Monday, 22 September 1986 The PRESIDENT (Senator the Hon. Douglas McClelland) took the chair at 2 p.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. Your petitioners urgently request the Honourable Senator Grimes, Minister of Community Services, to include Communication Aids on the equipment list funded through the `Provision of Aids for Disabled People's programme. And your petitioners as in duty bound will ever pray. by Senator Grimes (from 352 citizens). To the Honourable the President, and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: 1. That following the Chernobyl nuclear disaster of 26th April 1986, the Soviet Union has not yet adequately explained to its citizens or those of the Soviet-occupied Baltic States, Ukraine and other areas affected by the radiation fall-out the potential short-term and long-term health hazards and the available modes of prevention or reduction of radiation poisoning. Neither have the appropriate medicines for substitution therapies to minimise bodily accumulation of radioactive elements been adequately provided. 2. That the Soviet Union operates many nuclear power stations without the elementary structural safeguards against radioactive spillage regarded as mandatory in the West. Of particular concern is the safety of the largest Soviet nuclear power station at Ignalina in Soviet occupied Lithuania, of similar design to Chernobyl, which already has a record of operational problems. Radioactive spillage at Ignalina would quickly contaminate the whole of Latvia, Lithuania as well as vast areas of Europe. We request that the Australian Government will, 1. Through the World Health Organisation, provide medical aid and broadcast medical information to the victims of radiation exposure following the Chernobyl disaster. 2. Through the United Nations Organisation request the Soviet Union, (a) to close down all nuclear power stations similar to Chernobyl till protective structures are built. (b) permit international inspection of such safety structures. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 14 citizens). To the Honourable the President, and members of the Senate in Parliament assembled: This petition of concern to Australian citizens asks that: 1. The Australian government exert pressure on Moscow to- a. Allow the International Atomic Energy Commission full expert investigation of the Chernobyl nuclear disaster and its human consequences; b. Allow Australian Ukrainians to send medical aid to family and friends in Soviet Ukraine; and, c. Allow free communication between Australian and Soviet Ukrainians. 2. The Australian Government- a. Launch a public appeal to help the Chernobyl victims; b. Support the removal of Russian nuclear weapons out of Ukraine; c. Support the decolonization of the USSR so that captive nations like Ukraine and the Baltic states are not exploited for Soviet Russian nuclear purposes. And your petitioners as in duty bound will ever pray: by Senator Robertson (from 23 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- There is a threat to medicine by an alliance between some greedy doctors, private health funds and private hospitals who, since the inception of Medicare have run a campaign to destroy Medicare. People, especially pensioners, are suffering. We call on the Government to investigate why our taxes are being spent to prop up private hospitals. To carry out an overhaul of the Medicare legislation to close the loopholes to prevent this exploitation. And your petitioners as in duty bound will ever pray. by Senator Childs (from 578 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that: Whereas the Australian Bill of Rights Bill 1985: (i) does not include many of the rights which are fundamental to Australian society such as the right to own property and the right not to join a trade union. (ii) by virtue of the extremely wide powers which it will give to the Human Rights and Equal Opportunities Commission, will take away many of our traditional rights such as the right to legal representation, the right to be confronted by one's accuser and the right to be heard in public; and (iii) will therefore change many of the basic aspects of Australian life without people being given the opportunity to decide the Bill's fate at a referendum. Your petitioners therefore pray that the Senate will reject the Bill of Rights in its present or any future form. And your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from 82 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of the undersigned citizens of Australia showeth: That many Australian wage and salary earners and self-employed persons do not enjoy secure retirement incomes provided by superannuation; and That the Government issued in December 1985 Guidelines for the implementation of the proposed productivity decision by the Conciliation and Arbitration Comission and draft Operational Standards for Superannuation schemes. Your petitioners therefore humbly pray that the Government: 1. Guarantees to every employee the right and freedom to select the superannuation scheme of his/her choice. 2. Protects the individual exercising that freedom of choice from any coercion, influence or other pressure which may be applied by any employer, association or trade union. 3. Will recognise only those schemes which provide genuine superannuation and reject those schemes which do not provide for- preservation of benefits to retirement vesting of employer contributions equal employer and employee Trusteeship control to ensure security of investments. And your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from three citizens). To the Honourable the President and members of the Senate in Parliament assembled: The petition of the undersigned shows: (1) The Agreement between the United States of America and Australia concerning the Joint Defence Space Research Facility at Pine Gap may be terminated by either Government on one year's notice from 19 October 1986. (2) In the event of war between the United States and the Soviet Union, access by the United States to Pine Gap's facilities makes it a probable nuclear target. (3) Access by all nations to Pine Gap's capacity to monitor and verify compliance with existing and future nuclear limitations treaties could contribute to world peace and security. (4) The people of Australia are entitled to be consulted, through their representatives in Parliament, on any extension or modification of the Agreement affecting their lives, security and welfare. And your petitioners humbly pray that: (1) The Agreement between the United States and Australia concerning the Joint Defence Space Research Facility at Pine Gap be terminated one year from October 1986. (2) Public discussion and inquiry be instituted into the feasibility of negotiating a new agreement with the United Nations during the International Year of Peace offering the verification facilities of the Pine Gap base to all nations. (3) Any agreement concerning the future use of Pine Gap be referred to Parliament for ratification. And your petitioners as in duty bound will ever pray. by Senator Sanders (from 32 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: Upon evidence from within Australia and overseas, the introduction of Plant Variety Rights legislation would not be in Australia's best interests because: 1. Plant genetic resources should remain a public resource; 2. Australia's public plant breeding programmes could be undermined; 3. Such legislation may lead to a reduction in the genetic diversity of commercial varieties; 4. There is reason to fear that choices of seed and other plant propagation materials may be restricted due to the controls placed on their use; 5. Plant Varietal Rights legislation could lead to higher costs for the grower, the consumer, the plant-breeder and the tax-payer; 6. Plant Variety Rights will lead to a further increase in foreign control of Australia's plant genetic resources. Your petitioners therefore humbly pray that Parliament ensure that it recognises the widespread public opposition to PVR and promote alternative means of royalty collection for plant breeders. And your petitioners as in duty bound will ever pray. by Senator Childs (from 28 citizens). To the Honourable the President and members of the Senate in Parliament assembled. We the undersigned citizens of Australia humbly pray that the Federal Government join with the Tasmanian Government and institute an independent review of the Callaghan Report into the Structure of Industry and the Employment Situation in Tasmania. And your petitioners as in duty bound will ever pray. by Senator Newman (from 11 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that whereas: (a) Aboriginal and Islander languages, which numbered approximately 260 when Europeans first arrived, are even more seriously endangered-already 145 have become extinct. (b) English-speaking population expansion and English-speaking mass media expansion threatens the survival of the remaining languages of Australia. (c) Aboriginal languages reflect an ethos that is truly Australian and unless steps are taken to implement language maintenance, this ethos will be lost not only to Aborigines but to non-Aboriginal Australians, and to the world. We humbly pray the Government to: 1. Through the Prime Minister's Department, provide $300,000 per annum for a guaranteed period of ten years to enable the Aboriginal community of Australia to establish a co-ordinating body to implement steps to prevent the extinction of the remaining languages, and to introduce programmes which will enable these languages to continue into the future for the sake of all Australians. This body will enable us to maximise existing financial, material and human resources, and is the least expensive way of implementing urgently needed maintenance programmes. 2. Through the Prime Minister's Department, provide finance for the establishment of Regional Language Centres-ten are urgently needed-cost $200,000 each. And we pray you may be conscious of God's sovereign purposes for our Nation. And your petitioners as in duty bound will ever pray. by Senator Lewis (from 11 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of certain citizens of Victoria respectfully showeth: that all legitimate business expenses incurred in earning or producing assessable income should be allowable deductions; that the Hawke Government's Capital Gains Tax is an unwarranted burden on the small business and rural sectors, which will severely affect their long-term viability. Your petitioners humbly pray that the Government withdraws the Capital Gains Tax legislation without delay. by Senator Short (from 86 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: 1. That the Bill of Rights will have the power to override and negate our Common Law within five years of its enactment. 2. Because the Bill of Rights is based on an Inter- national Covenant, this will take the control of our country out of the hands of the people and their democratically elected representatives, giving the power to those outside Australia. Your petitioners therefore pray: 1. That the Senate rejects the Australian Bill of Rights and all cognate Bills. 2. That as our representatives, you protect our Australian Heritage and Christian culture and values, both in the Education System, and through the media. And your petitioners as in duty bound will ever pray. by Senators Knowles (from 82 citizens) and Robertson (from 347 citizens). To the Honourable the President and members of the Senate in Parliament assembled. Your petition of the undersigned shows: That we urge you to oppose the Australian Bill of Rights Bill because: We get no legally enforceable rights under the Bill The Bill does not guarantee vital rights such as the right not to belong to a trade union, the right to own private property and not be deprived of it without just compensation and the right of choice between Government and non-Government schools. The Bill gives Canberra extra powers to change our Federal system by the back door without a constitutional referendum. The Bill gives dangerous new powers to a Federal Government Commission. Your petitioners ask that the Senate, in Parliament assembled, should vote against the Bill of Rights, support Opposition amendments and seek a genuine public debate and a referendum on the Bill. And your petitioners as in duty bound will ever pray. by Senator Knowles (from 27 citizens). To the Honourable the President and members of the Senate assembled. The petition of the undersigned respectfully showeth that: 1. The Watsonia Army Barracks contains electronic communication facilities, operated by Australian and American personnel, that gives the United States the ability to pin-point Soviet nuclear submarines, hidden in the Oceans. 2. This would make it possible for U.S. killer-submarines to destroy all Soviet nuclear submarines, while the U.S. nuclear submarines launch their missiles in a ``first strike'' attack. This makes Watsonia a potential nuclear target. A nuclear attack on Watsonia would have a disastrous effect on Melbourne. 3. The ``joint U.S.-Australia'' bases in Australia endanger rather than protect us. They also add a new menace to nuclear arms race, that must be stopped. Your petitioners most humbly pray that the Senate in Parliament assembled should close the ``joint Australian-U.S.'' electronic communication facilities in the Watsonia Army Barracks. by Senators Cooney (from 234 citizens) and Zakharov (from 90 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That we the undersigned, having great concern because of the spread of moral pollution in our nation call upon the Government to introduce immediate legislation: 1. To provide strict controls over importation, production, sale, hire or mailing of video-cassettes with the open sale of only G, PG, and M rated video-cassettes; and the total prohibition of the sale of R rated video-cassettes so that R rated films can only be viewed in an adult theatre by persons over 18 years. We totally reject the concept of ``X'' rated video-cassettes which would allow the legal sale of hard-core pornographic films for screening in the homes of our nation, which endanger our children. 2. To dramatically improve the Federal Attorney-General's Guidelines for Classification of Video tapes/discs which restrict the importation, production, sale or hire, screening in private homes and mailing by Australia Post so as to include the total prohibition of any pornographic, obscene or blasphemous video cassette, or film containing child pornography, bestiality, sodomy, group sex, violent sex acts with women, such as rape and pack rape, sadism and torture, etc. Your petitioners therefore humbly pray that your Honourable House will protect our society, especially women and children from moral pollution and its harmful effects. And your petitioners as in duty bound will ever pray. by Senator Michael Baume (from 47 citizens). To the President and honourable members of the Senate of the Australian Parliament assembled. The petition of the undersigned residents of Australia respectfully showeth: We the undersigned residents of Australia totally reject any move to cut funding to Australia-wide English as a Second Language program in schools. We request that the Australian government restore funding to the 1985 level in the 1986-87 budget. And your petitioners as in duty bound will ever pray. by Senator Richardson (from 3,311 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that: Whereas the fringe benefits tax will place a costly and unfair burden on independent schools, the fringe benefits tax will have the most damaging impact upon schools which provide boarding accommodation for children as they are also required to provide accommodation for staff members to live in and supervise the boarders. Independent schools have limited resources and this additional impost will ultimately have to be passed onto parents, many of whom are already heavily committed to the financing of their children's education. Your petitioners therefore call the Parliament to recognize that the future of Australia depends upon the education given to its children and to exempt schools from the operation of the fringe benefits tax. And your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from 61 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- There should be no introduction of payment for pensioners pharmaceuticals. All pharmaceuticals for pensioners and the general public should be through Medicare. There should be no substituting of cheaper drugs for those prescribed by the Doctor. There should be full testing of all pharmaceuticals by the Australian Authorities before they are released on the market. And that Australia should develop its own manufacturing industry in Pharmaceuticals and stop relying on all overseas multinational drug companies. And your petitioners as in duty bound will ever pray. by Senator Childs (from 296 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that: (1) France continues to test nuclear weapons at Mouroroa atoll contrary to the wishes of all the people of the South Pacific. (2) Australia is a signatory to-(1) The Treaty on the Non-Proliferation of Nuclear weapons and the Antarctic Treaty. (3) Australia is currently pressing for a comprehensive Nuclear Test Ban Treaty in the United Nations. Your petitioners must humbly pray that the Senate in Parliament assembled should: (1) Condemn and demand the cessation of French or any other Nations nuclear testing in the South Pacific or the use of such area for long range missile tests (e.g. the U.S.S.R. or U.S.A.) (2) Declare Australia will join with New Zealand and other South Pacific countries in a treaty to make the South Pacific a Nuclear Free zone in line with that section of the world recognised Antarctic treaty which expressly forbids-The placing, stockpiling, testing or carriage of Nuclear weapons and the establishment of military bases. And your petitioners as in duty bound will ever pray. by Senator Jones (from 210 citizens). To the Honourable the President and members of the Senate in Parliament assembled-the petition of the undersigned show that patients in nursing homes are not being cared for with the dignity they deserve. We call on the Government and Opposition to put a stop to this widespread abuse of the elderly in nursing homes throughout Australia. That a freeze on the exorbitant nursing home fees in all States as already operating in two. That the Government should own and operate care facilities for the aged, such as nursing homes and hostels, this guaranteeing a higher standard of care and at a cheaper cost to the taxpayer by not fulfilling the profit motive of private owners. That strict legislative action should be adopted as a matter of urgency to restrict private ownership of nursing homes, hostels and private hospitals. by Senator Childs (from 198 citizens). To the Honourable the President and members of the Senate in Parliament assembled-the petition of the undersigned shows: We, the people, object to the elimination from the pensioner free list of certain medications previously on the Pharmaceutical Benefit Scheme. Your petitioners ask that the Senate, in Parliament assembled, should review the situation and restore the free list to its original state. And your petitioners as in duty bound will ever pray. by Senator Collard (from 2,228 citizens). To the Honourable the President and Members of the Senate in Parliament assembled-the petition of the undersigned citizens of Australia respectfully showeth that: (i) the welfare of many employees and their families depends upon a healthy, expanding gold mining industry; (ii) the success of many small businesses in gold mining towns also depends upon the continued profitability of gold mining and prospecting operations; (iii) the Federal Government's proposal to introduce a tax on gold mining and prospecting represents a threat to the profitability of these industries and will therefore cause widespread unemployment and depression throughout the whole gold mining industry. Your petitioners therefore call upon the Federal Government to reject any proposal to introduce a tax on gold mining or prospecting thereby ensuring that the spectacular growth of the industry over recent years is continued. And your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from 75 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully shows that whereas: (1) Identification cards and numbers severely threaten our freedom to live unfettered by excessive bureaucratic surveillance; (2) the Government has been unable to present any realistic justification for the introduction of ID cards and numbers; We humbly pray that the Senate, in Parliament assembled should reject any proposal to inflict ID cards and numbers on the freedom loving people of Australia. by Senator Puplick (from 18 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that: (i) the fringe benefits tax will place enormous cost increases on employers throughout Australia; (ii) in so doing, the fringe benefits tax will raise the cost of employing labour particularly in remote locations and it will inevitably worsen the already high level of unemployment in Australia; (iii) much of the cost of the tax will be carried by employees as employers reduce benefits; and (iv) the cost of the tax will harm small business particularly as these businesses will be unable to pass on the cost of the tax and as a result many may be forced to close. Your petitioners therefore call upon the Government to repeal this unfair tax before it damages Australian business and thereby reduces the standard of living of all Australians. And your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from 20 citizens). Petitions received. Senator GILES(Western Australia) —In the absence of Senator Cooney, and on his behalf, I give notice that, 12 sitting days after today, I shall move: That the Co-operative Societies (Amendment) Ordinance (No. 2) 1986, as contained in Australian Capital Territory Ordinance No. 10 of 1986 and made under the Seat of Government (Administration) Act 1910 be disallowed. I seek leave to make a short statement. Leave granted. Senator GILES —This Ordinance confers a discretionary power on an official to approve professional valuers for certain valuation work. The Regulations and Ordinances Committee considers that a refusal to approve a valuer could have some consequences for that person's reputation and livelihood, and the decision should perhaps be reviewable as to its merits in order to avoid any injustice. This is a protective notice of motion to protect the Committee's freedom of action while it corresponds with the Minister for Territories (Mr Scholes). Senator WATSON(Tasmania) —I give notice that, on the next day of sitting, I shall move: That the Senate, noting that- (a) the impact and direction of the fringe benefits tax on the business community has no equal anywhere else in the world; (b) the tax breaks all previous taxation laws and conventions by taxing the payer of the fringe benefit instead of the person who receives it, and that it taxes costs rather than profits; (c) it is cluttered with anomalies and for the first time in the history of this country, taxes non-profit making organisations; and (d) it has removed much of the incentive to live and work in isolated communities, condemns the Federal Government for the confusion, uncertainty and hostility it has aroused in the community by the introduction of its fringe benefits tax legislation. Senator REID(Australian Capital Territory) —I give notice of a motion similar to that given by Senator Giles. Twelve sitting days after today, I shall move: That the Co-operative Societies (Amendment) Ordinance (No. 2) 1986, as contained in Australian Capital Territory Ordinance No. 10 of 1986 and made under the Seat of Government (Administration) Act 1910 be disallowed. Senator VIGOR(South Australia) —I give notice that, on Wednesday next, I shall move: That leave be given to introduce a Bill for an Act to terminate provisions in Acts which appropriate money without specifying the amount appropriated. Senator GILES(Western Australia) —On behalf of Senator Cooney, and at his request, I give notice that it is my intention at the placing of business today to withdraw Business of the Senate, Notice of Motion No. 1 standing in the name of Senator Cooney for disallowance of the Export Control (Unprocessed Wood) Regulations. I seek leave to make a statement. Leave granted. Senator GILES —When the Standing Committee on Regulations and Ordinances examined the Export Control (Unprocessed Wood) Regulations it was concerned that licence applicants who were refused licences should automatically be given an explanation for that refusal, to the extent that this was possible without prejudicing the secrecy of Cabinet's deliberations on wood export licences. The Committee was also concerned that if the relevant Minister's power to reconsider a decision was lawfully capable of being delegated to officials, no ministerial delegate should reconsider an initial administrative decision that he or she had taken. The Minister for Primary Industry (Mr Kerin) has undertaken to amend the regulations to accommodate the Committee's concerns on these two matters. The Minister has also agreed that after 12 months he will review the regulations in consultation with the Committee to see whether these amendments are working adequately and determine whether any further adjustments are needed to protect rights. The Minister and his officials have been helpful to the Committee in its examination of the regulations. The Committee commends the Minister for his decision to act decisively today to meet the Committee's concerns that these important regulations should, as far as possible, protect the rights of licence applicants. Normally when the Committee has settled a matter it seeks leave to incorporate its correspondence in Hansard. In this case the correspondence is somewhat lengthy and I therefore seek leave to table it for the information of honourable senators. Leave granted. Senator VIGOR(South Australia) —I give notice that, on Wednesday next, I shall move: That leave be given to introduce a Bill for an Act to establish an Independent and Multicultural Broadcasting Corporation, and for related purposes. Senator REID(Australian Capital Territory) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) points out to the Federal Government its failure to comprehend the real impact of the fringe benefits tax on the Australian community; (b) draws attention to the article in the Australian newspaper of 16 August 1986 in which it was reported that the Prime Minister (Mr Hawke) had asserted that the fringe benefits tax would not be passed on to consumers, when this is clearly the case; and (c) calls on the Government to admit that it has no understanding of the real effects of its taxation package. Senator WATSON(Tasmania) —I give notice that, on the next day of sitting, I shall move: That the Senate, noting that Australia's grain producing industries are internationally competitive, but that their full export potential is limited by difficulties in the distribution system- (a) calls on the Federal Government to initiate an inquiry through the Industries Assistance Commission (IAC) into the cost and efficiency of national grain handling, storage and transport, from the farm gate to export markets; and (b) ensure that this inquiry covers all aspects of grain handling which could lead to inefficiencies and loss of export income, including State and Commonwealth regulations, organisational and work practices, and industrial matters, believes that an inquiry through the IAC would be much more appropriate and cost efficient in present day circumstances than a Royal Commission. Senator VIGOR(South Australia) —I give notice that, on Wednesday next, I shall move: That leave be given to introduce a Bill for an Act to enact certain transitional provisions and make certain amendments in consequence of the enactment of the Independent and Multicultural Broadcasting Corporation Act 1986, and for related purposes. Senator GRIMES(Tasmania-Manager of Government Business) —I table papers in accordance with the list circulated to honourable senators. I seek leave to incorporate the list in Hansard. Leave granted. The list read as follows- 1. Government response to the report by the Joint Select Committee on Electoral Reform on Determining the Entitlement of Federal Territories and New States to Representation in the Commonwealth Parliament. 2. The Inter-State Commission-annual report 1985-86-pursuant to section 32 of the Inter-State Commission Act 1975. 3. Australian Archives-annual report 1985-86-pursuant to section 68 of the Archives Act 1983. 4. Advisory Council on Australian Archives-annual report 1985-86-pursuant to section 68 of the Archives Act 1983. 5. Tasmanian States Grants Commission-annual report 1985-86-pursuant to section 10 of the Local Government (Personal Income Tax Sharing) Act 1976. 6. Treaties-(A) Two treaties which have been signed by Australia and which require further treaty action by Australia before the treaties can enter into force; (B) Two treaties which have been signed for and ratified by Australia; (C) Seven treaties to which Australia has become a party by signature; and (D) Six treaties which Australia has accepted or to which Australia has acceded. Senator BUTTON(Victoria-Leader of the Government in the Senate) —by leave-I inform the Senate that the Minister for Foreign Affairs (Mr Hayden) left on 19 September for the United States, primarily to attend the United Nations General Assembly in New York. He will return on 8 October. In his absence, the Minister for Resources and Energy (Senator Gareth Evans) is the Acting Minister for Foreign Affairs until 25 September. From 25 September to 8 October the Deputy Prime Minister (Mr Lionel Bowen) will be the Acting Minister for Foreign Affairs. Senator CHANEY —Does the Minister for Industry, Technology and Commerce agree that left and right wing dissatisfaction with his industry policy was a significant factor in the Victorian branch of the Australian Labor Party's decision to dump him from first to third spot on the Senate ticket? In view of the fact that the preferred candidate is a leading union official who has been very critical of the Minister's approach to industry policy, does the Minister intend making any changes to that policy in response to ALP dissatisfaction? Senator BUTTON —The causes of dissatisfaction with me or with any members of the Government cannot be susceptible to analysis by journalists or, indeed, Opposition politicians. These are internal party matters which are resolved in one way or another. They are not matters which go directly to my ministerial responsibility. The Government, since it came to office, has made a number of decisions regarding industry policy and it will continue to do so on the basis of judgments by the Government itself, not by any sections of the community, whether they are in the Labor Party or outside, who would seek to impose alternative views on the Government. I do not think that the assumption can necessarily be made that, although there has been some criticism by so-called left wing circles in Victoria of some aspects of Government policy, those criticisms in any way imply that those people would be anything but more dissatisfied with what emerges from the Opposition in this Parliament. Senator ELSTOB —My question is directed to the Minister for Resources and Energy. Is Australia an importer of the platinum group of metals from South Africa? In addition to gold, what is the potential for production of platinum group metals at Coronation Hill? What is the likely resource potential of the surrounding area based on known information? Will the exploration and development of these metals serve to reduce the dependence that Australia and other Western nations have on South Africa for these metals and therefore assist in bringing about more meaningful and effective sanctions against the South African regime? Senator GARETH EVANS —I have already given some information on this to a Senate Estimates committee. Senator Durack —Find out what Senator Zakharov has to say about that. Senator GARETH EVANS —I will bear that with as much fortitude as I can command. Australia imports some 70 per cent-that is 13,000 ounces in 1985-of its platinum group metal requirements from South Africa. Australian demand for platinum group metals will increase with the increasing use of catalytic converters for motor vehicles using unleaded petrol. As to the resource potential at Coronation Hill, according to Broken Hill Proprietary Co. Ltd, exploration at that site has demonstrated between 350,000 and 380,000 ounces of gold within an area of 18,000 square metres. This mineralisation is open with potential for one million ounces of gold, 170,000 ounces of palladium and 80,000 ounces of platinum. Regionally, the total potential, including Coronation Hill and five other prospects of which we are aware and on which we have some information, invites speculation of the following level of resources: 2,650,000 ounces of gold, 200,000 ounces of platinum, 410,000 ounces of palladium and 475,000 ounces of silver. The platinum group metals discovered at Coronation Hill appear to be in a new type of deposit and could well indicate that the region is a significant new platinum province. It is evident from what I said at the outset about the total amount of our platinum imports at the moment that Coronation Hill has the potential to meet in excess of our current and future platinum and palladium requirements. However, I should add that production from Coronation Hill cannot be expected much before 1989. In the meantime, Australia's requirements will be met by imports. However, this project, if it goes ahead, will clearly give Australia a self-sufficiency and export capacity from the production of rare and strategically important platinum group metals. I emphasise that the Government's commitment, made last week, to allow the Coronation Hill project to proceed is subject to a very important proviso, that is, that it meets the necessary environmental and other relevant preconditions, including within those crucially the protection of the South Alligator catchment area from any pollution. The final point to make, and this follows also from what I said at the outset, is that the development of the mine, if it can pass those hurdles, will be a very important step in reducing Australia's reliance on South Africa for these metals. Senator COLLARD —My question is addressed to the Leader of the Government in the Senate. Does he agree with the Prime Minister's comment in the Weekend Australian that the way in which the Minister canvassed the possibility of further spending cuts was `not wise'? Has the Minister noted yesterday's criticism by the Committee for the Economic Development of Australia of the level of Government spending, and the condemnation by the National Australia Bank Ltd of the 1986-87 Budget, particularly the way in which spending cuts were achieved? Does the Minister still believe that there is a need for further spending cuts, as he clearly indicated in interviews two weeks ago? Senator BUTTON —I have not seen the reported interview with the Prime Minister in the Weekend Australian. If he said that my comment was not wise, that is right; I totally accept that. But what the Prime Minister was probably saying was that the comment was not wise in the sense that it was open to misinterpretation. Of course, the misinterpretation was seized upon very quickly by the shadow Treasurer, Mr Carlton, and by the Leader of the Opposition, Mr Howard. Those two people both seized on that statement made by me and were very quick to provide a misinterpretation of what I had said. I understand that the degree of desperation which possesses the Opposition parties sometimes leads them into that course of action, and I note that more in sorrow than in anger. Senator Chaney —This is all very insulting to the chief political correspondent of the Age. Senator BUTTON —Senator Chaney says that I am insulting the political correspondent of the Age. I would not do that; I would not dare. But let me just say that anything the political correspondent of the Age wrote was not of the same order as the comments made by Mr Howard and the shadow Treasurer, Mr Carlton. In respect of the comments made at the weekend by the Committee for the Economic Development of Australia about the level of Government expenditure, they, of course, are not relevant to the recent Budget; they are relevant to the question of ongoing Government expenditure and the philosophical assumptions which underlie that. Those people who saw the early morning television this morning would have seen Mr Tim Besley, who was associated with the CEDA group and who prepared that study, saying quite categorically that in these matters the present Government was proceeding in the right direction. Senator Dame Margaret Guilfoyle —He said the Opposition was good, too, didn't he? He went on to say that. Senator BUTTON —An even-handed afterthought, I thought, Senator; it was not the burden of what Mr Besley was saying, as I interpret it. The important point about this question of expenditure restraint is the fact that, as in everything else, the Government provides a sense of direction and leadership on these issues. I just note in passing that the assessor for Moody's Investor Services Inc., which assessed the Australian credit rating, made this comment in terms of that reassessment: One of the positive features of the Australian scene is the intelligent guiding of the ship of state. That may be a flamboyant analogy, I concede, but nonetheless, of course, true. It is in light of these matters that the CEDA comments have to be seen and that is the light in which they will be taken account of by the Government. Senator COLEMAN —My question without notice is directed to the Minister representing the Minister for Transport and relates to the considerable publicity on the grounding of the TNT Alltrans on Lady Musgrave Reef in March last year and the subsequent finding of the court of marine inquiry that the consumption of alcohol was a contributing factor in the grounding. Will the Minister outline current steps being taken by the Government in relation to that finding and could he tell the Senate what the current maximum penalty is, under the relevant disciplinary code, for being under the influence of alcohol on board or in charge of a ship? Senator GIETZELT —The Senate may be aware that a marine inquiry is taking place into the circumstances surrounding the grounding of the TNT Alltrans on Lady Musgrave Reef, which happened on 25 March 1985. It is true that, to date, the conclusion that has been reached is that the consumption of alcohol was a factor in the grounding of that particular vessel. I am able to advise Senator Coleman that the Minister for Transport has set up a special committee of advice to report as a matter of urgency on the safety and other aspects arising out of the use of alcohol aboard ships. I think honourable senators will be aware, of course, that ships are at sea for considerable periods and therefore the use of alcohol is one of the means by which the crew members are able to find a certain relief and leisure. A consequence of that, of course, is that it is not conceivable that alcohol on ships should be banned. However, it is a disciplinary offence to be on duty under the influence of alcohol aboard ships-I think that goes without saying-and under the regulations is punishable by instant dismissal. It is covered in the new code of conduct being progressively introduced aboard ships. However, as this matter is still under consideration, I will draw the Minister's attention to the matter to see whether he has any further information and wishes to amplify the answer. Senator ARCHER —I ask a question of the Leader of the Government in the Senate. I refer to the Minister's announcement of a part time Australian Space Board. Could the Minister advise what new funding and new projects are involved in the program beyond what has been funded in either current or past Budget allocations? Has the Government given the part time Australian Space Board the five-year funding commitment recommended by Sir Russell Madigan and without which he said the Government should not start at all? Senator BUTTON —Funding for the Australian Space Board and for space programs was announced in the Budget. The total funding amount, which is $5.2m, is to fund three ongoing international programs in which various Australian scientists are involved. The commitment of that amount, together with an approximate amount of $6.5m being spent by the Commonwealth Scientific and Industrial Research Organisation, is the total amount of explicit funding for space related programs. Of course, there are a number of other government programs which assist in the development of space technology and which are of general application. It is quite apparent that the funding commitment in no way meets the suggested Madigan levels. The reason for that is the need for overall government fiscal restraint. The Madigan recommendations are discussed in the back of the Press release which the Minister for Science, Mr Barry Jones, and I put out on this matter. Senator ARCHER —I ask a supplementary question. Do I take it that no new money and no new programs are involved and that the Madigan recommendations are not being met? Senator BUTTON —The honourable senator can take what he likes. I have told him what money is being made available for financing these programs. I answered the second part of the question by saying yes, the Madigan recommendations in respect of funding are not being met. Senator ROBERTSON —I direct a question to the Minister for Education. Is it a fact that Kormilda College is to be transferred from the Northern Territory Department of Education to the Presbyterian Church? If so, does the Minister believe that such a move is in the best interests of Aboriginal education? What implications will such a move have for funding arrangements between the two governments? Is the proposal in line with agreements reached regarding Aboriginal education in the memorandum of understanding? Senator RYAN —It appears that it is a fact that the Northern Territory Government intends to transfer Kormilda College to the Presbyterian Church. The Northern Territory Government took that decision unilaterally and I was somewhat surprised and concerned that it proceeded in this fashion without consulting the Commonwealth. Of course, technically speaking Kormilda is now Northern Territory property. It was originally a Commonwealth institution, established when Mr Beazley was Minister for Education. On the transfer to the Northern Territory it came under the administration of the Northern Territory Government. The college was founded as a vocational education hostel for teenage Aboriginal children from remote communities. It has had a modified success. There has been some success; there have been many failures. So the Commonwealth was not opposed to changes in the way Kormilda was being run. However, in the first instance the Northern Territory Government decided to change the institution into a fee-paying body, which raised some questions about the Government's responsibility to pay the Aboriginal secondary allowance to the Aboriginal students. That matter was negotiated satisfactorily between the Northern Territory Government and the Commonwealth in that the allowances will be paid to the Aboriginal students so that they can now afford to board at Kormilda, but there will be a corresponding reduction in the States grants to the Northern Territory. So far that arrangement seems satisfactory. However, the new decision to put the college outside Territory education administration and with the Presbyterian Church is one about which I would like to have further information before I could say that I was confident there would be no disadvantage to Aboriginal students. It may well be that the group is competent to run an institution such as this to accommodate Aboriginal students. It may be that it is not an appropriate group. I have sent Errol West, the chief adviser on Aboriginal education to the Commonwealth, to the Northern Territory to have discussions with Mr Manzie to see what will happen. One of the other changes is that Kormilda will now accept non-Aboriginal students. That will dramatically change the character of the institution. Our concerns are that any changes should be in the interests particularly of the Aboriginal students, though of all students studying there. At this stage we are still finding out what the consequences will be for Aboriginal students. Our main concern is to preserve any educational benefit they may have had. Senator ROBERTSON —I ask the Minister a supplementary question. I draw attention to the last section of my question, which I admit was fairly long. Is the proposal in line with agreements reached in the memorandum of understanding regarding Aboriginal education? Senator RYAN —It appears that at this stage it is not, but we need further information before I can come to that conclusion. Senator HAINES —I direct my question to the Minister representing the Minister for Health. Has the Minister seen reports of the appalling breach of security in the Department of Social Security