automated. I would like to make some comments about my own experience. For a couple of years I worked in haematology at the IMVS and I saw first hand what was happening to technology at that time. As a pathologist I was on call at night and I had to do at night by hand what was done by machine in a very automated way during the day. The machines tend to suck in a small volume of blood and automatically do a whole range or battery of tests on that sample of blood, whether those tests are requested or not. That is how the machines are set up. That will happen, for example, in a run involving blood being examined for haemoglobin, white blood cell count, red blood cell count and so on or for a batch of biochemistry. If I had any disappointment in this legislation, it would be that I do not believe it has gone quite far enough in acknowledging the consequences of that automation. Unlike Senator Peter Baume, I hope that the first task of the Pathology Services Advisory Committee will be to review the current level of fees and the appropriateness of pathology items. In particular, I wonder whether we can look forward to seeing introduced very soon a fee for a group of tests. In fact, I am delighted to see pathology being given this kind of consideration because it has seemed to me for many years now unreasonable that the efficiency of tests previously carried out on single items by technicians enjoying a single fee and long since taken over by technology had not been improved. Automation and the significant improvement in the number of tests have not resulted in any cost benefit to the community but in fact have resulted in a massive increase in profits to sections of the pathology service. The Opposition's criticism about this is difficult to take. That benefit of technology, that cost efficiency, has not been passed on to the community. It has been evidenced not in a fall in prices but rather in a considerable increase in profits. I also find it curious that the Opposition is very selective in how it applies its standards of criticism of Government behaviour. The Government is introducing a piece of legislation that is likely to save $60m of taxpayers' money in a full year, and the Opposition is concerned that this might lead to some difficulty for some private pathologists. The Opposition's concern is right. We have that concern; that is exactly what the Government's concern is about. We want to continue to provide excellent pathology services, but if the Opposition was serious about Government expenditure it might at least have shed some words of praise on any provision saving $60m in a full year. I comment, too, on the removal of item 955 from the Schedule. This refers to the taking of blood, or venepuncture. It is interesting to note that pathologists have been enjoying a nice little return for that service, which very often-I am sure Senator Baume will agree-is not done by the pathologists, not even by doctors, but often by a sister or nurse. Yet the doctor or the pathologist has been receiving a fee for that. Senator Peter Baume —Given my choice, I would rather have the nurse do it sometimes, for competence. Senator CROWLEY —We should note Senator Baume's comments. I presume we do not take his comment that he would rather have the nurse do it as indicating in any way that he is criticising the medical profession. I heard him say earlier that of course we must not criticise the medical profession, and I am glad he is not criticising it when saying he favours the nursing profession. In a single stroke this provision will save $2,700,000, and I understand there is absolutely no objection to that. I have already alluded to the fee rearrangement. As of now there will be two fees, not three as we now have, for those 18 items. The rearrangement of those fees should go a long way not only towards containing costs but also towards preventing overservicing. It is also my hope that it will encourage a resurgence of the excellent hospital pathology that I know about and have taken part in. A few other items in the Bill are important, including the separation of a new schedule for pathology fees. Senator Baume made the point that there is already a committee in existence to do that, but it is involved with the medical benefits schedule and that whole system over the years has proven to be very unwieldy and inflexible and slow to adjust. I support the proposal to move to a separate schedule for pathology fees and a separate system for examining them on the ground that anything would have to be an improvement on the existing scheme. Hopefully, by separating the two, and focusing more on the task and having a smaller number of items to look at, we will see that happening. I have little doubt that it will be the case. Another important provision in the legislation is the reduction in number of self-determined tests; that is, extra tests ordered by the pathologists themselves. That is an important and significant matter. There has been a lot of criticism, not so much from Senator Baume but certainly from the other place, that pathologists were not happy, that they had not been consulted. That is incorrect. The Minister for Health acknowledges that the Royal College of Pathologists of Australia supports this measure to limit the number of tests the pathologists themselves can determine. The Royal College of Pathologists also commented in supporting this measure that it believes that perhaps the self-determined tests could be a source of abuse by some laboratories. That is one example of where clearly the College of Pathologists has been consulted. The approval of pathologists and the accreditation of laboratories are two points the Opposition supports, and I am pleased to note that. I would have been surprised if it had done otherwise. But both of those steps go very much to ensuring that some of the difficulties that have been highlighted by the Public Accounts Committee will be reduced or, hopefully, removed. One point I did want to raise was the mention of conflict of interest between ownership or involvement in pathology services by some doctors. It is interesting to note that Madam Acting Deputy President, Senator Giles, as the Chairman of the Senate Select Committee on Private Hospitals and Nursing Homes, would be as aware as I am, if not more aware than I am, of the conflict of interests we discovered in that area of medical practice. It is a matter of considerable disappointment to me but I suppose it is also no more than a measure of human behaviour that there are some doctors who have, from time to time, had interests in nursing homes or private hospitals, and here we have mention of interests in pathology services, that quite clearly allow for the potential for conflict of interests. In some cases that Committee found quite clear evidence that bad practices have followed on from that conflict. We would be very pleased to see the removal of anything that might allow that continuation. I am pleased with the way the legislation addresses this matter, and I hope it will remove that possibility for a conflict of interests. The points raised by the Opposition about lack of consultation are insufficient. I have already referred to the College of Pathologists' comments about self-determined tests and its approval of that, but I can refer honourable senators to the speech by Minister Blewett in the other place, in which he quite clearly dissociated himself from that kind of estimate. In fact, at page 3993 of Hansard, he said: When I met the College of Pathologists the other day it thanked the Government for the extensive consultations there had been on this matter. Either the College has been consulted or it has not. I would be surprised if it was thankful for something that did not happen. I accept the Minister's word that there has been consultation. It is also interesting to note, though, that the Australian Medical Association, which has been suggesting that there was insufficient consultation, has the gall even to suggest that, in the light of its recent behaviour when it refused to come to any number of meetings with the Government or refused to look at a review of fees. I congratulate the Government for continuing to try to talk to the AMA at all. Its behaviour has been much less than admirable. Again, of course, it is not every member of the AMA; but I do not believe those people who represent the AMA in those deliberations have been representative of many doctors in this country. I also suggest that if the Opposition wants to get into Labor senators or the Labor Government for their alleged criticism of the medical profession-which, of course, is incorrect, as it ever is; we do not criticise the whole medical profession; we are at pains to draw the distinctions-I also think it is a disappointment that the Opposition does not sometimes suggest that the AMA is less than adequate in its dealings with government, too. In the Minister's speech in the other place he also read a letter which I find very fascinating. It was an unsolicited letter from a pathologist, and I think it is of such importance that I will read it. The Minister said that he would finish his speech by reading a letter from an ethical specialist pathologist-just the sort that Senator Peter Baume praised-who ran a fairly large laboratory and who exemplified the very best in the medical profession in his response to the Government's legislative measures. The Minister said it was a courageous letter. It read: Dear Minister, Consequent to findings by the Joint Parliamentary Committee of Public Accounts on Medical Overservicing in Pathology, your government is enacting inter alia a reduction in schedule fees of pathology tests by 25% for the most commonly performed tests. There is widespread opposition to this fee reduction by pathologists in private practice. As a specialist pathologist of some thirty years standing operating my own private practice in Sydney, currently employing about 100 staff and serving upward of about 300 doctors, I feel you might like to know that there is at least one pathologist who approves the principle of the measure you propose. Pathology is a desirable and necessary scientific adjunct to the proper practice of medicine and has until recent years been an honourable profession requiring years of specialized training on the part of both the pathologist and the technologist. But today the profession is seen by the public as an industry motivated by gain, given to unethical practices like overservicing and actual fraud. To the disgrace of the profession there is a big element of truth to this. Now that we have a National Health Service, the cost of medicine is borne by taxpayers, and you act properly as Minister to protect the taxpayer from those abusing the system for their own pecuniary gain. In addition, you are upholding the true cause of medical science and acting to restore public confidence in the medical profession and pathology in particular. Those dedicated to medicine and pathology will support you for doing what the profession has been unable to do for itself. I look for continuing scrutiny of the effectiveness of the measures to reduce the attractiveness of pathology to the entrepreneur. If it will be of any help to ascertain the costs of providing a service in a medium-sized, large automated laboratory, or any other purpose, then my laboratory and its books are open to you or your representatives. The line in that letter that is most telling is the one that says: Those dedicated to medicine and pathology will support you- that is, the Minister and the Government- for doing what the profession has been unable to do for itself. That is a very telling comment from a private pathologist of the sort whom we wish to support. There is no dispute between me and Senator Peter Baume in that respect, we are entirely in agreement; but I believe that the line that I have just read out needs to be remembered. The pathology profession has not itself been able to prevent fraud and overservicing; this pathologist is grateful to the Government for doing it and doing it in a way that will involve pathologists and allow ethical pathologists to continue with their practices as they always have done. I believe that the letter should be noted and that it is representative of many pathologists. I support Senator Baume in saying that pathology is a significant part of the medical profession, although I certainly know a number of doctors who feel that the more pathology grows the less medical skills grow. In times past doctors could ascertain a lot of what they now require clever pathology to do, but I am not suggesting that we should revert to the pre-pathology days-not at all. We need to celebrate and acknowledge the contribution of pathologists. This legislation goes all the way to doing that and has not only addressed the question to this point but also put in place structures that will guarantee honourable pathology and honourable pathology laboratories and practice. It also establishes a responsible committee to continue to oversee pathology services and to ensure that the difficulties that have occurred in this part of the medical profession hopefully will not arise again. In fact, the Minister has set up structures to help the pathology discipline to keep an eye on itself. I certainly commend the legislation. Senator HAINES(South Australia)(8.33) —The Health Legislation Amendment Bill 1986 that is before us tonight has been introduced by this Government in an attempt to address the issues identified by the Joint Committee of Public Accounts on the problems of fraud and overservicing in the area of pathology. As Senator Peter Baume has already pointed out, the moves within this legislation to prohibit fee splitting and render illegal the sort of kick-backs that operate in some areas are supported by us all because these practices do nothing to advance the attitude of the general public towards a proud and generally honourable profession. Problems with the administration of a segment of the practitioners within the pathology field have been with us for some time in this country and, as Senator Baume said, steps were taken during the years of the Fraser Government to address the fee scales applicable to pathology services and to reduce incentives to overservicing by the profession. Those moves were made not through legislation but through administrative methods, and this Bill is another step in the direction of combatting the sorts of unsavoury practices that have been put into place by a minority of the profession which does no service at all to its colleagues. Because of the amounts of money involved from the public purse, it is crucial however that we deal with this problem expeditiously. Of course, it is also important that we do not deal with it in such a way that we disadvantage a section of the pathology profession which is, in fact, operating honourably and within all the tenets of its professional oath. The excesses which, it seems to me, at times approach racketeering and which exist within a small segment of the profession are costing this country enormous amounts of money. As one of the partners of the Queensland Medical Laboratory pointed out to me, the vast majority of ethical private pathology practices provide a comprehensive range of testing, and they are owned and operated by specialist pathologists who have been admitted to fellowship of the Royal College of Pathologists of Australia on examination and after a minimum of five years of post-graduate training. In contrast, many laboratories allegedly indulging in overservicing are owned by a variety of medical and non-medical persons without the relevant specialist qualifications. I do not think that many people in the Senate or elsewhere would argue with that. Nevertheless, it is also true to say that last year payments for pathology services amounted to something like 15 per cent of Federal expenditure on medical benefits, at a cost to the taxpayer of nearly $350m. The incidence of pathology services has also increased dramatically, as has the proportion of pathology services which are billed at the specialist rate. Between 1979 and 1985 the overall number of pathology services increased by 69 per cent, notwithstanding the sorts of measures that were undertaken in good faith by the Fraser Government. The number of pathology services provided at the specialist rate, attracting a higher fee is reputed at least to have increased by something over 110 per cent in the same period. This tendency towards billing in the highest fee