Wednesday, 24 September 1986 The PRESIDENT (Senator the Hon. Douglas McClelland) took the chair at 10 a.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: 1. That we oppose the deregulation of housing interest rates without adequate safeguards to protect homebuyers. 2. That we condemn the Government for breaking its unequivocal promise not to deregulate these interest rates. 3. We express our concern that the Government's decision will cause undue hardship to many Australian families. Your petitioners most humbly pray that the Senate in Parliament assembled, should: urge the Government to reverse its decision and re-impose the interest rate ceiling. And your petitioners as in duty bound will ever pray. by Senator Macklin (from three citizens). To the Honourable President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully shows: That we strongly support ``The A.C.T. Smoking and Tobacco Products Advertisements Prohibition Bill'' introduced by Senator Evans, because it represents the first positive national step towards the eventual elimination of wide spread serious ill health caused by smoking tobacco. by Senator Vigor (from 30 citizens). To the Honourable the President and members of the Senate, of the Parliament of Australia assembled. We, the undersigned, plead that Parliament becomes aware that the Public has no legal right to influence the setting of Standards for Television Programming, that we deplore the new Standards which came into force on 1st February, and that we call on Parliament to amend the Broadcasting and Television Act 1942, section 16 (2), so that the Australian Broadcasting Tribunal, when determining Television Standards, and screening hours, shall consult with the Australian people: because at present the Tribunal is compelled by law to consult only with television stations on these matters, because the new standards are a result of such consultation, and have already been implemented without public discussion, because the new Standards are ambiguous, and without definition, because the new Standards are composed of modifying terms which circumvent the proscriptions, because the media is only motivated by aspirations of pecuniary superiority, because, in contrast, the public is only motivated by their wish to exercise pastoral care over the nurturing home environment of their children, because we believe that the Standards wrongly ascribe extreme importance to ``the storyline'' of a film screened, because we believe that the Standards wrongly ascribe total unimportance to the effects of viewing, especially violent films, on the young, the impressionable, the immature, the unstable, or the socially disadvantaged, because we refuse to accept the media-imposed assessment of community standards, and because we wish to impart our demand to be consulted, our demand to have legal status in decision-making, and the right to counsel those whose decisions so deeply affect our homes. Your petitioners therefore humbly pray that you will give this matter your earnest attention. And your petitioners as in duty bound will ever pray. by Senator Harradine (from 25 citizens). To the Honourable the President and members of the Senate of the Parliament in Australia assembled. We, the undersigned, plead that Parliament will legislate, or act in accordance with the present legislation to replace the current members of the Film Censorship Board who have admitted to Senator Harradine on 12th December, 1984 as reported in the Senate Select Committee on Video Material, (see attached extracts), that they are not applying either the blasphemy or obscenity tests as required under the provisions of the Customs (Cinematograph Films) Regulations, and that these persons be replaced by persons who will apply these and the other related tests in accordance with the said Regulations. Your petitioners humbly pray that you will give this matter your earnest consideration. And your petitioners as in duty bound will ever pray. by Senator Harradine (from 699 citizens). To the Honourable the President and members of the Senate of Australia: The petition of the undersigned citizens respectfully shows that there has been clear demonstration of public dissatisfaction with the mismanagement of the Victorian Otway forests, and we pray that: the constitution of Australia be reformed to recognise significant expressions of public concern, eg petitions, by the formation of a committee to represent public requests. by Senator Sanders (from 20 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth: Every citizen should have- 1. A constitutional guarantee of the right to vote and 2. A constitutional guarantee of the equality of votes. Your petitioners most humbly pray that the Senate in Parliament assembled, should- Support the Constitution Alteration (Democratic Elections) 1985 Bill And your petitioners as in duty bound will ever pray. by Senator Macklin (from 16 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 91 citizens). To the Honourable the President and the members of the Senate in the Parliament assembled. The petition of the undersigned citizens of Australia showeth: That many Australian wage and salary earners and self-employed persons do not enjoy secure retirement incomes provided by superannuation; and That the Government issued in December 1985 Guidelines for the implementation of the proposed productivity decision by the Conciliation and Arbitration Commission and draft Operational Standards for Superannuation schemes. Your petitioners therefore humbly pray that the Government: 1. Guarantees to every employee the right and freedom to select the superannuation scheme of his/her choice. 2. Protects the individual exercising that freedom of choice from any coercion, influence or other pressure which may be applied by any employer, association or trade union. 3. Will recognise only those schemes which provide genuine superannuation and reject those schemes which do not provide for- preservation of benefits to retirement vesting of employer contributions equal employer and employee Trusteeship control to ensure security of investments. And your petitioners as in duty bound will ever pray. by Senators Crichton-Browne (from 96 citizens) and Vigor (from 127 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 45 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 upon 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 279 citizens). To the Honourable the President and members of the Senate in Parliament assembled. We, the undersigned citizens of Australia, being concerned that the Australian Government, in breach of its own stated policies, has lifted the bans on the sale of uranium to France; demand that the Government re-impose the bans on such sales, and further, that the Government ratifies and strengthens the South Pacific Nuclear Free Zone Treaty to prohibit uranium sales within the region. And your petitioners as in duty bound will ever pray. by Senator Sanders (from 12 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 Mururoa 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 most humbly pray that the Senate in Parliament assembled should (1) Condemn and demand the cessation of France or any other Nations nuclear testing in the South Pacific or the use of such area for long range missile tests (eg. 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. by Senator Jones (from 1,006 citizens). To the Honourable President and members of the Senate assembled, the petition of certain citizens of Australia respectfully showeth opposition to cuts in English as a second language (ESL) teaching, the scrapping of the multicultural education program, the amalgamation of the Special Broadcasting Service (SBS) with the Australian Broadcasting Corporation (ABC), and the abolition of the Australian Institute of Multicultural Affairs (AIMA), as announced in the Federal Budget of August 19, 1986. Your petitioners request that the Government will review and reverse its decisions on these matters. And your petitioners in duty bound will ever pray. by Senator Ryan (from 84 citizens). To the Honourable the President and members of the Senate in Parliament The petition of the undersigned shows: That the Government proposes to introduce retrospective legislation to allow it to increase interest rates on fixed interest loans it has made for housing. Your petitioners request that the Senate, in Parliament assembled, should: Reject this legislation. And your petitioners as in duty bound will ever pray. by Senator Vigor (from 26 citizens). To the Honourable the President and members of the Senate in Parliament The petition of the undersigned shows: That the ALP has a policy of no tertiary fees, and the parliamentary party is proposing to introduce a fee of $250 per year in 1987 Your petitioners request that the Senate, in Parliament assembled, should: Reject any legislation which would impose fees on tertiary students And your petitioners as in duty bound will ever pray. by Senator Vigor (from 22 citizens). To the Honourable the President and members of the Senate in Parliament. The petition of the undersigned shows: That the people of the ACT do not have a right to breathe tobacco-smoke free air in either work or confined public places. Your petitioners request that the Senate, in Parliament assembled, should: Support legislation which would guarantee citizens the right to breathe tobacco-smoke free air in confined work and confined public places in the ACT. And your petitioners as in duty bound will ever pray by Senator Vigor (from 13 citizens). To the Honourable the President and members of the Senate in Parliament. The petition of the undersigned shows: That the use of steel jaw traps is a barbaric practice, which has been banned in many countries. The RSPCA and Animal Liberation have supported a ban on the use of steel jaw traps in the ACT. In 1985 only Gordon Walsh, MHA (Australian Democrats) and Harold Hird, MHA (Independent) supported a proposal by Gordon Walsh, MHA for an ACT-wide ban on the use of steel jaw traps. Your petitioners request that the Senate, in Parliament assembled, should: Support legislation for a ban on the use of steel jaw traps in the ACT. And your petitioners as in duty bound will ever pray. by Senator Vigor (from 10 citizens). To the Honourable the President and members of the Senate in Parliament. The petition of the undersigned shows: That the ALP Parliamentary Party has announced that uranium sales to France will be allowed, even though this is against the policy of the ALP recently endorsed at the ALP 1986 National Conference which states that uranium shall not be sold to France whilst France continues nuclear testing in the Pacific. Your petitioners request that the Senate, in Parliament assembled, should: Support legislation to be introduced by the Australian Democrats which would ban uranium sales to France in accordance with ALP policy. And your petitioners as in duty bound will ever pray. by Senator Vigor (from 11 citizens). Senator WALTERS(Tasmania) —by leave-I present a petition which is not in conformity with Standing Orders as it is not in the correct form. The following petition is from 241 citizens opposing cutbacks in war widows' pensions: We the undersigned War Widows, wish to add our protest to that made by our National President, Mrs. Billie Hughes, on behalf of all members of the War Widows Guild of Australia, regarding cutbacks to promised increases in the Social Security pension and to the proposed transfer to National Health Service of pharmaceutical benefits. This is a betrayal of those promises made by successive governments to the men who gave their lives for their country. The anxiety caused by changes and a reduction in drugs available could have a most detrimental effect on health. We ask that earnest consideration be given to the fact that these ladies also have served by caring for sick or disabled husbands, or managing alone for more than forty years. They surely deserve to live out their lives with dignity and in a reasonable degree of comfort, free from worry. As dependants of deceased ex-servicemen we should not come under the jurisdiction of Social Security. We consider our compensation entitlements should be always administered by the Department of Veterans' Affairs. Petitions received. Senator WATSON(Tasmania) —I give notice that, on the next day of sitting, I shall move: That the Senate condemn the Federal Government for imposing a fringe benefits tax on employers where they are required to provide components, materials, allowances and housing, in accordance with award conditions for the benefit of their employees. Senator VALLENTINE(Western Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) commends the Federal Government on the setting up of a Senate Standing Committee on Foreign Affairs and Defence inquiry into safety procedures relating to nuclear powered or armed vessels in Australian waters; (b) notes that this implies the presence of both nuclear powered and nuclear armed ships and submarines in Australian waters presents a potential danger to Australian citizens in port areas; (c) notes, also, the imminent arrival of at least 7 nuclear armed ships of the Royal Navy and the United States Navy to take part in the Fleet Assembly in Sydney Harbour on 4 October 1986, and also to visit other ports; and (d) calls upon the Government, in the absence of adequate port safety plans, to prohibit the entry of nuclear warships into Australian harbours. Senator NEWMAN(Tasmania) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) condemns the attempt by the Hawke Labor Government to solve its financial mismanagement of the economy by breaking contracts of long standing, both with Australian Capital Territory (ACT) mortgages and with defence force retirement and death benefits pensioners; (b) calls on the Government to honour existing contracts and undertakings given to both these groups of Australian citizens; (c) urges the Government to cut out such grants as those to `women surfboard riders' and to `art in working life' if it is financially unable to meet these prior commitments to ACT residents and retired service men and women. Senator CRICHTON-BROWNE(Western Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate noting that- (a) the Hawke Labor Government has given its support to a six per cent increase in wages which, together with the Government inspired high interest rates, levels of taxes and charges which under this Labor Government are at the highest level in Australia's history, and have combined to give Australia a rate of inflation which is more than three times as high as that of the Organisation for Economic Co-operation and Development (OECD), more than twice as high as that of the European Economic Community and almost five times as high as the rate of inflation in the United States; (b) the Government's support for these policies has thrust a level of costs upon Australian farmers which is far in excess of costs to overseas producers, thereby making Australian farmers unable profitably to compete on world markets; (c) condemns the Hawke Government for its adherence to policies which are directly responsible for the destruction of Australia's farmers and for its deliberate attempt to deceive farmers into belie-ving that the Government bears no responsibility for the present rural crisis. Senator GARETH EVANS(Victoria-Minister for Resources and Energy) —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. A.C.T. Bush Fire Council-Annual Report 1984-85. 2. Australian Meat and Live-stock Corporation- Annual Report 1985-86-together with the Auditor-General's Report-pursuant to Section 49 of the Australian Meat and Live-stock Corporation Act 1977. 3. Australian Meat and Live-stock Research and Development Corporation-Annual Report 1985-86-together with the Auditor-General's Report-pursuant to Sub-section 63h (3) of the Audit Act 1901. 4. Overseas Telecommunications Commission (Australia)-Annual Report 1985-86-together with the Auditor-General's Report-pursuant to Sub-section 53 (3) of the Overseas Telecommunications Act 1946. 5. Veterans' Review Board-Annual Report 1985-86-pursuant to Sub-section 215 (5) of the Veterans' Entitlements Act 1986. 6. The Chernobyl nuclear accident and its consequences-Report by an Atomic Energy Commission task group-dated 19 September 1986 Motion (by Senator Vigor) agreed to: That leave be given to introduce a Bill for an Act to terminate provisions in Acts which appropriate money without specifying the amount appropriated. Bill presented by Senator Vigor, and read a first time. Senator VIGOR(South Australia)(10.09) —by leave-I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- Purpose The purpose of this Bill is to increase the accountability of the Public Service and statutory authorities to the people of Australia. Background Section 83 of the Constitution provides that no money shall be drawn from the Treasury of the Commonwealth except under appropriation made by law. Currently, each year the Parliament receives a budget for the year's expenses from the government. It then approves appropriation of funds to meet this budget through Appropriation Bills Nos. 1 and 2, and usually further Appropriation Bills in the course of the year. All appropriations come under scrutiny in the Senate by the Senate Estimates committees, which make recommendations to the Senate for consideration during debate on the Appropriation Bills. The Parliament, in debating the annual appropriations, in fact only regularly debates and approves expenditure under the Appropriation Bills Nos. 1 and 2, together with the Appropriation (Parliamentary Departments) Bill, whose appropriation was until 1982-83 included in the Appropriation Bills Nos. 1 and 2. Appropriation Bill No. 1 is the appropriation for recurrent expenditure of the Public Service as well as grants made to other people and organisations to achieve the aims of government. Appropriation Bill No. 2 is the appropriation for capital works and expenditure of a capital nature by the Public Service, as well as capital grants made to other people and organisations by the government. These two Bills together account for an ever diminishing part of the actual expenditure by government each year. The major part of the Budget is expenditure called `special appropriations', which for 1985-86 amounted to $47,470.3m, or 68.7 per cent of total Budget outlays. Special Appropriations Special appropriations result from expenditure on matters provided for by specific Acts of Parliament. For example, States grants, including some for distribution to local government, are negotiated by the government independently of the Parliament, and then approved by Parliament. The States Grants (Universities) Acts, the Universities (Financial Assistance) Acts, the States Grants (Advanced Education) Acts, the States Grants (Teachers Colleges) Acts, the States Grants (Pre-School Teachers Colleges) Acts, the States Grants (Science Laboratories and Technical Training) Acts followed by the States Grants (Technical Training) Acts and the States Grants (Technical Training Fees Reimbursement) Act, and by the States Grants (Science Laboratories) Acts, the States Grants (Secondary School Libraries) Act, the States Grants (Capital Assistance) Act, the States Grants (Independent Schools) Acts followed by the States Grants (Schools) Acts, and the States Grants (Capital Assistance) Acts are all Acts of Parliament dealing with special appropriations relating to Federal payments to assist the States with education costs. Most of these Acts come regularly before Parliament for amendment, sometimes twice in one year, and are considered by Parliament outside the normal budget and appropriations procedures. Similar Bills come regularly before the Parliament for States grants for health, social security and welfare, unemployment relief, housing assistance, transport, water supply and electricity, industry assistance and research grants. Other Bills in this category appropriate money for certain statutory authorities, for payments to holders of public office, for bounties and subsidies, and so on. Continuing Provisions These Bills appropriate the money necessary for the purposes of the Acts in a number of ways, either by direct annual amounts indexed for cost of living increases, by triennial funding arrangements, by rolling triennial funding according to predictions based on five-year plans, by matching States, local government or private funding on a dollar for dollar or some other basis, or by meeting specific needs as they arise. A number of the Acts in force which contain continuing provisions, appropriate the money necessary for the purpose of the Acts without specifying any limitation on the amount appropriated. These continuing and unspecified appropriations are known as standing or special appropriations. Because they have continuing effect, the provision of the money to be expended under them is not subject to annual scrutiny and renewal by Parliament. The proportion of government outlays which only irregularly, though sometimes frequently, come before Parliament has been increasing regularly over the years. In 1973-74, 58.3 per cent of government outlays were by special appropriation, while this year around 70 per cent of outlays are by special appropriation. This means that around 70 per cent of government expenditure will escape scrutiny and renewal by the Parliament. Only 30 per cent of government expenditure is subject to a deliberate parliamentary decision that authority for the expenditure be granted. The following table analyses the appropriations for the last 13 years and illustrates the relative growth of special appropriations with time: BUDGET APPROPRIATIONS ANNUAL BUDGET ESTIMATES Estimates for year Special appropriations (a) Appropriation Bill No. 1 Appropriation Bill No. 2 Parliamentary department appropriations Total Budget outlays 1985-86... $m 47,470.3 17,416.4 4,135.3 45.3 69,067.3 % 68.7 25.2 6.0 0.1 100.0 1984-85... $m 43,652.2 15,749.4 4,502.7 43.7 63,948.0 % 68.3 24.6 7.0 0.1 100.0 1983-84... $m 40,016.8 13,791.1 2,860.2 35.1 56,703.2 % 70.6 24.3 5.0 0.1 100.0 1982-83... $m 33,080.8 11,980.0 1,976.2 30.2 47,067.2 % 70.3 25.5 4.2 0.1 100.0 1981-82... $m 28,777.5 10,751.0 1,333.3 n.a. 40,861.8 % 70.4 26.3 3.3 100.0 1980-81... $m 23,830.9 10,449.1 1,756.7 n.a. 36,036.7 % 66.1 29.0 4.9 100.0 1979-80... $m 20,979.4 9,160.0 1,551,5 n.a. 31,691.9 % 66.2 28.9 4.9 100.0 1978-79... $m 18,520.1 8,755.5 1,593.9 n.a. 28,869.5 % 64.2 30.3 5.5 100.0 1977-78... $m 17,260.1 8,066.1 1,330.0 n.a. 26,656.2 % 64.8 30.3 5.0 100.0 1976-77... $m 15,093.4 7,502.1 1,725.4 n.a. 24,320.9 % 62.1 30.8 7.1 100.0 1975-76... $m 12,670.1 6,976.1 2,269.0 n.a. 21,915.2 % 57.8 31.8 10.4 100.0 1974-75... $m 9,935.8 4,667.8 1,670.8 n.a. 16,274.4 % 61.1 28.7 10.3 100.0 1973-74... $m 7,098.4 3,808.1 1,261.5 n.a. 12,168.0 % 58.3 31.3 10.4 100.0 (a) `Special Appropriations' includes special appropriations out of the Consolidated Revenue Fund as well as net payments out of the Loan Fund, net movements in Trust Funds and various other expenditures not covered by the Appropriation Bills. The figures in the Table show the Budget estimates for each year. That is, the `Total Budget Outlays' in any year are the Budget estimates for that year rather than the actual outlays. This approach has been taken for two reasons: (1) Because data on the split-up between `Special Appropriations' and appropriations under the Appropriation Bills are only readily available in respect of Budget estimates; and (2) Because the estimates are what come under scrutiny by the Estimates Committees. Standing or special appropriations are an unnecessary restriction on Parliament's ability to control the financial destiny of Australia. Many of the Acts which do specify ceilings on expenditure come regularly before Parliament to have these ceilings revised as circumstances change. Some of the Acts which require the expenditure of money for their operation provide that the necessary funds are to be appropriated by the Parliament in a separate Act, and the money required is included in the annual appropriation Bills. There is no reason for not providing for all government expenditure in this way. Function of this Bill This Bill has the effect of abolishing all existing standing or special appropriations, and requiring that the money needed for the operation of all Acts be appropriated annually and as required by the Parliament. The budgets are now estimated yearly, and they include both ordinary and special appropriations. However, Parliament does not currently have any direct input into the process of reviewing them. Timing The Act is timed to come into effect on 1 July 1987. This means that funds required for the operation of the various Acts affected by the Bill need to be included in the annual Supply and Appropriation Bills for the 1987-88 year, and all subsequent financial years. All provisions in Acts which appropriate unspecified amounts of money will cease to have effect as from 1 July 1987. Parliamentary Scrutiny Executive government and Public Service seem intent on bypassing the parliamentary processes. Such an attempt has occupied much of Parliament's time this week. For the second year in succession, the Government has presented Parliament with a loans Bill which would allow it to borrow year after year without referring to the Parliament. The Standing Appropriations Abolition Bill is a move in the other direction, towards re-establishing the power of the Parliament, and accountability to the people, breaking down the Yes Minister syndrome of control by top public servants and executive government. This is a Bill designed to reinforce democracy in Australia. The advantages for all Australians from the Parliament making a proper examination of the annual accounts of the nation are obvious. Currently, when only such a small proportion of outlays is under full parliamentary scrutiny, there is little ability to weigh the importance of one program against another. In fact, it is possible for a policy decision made years ago, and which has since been revised, to be left in place because of the inability of Parliament to reconsider the matter in the perspective of total government spending. Unless a provision is brought regularly to the notice of Parliament, it may well languish, or worse still prosper, `out of sight and out of mind'. We have many quaint legislative reminders of the past lying in the statute books. I remind honourable senators of the Honey (Export Inspection Charge) Bill 1984, which came to light in a routine attempt to raise money by increasing all rural produce inspection levies. On investigation resulting from questions raised by my Australian Democrats colleague, Senator Michael Macklin, it was found that no country to which Australia exports honey has any requirement for inspection of honey. As a result the levy was dropped. Without that scrutiny, and in fact without the request for an amendment to that Act, honey producers in Australia would still be paying that export inspection levy. How much of our current government expenditure is still being wasted on out-of-date requirements, and is not coming under regular scrutiny because the relevant appropriation is a standing or special appropriation hidden in an Act which does not need to be regularly amended by Parliament? Likewise, how much parliamentary time is wasted in regular amendment of individual small appropriations at random times throughout the year, when they should be considered in the overall Budget context? Conclusion In `hard times', such as we are told by the Government we live in, we must be careful to review all expenditure, so that we can prune out luxuries, stop waste and put an end to monetary peccadillos. This Bill will have the effect of increasing the effectiveness of Parliament's scrutiny of public expenditure, and of increasing the efficiency and effectiveness with which the appropriations are considered. I commend the Bill to the Senate. Debate (on motion by Senator McIntosh) adjourned. Motions (by Senator Vigor)-by leave-agreed to: That leave be given to introduce a Bill for an Act to establish an Independent and Multicultural Broadcasting Corporation, and for related purposes. 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. Bills presented by Senator Vigor, and read a first time. Senator VIGOR(South Australia)(10.12) —by leave-I move: That the Bills be now read a second time. I seek leave to have my second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- Purpose The purpose of these two Bills is to establish a solid and sympathetic legislative framework for the SBS to guarantee the continuance of its work in developing a strong, independent, multicultural broadcasting service in Australia. The two Bills should be considered cognately, since the first Bill establishes the Independent and Multicultural Broadcasting Corporation, while the second Bill provides the legislative means for handing over SBS functions to the new IMBC. Background The Connor report into `Serving Multicultural Australia-The Role of Broadcasting' proposed that the SBS be given independent legislative status through the establishment of a Multicultural Broadcasting Corporation to carry out the multicultural broadcasting functions of SBS. This Bill implements the relevant proposals of the Connor report, by establishing the Independent and Multicultural Broadcasting Corporation, and giving to this Corporation the necessary functions, powers and resources for continuing the development of multicultural broadcasting throughout Australia. The functions considered to be essential by the Connor Committee of Review of the Special Broadcasting Service included: The provision both of ethnic radio, through 2EA and 3EA, and of multicultural television through Channel 0/28; the support or creation of ethnic public broadcasting stations wherever in Australia there is sufficient community interest and support; the distribution of programs to the ABC and public stations, and provision of access on Channel 0/28 to local public television groups, so that locally-relevant programs are available to people of all ethnic origins throughout Australia to maintain their language and cultural inheritance; the funding of public broadcasting through the Public Broadcasting Foundation, and support for public broadcasters through the supply of networked news, current affairs, features and information programs to broadcast on their stations, and the offer of access for broadcasting their programs on SBS stations. It is to endorse these latter functions of caring for public broadcasters, and to emphasise the independence of the IMBC in its policies, that we have included the term `independent' in the title of the new Independent and Multicultural Broadcasting Corporation. We have followed the recommendation of the Connor Committee by giving the IMBC responsibility for funding all public broadcasters rather than just the ethnic public broadcasters. This avoids unnecessary duplication of funding provisions. Objects The objects of the Independent and Multicultural Broadcasting Corporation are: To co-ordinate multicultural and multilingual broadcasting services for the advantage of the Australian community as a whole as well as our component ethnic and Aboriginal and Torres Strait Islander communities; to help the ethnic and Aboriginal and Torres Strait Islander communities in Australia to maintain their language and develop their culture; to promote mutual understanding and tolerance between all Australians through an understanding and appreciation of the diverse cultures within Australia; to develop public broadcasting services throughout Australia, funded through the Public Broadcasting Foundation, and supported by provision of program material to broadcasters and access for public television groups to broadcast their television programs on Channel 0/28. Australia a Multicultural Society Over 40 per cent of all Australians were either born overseas, or have at least one parent born overseas. Over 60 per cent of all Australians have at least one grandparent of non-Anglo-Celtic ethnic origin, and most likely have some experience of a language and culture of non-English origin. The only ethnic groups which have long established cultural roots in Australia are the Aborigines and Torres Strait Islanders, who today are almost foreigners in their own land. The only country in the world with a higher proportion of overseas-born citizens is Israel. In Israel, cohesion of the population is achieved through a common religious identity and culture. In Australia, we have no such common bond. Yet a strong independent Australia can be achieved through a united multicultural society, in which every person is part of a cohesive whole society, has a strong cultural identity and self value, enjoys equality of opportunity and access to resources, and shares equal responsibility for, commitment to, and participation in society. These principles are the essential elements of multiculturalism, which recognises the strength in diversity of experience and unity of purpose. Discrimination Still Exists Australia today does not yet enjoy the benefits of a truly multicultural society, as is evident in this Parliament, where the representation of Anglo-Celtic ethnic people far exceeds that of people of other ethnic origins. We no longer have any representative in this place of the Aboriginal people. Our law, our public service, and our media show a similar discrimination against people of non-Anglo-Celtic ethnic origins. Throughout Australian society we see similar discrimination against migrant and Aboriginal people. In 1983 the Committee of Review of the Australian Institute of Multicultural Affairs reported some of the effects of being disadvantaged, second-class citizens as: . . . increasing evidence of psychiatric and other health problems, industrial disputes and the exposure of appalling work conditions, and more generally . . . the sense of restlessness, apathy and disillusionment among large sections of the migrant population. The Henderson Commission of Inquiry into Poverty identified lack of access to information as a major cause of poverty among migrants, and it was in large part to remedy this problem that the SBS was originally given the charter to sponsor ethnic broadcasting services. Special Broadcasting Service In 1980 the Ethnic Television Review Panel reported the need to establish an Independent and Multicultural Broadcasting Corporation under its own Act of Parliament, and legislation to achieve this was drawn up and widely circulated for comment throughout the community. The government, however, finally succumbed to the pressure of entrenched interests and dropped its legislation, and gave the SBS the job of introducing multicultural services by regulation, without an independent charter from Parliament. The success of the SBS to date has been outstanding, and it is probably for this very reason that pressure is now on the Government to pull its teeth and absorb it within the ABC, where multicultural programming would have to compete with the other interest groups served by the ABC. The SBS has expanded the role of the ethnic radio stations in serving individual ethnic language communities. The ethnic radio stations in Sydney and Melbourne, 2EA and 3EA, are the communication lifeline for a number of isolated migrants in those cities and a link to their cultural heritage. SBS has introduced television broadcasts of foreign language programs with English subtitles, English language programs of wide community interest, and excellent world news and current affairs services. It has developed a policy of employing people of diverse ethnic origins, and has been an innovative broadcaster. It has done much to increase communication and understanding between Australians of different backgrounds, and thus to foster equality of opportunity for all. However, just as it is still necessary to legislate for equal opportunity for women in the workforce, the separate multicultural broadcasting service remains necessary until people of all ethnic backgrounds achieve equal status and opportunities in society. Multiculturalism under Attack The Government, however, is moving in the other direction, ignoring its policy commitment to multiculturalism. This is being demonstrated not only in the proposal to merge the SBS with the ABC, but also in the concerted attack on all the programs which educate, inform and enhance the status of migrants in Australia. The closure of the independent and ethnically egalitarian Institute of Multicultural Affairs in Melbourne and its replacement by a body within the Public Service in Canberra is a sheer pretence at meeting the needs of migrants, most of whom live in Melbourne, Sydney and the other State capitals. It also goes directly against the recommendation of the Jupp Committee of Review of Migrant and Multicultural Programs and Services. Withdrawal of funding for the English as a second language teaching program is a kick in the teeth for newly-arrived migrants, and the Federal Government is hiding behind the States by suggesting that State governments fund it out of their other educational allowances. The Commonwealth is avoiding its responsibility. This Bill now gives the Parliament a chance to prove its commitment to multiculturalism. Control of the Media The current control of broadcast media is highly centralised, with too little participation by local, regional and State community bodies, and too little account taken of the specific needs of the various subcultures in Australia. Such uniformity leads to vulnerability, bigotry and rigidity within the community, none of which Australia can afford. The combination of national, ethnic broadcasting, public and special interest broadcasting under the umbrella of the IMBC will help to balance the domination of the commercial media by a few large centralised networks. It will also increase familiarity with things foreign, to give Australians confidence and knowledge to cope with changing circumstances. By encouraging the study of the languages, cultures and ideologies of our ethnic communities we enhance their identity and acceptability to other groups, making Australians conscious and proud of the values of the minority groups to which they belong. By providing real two-way access through the media we encourage a broader group involvement in the planning, production and presentation of programs. The richness of Australia's culture depends on diversity, breadth and depth of common understanding and interests. Democrats Oppose SBS-ABC Merger The Government plans to merge the SBS with the ABC. There are many cogent reasons for keeping the multicultural broadcasting function independent of the ABC over the immediate future. This Bill enshrines in law the essence of an independent SBS and fulfils the commitments of Liberal, Labor and Democrat policies for multicultural broadcasting. The role of the SBS as an equal opportunity employer with special affirmative action with respect to Aborigines and Torres Strait Islanders could not be matched by the ABC at this stage, because the ABC has an established work force that is quite unrepresentative of the multicultural nature of Australian society, due in large part to its emphasis in the past on English culture. The SBS employs over 40 per cent staff of other than Anglo-Celtic ethnic origin, which corresponds roughly to those proportions in the Australian community as a whole. No Cost Savings Overall Similarly, in the short term, the costs of integrating the two organisations would be likely to far outweigh any benefits of economy of scale or of shared facilities. There is no tangible evidence of the $2m which the Government claims will be saved-in fact, the opposite appears to be the case. Currently the SBS has a different system of staff tenure and conditions, which would be costly to integrate into the ABC system. The SBS is covered by a number of unions, and integration into the ABC with its strong staff union could well introduce industrial unrest over the initial period. The SBS has also succeeded in negotiating contracts with overseas program suppliers on a much more favourable basis than the ABC has been able to achieve, and in Australian dollars rather than overseas currencies. Integration with the ABC would bring with it a cost penalty in this major area of SBS operations. The supplementary estimates earlier this year bear this out completely. In fact, while there is undoubtedly scope for savings in staff numbers, services and facilities, the higher cost structure of the ABC makes the possibility of real savings most unlikely. A comparison of the annual budgets of the two organisations underlines this very cogently: The annual budget of the ABC last year was around $430m, out of which the ABC supported two radio networks, one with mainly national programming, a rural service, and one television network Australia-wide; The annual budget of the SBS was around $47m, out of which the SBS supported two radio stations in Sydney and Melbourne with mainly local programming, and one television network in all Australian capital cities, and in major regional population centres. The annual budget of the public broadcasting sector from all sources of revenue was under $8m for the same period. The Public Broadcasting Sector Public broadcasting is the most cost-effective of the non-commercial broadcasting services, and this is obviously a major reason for the Connor report's recommending expansion of ethnic broadcasting through the public broadcasting stations. With the integration of some public broadcasting funding into the new IMBC, the cost structure of ethnic broadcasting is likely to continue at well under that of the ABC, and its different ethos will be maintained. Support for public broadcasting comes from the community in several ways: From audience subscriptions, from work done voluntarily, from donations, from sponsorship of programming by commercial and private organisations, and from government funding. The Public Broadcasting Foundation was established by the Public Broadcasting Association of Australia to administer funding for public broadcasters. When in opposition, the Government promised to provide a capital grant for public broadcasting which would be administered by the Public Broadcasting Foundation as a trust fund. The trust would have invested the moneys vested in it, and from the earnings supported public broadcasting initiatives in Australia. In this way, taxpayers funds would have been preserved, and the public broadcasting sector would have become independent from government funding and isolated to some extent from annual budgetary variations. This capital grant has not eventuated-another broken promise. The extent of government support for public broadcasting is slight with no increase in this year's allocation of just over $1m. For the most part, public radio in this country operates under chronic financial stress, despite all efforts to raise funds in innovative ways, or through `sponsorship'. This Bill transfers to the Independent and Multicultural Broadcasting Corporation the responsibility for funding public broadcasting. Through the Public Broadcasting Foundation the IMBC has responsibility for sponsoring public, ethnic and Aboriginal broadcasting services. It is also directly responsible for providing news, current affairs and general programs to both public broadcasters and the ABC, so that ethnic communities Australia-wide have access to locally-relevant programs in order to maintain their language and culture. Public Television Public broadcasting includes both public radio as we now enjoy it, and also public television. Public television is a significant part of the television services available in the USA, and its development in Australia has been advocated for a long time. The Green inquiry recommended in 1976 that we provide for public television, catering for special interests such as education, community, and ethnic programs. It suggested starting public television services in the UHF band from 1981 onwards. In 1977, amendments were passed to the broadcasting legislation to include definitions of public broadcasting and public television. Public television, which requires a larger capital investment, also has greater organisational infrastructure expenses and significantly higher costs in program acquisition and production. Its viability depends on having a significantly higher level of funding than public radio. It is simply not feasible for a public television service to operate on a similar financial basis to public radio. A more flexible and much broader revenue base is necessary. Finance for public television will have to come from one or both of the only two financially significant areas of the economy-from the government or from commercial organisations through advertising. While government may be prepared to provide initial capital grants for equipment and developmental assistance, this source of funding cannot be seen as continuing in the long term. This leaves some form of advertising as the only source of ongoing funds for public television. For this reason we have included in the powers of the IMBC under this Bill the ability to raise money by advertising, to the extent that this does not interfere in meeting its obligations to the community under the Act, and to the extent allowed by the Australian Broadcasting Tribunal. Under current legislation, public television licensees have the same advertising guidelines as commercial television stations, whereas public radio stations are limited in the sponsorship announcements they can broadcast. An alternative funding source could be a levy on the advertising revenue earned by the commercial radio and television stations. Community Access Another means or providing community access to television broadcasting is through licensed channel sharing. Currently both the ABC and the SBS do not broadcast continuously throughout the day. This `downtime' could be profitably used by licensed public television services for developing innovative forms of television such as telemarketing, and for broadcasting community-based programs. In this way, public television services can share existing facilities, and get off the ground for a smaller capital outlay. Both the ABC and the SBS have been approached by public television associations about providing this type of co- operative service. The ABC has decided not to do this, but the first regular broadcasts of public television through the SBS community-access `windows' are scheduled to start early next year. These community-access windows on Channel 28 are yet another innovative way in which the SBS has been exploring its role in developing diverse multicultural broadcasting throughout Australia. This Bill provides a firm legislative support for their initiatives in this area. Community Benefits from Public Broadcasting The work done by the public broadcasters in teaching communication skills is a strong justification for claiming support from the commercial and national broadcasters, since both of these sectors of the broadcasting industry recruit heavily from the ranks of public broadcasters and are able to avoid training expenses on the scale of ten years ago. The public broadcasting sector offers training in communications to over 20,000 volunteers. The professional nature of the commercial and national broadcasting organisations makes it very difficult for them to provide training on such a large scale, and the academic prerequisites for courses through the education system close off this vital area of literacy for the underprivileged people in our community. Communication skills are a major step towards social equality and equity. Public radio has also been the lifeblood for many Australian musicians. Aboriginal Television The recent award of a remote commercial television services licence to Imparja Television is an outcome of video and television production work by the Central Australian Aboriginal Media Association over a number of years. CAAMA has contributed significantly to increasing effective communication skills among Aboriginal people. Encouraged by the Institute of Aboriginal Studies remote television project, the Aboriginal communities at Yuendumu, 300 kilometres north-west of Alice Springs, and at Ernabella in South Australia, developed their own television production resources. In 1985, seemingly unable to acquire any form of television licence through the Department of Communications, they went ahead and transmitted their own television locally without a licence. Eventually an embarrassed Department gave them experimental licences under the Radiocommunications Act. In this way these enterprising, and in effect, de facto public television stations are the first public television stations to get off the ground in Australia. They have proved that public television can be run on a shoe-string budget. I visited the facilities at Ernabella recently, and was impressed with the quality of programming and consistency of service achieved using equipment which cost about as much as an average home video camera outfit. Their programs are now being marketed and shown worldwide, although their small budget severely hampers their work in editing their program footage for commercial marketing. These productions on Aboriginal life and culture are a bridge between the cultures of old and new Australia, and they will prove to be of incalculable value in the years to come, for their innovative techniques, their artistic merit and their cultural integrity. We look forward to similar originality and success as other public television stations follow in their footsteps. The flexibility and youth of the SBS-IMBC will promote a freedom of operation for these public broadcasters which will allow a truly experimental Australian television art to flourish, free of the bureaucratic constraints which have developed over many years in the ABC. Cooperation between the IMBC and the ABC In their work for the Connor Committee, the consultants Peat Marwick considered that an immediate merger between the SBS and the ABC would be administratively difficult. The differing corporate ethos and the unwillingness of SBS staff to merge further adds to these difficulties. Economies can be achieved much more effectively by a program of co-operation and sharing of resources, while maintaining the separate identities and economic attitudes of the two organisations. This legislation requires the IBMC to co-operate closely with the ABC, with the ethnic broadcasters and with the public broadcasters in sharing services and programs. It also stipulates that the IMBC shall operate to minimise its demands on the public purse by maximising its opportunities to produce revenue through broadcasting of such advertisements as are allowed by the Broadcasting Tribunal, while having regard to the proper performance of its functions. The Independent and Multicultural Broadcasting Corporation Bill also requires the Corporation to take account of standards set by the Australian Broadcasting Tribunal. The powers given to the IMBC in this Bill are comparable to those which the ABC enjoys, with additional functions to allow it to perform its roles in funding and supporting public broadcasting and in providing access on its television channels to public broadcasters. It is also allowed to broadcast advertisements in order to maximise its revenue raising capacity to the extent permitted by the Australian Broadcasting Tribunal. Administration of the IMBC A Board is established to determine policy, to oversee the performance of the Corporation, and to maintain the independence and integrity of the Corporation while taking into consideration the policy of the Commonwealth government as it is from time to time expressed to the Board. The duties of the Board and of the Managing Director are similar to those laid down for the ABC, and similar provisions are also made for staff, finances, technical services and application of the Broadcasting Act. The Chairperson, the Deputy Chairperson and ordinary members of the Board shall be appointed by the Governor-General to ensure that the membership of the Board reflects the diversity of communities within Australia, and shall hold office on a part time basis for no longer than five years. In addition, the Board shall include a staff-elected member or his deputy, and the Managing Director of the Corporation. The Bill also provides for a national consultative and State consultative committees, as well as ad hoc advisory committees to be established by the Board. Transition Arrangements from SBS to IMBC The Independent and Multicultural Broadcasting Corporation (Transitional Provisions) Bill 1986 provides for the handover of staff, property, powers, liabilities, contracts, proceedings, duties and moneys from the SBS to the Corporation. It also includes amendments to the Archives Act 1983, the Australian Broadcasting Corporation Act 1983, the Broadcasting Act 1942, the Commonwealth Electoral Act 1918, the Copyright Act 1968, the Freedom of Information Act 1982, the Radiocommunications Act 1983, the Referendum (Machinery Provisions) Act 1984, the Telecommunications Act 1975, the Trade Practices Act 1974, and the Public Service Regulations to replace references to the Special Broadcasting Service with references to the Independent and Multicultural Broadcasting Corporation. Conclusion I reiterate the main objects of the Independent and Multicultural Broadcasting Corporation Bill and its companion transition Arrangements Bill: (a) To contribute to the development of a multicultural society through the provision of broadcasting services of a high standard which promote mutual understanding, appreciation and acceptance of the diverse cultures within the Australian population and which, through the encouragement of the study of the languages, traditions and ideologies of those cultures, foster within their members a sense of cultural identity and pride; and (b) to facilitate community access to the broadcasting media through broader group involvement in the planning, production and presentation of programs; (c) to provide a smooth transition from the SBS to the IMBC. These two Bills follow the recommendations of the Connor Committee of Review in establishing an Independent and Multicultural Broadcasting Corporation, to co-ordinate existing ethnic, Aboriginal and Torres Strait Islander broadcasting services, and to develop public broadcasting services throughout Australia, for the advantage of the Australian community as a whole as well as our component cultural communities. They establish the right media structure for a strong, independent, multicultural Australia-the Australian Broadcasting Corporation complemented by a vibrant new Independent and Multicultural Broadcasting Corporation as national broadcasters, a regional and urban commercial broadcasting sector, and a secure, voluntary, and enthusiastic public broadcasting structure. I commend the Bills to the Senate. Debate (on motion by Senator Gareth Evans) adjourned. Motion (by Senator Tate) agreed to: That the time for presentation of the report of the Select Committee on the Human Embryo Experimentation Bill 1985 be extended to 8 October 1986. