Wednesday, 3 December 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 the Parliament of Australia assembled. The petition of the undersigned citizens respectively showeth that your petitioners are gravely concerned at proposed cuts to the functions of the Human Rights Commission. In particular the undersigned believe that the Human Rights Commission or any body that may replace it in December must be allocated adequate resources for complaint handling and equal opportunity. The functions at present carried by the Human Rights Commission and the additional responsibilities relating to ILO Conventions 111 require increased resources if the rights of Australian citizens are to be safeguarded effectively, particularly on States and Territories which at present lack anti-discrimination legislation. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 23 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of we the undersigned requests that: The Parliament express its concern at the disastrous effect abnormally high interest rates are having on farmers, small business people and families. Your petitioners pray that your House strive to eliminate this unjustified burden that is sending many hard working Australians to the wall. And your petitioners as in duty bound will ever pray. by Senator Brownhill (from 20 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned shows: That the proposed introduction of compulsory identification (ID) cards should be reconsidered and rejected because the system: (a) is not a cost-effective method of reducing tax evasion and social security fraud and, to the contrary, in the form proposed will facilitate such evasion and fraud; (b) will constitute an unwarranted infringement of individual privacy by the aggregation of a wide variety of personal information of a private nature; (c) will cause a further large and costly growth in the bureaucracy and burden on the taxpayer; and (d) cannot be guaranteed against misuse for purposes other than for which their introduction is stated to be intended and in fact provide the opportunity for blackmail and other forms of misuse. And your petitioners humbly pray that the problems which identification cards are intended to reduce should be attacked by other, more effective and less obnoxious methods. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 10 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: The Hawke Labor Government's ID card proposal is the most far reaching and intrusive piece of Australian legislation ever, and that on all the evidence available will not tackle in the most cost-efficient and effective manner tax and social security fraud. Your petitioners therefore humbly pray that the Senate in Parliament assembled should: Reject Labor's ID card proposal to prevent a gross waste of taxpayers' money and a significant infringement of civil liberties. And your petitioners as in duty bound will ever pray. by Senator Robertson (from three citizens). To the Honourable the President and members of the Senate in Parliament assembled. We the undersigned are deeply concerned at the impact of the proposed Australia Card legislation on the following grounds: 1. We believe that it represents potentially undesirable interference in the lives of honest Australians and is a grave interference in the civil liberties of Australian citizens; 2. That it will not address the problems of tax evasion and social security fraud; 3. That it will create unnecessary expansion of the bureaucracy; and calls on the Senate to reject the legislation. And your petitioners as in duty bound will ever pray. by Senator Brownhill (from 63 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia showeth: 1. That over 67,000 men, women and students enjoy the pursuit of their sport and recreation every year at the Anzac Rifle Range at Malabar and have done so since 1967. 2. The people of Sydney through their membership of 41 clubs headquartered at the Anzac Rifle Range together with a number of other community, school and commercial groups, the police and armed forces will lose this community facility if the Federal Government proceeds to sell the Range to private developers. 3. The Australian Bicentenary Fullbore Rifle Championships are to be conducted at the Anzac Rifle Range in April 1988 as part of the celebration of Australia's Bicentenary. Your petitioners most humbly pray that the Senate in Parliament assembled should ask the Federal Government to retain the Anzac Rifle Range for the continued use and enjoyment of the people of Australia. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 12 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The undersigned are deeply concerned at the impact of the new Fringe Benefits on the following grounds: Its severe and damaging effect on business confidence, investment and incentive, especially in the rural, mining and small business sectors. Its capacity to seriously worsen unemployment through the additional costs it imposes. Its extremely negative impact on the competitiveness of export industries at a time when the nation desperately needs to improve its trading performance. In that it may compel many honest decent citizens to defy Tax in order to preserve their livelihoods, their businesses and the jobs of their employees, thus causing hardship, the breakdown of respect for the law and discord within the community. Therefore most earnestly petition you to repeal the Fringe benefits tax Legislation forthwith. And your petitioners as in duty bound will ever pray. by Senator Brownhill (from 60 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned shows: That the Hawke Government should: 1. Pass on the full benefit of lower international oil prices; 2. Not increase or extend fuel taxes, and 3. Maintain its tax cut commitments. Your petitioners humbly pray that the Hawke Government honour its commitment to the Import Parity Pricing Policy. And your petitioners as in duty bound will ever pray. by Senator Brownhill (from 20 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 recognise 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. Your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from 11 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 an employer, association or trade union. 3. Will recognise only those schemes which provide genuine superannuation and reject those schemes which do not provide for- preservation of benefits to retirement vesting of employer contributions equal employer and employee Trusteeship control to ensure security of investments. And your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from nine citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that whereas: (a) Aboriginal and Islander languages, which numbered approximately 260 when Europeans first arrived, are even more seriously endangered-already 145 have become extinct. (b) English-speaking population expansion and English-speaking mass media expansion threatens the survival of the remaining languages of Australia. (c) Aboriginal languages reflect an ethos that is truly Australian and unless steps are taken to implement language maintenance, this ethos will be lost not only to Aborigines but to non-Aboriginal Australians, and to the world. We humbly pray the Government to: 1. Through the Prime Minister's Department, provide $300,000 per annum for a guaranteed period of ten years to enable the Aboriginal community of Australia to establish a co-ordinating body to implement steps to prevent the extinction of the remaining languages, and to introduce programmes which will enable these languages to continue into the future for the sake of all Australians. This body will enable us to maximize existing financial, material, and human resources, and is the least expensive way of implementing urgently needed maintenance programmes. 2. Through the Prime Minister's Department, provide finance for the establishment of Regional Language Centres-ten are urgently needed-cost $200,000 each. And we pray you may be conscious of God's sovereign purposes for our Nation. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 10 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned shows: That human embryos deserve legal protection to enable the development of their full human potential. Your petitioners request that the Senate, in Parliament assembled, should: Pass Senator Harradine's Bill to prohibit experiments involving the use of human embryos created by in vitro fertilization. And your petitioners as in duty bound will ever pray. by Senator MacGibbon (from 15 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: 1. that the result of the recent Queensland State Election, when the National Party received a comfortable majority in Parliament with a bare 39% of the votes, violates the rights of a majority of citizens to elect a government of their choice, and 2. that consequently there is an urgent need for electoral and constitutional reform at Federal and State level. 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 51 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of the undersigned citizens respectfully shows: That the Australian flag symbolises the continuity between Australia's past, its present and its future. The presence of the Union Jack on the flag represents not a subservience to Britain, but a reminder of our inheritance of the fruits of hundreds of years of struggle for individual liberty against the forces of tyranny and oppression. Nonetheless recognises the rights of the Australian people should they wish as a people to change the design of their flag. Your petitioners humbly pray that no change be made to the Australian flag except with the consent of the people in a referendum. And your petitioners as in duty bound will ever pray. by Senator MacGibbon (from 12 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth: That there is widespread community concern about the proposal to irradiate food in Australia. Your petitioners, most humbly pray that the Senate in Parliament assembled, should: 1. Block the introduction of food irradiation into Australia; and 2. ban the import of cobalt-60 and caesium 137 and caesium 134 to be used to irradiate food products. And your petitioners as in duty bound will ever pray. by Senator Macklin (from 799 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully shows: That we strongly support the A.C.T. Smoking and Tobacco Products Advertisements Prohibition Bill introduced by Senator Evans, because it represents the first positive national step towards the eventual elimination of widespread serious ill health caused by smoking tobacco. by Senator Vigor (from 150 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 there is a need for an Independent and Multicultural Broadcasting Corporation to give a firm legislative and financial basis for the SBS Network. Your petitioners most humbly pray that the Senate, in Parliament assembled, should pass Senator Vigor's Bill with all expediency. And your petitioners as in duty bound will ever pray. by Senator Vigor (from 108 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia showeth that the 1986 Census deprived housewives of the right to record their occupation and instead forced them to give the negative response: `No, did not have a job'. That the 1986 Census could have been used, at no extra cost to taxpayers, to give a genuine `Fair Go' to all women to record their views on the Government's National Agenda for Women. That coinciding with the 1986 Census, the Office of the Status of Women is conducting a costly, selective survey titled: `A Fair Go For Women'. This survey requires no identification of respondents, making the results of the survey highly suspect since it is known that various groups and individuals have obtained bulk supplies of the brochures, while the majority of women are not aware that their views are being sought by the Government. Your petitioners humbly pray that the Senate, in Parliament assembled, will restore to the Census a category for housewives, and that the `Fair Go For Women' survey will be recognised as a costly exercise of dubious value in determining the real views of Australian women, as this should be done through the Census, or a referendum held in conjunction with the next Federal Election to minimise costs, and to give all women a genuine `Fair Go'. And your petitioners as in duty bound will ever pray. by Senators Bjelke-Petersen (from 52 citizens), Boswell (from 24 citizens), Colston (from 12 citizens), MacGibbon (from 32 citizens), Parer (from 28 citizens) and Sheil (from 23 citizens). To the Honourable the President and members of the Senate in Parliament. The petition of the undersigned shows: That the number of accidents and ``near misses'' which have occurred in La Perouse Street between Flinders Way and Monaro Crescent due to the volume of traffic and excessive speed of vehicles using the street is of great concern to the residents of the area and to the parents of children attending Red Hill Primary School. A large percentage of the cars using this and nearby streets appear to take little notice of the many traffic warning signs in the area. Your petitioners request that the Senate, in Parliament assembled, should: Request action be taken by the appropriate authorities to install roundabouts at the intersections of La Perouse Street with Flinders Way, Hartog Street, Carnegie Crescent and Monaro Crescent as a matter of urgency in an effort to reduce the speed of traffic and, hopefully, the number of accidents. And your petitioners as in duty bound will ever pray. by Senator Reid (from two citizens). To the President and members of the Senate of the Parliament assembled. This petition of the undersigned citizens of Australia respectfully showeth that: 1. The introduction of an administrative charge for annual enrolment will restrict access to higher education for a range of disadvantaged groups, particularly women, rural dwellers and some low income earners. 2. Students will be deterred from study because of the probable escalation in the charge in future Budgets, prohibiting students' ability to plan the long term costs of their education. 3. The introduction of an administrative charge is contrary to the education provisions of the ALP/ACTU Accord and the ALP policy which states that the party ``will maintain the provision of free tertiary education.'' Your petitioners therefore pray that the annual administrative charge for higher education students not be introduced and that subsequent funding shortfalls be met from Government tax revenue. And your petitioners as in duty bound shall ever pray. by Senator Robertson (from 300 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. Australia is one of the few industrial nations which has unlimited access to unemployment benefits without requiring some return to the community; 2. the present method of paying unemployment benefits as ``money for nothing'' is individually destructive, demoralising and socially unjust; 3. schemes requiring community work to be performed in return for unemployment benefits, such as the Workfare system in the United States, are explicitly endorsed by the International Labour Organisation (ILO) Convention No. 44 on Unemployment; `Work for the dole' schemes are supported by the overwhelming majority of the community, especially young people, and has recently been supported by the Australian Council of Trade Unions (ACTU). Your petitioners most humbly pray that the Senate in Parliament assembled should: Legislate to introduce a system which provides community work which must be undertaken in return for unemployment benefits. And your petitioners as in duty bound will ever pray. by Senator Reid (from 30 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: (1) That we are totally opposed to the introduction of the Labor Government's Identity Card. (2) That this form of national and compulsory identification will be intrusive, costly for taxpayers and business and will not be effective in combatting the growing problems of tax evasion, illegal immigrants or social security. (3) That we are deeply concerned at the Labor Government's inability to provide effective and efficient methods to combat tax and social security fraud without resorting to expensive, ineffective and authoritarian measures which are alien to the Australian way of life. (4) That we call upon the Labor Government to improve management systems within the Australian Taxation Office and other departments to crack down on tax evasion and fraudulent practices. And your petitioners as in duty bound will ever pray. by Senator Messner (from 18 citizens). Senator REID(Australian Capital Territory) —by leave-I present the following petition, from 252 citizens of Canberra, which is not in conformity with the Standing Orders as it is not in the correct form: We, the residents of Griffith, Narrabundah and Red Hill consider that the traffic speed and rate of accidents, minor and major, necessitate the installation of a round-about at the intersection of Carnegie Crescent and La Perouse Street in particular and also at the intersections where La Perouse Street crosses with Flinders Way, Dalrymple and Monaro Crescent and Bremer Street. Petitions received. Senator MICHAEL BAUME(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the Senate notes that- (a) Australia's international credit rating has been downgraded by the Standard and Poor's agency in the United States, because of the size of Australia's balance of payments and debt servicing problems, following the massive rise in our overseas debt under 3 1/2 years of Hawke Labor Government; (b) this latest downgrading of our credit rating follows Mr Keating's claim of 16 September 1986 that `the major United States rating agency, Standard and Poor's Corporation, has re-affirmed Australia's AAA rating by making it clear that it is not about to undertake a review as Moody's has'; (c) this latest downgrading follows Australia's worst ever monthly current account deficit of $1.7 billion in October 1986, and news early in December 1986 that Australia's foreign debt has now reached an horrendous $94 billion; and (d) the only way to restore Australia's AAA international credit rating is to get rid of the Hawke-Keating Government, whose big-spending, big-borrowing policies have seriously worsened Australia's world standing. Senator POWELL(Victoria) —I give notice that, on the next day of sitting, I shall move: That leave be given to introduce a Bill for an Act to amend the Petroleum Retail Marketing Sites Act 1980. Senator GRIMES(Tasmania-Manager of Government Business) —I table papers in accordance with the list circulated to honourable senators. I seek leave to have the list incorporated in Hansard. Leave granted. The list read as follows- 1. Monitoring recombinant DNA technology: a five year review-recombinant DNA monitoring committee report. 2. The Pipeline Authority-Annual report 1985-86-Pursuant to section 45 of the Pipeline Authority Act 1973. 3. A.C.T. Registrar of Co-operative Societies-Annual report 1984-85. 4. Australian National Railways Commission-Annual report 1985-86-Pursuant to section 66 of the Australian National Railways Commission Act 1983. 5. Advisory Council for inter-government relations-Annual report 1985-86-Pursuant to section 7 of the Advisory Council for Inter-government Relations Act 1976. 6. Complaints relating to the protest at Pine Gap, November 1983-Human Rights Commission report-Pursuant to section 30 of the Human Rights Commission Act 1981. Debate resumed from 2 December, on motion by Senator Walsh: That the Bill be now read a second time. Upon which Senator Archer had moved by way of amendment: At the end of the motion, add `, but the Senate condemns the Government for pursuing disastrous economic and taxation policies which have- (a) created the current housing crisis; (b) resulted in high levels of interest rates; (c) reduced the number of dwelling commencements; (d) reduced the availability, and increased the cost, of rental properties; and (e) increased the public housing waiting lists'. Senator CRICHTON-BROWNE(Western Australia)(10.08) —We are debating the Home Deposit Assistance Amendment Bill 1986. This Bill will end the Fraser Government's home deposit assistance scheme. That scheme, at least insofar as it still exists, provides assistance to people who purchased homes between 18 March 1982 and 30 September 1983. It has been substantially superseded by the first home owners scheme introduced by this Government. The Minister for Finance (Senator Walsh), in his second reading speech, indicated that the home deposit assistance scheme is effectively obsolete, with applications for assistance coming at a rate of but four a week. As such, this Bill is little more than an administrative measure. However, what I do challenge is the contention raised by the Minister in his second reading speech that the Government accords home ownership a priority. He said-I quote his words exactly: We are committed to providing affordable and adequate housing for all Australian households. Senator Cook —Quite right. Senator CRICHTON-BROWNE —I say to Senator Cook: Let us talk about interest rates and the effect that this Government's interest rate policy is having on Australian home ownership. On 2 April this year the Government quite properly lifted the interest rate ceiling of 13 1/2 per cent on home loans. Of course, this was after it realised that the number of home loan applications was falling at a great rate because by and large funds had almost dried up. It is not without significance to note that the decision to lift the ceiling past the 13 1/2 per cent rate was made after the Western Australian State election, after the South Australian State election and notwithstanding the fact that the Treasurer (Mr Keating) had, on a number of occasions, declared unequivocally in the House of Representatives that there would be no lifting of the ceiling on home loan interest rates. It was another broken promise. It just so happened that on that occasion he finally made the right decision. Of course, the reason was that people could get higher interest rates on their money elsewhere. Banks could not afford to offer these rates. The reason is obvious. Because of this Government's policies, interest rates on home loans were so low that savings banks were attracting no funds. In fact, in one month last year the Westpac Banking Corporation lost $60m of its savings bank deposits because of its very low level of attraction to savers. The removal of the ceiling was a further step towards the deregulation of the Australian financial system that started under the previous Government. That is to be commended. What is to be roundly condemned, however-I say to Senator Cook as he leaves the chamber-is that the Hawke Government, both before and after that move, has followed an interest rate policy which has driven up the cost of home loans and personal loans. It has followed a tax policy which has contributed very significantly to the cost of houses. Its attempt to claim some commitment to Australian home ownership is revealed for the laughing stock it is when we consider the reasons why the Hawke Government has seen fit to thrust high interest rates on home buyers and the effect that this is having. The Hawke Government has maintained historically high interest rates as a means of supporting the Australian dollar. High interest rates, of course, as we all know, attract capital into Australia and dampen down domestic demand, thus reducing the desire to spend on imports. Capital inflows are therefore increased and outflows reduced, holding the value of the dollar higher than it might have been. It is a conscious and wilful decision of this Government to dampen down demand, to seek to draw the balance of payments closer to parity. It is a failed attempt, of course, but it is the best attempt that this Government can make to correct its previous wrong decisions. The Government has been forced to do this because it knows that if the dollar falls any further it will have an inflationary effect and that, of course, will sponsor greater union wage demands. So we will see inflation rise further, a blow-out in our balance of payments again, interest rates will rise and the value of the dollar will again fall. This vicious cycle will go on and on. The real problem for the Government in the devaluation of the dollar is that it has the potential to create greater inflation. That, of course, means that the Government, with respect to wage demands, will have to deal with the union movement. It has not been prepared to do that in the past. One has no reason to believe that it will do so in the future. As a consequence, Australians will pay higher interest rates. The effect this is having on Australian home buyers is of particular interest in this debate. Since the lifting of the bank interest rate ceiling in April this year, bank interest rates, naturally-as was expected, intended and desired-have increased. Home loan rates are presently as follows: Westpac-15.5 per cent, the Commonwealth Bank of Australia-15.5 per cent, the Australia and New Zealand Banking Group-15.5 per cent. The rates for the National Australia Bank vary from 15.5 per cent to 17.5 per cent, depending on how long the person has been a customer of the bank and, presumably his financial strength. I suspect that that bank is really testing the market. I am quite sure that it does not expect to lend any money at 171/2 per cent. I am certain that it is just testing the market. Two of Western Australia's leading building societies, the Perth Building Society and the Town and Country Building Society, also now charge 15.5 per cent interest on home loans. Naturally, the rise from 13.5 per cent to 15.5 per cent has lifted monthly repayments on home loans. I seek leave to incorporate in Hansard a table showing the extra amount that home buyers must pay on loans over 25 years. I apologise to Senator Grimes because I have not shown him the table. I did not expect that I would be speaking so early in the debate. Leave granted. The table read as follows- Monthly Payments: 25 year loan Loan size Interest rate 13.5% 15.5% ($) 30,000... 349.69 395.92 40,000... 466.26 572.90 50,000... 582.82 659.86 60,000... 699.39 791.85 70,000... 815.95 923.82 Senator CRICHTON-BROWNE —I thank the Senate. By way of example I refer to a loan of $50,000, almost the average or median loan in this past financial year. Repayments per month last year, at 13.5 per cent, were $582.82 a month. Now, at the new rate, repayments are $659.87. That is an increase in the range of $80 a month. The Real Estate Institute of Australia has indicated that the median sale price for houses in Perth, for instance, for the year to the June quarter was, in fact, $53,900. That was the median price for a home in Perth over that period. For this group of home buyers, the cost of just that 2 per cent increase, from 13 1/2 per cent to 15 1/2 per cent, on a loan of $50,000 has amounted to an extra increase in repayments each month from their pay packets of $77.50. If the home loan interest rate had gone down 2 per cent and was now 11.5 per cent rather than 15.5 per cent-if it had gone the other way by 2 per cent-the repayments on the same loan would be $508.32. That is $150 a month less that average home buyers would be repaying out of their wages if interest rates had moved the other way. Last year the average grant under the first home owners scheme was $4,053. Coincidentally, the average price of a house bought with assistance from the first home owners scheme was $53,200, very close, in fact, to the median price paid last year in the State of Western Australia. In effect, the assistance scheme therefore is not so much providing net assistance as simply compensating for the effect of this Government's high interest rates. In other words, that $4,000 that is going from other taxpayers to individual home purchasers represents the value of the interest rate rises resulting from this Government's policy. In fact, if interest rates fell by 4 per cent, down to the figure of 11.5 per cent to which I referred, the value of the average grant under the first home owners scheme would be saved in just 26 months, or slightly over two years, of interest repayments. In other words, that 4 per cent is equivalent to the amount that taxpayers are paying people who are eligible for the first home owners scheme grants. In respect of interest rates, I might say that if it had not been for the self-indulgence and big spending of this Government-particularly in its first two years of office, when government outlays increased in the first year by 15.7 per cent and in the second year by 12.9 per cent-of course we would not have the problem we have with interest rates now. If the Government, instead of spending and wasting the $4 billion windfall it got from the breaking of the drought in its very first year in office-if it had saved that and been prepared to cut and not spend, and if with this last Budget it had been prepared to cut rather than defer-of course we would not have the problem we have with interest rates now. We would not have interest rates at 15 1/2 per cent crippling people-young families, new families and middle income families-trying to buy homes. The average size of home loans in the last 12 months has grown very significantly. In fact, to June of this year in Western Australia the average size increase in the amount of loans was 4 per cent, and in Victoria it was 25 per cent. In part, of course, I acknowledge and accept that that is due to the fact that, with the lifting of the ceiling of interest rates from 13 1/2 per cent to 15 1/2 per cent, banks now have a greater capacity to lend. They are also not required to the same extent that they have been in the past to limit the amount of each loan to satisfy all their customers and they are able, of course, to lend each customer a greater amount. It is not without significance to note that, at a time when interest rates are up and the size of repayments is going up, so is the size of the loan required. So the average home buyer who is borrowing money is being squeezed from both sides. The Real Estate Institute of Australia computes a ratio of average home loan affordability by comparing the ratio of average home loan repayments to median family incomes. I seek leave to incorporate in Hansard a table recently published by the Institute. Leave granted. The table read as follows- State June quarter 1986 % June quarter 1985 % Australian Capital Territory... 19.5 19.4 Western Australia... 19.8 17.3 Tasmania... 22.6 17.5 Queensland... 25.2 22.8 Victoria... 27.2 21.8 New South Wales... 28.1 24.3 South Australia... 28.3 22.6 Australia... 26.5 22.3 Real Estate Institute of Australia Home Loan Affordability Ratio of average home loan repayments to median family income. Senator CRICHTON-BROWNE —I thank the Senate. The table is calculated on the basis of the amount of home loan repayments as a percentage of the gross income of the borrower. Australia-wide that figure has moved from 22.3 per cent of gross salary being paid on home loans in the June quarter of 1985 to 26.5 per cent in the June quarter of 1986. In South Australia, for instance, the figure has gone from 22.6 per cent to 28.3 per cent. So there has been a very significant increase in the percentage of the average income being absorbed in repayments on home loans. The Institute clearly shows that it has become more difficult for Australians to buy homes over the last year. Of course the primary reason for that must be laid at the feet of this Federal Government, as it well knows, for consciously and wilfully pursuing high interest rate policies. There is no doubt that high interest rates are having an effect on the ability of people to buy homes. New home approvals peaked in August of 1985 at 13,340 and have not reached that level since. The figures for the early part of this year may have been due to the interest rate ceiling and the simple absence of funds. Funds were not there so people could not borrow money and that dampened down the obvious demand and so we saw a decline in successful applications for funds. That, of course, does not explain the fact that in July 1986 approvals were 16.8 per cent lower than in July 1985; in August they were 26.6 per cent lower than in August of 1985; and in September they were 23.4 per cent lower than in September 1985. In 1984-85, 160,415 new dwellings were approved; in 1985-86, 140,000 were approved. This year the figure is expected to be about 130,000. So we are seeing a steady decline in the number of new dwellings approved for construction. The Australian Financial Review of 19 August this year stated: Following the government deregulation move in April, the provision of housing finance is no longer a major problem for the housing industry but, instead, movements in interest rates have a bigger impact on the demand for funds from potential home buyers. In other words, there is lots of money around now; the banks are only too willing to lend it. That does not inhibit demand; what is inhibiting demand is interest rates. We have seen a decline in applications for home loans not because the funds are not there but because people simply cannot afford to service loans because of high interest rates, which are due to this Government's decision to maintain interest rates at an artificially high level. There is no doubt that the fall in the number of dwelling approvals has had an effect on the building industry in general, but it ought not to be forgotten that the building industry, of all industries within Australia, has one of the highest multiplier factors. Not only do an enormous range of items go into building a house but also an enormous variety of goods are purchased when a home is built. Indirectly, the health of the white goods industry, to cite just one example, depends on the level of activity in the building industry. Related industries have been hit more directly by the Government's high interest rates policy. Personal loans now start at around 19 per cent and the percentage tapers out into the middle twenties. One would expect to pay about 23 per cent interest on a personal loan, depending upon one's finances. It is not hard to understand the effect that is having on consumer demand. The ability of people to furnish their own homes, if they can afford a loan, is savagely impaired by these high interest rates. I turn to another aspect of the housing industry. This Government's interest rates policy and its taxation policies are intimately connected with housing for the poorer sector of Australian society-a sector, I might say, with which this Government has so often, but so falsely, claimed to have an affinity. These are the people who cannot afford to buy a home at all and are forced into renting homes. The policies of this Government have, and will continue to have, an inflationary impact upon rents. Firstly, of course, there are the higher interest rates themselves. A property bought for rent is classified as a commercial property and is subject to higher interest rates. Rates for such properties vary, depending on the customer's circumstances, but indications are, for example, that the Commonwealth Bank is presently charging 19.5 per cent for commercial properties, the Westpac Banking Corporation from 19 per cent but mostly around 20 per cent or more, the National Australia Bank starts at 18.75 per cent, the Perth Building Society charges 18.25 per cent and Town and Country charges 18 per cent. The effect of these interest rates must be coupled with the recent changes that the Government has made to the taxation laws with which all Australians are now becoming so familiar. Previously, if a landlord paid more in interest on a property he was renting than rent he obtained in any one year, he could deduct the loss against other income he might have earned. Therefore, it was not so imperative that a profit be made in the first part of the ownership of the property so rented. Previously there was negative gearing. Previously there was a tax incentive for people to invest in commercial properties. Of course, the Government has since changed the taxation laws so that a landlord can no longer deduct losses made on interest payments for housing and, at the same time, it has introduced a capital gains tax. Because of these two measures, a landlord is now forced to obtain a much higher gain from his home rents. His remuneration in the form of capital gain is reduced while the effective interest costs have increased, both from the taxation point of view and in absolute terms as we have seen. In other words, the owner of a commercial property, directly and indirectly, is paying more for his money and, therefore, he is required to recover that by higher rents. That, in turn, means that low income earners, those who cannot afford a home, those who rely on rental properties for accommodation, are paying more and more in rent as a result of this Government's deliberate decisions. Yet, as I have said, this Government claims an affinity with the poorer groups in the community. As I have said, the combined effect of the Government's interest rate and taxation policies harm those people least able to afford it-those who rent their homes. I have spoken at some length about interest rates and the adverse impact that they are having on the whole gamut of housing. I would like to dispel any contention that, somehow, Australians cannot avoid the high interest rates from which they are now suffering. I have some interest rate figures for other countries. Admittedly, they are interest rates on government borrowings of five years or more and not housing interest rates. Nevertheless, I believe that they give a comparison of Australian levels of interest rates and those prevailing in the rest of the world. It is reasonable to assume that the current premium that Australian Government paper is holding over government paper in other countries would be similar for housing rates. Furthermore, in view of the fact that real estate lending is a particularly secure form of lending, I do not imagine that overseas housing rates would be more than perhaps a few percentage points above those for overseas government paper. I seek leave to incorporate the table in Hansard. Leave granted. The table read as follows- COMPARATIVE INTEREST RATES-AUGUST 1986 Country Interest rate Australia... 14.30 Canada... 9.16 Germany... 5.70 Switzerland... 4.20 United Kingdom... 9.13 United States... 7.72 Source: Main economic indicators OECD Reserve Bank of Australia Bulletin Senator CRICHTON-BROWNE —I thank the Senate. The table shows Australia's interest rate as 14.3 per cent, Canada 9.16 per cent, Germany 5.7 per cent, Switzerland 4.20 per cent, the United Kingdom 9.13 per cent, and the United States of America 7.72 per cent. In other words, Australian interest rates in real terms are a great deal higher than any of our trading partners or comparable countries. While this Government is claiming to be assisting home buyers with various schemes and its broader macroeconomic policies, the contrary is true. As a result of its policies, rents and home loan repayments are higher for those who can least afford them. The cost of properties is being driven up by the Government's policies. I find it obnoxious that this Government had the audacity in its second reading speech to say that one priority was to have a concern to ensure that all Australians had access to a home of their own. The Minister for Housing and Construction (Mr West) stated: We are committed to providing affordable and adequate housing for all Australian households. I find that the absolute antithesis of the Government's policies. I will conclude by touching on a matter that was raised last night in Senator Haines's closing remarks. She said that there is some merit in having tax deductions for interest rates on housing loans. I think she said that method is used in the United Kingdom. I am not certain about that, but it is used in the United States of America, as I recall. I do not think it is a terribly desirable feature of the economic landscape. It would have the effect of providing the greatest benefit for those on the highest income and it would necessarily cause a misallocation of resources, inasmuch as there would be a temptation for those on the highest incomes to purchase the most expensive homes and so gear their properties to ensure that they get the greatest tax deduction by the provision. This will allow them to withdraw from their gross income the amount they are paying in interest rates on their private homes. The best way that any government can help home buyers is by making it possible and affordable for them to buy their own homes. That can be done in the general larger macroeconomic sense by having economic policies which directly reduce interest rates. Everybody had a capacity to be able to afford his own home, to reduce costs indirectly and also make wages in Australia comparable with overseas wages so that our balance of payments is such that we do not have a poor and falling dollar which causes interest rates to be at the level they are at present. Senator GRIMES(Tasmania-Minister for Community Services)(10.32) —I thank honourable senators for their contributions and for their support for the legislation. I will make only a couple of points in the light of some of the remarks made by Senator Crichton-Browne. I remind honourable senators that in 1982-83 under the previous Government housing commencements in this country were 105,000; in 1983-84 they were 137,000; in 1984-85 they were 153,000; in 1985-86 they were 163,000; and in 1986-87 they will be 120,000. Senator Crichton-Browne —Yes, that is right. In other words, they dropped 30,000. Senator GRIMES —They are still 15,000 more than they were in 1982-83 when the previous Government went out of power. Senator Crichton-Browne —That is right. There are 16 million people in Australia now. In those days there were 13 million, for goodness sake. We have a greater population. Senator GRIMES —That is a great example. Senator Crichton-Browne has informed us that since 1982 we have had an increase in population of three million people. That is absolutely typical of the sort of nonsense that he has been saying. Of course, no one is happy with the present interest rate situation. We would prefer interest rates to be much lower and we are working towards that. But the 2 April package in fact did increase the availability of housing finance for all home owners. I thought at the time that people such as Senator Crichton-Browne agreed with what was done. Without the 2 April package there would be very few funds available for bank lending for housing. Since the introduction of that package cocktailing of housing finance has disappeared. This has enabled prospective home buyers to borrow from one source and at one interest rate. The total repayments under these new arrangements are significantly less than with a cocktail loan. For instance, $60,000 borrowed over 25 years at 15.5 per cent would cost about $782 a month. A cocktail loan made up of $40,000 at 13.5 per cent over 25 years and a $20,000 personal loan at 18 per cent over 10 years would cost $816 per month. I remind honourable senators that prior to 2 April funds at that lower interest rate were so limited and rationed that obviously the decision of 2 April had to be made. It has resulted in a much greater availability of funds. Again, I remind honourable senators that the number of housing starts for each year of this Government has been and will remain consistently higher than under the previous Government. I thank honourable senators. I have no reason to delay the debate. I commend the Bill to the Senate. Amendment negatived. Original question resolved in the affirmative. Bill read a second time, and passed through its remaining stages without amendment or debate. Debate resumed from 12 November, on motion by Senator Grimes: That the Bill be now read a second time. Senator WATSON(Tasmania)(10.37) —The Liberal-National Party coalition supports the International Financial Institutions (Share Increase) Bill, the purpose of which is to grant approval for Australia to take up an increase in its capital subscription in the International Bank for Reconstruction and Development and the International Finance Corporation. Both of the international financial institutions are associated with the International Monetary Fund which was established at the end of the Second World War to promote international monetary co- operation. As a member of the IMF, Australia is entitled to a certain quota of shares related to our international importance in economic and trade terms. The IMF conducts a general review of its quotas at intervals of no more than five years. In recent years reviews have resulted in substantial overall increases in fund quotas in response to a number of difficulties in the world economy. The World Bank group of which the International Bank for Reconstruction and Development is a part is perhaps the most influential intermediary organisation between developed and undeveloped countries. Following the devastation caused by World War II it was found necessary to establish an international investment institution to make and guarantee loans for productive reconstruction and development projects from both its own capital provided by member governments and through the mobilisation of private capital. The International Bank for Reconstruction and Development has two financial affiliates: The International Finance Corporation, the subject of debate today, which works specifically with the private sector in developing countries, and the International Development Association which has been the subject of legislation in previous years and in which we have increased our capital. The latter organisation became operational in 1960. The loan credits are provided only to the poorer developing countries on easier terms than the conventional International Bank for Reconstruction and Development loans. As I mentioned earlier, the legislation before us will approve an increase in Australia's capital subscription to the IBRD and the International Finance Corporation. It will also enable the Treasurer to make all the necessary arrangements on behalf of Australia to purchase, in one case, 815 additional shares in the capital stock of the International Bank for Reconstruction and Development, and 14,560 additional shares in the capital stock of the International Finance Corporation. It also empowers the Treasurer to determine the terms and conditions under which these shares will be bought and, where appropriate, to issue securities in payment. The Bill also appropriates the funds necessary to make payments under these arrangements. Both the Government and the Opposition concur that it is appropriate for Australia to register its support for the bank and its activities by taking up its full entitlement. Since its inception the aim of the World Bank group, of which the International Bank for Reconstruction and Development is a part, has not fundamentally changed, but of course its emphasis has. Its goal is to assist in the mobilisation of resources of the affluent and the afflicted nations to combat global poverty and to achieve sustained development. This is achieved by encouraging freer world trade, by adjusting the burden of Third World debt, and by shielding the development processes from volatile aid flows and financial markets. The bank and its associated institutions therefore played a major role in channelling the flows of capital, principally from the rich industrialised countries of Europe, North America and Japan, towards investment that promotes growth and development in the poor and mainly agricultural countries of Africa, Latin America and Asia, and providing a shield against volatility of global financial markets and aid fluctuations. Therefore we must consider the maintenance of a balance of investment and adjustment lending in each country. But more importantly, the bank must maintain flexibility both in the design and in the management of its activities, in that its structures must provide the best match between resources and the bank's requirements. Since the Second World War a great deal of construction and world-wide development has been directly attributable to international finance. Let us very briefly go back in history. During the 1950s the World Bank concerned itself in the reconstruction of the war-damaged European economies. During the 1960s international money was then redirected to infrastructure projects in the developing countries, principally in Asia. The 1970s saw a re-awakening within the Western world to the plight of those countries which were living in terrible poverty. Millions of dollars were diverted to alleviating poverty directly. Unfortunately, the availability of ready money encouraged many of the developing countries to borrow money which they could never be in a position to repay. So international debt has grown into such huge proportions that we can see major problems emerging in the near future, with countries whose economies are being slowly destroyed by a combination of huge debt repayments and a fall in commodity prices. At the beginning of November this year senior officials from 25 Latin American countries met in Lima to forge a common means of limiting repayment of the region's massive foreign debt which, in United States of America terms, amounted to $370 billion. But significantly, after only two days, they agreed to refuse to repay the debt under the present conditions. Instead they recommended that their debt repayments be indexed to their export earnings or other economic variables. The group has called on creditor nations to increase lending to the region on much easier terms. Australia, of course, is suffering under its own external debt problem, so we have some appreciation of the plight of countries such as Mexico and, to some extent, Chile, Peru and others. The industrialised nations need to tread very carefully with Third World debt problems and must recognise that inability and, at worst, refusal to pay for borrowings could result in major damage to the world economy. The bank also influences adjustments to Third World debt so that borrowings can once again become a stimulus to progress. Agriculture is of vital concern in the poorest countries, so it is vital that all facets of agricultural development, from