bracket is most clearly evident in the most financially successful of Australia's pathology companies. The Public Accounts Committee observed that the top 25 pathology groups billed between 94 and 99 per cent of their services at the specialist rate. However the increasing proportion of services being billed at the specialist rate is not being matched by an equally increasing proportion of this work being performed by specialist pathologists. It seems that the problem starts and finishes there. The precise extent to which these figures reflect overservicing is not clear, and government estimates are always suspect, I guess, simply because they are government estimates. But the Government estimates that the operation of this legislation before us tonight will result in savings of some $60m a year. Senator Crowley has already mentioned that figure. It has been disputed in letters that have been sent to me and in conversations that I have had with pathologists. As I said, I suspect that, like many government figures, it is something that has been plucked out of the air. Of course, we will only know some considerable way down the track whether that $60m in savings is an accurate figure or whether it was a figment of this Government's imagination, chosen in order to persuade people that there is a considerable rort going on in the system. However, a number of pathologists who have made representations to me, as well as suggesting that these figures are not accurate, have indicated their concern that the Bill will not put an end to fraud and overservicing-in somewhat the same manner, I guess, as the introduction of the Australia Card will not put an end to the criminal element of social security and tax fraud-because many of those sorts of people are in a position to get around the system. Senator Peter Baume —They will continue to operate legally. Senator HAINES —Yes, they will simply get through or around the system using loopholes because they have a fairly massive incentive to do so. So the pathologists are concerned that the sorts of people who need to be stopped will not necessarily be stopped by this legislation. However, generally, as Senator Peter Baume said, with the exception of the proposal relating to the reduction in fees, pathologists are tending to support the legislation. Indeed, they have expressed to me, as they have obviously expressed to Senator Peter Baume and also to Senator Crowley, a concern that in some ways the legislation does not go far enough. The Society of Pathologists in Private Practice, for example, does not believe that this Bill picks up all of the recommendations of the PAC report that it should pick up, or that the measures proposed are the most efficient or effective way of curbing the current abuses. I am particularly concerned by arguments that have been put to me by that group of pathologists that the proposal will inhibit the legitimate business of the co-called ethical practitioners more than it will hinder the unethical pathologists determined to boost their profits by whatever loopholes they can find in this or any other piece of legislation. I accept those arguments to a certain extent, but I believe that the unethical so-called entrepreneurs-I suspect that description includes, at least in part, a rather notable organisation that operates in Senator Baume's State-will continue to find loopholes to exploit in any system which is introduced. That, I guess, is a fact of life. The profession itself may take some steps to remove those people who are putting the profession in a bad light, but I am not sure that we as legislators can do much more than we are currently doing. Obviously, these proposals should have been developed with much earlier and much more thorough consultation with members of the profession, notwithstanding Senator Crowley's comments that there was more than adequate consultation with the groups concerned. If those that came to see me are any indication, most believe that their concerns have not been adequately responded to by the Minister for Health (Dr Blewett). That may well have been due to pressure of business on his part or simply to a certain arrogance. One is never quite sure with the current Minister. In any event, they are concerned quite seriously and quite genuinely with what they perceive as lack of consultation, and they believe that those who work in the area on an everyday basis and who have a very real knowledge of the problems and the gaps in the system as it exists should be the ones who are most consulted. They believe that not only their interests but also their concerns for the profession and its reputation should be taken into account. This sort of concern, as I said, sometimes reflects more on the particular working style of the Minister than on anything else. The provisions of this Bill are, as Senator Baume said in his speech, something of a mixed bag. We support the majority of them, as does the Opposition. The Bill attempts to introduce a number of major changes. It revises arrangements for determining approved pathology practitioner status; it introduces accreditation of pathology laboratories and limits the payments of benefits to services performed in accredited laboratories; it requires request forms for pathology services which will be used by referring practitioners to be approved by the Health Insurance Commission; and it establishes a Pathology Services Advisory Committee allegedly to advise the Minister on services for inclusion in a pathology services table and an appropriate fee for those services. Like Senator Baume, I will wait with somewhat bated breath to see how successful that Committee is. I echo his comment that its success will rest very much on the sorts of people who are put on that Committee. While, I think, three of the seven members of the Committee are to come from lists provided by the pathologists and by the Australian Medical Association and the Chairman is to come from, of all places, the Conciliation and Arbitration Commission, there are still four whose appointment is to be left absolutely to the Government. That of, course, can make or break the value of any committee, particularly one which is inquiring into something as touchy, shall we say, as this matter. The Bill also prohibits particular practices which take place between the various parties involved in ordering and providing pathology services, such as pathologists providing a variety of so-called inducements to doctors to order more services than are necessary, ranging from the provision of service order forms in a particular format to various sorts of kickbacks and to what appears, if newspaper reports are occasionally to be believed, to be outright threats and bribery. It also restructures the fee schedules applicable to pathology services and reduces some of the fees. The specialist pathology rate will be reduced to the ordinary pathology rate for the 18 most commonly asked for tests and those which are automated. The Australian Democrats, as I said, will be supporting this legislation in principle although, again as I have said, we have some concerns about particular provisions. As Senator Peter Baume has indicated, he-and we too-will be seeking assurances and undertakings from the Minister with relation to those concerns, with regard, for example, to the level of cuts made in the 18 tests singled out by this legislation. Specifically we want a referral of those fee schedules to the soon to be established committee for review. As I have said, most pathologists who have made representations to us have supported the general thrust of this legislation. Their main objections have concerned, not surprisingly, the proposed reduction of pathology fees, which they see, again not unnaturally, as a threat to their very existence. While we support these fee reductions in principle, as I said a moment ago, we think they could well be reviewed by the new committee. The current fee levels fail, for example, to take account of increasing automation and the increasing high frequency with which the particular 18 tests are conducted. In combination with the existing structure of the fee schedule the levels of fees for these consequently extremely profitable tests undoubtedly provide an incentive for overservicing by the minority unscrupulous element in the profession. With the contribution made to current pathology testing by medical scientists and technology, to use the words of the Minister, the current SP fee rate provides a `professional premium' which is more than can be justified by the specialist pathologist's professional input in relation to these 18 tests. However, on the other side of the coin, the argument has also been put to me that the amount of reduction of the SP rate of fees by 25 per cent is somewhat arbitrary, to say nothing of excessive. While we accept, as I said, the principle of the reduction, I certainly seek an absolute assurance from the Minister for Health or the Minister representing the Minister that the items and fees in question will be referred expeditiously to the proposed Pathology Services Advisory Committee. In passing, I would like some indication from the Minister as to when exactly that Committee will get off the ground. There is not much point in seeking an assurance from the Minister that he will refer a question of a fee to the Committee if it is not going to be up and running fairly shortly. The Minister's statement in the second reading debate on this Bill in another place that he proposes to request a review by the Committee at what he called an early stage is simply not appropriate. It is reasonable of the Senate to demand of the Minister a more accurate time scale than merely `at an early stage'. The other concerns that have been expressed to me about the Committee include, as I think I mentioned earlier, its composition. Some concern has been expressed to me about the selection of Chairman and the source of that selection. Some concern has been expressed to me about the powers of referral to the Committee and a suggestion has been made that new section 78cc could well be extended beyond merely reference from the Minister or on its own initiative to include, for example, references from the Joint Committee of Public Accounts, from a Senate standing committee, or even a Senate select committee, or a simple resolution from either House of Parliament about something which is causing concern to senators or members. Another concern that has been raised with me and with my Queensland colleague has been the situation which obtains in Queensland. Here the specialist pathologists do tend to do more work of specialist value as a result of the nature of the Queensland hospital system. The situation in Queensland has differed from that in other States because of the long history of the free public hospitals in that State. The public hospitals in Queensland did not allow private medicine and, as a consequence, a private hospital system grew up in Queensland to a much greater extent per capita than it did in any other State. Because of this the private pathology services were actually specialist services for service to hospitals as distinct from pseudo-specialist services for service to general practitioner medicine. So there is a particular case to be dealt with in the Queensland situation. Again, I suggest that the Government has not really paid a great deal of attention to that peculiarity in this legislation. I would be interested to know from the Minister whether or not any assessment of the effect of this legislation on the Queensland pathologists has been made and, if it has, what the Government's assessment is. Furthermore, if there is some dispute between the Queensland pathologists' assessment of the effect on them of the legislation and the Government's assessment, I ask whether the Minister is prepared to refer that question to the newly formed Pathology Services Advisory Committee when it takes up the general question of fees. Like the Opposition, the Australian Democrats support many parts of this legislation. Our concerns lie with the arbitrary way in which some fees seem to have been cut, with the impact this could have on the Queensland situation, and with whether the Government has paid a sufficient amount of attention to that impact. Unfortunately, as I understand it, our hands are virtually tied with regard to making any changes to this legislation. If we defeat any part of this legislation, the Bill as a whole is held up for some months and the better parts of the legislation, therefore, will not be able to be put into practice. Furthermore, and probably more importantly, I understand that if the Schedule that is attached to the legislation is deleted and the subsequent regulations establishing the new lower fees for the 18 most common tests are disallowed, the fees, and hence the medical benefits payable, drop back to 1973 levels. This is not going to help anybody-not the pathologist and certainly not the patient. So it is unfortunate not just that the Senate's hands are tied but that the House's hands were also tied with regard to this piece of legislation simply because of the unfortunate effects that could have occurred had we taken up the normal opportunity of amending or deleting certain parts of the legislation or, some time down the track, taking up our option for disallowance. In concluding, I echo again Senator Peter Baume's comments that this Bill is indeed good in parts, that we all support an extension of the Fraser Government's original moves to eliminate some of the problems in this area, problems that were bringing an honourable profession into disrepute, unfortunately and unnecessarily. We certainly support moves to prohibit things such as fee splitting and kickbacks and moves to eliminate the major part of fraud, overservicing and abuse generally in the pathology part of medical care. Senator GEORGES(Queensland)(8.54) —I have a special interest in the debate that is taking place on the Health Legislation Amendment Bill. I merely wish to take up the Senate's time for a few minutes to indicate the position of the Joint Committee of Public Accounts on this legislation. The Public Accounts Committee is pleased that the Government has so promptly taken up many of its recommendations, but there are some residual concerns that will mean that the Committee will examine this legislation and also the response from the Department, which we have not as yet received. That will be the basis of a further, and I trust final, report on medifraud and overservicing which we expect to bring down in August. Those who believe that scrutiny by the Public Accounts Committee has been brought to an end can rest assured that a further scrutiny will take place. The Committee has been patient, hoping that some of the revelations that were made in the last report would be taken up by the respective authorities and that some of the problems which have not been addressed in this legislation would have been addressed in another fashion. We are concerned that much of the information which was revealed was of such a nature that certain people should have been brought to account. The reasons for their not being brought to account is now a matter for further examination as to whether the legislation which has been enacted by Parliament is sufficient to curb some of the extravagances of certain members-I stress certain members-of the medical profession. In our report we stressed that it was a minority of doctors who were involved in unethical practices which affected the whole of the health delivery service. We asked the Australian Medical Association to take particular heed of the fact that it was not possible without the co-operation of the profession itself to contain the problem. Most sections of the medical profession have responded constructively, but certain sections of the profession have taken the Committee to task and accused it of invasion of individual rights and other associated matters. We again express a wish that the medical profession through the AMA, its most responsible body, take the necessary step that we believe to be available to it to prevent an escalation of the problem which this legislation will not prevent. I believe that by the reduction of the fees the ethical section of the profession will suffer, but that the unethical section of the profession will adjust itself to maintain its level of return, which may lead one to anticipate an increase rather than a decrease in overservicing. One has to be careful that in imposing these limitations