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Gareth Evans) read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(10.14) —I move: That the Bill be now read a second time. I seek leave to have my second reading speech incorporated in Hansard. Leave granted. The speech read as follows- The Customs Tariff Amendment Bill (No. 2) 1986 which is now before the Senate proposes the removal of the 2 per cent revenue duty applicable to imports from general tariff sources under item 71.07 in Schedule 3 to the Customs Tariff Act 1982. This item covers gold, including platinum-plated gold, unwrought or semi-manufactured. The removal of the duty is to take effect on the third day after the legislation receives the royal assent. The main commodity involved in the removal of the revenue duty is gold bullion. It is accepted by the Government that the duty is impeding the development of the Australian gold market by restricting imports and preventing the necessary liquidity in periods of peak demand. The gold market could become an important source of foreign exchange earnings as an export oriented service industry. With the removal of the duty, Australia could become an attractive alternative for secure storage of gold bullion because of its geographical remoteness from Europe and political stability, thus earning foreign exchange from storage fees and commissions. The removal of the import duty should have no adverse impact on domestic producers. In accordance with the Government's commitment to simplification of the customs tariff the removal of the duty has been extended to the whole of the tariff item which includes gold bullion, rather than splitting the item to remove the duty from bullion alone. Financial Impact The removal of the duty from the relevant item is estimated to result in a loss to the revenue of the order of $20,000 per annum. I commend the Bill. Debate (on motion by Senator Reid) adjourned. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Gareth Evans) read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(10.15) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- This Bill gives effect to the Government's decision to abolish the Advisory Council for Inter-government Relations following on the Report of the Task Group established in September 1985 to review ACIR. The Task Group presented its Report in January 1986 after extensive consultations with the contributing parties and written submissions from the public. The Report was tabled by Mr Lionel Bowen in the House on 19 August 1986. ACIR was established by the Advisory Council for Inter-government Relations Act 1976 with the object of improving inter-government co-operation between the spheres of Federal, State and Local government through research and recommendations made under directions provided by the Premiers Conference. In addition to representatives of Governments, the Council has included representatives from the Commonwealth Opposition, and citizen members. As noted in the Task Group Report, ACIR has not established a reputation for high quality research generally and has tended to be remote from the practice of inter-government relations. Nor have its recommendations on the whole been acted on by participating Governments. As a result ACIR has had limited success in improving inter-governmental relations, particularly Commonwealth-State relations. The decision to abolish the Council has been agreed to by all States and the Northern Territory, with the exception of Tasmania. The Government considers that existing mechanisms, including Premiers Conferences and Ministerial Councils, are adequate to provide effective inter-governmental consultations without the need for a separate research body. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Bills received from the House of Representatives. Motion (by Senator Gareth Evans) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of the Bills being put in one motion at each stage and the consideration of such Bills together in the Committee of the Whole. Ordered that the Bills may be taken through all their stages without delay. Bills (on motion by Senator Gareth Evans) read a first time. Second Readings Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(10.16) —I move: That the Bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- SALES TAX (EXEMPTIONS AND CLASSIFICATIONS) AMENDMENT BILL 1986 During his Budget Speech the Treasurer announced, as part of the 1986-87 Budget, a number of changes to the scope of the present wholesale sales tax system to operate from midnight on 19 August 1986. This Bill, and two others I will introduce shortly, will amend the sales tax law to give effect to those changes. Given the comments already made by the Treasurer in his Budget Speech and the details contained in Statement No. 4 of Budget Paper No. 1 and the explanatory memorandum being circulated to Honourable Senators, I will do no more than outline briefly the changes proposed. First, the rate of sales tax on alcoholic wine and cider and other similar fermented alcoholic beverages is to be increased from 10% to 20%. Secondly, certain presently exempt non-alcoholic beverages are to be taxed at the 10% rate. These include packaged flavoured milk, non-alcoholic wine and cider and similar beverages and, broadly, all non-carbonated fruit juice products containing not less than 25% by volume of Australian fruit juice. Another change concerns the rate of sales tax payable on `luxury' motor cars and station wagons, including four-wheel drive vehicles. Where the wholesale price for sales tax purposes of such vehicles exceeds $19,892, sales tax will be levied at the top rate of 30%. The amount of $19,892 is the tax-exclusive wholesale price, on which sales tax is calculated, equivalent to a $29,646 retail price. This latter amount is the present upper cost limit on which depreciation is allowable on motor cars and station wagons for income tax purposes. This amount will be adjusted each 1 July in line with the indexation adjustment to the income tax depreciation limit. Finally, Mr President, the Bill will correct a number of anomalies and inconsistencies in the various schedules to the Sales Tax (Exemptions and Classifications) Act. The main changes are-all swimming pools, spa pools, spa baths and hot tubs and accessories, which are currently exempt from tax or subject to tax at only 10%, will become taxable at 20%; the tax payable on certain film and video recordings will increase from 10% to 20%; household fittings and sanitary ware will be subject to tax at the same rate as other household items, namely 10%; the rate of tax on gardening and industrial hand tools and machinery for business or industrial use will be increased to 20%; negatives, transparencies and film strips that are produced from exposed film, will be brought within the sales tax base, at the 20% rate; purchases of computers, calculators and other scientific equipment by individuals such as teachers, students and others for use in schools or universities will no longer be tax exempt. but such purchases by schools and universities themselves will remain exempt; all aircraft, including hot air balloons and other similar aircraft, are to be eligible for exemption from sales tax if used for business or industrial purposes; and, finally, several exemption items will be amended to confirm the scope of exemptions currently reflected in decisions of the Commissioner of Taxation. I commend the Bill to the Senate. SALES TAX LAWS AMENDMENT BILL 1986 This Bill will amend Sales Tax Assessment Acts (Nos 1 to 10) and the Sales Tax Regulations. The specific changes are as follows: The value of computer software has traditionally formed part of the sales tax base where its value has been reflected in the selling price of goods on which it is contained. However, in recent times those marketing such goods have, purportedly to protect copyright, used the technique of licensing the use of the software, thus separating its value for sales tax purposes from its carrying medium, for example, a disc or tape, which alone has minimal value. The Government could not stand idly by and allow this erosion of the sales tax base, nor permit its spread to other areas such as the marketing of sound recordings or videos. Measures in this Bill will ensure that the value of computer software, sounds or visual images when licensed separately from the carrying medium is brought back within the sales tax base. As the Treasurer has already indicated in his Budget Speech, `in-house' production of software will not be affected by these changes, nor will software produced for export. Software acquired as an aid-to-manufacture will also remain eligible for exemption. The Bill does not seek to tax the electronic transfer of software by means of the telephone system or satellite communications. The Government will, however, be giving further consideration to this question. The Bill will also change the sales tax treatment of swimming pools that are constructed on site. In the past, these pools, which are at the top end of the market, were not subject to sales tax. From midnight on 19 August 1986, the construction of the container or shell of such swimming pools will be treated as the manufacture of goods for sales tax purposes and subject to tax at the rate of 20 per cent. Until now the process of developing exposed photographic film did not constitute manufacture for sales tax purposes. This Bill will change that. The price charged for developing exposed film will be taxed at 20 per cent. Finally, the Bill will bring the sales tax law into line with the Customs law, by ensuring that goods imported into Australia on a temporary basis may be entered for home consumption `tax-free', where they will be for use in connection with an America's Cup yacht race in Australia or the bicentennial celebrations. The explanatory memorandum being circulated to honourable senators also contains detailed explanations of the technical aspects of this Bill. I commend the Bill to the Senate. SALES TAX ACTS AMENDMENT BILL 1986 This is the last Bill in this package of 3 Bills. It will amend relevant sales tax rates Acts to remove references to the Sixth Schedule to the Sales Tax (Exemptions and Classifications) Act. That Schedule is being repealed by the Sales Tax (Exemptions and Classifications) Bill. Details of this Bill are also set out in the explanatory memorandum that is being circulated to honourable senators. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Senator MACKLIN(Queensland)(10.18) —On behalf of Senator Haines, I move: That the following matter be referred to the Senate Standing Committee on Science, Technology and the Environment: The treatment of food by irradiation in Australia and, in particular: (a) the health and nutritional implications of food irradiation; (b) the associated storage, transport and disposal of nuclear materials; (c) the environmental impact of food irradiation plants; (d) the economics of food irradiation; (e) the adequacy of current and proposed Federal, State and local laws covering food irradiation and associated activities; (f) the importation and exportation of irradiated food; (g) the need for training of staff involved; and (h) food labelling, and that in its report the Committee make such recommendations as it considers appropriate for changes in public policy and law. The reasons that the Australian Democrats have sought this inquiry need to be made clear. The Government has already announced an inquiry by the Australian Consumers Association, funded with public moneys, to look into this issue. However, we believe that, no matter how useful that inquiry may be, the Parliament should undertake an inquiry of its own. The reasons for this are obvious. The Australian Consumers Association is not able to call for papers and people. It is not able to inquire into many of the matters that are obviously of commercial value. I cannot see any reason why a particular company which is interested in pursuing food irradiation in Australia would be interested in talking to the Australian Consumers Association. It has no power in law to inquire into these matters. To go back to a previous committee chaired by the then Senator Peter Rae, it is fairly obvious that in many parliamentary inquiries there is material that is of great commercial value. Hence, that is unlikely to be made available to a group such as the Australian Consumers Association, no matter how well it inquires. One aspect of a parliamentary inquiry is that it is able to call for people, papers and information and that people are required to appear before it. On 29 May I spoke in the Senate about a United States firm which has shown interest in food irradiation in Australia, Radiation Technology Incorporated of New Jersey. I listed the violations for which that company had been before the United States Nuclear Regulatory Commission. I believe that such a company would be unlikely to appear and discuss this matter with the Australian Consumers Association. The Committee has to be able to look at the matter. Some of the questions that need to be examined in this context include the involvement of the nuclear industry and/or the food industry. We should see whether the nuclear industry's primary interest is the use of caesium 137 from the radioactive wastes generated by nuclear fuel reprocessing. What safeguards would be taken in respect of the importation of that substance and cobalt 60, which would be necessary for gamma radiation, if that were the method chosen? What interest is being shown by firms in Australia already using irradiation, for example, in the sterilisation of medical instruments? Do they see this as a legitimate extension of their businesses? What would be the extent of the waste products to be disposed of? What safeguards would be necessary to protect the workers? How much nutritional value would be lost? Does irradiation destroy vitamins in food? So one can go on. I believe that before Australia proceeds down this path the public wishes to have information on a whole host of questions. Wild and exaggerated claims have been made by people on both sides of the issue. It is vitally important that, rather than embarking on a massive exercise of public experimentation on food, we should make available to the Australian public all the facts that are able to be gathered. The most appropriate way is through a committee of inquiry. Committees of the Parliament have shown in the past that they are able to take up these controversial issues; they are able to weigh them soberly and to make recommendations which have a standing in the community. This chamber in particular has been prominent in that type of movement. I believe that this is one such area. After all, we have inquired into many aspects of public policy which affect only a small group of people. This particular area affects every Australian, often three times a day. There is great community disquiet on this matter. It is not a matter solely for this Parliament. It is also a matter for the State parliaments in their labelling policy. It is also a matter for local governments and their policies. I hope that a committee inquiry will be able to sum up the position. I draw attention to a notice of motion given in the House of Commons on 9 April this year on irradiated food. It reads: That this House notes with grave concern the admission of a company from the Imperial Food Group that, having had a consignment of prawns condemned by the Southhampton Port Health Authority on the grounds of bacterial contamination, it had the consignment irradiated by Gammaster B.Y. in the Netherlands to conceal such bacterial contamination and caused them to be reimported; notes that this practice is illegal under the United Kingdom Food (Control of Irradiation) Regulations; notes too that it is also contrary to the recommendations of the Joint Export Committee of the World Health Organisation Food and Agriculture Organisation of the United Nations and the International Atomic Energy Agency, which bodies demand that irradiation be used solely to extend the shelf life of food otherwise wholesome and never be used to conceal contamination, thereby rendering salable food that is not truly wholesome; notes further that this instance highlights the inadequacy of existing food monitoring provisions and standards of enforcement procedures, presenting a potential public health hazard . . . It goes on, but the point I want to emphasise is that in Britain there has been a very public exercise whereby a particular company found itself with a substantial consignment of food which was bad. It exported the food and had it irradiated, then reimported it. The reason is that irradiation kills the smell and the food is therefore able to be placed upon the market. There is considerable difficulty in this area with regard to controls. I believe that it needs to be looked at before we move in this area, if we do move. It goes beyond simply concealing bacterial contamination. While irradiation can reduce the bacterial load on food-known in the trade as the bug count-it will leave unaffected the toxins generated by earlier bacterial contamination. This surely is a major potential health hazard for Australian people, which we need to address before any permission is given to proceed in this area. Unfortunately, testing food for the bug count is one of the main methods by which Australian authorities determine the wholesomeness of imported food which may otherwise look satisfactory. The use of irradiation makes such bacterial testing systems totally ineffective. As far as I have been able to determine, no tests are available at present to enable Australian authorities to detect whether food has been irradiated. It seems to me that that is an admission that we are unable to determine, whether or not food has been bacterially contaminated previously and then irradiated, because no tests are available to us. On my understanding, from talking to scientists in this area, we are some two to three years away from having such tests available to us. Since Senator Haines placed this notice of motion on the Notice Paper for debate today, which was done last week, I have had given to me a Press release from the Chairman of the all party House of Representatives Standing Committee on Environment and Conservation. I will read the Press release to the Senate as it will clarify where we are now: Mr Peter Milton, Chairman of the all party House of Representatives Standing Committee on Environment and Conservation announced today that his Committee would be conducting an extensive inquiry into food irradiation and other uses of ionising radiation. The Committee will be examining the use of ionising radiation for commercial sterilisation, disinfestation and food preservation and in particular, the effects on human health and safety, environmental impacts and the adequacy of assessment and regulatory procedures. Mr Milton said that he had long been concerned by the apparent acceptance by the Government that there would be few problems with its use in Australia. He said that he believed that this conclusion was reached without proper examination. `This concern is also apparent in the community. Just under 100 petitions have been presented to the House over the last six months containing many hundreds of signatures.' Mr Milton saw his Committee's inquiry as complementary to the investigation to be conducted by the Australian Consumers Association. `Ours however will be far more wide ranging. We also have the advantage that witnesses can give evidence under privilege and we have quite extensive powers in calling for information which may not be available to the ACA.' It seems to me that those points answer the issue at hand, and since our motion is put in the form of a reference to the Standing Committee on Science, Technology and the Environment it might seem to be inappropriate to push ahead with it at this time. However the Australian Democrats would like the Senate to be involved in this exercise in some way. That was our reason for moving the motion. It may be inappropriate now to move in such a way; I had little notice that the House of Representatives Committee was moving in this area. When we inquired last week there was no possibility of any such move, so it has taken my Party by surprise. It may be appropriate, therefore, for me to seek leave to withdraw this motion in the hope that the Standing Committee on Science, Technology and the Environment will talk to the House Committee with a view possibly to having a joint committee of inquiry. That might suit both committees. It seems to me that we cannot do that on the run here, so it might better be left to the Standing Committee on Science, Technology and the Environment, which I understand has an interest in this area, to talk to the House Committee with a view to coming back here with a joint reference. I am in the hands of the Senate, and I will seek leave to withdraw the motion to allow that type of procedure to occur if the Senate so desires. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(10.32) —I suggest that a more appropriate course would be simply to adjourn this debate so that the kind of discussion Senator Macklin is talking about can occur. If he withdraws his motion now he may well be tempted to re-introduce it at some later stage and we will have yet another speech from him, or someone else, advancing the cause or otherwise of irradiation. I suggest that Senator Macklin, having embarked upon a speech on this subject knowing full well that at the end of it he would suggest that his motion be withdrawn, is trying the patience of the Senate a bit. We do not mind giving people the odd free kick in terms of the procedures of this place, but that is sailing a little close to the wind. Rather than giving Senator Macklin or anyone else another opportunity to introduce the same motion again, a preferable course would be to adjourn the matter. Of course, the Government has taken the view that the granting of $90,000 to the Australian Consumers Association to conduct a major study on this matter and to report back in a public way to the Government should be sufficient to put at rest the fears that exist, for better or worse, in the community on this issue. People within the Parliament may take the view that they need the full panoply of the powers and privileges of a Senate, House of Representatives or joint committee to do the job, but that is not at this stage a view that the Government shares. Nonetheless we are willing to participate in any further discussions that may be held between the various interested members and senators on this matter to try to resolve it satisfactorily. On that basis, and after that explanation, I seek leave to continue my remarks later. Leave granted; debate adjourned. Debate resumed from 22 September, on motion by Senator Walsh: That the Bill be now read a second time. upon which Senator Messner had moved by way of amendment: 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 WALTERS(Tasmania)(10.35) —On Monday night I was debating the Loans Bill 1986 and I was talking about how the Budget decisions have affected the families of this country. The Government, as previous Labor governments have done, has committed the greatest atrocities against traditional families that have ever been perpetrated. Let us look at what has happened to just one section, the dependent spouse rebate, which is the major commitment any government can give to a family structure. It is recognised that tax relief is necessary to help a family in which the mother stays at home to bring up the children. Let us look and see what has happened to the dependent spouse rebate over the period of our Government and this Government. When we came to government the dependent spouse rebate was worth $400. By the time we left government we had increased that rebate to $830 for spouses who did not have dependent children, and to $1,030 for those who had dependent children at home. There has been no increase by this Government for the dependent spouse rebate, and that suits the ideology of this Government whose main aim is to put women in the work force. It believes that the name alone of the dependent spouse rebate is incorrect; that no woman should be dependent. The Government does not like the term and therefore it will not increase it. Let us look at what has happened to the dependent spouse rebate as a percentage of the average weekly earnings under the last Labor Government, the Fraser Government and the Hawke Government to get a full idea of just what Labor ideology is in this area. In 1972-73, as a percentage of the average weekly wage, the dependent spouse rebate was 6.88 per cent. By the time Mr Whitlam was thrown out of government, that had decreased to 4.54 per cent of the average weekly wage. As I said, when we followed that Government into power it was 4.54 per cent and we increased that, over the period we were there, to 5.48 per cent. Once again, because a Labor government is in office, that dependent spouse rebate has gone down. It is now 4.6 per cent-just about the same devastation to the dependent spouse rebate by the Hawke Government as happened under the Whitlam Government. If we wonder to what families the dependent spouse rebate goes, we have only to look to the Institute of Family Studies. It says that the dependent spouse rebate goes overwhelmingly to average families. The figures that were issued indicate that around 50 per cent of those families that the dependent spouse rebate goes to have incomes of less than $20,000 a year. Only 7 per cent to 8 per cent of families receiving that rebate have incomes of over $35,000 a year. So the rebate does not go to the wealthy members of the community; it goes to the average families and the lower income families. Let us look at how personal tax affects families. When we left government in 1983, the tax threshold as a percentage of average weekly earnings was 25.39 per cent. It has now dropped to 20.89 per cent. This shows the Government's complete disregard for the family which is struggling to make ends meet because of the extra tax that has been imposed. Let us look at family allowances. There has been absolutely no increase in the family allowance under this Government. Under our Government it was increased twice. Families have been affected in other ways. The Medicare levy in this Budget has gone up 25 per cent. The abolition of the subsidy for a patient who attends a private hospital will now mean that families which have been struggling to pay private hospital insurance will have an additional cost imposed on their contribution rates. Because insurance companies are losing $20, $30 or $40 a day they will have to put up their contribution rates. As well, the levy has been increased. We all remember very clearly the promise that that levy would never be increased by the present Government, but that promise has gone by the board. What has happened to interest rates? We know that home interest rates have gone from 13.5 per cent to 15.5 per cent. Interest on other borrowings has gone sky high and is as high as 20 per cent. Getting back to the medical side, what is the cost of medical services? The maximum cost has gone from $10 for a medical service to $20. The Government has doubled the medical prescription charges. The maximum to be paid is $10; it was $5. The Government has even put sales tax on flavoured milk and fruit juices, which have gone up by 10 per cent. One could hardly call those two commodities luxuries; most families believe they are necessities. The family allowance for 18- to 24-year-olds has gone completely and for 16- and 17-year-olds it is now means tested. The Government is gradually whittling away the small concessions given to families. It has whittled away the family allowance for 18- to 24-year-old students and has now means tested the allowance for 16- and 17-year-olds at school. Families have lost the tax deductions they used to get for education and health. I can assure you, Madam Acting Deputy President, that families do not forget. They are well aware of what is happening and how the Government is getting at them. As I have said, this is just the philosophy of this Government; that is what it is all about. It is not supporting the traditional family in any way but has done everything possible to make sure that conditions are so difficult for families that the woman is forced out into the work force. The Government certainly needs the Bill that has been debated over the last couple of days. As Senator Messner's amendment says, this legislation is very necessary as the deficit is so high. However, we do not go along with the Government's wish to avoid bringing this Bill before the Senate. I believe the only reason the Government could possibly have is to avoid the accountability to Parliament when the need arises for governments to borrow. I have much pleasure in supporting the Opposition's amendment, which states: `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 MAGUIRE(South Australia)(10.45) —Today we are debating the Loans Bill 1986. It is a piece of legislation that provides for the financing of the prospective Budget deficit for 1986-87. The Loans Bill is, in essence, a machinery financing measure. Provisions in the Bill prohibit borrowings for expenditures additional to those already authorised by the Parliament. The Treasurer, Mr Keating, announced in his Budget Speech a deficit for this financial year of some $3,500m. That deficit involves a prospective deficit in the Consolidated Revenue Fund, which is the Government's major bank account, of some $5,100m. Existing authorisations available to the Government enable some $2,500m of expenditure to be charged to the Loan Fund this financial year. This Bill seeks authority to borrow moneys from the Loan Fund to cover the shortfall of some $2,600m. It is important to note that that figure of $2,600m is substantially less that the $3,800m borrowed last financial year. That reflects the tremendous success of the Hawke Labor Government in reducing the Budget deficit of the Commonwealth of Australia. The Hawke Government has achieved a major reduction in the Government deficit and it is very welcome news indeed. Senator Messner —Why do you want perpetual authority to borrow, if you reckon it is so good? Senator MAGUIRE —To refresh Senator Messner's memory, the Budget deficit has been reduced enormously in recent years. For example, last financial year it was $5,700m; this financial year we have a prospective deficit of some $3,500m, a reduction of $2,200m. Those figures are all very well, but it is very important to relate the size of the deficit to Australia's total annual national income. The deficit for this financial year will be of the order of 1.4 per cent of Australia's total national income, our gross domestic product. That compares very favourably with the prospective deficit of Mr Howard, when he was Treasurer, for 1983-84 of $9,600m-- Senator Messner —That is a lie. Senator MAGUIRE —That would have come in at some 4 per cent of Australia's gross domestic product, compared with the 1.4 per cent deficit budgeted for this financial year. Senator Messner, like a lot of other members of the Liberal Party of Australia, has been involved in what I can describe as a Stalinist rewrite of history in recent years. I would advise Senator Messner to read very carefully the gripping and thorough account in the book by Mr Paul Kelly, The Hawke Ascendancy, in which he describes step by step the emergence of this prospective deficit of $9,600m for 1983-84. Far from being a lie, Mr Kelly very directly and accurately points out the fact that Australia would have had a Budget deficit of almost $10,000m in 1983-84 had Mr Howard continued to be Treasurer of Australia. This Budget provides for zero real growth in government outlays; that is, government spending will not rise faster than the rate of inflation this financial year. Total public sector borrowings will fall by more than $2,000m from the figure for last financial year. This is a very big achievement, a very real improvement in the situation in Australia. The net bond selling task of the Commonwealth Government will be zero this year; that is, there will not be any new bonds sold by the Commonwealth Government over and above the need to finance maturing bonds. That is a very, very big improvement on the situation in recent years. One of the important side effects of that will be to reduce growth in public debt interest, which will be held at 10 per cent of Commonwealth spending this financial year, after a period of steady growth since Mr Howard became Treasurer. The reduced borrowing requirement by the Commonwealth Government will ease pressure on our domestic capital markets, thereby hopefully helping to reduce interest rates in Australia. Lower interest rates are a key objective in this 1986 Budget to bring about greater private sector investment, which is central to economic recovery in the present circumstances. Members of the Opposition, and Mr Howard in particular, make loud noises about expenditure restraint and they are urging the Government to make greater spending cuts. Does the Opposition really live up to its rhetoric? Did the Fraser Government succeed in reducing the Budget deficit? Did Mr Howard, when he was Treasurer-he was Treasurer of this country for five successive years-succeed in reducing Commonwealth outlays? Mr Fraser failed in reducing the Budget deficit. Mr Howard failed to reduce Commonwealth outlays. They failed miserably on both counts. Outlays went up, not down. The deficit exploded; it did not diminish under Mr Howard. Mr Howard's record of budgetary mismanagement and incompetence is unmatched by any Treasurer of the Commonwealth of Australia since the Great Depression. In 1982-83, for example, there was a massive increase in the Budget deficit, from some $500m to more than $4,000m. It increased eight-fold in one financial year. Under Mr Howard as a proportion of gross domestic product the deficit rose from 0.4 per cent to 2.7 per cent. That is Howard's record when he was the Treasurer of Australia. In the same year, 1982-83, Commonwealth outlays increased by a huge 6.9 per cent in real terms; that is, Commonwealth Government spending rose almost 7 per cent ahead of the inflation rate in the community in Mr Howard's last year as Treasurer. In this Budget we are budgeting for zero real growth in Commonwealth expenditure. That is the difference between a Liberal government and a Labor government. From 1978 to 1982 Mr Howard was the Treasurer of Australia. In every one of his five Budgets he overshot his expenditure target. That is his record as Treasurer of Australia. The end result of Mr Howard's mismanagement was an horrendous prospective Budget deficit of $9,600m for 1983-84. That was the legacy of seven wasted years of Liberal government. That was Mr Howard's bequest to the nation. Yet Mr Howard and his acolytes are still prepared to talk about reduced government expenditure and credibility in politics in the same breath. As I pointed out, Mr Howard, in every one of his five Budgets, overshot his expenditure target, yet he now calls for expenditure restraint by the Hawke Labor Government. The Opposition's tax and policy commitments are an insult to the intelligence of every voter in the nation. In contrast to the Liberals, the Hawke Labor Government has reformed the Australian taxation system. The personal income tax reductions to be introduced on 1 December are the final elements of the Hawke Government's tax reform package. It is the most far-reaching reform of the Australian taxation system. The aim of the reform is to restore fairness and equity, to reduce the burden of taxation on the average pay as you earn taxpayer. The tax package will not raise the overall level of taxation in the community. It is a tax reform package that redistributes, not increases, tax levels in the community. The Opposition tries to cloud that point, that it is a tax reform package. It does not increase overall the level of taxation in the community. Now we have in this place, in the House of Representatives, in the media and in the community-- Senator Walters —Are you forgetting the fringe benefits tax? Senator MAGUIRE —People are going around-Senator Walters has now said it-saying that they want to abolish the fringe benefits tax, part of this Government's long overdue clampdown on tax avoidance and tax evasion in this country. The fringe benefits tax will raise about $575m next financial year. The Liberals oppose that tax. It is an essential and key element of the Government's tax reform package. Without it, we will not be able to introduce wide-ranging personal income tax cuts for the great bulk of the taxpaying community. The Liberals want to remove the fringe benefits tax. They are saying that they do not want personal income tax cuts for the rest of the community. It really boils down to that. Under the old taxation system, high income earners were able to avoid or minimise tax. The system was full of loopholes and rorts. They excelled in disguising taxable income as tax free gains. They were into negative gearing arrangements for rental properties and other real estate to reduce the taxation they paid on their income from their personal exertions. That is what was going on under the previous Government. The Liberal Government encouraged the proliferation of fringe benefits such as the so-called company car. What a misnomer. It encouraged companies to pay school fees and pay for private telephone calls-all tax free remuneration in a non-cash form. In some cases, according to the information available to the Government, top executives were receiving about 40 per cent of their total remuneration in a tax free form. That was condoned by the party that wants to perpetrate the subsidised lunch for well-to-do business people. The Liberals want to continue for a narrow section of the community that taxation advantage which is paid for by the rest of the taxpaying community. Those tax rorts cost the community hundreds of millions of dollars. Pay as you earn taxpayers-the average taxpayers-were forced to shoulder the burden; yet, when Mr Howard was Treasurer, payment of income tax was optional for the wealthy. It was a voluntary tax for the rich in Australia. No responsible government could tolerate a tax system that forced low and average income earners to subsidise the lurks and perks of the rich; yet Mr Howard tolerated and perpetuated this blatantly unfair and regressive tax system. In fact, under the Fraser-Howard Government, tax evasion and tax avoidance were among the few growth industries in Australia. While the manufacturing industry was in decline and other sectors went backwards, tax avoidance and evasion grew. From 1978 to 1982, Mr Howard, the Treasurer, was prepared to license the great Australian tax rip-off. The Government's tax reform package will close loopholes and eliminate rorts. The fringe benefits tax, the capital gains tax and the disallowance of entertainment expenses will ensure that, for the first time, high income earners will pay their fair share of tax. As I pointed out earlier, the revenue raised by the fringe benefits tax, which the Liberals want to scrap, is a key element in financing the personal income tax reductions for average Australian taxpayers from 1 December 1986. Without the fringe benefits tax, there will be no substantial income tax reductions for the great bulk of Australian taxpayers from that date. Of course, the Opposition chooses to deny that point. It seizes on parts of the Government's tax package and tries to create the impression that the Government is raising taxation. The Liberals, in saying that they would repeal the fringe benefits tax, are really telling the great bulk of wage and salary earners that they would deny them personal income tax cuts. It boils down to no fringe benefits tax and no significant personal income tax reductions from 1 December this year. The tax cuts on 1 December will follow those introduced in November 1984 by the Hawke Labor Government. At that time taxpayers on average incomes saw a reduction in taxation of $7.60 a week. Those tax cuts in November 1984 represented stage 1 of the Government's income tax reductions. In December this year there will be a further reduction of $5.10 a week for someone on an income of $400 a week. In just two years, from November 1984 until December 1986, the reduction in taxation for someone on $400 a week will have been $12.70 a week-a substantial reduction in personal income tax. This morning we heard Senator Walters mouthing off about the tax free threshold. The best the Liberals could do in regard to the tax free threshold-exempting some income from taxation-was to exempt those earning up to $4,595 from taxation. That was Mr Howard's record in his five years as Treasurer of this nation. From 1 December 1986 the tax free threshold will be not $4,595 but $5,100. That is the record of the Hawke Labor Government compared with the dismal record of the Fraser-Howard Administration. This Government is reducing income tax rates substantially. Persons in the major tax bracket paying a marginal tax rate of 46c in the dollar will, from 1 July next year, pay 40c in the dollar-a significant reduction in personal income tax for average wage and salary earners. As I have pointed out in this place before, the marginal tax rate for those in the lowest income tax bracket will be 24c in the dollar as a result of the Hawke Government's taxation package. The best that Mr Howard, in five years as Treasurer, could achieve as the lowest income tax rate was 30c in the dollar. This is the difference between the two governments-30c in the dollar under Mr Howard; 24c in the dollar under the Hawke Labor Government. In talking about taxation and the economy, the Opposition is treating the Australian electorate with contempt. It is asking voters to forget the Liberals' miserable economic performance when in government. It is asking the electorate to believe its rag-tag bunch of promises and rhetoric which pass for policy. But the Opposition is asking voters to vote for it at the next election. That must be either the greatest exercise in political naivete or the greatest political confidence trick since Federation. I would like to refer to some statements made this week in the Senate in the debate on this legislation. They are examples of what is said by Opposition spokespersons about the economy. I refer first to Senator Parer from Queensland. There might have been a special reason for the hype injected in his speech on Monday night-there is a State election in Queensland and possibly he was chasing a headline. The morning edition of the Dateline News Digest on 23 September 1986 stated: Senator Warwick Parer (Liberal, Queensland) said that judged by almost every statistic known, Australia under the Hawke Government was probably in its worst position since the depression. He has not been a senator for all that long. Either he was suffering from a mental block or he is engaged in some sort of Stalinist rewrite of history, because he ignored the key indicators. He said: `Judged by almost every statistic known'. I looked at the unemployment figures and found that, according to the Australian Bureau of Statistics, the level of unemployment under the Fraser-Howard Government in the 1982-83 recession was 10.4 per cent. The level of unemployment is now 8.3 per cent. So, judging by that key indicator, Australia certainly is not in the worst position in its history. It is certainly