in which confidential personal information held by the Department has been offered to debt collectors and credit agencies? Will the Minister confirm that the Federal Government, in its submission to the Joint Parliamentary Committee on the Australia Card, conceded that `it is recognised that no identification system can be 100 per cent secure'? In the light of this recent breach of the much greater potential for invasion of privacy with the Australia Card, can the Government justify the long-held view of the Minister for Health that the Health Insurance Commission has the capacity to develop and maintain a system of high security and integrity, particularly given the leaks that have been made earlier from that Department about New South Wales doctors' incomes? If so, can the Minister say how a repetition of such a serious lapse would be avoided in the future? Senator GRIMES —The Government is very concerned about the report in the National Times on Sunday. It is true that a person has been charged with possessing a social security microfiche. He is not a departmental officer. At the moment the Minister for Social Security, Mr Howe, is seeking a full report on the matter. In the last five years I think three or four people have been charged with misusing social security microfiche and providing such information, but I am also well aware that in my time as Minister, and in more recent times in even more cases, officers of the Department of Social Security have reported attempts to bribe them to give information to debt collecting agencies and all sorts of operators in this community who would take action of this type to seek such information. Senator Haines relates this to the Government's proposals for the Australia Card and how this recent breach will affect the proposals in future for the Australia Card. I point out that in the Department of Social Security in this case and in other cases that have been detected the problem has been the stealing of microfiche, which is notoriously difficult to keep secure. Despite the fact that microfiche has been used for so long in the Department of Social Security, very few breaches of security have been detected. In the case of the Australia Card, with the use of computers, with, I hope, the development of a data protection agency and with more sophisticated methods, in fact it will be much more difficult to breach that system than it has been to breach the social security system in the past. With the use of Stratplan and the modern computers in the Department of Social Security now, it will become increasingly difficult to breach the confidentiality there. In developing the Australia Card the Health Insurance Commission will have to have a far more sophisticated system of both identification and security than it has at the moment. No one is arguing with that; the Government has always said that. I believe that such a system can and will be developed. It will certainly be far superior to any system that we have now. Confidentiality is always a problem in departments such as the Department of Social Security, but mechanisms for overcoming the difficulty are to provide a greater certainty of detection when such breaches occur and to provide adequate penalties. The penalty for any officer in the Department of Social Security who breaches confidentiality is now a fine of $5,000 or imprisonment for a period not exceeding two years, and it is an indictable offence. It is that sort of thing, plus the certainty of detection, which keeps the level of breaches down now. It is that plus modern security techniques which will keep breaches down, or eliminate breaches, in the case of the Australia Card. Senator MAGUIRE —Has the attention of the Minister representing the Treasurer been drawn to an advertisement in the Australian this morning by the Australian Federation of Employers on the fringe benefits tax? Can the Minister say whether the claim is accurate that a $10 donation to the AFE campaign could save the average small business some $6,000 per annum if the fringe benefits tax legislation were repealed? Is the figure quoted of $6,000 per annum possibly one measure of the extent of tax avoidance which has been occurring in some quarters in the community? Does the Minister agree that the long overdue crackdown on tax avoidance through the fringe benefits tax is one key to the financing of the Government's income tax cuts which will apply to most Australians in December? Senator WALSH —The answer to the last part of the question is yes, as is the answer to the first part-I did see this advertisement. It has photographs of Mr Bob Ansett, who a couple of months ago was widely advocating that the law should be broken, and Mr Andrew Hay, who of course is noted as a former private secretary to Mr Lynch. I do not know whether in that capacity he organised the tax free gains that came from the corrupt Stumpy Gully land deal, but he probably would have known about it. The other photograph is of Mr McLachlan, and I will say something about Mr McLachlan in a while. The claim that the average small business could save $6,000 is patently false, as I would expect a claim coming from those three gentlemen to be. If one were to take the number of small businesses in Australia to be 300,000, which is a fairly conservative estimate on the assessment most people would make, that would mean that the fringe benefits tax would yield $2 billion. If that were true, it would illustrate, as Senator Maguire's question suggested, that the incidence of tax avoidance-cum-evasion in this area is very much greater than the Government estimates it to be, because the Government estimates that it will be $325m in this year and $575m in a full year. In respect of Mr McLachlan and the National Farmers Federation's high profile participation in an issue which has nothing to do with the interests of the great majority of people it claims to represent, I have this to say: The great majority of farmers will not be affected by the fringe benefits tax at all, but the response of the National Farmers Federation, when this issue first arose, was to join Mr Ansett and to advise its members to defy the law and not to pay the tax. As I said, the NFF ran a high profile media campaign against the tax. It published advertisements which were packed full of misinformation, and the NFF President, in his capacity as a member of the Australian Federation of Employers, continues to do that. The NFF advised its members to burn the Australian Taxation Office information booklet. More recently it complained about the lack of knowledge of fringe benefits tax administration, a lack of knowledge to which, of course, the National Farmers Federation's exhortation to its members to burn the information booklet would have contributed substantially. But even more alarming are the reports that the National Farmers Federation will endorse the Federal Opposition's flat tax proposal under which, according to the NFF's own estimates of farmers' incomes and the more reliable estimates which are put out by the Bureau of Agricultural Economics, the overwhelming majority of farmers would pay more tax than they do at present. A flat tax might suit very well the interests of the National Farmers Federation President and his fellow IXL directors, but it would be difficult to devise a taxation change more punishing to the people he purports to represent. Indeed, we are in the extraordinary position where the National Farmers Federation President vehemently opposes the tax which few farmers will pay and simultaneously advocates a tax which will require the great majority of farmers to pay more. My advice to any farmer who thinks it might be worth contributing the $10 to the Federation of Employers' campaign to oppose the fringe benefits tax should ask himself whether it is he, or someone else such as Mr Hay, Mr Ansett or Mr McLachlan, who really stands to benefit. Senator PUPLICK —My question is directed to the Minister representing the Minister for Science. I ask: Does the Government accept that a sound patent system contributes as an integral part of industry policy and can positively contribute to economic growth and development? Have both the 1984 report of the Industrial Property Advisory Committee in Australia and the 1986 United Kingdom White Paper on Intellectual Property and Innovation strongly recommended expanded access, especially for small business, to patent databases? If so, can the Minister explain and justify the Government's recent decision to close the Technology Information Branch of the Patents, Trade Marks and Designs Office, a decision which will hamper the vital process of technology transfer and be a particularly savage blow to small businesses which will need access to current patent information. Senator BUTTON —I will direct that question to the Minister for Science and obtain an answer as soon as I can. Senator McINTOSH —I refer the Minister for Education to an article which appeared in the Sydney Sunday Telegraph on 21 September 1986 and which reported that teachers and students who were upset about the English as a second language program intended to march on the electorate office of the Treasurer. In that article the New South Wales Teachers Federation multicultural co-ordinator was reported as having said that the Minister did not seem to have any conception of the importance of the ESL program or how outraged the ethnic community was. Can the Minister inform the Senate of the results of meetings held last week with members of the New South Wales and Victorian parliaments and the Federation of Ethnic Community Councils? Senator RYAN —I am able to report a satisfactory outcome to those very significant meetings. I am also able to report that there has been constant discussion between my office and the State Ministers' offices about a satisfactory resolution of the problems created by the cuts since the Budget was announced. So the suggestion by members of the New South Wales Teachers Federation that the Commonwealth is not informed about concerns in the community is absolutely wrong. As there have been members of several delegations to me and to my colleagues, they must know it to be wrong. I note too that they intend making some sort of demonstration outside Mr Keating's electorate office. I really think they would be better advised to have rational, sensible discussions with the New South Wales Government. The outcome of the discussions which the Prime Minister and I held with Premier Unsworth, Mr Debus, the Minister Assisting the Minister for Education in New South Wales, and Mr Cathie, the Minister for Education in Victoria, was that money was available unallocated-- Senator Chaney —Tell them to demonstrate in front of Mr Keating's Sydney residence. They will not have to go so far. Senator RYAN —Senator Chaney has no interest in these matters at all. I have made it clear to the Senate before, but it was made very clear and understood by the Victorian and New South Wales governments, that money is available through the extra general recurrent program and can be allocated to the ESL area if the State governments give a high enough priority to it. Some $38m is available under this element of the Commonwealth's program, and the cut in question was $27m. Further, $4m has already been allocated to the ESL program. The top priority for submissions under the participation and equity program will be for projects serving the needs of children with non-English speaking backgrounds. Of course there is $24m available under that program. It is clear to those honourable senators who have a genuine interest in this matter-I know that many, at least on this side of the chamber, do-that there is an adequate provision of resources that can be directed to the ESL area. Indeed it is the Commonwealth's wish, and it will be a requirement, that the allocation of extra recurrent money will take into account the ESL needs of children from non-English speaking backgrounds. The outcome of that meeting and of the subsequent meeting with FECCA, the Federation of Ethnic Communities Councils of Australia, I think, was most satisfactory in making it clear to these bodies that the money is available and that it is really up to the State governments to allocate a sufficient priority to them so that it can be used for those purposes. I would like to take this opportunity to lay to rest some of the very mischievous rumours in the ethnic communities about this matter. For example, there are rumours that the Commonwealth wishes to see the training of ESL teachers reduced to a derisively short period. That is quite wrong. The Commonwealth has expressed no view at all on the training of ESL teachers. Indeed, of course, the employment of ESL teachers, their in-service training and so forth, are very much matters for State governments. The Commonwealth has no direct or indirect role in the employment or in-service training of teachers in this area or any other area. I do not know why some people see it as in their interest to start running around with these silly rumours, but I am concerned about them because they cause genuine distress and anxiety among the ethnic communities. It has been a long answer, I appreciate that, but the Commonwealth does take very seriously the need to find ways of giving adequate resources to this very important program. We have done so, and the ball is now in the court of the State governments. I am happy to report that I believe that all State governments will respond and accord a sufficiently high priority so that the level of services involved in ESL to children of non-English speaking backgrounds can be retained. Senator BROWNHILL —My question is directed to the Minister representing the Treasurer. In reply to Senator Parer on the last sitting day, the Minister indicated that for fringe benefits tax purposes log books for motor vehicles would need to include only private usage. I ask the Minister whether he is aware of taxation ruling No. MT2026 which states: To establish this private use proportion, it is a requirement of the law that records evidencing the total kilometres travelled by the car during the relevant period be maintained. The total number of private kilometres is determined by deducting from that the kilometres travelled on business journeys, which are required to be evidenced by log book entries. So that the confusion and uncertainty in the community can be cleared up, would the Minister clarify for the Senate who is correct-the Treasurer or the Commissioner of Taxation? Senator WALSH —As I recall it, when I was asked that question Senator Parer stated that the Treasurer had said this. In my reply I think I said I believed that to be so, that the Treasurer had said this, and that I understood it to be correct but I would seek a more definitive response from the Treasurer. I am sorry I do not have one yet; I will try to get one. Senator BROWNHILL —I wish to ask a supplementary question: Who is correct-the Treasurer, who has been reported as saying that, or the Commissioner? Senator WALSH —Overlooking the implication that one or the other is incorrect-I do not accept that as being the case-Senator Brownhill will have to wait for the definitive answer that I said I will seek from the Treasurer. Senator McKIERNAN —Has the attention of the Minister for Finance been drawn to a copy of a speech made by Mr Charles Copeman, Chief Executive of Peko-Wallsend Ltd and a leader of the New Right, to a Liberal Party lunch in Perth on 1 September 1986? In particular, has the Minister's attention been drawn to a proposal contained in this speech on a new form of structure and power sharing of government where the States would be given additional and enlarged powers? I ask the Minister: Firstly, what would be the economic and social consequences to the people of Australia if the Government adopted this proposal? Secondly, has a similar or like proposal ever been attempted before and, if so, when? Thirdly, who was the architect of this proposal and are the people of Australia still paying for these errors? Fourthly, has the Minister seen Press reports concerning the statement by the Leader of the Opposition that he supports the policies of the New Right? Senator WALSH —I have seen reports of Mr Copeman's speech and, indeed, I think I have read it all the way through. If I may say so, I read it with some amazement. What really amazed me was that such a speech could have been delivered to a meeting sponsored by the Western Australian branch of the Liberal Party. According to Press reports, that speech was extraordinarily well received. As the question implies, Mr Copeman floated an idea that had once been floated but not proceeded with by a former Prime Minister, Mr Fraser, and I will say a little more about that later. Two things were particularly notable in Mr Copeman's speech, in respect of his suggestions on government and the division of constitutional responsibility. The first was he said that the Commonwealth would have residual functions after most of its present functions had been devolved to the States and that the funding for those residual functions would be on a basis of a per capita levy at a rate agreed by the States. Just as a matter of political organisation, Mr Copeman's prescription was unworkable because having deprived the Commonwealth Parliament of the power to levy its own taxation for its own revenue, as he would if the States could not agree, there would be no way in which the per capita levy could be applied. More importantly, particularly in the Western Australian context, if such a policy were to be implemented, it would remove entirely the present financial equalisation policies which are carried out by the Commonwealth Government, normally on the basis of recommendations by the Grants Commission, policies which pay to the State of Western Australia, for example, $250 a head more from Commonwealth sources than the six-State average. In other words, Mr Copeman's policies, if actually implemented, would deprive Western Australia of some $375m in income. I find it quite astounding that that proposition could have been enthusiastically received, if one is to believe the Press, by the Western Australian branch of the Liberal Party. So let it be noted, if that is the case, that the Western Australian branch of the Liberal Party is committed to policies which would deprive Western Australia of some $375m in income. As I indicated before, a similar proposal was floated in 1975 by the former Liberal Prime Minister, Mr Fraser. It was not implemented because in the end Mr Fraser was not an extremist. I note in the last part of Senator McKiernan's question reports that the present Leader of the Opposition supports this and other policies of the New Right. I believe that to be so not necessarily because Mr Howard actually believes in those policies but because he is a captive of the right wing extremists who are on the brink of taking over the Liberal Party and he does not have the strength to resist them. It does not surprise me that he endorses those policies but it would surprise me if he believed in them. Senator WALTERS —My question to the Minister for Education relates to an answer that she gave Senator Coleman during Budget week concerning cuts to the bicentennial program on Australian studies at the tertiary level. The Minister in her answer correctly said that the tertiary studies project had not been cut, but added: . . . the Chairman of the Bicentennial Authority and I have agreed today that there will be an additional $1m for new work in the Australian studies area. That is not accurate. Is it not a fact that no additional money has been allocated to any area since the board made its decision on where the cuts should be made? Is it accurate to say that the Chairman of the Australian Bicentennial Authority in that media release following the Budget said that there had been a $7m cut to programs involving special interest groups, including education, Aboriginal affairs, unions, women, youth, multicultural interests, the aged and people with disabilities? Is the $1m to which the Minister referred the money that the board decided to allocate more than three months ago, long before the Budget decision to make cuts in this area? Senator RYAN —I am not sure of the purpose of Senator Walters's extremely long-winded question. The outcome of a series of discussions between the Australian Bicentennial Authority and the Cabinet with regard to reductions in the program was that there were cuts in a number of areas, as Senator Walters has pointed out, but in the case of Australian studies the tertiary element was not cut and there will be an additional $1m-that is, $1m more than the amount allocated in the previous Budget. That $1m may, indeed, have been agreed earlier by the board and the Chairman but it would not have been proper to announce that allocation because all the bicentennial estimates were up for consideration by the Expenditure Review Committee. Until the Budget was finalised, the question whether a program was or was not to be cut was not settled. Senator SIBRAA —My question is to the Minister for Veterans' Affairs. Last week, in the hearing of Senate Estimates Committee F, the Minister confirmed that he had `some reservations' regarding the decision-making processes of the Australian War Memorial, a statutory authority under his control. Will the Minister comment on the sources of his information? Has the Returned Services League been involved in discussions on this matter? Senator GIETZELT —Under the Australian War Memorial Act 1980 the control of the Australian War Memorial is vested in the Council, to which the Minister of the day has the opportunity to nominate 10 members. As well, there are three ex-officio members from the armed services in their capacities as Chiefs of Staff of their respective service areas. In respect of administration of the Australian War Memorial, the Minister's powers under the Act are fairly restricted, so the managerial responsibility rests clearly in the Council's hands. Within the past year, certain information came to my attention that showed that some matters had not received the sort of care and attention that should have been within the responsibility of the administration of the Australian War Memorial. Those matters were drawn to the attention of the Council. In addition, I took certain steps which were available to me, within the restrictions of the Australian War Memorial Act, as the Minister responsible to Parliament for the care, control and management of the Australian War Memorial. In April this year, I referred some of those matters to the Auditor-General and I will shortly receive a confidential report in respect of not only those matters to which I drew the Auditor-General's attention but also other matters which he subsequently discussed with me. In addition, I found that, in respect of a number of matters which involved responses by me or by the Minister representing me in the House of Representatives and other matters, the information provided to me by the Director was such that I had to say to the Council that I had lost confidence in the Director. To give but one example, a question was asked of me following a report in the Canberra Times in September last year. When I replied in this place to the question, the information which had been provided to me by the Director was clearly at variance with the facts. At this stage I will make no more comment on that other than to say that that is one of the many matters I have referred to the Australian War Memorial Council and to Mr Greg O'Connor of the Department of Veterans' Affairs for investigation, some of those matters being in response to questions placed on notice by the shadow Minister in the other place, Mr Tim Fischer. All I can say at this stage is that those matters, the subjects of reports from the officers of the Department of Veterans' Affairs and the Australian War Memorial Council, which is delegating its executive officer to consider these and other matters, are the subject of further consideration by the Council, on which I place total managerial responsibility for these matters. It would be unfair of me to detail for Senator Sibraa the issues which are still the subject of further investigation except to say that in my judgment those matters are sufficiently serious to require investigation and to be referred to the Australian War Memorial Council. I am sure that in due course the processes will resolve the issues. Senator MICHAEL BAUME —I address my question to the Leader of the Government in the Senate. Following the second successive quarterly fall in manufacturing output in Australia, revealed last week by the Australian Bureau of Statistics, and the survey carried out by the Confederation of Australian Industry and Westpac Banking Corporation showing further deterioration in manufacturing industry in the September quarter and a worse outlook for December, when does the Minister expect the desperately needed general recovery for Australian manufacturing industry to take place, particularly in the face of the high interest rates, anti-business taxes and excessive labour costs-the burden of which is to increase by at least a further halfpenny after this weekend-that are the consequences and centrepiece of the Government's present economic policy? Senator BUTTON —Senator Baume has quoted from several sources. When he speaks, he quotes from several sources; he speaks with a forked tongue. He might be Steve Martin on one occasion, Patrick Partners on another and Senator Michael Baume on a third. But the two sources from which he quoted are now a little older than some more recent sources. Senator Michael Baume —But I was always No. 1. Senator BUTTON —Yes, in the honourable senator's own estimation. The recent survey by the Australian Chamber of Manufactures, which is one document to which the honourable senator did not refer, is a little more encouraging than the earlier information to which he did refer. An important point about the recent survey by the Australian Chamber of Manufactures, which is not bullish in terms of anticipations for the next three months, is that a very significant number of respondents were much more optimistic about the future than they have been for a considerable time. Senator Michael Baume —Are you? Senator BUTTON —Yes, I am. The reason for that is simply a change in attitude from the days of the previous Government, when companies looked to the next quarter's profits as the be all and end all. More and more manufacturing businesses in Australia are looking further ahead. They are devoting much more attention to the things that make for strong companies and strong industries rather than relying on excessive levels of protection, such as the previous Government was always prepared to provide them with, and a variety of things of that kind which were the hallmarks of failure in the 1960s and 1970s. For example, in the 1960s and 1970s, particularly the 1970s, investment in Australian manufacturing went down, down, down. In the 1970s under the previous Government, research and development activity in the private sector went down, down, down. The only things which went up, up, up were the private profits of speculators with companies such as Patrick Partners, perhaps. But in the manufacturing sector the trend was all down. Those trends have been greatly reversed and they are the important things relating to the long and medium term future of manufacturing industry. Those are the sorts of things which produced the results in the Chamber of Manufactures survey. The CAI-Westpac survey was based on their normal quarterly report and looked forward, with that great vision, to the next quarter's outlook. It is no secret-it is quite inherent in the Budget Papers-that we, as a government, anticipate some difficult months in the next few months. But that is really not the important point. The important point is whether the right direction is being taken and whether the right policies are being put in place in order that the manufacturing industry's position may be strengthened generally. Senator JONES —My question is directed to the Minister for Finance representing the Minister for Employment and Industrial Relations. Has the Minister's attention been drawn to the latest unemployment figures? Do these figures show that, of all the States, Queensland again has recorded the highest unemployment rate in Australia? Can the Minister indicate whether Queensland's unemployment performance is directly attributable to the lack of economic expertise displayed by the Premier, as Treasurer of that State, since he assumed office? Senator WALSH —Oddly enough, my attention has been drawn to the most recent unemployment figures, which are for the month of August. They show that in August the Queensland rate soared to 9.4 per cent, which was not only the highest in Australia but also August was the fifth consecutive month in which Queensland recorded the highest unemployment rate of any State. Moreover, in only three of the last 35 months since the last Queensland election has Queensland had an unemployment rate below the national average. So for 32 of the last 35 months the rate has been above the national average, and for each of the last five months it has been the highest of any State. So not only is the Queensland position bad relative to the rest of Australia, but also it is clearly deteriorating relative to the rest of Australia. When the Premier made his last policy speech in 1983, less than 15 per cent of the nation's jobless were living in Queensland. Now almost 20 per cent are living in Queensland, which implies a growth in the number of unemployment benefit recipients-and, of course, that sort of growth has happened. Between August 1985 and August 1986, the number of UB recipients in Queensland increased by a massive 17 per cent. So we have now reached the situation in which there are more UB recipients in Queensland than there are in Victoria, despite the fact that Victoria's labour force is some 65 per cent greater than that of Queensland. It has been the custom of the Premier to blame this extraordinarily high rate of unemployment in the State of Queensland on the alleged movement of people from the South to laze in the tropical sun of Queensland and draw unemployment benefits. But the truth, of course, is that, on the latest information, of people in the prime working age group of 20 to 34, more than 5,000 have left Queensland. They have voted with their feet and gone to Labor governed States where they have more chance of obtaining employment. Senator Jones also asked me whether the disastrous state of the Queensland labour market and the disastrous unemployment situation in Queensland were attributable to the mismanagement of the Treasurer. I guess it is hard to get absolutely definitive evidence that that is the case, but the circumstantial evidence is so powerful that one finds it difficult to avoid any other conclusion. Senator CRICHTON-BROWNE —Is the Minister for Resources and Energy aware that the Senate Standing Committee on National Resources, as a term of reference given by the Senate, is presently examining the resources potential of the Kakadu National Park, including Goodparla and Gimbat, and that the Committee will report on the desirability or otherwise of mining within the park? Why has the Government chosen to make its recent decision on mining in the park without the advantage of the Committee's evidence and deliberations? It would seem that the decision does not have the urgency which has been imposed on it by the Government, other than for party political reasons. Senator GARETH EVANS —I am surprised that Senator Crichton-Browne does not think that there is any urgency at all in resolving the question of access by mining companies to potentially highly prospective land in stage 3 of the Kakadu National Park. I am sure that the mining companies with which he deals would be very interested to hear from Senator Crichton-Browne to that effect. That is not the point of view that has been put to us-that is, that the status of this area has been uncertain for far too long already and it is important to clarify it as soon as possible. That is a view with which I am entirely sympathetic. The Government would appreciate and is looking forward to the work of the Senate Standing Committee on National Resources under the chairmanship of Senator Zakharov and, if there is any prospect of the work of that Committee being accelerated to such an extent that its report is to hand within the next few weeks, the Government would certainly have regard to that before making its final decisions about the future of the stage 3 area. But my understanding is that the report is still quite a long way from fruition and possibly cannot be expected this year. I would stand corrected on that if there were any correction. Under those circumstances I feel that it is difficult for us to do other than proceed to make a decision on the kinds of principles that I have already enunciated. Senator GILES —My question is to the Minister for Community Services. What is the Commonwealth Government's response when requested by hospitals to establish child care facilities for nursing and other staff? Senator GRIMES —The response is first of all to look at the proposal to see whether the hospital wants to establish a work-related centre run by a community group and accessible to members of the community as well as the staff nursing in that hospital. If the proposal is just to open a work base centre purely related to the staff in the hospital, the Office of Child Care in general does not fund such centres. Such centres, providing child care of that type, are in fact providing another condition of work and I believe that that runs contrary to the philosophy of the Government and the Office of Child Care which believe that we should provide child care services in this area which are community based and accessible to the community. Of course, hospitals are sites where children's services are frequently needed. There are numbers of women in the community who have skills and training in nursing and who would like to return to the work force, but one of the reasons that inhibit them is the lack of adequate child care. That applies also to other people who work in hospitals and to some people who have to visit hospitals regularly as patients or assisting patients. For that reason the Government has been willing to open children's services or child care centres in the vicinity of hospitals and hospitals have been willing to assist the Government to do so. Inevitably, in those circumstances, we end up with a centre which is accessible to nurses and those who want to work in the hospital, but which also provides a general service to the whole community. In my experience, estimates of the use the child care centre will be put to by members of nursing staff and others in hospitals are generally too high. Some centres have been opened in or near hospitals and the use to which the centre has been put by the hospital staff has been considerably less than had been estimated before. For that reason and for others, it is better to have a community-based centre nearby as a buffer in circumstances and at times when the centre may be underused by those who apparently have great need for it. Depending on the State, a number of centres are now associated with hospitals. Many are recurrently funded by the Office of Child Care; others are not. I think we will continue to have a mixture of work-based and work-related centres in areas such as this. In this way we shall get some of the flexibility we want in the children's services program. Senator BUTTON —Last Thursday, in answering a question by Senator Chaney, I may have misled the Senate in relation to industrial disputation in the steel industry. In giving the answer I said that in regard to industrial disputation in the steel industry 43,000 man hours had been lost in the last two years of the Fraser Government and something like 4,000 man hours had been lost in the last calendar year under the present Government. What I in fact gave, and I apologise, were the approximate figures for Port Kembla. The correct figures are these: In 1981 the man hours lost under the Fraser Government were 70,430 for the industry; in 1982 they were 46,255; and in 1985, which was the comparative year I gave for Port Kembla, the total in the steel industry was 8,553. There has been a reduction of one-tenth in the level of industrial disputation in 1981 and about one-fifth of the industrial disputation and man hours lost in 1982. Senator Michael Baume —With the loss of how many jobs over that time? Senator BUTTON —None since the steel industry plan was implemented. Senator GARETH EVANS —Last week Senator MacGibbon asked me a question, in my capacity as Minister representing the Minister for Defence, about what we were doing to protect United States of America and United Kingdom ships here in Australia as part of the 75th anniversary celebrations for the Royal Australian Navy. I am advised as follows by the Minister for Defence: The Government has a clear-cut policy of supporting naval visits by the ships of friendly navies. The ships visiting Australia now are visiting in accord with that policy. They are also here at the specific invitation of the Government to help celebrate the RAN`s 75th anniversary. This is of particular pride for this Government as it was, of course, the Fisher Labor Government which established the RAN. Our objective is to ensure a happy and safe visit and not to go around the country trailing coats to suit everyone's political purposes. We note warship visits have been made to Brisbane and that tugs were provided to the USS Paul Foster to assist it leaving Brisbane this morning. We are also pleased at the commitment of union co-operation for the birthday celebration in Sydney. Senator GIETZELT —The Minister for Territories, the Hon. Gordon Scholes, has provided me with further information. I should like therefore to expand upon an answer I gave to Senator Reid's question about the increase in Australian Capital Territory housing loan interest rates on Wednesday, 17 September. By increasing the interest rates on all outstanding Commissioner for Housing loans to 13.5 per cent, where the interest rates on those loans is not already 13.5 per cent, some $800,000 in additional revenue will be generated this financial year. In a full year, about $1.6 million would be raised. This money will be used to provide additional Commissioner for Housing loans, thereby enabling people who could not otherwise afford it to own houses in the Australian Capital Territory. The additional revenue generated by increasing the interest rates on outstanding Commonwealth of Australia loans to 13.5 per cent will be used to assist in reducing the Government's overall Budget deficit. This measure is expected to generate some $1m this financial year and $2m in a full year. Senator CHANEY(Western Australia-Leader of the Opposition) —by leave-In the course of an answer to a question by Senator Maguire today, Senator Walsh engaged in one of his usual bucket jobs; on this occasion about Mr Andrew Hay. He said: . . . Mr Andrew Hay, who of course is noted as a former private secretary to Mr Lynch. I do not know whether in that capacity he organised the tax free gains that came from the corrupt Stumpy Gully land deal, but he probably would have known about it. I would not seek the leave of the Senate to defend the living against the attacks of Senator Walsh, because there would not be sufficient time in the day to do it; but since he has chosen to attack the late Sir Phillip Lynch, I thought that in fairness to Sir Phillip's widow and children the record should be restated. There were allegations of impropriety relating to a land transaction at Stumpy Gully in Victoria during the 1977 election. Those allegations touched on Sir Phillip Lynch and my recollection is that he stood down from his Ministry at that time. He was extremely ill at the time and was in hospital. The Government of the day insisted that the matter be fully investigated. An independent counsel, Mr Stephen Charles, QC, was appointed to examine the matter and was given free access to anything he required. In due course Mr Stephen Charles, QC, gave an opinion in which he indicated that the then Mr Phillip Lynch had been guilty of neither illegal nor improper behaviour. It was on that basis that Mr Phillip Lynch returned to the Ministry. Since that time-since I suppose we should be able to vouch for Mr Stephen Charles, QC-Mr Stephen Charles has been retained by the Commonwealth in a number of important matters, including as counsel for the Murphy inquiry which has been recently discontinued by the Government. Mr Stephen Charles was at that time, as I recall, the Chairman of the ethics community of the Victorian Bar Council. I very much regret that an allegation made at election time in 1977-an allegation which was very fully examined at the time and commented upon and dealt with by independent counsel-should be raised in this passing way in the Senate. I had some hesitation in raising it because, of course, that simply gives the allegation a higher profile again. I regret that, but I think that in fairness to the late Sir Phillip Lynch those facts should be on the table at this time when the allegation has again been raised by Senator Walsh. I express my absolute contempt for that action by Senator Walsh and I regret that there is nothing in the Standing Orders which precludes such foul behaviour. Senator WALSH(Western Australia-Minister for Finance) —by leave-I note my recollection of the incident of some years ago-I will come back to it in more detail if Senator Chaney wishes me to-is that there is no doubt that members of the Lynch family were beneficiaries of the advance knowledge which Mr Peter Leake received about the rezoning of land at Stumpy Gully. I also note that at that time it was said by the then Prime Minister that he obtained from Mr Lynch, as he then was, a statement of his pecuniary interests. Those statements, however, were not published, nor to the best of my knowledge did they require Ministers to disclose the pecuniary interests of their immediate families. Both of those defects have been remedied by this Government. Finally, since Senator Chaney has seen fit to mention the Murphy inquiry, I think I ought to place on the record the humbug and hypocrisy of this present Opposition, which was absolutely satisfied with the report of a counsel appointed, as I recall it, by the Prime Minister of the day to conduct an inquiry into Mr Lynch's affairs, contrasted with the behaviour of the same Opposition with respect to Mr Justice Lionel Murphy, which has dragged Mr Justice Murphy through two parliamentary inquiries and wants to pursue, as I understand it, a judicial inquiry even though the probabilities are that Mr Justice Murphy will shortly be deceased. I think that draws attention to the humbug and hypocrisy of that lot opposite. They have a nice little in-house, semi-private inquiry of their own selection when allegations are made against one of their own, yet they want to hound Mr Justice Murphy to and beyond the grave. Senator Sir JOHN CARRICK(New South Wales)(3.25) —I move: That the Senate take note of the paper. The Joint Select Committee on Electoral Reform, of which I am a member, brought down a report in November last year entitled `Determining the Entitlement of Federal Territories and New States to Representation in the Commonwealth Parliament'. The Committee had the knowledge that the Commonwealth Constitution gives the Parliament very wide powers indeed with regard to representation of such Territories in the Parliament. Section 122 of the Constitution states: The Parliament may make laws for the government of any territory surrendered by any State to and accepted by the Commonwealth, or of any territory placed by the Queen under the authority of and accepted by the Commonwealth, or otherwise acquired by the Commonwealth, and may allow the representation of such territory in either House of the Parliament to the extent and on the terms which it thinks fit. The important point that the Committee considered was the fact that the Parliament may allow representation of the Territory in this House and in the other place to the extent and on the terms it thinks fit. Clearly, although the condition of the Constitution has not been abused, it would be possible for a government having a majority in both places to make provisions for the Territory quite outside the population demands, thereby stacking the Parliament. The Committee directed itself to ways and means by which this could be avoided. Clearly, the only way it could be avoided would be to have a device which, having been submitted to the electorate by referendum, would be embodied in the Constitution. The Committee felt that that should be so in the long run, but that there should be an interim measure; that is, that the Parliament should be invited to pass legislation which would set out the terms of representation of Territories. Whilst that in itself would be capable of being altered by another parliament, nevertheless it would be there both as a sanction and as a guide. Therefore, the Committee has decided, and the Government has agreed, to make a series of recommendations which, according to the Government, will be brought into