on one section of the medical profession, particularly pathology-and perhaps I should also include radiology-one may deprive the community of a service that is essential in a preventive sense, and that, because of abuses of the system, limiting the whole of the system can lead to a loss rather than a gain. I assure the House that the Public Accounts Committee will present a further report on this matter-we trust, towards the end of August-and this legislation will come under scrutiny. I do not want in any way to denigrate the legislation because it has gone a considerable way to pick up the errors that were so dramatically exposed by the Public Accounts Committee, but still much more needs to be done. It may be that further legislation is required to strengthen by regulation the self-regulation of the industry itself, because it is fairly obvious that there is an inability on the part of the profession to bring some respectability, should I say economic respectability, to the profession. Personally I find it hard to accept that the exposures of the Public Accounts Committee in the pathology area may lead to an increase in instead of a lessening of the excesses, because there seems to be a rush by a substantial section of the medical profession not to correct what has been happening but in fact to become part of what is happening. We now have a rush to join the Edelsten style of health service. There appears to be the possibility of a proliferation of the 24-hour medical services, which, in my mind, can survive economically only if they overservice. If such overservicing has been done by two or three practitioners, we can imagine the impact if it were to be done by many more. The idea seems to be developing that if you cannot beat them, you join them. It seems to me that the medical profession, under the advice of certain slick accountants and commercial advisers- Senator Walters —You can stop that easily; stop bulk billing. Senator GEORGES —By way of reply to the interjection, I suggest that the honourable senator might look at a fee for service system. Is she prepared to look at the fee for service system and question whether that is at the base of the problem? I think it possibly is. Senator Walters —Cut out bulk billing. Senator GEORGES —If I am forced to an ideological position, I suggest to the honourable senator that we might look at fee for service. The sooner the community wakes up to that, the better. Then we will not have any problems with bulk billing. I tried as much as possible in the examination of the problem before us, especially on the Committee, to place ideological positions to one side and to look exactly to what is needed within the system as it operates at present. Let me assure Senator Walters that, if we do not address the problem, we will be forced to change the system completely because the country cannot afford the excesses revealed by the Committee's report into pathology services. Neither can the country afford the further excesses that are likely to be imposed by a profession that seems to have lost its ethical base. Senator Sir JOHN CARRICK(New South Wales)(9.03) —The Senate is debating the Health Legislation Amendment Bill. The stated purpose of that Bill is to look at the medical pathology profession and to seek to eliminate what have been identified and described as malpractices. Whether this Bill will do so requires careful analysis. The fact of the matter is that the Joint Committee of Public Accounts has found certain irregularities. For example, there is evidence of such malpractices as fee splitting between doctors and pathologists, kickbacks in that regard, overservicing and fraud. The interesting thing is that we do not have before us any real measure of the magnitude of this. In a moment or two I will try to define the magnitude suggested from the amounts of money outlayed and alleged to be saved. The fact is that every honourable senator who has spoken has indicated that by and large the majority of the profession are highly ethical and carry out their practices with high integrity. Indeed, Senator Georges, who has just sat down, said that the Public Accounts Committee was convinced that only a minority of doctors were creating this aberration; but he concluded with a much broader brush-and I reject his conclusion in that regard. The fact is that one has to determine in the first place what is overservicing and what is a backyard situation. To the extent that this legislation seeks to give accreditation to proper laboratories and seeks to upgrade the system, to the extent that it will eliminate bad practices, kickbacks and fee splitting and to the extent that it will eliminate any form of fraud, no one could object to it. The real question is: What is overservicing, what is its nature and if it exists how has it come about? Pathology services are simply diagnostic tools. Everybody knows that in the last decade or two diagnostic services have increased, in their range, in their ability to assist the general practitioner or specialist and in their high technology and mechanisation. The real question is: How often should the doctor resort to them, to what range of them should he resort? What is servicing, what is good, conscientious medicine and what is bad medicine when a doctor goes too far? Senator Crowley created her own dilemma. She was puzzled as to whether improved pathology was not having an effect upon the diagnostic skills of the doctor. That is not a generalisation but a reflection on the scheme in which the doctor works. Senator Georges is a strong socialist. I reject his ideology but I respect him for his beliefs. He said that we might have to look at fee for service and get away from bulk billing. Let me put the following situation to honourable senators: A general practitioner or a specialist is with a patient. He has two kinds of dilemma. He knows that his judgment might be right on a particular matter but it could be supported if he used a number of diagnostic aids, diagnostic procedures. Why should he not do that? If he bulk bills, that helps him a great deal. Firstly he can, with conscience, request the patient to come back. The visit would not cost the patient and therefore, in conscience, he is urged that way. There is no charge to the patient when pathology is bulk billed, so the doctor can conscientiously say to himself: Why should I not use those extra diagnostic tools? Who, indeed, is to judge in this situation? Who is to decide whether it is more right for the doctor to use his intuition, his art, as well as his science in this situation or whether he should seek aids? If honourable senators want to see the major uses of pathology procedures they should go to any public hospital and look at what is done for patients by the intern or resident. The intern or resident, knowing that his master-the registrar-and the visiting medical officer will want to know everything, will take the procedures across the board because he will not want to make any mistakes or be neglectful. It is the narrowing of that procedure that is important. Who is to say what is done for reasons of conscience and what is overservicing? Senator Crowley thought she was doing something very skilful indeed by reading a letter from an unnamed pathologist, who employs some 300 staff, I think, in New South Wales to the Minister for Health, Dr Blewett. The pathologist said that he supported Dr Blewett and I accept that. However, Senator Crowley did not finish the exercise. That pathologist said: `If you want, come amongst us and measure my practice, measure my costs, see what I am doing and then you can get a balance'. That would have been a very good test for Dr Blewett to have done. He had an invitation from a major pathology practice to measure it, test it, look at its costs and procedures and then to use it as a yardstick for others. If we had had the yardstick here today we would have been much better off. I am thoroughly puzzled. We have a figure which was given to us and which, I think, Senator Haines quoted-presumably it is from the Joint Committee of Public Accounts and from the Budget-that the cost of pathology is $350m a year. Senator Crowley said that there would be a saving of $60m. I want honourable senators to do a little mental exercise. First, we are told that the breaches in the pathology are small and that they are confined to a minority of people. If in fact we would save $60m, it has to be a net $60m. I want to point out that if we take from the doctors, their companies or their proprietary companies the millions of dollars, they, as companies or people, will pay less income tax-they must do so. So the $60m is a net amount. What the Government is talking about is a sum of $100m or more. What is being put to the Senate, unless my maths are wrong, is that about one-third of all these practices are going out of business. That is a nonsense. Nobody here has said that. Senator Peter Baume, himself a consultant physician, has indicated that the pathology profession is a highly ethical profession, which is run by a learned college which sets high standards and it is admitted by everybody that the majority of its practitioners are obeying the rules. So we are dealing with a smaller number of people. That is what Senator Georges said. I would like the Minister to tell us how he works out a saving of $60m on $350m. At the very worst, if there were no loss of income tax at all by the Government, we would be dealing with a cost cutting situation of about 20 per cent. It is much more than that; it is about a third. I think that we are getting very faulty information. For instance, we are told that some doctors have arrangements in nursing homes. I think it was Senator Crowley who told us that. It is very easy to get up in this Senate and make claims of that kind. Those who are listening to us will imagine that there are thousands of doctors outside who own shares in nursing homes and who shove their patients into them to increase their profits. I am told-I have no basic evidence myself-that the number of doctors who have shares in nursing homes and who put their patients in those homes can be counted on slightly more than one hand-about six. That is about right. If that is so, let us get the dimensions right. Senator Walters —It is written up in the report. Senator Sir JOHN CARRICK —Senator Walters interjects that that is written up in the report. It is either right or wrong. If that is right, it is disgraceful for someone to get up in this Senate and communicate to the people of Australia that doctors have all got a foot in the door of nursing homes and are shoving their patients in those homes and making great profits. If they are, we should do something about it; but if almost no doctors are doing so, we need to correct the situation. The fundamental point is this: The national health scheme which this Government has brought in, a socialist scheme, has done the very reverse of what it set out to do. It is sold, as so many socialist schemes are, as something which takes away from the rich and will help the poor, that it will reach out to all the poor and give them a high quality service. The fact of the matter is that before this Parliament and before the coming Budget is a great dilemma. The cost of medical services is accelerating enormously and the standard of delivery of these services, particularly to the underprivileged, is decreasing very rapidly. The first thing is that if we want to stop overservicing we must look to what role wholesale bulk billing plays in creating the state of mind of the doctor. A decent doctor may say: `Yes, I can bring my patient back. No, I won't rely on my diagnostic skills; I will get some more information and it won't cost the patient anything'. The other doctor, who is less ethical, may say: `Let me overservice-the Government pays, not the patient'. One has to look at the very heart of the socialist scheme to see that in the end the more one encourages this sort of thinking, the more one hurts the ordinary people. The Premiers are going to be told that they are going to suffer massive cutbacks. The hospital systems around Australia at the moment are in an extraordinary state of disrepair. The public hospital systems, which have provided excellent high quality and high skilled services to the underprivileged of Australia-and let us not have any doubt about that; that is where the underprivileged come into contact with the best qualified specialists that this country could provide-are shedding their beds, shedding their qualified staff and degenerating in their capacity to deliver. Senator Peter Baume —They cannot hold nurses. Senator Sir JOHN CARRICK —Senator Peter Baume says that they cannot get nurses. But it goes further than that. I think that the honourable senator referred to Royal North Shore Hospital, where he used to practise. I think about 150 beds have now gone from that hospital. The position is similar wherever one may go. Westmead Hospital probably has 200 beds not open. The position is much the same at Royal Prince Alfred Hospital in my State of New South Wales. Hundreds of beds are lying idle and yet patients are lining up for the treatment of quite serious health problems. Who are those patients? They are not the rich. The rich can go to the specialist in his rooms or to the private hospitals and get treatment. The people who are being penalised at the moment by this socialist system are the underprivileged people who cannot afford to pay for private hospital treatment and who, incidentally, have been told by this Government that they need not privately insure. This is the Government that in fact abolished gap insurance. It is the Government which set out to discourage providence and thrift. We now have a situation in which two terrible trends have emerged throughout Australia. In the first place queues and queues-tens of thousands of people-are waiting for treatment. It is fair to say that in most public hospitals in my State no elective surgery is being carried out at all. A person who is not in absolutely acute need or does not require emergency treatment cannot have, say, a hernia patched, a hysterectomy done or a hip replacement carried out in a public hospital. The queues are more than a year long. We are now outrivalling the British system of nationalised medicine. This is the Government that said that it was setting up a system that would help the poor. It is more tragic than that. The great teaching hospitals themselves have given of their skills in a number of ways. The best of the visiting medical specialists were attracted to those hospitals to do two things-to teach the interns, the residents and the registrars, and to pass their skill on to build a system which would pass on skills. They are the people who have, over the generations, given of their skills to the public who use the public hospitals-the underprivileged and, by and large, the poor. By and large over the years these people have had the skills of the best of the visiting medical officers who could be attracted to the hospitals. Equally, the young interns and residents being trained have had the great advantage of working among the top people. Tragically, many of the top visiting medical officers are going from the public hospital system. This is primarily because they cannot work within the system and because this Government created a series of regulations which made the situation intolerable for them. Indeed, Dr Penington in his report on the rights of private practice in public hospitals recommended quite a number of reforms. In my State alone the disappearance of first class specialists from the public hospitals is creating a great crisis in the hospital system; not only, as I said, in regard to waiting lists, although that is one terrible thing, but also because we now do not have the structure to train the young doctors as they come on. It would be reasonable for us to turn to a widening of the private hospital system so that if the top specialists go to private hospitals, the public could go to them there. Incredibly, the New South Wales Labor Government has said that it will restrict the growth of private hospitals. So it will stop people going to private hospitals and force them more and more into the queues for the public hospitals. What a nonsense it is when socialism applies itself to these things. We had a system in which something like 90 per cent of the public were, one way or another, in some kind of medical, health or hospital scheme. People joined the schemes and elected to have their