not in its worst position since the Great Depression. Clearly it is better off than it was in 1982-83 when Mr Howard was the Treasurer of Australia. There has been a 2 per cent reduction in unemployment since then. Senator Parer talked about every statistic known, but he ignored employment growth. Look at the results. In the last financial year there was a 3.9 per cent increase in the total number of Australians at work. Some 200,000 to 300,000 extra Australians found work last financial year. However, in 1982-83, when the Liberals were in power and Mr Howard was Treasurer, the labour market shrank; it did not grow. The number of persons in work in Australia fell by 1.7 per cent. In fact, in the last year of the Liberals some 186,000 Australians lost their jobs. That is the record. I do not know which statistics Senator Parer was referring to but he certainly was not talking about unemployment or employment. I might go on to say that he could not have been talking about inflation either because despite the claims being made about inflation from the other side of the chamber-- Senator Knowles —Yes, the worst in 25 years. Senator MAGUIRE —Senator Knowles is clearly ignorant of the facts, and I would point them out to her. In 1983 when the Liberal Government lost office the inflation rate was 11 1/2 per cent. That is the fact. I do not know how Senator Knowles can talk about-- Senator Knowles —In real terms it is the worst for 25 years. Senator MAGUIRE —That is a contradiction in terms. There is no such thing as real terms inflation. Senator Knowles seems to be very confused. There is no such thing as real terms inflation. Inflation is a monetary concept and it has nothing to do with real values. I point out that when Mr Howard lost office in 1982-83, inflation in Australia, as measured by the consumer price index, was running at 11 1/2 per cent. It is now not 11 1/2 per cent, not 10 1/2 per cent, not 9 1/2 per cent, but 8.4 per cent. That is the difference between Mr Howard's record as Treasurer and the record of the Hawke Labor Government. They are some of the key statistics that demonstrate the nonsense that Senator Parer and other Liberals were talking in this chamber on Monday evening about the state of the economy. Senator Short has also spoken in the debate. As a former adviser to the Treasury, I understand, and a former adviser to Mr Howard, he ought to know better. I have listened to Senator Short's speeches in this chamber over a period and I have found that his big subject of interest is foreign debt. Of course, Senator Short has made some incredible bungles when talking about foreign debt. He has claimed-and remember, he is a former Treasury officer-that the great majority of Australia's foreign debt is government debt. That is what he has said week after week and month after month. That is an absolute nonsense; it is a fiction. The great majority of foreign debt owed by Australia is owed by private and public companies, companies which are listed on stock exchanges. That is a fact and the figures are publicly available. I am pleased, I must say, that in a very lame way Senator Short has now changed his terminology. He is now referring to the `relative' increase in public debt. So yet another part of the notes of a Liberal Party speaker has crashed to the ground. Whoever prepares those speakers' notes ought to be sacked because a gross fiction is being perpetrated. The great majority of Australia's foreign debt is owed by the private sector. I would like to go on and analyse the speech Senator Michael Baume made in this place on Monday evening. The honourable senator puts himself up as an expert on the economy. I understand that Senator Michael Baume also was an adviser to Mr Howard when he was Treasurer. It may be because he and Senator Short were advisers that we had to face the problems of the recession in 1982 and 1983. Senator Baume used the 1982-83 recession as a basis for comparing the economy during that time with the present circumstances. After being pressured from this side of the chamber, he said that the 1982 recession was caused by drought. Of course, what Senator Baume is really trying to do is protect his own back because he was one of the people who advised Mr Howard-he was one of Mr Howard's minders-on the economic policies to pursue in 1982-83. I would like to dispose of the argument of the drought of 1982-83 being a key cause of Australia's economic problems at that time. I would simply refer to the gross domestic product figures which are still available. I advise people to look at Budget Statement No. 1, which contains the economic growth figures. Of course, we should remember that there was negative growth during that period. However, we should look at those figures and hold them up against Senator Baume's claim that the recession was caused by Australia being in the grip of a drought. Certainly there was a drought, but it did not cause a recession in this country. For example, if we consider Australia's gross domestic product, which is the total income of Australia measured right across the economy, for that year and take out the farm sector we find in that non-farm gross domestic product figure-a figure which is publicly available and which is most used by economists to look at growth-that non-farm growth fell by one per cent in 1982-83. So, while Senator Baume claims that the drought was responsible for taking the economy backwards in that year, it is clear that the non-farm sector was in decline. It is very difficult to accept the arguments put forward by Senator Baume that all the problems in that disastrous period in Australia's recent economic history when Mr Howard was Treasurer were caused by drought. Senator Baume went on to say in the same speech-he does not seem to find it easy to be consistent in his logic-that manufacturing industry now is well down on its 1981 peak. He said that manufacturing production in the present day and age had not recovered to its 1981 peak. Of course, what he was really saying-it was a Freudian slip-was that in fact it was falling in 1982 as well. Despite his claims that the economic problems faced by this country in 1982-83 were caused by drought, it can be shown on the basis of two publicly available indicators that that is an absolute fiction and that he was talking rubbish in the debate earlier in the week. The Hawke Government has not backed away from the tough economic decisions needed in Australia. It has not reverted to the political expediency of the Fraser-Howard years. It certainly has not reverted to the soft options of Mr Howard. The Hawke Government's tough decisions, cuts in government spending and other measures are necessary to overcome the economy's structural problems. The imbalances in Australia's economy can be corrected if economic policy responses are positive, planned and well managed. The 1986-87 Budget continues the framework for this response and the imbalances will be corrected. The Hawke Government is guiding Australia's economy from dependence on commodity exports to promoting export orientated manufacturing industry and the result will be a sounder footing for Australia's economy, for Australia's future prosperity and continued economic development. Senator HARRADINE(Tasmania)(11.15) —The Loans Bill 1986 is a machinery Bill required by the government of the day because it cannot overdraw on the Consolidated Revenue Fund. In areas of expenditure such as defence, where programs are committed, it is necessary to ensure that money is available and, therefore, the money has to be drawn from the Loan Fund. Obviously, the amount borrowed must take account of the extent of the Budget deficit, which in this case is $3.5 billion. However, there has been a wide ranging debate which has been really in the nature of a debate that would normally occur on the Appropriation Bills. I do not intend to engage in such a wide ranging debate. I do not say that that is not necessary. Obviously, the task of Opposition senators is to take every opportunity to point out what they see as the shortcomings of the Government and it is a task of Government senators to listen to those comments and to respond to them. I will raise just a couple of issues that emerged from the speech of the previous speaker, Senator Maguire. He took Senator Short to task about what he perceived to be Senator Short's overemphasis on public sector indebtedness. As Senator Maguire quite rightly said, the great majority of Australia's overseas indebtedness results from the private sector. On Monday, Senator Short pointed out the nature of the total public debt. He indicated that the total debt of the public sector, of Federal, State and local government, is very disconcerting. He indicated that, as a percentage of gross domestic product, public debt has risen from 39.8 per cent to 50.6 per cent over the last 10 years. At 30 June 1976 the level of total public sector securities on issue in Australia was $28.9 billion. At 30 June this year that figure was $117.4 billion-a more than four-fold increase. Furthermore, something that should be noted with concern is that a public debt of $117.4 billion, which was the figure at the end of June this year, represents more than $7,300 for every man, woman and child in Australia, or more than $17,000 for every taxpayer. As was pointed out by Senator Short on Monday, the interest bill on the Federal Government's share alone of that debt is more than $7 billion, which is 10 per cent of the total Federal Government outlays. It is more than we spend on the nation's defence, on education or on health. That must be addressed. It is important for the Government to recognise the problem and to overcome it. Senator Short added that the growth in our foreign debt had been even more dramatic and that, in the last three years alone, it has increased from less than $30 billion to almost $90 billion as our balance of payments on current account has accelerated into deficit. Senator Short said: Last year . . . 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. They are figures which need consideration. Quite obviously, a further substantial foreign debt is incurred by the private sector. Nevertheless, the Australian Parliament does have a responsibility to consider the causes of that part of Australia's overseas indebtedness which is generated by Federal Government action. As I have said, I do not intend to engage in a debate that is more appropriate to the Appropriation Bills. In any event, Mr Acting Deputy President, I do not imagine that you would allow me to. But the other aspect that I want briefly to deal with with relates to certain things said by the previous speaker about taxation. He gave the impression that everything is rosy and that people should be grateful for what is being done for them in the area of taxation. Let me say to honourable senators that everything may be okay for some people, but it is not okay for the vast majority. In particular, everything is not okay for people with family responsibilities. In the last 10 years a worker on average earnings, with a wife and four children, has suffered a loss in real disposable income of 11 percentage points and, despite the much trumpeted tax cuts of this Government, will suffer a further one per cent loss by this time next year. Put in money figures, over the period from 1976 until next year, that worker will have suffered an annual loss in real disposable income of $600. Of course, some people will benefit and have benefited from the taxation policies of successive governments and of this Government. If that same worker did not have a dependent spouse and four children but had a spouse who also was working, and if their combined income was 50 per cent higher than average weekly earnings that couple, as a result of the policies, would not suffer a loss but would benefit to the extent of a $1,000 increase in disposable income. Is that a fair system? It is not. Unless the Government focuses on that particular fact, it will suffer a substantial reversal in the next election. I deliberately said that it was as a result of policies of successive governments, because the previous Government's policies were inadequate. But the policies of this Government appear not to heed the cry of those who have the responsibility of raising a family in this day and age of increased costs and burdens. If the Government does not hear that cry of the vast majority of ordinary families out in the electorate, let it listen to the statements made only yesterday, I understand, by Professor Borrie. At a seminar of the Department of Demo-graphy at the Australian National University's Research School of Social Sciences, Professor Borrie drew attention to the fact that, unless there is an increase in the fertility rate-in the number of children being born-we shall go out the back door. What he said, having given a detailed paper, was: The ultimate biological and social aim must surely be at least generation replacement if society is to survive. To this end an average of about 2.5 children a couple was required to ensure human survival. Since 1971, Australia had been returning rapidly to the situation of the 1930s, with evidence of an average completed family size of 2.4 a married couple-not adequate to provide replacement. In recent years, total fertility in Australia was an average of only 1.9, well below replacement level. For a government that is responsible for the continuance of society, that surely is a very real warning. If the Government does not hear the practical cries of ordinary families-those with the responsibility of parenting-at least it should look at where its policies are taking Australia, and it is taking Australian society right out the back door. Professor Borrie's whole lecture should be studied very carefully, not only by the Government, the Opposition, the Australian Democrats and every member of Parliament, but also by those people in the community who have substantial influence on government and on the direction of society. Professor Borrie also made another interesting comment when he said: . . . throughout human history `natural fertility' and life expectations of about 35 years had kept population numbers reasonably balanced, but the achievement of life expectation of 75 or more years had destroyed this natural system, and explosive population growth rates had been prevented only by increasing efficient checks on fertility-contraceptives and sterilisation. He warned that today these checks were so universal and so efficient that in Australia and many other Western countries, the intrinsic levels of fertility were below generation-replacement level. That and the anti-family taxation policies of successive governments pose real problems for this nation. I mention in passing that many people in power-I am talking of the bureaucracy-have come through the era of kneeling at the feet of gurus such as Erlich, the author of The Population Bomb. Those scientists and others who tackled Erlich's proposition of the population explosion, who were able to point out the possible effects of anti-family policies, and more particularly the likely effects of new methods of production and agriculture in sustaining any natu-ral population growth, were pooh-poohed at the time because they were against the Erlich dogma, but people are now starting to listen to them. I trust that the Government will listen to them, too. One of the problems of the Loans Bill is that it seeks to prevent such legislation being presented to Parliament each year. Over the years the Loans Bill, which is a machinery Bill to ensure that the Government has the ability not to overdraw on the Consolidated Revenue Fund, is brought into the Parliament each year. On this occasion, as on a similar occasion last year, the Government is seeking to make this a standing statute. That would prevent such a Bill being introduced each year. Last year, for the first time, the Government tried that course, but the Senate amended the Bill to ensure that it would have to come back to the Parliament each year. The House of Representatives ultimately accepted that amendment. It is important for this chamber, as the House of review and in exercising audit and control over the functions of government, which is our responsibility, on this occasion also to amend the Bill to ensure that it is not a permanent statute but the government, whatever government it may be, will be required to bring it back each year. That would enable this chamber to give consideration to the purposes for which the loan fund might be used. I believe that would be in the interests not only of the Opposition but also of the Government, because a future conservative government may wish to utilise the loan fund for various purposes, legitimate though they may be, but purposes which are not, in the consideration of the then opposition, in the best interests of the country. That would then give to the Parliament, particularly the Senate, the opportunity of exposing those purposes; thus democracy would be served. I intend to vote for such an amendment because it is in line with the responsibility of the Senate not to act as a rubber stamp for the House of Representatives or for the Government. Senator KNOWLES(Western Australia)(11.36) —While some specific references in this Loans Bill relate to expenditure incurred by the Department of Defence, the overall purpose of the Bill is to facilitate the funding of the prospective Budget deficit for 1986-87. For this reason I think it proper to direct my remarks to the broader question of the Budget deficit and those aspects of Government policy which most contribute to it. This is well summarised by the Opposition's amendment, which points to the concern at the continuing increase in the nation's indebtedness, the continuing balance of payments and trade crisis, the continuing high level of interest rates and the Government's cosmetic approach to the reduction of its spending. This morning I found Senator Maguire rather amazing. He does not bother to stay in the chamber to hear some of the facts. He spent probably 80 per cent of his time talking about the Fraser Government and how dreadful it supposedly was by comparison with this wonderful Hawke socialist Government and the world's greatest Treasurer, Mr Keating. The fact of the matter is that inflation has risen from 5.1 per cent when the Australian Labor Party took office to 8.4 per cent; Senator Maguire admitted that it is now 8.4 per cent. As I pointed out to Senator Maguire-he chose not to believe it-inflation in real terms is at the worst rate for 25 years. The Government has achieved this in only three short years. It is undoubted that by any measure this Government is a big spending and big taxing government. Tax revenue in real terms has increased at an annual rate of 5.4 per cent in just three years, compared with a 3.3 per cent increase in the seven years of the previous Government. Tax receipts as a percentage of gross domestic product are the highest in post-war history. Government expenditure in real terms has increased by 5.3 per cent per year under Mr Hawke and only 2.1 per cent per year under the previous Liberal Government. Expenditure as a percentage of GDP also is the highest figure in post-war history. If Senator Maguire or any of the other Government senators think that that record should be praised, I suggest that they think again because the whole question of the Budget deficit illustrates the weakness of the economic management of this Hawke Labor Government. A reduced Budget deficit has been achieved by papering over the cracks and by recourse to taxation, while the tough expenditure decisions simply have not been made. While the Government might proclaim the reduced deficit as a sign of its responsible management, this figure of $3.5 billion still represents outlays of 29.4 per cent of GDP; a percentage exceeded only once under Mr Whitlam in the last three ALP Budgets. Because so many supposed spending cuts are deferments, ongoing expenditure savings will be less than those of 1986-87, as the Government has merely put off the hard decisions until next year. On the other hand, the increase in taxes is very real; up by $1.4 billion in 1986-87, raising the tax take to a record 25.5 per cent of GDP. The Government has netted this extra $1.4 billion by breaking its trilogy commitment not to raise the level of taxes. This fourth Hawke Budget shows that since 1983 tax receipts have shown an annual average real increase of 4.9 per cent, compared with 3.3 per cent under the previous coalition Government. Over the same time the average annual real growth in outlays has been 3.9 per cent; a long way ahead of the 2.1 per cent average in the seven Liberal years. These figures in particular tell us what is behind this Bill and the whole economic and fiscal program of this Government. Both Government borrowings and the Government's failure to tackle expenditure are the major causes of the highest real interest rates that we have seen for generations. The extent of borrowing has resulted in the loss of confidence in the dollar which we are seeing daily and have seen for months gone by. The ALP chooses to defend the dollar by the quick fix method of pushing up interest rates. It should be remembered that the Prime Minister (Mr Hawke) stated repeatedly, right back from the 1984 election campaign, that he would not lift the ceiling on home mortgage rates. What have we seen in recent months? We have seen that savings bank mortgage interest rates are 15.5 per cent, up from 11.5 per cent in December 1984; the time when he was saying that he would not lift the ceiling on home mortgage interest rates. This in turn accounts for an increase of only 0.6 per cent in dwelling investments in 1985-86, compared with 11.6 per cent in the previous year. All it amounts to is yet another broken promise by this Prime Minister. What right have Ministers of this Government to criticise businessmen for refusing to invest and expand when the prime rate for business has increased from 14 to 18 per cent over the same time? Long term interest rates of 14 per cent, double those of major Western economies, and short term rates touching 18 per cent, or three times the rate of Japan and the United States of America, stand as a rebuke to the economic competence of this Government. The accumulation of four Budget deficits is a major cause of the prediction in this current Budget that we face an 8 per cent inflation rate in 1986-87, compared with 2.3 per cent in the other 24 Organisation for Economic Co-operation and Development countries. The determination of this Government to tackle such root causes of inflation as escalating labour costs is suspect when it merely talks of discounting 2 per cent from a likely 4 per cent wage claim at the next national wage case. We simply cannot discuss this Bill without continued reference to the Budget deficit. I believe it is highly appropriate that the projected deficit figure of $3.5 billion is the same amount that this Government expects to spend on unemployment benefits. I fear very much that the second figure will rise and drag the first figure up with it. With the June quarter statistics showing that the growth in full time jobs has reduced to zero-another little figment of Senator Maguire's imagination was that employment was going up-we find it hard to believe in the Budget prediction of 1.75 per cent employment growth for 1986-87. Equally dubious, of course, is the anticipated growth in gross domestic product of 2 1/4 per cent. Yet we have to remember that, on this Government's admission, a growth rate of 3 per cent is needed to stop further unemployment growth. The Budget's prediction of 36,000 more people receiving the unemployment benefit is far too optimistic. We should remember that one merchant bank projected that as many as 180,000 more Australians may be out of work in 1986-87. Even if unemployment does not reach this horrific level, a rise substantially above that predicted in the Budget can only blow out the deficit. I have a particular concern for the level of youth unemployment, running at 22.7 per cent for 15- to 19-year-olds. When Senator Maguire was speaking I asked him how successful the infamous Priority One : Young Australia campaign had been. He chose not to respond to that interjection because he knows that the unemployment figure for 15- to 19-year-olds is worse than it was when the Priority One scheme was introduced. The Government has provided in the last month only a few more than 2,000 of the 10,000 traineeships it promised. Nearly all of those are in the public sector, paid for out of the public purse, not in the private sector. So in anyone's language, the Priority One scheme has been an absolute disaster and a con for 15 to 19-year-olds who are seeking employment. Each and every wage subsidy scheme that the Australian Labor Party attempts is an implicit admission that youth wages are too high, and the continuation of rigid minimum wage rates will add significantly to unemployment and be a continued drain on the public purse. This Government has done back flips all over the place in the last few months on every matter one could imagine, not the least of which is encouragement for those on the dole to work for their payments. The Prime Minister said quite clearly and categorically that he would institute a system whereby the unemployed could gain work experience by working for the dole. Of course, increasing pressure from the Labor Party's Left in every State has made him back off. It is important to recognise that this problem will never be tackled so long as we have a government that sides with the truly reactionary forces on the industrial scene that aim to stop Australians selling their labour at a price the market can support. Instead of denouncing other suggestions and initiatives, ALP Ministers would do better to question the validity of those famous judgments of 1907 and 1909 on which our industrial system is based and which now contribute to unemployment and high Budget deficits. The assertion of Mr Justice Higgins in 1909 that `the remuneration of the employee cannot be allowed to depend on the profits actually made by his individual employer' must be recognised as a dangerous myth in the reality of 1986. Senator Harradine —Who has priority-capital or labour? Senator KNOWLES —Yes, precisely. Senator Harradine —You have taken me the wrong way. Labour obviously has priority, surely. Senator KNOWLES —Yes, it is an absolute myth. We need a government that is prepared to denounce the continuing fallacy that wage levels can be divorced from profitability, and that is an important matter on which we must act accordingly. Unless we act on that now unemployment will continue to rise. We must cut unemployment and consequently reduce the need for governments to borrow to pay for this unemployment. More Australians are beginning to realise that there is no prospect of such reform under the Hawke Government, but a Howard Liberal government will act with the right mix of courage and sensitivity in this area. People in this country have been asked continually to tighten their belts and to be satisfied with receiving less money. They will be awarded less money and they will be taxed higher. It is quite disgraceful that the Treasurer has introduced an amazing array of new taxes in the last 12 months, including the fringe benefits tax and a capital gains tax, which the Prime Minister has repeatedly said we would not have. He was rolled on that and we now have such a tax. Our wonderful Treasurer has abolished negative gearing and the entertainment tax deduction and has introduced an assets test on pensioners and a tax on lump sum superannuation. It is disgraceful that, while he has been taxing this country to death, he has been fiddling his own travelling allowance in Canberra, which has been giving him an effective pay rise of $947 a week. Senator Walsh —Mr Acting Deputy President, I require that that reference to the Treasurer be withdrawn. It is untrue. I find it particularly offensive, coming from somebody whose position in the Senate was endorsed by a bunch of tax criminals in the Western Australian Liberal Party. The ACTING DEPUTY PRESIDENT(Senator Townley) —Order! I would rather the Minister used reasonable language too. I ask the honourable senator to withdraw her comment that the Treasurer has been fiddling the books. Senator KNOWLES —I withdraw, Mr Acting Deputy President. I also wish to state, in withdrawing my comment, that it has been proven that the Treasurer's principal place of residence has been listed as Sydney when in fact he does not live in Sydney; he lives in Canberra with his family. The Government may find my reference to his travelling allowance offensive but if he is now able to claim, as he has been over 12 months, an allowance for living in Canberra when he has listed with the Special Minister of State his residence as being in Sydney, I leave it to the citizens of Australia to decide who is right and who is wrong. The reduction in the predicted deficit has been achieved, if that is the right word, by some half-hearted expenditure restraint and some very doubtful predictions as to economic growth and the extent of unemployment. There is, of course, a third factor-a very real increase in overall taxation. Much of this increased taxation falls on the business sector, ultimately reducing its capacity to expand and employ, thereby taking us down the road to declining revenue and higher welfare spending. Anti-business taxes, which I have already mentioned, continue to be levied in disregard of clear warning signals from the private sector, and we must remember that that sector is the ultimate revenue and employment base. Even though this Government seeks to increase just the public sector, we in the Liberal Party firmly believe that the ultimate revenue comes from the private sector, as does employment. The first of these warnings is the fall in non-farm gross domestic product for three successive quarters. In anyone's language that is the definition of a recession. Consumer sentiment has fallen steeply during 1986 and the Budget Papers predict that business investment will fall one per cent in 1986-87. Again we might ask whether this understates the likely outcome, since the June quarter survey by the Confederation of Australian Industry and the Westpac Banking Corporation shows that 35 per cent of businesses plan to reduce investment over the next 12 months. Investment statistics attract far less publicity than unemployment figures and the deficit, yet this ALP Government seems not to recognise that the lack of investment is the major cause of our most spectacular problems. Certainly the taxation policies implemented this year act as a positive disincentive to investment, employment and expansion. ALP Ministers attack business for its failure to expand. Why do they not return incentive? Business might then be able to expand. Australia's corporate tax rate is 49 per cent, compared with 34 per cent in the United States of America, 33 per cent in Singapore and 35 per cent in Britain. This Government is trying desperately to say that it is not a big taxing government and that it is not creating disincentives for business. At the same time the private sector is now grappling with this wretched fringe benefits tax, which affects large and small businesses and people on high and low incomes alike. The Minister for Finance (Senator Walsh) would have us believe that the fringe benefits tax is purely and simply hitting the high income earners. That is simply not so, and it has been demonstrated for months. This Government is convinced that it will not change a whisker of the fringe benefits tax but will just continue to penalise the Australian community at will. In Western Australia, we saw in late July the closure of the Agnew nickel mine, and with it the shut-down of the town of Leinster and the dispersal of hundreds of families. Yet Senator Walsh sits in this chamber as a Western Australian senator who supported the introduction of the fringe benefits tax and he could not give a continental about the people in his own electorate who have been pushed out of employment by this tax. The fringe benefits tax in Leinster, coming on top of declining nickel prices, was the deciding factor in this social and economic tragedy, and let us not forget it. The loss to national export earnings will be $55m and there will be a cost to revenue of $10m in company tax and $10m in pay as you earn receipts. Nothing could better illustrate the self-defeating nature of this tax and the fact that it will contribute to higher deficits and the need for future loans Bills. Again, the inequity of the tax has been shown by the example of a major Perth car dealer whose salesmen, as the recipients of benefits, have agreed to reimburse their employer for the cost of the tax. When, however, these employees provide their boss with the money to pay the fringe benefits tax it is assessed as extra income for the employer and taxed accordingly. Just when it has become so clear that Australia needs to generate more investment and, in particular, more risk taking investment, the ALP capital gains tax that has come in creeps forward as a growing disincentive to capital accumulation and entrepreneurial activity. Only now are the full ramifications of the Act becoming apparent, since pre-September 1985 assets will lose their tax free status if more than 50 per cent of share capital changes hands. This creates further administrative nightmares and is another reason for many businesses to abandon plans for expansion. In Australia we should be encouraging people to invest in property and make all other investments possible. But no, this Government provides every possible disincentive that it can think of to make sure that people will not invest in this country and will take their money overseas. One other major policy area with firm potential for blowing out the Budget deficit is, of course, Medicare, because there has been an enormous blow-out in the last 12 months in Medicare. This shows clearly how the ideological preoccupations of the socialist Minister for Health (Dr Blewett) result in inferior health care at greater cost to individual Australians and to public expenditure generally. The Treasurer had the gall to say in his Budget Speech that the Medicare levy would be increased `so that Medicare is self-financing'. This same Government, specifically the Minister for Health, Dr-non-medical-Blewett, said as recently as March that there would be no increase in the Medicare levy. Yet what do we see only a few months later? We see an increase in the Medicare levy, supposedly so that it will be self-financing. The simple arithmetic of the situation contained within the same Budget Papers makes an absolute mockery of this statement, because it is impossible to make any of the figures work out. This Government expects to pay out just under $4,000m in medical and hospital benefits. That, in effect, constitutes the cost of Medicare as opposed to such other major areas of health spending as pharmacy and veterans' and nursing home benefits. At the same time, expected receipts from the Medicare levy will amount to $1,645m in 1986-87. Even when we are generous to the Government and look at the increased 1.25 per cent levy over a full 12 months, the amount raised will be under $1,800m-a long way short of that $4 billion expenditure. We have, then, a supposedly self-financing health system that would require a levy of 2.8 per cent of personal income to meet its costs. But, of course, the Government will not tell people that it is 2.8 per cent. It will just rip 1.25 per cent off and take the rest out of general revenue, so that nobody is any the wiser. It has been doing that for as long as this wretched jolly Medicare has been in existence, anyway. People are getting worse service than they have ever received in their lives. Once again, the disincentive has been increased so that fewer people will be able to insure privately for their health. The Government has taken away the day bed subsidies to private hospitals so that private health insurance is bound to go up. It has to go up. So this increased measure of taxation, perhaps amounting to an extra $52 over the year for the average wage earner, meets no more of the cost of Medicare than did the one per cent levy. The shortfall must be met by either general taxation revenue or government borrowings. Any way it goes it amounts to more tax. This Government has tinkered with a dishonest levy without addressing the rising cost of medical benefits which, over two years of spending, is up 27 per cent. Last year the Government budgeted for an 11 per cent rise in medical benefits that grew by 15 per cent, causing a blow-out of $166m. With this track record the $3,230m allocated in the Budget for medical services may well be exceeded in the present financial year. The Liberal Party has proposed the obvious step of restricting bulk billing to those people with health care cards, putting, I might say, a real brake on the medical benefits spiral. This is viewed as either an infringement of socialist principles or simply just too difficult. In the same way this ALP Government ignores the advice of as respected a figure as Professor David Penington, who for months has been warning that unrestricted bulk billing would continue to create an open-ended cost spiral. The Government ignores the fact that during 1985 the number of bulk-billed services rose by 18 per cent, while the number of patient-billed services rose by less than 2 per cent. Health policy must be addressed if we are going to get reductions. Expenditure on health, as with social security which rises with unemployment, is an example of how the policies of this Government will inevitably result in increased outlays. Because of its refusal to abandon big spending socialist policies, Australians can expect either increased borrowing over the long term, with still greater recourse to loans, or increased taxation-and we are copping both at the moment. We are already beginning to see that high levels of taxation result only in the destruction of the revenue base and huge Budget deficits. This Bill, unexceptional in itself, I suppose, is a pertinent reminder of the ALP-Hawke Government's economic mismanagement-its fiddling on the fringes and its absolute string of broken promises. This Government has simply been spending too much, taxing too much, borrowing too much and interfering too much. If there is going to be any hope for this great country it needs a government that is prepared to bite the bullet on the simple reforms that are needed: The encouragement of overseas investment, not a disincentive; the reduction of taxation, providing incentive to employees and employers alike; the reduction of government spending; and the reduction of union power. A Howard-led Liberal government would have the gumption to take these hard measures that would bring back profitability to this country and to its people. I think that it is most important that, if we are going to address this Bill in any sense of the matter, we must look at the ramifications of it over the short and long term, and also at what the options are. A Howard-led Liberal government would deliver the reforms that are needed; this Government simply does not have the intestinal fortitude or the ability to do so. Senator WALSH(Western Australia-Minister for Finance)(12.04) —I always enjoy listening to Senator Knowles, because it reminds me of just how bad the Liberal Party of Australia, especially its Western Australian branch, is. If one needs something to restore one's enthusiasm, listening to a speech from Senator Knowles is always an effective way of doing that. Her defence of tax evaders was as passionate as it was predictable. I say `predictable' because Senator Knowles was installed in the Senate by the tax evaders who still control the Western Australian branch of the Liberal Party. So it is not at all surprising-- Senator Knowles —Madam Acting Deputy President, I raise a point of order. I ask the Minister to withdraw that comment. Senator WALSH —What comment? Senator Knowles —The comment made about members of the Liberal Party in Western Australia. Senator WALSH —Madam Acting Deputy President, on the point of order, I referred to the Western Australian branch of the Liberal Party being controlled by tax evaders. I believe that is true. If Senator Knowles is invoking standing order 418, I submit that it has nothing to do with standing order 418. The ACTING DEPUTY PRESIDENT(Senator Giles) —Standing order 418 states that there can be no imputations of improper motives on members. I do not believe that the Minister's statement was necessarily reflecting on a member; perhaps it was on other individuals. I do not believe that the remark in this case was offensive. Senator WALSH —Thank you, Madam Acting Deputy President. Senator Knowles also mentioned the assets test. I was eager to hear what she had to say about the assets test because I noted that last month, when cornered on this question-I think she chairs the back bench committee on social security or some similarly described committee-and asked whether a Liberal government would pay pensions to millionaires, she said: `No, of course it wouldn't. It had to have a cut off somewhere'. In other words, she repudiated what has been supposed to be firm Liberal policy over the last few years. I note that contradiction, that repudiation, of her Leader by Senator Knowles last month. I would like to say just a little bit more about the substance of what appears to be her position; that is, that there should be an assets test for a number of millionaires and a few people a bit below that, but that we should not have the assets test which this Government applies. If that were to be done, the government of the day would have to means test some one and a half million pensioners, in round figures, thereby incurring administrative costs of $30m to $40m for a negligible saving of revenue. If there is any policy worse than the Opposition's policy of abolishing the assets test, it is Senator Knowles's policy of retaining an assets test for a number of millionaires but nothing more stringent than that. In describing the Loans Bill which is being debated, I do not believe I can improve on the words of the Department of Finance officer who appeared before Estimates Committee C on Tuesday last week, when he said: The Loan Act does not give any additional authority to expend to the Government; that is covered by the normal appropriation processes. The Loan Act provides the flexibility to charge that expenditure to the revenue fund or the loan fund. It is as simple as that. It is an accounting measure. What the Government has sought to do with this Bill-there has been a loan Bill every year for as long as anybody can remember, I think-is to enact standing legislation instead of putting the Parliament through the time-wasting process every year of enacting a loan Bill on an annual basis. It is a streamlining measure, but a streamlining measure which is being sabotaged by the coalition of non-Labor parties. Once again, the Australian Democrats, in their attitude to this Bill, have displayed that they are a bunch of mental retards and mental misfits who suffer from delusions of grandeur. I do not intend to say any more about them. The Liberal Party of Australia paraded either its ignorance or the bloody-minded obstructionism that has been imposed on people in the Liberal Party who know better by the extremists and the fanatics who now control it. I think Mr Carlton summed it up as lucidly and accurately as the Finance officer did for Senator Messner's benefit last week. When the same measure was introduced into the House of Representatives last year, Mr Carlton, the shadow Treasurer, said: This Bill makes arrangements for the Government to borrow. Previously there used to be an annual Loan Bill to handle this situation for all circumstances arising during a financial year. This Bill has been drafted as standing legislation rather than annual legislation to remove the necessity to pass legislation annually. As the Bill does not itself authorise expenditure- I repeat `as the Bill does not itself authorise expenditure'- but merely creates a mechanism whereby expenditures authorised by other legislation can be made, the Opposition does not object to the concept of standing legislation. It merely improves the efficiency of the Parliament. We therefore support the Bill. That is a succinct and accurate summary of the legislation which was presented last year and which is being re-presented this year, but which is being sabotaged, as I said, by an unholy alliance of the mental retards and mental misfits of the Democrats who suffer from delusions of grandeur, and the bloody-minded obstructionists of the Liberal Party-the fanatics and extremists who now control it. Senator Siddons —You don't like it when you don't get your way, do you? Senator WALSH —Talking of mental retards and mental misfits, I think Senator Siddons is a prime example. This year, when the measure came up again, it was raised in the-- Senator Harradine —Madam Acting Deputy President, I think that is a bit over the fence. I ask that it be withdrawn. Senator WALSH —I am quite happy to withdraw it, but I just note that that was the description applied to Senator Siddons by one of his colleagues. I thought it would have been parliamentary, therefore, if one of his colleagues described him in those terms. When the same measure came before the Liberal Party meeting this year, Mr Howard and Mr Carlton, who at least understand what the measure is about, were rolled by the fanatics and extremists in the Parliamentary Liberal Party. They wanted to allow the Bill to pass unamended, but the fanatics and the extremists insisted that it be amended and they intend to amend it. Senator Messner's part in this exercise is, I think, particularly unworthy. He has revealed himself to be a toady of the extremists who now control the Liberal Party. Senator Messner took up this issue in Estimates Committee C hearings on 16 September. I apologise for the length of this quotation, but I think it is important to put it on the record in this debate. Senator Messner had asked a question about the Loans Bill, and went on to say: The point I am getting at is this: My understanding is that expenditures which end up being charged against the loan account are subject to the normal Appropriation Act or other Acts of Parliament authorising that expenditure, and the Loan Bill itself merely authorises the transfer of moneys between the CRF and the loans account. However, you are probably aware that another view is put, namely, that the Loan Bill each year authorises expenditure from the loan account of any amount of money which would be charged against it. What I am trying to do is assess precisely what is the correct view about the way in which that loan amount operates. Mr Galloway, who was representing the Department of Finance, said: I am sorry, I cannot answer that question. Mr Wilson, from the Department of Finance, was then called to the table and said: In short, the former. The Loan Act does not give any additional authority to expend to the Government; that is covered by the normal appropriation processes. The Loan Act provides the flexibility to charge that expenditure to the revenue fund or the loan fund. It is as simple as that. It is an accounting measure. Senator Messner said: Just to make the point clear, if the Government were to go outside and start borrowing hand over fist and that money was credited to the loan account, and then undertake expenditures from that loan account against those borrowings, those expenditures would have to be separately authorised by law? Mr Wilson replied: Any expenditure from the loan fund must be carried out by appropriation. Senator Messner said: The normal Appropriation Bills, together with other standing appropriations, do authorise expenditures, part of which are charged against that loan account? Mr Wilson replied: That is right. Senator Messner cannot plead ignorance. He had the facts set out for him and had all his questions answered unequivocally by Finance Department officers, but he stands here, as a toady of the extremists who have taken over the Liberal Party, sabotaging this measure. I do not know whether he contributed to the rolling of his Leader and the shadow Treasurer in the Liberal Party meeting, but he certainly stands here today as a toady of the extremists who now control the Liberal Party. The receipt of that information by Estimates Committee C in no way deterred Senator Messner from putting out a shonky Press release on the same day. I want to deal with this and refute not every false assertion which was made in it but a number of them. In his Press release he said: The Hawke Labor government is attempting to sneak through a significant change to legislation . . . The facts are that, far from sneaking through any legislation, the same Bill, drafted as standing legislation, was presented last year and there was a significant debate. I wrote to the Chairman of the Joint Committee of Public Accounts on 4 July concerning the proposal for standing loans legislation, well in advance of its introduction. So much for sneaking through a change. The second paragraph of Senator Messner's Press release said: . . . the Loans Bill, in its present form, gives blanket approval to the government to borrow, in each financial year, the sums that it requires in order to meet its deficit requirements. It does not give blanket approval. If Senator Messner does not know that, he is culpably ignorant. If he does know it, he has wilfully misrepresented the facts. Senator Messner —That is what your officers said the other day. Senator WALSH —They did not say any such thing. It does not give blanket approval. The limits on borrowings are the amounts included for defence in the annual Appropriation Bills. No more can be borrowed against the Loans Bill than the amount appropriated for defence. It does not give blanket approval. I repeat that Senator Messner is guilty either of being culpably ignorant or wilful misrepresentation. The third paragraph of Senator Messner's Press release said: We in the Opposition believe that the Parliament should retain annual review and scrutiny of the government's loan raising programs and we are dissatisfied with its present drafting to say the least. He went on: Therefore, the Opposition will be moving an amendment . . . He referred again to an underhand piece of legislation. There is nothing underhand about the Bill, as I said before, and the Parliament retains its power to review and scrutinise annually government loan raisings, whether this Bill is passed as standing or annual legislation. The deficit and the borrowing requirements are announced in the Budget Speech and the Budget Papers and are debated at length in the Parliament. So much for Senator Messner. I will say something later about the second reading amendment that has been moved by the Opposition. It is the sort of silly amendment that one would expect from the Opposition. The Democrats are moving a number of amendments, which I trust will be taken together to save time, the purpose of which is to sabotage this streamlining measure. I do not regard this Bill as being terribly important, as I said earlier. It is a measure to avoid the waste of time and money in administration and parliamentary time which the annual debating and presentation of a loan Bill requires. It is a streamlining measure by the Government, as I said before, which is being sabotaged. The fact that it is being sabotaged is not all that important because the savings that would be entailed are relatively modest. What is important, however, is what it demonstrates about this coalition of saboteurs opposite, that is, the Democrats-I quoted before how one of Senator Siddons's colleagues describes him-and the major part of the coalition, the toadies in the Liberal Party who know better but who act as agents for the extremists who are now taking over the Liberal Party. That toadying fanaticism needs to be camouflaged by a smokescreen of lies. We have heard a number of them during the second reading debate. As for the second reading amendment, I am looking forward eagerly to seeing an article by Steve Martin or Steve Baume or Martin Baume or Patrick Baume, or whatever his name is, in the Daily Telegraph explaining why the Opposition decided to do this. I note that Steve Martin or whatever he calls himself these days continues to make a living by deceiving the public. He used to write bogus prospectuses for Patrick Partners. He now writes shonky-- Senator Messner —I wish to take a point of order, Madam Acting Deputy President. The point of order is that under standing order 418 Senator Walsh is attempting to defame a member of this House by referring to activities that have been thrown aside in the proper court of law. Senator WALSH —It would never be decided in a court of law, but if Senator Messner objects I am happy to withdraw the comment. The ACTING DEPUTY PRESIDENT —Thank you, Senator Walsh. Senator WALSH —So much for what he used to do. These days he writes highly biased columns for the Daily Telegraph and then hides his identity behind a nom de plume. It says something about not only the ethics of Senator Michael Baume but also the ethics of the newspaper that they jointly deceive the public in that way, or had deceived the public in that way until the whistle was blown on them last weekend. Having said some harsh things about the Liberal Party, may I pay the Leader of the Opposition (Mr Howard) this compliment. When it was necessary to make a temporary appointment to the front bench of the Opposition he showed good judgment in appointing Senator Teague instead of Senator Michael Baume. Question put: That the words proposed to be added (Senator Messner's amendment) be added. The Senate divided. (The President-Senator the Hon. Douglas McClelland) Ayes . . . . . . . . . . . 