research to production, be encouraged. Agricultural development is seen as central and critical in this vital battle against poverty. Additional factors such as population control, environmental protection and the role of women in society are important in the growth of a country and should be given prominence. For this reason the Liberal-National Party coalition sees absolutely no reason for the Australian Democrats' proposed amendment to the motion for the second reading of this Bill. That amendment principally is concerned with environmental factors. Environmental issues are central to the matters that are evaluated before these loans are made. Much wider than the Democrats' concern about environmental matters are other issues such as population control and the role of women in the economy. These are important because high population growth rates, for example, place significant strains on a poor country's resources and therefore must be controlled in relation to development. There is a need to ensure that women are fully integrated in, and contribute to and benefit from, development programs. Women do two-thirds of the world's work. They are responsible for gener- ating the bulk of the food of underdeveloped nations, yet in return they get a negligible percentage of total income and are amongst the poorest of the world's underprivileged, particularly in countries such as those in Africa. The World Bank aims to provide leadership, not only for sustained development but also for concerns such as these. I think it is the Democrats' lack of appreciation of all these factors that are taken into account which has led them to bring forward this amendment, which we believe is unnecessary and is grandstanding directed to one particular aspect. If they are to move an amendment of this nature why not make it wider to cover all these concerns, which incidentally the World Bank considers before it makes these loans? Export growth, the World Bank group believes, is crucial to debtor nations as it is the primary means by which these nations can earn foreign exchange to service their debt. As a result, it is vitally important that the Inter- national Monetary Fund ensures that the developed and the developing countries alike do not retreat too much into protectionism and delusions of self-reliance. The continuing economic growth in industrial countries, the greater surpluses which have been created by countries such as Japan and West Germany and the preservation of an open trading system, we believe, are important to some improvement. The major problem in the international debt scene today is the overproduction of commodities in Europe and the United States, which has led to a dramatic drop in commodity prices. This has resulted in the external debt crisis which is facing many developing nations. Of course, it is having an impact in Australia. The International Monetary Fund and its associated institutions have a major responsibility to ease the debt crisis by devising ways and means to help these debtor nations to service and manage their debts. The satisfactory resolution of debt problems will require close co- operation between all parties concerned. Australia's participation is significant in this area. The borrowing countries have to make fundamental contributions by persevering with programs of economic adjustment which strengthen their external position. This is particularly pertinent to Australia at present. The slackening of world trade growth in 1985-86 has caused current account imbalances in many developing countries to worsen. The stagnation in the oil price markets and the declining prices for other primary commodity exports have led to sharp deteriorations in many of these countries' terms of trade and especially have forced many Latin American debtors to apply austerity policies. This has resulted in a reduction in their current account deficits, but the consequences for economic growth have been serious. Most of these countries have suffered from substantially reduced real living standards in the 1980s, and I believe this is unfortunate. While Brazil and Argentina are now showing signs of a breakthrough, through currency reform and deregulation, other Latin American country debtors are facing serious difficulties and unfortunately have little room to manoeuvre. With debt servicing costs likely to exceed export earnings in 1986, the debt position in these countries can only worsen. Asian nations, of course, are also feeling the pinch. Close to home we find that Malaysia, a country that has been doing quite well, has already been forced to cut back on its industry development program because of the increasing debt servicing problems. Indonesia has been particularly affected by the fall in oil prices because oil and gas provide 70 per cent of its export revenue. Thailand and the Philippines depend primarily on commodity exports, and others have been hard hit by poor markets and falling prices. Singapore too is in its second year of economic recession and is facing serious structural problems. The World Bank group, one of the two instrumentalities at which we are looking today, operates on the premise that only growth will provide the income which can ensure debt ser- vicing and debt repayment. It is an institution which works for the common good of mankind. It embodies the philosophy that we are a community for a moral purpose, that the privileged the underprivileged work together for the betterment of society. On behalf of the Opposition I support these Bills. Senator MASON(New South Wales)(10.52) —At first sight the International Financial Institutions (Share Increase) Bill 1986 may seem unexceptionable, even worthy. It is good to give aid money. It may seem that it is a good thing just to give money to the big international organisations. After all, this eases the conscience without involving bureaucrats and governments in too much effort. It is just a matter of throwing money and hoping that something will happen. That, of course, is the reason for the amendment the Australian Democrats have brought forward, and I shall now discuss the background to it. Given the pathetic level of Australian foreign aid, reduced by 12.8 per cent in this year's Budget to less than 0.4 per cent of gross domestic product-probably the worst effort we have ever made since the War, as far as I can establish, although figures are not available for the earlier years-one would have thought that the greatest possible care would be taken to ensure that this money, which after all is the money of all Australians, was used with maximum effectiveness. Sadly, that is not the case. One hundred and eight million dollars of our overseas aid vote is in the form of multilateral aid provided through international development financial institutions such as the International Bank for Reconstruction and Development and the International Finance Corporation which, together with the International Development Association, comprise the World Bank. These institutions do not have a good record in terms of either the types of projects funded, the countries to which they direct aid or, specifically, the way that aid is administered. It is common knowledge that funds from the multilateral development banks have supported massive environmental destruction and dislocation of indigenous cultures. I was able to witness this myself-quite a long time ago, I must agree-but it was an eloquent case. Honourable senators may recall the vaunted Mekong scheme, which was to develop the entire Mekong River and its tributaries. I was at that time a South East Asia Treaty Organisation civilian adviser at Konkan in Thailand. I saw there the first pilot scheme of the Mekong scheme develop. Because of the nature of the terrain there it was not possible to create a dam except in a very wide valley. Because of the low hills it created a big, shallow body of water. This happened also to be the best and major area of rice growing country in the whole region. The land holders, who had farmed that area successfully and whose contribution to that economy was absolutely vital, were kicked off their land. They were not given proper compensation of other land because there was no satisfactory land to give them. They were given very small sums of money with which they were able to do nothing whatsoever. The Nam Pong Dam was flooded. I understand that even now the generators which it served are not at full production, and never will be, and that the majority of the electricity generated goes to providing air conditioners in the houses of a few rich people and a bit of street lighting in the towns. The village society there has no reticulated electric power, and never will have. It has no use for it. It is a complete disaster and was recognised as such, and as a result of that the Mekong scheme was scrapped. Unfortunately, the philosophy which lay behind that scheme still exists, and we can see a good case of that. For instance, the multilateral development banks have funded massive purchases by Latin American farmers of pesticides and insecticides which were banned from use in the United States. There is solid evidence that the staffs of the multilateral development banks have been doing a totally inadequate job in analysing and taking into account the environmental and human rights impacts of their projects, in spite of promises and commitments to do so. In 1980 the World Bank agreed, in the Declaration of Environmental Policies and Procedures Relating to Economic Development, to change its policies and practices to comply with the principles of sustainability, protection of biological diversity, conservation of nature and respect for indigenous people. It is all very well to say these things but not more than the barest lip service has actually been paid to them. Although the World Bank has established a small environmental office and has hired all of one full time ecologist and two anthropologists, this office is not part of the central project cycle through which projects are identified, prepared, appraised and implemented. Consequently this tiny staff, compared with a professional staff of over 3,000 people and the expertise and other resources devoted to environmental issues and indigenous people, is appallingly inadequate. This tiny, ineffective group, probably ineffective not through its own fault, was put in place purely to give some sort of expression to the declaration made in 1980. It has not gone any further than that. In some cases the inappropriate development proposals that have come forward have also had a whiff of corruption about them. The Burmah edible oil project funded by the Asian Development Bank is a classic example, a classic extreme instance, of the disastrous misuse of multilateral development funds. According to a forthcoming publication by the conservative Heritage Foundation in Washington, entitled The Ten Worst Multilateral Loans in History, funding of the Burma edible oil project proceeded despite countless warnings form Asian Development Bank officials that it was unworkable and instructions from an ADB vice-president that it be dropped. According to a former senior ADB economic analyst, Mr Peter Nelson, the appraisal report on the basis of which the project proceeded was full of deliberate misrepresentations. According to another senior ADB economist, Mr Robert Blakey, in about one third of the Asian Development Bank's projects inconvenient facts were doctored by bank staff. These are very serious claims which the Government should be investigating, as Australia has contributed over $2 billion to the ADB and is the bank's fifth largest shareholder. The question of bad loans by the ADB is not unrelated to the International Bank for Reconstruction and Development nor to the International Finance Corporation, which are the subject of this legislation. As the honourable member for Fraser, Mr Langmore, observed recently on Australian Broadcasting Corporation radio, the major problem with providing aid through multilateral banks is the absence of suitable accountability mechanisms. It is not good enough to throw people's money, billions of dollars, at projects and not insist on some sort of accountability. Why should such organisations dependent on member governments for money not have some kind of accountability to those member governments which, after all, have or should have accountability to their own taxpayers for the way they use that money? It is not good enough for the Government to say that it should not be accountable. This country's Treasurer is Australia's governor on the boards of the International Bank for Reconstruction and Development and the International Finance Corporation. Australia's voting in these institutions is decided by Treasury, not by the Department of Foreign Affairs. I ask the Minister present, the Minister for Community Services (Senator Grimes), to let me know whether there is any mechanism by which the Treasury is required-and I do mean `required'-to seek the advice of Foreign Affairs or the approval of Cabinet in relation to the decisions it makes. The recent World Bank loan to Chile is a perfect example of the cockeyed way Australia votes on multilateral banking matters. The Pinochet regime in Chile, as everybody in the world must surely know by now, is appallingly brutal and repressive. It probably has the worst record in the world and it is a continuing record. The Pinochet Government is not under any threat. It is an established regime which uses torture, imprisonment and murder regularly against its citizens and it has no justification whatsoever to seek funding from anybody for anything. Nor is there any reason to believe that funding will be used other than in an improper way by that Government. In the United Nations on 16 December 1983, on 14 December 1984 and on 13 December 1985 resolutions were moved condemning human rights violations in Chile. Australia supported these resolutions. The United States of America, interestingly enough, did not. Among other things, these resolutions reiterated grave concern at the persistence of and increase in serious and systematic violations of human rights in Chile, expressed once again concern at the disruption of the traditional democratic legal order and its institution through the maintenance of exceptional legislation and once again requested the Chilean authorities to respect and promote human rights in compliance with the obligations it had assumed under various international instruments. Australia supported these resolutions, thus accepting, and reasonably so, that Chile is the home of a brutal and corrupt regime from which no saving grace can be claimed whatsoever. We then voted to lend Chile money. We actually voted to provide succour to the Pinochet regime when even the United States abstained. The United States Information Service, in explaining the reasons for the abstention, stated: After carefully weighing all the relevant factors-including economic, human rights and United States statutory criteria-we've decided to abstain today on the World Bank's structural adjustment loan for Chile. While we appreciate the merits of the particular loan, as well as Chile's free market economic policies, we also recognize the absence of a corresponding free and responsible political environment, together with serious, persistent human rights problems are matters of great concern. Our abstention on this loan reflects the serious concern of the United States over human rights violations in Chile. How nice it would have been if we could have had a statement here last week saying that our abstention on this loan reflects the serious concern of the Australian Government and of Australia over human rights violations in Chile but, of course, we did not get that. I go on to quote from the United States Information Service: As greatly as we value and commend that considerable economic freedom that has been established in Chile, we must also voice our firm conviction that political freedom and respect for individual rights are indispensable to the establishment and maintenance of free societies. It is either tragedy or farce that Australia, which has been criticised for tagging along behind the United States on World Bank decisions, has chosen this Chile loan, of all things, to strike out on its own. I think that one can feel the hand of Treasury heavily on the Chile loan vote. It would not be too unkind an interpretation, I believe, to conclude that insistence on ignoring political or human rights considerations was an attitude on the part of Treasury to preserve its monopoly over World Bank matters. If so, I suggest it has gone too far for this Parliament and much too far for the Australian people, who would thoroughly disapprove of this action. As the honourable member for Fraser (Mr Langmore), one of the more progressive members of the Government, said this morning, economic, political and human rights issues cannot be separated when discussing World Bank matters. Until there is an arrangement by which World Bank decisions are integrated with our foreign policy, tragedies such as the Chile loan approval will continue. This boils down basically to a matter of laziness on the part of the Government-the attitude that the Government thinks it has done something useful provided it throws money at something. The more money the Government throws at something, the better, because it is only one decision it has to make instead of four decisions which might more properly and reasonably have been made, or maybe 40 or 50 decisions which would have said that we will, as we did after the end of the Second World War, finance very carefully investigated projects such as those under the Colombo Plan. We not only put in money in a carefully considered way to small individual projects, but also expertise and people. We gained ourselves tremendous prestige, especially in Asia and in the Pacific, because we were willing enough not only to throw money at things governmentally but also to actually help people on the level at which they needed action, and to consult them first. The average peasant farmer in Asia, who has to be a pretty shrewd cookie to keep himself alive, is able to say what he wants. It is just that nobody ever listens to him. He wants improved breeding stock for poultry, improved fruit tree varieties and fencing wire so that he can keep marauding animals away from his orchards. He wants aluminium roofing for his house. These sorts of things are required desperately. Aluminium roofing on houses alone might cut down the number of deaths from water carried communicable diseases, especially among children, to half of what the number is now. Perhaps we could prevent half a million deaths a year if we provided aluminium roofing, but no; this is not good enough. Somebody would have to do some work; somebody would have to get of his butt and decide on these individual projects. It is much easier for us simply to throw money to these people and believe, in a pious way, that we have done something of some value. It is because the Australian Democrats recognise that there has to be a degree of control over the ecological and community aspects of aid programs that we have brought forward a rather unusual amendment which, I understand, is the longest amendment ever to be put before the Senate. It is an amendment to the second reading of the Bill. This amendment lays down some work for the Treasurer and his staff to do. As part of the Treasurer's governing capacity in this area, he must insist that certain proper and reasonable matters-matters of concern-be done. Believe me, if everything in this amendment were done probably hundreds of thousands of people, who will die, would live prosperously. It is a matter of that order of importance. This amendment is a direct challenge to the Government and the Opposition to recognise that there is a problem and that it is our problem. It is not only our problem because we are spending the money of the Australian people by giving aid but also because we are citizens of the world as well as of Australia. Surely, if we give this aid we must feel that there is a necessity for proper control over that money. The Democrats put forward this amendment as an amendment to the second reading of the Bill. It does not oblige us to do anything; it simply asks the Treasurer to do certain things-that it is the Senate's opinion that certain matters require attention. Every word in the amendment is thoroughly backed and thoroughly documented. Every bit of it can be justified by experience and by environmental and ecological organisations and those who work in the field. On that basis I ask the Government and the Opposition to accept this amendment, by agreement, and not to ignore it. By ignoring it they will be ignoring deficiencies only a few of which I have detailed in my speech and for which I feel we are all responsible. However, that lies in the past. How much worse it would be if we allowed that situation to continue, quite cold-bloodedly, quite cynically, into the future. I move: At the end of the motion, add: ``, but the Senate is of the opinion that the Treasurer, as Governor for Australia of the International Bank for Reconstruction and Development, and as Governor for Australia of the International Finance Corporation, should (a) vigorously promote a commitment of these institutions to add or strengthen professionally trained staff to undertake environmental review of projects, or have development management plans to increase substantially the environmentally trained staff engaged in review of the ecological impacts of prospective projects; (b) vigorously promote changes in these institutions in their preparation of projects and country programs that will encourage staff and borrower countries to- (i) actively and regularly involve environmental and health ministers, or comparable representatives, in the preparation of environmentally sensitive projects and in bank-supported country program planning and strategy sessions, and (ii) actively and regularly use the resources of available non-governmental conservation and indigenous peoples' organisations, consistent with international procurement policies, in the preparation of environmentally sensitive projects and in bank-supported country program planning and strategy sessions; (c) vigorously promote a commitment of these institutions to increase the proportion of their lending programs supporting environmentally beneficial projects and project components, protection of indigenous peoples, and appropriate light capital technology projects (examples of such projects include small scale mixed farming and multiple cropping, agroforestry, programs to promote kitchen gardens, watershed management and rehabilitation, high yield woodlots, integrated pest management systems, dune stabilization programs, programs to improve energy efficiency, energy efficient technologies such as small scale hydro projects, rural solar energy systems, and rural and mobile telecommunications systems, and improved efficiency and management of irrigation systems); (d) vigorously promote the establishment within the International Bank for Reconstruction and Development of a component which would provide training in environmental and natural resource planning and program development; (e) ensure that there is a thorough evaluation within the Australian Government of the potential environmental problems, and the adequacy of measures to address these problems, associated with all proposed loans for projects involving large impoundments of rivers in tropical countries, penetration roads into relatively undeveloped areas, and agricultural and rural development programs (the potential environmental problems to be addressed in such evaluations to include those relating to deterioration of water quality, siltation, spread of water borne diseases, forced resettlement, deforestation, threats to the land, health and culture of indigenous peoples, topsoil management, water logging and salinisation in irrigation projects, and pesticide misuse and resistance); (f) call for, by 30 June 1987, separate and special meetings of each of the Boards of Governors of these institutions to discuss their environmental performance, and ways in which this performance can be improved, including alternative projects considered and alternative configurations of projects with specific attention to environmental problems associated with the following categories of projects: large impoundments of rivers in tropical countries, penetration roads into relatively undeveloped areas, and agriculture and rural development projects; (g) in preparation for the meetings referred to in paragraph (f), request the preparation of reviews by the institutions, from available information, of their environmental performance over the past decade with respect to the categories of projects referred to in paragraph (f), and request that these reviews specifically discuss the environmental problems explicitly referred to in paragraph (e); and (h) prepare and submit to the Parliament by 30 June 1988 a report documenting the progress the institutions have made in implementing the environmental reform measures described in paragraphs (a) to (d)''. Senator GRIMES(Tasmania-Minister for Community Services)(11.07) —I thank honourable senators for their contribution to this debate and for their support of the legislation in general. I briefly respond to Senator Mason's remark on the International Monetary Fund loan to Chile. First of all I point out that the Australian delegate, the executive director, made a public statement dissociating the vote of the South Pacific constituency group, not just Australia, from any suggestion that we may support the outrageous behaviour of the Chilean Government. Our opposition to the Government in Chile is well known and has been well known since the tragic events of 1973. I remind Senator Mason that, if Australia and other nations vote in the way he suggested, that sort of reaction could be used in the consideration of future IMF loans to other nations in the South Pacific constituency group. The second point is that it was not Australia alone which voted in this way; Australia casts a vote on behalf of a number of constituents in the South Pacific, as Senator Mason knows. So the constituency vote was the view of that whole group. To suggest that such a vote was support for the regime in Chile is quite wrong. For several reasons I cannot accept the amendment moved by Senator Mason. Firstly, I am not for one minute suggesting that the motives behind the amendment and the end result of what is suggested in it are not worthy. However, I do not think it is sensible to pass amendments as detailed as this literally telling the Treasurer (Mr Keating), the Department of the Treasury and others involved in the International Bank for Reconstruction and Development step by step how they should go about assessing the ecological and environmental aspects of loans of this type. They already do so; they already have meetings about this matter and it is part of the conditions of IMF loans. Secondly, I certainly cannot agree that the Australian Government should go into detail about the potential environmental problems and inadequacy of measures in other countries. We get into enough trouble in this country doing that in Tasmania and Queensland let alone trying to do it in sovereign nations throughout the world. Our Tasmanian colleagues complain about a little interference in Tasmania even though it is part of this country. Senator Mason wants us to tell everyone in the world how to conduct his business. I take into account the fact that the amendment was put in a serious way and that the points made by Senator Mason are serious points. I accept that they are serious points; I accept that mistakes of the type he has put forward have been made. However, for the reasons I have stated I cannot accept this amendment even though it is the largest amendment ever put forward in the Senate. I am afraid it will be the largest amendment ever defeated in the Senate. I urge honourable senators to support the International Financial Institutions (Share Increase) Bill 1986 unamended. Question put: That the amendment (Senator Mason's) be agreed to. The Senate divided. (The Deputy President-Senator Hamer) Ayes . . . . . . . . . . . 7 Noes . . . . . . . . . . . 53 —— Majority . . . . . . . . . 46 —— Haines, J Sanders, N. K. Macklin, M. J. (Teller) Siddons, J. R. Mason, C. V. J. Vigor, D. B. Powell, J. F. Archer, B. R. Lewis, A. W. R. Aulich, 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. Ray, RobertCollard, S. J. Reid, M. E. Colston, M. A. Reynolds, M. Cook, P. F. S. Richardson, G. F. Crichton-Browne, N. A. Robertson, E. A. Crowley, R. A. Ryan, S. M. Devlin, R. Sheil, G. (Teller)Durack, P. D. Short, J. R. Elstob, R. C. Sibraa, K. W. Evans, Gareth Tate, M. C. Foreman, D. J. Townley, M. Gietzelt, A. T. Vanstone, A. E. Giles, P. J. Walsh, P. A. Grimes, D. J. Walters, M. S. Jones, G. N. Watson, J. O. W. Kilgariff, B. F. Zakharov, A. O. Knowles, S. C. Question so resolved in the negative. Original question resolved in the affirmative. Bill read a second time, and passed through its remaining stages without amendment or debate. Debate resumed from 17 November, on motion by Senator Walsh: That the Bills be now read a second time. Senator PETER BAUME(New South Wales)(11.21) —Any private overseas student studying in Australia needs to consider at least two questions. The first is whether the Government of this country intends to move towards full cost recovery for education services provided to those students. The second question is: If a government does intend so to move, at what rate? The Overseas Students Charge Amendment Bill 1986 and the Overseas Students Charge Collection Amendment Bill 1986 which we are now considering seek, firstly, to increase a variety of charges; secondly, to increase some of those charges by very large amounts; and, thirdly, to extend the charges to new groups of students. The charges will range fairly considerably, from $300 annually for private overseas students in secondary schools, through $740 for private overseas students studying in technical and further education institutions, up to amounts of $5,506 yearly for students of medicine, dentistry and veterinary science who start their courses after 1 January 1986. The matters for consideration by the Senate are the two issues that I raised above. The first is whether it is appropriate to move towards full cost recovery. The second is what is an appropriate rate at which to move. I will consider those two questions in order. The first, whether it is appropriate to move towards full cost recovery for private overseas students, requires some consideration of the philosophy which should underlie our acceptance of and welcome to students from other countries. I start with the proposition that Australia does have international obligations and regional responsibilities which extend to offering educational services to people living in our region and from overseas. It is my contention and the contention of the Liberal Party of Australia and the National Party of Australia that those obligations are best met in the area of education by the provision on a generous basis of free places on an agreed government to government basis and covered explicitly in the foreign aid vote. That is the approach that was taken by Sir Gordon Jackson in the report of the Committee to Review the Australian Overseas Aid Program which he put down and which dealt with the question of private overseas students. The approach was not that Australia should withdraw from its international obligations but, on the contrary, that Australia should acknowledge and accept them, should cover them explicitly in the foreign aid vote, should maybe double the present numbers but, having done so, should provide those places on a government to government basis as part of our regional and international obligations and at no cost to the students. This would be a significant improvement on the present scheme. The present scheme provides government to government aid but it has been mainly for postgraduate places. The subsidy for private overseas students until now has been a partial subsidy for many people, not a complete subsidy. It has been universal in the sense that all overseas students have been able to avail themselves of the partial subsidy and it has been hidden; that is to say, it has not been made explicit just what contribution is being made, on the basis of proper international obligations, by the taxpayers of this country. Two reports were produced for the Government in the last couple of years-the first by Professor Jack Goldring, the Dean of Law at Macquarie University. That report was entitled the `Review of Private Overseas Students Policy'. The other was a chapter in a report produced by a committee headed by Sir Gordon Jackson. They took completely different views. The Goldring report suggested-correctly, by the way, I believe-that Australia gains much from the participation in our education system of students from our region and from other countries outside our region. We gain in many ways; no one contests that. Professor Goldring, in attempting to deal with the problems that existed within the system, came up with what were extremely inadequate and inappropriate solutions and recommendations. He recommended, for example, spreading the overseas students rather more thinly and limiting the total enrolment in any particular faculty, but he did not refer to what were the underlying structural problems-that is, if one offers a subsidy in the name of international obligation, in the name of benefiting our region, it should be explicit, and it should be on a government to government basis, and it should be complete for those students. We think that government to government places for students from overseas should be supported by the foreign aid vote and should be outside the educational budget. Students who come in under those provisions should be additional to the quota of places provided for resident Australians. In one step that would end many of the problems we have on Australian campuses today. The private overseas students, of course, are a different group. The private overseas students who study in Australia are, by definition, those not covered by government to government arrangements. Having adopted the Jackson approach and having said that that is how we should handle the government to government students, the next question is: How do we decide what is the correct way, the fair way, to handle the provision of places for people who are other than government to government students-the private overseas students? We believe it is appropriate to seek to encourage their enrolments and participation, but to have them pay for the services they receive because, after all, they are not part of our foreign aid effort. Our foreign aid effort has been made, or should be made, explicit and separate, and it should be generous. We should therefore seek to encourage the enrolments of other private overseas students, to have them pay for their places, and to allow them to be enrolled in Australian universities-again separate from the quota provided for resident Australians. In this way the displacement of local students from our tertiary institutions by overseas students would end and, if it ended, much of the difficulty we face on campus today, much of the quite ugly racist tension and many of the racist slogans we see on campus would go because Australian students could no longer feel that they were being displaced by overseas students, and they would not be displaced any longer. This is why the Opposition parties have favoured the approach of Sir Gordon Jackson and have tended not to favour the approach of Professor Jack Goldring. We have much regard for Professor Jack Goldring. We think that on this matter he got it wrong and Sir Gordon Jackson got it right. Professor Goldring offered no relief from the problems; rather, he sought to hide them by recommending a dispersal of private overseas students between a greater number of campuses. He confused the problems of government-sponsored and of private overseas students. We commend the Government for having shown a disposition to support Sir Gordon Jackson's recommendations. They are the better recommendations. The second issue which must be considered in looking at this legislation is: What is the appropriate rate at which a government should move towards full cost recovery for that group of students who are private overseas students? It is a much more practical question. It involves issues of fairness and issues of efficiency. Let us look first at the question of fairness, particularly at the situation facing some private overseas students in which they believe that they may face sudden and unpredictable increases in charges for the courses in which they are already enrolled. We handled this matter in the Senate last year. I recall that I moved successfully, with the support of the Australian Democrats, for the insertion of a 15 per cent ceiling on the amount by which the fees could increase annually. We moved an amendment which limited to 15 per cent the annual increases in fees for students who were already enrolled in courses. We took the view that anyone coming here after the passage of the legislation would have had a clear indication of the intention of this Government, and that it was the students who were already enrolled that we wished to support and protect. The present legislation does reflect the effect of that amendment. The Government has increased fees for existing enrolled students by 15 per cent. We believe that, in regard to new enrolments after the Government's action in 1985, there was adequate notice of the Government's intention and that it is not necessary, either on equity grounds or for any other reason, to modify the Government's intention, whatever it is, for students hoping to come here now as new students under the new rules. So the rather large increases proposed for new students in this legislation, whatever we think of them, are not an ambush. They were signalled a year ago. They are not entirely unexpected. They are steps along the road to full cost recovery. Whether or not we would have introduced them, they are consistent with what we laid down last year as the de minimis position in terms of equity which we were seeking to have achieved. They will not remove the three class structures for private overseas students which now exist. So we now have those who are on full fees-those students who, since 1985 at least, have been permitted to come here on full fees; I do not know whether any actually are here, but that possibility was written in by the Government-those on part fees at the new and higher rate, and those on part fees at the controlled rate, a rate controlled by the work of the Senate last year. We do not applaud the Government for its clumsiness or its harshness in the way in which new students will find themselves facing very-- Senator Button —Don't be mean, Senator. Give us a bit of a clap. Senator PETER BAUME —I am sorry that Senator Button feels so sensitive about this matter. But new overseas students will face considerable difficulties as a result of the Government's Budget decisions. But at least the Government has acted in line with the signals-whatever one might think of the signals-it sent last year. For those reasons we do not oppose this legislation. We still, however, come back to the new vision of tertiary education which we are seeking and which we want to see characterised by a belief in excellence, by a belief in choice, by better access to tertiary education, by greater flexibility in provision of tertiary education, and by more accountability. We believe that, if we wish to increase access, it must be possible for those from overseas who wish to come here and pay their way so to do. They can go to North America and seek to pay their way-whether or not it is subsidised to some extent, as Senator Macklin pointed out last night-and they can go to England and seek to pay their way. They should be able to come to this country and do the same thing. Our vision seeks to encourage as many as possible from our region to seek their education here rather than in North America or the United Kingdom. We would like to see many of them here as guests. We would like to see many of them here as part of arrangements between governments. We would like to see them here paying no fees. As part of our obligations to our region and to the world, we would like to see them here receiving their education as guests of the Australian public. We would like that done, however, openly, on a government to government basis, as part of our foreign aid effort. We would like to see many others here who do not come under those arrangements. We would like to see them here on a fee-paying basis. We believe such an arrangement will enhance the community goodwill which will flow to Australia. It will benefit Australia by giving us exposure to many people who will enrich our university and college life. It will enhance the quality and range of our tertiary education, and it is a Liberal government that will provide such a system and seek such a freeing up. Having said that, the Opposition supports the overseas student charge legislation and does not intend, however much sympathy we may have, to support any amendments which would go further than we went last year in laying down limits upon the Government as to how it may, in its wisdom, increase or vary the fees which private overseas students have to pay. Senator MACKLIN(Queensland)(11.36) —The Australian Democrats are opposed to the Overseas Students Charge Amendment Bill and the Overseas Students Charge Collection Amendment Bill. As the Opposition has already indicated that it will support the Government on these Bills, we propose nevertheless, since we will have a Committee stage, to move some amendments at that stage. I would like to spell out why we believe that the Government is on a track which is not beneficial to Australia and which ultimately will be detrimental to our interests. The Bills, particularly the Overseas Students Charge Amendment Bill, propose higher charges for overseas students and extend that charge to students who hitherto have not been liable for such a charge. As the Government foreshadowed in 1985-Senator Peter Baume has already pointed this out-the overseas student charge for higher education students who commenced their courses in 1986 will now move to 45 per cent of full average costs from 1987. For new higher education students the rate will also be 45 per cent of full average costs, and students who commenced their study prior to 1985 will pay a 15 per cent increase in 1987, bringing that charge to the equivalent of 32 per cent of full average costs. From 1987, the charge is also to be extended to overseas students in schools and colleges of technical and further education. TAFE students who have commenced their courses prior to 1 January 1987 will pay 32 per cent of the average Commonwealth contribution to TAFE costs, and new students will pay 45 per cent. Secondary students will pay a flat rate of $300 a year. For higher education courses-that is, for university and advanced education courses-the overseas student charge from 1 January 1986 will now be $3,850 per student in medicine, dentistry and veterinary science, and $3,056 for students in other courses. Overseas students who commenced their courses after 1 January 1986 will be paying $5,506 per student in medicine, dentistry and veterinary science, and $4,666 for students in other courses. Because of the debate we had last night, I think it is important that people know at this juncture that overseas students in higher education will be paying the $250 fee. This charge, of course, is incorporated into the fees I have already mentioned. If the administration charge had not been introduced, the overseas student charge for students commencing courses before 1 January would have been $4,100 or $3,306 or, for those who commenced after 1 January 1986, $5,756 and $4,916. So there has been a shuffle with regard to the overseas student charges. The Minister for Education (Senator Ryan) last night said that overseas students would not pay the fee. That is not the case; it has been incorporated into the charges. The equity with regard to these charges certainly should be questioned. I believe that there is a danger that the charge is reaching, or may already have reached, a level where students from low income families will no longer be able to afford an Australian education. In other words, we are now looking at students coming from wealthy overseas families who will, of course, be able to afford the average cost, with subsidies of probably up to 55 per cent. The level of the charge and/or its administration, I believe, is acting as a disincentive to students to embark on an education here. I think this has been accepted by the Government, if one looks at the Budget Papers. Budget Paper No. 1 states that the increased charges to apply in 1987 are estimated to yield an additional $7.3m in revenue `after allowing for reductions in overall student numbers compared with 1985-86'. In other words, the Government knows that it is cutting back on the absolute numbers as well because of these charges. Unrealistic assumptions are being made of the extent to which our education system can be marketed overseas simply to earn foreign currency. When Australian fees reach a certain level the benefits of an Australian education drop compared with the status of an American or British education for what might in fact be marginal additional costs. This applies at least for wealthy families in the region. Meanwhile, the poorer families, of course, increasingly will miss out. The report of the Goldring Committee of Review of Private Overseas Students Policy, which was delivered in 1984, pointed out that most overseas students come from families which are not wealthy by Australian standards. Hence, I think we are impinging on a significant group. It is unfortunate that we will be moving into the more elitist area with our education, which of course is still subsidised. I believe that the Indian institutions will become much more attractive, particularly to students from Malaysia and Hong Kong. Since the Indian institutions do not differentiate between home students and those from abroad and all government and grant-aided higher education institutions charge the same low level of fees to all students, and since the subsidies in the Indian circumstances are over 90 per cent for medicine, 75 per cent for engineering and 70 per cent for other graduate courses, fairly obviously those institutions will now be much more attractive than those in Australia. I believe that increasingly that will put India in a position to be of major assistance and it will, of course, allow India, in terms of its foreign affairs, to be much more successful than Australia in years to come. The question is whether our overseas student system is becoming one that will neither provide assistance to the poor and middle class students of developing countries, with all the intangible but real benefits that come to Australia from their education, nor generate much foreign income, as the so-called hard-headed economic rationalists take over and run this Government. The Opposition has declared in this debate its intention, if it comes to government, to raise the private overseas student charge to full cost recovery by the mid-1990s, as a reiteration of that which was mentioned in the House of Representatives. The charge will be paid directly to the institutions and the aid component of education for overseas students would be provided solely and directly through the Australian Development Assistance Bureau of the Department of Foreign Affairs in the form of a government to government scholarship. That is to say, education aid would go through that government to government mechanism rather than through the present mixture of ADAB-funded students and private overseas students. Those who support totally going through a government to government scholarship system only would argue that subsidised private education student schemes advantage students from wealthier families to too great an extent. We believe there are problems also with the government to government scholarships because they are prone to policies of patronage by receiving governments, no matter how insistent the donor government-and no matter how insistent our Government-might be on the type of students it would ideally like to see gain from the scholarships. A generously subsidised private overseas students scheme will provide access to students from poorer families in developing countries to an Australian education system, and we believe that this would be of great advantage to Australia. In passing, it is interesting to note that New Zealand in May this year abolished its overseas student fee for quota students, New Zealand, like India, also seeing the advantage that can come from attracting overseas students and providing that support to them. All senators would know and have experience of significant overseas projects which have been very economic to Australia because the people conducting them have had their education in Australia. That goes without saying. We are possibly cutting off our nose here to spite our face. On the Overseas Students Charge Collection Amendment Bill, in the Committee stage we intend to seek the support of the Opposition to reduce the burden by allowing students to make payments in four equal instalments throughout the year. We are concerned that this Bill extends the liability for the payment of the overseas students charge to holders of overseas post-graduate student scholarships and other awards. We are totally opposed to such an extension. It will damage research and teaching in Australian universities and, more generally, damage Australia's contribution to the exchange of ideas between different countries. I think the short term financial gains from this extension are highly dubious. The extension of the charge to this category of student means that either the number of awards offered will be reduced so that the remaining awards can be increased in value to cover the charge, or that scholarships will no longer be attractive to gifted students