own specialists and private or intermediate beds, and they could get service immediately. This Government said it would not have any of that at all. It set out, basically, to cut down the voluntary health schemes. It pooh-poohed the idea of gap insurance and, as it wanted to do, it has made everybody reliant on the Government. In doing so it has recreated the system that has existed for something like 20 to 30 years or more in England. Indeed, if we did not learn from England we should have watched the Canadian experience. Whenever socialists are in power they wait for an accident to happen overseas so they can copy it. The socialists are attracted hypnotically towards socialist experiments overseas, particularly those that go bad. Tomorrow the Prime Minister (Mr Hawke) will tell the world what he has failed to tell us for something like three years. For these years he has said that this country is burgeoning, it is wonderful, it is prosperous, everything is going right. Suddenly we are told that we are in recession. Suddenly we are told by Labor Ministers opposite at Question Time that we will have to cut people's living standards. It is quite remarkable that the Government could on one day say one thing and then on another day say, as the Treasurer (Mr Keating) did, that we are on our way to becoming a Third World country or a banana republic. The truth is that we have had two quarters of recession. What will happen? The Government is setting to, cutting away at all sorts of things, because it has a problem of overexpenditure. The fact is that in its Medicare system it has created an absolute monster. The burgeoning of Medicare costs will force the pruning of a whole host of very important government functions. When the Treasurer or the Prime Minister mentions the pruning shears in all sorts of places, we should bear in mind that much of that pruning would not be necessary if the socialists had not decided that they wanted to impose on the people their blueprint of organised, institutionalised medicine. The great danger is that with the hospital system in a terrible way-not only with the shortage of nurses but with everything else I have mentioned-the process of moving towards good and necessary reforms in pathology and other procedures could be at risk. I think Senator Georges even hinted that the Government is doing exactly the wrong thing. It is having the ethical people obey and the unethical ones jumping through the fence, so we will have higher costs than we had before. We will not oppose this legislation. There are a number of amendments that are self-indicating but I understand that it is necessary that the legislation goes through. The fact is, though, that this has been brought before us with totally insufficient information. It is not good enough for us not to know, first of all, whether Senator Peter Baume is right in saying that of those 18 procedures the fees for which are to be cut, blood-matching is not an automated procedure. Another medical colleague on my right indicates that he agrees with that. If it is not a mechanised procedure and, indeed, if it goes in with 17 other procedures on the basis that it is, we are being told wrongly altogether. In any case, I come back to this: What kind of humbug is it when the Minister can incorporate a letter from what he says is the ideal-and well it might be-pathology practice, a big group practice employing 300 employees, which says' `Yes, chase the villains; yes, you are right in doing what you are. Come and have a look and you can examine our books' but the Minister did not go and examine its books? Why is it that we have information before us that is lacking in detail? Why do we not know the costs of running ordinary procedures in a proper ethical practice so that we can therefore say `That one is wrong', or `The other one is wrong'? When one applies a socialist mind to this, one comes back to the dilemma I want to finish on. Over the years until specific medicine-I interpolate by saying that specific medicine is 45 years old; it is only 45 years ago that the fungi, the penicillins, the antibiotics and the sulphur drugs emerged-medicine was primarily palliative, with few other aids. It was then recognised as more of an art than a science. It certainly balances art and science. Suddenly in the last 40 years there has been a burgeoning of technology in medical aids to the general practitioner and specialist which enable much more accurate diagnosis. My goodness, do we not want that? I do not know whether what I now say is accurate or not, but I am told that the patients in public hospitals who are there due to wrong drug therapy and the adverse effects of drug therapy can be as many as 20 per cent of patients. I believe that has been reported on in learned journals throughout the world. If this is so, how much more important it is that we should not force doctors away from proper diagnostic skills and diagnostic aids and just simply leave them in that comfort that Senator Crowley prayed for. Would we not be better off if we did not allow pathology to advance and we just went back to the diagnostic skills of the doctor?. We must never be frightened of modern science. The CAT scans-computerised axial tomography-and all the other great advances are all proper aids to be used correctly. We may not have yet learned the restraints that are necessary in using them-when and when not to use them-but I put to honourable senators what I started with: If a general practitioner or specialist has a patient about whom he has in his mind the question, `Should I or should I not get some tests just to confirm my reading of the patient's situation', if that medical practitioner is operating under a socialist medical system which says, `I can do this and have the patient get those procedures without overt cost to the patient; I can do this having the patient returning for a second visit without extra cost to the patient and without the patient looking at the bill, why should I not do that?' is that not ethical? Where do ethics start and where do they finish? I do not believe that the Public Accounts Committee has given us sufficient evidence of the whole condition. I repeat that, if there is any kind of villainy at all, any kind of malpractice in the pathology profession, it should be chased, found, and hounded out. If there is fee splitting, if there are kickbacks, if there is overservicing and fraud, yes, we should get rid of them. There are a number of measures in this Bill which may well do good, such as the provision accrediting laboratories. We do not want backyard laboratories. There are matters, such as the establishment of the Pathology Services Advisory Committee, which we can put on challenge and see how they work. But when it is all finished, when we look at it all, when we take it as part of the whole health system and remember what is happening to the hospital system in Australia today and to the general costs of medicine, we must bear this in mind: Today we are paying much, much more for medicine and the underprivileged and the poor in this country are getting much, much less. If this goes on, the situation will get worse. Senator BOSWELL(Queensland)(9.32) —I certainly appreciated that contribution from Senator Sir John Carrick. He outlined very precisely and distinctly the problems that Australia is suffering as a result of Medicare. Tonight I wish to address the Health Legislation Amendment Bill 1986 as it impacts on my State of Queensland. The arbitrary decision of the Minister for Health (Dr Blewett) to reduce the cost of the 18 most common pathology tests by 25 per cent will mean that the two major pathology laboratories in Queensland will make a loss. The net effect will be a reduction in fees by 12 per cent after the reduction in the rebate of 25 per cent is brought in under this legislation. These laboratories at present are working on a small profit margin and they estimate that they will make a loss if they maintain their fees at the present level and accept the bulk billing charges. They maintain that the losses they will sustain will be around the $3m mark. That is a lot to carry. No business can carry those sorts of losses. The legislation is unfair to the pathology laboratories, which are offering an excellent service in Queensland. The fees that they are currently charging were set by an independent tribunal after taking evidence from all parties. Those fees were set 18 months ago and have not increased. There are few businesses in Australia that could maintain their fees over an 18-month period and very few which could sustain a 25 per cent profit drop. By arbitrarily making a decision and overriding the previous committee that established these fees, the Minister has, by the stroke of a pen, reduced these fees by 25 per cent. This legislation establishes a new Pathology Services Advisory Committee, so surely the right way to go about this would have been to ask that new Committee to investigate the level of fees and come up with suggestions which were reasonable and which offered the pathology laboratories a modest profit but certainly did not force them to make a loss. But the Minister has gone about this the wrong way. He has appointed the Committee but has not allowed that Committee to make any ruling on the fees. I certainly cannot understand what the Minister is about. The Minister told us in his second reading speech that a number of unethical practices are being carried out by some pathology laboratories and that the reduction in fees would weed them out. Senator Georges and Senator Puplick have spoken in this chamber on unethical practices. No one wishes unethical practices to continue, but the across the board action of the Minister in arbitrarily setting a fee will only affect the honest, reliable and respectable pathologist who offers good service. It will not hit at the unethical pathologists, as both Senator Georges and Senator Sir John Carrick mentioned in their speeches. If the Minister and the Health Department know the shonks, they should weed out those people by not offering them accreditation. I believe that is the way the problem should be handled. We should get rid of the unethical people by not licensing their laboratories and we should leave the ethical people to do the good job that they are presently doing. The Minister for Health is on record as saying in Queensland that there is no place for private pathology in Australia. His actions in bringing this legislation forward show that he is trying to achieve that aim. I believe that the Minister is trying to get rid of private pathology in Australia. I stand to be corrected, but I think the Minister made that statement at an Australian Medical Association convention on the Gold Coast. I ask the other medical disciplines: Who will be the next to be socialised? Will it be the radiographers or the neurologists? Who will be next in the queue to go down the socialist line? Even the Minister must now have grave doubts about Medicare, which was the first step to get doctors to work for the Government with the introduction of bulk billing. As Senator Sir John Carrick said, a great many doctors-they may be ethical doctors-have a conflict of interest. They do not know whether they should get patients to come back to see them again. With bulk billing it does not cost the patient anything to do so. Many patients are now calling on their doctors because, with bulk billing, it is not costing them anything to do so. This is running up costs in this country. It is running up the medical service debt to a point where we cannot sustain it. It is interesting to note that the trade unions in the United Kingdom are demanding private medicine and the right to the doctor of their choice as part of their employment package because they realise now that private health care provides a better service for them and their families. They realise that the national health service-that is the United Kingdom equivalent of Medicare-is letting them down badly. Senator Puplick —The unions have helped destroy it in the UK. Senator BOSWELL —They have helped to destroy the system and now they want to opt out of it. They have found that it just cannot offer them the medical care that they want for their families and for themselves. The Government should also realise what is happening to Medicare in relation to hospitals in Victoria and New South Wales. There are long waiting lists-long queues of people who want urgent surgery. Even in Queensland, the Queensland Government is putting in 80c in every dollar to maintain its hospitals. The Minister in his second reading speech made a comparison between pathology charges in New Zealand and in Australia and he came to the conclusion that they were much lower in New Zealand. I ask whether he has made a comparison with pathology charges in the United Kingdom and the United States of America. If he had done that comparison he would have found that charges in those two countries are certainly higher than those in Australia. In Queensland most of the pathology is done in two laboratories-the Queensland Medical Laboratory and the laboratory of Doctors Sullivan, Nicolaides and Partners. These two laboratories employ 900 people each and offer Queensland an excellent pathology service. They offer a 24-hour service, seven days a week, 365 days of the year and put through over one million-I think 1,300,000-pathology tests a year between them. They pick up and deliver in country towns and the results of the tests are phoned back two or three hours after the tests are done. The tests are carried out in the laboratories but there are pick-up and delivery points throughout Queensland and the northern parts of New South Wales. These two laboratories are now facing the prospect of cutting services in the country towns. They have reduced services in Cunnamulla and one or two other country areas and I am told that they will have to make further reductions in staff and further cuts in their pick-up operations in the country areas. The two laboratories are run by doctors in partnership and all the partners are specialists in various fields of pathology. The laboratories in Queensland have specialists administering the tests, so the Minister cannot say with any credibility that they are charging specialist rates without having specialist supervision. Senator Zakharov —But are the people doing the tests qualified? Senator BOSWELL —Yes, they are doing the tests. Not only are pathologists standing there doing the tests but also many of them are phoning the doctors back and offering doctors in the country areas of Queensland and the northern areas of New South Wales specialist services over the phone. They are advising them and consulting them over the phone. They are offering absolutely specialist services not only in testing but also in consulting, for which they are not charging any special fee. That is part of the service. Senator Peter Baume —You would agree that the technicians are qualified technicians working under qualified pathologists? Senator BOSWELL —Certainly. There are 900 people working for each of these laboratories and, of course, those 900 people are not specialists. I want to make that point clear. But the specialists are supervising the tests and phoning back the results and consulting with the doctors. The specialists are not doing just that but are performing other public duties, such as tutoring in the hospitals at $19 an hour. They are on various public health committees and are playing their part in maintaining the overall health of the Queensland people. The Government's decision on the reduction of rebates has already caused many retrenchments. I believe that one of the laboratories has put off 50 people and that the other is letting people go by natural wastage. I point out to the Senate that in Queensland a number of public hospitals do not have a pathology department and very few private hospitals have a pathology department. They are totally dependent on these two pathology laboratories for their tests. Also, the Queensland Government, to sustain its hospitals, is putting in 80c for every dollar, and it is a well known fact that the Medicare rebate to the Queensland hospitals is much lower than that to any other State. If these two pathology laboratories have to reduce their services, the Queensland Government will have to provide pathology services. Already the health bill in Queensland is massive and the pathology services being offered by the Queensland Medical Laboratory and Nicolaides have to be used