this Parliament as law. At the same time the matter will also be referred to the Australian Constitutional Convention. On a number of recommendations the Government has said that the Parliament will have the appropriate legislation before it and that the Constitutional Convention will look at the constitutional nature of the legislation and report back to the Parliament. The basis of the representation of the Territories is the one on which representation in the various States is decided; that is, a quota is struck for the whole of Australia and, as a result, is applied to the Territories. Time does not permit me to outline this matter in any detail. The Committee is happy that the main recommendations are to be adopted by the Government. One provision has for the moment been set aside and is a question for the future; that is, whether the Australian Capital Territory should have self-government. I think that matter can be reasonably set aside for the moment. I commend the response of the Government and I commend the report of the Committee to the Senate. Select Committee on Electoral Reform Select Committee on Electoral Reform Senator MACKLIN(Queensland)(3.30) —The Government's response is welcome. It was made relatively rapidly, certainly compared with responses to a number of other reports. The major recommendation of the Joint Select Committee on Electoral Reform with regard to the admittance of new States is really not dealt with, because it is provided that the Australian Constitutional Convention shall consider this matter. I am not at all sure how beneficial that will be. Essentially the Joint Committee canvassed all the various positions that I think it was possible to canvass on that issue. When it comes down to it, there are only two major positions. One was the recommendation of the majority of the Committee members, that is, that no State be admitted to the Federation on terms and conditions which are more favourable than the recommendations for the representation of the Territories. The other position, which was the one that I took in the minority report, is that any new State which is admitted to the Commonwealth should be admitted on the same terms and conditions as the current States. Quite frankly, I think there really are not any other viable positions. I am not quite sure what the Constitutional Convention will do. I expect it will go over the entire ground again and come up with exactly the same answers. On the other recommendations to which the Government has responded positively, I think the response will be useful, particularly its decision to amend the Bill with regard to the representation of the Territories in the House of Representatives and the Senate. The only item which I wish to raise again and which was one that I raised in the Committee is that by packing ourselves into a firm structure we have to be careful that we do not pre-empt possible developments in terms of Territories. We are assuming for the purposes of this exercise that the only large Territories which Australia is likely to have in the future are the Northern Territory and the Australian Capital Territory. While I cannot foresee our having any other Territories, the possibilities in terms of any legislation, particularly with regard to the Constitution, or items with regard to the Electoral Act should be written in more general terms. I believe they should be written with regard to population. For example, the Committee's second recommendation dealt with quotas for the House of Representatives. The Committee recommended that at least half the quota should be achieved before a Territory is entitled to have a member of the House of Representatives. I simply wanted to add my response on this and to thank the Government for the speed with which it responded to the Joint Committee's report. I hope the legislation which is foreshadowed with regard to recommendations 2 and 3 is forthcoming rapidly. Senator HARRADINE(Tasmania)(3.33) —As a member of the Joint Select Committee on Electoral Reform I, too, would like to join Senator Sir John Carrick and Senator Michael Macklin in discussing this motion to take note of the responses of the Government to our report. It is report No. 1, indicating that a number of other reports are coming down the track. The next report obviously will be dealing with a good number of matters that have been referred to the Committee. I acknowledge the point that Senator Sir John Carrick made, that there is an anomaly at present. Whilst I believe none of the Committee members considered it a proximate possibility, it is possible that any government, if it had the majority in both the House of Representatives and the Senate, could stack the Parliament in its favour by providing representation in accordance with the current position for new States. Our Committee addressed that problem. As Senator Macklin said, it made a certain recommendation. Senator Macklin, in his dissenting report, opted for the other alternative. As he said, there really are-it seems to me, at all events-only two alternatives. Sending this question to the Australian Constitutional Convention may get the matter no further than we got it. After all, what more qualifications does the Constitutional Convention have to consider these particular questions which are essentially political than the broadly based membership of the Joint Select Committee on Electoral Reform? I do not mean at all to reflect upon the expertise of the members of the Constitutional Convention. However, it may well be that a future government may see no reason for the current Constitutional Convention. If that be so, where will this question end? Unfortunately it will have to end in this chamber. As has been said by the previous two speakers, the Government has rapidly responded to our Committee's report. For that it is to be commended. I feel that a point that was made by Senator Macklin is well worth considering. Coming from a State which was one of the original ones, I would not like to see a situation arise where a determination of the number of senators from that State is made on the basis of population. I feel very strongly about that, and I know that my colleagues in this chamber would agree. I see Senator Grimes who, I am sure, would agree, and I see Senator Archer who, I am sure, would agree with that. I think a very important question was involved in relation to the original States. It is very possible that as time goes on there will be a need for consideration of new States. In your State of Queensland, Mr Acting Deputy President, there has been quite a deal of discussion as to whether there should be a separate State in the northern part. In that event, of course, one would have to consider the question of what representation such a possible new State would have in the Commonwealth Parliament. I support the motion to take note of this paper. Question resolved in the affirmative. Senator ARCHER(Tasmania)(3.39) —I move: That the Senate take note of the paper. Although the report of the Inter-State Commission is only fairly small and although the Commission is only a fairly small body, it is an organisation of quite considerable significance in an island country and particularly to an island State of that country. The duties that the Inter-State Commission is given should be taken very seriously, bearing in mind the distances in Australia, the very considerable amount of cost that is involved as a result, our reputation of reliability and the importance of reliability in being able to service those distant areas. The Commission has already carried out several inquiries, from a review of the freight equalisation scheme for Tasmania to the cartage of bulk salt, the international air freight question, the economic regulations on domestic aviation and the distribution of Federal road grants, to name a few. Given the current economic situation, the Commission should be considering questions such as the inflexibility of the transport system and demarcation issues on the waterfront in particular but in other areas of transport as well. We need to make the system far more efficient than it now is. We need to look at the effects of excise and other taxes on fuel. We need to look at the whole question of the transport mode-whether there should be more or fewer railways; whether shipping can be restored to being as efficient as it was many years ago. The Commission is now in place and is doing the work for which it was set up. I suggest that it be given every encouragement to do the things that are of the greatest national importance in the field of transport. Senator VANSTONE(South Australia)(3.41) —I note in the paper that the Chairman of the Inter-State Commission, when referring the report to the Minister for Transport (Mr Peter Morris), said: I submit the annual report. He did not say that he had any pleasure in doing so. I can understand that. If I were the Chairman of the Commission, I would not have any pleasure in submitting this report either. As Senator Archer has just told the Senate, it is a fairly small report, and there is a reason for that. Quite frankly, in my view there is not much of a positive nature that one can say about the work the Commission has done, let alone what it is planning to do. Senator Archer pointed out that we need a far more efficient transport industry, and I agree with that. I would also suggest that the Minister should turn his mind to what he can possibly do to give us a more efficient Inter-State Commission. I point out to the Senate that this body wants over $1m; to be precise, it wants $1,084,000. Senate Estimates Committee F was told last week that the only reference the Commission is currently working on is the transport of bulk packaged salt between South Australia and New South Wales. I am sure honourable senators will understand that this is a matter of extraordinarily high priority for all Australians. Concerned Australians will therefore be very pleased to know that, as part of the data processing strategic plan that every government body now has, these people are purchasing a high speed laser printer so that multitudes of fascinated Australians can have all this useful information produced in a flash. I am aware of the references that have been completed by the Commission. One in particular dealt with interstate road transport cost recovery. I have to say that I have not met one person working in the industry in South Australia who has contacted or who has any confidence that that report reflects the views of the road transport industry in South Australia. At the Estimates Committee hearing, several honourable senators asked about other references, other work for this very useful body. We were told that the Commission and its staff were waiting on the Minister for further references. As Senator Archer pointed out, that is how much the Minister cares about very important areas being investigated by the Commission. If the Minister really did care and was on the job, the Commission would have more references than it now has. The Commission was asked what it was doing with unused capacity. Bearing in mind that the staffing allocation for the next year is $776,000, we must face the fact that quite an amount of money is involved. It does not take that much to inquire into the transport of bulk salt between South Australia and New South Wales. The Estimates Committee was told that the Commission is rostering holidays-that is how low the Minister has let the Commission's work go-because the Government does not have enough work for it. We were not told at the Estimates Committee hearing-I can understand from the report why we were not-why the Commission's work load is so low that the Commissioner and other members of the Commission are, on a gratuitous basis, undertaking work for other bodies that is, under its enabling legislation, outside its capacity to perform. One might ask why these people are, on a gratuitous basis, doing other work. They are doing so because the Minister has let the Commission's work run to a disgracefully low level. One might ask why the Commission has got into this position. It is probably because 45 per cent of its staff allocation is in the executive and administrative areas. Only 10 per cent of staff are involved in economic advice, 20 per cent in research and information, and 25 per cent in investigation. That is how the Commission has got itself into this disgraceful position. However, the Australian public will be pleased to know that, even though the Commission does not know what it will be doing next year, it does know that it needs a 40 per cent increase in its travel and subsistence allowance. I think that serious matters are raised in this report that should be addressed post haste by the Minister. Senator VIGOR(South Australia)(3.46) —I rise to support the Inter-State Commission against some of the attacks Senator Vanstone has made. I believe the Commission has done a quite excellent job in the reports it has produced. I will not however act as an apologist for the Minister for Transport (Mr Peter Morris), but I would like to remind Senator Vanstone of all the horror and problems that the interstate land transport industry-the truckies-faced throughout Australia. It was worried about the cost of licences. The Inter-State Commission did a very workmanlike job and allayed all the fears of the people within that industry. The Minister's upper figure for licences for interstate trucks was $1,400 and the Commission, after considering the costs of operation, which it got through consulting the various larger industry bodies-- Senator Vanstone —Any in South Australia? Senator VIGOR —I do not know whether it checked any of the South Australian organisations. However, on checking the costs that were involved in this area and comparing them with the railways-and consultation certainly did take place in South Australia in this respect-it came up with a cost for this licence of around $738, which was considerably less than the cost feared and predicted by both Senator Vanstone and some of the more outspoken South Australian trucking forwarders. I believe that the Tasmanian freight equalisation scheme was handled sensitively by the Commission and the result has been stabilisation of the trade, with a net decrease in the cost of freight by very large trucks and semi-trailers carried across Bass Strait. The Commission is carrying out an intermediate inquiry into the transport of bulk salt. I cannot comment on that matter because the report has not been released. However, I would like to commend Mr Justice Everett for the work he is currently doing as an individual on the inquiry into the Australian National Line. He has been consulting a number of people around Australia, including the unions and ANL itself. In fact, he even consulted me because, when the ANL legislation was being dealt with, the Democrats moved that a member of the Inter-State Commission should carry out this inquiry. Mr Justice Everett appears to be doing an excellent job in this area. The Inter-State Commission stresses that it is constitutionally independent. It is set up under sections 101 to 104 of the Constitution. Section 101 gives it independence, which makes it somewhat different from various other statutory bodies, and a few problems are created because the normal regulations and Public Service procedures do not automatically apply. For instance, the Audit Act 1901 needs to be amended so that the procedures apply to the Commission in accordance with constitutional guarantees. I would like to join the Commission in expressing gratitude to Professor Kolsen. He resigned from the Commission on 30 June 1986. His diligence and application have been appreciated by all those who came into contact with him. It is disturbing that a replacement for him has not been appointed. I recommend that the Government take some notice at least of what the Opposition says. I add my voice to theirs because we have a very valuable body in the Inter-State Commission. We should refer to it such matters as freight problems and Australia's infrastructure needs. It is not tied to dealing with just transport matters. I commend the report to the Senate. Senator REID(Australian Capital Territory)(3.51) —I would like briefly to comment on the report of the Inter-State Commission while in no way reflecting on any of its members and its work. However, with an allocation of $1,084,000, one would expect the members of the Commission to be doing more than was stated in the report or was told to us the other day-investigating bulk packaged salt transportation between South Australia and New South Wales. I think that one would have difficulty in persuading most Australians that that is of great significance. Perhaps the report, when it comes to hand, will show that that is a significant matter. A vast amount is being spent on the Commission, whereas there have been dramatic funding cuts in respect of many other matters about which many people would be disappointed. The Government has to decide whether the Inter-State Commission is of great value. The amount of funding involved is of some concern when so little is before the Commission for consideration. Question resolved in the affirmative. Senator REID(Australian Capital Territory)(3.57) —I move: That the Senate take note of the papers. I am a member of the Advisory Council on Australian Archives, having been appointed by the Senate. That Council is proving to be a useful organisation. I commend the Australian Archives for its work. It is important work to oversee the proper management of Commonwealth records, as is laid down in the description of its functions, to ensure that those records that should be kept secure and private and those documents that should be disposed of are treated as they should be. There is now much greater interest in genealogy. The Council is made up of a number of people, five of whom retire in October 1986. They have attended their last meeting and I was disappointed to find at the last meeting that they had not heard from the Minister whether they would remain on the Council or whether they would be replaced. This is really a matter of courtesy. It would have been nice if the Minister had let them know what was happening so that farewells could be said to any Council members who were leaving. It is necessary to know also who will be at the December meeting. I ask the Manager of Government Business (Senator Grimes) to draw this point to the attention of the relevant Minister so that the matter can be attended to in the appropriate time. It is necessary to have a building for the Australian Archives. I was disappointed that there was no further movement on this matter in the recent Budget. However, I appreciate that, with the economy in its present state, there was no possibility of that happening. The plan is that the building will be sited within the Parliamentary Triangle near the Australian National Library. It will be a very valuable facility which is needed by the Australian Archives. It will give people greater access to the Archives. It will be a tourist attraction in the Australian Capital Territory because the Archives contains a vast amount of information, papers and objects which can be displayed and which will be of great interest to many Australians. It will be to our advantage if these documents and objects are made available and shown. The Archives needs its own home so that archives are properly housed and so that it functions a little better than it already does. I commend the Director-General and all involved in the work of the Australian Archives. Question resolved in the affirmative. Senator HARRADINE(Tasmania) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator GILES(Western Australia) —Pursuant to my notice of intention given earlier today on behalf of and at the request of Senator Cooney, I now withdraw Business of the Senate, Notice of Motion No. 1 standing in the name of Senator Cooney. The ACTING DEPUTY PRESIDENT(Senator Colston) —The President has received the following message from the House of Representatives: Message No. 391 Mr President, The House of Representatives acquaints the Senate that the House does not insist on its amendment made in place of the amendment of the Senate to Clause 8 in the Bill intituled ``A Bill for an Act to repeal the `Parliamentary Commission of Inquiry Act 1986', and for related purposes'', to which the Senate has disagreed, and that the House has now agreed to the further amendment made by the Senate to that clause. JOAN CHILD Speaker House of Representatives, Canberra, 18 September 1986 The ACTING DEPUTY PRESIDENT —On behalf of the President and pursuant to standing order 38, I lay on the table the President's warrant appointing Senators Archer, Aulich, Peter Baume, Bolkus, Colston, Haines and Robert Ray to be members of the Standing Committee of Disputed Returns and Qualifications. Motion (by Senator Grimes) agreed to: That, unless otherwise ordered, at 5.30 p.m. this day, intervening business be postponed till after consideration of Government Business, Order of the Day No. 25 (Budget Statement and Papers 1986-87). Debate resumed from 18 September, on motion by Senator Walsh: That the Bill be now read a second time. (Quorum formed) Senator MESSNER(South Australia)(4.00) —The Loans Bill 1986 is very similar to a Bill introduced by the present Government in 1985 which sought to change the basis upon which the Government sought authority from the Parliament to carry out its borrowing program. In 1985 the Government decided in its wisdom to propose legislation which gave perpetual authority to the Government to carry on its borrowing program notwithstanding that for many years the practice had been for the Government to come to the Parliament each year and seek specific authority for each year's borrowing program. Last year the Opposition, together with the Australian Democrats, successfully amended that piece of legislation so as to return to the system of annual approval of the loans. I give notice that the Liberal Party and the National Party will move to amend this Bill so that annual approval for the Government's borrowing program remains within the control of the Parliament rather than a blanket authority being handed over to the Government for it to undertake its borrowings as and when it sees fit. This is in line with the basic propositions of the democratic system under a Westminster style of government which goes back to the days of the Stuarts and earlier in the development of our democratic process. For that reason, during the Committee stage of this debate we will propose specific amendments to the legislation. I also give notice that, at the end of the motion for the second reading of this Bill, we will seek to include the following words: but the Senate notes with concern the continuing increase in the nation's indebtedness, the continuing balance of payments and trade crisis, the continuing high levels of interest rates and the Government's cosmetic approach to the reduction of its spending outlined in the recent Budget. It is true that this Bill encompasses the whole range of matters involved in the Government's Budget. That is because the Bill specifically raises funds in order to meet the Government's revenue deficit. As a result, all of the measures to raise moneys that are authorised by this Bill have a direct relationship with the outlays side of the Budget, that is, all the expenditures that are undertaken by the Government. By implication, of course, it also relates directly to all the taxes raised by the Government to finance its expenditure. The difference between the two, which this year will be a deficit of some $3.5 billion, is the subject of this legislation. For that reason we will move an amendment to the second reading so as to draw attention to the shortcomings of the Government's management of the economic and financial affairs of this country. Over the last several weeks we have observed a dramatic change in this Government's approach to the management of the economy. Until about May of this year we saw on the part of both the Prime Minister (Mr Hawke) and the Treasurer, Mr Keating, a `she's all right' approach. All of the Ministers and back benchers went around the country parroting the line that Australia was going quite well. I think Senator Aulich also had a hand in this. Quite clearly, that has now been seen to be an illusion. In fact, the Government has pointed out quite clearly that we are at war in the economic management of this country. The Hawke Government is leading us in a campaign to restore the economic health of this nation as though the country was at war. The Prime Minister has pointed out to us time and again that we should be on a wartime footing. In the campaign in the lead-up to the Budget of 19 August we were conditioned to think that we all had to don our tin helmets, pick up a rifle and get to the trenches to protect Australia against the overseas hordes that were pouring in upon us. When the Budget was brought down, it was some wimpish document which did not attempt to deal with the fundamental problems in the economy but rather cosmetically dealt with some of the expenditure aspects and some of the needs within the economic framework in this country, such as our industrial relations and work practices problems. Let us look at the background to our present economic scene. We lack competitiveness with the rest of the world. That is why we are unable to sell our goods on world markets as well as we should. There has been a fall off in demand, and consequently in the price that we obtain, for our traditional exports, such as minerals and agricultural goods. There has been no offsetting income from the export of goods manufactured in this country because we have been unable, through cost pressures, to sell those goods on world markets. The reason for that is that we need not only to lift our technological basis to increase our ability to sell in world markets but also to improve our marketing and management capacities in industry. But, more than anything else, we need to realise that, whenever we pay ourselves an increase in wages, adopt work practices that are inefficient or assume that the world owes us a living, we will not find it easy to sell those goods on world markets. Is it any wonder that we have seen our exports fall to the levels of recent months and that our imports have tended to rise, although in the most recent months they have tended to level off due to a lack of demand in the Australian economy? It is interesting that that has led to a situation where every month we face a deficit on our overseas trading account of more than $1,000m. In order to make up that deficit we have to borrow about the same amount from overseas. Naturally, this leads to an increase in our overseas deficit and our total overseas borrowings. When this Government came to power in 1983 the total overseas indebtedness was about $35,000m. We now find that that level is in excess of $80,000m and is expected to rise to near $100,000m by the end of this financial year. What this Government has done in the last three years is to pump up the economy by borrowing, by stimulating demand and thereby bringing more imported goods into Australia. It has created a demand for those goods and stimulated the economy in a way that it promised it would do at the 1983 election. This has led to a colossal balance of payments problem the like of which we have never seen in this country's history and which is proving very difficult to deal with. The fact is that the answers to our economic problems lie in dealing with the fundamental questions which have not been dealt with in this Budget. They relate, of course, to our inability to compete and our lack of technology. We have seen in the immediate area around us, in the Pacific and in the Asian region, the growth in recent years of nations such as Taiwan, Korea, Thailand, Malaysia, the People's Republic of China and India. There we have seen developing technologies taking those countries ahead in terms of production and providing jobs for people in those countries, and leaving even the technology of Australia way behind. We need only consider the impact of technology in a country such as India where there have been enormous steps forward in recent years in the nuclear industry, in communications and in other areas. But probably the most significant area is the leap forward in Indian agriculture where, through increased technology and investment in agriculture, we now see for the first time in its history India exporting grain. We all remember in earlier times the fact that India always seemed to be plagued by famine. Now we find that country being a net contributor to the world's markets in grain, rather than being a customer for other producers. Is it any wonder that Australia is finding itself in difficulties dealing with countries that have decided to take all the risks in the world and invest heavily in technology of various kinds to develop their economies? Yet we have failed in this country to face that challenge. That, I think, is because-we have seen this in the last three or four years-of the development of a closed mind by this Government to that kind of development. Rather we have seen this rearguard fight against the possible loss of jobs in some industries instead of a new, positive approach in industrial development towards what might be achieved. The reasons for this are quite obvious. Instead of seeking to encourage investment in these kinds of industries which we have been talking about, those that have technological futures and a future in the world, we have turned our back on that. One might well ask: Where is the evidence for that? The fact is that we have allowed our interest rate structure to build up to the highest level, in real terms, for 50 years, thus putting a tremendous brake on investment in this country. Clearly that investment, which is so necessary to provide jobs for ordinary Australians, is not occurring because we are providing massive disincentives for people to do so. The Government has consciously, deliberately, kept a high interest rate policy, based on the need, of course, to protect a very weak Australian dollar, which has tended to fall over recent times and which has required even higher levels of interest rates in order to maintain some semblance of value for it. Senator Siddons —What about the Government's encouragement to invest in paper profits? Senator MESSNER —The honourable senator has a certain obsession about that matter which I think deserves a separate argument. But I draw attention to one other aspect of the interest rates question. The fact is that the matter of interest rates is not only an overseas question, in that the Government is forced to keep interest rates high deliberately to protect the Australian dollar; it is also keeping its own Budget deficit at a very high level in order to maintain some semblance of interest rate feasibility. Up until this year, the Budget deficit has been very high indeed and, in fact, ran some $800m over the Budget estimate up to the year ended June 1986. That in itself has created enormous pressure on the money markets in this country which has put more and more pressure on interest rates. It is quite clear that these two things together-the Budget deficit, which is the subject of this legislation, and a deliberate policy of having to maintain high interest rates to keep up the dollar-are part of a deliberate scheme totally within the control of this Government. It is not a question of pointing to trends in our overseas markets and blaming everybody else in the world for this situation. The fact is that we have seen the massive disincentive that high interest rates bring caused by this Government's own deliberate economic policies, which are totally within its own control. For that reason we have not seen the great leap forward in new industrial investment in this country which we could have expected in the last three and a half years that these people have been in power. That is what they are supposed to have brought us, but we have not seen that at all. All we have seen is heavier and heavier borrowings which have brought us to the brink of economic crisis with our balance of payments. That is a situation that will have to be retrieved by the Howard government after the next election. The failure of the Government in this area has been of absolutely monumental proportions. It is only now that the Australian people are starting to realise the extent to which this Government has brought them to a situation of crisis. The answers, of course, rest on encouraging new investment in green fields areas, new technologies and the development of new industries, to provide jobs for ordinary Australians. That is what the next government's policies must be about. The incentives for that have to be found by reference to the basic economic facts of life. The truth is that if we are to stop the huge, mammoth investment by Australian investors on overseas markets, which, of course, means that that money is not finding its way into Australian investments, we have to provide people with the incentive to want to invest here. The Government's own Budget has told us that there will be a fall this financial year, an actual reduction, in the overall investment rate by companies and other employers in this country. What we need is exactly the reverse. Yet we are seeing superannuation funds and insurance companies-I cite the AMP Society and the National Mutual Life Association as examples-investing up to 40 per cent of their current investable funds on the New York stock exchange or the Tokyo stock exchange rather than in new investments here in this country which would provide jobs. Senator Siddons —Isn't that an absolute tragedy for the country, a scandal? Senator MESSNER —It is an absolute scandal and a tragedy, and it is a direct result of this Government's policies. The reason for that is that there is no incentive for people to invest in this country and obtain a return. We cannot blame those funds and insurers for investing off-shore, because they have a charter to ensure that their policy holders get the best possible return for their investment. Consequently, if they see investments off-shore that are far superior to those available in Australia, they have a duty, not just a right, to make sure that they take advantage of it. Indeed, that seems to be the rationale of the Government's policy in opening the exchange controls a few years ago. Senator Siddons —Could I just ask what your reference is to the 40 per cent of superannuation funds being invested off-shore? Senator MESSNER —Forty per cent of current investable funds is my information. That refers to new moneys becoming available as opposed to the total amount of money which is actually invested by those organisations. Senator Siddons —It is an incredibly high figure. Senator MESSNER —It is a very high figure and a very concerning one to most members of this Parliament, if not to all in the Government. These concerns, I think, lie at the basis of the economic problem in Australia. What we have to do is to reverse the total sentiment towards investment in Australia to create jobs. It is largely a psychological problem. Yet we find this Government coming along with major disincentives to investment, such as the capital gains tax. Let us just strip away all the rhetoric that we hear from Ministers in this place about capital gains and so-called tax avoidance. Let us look at it just in pure and simple terms. This Government's capital gains tax is the highest and most difficult tax of its kind anywhere in the world. It applies to future, not past, investments. Consequently, it is a tax on the future and a deliberate attempt to take away from people the incentive to invest in this country. Those who already have investments will not be subject to the tax, thus the rich get richer and the poor get poorer. That is this Government's approach. The major effect that this has is to act as a disincentive to those who would have invested and created jobs in the future. Is it any wonder that people who might be contemplating investment in this country should be frightened when they see this kind of capital gains tax lobbed on them? Is it any wonder that they believe that this Government does not really understand what it is doing when it talks about giving encouragement and incentive to investment at a time when this is most necessary? It is quite clear that this Government fails to recognise the psychological need to lead this country out of the economic downturn that we have been experiencing since last Christmas. Clearly we are in a recession, by all normal measures of that term, and consequently we have circumstances which must be reversed. Psychology is the key to this, particularly in the area of investment. Yet we see more and more attempts by the Government to bring in various things to stop that incentive. Let us think back to the period around 1 July this year when the Government raced into print to introduce a new withholding tax on dividends paid overseas. A month later, when the dollar had crashed as a result of that, the Government whipped off the tax before it had actually had a chance to put it into effect. There is no coherent pattern for the development of a kind of psyche towards a better investment atmosphere in this country at all. There has been absolutely no attempt to think through what is required. Rather, the Government keeps rushing around like rats in the bottom of a bin trying to chase every little question mark that arises and accusing everyone else in sight of being evil people or the devils causing the problem, rather than facing the very real questions that it needs to face. Senator Siddons —The Government has done no long term planning at all. Senator MESSNER —Clearly, there is very little long term thinking at all about what could be done to stimulate incentive for Australians to get on and develop this country. One only has to look at the Budget Papers themselves to understand the nature of our problem. Just a moment ago I talked about the capital gains tax. This year the Government will take 25.5 per cent of the gross domestic product by way of taxation. That is the highest level of taxation ever taken by any government since Federation. That is a measure of this Government's attitude to incentive. All it does is seek to impose higher and higher taxes on Australians, rather than to lower taxation and provide more and more incentives. It can tell us how much it is doing in the tax avoidance area, but all of that falls to ground against the primary benchmark of that simple fact-that this Government is taking a greater proportion of this nation's total production than any government has ever taken before. That is in line with the high tax policy of this Government and is tied down directly to the fundamental psychology and philosophy of the Australian Labor Party. Let us look at the approach which this Government has adopted to the management of the outlay side of the Budget. There we find great shortcomings in its attitude as well. The total expenditures have remained steady compared with the previous year and that is something to be applauded. But it is necessary for the Government to take the real scalpel to the job and try to reduce expenditures rather than merely to defer them. A very large part of the Budget savings, as spelt out in the Budget Papers, is mere deferrals of expenditures that will occur and recur in the forthcoming financial year. From that point of view the Government has done little to attack the fundamental problems of this nation and is certainly not facing up to its real challenges in that area. We see, too, that the Budget itself has been put forward as an attempt to obtain a better market sentiment amongst financiers in the hope that interest rates will be kept down. That failed on this ground as well, because the financial markets saw straight through the Budget. They saw that it was an impossible statistic to predict that the overall level of unemployment this year would rise by only 36,000 persons in net terms. It is quite clear that, after a rise of some 60,000 unemployed in the last two months, that figure will be very hard to meet by the end of the year, especially in light of the contractionary nature of this Budget. Quite clearly that figure is understated. Also there are very serious doubts-and we have raised them in this place before-about the 8 per cent figure for inflation when it is already seen from within the Budget Papers that the underlying rate of inflation, unaffected by such things as Medicare and discounted values of wages obtained in the Australian Conciliation and Arbitration Commission last year, is running at about 10.5 per cent, even at the moment. All these things are being seen through-the deferrals of expenditures rather than reductions, the lower inflation rate than might be expected by the markets and the fact that unemployment appears to be out of line with expectations. Quite clearly all this is working against the sentiments that this Government sought to achieve in favour of its Budget. Clearly the markets are saying that every day as they deal with the problems of our economy. Obviously, the money markets were the target of this Government. It has unashamedly admitted that the main purpose of the Budget was to make sure that the markets gained a positive impression of the Budget and the direction in which the nation's economy was headed. We know how the Government raced around in the last few days trying to find expenditure cuts and increased taxes in order to get the deficit down to $3.5 billion just before it introduced the Budget. This was done to meet those expectations of the market-place. But the Government has failed and it has failed dismally to convince the money markets, both in Australia and overseas, that it has the solutions in this Budget. For that reason we on this side of the Senate have great feelings of shame about this Budget, both in terms of its presentation and in terms of this Loans Bill 1986 which governs the overall borrowing programs of the Government. We have considerable concern. As I mentioned at the outset, we will seek to amend the Bill itself in the course of the Committee stage of the debate in order to return to an annual approval of government borrowings rather than to allow the Government to proceed with its measure to provide perpetual authority for its borrowing program. That is of fundamental importance and we will develop those arguments later. At this moment I wish to move formally the Opposition amendment to the second reading. I move: At end of motion, add: `but the Senate notes with concern the continuing increase in the nation's indebtedness, the continuing balance of payments and trade crisis, the continuing high levels of interest rates and the government's cosmetic approach to the reduction of its spending outlined in the recent Budget'. Senator COLSTON(Queensland)(4.30) —The Senate is debating the Loans Bill 1986. The purpose of the Bill, among other things, is to make provision for the financing of the prospective Budget deficit in the financial year 1986-87. Because of this I would like to make some remarks about the Budget to which this Loans Bill refers and upon which this legislation has been built. In mid-August the Hawke Labor Government introduced a remarkable Budget. It was remarkable in that, although it was a tough Budget, it was and still is widely accepted by the Australian people, who expected, and maybe even demanded, the type of Budget which was introduced. It was a remarkable Budget in that it had no increase in real outlays and the deficit of $3.5 billion was less than most economic observers thought was possible. I am pleased to speak in this debate as a member of a government which has had the courage and resolution to rise to the challenge Australia now faces due to a large extent to the dramatic slump in world commodity prices. I am also gratified, as a member of the Australian Labor Party, to relate my remarks to the Federal Budget in which the Government has maintained its commitment to the most needy while asking for restraint from all sections of the community. Since the early days of European settlement, Australia has been a trading nation. Its fortunes have depended to a large degree on the health of the international economy and how much other nations have been able to pay for our exports. Over the years we have not diversified our export mix and nowadays we realise that a major restructuring is essential. Our export dependence on primary products has remained high. Even today, commodities account for 79 per cent of our exports. Other major countries do not have a similar level of dependence on commodities for their economic well-being. For example, the proportion of Canada's exports which are agricultural and mining products is 36 per cent compared to the 79 per cent I mentioned earlier for Australia. For the United Kingdom, the proportion is 31 per cent, and for other major nations the proportion is even less. I seek leave to incorporate in Hansard a table headed `Commodities as proportion of total exports-1985', the figures for which were provided by the Parliamentary Library. Leave granted. The table read as follows- COMMODITIES AS PROPORTION OF TOTAL EXPORTS-1985 Per cent Agricultural Agricultural and mining Australia... 