33 Noes . . . . . . . . . . . 26 —— Majority . . . . . . . . . 7 —— Alston, R. K. R. Mason, C. V. J. Archer, B. R. Messner, A. J. Baume, Michael Newman, J. M. Baume, Peter Parer, W. R. Bjelke-Petersen, F. I. Puplick, C. J. G. Boswell, R. L. D. Reid, M. E. (Teller)Brownhill, D. G. C. Sanders, N. K. Carrick, Sir John Short, J. R. Crichton-Browne, N. A. Siddons, J. R. Durack, P. D. Teague, B. C. Guilfoyle, Dame Margaret Townley, M. Haines, J. Vanstone, A. E. Harradine, B. Vigor, D. B. Kilgariff, B. F. Walters, M. S. Knowles, S. C. Watson, J. O. W. MacGibbon, D. J. Withers, R. G. Macklin, M. J. Aulich, T. Giles, P. J. Black, J. R. McClelland, DouglasButton, J. N. McIntosh, G. D. Childs, B. K. McKiernan, J. P. Coleman, R. N. Maguire, G. R. Colston, M. A. Morris, J. Cook, P. F. S. Richardson, G. F. Crowley, R. A. Robertson, E. A. (Teller)Devlin, R. Ryan, S. M. Elstob, R. C. Sibraa, K. W. Evans, Gareth Tate, M. C. Foreman, D. J. Walsh, P. A. Georges, G. Zakharov, A. O. Hamer, D. J. Coates, J. Hill, R. Bolkus, N. Lewis, A. W. R. Grimes, D. J. Collard, S. J. Cooney, B. Jessop, D. S. Gietzelt, A. T. Sheil, G. Ray, RobertPowell, J. F. Reynolds, M. Chaney, F. M. Jones, G. N. Question so resolved in the affirmative. Original question, as amended, resolved in the affirmative. Bill read a second time. The Bill. Senator MESSNER(South Australia)(12.31) — by leave-I move: (1) Clause 1, leave out `Loans', insert `Loan'. (2) Clause 3, definition of `defence service', leave out `a financial year', insert `the financial year'. (3) Clause 3, definition of `financial year', leave out paragraphs (a) and (b), insert `the year ending on 30 June 1987;'. (4) Clause 3, definition of `relevant appropriation Act', leave out the definition, insert the following definition: ` ``relevant appropriation Act'', in relation to the financial year, means: (a) the Supply Act (No. 1) 1986-87; or (b) an Act, whether passed before or after the commencement of this Act, appropriating the Consolidated Revenue Fund for the service of the financial year ending on 30 June 1987, being an Act that is expressed to have effect subject to this Act.'. (5) Clause 4- (a) leave out `a financial year', insert `the financial year'; and (b) leave out `that financial year' (thrice occurring), insert `the financial year'. The Loans Bill governs the Government's borrowing programs. That matter was aired significantly and at length during the debate on the motion for the second reading. The point that should be made at this stage is that this Government continues to be a substantial borrower. Its policies have led to increasing borrowing of overseas money by Australians, whether by governments or by the private sector. This has led to an increase in the total funds borrowed on the overseas markets from about $35 billion at the time the Australian Labor Party came to power in March 1983 to an amount approaching $100 billion. They continue to be the facts of life. We continue to borrow and borrow to pump up the standard of living of Australians. We have just had the first change in our credit rating in Australia's history. Overseas lending advisers, organisations and financial institutions are faced with the fact that Australia is not a top grade lending risk in the world community. In fact, Moody's Investor Services Inc. has reduced Australia's credit rating from AAA to AA1. Although this does not represent a substantial change in how Australia is perceived by other countries, the fact remains that this country has reduced its standing in the world's eyes by virtue of the policies this Government has tended to put in place in the past three years. Those policies, this Government and this Treasurer (Mr Keating)-who was described by the Prime Minister (Mr Hawke) as the `world's greatest Treasurer'-have brought us the first downgrading of Australia's credit rating in the history of the Federation. That has to be a significant factor-if not an economic one, then certainly a political one-in the life of this Government. We will continue to hammer the disgrace that has been brought on this country by this Government's policies and the introduction of the measures which produced that result overseas. Some points which arose during the second reading debate have a bearing on the matter under consideration. Senator Maguire raised many issues concerning tax avoidance. The truth is that, under this Government's tax measures, which will have effect from July next year, people earning $18,000 or $19,000-not even average weekly earnings but substantially below them-will suffer a marginal rate of tax of 40 per cent on their overtime earnings and the bonuses and allowances they receive in addition to their normal wages. That is the net result of this Government's new tax measures which will apply from next July. That income range is by no means handsome. The tax rate applies to the great bulk of taxpayers. It comes as no surprise to learn that, for the first time, come next July taxpayers in that range, and there are about two million of them, will find themselves paying a marginal tax rate of 40 per cent on their income. That is the kind of tax reform that this Government claims is saving the taxpayer a great deal of money. The Government says: `We are introducing reforms by way of the fringe benefits tax and the capital gains tax in order to give people tax cuts'. However, for the first time we find that people on low levels of income are paying a penalty rate of tax of 40 per cent. I repeat: Two million people in that category will in fact be paying more when the new tax proposal of this Government comes into force next July. The Opposition's amendments before the Committee seek to restore this legislation from what is a perpetual authority for the Government to borrow to an annual authority for the Government to borrow. The Opposition proposed amendments and drew attention to this point when this issue was discussed in the Senate 12 months ago. Those amendments, which were supported by the Australian Democrats, were passed and the Bill was amended. Senator Walsh went to some length during the second reading debate to answer the arguments that we have been putting down on this matter, but he has completely missed the point that we have been making. The point is not the one that he focused on-that is, the question of whether or not expenditures are properly covered by appropriation or other legislation. That is not the point at all. The point is simply that the kind of principle that this Government has incorporated in the legislation would take away from the Parliament the scrutiny of the Government's borrowing program. Parliament would have no say at all if the Government succeeded in using this Bill as a means of permanently gaining approval for its borrowing program. If this were done, the Parliament would have no overall authority and no oversight of the Government's borrowing programs. I return to my earlier point about borrowing programs. In three years under the Hawke Labor Government we have gone from being a $35 billion debtor country to being a $100 billion debtor country. Is that not enough reason for members of the Opposition to want to ensure that the Parliament and the Senate have total scrutiny of the Government's loan program and have the opportunity to debate the principles behind a government's borrowing program? Is that not a sufficient reason, quite apart from the points that Senator Walsh raised, to ensure that this Parliament plays a proper role in the conduct of this nation's affairs and that it authorises and continues to authorise the borrowings of this Government on the loan account? That, to me, is the point at issue here. It is quite simple and I am sure that all members on this side of the House, including the Australian Democrats, can see it. Clearly, the Government cannot. This is not just a simple accounting machinery measure. What this Government is about-and this is the scandal-is taking away from Parliament its right to oversee the borrowing program of the Government, taking away Parliament's right to ask questions about the borrowing program, to inquire into what is happening and to see and expose the Government's programs which, of course, are basic to our total financial structure. That is why we have moved these amendments. We stand very strongly on that point. I would like to make one point about a matter that was raised by Senator Walsh. He spoke of the appropriation for defence and other matters being covered by appropriate legislation. It is interesting to note that of the total-- Senator Walsh —We are limited by the Appropriation Bills. Senator MESSNER —That is the point that I am just about to make. It is interesting to note that only 32 per cent of the Government's total expenditure this year of almost $75,000m is actually covered by the Appropriation Bills that are before the Parliament. Less than one-third of the expenditures that this Government undertakes is specifically authorised by the Appropriation Bills. The other two-thirds is authorised by standing legislation, which ranges from Bills and Acts such as the social security Act and various repatriation Bills, right through to legislation which authorises special health expenditures and things of that nature. In other words, the Parliament has very little direct control over two-thirds of this Government's expenditures. We can see what has been happening over the years-the gradual erosion of the power of control of the Parliament over the Government's expenditure. We can see quite clearly in this Budget that $50 billion worth of expenditures out of a total Budget of $75 billion are in fact not subject to specific authority or specific appropriation by legislation of this Parliament. We believe that this trend towards extending this power with respect to loans, to the borrowings of the Government by virtue of the Loans Bill that is before us, to a perpetual authority to borrow is the major issue and is very closely related to the issue I am raising. Senator Walsh —You are saying that Carlton is a fool, are you? Senator MESSNER —No, I am not saying that Mr Carlton is a fool at all. He is saying quite clearly that, from a machinery point of view, the legislation may have some merit. We here are taking the broader view that it is the Parliament that has, and should continue to have, control over the borrowing programs and the appropriations of the Government. For that reason, I have moved the amendments standing in our name. Probably the first amendment is the most significant, in that it seeks to change the title of the Bill from a loans Bill, which connotes that the Bill has some continuing authority beyond one year, to a loan Bill, indicating borrowings only in respect of this financial year. Senator SIDDONS(Victoria)(12.43) —I rise to indicate that the Australian Democrats will be supporting amendments (1) to (5) which have been circulated and moved by the Opposition. They are, in fact, similar to amendments that were circulated by the Democrats. I will move later amendments circulated in the name of the Democrats which relate to clauses 6 to 10. The amendments seek to make it necessary for the government of the day to bring before the Parliament its borrowing program each year. Like Senator Messner, the Democrats are very concerned that this very important responsibility of the Parliament should be bypassed. Senator Walsh made great play of the fact that this Bill was purely a measure to increase the efficiency of the Parliament. I would have thought that he could have saved everybody a lot of time if he had not introduced into the Senate a Bill identical in wording to a Bill which was rejected by the Senate last year. Indeed, had he not done so, we would not have had to cover some of the ground that was covered 12 months ago. The fact that this has been such a long debate, the fact that so many senators felt it necessary to comment on the Government's loan raising program this year, indicates to me the absolute importance of having this debate each year. Consideration interrupted. Sitting suspended from 12.45 to 2 p.m. Senator BUTTON(Victoria-Leader of the Government in the Senate) —Mr President, I seek leave to make a statement about ministerial arrangements. Leave granted. Senator Withers —They are all leaving the country. Senator BUTTON —That is not so. I inform the Senate that the Minister for Community Services, Senator Grimes, and the Minister for Veterans' Affairs, Senator Gietzelt, will both be absent from the chamber at Question Time today. Any questions that would normally be directed to Senator Grimes in relation to his portfolio or those that he represents in this chamber should be directed to the Minister for Education, Senator Ryan. Queries on the management of Government Business should be addressed to me. Questions normally addressed to Senator Gietzelt should also be addressed to me. Senator CHANEY —My question is directed to the Leader of the Government in the Senate both in that capacity and in his capacity as Minister for Industry, Technology and Commerce. My question flows from his comments in a speech on Monday night and in the Senate yesterday about the likely value of the dollar in the context of manufacturers planning for the future. I note that the Budget predicts a further decline in private sector business investment and I ask: Does the Minister agree that the level of interest rates is a critical factor for manufacturers considering investment decisions? Given his comments on the currency, can the Minister tell the Senate whether interest rates will remain at their current very high levels and, if so, for how long? Senator BUTTON —It has always been the practice of Ministers from both sides of the Parliament not to speculate about interest rates. I remember that that practice was broken notably by Mr Doug Anthony when-- Senator Chaney —By the Prime Minister, by Keating, by you-- Senator BUTTON —No, Senator. It was broken spectacularly in one year by Mr Doug Anthony when he predicted interest rate falls and made the flamboyant undertaking that he would eat his hat if that did not happen. I am not aware whether he actually did that, but he should have done, and it should have been a stetson. Of course, as Senator Chaney will be aware, I do not dissent from the view put in the question that interest rates are a restricting factor on investment, particularly in some sectors. But the underlying strategy of the Budget is to produce, over time, lower interest rates. I will not speculate about when that might occur. I can really take the question no further than that. Senator CHANEY —I ask a supplementary question, Mr President. I ask the Minister: In the light of his answer that the underlying strategy of the Budget is to reduce interest rates, does he agree that interest rates have risen by about two percentage points since the Budget and when does he believe that this underlying strategy will start to take effect? Senator BUTTON —I repeat what I said in my main answer, which is simply that I will not speculate about interest rates. Senator McKIERNAN —My question is directed to the Minister for Finance. Has the Minister's attention been drawn to an article in the Australian of 28 August 1986 dealing with the activities of the Opposition's task force on the aged? If so, can the Minister verify the accuracy of the figures attributed in the article to Government sources? Do comments by Senator Knowles in the article imply support for the Government's fiscal priorities and are those comments at variance with the stated fiscal priorities of the present Leader of the Opposition? Senator WALSH —I am aware of the fascinating report. The one that I have in front of me right now was published in the Australian of 28 August but similar reports were published in other newspapers and I have a number of them here. The article in the Australian reports that Senator Knowles, who I think chairs the Opposition's task force on social security matters, was confronted by journalists-- Senator Chaney —What paper is that? Senator WALSH —It is a similar report to those in other newspapers. It just happens that this one is on the top of the pile. Senator Knowles was confronted by a journalist and asked to explain the Opposition's alleged commitment to reducing government expenditure in the light of its simultaneous commitment to abolish the assets test which, according to this report, would increase outlays by $300m, not reduce outlays. I think that figure is a bit high but I will let that pass for the moment. She was asked how, in the light of the Opposition's alleged commitment to lean government and reduced government spending, the Opposition would justify paying pensions to millionaires. Senator Knowles said that, of course, pensions would not be paid to millionaires and that the line would have to be drawn somewhere. We do not know precisely where Senator Knowles or the Liberal Party of Australia believes that the line for an assets test should be drawn. But I make the point that, if the cut-off line were drawn at the 34 millionaires who were flushed out and the 300-odd people who had more than $500,000 in assets-in addition to their house, car and a few other things-but who previously still received a pension, that would mean that about one and a half million people would have to be means tested in order for the Government to avoid paying pensions to those few hundred people. In other words, it would involve an administrative expense of about $30m or $40m to save pensions of $3m or $4m. Obviously, that is an absurd exercise to indulge in. To achieve any net savings, the Opposition's proposed assets test would have to have a ceiling or a threshold of exemption very close to the assets test which this Government has applied, and rightly so. The last part of Senator McKiernan's question asked: Is this at variance with the stated fiscal priorities of the Leader of the Opposition? The most important thing is that not only is it at variance with the statement made by the Leader of the Opposition in his reply to the Budget; it is a flat contradiction and repudiation of the statement made by the Leader of the Opposition in his reply to the Budget. That serves to highlight yet again the disunity and lack of cohesion that permeates the Liberal Party in every State and in the Federal Parliament. Senator Dame MARGARET GUILFOYLE — I direct my question to the Leader of the Government in the Senate. I refer the Minister to the fact that in its latest economic review, released today, the Westpac Banking Corporation has called on the Government to be more flexible in times of rapidly changing economic circumstances and particularly because it doubts that some Budget forecasts, such as the projected growth rate, will be achieved. Specifically the review states: Should it become readily apparent early in the financial year that the Budget targets are not realistic, it is to be hoped that a mini-budget is brought down forthwith. I ask the Minister: Was Senator Walsh speaking on behalf of the Government when last week he said that there would be no mini-Budget? If so, why has the Government locked itself into such a rigid position? Does the Minister agree that there may well be a need for a mini-Budget or a further major economic statement before the end of the financial year? Senator Walters —In other words, who is winning-you or Walshie? Senator BUTTON —I will answer Senator Dame Margaret Guilfoyle's question and ignore the interjection. I have read reports of the comments from the Westpac Banking Corporation and I have read this morning's AM transcript. Those comments should be put in the context of the reporter asking Mr Matheson, who spoke for Westpac, whether there was any point in having an annual Budget. He then asked: Would it be somehow better to conduct perhaps an ongoing review? Mr Matheson replied: Well I think the idea of having an annual budget was probably born in the days when there wasn't the same high volatility in the economy that we see today. And I think there is some good argument for not having a budget that's inflexible. That is the overall context of what Mr Matheson said. The Government stands by the Budget that it brought down. But on occasions Ministers-I recall that Senator Walsh and perhaps I have done so-have said something about the need for ongoing expenditure restraint and particularly the need to address issues that would normally be addressed in next year's Budget earlier than that, in calendar year 1987. I do not think Senator Walsh or I have said anything different about that. I do not think that denotes a degree of inflexibility, as implied in the question. I am sure that the Government will keep an eye on the situation and take the appropriate steps if and when necessary, but we do not think that will happen. Senator JONES —Has the Minister representing the Treasurer had his attention drawn to reports of a defamation settlement involving the Queensland Premier, Sir Johannes Bjelke- Petersen, and QTQ Channel 9 in Brisbane which is wholly owned by the Bond Corporation? Is the Minister aware of reports that the Queensland Premier received an out-of-court settlement of $400,000 in respect of the action, which is 20 times the normal settlement figure for actions of this kind? Can the Minister advise whether the Bond Corporation will be allowed a tax deduction in respect of the settlement payment and whether the payment will be assessable in the hands of the Queensland Premier as income? Senator WALSH —I am aware of at least one precedent under which a media magnate who had received or expected to receive a favour from someone in a position of authority made a large out-of-court settlement for alleged defamation. Given that sort of precedent, it is inevitable that malevolent journalists will write scurrilous stories alleging the $400,000 payment to Sir Joh Bjelke-Petersen was a pay-off for a favour that the media magnate had received or expected to receive from the Queensland Government for some of his other business interests. The fact that there is a precedent around makes it inevitable that journalists will indulge in that sort of totally reprehensible conduct. The only suggestion I could make as to how Sir Joh could stop this reprehensible behaviour and these scurrilous attacks on his good reputation and character would be, first, to make a public disclosure of the terms of the settlement and the amount of money-and I have noted that he said he could not do that. So either as an alternative or supplementary to the public disclosure he could donate the entire proceeds to charity, the proceeds having been alleged to be some $400,000, thereby showing that Sir Joh personally gained nothing from the alleged payment in the defamation action. But the definition of a charity would have to be tied down a bit. For example, it could not be the Bjelke-Petersen Foundation or any other National Party slush fund. If Sir Joh were to act on that suggestion, and provided that the charity was one of those accepted as a charity by the taxation Act or by the Commissioner of Taxation, the donation that he made would be deductible from taxable income also. So that he would receive some substantial and direct benefit from that, assuming that he has a taxable income. Because of section 16 of the taxation Act, I am not aware of whether he does have a taxable income or whether his affairs have been arranged so that he does not have one. In response to the last part of Senator Jones's question, as I understand it-and I will get confirmation from the Treasury or from the Commissioner for Taxation via the Treasurer-if the Bond Corporation did make the payment or any payment, it would not be a deduction from the Corporation's assessable income, nor would it be assessable in the hands of the Premier as income. That draws attention to the point I made earlier that if he were to hand over the $400,000 to a charity, he would or could gain very substantial personal benefit still, because the $400,000 when donated to a charity would be an allowable deduction from his taxable income, whereas the receipt of the $400,000 is not assessable. Senator SANDERS —I draw the attention of the Minister representing the Minister for Defence to the fact that, according to Jane's Fighting Ships, seven of the warships visiting Sydney from next Monday are nuclear armed and that this fact was confirmed on morning television today by Rear-Admiral Martin of the Royal Australian Navy. I also draw the Minister's attention to the fact that between 1965 and 1976 there were 381 accidents with nuclear weapons under the United States Navy's control-that is, one every 1.5 weeks. Is any radiation monitoring equipment in place in Sydney and have evacuation and clean-up plans been put into force to cope with a nuclear weapons accident on those ships involving the release of radioactive material? Does not Rear-Admiral Martin's statement make nonsense of the United States and the United Kingdom governments' policies of neither confirming nor denying the presence of nuclear weapons on board their warships, thus clearing the way for Australian authorities to identify and monitor those ships which are nuclear armed? Finally, have Australian defence forces ever held joint exercises with United States forces to deal with nuclear weapons accidents as recommended by the United States Defense Nuclear Agency in its NUWAX-81 report? The PRESIDENT —Order! Before the Minister answers, I again draw honourable senators' attention to the length of questions. If it continues, I will direct that the questions be placed on notice. Senator GARETH EVANS —As to the alleged statement by Rear-Admiral Martin, it is the case that, while being interviewed about the naval review on Sydney's Channel 9 program at 7.45 this morning, Rear-Admiral Martin said: `Inevitably some of the ships would be carrying nuclear weapons'. However, I am advised by the Minister for Defence that what Rear-Admiral Martin intended to say, and what he thought he had said, was that it was not inevitable that some of the ships would be carrying nuclear weapons. Rear-Admiral Martin's intention was to confirm the Navy's policy of neither denying nor confirming the carrying of nuclear weapons in visiting warships. Rear-Admiral Martin, not yet retired, has said that this was a simple slip of the tongue which he regretted. As to Senator Sanders's throw-away line in parenthesis of some hundreds of accidents with nuclear weapons under the United States Navy's nuclear weapons accident reporting system, let me immediately correct the record about that. Of the 630 incidents-not 380 but 630 incidents-that have been reported over the 20-year period of the operation of the Navy's nuclear weapons accident report system, 364 did not involve nuclear weapons at all but rather dummy weapons that are used for training purposes. The 264 incidents that did concern nuclear weapons in some way did not involve their nuclear components. They involved things like stripped threads on a bolt; sprinkler systems being activated inadvertently; intentionally sensitive alarms going off without reason; flat tyres on trailers for the weapons in question; small fuel spillages when fuelling an aircraft to transport weapons, and matters of that kind. There were only two accidents in that entire period of the hundreds to which Senator Sanders referred that could properly be classified as nuclear accidents. They were respectively the loss of an A4E jet with a bomb on board when it rolled off a United States aircraft carrier in the western Pacific in 1965, 21 years ago; and another in 1968 which was associated with the loss of the United States submarine Scorpion which sank in the Atlantic, again nearly 20 years ago. Let us have no more of this humbug about a parade of alleged statistics of incidents and accidents that have occurred with nuclear weapons. That is simply not the case. Turning finally to the substance of Senator Sanders's question about the possibility of accidents associated with the visit of ships to Australia for the naval review, ships which may or may not be nuclear armed, the Government is satisfied that the standards required by the North Atlantic Treaty Organisation countries, including France, in respect of nuclear weapons safety, coupled with the precautions taken on board visiting warships, effectively preclude the possibility of accidental nuclear detonation. The most serious accident that could credibly ever occur would be detonation of the conventional explosive in a nuclear weapon. This could result in the dispersion of some radioactive material in the immediate surrounds of the vessel, although most would be contained within the hull of the warship concerned. Measures for dealing with weapons accidents are covered in the general emergency arrangements made for all visits by foreign warships. Routine radiation monitoring of conventionally powered nuclear-capable warships is not carried out because there are no publicly hazardous radioactive fission products associated with the presence on ships of nuclear weapons. Mr President, I acknowledge that this is a long answer, but it was an unconscionably long question. As to the NUWAX-81 report to which Senator Sanders referred, the situation is as follows: The after accident report of the 1981 United States Defense Nuclear Agency nuclear weapons exercise-NUWAX-discussed the lessons derived from the simulated collision of a light aircraft and a United States Army helicopter transporting nuclear weapons. It is a type of contingency which might possibly occur in a North Atlantic Treaty Organisation country, but has no relevance to the safety issues associated with visits to Australian ports by nuclear capable warships, which I have outlined above, or for any other current United States activity in Australia. To date there have been three NUWAX exercises, all the scenarios of which involved simulated accidents with airborne weapons. The United States Government has not proposed that Australian forces take part in any NUWAX-type exercises, not did the United States Defense Nuclear Agency recommend in the NUWAX-81 report that Australian forces should hold exercises with United States forces. Senator MAGUIRE —Has the Minister for Resources and Energy seen a report in the Economist magazine from London which includes an international comparison of retail petrol prices? If so, how does Australia rank overall in terms of fuel prices? Does the article support Opposition claims concerning the level of Australian petrol prices? Senator GARETH EVANS —Naturally enough, I have seen the article in the Economist of 30 August to which Senator Maguire refers. It is based on data collected by the International Energy Agency and provides further confirmation of my statements made on many previous occasions-the most recent was yesterday-that Australian petrol prices are among the very lowest of the Western industrialised countries. I would have thought the Opposition would be impressed by this evidence, coming as it does from an impeccably dry source, the Economist, whose articles are normally quoted with such raging enthusiasm. The petrol price quoted for Australia is about the same as Canada's and is only slightly more than that of the United States of America. It is substantially lower, in most cases, than the prices in the other 12 major industrialised countries which are quoted in the article. The rate of tax on petrol is also among the very lowest of those countries quoted in the article. Australia's tax on petrol, quoted in the article at 45 per cent of the consumer price, is the fourth lowest on the list and is substantially lower than the average of 60 per cent for the countries listed. The article also compares the petrol price reduction in the major Western industrialised countries that have followed the plunge in the price of crude oil since the beginning of this year. Australia's price fall, at about 15 per cent, lies in the mid-range of those countries listed. Given our low petrol prices to begin with, this reduction has maintained very much our competitive position among those countries with the lowest cost liquid fuels. Senator REID —My question is directed to the Minister representing the Minister for Veterans' Affairs. Did the Government cause Mr Des Corcoran, the former Labor Premier of South Australia, to be told yesterday that he was not to be reappointed to the Council of the Australian War Memorial? Did the decision reverse a previous decision that he was to be reappointed? Why was the decision made not to reappoint Mr Corcoran? Why was he informed only 24 hours before he was due to take his place at a meeting of the Australian War Memorial Council today? Senator BUTTON —I will have to direct that question to the Minister and obtain an answer as soon as possible. Senator ROBERTSON —Is the Minister for Education aware that claims have been made that there has been a falling off of involvement in post-compulsory education recently? Is there any basis for those claims and, if so, what action does the Minister propose to take to encourage people to participate in further education? Senator RYAN —There has been no fall-off in participation rates in education; indeed, the contrary is true, certainly since the Hawke Government has been in office. Attendance at education institutions has been steadily increasing and has significantly outstripped population growth. The recent Australian Bureau of Statistics finding indicated that in 1985 there were 1,300,000 young people between the ages of 15 and 24 attending an educational institution. This is an 11 per cent increase since our Government came to power and represents 50 per cent of that population. The results are particularly impressive for those people over 25 years of age, where there has been a 25 per cent increase in participation over the same period, bringing the number of mature age people in education to 667,000. These figures vindicate our Government's policies directed at increasing participation in education at all levels and reflect the community's confidence in the education system. For example, our moves to bring the youth income support arrangements on to a more rational and generous basis have allowed many more students to continue their education at a time when they may have otherwise chosen to go on to unemployment benefit. In the case of the secondary assistance scheme there has been an increase of over 20,000 in the number of students assisted to date and we expect that another 38,000 students will benefit from the scheme, which is now called Austudy, in 1987. Similarly, we will be increasing benefits available for tertiary students in 1987. Of course, as the Senate will be aware, in response to the growing demands for higher education, by 1987 our Government will have created an additional 36,000 places since coming to office. Senator JESSOP —My question is directed to the Minister representing the Special Minister of State. No doubt the Minister is an avid listener to the Australian Broadcasting Corporation news in the morning, as I am. I ask whether he noted this morning that the news report referred to the annual report of the Department of the House of Representatives, which indicated that the hours of members of parliament had increased, and referred also to the fact, as reported, that the take home pay of members of parliament is $73,000. I ask the Minister whether the latter statement is correct. Senator GARETH EVANS —No, it is not correct, as all honourable senators would be acutely aware. The basic salary for back bench members of parliament is $45,543 which, after tax and Medicare, comes out at around $27,417. Added to that is the basic electorate allowance, assuming that it is all untaxed-that may be a large assumption these days-of $17,329, which is a total take home pay not of $73,000 but of $44,746. In addition, there is the travel allowance component for overnight stays in Canberra and other capital cities. The extent to which that allowance can be fully written off by the individual member of parliament varies to some extent; but equally clearly, it is inconceivable that any possible addition of the travel allowance component to the figures I have mentioned could get a figure anywhere like the $73,000 that has been mentioned. Senator McINTOSH —Has the attention of the Acting Minister for Foreign Affairs been drawn to a report in the Melbourne Age today indicating an impending famine in Mozambique which in part is the result of a South African backed insurgency in the country? Will the Government urgently consider responding to the Mozambique Government's appeal for emergency aid to assist in the crisis? Senator GARETH EVANS —I am aware from Press reports this week that the Government of Mozambique has appealed for international assistance in the form of food in view of its precarious domestic food situation. In fact, Mozambique is one of five countries in Africa still critically affected by food shortages. In 1985-86 Australia provided Mozambique with 7,000 tonnes of food aid for use in direct emergency relief feeding and 7,000 tonnes in support of agricultural development. The total cost of that was $5m, including freight. This gift represented a significant increase over the level of food aid provided in the previous year and reflected the Australian Government's increasing concern about the food situation in that country. In approving this financial year's food aid allocations Mr Hayden has placed highest priority on allocations of emergency food situations such as the one which is currently facing Mozambique. Consequently, although details have not yet been finalised, the emergency allocation for Mozambique is likely to be of approximately the same magnitude as that in 1985-86. The Australian Development Assistance Bureau is currently examining a number of requests for food assistance to Mozambique, including from a number of Australian non-government aid organisations operating in that country. In view of the Mozambique Government's appeal, the normal procedures involved in making formal food aid offers to recipient governments will be accelerated this year in respect of Mozambique. As in 1985-86, this may include the provision of some surplus Zimbabwean maize generated by a swap for Australian wheat. Senator SHEIL —Is the Leader of the Government in the Senate aware of the Taillon drug importation case, which has highlighted the fact that drug traffickers travelling through Australia to another country cannot be arrested under existing laws and have to be allowed to go free? Does the Minister know that the Federal Government promised nearly a year ago to carry out an urgent review of this anomaly in our laws and that so far all that has happened is that the Government has taken nine months to work out, under this urgent review, that the matter is one that rests within the Minister's portfolio? What does the Minister intend to do? Will he amend the laws to stop this ridiculous anomaly, or will he follow the example of the Special Minister of State and the Attorney-General and do nothing? Senator BUTTON —I am aware of the circumstances of the case in question. The matter is in the hands of the Attorney-General and I will obtain an answer to the honourable senator's question from him. Senator Foreman having addressed a question to the Minister for Finance- The PRESIDENT —Order! I rule the question out of order as the matters raised are not within the Minister's responsibility. Senator PETER BAUME —My question is addressed to the Minister representing the Prime Minister. In the light of continuing high interest rates and the continuing decline in new dwelling starts as well as the increasing difficulty Australians face in translating into reality their dreams of home ownership, what changes will the Government make in its private domestic housing policy to give more hope to Australians wanting to own their home, to avoid any further increase in building industry unemployment and to achieve greater equity between new and old home buyers? Senator BUTTON —I suppose the most direct answer to the honourable senator's question is that I have no idea. Senator Peter Baume —That is what we thought. Senator BUTTON —I am simply giving the honourable senator the answer I give on other occasions to this sort of question. If the Government feels it is necessary to make changes in policy it will make those changes and announce them at the appropriate time. Senator GILES —Is the Minister for Finance aware of Liberal Party opposition to the Government's decision to change interest rates on Government housing loans in the Australian Capital Territory? What would be the budgetary consequences if the Opposition's position were to prevail? Senator WALSH —I am aware that Mr Louttit, who is still the President of the Australian Capital Territory Branch of the Liberal Party, as I understand it-- Senator Reid —No, he is not. Senator WALSH —He is the former President. He has been running around saying that the Liberal Party is opposed to this Budget measure. Senator Maguire —He is a Liberal Party candidate. Senator WALSH —That is even worse. He has been running around saying that the Liberal Party is opposed to this, it will not allow it to happen, and so on. I do not know whether that view is shared by members of the Parliamentary Liberal Party but I do note that that assertion by Mr Louttit has not been repudiated by the Liberal Party's parliamentary Leader. Of course the Liberal Party's parliamentary Leader ought to be repudiating it for, among other things, this reason: It is asserted ad nauseam that this action involves the breaking of contracts. The fact is that probably far more than half of the contracts have escalation clauses in them. They have always been there. The precise number is not known but it is known that a very large minority, if not a majority, of the people who took out these loans many years ago do not still live in the houses for which they have the loans. A lot of them do not even live in the Australian Capital Territory. Monthly rental-purchase payments have been as low as, would you believe, $40. Even Doug Anthony, a few years ago-of course he was a beneficiary of such a housing loan-had repayments of $75 a month. Some of these loan repayments are as low as $40 a month. Senator Chaney —Mr President, I rise on a point of order. The Minister was asked a simple question about the budgetary consequences of this action, and he is clearly debating the question. I would ask you to call him to order. The PRESIDENT —I am listening to the Minister and I will hear his answer, but I ask him to bear in mind standing order 100. Senator WALSH —Certainly, Mr President. I do not believe I am debating the matter; I believe I am supplying information relevant to the question. These $40 a month payments could be increased to as much as $83 a month. That has provoked shrieks of outrage from the self-indulgent, selfish and egocentric people who live in this Territory and have been sponging on the taxpayers for 20 years. The interest rates are as low as three and seven-eighths per cent. It is also being asserted that there are no precedents for this sort of action by government. Of course there are precedents. The Premiers plan of 1931, for example, arbitrarily cut the interest rate on all existing Commonwealth bonds held by domestic bond holders. In New South Wales freehold titles were amended, I think in 1981, regarding the ownership of coal. Indeed, some other legislation which could be claimed as a precedent is about to come up in the Senate this afternoon. Many of these people have had the temerity to acknowledge publicly that they have second and third houses which they are paying off, but they still have these three and seven-eighths per cent loans which they expect to have in perpetuity from the rest of the taxpayers of Australia. The cost to the Budget is not great-of the order of $2m-should the Liberal Party's opposition to this be pressed. The principle involved is terribly important, and no principle is more important than the obligation on the Leader of the Opposition to repudiate what Mr Louttit has been saying. Senator CHANEY —My question to the Minister for Education follows the answer just given by the Minister for Finance. Does she agree with the description of her constituents as greedy, selfish and egocentric people who live in the Australian Capital Territory? Senator RYAN —I would happily take the opportunity to sing the praises of my constituents, but I am afraid Senator Chaney's question does not come within my ministerial portfolio. Senator CROWLEY —My question is addressed to the Minister representing the Minister for Community Services. I have received a constituent representation expressing concern that new guidelines under the occasional child care provisions