by both public and private hospitals. The Government states that many of these tests are now done on sophisticated machines, and that is correct. These machines have been in operation for a number of years and the current fees take account of automation. What the Minister failed to take into account when he arbitrarily reduced the Medicare rebate is the high cost of running a business. It is not only the pathology laboratories that are facing the high cost of running a business, but every other business in Australia. Pathology laboratories are no exception. They use very sophisticated gear. They pay high interest rates and high lease rates for cars, computers and the machines that they use. The proposed 3 per cent productivity case, redundancy payments and the devaluation of the dollar are all forcing up their costs. They have to put up their prices to maintain their services. This Government has reduced their payments by 12 per cent. Only in the last two or three days have they had to put up their fees and make the decision that they will not be able to bulk bill people other than low income earners and pensioners. So their fees have gone up by over 3 per cent in the last few days and they will no longer bulk bill. Everyone supports the Minister's desire to rid the medical profession of unscrupulous practitioners. I do not believe that one person in Australia would not go along with that decision. But the decision of the Minister to reduce the rebate by 25 per cent will hit the ethical practices that are providing a very good service in Queensland, a service that cannot be done without in my State. Senator WALTERS(Tasmania)(9.47) —Tonight we are once again debating health legislation. The public out there listening to this debate might be forgiven for thinking that at last something is being done about the dreadful situation caused by Medicare. However, that is not so. The Health Legislation Amendment Bill certainly does not address any of the problems such as the public hospital waiting lists in Victoria, New South Wales and my State, Tasmania. Nor does it do anything about the cost of Medicare. The cost of Medicare has increased to such an extent that Government expenditure now on the health care system is larger than that of any other government department except the Department of Social Security. It would not be so bad if all the taxpayers' money being spent on health care resulted in the best health care system in the world. Far from that, the Government has created a two-tiered system. We have one system for those who can afford to pay private insurance for private hospitals. We have another system for people who pay only the levy. Let me explain. The Government introduced-we all remember this-a 1 per cent levy on our income. That 1 per cent levy was meant to cover 85 per cent of the medical fee and provide a free bed in a public hospital. It still covers 85 per cent of the medical fee, although there is talk that in the next Budget it will cover only 75 per cent of the cost of the medical fee and the patient will be expected to cover the rest. That is the rumour going around at the moment. The levy covers a free hospital bed in a public hospital-if one can get into a public hospital. Let us consider the latest figures for the large States and for my State of Tasmania regarding hospital waiting lists. In Victoria, 27,900 people are on the public hospitals waiting lists. There are 6,299 patients waiting for orthopaedic surgery alone and about 1,500 children waiting for a bed at the Royal Children's Hospital. What a shemozzle. What a dreadful situation. Let us look at New South Wales. Even though the New South Wales Government does not supply figures-one must ask why-the estimates are that the situation is very similar. There are about 30,000 people on the waiting lists in New South Wales. Those requiring orthopaedic surgery have to wait 24 months for their hip replacements. Children requiring admittance to hospital have to wait up to nine months. In my State 3,000 people are waiting for private hospital beds-2,000 on the waiting list at the Royal Hobart Hospital and 1,000 at the Launceston General Hospital. Those are the sorts of waiting lists for people who are paying their levy and who were promised a free hospital bed in a public hospital. We have this pitiful situation where those who really need public hospital treatment-the pensioners, the unemployed and the low income earners-have to join those waiting lists. Let us look at what has occurred. Before Mr Hawke introduced Medicare the Liberal Opposition warned that there would be overcrowding in public hospitals. We told the Government that if people were forced to pay a health tax they would drop their private hospital cover and the public hospitals would not be able to cope with the numbers. That is exactly what has occurred. Professor Penington, a man not given to extravagant statements, has said just recently that the cost of Medicare is out of control and the Government has to take steps to alter it. Professor Penington is an expert in health matters who was appointed by the present Government to chair the Committee of Inquiry into the Rights of Private Practice in Public Hospitals. The Government should take note of a person it considers to be an expert and should heed the advice given to it. We have people paying a levy for services they find are unavailable. If a person wants to be assured of a bed, he is forced to pay twice. Firstly, he is forced to pay the levy and, secondly, he is forced to pay for private hospital cover. Let us look at what has happened to the levy, and I have figures here from the statistician. Do honourable senators remember the one per cent levy? The average paid in 1983-84 was $191 from the one per cent levy. In 1985-86 the average is estimated to be $229 for 85 per cent medical cover and a bed in a public hospital if it can be obtained; if not, join the waiting list. If a person was a member of a fund at the time of the introduction of that levy the Minister for Health, Dr Blewett, promised that it would be shown separately on the tax form. One wonders why he broke that promise. It is very obvious why he broke that promise. He did not want the people to see, as they made out their tax forms, how often that payment from the one per cent was going up. As I said, the average has already gone up since it was introduced from $191 to $229. Many people cannot afford to pay twice. They find that they are at the end of the waiting list. The poorer in our community are competing for a bed in a public hospital with those who previously could afford to insure for private hospital cover. The Government is trying to cut costs by all sorts of means. We know that it will have great trouble with its Budget. We know that at present the economy is in such a dreadful mess that the Government is hard-pressed to try to find where it can cut costs. We have been told that a children's hospital could be closed. Friday's newspapers contained headlines that the children's heart surgery unit at the Prince of Wales Children's Hospital is to be closed by 1 July. Those surgical patients will be transferred to the Children's Hospital at Camperdown. However, the Children's Hospital has cardiac surgery waiting lists of 160, whereas the Prince of Wales Children's Hospital's cardiac surgery waiting list is 27. The article said: It is a bit hard to see how you can solve the waiting list problem by closing down one unit. There are fears of a total closure of that hospital. In light of the disastrous waiting list that already exists in the public hospitals, there are rumours that the Government is to take away $135m from the private hospitals. We all know that at present a subsidy is paid to patients who enter private hospitals-a very small subsidy, but it amounts to $135m to those patients. Because of its mismanagement of the economy, the Government is considering saving costs in that area. If that is what the Government has decided to do, the situation in public hospitals will be 100 times worse than it already is and the waiting lists so much greater. Insurance rates would rise, there would be fewer to insure, more pressure on public hospitals and more pressure on the poor, because they would not be the ones who would be able to get the beds. We know that there are fewer beds now, and indeed last year, than there were when we left government. In 1982-83 in New South Wales there were 27,000 beds in public hospitals; they now have gone to 26,000, a loss of 1,000 beds. With the population going up and the number of hospital beds going down, is it any wonder that the Government has made such a dreadful mess of the availability of hospital beds in New South Wales? The Government has tried to cover up all these errors with talk of doctor fraud and overservicing. This time, again, the Government is talking about overservicing and fraud, but it is instancing the area of pathology services. We are told that this legislation will greatly reduce the capacity for fraud and overservicing in pathology services. We have the usual types of comments from Labor members in this place. Indeed, Senator Crowley talked of pathologists being offered jobs in entrepreneurial practices at $100,000 a year. We can fix that in one fell swoop, because they would not be able to offer that sort of income to pathologists if they were not bulk billing. It is because of bulk billing that there is a problem in some of the less reputable entrepreneurial types of pathology services. How much fraud and overservicing is there? We are told by the Government that there is a lot. However, in the first half of 1985-86 the Health Insurance Commission employed 217 people at a cost of $4m to stop this so-called abuse. During that time the Commission stopped payments of $325,000 and recovered $48,000 from fraud. In regard to overservicing the Commission recovered absolutely nothing at all. This was a really cost effective exercise! It cost $4m to get back amounts of $325,000 and $48,000. If the Government were serious, if it really wanted to save money, and if it were keen enough to give up its ideology, it could stop that overservicing, as I have already said. The Government only has to withdraw bulk billing for all patients. Let me make it perfectly clear that the Opposition believes-- Senator Bolkus —Mr Acting Deputy President, I raise a point of order. The whole of Australia is listening to Senator Walters's plaintive bleatings about the medical profession without knowing that she has a direct family interest in that her husband is a doctor. I think that, if she were to be honest about this, she should make that very clear. The ACTING DEPUTY PRESIDENT(Senator Jessop) —There is no point of order. Senator WALTERS —My husband is not a pathologist. The ACTING DEPUTY PRESIDENT —I said that there was no point of order. Senator WALTERS —I am quite well aware of that. As usual, Senator Bolkus is behaving in an extraordinary fashion. Senator Bolkus —Mr Acting Deputy President, I ask for that statement to be withdrawn. I do not ordinarily behave in an extraordinary fashion. I object to that. The ACTING DEPUTY PRESIDENT —Senator Bolkus, I think that you are out of order. Senator WALTERS —If the Government were serious about stopping overservicing, if it were serious about stopping any fraud or about trying to save money and if its ideology did not get in the way, it would stop bulk billing for all patients. The Opposition believes in bulk billing for some patients. It believes in bulk billing for pensioners and for disadvantaged groups. It does not believe that all patients should be bulk billed. Of course, this is what the Government is trying to encourage. If the Government were only serious, it would not encourage doctors to bulk bill all their patients. Of course, what the Government is attempting to do is to socialise medicine. We have to make it perfectly clear that once all doctors bulk bill, when all the doctors are fully paid by the Government, we will have the socialisation of the medical profession. Overservicing is a very tricky area. Indeed, patients themselves can ask for overservicing without realising what they are doing. Again, this is caused by bulk billing. We can instance the case of a young mother taking her family along to the doctor. Perhaps she has a four-year-old daughter with an ear infection. She is able quite legitimately to say to the doctor: `Look, while I have Jimmy here would you look at him too because he has been a bit grizzly and he could easily be coming down with the same infection'. Because it will not cost her a penny she will have the doctor look at both her children. Of course, this is overservicing, but overservicing by the patient. While we have bulk billing, such overservicing is easily done. I think people have to be well aware that the Government, because of its ideology, is encouraging bulk billing. Bulk billing is encouraging overservicing and, until we get rid of the bulk billing, the Government will have to put up with continued overservicing by some of the medical profession and many of the patients. Senator SHEIL(Queensland)(10.05) —The Health Legislation Amendment Bill 1986 was described earlier tonight as being rather like the curate's egg, which was good in spots and rotten in others. On that basis the speaker was prepared to accept the curate's egg that was rotten in some spots but good in others. I think there was something a little wrong with the analogy because the only thing to do with a rotten egg is to throw out the whole egg. It is more a case of the Sunday school teacher who put a bucket of ice-cream in front of a class, gave everyone a spoon and said: `Sit around that bucket of ice-cream and you have got to show self-restraint. You are not to eat any of that ice-cream'. Of course, after a little while a couple of the children dug into the ice-cream. The teacher said: `You children are behaving unethically. There is only one way to stop you from getting into this ice-cream and that is to put you all into a strait-jacket'. That is exactly what this legislation is trying to do to pathologists in Australia. The legislation represents the normal socialist and bureaucratic response to this part of the health mess that successive governments have got themselves into since 1974 with the advent of Medibank. The basic fault-this has been mentioned by many speakers tonight-has been the promise of health care free at the point of delivery. The engine that governments have used to fulfil that promise has been bulk billing. Bulk billing is at the very basis of the whole promise. I have said time and time again in the Senate that this promise of health care free at the point of delivery is impossible to fulfil. The Government must restrict the service, it must cut the cost. An open ended promise that has to be satisfied from a limited budget just cannot be fulfilled, so the service must be restricted. The Government never blames itself for the legislation it is trying to implement. It blames doctors, patients, hospitals, administrators, chemists and pharmaceutical companies-anybody it can think of except itself. Usually, it gets its programs underway by denigrating doctors. It says that they are grasping, greedy, bloody-minded-I have heard that said-and unethical. It then subjects them to computer analysis, analysing their prescribing patterns, their visiting patterns and their practising patterns, and compares them with their area averages. If they differ in some minor way with their area average they are counselled. If they do not do what the Government wants they are hauled before medical services committees of inquiry which virtually have Star Chamber powers and discipline them, usually by using a financial mechanism. The Government started off by telling doctors what pills they could give for what diseases, how many of them and how many repeats. It told doctors the conditions for which they could put patients in hospitals or nursing homes, how long they could keep them there for and how long they would attract benefits. The Government started controlling all the different aspects of medicine and now controls are extending to the pathology area. Once the Government gets its fiery fingers on the financial throat of the health industry it will start to squeeze the life out of it. Senator Chipp —I am not unsympathetic to what you are saying, but has the AMA ethics committee done its job? Senator SHEIL —I will answer that question shortly. I am pointing out that this has been the experience of all national health