as they will have to pay more than half their stipend to the Government simply to pay the visa fee. The chief effect of the Bill as it stands will be to extend liability for the charge to holders of new post-graduate scholarships awarded by Australian institutions, new students provided with awards by Australian institutions and new students provided with awards by Commonwealth departments or authorities granted after 1 January this year. It also removes exemption for holders of post-graduate scholarships from the Australian-American Education Foundation. Existing as well as new students on Foundation awards are to pay the charge. Of course, the Bill exempts a number of categories-holders of scholarships awarded by United Nations agencies and Commonwealth and secondary school students under short term exchange schemes, as provided, for example, by Rotary. The latter category was included in the Bill which was introduced in the House of Representatives. I raised this matter here with the Minister for Education. She said that that had not been the intention, although the Bill introduced in the House of Representatives showed that it was the intention. The Government moved an amendment in the House of Representatives in line with the Minister's statement to the Senate so that those categories are now exempt. It is illogical to require Australian-American Education Foundation scholarship holders who begin study before 1 January 1987 to pay the charge while holders of university granted scholarships are not liable until after 1 January. I am not sure whether this is a pay back to the Americans because of trade or what it is, but it seems a bit odd. What post-graduate students do in universities, and particularly their role in teaching, and the repercussions of the legislation on them, may not have been evident to some of the Minister's advisers. Such students have always played a very important, and increasing, role in teaching. If their teaching function in universities is lessened because of this charge, there will have to be more face to face contact by university staff. That will take them out of their research and significant problems will come from this. I should like to quote various people from universities as to the type of effect these people who actually work at the coal face, as distinct from the bureaucrats who draw up these types of Bills, see in the introduction of such charges. Professor Lennon, Dean of Earth Sciences at Flinders University, has said: Over the last decade, reduction in financial resources available within universities has resulted in significant staff reductions, thus making it more and more difficult for staff to devote adequate time to personal research effort as well as to teaching. In recent years, many research projects have continued to be pursued successfully only because of involvement of research students. Another effect, perhaps not very widely recognised outside the departments involved, concerns teaching. As reductions in university funding began to bite, some of the earliest casualties were junior fixed-term academic appointments (tutors, demonstrators, senior tutors and senior demonstrators). Science and Engineering teaching generally involves a very long commitment to tutorial and practical classes and many of the front-line teaching staff positions in these areas have disappeared. Most departments have managed to continue such classes until now, mainly through strong part-time support by postgraduate students. If the supply of able postgraduate students were to dry up, our system of practical and tutorial classes is likely to be at risk. This is interesting considering the problems with science and engineering that Australia is suffering, which have been documented extensively, oddly enough, by the Minister for Science, Mr Jones, in the other place in recent times. This is a most extraordinary situation. Also, Professor Clyne, of the German Department at Monash University, pointed to another area which people might not think would be damaged. He said: Many of our own graduate students study abroad on scholarships provided by overseas governments or universities. Some of them are engaged in research on languages other than English and need this experience to perfect their language skills-- I interpose that a number of those students are involved in Australia in studying Aboriginal languages and they study overseas to perfect the skills that are necessary for the study of Aboriginal languages. Professor Clyne continued: Such scholarships are not, on the whole, subject to reciprocity by Australia. It would be unreasonable to expect foreign countries to let our students study at their universities free of charge if we impose such exorbitant fees on our visiting scholarship holders. That problem has not impinged on the bureaucrats or the Minister, or they have chosen to ignore it. In a very interesting Science Show on 22 November 1986 Professor Fred Smith, Head of the Department of Physics at Monash University, referring to the problems with engineering and science in particular, put the situation clearly when he said, amongst various other things: In the face of this massive, long-term shortage of trained personnel, the Federal Government appears determined to shoot itself in the head by placing many areas of university research in jeopardy through the extension of the overseas student charge to encompass higher degree candidates receiving university scholarships. Approximately 40 per cent of university research is conducted by postgraduate students undertaking higher degree studies. He went on to say: Currently approximately one in five postgraduate students in science and engineering is from overseas. These students have become vital to the continuity of research programs essential for the training of Australia's future R and D workforce. It would be wrong to believe that the benefit lies entirely with the students. The stark reality is that without them research in certain areas, much of which has potential commercial benefit, would cease. Research programs require several years from conception to reach fruition, extending well beyond the candidature of an individual student. It is essential for the continuity of the program that there are succeeding generations of graduate students who have the opportunity to benefit from the skills and expertise of their more senior colleagues. This would not be possible without overseas students. Aside from the direct benefits that Australia derives from the research undertaken by overseas graduate students, the training they receive here further establishes the links with the research communities in their home countries. These have been instrumental in establishing Australia's prominence in the Asia-Pacific scientific community. The barrier that the overseas student charge will place before the very highly qualified applicants from the People's Republic of China- I raise that in particular because the Minister was there recently making a lot of rhetorical statements- is particularly inappropriate at a time when the Australian Government is actively promoting stronger industrial links between the two countries. I think that is an item for which we will pay dearly in the years to come. It is another of the short-sighted operations which is damaging our relationship with a country which is incredibly important to our development and our links in this region. I finish the quotes from Professor Smith by referring to something which I think is absolutely true. He said: But in the case of the post graduate students, I believe quite honestly that they are bringing more benefit to the country than the actual benefits that they are taking away. Anybody who has had anything to do with teaching in universities in recent times will know that that is perfectly true. I have alluded to holders of post-graduate awards from the Australian-American Education Foundation who come from America to study in Australia and get a stipend of about $8,100 which is roughly equivalent to that paid to the holders of Australian Government post-graduate awards. An extension of the charge will not affect many students but again I believe that it makes little sense. As far as I have been able to establish about 12 Americans who are studying or are about to study will be picked up by this charge. I understand it is probable that the Foundation will bear the liability for the charge for existing award holders in Australia and possibly for those about to take up the 1987 awards, should these students no longer be exempt. Of course, that is the case. If the Foundation does this, surely it will have to reduce the levels of its other awards or the number allocated. This could include awards made to Australians studying in the United States. According to the Foundation's report for 1985 released in September this year a total of 32 Australians were assisted in their studies in the United States by the Foundation. Twelve Americans are assisted here and 32 Australians are assisted there. Who will suffer? It will be the Australians. The funds for both awards-awards to Americans who come to Australia and Australians who go to the United States-are out of the same pool. That pool is administered by the Australian-American Education Foundation in Canberra. Quite frankly, I do not think we can squeal too much because, if we look at page 107 of Budget Paper No. 6, we see that the estimates for the Foundation are $240,000. Let us then look at the agreement in Article 10 under which these funds are given. Article 10 of the agreement between the Government of the Commonwealth of Australia and the Government of the United States of America provides for the financing of certain education and cultural exchange programs and fees are made available. That Article very clearly states that we shall: . . . make available to the Foundation one half of the new funds needed to finance the approved annual budget. I seek leave to incorporate in Hansard the article. Leave granted. The article read as follows- Article 10 Funds and property of the United States Education Foundation in Australia derived from sums made available to such Foundation by the Government of the United States of America pursuant to the Agreement of November 26, 1949, as amended, shall be available to the Foundation to be used for the purposes of this agreement. The Government of the Commonwealth of Australia shall, as and when requested by the Government of the United States of America for the purpose of this agreement, make available to the Treasurer of the United States of America such portion of the funds provided for in the Agreement of November 26, 1949, as amended, as has not been made available to the Treasurer of the United States of America by the time such agreement is terminated and superseded by this agreement. In addition to the funds described in the preceding paragraphs, there may also be used for the purposes of this agreement any other funds held or available for expenditure by either Government for such purposes and contributions to the Foundation from any source. Beginning in the financial year 1964-65 (United States fiscal year 1965) the Government of the Commonwealth of Australia and the Government of the United States of America shall each make available to the Foundation one half of the new funds needed to finance the approved annual budget. The performance of the commitments made in the preceding sentence shall be subject to the availability of appropriations to the Secretary of State when required by the laws of the United States of America, and to such internal procedures as may be required by the laws of the Commonwealth of Australia. All such funds and any accruals, as interest or otherwise, arising from investment or other use thereof shall be available for expenditure by the Foundation for purposes of the present agreement, within the budgetary limits established pursuant of Article 3 hereof. Senator MACKLIN —So we are not paying our full way and we have not pulled our full weight. We are now down to about 40 per cent of that funding and the United States is paying 60 per cent. So when our students in the United States are damaged I do not think we will have a leg to stand on. We really will not be able to squeal and Australian students will suffer yet again. The final category of student holders we are concerned with are those in receipt of awards by Commonwealth departments or agencies. These include schemes such as the Commonwealth scholarship and fellowship plan which is administered by the Department of Education, in the case of those students from developed Commonwealth countries such as Canada, and by the Australian Development Assistance Bureau in the case of students from other countries. I understand that the imposition of the charge in such cases will almost certainly reduce the number of scholarships available. The relevant departments will pay the charge out of the funds reserved for the awards. Those who are still getting the awards will not have to bear the cost of the charge. But to achieve this situation there will have to be fewer awards. It is a pity that only a certain number of students are currently able to take up those awards. The overall situation is that our best students are the ones likely to be affected-that is, students who receive institutional and Commonwealth awards. I think it is a pity that we will be able to afford fewer of those people who will provide the backbone for Australia's research and development. Overseas students are not the only ones who will be affected. Graduate and undergraduate students will be affected because of the reduction in teaching capacities in our universities and colleges of advanced education. Australia has argued very strongly in the international market-place for a free flow of, for example, its agricultural products and an imposition of free trade in that area. I had hoped that Australia would have been in the forefront in attempting to get these types of student exchanges acknowledged by the various countries. I believe that the extensions contained in the Overseas Students Charge Collection Bill will inhibit that type of flow and the type of work that Australia is doing in the international arena. I think it is likely to bring Australia into difficulties with a whole range of other countries and I think the long term effects will certainly outweigh the short term financial benefits that the Government is seeking to gain. As I have already mentioned, I am particularly concerned about the circumstances between ourselves and China. In anybody's terms China must be seen as one of the major areas that we have to develop. I had hoped that the Minister's recent trip to China would have deflected the impact of the charge, at least in that area. Unfortunately, that has not been the case. I think we will suffer extensively and, to our detriment, these students will be picked up by New Zealand which has removed its charge and they will be picked up by India which, as I have already pointed out, has very low charges. Senator RYAN(Australian Capital Territory-Minister for Education)(12.02) —I thank honourable senators for their contributions to this debate. The purpose of the Overseas Students Charge Amendment Bill 1986 and the Overseas Students Charge Collection Amendment Bill 1986 is to set the level of charge for overseas students coming to Australia to study. Although there is a variety of views about how this program should best be handled I must say that, at one level, I am pleased that there is agreement amongst honourable senators that the overseas students program is important to Australia, to the host countries and to relations in the region. There is not any argument suggesting that the program should be abandoned. The fact that there is general approval of the program is an important development. However, there are different views about how the program can best be handled and can best be paid for. I understand that Senator Peter Baume still favours the Jackson approach arising from the report of the Jackson Committee on Overseas Aid which, in summary terms, is charging all students full costs and then having a series of scholarships. That is not the line that our Government chose to pursue for reasons that I have stated many times and I will not take up the time of the Senate by restating them now. However, it is important to remember that we are still very substantially subsidising a program for overseas students. The cost of the subsidised program next year will be in the vicinity of $88m. Despite the sorts of criticisms that Senator Macklin might have about our commitment to our region I do not think there can be any argument that that is a substantial commitment to the educational development of our region and one that we intend to maintain. The size of the program not only is being maintained through additional policies, such as the opportunity for overseas students to study in Australia on a full cost basis, but also, generally, is being expanded quite dramatically. The subsidised program is remaining at the very high level it was when we came into office. We are simply requiring students to make a greater contribution than was originally the case. We need to do that for economic reasons. I do not think any honourable senator would suggest that the Government has revenue available to it to maintain an entirely free access or nearly free access to Australia for overseas students. It is no longer possible for a government to do that. I believe that we have balanced all considerations and come up with a very fair and practical way of continuing what has been and will continue to be a very successful program. I point out too that, despite the kind of criticism Senator Macklin has made, we have no evidence at all that there has been any drop in demand for the subsidised places. It seems that there are still very large numbers of students in our region who are prepared to make the contribution required by us to their university or college place in Australia. I remind honourable senators and those listening to the debate that we are still subsidising 55 per cent or more, depending on when the students started their courses, of the cost of overseas students studying in Australia. Given the pressures on our Government in the education area, I think any fair assessment would be that that is still a substantial contribution. Senator Macklin seems to be in some confusion about the relationship between the $250 administration charge and the cost to subsidise overseas students. In fact, there will be no extra cost arising from the charge to overseas students. What will happen is-- Senator Macklin —I did not say there was an extra cost. Senator RYAN —I think it would be desirable if Senator Macklin were to listen rather than interject because he has clearly misunderstood, as he so often does, the procedures for implementation of the policy. What will happen is that the overseas student charge-- Senator Haines —Tell us the last policy you implemented. Senator RYAN —I do not need to explain to Senator Peter Baume, because I think he understands it. The Australian Democrats are determined to shout and scream and not to listen to the explanation. Nonetheless, for the sake of the record, I will persist in the explanation. The overseas student charge will be discounted by $250. The student will pay the $250 but the charge will have been discounted. So there is no net additional cost to the student but, for reasons of administrative efficiency, the charge will actually be handed over by the overseas students, but it will be discounted. There is general agreement and agreement by the coalition parties that the legislation should go through. There is a variety of views about how we can best maintain and develop our overseas students program but, essentially, I think all honourable senators accept the value and worth of the program. I thank them for their consideration. Question resolved in the affirmative. Bills read a second time. The Bills. Senator MACKLIN(Queensland)(12.09) —Because of the interweaving of the Overseas Students Charge Amendment Bill and the Overseas Students Charge Collection Amendment Bill my amendments (2), (3) and (4) to the Overseas Students Charge Amendment Bill are really connected to the amendments that I wish to move to the Overseas Students Charge Collection Amendment Bill. There are really only two issues involved in all of these amendments. I seek leave to move all the amendments to both Bills together and suggest that we simply deal with the two issues separately. I think that is the simplest way of doing it. Leave granted. Senator MACKLIN —I move the following amendments to the Overseas Students Charge Amendment Bill: (1) Page 4, paragraph 6 (a), proposed new sub-section 6 (4), lines 25 to 27, leave out ``(not being a post-graduate student who is the holder of a scholarship awarded by the Australian-American Educational Foundation)''. (2) Pages 4 and 5, paragraph 6 (a), proposed new sub-section 6 (4a), lines 39 to 44 and 1 to 15, leave out the sub-section, insert the following new sub-section: `` `(4a) For the purposes of this section, an overseas student who is enrolled in a technical and further education course for a year (in this sub-section referred to as the ``enrolment year'') is an eligible overseas student in relation to the enrolment year if the student- (a) was enrolled in a technical and further education course before 1 January 1987; and (b) was or is enrolled in- (i) that course; or (ii) if the student has, on one or more occasions, transferred his or her enrolment to another technical and further education course-that other course, for the enrolment year and for each year after 31 December 1986 and before the enrolment year.' ''. I move the following amendments to the Overseas Students Charge Collection Amendment Bill: (1) Page 1, after clause 2, insert the following new clause: ``2a. Section 4 of the Principal Act is amended- (a) by inserting in sub-section (1) ``sub-sections (3) and (4) and' after `to'; (b) by adding at the end the following sub-sections: `(3) The charge in respect of the enrolment of an overseas student in a prescribed course for a year may be paid in four equal instalments and, in that case- (a) the first instalment is due for payment by the student on the day on which the whole of the charge would otherwise have been due for payment in accordance with sub-section (1); (b) the second instalment is due for payment by the student on 15 May in that year; (c) the third instalment is due for payment by the student on 15 July in that year; and (d) the fourth instalment is due for payment by the student on 15 September in that year. `(4) Where, but for this sub-section, the amount of an instalment would be an amount that includes a fraction of a cent, the last instalment in a year is increased by the least amount that will result in the earlier instalments for that year being equal instalments of an amount that does not include a fraction of a cent.'.''. (2) Page 1, clause 3, proposed new paragraph 4a (1) (a), line 16, leave out ``before 1 January 1987''. (3) Page 1, clause 3, proposed new paragraph 4a (1) (a), line 17, leave out ``and who commenced that study before that date''. (4) Page 3, clause 4, leave out the clause. I wish to speak only briefly to the amendments I have moved to the Overseas Students Charge Amendment Bill as I will rehearse the arguments at the Committee stage. Amendments (2), (3) and (4) are consequential on the Overseas Students Charge Collection Amendment Bill. I have read out a number of extensive quotations. Will the Minister for Education (Senator Ryan) respond to the problem expressed by many people in tertiary institutions concerning overseas students-who are, as I point out, one in five of all students-who pick up a lot of work demonstrating as tutors and carry a lot of the load in terms of research? Senator RYAN(Australian Capital Territory-Minister for Education)(12.11) —The views of many institutions have certainly been conveyed to me. Concern has been expressed that the effect of imposing the charge on post-graduate students will be a decline in the research effort. I am treating these concerns very seriously. I have asked the Australian Vice-Chancellors Committee to monitor the effect very carefully so that if there is such a diminution of research effort, as has been predicted, the Government will have this information available and will be in a position to review that particular aspect of the charge. Senator MACKLIN(Queensland)(12.12) —I thank the Minister. I presume that such a review will take place towards the end of an academic year. If this turns out as predicted, I imagine that the Minister will then be looking at a review for the next academic year? Senator RYAN(Australian Capital Territory-Minister for Education)(12.12) —Yes, I expect that preliminary information will be available by about April, which will be in time for the Government to take steps in the Budget should it make that decision. Senator MACKLIN(Queensland)(12.13) —I thank the Minister. I wish now to refer to the other topic which is really almost solely contained within the Overseas Students Charge Collection Amendment Bill. I refer to the way in which this charge might be able to be paid. Since the charge is there and since the Minister and the Department of Education in particular have been involved in what can only be called some very unfortunate incidents in terms of deporting people who are studying in Australia because of non-payment of fees-a visa charge-I would have thought that it is in the interests of the Government and of the students to come up with a more satisfactory way of payment. I remind honourable senators that the amounts we are now talking about are considerable even in Australian terms. I think most Australian families will be hard pressed to come up with that amount of money in one hit. Senator Peter Baume —What are you suggesting? Senator MACKLIN —My suggestion in these amendments is that payment be made in four instalments over the year. The idea of the instalment system is two-fold: Fairly obviously it will lessen the burden at any particular time and will also do something in terms of the Government's invidious situation with regard to deportations. I would have thought that if there was an instalment operation the leeway between one instalment payment and the next could be taken as the grace time, as it were. When a student got to, say, the second or the third instalment period, whatever it happened to be, and had not paid the previous instalment, it would be obvious to the student, his family and the Government that that student would not be in a position to be able to afford the fees over that year. What happened in a case that the Minister knows well is that the student was finally able to come up with that money a day or two later. But getting all that money together must be an enormous burden for many families. I would have thought that since this will be almost, but not quite, revenue neutral it might alleviate the Government of that type of embarrassment. It is an embarrassment not only to the Government but also to Australia because it does not give us good publicity in papers in overseas countries. It will also assist students and their families in meeting these ever rising costs. Senator RYAN(Australian Capital Territory-Minister for Education)(12.14) —There are many problems with the amendment proposed by Senator Macklin to allow students to pay the charge four times a year. It would quadruple the administrative burden on the overseas students State offices and on the Department of Immigration and Ethnic Affairs regional offices. Those two offices would have to process each student's case four times a year rather than once a year, so it would be increasing the work load by four; defaulting students would have to be pursued for four instalments, increasing the burden of recovery action; termination of studies for non-payment of the charge would be complicated; the application of the refund provisions would be more complicated; and staff increases would be required to meet the increased work load. Additional automatic data processing hardware and software would be required to monitor the payment of the charge made in instalments. On balance, the Government's view is that it is not appropriate for the Australian taxpayer to be asked to pay for the additional administrative costs which would be involved in increasing fourfold the administration of the program. The students are already in receipt of a substantial subsidy from the Australian taxpayer. We think that in the present circumstances it is not fair to ask the taxpayer to subsidise the program even further. Overseas students know quite well in advance the level of the charge they will be required to meet. They have to organise their finances well in advance in any event. While in Australia they are able to earn money to pay their living expenses. They know what their tutorial expenses are well in advance. Despite the fact that there would be some attractions to Senator Macklin's suggestion the overall administrative burden and cost cannot justify our acceptance of that proposal. Senator MACKLIN(Queensland)(12.16) —I probably could agree with the last reason that the Minister for Education (Senator Ryan) gave-that we would have to change the software. But we could probably get that done free of charge if the Minister really wanted to. The other comments do not bear much looking at. The costs of changing the software would be almost minimal. The vast bulk of students pay on time on entry. We are talking only about a small number of people. We already have difficulties with a small number and, under my proposal, we would be in difficulties with a small number. I do not believe the Yes, Minister response is reasonable in terms of the problems these students are facing. The marginal additional cost that would have to be borne would easily be justified in terms of the excessively bad Press that Australia has been receiving in overseas countries. As the Minister has already pointed out, we are still subsidising these students to the tune of 55 per cent but that does not seem to be having much effect on the type of image that we have managed to create over the deportations. My interest is both to alleviate the burden on the students and, more particularly, to avoid the unseemly circumstances of jettisoning students who have come here to study and the effect that that has on our relationships with their countries. Senator PETER BAUME(New South Wales)(12.18) —The Opposition has indicated that for various reasons it will not support the amendments should we divide on the matter. But Senator Macklin's argument puts in the balance on the one side issues of fairness and on the other side the Minister's response about government efficiency. Senator Ryan —And cost. Senator PETER BAUME —There are issues of cost and efficiency. Senator Macklin's argument is not without merit. These amendments try to provide for greater fairness in trying to meet the needs of students. I only ask the Minister to take Senator Macklin's general proposition back for further study. After all, we are asking a Labor government to do this. If there is an issue of equity which may be improved will the Minister put it under study in the hope that she may come up with some way of meeting-if not with Senator Macklin's formula with some other formula-the general proposition Senator Macklin put to seek to overcome the general problems? I add just one more thing. I do not believe that some of the publicity that has occurred with certain deportations has been fair or warranted. It is not our business to be defenders of the Government but I put on record that I cannot see any other course open to the Government if people do not pay the prescribed fee. The proposition that four equal payments may enhance the capacity to pay of people who study here is not without merit. It should be given more attention. Senator RYAN(Australian Capital Territory-Minister for Education)(12.20) —I thank Senator Peter Baume for his constructive approach to this matter. As I have admitted, there is some merit in the suggestion of students being able to pay by instalments. The suggestion was made to me by representatives of overseas students a couple of months ago. We looked at the matter. I am happy to say that we will look at it again. We rejected it after having examined, in terms of the Budget, the administrative costs involved. But there is no reason why we cannot look at it again, as Senator Peter Baume has suggested. I have recently announced the establishment of an overseas students council with overseas student representation to be chaired by Professor Goldring. It may well be that that council will wish to look at this matter. By way of warning I simply say that Senator Macklin seems to think that only a few students would want to take advantage of an instalment plan. Once such a plan existed there is no reason why all students would not want to take part because there would be some financial advantage in their doing so. We would not just be looking at an instalment plan for some students. We are not in a position to judge the relative hardship of students. We would be looking at making this plan available to 18,000 students. The administrative costs would be very high. However, in the spirit of the constructive suggestion that has been made I will certainly undertake to see whether it is possible to have a cost efficient instalment plan made available to students. I also thank Senator Peter Baume for his comments on media reports surrounding deportations. He said that they were unfair. I agree. I remind the Committee, too, that every year about 18,000 overseas students study in Australia. The maximum number that might end up having to return home, being deported, in a year would be no more than a half a dozen. One can get entirely out of proportion the fact that in some cases students have not kept to the conditions under which they came here and have been sent home. A maximum of half a dozen being deported in a year when 18,000 students study here is not a great number. This does not suggest that there is any harsh application of the deportation provisions. I refer to bad publicity in host countries. There has been criticism of the program from time to time. I have been in the region and have had discussions with governments and the media. Some criticism is inevitable, as it is in Australia, where any increase in any cost will attract criticism from some groups and attract media coverage. There is criticism, for example, in the Malaysian Press about increases in costs and occasionally about a deportation. I make it clear that the Government of Malaysia has no criticisms of the increase in costs. I have had very extensive discussions with the education Minister, the Prime Minister and others involved. They understand our economic circumstances. They appreciate our need to put up the costs. Honourable senators will notice that there is no government criticism. Criticism arises as it does anywhere in Australia when any cost or charge goes up. People do not like paying more than they paid the year before. The media will give them a run. I do not attach any greater significance than that to it. As to the effects on our bilateral relations in the region, there is a great deal of appreciation of the program by governments and a desire to see it continue. Question put: That the amendments (Senator Macklin's) be agreed to. The Committee divided. (The Chairman-Senator D. J. Hamer) Ayes . . . . . . . . . . . 7 Noes . . . . . . . . . . . 52 —— Majority . . . . . . . . . 45 —— Haines, J. Powell, J. F. Harradine, B. Sanders, N. K. Macklin, M. J. (Teller) Vigor, D. B. Mason, C. V. J. Archer, B. R. Lewis, A. W. R. Aulich, 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. Brownhill, D. G. C. Morris, J. Carrick, Sir John Newman, J. M. Childs, B. K. Parer, W. R. Coates, J. Puplick, C. J. G. Coleman, R. N. Ray, RobertCollard, S. J. Reid, M. E. (Teller)Colston, M. A. Reynolds, M. Cook, P. F. S. Richardson, G. F. Crichton-Browne, N. A. Robertson, E. A. Crowley, R. A. Ryan, S. M. Devlin, R. Sheil, G. Durack, P. D. Short, J. R. Evans, Gareth Sibraa, K. W. Foreman, D. J. Tate, M. C. Gietzelt, A. T. Townley, M. Giles, P. J. Vanstone, A. E. Hamer, D. J. Walsh, P. A. Jones, G. N. Walters, M. S. Kilgariff, B. F. Watson, J. O. W. Knowles, S. C. Zakharov, A. O. Question so resolved in the negative. Bills agreed to. Bills reported without amendment; report adopted. Bills (on motion by Senator Ryan) read a third time. Debate resumed from 10 October, on motion by Senator Grimes: That the Bill be now read a second time. Senator MESSNER(South Australia)(12.32) —This piece of legislation before the Senate today is yet another example of the incompetence of the Labor Government in its administration of the Australian taxation system. The Taxation Administration Amendment (Recovery of Tax Debts) Bill 1986 can be added to those misguided judgments of the Government with regard to the fringe benefits tax, the capital gains tax and other legislation which it has undertaken in the tax area. The Bill proposes to the Taxation Administration Act 1953 amendments that are purported to be necessary following a decision of the Full Court of the Queensland Supreme Court with regard to an action by the Deputy Commissioner of Taxation to recover an unpaid taxation debt. The Court, by a majority view, held that the time limit specified in the Queensland Limitation of Actions Act 1974 for the commencement of proceedings to recover a debt applied by virtue of section 64 of the Commonwealth Judiciary Act 1903 to proceedings to recover tax debts to the Commonwealth. This decision by the Queensland Supreme Court was contrary to decisions previously taken by Supreme Courts in other States, namely, Western Australia and New South Wales. According to the Acting Treasurer, the Minister for Immigration and Ethnic Affairs (Mr Hurford), when introducing the Bill into the House of Representatives in September, the Queensland decision was contrary to the long held view that taxation debts would, by virtue of the Crown prerogative, be recoverable at any time. As my colleague the shadow Treasurer, Mr Jim Carlton, pointed out in the debate in the House of Representatives, this is not a long held view and it is misleading for the Government to suggest that it is. I would like to make that point a little clearer later in my remarks. With regard to the recent Queensland decision, the Commissioner of Taxation has applied to the High Court of Australia for special leave to appeal against the decision of the Queensland Supreme Court. In other words, legal processes are currently in train for the Commissioner to challenge the decision, yet the Government is seeking to pass legislation, the intention of which is to negate the decision of the Queensland Supreme Court, before any appeal is heard in the High Court. Another slight difficulty in discussing the matter, which matter led to the introduction of this Bill, was decided in the Queensland Supreme Court. However, another matter is before the Court of Appeal of the Supreme Court of New South Wales. That Court is in the process of reaching its decision in the matter DTR Securities Pty Ltd v. Deputy Commissioner of Taxation. The Court is presently considering its decision, having announced on 27 June 1986 that it would reserve its decision. It is very important to the functioning of our constitutional arrangements that there be self-restraint by each area of government when it touches on the spheres of others. In this case, the House is being asked to debate a matter which is currently before the Court of Appeal in New South Wales. I think it is grossly improper that the Government be apparently attempting to influence the decision in that Court. If enacted to operate unconditionally, the Bill will have the effect of retrospectively overturning any judgment of any court in Queensland or any other State court exercising Federal jurisdiction given after 24 September 1986. In short, the Crown, in effect, has sought to stay all proceedings in any court exercising Federal jurisdiction. If this is not the case, any final judgment given against the Commissioner after 24 September 1986 will be rendered negatory if the Bill, when enacted, operates unconditionally. Clearly, the Bill is an attempt to influence the judiciary. Alternatively, if it operates unconditionally, it will override any judgment given for the taxpayer after 24 June 1986. In introducing the Bill in the House of Representatives, the Minister claimed that, unless prompt legislative action is undertaken, the recovery of many millions of dollars of outstanding tax, mainly from tax avoiders, would at best be delayed by several months and at worst be prevented altogether. Specifically it is claimed that if the rationale for the decision were to apply Australia-wide, revenue of approximately $200m for this financial year and a further $700m in the future would be placed in jeopardy. The Government has argued that a revenue loss of this magnitude cannot be countenanced, that not to act without delay to protect this would be irresponsible. However, the stated rationale for the Bill is contradicted by the inaction to recover outstanding tax debts even within the normal period of six years under the statute of limitations. In other words, the Australian Taxation Office has been grossly irresponsible, it seems, in not proceeding within a six-year period to initiate even the smallest action to recover outstanding amounts owing to the Commonwealth. It has had six years in which to recover or start the process of recovery, but it has failed to do so. It is obviously a gross dereliction of duty. When the Bill was introduced into the House of Representatives, Mr Hurford said: The vast majority of the $900m is owed by tax avoidance participants of the 1970s and early 1980s. Over the past five to 10 years, they have resorted to every means available to frustrate the considerable efforts of the Commissioner of Taxation to resolve disputes as to liability and to secure the payment of outstanding tax and penalties, I fail to recognise the legitimacy of that rationale, which has apparently been adopted by the Commissioner of Taxation, whereby recovery of tax debts is deferred until liability to pay the tax is determined. Even if one accepts this policy stance adopted by the Commissioner, that does not detract from the importance and desirability of the Australian Taxation Office pursuing the recovery of tax debt to the fullest. In this regard, more effective and more efficient means to determine and settle tax liability could be undertaken by the Commissioner of Taxation at any time. It is misleading and mischievous for the Government to suggest that without this Bill hundreds of millions of dollars in tax revenue would be forgone. If the Commissioner of Taxation had sought to take action within six years on any matter that is outstanding the alleged problem would not have arisen. However, through laxity and irresponsible behaviour on the part of the Commissioner of Taxation, this has not been undertaken. Legislation enacted by the previous Liberal-National Party Government to stamp out tax avoidance measures was apparently acted upon in a slothful and less than responsible fashion by the Commissioner of Taxation. The crux of the matter is that the Government apparently does not consider six years a long enough period even to start the smallest action against taxpayers to recover debts. Notwithstanding the settlement of tax liability, which is a totally different issue, if the Commissioner of Taxation cannot effectively initiate action to recover moneys owing to the Commonwealth within six years, this again calls into question the efficiency of the Tax Office in its administration of the tax laws. While the Commissioner of Taxation has practically unfettered responsibility and powers in the administration of the tax system and the laws pertaining thereto, it is an act of gross misrepresentation by the Government to suggest that more powers are warranted. If he cannot institute recovery procedures within six years of an assessment becoming due and payable, it is unlikely that the greater powers vested in this Bill will correct the laxity and the tardiness of the Taxation Commissioner in initiating action. I intend to go into this fundamental reason as to why the Government has proposed this legislation and why the Opposition does not support this ill-conceived piece of legislation. To suggest that the Commissioner of Taxation needs a longer period in which to initiate tax recovery procedures against persons who have been assessed to have a tax liability because a settlement of the liability usually precludes the recovery of debt within the statutory time limit is totally misleading and a blatant abdication of responsibilities. There is ample opportunity for the Commissioner of Taxation to institute proceedings for tax recovery. Section 204 of the Income Tax Assessment Act is express on that matter. Income tax and penalties are payable 30 days after service of the notice of assessment. That requirement is categorical. A taxpayer is required to pay his or her debt within 30 days of receiving an assessment. A taxpayer is obligated to pay the tax, irrespective of whether he or she disputes the excessiveness or otherwise of the liability to pay the tax. In short, a taxpayer is required to pay first and argue later. This requirement is embodied in section 201 (1) of the Act, which provides: The fact that an appeal or reference is pending shall not in the meantime interfere with or affect the assessment the subject of the appeal or reference; and income tax may be recovered on the assessment as if no appeal or reference were pending. The Commissioner of Taxation has been lax in his obedience in following those clear directions of the state which he is obligated to administer. The courts have adopted a most stringent view in refusing to grant applications by taxpayers for a stay of recovery of proceedings brought by the Commissioner where the disputed, unpaid tax relates to tax avoidance measures. Hence, the supposed rationale for this Bill falls apart. Expanding that point, I will quote from a case in which Mr Justice Hutley said: The fact that a taxpayer may arrange his affairs in any manner consistent with the law provides no justification for a Court giving any assistance to him in his attempts to resist the collection of assessments issued by the Commissioner of Taxation. In plain English, for the benefit of the Government, neither the Taxation Commissioner nor the Government can claim that tax recovery proceedings have been delayed because of the views expressed by the courts. The intent of the Income Tax Assessment Act and the views subsequently adopted by the courts are a clear instruction to the Commissioner that payment of tax is not to be deferred pending resolution of any appeal or objection to a tax assessment. Debate interrupted. Sitting suspended from 12.45 to 2 p.m. Senator CHANEY —I remind the Leader of the Government in the Senate that the Treasurer tried to dismiss the September downgrading of Australia's credit rating by Moody's Investor Services Inc. largely on the basis that Standard and Poor's Corporation, which the Treasurer described as the major United States rating agency, had kept Australia at the AAA level. In particular I refer to the Treasurer's comments on 12 September: There are a lot of other counter views and obviously the other major rating agency, Standard and Poor's don't hold Moody's view. The day before that, on the World Today program, the Treasurer said: . . . Standard and Poor's still has us on AAA so they've made a judgment about the current account . . . Now that Standard and Poor's has made a judgment on the Australian economy and has agreed with Moody's, I ask: What are the implications of this second downgrading? Does the Minister agree that this bad news further reduces the chance of a fall in interest rates in the near future? Senator BUTTON —I forget Senator Chaney's exact terminology, but I do not agree that Mr Keating as Treasurer, when Moody's downgraded the Australian dollar, gave the fact that Standard and Poor's had not acted similarly as a prime reason-I concede that he used it as a reason, but not as a prime reason-for his comments on the effects of the Moody's re-evaluation. I do not share the view that it was put at the time by the Treasurer, or by anybody else, as being a substantial explanation, although I certainly agree that it was adverted to by the Treasurer on several occasions and was possibly adverted to here in the Senate as well. Senator Walters —They do not understand. Senator BUTTON —I thank the honourable senator. Let me go to the second part of the question, which deals with the alleged consequences of the downgrading. It is most important to look at what Standard and Poor's in fact said in respect of this. Senator Walters might listen to this instead of interjecting. The essence of what Standard and Poor's said was that the Government's economic policies are on the right track, that they are appropriate policies to address the current account deficit, and that the major reason for Australia's continuing position at present is unfavourable external trade developments, particularly the continuing depressed state of our traditional major export markets, the sharp fall in the terms of trade which followed and increasing trade protectionism. Senator Walters —The fringe benefits tax? Senator BUTTON —No, it did not mention that, funnily enough; that is kept for the junior players. It went on to talk about the wide ranging measures introduced by the Government, including a tighter monetary stance, reduced Budget deficits and moderate wage settlements, which have dampened demand. It also went on to refer to extensive economic reforms, including lower income taxes, deregulation of the financial sector and gradual removal of industry protection. All those things were referred to by Standard and Poor's. They might be remote from Senator Walters's little bailiwick down there, but they are things which this agency had to say about the present Government's policies. A very important point which it went on to make was that economic adjustments to correct Australia's current account