will alter, reduce or remove child care from neighbourhood houses. The neighbourhood houses provide considerable occasional child care in varying amounts from place to place. Can the Minister outline the new occasional care guidelines and explain how, if at all, they will affect arrangements in neighbourhood houses? Senator RYAN —I am representing Senator Grimes today but I do not have a specific brief on the matter raised by Senator Crowley. I am sure that Senator Crowley's constituents have been ill advised because I cannot imagine that we would be ruling out services that already exist. I will have to get the guidelines and a commentary on them from Senator Grimes. Senator PARER —My question is directed to the Minister representing the Prime Minister. Has the Minister noted the remarks of the Leader of the Australian Labor Party in Queensland, Mr Warburton, that he does not want the Prime Minister in Queensland during the coming State election campaign? Is it correct that the reported reasons for this request by Mr Warburton are a reflection of Queenslanders' concern about Federal Government policies in general and, in particular, the fringe benefits tax which is so strongly opposed by Mr Burke, the Premier of Western Australia? Senator BUTTON —I have no information as to whether and why Mr Warburton made that request. I think it was probably a matter about which there was some unanimity, anyway. One can only speculate about the reason for that request, if it in fact was made. I think it most unlikely that the issues suggested by Senator Parer were foremost in the mind of Mr Warburton when the request was made, anyway. Senator RICHARDSON —My question to the Minister representing the Minister for Employment and Industrial Relations is about statements concerning the Peko-Wallsend Ltd dispute which were made by the Leader of the Opposition, Mr Howard. In the first statement, which appeared in the Sydney Morning Herald of 29 August 1986, he said: On behalf of the Opposition . . . Mr Charles Copeman and his colleagues in Peko deserve the support of all Australians who believe in the reform of our industrial system. In the second statement, reported in the Australian of 29 August 1986, he said: I do not accept that Peko is breaking or defying the law. That is a distortion of what has happened. Will these statements influence Government policy in light of the decision handed down by the Supreme Court in Western Australia relating to this dispute? Senator WALSH —In response to the latter part of the question, which asks whether Mr Howard's statements are in conflict with the decisions handed down in the Western Australian Supreme Court, the answer is clearly that they are. Mr Howard said that he did not believe that Peko was breaking or defying the law. The Supreme Court of Western Australia found that Peko was doing just that and accordingly issued an order with which Peko complied. I do not know whether the Leader of the Opposition still defends-not only defends but also enthusiastically supports-the action that Peko was taking, now that the court has found that that action was, in fact, illegal. It would be interesting to know whether Mr Howard is still, now that that activity has been declared illegal, supporting it. In response to the earlier part of the question, which referred to Mr Howard's enthusiastic endorsement of Mr Copeman and the actions of Peko-Wallsend Ltd in that dispute, let me say that I have already drawn to the attention of the Senate the fact that Mr Copeman's policy on government financing, both State and Federal, would have the effect of withdrawing some $375m from Western Australia. So, it would be interesting to know whether Senator Chaney, Senator Knowles and a number of other Western Australian senators endorse Mr Copeman's view on that. The fact that Mr Howard was an eager supporter of the action that Peko was taking-subsequently declared to be illegal-is, I regret to say, just another symptom demonstrating the fact that under this weak leader the Liberal Party is being taken over by the extreme Right. Senator Sir JOHN CARRICK —I refer the Minister representing the Treasurer to statements by the State governments that they are being forced to increase a wide range of taxes and charges and to reduce significantly the numbers in their public services. I ask: First, what consequential increases, if any, in percentage terms were made in the bulk Budget calculation when it arrived at an inflation level of 8 per cent? Secondly, how was that factor calculated? What assumptions were made? Thirdly, if no allowance was made, what increment of inflation will flow from State actions? Finally, in calculating a growth in unemployment of 36,000 in the Budget, what calculations were made for State and local government reductions in employment? Senator WALSH —On the last part of the question, the figure for the estimate of unemployment benefit recipients was derived principally from the growth forecast, with an adjustment incorporating the estimate of the lower number of UB recipients because of the tightening of unemployment benefit administration. Senator Sir John Carrick referred to the statements which have been made by a lot of State governments that, because the Federal Government has not given them enough money, they will have to increase charges, lay off people and that sort of thing. I think I can remember that sort of thing being said every year, certainly since I have been in Parliament and also for many years before. There is nothing new about that. I think it ought to be noted that the major payments which the Commonwealth makes to the States, that is, the recurrent per capita grants, have been increased by 2 per cent in real terms. Some 70 to 80 per cent of most State government expenditure is in wages. Wages have already been discounted and will, under the Budget policy, be discounted again during this financial year. So, the major part of State government expenditure is rising at a consumer price index minus rate-a rate less than the CPI-and the major component of State government income is increasing at a CPI plus rate, more than the CPI. So, there is a fair margin between those two things. That applies to the States in general. Senator Sir John Carrick asked what assumptions had been made in determining the Budget's estimated CPI increase figure of, I think, 7.9 per cent and what portion of that was attributed to State governments having to increase their charges. I am not sure what it was; I will try to obtain that from the Treasurer. Senator COOK —My question is again directed to the Minister representing the Treasurer. Has the Minister's attention been drawn to claims by the Premier of Queensland that Queensland is a low tax State? Can the Minister verify these claims? If Queensland is not a low tax State, as the Premier of Queensland claims, what are the implications for the Queensland and national economies of the level of State taxation applicable in Queensland? Senator WALSH —I am asked whether I can verify the Premier's claims that Queensland is a low tax State. The answer to that is no, I cannot verify those claims. Indeed, I will not, because they are not in fact correct. There was a time when many-though by no means all-government charges were lower in Queensland than in other States. The principal reason for that was the hidden tax which the Queensland Government collected from mining companies, principally Utah but also CSR Ltd and others, through overcharging them for rail freight. I think that some years ago an estimate of $150m to $200m a year was made for the excess rail freight which was being creamed off by the Queensland Government. This would be regarded as a tax in any other State, but it was not recorded as a tax in Queensland. For that reason the figures at that time, as they were officially recorded, gave a substantially misleading impression of the real underlying situation. However, in more recent times the rate of government charges and taxes, as recorded by the Australian Bureau of Statistics in the government charges index, has been increasing in Queensland at a rate very much faster than the consumer price index and very much faster than in any other State. Therefore, it has been increasing very much faster than the national average. Indeed, the figures show that the government charges index in Brisbane between the June quarter of 1984 and the June quarter of 1986 increased by 21.8 per cent. This was over a two-year period when the weighted average for the eight capitals was only 14.8 per cent and the consumer price index increased by 14.6 per cent. That was some 7 per cent higher than either the consumer price index or the weighted average for all capital cities. Charges in Queensland increased nearly half as much again, as they did in the other capital cities, on average. If one looks at the period from the June quarter of 1985 to the June quarter of 1986-that is, of course, the most recent year-one finds once again that the government charges index increased at a faster rate in Queensland than in any other State, indeed at a rate of 9.5 per cent. That is significantly higher than the consumer price index increase in the same period and a great deal higher-again, of the order of 50 per cent higher-than the weighted average for the eight capitals. Queensland is not a low tax State. When a proper accounting assessment is done it never has been a low tax State although it may not have been the highest tax State in the past. In the last two years it is certainly the State in which government charges and taxes have been increasing at a very much faster rate than they have been anywhere else. The fact that the contrary is being claimed by the Queensland Government in its advertisements is just another measure of the fundamental fraudulence of the campaign of that State Government and of its desperation. Senator KILGARIFF —I refer the Minister representing the Minister for Aboriginal Affairs to the report in today's Age which indicated that amendments to the Aboriginal Land Rights (Northern Territory) Act have been abandoned because of the Federal Government's concern that the Northern Territory will renege on agreements concerning excisions of land for Aboriginals from pastoral leases. If the report is correct, what source does the Federal Government have to suggest that the Northern Territory Government planned to take this action, particularly in view of the fact that in the past month seven newly excised titles have been granted and many others are being processed? If the report is not correct, what is the reason for the deferral? Is it because the Labor Caucus has reneged on the legislation? Senator RYAN —I am not aware of any announcement that the Minister for Aboriginal Affairs has made on this matter. Cabinet still has the matter of the Northern Territory legislation under consideration. Senator COLSTON —Is the Minister representing the Minister for Defence concerned that a perception that Australia is maintaining only a token presence on Christmas Island, with the winding down of the phosphate mining operations there, likely to invite a dispute over the sovereignty of the island? If so, and in view of the recent problems regarding landing rights for Royal Australian Air Force aircraft in Indonesia, will the Government be reconsidering the possibility of developing Christmas Island as a base to assist our patrols into the Indian Ocean? Senator GARETH EVANS —I am advised by the Minister for Defence that there is no dispute with any country over the sovereignty of Christmas Island and none is considered likely to develop. There are no plans at present to develop Christmas Island as a military base. It is not considered necessary to establish a military base to maintain our sovereignty over the island, nor to support defence deployments to the Indian Ocean. Existing facilities at Christmas Island will continue to be used to support defence operations as necessary. I should add, I suppose, for the record that the recent quite separate issue of landing rights for RAAF aircraft in Indonesia, which apparently arose from a misunderstanding, has now been resolved. Senator VIGOR —I address my question to the Minister representing the Minister for Immigration and Ethnic Affairs. What improvements were made to the Australian Institute of Multicultural Affairs after the Parliament increased the Institute's responsibilities last year and the government cut of 30 per cent from its Budget? What will be the staffing and annual running cost of the new Office of Multicultural and Ethnic Affairs which is set to replace the Australian Institute of Multicultural Affairs? What extra funds will the Government channel into community education activities and independent multicultural research to fill the gap left if the Australian Institute of Multicultural Affairs is dismembered? What was the reason for disbanding the Australian Institute of Multicultural Affairs, despite the advice of the Jupp Committee, and for this Government's attacks on the independence and integrity of the Special Broadcasting Service, the migrant education program and the English as a second language program and the closure of regional offices of the Department throughout the Australian community? Senator BUTTON —I ask the honourable senator to place his question on notice. It is a very detailed question requiring a great deal of factual information. However, as an example, let me comment on the reason for disbanding the Institute of Multicultural Affairs and the changes made to the Special Broadcasting Service. Both those decisions were made in a budgetary context. In both cases the Commonwealth had assumed and maintained functions which it was not prepared to continue to maintain. The reason for that, in the case of the SBS, is that Australia is one of three countries in the Western world which maintain a taxpayer funded national broadcasting service, the Australian Broadcasting Corporation. In the view of the Government this country cannot afford to maintain two taxpayer funded public broadcasting services. It is a luxury which cannot be afforded by this country. One can make similar sorts of comments about some of the other things which were raised in the honourable senator's question. But in all these matters in which the well of inspiration clearly springs in the honourable senator's heart from the complaints of one or two aggrieved, let me say that the Government is in the position of having to make responsible decisions about these things and is not in the position in which a new Democrat senator from South Australia can indulge himself. Insofar as there are factual matters in the honourable senator's question, I will direct them to the appropriate Minister and have the honourable senator provided with an answer as soon as possible. Senator MAGUIRE —Has the Minister representing the Treasurer seen an international report which has found that the Australian dollar has been oversold and that it is substantially below its true value on the international exchanges? If so, can the Minister provide the Government's response to the report which examined purchasing power based exchange rates in 15 major trading nations? Senator WALSH —I have seen-this is no joke-an article published in the Economist of 6 September. It is on page 67 if anybody wants to look it up. It refers to the Big Mac triple P rating. The Big Mac triple P rating is the Big Mac hamburger purchasing power parity. In a somewhat lighthearted vein, the article has a table giving the cost of a Big Mac hamburger in a number of countries, adjusted for exchange rate variations between those countries. Senator Messner —What is it in Saudi Arabia? Senator WALSH —Saudi Arabia is not on the list. What it shows is that after adjustments for the exchange rate there is a 34 per cent discrepancy between the purchasing power of the Australian dollar measured against the cost of a Big Mac hamburger and its official exchange rate. So from that it is concluded-I am not sure how seriously-that the Australian dollar is undervalued by some 34 per cent. I do not think that is a conclusion which many serious students of the international monetary market or any serious student of economics would agree with. But to the best of my knowledge the facts presented are correct; that is, that it costs in terms of real purchasing power 34 per cent less to buy a Big Mac hamburger in Australia than it costs in the United States of America. It does, however, draw attention to a more significant and more serious matter; that is, that there are a lot of bargains in Australia, that Australian goods at present current exchange rates are very cheap against the exchange rates of other countries. That is something which the Government is well aware of. It presents a great opportunity to Australian industry, both for export growth and for the increasing substitution of domestic production for goods which are currently imported. Indeed, as the Budget Papers forecast, it is in that very way-that is, the improvement in net exports because of the highly competitive exchange rate we now have-that most of the economic growth forecast in the Budget will originate. Senator BJELKE-PETERSEN —My question is directed to the Minister for Finance. Given the estimated $6m shortfall in Queensland's compensation for 1986-87 under the brucellosis and tuberculosis eradication campaign, due to a predicted doubling of the number of cattle to be destocked from 60,000 to 120,000, will the Minister support half the destocked cattle being placed in feed lots so that they can be fattened and sold for slaughter, thereby recouping some $3m which could contribute to other aspects of the BTEC program? Senator WALSH —With regard to the last part of the question, I understand that is a matter at which the Minister for Primary Industry is looking. In regard to the first part of the question as to the alleged $6m shortfall and so on, if that figure originates from the Queensland Government, quite frankly I would not accept it until I have had it independently verified. We have ample experience to demonstrate that the facts and figures are sometimes misrepresented by the Queensland Government. Senator Cook —Rubbery. Senator WALSH —Yes, they are rubbery, to say the least. The Queensland Government, it would appear, will refuse to disclose essential details of the way in which it has handled Commonwealth money. In short, at any time figures produced by the Queensland Government are likely to be rubbery and highly suspect. Senator Boswell —Answer the question. She asked a sensible question. Senator WALSH —I do not know what is agitating Senator Boswell. Perhaps he got one of those lousy $145,000 loans, most of it at 4 per cent as well. I do not know whether he did; if he did, I wish he would stand up and make a declaration about it. Perhaps there were not enough lousy $145,000 loans to go around for every National Party apparatchik in Queensland. At any time figures presented and assertions made by the Queensland Government ought to be subjected to independent assessment before they are accepted, but even more so in a period such as this when there is an election campaign on the way. The PRESIDENT —I inform the Senate that I have received the following letter, dated 24 September, from Senator Siddons: Dear Mr President, Pursuant to Standing Order 64, I give notice that today I propose to move- `That, in the opinion of the Senate, the following is a matter of urgency: The Government's current strategy of reducing the authority of the Foreign Investment Review Board, which will open the door for foreign countries to buy the remainder of our wealth producing industries at rock bottom prices.' Yours sincerely, JOHN SIDDONS Senator for Victoria Is the proposal supported? More than the number of senators required by the Standing Orders having risen in their places- Motion (by Senator Button) agreed to: That so much of Standing Order 64 be suspended as would prevent the senator speaking third in the debate from speaking for up to 20 minutes. Senator SIDDONS(Victoria)(3.05) —by leave-I amend the motion that has been circulated in my name to change one word which was included by mistake. I move the revised motion: That, in the opinion of the Senate, the following is a matter of urgency: `The Government's current strategy of reducing the authority of the Foreign Investment Review Board, which will open the door for foreign companies to buy the remainder of our wealth producing industries at rock bottom prices.' This motion covers what can only be described as the most important issue facing Australia today or ever likely to face this country. We are debating essentially whether Australians are to control their country or whether we are again to be colonised. The Prime Minister (Mr Hawke) said only last Thursday that he wanted to internationalise the Australian economy as quickly as possible. On the basis of the Government's record we can only assume that when the Prime Minister says he wants to internationalise the Australian economy he is saying that he wants to sell out the assets of Australians to foreign capital and overseas interests. Foreign investment has been progressively encouraged by this Government, firstly on ideological grounds and later, in a state of panic, as a way of getting our balance of payments problem under control. Unfortunately, most of the foreign investment regulations are policy matters decided by the Treasurer (Mr Keating). This has meant in effect that it has been possible for the Government to weaken substantially the regulations relating to foreign investment in this country without referring these changes of policy to the Parliament. This is one of the few occasions on which we will have an opportunity to debate what is going on. Foreign investment guidelines in Australia at the moment are virtually non-existent, and this has never been brought to the attention of the Parliament. We saw just two days ago how powerful the socialists in the Victorian division of the Australian Labor Party are. They were prepared to drop the third-ranking Minister in the Government to third place on the Senate ticket and put an ex-member of the Communist Party of Australia in the No. 1 spot. The essential thrust of the socialist ideology, as I understand it, is that they are concerned about who should own the means of production. They believe the state should own it. On this point the Australian Democrats are in fundamental disagreement. We believe that individuals or co-operatives or employee owners or the public should own the productive wealth of this country. We do not believe that the means of production should be owned by the state. At least the socialists have going for them the fact that they are concerned about who should control the means of production. If Australians control the means of production in this country then Australians will control the country. If overseas interests control the means of production in Australia then overseas interests essentially will control this country, and what we say or do in this Parliament will become nothing more than a charade. It is incredible that a Labor Government, which is supposed to represent the interests of working Australians, has travelled now 180 degrees from the central issue of who should control the ownership of the means of production here. Its members are now saying: `We are economic rationalists. We believe the highest bidder should own the productive capacity of this country'. This means ipso facto that eventually the highest bidders for our productive resources will be overseas bidders, simply because in the long term 15 million people cannot hope to outbid the entire world. As soon as an Australian company goes international and is successful and begins to worry a large overseas competitor, all that competitor has to do is turn to Australia and buy out the company that is causing the trouble, generally for an amount that, in relation to the competitor's size, would be purely petty cash. I wonder sometimes why we worry about spending money on defending Australia. Who on earth would attack this country when all that attacker has to do is come in and buy it up, not surreptitiously but with the open invitation of the Government? The Government is saying: `Come and buy up our assets'. This is a disastrous course for it to be adopting and one that will have to change. I have spent a lifetime working day and night building up an Australian enterprise of which I am proud and of which the other employee owners are proud. Our motivation over all those years was simply that we were helping to build an enterprise that would strengthen the development of this great country. Our watchword was `achievement'. Financial rewards were always secondary considerations. The Government is suddenly saying to all those people-a whole generation-who put so much effort into establishing the wealth-producing enterprises of this country: `Don't worry about doing that any more. We are perfectly happy for you to sell out these companies to the board rooms of Japan, the United States of America, the United Kingdom or wherever. We do not care who owns this country's productive wealth'. Australia can never be a great nation while it is subservient to foreign masters. That is the essential reason why this Parliament should revolt at what the Government is doing. As Australians, we should be prepared to make any sacrifice to protect the ownership, integrity and independence of this country. It is significant that it was the Liberals, under Mr McMahon, who introduced the foreign takeovers legislation. Mr Fraser later set up the Foreign Investment Review Board. I will be interested to hear what the Liberals' attitude is. Are they still concerned about who controls Australia, or has the Liberal Party of Australia been so infiltrated by radical free marketeers that it no longer cares who owns this country's productive wealth? The proposition which is most frequently cast around at the moment is that we must sell off our assets to finance our trade deficit. This can only be described as the ultimate in idiocy. Rather than addressing the economy's fundamental problem-the balance of payments-we are to solve it by selling off our assets to cover our cash flow problems. That approach is not only morally wrong, because eventually we will have no say in what Australia's direction is, but also economically nonsensical. Overseas investors bring in their money as a once-off cash flow-that is, the money to buy an enterprise comes in once-but, once the enterprise is bought, there is a continual flow outwards from Australia as the dividends from that enterprise continually go back to the foreign owners. No overseas investor would buy a company without planning to get his money back in about three years. It is a short term approach to think that we can sell off our wealth-producing assets and solve our balance of payments problem in that way. When we look at the figures it becomes obvious that we will not succeed with this policy. Income payable abroad due to foreign investment in this country has skyrocketed from $2,884m in 1982-83 to $6,303m in 1984-85-a three-fold increase in the money flowing out of Australia to service the assets that have been bought by foreign interests. Senator Parer —That is not dividends. Senator SIDDONS —That is servicing the dividends. The position is doubly critical now because the dollar is at rock bottom levels. If we do not do something about controlling the selling of our assets, there will be an enormous attack on those assets and they will be bought at very low prices. To illustrate this point, let us consider a Japanese company with, say, 10,000 million yen to invest in Australia. In 1974 that 10,000 million yen would have bought an Australian company worth $24m. Today it would buy an Australian company worth $107m. We are selling our productive resources at rock bottom prices. The Australian Democrats are not, of course, saying that there should be a blanket ban on foreign investment. We are simply saying that it is vital for Australia to regain control of the economy. We would like much greater attention to be paid to how the money that flows into this country is invested. If it is invested in productive resources and new industries, it will eventually help our balance of payments, but if the capital which flows into this country simply takes over an existing company that will not help our balance of payments one little bit. One often hears the argument that, without foreign capital, Australia would not have the capital to develop its enterprises. Over the past 20 years, Australians have supplied 90 per cent of the capital required to develop this country. The problem has been that most of that capital has gone into building houses, roads and other infrastructure, and that we have let foreign capital move in to existing companies and let ownership of those companies move outside Australia. The whole foreign investment debate has been carried on in terms of bland macroeconomic arguments about the balance of payments. The strategic side of the equation, which is the important side, has been virtually completely ignored. We must consider one very important aspect: If we wish to have a strong export oriented manufacturing and servicing industry, we must have greater Australian ownership. The first thing a foreign-owned Australian subsidiary does is become involved in export franchises. Foreign owners always like to have their research carried out at their head office overseas. There is no doubt that our poor export performance with manufactured goods and our poor research and development performance have been due to the fact that Australian ownership of Australian industry has fallen dramatically. Australia is one of the most foreign dominated economies in the Western world, matched only by Canada. The United Nations Committee on Trade and Development has estimated that 40 per cent of world trade is conducted on an intercorporate basis-that is, components are transferred between subsidiary companies around the world. This means that, if Australia is to be an exporter of manufactured goods, it must develop multinational Australian-owned organisations. In that way, we will be able to move components from one subsidiary to another and obtain the benefit of that international trade. Multinational companies always think in terms of the best outcome for their global operations. Profits always flow back to head office; they are not generally retained to any great degree in the subsidiary company. We have a sad record of Australian companies which have been brave and adventurous and which have developed international markets being taken over by foreign companies. Nicholas Kiwi is a case in point. In the 1960s, it was regarded in ethical drug manufacturing circles as a respected international competitor. Recently, it was taken over and it is now owned by Sara Lee of the United States of America. Repco, another company which was export oriented, was recently taken over by New Zealand interests. There is no doubt that any successful exporting Australian company will be subjected to international attack. As soon as it is successful, an attempt will be made to buy it and take it over just to control its export activities. Unless we face up to the needs for controls on foreign investment in our industries, we will never be a substantial exporting country of manufactured goods. It is very interesting to look at a country such as Sweden which is about half the size of Australia in terms of population. Whereas 10 per cent of that country's industries are in foreign hands, the figure in Australia is close to 50 per cent. Yet Sweden can develop very vibrant and successful export companies which are going from strength to strength. A survey conducted recently of Japanese subsidiary companies in Australia showed that virtually no export from Japanese subsidiary companies in Australia was attempted. It also showed that virtually no research and development was attempted in Australia by Japanese companies. Although these are economic considerations, I get back to the fundamental point that unless we control our wealth producing industries, Australians will never really have control of their country. We will develop a branch mentality and we will be concerned more with taking orders from overseas bosses than making decisions of our own and trying to do what is in the overall interests of this country. Australia exports about 20 per cent of its manufactured goods, while most European Economic Community countries export something like 80 per cent of theirs. So we have a long way to go; we are very far behind what has been achieved by other countries. I hope that the Liberals will see the importance of the issue of controlling foreign investment in Australia. They took up the issue first in this country. If we are going to have a complete open door mentality, Australia undoubtedly will finish up being colonised just as surely as it was in the beginning. Senator PARER(Queensland)(3.23) —We are debating today an urgency motion from the Australian Democrats, the thrust of which is as follows: The Government's current strategy of reducing the authority of the Foreign Investment Review Board, which will open the door for foreign companies to buy the remainder of our wealth producing industries at rock bottom prices. At the outset, let me state that the Liberal-National coalition cannot support this urgency motion, which is a desperate attempt by desperate Democrats to whip up cheap emotionalism. It does not recognise the critical economic situation in which Australia finds itself today. Australia has always relied on foreign capital. The question is: How do we want that capital? Do we want it in borrowings, the interest on which must be repaid on a regular basis-and, of course, the capital must in time be repaid-or do we want it by way of equity where the investor takes the same risks as do his Australian counterparts? Notwithstanding this urgency motion, the Democrats cannot make up their minds on this simple question. Over the past year we have heard Senator Siddons repeatedly say that interest on overseas borrowings should not be tax deductible for Australian companies making investments in Australia. Now he is saying that we should prevent overseas capital being directed to equity investment in Australia. I believe that economic realists in the Government, such as, I imagine, Senator Walsh and probably Senator Richardson, who will follow me in this debate, would be the first to admit that encouragement for Australians to borrow overseas rather than encouragement for foreign equity investment was a mistake. The Foreign Investment Review Board had its origins in the Foreign Investment Committee set up in fact by the Whitlam Government. Prior to that time the only real requirement for a would-be investor was to seek Reserve Bank of Australia approval to enable that investor to bring funds into Australia. The late 1960s and early 1970s were the beginnings of the great mineral developments in the Pilbara and the Bowen basin. It is too horrific to contemplate where we would be today without those developments. The Whitlam Government initiated a political campaign of hate against the foreign equity of those companies. We heard emotive phrases such as `ripping and raping' the country. I heard similar emotive phrases from Senator Siddons today, which rather surprised me. He said things such as `we are in danger of being colonised' and `we must control our means of production'. I would like to ask Senator Siddons: Who votes in this country, who elects governments and who makes the laws? It is not the people who invest here, whether they invest by way of equity or loans. This campaign in the 1970s by the Whitlam Government culminated, of course, in the shady Khemlani loans affair, the justification for which was to buy back the farm. At that time it cost the Americans $1.49 and the Japanese 440 yen to buy an Australian dollar. Yet there was an enthusiasm to take equity investment in Australia. The aim of the FIC was to tell foreign capital that equity investment was out and borrowings were in. Based on emotion, it set in train a series of managerial decisions which continue to haunt us today. This and export controls, which were also aimed at foreign investors, prevented projects developing and those projects still remain undeveloped today. Others were postponed until the defeat of the Whitlam Government and there are many examples of that, at a great cost to this country. In that period investment in the great mineral industry fell off. I can recall at the time trying to encourage the company I was with not only to maintain but to increase its exploration programs. As everyone knows, exploration is to a mineral industry what research and development is to other industries. We approached the then Minister for Minerals and Energy, Mr Connor, and asked the simple question: What will happen if, as a result of continuing exploration, a major resource is discovered? His response was `Keep exploring' and, if successful, he would then determine whether the resource could be developed. What an encouragement for continued investment in this country at that time! Another example is the Newlands mine operated by Mount Isa Mines Ltd. That company had the opportunity to develop Newlands and, with a Japanese partner which also happened to be a buyer, provide the infrastructure, which they were prepared to pay for, for town water, power, roads, rail and a port at Bowen. The FIRB regulations prevented the foreign equity and Mount Isa Mines was forced to borrow overseas an amount of the order of $1,000m. The market turned down, the dollar collapsed and the company was lumbered with enormous regular interest payments which would not have been necessary if that $1,000m could have been in equity. That is not to say that Mount Isa Mines was giving up control; that was not its proposal. That is the sort of problem which the Democrats apparently wish to perpetuate. It is the sort of problem which the Government, or at least some members of the Government, now recognise. It is something that must not be permitted to occur again. That company, Mount Isa Mines-and many others-has foreign debt problems through no fault of the company, which had its commercial decisions distorted by government interference. What is the extent of our foreign debt problem? The Australian Democrats would be well advised to read a most opportune article in today's Australian Financial Review by Dr David Clark, a senior lecturer at the University of New South Wales School of Economics. For the benefit of the Democrats, I will repeat some of the facts I provided in a recent debate on the Loans Bill, many of which are included in the Australian Financial Review article. As at the end of June this year, gross external debt totalled $86 billion, which represents over $5,000 for every man, woman and child in the country. Over the past year interest and loan repayments amounted to about $1,000 for every Australian. A leaked Treasury document estimated that the gross debt is likely to exceed $100 billion by the middle of 1987. Mr Will Buttrose of Lloyds Bank expects it to be about $110 billion by that time. By the end of 1986 about half of our current account deficit will be made up of overseas debt servicing obligations. Five years ago, only 8 per cent of our export income was needed to repay borrowings and meet interest repayments. It has been estimated that by June 1987 that figure of 8 per cent of exports will have increased to 42 per cent to service our overseas borrowings. Naturally, we do not compare favourably with most other countries in the world. That was one of the factors that brought the admission from the Treasurer (Mr Keating) that we were heading towards being a banana republic, and the comment from the Prime Minister (Mr Hawke) that we face a crisis akin to war. Dr Clark makes the point that we are not far removed from the debt situation which has required the International Monetary Fund and the World Bank to intervene in other far less developed nations. The policies of the Hawke Labor Government have caused Moody's Investor Services Inc. to reduce our AAA rating as a borrower. In only three years of the Hawke Labor Government, our gross debt has increased from around $36 billion in 1983 to an estimated $100 billion-plus by 1987, and net external debt has increased from just over $20 billion to over $80 billion in the same period. Total debt servicing costs have increased from about $12 billion to nearly $20 billion in the same three years. Why has our foreign debt increased at such an alarming rate? Why has the private sector, which is responsible for the largest chunk borrowed overseas, moved so much into foreign debt? I will not go into the government sector today as this urgency motion is aimed at the private sector. Until the mid-1970s borrowings were only a very small part of net private capital inflow. The vast majority was in equity capital. Much as the Democrats would like us to believe otherwise, a leading banker has estimated that the blow-out in private foreign borrowings has not been to finance takeovers. Between 1983 and 1985 borrowings for that purpose totalled less than $4 billion, or less than 20 per cent of the increase in gross private foreign borrowings. One of the many reasons for the blow-out has been the Foreign Investment Review Board, which has encouraged Australian companies to borrow off-shore. Another major cause has been the devastatingly high domestic interest rates imposed upon the Australian community by the Hawke Government. Apart from the classic example I gave previously of the Newlands Mount Isa coal mine, the time and expense required to obtain FIRB approval for a direct investment proposal, and the delays involved, encouraged Australian companies to borrow rather than seek foreign equity partners. There is no doubt that foreign equity can mean repatriation of dividends, as has been pointed out by Senator Siddons. In a growth period those dividends can also be reinvested in Australia. However, the point is that dividends can be repatriated only if a profit is made. There is no requirement to repay the principal. With borrowings, the interest must be repaid on a regular basis whether the venture makes a profit or not. The absence of profit, where borrowings are concerned, means rollover or renegotiation of loans, which can be totally devastating if the value of our dollar is then lower than it was when the loan was first negotiated. There have been many examples of that. That very real problem does not exist with equity investment. Briefly, I have some comments about the functions and practical operations of the FIRB. As honourable senators will know, the FIRB was set up to assist the Government in the administration of its foreign investment policy. This is done by an examination of proposals by foreign interests wishing to invest directly in Australia and by explaining Australia's foreign investment policy to business groups. The average time taken to process all proposals was 43 days in 1984-85, which was 10 days longer than in 1982-83. This does not include the time and money involved in preliminary discussions which can take place prior to formal application. That time can range from three to six months. The delay imposes considerable costs on applicants, even before any investment takes place. There have been occasions of proposals being found to be exempt from review. Such mix-ups are not only costly but also totally unnecessary. In 1984-85 some 1,300 proposals were approved, with a total value of $4.5 billion. Of those 1,300, 40 per cent were approved subject to conditions, and 34 were rejected. If 34 of the 1,300 were rejected, over 1,200 were approved. The average time delay was 43 days. If one wishes to assess the real cost, one has to take into account the time factor, which was between three and six months. The 1980s have seen a major change in the composition of foreign investment inflows into Australia. In the five years to 1978-79, direct investment accounted for 70 per cent of total foreign capital coming into this country; it now accounts for only 25 per cent. On the other hand, portfolio investments have risen from an average of 29 per cent of total foreign investment in Australia over five years to 74 per cent. Within the portfolio category, inflow into equities has fallen from 23 per cent in 1979-80 to about one per cent. This reflects interest rate differentials which have favoured overseas borrowings. Borrowings have risen from 27 per cent of total foreign investment to 73 per cent. I refer to a graph showing levels of foreign investment in Australian enterprises, broken down into debt and equity investments, between 1975 and 1985. I seek leave to have the graph incorporated in Hansard. The ACTING DEPUTY PRESIDENT(Senator Townley) —I do not think it is possible to incorporate such a graph in Hansard; so we cannot give you leave to incorporate it, much as we would like to. Leave not granted. Senator PARER —It is apparent that the Government has at last recognised the negative effects of the Foreign Investment Review Board, particularly the requirements which have forced investors to seek overseas borrowings rather than equity investment. The Government's foreign investment policy has been identified as a major factor that is responsible for enormous foreign debt. The Liberal-National Party coalition does not support the Australian Democrats' urgency motion, which would serve only to compound an already serious and dangerous level of foreign debt in Australia. Senator RICHARDSON(New South Wales)(3.40) —Had I been asked when I was at university to make a speech on the matter of urgency introduced by Senator Siddons I would have totally agreed with him. The problem in taking that course is that I left university about 16 years ago, and I grew up. What I discovered when I grew up and went into the real world was that the sort of jingoistic nonsense spoken by Senator Siddons bears no relation to the Australia of the 1980s. Any attempt to turn back the clock to pretend that we are not part of the wider world community will fail and there will be great cost to Australian workers. I cannot support such a concept. I wish to reply to some of the comments made by Senator Parer, who got his wires crossed. I have been critical of honourable senators from Tasmania and Queensland, States which have their problems, but on this occasion Senator Parer spoke about the scourge of foreign debt, the amount by which it has risen, and compared figures in 1981 with what they are likely to be in 1987. However, he failed to point out that the reason that we have had a huge growth in foreign debt in this country is that at the end of 1980, in yet another attempt to win an election, Malcolm Fraser and John Howard talked up a minerals boom. That boom, which lasted all of five minutes, was paid for by foreign debt. Australian companies went all over the world borrowing lots of money for lots of projects, some of which never got off the ground. It is those opposite who put Australia on the path to an increasing foreign debt. Fortunately, it was a Labor government that did something about it. I agree that foreign debt is a significant problem. It will never get fixed up, however, if the best we can do is to talk up sectors of the economy and ask them to borrow money. What we have done in the past few months is to bring about changes in conditions. I wish to quote from a Fairfax publication-I have never shrunk from doing so-namely, the Australian Financial Review. An article on 22 July this year set out details of the changes in government policy for the Foreign Investment Review Board, which were announced on 28 July. The editorial on that date made a number of points and I wish to take a few minutes to go through them: The fact is that foreign ownership has not represented a threat to Australian independence in the past, and there is no credible threat presenting itself, notwithstanding the low level of the dollar. Australia desperately needs more, not less, equity investment. I say to Senator Siddons that it is very hard to argue with that. All the facts bear it out. The editorial continues: . . . Australia's restrictions on foreign investment are more onerous than most other countries. While most maintain some supervision of the level of foreign ownership, few, if any, have a law against equity above a certain percentage without government approval. That is also worth knowing, because again I say to Senator Siddons that when one checks around the world one finds that that is true. That is another lesson for the Liberal Party. That Party when in government talked long and loud about deregulation, but did nothing. It has only discovered that it should do something about the suggestion since this Government started doing it in the last couple of years. It is all very well for Senator Parer to talk about the wonders of de- regulation. Where was he during all the years of Fraser Government when it did nothing? He was probably trying to obtain pre-selection, which took him a long time to organise. The editorial further comments: . . . what statistics there are about the proportions of foreign ownership and control for major sectors of the economy do not support the belief that foreign influence over Australian industry