37 79 Canada... 13 36 France... 18 24 Italy... 9 14 Japan... 1 2 United Kingdom... 8 31 USA... 18 24 West Germany... 6 10 Senator COLSTON —I thank the Senate. The table indicates, firstly, the proportion that agricultural products represent of total exports for eight nations and, secondly, the proportion that agriculture and mining represent of those nations' exports. The figures in these tables clearly indicate Australia's far higher dependence on agricultural and mining products than the other seven countries-Canada, France, Italy, Japan, United Kingdom, United States of America and West Germany. This higher dependence carries with it a higher risk of a reduction in national income if commodity prices fall. In this respect, our resource-based exports have always been prone to fluctuations in international markets and susceptible to the long term decline in the value of commodities, relative to processed goods and services. For a decade or more our terms of trade-export prices relative to import prices-have been declining by an average annual rate of one per cent. This long term trend accelerated dramatically over the last 18 months because of the sharp slump in world commodity prices. In real terms, the International Monetary Fund non-oil commodity price index reached a post-World War II low in 1986. Compared to the long term average decline of around one per cent per annum, our terms of trade have fallen 14 per cent over the last year alone-10 per cent of which has occurred since the June quarter. Quite clearly, this represents a staggering decline in the value of Australia's exports and thus the nation's income. This decline is evident from an inspection of price movements for the particular commodities which form the bulk of Australia's exports. Since mid-1984, just over two years ago, international prices for wheat and aluminium, measured in United States dollar terms, have fallen by 20 per cent. Coal prices have dropped by 14 per cent. In this year's June quarter alone, wheat prices fell by 23 per cent. Measured against a basket of world currencies, metal prices fell by an average of 17 per cent during the last financial year. What these changes in world prices have meant to Australia is a reduction of about $6 billion, or about 2 per cent, in our national income. The decline in our terms of trade has caused the current account deficit in 1985-86 to be $4.25 billion greater than it otherwise would have been. It turned 1985-86 from being a year of significant improvement in our balance of payments position to being a year almost as bad as the record set by John Howard in 1981-82. There are numerous reasons why world prices for commodities have fallen. A major cause is the questionable, if not corrupt, trading practices of the United States of America and the European Economic Community. This may have been turned around slightly over the past couple of days in meetings in which the Minister for Trade, Mr John Dawkins, has had some remarkable success. It should be realised that our diminished export earnings are the result of external factors over which this Government has very little, if any, influence. As I have outlined, however, Australia has long been extremely vulnerable to such a price collapse because of our heavy dependence on primary exports. Our economy has been geared towards selling primary products to the rest of the world at high prices and buying manufactured goods at low prices. The world is no longer like that, and we cannot sit back and hope that the old days will return. Much of the responsibility for our trade imbalance must rest with those governments of the past which lacked the foresight to develop a sound manufacturing industry and lessen our export dependence on primary products and the mining industry. The sharp fall in Australia's capacity to maintain its living standards may thus be traced to decades of coalition neglect-neglect of our manufacturing industries and neglect of our need to expand and strengthen Australia's industrial and export base. Indeed, one of the greatest tragedies of Australia's economic history has been the underperformance of our manufacturing sector. The conservatives regarded assistance to the agricultural sector as some form of holy writ but stifled the manufacturing sector with an overvalued exchange rate. The overvalued Australian dollar made our manufacturers uncompetitive, eventually resulting in imports flooding in, wrecking Australian jobs and industry. To put our balance of payments problem into an historical perspective, it is necessary to look back to the Menzies-McEwen era, when protection was increased to a wide range of industries. The long term results of those policies are all too evident in our current balance of payments difficulties. More recent coalition governments have also left their sorry mark. In particular, the Fraser-Howard team institutionalised import quotas in our most highly protected industries-textile, clothing and footwear. Assistance to the motor vehicle industry was also increased significantly under the Fraser Government, mainly via import quotas. Equally significant was the Government's inaction when faced with the opportunity to reform Australian industry. What did the Fraser Government do about the Industries Assistance Commission report, `Approaches to General Reductions in Protection', which recommended ways of reducing protection across the broad spectrum of industries? It did absolutely nothing. Rather than take a realistic, reasonable look at Australia's economic base, the conservatives preferred to ride on the sheep's back and the prospect of the resources boom. For years after I entered the Senate in 1975, the governing coalition saw a forthcoming resources boom as the answer to Australia's economic problems. Scarcely a week went by without the boom being hailed as the nation's salvation. Of course, the boom never materialised. Thirty years of tired coalition policies fostered a complacent Australian industry. By the late 1970s the protectionist policies of a succession of so-called free enterprise governments had had their effect. Industry was dealt a further heavy blow in the 1980s by our predecessors, whose policies led to an economic recession. In contrast, the Hawke Government over the last three years has shown itself willing and able to make the necessary and sometimes hard decision to assist Australian industry and Australian people to meet the challenges we face. We have taken the necessary steps to encourage the development of strong, healthy, internationally competitive manufacturing industries in Australia. In this respect, it is pertinent to examine the floating of the Australian dollar and how this has assisted our manufacturing sector. Since early 1985, the Australian dollar has depreciated about 25 per cent against the United States dollar, 40 per cent against the trade weighted index and 50 per cent against the Japanese yen. Coupled with wage restraint-an estimated 8 per cent decline over four years-this has given Australian industry a level of international competitiveness unknown in at least 20 years. Already there is clear evidence that our policies are having the desired effect. During the last financial year there was a 7.4 per cent increase in the volume of Australian exports and import volumes declined at an annual rate of 10 per cent in the first half of 1986. In 1985-86 investment in manufacturing grew by 40 per cent. The floating of the exchange rate means that our economic problems can no longer be hidden away in the balance sheet of the Reserve Bank of Australia, as was previously the case. As a representative of Queensland, I am pleased that my State is particularly well endowed to take advantage of the growth in international tourism resulting from our dollar's devaluation and the resulting increased attractiveness of Australia as a holiday destination. That the Hawke Government has already established first-class economic credentials is another reason why I am confident that this Government is better equipped than any other in Australia's history to match the challenge we now face. A quick comparison of the Hawke and Fraser governments' economic records will illustrate my point. The Fraser Government actually created negative economic growth of minus one per cent in 1983. The Hawke Government has created several years of strong growth. In 1983-84 and 1984-85, the first two years of the Hawke Government, economic growth reached 5 per cent, and 4.5 per cent in 1985-86. During 1986-87 the economy is expected to grow at a rate of more than 2 per cent. During the Fraser years unemployment reached double digit figures, while the Hawke Government has created 713,800 jobs since March 1983. Employment has grown by around 12 per cent in the last three years and most of this employment growth has been in the private sector. The increase in employment in 1985-86 was the largest growth in the 20 years since official labour market surveys began. The Hawke Government has halved the number of days that were lost in industrial disputation under the Fraser Government. Under the Fraser Government profits were slashed, reaching a low of 12.7 per cent of gross domestic product in 1982-83. Under the Hawke Government profitability has been restored to the levels experienced in the 1960s, reaching 15.6 per cent of GDP in the first half of 1985-86. Mr Howard, as Treasurer, started off with a Budget deficit of $1.4 billion in 1982 and 18 months later left the incoming Labor Government with a prospective $9.6 billion deficit. I mention those matters to give a comparison of the previous Government with the present Government; a Government which is working to bring prosperity to Australia. As the Hawke Government has picked up and repaired the coalition's economic legacy, we are now in the process of accomplishing the long needed restructuring of an imbalanced economy. It is ironic that the Opposition is now suggesting that a decline in manufacturing and manufacturing exports which took place over 20 years should be reduced overnight. The Hawke Government has made enormous progress in the past three years in modernising and freeing up the economy. We now have a much lower wage cost structure and an energetic financial sector, making us vastly more competitive than we were a few years ago. We have also accomplished something without precedent in Australia-a comprehensive and integrated basis for consistent long term economic planning. We have brought about the basis of change which will enable Australia to adjust and become more responsive to future change. Accordingly, the Hawke Government's fourth consecutive Budget represents our commitment to facilitating Australia's adjustment to changed economic circumstances. Restraint in spending is essential to align our living standards more closely with our capacity to produce. The Budget has spread this adjustment fairly across the community and the community has accepted that these adjustments had to be made. As a government, we have cut expenditure by nearly $3 billion, leaving us with a Budget deficit of $3.5 billion, compared with the $9.6 billion legacy of the previous Government. This was only the third time in 30 years that there has been no real growth in outlays. The Government has deregulated the financial sector, provided positive incentives for industry to increase research and development, removed the double taxation of dividends, established Austrade, expanded the Australian Industry Development Corporation, removed State purchasing preferences and relaxed foreign investment guidelines. The Government's policies for Australia's future are based on sound budgetary, monetary and wages policy and specific restructuring programs for Australian industry. The Government is to be commended for its Budget, upon which the Loans Bill is built. As one of the Government members who will be speaking on the Appropriation Bill, I commend this Bill to the Senate. Senator SIDDONS(Victoria)(4.48) —We are debating the Loans Bill 1986. It is important to realise that this Bill is almost identical in wording to a Bill which was introduced into the Senate last year and which was substantially amended by this Senate. This Loans Bill is a blatant attempt by the Minister for Finance, Senator Walsh, and the Government to get this Parliament to sanction the Government's borrowing program forever. It has been customary to have the loans program for a particular year debated by the Parliament, as well it should be. If this Bill were passed by the Parliament it would take that responsibility from the Parliament and would allow the government of the day to borrow as it saw fit, without any debate as to the size or the burden of debt that the government of the day was placing on the people of this country. The fact that the Minister for Finance is prepared to bring in an identical Bill of such far-reaching importance is nothing more than an attempt by the Government to treat this Parliament and this Senate, as the Minister repeatedly does, as a kindergarten. The Senate made it abundantly clear to the Minister for Finance last year that it was in no way prepared to pass a Bill which took from the Parliament its responsibility to debate and to comment on the loan program of a government in the year in which that loan program was brought down. Yet we have another blatant attempt by this Government to do just that. I believe it is incumbent on the Government to explain to this Senate why it has again attempted this year to do what the Senate clearly rejected last year. It is very significant that the Minister for Finance, who is responsible for this piece of legislation, is not in the chamber. Presumably he does not consider it important enough to sit through this debate and take note of the points that the Senate raises on this vitally important piece of legislation. We have just sat through a disgusting spectacle during Question Time. The Minister for Finance indulged in the most blatant and almost unforgivable piece of character assassination in relation to the late Sir Phillip Lynch. He is quite happy to indulge in the character assassination of people who are no longer living, but he is not prepared to face up to his responsibilities in regard to legislation of this importance. Let me place on record that in my six years of involvement in the Federal Parliament I have yet to meet a politician who had a greater understanding of Australian industry than did the late Sir Phillip Lynch. He was an extraordinarily hard-working politician. If he had led a government-I believe his record gave him every right to do so at some stage-I am sure Australian industry would be in a much better position than it is today and many of the problems that we are facing right now would not have to be faced and would not be a burden on the Australian people. The Opposition asserted that the Budget is fundamentally flawed, that it does not raise or address the fundamental problems relating to the Australian economy today. On behalf of the Australian Democrats I can only say that we could not agree more. I have said before and will say again that this Budget has not attacked the problem, which is our balance of payments. The fact of the matter is that over the last 30 years we have been borrowing money to balance our trading account and today we cannot afford to pay the interest. We have to stop borrowing money. This Government has made no attempt to address that problem, either directly or indirectly. It has said: `We will grind the economy into the dust. Maybe that way we will stop people importing goods that we do not have the funds to finance'. The Government is saying that we have to screw the economy and to place enormous burdens on average working Australians so that they just cannot afford to buy imported products, rather than saying: `We have a responsibility to manage the economy. We will manage it and we will take whatever measures we see fit to restrict the flow of imports into this country which the Australian nation can no longer afford'. I was also interested to hear Senator Messner's comments along the lines that the Government had to encourage investment. The Democrats could not agree more. We do have to encourage investment. However, Senator Messner stopped short of saying that the Government has a responsibility to encourage investment in the right sorts of areas which are, clearly, productive areas. It is almost ludicrous and it never ceases to amaze me that, whilst we talk about the size of the Government's deficit-let me remind the Senate of the deficit of $3.5 billion which is, no doubt, a large amount of money and which I will come to later-an amount of $7.7 billion was borrowed, very largely from overseas, by those attacking and defending Broken Hill Proprietary Co. Ltd. Nearly twice the amount of the deficit that we are so concerned about was borrowed overseas by private investors without the Government considering it was necessary even to have an inquiry as to where this money was coming from and the terms of repayment. All Australians will have to accept the responsibility of meeting the interest commitments. There was no inquiry; the Government showed no concern and nearly twice the amount of the deficit was borrowed overseas. The Bill before us enables the Government to borrow the money to finance its deficit. As I indicated previously, this is a very important responsibility. When the Government borrows money it puts debt on the shoulders of every Australian. It is vital that this Parliament should have the opportunity every year to scrutinise those borrowings and formally to give the Government the leave to incur the debt in the name of the Australian people. We are dealing with very large amounts of money. In 1984-85 the deficit was $6.74 billion; in 1985-86 it was $5.726 billion; and the figure for 1986-87 is likely to be $3.5 billion. These are huge figures. They are beyond the comprehension of most Australians. However, the fact of the matter is that the total debt incurred by governments to 1986 is $93 billion. That represents $6,200 for every man, woman and child in this country, which is a very considerable burden on average Australians. There is no way that the Democrats can let the Government take away from this Parliament the power to oversee debt management. It is significant that when this Bill was introduced into the House of Representatives last year the Opposition passed the legislation without an amendment, without a murmur and without any considerable criticism. It was not until the Bill got to the Senate last year that the Democrats raised the point that the Bill, as it was worded, gave the Government the responsibility to incur debt forever without ever referring that debt to the Parliament for debate. The Opposition in the Senate has again joined with the Democrats to ensure that such a responsibility is not given carte-blanche to the Government. We have circulated amendments to be moved in the Committee stage which will take away the power this legislation gives the Government never again to debate in this Parliament the size of its annual deficit. I stress that there is no way the Democrats will block this legislation. We are committed to allowing the Government to govern, and we will certainly not be doing anything that will block Supply. But it is fundamental that the Government should stand up to the criticisms and comments that are reasonably put before it. I would like to make just a few comments about debt and whether the Government is right in borrowing money to finance its activities. I stress that debt, whether it is private or government, is not in itself wrong, provided that the money that is borrowed is wisely used and wisely invested. Since the radical free marketeers have taken control of the Australian Labor Party, as unfortunately they also control the Liberal Party of Australia, it is now conventional wisdom to say that all government debt is somehow inherently bad and that private debt is inherently good. This position, I would suggest, is obviously ridiculous. Those who attack the Government for borrowing money, for incurring debt-business people and others make this point-do not practise what they preach. Most company managers borrow money to finance their own companies. They run into debt and wisely and carefully invest the money that they borrow. Without debt people cannot buy the things they need, such as cars and houses; companies, likewise, must operate with a reasonable and managed amount of debt to enable them to expand, as governments have to borrow money to expand. The country is like a company; it has to operate with a certain level of debt. The fundamental questions are: Is that debt reasonable? What is the money to be spent on? The Government and indeed the Opposition are saying that we must cut back on government borrowings to make room for the private sector. The Government is a government that was elected to represent working Australians. It is not a point of view that I thought a Labor Government would embrace. The theory runs something like this: If the Government borrows money it crowds out the private sector, and then there is not enough money available for the private sector to borrow and to invest wisely, on the basis that the Government always invests money unwisely. In fact the truth is the opposite. If one looks at the figures, the Government's debt as a percentage of gross domestic product is historically low in this country now. The debt has fallen from, would you believe, 181 per cent of gross domestic product in 1947. Senator Messner —After the war. Senator SIDDONS —Indeed, after the war. In 1969 that had fallen to 56 per cent of gross domestic product. The figures do not bear out the fact that the Government is borrowing money and crowding out the private sector. Of course, it is very important for governments to borrow money and invest in such things as the building of roads and infrastructure generally. While the Government is castigating industry now on the basis that it is not investing in capital and development, the same criticism could be applied to the Government; it is not investing money in things that are the Government's responsibility, such as the building of roads and the infrastructure. If the Government is not prepared to give a lead it cannot really blame the private sector for being unhappy to invest in the future of this country. Again, as the Opposition has pointed out, at the current extraordinarily high interest rates it is a very, very good investment that can make a sufficient return to beat putting money into speculative paper investments, such as on the stock exchange, putting money into fixed investment and so on. When one can get interest rates of the order of 18 per cent or more, who would put money into machinery or developing productive resources? Senator Crichton-Browne —Private fixed term investment is down to billyo. Senator SIDDONS —The honourable senator will have his turn in a minute. I am just putting a point of view which I think the figures make indisputable. Without capital investment wisely invested we will not be able to climb out of the hole in which we find ourselves. That is a fact. We say that the fundamental strategy of this budget is flawed. It is cosmetic in the sense that it has played up to the international money markets. It was said by them that the only thing that mattered was a low deficit. Certainly the Government came up with a small deficit for this year. That is not solving our fundamental problems, which are: We are borrowing too much money; we have to get interest rates down, and we have to encourage investment in productive areas. To summarise, I notice that the Opposition, without reference to the Australian Democrats, has moved an amendment to the second reading motion which states that the Senate notes with concern the continuing increase in the nation's indebtedness. Certainly the Democrats are concerned about the increase in the nation's indebtedness. However, we are more concerned about how borrowed money is invested. It is very hard for us to assess whether the purpose of this second reading amendment is purely to draw attention to the size of the deficit or whether it is directed more to some of the other things that it raises, such as the balance of payments and the trade crisis. Certainly we support that as the area which has to be focused on by the Government. Certainly we abhor and criticise the continuing high levels of interest rates. Certainly we will agree with the part of the Opposition's amendment that refers to the Government's cosmetic approach to the reduction in its spending in the recent Budget. This Budget was cosmetic. Very largely the deficit was got down by failing to index personal income tax rates. The much vaunted $2 billion cut in personal taxation rates will mostly be dissipated due to the fact that the Government has failed to index the threshold for personal income tax. On balance the Democrats will support the Opposition's amendment at the second reading stage. I believe the emphasis on the nation's indebtedness can be misleading and can be misinterpreted by the Australian public, but on balance it raises matters which are of great concern to the Democrats. In the Committee stage of this Bill, as I foreshadowed, we will move amendments which have been circulated and which will take away from the Government the power to bypass the Parliament in getting approval for its annual debt commitment. I notice that the Opposition also has circulated an amendment which is to be moved in the Committee stage and which is not dissimilar to the Democrats' amendment. I have had the opportunity to discuss that matter with Senator Messner on behalf of the Opposition. We had to discuss it because it is such a vital matter. We have agreed that parts of our amendment will be moved by the Democrats and parts of the Opposition's amendment will be moved by it. Certainly there is no way that the Government will get away with this subterfuge of trying to bypass the Parliament on the vitally important question of whether we, the Senate, the Australian Parliament, should have a say in the annual debt commitments of the Government. Senator FOREMAN(South Australia)(5.10) —I rise today to speak on the Loans Bill 1986 because the extent of Commonwealth borrowings is an important feature of both domestic and international economic policy. In the supply and demand scene the demand on funds determines what interest rates will be. If excessive government borrowings take place, the availability of these funds for private investment is limited. Competition for loan funds, primarily determined by the extent of Commonwealth borrowing, can drive interest rates too high and hence damage to the economy can result. It is for this reason that I commend the Government on its restraint in this area, and I believe the background to our present economic situation needs to be explored to understand why this restraint has become possible. The economy of Australia is the real provider of the benefits and standard of living which Australians enjoy, and when this economy is threatened then so too is the standard of living. When the Hawke Government came to power in March 1983 there was double digit inflation and double digit unemployment. The employment participation rate was at an all time low and the provision of new jobs in the 1982-83 financial year was at a disastrously low level. Consumer confidence in 1982-83 was also at a level such that retail sales were low. In the dying days of the Fraser-Howard Government the economy was experiencing such a rapid decline that real fears were held by Australians from all walks of life for the economic future of this country. In 1975, at the inception of the Fraser Government, the level of unemployment was almost 200,000. At the time of its removal by the Australian people in 1983, the level of unemployment had risen to over 700,000. Throughout the period of the Fraser Government the level of employment slowly drifted downwards, sometimes in great rushes, such as in the last quarter before the March 1983 election and at other times in a slow relentless drop. At no stage did unemployment drop below those 1975 figures during the life of the Fraser Government. It was not only a case of a government which promised a great deal and never delivered, or never seriously looked like delivering; it was a government which stood on an industrial relations record that was abysmal. The number of working days lost was over the three million mark per annum from 1977 until 1981. The level since this Government has taken over has been on average less than half of that figure, despite an upswing in the economy which has seen significant inroads into unemployment and dramatic increases in the participation rate. The judgment on the Fraser-Howard years, written so convincingly in March 1983 by the public of Australia, was that of a government which had promised so much and delivered so little-I repeat, promised so much and delivered so little-with consumer confidence shattered, unemployment skyrocketing, interest rates at disastrous levels, industrial disputation levels ludicrously high, and no idea of what policies to pursue to turn around this bleak picture. Upon the election of the Hawke Government in 1983 the policies which have been so successful were put in place. The creation of 680,000 new jobs has meant a vastly improved labour market and a significant reduction of the order of 200,000 in the number of people who are currently unemployed. In percentage terms, the level of unemployment has dropped almost a full 3 per cent on the figures of 1982-83, the last year for which Mr Howard was responsible for the Treasury. It should also be pointed out that in so many of the Fraser years inflation was identified as the first priority of the economy. It took this Government to put the lid on inflation and bring about its significant reduction. This is also an important ingredient in net Commonwealth borrowings that are part of the Bill before the Senate today. In terms of industrial disputation, the 1.26 million working days lost in 1985 represents the lowest figure for any year since 1968. It will be of benefit to us to have a look at the circumstances under which these figures have been achieved. The Federal Government-Australian Council of Trade Unions accord has been the cornerstone on which these economic successes have been founded. The conservatives in this country have always sought to attack the trade union movement and have constantly attempted to wage a war of attrition with the unions. Sadly, rather than seeing the folly of this approach culminating in the end of the Fraser-Howard years, this abrasive policy of confrontation has been re-emphasised or recycled in an ever more aggressive form. The Hawke Government has believed strongly in the principle of working with the trade union movement and not deliberately against it. This constructive approach has meant a sharp decline in disputation, a renewed confidence in the economy and much better outcomes in wages and profits than would otherwise have been the case. I note with interest a booklet from Broken Hill Proprietary Co. Ltd received in my office, with a letter attached signed by the Manager of Corporate Affairs, Mr McGregor. In that letter Mr McGregor made the following point: BHP recently completed a financial year unprecedented in the amount of media attention due to the activity on its share register. This has tended to hide what has been the most successful year in the company's history with an Australian record profit of $1,009 million achieved. I think this figure needs to be emphasised once more. BHP has had a record profit of over $1 billion and the most successful year in the company's history. Many other companies have registered record profits, which is one of the many benefits that have followed the accord between the Government and the ACTU. It is, of course, important to have substantial levels of profitability to ensure reinvestment in Australian industry. The ability to have good rates of profitability and reliability of that profit share, which is guaranteed by better industrial relations, has been the reason for our improved economic performance. Now, it is true that some factors have worked hard to slow down this economic performance. What the Bill before us is really about is the extent to which government has to borrow to fulfil its obligations. It is pleasing to see that the amount of money required to finance a reduced deficit is now well below 2 per cent of gross domestic product. This reduction has meant that funds can now be made available for renewed economic activity. It should be remembered that whilst record rates of economic growth have meant that the domestic economy has fared well, the same is not so in the international arena. The continued international recession, with serious gluts of most commodities, has meant that on the international scene growth has been low or non-existent. The expansion of trade has been minimal or non-existent. The resultant contraction of international economic activity has been and will continue to be a big influence on Australia. As a trading nation Australia depends for a substantial share of its economic wealth on healthy trade markets overseas. Unfortunately, despite record growth in the volume of Australian exports, the value of these exports has fallen dramatically. The glut in the commodity market overseas has meant a decline of over 14 per cent in prices and a decline of 3 per cent in Australia's national income. This serious erosion of Australia's national income over the last 12 months has followed a slow decline in commodity prices over many years. The difference in the 1985-86 financial year was the suddenness and magnitude of this decline. During the Fraser-Howard years we were constantly being told that manufacturing in this country could go. The principle of the resources boom was that, by making Australia into a quarry, all imports could be paid for and a vibrant manufacturing sector was unnecessary. It was that attitude by the conservatives which meant that Australia was, indeed, adopting the features of under-development. A sophisticated economy derives its international trading position from a variety of exports, and not just an increased volume of exports of the same type. This Government has attempted, with considerable success, to rebuild a vibrant manufacturing sector which concentrates on exports. This job has been greatly helped by the depreciation in Australian currency which has brought about a new competitiveness not envisaged by countless conservative governments over many years. The greatest insulator of Australia's trading wealth is variety-variety of exports. The 1986-87 Budget is, in my view, a document worthy of praise. The reduction in the deficit to $3,503 billion was a figure hardly contemplated. It underscores a determination that this Government has to overcome the problems which have accrued over many years of conservative mismanagement. I point out also that the demand on loan funds has diminished accordingly. The general thrust of the Budget and the Hawke Government's economic strategy has been to build an economically stronger and more vibrant Australia. The measures in the Budget spread the burden of Australia's dramatic trade decline fairly. In summing up, the strategy of this Government has been sound. The Hawke Government has shown what benefits can be derived from a consensus approach to industrial relations and from the development of a stronger manufacturing sector. The Budget is a key part of that strategy and it shows the determination that this Government has to put the Australian economy back on the rails. Consequently, I commend the Bill to the Senate and re-emphasise that it was the responsible approach of the Hawke Government in its demands for Commonwealth borrowing that brought about the situation that we are in today-a situation in which Commonwealth borrowing is not at the level at which it is destroying investment and driving up interest rates. Senator CRICHTON-BROWNE(Western Australia)(5.23) —The Senate is debating the Loans Bill 1986. The Bill is designed to permit the Government to borrow $2.6 billion to finance, in part, its anticipated deficit of $3.5 billion. The $3.5 billion deficit which the Government is projecting as the real figure for this financial year is as unlikely to happen as is my finishing this speech by 5.30 p.m. By any measure, the Government is understating in major proportions the real deficit that this country and the taxpayers will face in 12 months time. Every indicator shows the contrary; yet the Government tells us that the economy will grow by 2.5 per cent in the coming financial year. Of course, that will not happen. As a result, there will be a significant shortfall in taxation receipts and a significant increase in the levels of unemployment benefit paid out and the other social welfare benefits that flow from a decline in real growth in gross domestic product. In the past, it has been common for governments to pass Loan Bills each year to finance their deficits. However, as is shown by our amendment, this Bill goes one step further: It seeks to give standing powers to appropriate money from the loan fund. Of course, in doing so, it will remove from Parliament the ability it has always had-namely, carefully and conscientiously annually to scrutinise and comment critically on the raising of loans by the Federal Government. The Opposition has moved an amendment to the Bill so that it will do no more than authorise borrowings for this financial year, not for future financial years. In this way, the Opposition will ensure that the raising of loans by the Government is always subject to examination and scrutiny by the Parliament. I shall take the opportunity, which by way of this Bill the Government seeks to deprive members of parliament of the future from taking, to comment on the Budget and the resultant need to borrow the $2.6 billion which the Loans Bill seeks to accommodate. This year, the Commonwealth Budget deficit is expected by the Government to be $3.5 billion. We are witnessing the extraordinary situation of the Government congratulating itself because it is spending only $3.5 billion more than it is raising. If one can find some light relief in that extraordinary claim of self-congratulations, it is that the Government has reduced the deficit from last year's $5.726 billion. Nevertheless, it is certainly not the basis, in any circumstances, for the self-congratulations in which the Government has been indulging. The fact remains that the Government has projected outlays of $3.5 billion in excess of that which it expects in receipts. To finance that amount, the Government has had to raise enormous sums, such as those authorised by the Bill. In effect, this means that the Labor Government's extravagance today will be carried on the backs of our children and their children in the future. It is they who will have to repay the legacy of this Commonwealth Government's debt which the Government intends leaving to them. Let us look at the history of this Government's economic mismanagement and demonstrate how it has betrayed the trust that the Australian people placed in it when it was elected. When the Australian Labor Party came to office it did what seems to be the fate of all Labor governments-past, present and, I have no doubt, future. It managed the Australian economy as though there would be no tomorrow. It took advantage of the upswing in the Australian economy and governed as though the upswing would go on forever. Now that the international economic climate has turned against the Government, we are faced with the Prime Minister (Mr Hawke) telling the country that it faces a crisis as great as it would be if wartime were upon us. Australia is paying the price of the early extravagance of the Federal Government. When the Labor Party came to office, it was blessed with the breaking of the worst drought in Australia's history and an upturn in the world economy. As might be expected, that led to an increase in Commonwealth Government taxation receipts. For example, in 1984-85 sales tax revenues increased by 19.2 per cent over the receipts of 1983-84. Similarly, income taxes increased by 25 per cent for companies and by 18.6 per cent for individuals. The interesting thing is that the breaking of the drought was worth $4 billion to gross domestic product. This Government had a windfall of $4 billion. What did it do with it? It squandered it; it wasted it; it spent it. Debate interrupted. Debate resumed from 22 August, on motion by Senator Walsh: That the Senate take note of the statement and papers. The PRESIDENT —Order! Before I call Senator Alston, I remind honourable senators that this is his first speech in this chamber and I ask that the normal courtesies be extended to him. Senator ALSTON(Victoria)(5.31) —It is a great honour to be chosen to represent the people of Victoria. It is my privilege to enter the Federal Parliament at a parlous time in Australian history when many are claiming either that there are no solutions to our economic woes or that such solutions lie outside the parliamentary arena. Indeed, in many quarters there are calls for direct action and mass mobilisation by farmers, small business people and others. It is important to understand the reasons for such frustrations if we are to make an effective political response. At the outset I would like to pay tribute to the Senator whose place I have recently taken. Alan Missen attained his life-long ambition in 1974 when he was elected to the Senate. Thereafter, he served with distinction until his sudden and untimely death on 29 March 1986. He was in many ways unique. His political ideology never wavered. He was passionately concerned with human rights issues and fought tirelessly to address political and social injustices, especially through his long involvement with the Parliamentary Group of Amnesty International, of which he was the Chairman at the time of his death. Through all of his political battles he had the strong support and admiration of his wife, Mollie. He was indeed a very fine human being and the Parliament is much the poorer for his passing. I would like also to pay tribute to my many friends within the Liberal Party of Australia in Victoria. I was honoured to be President of the Party through a period of far-reaching administrative change. Through that difficult transition and beyond I was fortunate to have the help and support of many fine people who know the necessity for a successful political party to be able to rely on a united and effective organisational structure. Finally, I would like to thank my wife Megs and our children, Amy and Nicholas, for their love and support. In an age where there is no shortage of superstars in the corporate arena, on the sporting fields or in the entertainment industry, statesmen remain in very short supply and politicians rank not far ahead of snake oil merchants in terms of public respect. It is therefore of vital importance that the national Parliament remain the crucible of democratic activities. The Senate offers a unique opportunity to pursue issues of national importance in a responsible, rational and, if necessary, courageous manner. Whilst I come to the Parliament with a background of almost 20 years in private practice at the Victorian Bar, for almost all of that time I have had a keen and active interest in the political process. For almost a decade I was a senior office-bearer in a range of national organisations, including the United Nations Association of Australia and the Australian Council for Overseas Aid, the peak body for over 70 overseas aid agencies and of which I was the National Chairman from 1978 to 1983. Through my activities at both a national and an international level, I had the opportunity to travel widely, especially in the Third World, and to see at first hand the plight of many people less fortunate than ourselves and the many man-made rather than natural disasters which often account for poverty and underdevelopment. My involvement in non-government organisations has made me acutely aware of both the power and the significance of extra-parliamentary groups. Whilst responsible community organisations are an essential safety valve in a democracy, they must never be allowed to usurp the role of government and the Parliament. In many ways this has happened by default. We have seen Federal governments of all persuasions which have been cowed by the headlines of the day, the squeals of vested interests, the naked blackmail and intimidation of the abusers of power. But what is needed is not merely a strong determination to stand firm but a set of principles by which to be guided. I believe the Liberal Party has now developed a very clear and coherent alternative to the politics of expediency. We will restore the primacy of self-reliance, incentive and healthy competition rather than the debilitating and ultimately self-destroying reliance on the walking frame of government. As Professor Ralf Dahrendorf has argued, liberty involves the fostering of individual life chances. In many ways Australia can be seen as a heathen society, constantly aspiring to material improvements and acquisitions without counting the social costs and without seeking the holistic integration of body, mind and soul. `To have or to