services around the world, everywhere they have been tried. The one thing they all have in common is that they are all failures. Why we should follow them down the gurgler I do not know. The Government says that it has been removing the financial barrier between the doctors and the patients, but the contrary is the correct view. The Government has erected a financial barrier between the patients and the doctors. People place a far higher value on their health care than does any government. People are willing to donate more, to bequeath more and to spend more on their health than is any government. It is no small wonder that the promise of a health care free at the point of delivery attracts an enormous vote, but it reaps a withered harvest. As this Government's stranglehold tightens, there are more restrictions and controls. There are now more controls on patients, doctors, nurses, hospitals and pharmacists. The constituents of the health area are becoming more disillusioned, disappointed and dissatisfied. That is the position with the pathologists today. Instead of realising the error of its ways and reducing its role in the health care industry, the Government continues on its rampage. It does not recognise the long waiting lists, particularly for elective surgery, or the shortages of hospital beds, the shortages of nurses and the inequities of nurses' wages and education, the misallocation of funds to areas such as the esoteric, artificial resuscitation programs which are going on in Australia today, such as the acquired immune deficiency syndrome program and the drug offensive to which hundreds of millions of dollars have been misallocated, the cutbacks in research funds, and the dislocation in essential services, especially in private practice and in private hospitals. The Government simply introduces more cost cutting measures, and that is what this is. It is hoping to save $60m with the introduction of this legislation. It does not improve or expand the health services; all it does is restrict them and this Bill is a restrictive Bill. The Government introduces things such as the fraud and overservicing detection system with an army of investigators, bovver boys, and counsellors. It introduces committees of inquiry to restrict doctors in their practising patterns. It introduces quality assurance, peer review and all sorts of accreditation schemes, not just for doctors and pathologists but for hospitals, nursing homes and pharmacies. It now wants to introduce preferred provider organisations and health maintenance organisations. All these schemes have been tried overseas. They are all measures to cut costs, not to give better services to patients. They restrict services to patients and they all have been proven failures. Not one of them is a success overseas. Far from assuring quality or reducing costs, they increase costs and reduce quality. There is plenty of evidence of that from the schemes being tried overseas, so why is Australia going down that track? The Government says things such as: `The patients are too dumb to know whether their doctor is any good'. The Government says that doctors are so unscrupulous that they will exploit people when they are at their most vulnerable. The Government also says that health costs are so high that many people cannot afford them, that medical insurance costs are out of reach, that health is too important to leave it in the hands of the doctors, that people must be protected from receiving charity and that health care is their right. All these statements are untrue and, by placing itself between the patients and the doctor, the Government is denying itself the best possible curb on health costs and that is that patients themselves. Each patient when checking the account can see whether he has had the visit, whether it was out of hours, how long it took, and whether he had an X-ray or a test. It is the patients who are the best check on health costs. But, in order to fulfil this impossible promise, the Government is trying to enslave the people who provide the health care. In this case it is the pathologists. Once again, the Government is going to use its bulk billing as the engine to try, in effect, to convert private doctors into government doctors. When the Government is the doctor's paymaster, the doctor is working for the Government. He is not working for the patient. The doctor will be protecting his position with the Government rather than satisfying the patient. The private doctors will, in effect, become public servants without having any of the benefits enjoyed by public servants. Bulk billing will make government doctors, not private doctors. Government doctors can only do their best with the resources they have available to them. Heaven knows, they try to give good service, but nobody here could say that they are giving a proper service to people when one just looks at the conditions in Australia at the moment. All sorts of administrative restrictions are placed on doctors. Admission and discharge restrictions are being placed on the patients. Treatment routines and treatment restrictions exist in the government hospital service today. Hospital out-patient administrations subject patients to certain requirements. In other words, the administration of the system becomes more important than the poor little patients who walk through the front door of the hospitals. We have seen doctors and nurses withdraw their services. There is a shortage of nurses in Australia today. Although advertisements have been placed overseas in order to attract nurses to Australia, we have not had very many inquiries about jobs. As a matter of fact, there was a minuscule response to the advertisements. The hospital system has a shortage of thousands of beds. Also, there is a waiting list for elective surgery that one cannot jump over. Before Australia was subjected to this Australian Labor Party onslaught, we had health services that were the envy of the whole world. Senator Grimes —Dear, oh dear! Senator SHEIL —The Minister can laugh but that is the truth. No other country in the world had better health services than Australia. Now we have a costly crumbling shambles. The present package is designed to put pathologists into a tighter straitjacket and to reduce their incomes. The pathologists are really just the next tank off the rank as this socialist juggernaut grinds on, following the assault on our general practitioners, surgeons, nursing homes and private hospitals and hostels. The Government is gradually closing the noose. The Government never thinks right through what the effects of the implementation of its policies will be. It has been mentioned here tonight that there are going to be vast restrictions on the provision of pathology services to country areas. But, of course, that does not worry this Government because it has always had it in for the people in the bush. The Government does not like their rugged individuality and the fact that they are implacable opponents of its socialist policies. As time is running out, I will move on to outline what the Bill is going to do. The Bill seeks to introduce a new approved pathology practitioners scheme. I want honourable senators to note the word `approved'. Today, Australia possibly has the best pathology services in the world. But now the Government is going to approve pathologists who are already qualified, certified and registered and operate laboratories that have been extolled during this debate. Now the Government is going to approve them, not on the basis of their qualifications but on their ability to attract a Medicare rebate. This, in fact, is going to be the criterion. The legislation provides for Medicare participation review committees-another type of review committee-to determine whether a pathologist will be allowed to participate in the scheme, not whether he is a good pathologist. This is just another form of bureaucracy. It provides for the accreditation of pathology laboratories, when we already have some of the best laboratories in the world. Now the Government wants to accredit them. The pathologists are putting their own heads into the accreditation noose by agreeing to such a scheme. Surely the doctors on their own can work out which laboratories are good and which are bad. Laboratories which are abusing the system ought to jump out of the computers. We do not need another bureaucracy; all it will mean is more controls and more restrictions. We will have a Pathology Services Advisory Committee to advise on fees and services. So we will have more bureaucracy; a whole new section will be set up to handle that. The legislation will create also a pathology services table-this will need another bureaucracy-which will set out prescribed pathology services. The Government might have spelt that word incorrectly; I would say it means proscribed services. We will have pathologist-determinable services. Only a bureaucrat could think up a term like that. We will have another bureaucracy there. Even pathology request forms will have to be approved by the Health Insurance Commission. No longer will a letter from a doctor be acceptable; the request form will have to be approved by the Commission. On top of all this, the whole Bill is to conform with the Sex Discrimination Act, which was brought in in 1984, at a time when I was not a member of the Parliament. If I had been, I would have opposed that, too. It sounds to me very much as though this will be another bureaucrats' Valhalla. It is typically par for the course for the Government. It is just taking control of another section of the medical profession. It has been said, and I suppose it is true, that the Royal College of Pathologists of Australia is still negotiating with the Government. I do not know why the pathologists should be doing that. They are disillusioned and discouraged at the moment, but they are going ahead with all this accreditation and they probably think they are doing the right thing. I think they are being politically naive and ingenuous. The pathologists are really just fighting a rearguard action against the Government, and I think they have had their Camelot. Senator GRIMES(Tasmania-Minister for Community Services)(10.22) —in reply-One feature of this debate tonight has been that some of the speakers, for example, Senator, Sir John Carrick, Senator Walters and especially Senator Sheil, hardly referred to the Health Legislation Amendment Bill at all. I thank honourable senators for contributing to the debate. I thank the Opposition for not opposing the legislation, which is good legislation, despite the fact that it was described as a curate's egg by two speakers and despite the fact that some reference to ice cream was made by Senator Sheil-a reference I did not quite understand. Very briefly, I point out that Senator Sheil made one of his usual speeches against all controls, all government intervention, all government involvement in medicine. He said tonight that he particularly did not like the way the Australian Labor Party had done terrible things to the medical profession, by introducing computers to look at the patterns of practice of medical practitioners, by introducing counselling for medical practitioners who do not follow the pattern, by cutting back on research, and by introducing peer review and accreditation. The use of computers, the determination of patterns of practice, and counselling of medical practitioners by Government officers, looking at their practices, were introduced even before 1972 by the Liberal-Country Party Government. Senator Sheil —I did not blame the ALP. Senator GRIMES —The honourable senator did blame the ALP. Peer review was introduced by a Liberal-Country Party coalition with the agreement of the Australian medical profession, as was accreditation. There has been no cut in medical research; in fact, there has been a real increase in medical research funds in the last three years. That sort of nonsense was typical of the whole of the speech he made. Senator Sir John Carrick and Senator Withers, as they always do, blamed all the evils of the medical profession, all the evils of the health scheme, as they see them, on bulk billing. That is the politics of simplicity carried to its extreme. Neither of them produced one skerrick of evidence or one figure. They proceeded to denigrate those doctors who bulk bill in the way they complain others denigrate the medical profession. I will not go on listing the sort of nonsense they went on with. But the simple fact of the matter is that if people get up in this place and say that all that is wrong with the medical profession or the health scheme in this country is bulk billing, they are wrong. They should know they are wrong, and I wish my colleague on the other side, Senator Peter Baume, would inform them of that. Similarly, Senator Sir John Carrick talked about what a terrible thing this Government had done by abolishing gap insurance. I can remember the days when the Australian Medical Association opposed gap insurance, as did the Liberal Party of Australia and the Country Party of Australia. However, things change; it depends whether one is in government or in opposition as to whether one believes in gap insurance. To get to the specific points that were raised about the legislation, Senator Peter Baume and Senator Haines both asked for assurances that the 18 tests for which rebates are to be reduced would be referred to the proposed Pathology Services Advisory Committee. The Minister for Health (Dr Blewett) proposes to refer these 18 tests to the Pathology Services Advisory Committee for immediate review. They are the first things that that Committee will look at as part of a detailed review of the entire medical services table. Senator Haines asked when this review would occur. It is envisaged that the Committee will commence its operations as soon as the legislation is through and as soon as the Committee can be established. I cannot give her an exact date but when I can I will get an exact date from the Minister. Senators Haines and Peter Baume also queried whether the powers to refer matters to the Pathology Services Advisory Committee were too narrow and raised the question that the Parliament might wish to refer matters to the Committee. The Minister, in his second reading speech on this Bill, indicated that the power to refer matters does not limit the capacity of appropriate bodies to raise matters with the Committee. It would then be up to the Committee to decide whether or not it was appropriate to consider the matter, so not only the Minister and the Government can refer matters to the Committee in that way. Senators Sir John Carrick and Boswell very loudly asked why the Government did not ask for the books of the pathology practitioners to establish costs before making decisions. The Government wanted to and the Government would still like to do that. It is true that some pathologists, particularly the very reputable Queensland pathology company referred to, wish the Government to do so. But in the past the pathologists have always opposed this. The Australian Medical Association has refused to co-operate with the Government in its efforts to establish costs in medical practices. In fact, at its recent national congress the AMA passed motions to advise members not to co-operate with surveys of practice costs-surveys that were being conducted not by the Government but by independent consultants on behalf of the Department of Health. What more can one do when the pathologists and the medical profession refuse to co-operate; but when things happen, they say, `We will now co-operate' and they expect governments to drop everything and to co-operate with them. If they are willing to co-operate, the Government will look at it and the Advisory Committee that is being established, if it so wishes, will look at it. I believe this is sensible legislation, and I think that everybody on the other side really agrees that it is sensible legislation. I thank honourable senators for their co-operation, and I urge that the Senate give the legislation rapid passage. Question resolved in the affirmative. Bill read a second time. The Bill. Senator PETER BAUME(New South Wales)(10.28) —I thank the Minister for Community Services (Senator Grimes) for his advice about the immediate reference of the 18 most common pathology services to the proposed Pathology Services Advisory Committee. I have one other question which relates to the Medicare Participation Review Committee, which is mentioned in the legislation. The