is increasing. Whenever big changes are required in any section of Australian life, in industry, the unions or anywhere else, one always faces the entrenched opposition. The major part of the editorial goes on to explain where that opposition comes from. It reads: Inefficient management who want a quiet life in protected home markets need to be threatened, not shored up. The trouble with bodies like the Foreign Investment Review Board is that they give bad management an additional layer of protection. They also inhibit the growth of an efficient, export-oriented manufacturing sector which is desperately needed in Australia now that domestic manufacturing can no longer be parasitic upon agricultural and mineral exports. That is the crux of the problem. The Government had to deal with the fact that all that has happened by making it harder and harder for people to invest in our manufacturing industry is that it has propped up the inefficient ones and made certain that more and more industries close down. Manufacturing industry was never discovered by the Liberals when they were in government. They had never heard of it and did not want to know about it. They were interested only in the mining industry and in agricultural products. They forced Australia into an unrealistic reliance upon those commodities. This Government is trying to change that balance and to improve the mix. The changes that were announced at the end of July are related to that policy. I wish to go through the changes because nobody in this debate had spoken of what the Government had actually done. There seems to have been a fundamental misunderstanding, certainly on Senator Siddons's part. First, there was a major relaxation of the foreign investment guidelines to be implemented relating principally to manufacturing industry and to real estate. That was to facilitate equity investment in both those sectors, to try to correct the problem of which Senator Siddons and Senator Parer have spoken. Secondly, the Government decided to abolish dividend withholding tax and branch profits tax from 1987 to coincide with the introduction of the full imputation system. Thirdly, one of the three measures announced was the closing off of interest withholding tax exemption; that was to be reversed. All these steps were taken to facilitate foreign equity investment and continued access to European and other capital markets through widely spread securities. Fortunately, we have already seen some successes in that program. They flow from the Government's desire to ensure that foreign investment policy is more flexible-more flexible than it has been under the Hawke Government in the last three years and much more flexible than it ever could have been under a Fraser government, which was always a government for regulation. As well as removing a regulatory burden on companies, it makes it easier for foreign investors, not just on their own but in partnership with Australian firms, to pursue opportunities in manufacturing and service activities. The sharp improvement in our competitiveness brought about by the fall in the dollar should enable foreign firms and our own companies to capitalise on that advantage. Let us look at the details of change in manufacturing. This is the area that interests me most. If we are to have a truly structured Australian economy that can compete with the rest of the world and provide increased standards of living for Australians, that is the sector we have to look at first. The requirement for investors to satisfy economic benefit and Australian equity tests is to be suspended. However, under the terms of that policy suspension, investment proposals will be approved automatically unless they are judged to be contrary to the national interest. Senator Siddons should take note of the national interest. Senator Parer —What is that? Senator RICHARDSON —Senator Parer would not know what the national interest is, that is for certain. Fortunately, I have an idea. Senator Siddons should take note that those national interest provisions are still intact; they still have to be satisfied. That is what the Foreign Investment Review Board has to do. Under the changes the rules for foreign investors to notify the Foreign Investment Review Board of their intention to invest remain the same-that is, a single foreign investor planning to take more than a 15 per cent share in a local company or a portfolio investor planning to go beyond 40 per cent has to notify the FIRB before proceeding. It is necessary for that to be maintained because we must ensure that the situation can be monitored. If the dire consequences which Senator Siddons predicts, but which there is no evidence to conclude are happening now, were to happen, the Government would be in a position via the Board and via the maintenance of those provisions to examine the situation and to ensure that it is constantly monitored. The fact is that proposals no longer will have to satisfy the twin tests of economic benefits in Australia. Those proposals will gain automatic approval, provided they are not against the national interest, which will ensure a dramatic increase in equity in Australian industry. That is what everyone in the Parliament wants, which is why the fact that this matter of public importance came up at all today was such a surprise. The second area into which the Government moved was real estate. There was a substantial liberalisation of the policy in this area, as there should have been. I took up the cause for a number of very large developers who had problems under the previous regime of investment controls. The reason they had problems was that very often investors, particularly the Japanese, who were prepared to pay very high prices for Australian real estate, were prevented from doing so. That meant that a number of very large development and building companies, particularly in New South Wales and Victoria, had to lay off staff, because the only real prospects they had of selling some of their developments were to foreign investors. As these things became more obvious to the Government over time, the Government did the right thing and brought about the changes. Under the previous policy, acquisitions of real estate of $10m or more for development and retention or development and sale to Australians were generally approved only if they provided 50 per cent Australian equity. That provision was abolished. It will still be the case that applications will be subject to a national interest test which the FIRB can administer, but it will mean that there will be an opportunity for our construction industry to grow. One of the sectors that will always be the backbone of an economy and will always be one of the first indicators of recession or good times is the construction industry, and it needs a boost of this kind. Under the previous policy a stricter test than usual was applied to acquisitions if service industry real estate-proposals for the status of new hotels, tourist resorts, et cetera-was involved. That normal requirement of at least 50 per cent Australian equity in joint Australian-foreign control was abolished. That will be a boon for development in that area. Having looked at the issue, not just since 28 July when it was announced but for the past couple of years, as more and more people in the industry have come to complain, I cannot see why there is any problem with that whatsoever. It will not mean, for instance, that things will be prevented from going ahead; it will mean that more Australians can be in jobs because projects that would never have got off the ground without that foreign equity will now be given the nod, so more and more Australians will be in employment and the economy will be able to start ticking over. That is what this Government is about. I really did not see anything in the contribution of Senator Siddons that even began to touch on that aspect of the changes. Previously there was a virtual prohibition on acquisitions of developed commercial real estate. It had been very difficult for foreign investors in that area. Now that a capital gains tax is in place, why have that provision anyway? Profits made by foreigners can be taxed, so there are plenty of gains to be made by governments in their revenues. There is considerable interest on the part of overseas pension funds in this area and time and time again they have been rolled back. I hope that these changes will lead to a great number of them looking once again at Australia as a place for investment. When it can be demonstrated that 50 per cent Australian equity participation is not available on reasonable terms and conditions, investment will be approved-again, unless it is contrary to the national interest, which Senator Parer has difficulty in understanding. Senator Parer —You still haven't explained it to me. Senator RICHARDSON —As I said, trying to explain the national interest to Senator Parer would be a pretty futile exercise. In the six minutes left to me to touch on the real topic of today's debate, I could not attempt it; in six years I could not attempt it. To encourage foreign investment in Australia and to reduce tax distortions which favour debt over equity, the Government has decided to abolish the dividend withholding tax and the branch profits tax. This is to reverse the trend to increase debt as distinct from equity, which got a rocket-like start under the Fraser-Howard Government. We have taken a direct step to reverse that situation and to encourage it to go back the other way. The first point I want to make about the motion, in the light of what the changes are rather than what Senator Siddons thought they might have been, relates to the inference that if the authority of the Foreign Investment Review Board is reduced in the way it has been by relaxing some of the guidelines, Australian companies will be sold at rock bottom prices. I do not understand the connection. Obviously the sale of any Australian company or asset will still be subject to the ordinary commercial negotiations that go on, as I am sure they do when Senator Siddons's company is taking over another company. He will still be able to negotiate with the owners of it and to set a price. That will still happen, whether the pursuer is a foreigner or an Australian, so the idea that in some way the relaxation of these controls affects price is beyond me. Senator Siddons —I did explain it. Senator RICHARDSON —Senator Siddons did not explain it very well, because it is a nonsequitur; it just does not happen. The price at which a company's assets are sold is, obviously, a matter between the buyer and the seller. That is the way the world goes around, always has and always will. The suggestion that foreign investment in all cases leads to takeovers is wrong. Obviously there will be a lot of investment into new companies and new directions, and that is something to which all of the Government's deregulations over the past couple of years has been directed. We want to see new firms established. I have no doubt that joint venturing will go on apace under the new guidelines, which was one of the principal reasons for the Government moving in the first place. The changes related to the manufacturing sector are largely designed to streamline the application process, not to reduce the authority of the Foreign Investment Review Board. One of the great complaints from foreign and domestic companies which had applications before the Foreign Investment Review Board was the length of time it took to get a decision. That complaint has existed for many years-it did not happen yesterday, it went on and on. The delays were not the fault of the Foreign Investment Review Board but were because the regulations were of such a complex nature and the test of such a high standard that it took a long time to assess applications; a lot of work had to go in. What we have done will mean that applications which go before the FIRB, most of which are fairly routine, can be dealt with easily and decisions can be made quickly. One thing is for sure: If foreign investment is delayed it will go somewhere else. There is no doubt that plenty of places around the world are crying out for it and we have missed the boat for too long. Hopefully we can get on it now. Considering the acute problem we have with our balance of payments at the moment, the Government policy as announced on 28 July is the only appropriate response. The current account deficit of $14 billion a year, which is 6 per cent of gross domestic product, has to be covered by net capital inflow into Australia-there is no other way. We need to get that capital in, but it will come always in two forms; equity or debt. When foreigners put up the share capital for new or existing business in Australia, or buy real estate or other physical assets, we are getting equity investment, which is what this game has to be all about. In conclusion, I go back to that editorial of Tuesday, 22 July, in the Fairfax publication, the Australian Financial Review. It says: . . . the immediate problem facing Australia is not the control of foreign investment, but the lack of it. To agonise about the institutional and policy means of controlling, limiting or excluding foreign investment which is not in any case being offered is an absurdity only too typical of Australian economic policy. . . . The real threat to our future economic independence is not foreign ownership and control of our industry, but the lack of world interest in the Australian economy, despite its enormous natural endowments. That is the real problem. It is not a matter of being taken over, it is a matter of interesting anybody in it at all. The headline of that editorial is `There's no-one at the door, let them in'. Senator SIDDONS(Victoria)(4.00) —in reply-In summing up this debate I would like to make clear some of the misstatements of Senator Richardson and Senator Parer. Senator Parer began by saying that this was an attempt by the Australian Democrats to whip up an emotive issue. He did not address the fact that two Liberal Prime Ministers, Mr McMahon and Mr Fraser, both thought it was necessary to have regulations and laws in this country to control the direction of foreign investment. So it escapes me why the Liberal Party is now saying, through Senator Parer, that this is an emotive issue. It has not been an emotive issue for about 10 years because we have had regulations to control forforeign investment. These regulations are now being dismantled, and we should address the consequences. Senator Richardson made great play of the fact that he is concerned about jobs. He suggested that if we did not have investment, expansion of the job market may be held back. Nobody-certainly not the Democrats-is saying that there should be any discouragement to foreign investment in new enterprises. If foreign interests want to start up a new business, whether it be a mine or a factory, obviously it is good for the country. They may be prepared to risk capital in enterprises in which local interests are not prepared to risk it. That is a good thing. The very structure of the Foreign Investment Review Board covers that situation. Where foreign investment can be seen to be constructive and developing the potential of this country, of course it should go ahead; but where foreign capital is used to take over existing companies that are performing profitably and paying dividends to Australian shareholders there is no advantage to the economy in having those successful enterprises suddenly in the hands of foreign interests with dividends from those enterprises all of a sudden flowing overseas rather than into the Australian economy. I believe that Senator Richardson's comments were not very helpful and they did not address the fundamental point being made. He also went on to say that he could not see why at present Australian businesses were subject to being taken over at rock bottom prices. I thought I had explained that. For example, a certain number of Japanese yen can buy much greater equity in an Australian company simply because of the devaluation of the Australian dollar. The falling exchange rate has reduced such costs to foreign interests by roughly half compared to a few years ago. So it is much more profitable for foreign companies to buy Australian companies at the depreciated value of the Australian dollar. I thought that would have been clear. Neither speaker addressed the two central problems. First, subsidiaries of foreign companies do not, by and large, export to any great degree. I did not have time to cover previously the case of the Ford Motor Co. of Australia Ltd. It wanted to export Falcon cars to the United States of America but was stopped from doing so by its parent company in the United States because that would have affected the market for motor cars in that country. That is typical of what goes on. No Japanese subsidiary companies operating in Australia export to any degree at all. Secondly, no foreign subsidiary companies involve themselves in research and development to any degree. That is almost always carried out by the parent company back home, where it can be watched and directed. I refer also to successful exporting countries with similar populations to Australia's-countries like Sweden and Switzerland, which have very successful organisations exporting around the world. Nestles, and the Volvo car company in Sweden, are cases in point. Senator Archer —Throw them out. Is that what you are saying? Senator SIDDONS —I am simply saying that foreign subsidiaries do not have an open go to export their products. Controls are placed on their export franchises by parent companies. If companies are Australian owned, of course, they can export to wherever they like. I was pleased to hear Senator Richardson say that the Foreign Investment Review Board would be retained and that overseas investment in Australia would be monitored by that body. It is reassuring to hear that. That matter was raised with Senator Walsh a few days ago and he was unable at that stage to give any assurance that the Foreign Investment Review Board would be retained by the Government. That could be good news. Question put: That the motion (Senator Siddons's) be agreed to. The Senate divided. (The President-Senator the Hon. Douglas McClelland) Ayes . . . . . . . . . . . 7 Noes . . . . . . . . . . . 52 —— Majority . . . . . . . . . 45 —— Haines, J Sanders, N. K. Harradine, B. Siddons, J. R. Macklin, M. J. (Teller) Vigor, D. B. Mason, C. V. J. Alston, R. K. R. Knowles, S. C. Archer, B. R. McClelland, DouglasAulich, T. MacGibbon, D. J. Baume, Michael McIntosh, G. D. Baume, Peter McKiernan, J. P. Bjelke-Petersen, F. I. Maguire, G. R. Black, J. R. Messner, A. J. Boswell, R. L. D. Morris, J. Brownhill, D. G. C. Newman, J. M. Carrick, Sir John Parer, W. R. Childs, B. K. Puplick, C. J. G. Coleman, R. N. Reid, M. E. (Teller)Colston, M. A. Richardson, G. F. Cook, P. F. S. Robertson, E. A. Crichton-Browne, N. A. Sheil, G. Crowley, R. A. Short, J. R. Devlin, R. Sibraa, K. W. Durack, P. D. Tate, M. C. Elstob, R. C. Teague, B. C. Evans, Gareth Townley, M. Foreman, D. J. Vanstone, A. E. Giles, P. J. Walsh, P. A. Guilfoyle, Dame Margaret Walters, M. S. Jessop, D. S. Watson, J. O. W. Jones, G. N. Withers, R. G. Kilgariff, B. F. Zakharov, A. O. Question so resolved in the negative. Senator REID(Australian Capital Territory)(4.13) —I move: That the Senate take note of the paper. I shall not dwell on this report unduly as it has had a considerable amount of publicity since it was released. As honourable senators will know, the report points out the difficulties of protecting Canberra from bushfires. These difficulties result largely from the nature of the city, the way it is laid out. There are various satellite towns, all of which are bordered by bushlands, and there is considerable open space within the city itself. As a consequence of a very wet spring, when, of course, Canberra looks its most beautiful, there is the risk of fire in the summer. It is regrettable that a number of the fires in recent years have been caused by people deliberately lighting them. In some cases I think they could have been due to children being careless with matches, but in other cases, clearly, fires were deliberately lit. That is a matter for concern and regret. The Australian Capital Territory Bush Fire Council does a remarkable job in looking after Canberra and I wish to commend its members for the work that they do. I wish to commend to the Government that the Bush Fire Council be retained in its present form-that is, comprising a number of volunteers and some paid firemen. We have been served well by this Council in conjunction with the Australian Capital Territory Fire Brigade, because there are areas of Canberra where the activities of the two organisations overlap. Without going into the report in great detail, I just remind the Senate that, as a consequence of the very bad bushfire season in 1983 and in early 1984, the members of the Australian Capital Territory Bush Fire Council were made Canberrans of the Year for the work that they had done. They are much appreciated in this community and there is little doubt that they will continue to be needed as a very vibrant and viable force during the summer season in Canberra. They, of course, are involved in hazard reduction, which is an important part of the process, but in spite of the best efforts in that area there are times when bushfires occur quite near to the city and our reliance on the skills of these men will continue. Question resolved in the affirmative. Senator ARCHER(Tasmania)(4.15) —I move: That the Senate take note of the papers. I would like to start off by paying credit to Dick Austen, the Chairman of the Australian Meat and Live-stock Corporation, for having injected into the Corporation a change of attitude. The Austen philosophy is now really showing through in the operations of the Corporation and the operations of the Australian Meat and Live-Stock Research and Development Corporation. The main change is that it has been built on a consumer-led and not a production-led arrangement. The basis now is to give the customers more of what they want. In the past we were very much inclined to produce meat in Australia and then hope that somebody would buy it. That seems now to have changed. The objects of the Corporation and the research and development group are to show the producers and the processors how to achieve what the customers are after and to improve the techniques and requirements to do it. The year under review was a difficult year. Not only were there problems with the international market, but there were problems with the season as well. I cannot see that the marketing situation will get a lot easier. I believe that it will require ever so much more expertise than we have exhibited in the past. The unloading of surplus stocks, from the European Economic Community in particular, has been a major problem. I hope that these stocks have been reduced somewhat, but I believe that we will still see a major problem in that area for some years to come. The dollar devaluation in recent times has helped and provided some offset benefit. However, in spite of the difficulties there was an overall figure of almost one million tonnes of exported meat, and there was improved access to several of the markets that we have enjoyed in the past. I think it is important to note that the stock numbers of both cattle and sheep increased during the year-cattle to 23.2 million, sheep to 156.2 million. I believe that the producers ought to keep an eye on those figures and make sure that they get them to a level which will optimise the market but not exceed it. I think it is also worth noting that mutton sales have gone up, but live sheep sales have gone down. Besides that, of course, lamb has turned out to be a very big winner. I see a good future for an extension of the lamb market. The big issues have been faced and that is heartening. This question of consumer orientation and giving the markets what they want has been the main feature, as I have already said. The Corporation has also gone in for computer-aided livestock marketing. I believe that that is of enormous advantage to producers everywhere. All the producers want is to be paid for what they produce. They do not want more and they do not want less, and computer-aided livestock marketing will give them a much better chance of that. There has been a change in the amount and direction of funding in research and development. I think it is interesting to note that the task of improving the efficiency of converting livestock to meat has received an expenditure this year of 20.7 per cent of the funds available compared with 8 per cent in the previous year. With an improved product range and quality, marketability has been increased from 13.1 per cent in 1985-86 to 19.3 per cent in 1986-87. That is the direction in which the industry needs to continue. I think it is very commendable that the direction is so clear in relation to what it is trying to achieve. The research effort has gone for leaner meat, for presentation in merchandising, for curing diseases such as footrot, and for better breeding. It has been a very good year. I believe it is very promising. The drought position in 1986-87 is better than it was previously. I congratulate the AMLC on the results it has achieved for the year. I call on the industry to follow that lead and to make 1986-87 even better. Senator BROWNHILL(New South Wales)(4.20) —I also congratulate the Australian Meat and Livestock Corporation for its performance and for the presentation of this report. It is clean, easy to read and attractive. The importance of the rural industry is well known to most people, although probably not to Senator Sanders. I am sure it is well known to every other senator in this chamber. The important role of the AMLC in promoting meat both here and overseas is also well known. The report highlights areas in which meat exports have recorded the largest annual increase in almost a decade. Both veal and beef shipments are up some 12 per cent, and lamb has re-emerged as the major export industry, showing an increase of 51 per cent on the previous year. The promotional programs, especially the short cuts campaign, are to be commended. As Senator Archer has already said, the computer-aided livestock marketing is an important innovation. Work during the year with the United States of America and the European Economic Community to protect the Australian markets is also to be commended. Senator Archer also mentioned the commencement of in-depth research into the demands and priorities of the beef market in the United States of America and Japan. This will provide a framework for future marketing strategies and promotion campaigns, which has been lacking in our industry for quite some time. I would like to dwell on the short cuts campaign. Recently I was privileged to participate in the short cuts campaign in Canberra. I assure everyone that meat produced in that manner is a delight to eat. I recommend the short cuts recipes to anyone who has not tried them. As part of its research the AMLC found that the housewife wanted something that was easy to prepare, had variety, and provided an awareness of nutritional benefits. That is pretty good. Housewives go home at night and wonder what to cook for dinner, as do many people who work hard all day. They have found that easy with the short cuts recipes. The fact is that 5,500 butcher shops now have these short cut recipes; the material has now been distributed to 1,800 supermarkets, and 18.5 million recipe cards have been distributed. I think that says a lot for what the AMLC has done. I suggest that people try these recipes. Anyone who goes to the local butcher shop and cannot find one of the recipes should go to another butcher shop or should get his butcher to look into the matter. I presume that the people on the other side of the House eat, so it would be a good idea if they tried those short cuts. I commend the Australian Meat and Livestock Research and Development Corporation on its first annual report. The range of projects it has been investigating in the last year is most interesting. One project relates to new lucerne varieties. I ask the industry to look closely at bloat control for the new lucerne varieties and for the existing lucerne varieties and clovers. I commend it for its part in the report. Senator VALLENTINE(Western Australia)(4.24) —As a vegetarian I object to the blatant advertising for these short cut recipes that Senator Brownhill has recommended. I did not think I would ever hear recipes being exchanged in this Senate. It was done in very sexist terms. Lots of men, as well as women, have to decide what they are going to cook for the evening meal. Perhaps the people who are proposing such recipes could give a thought to men who do the cooking and also to vegetarians who do not want to eat any killed food. Question resolved in the affirmative. Senator VIGOR(South Australia)(4.26) —I move: That the Senate take note of the paper. I wish to congratulate the Overseas Telecommunications Commission on its performance this year. With a revenue of $473m and a pre-tax profit of $101m resulting in an after-tax profit of $56m, this is the most profitable year yet for the OTC. Unfortunately, the report does show some real problems, not with the OTC but with the Government. This organisation, which is involved in an industry with growth rates exceeding 20 per cent per annum, that is, the international communications market, needs a large amount of capital expenditure for such capital projects as the submarine cable between Australia and New Zealand-the Tasman 2 cable-and various amounts of money for new switching systems and the upgrading of facilities for satellites. All of this money must come out of its operating capital. Yet the Government which in 1983 set a 10 per cent dividend target for the period 1987-88 is now about to ask not for the 10 per cent which it promised and which would have been something to keep a stable industry going but for 15 per cent. It is trying to bleed this industry of the working capital which could make it possible for Australia to be the hub of the communications systems of the Asian-Pacific region. This blindness, this killing of the goose that lays the golden egg, is typical of the attitude the Government has towards high technology industries such as that which exists within OTC. I deplore it. I believe that the Government must allow organisations such as OTC to re-invest their capital in order to keep Australia ahead in the telecommunications industry and to give it a presence which is really important to our future viability as a world trader. If we do not do so, we will just have to pay overseas companies for the products and the technology we use in our telecommunications system. I also wish to congratulate the OTC on its seaphone system, which has been quite effective, as is claimed in the report, in saving lives. It actually keeps people in radio contact in the sheltered regions around our coastline. The next area that I would like to mention is that of forward planning. Henry Ergas of the Organisation for Economic Co-operation and Development pointed out last year that the lack of adequate investment in telecommunications systems is a threat to Australia's economic development. In the report he said there was a recognition by people overseas that it was possible for Australians to move ahead in this area in which lead times are around 10 years and the initial planning stages may take three to four years. However, having a penny pinching government that is squeezing the research efforts of an organisation such as OTC can be debilitating and can leave us with a real long term problem. The OTC says it needs to undertake capital works of the order of $2 billion over the next 10 years, and it needs to start planning these developments now. In the current climate it is rather difficult for it to do this. So far OTC has paid an average of 62 per cent of its net profit in dividends, leaving it with no spare investment capital. I cannot overemphasise the point that the Government cannot keep milking an efficient organisation like OTC which is doing so well just because the Government cannot manage its own economy. Senator PUPLICK(New South Wales)(4.31) —It is a great pity that in some respects Senator Vigor and the Australian Democrats are not prepared to put their votes where their mouths are on some of these issues. When this Senate was debating the very important issue of taxation of optical fibres some little time ago, in recognition of the significance of the optical fibre industry in Australia and of optical fibres in world communications in general, the Opposition parties sought to move an amendment to the Customs legislation in which the Government was proposing to raise the tariff on optical fibres from 2 per cent to 20 per cent. When it came to the crunch, of owing something about reducing the costs of international telecommunications, the Democrats squibbed; they were not there when they were needed as far as that is concerned, and they played their part in imposing a 10-fold increase in the cost of optical fibres to the telecommunications industry in this country. They come into the chamber today and bleat about the costs and about what the Government is doing, when they had the perfect opportunity to do something to help the communications and telecommunications industry in Australia but they did absolutely nothing about it. When one looks at page 19 of this excellent report from OTC, one can see under the heading `Optical Fibre Network' that plans have been announced this year for a billion-dollar optical fibre cable network linking Australia and New Zealand with North America and Asia. That gives some indication of the magnitude of the costs about which we are talking and the significance of projects that are under way. I believe that Mr Somervaille and the Commission are to be congratulated on a very productive year. I also extend congratulations to Mr Somervaille in terms of his appointment to the newly announced Australian Space Board. I hope that he will be able to bring some of his undoubted expertise to the development of a space industry in Australia, and a space technology industry in particular. The report certainly highlights a great deal of financial progress made by OTC during the year. It had a revenue of $473m; a profit in excess of $100m, of which $42m was provided for income tax and nearly $30m was provided as a dividend to the Commonwealth. The report also indicates a couple of areas in which one would hope that OTC would be a little more adventurous in allowing private sector involvement in the telecommunictions industry in Australia. I look at two areas in particular-the electronic mail area, in which OTC's Minerva computer system has achieved quite a number of successes during this year, and the fact that private systems, in terms of privately leased, privately dedicated communications networks, were OTC's third largest revenue earner, recording $21.3m in sales. I believe both of those areas-the privately dedicated communications network and the electronic mail areas-are ones in which a greater degree of private sector involvement ought to be facilitated and promoted by OTC. The other point that I make is that, with revenue in the order that I have just indicated-that is to say a total revenue of $473m-only $4.5m worth of research and development contracts were awarded to Australian industry. I think OTC could have done a great deal more in that regard. I do not think $4.5m of a revenue base of $473m is particularly outstanding. I would hope that OTC would be playing its part, in what have been otherwise announced as government decisions, to try to source more contract work within Australia, to get more offsets and to get more involvement between government bodies, such as OTC, and Australian research and development facilities. This is an excellent report. It provides a great deal of useful information and certainly helps us to advance the cause of understanding the communications system in Australia. It does, however, give us the opportunity to reinforce what Senator Vigor said about the attacks that the Government has made against OTC and its revenue and to mention the attacks which the Democrats have made against OTC and their capacity to get cheaper telecommunications for Australia. The ACTING DEPUTY PRESIDENT(Senator Giles) —Order! The honourable senator's time has expired. Question resolved in the affirmative. Senator REID(Australian Capital Territory) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator DURACK(Western Australia)(4.37) —I move: That the Senate take note of the paper. This is a very good paper indeed; it has been very well thought out and researched-- Senator Sanders —It is an apology for nuclear power. It is biased. Senator DURACK —It is one which needs to be properly debated in the Senate, not with the irrational interjection that we have just heard from Senator Sanders. It needs to be given proper time in the Senate, not under the pressure that we have at present. The report very fully covers the issues and comes to a number of important conclusions, which no doubt will be the subject of controversy but nevertheless should be given very careful consideration. As the report says: Understandably, the immediate response to the accident has been adverse and there is no doubt that the performance of the industry will be under closer scrutiny than ever before. Nevertheless it would be wrong to draw conclusions from Chernobyl which are subsequently invalidated as a more thorough understanding emerges. This report is a notable contribution to a more thorough understanding. It is one which was commissioned by the Government from the Australian Atomic Energy Commission in the immediate wake of the Chernobyl disaster. It will clearly inform the Australian Parliament and the people about many of the issues. I think one of the most striking things that have occurred since Chernobyl is the degree of international co-operation and efforts to understand scientifically and come to grips with the problems presented by the Chernobyl disaster. Since then there have been striking examples of international co-operation, particularly through and under the leadership of the International Atomic Energy Agency. Within a very brief time it assembled two groups of experts from the members of that Agency to consider new conventions-one on early notification of such disasters and another for emergency assistance in the case of such disasters. Those meetings have been held, and draft conventions have been agreed upon. The governments which have been represented in this process are meeting again this week to consider them further. It is likely that those conventions will soon be agreed on. Australia has played an important part in the meetings and the Opposition has supported those attempts. In addition, there has been a major conference at the International Atomic Energy Agency which the Russians attended and use has been made of the very detailed report which they gave. The task group's report has made use of the matters considered at that IAEA conference. It is clear, as I said immediately in the wake of the Chernobyl disaster, that the implications require rational and informed consideration and debate. The massive problem which it presents for the whole world will be resolved not by hysterical and emotional statements but by calm and reasoned judgments. I said that we must all work in conjunction with the rest of the world to enhance our control over nuclear power. We cannot just wish it away. I am pleased that that approach is being taken by the nations of the world, particularly under the guidance and leadership of the IAEA. The world is facing this major problem. It is being confronted through the processes to which I have referred. Australia has contributed through its attendance at meetings of the International Atomic Energy Agency and other conferences. This report has contributed also. I seek leave to continue my remarks later. As I said, this subject needs to be fully and adequately debated. It cannot be treated fully in the brief time available today. Leave granted; debate adjourned. Debate resumed from 23 September, on motion by Senator Childs: That the Senate take note of the report. Senator CHILDS(New South Wales)(4.43) —On 13 June 1986 the following matter was referred to the Senate Standing Committee on Industry and Trade-an inquiry into certain aspects of Australia's manufacturing industry revitalisation. At that time the Committee noted that it was very concerned about the need for Australia's manufacturing sector to become more internationally competitive and export oriented. The Committee indicated also that it wished to make a tangible contribution to the debate on manufacturing and that it would not try to cover all aspects of this large and complex issue but rather would concentrate on a number of issues that require further investigation and report. The Committee has spent a great deal of time discussing various aspects of manufacturing industry revitalisation with many people and organisations directly involved in this sector. It has become apparent to the Committee during these discussions that Australian attitudes towards and awareness of manufacturing need to be exposed to the widest possible public debate. Today, the world oversupply in agriculture and mining threatens the post-Second World War prosperity which we have enjoyed in Australia. The devaluation of the Australian dollar presents advantages to Australian manufacturers; yet there are difficulties that inhibit this growth. All Australians will benefit from a discussion that identifies the steps to manufacturing industry revitalisation. We must learn from the protection debate of the 1960s and 1970s which concentrated on tariff issues and can be seen with hindsight to have been too narrow, short term and pre-occupied with sectoryal interests. At the same time, the rest of the world erected a complex and sophisticated system of non-tariff barriers in a rapidly internationalised market. As a result, in Australia imports replaced many locally produced manufactured goods and many industries simply disappeared, along with one million jobs. We were able to continue to do this because our agricultural and mineral exports were growing at a sufficient rate to pay for these imports. The story is now vastly different. Everyone is talking about the need to revitalise our manufacturing sector. Unfortunately, it appears that many Australians have developed a negative attitude towards manufacturing. As a community, we are not supportive of the manufacturing sector. It would appear that we have developed attitudes which tend to favour imported goods over locally produced goods. It would appear also that we have adopted a view that there is no long term future for manufacturing in Australia. Therefore, my Committee feels very strongly that these attitudes towards manufacturing require the fullest possible public debate. If we can raise the level of awareness in our community, we will be in a better position to develop a more positive approach to manufacturing in Australia. It is for that reason that the Senate Standing Committee on Industry and Trade has chosen the following terms of reference as its first inquiry into Australia's manufacturing industry revitalisation: The prevailing attitudes to manufacturing and the need to develop an environment more conducive to sustained growth and increased investment in manufacturing. The aim of the inquiry will be to examine community and industry attitudes towards Australian manufacturing. A vital determinant of industry's performance is Australia's prevalent manufacturing environment-that is, employer and employee attitudes to each other, to decision-making, to work practices and to productive efficiency. Many see our present environment as isolationist and adversarial, which only encourages confrontation, irresponsibility and industrial self-destruction. The Committee believes that, if we can gain a clear understanding of these community held views and the views of employers and employees in the industry and why they have persisted, it will be possible to address the issue of manufacturing growth and investment in a more positive manner. I commend the report to the Senate. Senator SHORT(Victoria)(4.48) —As a member of the Senate Standing Committee on Industry and Trade, I would like to speak briefly to support the Committee's report, which was tabled yesterday, and the remarks just made by the Committee Chairman, Senator Childs. The Committee is about to embark on an inquiry which could have very important positive implications for the future of Australia's manufacturing sector. I think that there is general agreement throughout the community and between all major political parties that revitalisation of the manufacturing sector is of the greatest importance for Australia's future. There is no doubt that the manufacturing sector in Australia-certainly in relative terms and, in some important areas, in absolute terms-has slipped considerably over the past couple of decades. The share of the work force engaged in manufacturing has fallen admittedly along with the trend in the rest of the Western world, but so, too, has the share of manufacturing in the nation's total production. I guess that, to some extent, that is inevitable as we move through a period of industrialisation into, as some would say, an increasingly post-industrial world. My view is that those who say that we are about to enter a post-industrial world are writing off manufacturing too easily and far too quickly. There is no doubt that we need to look at many of the factors that concern manufacturing. We need to look at the reasons why it has slipped and we need to look at what can be done about it. Perhaps more than ever before we need, more than many other countries, a revitalisation of our manufacturing sector. We have as a nation relied, particularly for our external trade, on agriculture and mining over many years, and I think that is going to continue. However, it is equally obvious that the prospects for some of those industries in the years ahead are not looking as good as they were. In view of the balance of payments situation facing this country, I believe that the manufacturing sector will be required to play an increasingly important role in our export effort and also in the area of import replacement. That can be achieved only on the basis of internationally competitive industry. Gone forever are the days of believing that we can have a vibrant and vital economy and manufacturing sector, or any other sector for that matter, based on a high degree of protection and assistance. It is interesting to note the fundamental change in the manufacturing industries themselves towards the question of industry assistance over the last few years. Indeed, the manufacturing sector-I welcome this-has led the way in many respects in undergoing a change of attitude towards industry assistance and a recognition of the need to be internationally competitive. That brings me to the question of investment, because we will not be able to produce at all, let alone be competitive, unless we have an environment conducive to investment in manufacturing and in this nation as a whole. For that reason I am very pleased that the Committee's terms of reference for its threshold inquiry will include the need to develop an environment more conducive to sustained growth and increased investment in manufacturing. The reference also includes the important task of looking at the question of attitudes to manufacturing. It is obviously very important to consider community attitudes, attitudes of the work force and attitudes of management. There is a great deal of talk today about work practices and other factors that affect the manufacturing sector, which are all in their own way attitudinal. Surely at the end of the day it is the bottom line that counts. If we cannot have an environment in which investors in the manufacturing sector can make an adequate return on their investment, we are not going to get investment and therefore manufactured output; we are not going to get the revitalisation of the manufacturing sector we need. We have, as the report says, discussed our terms of reference before finalising them with a wide range of people involved with the manufacturing sector-people from companies, industry associations, trade unions and other sources. There is no doubt that, as the report says, competitiveness, productivity, rationalisation, wages, profit shares, export market development, labour skills, education and training, which at the end go to determine the bottom line for a company's performance, are matters that we are going to have to look at very carefully. I welcome the opportunity the Committee will have to do that. I think we will have to be very careful that we do not try to re-invent the wheel by looking at all the things that are being looked at in other forums as well. We have an important role to try to develop a separate niche in the market, if you like, of investigation of these matters. I think we will be very well equipped to do so. I was very interested to read an editorial that a friend sent me recently from the Melbourne Age of 2 December 1952 