be', said Erich Fromm. Many Australians unknowingly opt for the former. Many of our social dislocations can be attributed to a lack of spiritual purpose in life and a too ready resort to short term palliatives. To some extent progress is about means as much as ends. The mere accumulation of riches is an empty pursuit. But the striving for personal success and willingness to contribute to economic growth are vital for a dynamic yet caring society. I do not want an Australia in which its major institutions are overthrown, the social safety net removed and the strong left to exploit the weak. But I do want a more thrusting, vibrant, challenging society in which individuals strive to maximise their potential to achieve worthwhile social and human goals rather than sheltering behind strong unions or big government. Over the last several years the political debate in this country has been transformed. After decades of concentrating on the social consequences of government actions and the politics of handouts, regulation and protection, all of which are narcotics designed to destroy self-reliance, even the dominant factions in the Australian Labor Party have now grudgingly conceded the centrality of economic growth as the sine qua non for human progress. Capitalism world-wide has made a very strong comeback with many developing countries embracing privatisation, China firmly on the capitalist road and even the eastern European bloc striving for the competitive edge. It is little wonder that even a New South Wales senior Cabinet Minister recently suggested that socialism has failed. I was indeed fortunate to grow up in the lucky country. World War II and the following two decades were periods of great development and steady progress in the growth of the Australian economy, and we were all able to take for granted the occupations of our choice. Perhaps the seeds of our current predicament can be found in the rejection of the 1966 report of the Vernon Committee of Economic Inquiry, a group of eminent Australians who said: The trend of national productivity is of key importance in the economic growth of a country and in the improvement of its living standards. The study of this trend is vital for the discussion of wage trends and their relation to price stability, and to the competitive position of industry in relation to that of the country's principal competitors. It is a great pity that such advice was not taken and has on a number of occasions been wilfully ignored by the Conciliation and Arbitration Commission, which has preferred to genuflect and at times grovel before the realism of industrial peace rather than take the responsible approach by having regard to an employer's capacity to pay, the economic consequences of indexation, the crippling effects of extravagant work practices and other forms of largesse unrelated to productivity and therefore to the competitive market-place. Productivity will improve only when there is less of a cold war mentality between management and union leaders and a marked attitudinal change that recognises the mutuality of interest in the success of an enterprise. The ostrich approach to economic reality has its executive counterpart in the pusillanimous refusal of governments of all persuasions to recognise the beneficial incentive effects of low income tax regimes. At a time when the United States of America is moving to a top individual marginal rate of 28c in the dollar and when France and Ireland are the only two industrialised countries with higher corporate tax rates on distributed income, the present Federal Government persists in retaining a tax structure which can only drive the most productive enterprises off-shore or underground. I regret the instant negative reaction to the concept of privatisation from those who are too cautious to recognise the obvious benefits of smaller government and competition within the public sector. The object of such reforms is not some crude moral crusade or ideological binge but rather a desire to enable individuals to have greater control over their lives and incomes. In many ways, a quiet revolution is occurring within Australia, in large measure as a response to an uncertain international trading environment but perhaps also reflective of the desire to maintain traditional ethical values in a period of rapid technological change. The capacity of government to influence people's lives must not be underestimated, and it is now clear that in many ways the responsibilities of government are being redefined. Australia must always remain a generous nation, ready and willing to protect and support the weak, the poor and the needy and to strive for equal opportunities for all. But it does not follow that it is necessary to have an ever-increasing bureaucracy maintained by higher taxes and charges in order to achieve a just society. Whilst a balance must be struck between incentive and compassion, the pendulum can swing too far either way. The time has come when it is more important to emphasise freedom than mere equality. Over the years I have been fortunate to have visited many countries in Africa and Asia as a member of official project aid missions. In my experience it is very difficult to make a quick quantitative assessment of the worth of many projects. Often it is necessary to attempt to gauge the development ethos and personal philosophy of aid workers and recipients. Almost invariably, the success stories are those where there is a high level of personal commitment and active involvement and a minimum of government intervention or assistance. The same lesson can be learnt at home. Those who lead the most worthwhile lives and achieve a measure of success are usually not those who merely inherit riches or rely on others to generate wealth. The real achievers are those who strive to improve the spiritual and material quality of their own lives and those of their families. However, it should never be forgotten that, whilst there is a very important humanitarian basis for an overseas aid program, it is also in our enlightened self-interest both in maintaining influence and good relations with our neighbours and in facilitating trade flows. For example, whilst we currently provide $300m to Papua New Guinea for budgetary assistance, the balance of trade is almost four to one in Australia's favour. I am determined that in the course of my parliamentary career I will work for government initiatives which enable individuals to take control of their own lives and provide maximum opportunities for worthwhile employment. In many ways the carnival is over. By now all thinking Australians realise that we have had it too good for too long. Thanks to all-round protection, buoyant agricultural and mineral commodity prices, a high level of capital inflow and an administered currency regime, we have been sheltered from the harsh need for industry and sectoral restructuring. We have slipped from having a gross domestic product per capita 100 years ago which was 70 per cent higher than that of the United States of America to a point where we fell to 25 per cent below the United States some 50 years ago, and we have remained there ever since. Even worse, from having the world's highest per capita income at Federation, now we are barely in the top 20. For too long Australia has consistently taken the easy way out. Although inward looking trade policies were designed to encourage domestic production and employment in manufacturing, they simply led to import substitution when other newly industrialising countries were embarking on export oriented policies. As a result, Australia's share of world trade has fallen. Whilst manufactured goods account for 60 per cent of world trade, Australia's manufactured exports comprise only about 15 per cent of our total exports, with 80 per cent being constituted by mineral and agricultural products subject to considerable fluctuations in demand and chronic oversupply. Thanks to wage indexation myopia, the wage share of GDP rose from 57.4 per cent in the mid-1960s to 63.5 per cent in the late 1970s, at the expense of profits. The Australian labour market operated as though it was in a closed economy until the floodgates of deregulation opened to expose our inadequacies so painfully-excessively rigid wage and benefit structures which are totally unaffordable, especially in tough times. Instead of spending vast sums on make-work programs such as the community employment program, on which $290m was spent last financial year and over $1 billion has been spent since 1983, we should be investing much more in youth education and training and creating a more conducive climate for acquiring relevant skills and fostering entrepreneurship. Perhaps the most damning indictment of artificial job creation schemes is that whereas in 1983-the worst year for employment under the previous coalition Government-the average period of unemployment was 34.3 weeks, now it is 51.9 weeks. Over the last 10 years the proportion of those in receipt of unemployment benefit for more than six months has risen from 19.3 per cent to 53.4 per cent. It is imperative that we endeavour to provide long-lasting jobs for all who seek work in our society. During the last 10 years, 10 million new jobs have been created in the United States-nearly all in the small business sector. Technological innovation is one of the main driving forces behind job creation and productivity increases. A recent Brookings study indicated that 44 per cent of the productivity increase in the United States since the war could be related to technological innovation, about 16 per cent to tangible capital investment, 16 per cent to economies of scale, 12 per cent to improved education and 12 per cent to better allocation of resources. Australia has led the way in some biotechnology and genetic engineering developments but generally tends to rely on imported, and therefore lagged, derivative technology. Telematics, robotics and fusion energy will bring substantial social change, but Australia's response to date has been essentially passive and inward looking, even with increased research and development tax incentives. Australia has been described as a rent seeking society where the best human resources are devoted to seeking rewards from the political system rather than increasing the production of goods and services. Business finds import quotas much more attractive than becoming internationally competitive, unions devote their energies to inducing the Conciliation and Arbitration Commission to grant wage increases rather than optimising output and bargaining for productivity gains and governments raise taxes rather than cut expenditure. All are victims of the sheltered workshop syndrome-the easy way out, the soft options. In speaking of the Australian commitment to egalitarianism, a recent major United States survey of the Australian economy noted that a pervasive distrust of markets `seems to suggest that Australians prefer government determined outcomes in many cases to market solutions even if efficiency is sacrificed'. It is little wonder that the newly industrialised countries of South East Asia have beaten us pointless in recent years in the growth stakes. It is often seen as un-Australian to be outstanding. Risk taking must involve some failure. But we fail at the outset if we do not try. Competition is the essence of the human spirit-striving to be a better human being, striving to build a better political and social climate. We live in a century of towering achievements in science and technology-quantum mechanics, the unravelling of the DNA molecule, nuclear fission, space travel, the information explosion, fourth generation computers and the green revolution. Most of these breakthroughs are the result of higher education, increased research and development and more adventurous risk taking. It is not the role of the government to pick winners, but it can set the scene which will encourage winners to emerge. Post-secondary retention rates in Australia are low. Less than 30 per cent of our 20 to 24-year-olds are in post-secondary educational institutions, compared to almost 60 per cent in the United States. To compound the problems facing a more dynamic private sector, 25 per cent of the labour force is in the public sector-almost the highest proportion in the Western world and in marked contrast to 17 per cent in the United States and 7 per cent in Japan. Academic entrepreneurs and university-based science parks are very thin on the ground in Australia. Increased emphasis on technical education is needed, especially in science and mathematics, at primary and secondary levels if we are to eliminate institutional barriers to future demands. Whilst Australian manufacturing can and will become more outward looking, perhaps the greatest prospects for export growth are in the services sector. With a stable political system, well-developed communications systems and higher educational standards, we are well placed to expand exports of technical services, agricultural services, financial services and off-shore banking services. Already we export more than $140m per annum of management consultancy advice, most of it to the east Asian region-but we are still light years behind aggressive leaders such as France and Japan. Rather than dwelling for too long on our past mistakes and present inadequacies, I prefer to look ahead. There is no reason why by the year 2000 Australia cannot be the centre of trade and commerce in the Asia-Pacific region. It is undoubtedly the fastest growing region in the world. At the beginning of the 1960s the GDP of Japan was less than 10 per cent of that of the United States; by the 1980s it had risen to about 40 per cent. In 1962 east Asia accounted for 9 per cent of world GDP; 20 years later it had climbed to over 15 per cent. By the year 2000 there is every prospect of east Asia accounting for around one-quarter of world GDP, with east Asia and north Asia together providing one-half. Whilst there are serious difficulties in the Philippines economy and the growth rates of a number of east Asian countries are likely to be somewhat reduced over the next few years, China's emergence as a new force on the regional and world economic stage will substantially offset these effects for east Asia as a whole. Continuing regional growth is likely to be accompanied by increased demand for industrial raw materials, food and manufactured products. During the last 30 years the share of Australia's exports to east Asia has risen from 14 per cent to 47 per cent while imports from these countries have increased from 9 per cent to 36 per cent. However, Japan, Korea and Taiwan now have agricultural sectors which are among the most protected in the world. Australia's efforts should be devoted to trade liberalisation-gaining greater access in exchange for less protection of Australia's labour intensive industries, such as textiles, clothing and footwear. Already a 30 per cent devaluation against the United States dollar over the last three years has significantly increased our export competitiveness. Wage moderation, productivity based increases, elimination of unaffordable work practices and profit sharing incentives can help to restore Australia's trading position. There are already indications of new and progressive export oriented Australian companies taking advantage of our enhanced competitive position. Australia is about to export 30,000 locally produced Ford motor vehicles a year to the United States and we are already exporting ferries and small ships to Europe and Asia. Australia can become a regional centre of excellence, with a commercial disputes forum, the leading securities futures and currency markets and the most sought after education system based on quality of learning, rather than mere quantity of facilities. The magnitude of Australia's economic crisis, as exemplified by the $14.3 billion current account deficit, has transformed the political landscape. I salute the Government's courageous decision on currency deregulation. More than any other single factor, it has compelled Australians to confront the harsh economic realities which have been a product of flaccid attitudes, beliefs and practices which have been allowed to develop since World War II. But now the moment of truth is upon us: Do we want to compete with the rest of the world or throw in the towel and become the poor white trash of Asia? Whilst the Budget remains the cynosure of public attention and debate, I cannot avoid the observation that the Government has missed an historic opportunity. Having created a favourable climate and a general expectation of significant spending cuts, it opted for a public relations approach to deficit management by imposing $1.4m of new taxes, sleight of hand deferral of welfare increases and a $600m windfall gain on currency speculation rather than biting the real bullets. The reduced deficit has been achieved through increases in government receipts of 4 per cent in real terms, leading to a record 28 per cent of gross domestic product. Moreover, despite the tax cuts from 1 December, net PAYE taxation will increase by more than 10 per cent, well above the forecast increase in earnings and employment. As a result, we are left with a $14.3 billion current account deficit which is 6 per cent of GDP compared with 2 per cent throughout the 1970s and is now the largest of any economy in the Organisation for Economic Co-operation and Development. We also have the worst relative position on inflation amongst the industrialised nations in the last 25 years, with a rate three times the OECD average, four times that of our major trading partners and almost five times that of the United States. We also have rising real unit labour costs to the highest level since 1981-82; a public sector percentage of GDP over 42 per cent compared with around 33 per cent barely 15 years ago; a $21 billion social welfare program which has almost doubled in cost in the last five years with no appreciable decline in poverty levels; and foreign debt currently at $69.3 billion and expected to exceed $80 billion this financial year, with a debt service ratio as a proportion of exports of almost 16 per cent-approaching the International Monetary Fund danger line for developing countries of 20 per cent and up from 4.5 per cent 10 years ago. Most importantly, $30 billion is public sector debt, which has outstripped private sector debt since 1983. The outlook for 1986-87 is for prices of domestically produced goods in Australia to rise more than three times faster than those of our major trading partners so that more than one-third of the increase in competitiveness deriving from the 13.5 per cent fall in Australia's trade weighted index in 1985-86 will be eroded in the coming year by our high inflation rate. This makes it imperative that there be no more wage compensation for devaluation effects and that the superannuation push be deferred until more affordable times. More than ever before, Australia requires leadership which is prepared to undertake at times radical economic surgery. More than ever before, Australia's economic future is dependent upon the world economy, and an incremental approach to change will not be sufficient to see us through the harsh realities. Unless we are prepared to face the world we will get what we deserve. I remain confident that there are enough men and women of good will, foresight and determination in the Australian community to deliver us from ourselves. The PRESIDENT —Order! Before I call Senator Powell, I remind honourable senators that this is her first speech in this chamber and I ask that the normal courtesies be extended to her. Senator POWELL(Victoria)(5.56) —Last Tuesday I took my seat in this place as a senator for Victoria, filling the vacancy created by the retirement of the Honourable Don Chipp. I welcome the opportunity to pay tribute to Don Chipp and his contribution to Australian politics. He served the Parliament and the Australian people for 25 years-an outstanding achievement in itself. But more than that, in that time he made a significant impact on the Parliament and on the face of Australian politics. As Minister for Customs, he liberalised the nation's censorship laws and struggled to alert us all to the dangers posed by addictive drugs and organised crime. He was always a passionate and colourful character, yet he was readily given a great deal more trust and confidence by the public than most politicians usually manage. That is a tribute to his open, direct and honest approach. It was not surprising that when, in 1977, he decided to resign from the Liberal Party of Australia, many of the people who had for some years been working in their various ways towards a new reformist direction in Australian politics were able to come together under his leadership and establish a new political party. Many thousands of other previously uncommitted Australians-including myself-took up the challenge and the Australian Democrats were formed. Of course, the experts-journalists, political analysts and other politicians-all said that it would not last, that it could not survive. That was almost 10 years ago and we are still here. We have increased our numbers at each Federal election that we have faced in those 10 years, against all the odds which are stacked against new parties in Australia's entrenched two-party system. There is no doubt that this success would not have been possible without the leadership of Don Chipp. Somehow he managed to combine an extraordinary physical energy with a sensitive and perceptive approach to project new ideas into the public arena and to weld together the various groups looking for an alternative approach to Australian politics. In doing so, he was able to nurture the fully participatory process which was so important to the emerging Australian Democrats. I have often thought over the years, as decisions were being made in a somewhat cumbersome way, that Don Chipp could have been excused for wishing that he was leading a party on which he could have imposed his will from the top. But he did not do that; indeed, he could not, none of us can. That is the essence of the Democrats. Don Chipp has done more than simply ensure the survival of his new party for 10 years; he has also helped build a party which can survive beyond the term of his leadership. The processes of the party are well established and through those processes an extraordinarily capable parliamentary team has been built which can readily carry on the task and will do so. Naturally, the outstanding public presence of Don Chipp very often overshadowed the genuine teamwork and breadth of the base that was being built. This is not the way that he wanted it himself. No one could have been a more generous or supportive political mentor. Many hundreds of Australian Democrats candidates around Australia have shared my experience of his willingness to lend a hand in campaigns, and especially of the advice he so readily gave to budding politicians from an old pro. The tag `Don's Party' which the media consistently tried to attach to the Australian Democrats never did justice to his generosity of spirit or to his vision of a party belonging to all its members and forging a new political path to take this country into an uncertain and challenging future. Now, more than ever, that vision is needed and more and more people are turning to the Australian Democrats as the only parliamentary voice for the disenfranchised, for those left stranded outside the politically powerful vested interests of big government, big unions and big business and, of course, for those who work for a nuclear free future. Don Chipp made this happen in 1977 and he has given it his all since then, always doing what was right, never what was expedient. It is an honour and a great challenge to take up the seat he vacated. I was interested in a comment made by way of interjection last week when I was on my feet proposing a notice of motion-a comment from somewhere on the Government benches, I think-which referred to me as a typical Democrat. Perhaps I am. I was one of the many thousands of Australians with no past political allegiance who found the prospect of a new political party attractive in 1977 -a party which looked beyond the entrenched two-party adversary system, a party which offered its members the opportunity for a direct say in determining polices and in choosing candidates, office bearers, leaders, and even replacement senators. No other Australian political party provides this direct access to the political process and, with it, the opportunity to initiate reform. From the very beginning the Australian Democrats have seen it as our major role to free political thinking and political action from the shackles of vested interests and to make it possible to translate basic human values into political decisions. The people who, like me, were to become `typical Democrats' were those who were concerned to find long term solutions to society's major problems, rather than the usual short term band-aids dictated by political expediency. We believe that environmental, social and moral concerns should have equal weight with political and economic factors when the hard decisions have to be made. We want to replace confrontation and polarisation with effective and sensible conflict resolution, while recognising that some moral issues must be non-negotiable. In such an environment we seek the development of a sustainable economy, with priority for personal initiative and hard work in small business, the development of co-operatives and small scale individual enterprises, rather than the monopolies of either private or public juggernauts. We recognise that the way to social and economic justice is to provide more equality of opportunity through more information, more skills and greater mobility. We therefore reject both the indiscriminate handouts approach and the survival of the fittest attitude to welfare in favour of creating the conditions for improving the capacity of individuals to live a better life. Clearly, redistribution of wealth alone is not enough because ultimately wealth flows back to those who control the system. An individual can be oppressed at least as much in a socialist system as in a capitalist economy. The answer is to empower people to take part in the decisions which shape their lives and which will enable society to cope with the fast-moving changes and threats which face us all. For these `typical Democrats' of whom I am speaking there was always the clear recognition of the greatest threat of all-the nuclear threat. The very first policy we set in place, with every individual having a direct say, was our anti-uranium, anti-nuclear policy. We were quite unequivocal right from the outset that, having committed ourselves to political action towards a better world for the future, for our children, we must first act against the threat to any future at all. We have never wavered from this position and have concentrated a good deal of our effort on trying to move Australia out of the global nuclear power plays of the super-powers. We will persist with this course. We must, for all our sakes. There was particular significance for me in the fact that the day I was sworn in in this place was designated International Day of Peace. I could not have thought of a better way of beginning. So, yes, I am happy to agree with the suggestion that I might be a typical Democrat. Indeed, I hope that will be the case. However, I would not want anyone to imagine that I might be a stereotypical Democrat. In fact, I would say that it is not possible for there to be such a thing, at least in the parliamentary sense. I say this because there is no compulsion for Australian Democrat parliamentary representatives to vote in accordance with caucus decisions. In the case of the major parties, decisions are often dictated by the interests of a powerful lobby group rather than the interests or wishes of the voters who put the person into Parliament as their representative. The issues of uranium mining and nuclear disarmament have been betrayed by every party except the Democrats, largely due to party discipline exercised by the party machine muzzling the sincerely held beliefs of many politicians and forcing them to vote against their consciences. Now, of course, we have the absolute sell-out in the most recent decision to sell Australian uranium to France which is causing so much heartache to many members of the Labor Government. How could I expect my family to accept the many sacrifices and frustrations of sharing their lives with a politician and how could I face the people who worked hard to put me here if, in the end, my own firm beliefs and principles were to be overridden by the will of caucus? I do not believe I could. I have mentioned my family and my concern for the future of all our children. I have four-two who are now young women, and two small boys-who, with my husband, and our parents, have been a major source of strength, inspiration and support to me as I have worked in many ways for almost a decade, helping to ensure the survival and develop the effectiveness of the Australian Democrats. Our family life has, of necessity, been a model of the very kind of co-operation and individual initiative so supported by Democrat philosophy. Their love and understanding has been of utmost importance to me at all times, and I thank them for it. As Australians we lay claim to a belief in a fair go for all. For the Australian Democrats this means that there is an obligation to provide equality of opportunity as a matter of justice. For those who are unable to look after themselves at any point in their lives, we believe there should be a safety net to support them. As a nation we are not doing well. Ownership of assets and opportunities for access to education, income and essential services are still extremely uneven for a society which prides itself on being one of the most egalitarian in the world. Long term unemployment and poverty are increasing. Three million people, 800,000 of them children, are now living below the poverty line. Almost a quarter of our young people aged 15 to 19 are without jobs. By contrast, there is evidence that at the other end of the scale 10 per cent of the population own 50 per cent of the nation's wealth, that taxpayer-subsidised company takeovers yield hundreds of millions of dollars, and that luxury imports are thriving. This situation is intolerable to the Australian Democrats, as it ought to be to all Australians. It is particularly important that at this time, when the whole economy is in difficulty, largely as a result of mismanagement by successive governments which have failed to establish long term goals and which have now left our fate in the hands of foreign money markets, we accept responsibility for those who are not able to help themselves. Indeed, for many it is really just a matter of removing impediments, which is what the poverty traps legislation was designed to do. It is now more critical than ever that these measures be implemented. For the unemployed, it is not sufficient simply to pay a benefit and believe that our obligation is met. We must make it possible for them to move back into productive work. For many this will mean retraining, and they will need to be paid while this is undertaken. For others it will mean being able to take up opportunities in community work, their own enterprises, co-operatives, or part time employment. This will be possible only if we lift the free income limit to at least $80 so that the new opportunities can be taken without loss of support. It makes no sense at all that so many of our children live deprived lives below the poverty line. We must give priority to increased support for families with dependent children. The Australian Democrats have consistently pushed for higher child allowances for single parent families, pensioners and the unemployed. We have deplored the reduction over time of the real value of the family allowance. We have opposed the introduction of sales taxes on the necessities of life. We have pushed for the provision of affordable and accessible child care facilities and voted against child care funding cuts because we recognise that the very best way out of poverty for single parent families is through the opportunity for employment. The Australian Democrats have always recognised the need for greater flexibility in working patterns and we see this as essential in getting more people back into work. As we have done in the past, we will continue to pursue moves towards job sharing, permanent part time work and paid retraining. Quite apart from the problems currently escalating because of the general economic crisis, there are major changes ahead in the nature of work because of the introduction of new technology. To cope with what are quite dramatic changes we will need an increasingly well educated and highly trained work force. Access to education at all levels must, therefore, be a very high priority. It is staggering to find that government does not apparently see it this way. To the Australian Democrats, education is an investment in the future and should not be seen as a cost on the community. We therefore believe that it should be available free of cost at all levels to all people throughout their lifetimes. We deplore as a most retrograde step the latest move to introduce the $250 levy on students. Since the abolition of fees in 1974 there have been marked changes in participation rates of people from non-traditional blue collar families, and particularly of women. In 1970, 18 per cent of students were women; in 1983, women made up 44 per cent of university students and 48 per cent of students at colleges of advanced education. The number of mature age students also increased by 10 per cent between 1970 and 1980. Reintroduction of fees will have cruel effects on the ambitions, dreams and aspirations of part time tertiary students, mature age students and especially women and country students. The question of fees comes on top of a situation where income support for students is inadequate in any case. The Australian Democrats have consistently called for raising assistance under the tertiary education assistance scheme to at least 120 per cent of the poverty line income level, and will continue to do so. It is a disturbing feature of the current economic situation that so much of the burden and, even worse, so much of the blame seem to be falling on those who have not been in any way the cause of the crisis. Simplistic calls of work for the dole might give some people a sort of perverse satisfaction, but artificial make-work schemes are not going to pay our overseas debt or improve our balance of payments. Certainly all people have the right to a satisfying job and we must establish procedures, as we have suggested, to make this possible. But the responsibility for the economic position of this nation lies with the community, not with the individuals who are the victims. Governments could begin by recognising that a deregulated economic system is not the be-all and end-all; that speculators and company promoters must be made to contribute to the wealth of this country, not just their own; and that business must be encouraged to invest in future development in Australia rather than off-shore. For solutions we need to look at the whole picture, not blame and victimise groups and minorities which are not in a position to defend themselves. In fact, it is these people we should support and defend. By becoming a senator I became a member of a minority because I am a woman. Of course, women do not constitute a minority in the community at large-in fact, at the moment we constitute about 51 per cent of the community. However, only 10 per cent of Federal parliamentarians are women, although the Senate manages to do a little better. I consider this to be an imbalance which is a decided disadvantage to our society. Of course, there have been advances for women in recent times. I certainly count the election to the leadership of the Australian Democrats of Senator Janine Haines, Australia's first woman parliamentary leader, as one of those advances. But what does that event say? Does it say that there are not others who are capable of that role, that there never have been others, in any other party? I think not. I think it actually says that we have here a party which is capable of recognising talent and ability and which, having done that, does not have the disadvantage of a history and structures, both formal and informal, which shore up the male dominated power bases of our society. Bearing in mind the fact that the decision was made by a vote of Party members, I would suggest that it is a most encouraging sign for women as a whole that a group of ordinary Australians have reached a stage where they are prepared to take this kind of step. I believe that most of my female colleagues in the Parliament and women in other decision-making and non-traditional roles would agree with me that we do not want to be labelled; we simply want to be seen as equal people and to be able to get on with the job. Unfortunately, I do not believe that the time has yet come when that is possible. There are some traps into which women in our position can fall. We can say: `Well, I have made it and that proves that any women can-end of argument, end of problem'. If we are honest with ourselves we will know that that is not the case. I believe that we must act in every way possible to ensure that we achieve equality of opportunity for all women. For me it is simply this: It is very important for society as a whole that all individuals are able to shape their lives in accordance with their capacities and personal choices, but we have ascribed to males and females quite limited and limiting roles in our industrial society and we have prevented real choice in very many cases. We have locked our men into the breadwinner, achiever role and in doing so we have shortened their life span relative to women, denied them the caring and sharing experiences of close ties with their children and discouraged them from expressing the full range of their emotions in a natural way. On the other hand, we have not acknowledged the wealth and variety of talent which women have, while we have encouraged and expected them to limit their lives largely to the home. As we move to face the challenges of the future we can ill afford to ignore any assets that any of us might have to offer. In addition, there is the issue of equity. Because of our attitude to women and our limited view of their role and potential, we have now reached a position where the negative effects on individuals are palpable. It is young women who suffer the highest unemployment rates. The vast majority of single parent families living in poverty are headed by women. In spite of high rates of participation in higher education, women are grossly under-represented in administrative and decision-making roles in education. Women are still not making their mark in the upper echelons of business across the spectrum and only 10 per cent of parliamentarians are women. It is important, I believe, for equity and balance which will benefit all peoples that all possible steps are taken to ensure that women are part of all community decision-making, that we are not restricted to the areas which have been traditionally ours and that men are not excluded from those areas. I am quite sure that the sorts of decisions which are made by government could be quite different, more compassionate and less remote from reality if the balance were more even. For those reasons, I see it as very important for me, as a woman in a decision-making role, not to take the attitude that my responsibility to other women has ended, but to make it clear that I will act in the interests of equity and balance. As I said at the beginning, the attraction into politics for me was the prospect of a new, innovative and independent political party. I believe that is certainly what we have achieved as Australian Democrats. So I watch-it would be with some amusement if it were not so serious-the political `experts' trying to fit us into the traditional political pattern, the Left-Right spectrum. It was a real problem when, the media having decided that we fitted neatly in the middle, the Hawke Labor Party moved quickly to that position, nudging out the Liberals who were trying to look as though that was where they belonged. Of course, the answer then was that the Democrats must be a little bit left of centre, but as the Labor Government moved even further to the Right-selling uranium, knocking the pensioners, castigating the unions and cutting foreign aid-what about the Democrats? They must, of course, have moved much further to the Left! That is given sagely as the answer, yet if any of the experts took the trouble to look at what we were saying back in 1977 they would have to think again. From the very beginning the Australian Democrats have been about reform, about new ways, new ideas, about bringing people into the decisions which affect their own lives; about a world which will survive and justice for the individual. This is why we have consistently acted in the Parliament on the nuclear issue, why we went to the polls in 1983 on a platform of saving the Franklin River, why we support a Bill of Rights for Australians and effective affirmative action, why we fight for land rights for Aborigines, why we stand up for the right to free education and why we will not tolerate further burdens being placed on the poor. These are the reasons why we will not allow the wealth speculators and company takeover merchants to play their games without opposition and why we will continue to push governments to accept their responsibility for the kind of forward thinking that is needed to get Australia into a safe and viable future. Political dogmatism will not remove inequity, put food on the people's tables or find them jobs. The Democrats are not interested in dogma; we are interested in people. We will take up issues as they arise, making decisions as we see them in the light of our long-standing objectives and policies and in the interests of the community as a whole. Debate (on motion by Senator Robertson) adjourned. Sitting suspended from 6.19 to 8 p.m. Debate resumed. Senator CRICHTON-BROWNE(Western Australia)(8.00) —Before the interruption of the debate on the Loans Bill 1986 I was making the point that during the flush period of 1983-84 when there was a break in the drought and the Government was the beneficiary of an additional $4 billion coming into the economy, the Government, rather than reducing taxation and providing us with a sound base for our economy, capriciously spent the money. What did the Government do with its windfall money? Did it reduce taxation? Did it reduce the Government deficit? No, of course it did not. It did what all governments of this political persuasion do-it spent more and more. Budget outlays increased by 15.7 per cent in 1983-84 and by 12.9 per cent in 1984-85. This Labor Government, as a result of its extravagant expenditure, is now going to incur a deficit of $3,500m at a time when the country and the economy are fast moving into recession. This is after a Budget which is allegedly as tough as one might expect in a crisis as bad as if the country were at war. The fact is that there was no need for this Government to lead the country into the situation that we now have. The pain which has been inflicted upon so many people is not as the Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) would have us believe-that it is simply a matter of bad luck. It is simply a matter of bad management. In looking at the balance of payments deficit one may ask: `Why is it, other than the fact that there has been a glut and a reduction in prices in the rural and mining sectors, that we are suffering worse proportionately than most other countries?' It is because of our lack of competitiveness against our trading partners. When 50 per cent of the gross proceeds of the rural sector are absorbed past the farm gate, is it any wonder we are not able to compete in the world market? When 25 per cent of the mining industry's outlays go in wages, is it any wonder that we cannot compete? We now have Brazil coming on stream with 35 million tonnes of iron ore every year-one-third of our total annual production. That country is far more competitive than Australia. We have rigidities built into our system which deny us an opportunity to be competitive. We have bizarre work practices, as has been demonstrated recently, particularly in the iron ore industry in the north-west of Western Australia where, irrespective of what equipment is required for a day's work, the union will decide what will be used. A scraper or a drag line might be required, but if the union decides that a water truck should be used on a wet day, so be it. Up until now Mr Burke and Mr Hawke have been saying that there is something terribly wrong with mining companies seeking to object to that type of blackmail by the trade union movement. As a result, we find the Government failing to make any provision in its economic management for the times when, as we have now, there is a downturn in the economy. The Government having led Australia into recession, let us now look at the action it has taken at the last moment, late as it might be, to