problems will take time; that is, as it went on to say, it will only occur `over the medium term'-that was the expression it used. That is something which has been consistently said by us, and it is quite distinct from the views put forward by the Opposition here in the Senate, and quite distinct from the taking of opportunistic steps in relation even to a late filing of a tax return as being an issue of fundamental importance. Senator CHANEY —I ask a supplementary question, Mr President. I thank the Minister for his explanation of some of the matters put forward by Standard and Poor's. I realise that this is not the time to debate his view on the Treasurer's reliance on Standard and Poor's when Moody's downgraded Australia's credit rating in September, but I just point out to him that on five occasions over 11, 12, and 16 September the Treasurer did in fact rely on the Standard and Poor's rating to support his position. However, I remind the Minister that my question related to the implications for interest rates, which he did not directly address in his answer, although he did say that Standard and Poor's referred with approval to the Government's tighter monetary stance, which, of course, is directly relevant to the question of interest rates. I ask: Does the Minister confirm that the position including the downgrading of our credit rating reduces the chance of a fall in interest rates in the near future? Senator BUTTON —I am not sure that it does in itself. I am not any better qualified than any other commentator to put a view about this. The fact of a revised credit rating does not in itself, in my view, affect the outlook for interest rates. The Government has made its position clear on this issue. I would have thought that it is a matter for judgment at the appropriate time as to policies which will affect interest rates. That will be exercised. Senator ROBERT RAY —Has the Minister representing the Minister for Foreign Affairs seen reports that a court in West Berlin has implicated a Syrian official in providing explosives to two persons convicted of a terrorist bombing in that city? Is the Minister able to comment on the consequences of this development and on the measures the Government can take to counter the threat of state-sponsored terrorism, or indeed any form of terrorism? Senator GARETH EVANS —I am aware of reports that two Jordanians having close links to Syria have been convicted in the Federal Republic of Germany of carrying out a bomb attack on the German-Arab Association in West Berlin on 29 November. One of the persons, Ahmed Hasi, is the brother of Nezar Hendawi, who was recently sentenced to 45 years imprisonment for the attempted bombing of an El Al airliner in London. Evidence given at the trial clearly indicates Syrian Government involvement in the attack. As a consequence of the trial, four Syrian diplomats have been expelled and the Bonn Government has not determined the date to replace its Ambassador to Syria, who has already left Damascus on the completion of his assignment. Certain Syrians resident in East Berlin will no longer be granted entry to West Berlin following action taken by United States, French and British officials in their sectors of the city. The Australian Government consistently and unequivocally condemns all forms of terrorism and has welcomed and encouraged the growing resolve on the part of countries threatened by the terrorist menace to work together against it. The relevant government agencies and departments already have substantial counter-terrorist links with a number of countries. The Minister for Foreign Affairs, Mr Hayden, advised Parliament in May that Australia had initiated a new round of discussions to improve co-operation in the counter-terrorism field. The initial results of these exchanges are currently being considered by other government departments and agencies which share responsibility for counter-terrorist activities. Senator MESSNER —I address my question to the Leader of the Government in the Senate. I inform the Minister that documents lodged in the Land Titles Office in Sydney show that $60,000 from the sale of a shop in Paddington was received by the Treasurer on 25 July 1984. I refer the Minister to the Treasurer's statement in the House of Representatives on Friday, and I quoted: Whatever appropriate inclusions will go in my tax return of course would have been there, as appropriately they should. Has the Government inquired, and if not, will it so inquire, as to whether income from this source received by the Treasurer was disclosed in the 15-month late 1984-85 tax return he lodged last week? Senator BUTTON —The first thing I should say about that is something I have said all along: Despite the desperate efforts of Opposition senators, this is a matter between the Commissioner of Taxation and an individual taxpayer. The assumption by Senator Messner-even if the facts were as stated-is that any such sum of money was in fact income. Senator Chaney —Some or all of it? Senator BUTTON —I do not know, but I think that Senator Messner ought to be very careful about some of the assumptions he makes. I am only trying to help. To the extent that the question may be based on false assumptions, I suppose we will be able to bounce it on the Opposition at some time in the future, and we will do that. Senator Chaney —Are you threatening me? Senator BUTTON —Yes, I am-very nicely, though. The matter is essentially one between the Commissioner of Taxation and the taxpayer. I have nothing more to add, except to say that it is important-- Senator Chaney —What about your BHP shares? The PRESIDENT —Order! There are too many interjections. Senator BUTTON —Not very good, either, Mr President. That is my problem with them. Senator Puplick —One of your problems. Senator BUTTON —The point I was about to make is relevant to Senator Puplick as well as to Senator Messner. It would be a tragedy if on the basis of all these scurrilous and probably false assumptions the Liberal Party continued to degenerate into a name-calling, factionalised body rent by leadership struggles, which bringeth the verdict that when Australia needed the input of Liberals it was not a party of big enough people to answer the call successfully. That is what it is all about. They are not my words, of course; they are taken from the editorial of yesterday's Australian. Senator MESSNER —Mr President, I ask a supplementary question. Does the Minister agree that if even a part of the $60,000 profit represented income, that would destroy the Treasurer's assertion that he would have received a refund for the 1985 financial year? Senator BUTTON —I am not any longer a practising lawyer nor a practising tax consultant and I do not give free advice on highly hypothetical matters to Senator Messner, who is probably desperate to get a bit of advice about anything he can get. I will not give it free. This is a matter between the Tax Commissioner and the taxpayer. It is not a matter about which I intend to give advice on the basis of totally hypothetical and, if I might say so, nitwitted assumptions. Senator COOK —My question is directed to the Minister for Industry, Technology and Commerce. From time to time small business people complain about the lack of support for inventions and innovations, many of which arise in small rather than large enterprises. What is the Government doing to encourage the development of inventions and innovative ideas? Are small business people given the fullest opportunity to obtain the advice and information they need to test, develop and market their inventions? Senator Archer —Could we have a ministerial statement, please? Senator BUTTON —I know this is a relatively dull subject for members of the Opposition who are not interested in these issues, but it is an important question and that is what the Government has to be concerned with-important questions, not trivia. I am sorry if it is boring for them, but I will give them an answer. Somebody over there invited me to make a ministerial statement. I will not; I will be quite brief. The Government has established a new network of centres for the innovation and development of enterprises. There is now one in each State. That initiative was launched last night. This national network of innovation centres will help to accelerate the development of innovation and entrepreneurship in Australia. It is an important component of the National Industry Extension Service which was launched earlier this year. It is not purely a Commonwealth Government initiative; it is a joint Commonwealth and State initiative. There is very close co-operation, and it is designed to help ensure that Australia develops world-class businesses. The innovation centres are non-profit making and designed to draw together the raw materials of invention, innovative ideas and new concepts. The centres will provide the specialised technical, managerial and entrepreneurial assistance needed to achieve profitable commercial reality, a flow of innovative products and processes to Australian industry and assistance to newly established firms. Those things are important. The manufacturing sector, particularly the small business sector, was neglected by governments throughout the 1960s and 1970s, no more so than by the Fraser Government. It is important that in the process of strengthening the manufacturing sector, making it more viable, we give particular attention to the needs of small firms in the ways in which I have indicated. I thank Senator Cook for his question about this issue because the policies of the present Government in that area are reflected in a variety of ways, mostly ways which help with the financial arrangements of small business, with innovation support and with increased support for research and development and so on. Senator HAINES —Is the Minister representing the Treasurer aware of a report in the Australian Financial Review last week that a Mr Peter Nelson, formerly a senior financial analyst for the Asian Development Bank, alleged that the ADB invented figures to justify its development projects? As Australia has apparently contributed over $2 billion to the ADB in the past 20 years and is the fifth largest shareholder of the ADB, has the Government taken any steps to investigate or instigate an investigation into Mr Nelson's serious allegations? If it has not, why has it not? Senator WALSH —I am told that the Government has been in touch with its representatives on the Asian Development Bank regarding this matter. Australia recognises that there have been some difficulties in bringing forward ADB projects of uniformly high quality and has been working within the bank, along with other members, to improve that situation. However, we believe that it would be wrong to suggest that there are any major weaknesses in this area. Further, we consider the ADB to be a generally effective and efficient channel for multinational aid for the region. Senator JONES —On 24 September I asked the Minister representing the Treasurer a question regarding the potential tax liability of the Queensland Premier in relation to his $400,000 out-of-court settlement received from the Bond Corporation through QTQ Channel 9. Can the Minister now advise on the Queensland Premier's tax liability in relation to this matter? Senator WALSH —I recall that question and I have been provided with a further response from the Treasurer and, ultimately, from the Commissioner of Taxation. This response is as follows: The question concerns the personal affairs of particular taxpayers and is one that ultimately has to be determined by the Commissioner of Taxation. Furthermore, all the facts have to be known and a full and complete review conducted before a definite answer can be given. For these reasons, and because express provisions of the income tax law prohibit him from divulging information about taxpayers' affairs, the matter is not one on which the Commissioner of Taxation is able to comment. Senator BROWNHILL —Will the Minister representing the Treasurer confirm what he told the Senate yesterday about the Taxation Commissioner's treatment of income received in the form of travel allowance, that is, that a travel allowance can be paid to someone not living away from his or her normal place of residence, and that there will be no check by the Taxation Commissioner as to whether the recipient actually travelled at all? Senator WALSH —I did not say any such thing yesterday, of course. That is the first response. I have, however, noted that an extract from Hansard has been peddled around the Press Gallery by Senator Chaney in what can only be described as a fraudulent misrepresentation of what was said. He managed to con the Australian Broadcasting Corporation into repeating it. These are the exact words: The Tax Commission does not require substantiation of travelling allowance. That, of course, was in respect of the very specific context of the travelling allowance paid to the Treasurer. It also applies to travelling allowance received by any other member of parliament, some of which, if the circumstances were fully investigated, I suggest would be somewhat embarrassing to the recipients of them. Having dealt with that, I have advice on the question of travelling allowances. Firstly-this is a public document which I think has already been published-the Tax Commissioner's ruling No. 2327, which was issued on 27 June this year, for taxpayers in general lays down that as from 30 June 1986, in other words prospective application only, in respect of employment related expenses documentary evidence of the expense will be required to be obtained and produced by the taxpayer. Within the same ruling there are two qualifications to that, the first of which because it is concise I will quote in full: Against that background, where a travel allowance paid by an employer does not exceed rates of travel allowances set for members of the Australian Public Service (APS), the travel allowance will be treated as reasonable. A further qualification in paragraph 7 of the ruling states: In line with the principles laid down in paragraphs 3 and 4, therefore, daily travelling allowance paid to employees that do not exceed allowances set by the Remuneration Tribunal for equivalent salary ranges- and so on. In respect of the context in which the Opposition has raised this, that ruling has clearly absolutely no relevance to Mr Keating's 1984-85 or 1985-86 tax returns and nor does it seem to me to have any relevance to Mr Keating's tax return for the present financial year or to that of any other member of the Parliament because of the qualifications in paragraphs 4 and 7 of that ruling which I have read. I do not have to fraudulently quote out of context in the way that the Leader of the Opposition has done. The PRESIDENT —Order! I ask the Minister to withdraw that remark. Senator WALSH —Very well, Mr President; I withdraw. I have received official advice from the Commissioner of Taxation relevant to allowances paid to members of parliament in accordance with determinations of the Remuneration Tribunal. I quote: The allowances paid to members of parliament are fixed by the independent Remuneration Tribunal. The rates of allowance are set on the basis of a reasonably based appraisal of the costs that members can be expected to face by reason of their having to carry out duties in Canberra. Such costs are, by and large, deductible for income tax purposes. Against that background, the general practice has been to accept claims for deductions up to the amount of the allowance without detailed vouching. This continues to be the case in the context of the substantiation rules. Senator REYNOLDS —Is the Minister representing the Treasurer aware that the Principal of Toowoomba Grammar School has called the fringe benefits tax on boarding schools `conscious spite and deliberate malice'? What steps has the Federal Government taken to assess fairly the housing requirements of boarding school staff so that FBT does not pose additional costs on country parents required to send their children to boarding schools? Senator WALSH —Until a couple of seconds ago I was not aware of the extract from the Toowoomba Chronicle which I now have in front of me, but in respect of that and more generally to FBT and boarding schools, these points should be made: Boarding schools, like other employers, are subject to FBT on non-cash benefits provided to teachers and other employees, the most common benefits being housing and meals. Housing will be taxable where it is provided to an employee as a usual place of residence-that is, accommodation of permanent staff living on or near the school grounds. Accommodation provided to employees such as nursing staff on roster, temporary teaching staff or exchange teaching staff is not taxable. Those categories of employees are regarded as living away from their usual place of residence while being housed at schools. Housing benefits of boarding school staff that are identical or similar to accommodation provided to students are treated as in-house benefits so that the taxable value is only 75 per cent of the market rental value of the housing less, of course, any rent paid by the employee. If two or three meals a day are provided to the school employee, they are taxable at the rate of $2 per meal where the employee is also provided with accommodation. There is no reason in principle why schools as employers should not pay FBT on non-cash benefits provided to employees in the same way as other exempt taxpayers. If tax exempt employers were excluded there would be an incentive for such bodies, many of whom compete commercially with taxable businesses, to expand the range of employee benefits, thereby minimising both their own costs and the employee's tax liability. In that context, I recommend that anybody in the Senate or outside it who has a serious interest in this subject read the excellent article published in the Sydney Morning Herald today under Ross Gittins's name but ultimately derived from an economist, I think, called Collins. Senator CHANEY —My question is addressed to the Minister for Finance and it follows his failure to address the question asked by Senator Brownhill. I point out to the Minister that the information he gave to the Senate related to the substantiation of an allowance paid to someone who is travelling. Senator Brownhill's question related to the substantiation of an allowance paid to someone who is not travelling but who is spending the night at his usual place of residence. I again ask the Minister whether he is saying that in such a case where a person is not living away from his or her normal place of residence there will be no check by the Commissioner of Taxation as to whether the recipient actually travelled at all. Senator WALSH —Senator Brownhill's question was derived from a stunt letter written by Mr Braithwaite to the Taxation Commissioner on 28 November and peddled vigorously around the Press Gallery ever since. It has, of course, been answered by both the Tax Commissioner's ruling from which I quoted earlier-the one that was published-and also from his further definitive ruling which I have already read out. Senator FOREMAN —My question is directed to the Minister for Veterans' Affairs. The editorial in this morning's Australian newspaper attempts to portray a picture of sad neglect at the Australian War Memorial. Is it true, for instance, that millions of exhibits are in danger of rotting away or being lost to future generations because of a lack of money and staff? What action is the Government taking in making funds available to preserve all its treasures? Senator GIETZELT —I have seen the editorial in today's Australian. It is certainly not true that millions of exhibits are in danger of rotting away because of a lack of money and staff, as was expressed in that editorial. Editorial writers have a penchant for making statements without checking the facts. Unfortunately in this particular case the details upon which the editorial has been written have obviously been taken from the 1984-85 annual report of the Australian War Memorial. It was the recognition of some of the deficiencies in previous years that led to a number of changes being made, including the War Memorial coming under my portfolio. It is true that in difficult financial times funds and staff are never sufficient to meet all the demands of government. It is rather a contradiction that the Australian newspaper which has carried editorials in recent times generally supporting the policies of the New Right and, suggesting that there should be cutbacks in public sector spending should draw attention to what happened in respect of the Australian War Memorial when there were such cutbacks over many years. This Government and, in particular, the Minister have accepted their responsibilities and there has been very substantial improvement in both the staffing and funding of the Australian War Memorial. For example, in the two years-and the two Budgets-for which I have had responsibility for the War Memorial there has been a 50 per cent increase in funding. So the matters referred to in the editorial should be well and truly put aside, recognising that the Memorial has received vast increases in funding from the Department of Veterans' Affairs. In addition, 44 more staff have been made available to the Australian War Memorial. There have been five new policy proposals in the last two Budgets, four related to the preservation of written records, films and photographs. I agree that if there is neglect in these areas these records are lost over time. I advise Senator Foreman that the Government gave approval in the last Budget for the construction of a new administrative building costing $9.955m and a new storage facility in the previous Budget which cost $1.32m. These new buildings will provide needed accommodation for staff and will allow an expanded and upgraded space for relics and collections. A program for the air-conditioning of the existing War Memorial building will commence during the current financial year. One welcomes the fact that public attention has been drawn to deficiencies in the past. For example, in 1982 the War Memorial had 126 full time staff, six part time staff and a budget of only $3.53m. Currently, following the 1986-87 Budget, it has up to 218 staff and funding has increased from $6.42m to $9.63m. Today I asked the Australian War Memorial administration to give me a schedule which would indicate what has happened with respect to staff and funding in the Australian War Memorial over the last 10 years. For example, on 30 June 1977 only 80 people worked at the War Memorial and its funding was less than $1m. I have just indicated how much recognition has been given by past governments, and particularly this Government, to fulfilling our obligations to preserving the important collections that exist in the Australian War Memorial. I seek leave to incorporate in Hansard the schedule which has been provided to me by the administration of the Australian War Memorial. Leave granted. The schedule read as follows- COMPARISON OF STAFFING AND FUNDING OVER THE PERIOD 1.7.76 TO 30.6.86 Staff 30.6.77... 69 F/T 11 P/T 30.6.78... 85 F/T - 30.6.79... 89 F/T 3 P/T 30.6.80... 95 F/T 4 P/T Statutory Authority Status 30.6.81... 116 F/T 6 P/T 30.6.82... 126 F/T 6 P/T PAC Inquiry 30.6.83... 156 F/T 10 P/T 30.6.84... 159 F/T 25 P/T 30.6.85... 188 AOSL 30.6.86... 207 AOSL Funding 30.6.77... $0.986m 30.6.78... $1.245m 30.6.79... $1.634m 30.6.80... $1.90m Statutory Authority 30.6.81... $2.51m 30.6.82... $3.53m PAC Inquiry (196 Report) 30.6.83... $5.50m 30.6.84... $6.42m 30.6.85... $7.15m 30.6.86... $9.01m* * Does not include costs of the new storage facility at Mitchell ($1.32m) and preliminary work on the Administration Building. This expenditure is shown under NCDC but was funded through savings achieved by the Veterans' Affairs portfolio. Senator ARCHER —I direct my question to the Minister representing the Minister for Science. It concerns the reported decision of the Hawke Government to appoint Mr Neville Wran as Chairman of the Commonwealth Scientific and Industrial Research Organisation. Is this the same Mr Neville Wran whose government employed Mr Al Grassby, a man whose evidence before the Nagle New South Wales Commission of Inquiry into the Police Investigation of the Death of Donald Bruce Mackay has been described as `extraordinarily unsatisfactory and evasive'? Is this the same Neville Wran who had to be dragged screaming into appointing the Nagle Commission, who arrogantly challenged the people of Griffith to put up and who tried to intimidate those who for years had sought an inquiry into the handling of the Donald Mackay murder inquiry? In light of these and countless other examples of the undistinguished record of the former Premier of New South Wales, plus Mr Wran's Government's pathetic record in the field of research and development, why is he to be appointed to this position ahead of the many eminent scholars, scientists and industrialists whose achievements and standing would have added much to the dignity and stature of the organisation both nationally and internationally? Senator BUTTON —The Government has made no decision about filling the vacancy in the chairmanship of the CSIRO. Lest Senator Archer be in any doubt about the matter, the Mr Wran who is being considered, I believe, and who has been referred to in the Press is the same Mr Wran to whom Senator Archer referred. Senator GILES —My question is directed to the Minister for Community Services. Is it true that the New South Wales Department of Youth and Community Services has refused to allow a woman to adopt a baby because she is overweight? Is this reasonable or justifiable? Senator GRIMES —It has certainly been reported that a woman in New South Wales was refused the right to adopt a child merely because she was overweight. I would say-I understand it is the view of the Department of Health-that if that is the sole reason that she was refused the right to adopt a child, it is not reasonable. The other day I answered a question from Senator Crowley about the images we force on people in this community, particularly women. If we are to base decisions about whether people can adopt a children merely on the fact that they are overweight or they weigh more than what somebody else deems desirable perhaps we are going a bit far. From a health point of view it is probably more desirable not to be overweight. The logical extension of this decision is that people who are overweight cannot have children. That would be a silly extension but it would be a logical extension. If that were the case I suppose the world would be populated by thin people and what a miserable place it would be. I will seek information from New South Wales as to whether that was the sole reason why the woman was refused adoption. All I can say is that if it is the sole reason I think it is carrying the use of medical statistics too far. Senator PARER —My question is directed to the Minister representing the Treasurer. Is it a fact that as from 1 July any tax liability arising from receipt of travel allowance payments will be assessed under the Fringe Benefits Tax Act? Does this mean that any excess of travel allowance remaining after reasonable expenses have been deducted will be taxed in the hands of the employer, not the employee? In a case such as that of the Treasurer, is it true that any tax liability will be incurred not by the individual receiving the travel allowance but by the Commonwealth Government? Senator WALSH —If I understood the question correctly, I was asked whether travelling allowance paid in cash from 1 July next will be taxable under the Fringe Benefits Tax Act. I do not know but it seems unlikely that that would be the case because that allowances is paid in cash. Senator Messner —Wrong, again. Senator WALSH —I did not claim that I was right. If that is the case, I will get confirmation from the Treasurer along with answers to the other questions that Senator Parer asked in a pathetic attempt, in the most oblique manner, to try to keep alive the Opposition's stunt of the week. Senator MAGUIRE —My question is directed to the Minister for Resources and Energy. I refer to the proposed interstate electric power grid linking Victoria and South Australia. Will the Minister advise on the present status of the project for an interstate power line in the Portland and Mount Gambier areas which would bring into existence a three-State electricity network? Senator GARETH EVANS —My information is that this very important project to link the electricity grids of Victoria and South Australia is proceeding according to schedule. A memorandum of agreement between New South Wales, Victoria and South Australia which sets out the very complex operating arrangements for the link was finalised in July this year. Public comment has been sought on the draft environmental impact statement covering possible routes for the link. I understand that work is presently under way to evaluate comments on the EIS. A supplement to the statement is expected to be released early next year and authorities will then be in a position to make a decision on a route for the link. When completed in 1990, the project will be most valuable to the three States concerned by providing more reliable, secure and economic electricity supplies, providing total savings of at least $14m per year. My only regret is that neither this project nor perhaps an even more spectacular recent example of intergovernmental co-operation-that is, the agreement between New South Wales, Victoria, South Australia and the Commonwealth to establish Murray-Darling Basin co-operation-yet appears to have come to the attention of the former Prime Minister, Mr Whitlam. Senator NEWMAN —My question is directed to the Leader of the Government in the Senate. I refer the Minister to the words of the Prime Minister in the House of Representatives on Friday when Mr Hawke, in reference to the Treasurer's failure to lodge his tax returns on time, said: By any standard or criterion one would wish to apply to this matter there is no question of ministerial propriety involved. There is no question of a pecuniary or any other gain involved. I ask the Minister: What steps has the Prime Minister taken to satisfy himself that these sweeping statements are true? Did the Prime Minister consult the Minister or any other Ministers and cause inquiries to be made, or did he simply take the Treasurer's word on this matter? Senator BUTTON —The Prime Minister made that statement in the House of Representatives last Friday. I am sure that he made that statement being satisfied about the matters referred to in Senator Newman's question. Senator Kilgariff —He is easily satisfied. Senator BUTTON —I am rendered speechless by the quality of the interjections. I was asked whether the Prime Minister consulted other Ministers. To my knowledge, he did not. He may have done, but I do not think there would be much point in doing that because Ministers would not, unless the Liberals were in power, have an intimate knowledge of each other's tax returns. I do not think that in a fair society that is appropriate, so I do not think there would have been any consultation with other Ministers. I believe the statement was made by the Prime Minister, his being satisfied about the circumstances in respect of which he made the statement. Senator NEWMAN —I ask a supplementary question, Mr President. I draw the Minister's attention to questions remaining unanswered. Did the Prime Minister consult the Leader of the Government in the Senate and did he cause any inquiries to be made? Senator BUTTON —Honourable senators on the other side of the chamber really should try to understand this issue. First of all, let me say that it is none of their business whether the Prime Minister consulted me. But seeing they are a set of keyhole voyeurs, the answer is no, he did not consult me. Opposition senators can take that home, chew it over overnight and see what they can do with it. Let me make the point clear. If the Prime Minister had sought to consult one of the two parties-he would have consulted the Treasurer and I believe he did-the other party involved would have been the Commissioner for Taxation. If the Commissioner for Taxation had had information sought from him by the Prime Minister of Australia about the Treasurer's tax returns, the Commissioner for Taxation would properly have told the Prime Minister that it was none of his business. That is the rule which applies in respect of every citizen's tax return, and it applies to the Prime Minister as well. Opposition senators should try to understand that point. They have been ignoring all the important issues that face this country. They have been wasting their travel allowance and their senatorial salaries sitting here asking stupid questions for the last week instead of dealing with the issues that confront this country. They ought to understand that simple point: It is a matter between the Commissioner for Taxation and the taxpayer. Senator COLSTON —I direct a question to the Minister for Veterans' Affairs. My question relates to conditions at the Greenslopes Repatriation Hospital in Brisbane. Has the Minister noted a letter in the Courier-Mail of 27 November 1986 which complained of the conditions in a particular ward, a ward which apparently did not have a bath, even though it had been remodelled recently? Is the Minister able to provide any information in relation to the complaints expressed in the letter? Senator GIETZELT —Yes, I naturally had drawn to my attention the letter written by a veteran who was critical of some of his treatment at Greenslopes Repatriation Hospital. It would be true to say that a letter received from another veteran a couple of days later puts the first letter into proper perspective because the other veteran, in an equally strong letter, points out that the treatment at Greenslopes is excellent and decries the criticism of the previous letter writer. I am satisfied beyond any reasonable doubt that the general treatment of veterans in Greenslopes Hospital-in fact in all repatriation hospitals-is of high class. As honourable senators will be aware, on Monday I participated at the opening ceremony for the first digital subtraction and geography unit at Greenslopes, which has cost $1m. I therefore had the opportunity to go around the wards and to speak to many of the patients. There is no question that the overwhelming majority of them were very satisfied with the treatment they are receiving at Greenslopes and with the way that the Department of Veterans' Affairs looks after them. That particular piece of equipment is part quite a considerable amount of new equipment which has been put into our repatriation hospitals and it will greatly enhance the health of veterans suffering from strokes, peripheral vascular disease, hypertension, pulmonary embolism and such illnesses which now face many of the aged veterans who are patients in our repatriation hospital system. Some $28m has been allocated for that purpose in the last four Budgets of this Government. I am satisfied that, whilst the odd patient may be dissatisfied, in the overwhelming number of cases there is a degree of satisfaction with the treatment. Senator WALTERS —My question is to the Minister representing the Treasurer. I refer the Minister to an answer given by the Treasurer in the House of Representatives on 23 September last when, in respect of his travel allowance entitlements, Mr Keating said. I am only here to do this job. If I were not, my family and I would be living as many days out of seven as possible in Sydney. A little later he said: Is he saying that I should use my salary of office as Treasurer to pay my rent to enable me to do the job? Of course that is nonsense. I ask: What is the difference between the Treasurer and a farm manager or farm worker who has to live on a property but maintained a home elsewhere and who would, were it not for the job, spend as many days out of seven as possible at his principal place of residence? Is such a person entitled to the same tax-free travel allowance which, the Minister claims, is available to the Treasurer? Or does the Australian Taxation Office consider that a farm worker should do his job and work for six or seven days a week and spend his salary on housing himself to enable him to do the job? Senator WALSH —The difference-I would have thought that anybody with an IQ of above 85 might have deduced it by now-is that the TA received by members of parliament is paid in accordance with a determination of the Remuneration Tribunal. I do not know how many times I have to say that. I will try to break it down into monosyllables although I cannot off the top of my head think of a way of doing that, so that people like Senator Walters will be able to understand it. While I am on my feet, I inform the Senate that I have received a note from the Treasurer's office which states unequivocally that travel allowances are not subject to fringe benefits tax. I can only assume that the Opposition has scrambled together the fringe benefits tax and the substantiation rules and misrepresented them in the way it has consistently done. I do not believe that Senator Parer would wilfully misrepresent the truth, so I assume he was set up to do the job by some of the more sleazy Opposition front benchers. Senator ROBERTSON —My question is directed to the Minister representing the Treasurer. I refer to Des Keegan's column in yesterday's Australian which claimed that the prospect of a Peacock-Macphee Opposition leadership team would precipitate panic in the financial market. Is the Government concerned about the implications for the stability of the Australian dollar of an Opposition leadership challenge? Senator WALSH —I did have a note on this, Mr President, but I cannot find it. Opposition senators interjecting- The PRESIDENT —Order! Senator Chaney —I could take a point of order to cover the Minister's embarrassment, Mr President. The PRESIDENT —Order! I ask the Minister to put that book away. Senator WALSH —Mr President, I do not think I need a note to answer that question, if only for the reason that the possibility of the Liberal Party actually coming into government, given its present warring and divided state, is so remote that I do not believe that any serious watcher of the foreign exchange market would take that into account. If I need to produce any further evidence to support that, I can refer to a report from the West Australian newspaper of today, but I think similar reports were published in a number of other newspapers. Under the heading `More Libs join in hating New Right', the report states: Tasmanian MP Max Burr and Senator Chris Puplick-- I repeat, Senator Puplick-- spoke out strongly against the New Right and warned of growing disaffection towards it within the Liberal Party. It continues: Senator Puplick, launching a book on Liberal philosophy yesterday, said that advocates of the New Right's brand of politics were `preachers of old wrongs, greed and social-- Senator Chaney —Mr President, I take a point of order. I did not take a point of order on the original question because the questioner, rather more dextrously than was managed yesterday by Senator Crowley, actually managed to relate the question to a matter which is within the responsibility of the Minister, namely, the stability of our highly unstable currency. The Minister having confessed that it had nothing to do with the stability of the currency, is now obviously going on to deal with matters which are in no way within his ministerial responsibility. I suggest that you should ask him to bring his answer to a close, Mr President. The PRESIDENT —I ask the Minister not to get into the area of debate and to answer the question, which I might say was a quite legitimate question. Senator WALSH —Certainly, Mr President. I can understand Senator Chaney's reluctance to have any more of the comments of his back bench colleagues, or indeed some of his front bench colleagues, about the present state of the Liberal Party quoted in the Senate or anywhere else. In view of Senator Chaney's sensitivity on this matter, I will not bother to quote any more of the comments. Senator SHEIL —My question is also directed to the Minister representing the Treasurer. I refer the Minister to his answer yesterday concerning the Australian Taxation Office's prosecution of a man who claimed a 1985 tax refund of $1,381, 10 weeks after the due date. The Minister argued that whether he had actually got a refund was relevant and that the Commissioner of Taxation would be more likely to prosecute someone who had a `long and scungy' record with the Taxation Office. I ask: Given that the man did actually receive a refund of $1,376, and given that he had been an honest taxpayer, scrupulous in his relations with the Tax Office, will the Government now instruct the Commissioner of Taxation to review his and similar cases? Senator Walters —Hear, hear! Senator WALSH —I would like it noted for the record that Senator Walters, by way of interjection, advocates a policy under which the Government can instruct the Taxation Commissioner to do anything the Government wants the Taxation Commissioner to do with respect to the taxation law. That is not a policy which the Government supports. Were it to be the actual policy, I am sure that an instruction to the Tax Commissioner to investigate the affairs of a number of named prominent members of the Liberal Party would produce some very interesting outcomes. However, Senator Sheil asked me whether the Government would instruct the Tax Commissioner to do this. The Government is not able to instruct the Tax Commissioner in that way. Senator Sheil has told us that the taxpayer in question did receive a refund. I suppose I am willing to take his word on that, because the question of whether a cheque was written and received is a pretty black-and-white question-although not all mail posted from the Tax Office, as we know, is received. Some of it is diverted along the way. I have noted with some satisfaction that the Opposition Leader was quoted in the Press today as saying that he will co-operate fully with Australia Post in its inquiry into mail theft, which means, of course, that he will tell the post office who handed him the photocopy of the original letter. As to whether the taxpayer in question had a perfect, immaculate record of compliance with the tax law, that is a much more subjective question, a judgment on which, I presume, was made by the Tax Commissioner. For the reasons I have already stated-that is, what the law requires the Tax Commissioner not to divulge-neither I, nor the Treasurer, nor the Prime Minister nor anyone else is able to second judge that issue. Senator McKIERNAN —My question is also directed to the Minister representing the Treasurer. I refer the Minister to Ross Gittins's article in today's Sydney Morning Herald, to which he referred in answer to a question from Senator Reynolds. Is the article accurate in refuting claims by Bob Ansett that the fringe benefits tax is unfair because it asks one man to pay another man's tax, and by Ian McLachlan, who said that the National Farmers Federation is not opposed to the taxing of benefits but would never agree to a tax which becomes the responsibility of someone who is not the recipient of the benefit? Senator WALSH —I have seen the article, as Senator McKiernan noted, because I referred to it earlier in Question Time. As I suggested, rather than being an original article, it is a summary of and report of a paper prepared by Mr David Collins, an economics lecturer at Macquarie University. It is very tightly argued and, I believe, logically unassailable. It examines the situation which existed before the introduction of the fringe benefits tax. At one extreme, some employees were price makers, and at the other extreme, some employers were price takers, and vice versa. In the case of an employee who was a price maker, who could effectively name his own after-tax income-because that was what the employee was interested in-it would then be left open to the employer, through paying part of that after-tax income in the form of a fringe benefit and part in the form of salary, to devise arrangements, in the absence of a fringe benefits tax, to minimise the cost to the employer of providing that employee with his or her demanded level of after-tax income. The same sort of argument, or a mirror image of it, of course, can apply in reverse. Gittins quotes Collins as saying: If the employer is unable or unwilling to cash out the benefits this seems a clear indication that the employer is in effect a beneficiary, to some extent at least, from the non-taxation of fringe benefits. On this point Mr Gittins observed: that's the first leg of the Ansett-McLachlan argument biting the dust: it's by no means clear that it's only the employee who benefits from the use of fringe benefits- in the way that I have described. The article goes on to make the point that there is nothing unprecedented-apart from the drawing of the important distinction between the recipient of a fringe benefit and the ultimate beneficiary of a fringe benefit, which is not the same thing necessarily; indeed, the benefits are in practice usually distributed in some ratio or other between the two-in one person being obliged to pay the tax which is ultimately borne substantially or entirely by another. For example, the wholesale sales tax is levied on the seller of goods on the assumption, valid certainly in most cases, that that tax is passed on to the consumer. So the tax is ultimately paid by someone other than the person who nominally pays it. To that, of course, could be added the long-standing collection of payroll tax, under which employers are required to pay a tax related to the total payroll that those employers pay, even though the payroll, of course, goes to the employees. The same point can be made with respect to pay as you earn deductions, under which in the first instance the employer is required to make the payment on salaries that are paid to the employee. So it goes on. In other words, it is by no means new that the principal argument being used against the FBT is unsound, hypocritical and even fraudulent. That particular article which Ross Gittins has written sets out in much more detail than I am able to do in Question Time the very sound and logically unassailable reasons why that is so. Senator BUTTON —At Question Time today Senator Archer asked me a question about appointments to the chairmanship and executive of the Commonwealth Scientific and Industrial Research Organisation. In answering that question I said that the Government had not considered the matter and had not made any appointments at this stage. That is incorrect. But no announcement has been made by the Government in respect of that matter and an announcement will be made in due course by the Minister for Science. That will give Senator Archer the opportunity to ask again his question loaded with smear and innuendo-if the appointments are consistent with the implication of his previous question. We will deal with that matter at the appropriate time. The PRESIDENT —I inform the Senate that I have received the following letter, dated 3 December, from Senator Harradine: 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 need for the Government to implement the recommendations of the Senate Select Committee on Video Material and in particular to ensure an immediate ban on video materials which have received the ``X'' classification by the Film Censorship Board and contain depictions of incest.'' Yours sincerely, BRIAN HARRADINE (Senator for Tasmania) Is the proposal supported? More than the number of senators required by the Standing Orders having risen in their places- Senator HARRADINE(Tasmania)(3.04) —I move: That, in the opinion of the Senate, the following is a matter of urgency: The need for the Government to implement the recommendations of the Senate Select Committee on Video Material and in particular to ensure an immediate ban on video materials which have received the `X' classification by the Film Censorship Board and contain depictions of incest. I understand that, by agreement, there will be 10 minutes for each speaker, and I would be obliged if the clock were set accordingly. In order to understand the point of this motion, it is important to know what the Senate Select Committee on Video Material did. The Senate Select Committee, whose final report was presented to the Parliament on 28 March 1985, recommended that the Federal Government take action pending the outcome of the Joint Committee inquiry, that Joint Committee having been established earlier in March of 1985. The Senate Committee said that these interim measures should have regard to the many problems brought to it in evidence concerning the extent of violence and sex depicted in videos, their transmission by post and accessibility to children. It specifically recommended a moratorium on the sale and hire of X classification video material and on its importation until the Joint Committee investigated and formulated considered recommendations on the subject and the Parliament and the Government had considered those recommendations. The Government has repeatedly refused to act on these recommendations of the Senate Select Committee despite the fact that its original formulation of an ordinance on this subject was based on the proposition that there should be uniformity throughout the Commonwealth, despite the fact that since then all of the States have banned X-classified videos, and that X-classified videos are now available for sale and hire only in the Australian Capital Territory and the Northern Territory, which represent some 2 per cent of the population. Nevertheless, there has been an enormous dislocation, so far as the States are concerned, because of the fact that this material is being sold from Canberra by post to the States, thus undermining the very principle that the Government said was at the centre of its ordinances. The inaction of the Government has prejudiced the work, I believe, of the Joint Committee in that the argument being advanced very strongly now is that the material is so prevalent that it would be very difficult to have such matter excluded from the community. The Senate Committee also recommended a moratorium on the importation of this material. But, because of the inaction of the Government, the country has been literally flooded with that material. What is the nature of the material on which the Senate Select Committee sought to have a moratorium imposed? The nature of its contents is not well known amongst the community. How many Australians, for example-indeed, how many members of parliament-would know that the possession for sale and hire of a particular video which in Australia fits within the guidelines for the X category would in Canada be an offence? Canada, as we know, is quite a liberal society. Indeed, it is proposing a tightening up of its laws. But there is available on the shelves here for hire and sale material the possession for sale and hire of which in Canada would be an offence. I refer to the judgment in R v. Wagner, Alberta Queens Bench, Canada. Wagner was convicted of having certain videos in his possession for the purpose of distribution or circulation. At least two of the titles are legally sanctioned for hire and sale under the Australian Capital Territory Classification of Publications Ordinance and classified by the Film Censorship Board in the X category. The judgment referred to these two particular videos-and these are an example-as: `sexually explicit, without violence but de-humanising or degrading'. Through the Joint Select Committee secretariat, one of these videos was hired from a Canberra video outlet. I viewed that video from start to finish and I know of very few human beings who would not regard it as non-violent, dehumanising or degrading pornography and beyond the pale. It may be asked: `What of the new guidelines that were adopted by the Film Censorship Board in late 1984?' This video was classified X in April 1984 by the Film Censorship Board and, on reference by the Victorian police, in May 1986 it was declared by the Film Censorship Board as identified correctly as X under its current guidelines. The bulk of material in the X category would fall into a category of non-violent, dehumanising or degrading pornography. This material has been described in the academic literature as depriving `fellow human beings of identity and community'. `Women, particularly, are deprived of unique human character or identity' and are depicted as sex stereotypes, `anonymous panting playthings, adult toys' to be used and discarded. They are depicted as lacking free will, discrimination, choice, judgment, self-control or integrity and as made ready to meet any sexual demand at any time. That is how this material is described in academic literature. To use the terminology of a Canadian feminist who applauded the Canadian court's decision, this material: tends to objectify or dehumanise the persons portrayed, so that the participants are stripped of all individuality and all persons of a gender class are thereby reduced to their genitalia. The Canadian court was convinced that: Men, who are repeatedly exposed to such films, become more sexually aggressive in their relations with women and more tolerant of such behaviour in others. That leads to increased callousness towards women on a personal level and less receptiveness to their legitimate claims for equality and respect. In addition to what I have said, 25 per cent or more of material that is classified by the Film Censorship Board as X has explicit depictions of homosexual acts. Also, other material includes the theme of incest. Let us consider for a moment that we are allowing material which explicitly depicts incestuous acts and indeed promotes them. Of course, I am not talking about themes in films or books which seriously question or consider the subject of incest. Anybody who has seen the material to which I referred will know that I am not talking about that; what I am talking about is the explicit promotion of incest. Consider whether that is appropriate in view of the fact that only last year we in this chamber had before us the Crimes Amendment (No. 5) Ordinance of 1985. This material is promoting the type of incest which under that Ordinance is punishable by imprisonment for 10 years. I am not sure how much time is left to me. My concern is that there is a Government proposal that this material and other material which is also described as non-violent, dehumanising and degrading pornography now in the X classification should be placed in a new ER category for sale and hire under the Australian Capital Territory Classification of Publications Ordinance. It is disturbing that though this question was raised in the Victorian Parliament recently, the Victorian Government stated in evidence to the Senate Select Committee on Video Material, as reported at page 1273 of the transcript, that the Films (Classification) Act of 1984 allows for this new category to be automatically introduced in Victoria if the Australian Capital Territory Ordinance is amended to introduce it into the Australian Capital Territory. It is of concern that there is an attempt-we should face this-to so entrench this material in society that it will be too hard to get rid of it and we will have to tolerate it. I believe the time has now come for Parliament no longer to be a party to entrenching this type of material in the community. Indeed, it is being forced on to the States through the post at present. This motion should be adopted. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(3.16) —The Government will not act to pre-empt the report of the Joint Select Committee on Video Material, which Committee was established in the aftermath of the Senate Select Committee on Video Material to which Senator Harradine's motion refers. The Joint Select Committee report will deal with further recommendations made by the Senate Committee report. The report of the Joint Committee is expected early in the new year. The Government has taken a steady and deliberate course on this matter which we believe is a responsible course given the conflicting arguments and principles that are involved in this whole sensitive subject area. The recommendations of the Senate Committee were that there be a moratorium on the sale or hire of X-rated videos in the Australian Capital Territory as an interim measure and the importation of X-rated tapes and similar material be prohibited. The report of the Senate Committee was not unanimous but those were the recommendations and they have been taken seriously by the Government. They have been referred to the Joint Select Committee and that Committee is taking evidence upon them and considering them very seriously. We also ensured that the report of the Senate Select Committee, with those recommendations, was examined closely not only by the Government but also by the Australian Capital Territory House of Assembly. It was referred to that body for comment in accordance with the usual practice and that body, which had conducted an examination of the Australian Capital Territory Ordinance via its standing committee on education and community affairs, did not support the implementation of a moratorium. So the community most immediately affected by the alleged problems associated with X-rated videos was not, through its elected representatives at the time, prepared to act in the way that Senator Harradine urges that we now should. As I said, the Government acted responsibly by further ensuring that the matter would be investigated through the Joint Select Committee which is now in operation with essentially the same terms of reference. That Committee has taken quite a deal of further evidence on this subject. Some of that evidence which has been taken, as I understand it, puts Senator Harradine's motion in an interesting and, I think, rather less heated perspective than he is seeking to generate here in this chamber today. Senator Harradine —What do you mean by that? Senator GARETH EVANS —I will explain. Senator Harradine —I was not heated; I was trying to get through in the 10 minutes. Senator GARETH EVANS —To the extent that Senator Harradine was talking about the need to act urgently to stop a phenomenon which has got out of hand, which is generating anxiety, which is causing concern and which is wrong in principle and so on, I draw the Senate's attention to some of the evidence before that Committee which is on the public record. I mention first of all that the hiring rate of X-rated videos has dropped away quite dramatically. There is impressionist evidence to that effect from the Australian Capital Territory but quite specific arithmetic or numerical evidence from the Northern Territory, where these things are the subject of computerised records by a number of retailers. As I understand it, figures in the Northern Territory which were put to the Committee show that there has been a falling away in the hire rate of X-rated material from 11 or 12 per cent of total video hirings in 1984-85 to something around 5 per cent now-in other words, over a 50 per cent drop. That would suggest a significant falling away in that jurisdiction. I understand that similar impressions are abroad about the rate of utilisation and hiring of such material in the Australian Capital Territory. The other point that is worth mentioning from the evidence that has been put before the Joint Committee is, as I understand it, that the number of complaints made about X-rated videos has fallen away quite dramatically. Of course, having said that, it will, no doubt, result in a flood of complaints specially produced to prove to the contrary what I am now asserting. I refer to the evidence of Mrs Hocking from the Family Life Movement of Australia before the Committee on 27 November. At page 2672 of the evidence she talked about the last six months having resulted in a very significant falling away of complaints. Again, at page 2670 of that evidence, Mr Doyle, who although an Australian Labor Party member is known to have conservative views on a number of social issues, talks about the number of complaints falling away very significantly over the last six to eight months. So we have a situation-- Senator Zakharov —The Federal Police also. Senator GARETH EVANS —I am indebted to Senator Zakharov for that interjection. She would be closer to the detail than I am by virtue of her membership of and involvement with these committees. So the notion that there is some sort of increasing level of community concern about this, I think, is not made out. It may be, as Mrs Hocking said in her evidence, that one of the reasons for the fewer complaints is that a parliamentary committee is known to be looking at the issue. If that is right and if that is the reason it simply adds weight to my basic point that there is no need for any of us to take precipitate action until we have a considered, further and substantial report from the Joint Select Committee. Of course, what seems to have set Senator Harradine's concern racing again in this matter is an advertisement-a rather tacky advertisement, I readily acknowledge-in the magazine People published in Australia on 8 September, of which Senator Harradine gave us all copies, which lists a number of titles of pornographic videos as being available from a New South Wales address but refers to this material as having been dispatched from the Australian Capital Territory. It also refers to the material as being Commonwealth classified material. I guess that that has given rise again to the terms of Senator Harradine's motion which is directed to implementing a moratorium on the further sale of X-rated videos in the Australian Capital Territory and doing something about the classification standards that are presently applied. But when we focus on this material it is not at all obvious that the problem is on the scale which it might at first sight appear. The advertisement has been forwarded to the Film Censorship Board and officers of the Attorney-General's Department for investigation and they are now co-operating fully with the Victorian and New South Wales governments to identify which tapes the trader in question is offering for sale and to establish whether any offence has been committed. The basic problem that has shown up in that investigation is that, while the advertisement provides story lines, it does not in fact provide titles, and identification of the video tapes in question has thus been very difficult. One finds in the advertisement that the material is gathered into groupings, for example: `Boobs', `Oriental', `Fat Mammas', `Nurses', and so on. There are storyline descriptions-I will not burden the Senate with more than just one example-such as `Rolls and Rolls and Rolls of Gross Sensuality', which demonstrate the sort of thing we are talking about. Those storylines are not titles; they are simply descriptions, although who on earth would be moved by such descriptions to buy the material in question I hesitate to contemplate. Identification of the video tapes has proved difficult. Although the investigation is incomplete as a result, it appears that certainly some of the tapes offered have not been submitted for classification and some have been submitted but have been refused classification. Under those circumstances, real questions arise about criminal liability for the material and that aspect of it is being very closely looked at. The question of whether offences under the Australian Capital Territory Classification of Publications Ordinance and the New South Wales Film and Video Tape Classification Act have been committed is, as I have said, being examined. Turning to more specific matters in these tapes, as far as it can be ascertained at this stage, it appears that the tapes concerned do not involve child pornography at all. I qualify everything that I say by reference-- Senator Harradine —Who suggested they did? You did not mention incest. Senator GARETH EVANS —There is no reference to children but there has been-- Senator Harradine —Of course there isn't. Why did you bring it in? Senator GARETH EVANS —Because I had rather assumed that that had come up in the public debate. But if it did not-- Senator Harradine —You didn't mention incest, did you? Senator GARETH EVANS —Okay! I am getting to incest right now. I know that the honourable senator is panting to get to the incest question and I am only too happy to accommodate him. But I am making the point that, to the extent that people might be concerned that the incest category might involve children-and most people think of incest as involving children-there is no evidence of child pornography as such, nor is the existence of child porn- ography overtly suggested by any of the titles except perhaps one of the incest storyline titles: `The kids teach dad a lesson he'll never forget'. There are no children whom we are aware of involved in any of this material that has at least so far been seen and identified by the Australian Federal Police. As to incest more generally, to the extent that it can be distinguished from child pornography, I am advised that of the titles so far identified by the Film Censorship Board from the catalogue submitted by this organisation going by the name of Golden International-I give that information in case someone is contemplating a boycott of it-only one involves a so-called incestuous relationship. The Film Censorship Board report of this video tape-it has been looked at and dealt with by the Board-includes the following: The Board considered that the depiction of the `incestuous relationship' was totally unconvincing with the so called mother and son being played by unrelated and familiar `porno' actors, both being (and depicted as) consenting adults. I simply make the point under those circum- stances that, as with so many other things in this area, the titles of the tapes do not appear to live up to their descriptions and people clearly are being ripped off by the organisation in question to the extent that they think they are getting something even more sordid than that which they are. Of course, one has very little sympathy for people in those circumstances. I am simply making all these points in order to put on the record that the situation in practice would appear, on the basis of all the evidence that is to hand and such investigation as has been done and completed to date, to be nothing like as serious as Senator Harradine and others, who understandably react with some concern when they see advertisements like this, would believe. I conclude by saying that the powers available to deal with a matter that is utterly beyond the pale, in terms which we have previously debated in this place, are ample at the moment. The Film Censorship Board, in classifying all video tapes, has regard to section 25 (3) of the Australian Capital Territory Classification of Publications Ordinance, which requires that it refuse classification to a film: . . . where the Board is satisfied that the film depicts, expresses or otherwise deals with matters of sex, drug misuse or addiction, crime, cruelty, violence or revolting or abhorrent phenomena in such a manner that it offends against the standards of morality, decency and propriety generally accepted by reasonable adult persons to the extent that it should not be classified. That is what the Board is obliged to have regard to at the moment in relation to the Australian Capital Territory. It is not as if all bets are off and that anything goes in the X category. The Board must have regard to those considerations. It has the capacity and it exercises that capacity to refuse classification altogether. There is the further consideration about child pornography which is relevant to this debate, even though it might not have been specifically brought into issue by Senator Harradine, that any video materials containing child porn- ography are unequivocally prohibited under the Customs (Prohibited Imports) Regulations and, of course, are also refused classification under the Australian Capital Territory Classification of Publications Ordinance. Moreover, under the Australian Capital Territory legislation, the keeping of such material for the purpose of selling or otherwise publishing it is punishable by a fine of up to $10,000 and imprisonment of up to 12 months. So anyone who wishes to argue that the situation is somehow totally libertarian, laissez-faire, where anything goes, where there are no rules and no constraints, is quite profoundly misreading the situation. Senator WALTERS(Tasmania)(3.30) —The matter of urgency that Senator Harradine moved is as a result of the long period that the Senate Select Committee followed by the Joint Select Committee on Video Material have been sitting. Indeed, the report of the Committee was first brought down in March last year. The Senate Committee had been sitting for nearly two years on this particular term of reference. The new Committee, the Joint Select Committee on Video Material is likely to go on for a number of months. I am not being critical of the length of time that it has taken to end its deliberations. There were 1,546 submissions and several international inquiries. The Committee has been doing its job very thoroughly. As Senator Harradine pointed out, the Senate Select Committee brought down a recommendation after the Senate made a request. I will quote it to the Minister for Resources and Energy (Senator Gareth Evans) because he chose to ignore it completely: It stated: That the Senate-calls on the Federal Government to place a moratorium on the importation, sale, hire, reproduction and private distribution in the Australian Capital Territory and across Australia of all X-rated and other sexually sadistic and violent videos pending the outcome of the proposed Parliamentary Committee of Inquiry into video material. So it was not only the interim report that asked the Government to bring in the moratorium, but it was also the Senate. The Minister, who was then Attorney-General, has blatantly ignored the Senate. He has treated it as of no consequence at all. He decided that he would not take any notice of the Senate or abide by the request it had made. As a result, the Senate Committee, in bringing down its interim report-before the Joint Committee of both Houses of the Parliament was established-again reminded the Government of the Senate's request and asked again that a moratorium be placed on the videos. The Minister is saying that the Government will not act to pre-empt the Committee's decision. No request has been made for the Minister to pre-empt anything. We are asking the Government, as an interim measure, to set aside all X-rated videos until a recommendation has been made. The Committee has been considering this matter for so long that at least one of our very important witnesses has changed his mind. He started by saying that he did not believe that these types of videos did any harm. He has now changed his mind and said statistically that the figures are worrying him because of what is occurring in the community. Over the period he has changed his mind. Senator Zakharov —One witness. Senator WALTERS —I have said one, Senator. The Minister, in his typical way when he first became Attorney-General, opened the floodgates. He stated: Barriers to the importation of hard core pornography-other than child pornography, publications which incite terrorism and publications containing extreme violence and/or sexual violence-have been lifted. So the floodgates were opened. He then brought in the most incredible guidelines that one could imagine, making it positive that the floodgates had been opened. The reaction of the Australian public was such that the guidelines were changed in this place. The then Attorney-General had to withdraw the guidelines and tighten them up a bit. However, as has already been indicated in this debate, they are nowhere near tight enough. As the Minister said, when referring to incest the majority of people think of children. I still think of 16- and 17-year-olds as children. I believe that it was certainly not the intention of the Senate that material depicting incest should be allowed to be peddled around Australia. However, the Film Censorship Board, under the guidelines set down by the Minister, must allow this sort of rubbish in. As a result, it is clearly available to the people of Australia. Every State in this country has opposed the importation of such videos and will not allow them within their boundaries. That is a rather easy way of saying that the majority of people in Australia who have elected those State governments have said that they do not want these videos within their boundaries. But because the Constitution permits the Australian Capital Territory and the Northern Territory to peddle their goods without any legal prohibition throughout the country we are able quite easily-indeed, they are advertised in State newspapers-to get these X-rated videos from the Australian Capital Territory. All a person has to do is to send off and he will be able to get them. I would like to make it perfectly clear that we are not talking about blue movies. Most people seem to think that we are talking about blue movies but we are not talking about that sort of thing at all. If people want to watch blue movies, I am the last person to say that they should not be doing it. The issue goes much further than that. The only description that can be placed on it is that every sort of perversion is also permitted. I feel very strongly that our children ought to have some sort of protection. I believe it is ridiculous that we allow in our homes for entertainment videos which we consider too bad to be shown in public places. Senator MACKLIN(Queensland)(3.37) —The Australian Democrats indicate that we will, on balance, support the urgency motion moved by Senator Harradine. I say `on balance' because we have some difficulty in this area. There are no members of my Party on the Senate Joint Select Committee on Video Material and, hence, we have not had access to the very extensive discussions obviously that that Committee has been able to undertake. Senator Zakharov —It is all on public record. Senator MACKLIN —It is, indeed, Senator. We have not been able to peruse the vast volume of material in the submissions made by various people. It would seem that if one were attempting to make a judgment on the interim report one would lean towards the fact that as the States in general have decided to await the final recommendations of the Joint Select Committee on Video Material-in the interim they have prevented the sale or hire of X-rated material within their boundaries-that as a matter of mere conformity the Australian Capital Territory and presumably the Northern Territory, if it wished to do so, would adopt the general view that has been adopted by the States which have constitutional power over the vast bulk of the population of Australia. The urgency motion worries us at least in one respect. It seems to have an implied criticism of the Joint Select Committee on Video Material. I do not know whether Senator Harradine is concerned about the length of time that the Committee might meet, but it seemed to us that the way the urgency motion was worded cast some doubt on the operations of that Committee. We have all served on a number of committees and we are very much aware that it is almost impossible, at least from the outside, to make a judgment on a committee and its proceedings because, in opening up, some areas turn out to be more vast, complex and detailed than one would have imagined when one started. Hence, our view from outside is that this Committee has probably met the same type of operation. The difficulty, however, is that Senator Harradine is a serving member of the Committee. In his bringing forward this motion we have some misgivings on that score at least. As I have already indicated, on balance we believe that conformity with the States on this matter until the Joint Committee has reported is the best course. Senator HARRADINE(Tasmania)(3.41) —in reply-I wish to respond to some of the scoring points that were raised by the Minister for Resources and Energy (Senator Gareth Evans) on behalf of the Government. I am concerned that Senator Evans has made a number of points which are quite inaccurate. Let me make it perfectly clear to the Senate and to him that, as he would well know, my concern about this matter arose not merely from the concerns publicly expressed by the South Australian Council for Children's Films and Television or the concerns expressed in the Victorian Parliament after the letter was received from the women's group in Victoria, but because the Government has consistently failed to act in accordance with the resolutions of this Senate and the recommendations of the Senate Select Committee on Video Material. I remind Senator Evans that the Senate Select Committee was chaired by Senator Jones-a member of the Government. The other members of the Committee were Senator Crichton-Browne, Senator Elstob, Senator Walters, Senator Zakharov and me. Senator Evans said that the Committee was not unanimous in its viewpoint. In fact, Senator Zakharov was the only dissentient in the all-party Committee. The Government chose to ignore, and has continued to ignore, the statement and chief recommendation of the Senate Select Committee. Incidentally, it is interesting to note that the Minister did not challenge my description of the content of the material. It is important to remind the Senate that the degrading and dehumanising nature of the bulk of the material in the X category is such that its possession for sale and hire in Canada, for example, would be an offence. How many people would have realised that? Very few, I submit. Senator Evans then went to the evidence that was given to the Committee about the hiring rate dropping. I suggest that he not be selective and that his statements ought to be compared with the statements that have been made by the industry following the publication of the research done for the Attorney-General's Department by the Australian Institute of Criminology. He ought to have a good look at that document because it shows, in conjunction with the statement by the Institute, that Senator Evans is wrong on that count as well. Senator Evans then tried to besmirch those people who have expressed concern about this question. Quite obviously a number of people recognise that this matter has been subject to investigation by a committee of the Parliament. But those people also should now know that the Government does not intend to do anything about the Senate Select Committee, and intends to prejudice the investigation by that Committee by ensuring that this material continues to be made available, imported and distributed in the Australian Capital Territory and, as Senator Walters said, throughout the length and breadth of Australia by post. Senator Evans says that the Government does not intend to pre-empt the Joint Committee report. The fact that the Government has not adopted the Senate Select Committee report calling for a moratorium on the sale, hire and importation of the material has pre-empted the Joint Committee report and prejudiced proper investigation by the Committee, because the statement is now being made that the material is entrenched and we cannot do anything about it. Senator Evans then talked about incest and said that there was no child pornography in the material. Who said that there was? The cover of the material says that the actors are over 18 years of age, but frankly they do not look over 18 in much of the material. He talks about one of the incest films dealing with mother and son. The most offensive of the films that I have seen concerns not a mother and son relationship but a father engaging in incestuous acts in teaching the daughter how to be a prostitute. I consider that Senator Gareth Evans, representing the Attorney-General, did not address the question. Does he deny that the Crimes Act imposes an imprisonment term of 10 years for that type of activity? I am talking not about the serious consideration of the theme of incest but about the promotion in this material of explicit incestuous acts. It is clear from the Minister's response that he will not do anything about this. I raised this matter with the Minister in a question on 13 November 1986. I said: Is the Minister representing the Attorney-General aware of concern expressed yesterday in the Victorian Parliament about videos promoting incest finding their way into Victoria from the Australian Capital Territory under laws supported by the Commonwealth Government? Is the Minister also aware that the Attorney-General, Jim Kennan, promised to investigate this? Is the Minister further aware that recently the South Australian Community Welfare Minister, John Cornwall, launched a major survey revealing the devastating impact of videos, approved by the Film Censorship Board under the same Federal Government laws, and that a spokeswoman for the authors of the survey, Barbara Biggins, condemned the undue delay of the Joint Select Committee on Video Material in reporting to Parliament? Is it not a fact that this delay cannot be justifiably used as an excuse by the Federal Government to sit on its hands? Is it not a fact that the Senate Select Committee on Video Material . . . last year recommended that the Federal Government take action pending the outcome of the Joint Select Committee inquiry and that such action would have overcome the fears of the Victorian Parliament and Mrs Biggins? What action does the Federal Government propose to take . . . The Minister, Senator Gareth Evans, responded by saying: The Attorney-General seems to be displaying a much healthier sense of relaxation about this issue than is Senator Harradine. I am not relaxed about the promotion of incest being included in this material. I do not think any member of parliament should be relaxed about that question. I do not know whether the Minister, Senator Gareth Evans, is speaking truly on behalf of the Attorney-General, Mr Lionel Bowen. I would like to know whether Mr Lionel Bowen is relaxed about that. The Minister has made certain incorrect statements about the material that was advertised. I have not got time to go into that now, but suffice it to say that he has made incorrect statements about that because I have found out and have been given the titles of the material. Finally, I inform Senator Macklin that I did not offer any criticism formally in this sphere about the length of time that is being taken by the Joint Committee. I am aware, of course, that the Chairman of the Committee is on the public record as opposing a moratorium and saying that it is fair to say that his prejudices are against any form of censorship, but I am not here raising that as an issue. I have not questioned in this forum the matter of delay; I can do that in other forums. What I have done is attempted to protect the Committee from attack from outside, and the attack is coming. I have said that the Government cannot use the delay in the Committee's reporting to Parliament as an excuse for sitting on its hands. The Minister says that the Government has adopted a steady and deliberate course on this matter. That steady and deliberate course will ensure the entrenchment of this material in our community. Question resolved in the affirmative. Senator RYAN(Australian Capital Territory-Minister for Education) —I present the Government's response to the report of the Senate Standing Committee on National Resources on the natural resources of the Australian Antarctic Territory, and I seek leave to make a statement relating thereto. Leave granted. Senator RYAN —I seek leave to incorporate the statement in Hansard. Leave granted. The statement read as follows- For the information of honourable senators, I present a schedule containing the Government's response to the Senate Standing Committee on National Resources report on the Natural Resources of the Australian Antarctic Territory. On 2 June 1983 the Senate resolved to refer the matter of exploitation of the natural resources of the Australian Antarctic Territory to the Standing Committee on National Resources. The terms of reference of the Committee were widened on 7 December 1983 to reflect the Committee's concerns regarding environmental issues in Antarctica. The wisdom of this is evident in the large proportion of the Committee's recommendations which deal with environmental matters. The Committee, which tabled its report on 5 December 1985, is to be commended for its efforts. The Government has closely examined the report and its recommendations and it is with appreciation that we present our response to the Committee's 28 recommendations. The Government welcomes the fact that many of the Committee's recommendations accord closely with the thrust of existing Government policy, in particular support for the maintenance of Australian sovereignty over the AAT, support for the Antarctic Treaty system and emphasis on the need for stringent environment protection in the Antarctic. In the latter regard, I would draw honourable senators' attention to a number of important initiatives which Australian delegations have taken during the past year at the Thirteenth Antarctic Treaty Consultative Meeting as well as in the Commission for the Conservation of Antarctic Marine Living Resources with the object of strengthening environment protection arrangements in the Antarctic. These are mentioned in the schedule accompanying this statement. The Senate Standing Committee rightly drew attention to the need for Australia to ratify the Convention for the Conservation of Antarctic Seals. Ratification will allow Australia to participate fully in any international negotiations on the conservation of Antarctic seals. I am pleased to be able to say that problems with the enabling legislation have now been overcome and the Seals Convention will be ratified in the very near future. Although the Seals Convention allows for harvesting of seals, the Government has decided that it will not permit the commercial harvesting of Antarctic seals by Australian nationals. The Government may permit the culling of seals for environmental purposes if recommended by the Commission for the Conservation of Antarctic Marine Living Resources. The Government also welcomes the Committee's support for active Australian involvement in the negotiations aimed at developing an Antarctic minerals regime. Australia hosted the eighth round of these negotiations in Hobart from 14-25 April this year. Protection of the Antarctic environment and its dependent ecosystems remains an important Australian objective in these negotiations. The Government shares the Committee's views regarding the impracticability of establishing a `World Park' in which all resource development is prohibited. At the same time, it sees some merit-as a long-term goal-in the idea of an Antarctic Conservation Convention providing a more comprehensive framework in which environmental measures could be co-ordinated and strengthened. For the reasons set out in the schedule, however, the Government considers it premature to propose this idea to other Antarctic Treaty nations at this stage. The Government also welcomes the Committee's recommendations relating to tourist and non-government expeditions to the Antarctic. We have repeatedly expressed our concern for the safety of such expeditions and the potential cost of disruption to national research programs as well as the risks to personnel in the event of the need to assist in an emergency. Our concerns have proven well founded and have been graphically illustrated in the 1985-86 season which saw the sinking of the vessel `Southern Quest' and the return of the Greenpeace expedition without establishing a base in Antarctica. The Government will continue to make every effort to ensure that tourist and non-governmental expeditions are properly prepared and that they adopt appropriate safety measures. The Committee made a number of recommendations on the position Australia should take in relation to the Convention on the Conservation of Antarctic Marine Living Resources. Australia has a record of achievement in this area, and indeed played a major role in the establishment of the Convention. This role was recognised by the selection of Hobart as the headquarters of the Commission for the Conservation of Antarctic Marine Living Resources, the only headquarters of an international organisation to be established in Australia. Australia has continued to take an active role in the Commission. At the Commission meeting held in Hobart in September 1986 Australia drew attention to the need for a more scientifically based ecosystem approach to the conservation of Antarctic marine living resources. This picked up several of the Committee's recommendations. The Government does not accept the Committee's recommendations calling for a review of Australia's Antarctic policy objectives, transport arrangements and expeditioner selection and training. Over recent years, and in some cases, in recent months, there have been a number of major reviews of these matters. In accordance with normal practice, these matters will be monitored and adopted or refined as required by developments in the Antarctic Treaty system, changing operational requirements or other relevant circumstances. Lest there be any doubt, however, let me say that the Government is fully aware of the importance of the Antarctic to Australia. For reasons of history and geography, Australia has a major interest in our nearest continental neighbour. Australia needs to be sure that Antarctica continues to be used exclusively for peaceful purposes, that the Antarctic environment is protected and that Australia is involved in all decisions on the future of the continent and its surrounding seas. In these respects, the Antarctic Treaty serves us well and the Government will continue to support it. In conclusion, the Government wishes to express its appreciation of the work of the Committee. Its report will be of lasting value. The recommendations and responses read as follows- SENATE STANDING COMMITTEE ON NATIONAL RESOURCES REPORT ON THE NATURAL RESOURCES OF THE AUSTRALIAN ANTARCTIC TERRITORY Recommendations: The Committee RECOMMENDS that: (1) Australia maintain its claim to sovereignty over the Australian Antarctic Territory; however, it believes that there is an urgent need for Australia to re-examine the purpose and objectives of its presence in Antarctica. (2) The Australian Government continue to support the Antarctic Treaty. It also RECOMMENDS that Australia encourage the adaptation of the Antarctic Treaty system to meet changing circumstances, such as the increasing emphasis on environmental protection and the need for greater participation in Antarctic decision-making processes, without prejudice to Australia's sovereignty claim. (3) The fish resources of the Australian Fishing Zone surrounding Heard Island and the McDonald Islands should be determined as a matter of urgency. (4) Australia propose to the Antarctic Treaty nations that a scientific study be undertaken to determine the impact on whale and krill populations if an Antarctic seal culling program were to be carried out. (5) Australia ratify the Convention for the Conservation of Antarctic Seals without delay. (6) The Antarctic Division undertake a feasibility study to assess the resource potential including economic viability of icebergs, particularly as an alternative source of freshwater. (7) During the Minerals Regime negotiations, Australia continue to maintain its sovereignty claim while supporting minerals negotiations within the Antarctic Treaty system. (8) A basic objective of Australia during the Minerals Regime negotiations be the protection of the unique Antarctic environment and its dependent ecosystems. (9) The Antarctic Division be provided with the necessary human and financial resources to enable it to continue its program of collecting and returning waste to Australia from its Antarctic bases. (10) Australia propose to the Antarctic Treaty nations that procedures be adopted to minimise the potentially significant environmental impact of Antarctic research expeditions. (11) The Antarctic Division finalise its proposals to reserve areas of the Vestfold Hills without delay to enable consideration by the next Antarctic Treaty Consultative Meeting in 1987. (12) Tourist activities in Antarctica continue to be monitored by the Antarctic Division and that tourism in the Australian Antarctic Territory be strictly controlled to ensure minimal environmental damage. (13) Australia propose to the Antarctic Treaty nations that all private expeditions, including tourist expeditions, be subject to stringent safety regulations. (14) Australia propose to the Antarctic Treaty nations that a review be undertaken of the scope and purpose of the present system of Specially Protected Areas and Sites of Special Scientific Interest. (15) Australia propose to the Antarctic Treaty nations that the Antarctic environment be given the same level of protection as is presently afforded to Antarctic fauna and flora. (16) Australia propose to CCAMLR that a study of the possible impact of krill harvesting on the Antarctic ecosystem be undertaken prior to any expansion of current utilisation levels. (17) Australia propose to CCAMLR that CCAMLR Convention be amended to prohibit the introduction of alien species to the region covered by the Convention. (18) Australia propose to CCAMLR that its Scientific Committee be provided with the resources necessary for it to conduct research into the impact of the exploitation of Antarctic marine resources. (19) Australia propose to CCAMLR that a high priority be given to a study of the feeding ecology of whales in Antarctic waters. (20) Australia propose to CCAMLR that the necessity of establishing permanent marine reserves and sanctuaries to protect potentially endangered species be examined. (21) The Antarctic Division give high priority to a study of the environmental impact of mineral exploitation in the Australian Antarctic Territory. (22) Australia propose that the international environmental impact assessment procedures be adopted as part of the decision-making processes of the Antarctic Treaty system. (23) Australia propose to the Antarctic Treaty nations that a Conservation Convention for Antarctica be adopted which would strengthen existing environmental measures but permit resource exploitation under stringent environmental controls. (24) The Antarctic Science Advisory Committee give high priority to determining the level of funding necessary to enable a major Antarctic science program to proceed. (25) If a station is established in the eastern sector of the AAT, it should not inhibit the substantial increase in scientific research funding recommended by the Committee. (26) The Antarctic Science Advisory Committee should as soon as possible determine priority areas for Australia's Antarctic science program including the need for research in the social sciences. (27) A comprehensive study of Australia's Antarctic transport options, including possible environmental impacts, be undertaken by an external agency in conjunction with the review of Australia's Antarctic policy. Such a study should also examine the need for long-term planning in the provision of transport facilities, particularly shipping. (28) An external agency review the adequacy of the Antarctic Division's expeditioner selection and training procedures. Responses: (1) The Government will continue to maintain Australia's sovereignty over the Australian Antarctic Territory (AAT). The purpose and objectives of Australia's presence in Antarctica are regularly reviewed by the Government, most recently in 1984. (2) The Government strongly supports the Antarctic Treaty system as the best means of preserving Australian interests in the Antarctic while at the same time ensuring peaceful international co- operation in the area. The Treaty system has demonstrated a remarkable capacity for evolution and adaptation over the past 26 years and, no doubt, will continue to do so in the future. The treaty system already gives major emphasis to environment protection. During the past two years, Antarctic Treaty parties which are not Consultative Parties have been invited to attend Consultative Meetings as well as meetings of the Antarctic minerals negotiations as observers, and have played an active role. Any proposal for even greater participation in decision-making would need to be examined very carefully for its possible effect on Australia's ability to protect its interests in the area. (3) The Government accepts the need to obtain additional information about the fish resources of the Australian Fishing Zone surrounding Heard Island and the McDonald Islands. To determine fish resources, a commercial-scale trawling capability is required. Accordingly, the Government has accepted in principle an offer by the USSR to undertake a fisheries research cruise in waters adjacent to Heard Island and McDonald Islands using a Soviet fisheries research vessel. Details of the cruise, including the timing, are still to be finalised. Information on the research will be made available to the Australian fishing industry. (4) It has been stated that Crabeater seals are a major predator of krill, and thus may have a large effect on krill and whale populations. The latest information from the 1985-86 research season suggests the need for a reassessment of the status of Crabeater seals in Antarctica. There may be fewer of these seals than was previously thought. More research is required. It is therefore not appropriate to put forward a proposal along the lines suggested at this stage. (5) The Government has decided to ratify the Convention for the Conservation of Antarctic Seals. There were difficulties in determining whether the Convention should be implemented by means of the Antarctic Treaty (Environment Protection) Act 1980, the Antarctic Marine Living Resources Conservation Act 1981 or the National Parks and Wildlife Conservation Act 1975. This question has now been resolved and the Antarctic Treaty (Environment Protection) Act was amended in 1985 to allow the proclamation of regulations implementing the Seals Convention. Draft regulations have been prepared. The instrument of ratification will be lodged with the UK, which is the depository nation for the Convention, simultaneously with the promulgation of the regulations. Although the Seals Convention provides for harvesting of seals, the Government has decided that it will not permit the commercial harvesting of Antarctic seals by Australian nationals. The Government may permit the culling of seals for environmental purposes if recommended by the Commission for the Conservation of Antarctic Marine Living Resources. (6) The Antarctic Division, through its glaciology program, will continue to obtain data relevant to the resource potential of Antarctic icebergs, and will continue to monitor overseas research. At the request of the thirteenth Antarctic Treaty Consultative meeting in October 1985, the Scientific Committee on Antarctic Research (SCAR) will seek to identify relevant scientific or technical information on the use of Antarctic ice, with a view to a possible inter-disciplinary study of this matter. (7) See response to Recommendation 1 above. Australia continues to play an active role in the Antarctic minerals negotiations and hosted a session of the Special Consultative Meeting on Antarctic Minerals in Hobart from 14-25 April 1986. (8) The protection of the Antarctic environment and its dependent ecosystems has been and will continue to be an important Australian objective in the minerals negotiations. (9) Continuation of existing policy. Funding will be considered in the normal Budgetary process. At Australia's initiative, the Thirteenth Antarctic Treaty Consultative Meeting agreed to call upon the Scientific disposal in the context of a revision of the Code of Conduct for Antarctic Expeditions and Station Activities. The Antarctic Division, through its Environment Committee, regularly reviews its waste disposal procedures and is currently examining the selection and packaging of stores with a view to reducing the amount of waste generated at stations. (10) Antarctic Treaty nations have already agreed to guidelines for Antarctic operating organisations planning major Antarctic projects. These provide that in the planning of major operations in the Antarctic Treaty area an evaluation of the environmental impact of the proposed activity should be carried out by the