Australian Medical Association has advised me that it has some concerns about the role which this Committee might play in the oversight of pathologists. It observes that some of the matters are highly technical matters, and while it recognises that appropriate disciplinary action has to be taken, it is concerned that the technical matters should be dealt with by people with appropriate technical expertise. I ask the Minister what assurances he can give that might meet the concerns of the Australian Medical Association in this matter? Senator GRIMES(Tasmania-Minister for Community Services)(10.29) —I am advised that written into the guidelines will be that to establish the fact of overservicing, the medical sub-committee of the Medicare Participation Review Committee, which is made up of doctors, will be the group which decides that fact, but the Committee as a whole will decide as to penalty and whether action should be taken. That technical problem will be decided by the medical sub-committee, which is made up of medical practitioners. Bill agreed to. Bill reported without amendment; report adopted. Bill (on motion by Senator Grimes) read a third time. The PRESIDENT —Order! It being 10.30 p.m., under sessional order I put the question: That the Senate do now adjourn. Senator REID(Australian Capital Territory)(10.31) —I wish to raise the question of the future of the intersection of the Barton Highway and William Slim Drive. It is with considerable sorrow that I report to the Senate that during the past three years there have been five deaths at this intersection on a major road going out of Canberra. I do not know why this occurs; it is certainly a wide intersection. There are a number of signs there-perhaps too many, and perhaps this causes confusion. As a result of five deaths having occurred there, there is concern in the community about what should be done. In today's Canberra Times there is a photograph which indicates some of the complexities of the intersection. With that photograph there is a letter which refers to some of the people who have lost members of their family as a result of one of the accidents. There is also a comment from another person who uses the intersection daily. I also have a letter from the Giralang Community Association. Giralang is a suburb quite near the intersection and many of its residents use that intersection frequently. Naturally they are worried about what might occur in the future. A number of suggestions have been made as to what should be done. It would appear that the National Capital Development Commission is certainly aware that changes need to be made and it is suggested in the Canberra Times that plans to change some of the lead-in lanes would be implemented soon at a cost of about $30,000. There is another suggestion that perhaps a fly-over should be installed and that this might cost between $2m and $3m. Whatever the sum needed to correct the intersection, it is not easy to come by that sort of money. One suggestion is that there should be a `stop' sign placed against the traffic from William Slim Drive and perhaps there should also be a sign a few hundred metres back saying: `Slow down, stop sign ahead'. That might help. I ask those responsible for maintaining our road system and that intersection in particular to do something immediately and perhaps work out the more expensive solutions later. Something should be done before anything worse than has already happened occurs. It is suggested that perhaps the speed limit should be reduced but reducing the speed in the Barton Highway over a short period may cause some problems. I am not an expert in traffic, but I know that this corner is causing a great deal of worry to those who use it and especially to those who have suffered loss as a result of it. I seek leave to incorporate in Hansard a letter which I have not shown to the Minister and which was written to me by the Giralang Community Association expressing its concern and asking me to refer the matter to the Minister for Territories (Mr Scholes) for urgent attention. Leave granted. The letter read as follows- GIRALANG COMMUNITY ASSOCIATION 1 Hirst Place, Giralang, ACT 2617 3 June 1986 Senator Margaret Reid, Parliament House, CANBERRA ACT 2600 Dear Senator Reid, I am sure you are aware of the recent road death at the intersection of the Barton Highway and William Slim Drive. The fifth casualty at this intersection. We are deeply concerned that many people may be killed or severely injured before action is taken. Remember, you personally, and your family and friends are also at risk every time they use this intersection. As President of the Giralang Community Association I implore you to act immediately and use your influence to improve the safety at this intersection. The Giralang Community Association would like to see 3 immediate changes. 1. Reduction of Barton Highway speed limit near this intersection of 80 kph, reduction of William Slim Drive speed limit to 60 kph. 2. Replacement of the give way sign on the William Slim Drive entrance to a stop sign. 3. Erection of large warning signs on all entrances to the intersection, warning traffic of an extremely dangerous intersection. As the above 3 measures will only have limited success Giralang Community Association requests the intersection be completely redesigned. We would like to know the practicality of commencing work on such a design by advancing the plans for the duplication of William Slim Drive at the intersection. Yours faithfully, Bill Burmester, President Giralang Community Association 5.6.86 Senator GRIMES(Tasmania-Minister for Community Services)(10.34) —I will do as Senator Reid asks. Question resolved in the affirmative. Senate adjourned at 10.34 p.m. The following papers were tabled: Apple and Pear Levy Collection Act-Regulations-Statutory Rules 1986 No. 128. Banks (Shareholdings) Act-Regulation-Statutory Rules 1986 No. 116. Canned Fruits Levy Collection Act-Regulations-Statutory Rules 1986 No. 118. Dairy Industry Stabilization Act-Regulations- Statutory Rules 1986 No. 119. Dried Vine Fruits Equalization Act-Regulations-Statutory Rules 1986 No. 120. Health Insurance Commission Act-Regulations-Statutory Rules 1986 No. 127. Live-stock Slaughter (Export Inspection Charge) Collection Act-Regulations-Statutory Rules 1986 No. 121. Live-stock Slaughter Levy Collection Act-Regulations-Statutory Rules 1986 No. 122. Oilseeds Levy Collection and Research Act-Regulations-Statutory Rules 1986 No. 123. Public Service Act-Regulations-Statutory Rules 1986 No. 124. Radiocommunications Act-Regulations-Statutory Rules 1986 No. 125. Superannuation Act-Regulation-Statutory Rules 1986 No. 126. Seat of Government (Administration) Act- Ordinances 1986- No. 12-Air Pollution (Amendment). No. 13-Children's Services. No. 14-Children's Services (Miscellaneous Amendments). No. 15-Crimes (Amendment). Regulations 1986- No. 3-(Magistrates Court (Civil Jurisdiction) Ordinance). No. 4-(Air Pollution). GOVERNOR-GENERAL'S PROCLAMATIONS-COMMENCEMENT OF SECTIONS OF ACTS: A Proclamation by His Excellency the Governor-General was tabled, notifying that His Excellency had proclaimed the following Sections of Acts to come into operation on the dates specified: Bankruptcy Act 1966-Amendment of section 41 made by the Statute Law (Miscellaneous Provisions) Act (No. 2) 1985-9 June 1986 (Gazette No. S 264, 6 June 1986). Statute Law (Miscellaneous Provisions) Act (No. 2) 1985-Section 7-9 June 1986 (Gazette No. S 264, 6 June 1986). The following answers to questions were circulated: (Question No. 596) Senator Withers asked the Minister representing the Minister for Arts, Heritage and Environment, upon notice, on 8 October 1985: (1) What sum is allocated in the current financial year for hospitality/entertainment which may be expended: (a) by the Department; and (b) by each and every Statutory Authority for which the Minister has responsibility. (2) What were the guidelines in force as at 1 September 1985 for expenditure from the hospitality/entertainment account of: (a) the Department; and (b) by each and every Statutory Authority for which the Minister has responsibility. (3) Following upon the Statement by the Treasurer ``Reform of the Australian Taxation System'' on 19 September 1985 what action is proposed in relation to questions 1 and 2. Senator Ryan —The Minister for Arts, Heritage and Environment has provided the following answer to the honourable senator's question: (1) (a)- $9,500-Central Office $500-Australian Archives $3,000-National Film and Sound Archive. (b) Statutory Authorities $44,000-Australia Council $9,000-Australian Film and Television School $64,700-Australian Film Commission $2,000-Australian Heritage Commission $8,000-Australian National Gallery $1,000-Australian National Parks & Wildlife Service $2,000-Great Barrier Reef Marine Park Authority $3,000-Museum of Australia $8,000-National Library of Australia $1,000-Supervising Scientist for the Alligator Rivers Region (2) (a) Hospitality/entertainment expenditure within the Department of Arts, Heritage and Environment is in accordance with Finance Directions 13/1 and 13/2, Guidelines 13/1 and 13/4 and Section 13 of the Finance Manual. (b) Relevant Finance Directions and Guidelines are used as the basis for expenditure on hospitality/entertainment by Statutory Authorities within the Arts, Heritage and Environment portfolio. (3) Following the Treasurer's statement of 19 September 1985 all payments for hospitality have been monitored closely in line with Finance circular 1985/18. (Question No. 923) Senator Short asked the Minister representing the Minister for Employment and Industrial Relations, upon notice, on 18 February 1986: (1) What is the total amount of funding granted under the Community Employment Program for activities in the Arts, from February 1985 to February 1986. (2) What grants have been made to community theatre groups. (3) What is the name of the sponsoring group for each grant and for what purpose was the grant made. (4) What monitoring of those employed occurs to ensure that the target groups of long-term unemployed, handicapped, women and aborigines are given priority. Senator Walsh —The Minister for Employment and Industrial Relations has provided the following answer to the honourable senator's question: (1) $6.6 million. (2) and (3) Data on the CEP Management Information System for community theatre groups are collected under the category of Choral, Music and Theatre Groups. The following is a list of the organisations which have received grants; the amounts approved; and the purposes for which the grants were made: Brindabella Community Arts Association Inc; $16,220; trainee environmental artist Canberra Repertory Society Theatre 3; $9,211; theatre workshop trainee/storeman Canberra Dance Ensemble; $8,512; trainee dancer/administrator Canberra Youth Theatre Company Inc; $16,510; administrative assistance and assistant production manager Ensemble Theatre Project Inc; $137,000; theatre project Theatre ACT-Fortune Theatre Inc; $22,624; production assistants training project Theatre Projects; $56,942; set construction trainee project 2 Till 5 Community Theatre Co-op Ltd; $14,366; trainee community theatre administrator Cessnock City Band Hunter Music Academy; $15,516; clerical assistant Hunter Region Music Co-ordination Committee; $11,363; music workshop and art administration Tuggarah Lakes District Band; $28,285; additions and renovations to band hall Shopfront Theatre for Young People Co-op Ltd; $85,928; youth arts centre community expansion project Theatre South Co Ltd The Bridge Theatre; $95,689; a bridge to the community (development of community theatre) Maryborough Players Inc; $21,250; Aubinville Playhouse renovations Newmet Dance Theatre; $24,120; dance performances to schools Troupe Inc; $24,115; promotion of community theatre Salamanca Theatre Co Ltd; $13,840; theatre sound studio Salamanca Theatre Co Ltd; $8,698; trainee theatre technician Terrapin Puppet Theatre Ltd; $54,400; touring puppet professional staff Launceston Foundation Festival; $8,769; administrator of festival to celebrate Launceston Foundation Mersey Valley Festival of Music Inc; $9,452; trainee festival administration officer Australian Contemporary Theatre Co Ltd; $26,677; women's theatre development Australian Guild of Music and Speech Ltd; $9,563; reception and office duties Ensemble Dance Theatre; $65,588; 1985 performing season Frankston and Mornington Peninsula Arts Council; $26,440; community arts co-ordinating unit Handspan Theatre Ltd; $26,443; arts administration training scheme Handspan Theatre Ltd; $22,890; trainee administrative assistants Mill Theatre Company; $20,239; actor and administrator training project Playbox Theatre Co Ltd; $24,875; new theatre facilities St Martins Youth Arts Centre; $15,054; employment of two arts trainees Theatre Works-Eastern Suburbs Community Theatre Co Ltd; $11,221; theatre profile Time and Tide; $59,741; Port research theatre (research, write and perform 3 plays based on local stories) West Theatre Co Ltd; $49,002; community performance training project (4) Referrals to projects are made prior to project commencement and are based on agreement reached with individual sponsors on the appropriate mix of target group persons, bearing in mind the nature of project activities and target group availability at the local level. (Question No. 925) Senator Short asked the Minister representing the Minister for Employment and Industrial Relations, upon notice, on 18 February 1986: What are the names of the sponsoring organisations in the categories of `Cultural' and `Work Co-operatives' under the Community Employment Program. Senator Walsh —The Minister for Employment and Industrial Relations has provided the following answer to the honourable senator's question: The following is a list of names of organisations who have sponsored CEP projects in the categories of `Cultural' and `Work Co-operatives' from the inception of the Program on 1 August 1983 to 17 February 1986. Aboriginal Artists Agency Aboriginal Corporation of Sporting and Cultural Activities Aboriginal Resource Centre, Monash University Aboriginals Advancement League Ainslie Village Management Pty Ltd Amata Community Incorporated Armadale Town Council Arts Centre, Australian National University Arts Council of the A.C.T. Artworkers Union Ashfield Municipal Council Association of Cultures and Arts of South Australia Incorporated Australia Council Australian Film Commission Australian College of Entertainers Australian Contemporary Theatre Co. Ltd Australian Turkish Association Child Care Co-operative Ballarat and Districts Aboriginal Co-operative Ballarat Historical Park Association Ballina Players Bamaga Community Council Barrambarr Creative Centre Bellerive Community Arts and Crafts Centre Black Women in Focus Incorporated Bowraville Aboriginal Land Council Bread and Circus Community Theatre Ltd Brindabella Community Arts Association Incorporated CAS Print Workshop Incorporated Canberra Australia Day Council Canberra Community Arts Front Incorporated Canberra Dance Ensemble Canberra Philharmonic Society Canberra Repertory Society Canberra Symphony Orchestra Incorporated Canberra Youth Theatre Company Incorporated Carclew Youth Performing Arts Centre Carringbush Regional Library/Community Arts Central Coast Community Arts Group Chinese Association of South Australia Incorporated Circular Head Arts Festival City of Berwick City of Essendon City of Footscray Historical Society City of Frankston City of Hawthorn City of Northcote City of Wangaratta Co As It Italian Assistance Association Coalition on Employment Coffs Harbour Arts and Crafts Centre Coffs Harbour Shire Council Community Aid Abroad Community Arts Network, Tasmania Community Radio Federation Ltd Community Youth Support Scheme-Committee of Management of Clarence Crafts Council of South Australia Incorporated Crafts Council of Tasmania Creative School Holiday Club Ltd Crossroads Community Care Centre Dandenong Resources Co-operative Deck Chair Theatre Incorporated Department for the Arts Department for the Arts-State Library Department of Community Welfare Department of Community Welfare Services Department of Education-Adelaide Area Department of Technical and Further Education Diocese of Wagga Wagga Echuca Aboriginal Co-operative Limited Ensemble Dance Theatre Ensemble Theatre Project Incorporated Experimental Art Foundation Far East Gippsland Aboriginal Corporation Film and Television Institute of Western Australia Incorporated Fitzroy Ethnic Chinese Parent Association