seek to overcome some of the problems. Let us start with the Commonwealth Budget. As I said, the Budget is providing us with a deficit of $3.5 billion. A total of $3.5 billion more than is being earned is being spent. In an effort to reduce the Government's current account deficit and to prop up our ailing and failing Australian dollar, the Government has taken two forms of action: It has held interest rates at abnormally, intolerably high levels and it has, in part, begun to prune the deficit. As we all know, there are other more realistic and practical strategies which this Government could use to reduce last year's $13.7 billion current account deficit. If time permits I will discuss those alternatives later. Let us turn to interest rates. This Government has given Australia record interest rates, the highest ever interest rates, in a desperate attempt to attract foreign capital and to hold up the Australian dollar. If it were not for the fact that the Reserve Bank was interceding, interfering and involving itself, the Australian dollar would be considerably lower. We no longer have a clean float; we now have a dirty float because the measures the Government has adopted have been found wanting. The effect of this has been to cause the onset of a recession and to place our export industries at yet another competitive disadvantage. Inevitably, the wondrous J-curve has not arrived. That is because, first of all, we do not have the capacity for import substitution and, secondly, we do not have investment in the manufacturing sector which allows us to export. That is due largely to high interest rates and companies' reluctance to invest in capital equipment. One might well compare the interest rates on long term government bonds. In July in Canada long term bonds carried an interest rate of 9.36 per cent; in the United States of America a comparable figure for June was 8.23 per cent; and in Japan it was a mere 5.95 per cent. In Australia, under the present Labor Government, the interest rate on long term government bonds in June this year was 14.4 per cent. These interest rates are only indicative. As we all know, real interest rates are the cost of commercial borrowings, which are essential for the investment and growth which this country needs. These interest rates are far higher in Australia than in other countries and far higher than long term government bonds. For an arranged overdraft with Westpac Banking Corporation, the interest rate is typically around 19.75 per cent, although this can vary up and down marginally depending upon the customer. For an unarranged overdraft from the same bank the rate is 21.99 per cent. If a person is, like many, unable to arrange finance from a bank and has to go to a finance company, the interest rates are a great deal higher. If he wants to purchase machinery and goes to Australian Guarantee Corporation Ltd, he will be paying 21 per cent, but if he is borrowing money on second-hand farm machinery he will be paying 24 per cent. We wonder why there is no investment! Even the day to day consumers feel the effect in a commercial sense of these interest rates. Interest rates on credit cards start at around 18 per cent and peak at around 22 per cent. We wonder why consumer demand is down and why the consumption of whitegoods is down. At those sorts of rates, who can afford to consume at the levels we have in the past? Not surprisingly, the economy has begun to contract under the weight of these intolerable interest rates. Not since December 1985 has there been a comparable month in which the number of motor vehicle registrations has exceeded the figure of 12 months ago. I have to say that the decline has not been marginal. The number of motor vehicles registered in July 1986 was 21.7 per cent less than the number registered in July 1985. The Federated Chamber of Automotive Industries predicts that, while last year 500,000 motor vehicles were sold, only 385,000 motor vehicles will be sold this year. A similar story occurs in relation to dwelling approvals. This time it is not since October 1985 that new dwelling approvals have exceeded the comparable figure for the previous year. Once again the decline has not been marginal; it has been significant. In July new dwelling approvals were a massive 16.8 per cent less than in July 1985. The Government's interest rate policies are doing nothing more than driving Australia further and further into recession. At the rates of interest which are prevailing under this Government business simply cannot afford to invest. Private expenditure on new capital equipment in seasonally adjusted constant prices, in 1979-80 dollars, has been falling since September 1985. The proportion of gross domestic product devoted to business investment in Australia compares poorly with other comparable economies. The percentage of GDP in Australia is 9.9; in the United States of America it is 13.2; in the United Kingdom it is 14.9; in France it is 15.4; in Canada it is 15.8; and in Japan it is 17.9. That is a reflection of the level of confidence in the present economy and the present Government. People are simply not putting money into capital equipment; they are chasing the high interest rates. One wonders why we do not have exports in the manufacturing sector. Surely that answers the question. Let us look at the other part of the mechanism used by the Government to seek to rectify the state of the Australian economy, and that is the Budget deficit. The Government claims to have reduced the Budget deficit by $2,223m from $5,726m in 1985-86 to something like $3,503m in 1986-87. It is worth looking at the methods that the Government has used in achieving this figure. The Government has not been courageous, as it would have us believe; it is not that it has put the knife in; it is not that it has wielded the axe; it is simply that it has increased taxation. The deficit has been reduced by increasing taxation. There is nothing brave, courageous or clever about that. It is simply compatible with the philosophy of the Australian Labor Party-big government spending and higher taxes. Despite the claims that the country is heading towards being a banana republic and that we face a crisis that is as great as that of being at war, the Government has not been prepared to cut expenditure in real terms. In fact, government expenditure this year will increase in nominal terms by 6.9 per cent. The Government has done no more than to hold its level of spending constant in real terms. There have, however, been no spending cuts. Last year the Government spent $69,917m; this year it has spent $74,764m on outlays. Commonwealth Government outlays now are still higher as a percentage of gross domestic product than in any Budget brought down by the Fraser Government, running at about 29.4 per cent. The Treasurer, in his Budget Speech, claimed to have cut $3,000m from existing programs. As has been pointed out by John Howard, in his reply to the Budget, many of these cuts are really not cuts at all; they are primarily deferrals. This is a Budget that is supposed to have charmed, encouraged and excited both Australians and the overseas business community. It has failed to do so because they have seen through the sham that has been put forward by the Treasurer. The National Australia Bank's Monthly Summary states: Where the Budget begins to lose credibility is in the areas of expenditure cuts. These were largely achieved through deferral of indexation flow-ons and increases in charges. In this sense the Budget was not a `small government' Budget which, given Australia's economic situation, was essentially what was needed. The National Australia Bank goes on: For example the deferral of increases related to pensions and scheduled fee rises for Medicare and hospital benefits, while saving $388m in 1986-87, are not ongoing expenditure cuts. Again the $100m repayment of capital and advances from Telecom relates mainly to 1986-87. Notwithstanding the rhetoric, few really tough decisions were taken. There is of course the other side to the reduction in the Budget deficit, and that is the increases in taxes which the Government has chosen to thrust upon the community. Taxation receipts are to increase by 11.4 per cent and non-tax receipts, such as government charges for services, are to increase by 26.7 per cent. When given a choice between reductions in government expenditure and increases in taxation, Labor will always opt for increases in taxation. Taxation now is 25.5 per cent of gross domestic product and at the highest level in Australia's history. Despite claims by the Government that it wants to alleviate the burden faced by pay as you earn taxpayers, PAYE taxation will rise by more than 10 per cent. The ratio of income tax receipts to total tax receipts will rise from 61.4 per cent to 62.9 per cent. So the Government has chosen to reduce the government deficit by a substantial reliance on increased taxation. Reductions in spending have been small, and in many cases they have been reductions which will have an effect but only once. The Government, true to its habit of opting for patch-up solutions, in 12 months time when it can no longer take advantage of these short term measures for Australia, will have to look again at spending reductions. As Senator Button has publicly said, notwithstanding the fact that he has been chastised for it, there will have to be a mini-Budget. Already the figures have been demonstrated to be so rubbery that just to maintain some credibility with the present figures there will have to be a mini-Budget for either increases in taxation or, more likely, reductions in expenditure. Naturally the longer this is delayed the more severe will have to be the reductions. I would like to look now at the effects which the Government's policies have had so far. I have already referred to the domestic effects that they are having. Quite simply, as I have said, they have sent this country into recession. They have also had little impact on the economic aggregates that the Government hoped to effect. Australia's gross external debt increased from $68.7 billion in June 1985 to around $86 billion at the end of June 1986, and it is expected very shortly to reach $100 billion. This is the equivalent of $5,460 for every man, woman and child in this country, or for a family of five a debt of $27,000. That ought to give some idea of the scale of Australian indebtedness. Commonwealth debt, for which all Australians must eventually pay, is now almost $65,000m. When the present Government came to office the total debt for the Commonwealth was around $40,000m. In three short years it has increased it from $40,000m to $65,000m. Sadly, most of the increase in the Commonwealth debt has been incurred to finance Budget deficits. Last year the Commonwealth paid $7,053m in interest to finance its debt. This year it is expected to pay $7,240m in interest, or almost $20m per day. Senator Maguire —A lot of that is State debt. All of that is interest on State government debt. Senator CRICHTON-BROWNE —I am just talking for the moment about Commonwealth debt. The truth of the matter is, of course, that that debt is blowing out of sight, with little prospect of the increase slowing down in any way. The Government has achieved no more success in holding up the exchange rate. In March 1983, the first month the Labor Government was in power, the trade weighted index was 76.1. On Friday, or exactly one month after the Budget upon which this Government had placed so much hope, it was 51.8. In the three short years this Government has been in power the value of the Australian dollar against the Japanese yen has decreased by something like 57 per cent. Against the American dollar it has decreased by around 37 per cent. As we all know, in recent times the American dollar has been weakening. Had that not been the case, of course, the depreciation would have been considerably lower. In terms of the trade weighted index, the Australian dollar has fallen by something like 32 per cent. This Government has failed on every front. It has failed to stimulate growth domestically. Because of the crisis it has got itself into, it is now seeking consciously and wilfully to dampen down domestic demand. As I have said, that is having the compounding effect of dampening down the capacity of business to invest in fixed assets and is reducing its capacity to export or to replace imports of the same nature. One might ask what the Government is doing to encourage exports. It is doing absolutely nothing. Until such time as it has the courage to make the decisions that it quite properly ought to be making, until it has the courage to deregulate the labour market, which is totally compatible with deregulating the finance market, the economy is going to deteriorate. In the short and medium terms, nobody could be optimistic, given the prescription that we have had served to us by this Government, that the economy is going to improve in any way. Senator PARER(Queensland)(8.23) —We are debating this evening the motion that the Loans Bill 1986 be read a second time, to which the Liberal-National Party Opposition has moved the following amendment: but the Senate notes with concern the continuing increase in the nation's indebtedness, the continuing balance of payments and trade crisis, the continuing high levels of interest rates and the government's cosmetic approach to the reduction of its spending outlined in the recent Budget. The outlays exceed revenue by some $3.5 billion. My colleague Senator Crichton-Browne went into some detail as to how that was achieved and the phoney methods that were used. The important thing, however, is that the deficit is very rubbery and is based on a 2 per cent growth rate. Because of prevailing economic conditions, irrespective of the protestations to the contrary, the Government cannot go the next 12 months without a mini-Budget for either expenditure reductions or an increase in taxation. I should like to discuss the various factors that are of great concern to the Australian public. By almost every statistic known, under this Labor Government our economy is probably in the worst situation since the Depression, possibly in our history. Taking those statistics in some sort of order, our foreign debt increased from $35 billion when the Hawke Government came to power to $86 billion by June 1986 and, according to a leaked Treasury document, could reach $100 billion by June 1987. The level of foreign debt has risen alarmingly for a number of reasons. Persistent large current account deficits have been financed largely by foreign borrowings which add to our foreign debt. The Budget Papers estimate that 85 per cent of the current account deficit in 1985-86 was financed by debt. Excessive expenditure by the Hawke Government has directly and indirectly added to our foreign debt. In addition, there has been a depreciation of the dollar. As most of our debt is in foreign currencies, when the dollar declines our foreign debt automatically increases. We have restrictive foreign investment guidelines which have favoured overseas borrowings rather than high investment. Admittedly, the private sector is responsible for most of Australia's net foreign debt. However, the government sector's share has risen sharply over the last few years and is now responsible for some 35 per cent of the nation's net foreign debt. Our net foreign debt rose in 1985-86 by $22 billion whereas equity capital inflow amounted to about $2 billion. The cost of servicing Australia's net foreign debt was equal to almost 14 per cent of the value of Australia's exports of goods and services in 1985-up 4 per cent from 1981. Foreign debt need be of no concern to the nation if the borrowed funds are used to finance investment activity that in due course generates a flow of goods and services. Foreign debt can, however, rapidly become a concern when the funds raised are used to cover non-productive consumption spending, and that is now happening. To highlight the magnitude of the problem, a $100 billion foreign debt represents 35 to 40 per cent of gross domestic product. It would generate an interest bill of $9 billion, or 3.5 per cent of gross domestic product, which is considerably more than the Government spends each year on health, education and defence. To pay off completely our foreign debt would require approximately $6,000 to be taken from every man, woman and child in Australia or, alternatively, it would require almost $25,000 to be taken from each and every Australian family. Australia's balance of payments is in total disarray, having deteriorated considerably in the past two years. In 1985-86 our current account deficit reached a record level of $13.7 billion, or 5.9 per cent of gross domestic product, and it is continuing to go down at the rate of something in excess of $1 billion per month. The current account deficit blow-out of almost $14 billion compares with Budget forecasts for the year of $10.7 billion. International comparisons show up the seriousness of Australia's balance of payments difficulties. The Organisation for Economic Co-operation and Development forecasts that in 1986 Australia's current account deficit as a percentage of gross domestic product will be the largest in the OECD area. The OECD forecast of current account deficit as a percentage of GDP indicates that Australia's prospective minus 6 per cent is way out of line with every other major industrial economy. By way of comparison, it is forecast that Japan will show plus 4.2 per cent, West Germany plus 3.4 per cent, France plus 1.1 per cent, and so on. Of the OECD countries, the United States of America, with minus 3.1 per cent, is the closest to Australia's. I now turn to the exchange rate. The value of our dollar has fallen dramatically under the Hawke Government. After holding up during 1983 and 1984, the dollar fell during 1985 and in the first half of 1986. I do not think anyone would have expected, just a few years ago, that the value of the yen would be more than the value of our cent. The value of the yen has moved from a figure of approximately 210 or 220 to the dollar when the Hawke Government came to power to around 92 to the dollar. The trade weighted index has shown a reduction from 82 or 83 to 53 or 54. The value of the Australian dollar in US dollar terms has dropped from about $1.12 in 1981-82 to about 60c today. There has been a complete collapse of our dollar. It is often forgotten when people talk about so-called high profit increases that, if the dollar is not worth very much, one is getting paid a very small amount. Let us look at interest rates. The prime rate for big business is about 18 per cent, compared with 14 per cent at the time of the last election in 1984. The savings bank home loan interest rate is currently 15.5 per cent-the highest ever-compared with 11.5 per cent at the time of the last election. The small overdraft interest rate is currently running at about 19 per cent, compared with 14 per cent at the time of the last election. What is the effect of that? From a business point of view, it is an absolute disincentive to investment. People would be more interested in collecting the proceeds of high interest rates than in taking the risk of investing in developing our manufacturing sector or other business sectors. Compared with the rest of the world, our interest rates are the highest in history. For example, the current short term interest is 4.4 per cent in West Germany, 4.7 per cent in Japan, 5.6 per cent in the United States of America and 8.4 per cent in Canada. The other side of the coin is the interest rates that are imposed on the home buyer. It has been estimated that, for a home buyer with a $50,000 mortgage, from December 1984-at the time of the last election-to June 1986 repayments have increased from $508 a month to $660 a month. It has been estimated also that the average Australian home buyer with a $50,000 mortgage pays $70 more a week in interest than does anyone from a comparative country. Is it any wonder that people revolt when they hear the Prime Minister (Mr Hawke) say: `Tighten your belts'? The response which I bear from people who telephone me is: `How can we tighten our belts when we have to make those mortgage repayments? How can I buy a house for my wife and family?' The inflation level is probably the most worrying statistic. While inflation levels in the rest of the world are decreasing, our inflation rate is between 8 and 9 per cent. How does that compare with the situation of our trading partners or the OECD? The estimated current inflation figures are 0.5 per cent in Japan, 1.7 per cent in the United States, minus 0.2 per cent in West Germany, 2.3 per cent in France, and so on. Worse still is the OECD's most recent inflation forecast, as at May 1986, for 1987: Australia, 6.25 per cent; Japan, 0 per cent; West Germany, 0.25 per cent; the United States, 2.5 per cent. The OECD average is estimated at 3 per cent. How on earth can we compete with the rest of the world when those inflation rates are forecast for the next 12 months? It is perfectly clear that our attitude must change. It is not just a matter of looking at our wage rates and interest rates. It is vital that we look at the work practices that were forced on industries in the 1970s and genuinely address these problems. After Peko-Wallsend was castigated by the Prime Minister and by the Premier of Western Australia, who even threatened to see whether he could take the leases from the company, there is recognition of the fact that, somehow, these work practices must be looked at. Will that be done in a genuine way? I doubt it. I cannot for the life of me believe that some of the work practices which have been forced on people over the years will be given up so easily by the more militant trade unions. I shall give some examples of work practices. First, there is compulsory unionism. The Prime Minister said in the other place in answer to a question that unionism was not compulsory in Australia. Who on earth did he think he was kidding? There are people who know darned well that there is no way in the world that they can get a job without joining a trade union. A kid who gets a part time job at a supermarket has to join a union whether he wants to or not. The money is taken out of his wage whether he wants that or not. He has no choice. Try to get a job in any of the major industries-mining, maritime, steel, et cetera-and see how easy it is to get a job if one is not in a trade union. It is impossible. What is wrong with unions being invited into the competitive world that exists for everyone else, whether in the financial market, the consumption market or whatever? If they are perceived to perform, they will not have any worries. If they do not perform, people will leave them in droves. That is what the competitive market is all about. Another example concerning work practices is the inflexibility of the labour market. I draw honourable senators' attention to an article in today's Sydney Morning Herald which refers to the jobs of residents of Christmas Island being under threat because they have become uncompetitive. Apparently, the work force offered to take a 25 to 30 per cent pay cut to keep the men in work. That offer was rejected by the Federal Government, which employs everyone on the Island, either directly or through the Phosphate Mining Company of Christmas Island. How inflexible and absurd can a wage-fixing system be when everyone on the Island says `We want a pay cut so that we can keep our jobs' and that offer is rejected by the main employer? Another example of the work practices forced on industries concerns productive work. Productive work in, for example, the coal mining industry is permitted to be carried out only from Monday to Friday. No productive work is allowed on Saturday and Sunday. The reason is steeped in history and ignorance. It is that the majority of the people who control the Miners Federation-not all of them, by a long shot-take the view that, if they increase productivity and are prepared to trade productivity for dollars, the net result will be that the life of the mines will be shortened. Nothing could be further from the truth. Once workers become more productive, they will make coal reserves more economically mineable, lengthen the life of the mines and make our products more competitive on world markets. The ACTING DEPUTY PRESIDENT(Senator Jessop) —Are you talking about the Loans Bill, Senator? It might be appropriate to refer to it. Senator PARER —Yes, Mr Acting Deputy President. I am coming to the reason for our problems and why we have to have these loans. I could cite ad infinitum a series of other work practices that have made us less competitive throughout the world, and, hence, the reasons why we are now required to borrow increasingly large sums of money to fund ongoing expenditure. We have an accord mark 2 on union superannuation. It is worth referring honourable senators to the open letter to the unions from the Business Council of Australia. Let us bear in mind that this open letter was sent only a couple of days before a so-called meeting, another summit, to talk about work practices. The following comment is made: `How can you expect business to maintain employment, keep prices down, export and invest for our future when you are forcing destructive strikes and bans on to your membership in pursuit of superannuation?' That was an open letter to Mr Crean. The letter draws attention to the fact that major unions, with the active support of the Australian Council of Trade Unions, are targeting exclusively those companies in which generous and long standing superannuation systems already exist. Those are the sorts of things that I am talking about. They are the sorts of things that we as a community must address and do something about unless this country is to slide further and further into the mire. Until and unless these bottom line questions are addressed, we will borrow more and more to finance current rather than capital spending outlays. Senator BROWNHILL(New South Wales)(8.41) —I rise to speak on the Loans Bill 1986 and the second reading amendment moved by my leader in the debate, Senator Messner. The amendment adds the following words to the end of the motion for the second reading: but the Senate notes with concern the continuing increase in the nation's indebtedness, the continuing balance of payments and trade crisis, the continuing high levels of interest rates and the government's cosmetic approach to the reduction of its spending outlined in the recent Budget. This is a machinery type Bill. However, it is needed because governments are not allowed to overdraw on Consolidated Revenue and so defence and other expenditures are charged to the Loan Fund. Therefore, the amount and extent of borrowings are governed by the deficit. Of course, this Government's borrowings are excessive by any standards and by anyone's reckoning. For the interest of honourable senators, in the first 82 years since Federation the total of all Commonwealth government accumulated foreign debt was $23 billion. Between 1983 and now that foreign debt has risen to $65 billion-a trebling in three years-or $21 billion per year. That is quite an achievement by the Hawke-Keating Labor Government. Senator Sheil —What was the first figure, Senator? Senator BROWNHILL —The first figure was $23 billion over 82 years and the second figure was $65 billion. The Government has claimed in its latest Budget that in this financial year the deficit will be lowered. But the Government is attempting to do this simply by raising taxes. Taxes have risen by some $1.4 billion. We should all ponder on that. The national accounts estimates show clearly that we are entering a period of serious recession. The last three quarters have shown that non-farm gross domestic product is falling. Inflation remains high. We cannot continue to ignore or pretend that it does not matter that our inflation rate, as my colleague Senator Parer and many other speakers have already said, is eight times higher than that in Japan, our major trading partner, and twice the average among member countries of the Organisation for Economic Co-operation and Development. What has happened to interest rates since the Australian Labor Party has been in power? Interest rates are one of the most adverse features of the current state of the economy. As Senator Parer asked a little earlier, how will people afford to buy motor cars? How will people afford to buy houses? How will they afford to stay even currently financially viable? The prime lending rate went over the 20 per cent barrier for the first time in late 1985. Real interest rates have increased dramatically under this Government. At the moment the Commonwealth Bank of Australia's overdraft rate is about 20.25 per cent. How can farmers or anyone sustain that level in this economic climate? The interest rate in Japan is 4.7 per cent, in West Germany 4.4 per cent, in the United States of America 5.6 per cent, in France about 7.1 per cent and in Canada about 8.4 per cent. They all have a distinct advantage over Australia. This Government has continued to support its policy of high interest rates and to prop up the dollar, but it clearly has not worked. The Government said earlier in the piece, a year or so ago, that the falling dollar would help our export industries, but that has not happened. I seek leave to have incorporated in Hansard two tables which show loan repayments required over 10, 15 and 20 years at different interest rates from 12 per cent to 19.5 per cent. Leave granted. The tables read as follows- LOAN REPAYMENTS AMORTISED Amount $100,000 12.00% Monthly Total 16.75% Monthly Total 19.00% Monthly Total 19.50% Monthly Total $ $ $ $ $ $ $ $ 10 years 1,420 170,400 1,695 203,400 1,820 218,400 1,850 222,000 15 years 1,185 213,300 1,490 268,200 1,630 293,400 1,665 299,700 20 years 1,085 260,400 1,410 338,400 1,565 375,600 1,600 384,000 30 years 1,010 363,600 1,360 489,600 1,530 550,800 1,570 565,200 LOAN REPAYMENTS AMORTISED Amount $100,000 12.00% H/yearly Total 16.75% H/yearly Total 19.00% H/yearly Total 19.50% H/yearly Total $ $ $ $ $ $ $ $ 10 years 8,715 174,300 10,475 209,500 11,350 227,000 11,550 231,000 15 years 7,265 217,950 9,200 276,000 10,170 305,100 10,390 311,700 20 years 6,645 265,800 8,725 349,000 9,760 390,400 9,995 399,800 30 years 6,185 371,100 8,405 504,300 9,550 573,000 9,800 588,000 Senator BROWNHILL —I thank the Senate. As people know, high interest rates have affected investment. That has already been mentioned by many speakers. Not only have they affected investment; they have stifled it. This Government continually tries to blame low investment for the state of the economy. But it is the Government's tight monetary policy, not the people who want to invest, which is to blame for poor investment levels. The people just do not have the guts, the temerity or the desire to invest with interest rates as high as they are. What about young people? Why would they want to invest with interest rates so high? How could they ever sustain the interest payments? In real terms this latest Budget is the highest taxing Budget ever. It will further exacerbate the disincentive to save and invest already prevalent in the community. Nothing was done about taxation in the Budget. The fringe benefits tax is another disincentive to investment. We cannot even get an answer as to how log books should be kept for motor vehicles. Additional capital taxes are another disincentive to people who want to invest. The capital gains tax is a disincentive to foreign investors who want to invest in Australia because they will have to pay the tax if they make a profit. Additional taxes are also a disincentive to all the Australians who may want to invest. What did the National Australia Bank Ltd say only yesterday? It stated: The longer interest rates remain at such high levels, the longer the period of economic adjustment and lower living standards. The Bank is not impressed with the latest economic efforts of this Government and nor is the rest of the community. Nowhere is this more apparent than in the rural industries. We have disastrous terms of trade. The trade weighted index is at a post-war low. What about our account deficit of $14 billion last year with a $1.5 billion current account deficit for July and $1.2 billion for August? That is not really conducive to an Australia that is going places. That is due in large slabs to the efforts of this Hawke-Keating Labor Government. The slump in the dollar has done nothing, as I have already said, for the economy. It has not helped the export incomes as it should have. Obviously the world rural commodity markets have added to our internal financial difficulties. But that is not the only problem. Overseas problems cannot be blamed on this Government, but, as I have said, internally our problems are even worse and they are the direct result of irresponsible and inappropriate economic management. The wage-price spiral, foisted on to the economy by the trade union movement, combined with the irresponsible activities of the Reserve Bank in supporting the dollar, has also caused havoc. The Budget offers no hope for improvement. It predicts higher unemployment, less business investment, less housing investment and a continuation of our disastrous balance of payments problem. The Government is now aware of the state of the economy but appears to be unwilling or unable to do anything about it. Six months ago the Treasurer of this country, Mr Keating, told Australians: What we have is an entirely healthy economy . . . He said that the Government's economic strategy had been entirely appropriate. I shall read some other quotations. This one from the Prime Minister (Mr Hawke) is from Hansard of 13 February 1986: As far as the Government is concerned, we assert that the economic fundamentals of policy making in this country are right and will continue to deliver to this country the economic and the employment growth which has put the performance of this country so far ahead of anywhere in the rest of the world. I read another quotation, from the Treasurer at the Economic Planning Advisory Council meeting on 7 March 1986. He said: I remain confident . . . that with domestic demand slowing and the depreciation having produced a large improvement in our competitive position, a downward trend in the current account deficit will emerge clearly during 1986. I further quote the Prime Minister's words, from the Hansard of 12 March 1986: We believe that evidence is starting to emerge of the turnaround- referring to the current account deficit- we have been looking for for some time. The Prime Minister also said: The Treasurer and I have emphasised that we expected and anticipated that progress- in overcoming the current account deficit- would occur consistently through 1986. I quote this time from the Treasurer: We have had tolerable current account outcomes which must prove conclusively to any interested observer that the J effect has been working right through calendar year 1985. I think that they are quotations for posterity. Now, of course, we have the Prime Minister saying to us that we have a problem. Indeed, the Prime Minister's words in August were that `the party is over, finito. We are now in a crisis which is as great as the crisis of war'. That, I think, indicates that the problem is very severe indeed. Maybe the so-called world famous best Treasurer should now collect banana peelings rather than antiques. However, there is no joke about what is happening to the economy. The comparisons with Argentina are becoming more alike every day. Argentina is an exporter of wool, meat and grains. It exported these things to Europe and it was an importer of capital and labour. In other words, Argentina has an economy structured similarly to that of Australia. However, it has been traditionally recognised that Australia's higher living standards were the result of our superior export record. However, the Whitlam Government-I think that it can still take a bit of the blame for a lot of the problems that we are having-was responsible for high wages and falling profit ratios, rising unemployment and a worsening external situation. I believe Mr Whitlam was the Prime Minister at the time somebody called Mr Khemlani was approached for some money to pay off some overspending. That is what has to be watched with the Bill that we are discussing here tonight. I return to the Argentine. At the same time, the Argentine suffered from an oversized public service, soaring inflation and a declining balance of payments situation. In Argentina, chronic Budget deficits, compounded by the prominent place occupied by the public sector, fuelled inflation which started the circle off once again. That was not much different from what is happening here in Australia. We are rapidly falling into the same vicious circle and it will take more than the cosmetic approach of this Government and a rubbery Budget to improve the situation. I quote some words attributed to Mr Keating in an article in the Australian Financial Review of Monday, 8 September by Mr Richard Hubbard. Mr Keating said: Some may have interpreted our stated intention as implying that we will seek to reduce interest rates without proper regard to these other factors. He went on to say: While the Government has established the foundations for a reduction in interest rates, it will not engineer a premature reduction. To do so would put at risk the prospects of financial market and exchange rate stability. At the end of that article Mr Richard Hubbard said: The Government's economic strategy as outlined to EPAC remains based on restructuring the economy towards export production and import replacement through maintaining the improved competitiveness which has come from wage restraint and the depreciation. But the problem is that it has not, and I do not believe that it will. The Treasurer claims that tighter policies would result in overkill. That, of course, means that the Government is quite happy to continue with excessive interest rates. As can be seen from what I have already quoted, the Treasurer does not agree with such a reduction at all. If what has happened to the Australian dollar in recent months is regarded as financial stability, I would hate to think what the Treasurer regards as financial instability. Perhaps at least Senator Walsh has a more realistic view of his Government's policies. He is quoted as saying, on 28 August: The high growth strategy pursued by the Hawke Government during its term of office has always been fraught with a high degree of risk. Furthermore, he acknowledged criticism of the Budget that it was aimed at the foreign exchange market rather than the demands of the domestic economy. That may help to explain why the parlous state of the rural economy in Australia is apparently of so little interest to the Government front bench. Perhaps Senator Button has the most appropriate response to the Budget-and I suppose he is a lot happier after the weekend. He announced only two days after the Budget that the Budget is here today and gone tomorrow. This may explain why the Government is simply unable to address itself to the long term economic problems of this country and why this Government, which is here today, should definitely be gone tomorrow. Senator MICHAEL BAUME(New South Wales)(9.00) —The Opposition's amendment seeks to add the following words at the end of the motion: but the Senate notes with concern the continuing increase in the nation's indebtedness, the continuing balance of payments and trade crisis, the continuing high levels of interest rates and the Government's cosmetic approach to the reduction of its spending outlined in the recent Budget. As my colleague Senator Messner says, that list is, regrettably, shameful. I believe that it underlines in summary the basic failures of this Government and the inevitability of the recessive forces that will make their presence felt in Australia in the future and meet the forecasts of so many expert commentators around Australia. Quite recently the Westpac Banking Corporation and Melbourne University Institute of Applied Economic and Social Research leading index of economic activity clearly indicated that Australia was on the edge of a recession and the Westpac chief economist, Mr Bob Graham, warned that factors dampening investment and employment creation indicated that the recession could be protracted. One is not crying gloom, one is not damning the economy and talking it down by facing up to reality. The reality is that there is no need for the Australian economy to be in the crisis in which it now finds itself. Senator Watson —Bad management. Senator MICHAEL BAUME —As my colleague says, it is bad management. It is regrettable that that element, which was avoidable, has now become so dominant in our misfortune. The reality is that the terms of trade have gone against Australia. We are now getting less for our exports in value terms, even though the volume has gone up, and we are paying far more for our imports which we can afford less and less. That creates an economic problem. It creates a great deal of pressure and a great requirement of discipline on any government in Australia. Unfortunately, that discipline has not been expressed by the present Government and to that extent the Government's own policies have worsened the problem into a crisis-a crisis that we must all now meet. The Senate will have noted that the economy has become so accustomed to crisis that as bad news comes up-such as Australia's downgrading as a borrower from AAA to AA; such as the latest figures which confirm an inevitable $14 billion to $15 billion deficit again in the balance of payments for the year-the money markets shrug it off because they are so accustomed to disaster. They expect disaster. Senator Gareth Evans —That is a profound disappointment to you, isn't it? Senator MICHAEL BAUME —It is no profound disappointment to me, Senator. What I find disappointing is that this economy was talked up in such a phoney way for so long by you and your colleagues that many people lost very large amounts of money. They made investment decisions that were disastrous. I can remember your colleagues telling the money markets when they were much higher than they are now that they were full of ruffians and mad men to be marking the Australian dollar down. Senator Gareth Evans —`The times will suit us' was your Leader's comment. Senator MICHAEL BAUME —Now we see the Reserve Bank of Australia confirming this much reduced level of the dollar which you say, by way of your curious interjections, would have been wrong to have come down to. Your colleagues at the time claimed that people who made these forecasts were ratbags and ruffians. Now we see this current low level of the Australian dollar not only confirmed by the Reserve Bank, which now interferes in the market-place to maintain it, but we also see the Prime Minister (Mr Hawke) himself saying that he would like to see this new low level maintained, even though it was a level that he and his Treasurer (Mr Keating) were regarding as impossible and ridiculous only a few months ago. In those circumstances it is reasonable to look at the current situation and to see that the level of expectation in the market-places is for continuing disaster. The market-place has marked Australia's currency down at what is, compared to recent times, a disaster level. It will remain so. The big question is, having created this problem: Is the Government setting out on policies that will correct it? We have seen in the Budget a whole range of actions which are alleged to fit into the set of policies that the Treasurer says we need. For example, he says we need to keep costs in Australia down to a level which will not destroy our competitive position with the rest of the world. Yet we have an inflation rate now of 8.3 per cent-three to four times that of the average of most of our trading partners. It is eight times that of some and infinity times that of certain major trading partners, particularly Germany, Japan and the United States of America which have inflation rates ranging from 1 per cent down to nil. We have an inflation rate of 8.3 times that is rapidly destroying the advantage that has been acquired by our devaluations. That inflation rate is certain to rise quite rapidly and soon because of the increasing price of oil which, while bringing us some benefit in terms of our exports-in the last couple years we were a net exporter of oil until the latest oil price destroyed our exports-will also bring to us considerable increases in costs internally. On top of that there will be the enormous impact of increased State charges and taxes which will inevitably follow this Budget. This morning the newspapers in New South Wales forecast very substantial rises across a whole range of items and I understand that those will occur this week. So on the inflation front, which the Treasurer himself says is very important, this Budget clearly fails. The question of restraint in government spending is supposed to be very important and we have heard from both the Treasurer and the Minister for Finance, Senator Walsh, what a magnificent job the Government has done in cutting government spending. Despite the 3 per cent slash in our national income to which we are all supposed to adjust, the Government is increasing its own spending in