which commented on a speech which Viscount Bruce of Melbourne, a former Prime Minister, gave before 2,500 people at the Town Hall on 1 December 1952. The theme of his speech was the need for `relevant data on the export industries so crucial to maintenance of our incomes and living standards'. The editorial stated: The picture strongly suggests that this is no time for thinking of sectional gains, but for setting about devising means to avert a widespread collapse that could bring severe effects to all. Viscount Bruce observed that `our costs are out of line with those of the rest of the world, and that for our own safety they must be brought into line'. I had a distinct sense of deja vu when, 35 years later, I read similar comments. They are the sorts of things we need to look at. We all have a great and vested interest in the future and in the revitalisation of our manufacturing sector. I hope that in its own way the work of this Committee will contribute to that. Senator McKIERNAN(Western Australia)(4.56) —The reference that the Senate Standing Committee on Industry and Trade is about to embark upon is a vital and much needed investigation into Australia's manufacturing industry. The demise of Australia's manufacturing industry over 20 years or so is of great concern to the nation as a whole. I speak in particular of those people who have a vital interest in the industry-that is, the workers and, more importantly, those people who ought to be in the industry but who unfortunately, because of its demise, have been retrenched and have no jobs at the moment. They number many thousands. It is a sad reflection on the industry as a whole that it is not operating at the optimum at the moment. The Committee has been discussing this matter for some six months or so now and our investigations have been spread quite widely. We had consultations with people from the Industry Councils Secretariat; with private corporations such as CRA Ltd; with the Metal Trades Industry Association, the Business Council of Australia, the Confederation of Australian Industry and the Australian Manufacturing Council; and, through the Australian Council of Trade Unions, with representatives of the Amalgamated Metal Workers Union. We did so to find out what they thought were important elements of an inquiry into a rejuvenation of Australia's manufacturing industry. Issues that were raised by those bodies and by Committee members ranged far and wide and were quite exhaustive. Each of the points raised could warrant an inquiry in its own right. Obviously the Committee would not have the time to deal with each one, but I think we will cover most of them through the life of the inquiry. The issues raised covered matters such as competitiveness, productivity, industry rationalisation, industrial democracy, wage profit shares, import substitution, export marketing development, marketing, research and development, marketing skills, labour skills, education and training, industry assistance, government regulations, investment, conciliation and arbitration, and the general macro-environment. It is obvious to any person listening to the debate that it will be an exhaustive inquiry. I am very pleased that the Committee, which is a bipartisan committee, has shown a tremendous degree of unity of purpose in addressing this inquiry. It is hoped that on our way through the inquiry we might be able to spell things out to some of those in our society who feel that workers in industry ought to be serfs and not have any say in the enterprise in which they are involved. They might wake up and show some degree of unity of purpose towards their own enterprises and towards the country as a whole. There is ample proof that workers and management, operating with the assistance of government at a State and Commonwealth level, can go forward and build an enterprise, a manufacturing industry, in this nation of ours that will be capable of import replacement as a first step and that will also be competitive in world markets. It is an exhaustive inquiry. We should not start the inquiry, which probably will be a long and enduring one, with lengthy speeches. The really hard work is still to be done and I am very pleased to be a part of what, in my opinion and the opinion of the Committee, will be a very important inquiry to the Parliament, the Government and the people of Australia. Senator VIGOR(South Australia)(5.00) —I commend the report to the Senate. The Standing Committee on Industry and Trade was asked to conduct an inquiry into certain aspects of Australia's manufacturing industry revitalisation. After examining many alternatives, the Committee has adopted the following terms of reference: (a) The prevailing attitudes to manufacturing; and (b) the need to develop an environment more conducive to sustained growth and increased investment in manufacturing. It is a fact that Australians have tended to favour imported goods. I welcome the Committee's inquiry, which could lead to a change in Government policy and to renewed `Vigor' in manufacturing industry. I hope that it will lead to more value added, more bounties and fewer tariffs, and a more co-operative approach between the labour force and the forces associated with capital. The preference for buying imported products is particularly evident in government purchasing where imported products are purchased in preference to similar Australian products. Government and its agencies are major purchasers in Australia. Currently government has no commitment to buying Australian products, despite certain noises to the contrary. In fact, Australian high technology industry finds it very difficult to deal with government at all. I would like to bring this aspect to the notice of the Committee. In April, during examination of the Estimates, I learned that only 52 per cent of minor defence equipment purchases come from Australian suppliers. In April the Department of Defence asked Parliament for an extra $68m to cover currency fluctuations in its overseas purchases; yet its `buy foreign' policy jeopardises the whole of our defence because in time of war we could not depend on supplies of essential spare parts being available in Australia in a timely way. I draw the attention of the Senate to my notice of motion of 17 September last calling on the Government to introduce a Bill for an Act for the purpose of ensuring that Australian suppliers are given maximum opportunity to compete for Commonwealth contracts and that such contracts be awarded to Australian suppliers unless there are cogent reasons to do otherwise. Such affirmative action for Australian industry is necessary to counter the present preference for imported goods by Public Service purchasing agencies. The motives for preferring to buy foreign goods could well reflect a community attitude. It could also well reflect a cultural cringe. However comforting this idea may be to managers in our manufacturing industries, we cannot afford to assume that the fault lies wholly with the Australian consumer. Let us look further at ways in which Australian manufacturing industry needs to lift its game. In order to sell in a competitive market, products need to meet customer's needs. The Australian Science and Technology Council, in its report `Mechanisms for Technology Transfer' this year, underlined major difficulties for Australian manufacturing industry in meeting local needs. These difficulties result from the lack of investment in new technologies and products and from the domination of Australian manufacturing by foreign controlled enterprises. ASTEC was concerned with the steady decline in private capital expenditure in the manufacturing sector and other evidence of a slow rate of innovation over the past two decades. This decline is reflected in an aging of capital stock and an obsolescence of its associated technology. We also have the problem of foreign technology transfer. There is a need for us to control our industry locally. Three-quarters of all payments by Australian companies for technology know-how are made to related overseas companies, to what are essentially `head offices'. Many of the technology-intensive industries are foreign owned and subsidiaries obtain a large part of their technology from the parent company. There is generally an attitude of `head office' research. ASTEC also looks at the problem of transfer pricing, which is a means of tax avoidance. This must be considered by the Committee because it also is having a devastating effect on the development of a sound Australian export industry. Restrictive conditions on licensing of technology are common in world markets, particularly on exports of manufactured products from Australia. Thirty per cent of licensing arrangements involve export restrictions on the product being developed. I commend to the Committee that it look at these types of restrictive practices. With regard to licensing back of improvements, 45 per cent of licensing arrangements insist that ownership of all improvements in technology be vested in the original overseas licensor. With regard to modifications to the product or quality control provisions, 35 per cent of all licence agreements prohibit adaptation of the technology locally. We cannot accept these types of restrictions on development in our industry. In the heavy engineering industry, nearly 60 per cent of companies have technology agreements with overseas companies and 95 per cent of foreign controlled companies have such agreements. Many of these agreements have restrictions on exporting offset by sweetheart agreements in the way the local market is handled. Foreign owned manufacturing industry in Australia does not compete on international markets with its parent companies; nor does it invest in local development or in local market requirements. We need to solve this `branch office' attitude that we have in Australia. The Foreign Investment Review Board in its 1984-85 report pointed out that approximately 71 per cent of total expected foreign investment approved that year would be spent on acquiring existing businesses. Of that foreign investment, 86.7 per cent would be in the form of borrowings, the interest payments on which will be a drain on our foreign exchange for years to come, while earnings will be exempted from tax for the interest paid. Australian taxpayers are in fact subsidising the foreign takeover of our Australian manufacturing industry. Of the 30 per cent of foreign investment in Australia that will be invested in new business, most will be in the service industry-in hotels, accommodation and other services to people coming in from overseas-and in the finance and insurance sectors, `the invisibles'. Foreign investment in manufacturing is declining while total foreign investment is rising overall. If we look at the foreign investment in manufacturing in 1985, we see that only $50m, which is 0.5 per cent, was invested in new developments, compared with $1,000m used in taking over existing manufacturing complexes. I wish to bring to the notice of the Committee that in Australia we have employed in manufacturing only one-tenth of the number of engineers that is judged appropriate overseas for a similar effective operation. We also have only about one-fifth of the amount of investment in industrial research and development in `comparable' countries of the Organisation for Economic Co-operation and Development. That is 0.21 per cent of gross domestic product in Australia and 0.93 per cent of GDP in those corresponding countries. We need to solve our intellectual property problems; we need a sensible patent system. We need to look at vast numbers of problems, which in the time available I could only hint at. I wish the Committee luck in trying to bring this matter together, because Australia needs a competitive manufacturing industry as an essential base on which to build a strong, independent Australia. Senator COOK(Western Australia)(5.10) —The Senate is dealing with the report of the Senate Standing Committee on Industry and Trade which deals with certain aspects of Australia's manufacturing industry revitalisation. I acknowledge the comments of Senator Vigor, my colleague from South Australia and an Australian Democrat senator, who has taken an enthusiastic interest in the revitalisation of the Australian manufacturing industry. No doubt some of his concerns will be taken up by the Committee. Senator Chaney —You are not recruiting him to the Centre Left, I hope. Senator COOK —If he were to change political parties, he may well be an admirable recruit to such a body. But I do not think that he would change political parties, and therein lies the problem. However, on this issue, which is not in any sense to be lightly regarded, it will be fairly recognised by all members of the Committee that Senator Vigor takes a sincere and deep interest in these issues and he speaks strongly on them in the Senate. In my experience of the Senate, there is sometimes criticism that occasionally Senate committees do not fulfil their potential. It is said that sometimes they sidetrack themselves into great areas of activity and that at the end of great study and expressions of concern, and having heard a great deal of evidence and so on, they bring down reports that gather dust on the shelves of the library-reports that are not much use and are not resorted to as a reference in industry and in the practical world outside Parliament. I think that the report now before the Senate indicates a direction that will be relevant to the interests of unions, commercial operators in manufacturing and those who are concerned about Australia's manufacturing performance generally. Indeed, I believe the Committee will produce recommendations that will be of great value to the Government as well. I do not want to repeat the remarks made by those who have spoken in this debate about the importance of revitalising Australian manufacturing industry, except to make a few short observations. Anyone who is at all concerned about Australia's balance of trade is struck, when comparing Australia's trade performance with that of other more buoyant economies, by the fact that about 90 per cent of our exports comprise minerals and agricultural products, whereas in the world's stronger economies most exports are made up of manufactured goods. Quite clearly, the economic challenge for Australia, a challenge which is more foundational than almost any other, is to revitalise our manufacturing output, not only to meet the needs of our own domestic market but also to compete with other world exporters on the international stage and to beat them, so that in our export effort we can take a bigger share of manufacturing export and be a producer of quality manufactured goods that people, including consumers overseas, want to purchase. That view has a great deal of bipartisan support in this Parliament-it certainly has on the Committee. Senator Vigor —Tripartisan. Senator COOK —Tripartisan, if I include my South Australian colleague Senator Vigor. The Committee has been helped in its deliberations by an input from industry spokesmen, union spokespeople and various departments. I was particularly struck by comments made by representatives of the Australian Manufacturing Council who helped the Committee to choose the reference. In particular, the Council produced the reports of the industry secretariats and showed the work done in each of the industry sectors in getting on a tripartite basis an agreed stocktake of the deficiencies in that sector. That work was impressive, as was the Council's work on the sectoral strategies in examining how those industries should proceed to develop themselves more effectively. The report showed a number of issues that were common across the board to all industry sectors in this country. My colleagues on the Committee have probably heard me ad nauseam on some of these matters, but let me repeat two of them. Quite clearly, there is across the board in all those industry stocktakes a tripartite agreement that there is a need to look at more flexible work practices, and specifically at multi-skilling. There is in all those industry sections, again as a matter of tripartite agreement, a belief that there is a need to improve middle management and managerial expertise in Australian companies. Everyone is in agreement on both items. The challenge is not simply to cite principles that are commonly approved, but to apply them to make real change. The strategies that those industry committees were developing seem to me to be addressing those matters. Although the Australian industrial landscape is often portrayed as divisive and confrontationist, the work of the committees clearly involves co-operation and common problem-solving by management, union and government. It not only expresses the spirit of the Australian Council of Trade Unions-Australian Labor Party wages-prices accord, but also stands as an effective way-I believe the only effective way-for this country to address fundamental economic problems. The report does not directly address those two themes. We have focused on the broad issue of the manufacturing culture in Australia. We have asked whether there is a cringe in Australia in that our manufacturing industry is not worth the candle and is to be considered only in minor domestic terms, and that we should concentrate our efforts on developing mineral and agricultural resources. Is there a cringe inbred in our culture that something made in Australia is not as good as one which comes with an exotic label from some foreign source? Is there a belief among those who invest in industrial development that it is better to put it in bricks and mortar than in manufacturing goods, and thus to achieve a speculative gain down the track rather than produce real wealth in the community? Do we have that cringe? These are some of the aspects of the manufacturing culture which I expect the report will address. The report makes clear that many see our present environment as isolationist and adversarial, which only encourages confrontation, irresponsibility and industrial self-destruction. What the report will not be able to do is to come deeply to grips with that wide canvass, but one hopes that by directing attention to certain specifics it will be able to carry out a useful service, not by repeating all the findings of previous reports but by synthesising those findings in a way that is relevant to the development of manufacturing industry. I commend the report and the future work of the Committee. Senator BROWNHILL(New South Wales)(5.19) —I support the inquiry by the Senate Standing Committee on Industry and Trade into the revitalisation of our manufacturing industry. In the last 20-odd years Australia's share of world markets has fallen from 2 per cent to about 1.2 per cent. This country has abundant resources and there are no clearly perceived reasons for not employing teamwork and striving for higher productivity as is the case in some of our competing countries, such as Japan. The quality of our manufactured goods has to be maintained and improved and we must recognise and reward excellence. We pay too much attention to our sporting heroes. We have an Institute of Sport, which is most probably a good thing, but we do not pay much attention to our apprentices. Institutes such as the work skills Australia programs, which do something for apprentices and which try to promote higher standards in the community and to promote public awareness of trades, are a step in the right direction in making an effort for the young working people who want to go into the manufacturing industries. I note that the Leader of the Opposition (Senator Chaney) wants to speak on this, as does Senator Button, so I will leave my remarks at that. I believe that this inquiry will achieve a lot to help our manufacturing industries-industries on which we will rely so much in the years ahead to get us out of our economic problems. Senator CHANEY(Western Australia-Leader of the Opposition)(5.20) —I thank the members of the Senate Standing Committee on Industry and Trade for the comments they have made on the report on certain aspects of Australia's manufacturing industry revitalisation and also for the invitation they extended to me as the Opposition spokesman on industry, technology and commerce to join in this debate; an invitation they issued also to the Minister for Industry, Technology and Commerce (Senator Button), who is at the table. It is instructive that there is a good deal of common ground in the approach which is being adopted to manufacturing industry, not only by the Parliament but also by the various bodies around Australia which are concerned about its future. We find in the first paragraphs of this report a reference to the revitalisation of Australia's manufacturing industry, which is generally accepted as being necessary. The Committee noted that it was concerned about the need for Australia's manufacturing sector to become more internationally competitive and export oriented. I can only say that those words seem to have been used by the Prime Minister (Mr Hawke), the Minister, the Leader of the Opposition (Mr Howard) and by me and those words will be found sprinkled throughout the documents which are presently being produced by so many people on manufacturing industry. That common ground is to be welcomed because it is more likely that we will get acceptable long term solutions if, even at that broad level of generality, there is agreement. In terms of addressing the Committee's task, it is important to note the way in which the debate has changed even in this decade. At the end of the 1970s and the beginning of the 1980s we were concerned about the Gregory thesis and about the fact that Australia faced the problem of a continually appreciating currency because of our massive exports surplus. In those circumstances, the future of Australian manufacturing industry was seen to be rather doubtful but also as being relatively unimportant. There has been a very sharp change in our expectations. We now apply the Gregory thesis to the reverse conditions. We see long term problems with respect to our balance of payments, a depreciated currency which may, but we hope will not, depreciate further if the balance of payments goes against us further, and we have a situation where, rather than accepting the fact that manufacturing may decline and so what, almost everybody agrees that a vigorous and internationally competitive manufacturing sector is of fundamental importance to us. In that brief look at recent history there is an explanation of why we cannot expect an immediate and rapid response to the changed circumstances. In fact, industry has not been living in an environment which suggested that it would be subjected to the pressures and requirements which are now being placed upon it, not merely by the Government and the Opposition but also by the trade union movement and virtually every commentator. I express the view to the Committee that any response to our present problem requires a long term approach. It requires a situation where those who we wish to invest in new industry in Australia can see that there is a predictable future. To the extent that anything is predictable in economics, those people ought to be able to see that there is a framework of policy which is broadly blessed by the Government, the Opposition and hopefully by the trade union movement and business organisations, so that there is some hope of a more predictable environment in which they can invest with confidence and certainty. The second point which flows from that is that there is a real requirement in this area for bipartisanship, if that can be achieved. A number of the Committee members stressed the bipartisan approach which has been adopted by the Committee and I suggest to them that there is value in that approach in itself. If industry faces a situation where there will not be radical changes to the approach being adopted just because there is a change of government, which may be caused by factors which have nothing to do with industry policy, that will be helpful. In that regard I draw attention to the fact that the present Opposition has sought to follow that approach over recent years. It has supported many of the broad objectives put forward by the Minister at the table and has supported in the main his steel and car plans, just as when the Minister came in in 1983 he said that the textiles, clothing and footwear arrangements would run their course because people were entitled to rely on the arrangements which had been put in place. In this debate I affirm that as something which should be an important element of our speaking. My concern about the report, which I am glad to have the chance to express, is that the Committee may adopt too narrow an attitude to its inquiry and run the risk of becoming very expert about one aspect of what many of the speakers have stressed is essentially a multi-faceted problem. I noted that Senator McKiernan, like Senator Short, stressed the range of issues which are relevant to obtaining a better future for our manufacturing industry. Senator McKiernan read extensively from page 2 of the report, where the Committee referred to issues such as industrial democracy, wage-profit shares, import substitution, export market development, marketing, research and development, management skills, labour skills, education and training and so on. As time is short I will not go through the whole list. My concern is that, whatever the Committee does, it should be placing some stress on the second limb of the self-imposed term of reference, where the Committee refers to the need to develop an environment more conducive to sustained growth and increased investment in manufacturing. If we fall into the trap, which we have fallen into in the past, of concentrating too much on either a specific industry or a specific element of policy which impacts on industry, we will not achieve the overall result we wish. In that regard, the Opposition has recently published a document called `Policies for Business' which tries to bring together, for the sorts of reasons I have been stressing, a range of policies which we believe affect the investment environment in Australia and need to be tackled if we are again to make Australia a place which is attractive to investment, rather than people putting their money overseas, be they foreign or Australian investors. For the sake of confirming at least one element of the Committee's approach, I direct attention to the fact that the third issue which is raised in that document is community attitudes. The Opposition supports the importance of community attitudes as an element to try to get a better environment for manufacturing industry. Indeed, our policy document contains words which are very close to the words which appear on page 3 of the report, where there is reference to work practices and employer and employee attitudes. I quote from the Liberal-National Party document, which states: Australia's chances of success in a world of fierce competition and constant change depend upon more than simply having correct policies. Community attitudes need to be conducive to improved productivity. In the past, our biggest single handicap has been a lack of common purpose. It states further: This is most clearly seen in the workplace: confrontation, `us against them,' bosses versus workers- have been the order of the day too often. Too few employees have identified with the interests of their employing firm. I quote that to underline again the high degree of common ground which exists but which needs to be developed further. It is the view of the Opposition parties, on the examination of this very important area so far, that there is a great range of things which need to be tackled in our community if we are to have a genuinely good environment for investment in manufacturing and indeed in other areas of business and industry. That multiplicity of things that need to be addressed, some of which were referred to in the debate by Senator McKiernan, may be brought together under what we have described as four broad requirements. We suggest that they are, firstly, reduced and restructured taxes, made possible by reduced government spending; secondly, reduced and less costly regulation of business activity-the present Department of Industry, Technology and Commerce has a Regulation Review Unit which is obviously aimed at tackling one of those essential areas; thirdly, the restoration of the rule of law in industrial relations and a flexible labour market, a matter of great debate currently; and, fourthly, rigorous control in the reduction of business input costs, especially government taxes and charges. Time does not permit me to go through the great range of points, but I ask the Committee to bear in mind that any examination of a factor in isolation is likely to give us a false picture. I hope that the Committee will pay close attention to its second point, which is the need to develop an environment more conducive to sustained growth and increased investment in manufacturing. That will inevitably require the Committee to address some of the things which have been addressed by others, but I am encouraged by the fact that the Committee will have much common ground in the material put before it. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(5.30) —Having listened to Senator Chaney I do not have much to add. I agree with many of the general comments he made. It is suggested that the Standing Committee on Industry and Trade inquire into two matters-prevailing attitudes to manufacturing and the changing environment for manufacturing. I do not know how the Committee can establish prevailing attitudes to manufacturing. I assume that refers to attitudes of the community at large. The Committee is likely to find that manufacturing is seen as something of a burden on the truly productive sectors of the economy and out of date, slow to innovate, complaining, an area of entrenched industrial relations warfare, cosseted too long from real competition, perhaps noisy, polluting, and all those sorts of things. They are the very negative perceptions probably held by fair sections of the Australian community about manufacturing. I think they are wrong and are largely out of date, but I rather suspect that they still exist. I believe that the Committee will also find that the educationally upwardly mobile in Australia do not want to go into manufacturing as a career. The professions probably have the greatest lure, the greatest attraction, for people undergoing post-secondary education, rather than attaining the skills which go into manufacturing. I am not sure what the figures are but I think we employ about two engineers in manufacturing per 1,000 compared with something like 75 engineers per 1,000 in Japan. The figures for other countries are somewhere in between. I accept that there is an enormous need to encourage the skills of the engineering profession into manufacturing, particularly into process engineering and areas of that kind. The second thing that traditionally manufacturing here does not do-one cannot generalise about these things because some companies have a totally different history-is direct attention to the skills required by middle level management. I remember reading last year an Organisation for Economic Co-operation and Development survey which assessed the relative competitiveness of British and German industries. Its conclusion, which came down heavily in favour of German industry, was that this was largely as a result of the long-standing attention given in Germany to skills in middle management. In Japan-Senator Chaney has had the misfortune of hearing this twice in one week-motivating the work force is seen as a task of middle management, such as foremen and supervisors. That is their fundamental task. In a country such as Germany, where the social and structural arrangements are different, the task of middle management is still in a sense the same; that is to say, arriving at the best methods for producing whatever the enterprise produces, ensuring that those methods are discussed with and communicated to the work force. Again, the purpose is to obtain the best results in terms of productivity. Australia has inherited something of the British tradition and has not developed those skills which I regard as important ingredients of good manufacturing. Insofar as developing an environment more conducive to sustained growth and increased investment in manufacturing is concerned, those economic factors are very important. I agree with what Senator Chaney had to say basically about them, but I also agree very strongly with him that changing attitudes in industry and about industry is a multi-faceted task. For example, the education system in Australia probably suffers from a similar British disease. By and large post-secondary academic institutions in Australia have been divorced from industry. There has been an academic stream of basic research, which I believe to have been of world class-per head of population I think we are outstanding in basic research-but the level of applied research in academic institutions and the interaction with industry in this country is probably well down the pecking order in world terms. The Japanese are now devoting enormous financial resources to basic research. For years they were criticised for their very low level of basic research; all their research was applied, but that applied research has provided the benefits that have now enabled them to make a national decision to devote far more resources to basic research. I am not claiming firsts, but I was the first industry Minister in this country to have a meeting with the vice-chancellors of Australian universities to discuss the relationship between universities and industry. I do not claim any credit for that. I am just saying that, as Senator Chaney suggests, circumstances have changed and things have to change with them. There is now an ongoing relationship between the Business Council of Australia and the university vice-chancellors, which again is a first. It takes time to break down those sorts of problems, but they are matters which go fundamentally to the environmental issues that afflict manufacturing, quite apart from the questions of investment and a whole range of other macro-economic issues which affect the environment in which industry can operate. I welcome very much the Committee proceeding with this inquiry. I guess it is not for us in the Senate to say what we believe it is likely to find in the course of its inquiry, but I hope that it will look at the multi-faceted nature of the issues which affect the two questions to which it is fundamentally directing its attention. It involves many attitudinal matters. One could talk about the economic issues forever, but also involved are a whole lot of quite intangible attitudinal factors which are immensely important in building a productive culture in this country. They involve, for instance, a commitment to excellence, pride in workmanship, corporate teamwork, a commitment to quality and service, innovative capacities, management practices, co-operative industrial relations and, above all in relation to the Committee's first term of reference, community recognition for commercial success. This country is great at recognising its tennis players and its golfers. My second name is Norman and I see all those headlines: `Norman wins again'. I think, `My God, I have done something at last', but of course it is never me; nor would it ever be a managing director. I must say that in the last six months there have been signs that some of the media in this country are starting to get interested in some of these issues. I do not hand out bouquets to particular newspapers, but the Australian Financial Review is now running a series of columns about success in innovation, success in exports and so on. I think this is very welcome and very important and the sooner some of the other newspapers catch on to that idea the better it will be for this country, because the more we recognise success in business and innovation in industry the more success will follow from that recognition. The ACTING DEPUTY PRESIDENT(Senator Townley) —Order! The Minister's time has expired. Senator BUTTON —As you said, Mr Acting Deputy President, my time has expired. I wish the Committee every success in its deliberations and I hope that the process of the Committee inquiry will add further to the pressure for change in desirable directions on the issues into which the Committee proposes to inquire. Senator HARRADINE(Tasmania)(5.41) —I can take only three minutes, but I rise to add perhaps another dimension for consideration by the Standing Committee on Industry and Trade. No doubt this point has been mentioned in passing, but I want to suggest to the Committee that it examine, if it has not already done so, ways and means by which the participants in manufacturing-those many thousands of workers who are in the manufacturing industry-are able to share in the means of production. Those workers, of course, have the right not only to fair wages and safe working conditions, but also to feel and in fact be creative. They have the right to satisfaction in their jobs and to know what the end result of their work is in their particular field, no matter what type of work it is in the manufacturing industry. Too many jobs are seen to be humdrum and repetitive. Very often, those in control of such manufacturing industry do not recognise the primary purpose of work in manufacturing industry specifically and especially for the workers involved. Those workers spending their lives working in manufacturing industries are entitled to have their humanness fulfilled in the creative sense assisted by their particular work. Senator Tate —Laborem Exercens. Senator HARRADINE —Yes. It is not new. I think it also goes back to Quadragesimo Anno and Rerum Novarum, if the honourable senator wants to look at it that way. The point that I am making-- The ACTING DEPUTY PRESIDENT — Order! The time for the consideration of papers has now expired. Senator VIGOR(South Australia) —by leave-I move: That the Senate take note of the report. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator TATE(Tasmania) —I present the thirteenth report of 1986 of the Senate Standing Committee for the Scrutiny of Bills concerning the Australian Capital Territory Council Bill 1986, the Australian Capital Territory Council (Consequential Provisions) Bill 1986 and the Parliamentary Commission of Inquiry Act 1986. I also lay on the table Scrutiny of Bills Alert Digest No. 13, dated 24 September 1986. Ordered that the report be printed. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Button) read a first time. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(5.48) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- Pensions payable to, or in relation to, former Commonwealth Government employees and Defence Force personnel under the Superannuation Acts 1922 and 1976, the Defence Forces Retirement Benefits Act 1948, the Defence Force Retirement and Death Benefits Act 1973 and the Papua New Guinea (Staffing Assistance) (Superannuation) Regulations are increased in July each year in accordance with the increase in the weight average of the Consumer Price Index for the 6 State capital cities to the previous 31 March. On 3 July 1986 these pensions were increased on the basis of the 9.2 per cent increase in the Consumer Price Index to 31 March 1986. The extraordinary circumstances of the economy require all members of the community to share the cost of reducing Government expenditure. Accordingly, as announced in the Budget Speech, the 2 per cent wage discount recently applied to wages is to be extended to Government superannuation benefits payable to, or in relation to, former Commonwealth Government Employees and Defence Force personnel. This Bill amends the Defence Force Retirement and Death Benefits Act 1973, the Defence Forces Retirement Benefits Act 1948, the Superannuation Acts 1922 and 1976 and the Papua New Guinea (Staffing Assistance) (Superannuation) Regulations to provide for the levels of pensions payable under that legislation to be decreased with effect from 10 October 1986 to the levels that would have applied if the increase in July 1986 had been based on an increase of 7.2 per cent in the Consumer Price Index rather than an increase of 9.2 per cent. It is expected that, as a result of the proposed amendments, Government outlays on the relevant pensions during 1986/87 will reduce by approximately $12.6m and during 1987-88 by approximately $17.3m. I commend the Bill to the Senate. Debate (on motion by Senator Chaney) adjourned. (Quorum formed) Consideration resumed. The Bill. Senator SIDDONS(Victoria)(5.50) —We were debating these amendments before the suspension of the sitting for lunch. I indicated then that the Australian Democrats would support Liberal amendments (1) to (5) and that the Democrats would move amendments (6) to (10), which have already been circulated. I was commenting on the need for these amendments. The Loans Bill in its present form, which is identical to the Bill that was presented last year, would have the effect of making the Government's borrowing program automatically approved with the Budget and would deny the Senate the opportunity of debating the Government's loan borrowing program each year. The country's volume of debt is of great concern to the Australian people, and certainly of great concern to this Senate. For evidence of that, we have to look no further than at the number of senators who felt it necessary to speak on this particular issue. Senator Walsh would very much like not to have to face up to the criticism. He would like to be able to bypass the Parliament and to borrow money quite indiscriminately, without standing up to any reasoned debt. It was very noticeable, when Senator Walsh made his remarks, that there was a great shortage of any reasoned argument and a great indulgence in character assassination. He indulged in the character assassination of the dead yesterday and he indulged in the character assassination of the living today. I suggest that character assassination and abuse is no substitute for reasoned argument. The Democrats' position is quite clear. This is a very important matter. Providing an opportunity for debate on the Government's borrowing program is a responsibility of the Government. For that reason, we support these amendments. Senator WALSH(Western Australia-Minister for Finance)(5.52) —I have noted that common sense is being sabotaged by this mixture of opportunism and stupidity on the other side. Having noted that, I will not be calling for a division, but the Government does not accept any of the amendments. Amendments agreed to. Senator SIDDONS(Victoria)(5.53) —by leave-I move: (6) clause 5- (a) leave out `a financial year', insert `the financial year'; and (b) leave out `that financial year', insert `the financial year'. (7) clause 6- (a) leave out `a financial year', insert `the financial year'; and (b) leave out `that financial year', (thrice occurring), insert `the financial year'. (8) Sub-clause 9 (1)- (a) leave out `a financial year', insert `the financial year'; and (b) leave out `that financial year', (thrice occurring), insert `the financial year'. (9) Sub-clause 9 (2), leave out `a financial year', insert `the financial year'. (10) Clause 9, after sub-clause (2), add the following sub-clause: `(3) Nothing in this Act shall be taken to authorise expenditure (otherwise than for the expenses of borrowing) after 30 June 1987.'