Antarctic operating organisations concerned (Recommendations VIII-11 and XII-3). At the Thirteenth Consultative Meeting, the question of procedural guidelines for environmental impact assessments was considered on the basis of proposals put forward by the United Kingdom. Australia strongly supported the adoption of such guidelines and, together with a number of other delegations, indicated its readiness to use the proposed guidelines in the interim in planning future scientific and logistic activities in Antarctica. The matter will be considered again at the Fourteenth Consultative Meeting. (11) The Antarctic Division is working to meet this timetable. (12) Tourist activities and non-governmental expeditions are monitored continuously by both the Antarctic Division of the Department of Science and the Department of Foreign Affairs. Expeditions departing from Australia to the Antarctic are provided with information setting out the range of measures applying under the Antarctic Treaty system, particularly those applicable to non-governmental expeditions, which are designed to ensure stringent protection of the Antarctic environment. They are also supplied with a special booklet for visitors to the Antarctic prepared by SCAR. Antarctic Treaty parties have this matter under continuing examination. (13) Private expeditions, including tourist expeditions, have been considered at numerous Antarctic Treaty Consultative meetings. A variety of recommendations governing their activities in Antarctica have been adopted over the years. The Government is concerned at the dangers facing private expeditions in Antarctica and at the potential cost and disruption to national programs as well as the risks to personnel in the event of the need to come to the assistance of such expeditions in an emergency. The loss of a private expedition vessel, the `Southern Quest', in January 1986 amply demonstrates these dangers. The Government will continue to make every effort to ensure that non-governmental expeditions organised in or departing from Australia are properly planned and equipped and that they adopt appropriate safety measures. it will also consider the scope for further measures under the Antarctic Treaty. (14) and (15) At the Thirteenth Antarctic Treaty Consultative Party Meeting in October 1985, Australia successfully proposed a recommendation which calls for SCAR to offer advice on `the system of protected areas in the Antarctic including Sites of Special Scientific Interest and Specially Protected Areas and the question of a possible additional category of area under a different form of protection'. This recommendation is a first step towards the improvement of environment protection measures in Antarctica. (16) Australia chairs the CCAMLR Ecosystem Monitoring and Management Working Group, which is developing a scientifically based ecosystem approach to the conservation of Antarctic marine living resources. This Working Group has identified krill as a key component of the Antarctic ecosystem. Australia has taken the lead in proposing an international research program in the Prydz Bay priority area centring on the impact of krill harvesting on the ecosystem. (17) The Agreed Measures for the Conservation of Antarctic Fauna and Flora prohibit the introduction of alien species to the area south of 60*s except in accordance with a permit. The CAMLR Convention would not need to be amended to extend this protection to the Convention area. The CAMLR Commission may adopt measures directed towards the conservation of Antarctic marine living resources, which could include measures to control the introduction of alien species. As a result of the recommendation, the Government has requested the relevant Departments to examine the specific matters raised in evidence (para 3.72). (18) For political and financial reasons it is highly unlikely that international agreement would be obtained to a proposal that the Scientific committee be provided with resources for the conduct of research. The Government believes that the present arrangements, whereby governments fund national programs and the results are made available to all interested nations and the Scientific Committee, is an effective way of promoting coordinated research into the Antarctic marine ecosystem. At the same time, Australia has lent support to efforts to develop a long-term plan for the Scientific Committee's activities so as to enhance its effectiveness. Australia has also supported proposals for joint programs between Commission members and has proposed a multinational program in ecosystem monitoring in the Prydz Bay region of the Antarctic. (19) The feeding ecology of the major consumers of krill, including whales, is being investigated through the CCAMLR Working Group on Ecosystem Monitoring and Management. On the basis of available scientific advice, however, the Government does not think the feeding ecology of whales should be give a higher priority than research directed to the direct conservation needs of CCAMLR. (20) The proposal to establish permanent marine reserves and sanctuaries raises a number of complex issues. The question of permanent reserves will be considered as one of the options for conservation measures. (21) The Government accepts that such studies will be essential in the context of Australia's participation in a future Antarctic minerals regime. If studies of this type were to be conducted by the Antarctic Division, there would need to be a substantial increase in its program unless other elements of the program were cut back. At the present time the Government does not view this as a high priority because the possibility of mineral exploitation in the area is extremely remote. However, part of the Antarctic Division's scientific research program provides information which is of value in understanding the Antarctic en- vironment. This information will contribute to Australia's capacity to assess the environmental impact of any specific proposals for minerals activity which might be put forward in the future, and to the determination of appropriate environment protection measures. (22) The XIII Antarctic Treaty Consultative Meeting received a report on environmental impact assessment procedures for evaluating the effects of scientific and logistic activities. Delegates agreed to give further consideration to this question. Australia will continue to support the introduction of assessment procedures. (23) While the idea of a Conservation Convention may have merit, it is unlikely to gain support until the environmental protection measures to apply under an Antarctic minerals regime are decided. The overall pattern of major measures and possible gaps will then be clearer. In any case, proposals for a more comprehensive approach to environment protection in the Antarctic in recent years, including by Australia at the Twelfth Consultative Meeting in 1983, have not enjoyed much support. Australia has, therefore, been working to strengthen existing protective arrangements and to fill perceived gaps. At the Thirteenth Consultative Meeting Australia advanced proposals for additional protective arrangements which have now been referred to the Scientific Committee on Antarctic Research (SCAR) for further examination. Australia is also supporting proposals to ensure that the proposed Antarctic minerals regime provides that minerals activity will only occur under strict environmental safeguards. (24) The Antarctic Science Advisory Committee has noted this recommendation and proposes to provide detailed advice on it to the Minister for Science. (25) The Government notes the recommendation and will consider the relative funding of scientific research and logistic support within the budget context. The establishment of a station in the eastern sector of the AAT would enhance the opportunity for scientific research. (26) The Antarctic Science Advisory Committee has noted this recommendation and proposes to provide detailed advice on it to the Minister for Science. (27) A number of studies of Australia's transport options have recently been undertaken. An external review of the besetment of the Nella Dan was carried out by a committee headed by Professor John Lovering. The recommendations of the Committee, which included a recommendation that long-range helicopters be obtained, is currently being examined. A review of air transport options was undertaken in July 1985, by the National Materials Handling Bureau. The Antarctic Division has also set up a Projects Section to comprehensively review and plan future Antarctic transport systems. An initial task is the preparation of specifications for a possible replacement vessel for the Nella Dan which will go out of service in 1988. Specialist external consultants are used to support the work of the Projects Section. The Antarctic Division has been requested to report to Government before the end of 1986. The question of Australia's Antarctic transport options falls within the terms of reference of the Antarctic Science Advisory Committee and the Committee's advice will be sought on this issue. (28) A Joint Management Review, which included an external consultant, reported in December 1983. This review examined expeditioner recruitment and made a number of recommendations which have subsequently been adopted. The recruitment processes conform with departmental and Public Service Board guidelines for the selection of staff. The feasibility of psychological assessment of applicants' environmental attitudes is being examined. Training procedures are continually under review. Several of the Committee suggestions have been implemented during the 1985-86 season, including environment protection training and training on-board ship. Senator Ryan —I move: That the Senate take note of the paper. Senator ZAKHAROV(Victoria)(3.54) —As the Chair of the Senate Standing Committee on National Resources, I believe that the Government's response to the report is very welcome. The report received a lot of interest from people concerned both directly and indirectly with Antarctica who have expressed interest in and approval of the Committee's report. I am very glad that is is now available at the beginning of the Antarctic summer, when there is always a great deal of interest in matters occurring there as well as in the future of Antarctica. Senator VIGOR(South Australia)(3.55) —This is an extremely important statement and we are very happy to be able to support the Government in relation to some of its aspects. The Australian Democrats welcome this long-awaited Government response to the report of the Senate Standing Committee on National Resources. We particularly welcome the Government's continued commitment to the need for strict environmental protection of the Antarctic and its recognition that Antarctica must be treated as a whole ecosystem and not just as a group of individual species of fauna and flora and a number of areas which can be mined. The Australian Democrats reiterate the need to ensure that this protection is reflected in the terms of the Antarctic minerals regime, which is currently being negotiated by member nations of the Antarctic Treaty. We are concerned that to date not enough environmental controls have been spelt out in the draft convention. The mining states have been so keen to facilitate mining that they wish to have an unlimited ability to explore in the area and to mine Antarctica. This is particularly true of the United States of America, which wants to do away with strict and unlimited liability for exploration and mining in that Antarctic region. These people are particularly anxious that once a permit for exploration has been granted, this will guarantee that exploration can automatically proceed. In particular, they do not want to accept break points for reassessment between exploration, development and extraction in any mining operation, and they want to avoid any provisions in the minerals regime which would give the regulatory committee an option to refuse permission for later stages to proceed. Another move being pushed by the mining states is that the minerals regime should be negotiated to allow for exploration to start now and that environmental safeguards should be negotiated only at a later stage. Such moves would be disastrous in giving absolutely no cover for protecting the Antarctic, since environmental damage can be as drastic in the exploratory stages of mining as at any later stage. In fact, exploratory drill holes, which may be left capped on the seabed, are particularly vulnerable to being scraped by passing icebergs, which regularly scour the seabed, taking everything in their path. The Australian Democrats are most concerned to see that adequate environmental safeguards and strict and unconditional liability are accepted by any organisation or body undertaking mineral exploration, development or exploitation in the Antarctic region. The fragility of the Antarctic ecosystem and its deep freeze conditions, which preserve rather than heal any damage to the environment, make oil spills and heavy metal contamination and other hazards so much more dangerous than they would be in most normal circumstances, and make safeguards a mandatory restriction on any mining in the area. Australia must do everything in its power to ensure that statements on control are properly built in and spelt out in the minerals regime and not left for resolution until later, when it will be too late to enforce them. The Environmental Advisory Committee of the Antarctic Treaty is a toothless tiger. We also need guarantees that its advice must be accepted by the regulatory committee of the minerals regime. The regulatory committee currently has 10 members. Two of them represent the two super-powers, that is, the Union of Soviet Socialist Republics and the USA; four represent claimant states in the Antarctic; and four represent the Antarctic Treaty consultative parties. There is a strong likelihood that this regulatory committee may have a conflict of interest in its regulatory functions, so it is all the more important that the Environmental Advisory Committee be given some teeth in regulating its processes. It is also desirable that an outside body of environmental experts be given a position on the regulatory committee. The Australian Democrats express strong support for the role played by Australia in the negotiations in relation to the mineral regime to date and for the leadership displayed by Australia in pressing for environmental provisions to be included in the minerals regime before it is endorsed. The Democrats also commend the Government for its support of most of the recommendations of the Senate Standing Committee, particularly for its proposal to ratify the Convention for the Conservation of Antarctic Seals. Indeed, this has been done and does not permit the harvesting of seals by Australian nationals for any purpose unless recommended by the Commission for the Conservation of Antarctic Marine Living Resources for environmental reasons alone. We endorse the need for regulations for appropriate safety and environmental protection measures for expeditions to the Antarctic, but we would prefer these to be unrestricted in scope and not applying only to tourists and non-government expeditions. We must remember that last year a government ship was stuck in the ice, as well as the Southern Quest. Senator Crichton-Browne —What is the point you are making? Senator VIGOR —We want to have the same standards applied to the Government as are applied to the tourists and non-government expeditions. We can see no rationale for picking out just the private expedition when regulations would seem simpler if they applied to all expeditions in the region. Finally, the Australian Democrats would like Australia to take initiatives towards declaring the whole of the Antarctic a world park and to reconsider our present Antarctic policy, which expresses Australia's desire to get a financial pay-off for the money we have invested in research. I remind the Government and the Senate that we are receiving such pay-offs in the form of better weather predictions, better communications and a much better understanding of the region to our south. To expect such pay-offs directly in terms of minerals extracted is unrealistic in view of the potential damage such operations can permanently inflict upon the Antarctic environment. The other points which are definitely worth mentioning are the need to continue with the active program of rubbish clean-up in the area, which is a government commitment which it seems to be fulfilling quite effectively, and the need for environmental impact assessments, not only before embarking on mining ventures but also before any type of construction work is carried out-even surveys for things like airfields, new bases or intrusive experiments in the area. We have a lot of expertise in the Antarctic, and we should use this in the right way. World peace is currently threatened by the greed of many nations for whatever resources can be extracted from the Antarctic and, indeed, by its strategic importance in defence. Australia must be prepared to take a strong stand in preserving the Antarctic as a region of peace and co-operation and in protecting the world from the potential global damage which could result from an upset to this fragile polar region, which is so important to the climate of the world. Senator ARCHER(Tasmania)(4.04) —I welcome the response of the Government to the excellent report of the Senate Standing Committee on National Resources. Antarctic research is very important to Australia and internationally. More and more nations and more and more people have become involved and interested in all the fascination and the magnificent science that is associated with it. The report covered so many of the issues, and the response will satisfy the concerns of most of those involved. One of the issues to be taken into account is that, whatever rules are made, the interest of people will only continue to increase. Stopping people, particularly those dedicated to research, from pursuing that interest will be very difficult. However, carrying out genuine research in an orderly manner is what it is all about, and that should be possible. The Australian Antarctic research establishment is the body that is best fitted in the world to influence a management position. Hopefully, a substantial Antarctic industry can be set up from Hobart, where transport, communications, technicians, tradesmen and scientists can be contracted to overseas nations and can be equipped, clothed and fed. Having that base and the Commission for the Conservation of Antarctic Marine Living Resources in Hobart has already become important, and efforts to have the treaty headquarters constructed there also must be pursued. While the unknown mineral content, the animals, the scientific history and the climatic genesis are there, people in growing numbers will be wanting to participate as scientists or frontiersmen seeking thrilling experiences. It is a matter of regret that at this stage we rely so much on other nations to tell us much about our possessions and our resources. I believe Australia needs to determine clearly its position as to its Antarctic possessions. At this stage nothing is clear as to whether our involvement is mainly territorial, scientific, for conservation, resources or what. I believe a statement should be made, even if only to state how the present funding should be appropriately distributed between the various departments. Fortunately, there appears to be total bipartisanship on the part of the Government and the Liberal Party of Australia, both on the Committee and in the Parliament. Senator CRICHTON-BROWNE(Western Australia)(4.06) —I wish to make some brief comments in respect of the response of the Government to the report of the Senate Standing Committee on National Resources, provoked by the comments made by Senator Vigor of the Australian Democrats. The first is to observe that yet again one cannot help but note that the priority of the Democrats seems to be to kick the Americans. I am not sure what brings on this hobby, but if Senator Vigor sought to understand the contribution that the Americans have made to both the minerals regime and the environment studies in the Antarctic and if he were prepared to be objective in his conclusions, he could record only that they have made an outstanding contribution in those fields. It is ironic that he endorses much of what the Australian Government has done but has criticised the American Government without being prepared to accept that the American budget-notwithstanding the fact that we claim one-third of the Antarctic land mass as ours and the Americans have no claim-is vastly greater than the amount which we allocate. America's contribution to the minerals regime is the same as that of many other countries, including Australia and South Africa. It is terribly important that a minerals regime be in place soon so that environmental considerations will be able to be properly contemplated. The object of having an early minerals regime is to ensure that environmental considerations are taken into account and that minerals exploration does not take place in the Antarctic prior to such a regime because minerals exploration, more than anything else, would be detrimental to the ecology of the Antarctic. Anybody with concern for the environment in the Antarctic would be very enthusiastic about an early resolution of a minerals regime. Senator Vigor —We need an environmental regime at the same time. Senator CRICHTON-BROWNE —They go hand in hand. The premise of a minerals regime is not simply an economic one but also is designed to ensure that the fragile, pristine nature of the Antarctic remains, as much as possible, as is. That can happen only after all factors have been taken into consideration. It is worth noting that the Convention for the Conservation of Antarctic Seals could have been ratified some considerable time ago but there was conflict between the Antarctic Division of the Department of Science and the Australian National Parks and Wildlife Service, which likes to have its sticky finger in everything. Finally, that matter was resolved because the Prime Minister (Mr Hawke) agreed to the Convention being the responsibility of the Department of Science. With respect to the matter of rubbish, which was raised by Senator Vigor, it needs to be understood that an accumulation of more than 20 years' disposed rubbish is in the Antarctic, much of that not because of delinquency or inadequacy of concern but because of the physical difficulty of removing it. It has been a question of priorities, with small ships, such as the Nella Dan, travelling to the Antarctic and back in very short seasons. It has been a matter of priority whether to have scientists and researchers on board the ship, or whether to have cargoes of rubbish. Now that the Antarctic Division has got on charter the Icebird, a ship of considerable size, it is consciously and conscientiously removing as much rubbish as it possibly can, again given some limitations and judgment on priorities. A great deal has been done and it is something of which the present management of the Antarctic Division is very mindful. I say in passing that management has taken up, I think without exception, everything we recommended in the report in a very enthusiastic way. My view is that the management is excellent, and the comprehension of what needs to be done there has also been excellent. There has to be some sort of regulation for shipping so as to ensure that there is no danger of private, as compared to government, shipping getting into difficulties. One does not have to be brilliant to understand the distinction that can be drawn between Dick Smith's ship going down there, and the Nella Dan and the Icebird; there is a vast difference in terms of logistics, communication, and the capacity for extracting themselves from difficulty. Australian ships go down there with a dedicated purpose. It is understood that, if they get into difficulty, naturally the appropriate steps will be taken to ensure that they are relieved as quickly as possible. What we do find is unco-ordinated, unauthorised-if one can use that term-private groups which tend to go to the Antarctic against the better advice, as recently happened, of the Minister for Science (Mr Barry Jones) and run the grave risk of putting not only themselves in danger but also those who seek to rescue them in danger, and of imposing a very considerable cost on Australian taxpayers. Senator Vigor —It was the Americans who rescued them. Senator CRICHTON-BROWNE —Yes, that was part of a co-ordinated attempt with Australians and, as I recall, the Soviets. There was some mention by Senator Vigor of the Nella Dan being stuck in the ice last year. That is always a hazard for a ship of that size and for a ship that does not have the icebreaking capacity of the more modern ships. But again it is a budgetary constraint. If Senator Vigor is saying that more money ought to be spent and that the Nella Dan should be taken off the run, so be it. It is something with which I would not disagree. Again, it is a question of priorities and a question of dollars and cents; something which does not seem to bear the weight of consideration with the Democrats. The Nella Dan is required from time to time for extended periods to probe further south than the crew may wish to go. That is part of our scientific endeavours. The Nella Dan was never in danger, nor were the crew or the passengers on the ship. Ultimately, it was comfortably and safely rescued. I do not think it is fair to put the proposition that it was bad planning or bad management that caused the Nella Dan to be stuck. It is just a hazard. One can never predict the weather from day to day when one is several thousand miles away. That is the very reason there is no air base down there. It is always a hazard. Nobody can be certain of what the weather will be in the Antarctic months in advance when the Department is required to program visits to the Antarctic using the ships and the capacity it has. I am glad that the Government has responded, as Senator Zakharov said, so quickly and so enthusiastically to our report. I thought that the report was a very comprehensive, sensible and balanced one. As I said earlier, the Department has done an excellent job in taking up our recommendations and in generally lifting not only the morale but also the level of scientific research and endeavour in the Antarctic; not to the level, I might say, that we can claim to be fulfilling all our obligations as a nation that claims one-third of the total land mass of the Antarctic, an area slightly smaller than the total size of the Australian continent, and where, I might add, during the summer months we have only about 160 people on the ground and a great deal fewer during the winter period. Our standard of research is improving daily and the budget is increasing. I hope that this Government and future governments continue to expand the level of research and the level of the budget. Senator SANDERS(Tasmania)(4.14) —I will not detain the Senate for very long. I point out that the Government still has not realised the true value of the Antarctic continent. The true value of the Antarctic continent lies in its wilderness value. It should be a world heritage wilderness area because that is what it is; it is the world's last great wilderness. Mineral activity, mining, oil drilling will ultimately destroy this wilderness as all the major wildernesses on earth have been destroyed by human activity. We have the opportunity now and we should be able to exercise our 20:20 hindsight to see what has happened to the rest of the world and harness that with some foresight to preserve this wilderness once and for all. We had the foresight to preserve it from military activity-well and good. Now we should preserve it from all mineral activity. One very disturbing thing that is happening at this very moment, and a thing which the Australian Government is aiding and abetting, is the French extension of their arrogance on to the Antarctic continent. Their arrogance in the Pacific is well known with the testing of their nuclear weapons against our wishes, against the wishes of everybody in the Pacific. Now they are building an airstrip at Dumont d'Urville on the Antarctic continent. This airstrip is on one of the few bare patches of land on the Antarctic continent. There are not many bare patches of land there; most of it is covered with ice as is well known. In order to build this airstrip they have had to shift the animal life, the bird life, which has always lived there. This is not easy to do. Because there are so few bare patches of land in the Antarctic, the amount of animal life on each bare patch is quite considerable. The French have sought to shift the penguins from their rookery. They shifted the penguins but they came back. They have killed quite a few and they are adamant that they will continue in this effort to build their airstrip, despite the outcry of many concerned people around the world. Australia has aided and abetted in this activity by allowing the Nella Dan to bring the earthmoving equipment from Europe to Hobart where it will be transhipped on a Norwegian vessel, the Polar Bjorn. The fact that it is being transhipped from Hobart, an Australian port, makes Australia as guilty as France in destroying the fragile ecology of the Antarctic continent. It is time that the Australian Government took some action to preserve this portion of the Antarctic continent from the depredations of the French. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator ZAKHAROV(Victoria) —Mr Deputy President, I seek leave to make a personal explanation. Leave granted. Senator ZAKHAROV —I understood that there had been agreement between the Whips this morning that the Government's response to the report of the Senate Standing Committee on National Resources would not be debated today in the interests of expediting the business of the Senate, some of which is quite urgent. I understood also that there was agreement between members of the Committee that this would be so. I am not having a go at Senator Crichton-Browne because that was our agreement up until the debate started. I am certainly glad that he did say something about this response. That was the reason I referred, when I spoke before, to our speaking only very briefly. Obviously, there has been some breakdown in communication. I would not want the Senate or the public to think that as Chairman of the Committee I did not show sufficient interest to even take part in the debate. That is how it would have appeared if I had not made this personal explanation. I was acting in the interests of expediting the business of the Senate and also in the interests of having time to read the response, which was only tabled at that time, in order to respond more adequately to it. Senator TOWNLEY(Tasmania) —Mr Deputy President, I seek leave to make a personal explanation. Leave granted. Senator TOWNLEY —I have not spoken in the debate on the Government's response to the report of the Senate Standing Committee on National Resources for the very same reason that Senator Zakharov has not spoken. It was my clear understanding that we would not speak for very long and that she would just introduce the debate. It is not that I am not interested in Antarctica; as a member of the Committee I will be speaking on it at a subsequent time. Senator CRICHTON-BROWNE(Western Australia) —I also seek leave to make a personal explanation on the same matter, Mr Deputy President. Leave granted. Senator CRICHTON-BROWNE —What Senator Zakharov says is absolutely true. As I understand it, the agreement that we all made was that because the response was only tabled immediately prior to the Senate dealing with reports and papers, there would be no debate on the matter. That was the condition I entered into with Senator Zakharov. However, the Australian Democrats appear once again in their maverick fashion to have pursued the response to the report today. The DEPUTY PRESIDENT —Order! Honourable senators must not use a personal explanation to attack another senator. Senator Crichton-Browne, you must confine yourself to the personal explanation. Senator CRICHTON-BROWNE —They have done that contrary to that understanding and the reason that I was finally moved to respond was not in order to speak on the report-which I did not, because I have not yet read it-but to respond to the Democrats response to the report. I regret that Senator Zakharov did not have an opportunity to speak after Senator Vigor because she has been a very active and enthusiastic contributor to the report as chairperson of the Senate Standing Committee on National Resources, and I think that it would have been proper had she been given a chance in the same way as Senator Vigor to speak today. Senator VIGOR(South Australia) —Mr Deputy President, I seek leave to make a personal explanation. Leave granted. The DEPUTY PRESIDENT —I should make it clear that personal explanations are not to become a subject of debate; they are purely personal explanations and should not be used to attack any other senator. Senator VIGOR —Mr Deputy President, it is not my style to attack any other senator and I never have in my time in this place. My personal explanation relates to the fact that there was apparently some agreement, and I believe Senator Zakharov in this matter. I was given the Government's response to the report of the Senate Standing Committee on National Resources this morning. I was told that there would be a ministerial statement and that I would be expected to respond on behalf of the Australian Democrats, which I did. There was no intention to create any problems for either Senator Zakharov or Senator Crichton-Browne. Messages received from the House of Representatives intimating that it has agreed to the amendments made by the Senate to the following Bills. Human Rights and Equal Opportunity Commission Bill 1985 Human Rights and Equal Opportunity Commission (Transitional Provisions and Consequential Amendments) Bill 1985 Cheques Bill 1985 The DEPUTY PRESIDENT —Before I call on the first paper I wish to clarify one matter. The Senate will remember that earlier this week a contingent notice of motion was moved to suspend part of the sessional order on consideration of Government Papers so as to permit a motion to be moved to vary the order in which papers are considered. It is not clear from the terms of the sessional order whether the debate on such motions is part of the 30 minutes allotted under sessional order for the consideration of Government Papers. I have raised this problem with the President and he is taking the appropriate action to have the present wording of the sessional order reviewed. Senator VIGOR(South Australia)(4.25) —I move: That the Senate take note of the paper. This is at least the second year running that only a handful of copies of the Freedom of Information Act annual report have been available when the report was tabled. I believe this is a reliable indicator of how senior elements within the Government and the Public Service would like things to be when it comes to revealing information. This Government says that it is committed to open government. Indeed, it seems that its policy is that the fewer who find out what is going on the better. Page 1 of the report has adjusted figures for the cost of freedom of information legislation in the previous two years. The indefensible 88 per cent on-costs figure has been added to all freedom of information labour costs in previous years. Last year that figure was reduced to 60 per cent, which seems much more reasonable. In one stroke this has removed $5.3m in costs ascribed to FOI. That is probably a sign of how agencies record their time and effort in these areas. The table of basic statistics shows that the average cost per request has fallen from $779 in 1983-84 to $496 in 1984 and to $430 in 1985-86. Obviously, this is one of the areas in which inflation is not having an effect. Maybe the Public Service is becoming more efficient, and I congratulate it on this if this is so. Average staff hours per request have fallen by nearly half over this period while the number of requests has doubled, to 36,512. The report makes this comment in summary: The table suggests an overall picture of an Act having settled into operation with improved efficiency, stabilised costs, fewer external appeals and a steadying flow of requests. Normally, such improvements are cause for congratulations. With this Government they are usually the prelude to drastic wrecking action, as we have seen with the independent information bodies, such as the Australian Institute of Multicultural Affairs and the Advisory Council for Inter-Government Relations both of which the Government has recently torpedoed. Sure enough, there are ominous portents in the Attorney-General's foreword. Mr Bowen complains that the all-up cost of producing an annual report is $700,000. He says: It is not clear that such continuing expense can be justified. He goes on further: The Government will therefore be considering the need for continuation of these annual reports and, if continued, the appropriate form and content. He then suggests that the Senate Standing Committee on Constitutional and Legal Affairs should bear this in mind when it reports to the Senate on the first three years of the FOI legislation. The Government has already introduced fees for decision making time. In fact, this has been high on the Treasury's agenda. Now the knives seem to be out for reporting standards, especially when people are wondering how much of the cost of FOI goes into working out how to deny information-freedom from information rather than freedom of information-or into the pro- cess of internal review, review by the Administrative Appeals Tribunal or even further court procedures. The report says that, of 535 applications for internal review, 208, or 39 per cent, met with some sort of success. On 17 occasions agencies conceded a case more or less on the doorstep of the Administrative Appeals Tribunal. At least the Attorney-General's Department is now co-ordinating AAT and further court matters so that maverick agencies will not be able to continue to waste resources as some did before. I believe that it is extremely important to get the Department of Defence to get its act together as it denied information in the Cobar land grab. We could not have detected its lying in that area if it had not been for FOI. Maybe that is why it is against freedom of information. The freedom of information section in the Labor Party's new policy says that there will be regular tabling in parliament of full information on the operation of government and semi-government agencies. Obviously, the way is being prepared for the abandonment of that plank of its policy in the near future. I believe that this is another nail in the coffin of open government. Senator PUPLICK(New South Wales) —I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator WATSON(Tasmania)(4.31) —I move: That the Senate take note of the paper. The 1985-86 annual report of the Commissioner of Taxation is significant for its omissions rather than its inclusions and for the challenges that the Commissioner faces at this time. One of the unfortunate features of the past 12 months has been the entry of the Tax Commissioner into the political arena. I would like to draw on two particular cases: Firstly, in his introduction he stated that he welcomed the fringe benefits tax and the implications it would have for income tax cuts. I do not think that is a proper role for a public servant to act in and I think it is a very dangerous precedent for a public servant to enter into political debate. The more recent case was in respect of the Australia Card. I hope that this will be the last of these intrusions by a senior public servant, particularly the Taxation Commissioner because on the change of government his role as Tax Commissioner must become somewhat embarrassing. I believe that the Australian Taxation Office, which is an independent statutory body charged with the administration of various taxation Acts, has come under widespread criticism from many quarters. The Tax Commissioner is not only facing problems in respect of new and complex legislation but also that is manifesting itself in a very low morale within the Taxation Office. There has been a high number of resignations and the office has even had to resort to calling back retired officers to assist in the administration of the Fringe Benefits Tax Act 1986. As I said, never before has the performance of this Office been under such widespread and often independent criticism. I now draw attention to some of that criticism. Firstly, in August 1986, the Auditor-General said that there had been little effective action with regard to unpresented group certificates since this matter was identified as serious, which was many years ago. On page 3 of the report before the Senate it is stated that the Tax Office is an efficient organisation. This contrasts markedly with what the Auditor-General has to say. He said: The failure to take action on unpresented group certificates is a continuing weakness in the PAYE system resulting in the failure to detect tax evasion. If the system is to work properly, the Australian Taxation Office should do more to ensure that tax instalment deductions are correct and that group certificates enclosed in employees' returns are correctly assessed. It is also interesting to note that despite the plethora of amendments we have had in recent years, the Tax Commissioner is increasingly falling back into the traditional role of bringing up assessments. We have all these new things such as Part IVa, but increasingly he is relying on precedents of the Ramsay-type decisions and also on the old section 260. He has pointed out to successive governments that this really is an ineffective section but the point I am making is that increasingly he is now successfully applying that section. I would like to know why he was not applying that section years ago and chasing those cases through the courts. Unfortunately, the system has continued to become more and more bogged down with complex legislation, despite the Hawke Government's pledge to try to simplify it. In addition, the Government has introduced amendments which increasingly put the burden of assessment on the taxpayer. Taxpayers increasingly are being asked to decipher reams and reams of tax law that would require a lawyer or an agent to unravel efficiently and effectively. The Government is proposing to introduce an Australia Card. The Auditor-General has also indicated problems in relation to the prescribed payments situation, because again that has not been administered properly. But one of the most disturbing features is the fact that increasingly the Australian Taxation Office is becoming a law unto itself. It is making laws that have not had legislative sanction, taking actions outside the law or which are incompatible with the relevant legislation. I believe that this is unfortunate. The ACTING DEPUTY PRESIDENT(Senator Townley) —Order! The honourable senator's time has expired. Senator ROBERT RAY(Victoria)(4.36) —We have just heard Senator Watson. This has been a long awaited debate and I thought we would have had a slightly more high powered contribution. Senator Watson has first of all criticised the Commissioner of Taxation for what he regards as entering the political arena. I think that is an unfair criticism. If he wants public servants to have no views whatsoever, that is his point of view and not mine. I believe that the Tax Commissioner is charged with protecting the integrity of the tax system and I can understand his frustration at seeing the whole taxation base potentially erode in this country. It was potentially eroding in the area of fringe benefits tax. Higher income groups in this country were avoiding their proper tax responsibility by putting together with the bosses tax packages that included all sorts of fringe benefits, be it entertainment allowances, free use of cars or whatever else, all non-taxed. What it basically meant to the rest of the community-not that the section of the community that honourable senators opposite represents would care about it-was that PAYE taxpayers were carrying an unreal burden of taxation in this country and they had the perception that this tax system was not in any way fair; not when someone who may have been on a nominal income of above $50,000, $60,000 or $70,000 a year was taking that income in direct money terms, say $35,000, and getting a nice negotiated package well and truly above that that included all sorts of perks and lurks. It was not just the damage that it was doing to the existing system, it was the potential damage or the rate of increase at which higher income employees were taking fringe benefits that would have eroded entirely one of the major tax base areas in this country. I can understand any commissioner being particularly annoyed with that process. I do not recall the Taxation Commissioner criticising the Opposition in this regard. Let us move, secondly, to Senator Watson's comments on the Australia Card, where the Opposition has a slightly stronger case. I think the Commissioner should have been a little more judicious in his remarks about support for an Australia Card because, quite obviously, it is not just a tax issue in the political arena. The objections to the Australia Card in some cases are based on civil libertarian concerns and in other cases on opportunistic reasons in my view; nevertheless, there are a wide range of views on the Australia Card and a wide range of applications. I can also understand the Commissioner's concern that the one area that the Opposition, when it was in power-Government has also had difficulty-had great difficulty in attacking was tax evasion by people who simply do not pay tax. It is a major problem. We may be able to touch it by going in to the prescribed payments area, but even in the inquiry that this Senate had into that tax, many other areas were obviously not touched such as people with two jobs working under false names. There is a whole range of areas, that possibly the Australia Card will be able to corral, and meaning a great increase in government revenue. Senator Watson talked about the Tax Office not working efficiently enough. I remember that at the Estimates Committee C hearing in 1982 evidence was given by the Tax Office that the previous Fraser Government had failed to fund the Tax Office and failed to staff it properly. It gave us calculations as to how much revenue was forgone. It was only under the sort of pressure that increased resources, via the Estimates Committee report, were made available to the Commissioner of Taxation so that he could do his job properly. Senator Watson said that the Auditor-General had criticised the Tax Office for not chasing up certain group certificates and admitted that this had been going on for many years. I agree that that matter will have to be addressed, because the tax system can never be perceived to be unfair in any way. I am happy to get up here at any time and defend this Government's record of trying to reform the tax system because throughout we have tried to put equity into the system. We have not worried about protecting some small vested interests in the community, or alienating them in any way. I admit that we may eventually lose office by reforming the tax system but it would be worth it because the one thing this country needs is a fair system. The other area on which I would lay some blame for this whole tax matter is the High Court of Australia and some of its very iconoclastic rulings. It now seems that in future we may get more consistent rulings and the Tax Office will not be so frustrated that it does not even take any action. The ACTING DEPUTY PRESIDENT(Senator Townley) —Order! The honourable senator's time has expired. Senator MICHAEL BAUME(New South Wales)(4.41) —On page 114 of the 1985-86 annual report of the Commissioner of Taxation is a section dealing with breaches and evasions of tax laws. Table 66 shows that in 1985-86 additional tax imposed for failure to furnish returns or information amounted to $45.4m and that 170,999 taxpayers are suffering from the imposition of additional tax last year because of their failure to lodge a return or to furnish information by the required date. I stress the words `by the required date'. The other day in Question Time, when the Opposition quite properly pursued the matter of Mr Keating's failure to lodge a return by the required date, it was falsely held by the Minister for Resources and Energy (Senator Gareth Evans) that we were misunderstanding this matter and that the imposition of tax penalties and so on related only to failing to provide a return full stop, not to having failed to so by the required date. That ministerial nonsense is demonstrated in the Tax Commissioner's report where it clearly says: Where a taxpayer fails to lodge a return or furnish information by the required date, additional tax equal to double the tax payable is imposed by section 222 of the Income Tax Assessment Act 1936 . . . additional tax is normally remitted before the assessment issues to an amount equal to 20 per cent per annum of the tax payable, using the Commissioner's discretion . . . That is the element under which the Treasurer is now claiming that he is under no obligation in respect of additional tax for his failure to put in his return on time, which, of course, would render him liable to join the 170,999 other Australians who are listed in this report. He says that he is not obliged to join them because no additional tax is payable and therefore any 20 per cent penalty to be added on would not affect him. The reality may well be that the Treasurer should be required to pay additional tax because of the curious situation-which we have been pursuing at Question Time but about which we have been getting totally unsatisfactory answers from the Minister for Finance (Senator Walsh)-about the Treasurer's travel allowance. It is evident from what the Minister for Finance said today at Question Time that, provided something is called travel allowance even though the person is not travelling, it is not to be regarded as an