both money and real terms this year. These cuts are simply against what the Government wanted to spend and what its existing programs would have involved. But Government spending is still at a record high of $74.8 billion this year. In real terms and in money terms this is higher than last year. It is a record, the highest ever, yet all we hear about from the Government is its cuts. Those are quaint sorts of cuts that leave government spending at a record level. For government spending to adjust in accordance with what the Government says is a 3 per cent slash in our national income, the Government would have needed to cut another $2.2 billion off its spending. According to the Government, the nation has had a 3 per cent slash in its income. It is fascinating that at the same time this Government is increasing its own spending, even in real terms. Everyone else has to suffer the cut, the 3 per cent slash in income, except the Government. Somehow the Government itself is above the people. It can increase spending, but the rest of the nation must cut. We can see that sort of approach in the way the Treasurer approached his own financial arrangements for living away from home. He receives something like a $100 a night living away from home allowance in order to enable him to live in Canberra with his family. Senator Watson —It is hypocrisy. Senator MICHAEL BAUME —As my colleague says, it is the kind of hypocrisy that goes not only behind the Treasurer's own personal activities but also behind the Budget that he has brought down. Such a spending cut should have been put in place instead of the Government raising an extra $2.2 billion in revenue through new taxes of $1.5 billion and $800m in profits from its selling off of our foreign exchange reserves while it doctors the deficit to make it look less than it really is. On the question of restraint in government-forget it! There has been the rhetoric of restraint, the claims about cuts, yet the reality is that the Government is spending more this year than ever before. It is spending more of the people's money on its own schemes because it has not had either the political courage or the economic intelligence to face the reality of what is needed by this nation. Higher growth is one of the Government's targets. That is what it is seeking, what its economic policies are supposed to be all about, apparently, judging by what one reads of this Government's curiously changing and unstable objectives. But instead of growth rising this year, as a result of this Budget internal economic growth is forecast to slump from 2.4 per cent to 0.5 per cent and net external growth is to rise by a widely disbelieved 1.75 per cent, as exports are budgeted to rise by 2.5 per cent and imports to fall by 6.5 per cent. This is expected in the Budget Papers to bring a cut in gross domestic product from last year's 3.7 per cent to 2.25 per cent and, quite frankly, this level is excessively optimistic. Even on the Government's own figures, this Budget will bring a reduction in economic growth and so on that score cannot be seen as a success for the Government. Stronger employment is the keystone of this Government, but ever since it came into power it has doctored the economy to create a situation where jobs can be created artificially-and they will be temporary jobs, as the figures are beginning to show. The Government's heroic forecast that employment will rise by 1.75 per cent in this Budget, or three and a half times the rate of economic growth in the internal economy, is absolute nonsense. It cannot be achieved. There is to be an economic growth rate of 0.5 per cent in the Government's internal economy, and it is talking about a growth in employment of about three and a half times as fast. That strikes me as extraordinary. Even the figure the Government is talking about will result in an increase in unemployment, with the Government's own figures showing a 36,000 increase this year in the number of those who will be on the dole. That is arrant nonsense. I would be overjoyed to hear the Minister for Finance at the end of this debate give us his view of what the unemployment figures will be and see whether he agrees with the nonsense that is put in the Budget Papers on this score. I do not think Senator Walsh would damage his own integrity by backing those rubbery figures. What about investment? It is investment on which our economic recovery, if we are to have one, must be based. If we are to replace imports and increase our exports we must do it through investment in the private sector. Unfortunately, this Budget will do nothing to help that. Under this Budget there will be a one per cent fall in business investment, a 2 per cent drop in non-dwelling construction, and a one per cent drop in new equipment purchases. How will we cope with the essential requirements of recovery-investing in new plant and equipment, increasing our capacity to compete with imports, so reducing our import demands and enabling us to get out of this disastrous balance of payments crisis-unless we invest more? Yet this Government is presiding over a Budget which diminishes private sector investment. But do not worry, because the Government is increasing its spending. Rather than the private sector doing so, we shall have this enormous and continuing rise in government spending. I mention at this stage that over the past three years there has been an $11.4 billion jump in government consumption spending. That is a real terms record that is even worse than Whitlam's. For a government that is claiming restraint, an 18 per cent real rise is more than double the 8.4 per cent rise in real private consumption expenditure over the same period and demonstrates what has gone wrong with the economy. The private sector, on which our eventual recovery must depend, is having to cut down its demands to an increase of only 0.5 per cent, but naturally the Government is holding its figure at a point that is three times higher at 1.5 per cent. This is further evidence of this Government's and this Treasurer's total failure to exercise anything like the self-control needed over the excessive rises in public sector activity while the private sector is hit harder, taxed tougher, and then blamed for not investing more. This kind of continual abuse of the private sector goes on. Figures last week revealed that manufacturing was going down, but in particular some further figures showed that the public sector remains far more active than the private sector, on which real recovery depends. Last week's building statistics showed that public construction projects accounted for 60 per cent of the total construction projects in the June quarter and that the bulk of private sector activity was limited to large natural gas development and gold mining. This left very little over for the rest of the private sector, and this trend is also evident in the Reserve Bank's gloomy review of fixed investment in Australia. The most dismal aspect of the Reserve Bank survey was the fall of 5.5 per cent in capital spending on new plant and equipment over the three years since the 1982-83 recession. Senator Maguire —Who was that under? Senator MICHAEL BAUME —That was under the worst drought this nation has suffered and under a world recession, neither of which this Government has been prepared to accept or acknowledge. Along with the other things this Government has not been prepared to accept or acknowledge is-- Senator Walsh —You had better get Steve Martin to write an article on this. Senator MICHAEL BAUME —Steve Martin has made the occasional mistake-- Senator Walsh —You put out a bogus prospectus for Patrick Partners and now you write bogus articles. Senator MICHAEL BAUME —I thank the Minister for his interjection. I am glad to get on record the fact that-- Senator Walsh —That you are a fraud. The ACTING DEPUTY PRESIDENT(Senator Colston) —Order! Senator Walsh, you will withdraw that remark. Senator Walsh —In recognition of the fact that the Standing Orders are the test of what is acceptable here instead of what is true, I withdraw. The ACTING DEPUTY PRESIDENT — Order! Senator Walsh, you will withdraw that remark unconditionally. Senator Walsh —In deference to you, Mr Acting Deputy President, I withdraw. Senator MICHAEL BAUME —I thank the Chair. I note the sensitivity of the Minister because whenever the truth is being spoken to him, he has not the capacity or the decency to accept it. His only retaliation is continual personal abuse. Senator Walsh —Drag up your scungy past and your scungy present. The ACTING DEPUTY PRESIDENT — Order! Senator Walsh you will withdraw that remark as well. Senator Walsh —I withdraw. The ACTING DEPUTY PRESIDENT — Senator Baume, I urge you to get back to the Bill we are supposed to be debating. Senator MICHAEL BAUME —The point I wish to make is that I have been attacked and accused by the Minister by way of interjection of having done something improper. His withdrawal was reluctant and offensively made, if I may say so. I think it improper that I should not be able to state the facts on the matter which he has drawn to the attention of the Senate by way of disorderly and unpleasant interjections. The ACTING DEPUTY PRESIDENT — Order! Senator Baume, I ask you to disregard the interjections and go back to the Bill we are debating. Senator MICHAEL BAUME —I suppose that, like a pothole in a country road, it is possible to steer around it, but it is still an excrescence. I was saying that under this Government the public sector has been given a far greater share of the nation's resources and is still being given a larger share, despite the claims by the Government, in particular by Senator Walsh, who is able to say anything at any time, no matter what its relevance to the truth. This trend by the Government is one of the major reasons that we are in this serious economic situation, from which under the Government's present policies we will not emerge, as the Opposition has said, quite strongly. It is interesting to note that, in the circumstances, the Government has started to change ground and has started to admit that perhaps there is a need to renegotiate the accord, as we have been saying, and perhaps there is a need, as Senator Button has said, to have another look at Government spending before next year's Budget, because this Budget obviously did not do enough. In other words, the Government is being dragged screaming and reluctantly to reality. What are the other failures of this Government in the Budget? The Budget says that we should save more, yet the Budget is based on exactly the opposite. We have to invest more, but to invest more we have to save more, and we have to reduce spending because spending will flow over into imports, which will worsen our balance of payments crisis. That is the theory-that is what the Government says-but the Budget ends up indicating that there is to be a decline in the savings ratio this year because this will be needed to supplement the rise of 0.5 per cent in disposable household income if the Budget's forecast demand figures are to be met. On all major grounds where areas of economic recovery are absolutely vital, this Budget and this Government fail and we are facing a harder task than we would have faced had we had more correct and rational economic policies than this Government has provided to us. Now let us come to the daddy of them all, our external account. Last year's record current account deficit of $13.7 billion is budgeted to worsen to about $14.7 billion as we continue to spend more overseas than we can sell and as the terms of trade keep deteriorating. This Government is sending us broke at the rate of $30,000 a minute, yet its policies, Budget and actions have done nothing to reduce last year's record deficit; on the contrary, they have made it worse. Last month's balance of payments current account deficit figure was $1.2 billion, which is exactly on track with about $14.5 billion for the year, yet the markets were relieved that things were not even worse. There are forecasts around that in the next few months we will have deficits of $1.6 billion and $1.7 billion. I fear that those figures look very reasonable and I am concerned, when I look at the crisis that so many of our exports are still in and the inevitability of continuing import demand, that we are a long way from being out of the woods. Now we see that all these things have emerged from the Government's Budget. I am not saying that there would not have been problems-on the contrary, the problems were there-but they could have been solved and handled better. A result of this Government's activities is that last week we saw official production statistics revealing a further 1.7 per cent fall in manufacturing production for the June quarter, following on from the March quarter's decline and providing the first successive quarterly falls since the 1982-83 drought and world recession. This Government's economic policies are causing further falls in manufacturing and the inevitability of further falls in employment. The sharp fall in domestic demand, high interest rates, uncertainty over rising labour-not just wage costs-and anti-business taxes are all factors in this failure. As a result, manufacturing production is now about 7 per cent lower than its 1981 peak, despite what the Prime Minister and the Treasurer have chosen to describe as Australia's greatest ever economic recovery and despite the Government's confident predictions that the record devaluation of the Australian dollar would provide a major stimulus to manufacturing by making local producers more competitive. These things have been overwhelmed by the end of the economic recovery which the Government had artificially stimulated with public sector spending in order to window-dress its performance on employment and economic growth. The reality is that the enormous increase in employment that took place under this Government was bought at the taxpayers' expense. I restate that there has been a $11.4 billion jump in governmental consumption expenditure, Federal and State, over the past three years, at a higher rate than took place under Whitlam, and this 18 per cent real rise is more than double the real rise in private consumption expenditure. Senator Messner —It is also at the home buyers' expense. Senator MICHAEL BAUME —As my colleague Senator Messner says, it is at the expense of home buyers. This Government's spending has created this phoney recovery. The phoney part of the recovery is that part on top of what would have inevitably happened at the end of the drought and the end of the world recession, for both of which the Australian Labor Party takes credit. The phoneyness and the cause for concern we now have is that the Government overheated the economy with public funds, created temporary jobs with public money and, as these evaporate, as manufacturing industry falls and investment continues to decline, we will find it harder and harder for the Australian economy to pick up. It will be largely as a result of Government policies that, when we return to office, we will face a very difficult recovery period. It would be wrong for any government to hold out false hopes of how long it will take to recover. It is like a repeat of the Whitlam situation. The Whitlam years were marked by difficulty overseas. The oil crisis obviously had an impact on that Government, but its economic policies worsened the situation. They were exactly the wrong economic policies at the wrong time. The Hawke Government is repeating exactly that situation. It has learnt nothing, yet as a result of its activities we are now having an economic problem which is being turned into an economic crisis. As a result, I strongly support the amendment moved by Senator Messner, which I repeat in conclusion: . . . the Senate notes with concern the continuing increase in the nation's indebtedness-- It is up to $86 billion now and the cost of servicing it alone, excluding repayments, rose by $1.1 billion to $6.4 billion, or about 20 per cent of our total export receipts. Senator Maguire —Most of it is company debt, private sector debt. Senator MICHAEL BAUME —The interjection is that most of it is from the private sector. I would hope that was so, but regrettably one of the major problems is that an enormous proportion of it is from the Government sector. Senator Maguire —Most of it is private sector debt. Senator MICHAEL BAUME —Naturally, it should be, because the private sector involves about two-thirds of activity in Australia, whereas the Government should have been leading by restraint. The Government did not show that restraint and a major element in this increase has been the doubling of public sector borrowing overseas in the last three years in a disgraceful and irresponsible way. As a result, I have very great pleasure in supporting Senator Messner's amendment, which strongly and properly criticises the Government's recent Budget and its economic policies. Senator ALSTON(Victoria)(9.28) —I rise to speak on what was originally thought to be a fairly innocuous Loans Bill, but which on closer examination almost amounts to a request for carte-blanche. It is probably instructive to start at the point at which my friend Senator Michael Baume finished, which was in relation to the level of public and private sector borrowing. The fact is that public sector borrowing overseas is of the order of $30 billion and the balance is private sector borrowing, simply because of the high level of interest rates that prevail in this country. There is no option but for corporations to go off-shore to take advantage of rates which are at times less than half the level of those prevailing in this country. What troubles me is that the Bill, as Senator Messner quite correctly described its predecessor on 17 October 1985, gives the Government a blanket power to borrow money year upon year in perpetuity in order to meet its deficit. I was intrigued when I went back to look at the original debate to see that the second reading speech by Mr Hurford, who presumably was speaking in his capacity as Minister for Immigration and Ethnic Affairs and Minister Assisting the Treasurer-- Senator Walsh —Did you read what Carlton said? Senator ALSTON —I have read that. I will come to that in a moment. The Minister said in very bland and harmless terms: The purpose of this Bill is to make provision for the financing of the prospective Budget deficit in 1986-87 and in subsequent years together with the associated prospective deficits in the Consolidated Revenue Fund. He then went on to say that successive governments have used an annual form of borrowing. He said-this is no doubt the point that excites the interest of Senator Walsh: In view of the non-controversial, accounting nature of the legislation, which has been acknowledged by all the major political parties in the Parliament, the Bill has been drafted as standing rather than annual legislation. He then concluded with something else which was similarly harmless. In all of that there was simply no explanation whatsoever for the need to have this form of legislation. In many ways it is an affront to parliamentary accountability and it would enable governments to undertake borrowing without informing the Parliament. As much as Ministers might like to suggest that this does not necessarily follow, the fact is that the option is there and would no doubt be taken advantage of if the Government thought it was appropriate and that it would be able to get away with it. But what is so striking about this in the present economic climate is that it goes against the whole approach that has been taken everywhere else of very strict financial discipline and fiscal responsibility. It is light years removed from the approach that the United States Congress is now taking with the Rudd-Gramm-Hollings Act. The whole thrust is to try to balance the Budget to understand why we have these massive deficits and to expose them to the greatest degree of scrutiny. The consequence of a Bill such as this is to absolve the Parliament from all responsibility, to allow the Government simply to go outside the confines of the chambers and to undertake any level of borrowings that might be necessary to fund the deficit. In my submission that has to be the greatest level of irresponsibility. The Bill is couched in such broad terms that the Government or the Treasurer has power to borrow whatever is necessary, the amount that at the time of borrowing the Treasurer considers to be the greatest amount by which the money, lawfully available, is likely to be used. In making payments the Treasurer can then appropriate it to the credit of the Consolidated Revenue Fund; in other words, it is open slather. Given that the problems that are so manifest in the economy and the Budget are now recognised on all sides-there is even talk of an accord mark 3, which we know will make little or no difference-it certainly will not assist in freeing up the inflexible wages market or in reducing business costs; it will simply keep industry and business in a strait-jacket. But, given all of those problems and the very real difficulties that this Government has had in getting anywhere near a respectable Budget deficit, one would have thought that the temptations would be irresistible if they were not exposed to annual scrutiny. Perhaps it was thought to be an heroic effort to achieve a Budget deficit of $3.5 billion. In fact it is a result of economic legerdemain. There has not been a display of responsibility; rather, the deficit has been achieved by an increase in revenue, which is the very opposite of what is required at present. That is indicative of what is wrong with this Loans Bill. At the very time when there is a need for much closer scrutiny and a much closer degree of supervision, we have a Loans Bill that is couched in such general terms that it is symptomatic of a reluctance to take those hard decisions. As we know, this Budget is a public relations Budget. Many of my colleagues have eloquently established its shortcomings. If it is necessary to come up with a deficit, and to ignore all the other fiscal imperatives and all of the virtues that flowed from balanced Budgets, the least that could happen is that parliament should address itself on an annual basis to the reasons for breaching those disciplines. In fact, this Bill goes in the opposite direction. It ignores the unprecedented rate of change and the problems that can occur almost overnight. As we all know, the dollar fell in dramatic terms almost without warning to the foreign exchange markets and certainly to the Australian stock exchanges. Senator Walsh has chosen to rule out a mini-Budget. We are not sure whether that encompasses a further economic statement or whether it means that there will be no new fiscal initiatives in the current financial year. The fact is that one simply cannot take account of the problems that are likely to occur with an economy as fragile as ours and with a foreign debt that is accumulating with the rapidity of ours. Against that background, with classic structural deficiencies which have built up in this country over many decades and which have seen Australia go from being close to the top of the international league table to barely in the top 20, one would have thought that the most effective way of keeping the pressure on both Ministers and the Government was to ensure that the level of public debt and the level of expenditure borrowing that might be required was subject to the greatest possible degree of scrutiny. Yet that is simply not what is happening here. We have a debt service ratio approaching critical levels. All the economic indicators are very unhealthy indeed when compared with our major trading partners. I instance the present high level of inflation, which is about three times the average of our Organisation for Economic Co-operation and Development partners, and the inflation rate of 8 per cent forecast in the Budget. Clearly that is a very significant warning signal. Let us put that alongside the current high level of interest rates, the rising level of labour costs, the balance of payments deficit that we are now carrying-at about 6 per cent of gross domestic product, it contrasts very unfavourably with the positive current account position of several of the Western economies and is certainly much higher than any of the others even on a deficit basis-an exchange rate that has fallen dramatically and the fact that government expenditure as a proportion of GDP has not fallen by any extent since the last financial year. It is quite clear that none of those parameters augur at all well for the state of the economy, yet the Government is choosing a method which would involve much less scrutiny, much less supervision and much less responsibility. I come back to the provisions of the Bill and what was said by Mr Hurford when first introducing it. A proposition which has led to no re-think on the part of the Government, has certainly led to a substantial re-think on the part of the Opposition. This Bill must be viewed as an insidious proposal. It does not take account of the real needs of either the Parliament or the national economy. It is simply a recipe for encouraging the fiscal irresponsibility that we deplore. Until the Government can come up with a cogent explanation for the necessity for this Bill, I am forced to conclude, as I am sure will others, that it is simply a form of back door dealing, that there is absolutely no economic necessity for it and that it will simply exacerbate the present problem. Senator WATSON(Tasmania)(9.39) —The Senate is debating the Loans Bill 1986, which contains the usual mechanisms to enable the Government to raise funds by loan to finance the Budget deficit. For the second time now the Government is trying to make this Bill a standing Bill rather than an annual Bill. In effect, this Bill as it stands, provided it goes through unamended, provides for standing legislation in order to eliminate the need to seek the permission of Parliament each year to borrow money from the Loan Fund to finance the Budget deficit. In other words, the Government is seeking to deny this Parliament the opportunity to debate increased loans and increased government expenditure, which are indicative of an increased incompetence on the part of the Government. The elimination of the need to present a loan Bill annually could have serious consequences for the management of a deficit and the accountability to the people of Australia because it would allow the removal of some items of expenditure from Consolidated Revenue and their inclusion in the items paid for from the Loan Fund. This is a possibility as a result of what is put before us today. They would therefore not be subject to the sort of scrutiny of, say, a Senate Estimates committee, and the Government could mask the real intent of an ever-increasing deficit on this nation. The servicing of our debt is costing this nation more and more each year. The Government has failed in the 1986-87 Budget to reduce effectively government spending to a level which would, in even a small way, reduce the overall debt. While the Government has estimated that it will reduce the deficit to some $3.5 billion this financial year-the figures is rubbery-it also admits that the prospective deficit in the Consolidated Revenue Fund will be around $5.1 billion. The only way to reduce the cost to the Australian taxpayer of financing this huge debt is to reduce government expenditure. But it is in the area of expenditure cuts that this year's Budget loses its credibility. We have seen the deferral of indexation flow-ons and increases in taxes and charges. We have seen the deferral of pension increases and scheduled fee rises for Medicare and hospital benefits. What about ongoing expenditure cuts? The Budget loses its credibility in this area. Zero real growth, however pleasing to some, means that expenditure has really not been cut at all after allowing for the effects of inflation. As a result of this Government's failure to make the necessary hard decisions, government receipts had to be increased by 11 per cent, or 4 per cent in real terms, in order to cut this phoney deficit to $3.5 billion-an increase in taxes. These receipts will rise to a record 28 per cent of gross domestic product. Where are these major revenue item increases coming from? They are coming from increased excise on petroleum products, the introduction of the iniquitous fringe benefits tax, rises in sales tax in certain areas, increases in the bank account debits tax and rises in personal income tax. Despite the proposed personal income tax cuts which will take effect on 1 December this year, pay as you earn tax will still rise by 10 per cent this year. This will result in the movement of salary and wage earners into higher and higher tax brackets because of inflation. In other words, wage and salary earners will be paying a higher proportion of their incomes in taxes and charges during 1986-87 over and above a greater contribution to Medicare and higher excises on petrol. Who are the people who are having to pay the costs for this increased debt burden? It is the ordinary workers of Australia, the blue collar workers, the people who put this Party into government. These are the people who are having to pay the price of our high indebtedness today. These are the people who will be forced to suffer wage discounting. These are the people who will have to suffer decreases in their standards of living, et cetera. Instead of cutting expenditure, this Government has chosen to increase taxes as a means of reducing the deficit. Now our external debt is being eaten up by a growing share of our national income. Each succeeding year less and less of our national income is going into constructive ends. I think the Minister for Finance (Senator Walsh) agrees with this. Unfortunately, it is not going into those projects which are capable of providing employment and yielding returns to cover the debt in future years. The fastest growing item in our external debt now is the interest required to service this debt. There is no real basis to expect that there will be any great improvement in the situation in 1987. The real beneficiaries of this sort of situation, from what is being put forward by this Government, are the financial markets. The financial entrepreneurs have done very well, thank you very much. The people who have been the real sufferers are the productive investors, those who have tended to put their money into productive, long term investment. The deliberate policy of making the taxpayer foot the bill for an increasing government expenditure has left this country in a very sorry state. The overseas financial markets have also reacted to what they see to be the financial mismanagement of our country. What have they done? They have not only devalued our currency but they have also devalued and decreased our credit rating. Australian business is indeed losing the confidence of this Government. It now recognises the sorry fact that no real progress in overcoming the nation's crisis is in sight. Our overseas current account deficit is likely to be higher in nominal terms and our overseas debt is expected to rise even further this financial year. Our gross national debt is expected to approach $100 billion. This external debt burden is creating a downward pressure on exchange rates. The more the exchange rate falls the more onerous becomes the debt in international currency terms. As a result, our inflation rate is likely to remain well above that of our major trading partners, thereby reducing our ability to compete on international markets. Business investment is not expected to increase markedly because of continuing high interest rates which have discouraged new investment which is so necessary to turn the economy around. Taxation rates continue to rise in Australia while other countries tend to lower taxation rates, particularly in the corporate field or in the business area. Who is taking the risks for this increasing debt? Where is the risk falling? It is not falling on the financial entrepreneurs; it is not falling on the banking community. Instead the risk has been transferred to those who create the wealth of Australia, the real wealth-the farmers, the miners, the manufacturers and so on. What is happening? The banks have effectively insulated themselves and their profit margins by transferring this risk to other people, including the farmers. That is the deplorable state in which people find themselves because the element of risk taking has been transferred from the financial community to the productive sector of Australia. That is the sector that can least afford to take that risk as well as pay these extraordinarily high rates of interest at present. Unfortunately, we have now entered an environment in which the Government's wages policy is also completely out of step with its monetary policy. For example, while it is anticipating a growth rate of 2.25 per cent-this is highly unlikely because of conflicting statements within the Budget Papers-it is estimating a 6 per cent growth in wages. This is not compatible with the expected worsening of our terms of trade. The Australian people are now a wake-up to this Government. Reduced household disposable income reduces the incentive to save, and therefore we have less investment. Also we find that business costs will be higher-these costs will be passed on to consumers-with such associated government measures as the fringe benefits tax. The Government has led the people of this country to believe that a devalued currency will benefit business and thereby improve employment and business prospects. Unfortunately, a devalued dollar is really of no benefit to a manufacturer of products that are not competing against imports. The Government seems to forget that fact. Even where there is some competition and there is still a reliance on imports the imported cost has gone up and the inflationary effect is putting up on-costs and added values as well. The real beneficiaries are governments which get increased taxes as a result of this inflationary pressure. Unfortunately, this Government fails to recognise the link between a devalued currency and a high inflation rate which is associated with this policy. The Treasurer (Mr Keating) in his Budget Speech said that Australia must maintain control over its own destiny. However, such a low valued currency effectively makes Australian assets so much cheaper to acquire. It is not surprising that the financial markets overseas are getting bargain basement prices in the share markets and are buying into real estate and other areas. I only wish they would start making a little productive investment in, say, manufacturing or something that is going to give some real term future to this country. In fact, the Treasurer in his Budget Speech went on to say that there is a need to become more efficient and to invest more. How can we invest more when more and more disposable income is effectively being taken by government in the form of increased taxes and charges? How can we expect business to invest more when there is no certain climate for the future? How can we expect business to invest more when an artificially high value is put on machinery to produce goods, machinery that essentially must come from overseas? What is the Government doing? The Government says that it must spend less and borrow less and therefore improve the climate for lower interest rates and more private sector investment. Nobody will dispute that those are fine words; but it is a pity that this rhetoric is not matched with action. Interest rates have in fact gone up two percentage points since July. Taxation for business and pay as you earn taxpayers will increase. There is no incentive for the private sector to invest. The servicing of our debts is costing this country dearly, and it is poor servicing indeed when debt is used to finance current consumption. The legislation before us is essentially a measure to bridge the gap between expenditure and receipts by borrowing. What is the way out for this country? We must have improved prosperity, which must be used for the future and not diverted to government taxes or corporate asset redeployment. The takeover mania has been a feature of this Labor Government. In fact, it has received encouragement from the Prime Minister (Mr Hawke), who blames bad management in Australia for some of our current problems. Unfortunately, we now have a situation in Australia in which there is an unhealthy emphasis on cost reduction. While it may be important to reduce costs as a result of bad work practices and so on which make our industries uncompetitive with overseas industries, this unhealthy focus on cost reduction just to keep one's head above water at the expense of all other management objectives inhibits a rapid management response to changes in market conditions. This country needs a greater degree of flexibility-flexibility in work practices and flexibility in management attitudes. c It is regrettable that only 6 per cent of Australians are employed in the export sector and that, therefore, 94 per cent are employed in the domestic sector. This leads to an unhealthy inward-looking attitude, to high regulation and to intervention by government. Our present overseas debt position, the low prices for our mining and rural products, and our adverse balance of payments have a stronger resemblance to the 1890s Depression and the eve of the world Depression than any other example in the last 25 to 30 years. In the 1890s Depression Australia suffered because almost 40 per cent of its export earnings were devoted simply to paying the overseas interest bill. We are rapidly approaching that situation. Because of our inward looking attitude, our exchange rate does not respond quickly to changes in our level of exports and inputs to the trade account. The exchange rate really is driven by the movement of foreign funds into and out of the domestic economy-the capital account. Unfortunately, as a result, adjustments to the value of the dollar, which should flow from fundamental changes to our export performance or underlying cost structures, are far too slow. So our salvation really lies in being able to develop processes, products and designs which other countries cannot match. I urge the Senate to refrain from making this Bill a standing Bill and, instead, adopt the amendment which will mean that it will be annual legislation subject to the scrutiny of this Parliament, thereby increasing people's awareness of just how government is managing the economy. Senator SHORT(Victoria)(9.56) —I join with my colleagues in this debate in supporting the following Opposition amendment to the second reading motion: At end of motion, add: `but the Senate notes with concern the continuing increase in the nation's indebtedness, the continuing balance of payments and trade crisis, the continuing high levels of interest rates and the Government's cosmetic approach to the reduction of its spending outlined in the recent Budget'. I think it is very timely and necessary to look at each of these four points in some detail because the first three are merely symptoms of the economic crisis facing Australia today. The fourth point, the failure of the Government to tackle its profligate approach to its spending of taxpayers' funds, is one of the causes of the crisis. I make the point first, however, that if the decision of the Australian Labor Party to include John Halfpenny on its Senate ticket for the next election results in his election to Parliament and if similar extreme left wing Labor candidates are elected, even the profligacy of this present wanton spending Government will look like small change. In that context, it is worth having a look at Mr Halfpenny's remarkable career to date. According to Mr Santamaria in a recent report in the News Weekly, Mr Halfpenny comes from one of Australia's strongest communist families. His education proceeded through the Eureka Youth League in which, to quote Mr Santamaria, `his qualities of leadership became so apparent that the Central Committee of the Communist Party selected him to go for higher training to the Soviet Union'. He studied full time at one of Moscow's party schools for about fifteen months from 1961 to 1963. Since then, of course, his industrial ascent has been meteoric. In 1972, Mr Halfpenny became Victorian State Secretary of the Amalgamated Metal Workers Union, which is today the dominant influence in the Australian Council of Trade Unions. He also became a member of the Communist Party's national industrial committee and later a member of the ACTU Executive. Mr Santamaria points out that Mr Halfpenny, our Senate candidate, visited the Soviet Union again during 1971. During 1978, he made another visit to the Soviet Union. In 1979 though-- Senator Siddons —He was put in on top of Senator Button. Senator SHORT —Yes, he was put in on top of Senator Button and, in its wisdom, the National Executive of the Party reversed that decision. However, the fact remains that Mr Halfpenny is still in a key position on the Labor Party Senate ticket. Interestingly, Mr Santamaria points out that when in 1979 Mr Halfpenny left the Communist Party to join the Australian Labor Party, he carefully emphasised that he had not changed his views but only the vehicle through which he would seek to realise them. The PRESIDENT —Order! I find the remarks of the honourable senator quite interesting but I would ask him to relate them to the motion for the second reading of the Loans Bill, which is now before the Senate. Senator SHORT —Thank you, Mr President. Can I put it to you that my remarks are extremely relevant because Mr Halfpenny and the Labor Party faction from which he comes are dedicated to major increases in government spending, major increases in Budget deficits and, therefore, major increases in the requirements of a Loans Bill, the purpose of which is, of course, to fund the deficit. The PRESIDENT —I will hear the honourable senator but I will listen with great interest to what he has to say and constantly remind him that it is the second reading of the Loans Bill, not the first reading, that is before the Senate. Senator SHORT —Thank you, Mr President. I will be guided by you. I conclude my remarks about Mr Halfpenny with the comment that when he left the Communist Party the State committee of that Party issued a statement concluding: We look forward to continued work with John Halfpenny as we do with others in the labour movement. I believe those statements are significant in relation to the Bill presently before the House. As I said, the facts are relevant to this debate because it is about a Bill to make provision for the financing of the Government's Budget deficit in 1986-87 and, if the Government got its way with the Bill as presently drafted-which, of course, the Opposition opposes-it would cover also the financing of deficits in any future years. Members of Mr Halfpenny's faction in the Australian Labor Party are hell-bent on massive increases in government spending and, therefore, massive increases in Budget deficits, with all the attendant miseries of soaring inflation, interest rates and unemployment and plummeting economic growth that result from them. The continuing increase in Australia's indebtedness is a matter of the greatest concern. There are two elements to this debate: One is the total debt of the public sector-Federal, State and local governments-and the other is our debt as a nation to the rest of the world. The public sector debt has exploded in the past decade and most of that explosion has occurred since the Hawke Government came to office. But, at 30 June 1976, the level of total public sector securities on issue in Australia was $28.9 billion. On 30 June 1986, the figure was $117.4 billion-a more than four-fold increase. As a percentage of gross domestic product, the public debt rose from 39.8 per cent to 50.6 per cent over those 10 years. A public debt of $117.4 billion is more than $7,300 for every man, woman and child in Australia. For every taxpayer in Australia, it is more than $17,000. The interest bill on the Federal Government's share alone of that debt is more than $7 billion this year. It will constitute more than 10 per cent of the Federal Government's total outlays, which will make it the third largest item of Federal Government expenditure this year-more than it spends on this nation's defence, education or health. This debt is a crippling millstone around the neck of every Australian. Through its effects on taxation, inflation and interest rates, it destroys incentive, investment and productivity; yet the Government's policies will inexorably increase this debt burden. The growth in our foreign debt has been even more dramatic and carries with it even graver dangers. In the past three years alone, our foreign debt has increased from less than $30 billion to almost $90 billion as our balance of payments on current account has accelerated into deficit. Last year-1985-86-that deficit was $14 billion; this year it will be higher, even on the Government's own estimates. On this basis, our foreign debt will exceed $100 billion by the end of June next year. Our foreign debt is increasing by $40m every day of the 365-day year. The Government has attempted to hoodwink the Australian public into believing that this disastrous state of affairs