Focus-Adelaide Festival Fringe Incorporated Footscray Institute of Technology Forest Community Arts Centre Four Flats Youth Service Ltd Frankston and Mornington Peninsula Arts Council Fremantle Education Centre Incorporated Friends of the Campbelltown Art Gallery Gambit Theatre Incorporated Geraldton Cultural Trust Incorporated Gippsland and East Gippsland Aboriginal Co-operative Gold Coast Tropicarnival Ltd Goulburn Lieder Southern Regional Theatre Greek Community Council of Sydney Greek Orthodox Community and Church of Canberra Greek Orthodox Community of Broadmeadows Greenhill Aboriginal Corporation Handspan Theatre Ltd Hobart FM Incorporated (The-FM) Hurstbridge High School Community Education Advisory Committee Indo-China Chinese Association Inner City Music Project Italian Assistance Association Kaleidoscope Community Arts Company Kardu Numida Incorporated Katherine Town Council Kew/Deepdene Community Education Advisory Committee Kindergarten Union of NSW Incorporated Koorie Education Centre Lake Condah and District Aboriginal Co-operative Ltd Lake Macquarie Music Society Lane Cove Municipal Council Lebanese Educational Cultural Association Macau Mamabulanjin Resource Centre Manning District Scout Groups Margaret Walker Dance Centre Maryborough Players Incorporated Ministry for the Arts Minto Neighbourhood Centre Mt Druitt Youth Organisation Murray Valley Aboriginal Housing Co-operative Muse Arts and Entertainment in Canberra National Institute of Dramatic Art National Library of Australia National Trust of Australia (Northern Territory) New Patch Theatre for Young People Newcastle Mattara Festival Committee North Eastern Regional Library Nyampa Aboriginal Housing Company Open Channel Co-operative Ltd Orange Festival of Arts Playbox Theatre Co Ltd Q Theatre Group Pty Ltd Queensland Arts Council Queensland Film and Drama Centre (Griffith University) Rainbow Youth Theatre Richmond Employment Group Riverina Theatre Company Riverland Regional Cultural Trust Salvation Army Community Centre Mordialloc Salvation Army Grafton Corps Shepparton Aboriginal Arts Council Co-operative Shepparton and District Ethnic Council Shire of Healesville Shire of Korumburra Soil Conservation Service of New South Wales South Australia Visual Arts Committee South Western Metropolitan Arts Development Committee Spare Parts Puppet Theatre Spoleto Melbourne Foundation Incorporated Springvale Multicultural Resource Centre St John's Parish Centre Auburn St Saviour's Neighbourhood Centre State Library of Australia State Theatre Company of South Australia Sunshine Coast Art Group SWY Theatre Company Sydney City Council Tasmanian Theatre Trust TAU Community Association Terrapin Puppet Theatre Ltd Tharawal Local Aboriginal Land Council The Praxis Group Theatre ACT-Fortune Theatre Incorporated Theatre South Co Ltd Theatre South Co Ltd the Bridge Theatre Theatre Works/Eastern Suburbs Community Theatre Company Thebarton High School Council Incorporated Tiwi Pima Arts Incorporated Turkish (Anatolian) Arts and Culture Group Turkish Cultural Association Twofold Aboriginal Corporation University of Adelaide Victorian Trades Hall Council Warrandyte Community Workshop Co-operative Ltd Wattle Park Teachers Association West Theatre Company Western Australia Week Council Whyalla College of Technical and Further Education Wollongong Arts Council Women on a Shoestring Woodville High School Council Incorporated Work Resources Centre Yaegl Local Aboriginal Land Council Zoe Community School Incorporated 2XX Community Radio Incorporated (Question No. 927) Senator Short asked the Minister representing the Minister for Employment and Industrial Relations, upon notice, on 18 February 1986: (1) Since inception of the Community Employment Program has any project been suspended and/or terminated, due to a failure to provide: (a) audited statements; (b) any certificates as required; (c) repayments of funds expended on purposes not approved for the grant; (d) information as required by the Commonwealth or State for their monitoring procedures; and (e) assuming all normal employee responsibilities including securing all appropriate insurances; if so, what are the names of these projects. (2) Who were the sponsors. (3) What funding had been allocated and actually provided for each of these projects. (4) What action was taken. Senator Walsh —The Minister for Employment and Industrial Relations has provided the following answer to the honourable senator's question, based on information provided by State and Territory departments that have responsibility for financial and project monitoring: (1) to (4) There has been one project, the Borroloola Beautification Project, suspended on 5 December 1985 for failure of the sponsors, Warrawulla Association (NT), to obtain workers' compensation coverage for participants before commencement. A total of $152.770 was approved for the project but no grant funds had been provided at the time of suspension. The required workers' compensation cover was obtained on 13 December 1985. One project, the Public Education Project, was terminated on 7 November 1984 for failure of the sponsors, United Nations Association of Australia (ACT Division), to produce evidence of incorporation. A total of $17,638 was approved for the project, however no grant funds were provided. Funding approval was withdrawn and the sponsor notified in writing of the reason. (Question No. 1008) Senator Maguire asked the Minister representing the Minister for Employment and Industrial Relations, upon notice, on 8 April 1986: (1) What were the number of days lost per employee due to industrial disputes in those countries which are Australia's major trading partners, in the latest available time period. (2) In respect of the period in (1), what were the numbers of days lost due to industrial disputes in each of the Australian States and Territories. (3) Do some Australian States and Territories now have industrial relations records comparable to those in major trading countries. Senator Walsh —The Minister for Employment and Industrial Relations has provided the following answer to the honourable senator's question: (1) According to the 1985 edition of the International Labour Organisation's Year Book of Labour Statistics for the twelve months ended December 1984, which is the latest available time period, the numbers are: Country Days Lost Per Employee Canada... 0.352 France... 0.065 Italy... 0.426 Japan... 0.006 New Zealand... 0.328 United Kingdom... 1.147 United States of America... 0.081 West Germany... 0.228 (Average of above countries)... (0.329) (2) For the twelve month period to December 1984, according to the Australian Bureau of Statistics (ABS) publication Industrial Disputes-Australia (Cat. No. 6321.0), the numbers are: Australian States and Territories Days Lost Per Employee Australia... 0.246 New South Wales... 0.355 Victoria... 0.131 Queensland... 0.301 South Australia... 0.056 Western Australia... 0.251 Tasmania... 0.352 Australian Capital Territory... 0.093 Northern Territory... 0.367 (3) There are difficulties in making comparisons between countries. This is because the definition of what constitutes an industrial dispute, the statistical bases and data collection techniques differ markedly from country to country. Further, in most countries reporting of disputes is voluntary whereas in Australia employers are legally obliged to file a return on a dispute identified by the ABS for official purposes. (Question No. 1115) Senator Mason asked the Minister for Resources and Energy, upon notice, on 29 May 1986: When will the reply to my question, which first appeared on the Notice Paper of 12 February 1986, be forthcoming. Senator Gareth Evans —The answer to the honourable senator's question is as follows: The reply to the above question appeared in Senate Hansard of 30 May 1986, on page 3130. (Question No. 1039) Senator Mason asked the Minister representing the Minister for Social Security, upon notice, on 1 May 1986: (1) How many people in each State and Territory are currently in receipt of the Commonwealth Pensioner Entitlement Card. (2) What is the average saving in living costs per week for the pensioner who is in receipt of this card. (3) How many pensioners since November 1983, in each State and Territory, have lost their Entitlement Card because of a resultant increase in their pensioner entitlement such that it now exceeds the income limit set for the receipt of the Commonwealth Pensioner Entitlement Card. (4) What is the average saving to the taxpayer for each Entitlement Card that is withdrawn and further, what has been the total saving for each year since 1983. (5) Will the Minister for Social Security reconsider the issue of phasing out fringe benefits for pensioners once their income exceeds the limit set for receipt of the Commonwealth Entitlement Card; if not, why not. Senator Grimes —The Minister for Social Security has provided the following answer to the honourable senator's question: (1) The table below shows the number of Social Security pensioners and beneficiaries holding Pensioner Health Benefits (PHB) cards in each State and Territory as at 4 April 1986: New South Wales... 635,057 Victoria... 443,423 Queensland... 275,995 South Australia... 173,841 Western Australia... 146,827 Tasmania... 51,316 Northern Territory... 8,973 Australian Capital Territory... 12,020 Australia... 1,747,452 (2) There are no current data on this issue. A report prepared by the Social Welfare Policy Secretariat in June 1984 identified a range of possible values of fringe benefits to single pensioners and married couples in 1981-82. (3) The Department does not keep statistics of pensioners whos PHB cards were withdrawn because of an increase in non-pension income. A significant proportion of these pensioners would, in any event, have had their cards restored because of subsequent reductions in income or increases in the level of income at which entitlement to the card ceases; this level has been automatically indexed since 1 November 1983. (4) The average saving for each PHB card withdrawn is not known, and the total savings from withdrawal of the PHB card cannot therefore be estimated. The average cost to the Commonwealth of providing fringe benefits to a Social Security pensioner or beneficiary with a PHB card was estimated in July 1985 to be some $125 a year. This figure is based on expenditure in 1984-85 on pharmaceutical benefits, hearing aid benefits, funeral benefits, transport concessions and postal redirection concessions. In addition, PHB card holders with telephones may receive a telephone rental concession (currently worth $40 a year) if household income falls within specified limits. The States also incur substantial costs in respect of benefits to PHB card holders. (5) The Government keeps such matters under regular consideration. The issue is complicated by the nature of some of the benefits, which makes phasing of entitlements difficult. It is also relevant that such a phasing out of benefits could require substantial increases in expenditure by the States. Senator Button —On 10 September 1985 (Hansard, page 318), Senator Chaney asked me a question without notice regarding the agreement reached between management and workers at the Mudginberri abattoir. Senator Chaney asked whether the agreement resulted in higher wages, increased productivity and lower costs which enabled the meatworks to achieve a more competitive position and whether Australia's competitive position can be improved by other enterprises entering into the same sorts of employer-employee relationships. In my reply I undertook to pass Senator Chaney's question to the Ministers responsible. The Minister for Employment and Industrial Relations has provided the following answer to the honourable senator's question: Prior to the making of the Northern Territory Meat Processing Award 1984 by the Australian Conciliation and Arbitration Commission the meat processing industry in the Northern Territory was award free and was predominantly regulated by contract. The new Award, which is based primarily on the provisions of Part I of the Federal Meat Industry Award 1981, includes a provision (Clause 33) enabling the use, on certain conditions, of systems of payment by results. The Commission's decision was made in accordance with Principle 10 of the current National Wage Principles, First Awards and Extensions of Existing Awards, which embodies the long established practice that any new award would reflect existing rates and conditions in an industry. In accordance with the terms of the Award the owner of the Mudginberri abattoir entered into a private agreement with his employees concerning rates of pay. The owner claims that that agreement resulted in higher wages, increased productivity and lower costs. However, the Australasian Meat Industry Employees Union, which was not involved in discussions concerning that agreement, continues to have a number of serious reservations about the appropriateness of such agreements. The union was concerned about being left out of the decision making process on the form of payment which shall apply under the Award. In that context the union applied to the Australian Conciliation and Arbitration Commission for a variation of the payment by results clause of the Award. On 27 March 1986, a Full Bench of the Commission handed down its decision on the union's application. Specifically, the Full Bench decided to vary the Award to prescribe a consultative role for the union so that it will be aware of moves to negotiate a payment by results agreement, though not necessarily being a direct party to those negotiations unless requested by employees. The Full Bench also commented that it saw its decision as an attempt to encourage an essential improvement in industrial relations in the Northern Territory and that the success or otherwise of that attempt depends upon the willingness of the parties to contribute to such an improvement. The Government supports that intention and accordingly encourages the parties to seek to work towards that objective. With regard to claims that the agreement which operated at Mudginberri during the 1985 season resulted in higher wages, increased productivity and lower costs, I would refer to comments made by the Industries Assistance Commission (IAC) concerning the tally system in its 1983 Report on the Abattoir and Meat Processing Industry. Specifically the IAC concluded that it was not clear that any alternative to the tally system of payment, which is used in the great majority of abattoirs throughout Australia, would improve industrial relations or reduce the costs of meat processing. Indeed, the IAC report identified a number of cost disabilities not stemming from the method of payment of meat- workers, which fell within the responsibility of State Governments and which distorted the efficient operation of the industry. In that context I would also indicate that a number of abattoirs in the Northern Territory currently operate under the tally system. As to the question whether Australia's competitive position can be improved by other enterprises entering into similar sorts of agreements, I would point out that this really touches on one of the basic points made by the Opposition parties in the area of industrial relations, that being the need to deregulate the labour market. Deregulation of the labour market has been comprehensively and unambiguously rejected by the tripartite Hancock Committee of Review of Australia's Industrial Relations System. So far as this Government is concerned, the Hancock Committee is absolutely right. There is little doubt that deregulation is a totally impracticable policy. It involves inevitable widespread confrontation with the trade union movement and all the industrial turmoil that would produce. Such a policy would also mean that there would be no mechanism through which a wages policy could be effectively implemented. In all likelihood a wages explosion, such as occurred during Australia's last experiment with deregulation in 1981/82, would occur destroying the benefits of lower inflation, reduced unemployment and real labour costs which have resulted from implementation of aspects of the Prices and Incomes Accord. Major employer organisations have made it clear that they do not want deregulation of the labour market. For instance the Director-General of the Confederation of Australian Industry (CAI) last year stated that not only did the CAI prefer the current system of conciliation and arbitration, but so too did the majority of employers.