. The reason for these amendments is identical to that for the amendments that have just been passed: Without them the Government would be able to bypass debate on its borrowing program each year. For that reason, I commend these amendments to the Senate. Amendments agreed to. Bill, as amended, agreed to. Bill reported with amendments; report adopted. Bill (on motion by Senator Walsh) read a third time. Debate resumed. Senator MESSNER(South Australia)(5.55) —The Superannuation and Other Benefits Legislation Amendment Bill seeks to implement the Budget decision of the Government to reduce by 2 per cent the indexation rate of pensions payable to Defence Force pensioners and also to Commonwealth superannuitants. This will yield about $12m in savings to the Commonwealth in the Budget this financial year. Senator Walsh —It will be less this year. Senator MESSNER —That is the full year figure. The point that is being made by the Government is that it is looking everywhere for savings in order to get the deficit down to the $3.5 billion figure that it announced some weeks ago, which was designed to make sure that the Government was presented in the best possible light in the financial markets. So the Government went skimming around in the last few days before the announcement of the Budget looking for every possible saving. It came up with this one, which means a reduction in the amounts that are going to go to pensioners of the Commonwealth, be they from the defence forces or former public servants. The Government will rob them of 2 per cent of their pension. The point at issue here is simply this: The Government has announced that it intends to go to the Australian Conciliation and Arbitration Commission and seek a 2 per cent reduction in the flow-on of the consumer price index increase in the forthcoming national wage case. That relates to the inflation rates that have already been announced by the Australian Bureau of Statistics for the quarters ended March and June of this year. Obviously the national wage case hearing has not yet started. It will be some time before it does start. The Government will then go to the Commission and put down its argument in favour of that particular proposition. It will then be open to the unions to go to the same Commission and put forward their opposing arguments. This will be open to other interested parties-employers and others who might argue for indexation adjustments to allow for the discount factor, as we have been discussing. They will have full opportunity to appear before a commission and to put their case. The matter will be decided with all the facts in hand, with all the arguments before the judicial persons on the Arbitration Commission and, consequently, a judgment will be made. If a judgment is made along the lines of the argument presented to the Commission by the Government and the Commission comes out in favour of the Government, that decision will flow through to all wage and salary earners in this country. The point at issue here is that that remains to be argued before and decided by the Arbitration Commission, yet this 2 per cent discount factor is being applied from 1 July this year to pensioners of the Defence Force and Commonwealth superannuation schemes. The discount is being applied without individual members having an opportunity to put before the Commission a case against the Government's decision. Individual members of the Commonwealth pension schemes or of the Defence Force pension schemes have no representative to put their case before a commission and have the matter judged. To that extent there is a difference of treatment of the pensioners who will have this 2 per cent discount applied to them arbitrarily, whereas in the case of wage and salary earners that matter is yet to be determined. That is the basic argument about which we are complaining in respect particularly of the Defence Force pensioners. This legislation comes at a time when there have been numerous broken promises as far as the treatment of superannuation is concerned. We go back to the earliest days of the Hawke Labor Government, in May 1983, when it first imposed the lump sum superannuation tax. You may recall, Mr Acting Deputy President, that the Opposition raised arguments which could have some force and which were recognised by the Government at the time that this tax, as it would be applied by the Government, would impact heavily upon Defence Force personnel. One of the reasons that it falls unduly heavily on that group is that Defence Force people are compelled to retire at mandatory ages which are somewhat lower than the retiring ages for the general population. For instance, majors who are around 45 years of age are compelled to retire and cannot continue in the Regular Forces until the normal retirement age of 65 years. That means that at the height of their middle age they are required to set about establishing new careers. It was perfectly reasonable that people retiring at that stage of their lives should have been able to obtain a tax free capital sum by commutation of their future pension rights and to use that to invest in a business or some such to get themselves started in new careers. Also, considering the vagaries and the special kind of life which people in the defence forces have to put up with, as they are moved from place to place around the country and perhaps around the world, many times they do not have the opportunity of acquiring a home. A lump sum by way of commutation of their pension benefits is useful in establishing homes for such people while they get their new careers established. These are the special considerations which apply to Defence Force persons and the sorts of things which this Government failed to recognise when it introduced the lump sum superannuation tax in May 1983. That was just one of the broken promises. We recall quite well that before the election in March 1983 the then Opposition said that there would be no superannuation tax. That was one of the first promises that it broke upon being elected to government. The others are well known to us. For instance, there was the breaking of the promise with regard to the assets test. We well remember Senator Grimes in this place and the National Economic Summit of 1983 saying that there would be no assets test on pensions, but that was broken in the August 1983 Budget. The Government cannot be trusted in the handling of superannuation matters. That has been demonstrated quite clearly since it came to office three years ago. Now we have seen a further change brought about in such a way as to affect the pension entitlements of Defence Force personnel. After the introduction of the lump sum superannuation tax in 1983 and after much pressure was brought to bear upon the Government by the Liberal and National parties it did recognise to some extent the special problems of Defence Force persons by increasing the amount of the commuted value of pensions. That had the effect, partially at least, of offsetting the impact of the lump sum superannuation tax, but also it reduced the future benefits that pensioners would obtain by virtue of the need for future pensions later in their lives. In other words, the tax was imposed; there was no alleviation of it for this special band of people. I think it shows a degree of ignorance of the special problems of Defence Force persons that the Government has failed to adjust properly its taxation policies to take account of these special circumstances. We recall the attitude which this Government adopted in 1983 to people who were in the Regular Army Reserve. We recall that, whereas those people had previously had their reserve pay exempted from taxation, the Government sought to tax half of that pay. Now, three years later, with falling recruitment of people into the Reserve, the Government has been forced to go back to the original position of exempting the Reserve pay. That has been announced in the recent Budget. Again that demonstrates an attitude of the part of this Government to take the bat to those people in the Defence Force and reduce their opportunities to look after themselves and their families and to make it difficult for the Force to prosper and develop. That point of development is essential when we consider the very important requirement of the building of morale for Defence Force personnel, to ensure that they operate at the highest possible levels in their duties in the defence of this nation. That attitude question seems to be one that has slipped straight past this Government in that it has little regard for the problems of maintaining morale. I am sure that honourable senators on this side have had experiences of dealing with personnel from the forces who tell us of the very real problems faced by those in that community and the demoralised attitude which is developing amongst them towards their status, work and position in society. That can have only a downward effect on this nation's preparedness for war if, heaven forbid, that should occur. That is a principle which we believe is vital to this legislation which is now before us. It is interesting to note that the effect of this 2 per cent discount on Defence Force pensioners' benefits, which will apply from 10 October this financial year, will accumulate. It will never be recovered by those people from future indexation adjustments, except by somebody making an ex gratia payment some time in the future. This means that over a 10-year period the accumulated reduction of such a benefit will amount to more than $2,000 for each pensioner. Those people will be less able to look after themselves in their retirement, which means that they will no doubt find themselves coming back into the social security system by way of age pensions or other benefits in order to protect themselves against the rising cost of living. It is quite possible that what the Government gains here it may well lose in terms of future costs of social security for the people whom it is punishing now in this legislation. All in all, this legislation is aiming to raise from defence people and from those former public servants some $12m. That is the Government's judgment. We have a concern about it, as is evidenced by my remarks. In order to put extra weight to the position of the Liberal and National parties, I move: At end of motion, add: `, but the Senate- (a) expresses its concern that the level of discounting of superannuation, Defence Forces Retirement Benefits (DFRB) and Defence Force Retirement and Death Benefits (DFRDB) pensions imposed by the legislation has not yet been proposed in a National Wage Case, let alone given effect by a decision of the Australian Conciliation and Arbitration Commission, and notes that: (i) the Bill imposes on Commonwealth superannuants, without consultation, a burden greater than that proposed for the community generally, in that it will come into effect before equivalent discounting of wages is even considered, (ii) discounting of DFRB and DFRDB pensions further erodes conditions of service in the Australian Defence Force (ADF) at a time when ADF resignations are at near-crisis level, and (iii) the Bill breaks, for the second time, Labor's 1983 election promise not to cut DFRB and DFRDB benefits; and (b) calls on the Government to direct the Defence Force Remuneration Tribunal, as a matter of urgency, to inquire into the adequacy of pay and conditions of service in the ADF compared with those in the private sector and public service'. The amendment clearly makes the point that we are concerned about falling morale in the defence forces caused by the Government's approach and exacerbated by this legislation. We are concerned that the Government is not fully cognisant of the problems in the defence forces. We believe that this motion will draw attention to those problems. If it is carried, as I expect it will be, it will at least bring these serious problems to the Government's attention. I commend the amendment to the Senate. Senator MASON(New South Wales)(6.11) —The Australian Democrats oppose the Superannuation and Other Benefits Legislation Amendment Bill, which we believe is yet another manifestation of the Government's policy of economic attack on those people least equipped to fight back and, in many cases, least able to afford it. I listened with considerable care to what Senator Messner said on behalf of the Opposition and to the terms of his amendment. I suggest to him that, if the Opposition really thinks that way, it should join us in opposing the Bill. If the Democrats and the Opposition in the Senate vote against the Bill, it will not pass. If it does not pass, we will have done something of great value for the Australian people, for reasons which I shall proceed to outline and which, I am sure, the Opposition understands. I have discussed this legislation with Mr Sinclair and Senator Messner. I think they see that there is a problem, one which they would very much like to do something about but for certain inhibitions they have about Budget Bills, which I shall later suggest are ephemeral and should not bear directly on this issue. It is of great interest to the Democrats that the Government is bringing on this Bill and seeking its passage with almost indecent haste. It was in the House of Representatives only yesterday. I think that this is because the Government understands that there is now a growing groundswell of justifiable protest about the measure and it wants to get the dirty deed over as quickly as possible and with as little media attention as possible. I see the hand of the Minister for Finance, Senator Walsh, in this measure. He resembles an aging and short-sighted shark in a school of schnapper. He bites up whatever comes into his view without much discrimination or thought. Senator Newman —Very good. I could not have said it better. Senator MASON —I thank Senator Newman. This legislation is certainly short-sighted and thoughtless. Basically, it is designed to short change people on defence and Public Service superannuations. It is a strict short change operation, a breach of a promise and a breaking of undertakings. The benefits paid under these superannuation schemes have always been indexed to the consumer price index, with the very reasonable aim of ensuring that a pension is not eroded by inflation. That has been one of the basic principles of government-one we have all striven to support over many years. When one talks to people on pensions, one sees why that is so. They are looking for security in their pensions, without governments meddling and tampering for what they see are political and economic reasons. If the Bill passes, the Government will have destroyed that principle. The Bill is simple enough. It seeks to pay next month not the 9.2 per cent full indexation, as assessed on the CPI at 31 March last, which is due to many thousands of people, but an amount discounted by 2 per cent to 7.2 per cent. Hence the value of the pension in real terms will be reduced this time and, I suppose we can assume, many times in the future. We are talking about a genuine attack on the income and position of those who in many cases are least able to afford it. The Government has put forward some very tenuous reasoning. It has claimed that because of wage discounting there should also be superannuation award discounting. Do I hear the voice of the Australian Council of Trade Unions somewhere in this? Of course I do. The Government claims that, because of wage discounting- Senator Walsh —I can assure you that the ACTU is not very happy about it. Senator MASON —The Government claims that superannuation should be cut, too, and that one class of people should be discriminated against. That is what it amounts to, and Senator Walsh knows that as well as I do. The Democrats disagree fundamentally with this principle. For most people on superannuation, their pension is their only source of income. They are past the age and stage when they could increase their expectations. All they want is a secure future in which their financial stability is reasonably guaranteed. In many discussions I have had with older people on this issue, the fact has emerged clearly again and again, and it is so important that I will repeat it, that their principal worry is that the Government will meddle with their pensions. The prime consideration is not the amount of the pension, although that is plainly important. The most feared manifestation of government is its tendency to tamper with pensions for political reasons or for what it sees as sound economic reasons. I shall return to that point a little later. The point of major interest in the Bill, which I ask everyone who is listening to consider carefully, is that it establishes the principle of cutting back on the indexation of pensions. I ask Opposition senators to consider this point carefully. If the Government gets away with this one, it will feel that it has been given green lights all the way to treat other pensions in the same way. Why should it not feel that way? If we in this place are so silly as to leave open a gate as wide as this, can we not expect that consequence? Of course we can. I believe that the Government already has in mind in a mini-Budget early next year the idea of reducing age pensions, and probably all pensions, by applying the same principle of discounting. The age pension is particularly significant in this regard. I know from contacts in my State of New South Wales, particularly in Sydney, that the present age pension is totally inadequate to provide reasonable accommodation and healthy food. That is a fact. I have been told by social workers and others closely associated with the aged in Sydney, especially central Sydney, that it is not unusual for old people to eat dog and cat food-only the best brands, of course-because meat is too expensive. That is a deplorable shame which we should not tolerate. This situation of poverty is partly due to the meanness of the pension in terms of today's cost of living but is due also to another factor which I have had occasion to mention here before and which I will go on mentioning as long as I am a senator. I refer to the Government's failure to index the rent allowance paid to pensioners to the cost of living in different parts of Australia. The reason, I am told, is that the Constitution says that all citizens must be treated equally. How far into wonderland can we get? Is it equal treatment to pay the same rent subsidy to a person in Sydney as to a person in, say, a Tasmanian country town? In Sydney, a room in a hovel in Kings Cross will cost more than a small but reasonable apartment in Tasmania or Western Australia. It is not treating people equally to apply the same rent subsidy throughout the country. It is guaranteeing a situation in which there is not only actual hardship in Sydney but even danger to life. In recent years, there have been some extremely nasty cases in which old people have died or been terribly injured because of fires in residential slums which were fire traps. Those elderly people were in those places because that was the only accommodation they could afford. I suggest that this is an indictment of the Parliament and of the Government. Over the years I have become sick of raising this matter and being told blandly by some public servant in a Minister's office who has drafted a reply that the only reason for this is that the Constitution says that all Australians should be treated equally. It is an Animal Farm situation in which some animals plainly are more equal than others. I repeat: A government attempt to discount age pensions next year and allow those pensions to drop further and further below the poverty line would only increase those hardships. I want to make it quite clear that, if the Bill passes, the principle will have been established and there is every reason to expect its extension to other pensions, regardless of government denials or promises. As the Opposition amendment before me points out, the Government is breaking a promise that it made in the 1983 election campaign in bringing forward this very Bill we are discussing today concerning Service pensions. The Government, of course, will deny things. It undertook then not to interfere with Service superannuation. Now it is interfering with it. So if we hear later in this debate any Government protestations from the Minister or anybody else that there is no way that they will affect old age pensions, do not believe it, my friends. Do not fall into the trap of Service pensioners who believed what the Government said in 1983 and who will suffer from it today if this Bill is passed. Let us assume that the Government finds some other schnapper to bite at and that it does not index age pensions in the next mini-Budget. What is the other thing? People are plainly being discriminated against. Here again, not all animals are equal. Some people are going to have their pensions discounted and others are not. Let us get back to the concept of treating all Australians equally. I would suggest that the Minister's public servants, who are discussing this matter so intently at this stage, might consider that point, among others. Defence Force and Commonwealth Public Service pensions are indexed annually in July, based on the March consumer price index figure. There is, therefore, a 15-month lag already in catching up with the rest of the community. When the superannuation recipient received an increase in July of this year, it was in part compensation for price increases which occurred over 15 months ago. By contrast, the indexation of age pensions and of wages occurs at six-monthly intervals, not annually. In another Budget decision, which, I must say, the Australian Democrats find very untenable and unpalatable, the Government has deferred the age pension indexation by six weeks, and that in itself indicates to us that it is getting bold about this matter and is prepared to interfere with age pensions. What will it do next? The Government says that by carrying out this measure it is only extending the wage pause to superannuitants-only those superannuitants whom they have it within their power to disadvantage, of course; and that is the point. Is this wage pause corollary reasonable? The Australian Democrats suggest not. We reject this whole idea as discriminatory and totally unfair. So I would like the Minister to say later on, when he replies in this debate, whether the Government intends to extend this to all pensioners or whether it proposes to be discriminatory. To my mind, it has no options other than those two. This, of course, is not the reduction of a prospective increase; rather, it is the reduction in real terms of an income already being received by pensioners. The discount was not contested before any independent tribunal and no opportunity was given to those who are being discriminated against to make their case to oppose this cut. We are dealing here with pensions paid out from superannuation fund contributions which were, in most cases, compulsory. In the case of the defence forces, the contribution is 5.5 per cent of salary and for permanent officers of the Commonwealth Public Service a contribution of 5 per cent is compulsory. While we disagree with this totally, we believe, for a variety of reasons, that there is an even stronger case for Service pensions than there is for Public Service pensions. As those reasons have been put, I think, by Senator Messner, I will not go over them again. Nevertheless, the former public servants on superannuation are not rich. This is not a fat cat situation. The discount of 2 per cent of the real value of the pension will have a greater effect on the disposable income of a pensioner receiving less than half his former salary than it has on the person in employment. This is the whole point. People in employment have more money; ipso facto, pensioners in virtually every pension scheme in Australia have considerably less. Therefore, a cut bears on them much less fairly and creates much more real and genuine hardship over a period. On figures that we have, the average income of a superannuated Commonwealth public servant last year was $10,452. That is no princely sum in today's situation. A person who retires at 55 years of age after 10 years in the Public Service will receive 14.4 per cent of his final salary. If that person were to die, his surviving spouse would receive five-eighths of that pension. Many Public Service superannuitants are on pensions akin to the age pension, but without the associated fringe benefits. I think these people are going to suffer particularly badly if this situation continues. I think the Minister ought to tell us in his reply what the Government's intention is. Having established this principle, if economic conditions appear to justify it over a period, will it go on doing this? Will it go on year by year reducing the-- Senator Walsh —Our policy is to ignore the real world and pretend it is not there! Senator MASON —The Minister might like to take up the point when I have finished my speech and he is replying. I agree with him; he does ignore the real world and pretends that it is not there. Senator Walsh —It is something we picked up from you. Senator MASON —It is time the Minister went out and found out how people in the community live. They do not live as well as rich farmers from Western Australia who also get a Senate salary. It is time that the Minister went out into the real world and had a talk to them to find out what it is really about. He should have done that before he started cutting their incomes about in this callous and unregarding way. It is no wonder at all that this action is considered by the Defence Force and Commonwealth Public Service communities to be a breach of trust. It is a breach of trust. These people went into the service of this country on the clear understanding, as set out in legislation, that they would receive a certain income on retirement after paying a considerable amount of their salaries into superannuation. That promise is about to be broken. Their incomes will never catch up with what they should be. Every future increase will be calculated on a diminished figure, and it will become more and more difficult for these people to afford accommodation, food and the basic necessities. This will apply especially in the higher cost areas of the country, including my own constituency in the city of Sydney. It is my duty and my job to get up here and remind the Government of what it is doing to those people in Sydney. It is also my duty to implore the Opposition to do something. The Liberal and National people have a big responsibility here not to let this Bill get through. In spite of the decision they have made on this matter, they ought to vote against the legislation. They know what they should do as well as I do. I would like to read two quotes from letters that are not exceptional. We have had many letters on this subject and these quotes are indicative of the feelings of most people on superannuation. They are plain and simple statements, but they are to the point. The first is from a Mr Wrigley, who wrote: On joining the Public Service, I was forced to join the Superannuation Scheme and the relevant payment, as decided by the Government, was automatically deducted from my pay each fortnight. Over the years the pensions on retirement entitlements were published and, of course, in taking the final decision whether to retire or not, these entitlements were very carefully scrutinised. I can see what this gentleman is talking about. He had to assess the whole of his future-what he bought, what sort of car he would have, his house, his furniture and everything else-on what his expectations were. The average person's expectations would be based only on the superannuation payment. There is no way that he can go out and get another job and do things like that. We know what the job market is like now for elderly people. The second quote is from a Mr McLennan, who said: When I was employed by the Commonwealth Public Service, I understood that the conditions of employment were binding on both the employer and employee. One of the conditions was to contribute to the Superannuation Fund. Therefore at retirement I anticipated that the Government would honour its commitment to pay the superannuation pension in accord with the 1976 Act. His view is a perfectly reasonable one. One does not expect governments to break their financial undertakings. If a commercial organisation broke its undertakings in the way the Government is breaking this undertaking by using the weapon of legislation, it would be taken to court because it would be regarded as committing a crime. Senator Vigor —They would probably be put in gaol. Senator MASON —As Senator Vigor says, probably the person responsible would be put in gaol if he had managed to con elderly people into somehow accepting such a proposition over a period. What the Government is doing is a very serious matter. It is even more serious when we consider that in 1973 the Defence Force superannuation scheme was transferred from an investment trust to Consolidated Revenue on the clear understanding that contributors would be in no way disadvantaged. That is a matter of fact. No doubt the contributors felt that governments of the future would honour their commitments. Not only are those contributors being disadvantaged, but so are all future Defence Force superannuitants and all Commonwealth Public Service superannuitants. Members of the Defence Force are under a particular disadvantage in this situation. Because their contributions are paid into Consolidated Revenue, if members of the Defence Force decide to leave before 20 years service, I understand their contributions are returned to them with no interest. They are in effect giving the Government a subsidised loan through their superannuation contributions. When their final superannuation is calculated, they receive 35 per cent of their final salary after 20 years service. The Government now proposes to disadvantage even further these people who, in fact, give the Government interest free loans. As we all know, the armed forces are having the greatest difficulty in retaining well qualified professional staff. They are very badly paid. I have looked at service housing and things of that kind and I am concerned when I talk to senior non-commissioned officers whose job is to train people in parachuting, weapons use, skills and occupations demanding teaching skills and tact, and often with elements of danger. They are paid very small sums of money. Given their salaries, and the many moves that they have to make, it is not likely that they will save very much during their service career which, as we know, is short because they are retired early. They need this superannuation payment. Their retirement is based on their being able to rely on the superannuation payment. That is what the Government wants to destroy. The Minister for Finance finds this so unpalatable that he is now leaving the chamber. It is probably a damned good idea that he should. Senator Walsh —You will be leaving it permanently soon. Senator MASON —I hope that the Minister will be leaving it permanently soon. After the things that he said about us this morning, I think he should consider it. I have no respect for him. Senator Walsh —You will all be leaving it permanently soon-and a good thing too. Senator MASON —The Minister should get back to his dirt cupboard. The discounting of retirement benefits would greatly increase the rate of loss of professionals from the services. There is no doubt about that. Any organisation will tell the Government that. It will cost the Government far more than it will receive. That is what I meant about the Minister being a short-sighted elderly shark. He has not thought about those sorts of consequences, but they are there. Anybody in the armed services, anybody who has retired from them and any of the service organisations could have told the Minister that. Any of the higher officers in the Army could tell him this. The Government will lose people and money because of this action. It will be taxpayers' money that is lost in order for the Government to get a miserable sum of money. It will be just a few million dollars that the Government will get from it and it will lose a lot more than that. The Bill could very well prove to be counter-productive, at least in relation to the Defence Force. The Federal President of the Armed Forces Federation of Australia wrote to Senator Haines on 22 September. He made some very good points which I commend to the Minister. He said: At a time when Defence Force resignations are at a post-war high, such a proposal provides little incentive for retaining committed personnel. The Bill will have a heavy impact on what can only be described as marginal payments, yet the total savings expected could be lost by the resignation of less than ten front line pilots. That is what I mean by short-sighted and thoughtless. In the last two months the Royal Australian Air Force has lost 22 pilots, each trained at a cost to the community of more than $1m. They left the Defence Force because of just this sort of penny pinching measure. Indeed, over 560 male officers have resigned from the Defence Force this year. The cost to the Government of denying this Budget measure is estimated at $4.7m for Defence Force superannuation and $7.9m for public service superannuation this year. These are not massive amounts. By way of comparison, a massive $274m is being spent this year, not very far from here, on construction costs for the new Parliament House-that monolith that will cost over $1 billion. It will be the world's first $1 billion building. Does the Government have any right to bring in a Bill to cut back on an undertaking to people in order to save $4.7m when it is quite prepared to spend so much money on something that will not be of any real value to the people of this country? Flesh and blood should come before bricks and mortar. That is the way the Minister should look at it. We are aware that the $274m is being spent in an effort to have the building completed by the bicentennial year of 1988. Big deal! We must ask ourselves what is more important-the welfare of elderly people in our community or a massive and very expensive monument to the Parliament of this country. The Minister should think about getting rid of or perhaps deferring that ridiculous flagstaff which has cost such an enormous amount. The Opposition has said that it will support this legislation because it is a necessary part of Supply, because it is a Budget Bill. I often wonder whether the Opposition wonders why we are here. What are we here for? Are we here to allow the Government to get away with any kind of murder just because it does so in the context of the Budget? Of course we are not. In this instance we are not touching or meddling with Supply. We get the constant talk and buzz that every time we look at or try to stop a Budget Bill we are said to be blocking Supply. I want to deal briefly with this matter. The Bill that was blocked in 1975 when the Whitlam Government was dismissed was Appropriation Bill (No. 1). That action took away the overall revenues from the Government and it could not pay the public servants or continue with the business of governing the country. From our inception, the Australian Democrats have said-and we maintain this view-that we will never use our balance of power in the Senate to connive with the Opposition to block Appropriation Bill (No. 1). We never will. But that is another matter. It is deceptive and wrong to raise that issue. People who run around with the story that, because this is a Budget Bill, we must regard it as sacrosanct and that to vote against it is equivalent to blocking Supply are attempting to deceive the people. I know that everybody in the Parliament knows that that is so, but it is bad that people go around spreading this stupid idea which misinforms the Australian people. If the Opposition feels strongly about this, as it says it does in its amendment, it should vote with us against the second reading to defeat the Bill. The Bill ought to be thrown out. The Democrats believe that a clear breach of conduct is contemplated by the Government in this legislation and therefore it should be rejected as a matter of ordinary equity. Meanwhile, we have looked at the Opposition amendment. It has no real effect. It is an amendment to the motion for the second reading. It does not affect the Bill. It will have no effect whatsoever on what the Bill does. However, it says various pious and useful things. If the Bill passes, as, regretfully, I believe it may do, it is better that it pass with at least that attachment than for that attachment not to be there. We will support the Opposition's amendment and we will vote against the second reading of the Bill. Senator NEWMAN(Tasmania)(6.37) —I am glad that the Minister for Finance (Senator Walsh) is in the chamber because I must here declare my interest in this matter as the wife of a returned serviceman who fought for his country in Malaya and Vietnam. I am glad to have him here and know that that is why I have an interest in this matter. However, I am afraid that I must take issue with Senator Mason and immediately say that, although he supported the servicemen, I am afraid that the Australian Democrats are masquerading here and are hypocrites. The Australian Democrats talk about blocking the Budget and the legal distinction between what is a Budget measure and what is an Appropriation Bill but they were not too fine on that point over the years when they trumpeted about how they would never stop the Government's Budget measures. Senator Mason —We have said that we will not block Supply. Senator NEWMAN —The Democrats were very strong on this point. It seems to suit them to say different things at different times. Senator Mason knows as well as I do that the Government must answer for its Budget and this is a financial measure which affects the Government's ability to implement its Budget measures. Regrettably, we will not block this measure. I challenge Senator Mason to support our amendment in a meaningful way. This Government has been breaking promises to the servicemen. Senator Mason has said so. He has said that the Government is short changing the servicemen and the public servants with this superannuation measure. I would call it straight out robbery, and I do not think that that is putting too fine a point on it. Senator Mason —We will vote for your amendments. Senator NEWMAN —Thank you. I am very glad to have Senator Mason's reassurance. These servicemen and women, these employees of the Commonwealth, have been receiving pensions since the beginning of this financial year. It is interesting to look at the number of people who will be affected by this measure. As at 30 June 1985 the number of pensioners from the Department of Defence was 30,589, the number of public servants 74,635, and those from Papua New Guinea 714. So we are not talking about a small part of the Australian population; we are talking about a very large number of Australians who are having their benefits and entitlements stolen from them by this Government. I rather like Senator Mason's description of the Minister for Finance as the shark. That is apt and appropriate. I did not know that Senator Mason had such poetry in his soul. It would be interesting to know what the Australian Council of Trade Unions would have to say if its members were having cash refunds taken away from them. This is money taken out of their hands. Senator Walsh —You stupid woman, ACTU affiliates are being affected. They are the main people who are being affected, you silly woman. The ACTING DEPUTY PRESIDENT(Senator Townley) —Order! The words used by the Minister are unparliamentary. I ask him to withdraw. Senator Walsh —I called her a silly woman. If that is unparliamentary, I withdraw. Senator NEWMAN —Most Australians recognise that the ACTU represents people in work. It does not represent the unemployed or the retired. It only looks after people who are on better and better salaries through the present Government's inflationary system. I would like to know what Senator Cook, Senator Devlin and Senator Harradine would say if their union members were being asked to take a cut in wages. For example, our own parliamentary messengers in this place, many of them returned servicemen, took jobs here because they could afford to as they had some sort of back-up pension. Now Senator Walsh and his Government are cutting those pensions and taking away rights on which people have planned for their later years. The Government's lack of honour is demonstrated in the way it is treating mortgagors in the Australian Capital Territory. The Government has no regard for keeping its word and is totally without honour. This measure will save $4.7m this year and $6.3m in a full year. Let me go through some of the measures which the Government regards as priorities. For example, women surfboard riders can have $11,000, and Mr Keating can have $17,000-odd for not sleeping in his own bed. If one is a unionist, and only in that case, one will be able to take part in a $1m art in working life program, but a working person who is not in a union will not be eligible to participate. Prisoners take out $1.4m in dole moneys. Those who wish to defend the America's Cup are to be given $30m, but we cannot afford to defend our country. These are just a few ways in which this Government sets its priorities for spending its money. Senator Vigor —It is the people's money. Senator NEWMAN —It is the people's money; that is correct. If the Government gave more thought to where the money came from it would probably spend the money more wisely. The Government spends as if money is going out of fashion. Assistance to mortgagors and pensioners is being removed unilaterally. There has been no consultation and no consensus. Consensus applies only when it suits this Government. There is not opportunity for pensioners to put their case to any sort of industrial tribunal. We are talking about compulsory contributions which were made in the belief that the Government's word would be honoured. The Defence Force retirement and death benefit pensioners have contributed 5.5 per cent of their annual salary over 20 years; they were compulsory contributions. What are the effects on the recipients? Typically, they average about $9,900 a year and they will lose $161.54. Compare that with the age pensioners who are being asked to wait and who will lose $26.40. A submission from the Armed Forces Federation makes clear that a typical married service pensioner will receive only $231 a year more in the hand than equivalent recipients of the age pension, despite contributing 5.5 per cent of his annual service salary over 20 years towards the cost of his pension. The Federation points out that at a time when Defence Force resignations are at a post-war high, such a proposal provides little incentive for retaining committed personnel. The Regular Defence Force Welfare Association has pointed out that the change represents a diminution in the conditions of service for those now serving. It also says that there has been enough tinkering with conditions of service for members of the regular Defence Force over the past few years. Anybody who knows anything about the defence forces will recognise that there may have been tinkering, but certainly not enough attention has been given to the conditions of service of our servicemen and women. They are voting with their feet, and Senator Mason has already referred to the alarming resignations in the defence forces. At this stage I wish to refer to evidence given to Estimates Committee E on 18 September. Commodore Dickson said that the Defence Force was unable to maintain the professional standards that were attainable in times when more resources were provided. So there is criticism about what the Government is doing in the Services. Obviously the Services are not able to maintain professional standards when training time and steaming time are limited. Commodore Dickson in responding to a question by Senator MacGibbon said: There is a 23 per cent shortfall on HMAS Platypus as at present. We have 493 sailors out of a target of 603, so we have 81 per cent of the manning we desire. We have 92 officers out of a target of 111, or 82 per cent. That has come up since April. In respect of the other ranks, sailors have gone from 454 to 493 and officers from 86 to 92. It was said that there was an Army officer wastage rate of approximately 10 per cent. Any thinking Australian will ask what is happening. We cannot afford to go on like this. This country has only 0.8 of a pilot per aircraft. If these are not serious matters, I do not know what are. This Government is going on cutting away at any conditions of service that servicemen currently enjoy. Wing Commander Mills, who has recently retired, claimed in the Defence Force Journal that the RAAF manpower was at a critical point. He said that if loss rates increased without an increase in manpower allocation, operational tasks would have to be surrendered. Air Commodore Prior, referring to this matter in the Estimates Committee on 18 September, said: As to the effects of increased wastage rates and the necessity to shed tasks, this is a threatening issue that is with us all the time. It is no good this Government making the headlines as to what it intends to do about the defence forces. The fact is that when it comes to the crunch the Government is cutting, cutting, cutting at the conditions of the men and women who are here to serve and protect this country. These are not the only matters to be borne in mind. We all know what service people have to put up with in their terms and conditions of service. They face difficulties with removals and in many cases live in intolerable housing conditions. They have difficulties with their children and face educational problems in moving from State to State. Their spouses have problems looking for employment and they have a lack of extended family to give them support in times of need. This Government, to its credit, brought in Sue Hamilton to look into the conditions of service. She came up with a number of recommendations which the Services and the families have welcomed. But what has this Government done? It has set up a team-which is fine-and will monitor these conditions, but the progress of that monitoring will be private because no progress reports will be made public. The rest of us will not know what is happening to the conditions of service of servicemen and women, and I express my fears as to what will happen. Once these things get into the maw of the bureaucracy, where finance, national wage implications, flow-ons and industrial relations implications have to be taken into account, God help the poor servicemen because they are at the very end of a long line. With all these problems, these servicemen and women serve on. We know full well that they will serve on for their fixed terms until their retiring ages. They expect that in return, having put up with the inconvenience, discomforts and problems that service life brings, at least their pension entitlements will remain inviolate. This is typical of the way this Government treats servicemen. Look at what the Government did to the tax deductibility for the Reserve. My side of the Parliament told the Government what would happen about that, but it would not listen. What happened? The target last year for the Army Reserve was 26,500. Last year the Government started with 23,772 and finished with 23,539. The Government spent $2.5m on an advertising campaign in order to lose 537 men and women, but in the course of the year it lost 7,411 members of the Reserve. The Government lost 9,535 people in the previous year. So over two years it lost nearly 17,000 Reserve personnel from a force of under 24,000. So much for protecting this country. When we got to the Estimates Committee we found that the Department of Defence admitted that the efficient strength of the Reserve is only 17,000. That is the number of people who can be deemed to be in training. So the Government's figures, even for the Reserve forces, are pretty rubbery. The next item must be right up Senator Walsh's alley; it is probably due directly to him personally. We find that there are delays, sometimes up to months, in paying the men and women in the Reserve the amounts due to them. Is that on instructions from the Department of Finance? Senator Mason —That is right. Senator NEWMAN —Yes, that sounds right. That is the way it treats the servicemen. They used to get paid straightaway, but now they have to wait. In at least one State they have been attending some parades in their own time. Due to government restrictions on man days, courses have been cut for recruits and drivers and camp periods have been cut. Only the best shots are being given ammunition for weapons training because ammunition cannot be wasted. Bad luck if the enemy happens to meet one of those bad shots who has not had any training! A report has been given to the Hawke Government which recommends a continuous 3 per cent real growth in expenditure on defence. The Minister for Defence (Mr Beazley) is trumpeting that the proposal will be implemented, but what is the reality? We have a Budget with rubbery figures trying to demonstrate a one per cent real growth in defence spending, yet the Minister for Arts, Heritage and Environment (Mr Cohen) is boasting how he saved his Department from cuts. Obviously this Government's priority is for cakes, not bread. This nation cannot afford to put its defence and the welfare of its servicemen and women at the end of the queue. Our servicemen and women and their morale are vital to an efficient, trained defence force. Attempts such as this current legislation to cut once more and break one more promise on superannuation will be one more nail in the coffin of the defence of this country. We cannot afford this economy measure. I call on the Government to get its priorities right and I urge the Senate to support the Opposition's amendment. Senator WALSH(Western Australia-Minister for Finance)(6.54) —Oh so genteel, sanctimonious, ersatz upper middle class Liberals offer and pontificate about unions and industrial relations. In the process they exhibit their ignorance, and we have just had a magnificent exhibition of that tonight. Senator Newman should have stuck to the script that somebody else wrote for her and not decided to interpolate some comments of her own. She challenged the Government and Senator Cook, among others, to say what they would do if the Government were proposing something which affected the membership of the Australian Council of Trade Unions. The plain fact is that of the 112,000 people or thereabouts who will be affected by this measure, approximately 80,000 of them are Commonwealth superannuation scheme pensioners who have been or are members of Public Service unions, almost all of which are affiliated with the ACTU. Senator Newman is a silly woman who could not have been wider of the mark than she was. Three-quarters of the effects of this measure are directed at members or former members of unions which are affiliated with the ACTU. You could not have been more wrong, you dopy creature. The PRESIDENT —Order! The Minister will withdraw that remark. Senator WALSH —I withdraw. Senator Newman could not have been more wrong. Before she gets up, pontificating and throwing around what she thinks is a smart jibe at the ACTU, she had better do a bit of homework about unions, industrial relations, and who is affiliated with whom. Senator Newman declared that she had a vested interest in this question-and she does. I do not know whether she wants me to spell out some of the details of it. Her spouse receives a parliamentary pension of about $13,000 a year, having previously commuted a lump sum of $130,000. In addition to that he receives a Defence Force retirement benefits pension of another $13,000 a year or thereabouts, and he commuted a lump sum; I do not know how big that lump sum was. So he is doubly superannuated, as well as being a spouse of a member of the Senate. We have seen yet again the sort of disgusting performance from the coalition that we saw earlier today. The Australian Democrats were their usual mixture of irresponsible opportunism, coupled with occasional flights away with the fairies, whereas the Liberals displayed their usual stupidity, opportunism and cowardice. I will return to the question of cowardice when I delve into the Clayton's amendment the Liberal Party of Australia has moved, which demonstrates a fundamental cowardice and dishonesty. One point was made, if not in the debate in the House of Representatives then about which members of the Opposition in the House were told. This cowardly, tatty little amendment that has been moved on behalf of the Opposition expresses concern at the level of discounting of superannuation and Defence Force retirement benefits imposed by the legislation which has not yet been proposed in a national wage case. I know that there is an abundance of ignorance on the other side of the Parliament on all matters pertaining to industrial relations and unionism, but I would have thought that even the members of the Opposition might have noticed that there has already been a 2 per cent wage discount and that the Government is seeking a further 2 per cent wage discount. If they were too far or too often away with the fairies to have noticed that that happened, some members of the Opposition were briefed yesterday and told that that was the case. So the premise upon which almost the entire Opposition argument is based is patently false. I seek leave to continue my remarks later. Leave granted; debate adjourned. The PRESIDENT —Order! It being near the hour of 7 o'clock, I propose the question: That the Senate do now adjourn. Senator COLSTON(Queensland)(6.59) —Honourable senators will be aware that there have been allegations that the Premier of Queensland, Sir Joh Bjelke-Petersen, benefited from a defamation pay-out from Brisbane television station Channel 9. It has been suggested that Sir Joh Bjelke-Petersen received a settlement of $400,000. Today certain documents were released by the Australian Broadcasting Tribunal relating to its investigation of the Premier's out of court settlement. These documents did not reveal a settlement figure. It may be necessary for me to expand on my comments on this matter on a future sitting day. This evening, however, I just indicate to honourable senators that I have today made a request to the Australian Broadcasting Tribunal under the Freedom of Information Act. I have requested all documents held by the Tribunal relating to this out of court defamation payment. I trust these documents will reveal that settlement figure. I agree with the Opposition Leader in Queensland, Mr Warburton, that the matter must be pursued. In view of the gravity of the allegations which have been made, I trust that the Tribunal will act on my request expeditiously. Question resolved in the affirmative. Senate adjourned at 7.01 p.m.