item subject to substantiation, to income tax or to the fringe benefits tax. That, of course, is a clear nonsense. The suggestion clearly emerges from this annual report that there is nothing to distinguish the Treasurer of Australia from the 170,999 other people who were subjected to the imposition of additional tax for failing to furnish their returns. It is worth while noting in the report that the Tax Office has decided to switch its top priority from chasing artificial tax avoidance schemes, which it believes has largely died out, to stamping out much more non-spectacular tax minimisation schemes and avoidance by such means as the non-lodgment of returns. In other words, the Treasurer is now in the firing line for the main thrust of the Australian Taxation Office's new attack on tax avoidance. It regards the non-lodgment of a tax return-exactly what the Treasurer has done-as so serious that it is now making that its top priority: Its top priority is chasing exactly what the Treasurer has done. I believe that the Opposition has every right to demand the information that the Prime Minister (Mr Hawke) apparently has under the Claytons declarations of interest which members of this Government put in and in which no amounts are listed but deposits and so on are given. The Prime Minister is aware of the size of the Treasurer's deposits. If the Treasurer has deposits greater than $6,000 with the Greater Newcastle Permanent Building Society Ltd, at current rates of interest he would be subject to provisional tax and, as a result, would come under this requirement. The ACTING DEPUTY PRESIDENT(Senator Townley) —Order! The honourable senator's time has expired. Senator COONEY(Victoria)(4.46) —I address some remarks apropos of what Senator Michael Baume has said. In the hurly-burly of this chamber it is to be expected that the Opposition would make an attack on the Treasurer (Mr Keating) for his apparent failure to put in an income tax return. If he has done that, as seems to be admitted, clearly he has done something that he should not have done. I will certainly not pretend that that is any less a matter than it is. On the other hand, when we debate these matters in the chamber and make a political point of them we ought to remember what we are doing. What we are really doing in this chamber is trying to pre-empt the sorts of things that other institutions ought to be doing. If this matter were to go to court I hope that any evidence used against Mr Keating would not include tainted evidence. As I understand it, the evidence relied on in the present instance includes a stolen letter. If the case set up against the Treasurer relies on evidence that has been stolen, it is my view-it is a consistent view which I have put in this chamber over the years-that that evidence should not be allowed. It is time that we, as a parliament, realised that to score political points and to get advantage over our opponents by using evidence which is tainted is to corrupt the proper order of this society and to corrupt the legal system. It is true, I admit, that at common law evidence that is tainted can be admitted if the judge so orders but, in my view, people who rely on tainted evidence rely on a process which is ultimately damaging to society. The question of travel allowances has been raised. Senator Michael Baume —The Treasurer has now admitted that that situation was so. So it is no longer tainted evidence. Senator COONEY —This is exactly the sort of proposition I do not like to see relied upon. Evidence that is tainted is used to bring forth a statement or an admission. In my view, that is in the same category as using the tainted evidence in court to obtain a certain result. The question of travel allowances is a serious one. Travel allowance is paid to politicians pursuant to the laws established by this Parliament. I think there is good ground for saying that that law ought be changed. However, if it is to be changed we ought to debate it. In debating it we ought to realise that it affects not only the Treasurer but politicians generally. To attempt, as it were, to isolate the Treasurer as being exceptional in this area of travel allowance is not correct. It is true that it appears that he receives a lot more in travel allowance than many others. However, the general principle remains that the laws by which he gets it are the same as apply to politicians in general. I would also go along with the suggestion that the declaration of interests of all members and senators be revealed, but, again, it should not apply simply to a Treasurer or to a Minister but across the board. We should all be obliged to declare our interests and to put that declaration into the public arena. We cannot have it both ways. We cannot criticise the Treasurer in isolation. We must realise that he has operated within a system all parliamentarians enjoy. The laws under which the Treasurer has failed to lodge an income tax return are laws applicable to the community generally. The laws relating to declarations of interest and travel allowance apply to politicians in general. The Treasurer has not been treated in an exceptional way. Senator MacGibbon —Ha! Senator COONEY —No. He has been subject to exactly the same laws as apply to the rest of the community. Senator MacGibbon —Come on! Senator COONEY —If Senator MacGibbon is saying that in this instance somebody has exercised a discretion never previously exercised, he should produce the evidence of that. Of course, he cannot produce that evidence. It is no good his simply saying across the chamber that something is right or wrong. There is such a thing as evidence that ought to be produced to prove what calls for proof. Unless he can do that, he is left with what he is doing now; that is, throwing remarks across the chamber so as to gain political advantage. That is the sort of thing that happens in this chamber repeatedly. As distinct from that, one has to look at the legal and moral dimensions of this in terms of the values by which this society seeks to live. The ACTING DEPUTY PRESIDENT(Senator Townley) —Order! The honourable senator's time has expired. Senator BOSWELL(Queensland)(4.51) —There are 59,596 Australians who must be very upset. They are the people whom the Australian Taxation Office last year summonsed for not lodging a return or for providing the Tax Office with insufficient information. They are the people whom the Treasurer (Mr Keating), the Minister for Finance (Senator Walsh) and the Prime Minister (Mr Hawke) call tax cheats, leeches and a number of other names. They are the people who have been prosecuted by the Tax Office. Did Trevor Boucher, the Commissioner of Taxation, make 59,596 phone calls to these people to say: `It is about time you lodged your tax return'? Can we imagine how those 59,596 people feel after being hounded by the Tax Office and prosecuted? They now find that the Treasurer, supposedly the person in charge of the Tax Office, has not even lodged a return and that, worse than that, he has not been summonsed after receiving his final notice. After the Prime Minister's statement that it is of no consequence if one does not lodge a tax return, these 59,596 people must be very confused. Will the Government still prosecute them? They have their summonses in the mail. Surely, what will happen now is that they will receive a phone call from the Commissioner, just as the average Mr Paul Keating received his phone call from the Commissioner. This debacle highlights the unfairness of our taxation system. We have a Treasurer who can get away with not lodging a return for three years while small businessmen and primary producers are hounded at every turn by the Taxation Office. I remind the Senate of the problems of primary producers who are forced into paying under the inappropriate pay as you earn tax system. I have already raised in this chamber the problems of fishermen who have been forced into the PAYE system by a tax ruling last year. I refer to the situation of a trawler owner who receives income for eight or nine months of a year, whose income fluctuates dramatically, who is at sea for weeks at a time, and who is then forced to make weekly deductions for himself and his crew, as well as calculating and paying the ridiculous fringe benefits tax. Why is he forced to take this unproductive, unfair and inefficient course of joining the PAYE scheme in order to make life easier for the Tax Office? This is a shocking indictment of our economy and of the Tax Office. What about the people who are sub-contractors and who have been forced into the PAYE scheme? They are the productive people who have to carry our economy. They are bogged down in an inappropriate system, quite apart from the inordinate and discriminatory level of taxes. Small businessmen have every worthwhile concession removed from them-entertainment allowance, negative gearing and the fuel rebate. They must be disgusted that the nation's Treasurer does not even bother to lodge a tax return. Debate (on motion by Senator Messner) adjourned. The ACTING DEPUTY PRESIDENT — Order! The time allotted for the consideration of papers has expired. Motion (by Senator Messner) agreed to: That Government Papers tabled on 1, 2 and 3 December 1986, and not called on at consideration of Government Papers this day, be called on at the consideration of Government Papers, pursuant to sessional order, on the next day of sitting. Consideration resumed from 28 November, on motion by Senator Button: That the Senate take note of the report. Question resolved in the affirmative. Debate resumed from 28 November, on motion by Senator Button: That the Senate take note of the report. Senator MacGIBBON(Queensland)(4.57) —I commend this report to the Senate. It is a very carefully written report, the contents of which are of great importance to all members of the Senate. It has been worded with great care; it has been worded that way because the Joint Standing Committee on the New Parliament House does have some very real concerns about the way the new Parliament House is going. I have a personal interest in this because I stood for election to the Committee after the 1984 election and I have served on the Committee as one of the representatives of the senators and members of this Parliament for two years. When I first went on to the Committee, it met infrequently and a huge load of paper was presented at each meeting. It was rather reminiscent of the description of the Australian Bicentennial Authority given by Mr Ranald Macdonald on his resignation. The Committee changed its practices after the 1984 election and we now meet regularly every month when the Parliament is in session. The Committee works very hard and very conscientiously. The meeting day once a month is a big day and there is still a very big paper load. I will read from the motion that went through both Houses of the Parliament when the Committee was set up. It stated: That a joint standing committee be appointed to act for and represent the Parliament, as the client for the new Parliament House, in all matters concerned with the planning, design and construction of the new Parliament House and all matters incidental thereto. That the committee consider and approve the developed design for the building . . . That the committee determine user requirements . . . That the committee be authorised to provide, on behalf of the Parliament, all necessary information concerning the functional requirements for the new Parliament House and matters incidental thereto direct to the Parliament House Construction Authority . . . In other words, the Committee was set up to report to the Parliament House Construction Authority on the client's requirements. Any reasonable person would assume that that would be the sort of relationship that exists between an architect and a client and that the requests put forward by the client would be met by the architect. Unfortunately, this is not so. Two meetings ago, on 21 November, the matter of furniture for senators' and members' rooms came before the Committee. The Committee was told that a decision had to be made on the spot because the Parliament House Construction Authority wanted to let the contract that afternoon. The matter had been under consideration for years and yet we were presented with a decision having to be made on the Friday morning for a contract to be let in the afternoon. The problem arose because, of the two tenderers that were selected, the one selected by the Parliament House Construction Authority was not the tenderer selected by the Committee. Everyone who saw the mock-ups for the furniture acquisitions-the architects who built the building, the officers, the Clerks of the Parliament, the Special Minister of State (Mr Young) and, above all, the Sub-committee of senators and members-unanimously agreed that the furniture should be provided by one of the tenderers, which was called Unifor. But the Parliament House Construction Authority stuck out in favour of the other tenderer, a company called Co-Design Pty Ltd, on the grounds that it offered a higher Australian content and it was cheaper. The fact is that we are talking about a contract of about $3m and Co-Design was cheaper by about $150,000-an infinitesimal difference. The Parliamentary Committee asked the architects to do an assessment of a 20-year life-cycle cost of maintaining both sorts of equipment. They came up with a figure of $1.5m for the life-cycle of the Co-Design tender, which was the design proposed by the Construction Authority, as against a figure of $450,000 for the Unifor tender, which was the design which the Committee recommended. The Unifor furniture was much more robust and much more flexible in its layout. One of the factors which the Construction Authority said was important was the degree of Australian content. It said that the Co-Design company's furniture would have about an 85 per cent Australian content, whereas Unifor, being an Italian company, would reach an Australian content of only 76 per cent. But Unifor came back before the Committee and guaranteed an 83 per cent Australian content, by using Australian sub-contractors. So the difference was only 2 per cent. But the interesting thing is that the Co-Design company turns out to be a New Zealand company, owned by Feltex New Zealand Ltd and, in turn, owned by a takeover merchant, an asset stripper, and the Hong Kong banks. There are other unsavoury elements to this contract. Every member of the Sub-committee of the Joint Parliamentary Committee who looked at furniture acquisition was contacted by, and received long telexes from, Co-Design, putting the case for that company. When the matter came before the Committee, we supported the Sub-committee's decision that the tender be awarded to Unifor. We made a request, as we were legally entitled to do, to the Parliament House Construction Authority that that was our wish and we said that if it felt that the selection of the tenderer had to be made in a hurry, it should at least come back to the Committee over the weekend with its decision so that we would have an opportunity to meet and discuss its rejection of our proposal. At that Committee meeting I moved that the matter be held confidential-that Co-Design and Unifor not be told about the decision of the Parliamentary Committee, in light of the lobbying that had gone on previously. Yet at least one member of the Committee was rung up and threatened-in his own words-by Co-Design if Co-Design did not get the contract. I do not know how Co-Design found out about the determination made at the Committee meeting held in this building. I am not imputing any improper motives to the Parliament House Construction Authority. I think it is impeccably honest. But one does have reservations about its competence. The contract price for the building started out at about $170m and it now looks like costing over $1,000m to finish. It seems to me that the Parliament House Construction Authority is making a big thing out of itself by saving money at this stage-and saving very insignificant amounts of money; $150,000 out of $1,000m-just to make sure that the public knows that it is careful with money. But the truth is that it has wasted and frittered away hundreds of millions of dollars. That great monument on the hill is testimony to the way in which it has let it run out and blow out through the course of construction. Senator Gareth Evans —Come on! Senator MacGIBBON —I come back to this report. I advise Senator Gareth Evans and every other senator to read it, because the problem is that the Parliament, in good faith, set up a committee to represent senators and members on both sides of the Parliament in regard to the building of the new Parliament House. We are representing senators and members to see that the building is built properly, as a Parliament House. Apparently, we have no power. We made what would have been determined in any circumstances a reasonable and proper request to the Authority to comply with our requirements. It turned that request down, and we have nowhere to go. The only recourse we have under the Act is to pass a motion in both Houses of the Parliament-the House of Representatives and the Senate-to give force to our wishes. That is a completely impracticable way to go about it. The Committee considered it at its last meeting. But in view of time constraints we could not proceed in that way. But it is because of the frustration we feel that this report was presented to the Parliament this week. It is important for honourable senators to read it because we do have to reassess our position. The Parliament House Construction Authority apparently is guided only by itself. The place on the hill is a monument to how it is going. Debate (on motion by Senator Reid) adjourned. Debate resumed from 28 November, on motion by Senator Sibraa: That the Senate take note of the report. Senator McINTOSH(Western Australia)(5.06) —The report of the Joint Committee on Foreign Affairs and Defence justifies its use of the term `border crossers' by saying that the United Nations High Commissioner for Refugees has not officially determined their status. It seems to me a rather highly legalistic way to avoid identifying the reality of why 12,000 people from the Indonesian province of Irian Jaya have left their land and fear to return. The term `border crossers' is quite misleading and throws no light on the reasons for their presence in Papua New Guinea. Page 3 of the report states that the visit to the camps provided insights into the various motives and concerns of the border crossers. I wish the report had shared this insight with us. However, there is a minority report. I note the minority report of the honourable member for Hotham, Lewis Kent, and Senator Bolkus. The key omissions from the body of the report are included in their minority report. But I cannot agree with their claim that racism is the key reason why Australia will not take refugees from Irian Jaya. If they had said that the reason was that we do not want to upset Jakarta by acknowledging that people from Irian Jaya have reason to flee their land, I think they may have been closer to the point. I seek leave to continue my remarks later, for the sole purpose of allowing my colleague Senator Bolkus, who is attending the United Nations now, to contribute to the debate on this report. I would like to hear his views on this matter. Leave granted; debate adjourned. Debate resumed from 1 December, on motion by Senator Jessop: That the Senate take note of the report. Senator Sir JOHN CARRICK(New South Wales)(5.09) —The National Crime Authority has before it now a massive series of problems. Hardly a day passes before a new problem is referred to the Authority. It has before it, of course, the residue of former commissions. It has before it the enormous investigations of the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union and all the records of the Costigan Commission, including its computer records. It has before it records from other commissions. It has, of course, had referred to it the evidence held by the three commissioners appointed to look at the late Mr Justice Lionel Murphy's problems. More recently, there have been referred to it from New South Wales matters concerning a former judge, Mr Foord, involving a suggestion that in his decision making he pursued a particular pattern of leniency atypical of the general pattern of approach by brother judges. Senator Georges —That would not be hard. Senator Sir JOHN CARRICK —I make no comment. I am relating to the problems that are before the Authority. As honourable senators will know, the Government, faced with an academic report, the Vinson report on this matter, sought to set up a judicial commission in New South Wales to inquire into the conduct of particular judges. The particular judge, now Mr Foord, resigned on the basis of ill health and the Government has said that the commission is not capable of dealing with him. These matters have now been referred to the National Crime Authority. I am concerned at this trend, because the one way to destroy the effectiveness of the National Crime Authority is to use it as an overloaded area where one cannot find some other method of approach-indeed, virtually to use it as a dumping ground. If it is so overworked the matters that are before it cannot be dealt with. We have had a classic situation recently, first of all, in the Vinson report. That must be looked at. Only yesterday allegations were made in the New South Wales Parliament that there was a pattern of leniency and an adverse practice amongst lawyers called plea bargaining; that is, lawyers making bargains to get their clients either off or a lesser sentence by shopping around for judges. I make no reflection on the general judiciary of Australia. I believe that the judiciary of Australia, as to the overwhelming majority, are people of impeccable integrity. But, indeed, if there is evidence of this kind of thing it has to be sorted out. It has to be dealt with. There is no evidence at all that that can be done through the National Crime Authority. Yesterday the report of the Nagle inquiry into the Mackay disappearance and presumed murder was released. Out of this and the whole Mackay area-a matter now stretching over perhaps a decade-a grave worry has emerged about the conduct of all of the law enforcement agencies, particularly in New South Wales and elsewhere. Senator Michael Baume —Particularly relating to drugs. Senator Sir JOHN CARRICK —Yes, particularly relating to drugs, which is, of course, a Commonwealth matter of primary importance. The fact is that for a prosecution of people allegedly involved in the Mackay disappearance and murder to come about it had to emerge from Victoria and not the home State, New South Wales. It is an absolute outrage and a reflection on the whole law enforcement area that that should be so. That fact is that yesterday a former judge, Mr Nagle, had to report adversely on a very senior police officer and to say of that officer that whilst he knew he should take a particular course he deliberately did not take that course because it suited his ambitions to do the reverse. I make no judgment except to say that the whole system of law enforcement in this country is coming under very serious surveillance and question if this is so. If we look at how the person alleged to be the main criminal in all this drug business and, indeed, allegedly involved in the Mackay murder, Trimbole, was allowed by the New South Wales authorities to escape the country one has to ask-- Senator Puplick —He was tipped off. Senator Sir JOHN CARRICK —Yes. Indeed, the evidence is that an information was given to him that if he did not go he might be arrested, and nothing, apparently, was done to apprehend him at all. In other words, he clearly had friends within the whole law enforcement system. This gets to the very heart not only of law enforcement at the police level, magisterial level or the judicial level, but also of the legislature itself-the Parliament and the Government of New South Wales. Yesterday there was the outrageous revelation about a former ethnic affairs commissioner, Mr Grassby, who lent himself, according to the Commissioner, Mr Nagle, to what must be one of the most corrupt approaches-an attempt to have made in the State Parliament a completely false statement on the Mackay situation, an attempt which Mr Grassby, according to the Commissioner, brought in writing, not only as a statement, but indeed as a draft speech to be made in the Parliament alleging quite wrongly that the Mackay disappearance and murder was not done by the particular drug mafia but by his family. How ugly is the allegation of a paper peddled by Mr Grassby that it was done by Mrs Mackay and her son. Anyone who knows the Mackay family knows of their tremendous integrity. I cannot think of anything more ugly, except perhaps the resistance of Mr Wran to any attempt even to have the family come and talk to him and his abuse of them when they did come. This was the ugliest thing-an attempt to present a completely false situation which led the Commissioner having to say that Mr Grassby was a witness of no credit at all, a man who has held high office in this country. Something terrible is happening in this community, something that needs a rapid and effective cleansing, when we are able to say that the Federated Ship Painters and Dockers Union situation is still not discharged-some 35 murders of which some three only have been brought to justice. All the drug situation is not discharged. If we can say that there are elements in the police force, the magisterial system, the judicial system and the Government of the State that are obviously in a pattern of corruption it is a sad situation. I am proud to be able to say that the major focus on this situation resulted from Liberal governments both State and Federal. The Moffitt Royal Commission on Alleged Organised Crime in Registered Clubs in New South Wales first exposing drugs was appointed by a State Liberal government. The Costigan Royal Commission, the Woodward Royal Commission into Drug Trafficking, the Williams Royal Commission of Inquiry into Drugs and the Stewart Royal Commission of Inquiry into Drug Trafficking were all part of a Federal Liberal attempt to expose the situation. My worry in rising to speak is that we are now overburdening the National Crime Authority. We are making it virtually impossible for it to do its specific work and, indeed, the Government must look to see how it can be strengthened to tackle the problems before it which are so enormous. Question resolved in the affirmative. Consideration resumed from 25 November, on motion by Senator Harradine. That the Senate take note of the report. Question resolved in the affirmative. Debate resumed from 26 November, on motion by Senator Sibraa. That the Senate take note of the report. Senator Sir JOHN CARRICK(New South Wales)(5.19) —The Senate has before it a massive report of very great significance by the Joint Standing Committee on Foreign Affairs and Defence of this Parliament. It is a report in two volumes, one largely containing the recommendations, the other containing the discourse or the analysis. I have to confess that in the time available I have read the first; I have had no chance to read the second. I rise basically to make a plea to the Government that this report should not simply disappear from the Notice Paper but that it should be made the subject of a major debate in the autumn session of Parliament so that there can be a full understanding of it. The Minister for Veterans' Affairs (Senator Gietzelt) has nodded and I accept his undertaking by that acknowledgment that that will be so. That being so, I commend the Joint Standing Committee on Foreign Affairs and Defence on its work. It has produced a majority report and a minority report. A community of viewpoint has been largely established within this Parliament on the whole concept of peace and disarmament. On very major issues the government of the day, the Australian Labor Party, and the Liberal and National parties have found a community of journey and a community of action. I commend that greatly. In the majority report there is an absolute understanding of the vital nature of the ANZUS Treaty. It is good to know that the great majority of members of this Parliament find themselves in agreement that it is essential to Australia's defence and security, and indeed to the basis of stability in the world, that the ANZUS Treaty should be upheld and strengthened. I have to pass sad comment that that is not the overall and universal viewpoint of this chamber or of this Parliament. The sad fact is that there is a minority view here, the Australian Democrats view. Senator Georges —It is a sound fact; not a sad fact. Senator Sir JOHN CARRICK —Should I take it from the interjection that Senator Georges does not favour the ANZUS Treaty? Senator Georges —Not exactly. I think it should be re-examined. Senator Sir JOHN CARRICK —Senator Georges has made his comment. I say it is a sad fact that we do not have unanimity in this Parliament in support of the ANZUS Treaty. If that means that the Australian Democrats and Senator Georges do not support it I am deeply sad. It is certain that the Australian Democrats do not support it; I was not aware that there is a breach in the Labor Party ranks on it. Senator Gietzelt —Seek leave to continue your remarks and make it an order of the day for the next day of sitting. Senator Sir JOHN CARRICK —No, I have some minutes yet in which to speak, unless the Minister has some urgency. Senator Gietzelt —I thought you wanted to debate it at length at some other time. Senator Sir JOHN CARRICK —I said that I wanted a major debate but I wanted to sketch out the importance of the subject. I can understand the desire of the Government to have this debate interrupted at this moment and I do not intend to support that desire. What I was saying ought to have been commended by the Minister in this chamber. I was saying that it is good that there should be agreement over most of the area between the Government, the Liberal Party and the National Party. For the life of me, I cannot understand why a Minister would want to interrupt on that note. But of course it has been exposed that the Labor Party has chinks in it on this matter. I am saddened to think that inside the Labor Party there are people who doubt or oppose the ANZUS Treaty. The report indicates that in seeking disarmament and peace there should be first of all multilateral disarmament. It rejects unilateral disarmament. It points out that if only one side disarms that leaves it totally vulnerable. It is important that there is majority agreement basically on multilateral disarmament, that there should be substantial, progressive, verifiable and equivalent disarmament between the great powers so that they step by step disarm and take out their major nuclear weaponry until, desirably, there is no nuclear weaponry. There should be a similar approach on conventional weapons. The Liberal and National parties totally commend that. The majority viewpoint is that the deterrent of the ugly phrase `mutually assured destruction' at this moment is the only facility available to preserve the world against nuclear war. It suggests that the world powers should be balanced-however much the threshold can be lowered-so that no country can make a pre-emptive strike against another because it knows that there will be retaliation and substantial and even lethal damage to itself. There is a recognition that no one can win a nuclear war. The Liberal and National parties absolutely support the view that a nuclear war must never be fought. The majority of senators from both sides recognise that for the time being the deterrent is the only substantial available method of keeping the peace-a sad situation. Senator Georges —Why don't you catch up with events? Senator Sir JOHN CARRICK —If Senator Georges wants to get up subsequently to attack his Party and its policies he is at liberty to do so. I wish only that others in his party who hold similar views would do the same. It is sad that this is so. One of the unfortunate aspects of the report is that there is disagreement on the one proposal that has been put forward in this world to replace nuclear aggressive defence-the nuclear missiles which exist today-with a non-nuclear defence system. The Liberal and National parties want to get rid of all nuclear weapons and to replace them with non-nuclear defence systems-not aggressive but defensive systems. The strategic defence initiative, the SDI, or so called Star Wars concept, proposes ways of rendering nuclear weapons obsolete and unworkable by stopping them from being launched. By so doing it would create a non-nuclear defence system to remove nuclear weapons from the world. The American Government has said: `For those of you who are cynics, we give this promise: We will not do any development past the point of research. If the research proves that the system is incapable of being effective we will not develop it at all and at that point you will be no better or worse off, the deterrent will be functioning in the world. If the research proves that it is workable we will step by step exchange all the information with the Russians and others. We will undertake an equivalent disarmament of our weaponry with the Warsaw Pact countries. We will at all times keep them fully informed about this so that there can be no one-upmanship and we will progressively disarm'. I cannot think of anything more shiney eyed in its idealism and more in the hearts of the Australian people. It is sad that the Labor Party opposes the proposal. Let us try to find a solution that does not depend upon nuclear weapons. At the moment the Labor Party rests purely on keeping the peace in the interminable future by the use of nuclear weapons. That is the ugliest thing in the world. We want to get total disarmament. This is too big a subject for a 10-minute discourse. I rose to speak now to stress the enormity of it and to express the view that it is good that we have come so far in parallel; it is sad that on a number of significant things we vary. Senator MASON(New South Wales)(5.30) —This huge report entitled `Disarmament and Arms Control' from the Joint Committee on Foreign Affairs and Defence well repays study. It is quite difficult to encompass it or to comment on all aspects of it but I was greatly impressed with the thoroughness with which the Committee had done its work. I do not agree with all its conclusions or the emphasis that it puts on facts and I propose to deal with a few of those today. As honourable senators would know, for some years I have stressed the dangers of horizontal proliferation, by which I mean the acquisition of nuclear weapons by nations beyond the present nuclear five-that is, the Soviet Union, the United States of America, France, China and Britain. Earlier this year I had occasion to discuss this problem, which I believe to be intimately associated with the development of nuclear power, with quite a few eminent scientists and political leaders in Europe and the Middle East. I was interested to note that even the nuclear power enthusiasts are beginning to share the concerns that I have expressed on this matter for a year or two now. In fact, most of them are seeing it now as a front level matter of consideration-a matter which has to have the urgent attention of the world. I have no evidence yet that the Australian Government has any desire to look at it in that way. At that level of scientific expertise, which is certainly far beyond my knowledge, the danger of so-called peaceful nuclear technologies developing which will make it possible for virtually any determined group, even a group of terrorists, to make nuclear weapons-by that I mean fission weapons of the Hiroshima and Nagasaki type-is now well recognised. That is something to which I think the world ought to give serious attention. There are two technologies which are seen as presenting the greatest risk. The first is the fast breeder reactor which produces nuclear fissionable plutonium 239 in huge quantities. Most of the Western powers have, I think, quite responsibly abandoned that technology and the United States has decided not to proceed with it. The only country which is proceeding with it is France. France has the world's biggest fast breeder reactor in the form of the Superphenix in the Rhone Valley. The significance of breeder reactor is that it takes what one would call the inert part of uranium 238, that which is left after the fissionable U235 is taken from it, and breeds that in a blanket which is placed round the outside of the reactor. Over a fairly lengthy period it actually breeds plutonium 239. The excuse that has been made for it is that it is economic. It uses all the uranium and turns it into another material-PU239-which can be used to fuel nuclear reactors. If that were the only thing it did possibly that would be acceptable. I will not canvass all the other problems of nuclear power at this stage because they are not relevant to this debate. But the point that relates to this debate is that the PU239 is also a highly efficient and commonly used material for bomb fuel. By going ahead with fast breeder reactor technology not only do we make it possible but also we guarantee that huge quantities of plutonium-I am speaking of hundredweight and tonne lots-will be available around the world. It will also be available for piracy, stealing and any illegal taking by terrorist groups that want to make weapons. It is a fact already that the inventories of plutonium in the United States are lacking considerably. Plutonium has been lost again and again and it has not been possible to establish what actually happened to it. We do not know what has happened in the Soviet Union and in other places, such as France. Their information close-down on the nuclear power process is so great that we will never know. The other technology seen as presenting the greatest risk is the laser method of enriching uranium. This method uses a laser beam to separate the two isotopes U235 and U238. The word `separate' is significant because this is not a long, slow, expensive process of enriching the U235 gradually. It is an actual separation process which, if it is developed fully, will quite quickly, quite cheaply and economically provide a very easily concealable process which will not take very much space and which will allow any group that so wishes to obtain bomb lots of U235. If those bombs were ever made they would be relatively crude weapons but not in the sense that they will not work. They will be crude in two senses: Firstly, their yield will be impossible to estimate, except that they will be very destructive. As we all know, a bomb of the type that I have mentioned destroyed Hiroshima. Secondly, they will also be dirty in the sense that there will be a very high fall-out. With every bomb that is used in the world environment the fall-out will increase and so will the world toll of spontaneous abortions, cancer and genetic malformation. That is not the kind of world that we want. I am concerned that this matter has not been sufficiently addressed in this report. As I recall, there is a mention of this on page 143 of the report. The report states: Any recovery of demand for nuclear power could place greater pressure on the non-proliferation regime. The report begins to approach this matter. The report, on the same page, further states: Also, some States not party to the NPT may soon be able to export a fairly comprehensive range of nuclear goods and services including natural and enriched uranium, research reactors, components of power reactors, fuel cycle technology and training services. Control over the supply of nuclear materials and technologies is complicated further by the need to identify and restrict `dual-use' items-items that can be used in nuclear and non-nuclear industrial applications-and by the absence of a general `full scope' safeguards regime. I think I can at least give the Committee credit by saying that it has recognised the problem although in the recommendations in its report it has not made this sufficiently obvious. Only someone who is prepared to delve into the centre of this huge volume of nearly 800 pages will dig out these points-which is what I have tried to do in the brief time available to me. I turn now to page 162 of the report because that raises the second major point that I wanted to discuss. That section of the report deals with whether Australia would be a nuclear target in time of war. The Committee took a wide range of evidence on this matter, including evidence from a large number of well-informed people. Anybody could read in the report their statements that Australia would be likely to be a nuclear target in time of war. But on page 162-- Senator Crichton-Browne —It is not going to be a target in a nuclear war. Senator MASON —The honourable senator should speak after me in this debate and not interrupt my line of thought so that I can deal with this matter. On page 163 the Minister for Foreign Affairs (Mr Hayden) is quoted. The report states: . . . the Foreign Minister, Mr Hayden, argued that regardless of the presence of the joint facilities, Australia could not escape the consequences of nuclear war. He argued that once a nuclear exchange began, the superpowers may seek to eliminate countries such as Australia `for the simple reason that they would not wish to leave any immune areas which could be built up as enclaves for the regroupment of their opponent'. I think that is an unduly pessimistic and reactionary point of view in the sense that it is a reaction to the easiest course of action. Yet it is not an argument for Australia actually going ahead and presenting itself as a nuclear target. If that argument were to be taken we might as well fill the place up with cruise missiles. We might as well arm to the teeth and tell the Russians that we-- Senator MacGibbon —Come on, don't be silly. Senator MASON —It is a fact. For the benefit of the honourable senator I will again read what the Foreign Minister said: . . . regardless of the presence of the joint facilities, Australia could not escape the consequences of nuclear war. This depressing scenario is by no means the last word on the subject. It is far too convenient and it is too large a generalisation for my liking. The fact is that even in conditions of major war nuclear submarines, for instance, would be hardly likely to return to ports in Australia-I suppose what is indicated is that they would be the only things that could reach Australia in the circumstances that the Minister has mentioned-until their weapons had been used. It seems to me that the main volume of attack would reason- ably be attracted by the perceived enemies of the time. We could well see a world in which Europe, the Soviet Union and the United States to all intents and purposes would disappear. It seems more likely to me that remote parts of the world, such as Australia and New Zealand in that context, would avoid direct attack if they had done nothing to attract it. The more reasonable point is that if weapons are detached to attack three bases in Australia other targets in the same place are more likely to be targeted for the simple reason that these weapons have multiple independently targetable re-entry vehicle capability. They are multi-weaponed; they are not just simple things. As for the nuclear winter, it is likely enough. But I think Australia, with its degree of decentralisation, its reasonably hot climate in much of the territory and its sheer size is likely to avoid the worst effects of a nuclear winter. I am concerned deeply that the Committee has not carried out its work satisfactorily in this regard in not taking this area seriously enough. It deserves further study and examination. Senator CRICHTON-BROWNE(Western Australia)(5.40) —We are debating the report entitled `Disarmament and Arms Control in the Nuclear Age' from the Joint Committee on Foreign Affairs and Defence. Senator Georges —You debated this yesterday. Senator CRICHTON-BROWNE —No, I did not debate it yesterday, Senator Georges. I referred to it in respect of another issue-the South Pacific Nuclear Free Zone Treaty. That impinged, in a very modest way, upon the content of 715 pages of report. It was a very good report, perhaps the most definitive report in respect of matters nuclear put down in this Parliament and perhaps any other parliament in the Western world in recent years. I support the vast majority of the recommendations in the report, but there are some matters where I and a number of my colleagues found ourselves departing from the route being taken by Australian Labor Party senators and members. Firstly, we were not prepared to accept the assumption, as the report does, that one can equate, in a very real sense, the morality, the integrity, the response, the actions and the reactions of the Soviets and, particularly, the United States of America or the Western democracies. There is a very real distinction between the two. Senator Georges —You take them as the source of all evil. Senator CRICHTON-BROWNE —If the honourable senator is asking me whether the Soviets are the source of all evil, the answer is no, just most. Any primary assumption based on the conclusion that both superpowers have the same moral plane, the same moral plateau, is to completely misunderstand and misread the real world. It is certainly not the case. This report in many ways, in the areas where we depart in respect of the recommendations, is seduced into believing that the conduct, behaviour, reflex and response of the Soviet Union can in some way be equated to those of either the United States or any other Western power. They simply cannot. I am sure that even Senator Georges will understand that. I will quote from the dissenting report: The adoption of such a spurious `even-handedness' defies history, morality and our basic national security interests. Of course it does. It makes us very fragile if we work on the premise that the Soviets will respond in the same way as an open Western democracy and an open Western society. For instance, in my view, to assume that the global ambition of both super-powers is parallel, equal and the same shows a remarkable streak of naievite. Senator Georges —It is. Senator CRICHTON-BROWNE —Of course it is not. To seek to place the United States and the Soviets on the same plateau in respect of expansionist policies is quite misguided. One only has to look at the spoils of the Second World War to see the difference, the contrast. Countries have been kept and taken in as satellites and have had whatever democracy they had gutted, whereas countries were invaded temporarily by the allies. Even Senator Georges, with his aging eyesight, will understand that. He is not that myopic. There is a very real difference. There is a very real difference between an open society and a closed society. Can one ever imagine the Soviets having an inquisition or an inquiry? If they had been selling arms to Iran or sending money to the Contras in Nicaragua can one imagine them having an inquiry? The person who inquired would lose his head. Of course there would not be an inquiry. The very societies themselves are so fundamentally different. It is those differences that dictate the responses and the direction. They are the very essential elements which make the two super-powers so removed in terms of seeking to identify what they have in common. Senator Lewis —The radical left wing of the Labor Party is still alive and well. Senator CRICHTON-BROWNE —That is absolutely right. The real difference is that foreign policy of a democratic society is a reflection of domestic policy. It is a reflection of the views of the community; it is a reflection of the views of the public. Any President, any Prime Minister and any leader who so departs and is so out of step with his public and his voters will soon be out of office. He has responsibility, an obligation, a commitment and political constraint and restraint imposed upon him by his society, by his community, and by the public. It is not a constraint or a restraint in terms of decisions, negotiations or commitments that a leader of a closed society has. The difference is that one is accountable and one is not. In a closed society such as the Soviet Union, the Soviets' only responsibility is unto themselves and unto the armed forces leadership. Senator Lewis —But Georges wouldn't understand that. Senator CRICHTON-BROWNE —Of course he would not. We have seen in the United States that, when a leader is out of step with public opinion, such as President Carter was, he is cast from office. There is a very real difference. The population in the Soviet Union, the population in the satellite states and the population in the Warsaw Pact countries have no say, absolutely no influence and no control on the leadership and its decisions-quite the opposite to the situation of the Americans. The Soviets are kept ignorant; the truth is shrouded from them; and they are bathed in darkness. They are not intended to know and they are not intended to make a contribution. Hence their leadership are in no way shackled to making judgments which are in the best interests of the public, but simply only ensure that they are ensconced. As long as the hierarchy is in place so that they are able to impose their views of the world on the rest of society, that is what decision-making depends upon-quite the contrary to democratic societies. I will just touch on some of the matters where we differed. Firstly, we differed on the South Pacific Nuclear Free Zone Treaty. We took the view that the Treaty is but a political statement, and nothing more. Senator Georges —Senator Lewis, you are so- Senator CRICHTON-BROWNE —Do not let me interrupt Senator Georges! The South Pacific nuclear free zone is nothing more than a political statement. In no way does it inhibit Soviet penetration from the north Pacific where one quarter of the total Soviet fleet is seeking the capacity to penetrate at any time into the South Pacific. The only people who will be inhibited and affected are the Americans. We have ruled out home porting under any circumstances, under any event and on any occasion when we might find ourselves threatened in any shape or form. The Americans can no longer come to our aid or in any way be stationed or home ported in any country that is a signatory to that Treaty. Of course, we have the Russians up in Cam Ranh Bay. Honourable senators might remember the spoils of war. Senator Georges —When are you going to come to the United States? Senator CRICHTON-BROWNE —The United States has a base in a democracy-the Philippines. In fact it was intended as a term of the new Constitution to have the United States bases excluded from the Philippines. They will have a say. Do honourable senators think the people in Vietnam have a say? Do honourable senators think they have a plebiscite? No chance. Let me move quickly past that point. Another matter where we vary dramatically is in terms of the strategic defence initiative. It seems to me that the opponents of SDI have two premises. The first is that SDI will not work and, therefore, we should not be involved in it; the other is that it will work and that makes it dangerous. Senator Georges —Yes. Senator CRICHTON-BROWNE —Which is the honourable senator opting for? I can never be certain. My view is that any form of deterrent, any invention that man can possess which eliminates the capacity for a nuclear war, is something we ought to commend. Anything that makes nuclear weapons obsolete has virtue and merit. It seems to me that there is a real conflict in the minds of those who are opposed to SDI. I have never been able to find people who will articulate one point or another in precise terms. They seem to waffle and say: `If it works it is bad, but it probably won't work anyway. Whatever happens, we don't like it and we don't want to know about it'. President Reagan has said from the outset that the knowledge that is obtained from research on SDI will be passed to the Soviets. We will then have two defensive mechanisms which will make nuclear war obsolete, in the event that SDI is effective. In the last arms limitations meetings the Soviets decided they wanted to experiment in a laboratory for 11 years-for crying out loud! I will touch, very briefly, on deterrence. The difference between those of us who signed the dissenting report and those who signed the majority report is that we do not find ourselves shackled to mutually assured destruction. Our view is that there ought to be some negotiating room before we blow ourselves up. We believe in a sense of deterrence and we believe in extended deterrence. That is the very real difference. It is regrettable that the majority do not understand that. The ACTING DEPUTY PRESIDENT(Senator Giles) —Order! The honourable senator's time has expired. Debate (on motion by Senator Kilgariff) adjourned. Consideration resumed from 26 November, on motion by Senator Sibraa. That the Senate take note of the report. Debate (on motion by Senator Coates) adjourned. Motion (by Senator Gietzelt) agreed to: That General Business orders of the day relating to the consideration of committee reports pursuant to sessional order be not further proceeded with this day. The ACTING DEPUTY PRESIDENT(Senator Giles) —In accordance with the usual practice I table the list of parliamentary reports to which the Government has not responded within the prescribed period. This list has been circulated to honourable senators. With the concurrence of the Senate, the list will be incorporated in Hansard. The list read as follows- PRESIDENT'S REPORT TO THE SENATE ON GOVERNMENT RESPONSES OUTSTANDING TO PARLIAMENTARY COMMITTEE REPORTS Title of Report Date tabled Government response SENATE STANDING COMMITTEES Constitutional and Legal Affairs 1. Conscientious Objection to Conscripted Military Service... 