has developed entirely for reasons outside the Government's control. What nonsense. It is true that part of the problem has been a decline in our commodity prices overseas, but that is only part of the problem. Even that is, in part, a result of the massive decline in the value of the Australian dollar, a decline that has seen its value fall against the other currencies to its lowest in our history and has seen a fall against our history and has seen a fall against our major trading partner, Japan, of no less than 60 per cent in the past 18 months alone. There is no doubt that that decline has been due entirely to the Government's budgetary, monetary and wages policies. The attempts in the past few months by the Reserve Bank of Australia to support the Australian dollar are ill-conceived and fraught with danger. They are causing a haemorrhaging of our international reserves. Well over $2 billion of our international reserves have been lost in the past two months alone. The actions of the Reserve Bank, obviously supported by the monetary authorities, are giving speculators a no-risk, one-way option. That is something that the Treasurer (Mr Keating) claimed as recently as July at the Australian Labor Party National Conference in Hobart he would not do. So much for consistency in economic policy from the Government. So much for economic responsibility and integrity. The Government has demonstrated beyond any doubt that it has no consistency, responsibility or integrity. The increase in our total foreign debt has come from both public and private sector borrowings overseas, but the relative increase in public sector borrowings has been astronomical compared with that of the private sector. Ten years ago, the total outstanding foreign debt owed by the government sector was $1.3 billion. By 30 June this year, it had grown to $27.3 billion-a more than 20-fold increase. Most of this increase has occurred during the life of this Government. No wonder the Treasurer uttered his now infamous `banana republic' statement. He conveniently forgot to say, however, that his and his Prime Minister's economic policies were in very large measure responsible for that calamitous situation. The Treasurer might also at the same time, had he been honest with the Australian people and particularly with the people of Victoria, have explained how it came about that an agency of the Hawke Government, in the form of the Australian Industry Development Corporation, came to take a 10 per cent equity stake in the Portland aluminium smelter project and why last year the Hawke Government gave the Cain Labor Government in Victoria a $1.5m grant for the project with no conditions attached when it was obvious to anyone with half an ounce of business understanding that the project was in serious trouble. The Hawke Government's role in all this has been, at best, irresponsible. The Cain Government's role has been nothing other than scandalous. As a result of its criminal ineptitude, the Cain Government will have to pay out about $200m to get the Portland project operational. That $200m is over and above the $450m which it has already sunk into the project through its 35 per cent stake. Senator Siddons —But a Liberal Victorian Government started the Portland project. Senator SHORT —But not the arrangements which have been entered into in the past four years. The longer term financial implications of this scandal for both the Cain and the Hawke governments cannot be accurately quantified at this stage, but it is clear that the cost, not only to Victorian taxpayers but to taxpayers in the rest of Australia as well, will be significant, at least into the 1990s. This will be just one more of those policies of Labor governments in Australia that have the direct effect of pushing up both interest rates and inflation. Australia is now well out of line with our trading partners on both these fronts. Real interest rates in Australia are approaching double digit figures. They are well above those of any major Western country. Our inflation rate is more than three times that of the average of our major trading partners. It is no wonder that the outlook for the Australian economy seems so bleak to so many people and observers. It is the Hawke Government's policies that have led to this state of affairs. I have talked this evening of only some of the Government's policies. Time prevents me from outlining in any detail its other policies about which one could speak so freely, such as the anti-business taxation policy or the wages and industrial relations policies through which the Government has sought to appease just a handful of militant trade union leaders, including Labor's new Senate candidate, John Halfpenny. This appeasement has been at great cost to the fabric of the Australian economy. In that context I note with very considerable interest the sudden emergence of the Prime Minister (Mr Hawke) as an advocate of an examination of work practices in Australian industry. Senator Zakharov —And management practices. Senator SHORT —And management practices; I accept that quite readily. Senator Zakharov —Some of your colleagues don't. Senator SHORT —Both management practices and union work practices need to be looked at. But the interesting thing is that the Prime Minister called people who advocated an examination of work practices `troglodytes' and `lunatics' and the Minister for Trade, Mr Dawkins, called them `treasonous'. But within a matter of days of comments like that, they had turned around and tried to jump on the band-wagon-but it was too late; they had missed it-of catching the very widespread mood among people in Australia who believe that there are many things going on in our economy that, quite frankly, we can no longer afford. For the Prime Minister to try now to lead that band, when beforehand he exercised a complete lack of leadership, is something that will not go unnoticed by the Australian public. Many Australians are still unaware of the economic minefield on which Australia is treading as a result of the policies of the Hawke Government. The Government must change direction. It must restore responsibility, consistency and integrity to government. However, day by day the evidence mounts that the Prime Minister and his pack are increasingly unable to govern. I understand that there is some talk of an early election in the wind. It cannot come soon enough. Otherwise, Australia may truly be unsavable. Senator WALTERS(Tasmania)(10.13) —We are debating the Loans Bill 1986, which is described as `a Bill for an Act to authorise the borrowing and expending of money for certain purposes'. This Bill allows the Government to borrow additional money to finance this year's Budget. The second reading speech applauds the fact that the Budget deficit is $3.5 billion. According to Government members and to the Prime Minister (Mr Hawke) the Budget deficit of $3.5 billion represents a fantastic effort that involved a lot of cutting. They have said that difficult questions had been answered and important decisions taken. But more important still was the response of overseas finance markets. Let us look at their responses. As soon as the Budget deficit was announced the dollar went up for 24 hours but, of course, straight after that the dollar fell by over 1c. Interest rates went up 2 per cent and are now hovering around 19 to 20 per cent. The promises made in the Budget were supposedly the good news. The good news is continuing high inflation-this was promised by the Treasurer (Mr Keating)-increasing unemployment, high balance of trade figures, reduced private investment and reduced growth. According to the Treasurer, that is the good news; those were the Budget promises. The very latest comments that have been put out about the Budget were by the National Australia Bank Ltd. The heading of its news release of September was `Budget falls short of target'. It stated: Last month's Federal Budget has done little to restore domestic and international confidence in the Australian economy . . . On the surface the reduction in expenditure growth and the size of the deficit is impressive . . . However . . . the Budget begins to lose credibility when the expenditure cuts are examined more closely. These cuts have been largely achieved through deferral of indexation flow-ons and increased charges. Notwithstanding the rhetoric . . . few really tough decisions were taken. . . . . . . . the reduced deficit has been achieved through increases in government receipts of 11 percent, or four percent in real terms. As a proportion of GDP, government receipts have risen to a record 28 percent . . . despite the tax cuts from December 1, net PAYE taxation will increase by more than 10 percent, well above the forecast increase in earnings and employment in 1986/87. This is good stuff, is it not? It continues: . . . higher levels of taxation will stifle private incentive to save and invest. . . . the Budget also damages investment through high interest rates. The longer interest rates remain at such high levels, the longer the period of economic adjustment and of lower living standards. It also states: Of the three major variables-fiscal, monetary and wages policies-it is obviously wages policy that is furthest out of line and consequently imposing the greatest strain on monetary policy. It ends by stating: . . . no real progress in overcoming the nation's crisis is in sight and there is little to restore the confidence of the Australian and international community. That sums up the Budget better than anything else has done to date. Of course, we have also had the reaction from Moody's Investor Services Inc. of the United States of America. It has put our credit rating down from an AAA to an AA rating. That means that an interest loading will be put on our borrowings from overseas. But Mr Hawke and the Government have played that very low key. Indeed, we have all become so used to bad news that the Prime Minister brushed aside the fact that for the first time in our history our credit rating has been lowered to an AA rating under a Labor government. It is the natural disgrace of a Labor government that this has occurred. Is it any wonder that Moody's has done that when we look at our present competitive situation? Let us compare our inflation rate, our interest rates and our labour costs with those of our competitors. Australia's inflation rate at the moment is about 9.2 per cent. In Japan it is 1.1 per cent, in the United States of America it is 2.3 per cent and in West Germany it is 0.1 per cent. Interest rates are 19 per cent in Australia, about 6.4 per cent in Japan, 8.8 per cent in the United States of America and 8.7 per cent in West Germany. Let us look at labour costs. Australia's increase in average weekly earnings last year was 6.5 per cent, in Japan it was 2.2 per cent, in the USA it was 2.4 per cent and in West Germany 3.3 per cent. Yet Mr Keating had the hide to tell the Economic Planning Advisory Council that the rate of increase in average earnings in Australia has recently been quite close to those of our major trading partners. Is 6.5 per cent close to the others at 2.2 per cent, 2.4 per cent and 3.3 per cent? I would like to see what he really means by that. Average unit costs, which, of course, are also added on to labour costs, for member countries of the Organisation for Economic Co-operation and Development are slightly over one per cent, but for Australia they have been 4 per cent. All these problems have given business a headache, as one could well imagine. Yet it is business that has been blamed by Mr Hawke. Businesses have been told that they are not playing their part, that they ought to get out there and invest and that they should be doing something to right the mess into which this Government has got the country. The unions have been abusing businesses and telling them that they are not out there investing. There would not be a business in Australia that would not be willing to invest if the climate were right; but, as I have just indicated, the climate is wrong and there will be no chance of them investing. Mr Hawke has told them exactly that and yet he still blames them for not investing. Mr Hawke has told us all that Australia is facing a situation as grim as that of a country at war, and our Treasurer-you know, that best Treasurer in the whole wide world-says that Australia is nothing short of a banana republic. Yet business is blamed for not investing. The thing that would assist business more than anything else would be, of course, a wage freeze. But the Prime Minister has ruled out a wage freeze, and all that business has to help it invest is more taxes for this Government under its Budget. In this Budget alone taxes went up by $1.4 billion, and that great trilogy that the Prime Minister promised us and Australia that he would stick by has gone-shattered for the second year in a row. Since this Government took office personal tax has gone up $14 billion. Commonwealth tax paid by business has gone up from $5 billion to $8 billion under this Government. Total tax revenue has gone up $27 billion since this Government came to power, and total Commonwealth outlays went up $26 billion in that same period. Despite supposed cuts, outlays in this Budget, although the increase is slight, have still gone up in real terms. The interest paid on behalf of the Commonwealth is up from $1.8 billion to $5.5 billion in that same period. Just paying interest on the deficit that this Commonwealth Government keeps on giving us is driving this country broke. Yes, we are facing the banana republic stage; we are facing a crisis as grim as that of a country at war. On that I agree entirely with the Treasurer and with the Prime Minister. But what we as an opposition have been calling for is a more flexible wage system. Honourable senators can all remember-indeed, I am sure you do, Mr Acting Deputy President-when our industrial relations and wages policy first came out. The Prime Minister ridiculed it; the unions would not have a bar of it. Honourable senators remember also when Mr Charles Copeman spoke about the work practices. The Prime Minister called him a troglodyte. Mr Burke threatened to take away the licences of his company. Honourable senators will remember him calling Mr Copeman a traitor. Honourable senators will remember all these extravagant expressions used by the Australian Labor Party. Well, yesterday's comments by Mr Hawke, Mr MacBean, Mr Simon Crean and Senator Button indicate that they are all now talking about a more flexible wage system and telling the unions that they have to be more flexible, that they will have another wages accord and that it has to be more flexible. Is it not extraordinary how just a short time ago the Prime Minister was ridiculing our industrial relations and wages policy? Yet now, of course, he is picking it up and using it as though it were his own. Is it not extraordinary how such a short time ago he was abusing Mr Copeman about work practices that are unforgivable in any climate? Mr Hawke, when he is accused of being responsible for these work practices that started, were fought for and were instigated under him as President of the Australian Council of Trade Unions, has the hide to say: `Well, it was a different era then'. These work practices were never correct; they were never right. There was never a need for strikes over the fact that there was only smooth peanut butter and not crunchy peanut butter in the canteen at lunch, that the canteen provided only two flavours of ice cream, not three, and that there would need to be three men on standby where one man was doing the job. Yet these are the sorts of things that occurred under the present Prime Minister as President of the ACTU. He excuses his actions by saying that it was a different age. What a ridiculous way to carry on. As I said, we now have both Mr Hawke and Senator Button saying that there has to be a new and more flexible wage policy. We have Mr Hawke now deciding that he will call a summit on work practices and that he will get more co-operation from the unions on some of those work practices about which Mr Copeman spoke so scathingly and which he decided would make his company unable to compete with overseas companies if they continued. Mr Hawke has suddenly decided that he is not such a troglodyte and that he will hold a summit and see what he can do about those work practices. Is it any wonder that business does not have a clue what the Government is on about? Is it any wonder that business does not really know whether Mr Copeman is a troglodyte in the Government's eyes or whether he is a knight in shining armour who is bringing to the attention of the Government these work practices that are so destructive to our competitiveness overseas? That is the situation, and I know that the business community at this stage is probably rather reluctant to have yet another summit with the Prime Minister. I wonder whether the summit will be held in this chamber. Perhaps it will be held in the House of Representatives. I sincerely hope, Mr President, that you will not give permission for the summit to be held in this chamber, even though the House of Representatives may see another summit. Let us now look at how the economy is affecting the families of this country, because once again all those extra taxes will make the position of the single income earners even more difficult. Those single income families which have been struggling ever since this Government came to power will find this Budget has affected them and will affect them very much in the coming year. They have an increase in their Medicare levy-it is up by 25 per cent-and the cost of their medical prescriptions has doubled from $5 to $10. Debate interrupted. The PRESIDENT —Order! It being 10.30 p.m., under sessional order, I put the question: The the Senate do now adjourn. Senator McINTOSH(Western Australia)(10.30) —I wish to draw to the attention of the Senate and the Government some recent disturbing events involving the arrest and disappearance of three East Timorese students in Jakarta. East Timorese in Australia have approached Amnesty International, the Australian Council for Overseas Aid, as well as Senator Robertson and me, asking us to do whatever is possible to afford some protection to those arrested. In speaking on this matter tonight, I am also representing the interests of Senator Robertson. At about 10.30 a.m. on 3 September, just under three weeks ago, three men in civilian clothes, believed to be from Indonesian military intelligence, arrived at Atma Jaya University in Jakarta. At the university, the three men abducted a student, who was at the time drinking coffee with friends. He was forced into a grey car with licence plate number B1136V. The 34-year-old student was doing final year law at the university. His name is Antonino Goncalves and he is from East Timor. Antonino Goncalves is a nephew of a former Indonesian-backed Governor of East Timor, Guillerme Goncalves. He was in the Portuguese army at the time of the Indonesian invasion and apparently became an active member of the armed resistance until his capture or surrender in 1978. His parents, his wife and his wife's parents all died in the East Timorese countryside that year-as did so many others during that time of intense military operations and subsequent famine. In 1981, Antonino Goncalves received a scholarship to study in Jakarta, where he has been since. This detailed information comes from an Amnesty International action alert, issued on 5 September, just two days after the abduction. According to Amnesty at that time, efforts by students and concerned church personnel in Jakarta to establish where Mr Goncalves was taken, and why, were unsuccessful. Now, almost three weeks later, still nothing has been heard from or about this man. Amnesty issued its alert, expressing a fear that he may be tortured. This fear is based on Amnesty's knowledge of evidence of the use of torture during interrogation in Indonesia and East Timor. Amnesty has called on the Indonesian Government to make known the whereabouts of Mr Goncalves, to make known the charges against him and to ensure that he has access to friends and lawyers. As of today, Amnesty has had no response from the Indonesian Government. The Australian Department of Foreign Affairs was informed of this abduction within a day of its happening. I understand that both Amnesty International and the Australian Council for Overseas Aid have sought from the Department assistance to obtain official confirmation of the abduction. I further understand that the Department has made informal inquiries through non-government contacts in Jakarta and has confirmed that the abduction did occur. But there appears to be a reluctance on the part of our Government to take the matter any further. In the Senate last Tuesday, I asked the Government to seek from Jakarta a formal confirmation of the arrest of Mr Goncalves, to express formally concern for his welfare and to ask that he be granted access to lawyers and relatives. I was told that the Government did know of the arrest but nothing of the reasons for it. The Australian Embassy in Jakarta is continuing to make inquiries and I would be kept informed. I was told. I have heard nothing since. I now ask the Government to tell the Senate what further inquiries need to be made. Given that the Government is aware of the arrest and given the expressed concerns of Amnesty International, why will the Government not simply signal to the Indonesian Government its concern for the welfare of Mr Goncalves? This question has become more urgent because last week similar arrests of East Timorese took place. At midnight on the night of 16 September-that is, Tuesday of last week-29 year-old Joao Freitas da Camara was arrested in Jakarta. A few hours later, at 5 o'clock on the morning of 17 September, Francisco Fernandes Carvalho, aged 30, was also arrested. Like Mr Goncalves, both men were also students at Atma Jaya university. Amnesty International has issued action alerts on both these cases, calling on the Indonesian Government to make public the charges against them, to reveal their places of detention, to ensure access to lawyers and friends and to ensure that they are humanely treated while in custody. The Australian Government has made many claims about its concern for human rights issues wherever they occur, including Indonesia and East Timor. Here the Government is presented with some detailed, specific human rights cases, almost immediately after they have occurred. The reasons for the arrests of these East Timorese men is irrelevant. What has happened-abduction and being held incommunicado-is not acceptable or justifiable behaviour in any country. Formal representations from our Government about their welfare could offer those men some form of protection. This is the rationale behind Amnesty International's call on the Indonesian Government. So I again call on the Australian Government to make formal representations to the Indonesian Government about these men in line with the reasonable requests made by Amnesty International. If the Government is not prepared to do this, I believe the onus is on the Government to explain why it will not do so. Senator RYAN(Australian Capital Territory-Minister for Education)(10.36) —I do not have the relevant information to respond to Senator McIntosh's questions but I will ensure that they are passed on to the appropriate Minister and that a reply is obtained as soon as possible. Question resolved in the affirmative. Senate adjourned at 10.37 p.m. The following papers were tabled: Australian Meat and Live-stock Corporation Act-Order 1986 No. M30-1987 Performance, dated 9 September 1986. Export Control Act-Export Control (Orders) Regulations-Orders 1986 No. 9-Export Control (Fees), dated 5 September 1986. Meat Inspection Act-Meat Inspection (Orders) Regulations-Orders 1986 No. 3-Meat Inspection (Fees), dated 5 September 1986. Wildlife Protection (Regulation of Exports and Imports) Act-Declaration by the Minister under sub-section 9 (1), dated 30 August 1986. GOVERNOR-GENERAL'S PROCLAMATION-COMMENCEMENT OF PART OF AN ACT: a Proclamation by His Excellency the Governor-General was tabled, notifying that His Excellency had proclaimed part of the following Act to come into operation on the date specified: Crimes Act 1914-Amendment made by the Statute Law (Miscellaneous Provisions) Act (No. 1) 1986-1 October 1986 (Gazette No. S 471, 17 September 1986). The following answers to questions were circulated: (Question No. 1168) Senator Archer asked the Minister representing the Attorney-General, upon notice, on 5 June 1986: (1) What changes have been made to the laws relating to the revealing of beneficial ownership of shares since recommendations 63, 64 and 66 of the Stewart Royal Commission of Inquiry into Drug Trafficking, which relate to current banking practices and the availability of company information, were presented. (2) Has the Treasury and the Reserve Bank given consideration to the banking reforms suggested by Mr Justice Stewart; if so, what banking reforms, if any, have been implemented in an effort to improve banking practices. Senator Gareth Evans —The Attorney-General has provided the following answer to the honourable senator's question: (1) The Companies and Securities Legislation (Miscellaneous Amendments) Act 1985 made a number of amendments to the Companies Act which has increased the level of disclosure of beneficial ownership of shares. A shareholder in an unlisted company is now required to disclose in a notice to the company details of shares held by him in a non-beneficial capacity when a transfer of shares is lodged. Furthermore, an existing shareholder of an unlisted company is required to notify the company whenever there is a change in the capacity in which the shareholder holds the shares. Previously, details of interests in shares were only provided to the company in respect of listed public companies and certain declared bodies in accordance with the substantial shareholdings and tracing (s. 261) provisions of the Companies Act. Another amendment requires the above information on the beneficial ownership of shares to be included in the register of members of unlisted companies. This will ensure that such information is conveniently available for public inspection. In addition, the power of a company to trace the beneficial ownership of its shares, which has hitherto been restricted to public listed companies and declared bodies, has been extended to unlisted companies. (2) The banking reforms suggested in recommendation 66 of the Stewart Royal Commission were also the subject of recommendations by the Royal Commission on the Activities of the Federated Ship Painters and Dockers Union, headed by Mr Costigan, QC. These latter recommendations were subsequently examined by a Working Group of officials, the establishment of which was announced by my colleague the Treasurer on 17 April 1985. The Government still has under consideration the Working Group's report on the matter. (Question No. 1176) Senator Archer asked the Minister representing the Special Minister of State, upon notice, on 5 June 1986: (1) What action has the Government taken in respect to recommendation 10 008 of the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union concerning the provision of the Commission's computer systems to law enforcement agencies following the conversion of the systems to fourth generation language. (2) Have the Commission's computer systems been converted to a fourth generation language and to a new data base management system. (3) Will the converted system be made available to all State Police Forces and other law enforcement agencies; if not, why not. Senator Gareth Evans —The Special Minister of State has provided the following answer to the honourable senator's question: (1) The Government referred this recommendation to the National Crime Authority, to which the systems passed pursuant to s. 56 of the National Crime Authority Act 1984 upon the termination of the Costigan Royal Commission. (2) The Authority has converted its computer systems to a fourth generation language and installed a new database management system which is widely used in law enforcement organisations. Substantial modifications have also been made to the registry system. (3) The Authority has on request made component systems available to law enforcement and similar agencies, and in two cases, the complete system. The wider availability of the systems has been taken up with the National Exchange of Police Information Management Group, set up under the auspices of the Australian Police Ministers Council. (Question No. 1240) Senator Archer asked the Minister representing the Special Minister of State, upon notice, on 19 August 1986: (1) In view of the Special Minister of State's involvement through the Australian Federal Police and National Crime Authority, can he give an assurance that the enquiry into the death of Donald Mackay, and associated issues, has adequate powers to obtain all the information it needs, and to totally protect witnesses. (2) Does the enquiry have Royal Commission powers and privileges. Senator Gareth Evans —The Special Minister of State has provided the following answer to the honourable senator's question: (1) and (2) It appears from the honourable senator's question that he is referring to the Nagle Special Commission of Enquiry established by the New South Wales Government. If he is, the powers of the enquiry are not matters for the Special Minister of State to comment on. (Question No. 1248) Senator Haines asked the Minister representing the Minister for Social Security, upon notice, on 19 August 1986: (1) How many counter staff were employed by the Department of Social Security in 1983-84 and how many are currently employed by the Department of Social Security, in each State. (2) How many field officers were employed by the Department of Social Security in 1983-84 and how many are currently employed by the Department of Social Security, in each State. (3) How many counter staff took sick leave, transferred to another section of the Department of Social Security or resigned in 1983-84, and how many have done any of these things in 1985-86. (4) How many field officers took sick leave, transferred to another section of the Department of Social Security or resigned in 1983-84, and how many have done any of these things in 1985-86. Senator Grimes —The Minister for Social Security has provided the following answer to the honourable senator's question: (1) The number of counter officers employed in each State at 30 June 1984 and 30 June 1986 is outlined below: 30 June 1984-NSW 239; Vic 214; Qld 141; SA 66; WA 48; Tas 17; NT 10; ACT 12-Total 747. 30 June 1986-NSW 242; Vic 194; Qld 151; SA 64; WA 75; Tas 17; NT 12; ACT 15-Total 770. (2) The number of field officers employed in each State at 30 June 1984 and 30 June 1986 is outlined below: 30 June 1984-NSW 174; Vic 122; Qld 127; SA 55; WA 42; Tas 19; NT 7; ACT 6-Total 552. 30 June 1986-NSW 180; Vic 121; Qld 98; SA 52; WA 36; Tas 17; NT 7; ACT 6-Total 517. (3) and (4) The information sought is not readily available and I am not prepared to authorise the use of the considerable resources of time and money that would be involved in assembling it. (Question No. 1250) Senator Knowles asked the Minister representing the Minister for Transport, upon notice, on 20 August 1986: (1) Does the Minister for Transport state that coastal waters such as defined in my previous Question on Notice No. 1001, Hansard, 29 May 1986, p. 3060, Section 1 (a) and (b) within Australian Territory are not under the jurisdiction of the Commonwealth and are therefore not entitled to have warnings for hazards broadcast via the Sea Safety and Surveillance Centre, unless someone with responsibility for the coastal waters containing the hazard requests such warning. (2) (a) Would the Minister agree that his Department must abide by International Association of Lighthouse Authorities (IALA) rules as he recognises his Department as a member of IALA; if not, what explanation can the Minister give. (b) if this is the case, does the Minister agree that the South Passage Marker of Fremantle Harbour, transformed into a hazard on the 16-17th December, 1984, was a ``New Danger'' as defined in IALA Buoyage System Book 7; if not what are his reasons. (c) if the Minister agrees, does he agree also that the rules of IALA require the danger to be promulgated. (d) does the Minister agree that the danger was not sufficiently promulgated. (e) would the Minister describe the destruction of a light for navigation, such as the South Passage marker, being destroyed and another light buoy placed supposedly to mark the danger, as buoyage changes. (f) if the Minister would not describe such alteration to the navigational markers as buoyage changes, how would he describe it. (g) if the Minister agrees that there was a buoyage change caused by the ``New Danger'', and the new danger requires promulgation as required by IALA, how can the Minister maintain in his previous answer (Section 3b) that IALA does not refer to promulgating buoyage change. (3) (a) Does the Minister state that because the yacht ``Leschenault'' was under Australian registration, and Fremantle was its home port, that it becomes a domestic issue that could be handled (but was not) by the State of Western Australia, accordingly relieving the Minister of his responsibility under International Law to issue warnings to all those concerned, given that in his previous answer to my Question on Notice No. 1001 (Section 3a) the Minister acknowledges responsibility for International Law and then states that the domestic obligations ``can'' (not must) rest with the Australian State. (b) does the Minister acknowledge that ``Leschenault'' is a vessel that travels inter- nationally. (c) does the Minister acknowledge that the owners and crew (2 of whom hold the internationally recognised certificate of qualified Yachtmasters) have sailed ``Leschenault'' approximately 100,000 miles covering most of the major oceans of the world as experienced International mariners. (d) is the Minister aware that the ``Leschenault'' has an International Radio Licence and Call Sign-V.L.H.B., and that the Skipper and one of the crew hold international radio operator's licences. (e) would the Minister expect that a yacht on the Australian Register, with the Skipper and the crew all Australian Citizens, would be entitled to the protection of International Law, Agreements, Conventions and treaties to which Australia is a signatory, when outside Australian Territorial Waters and in the territories of other signatories. (f) does the Minister state that because the yacht ``Leschenault'' was sunk in Australian coastal waters the owners and the crew could not expect protection under those same International agreements, conventions and laws. (g) does the Minister state that had the vessel been a registered foreign craft it would have been entitled to protection under the same international agreements and been warned of the hazard. (h) as the Minister acknowledges the Commonwealth responsibility and obligations under international agreements, and all concerned should therefore have been warned, how does he relate this to his department's denial of responsibility for sending out radio warnings. (4) If it is inept to speak of the Minister handing over responsibility (Section 4b) and only co-operative arrangements exist between the States and the Commonwealth, could the Minister inform the Senate- (a) who has the overall responsibility for overseeing international agreements and conventions signed by the Commonwealth, and Commonwealth Acts of Parliament covering the Warning of Hazards once a co-operative arrangement has been entered into. (b) if another party, whether it be a State or a Department of that State has assumed responsibility, why is it then inept to say that the Minister has handed over his responsibility. (5) (a) Could the Minister inform the Senate if the shared responsibility for which the Commonwealth is responsible results from written arrangements between the Common- wealth and the States. (b) which actual documents arrange for the sharing of responsibility for radio warnings. (c) is the normal range of the Fremantle Port Authority radio 18.6 nautical miles; if so, how can he or his Department claim that the Fremantle Port Authority (FPA) radio facilities were adequate to warn all concerned when this nominal range does not even cover the FPA outer harbour limits. (d) does the Minister agree that a nominal 18.6 nautical mile range would indicate a possible difference in the order of 5-8 miles either way. (e) would the Minister agree that if, as is claimed, the letter from the Prime Minister of 1934 does not include radio warnings, that his Department is responsible for warnings within the FPA area, and is therefore responsible, or at least shares the responsibility for the sinking of ``Leschenault''. (6) (a) Could the Minister clarify his previous answer to my Question on Notice (Section 6 (a)) regarding the effects of Acts on the domestic exercise of jurisdiction by the Commonwealth. (b) does the Minister state that international law does not apply to coastal waters even though those coastal waters include navigational aids to assist entry to a major port. (c) can the Minister provide a definitive answer as to who has the overall responsibility, States or Commonwealth: (i) for sending out required radio warnings, and (ii) for making sure facilities are adequate to carry out such warnings when the Commonwealth has an agreement with the State. (7) (a) In reference to his previous answer (Section 7 (b)) is the Minister aware that the Prime Minister's letter of 1934 to the States does not refer to radio warnings. (b) is the Minister aware that the letter, while referring to lights, buoys and beacons, makes no mention of radio. (c) why does the Minister believe radio could be covered by the 1934 letter given that radio for ship to shore was operated by private enterprise in 1934, and neither Commonwealth, State or the FPA had radio for navigational purposes. (8) Can the Minister further explain how the author of a letter written before any relevant departments had radio facilities could foresee the requirements of radio and the control of it. (9) (a) Is the Minister aware that the Prime Minister's letter of 6th July 1934 refers only to Section 51 of the Constitution. (b) is the Minister aware that Section 51 of the Constitution mentions Navigational Aids only in one item, namely item (vii) which refers to Lighthouse, Lightships, beacons and buoys. (c) does the Minister affirm that the Prime Minister in his letter of 1934 forgot to add the proviso that should radio communication develop and be taken over by the Commonwealth, it would become part of the intent of his letter of sharing responsibility with the States. (10) Does the Minister justify the shedding of responsibility by his Department, and does he consider it absolved from any obligation to a Commonwealth law that states that it is to carry out certain duties, when they enter an agreed arrangement with the State for that State to administer that law, and in turn that State both passes legislation that forbids civil action to be taken against it for negligence in administering that Commonwealth law, and fails to administer the same law through negligence, by which negligence property loss is caused to Australian Citizens. (11) Does the Minister believe that the Commonwealth is protected by the State legislation that prohibits an Australian Citizen taking civil action against the State for administering Commonwealth law; if so, can the Minister reconcile this position with Section 109 of the Constitution that states `When the law of a State is inconsistent with the law of the Commonwealth the latter shall prevail, and the former shall, to the extent of the inconsistency, be invalid'. (12) Does the Minister acknowledge that the intent of the Acts of the Commonwealth Government covering navigational warnings to all concerned, International Agreements, conventions and treaties for navigational safety etc., was to assure the world at large and in particular all those directly concerned with the safety of navigation in Australian waters, that they could fully rely on Australia as a responsible country who would honour its obligations under such treaties. (13) Is the Minister aware that internationally-read sailing magazines are already reporting the sinking of the `Leschenault' as a case of an international traveller who was not entitled to be warned by the Commonwealth of a known danger to navigation (See also answer to Question on Notice No. 735, Hansard, 11 February 1986, p. 140). Senator Gietzelt —The Minister for Transport has provided the following answer to the honourable senator's question: The issues raised in the question have been the subject of two previous questions by the honourable senator (Questions on Notice Nos. 735 and 1001, Hansard of 11.2.86, page 140 and Hansard of 29.5.86, page 3061 respectively) for which substantial answers have been provided. Additionally, the matter of the Commonwealth's responsibilities for issuing warnings of hazards to navigation has been the subject of an extended investigation by the Commonwealth Ombudsman. In his report into a complaint by the Australian owners of the yacht `Leschenault', the Ombudsman concluded that there was no failure on the part of any Commonwealth agency. In view of the extensive official investigations into this matter and the answers already provided to the honourable senator, I am not prepared to permit the allocation of scarce Departmental resources to assist in answering a further similar question, for which the answer remains essentially the same as those provided previously. (Question No. 1284) Senator Michael Baume asked the Minister representing the Minister for Social Security, upon notice, on 20 August 1986: (1) What reclassifications of Senior Executive Service positions in your Department have been made since March 5, 1983. (2) What were the dates and the salary details of these reclassifications. Senator Grimes —The Minister for Social Security has provided the following answer to the honourable senator's question: (1) Nil. (2) Not applicable. Senator Button —On 18 September 1986 (Hansard, page 598), Senator Powell asked me, in my capacity as Minister representing the Minister Assisting the Prime Minister for Youth Affairs, why female groups making applications under the program of assistance to youth organisations-PAYO-were unsuccessful in obtaining grants. I undertook to provide her with an answer to her question. The Minister Assisting the Prime Minister for Youth Affairs has supplied the following answer to the honourable senator's question: The basic objective of PAYO is to help non-government youth organisations strengthen and develop their programs and services for young people. PAYO is not intended to provide on-going funding for youth organisations and it is unfortunate that some organisations who have received funding in successive years for discrete but distinct projects have overlooked this long established provision. For 1986-87 a total of 73 applications were received for grants amounting to $2.6 million. These applications were assessed against the Program guidelines and the Government's priorities along with other applications. The assessment process included consultations, wherever appropriate, with line departments, including the Office of the Status of Women, having primary responsibilities for the activities being proposed. Given the funds available compared to the total funds requested, it simply was not possible to fund the applications to which the honourable senator refers. The Minister Assisting the Prime Minister for Youth Affairs has announced 18 grants totalling $812,480 already. The balance of funds available have been reserved to meet the costs of evaluating the Program and as a provision for additional grants. In this respect three organisations which proposed activities of high priority have been asked to clarify aspects of their proposals to enable the Minister to finalise his deliberations. PAYO does place particular emphasis on the requirements of organisations representing or providing services to disadvantaged young people. This year some $250,000 were earmarked for this purpose and grants to this level were in fact made. One should not overlook the fact that many of these organisations cater for both young women and young men. Senator Button —On 10 June 1986 (Hansard, page 3631), Senator Walters asked me, without notice, whether the cost of the two different types of membership cards for the Australian Labor Party's National Conference in July sent to Australia's top 500 corporations were tax deductible. I undertook to provide her with a detailed answer. The Prime Minister has supplied the following answer to the honourable senator's question: The Commissioner of Taxation has informed me that there is not any provision in the income tax law which expressly allows income tax deductions for contributions to political parties or to functions, activities etc. organized for their benefit. The Commissioner added that he would not ordinarily see the cost of the membership cards in question as being an allowable tax deduction under the general deduction provisions in the income tax law.