28.5.85 I: 6.12.85 I: 13.6.86 2. Commonwealth Law Making Power and the Privilege of Freedom of Speech in State Parliaments 30.5.85 I: 6.12.85 I: 13.6.86 3. IVF and the Status of Children... 6.12.85 I: 13.6.86 Education and the Arts 1. Tenure of Employment of Academics... 9.9.82 I: 15.12.83 I: 22.10.84 I: 31.5.85 I: 6.12.85 I: 13.6.86 2. A National Language Policy... 21.2.85 I: 28.5.85 I: 31.5.85 I: 6.12.85 I: 14.2.86 I: 13.6.86 3. Examination of Annual Reports (Fifth Report). Another Look at Children's Television 20.3.86 - 4. Examination of Annual Reports (Sixth Report). The Australian National Gallery 12.6.86 - Finance and Government Operations 1. Statutory Authorities of the Commonwealth-5th Report 16.9.82 I: 11.11.82 I: 15.12.83 I: 22.10.84 I: 31.5.85 I: 6.12.85 2. Report on the ACT Registrar of Co-operative Societies 1983-84 Annual Report 7.5.86 - Foreign Affairs and Defence 1. Land Acquisition in NSW by the Australian Army-First Report 30.5.86 - Industry and Trade 1. Australia-China Trade... 23.8.84 I: 31.5.85 I: 11.9.85 I: 6.12.85 I: 13.6.86 2. The Development of Closer Economic Relations between Australia and New Zealand (First Report) 11.10.84 I: 31.5.85 I: 6.12.85 I: 13.6.86 3. The Development of Closer Economic Relations between Australia and New Zealand (Second Report) 20.8.85 I: 6.12.85 I: 13.6.86 4. The Development of Closer Economic Relations between Australia and New Zealand (Third Report) 11.2.86 I: 13.6.86 5. The Development of Closer Economic Relations between Australia and New Zealand (Fourth Report) 20.8.86 - National Resources 1. Development of the bauxite, alumina and aluminium industries 25.11.81 I: 15.12.83 I: 16.10.84 I: 31.5.85 I: 6.12.85 I: 13.6.86 2. Natural Resources of the Australian Antarctic Territory 5.12.85 I: 13.6.86 Science, Technology and the Environment 1. Land Use Policy in Australia... 21.2.85 I: 31.5.85 I: 6.12.85 I: 13.6.86 2. Examination of Annual Reports. Australian Libraries and Information Council 11.9.85 - SENATE SELECT COMMITTEES 1. Statutory Authority Financing Vol 1:... 8.9.83 I: 15.12.83 I: 22.10.84 I: 31.5.85 I: 6.12.85 Vol 2:... 13.10.83 I: 15.12.83 I: 22.10.84 I: 31.5.85 I: 6.12.85 2. Video Material... 28.3.85 I: 31.5.85 I: 6.12.85 I: 13.6.86 3. Animal Welfare: Dolphins and Whales in Captivity... 29.11.85 I: 13.6.86 4. Volatile Substance Abuse in Australia... 6.12.85 I: 13.6.86 JOINT SELECT COMMITTEES 1. Parliamentary Privilege- (Final Report)... 3.10.84 I: 13.6.86 Note-I: Interim Response Only. As at 2 December 1986. Senator JONES(Queensland) —I move: That the Senate take note of the paper. On this list appears the report from the Standing Committee on Science, Technology and the Environment on land use policy, as it has appeared on similar lists over the last couple of years. The report was presented to the President on 23 January 1985 and tabled in the Senate on 21 February 1985. The report was the result of a long inquiry into a large, complicated and important subject. We were careful to concentrate on a few major issues that needed urgent attention, and our recommendations emphasised a small number of administrative measures which we believed to be feasible and which, when implemented, would have highly beneficial effects on land use throughout Australia. The Committee is disappointed that after almost two years a government response has not been received. It is a complicated matter, with many responsible authorities involved, but our recommendations were clear, concise and realistic. We look forward to receiving a response in the near future. Question resolved in the affirmative. Senator TATE(Tasmania) —I present the twentieth report of 1986 of the Senate Standing Committee for the Scrutiny of Bills concerning the Bounty (Books) Bill 1986, the Human Rights and Equal Opportunity Commission Bill 1985 and the Plant Variety Rights Bill 1986. Ordered that the report be printed. Senator COATES(Tasmania) —On behalf of the Standing Committee on Finance and Government Operations I present the report on Australian Broadcasting Corporation employment contracts and their confidentiality, together with the transcript of evidence. Ordered that the report be printed. Senator COATES —by leave-I move: That the Senate take note of the report. The Committee's reference was whether the claim by the Australian Broadcasting Corporation that certain information should not be made available to Estimates Committee C on the ground of commercial confidentiality is justified. The `certain information' was the amount of payment by the ABC to its National compere-interviewer Geraldine Doogue. The Committee decided that it should first look at the general question of contract employment and of claims of confidentiality, the amount paid being irrelevant to the principle involved. The Committee concludes that in general it does not disapprove of contracts of employment by a statutory authority, particularly when it will facilitate and improve the functions and responsibilities of the authority. However, the Committee believes that contract employment should not be used for normal full time employment, and that contracts limited to contracts of employment should be used only for limited employment or for the engagement of persons to perform particular tasks. The Committee believes that contracts for service are not a desirable form of arranging employment. I draw attention to some qualifying comments on contract employment by the two Opposition members of the Committee. On confidentiality, the Committee concludes that details of contracts should not be kept confidential if a parliamentary committee, acting with appropriate discretion, seeks the information. This is basic to the accountability of a statutory authority to the Parliament. On the Doogue contract, a contract with a company to supply Ms Doogue's services, the Committee discovered that it contained two unusual and unjustifiable terms about which the Committee was gravely disturbed. One was a non-disclosure clause applying to the contractor but which the ABC claimed it was also obliged to honour, though it claimed commercial confidentiality generally as the prime reason for keeping the size of the fee secret. The Committee concludes, and the ABC now agrees, that the Parliament and its committees are entitled to full disclosure of such information and that no one should be left in any doubt about this. The other clause provided for Ms Doogue's fee for the year to be provided entirely in advance in two lump sums of 50 per cent each. I for one was outraged to learn this, and the Committee concludes that it was highly irresponsible of the ABC to enter into a contract which provided for the payment for services so far in advance of their being provided and considers that no similar provision should ever be even contemplated again. I seek leave to continue my remarks later. Leave granted; debate adjourned. Debate resumed. Senator MESSNER(South Australia)(5.57) —Before the debate on the Taxation Administration Amendment (Recovery of Tax Debts) Bill was interrupted I was making the point that the Government is seeking to put through what really is unnecessary legislation. It is giving power to the Commissioner of Taxation to recover tax debts over an unlimited period, thereby taking them out of the ambit of the so-called statute of limitations in the various States. That means that the Taxation Commissioner is being put on a totally different basis from every ordinary citizen, who is limited by the statute of limitations to six years for the recovery of debts. That means that, for any debt owing between ordinary people, if action is not taken to obtain payment of that amount within the six years the debt disappears. If this legislation is passed the Taxation Commissioner will have power to go back for an indefinite period to recover tax debts. In that way he is being given a power far greater than that applicable to the ordinary citizen. In that context I would like to refer to an earlier debate on this point in this chamber on 12 October 1922. That was quite a long time ago but the remarks are quite pertinent in part because they were made by Senator Keating, who was then a member of this chamber, as a Liberal protectionist from Tasmania. As I understand it, he is no relative of the present Treasurer (Mr Keating). It is rather ironic that Senator Keating appears to have taken the opposite point of view. He said: I must also determinedly protest against this clause-- this being a clause to give the Commissioner of Taxation such unlimited power- because I am strongly opposed to the Income Tax Department being exempt from any Statute of Limitations. He went on to say: If it were ever within my power to deal with the Taxation Department I should make it my duty to see that that Department, equipped and armed as it is, shall observe the ordinary rules of business, and shall be subject to the same conditions as are taxpayers in the community. I believe that is a most succinct statement of the Opposition's position on this matter, because we strongly hold the view that the Taxation Office should not have powers which are above the ordinary powers of the rest of us in the community. Once we establish organisations, bureaucracies and government authorities with such extraordinarily widespread powers that they can act in areas which are not available to ordinary citizens, we have a situation which may pose grave dangers to the liberties and freedoms of all Australians. For that reason we hold very strongly to those words of Senator Keating. We believe that is the essence of the argument we are seeking to put here today. It is clear that the Commissioner and the Treasurer must have ignored certain instructions that have been given to the Taxation Office over the years in regard to the recovery of debts. Where there are problems of doubts and disputes over the actual assessment of liability for taxation, a simple solution would be for the Commissioner to act promptly by commencing recovery action within the statutory period of six years, in the case of tax liability, and two years, in the case of penalties. That should be quite an easy, straightforward and simple thing for the Tax Commissioner to do. All he does, and all he needs to do, is to initiate some kind of recovery procedure in order to get the ball rolling. He does not have to complete the recovery procedure within that six-year period in order to ensure that his rights are preserved and are not vitiated by the statute of limitations in the State. All that is needed to be done in a case of recovery is simply to lodge a statement of claim with the court and have a summons issued. To argue that the Tax Commissioner needs more than six years to take such a simple action, is beyond the realms of reality. Consequently, that is a very strong reason why we in the Liberal Party and the National Party of Australia oppose this Bill. Alternatively, the Commissioner can act to ensure that the settlement of any tax liability which is due to be settled during the six years is completed within that period. Surely it is within his present powers to achieve that. As I have said earlier, if the Commissioner cannot ensure this outcome, we have to question very profoundly the operational efficiency of proceedings to settle taxation liability objections within the Taxation Office. The only objective of this Bill is again to hand over greater powers to the Commissioner of Taxation, irrespective of whether in the first place he has in fact sufficient powers to administer the law in an effective manner. This legislation is not only nonsensical; it is absolutely unfair. I referred earlier to the debate of 64 years ago. Parliament resolves at that time to make the Commissioner of Taxation subject to the statute of limitations. That was fair and equitable then and it is fair and equitable now. Hence, by enacting section 201, the Parliament authorised the Commissioner to recover tax even if it was subject to appeals on review. Laxity on the part of the Commissioner does not justify the proposed changes and enhancement of his powers. The Opposition rejects this absurd measure and requests the Treasurer to seek an assurance from the Commissioner of Taxation that he will energise himself to the degree that it is possible for him to do so and, if not to resolve disputes within six years, at least to commence proceedings for recovery in the courts within that period. Surely that is not too much to ask. The failure of the Commissioner to sue for the recovery of disputed tax and penalties has nothing whatsoever to do with the delays of the Commissioner in, firstly, determining objections against assessment or, secondly, referring requests by taxpayers to have decisions referred to the Supreme Courts and the Taxation Boards of Review, which have now, of course, been absorbed into the Taxation Appeals Division of the Administrative Appeals Tribunal. The basic tenet of the Opposition's criticism of this Bill is that if the Commissioner of Taxation cannot resolve a dispute within six years or, not having resolved it, at least commence action within six years and so remove himself from the ambit of the statute of limitations, there is something appallingly wrong with the administration of the Taxation Office. We have report after report from the Auditor-General pointing to the maladministration of the Taxation Office and the total collapse, as it seems, of systems to be able to control evasion and avoidance. Senator Georges —That is not quite accurate. Senator MESSNER —Well, there are many reports around, Senator, that indicate that there are major failings on the part of the Department in chasing up those matters. Senator Georges —Well, they have some difficulty catching up with technology. Senator MESSNER —That is another aspect. Technology is lacking, and apparently the Taxation Office has over the years underspent its allocation of funds to employ electronic data processing equipment in order to build up its battery in this area, and consequently has not moved into the twentieth century to enable it to chase up these matters. Finally, the proposal put forward by the Government cannot be sustainable on any grounds of fairness or justice. It is a retrospective proposal, and that is why the Opposition cannot support it. The Australian taxpayer is already confronted with hundreds of pages of taxation legislation, swelled in the last 12 months by over 750 extra pages. That legislation is of immense complexity, and some of it, such as the fringe benefits tax and the capital gains tax, is grossly unfair. We will simply not tolerate a proposal in the administration of the Income Tax Assessment Act which takes away citizens' rights retrospectively and allows the Commissioner of Taxation liberties which are not granted to the ordinary citizens of Australia; hence the amendment in my name, which has been circulated to all honourable senators. I move: Leave out all words after ``That'', insert: `the Senate declines to give this Bill a second reading because- (a) the Commissioner of Taxation should be subject to the statutes of limitations in the same way as any other citizen of Australia; (b) a 6 year period from the date of liability falling due should be sufficient time for the Commissioner of Taxation to initiate action for recovery of tax or to take appropriate legal action to safeguard his rights; and (c) the Bill retrospectively applies an unlimited time for taxation liability to a certain group of taxpayers'. Senator HAINES(South Australia-Leader of the Australian Democrats)(6.09) —The legislation that we are debating at the moment, the Taxation Administration Amendment (Recovery of Tax Debts) Bill 1986, is, I gather, an attempt by the Government to clarify and regularise a situation which has arisen as a result of a Queensland Supreme Court decision in the Deputy Commissioner of Taxation v. Moorebank Pty Ltd. I think it is worth while remembering exactly how the relationship that exists between the Commissioner of Taxation, the Deputy Commissioners of Taxation and taxpayers operates, at least in most instances, in this country. For many years in this country we have had a system in which a review of assessment is done essentially at the option of the taxpayer, that is, the taxpayer has the right to instigate a review of the assessment that is made of his or her or of a company's tax requirement. That system has operated in Australia certainly as long as I can remember. It is quite proper-nobody is disputing this-that taxpayers should be able to challenge assessments. We could not have the situation in which a Deputy Commissioner of Taxation in any given State could assess a taxpayer's liability and then insist that the money be handed over willy-nilly. I am sure that from time to time governments facing deficits would rather like it, but it has never applied in this country, nor should it. It is quite appropriate that taxpayers be able to challenge assessments while proceedings for review are pending. Sometimes they take quite a deal of time. In this country it has also been the practice of the Commissioner not to enforce the debt. It is worth noting, as the Opposition spokesman in another place pointed out, that the debt is probably capable of enforcement within weeks of issue of the assessment. (Quorum formed) Senator Walsh —Wouldn't they be complaining if it were actually done? Senator HAINES —I will get to that. In another place a couple of months ago Mr Carlton had this to say: There does not have to be a resolution of a dispute before action is taken. The Commissioner can take action before a court at any time . . . The Revenue can be got in and action can be taken at any time within six years. The action does not have to be completed within six years; only begun. If the Taxation Commissioner had been taking action in any of the matters that are outstanding within six years, the alleged problem would not have arisen. I echo the comments that were just made by Senator Walsh: What an outcry there would have been if that were the sort of behaviour of the Taxation Commissioner. It certainly seems to me and to many other people to be a trifle unfair at least to take the revenue away from the taxpayer before all legal appeals have been dealt with. I would have thought that if the Tax Commissioner had been in the habit of issuing an assessment, asking the taxpayer to hand over the money and then doing the appeals-a sort of Alice in Wonderland sentence first, verdict afterwards type of thing-the loudest screams, and quite rightly so, would have come from the people who are now suggesting that the Commissioner need not wait until all the appeal provisions have been dealt with before he puts his hand in the taxpayer's pocket. In any event, it has been acceded under various administrations for many years that tax debts are Crown debts and that it was believed that the old prerogative of immunity of the Crown from limitation laws protected the proceedings for the recovery of tax from any limitation period. Whether or not that is the case, it certainly was believed to be and was the basis on which the Commissioner did not do what Mr Carlton suggested could be done-that is, instigate proceedings at any time, no matter what else was happening. As I said a moment ago, the problem has arisen as a result of the Moorebank decision in the Queensland Supreme Court. If this decision is upheld-the Government has an appeal before the High Court of Australia at the moment-it means that the Tax Commissioner cannot recover tax owing because more than six years have passed since the liability first arose. Again, that is a trifle like Alice in Wonderland. I mean no disrespect to the judges, but it does not seem to be a terribly logical way of approaching it. After all, the reason that six years had expired was that the Commissioner did not sue for recovery as a matter of course until after challenges to liability had been settled. In the sort of democratic country in which we are supposed to be it seems to me that that is a fairly reasonable manner of behaviour for somebody in the position of the Tax Commissioner. The effect of the decision in the Moorebank case is that tax avoiders can drag out their disputes about liability until the six-year limitation period has expired and, in doing so, they can avoid paying their tax debts. The only alternative is for the Commissioner to step in and say: `Hand over the money now. Finish your appeals after that.' It is worth noting here, too, that, according to Mr Carlton, the Queensland decision is `contrary to decisions taken previously by supreme courts in Western Australia and New South Wales'. We have the Opposition spokesman admitting that the Queensland decision was at variance with decisions taken in supreme courts in two other States. It is by no means a fixed piece of law, except maybe in Queensland. As we in this place are all aware, the Commissioner is, as I said, seeking to appeal the Queensland decision in the High Court, and in the meantime the Government has taken the step of introducing this piece of legislation to remedy the problem that was caused by the Moorebank decision. I can only repeat that in my view and in that of my colleagues it seems to be quite unreasonable for the Commissioner to sue for recovery without waiting until after challenges to liability have been settled and equally unreasonable for tax avoiders to use delaying tactics and, in doing so, not avoid the assessment but avoid having to pay up, no matter what ultimate decision is taken. The taxpayer's indebtedness, if confirmed after review, does not, nor should it, expire. The application of State laws of limitation simply means using a technicality to avoid payment. Given the actual and the always potential variation in the laws of limitation in Australian States, a very real question arises as to whether allowing this Moorebank decision to stand would not be in breach of say, section 117 of the Constitution which quite clearly states: A subject of the Queen, resident in any State, shall not be subject in any other State to any disability or discrimination which would not be equally applicable to him if he were a subject of the Queen resident in such other State. When we play around with variations in the laws of limitations from State to State one questions whether this sort of decision is not in conflict with the intention of section 117. Much has been made by the Opposition about the question of retrospectivity. I think it is important to make two points in particular: First, the amendments in the Bill do not apply-and the Government has made that clear-to cases already decided by the courts, hence there is no real issue of retrospectivity; and, secondly, the Bill certainly makes the fresh limitation period applicable to current assessments. But, given the previous understanding that no limitation period applied, it does not seem to me, or to my colleagues, to be retrospective in the sense that says attempts in the bottom of the harbour legislation were retrospective. It is worth while noting at this point the report on this Bill from the Scrutiny of Bills Committee. That Committee said that it did not consider that this was retrospective in that sense. I remind the Senate that the Committee is particularly sensitive about legislation which is deemed to trespass unduly on personal rights and liberties. That report stated: Adjournment The Committee recognises that the new section 14zka deals only with the time at which a claim for recovery of tax debt may be lodged and that it does not alter in any way the substance of the taxation law. It also recognises that the new section cannot be said to work any injustice insofar as it merely restores the law to what it was thought to be prior to the decision in the Deputy Commission of Taxation v Moorebank Pty Ltd. In that way it is significantly different from other pieces of legislation that, in fact, I have objected to on the grounds of retrospectivity. It does not change the law or alter in any way, as the Committee said, the substance of the tax law. It attempts to settle a problem that arose because the Queensland Supreme Court chose to treat the statute of limitation as applying in this case. The only alternative to the approach taken by the Tax Commissioner in the past, and which is confirmed in the piece of legislation before us today, would be for the Commissioner to enforce the debt before any challenge to the assessment. As we have already said, that would cause a justifiable cry of outrage from honourable senators at least on this side of the chamber and, I would hope, from the other side as well. Many people would quite rightly see it as grossly unfair and it is certainly a less attractive proposition than the traditional approach taken by the Commissioner. Given the expressions of outrage at the lateness of the Treasurer's tax return by some honourable members on this side of the chamber when he is allegedly owed money, I find it totally bemusing that these same people can treat with some enthusiasm the idea of supporting people who owe the Commissioner but are attempting not to pay that money by stringing out their appeals beyond the statute of limitations that applies in Queensland. We cannot have it both ways; either the deputy commissioners of taxation demand payment of the assessed tax owed immediately it is assessed and then repay it if on appeal the assessment is reduced, or the deputy commissioners of taxation allow time for appeal and wait more or less patiently for the conclusion of those appeals. I would have thought that the latter is the more appropriate system in a democracy. The public outrage at the alternative that presents itself would be more than justified, and I think it would be only slightly less than the outrage from the public if this Bill is defeated since essentially it will allow people who have taken advantage of the system to avoid paying assessed tax provided, of course, they live in Queensland, presumably. I do not believe that this artificial wriggling out of a commitment by some taxpayers can be condoned. Not only will we be supporting the Bill in order to ensure that the statutes of limitations are not artificially used by some taxpayers to avoid the commitment they have to Consolidated Revenue but also the Democrats, the Government and the ordinary taxpayers will be opposing the amendment that has been removed by the Opposition since its effect essentially is to gut the Bill and to allow the current situation essentially to proceed. (Quorum formed) Senator MICHAEL BAUME(New South Wales)(6.27) —Basically the Taxation Administration Amendment (Recovery of Tax Debts) Bill 1986 relates to whether the Commissioner of Taxation will become the only person in Australia not subject to the statute of limitations in respect of being able to take action against taxpayers beyond the time limit that every other litigant in Australia is allowed. Certainly, this Bill relates to a specific area and it gives certain conditions, but the fact is that the Government is attempting to give the Commissioner of Taxation the power to pursue people beyond the statute of limitations which, as I imagine every honourable senator knows, goes back to the Magna Carta-the whole concept of the law being speedy. The Magna Carta says that to no one will we deny or delay right or justice. That was in the year 1215. It is disappointing that once again in Australia we have an attempt to legislate along the lines that the Government is now doing which is to exempt the Commissioner of Taxation from the limits that every other litigant must follow. As Senator Messner noted, this attempt was made before in the Parliament. In fact, it was defeated in this chamber. As Senator Messner noted, it was defeated, ironically, with the great support and effort of a senator called Keating-a most appropriate name in the circumstances. It is a pity that the present Minister in charge of the Australian Taxation Office does not have the wisdom and the sense of what is right and proper in legal matters that Senator Keating had back in the 1920s. The point being made by the Government is that this legislation is necessary because a Queensland decision had changed the situation. That does not appear to be so and it is also held by the Leader of the Australian Democrats, Senator Haines, for example that this Bill is not retrospective. It is notable though that the Minister assisting the Treasurer, Mr Hurford, when introducing the Bill said that the Bill is, if the Queensland Supreme Court is correct in its decision, technically retrospective in application. While it is true that no new or increased tax liability is imposed, the reality is that it is a clear and very disturbing addition in liability in making unlawful, if you like, or making allowable the pursuit of conduct as a result of the incompetence or failure of the Tax Office. Sitting suspended from 6.30 to 8 p.m. Senator MICHAEL BAUME —Madam Acting Deputy President-(Quorum formed) Before dinner I was pointing out that this legislation has serious problems, basically because it provides the Commissioner of Taxation with a right that no one else in Australia has. The system established under this legislation will place no time limit whatsoever on the Commissioner's seeking to recover debts once an objection has been made by a taxpayer to his assessment. This leaves the Commissioner of Taxation in a special situation. Everyone else in Australia will be subject to the statute of limitations; the Taxation Commissioner will not be. Under the present legislation, which could well operate satisfactorily if it were applied properly by the Commissioner, within the normal period of six years under the statute of limitations action can and should be taken. Senator Haines said that the Opposition would regard it as improper if the Commissioner, in an unresolved matter where appeals were still proceeding, demanded the payment of the tax. Let me assure her that the Commissioner does require the payment of the tax and charges us 20 per cent per annum if we fail to pay it. In fact, for Senator Haines's benefit, section 201 of the Income Tax Assessment Act provides as follows: The fact that an appeal or reference is pending shall not in the meantime interfere with or affect the assessment the subject of the appeal or reference; and income tax may be recovered on the assessment as if no appeal or reference were pending. That is what the law says. If the Commissioner chooses not to apply the law he has no right to come to this chamber requiring additional statutes, on top of those that exist, to protect him from his own failure to apply that law. This has been a traditional pattern of behaviour by Commissioners of Taxation, past and present-I do not distinguish; it is a pattern within that Office-to seek to solve problems in a broad sweeping mallet sort of approach. It is a mallet to hit a tack consistently. It is a procedure which takes no regard of the proper rights of Australians. For example, I well recall that the first proposition relating to the Crimes (Taxation Offences) Act that the previous Government received involved a reverse onus of proof on a criminal matter. The Tax Office said that the only way to solve this problem, when we were requiring the possibility of criminal proceedings, was to do it their way-to have the onus of proof on the people of Australia to prove that they were not guilty of a criminal offence. I raise this simply to point out the pattern of behaviour in the Tax Office. Certainly the Tax Office has felt oppressed and unfairly treated for a whole lot of reasons, many of which are very sound indeed, and it suffered under an immense burden when the High Court was taking views which I must say-and I agree with Senator Walsh on this-I find it very difficult to agree with about the meaning of section 260. But I also find it very difficult to agree that the Commissioner could not have responded much more quickly to the strong points being made, for example, by Mr Roger Gyles, who was appointed by the previous Government and who consistently said that section 260 was alive and well and that action should be taken under it. But the Office failed to do so. This raises what to me is the major issue with this legislation-the extent to which legislating in this way breeds an indolence and an indifference to the rights of Australians and an indolence within the Tax Office, knowing that it will be protected by legislation from behaving in a way that the rest of society is required to behave. I suppose an analogy is that indexation against inflation breeds indolence and lack of concern for inflation. In other words, if we had no indexation people would be much more concerned and much more determined to prevent the escalation of inflation that takes place in Australia, at a massive rate compared with the rest of the world, simply because so many people are protected from the impact of inflation by indexation. By analogy, if the Tax Office is convinced that, every time it makes a muck of things, legislation can be pushed through the Parliament which deprives Australians of their rights but which improves the capacity of the Taxation Office not to properly implement existing legislation, in fact it breeds an indolent and, I believe, an improper attitude by the Tax Office to the proper requirements of government. I think this is a major and serious philosophic point that the Government certainly has ignored and that the Tax Office has consistently tended to ignore. The important point in this matter is not that the Tax Office has to have completed its attack on the defaulting taxpayer, if one wants to call him that, within six years. All that has to happen is that the Tax Office has to begin an action within six years to come within the existing legislation. The Tax Office can quite properly say that in the past it has had an enormous backlog of matters going before Taxation Boards of Review where there is disputation, but I notice in the latest annual report that there is a massive speeding up of that system of appeals and so on. It seems to me that, if a case can be made that there may be some situations that would be covered by this backlog in this present legislation, there is no doubt in my mind that in the future there can be no justification whatsoever, even on the basis of the outstanding cases. At the very best this legislation is aimed as solving a very short term problem but it will be a burden on the people of Australia until it is repealed. Senator Messner —Senator Keating saw that too. Senator MICHAEL BAUME —As Senator Messner points out, in 1922 Senator Keating made exactly those points. The reality is that when a taxpayer objects to his assessment he nonetheless has to pay it. This is why it seems extraordinary that the Government has made a great logical leap, having not coped with the reality of the present situation. Section 204 of the Income Tax Assessment Act states that income tax and penalties are due and payable 30 days after service of the notice of assessment. Sure, disputes can go on and on about an assessment, but it is due and payable within 30 days after service. After six years the Commission does not have to have recovered the money owing but to have initiated action, which just means putting in a statement of claim; that is all. There is no great administrative task, no massive burden of paperwork. It means putting in a claim before a court. If he has not done it after six years, why not? The simple fact is that a taxpayer has to pay the tax assessed irrespective of whether he believes that the tax is excessive, irrespective of whether he believes he has a good case. As I said, a penalty of 20 per cent per year is imposed on him if he fails to do so. If the Commissioner fails to ensure that legal action of some kind is initiated during that six years, why should the Commissioner be further protected in this way against the people of Australia? I think that is a fair question when one recognises the extent to which the Commissioner has been very properly and very severely criticised in the courts for delays in matters before the courts-delays the judges have repeatedly described as unjustifiable, incredible, puzzling. Many adjectives have been used by judges in recent times. Goodness me, if one goes through the list it is clear that the Tax Commissioner has some kind of problem in getting around to proceeding in a proper way to implement existing laws. I do not know whether the Government after 3 1/2 years in the saddle will say: `It's all the fault of the previous Government'. I suppose that is what it will say. That is all it ever says, along with claiming that every time the Opposition objects to a piece of taxation legislation it is appearing on the side of the tax lurks. Here we have a matter of major principle relating to the failure of the Commission to implement existing laws and as a result of that failure conning the Government into imposing a situation which is clearly improper. I think the Government should try a little harder; it should try to do a little better. For the benefit of the Minister for Finance (Senator Walsh), I refer to the judgment of Wilcox J. in Barina Corporation Ltd v. the Deputy Federal Commissioner of Taxation, which stated: . . . the Deputy Commissioner came under an obligation forthwith to forward the objections to the Court. He did not do so . . . The judge continued: It is puzzling that this section was thought to be necessary . . . It is more puzzling that a period as long as 60 days was allowed for the simple mechanical task of referring the objection to the Court, especially in a context where the objecting taxpayer is under an obligation to pay the tax pending resolution of the objection. The judge continued: I regard as intolerable that delay of six months necessarily inflicted upon the present applicant in relation to the determination of its appeal. Such delay appears not to be peculiar to the Sydney Taxation Office. These are slightly different matters. Nonetheless they give evidence of judicial concern at delays within the Tax Office in dealing with these matters. I suggest to the Government that the way to solve these problems of delays is not to impose legislation which will be with us until repealed, not to impose this kind of legislation which diminishes the rights of Australians, but to improve the functioning, within existing legislation, of the Taxation Office. Quite recently, we have seen the Auditor-General criticise the procedures within the Taxation Office. I know there is great disagreement-- Senator Chaney —Very severely. Senator MICHAEL BAUME —Very severely, as Senator Chaney says. Of course, there is disagreement between the Commissioner of Taxation and the Auditor-General about this. The Commissioner appears to take the view that anyone who criticises the Taxation Office is damaging the capacity of that Office to collect tax. This kind of embattled attitude, this approach that the Taxation Office has, is counterproductive if it leads to the requirement for oppressive and unnecessary legislation to be imposed upon the people of Australia simply to cover up the shortcomings of the Taxation Office, which has been under the administration of this Government for 31/2 years. The impact of that new Government has been to increase very substantially the numbers within the Taxation Office. I believe the number of people in that section has increased by about 500. So there should be no suggestion that the Taxation Office does not theoretically have the capacity at this stage to be able to cope with the existing legislation. But it has failed to do so. All we are suggesting is that it is not beyond the capacity of the Taxation Office now-quite frankly, I find it difficult to believe that it ever was-to have instituted proceedings. It need not have finished them or even have argued them at great length. All it needed to do was to put in a statement of claim within six years. Its failure to do that strikes me as incredible. I have to admit that I have great difficulty in accepting the claim by the Minister for Immigration and Ethnic Affairs and Minister Assisting the Treasurer (Mr Hurford) that $200m in revenue could be placed in jeopardy. Quite frankly, I have seen those sorts of estimates before. I have great difficulty in accepting them. I would like to have far more information before accepting that estimate. I note here that the Minister for Veterans' Affairs (Senator Gietzelt), in his second reading speech, said that up to $900m could be involved over time because a further $700m would be at risk in later years. Of course, we do not know what the degree of risk is. It might be a five per cent degree of risk or a 95 per cent degree of risk. Frankly, I find that kind of very loose terminology to be fairly hairy. But the interesting thing is that, according to the Minister, the vast majority of the $900m is owed by tax avoidance participants from the 1970s and early 1980s. In the atmosphere prevailing at that time, I would have imagined that it would have been the number one priority of the Taxation Office to have instituted proceedings in all of those matters and to have lodged a claim-not necessarily to have proceeded with it or to have had a successful outcome, or any kind of outcome. The Taxation Office claimed to be energetically pursuing tax dodgers and tax frauds. Why did the Taxation Office not get around even to lodging a claim, particularly when it required those people to pay a 20 per cent interest bill on the outstanding tax, which was due within 30 days of the assessment being made, no matter what the degree of dispute. I say simply that this is a very bad principle. This is not the way in which to legislate. Legislating to protect the mistakes of a department and then perpetuating its ability to continue to make that kind of mistake seems to me to be totally improper. The Government does not find any difficulty with that. It does not find any difficulty with imposing a special burden on people in their dealings with the Tax Office, and leaving the Tax Office as the only instrument in Australia that is not bound by the statute of limitations. I would have thought that even a Labor government would have felt that those basic traditions of justice would be of some moment. Even it would have thought, surely, that there was some merit in requiring departments to follow and act on their own legislative requirements, which are so clearly stated here. It is absolute nonsense for Senator Haines to say that it would be improper, before these matters were resolved, to require the payment of the money, because that is what the law already clearly states. I suggest that it is an extraordinary decision by the Australian Democrats to side with the Government on this matter. There is no doubt that the word Democrats should be removed from their title. Senator WALSH(Western Australia-Minister for Finance)(8.21) —I shall deal later with the spurious amendment which the Opposition has moved to the motion for the second reading of this legislation. But I think it might help to put in its historical context the reason for this legislation. In the late 1970s, paper tax avoidance schemes-that is, the setting up of contrived arrangements to claim shonky deductions from taxable income that wiped out taxable income liability, had they been allowed-proliferated. They proliferated for two reasons: Firstly, because the High Court of Australia at that time was under the domination of Garfield Barwick. It certainly does no credit to the rest of the judges who sat on the High Court at that time, or to the majority of them, that they so often-- Senator Chaney —Madam Acting Deputy President, I draw your attention to the state of the House. Senator WALSH —You do not want to hear this, do you? You stand here protecting the tax evaders, as you have always done. Senator Chaney —You can call me what you like, but you will have an audience. The ACTING DEPUTY PRESIDENT(Senator Giles) —Order! A quorum is not present. Ring the bells. A quorum having been called for, and the bells being rung- Senator WALSH —How much will the Western Australia Liberal Party finance committee get out of this if the amendment passes? How much will you get, Senator Crichton-Browne? Senator Crichton-Browne —What are you on about, you poor morally bankrupt dill? Senator WALSH —How much will you get if the Opposition's amendment succeeds? Senator Crichton-Browne —What are you suggesting? Senator Chaney —Madam Acting Deputy President, I take a point of order. The Minister is making a thoroughly objectionable accusation. He should be told to withdraw. The ACTING DEPUTY PRESIDENT —Senator Walsh, I think it might be-- Senator WALSH —Coming from the scumbag who is the Leader of the Opposition and who accused the Treasurer yesterday of being a tax fraud, I find that a bit rich. The ACTING DEPUTY PRESIDENT —Senator Walsh, will you please withdraw that unreservedly and immediately? Senator WALSH —Withdraw what, Madam Acting Deputy President? The ACTING DEPUTY PRESIDENT —Both references that you made to members of the Opposition. Senator WALSH —I simply asked a question. I asked Senator Crichton-Browne how much he would personally get out of this if the Opposition got its way. Senator Chaney —On a point of order, Madam Acting Deputy President: The Minister is clearly defying you and is repeating-- Senator Robertson —How can you take a point of order if the Senate is not in session? Senator Chaney —I will hold the paper over my head. That is a great custom. The ACTING DEPUTY PRESIDENT —There is a point of order, Senator Robertson. I would like to hear it. Senator Chaney —Senator Walsh is clearly defying your ruling and is behaving in a contemptuous way. I ask that you seek his immediate withdrawal of both the reference to me and the reference to Senator Crichton-Browne. The ACTING DEPUTY PRESIDENT —I have requested that Senator Walsh withdraw both the allegation against Senator Crichton-Browne and his reference to the Leader of the Opposition. I ask that he do so unreservedly. Senator WALSH —I am not sure whether the Senate is technically in session, but I will withdraw that allegation, as I am conscious of the fact that the test of acceptability here is not the truth but the Standing Orders. The ACTING DEPUTY PRESIDENT —Senator Walsh, will you please withdraw those remarks. A quorum is present. Senator Chaney —On a point of order, Madam Acting Deputy President: Again, the Minister did not make an unqualified withdrawal, and I seek that with respect to both remarks. If he does not do so, he should be disciplined. The ACTING DEPUTY PRESIDENT —I have also sought that. Senator Walsh, would you please withdraw unreservedly? Senator WALSH —I withdraw. I was giving the historical context from which the need for this legislation arose. In the late 1970s paper tax avoidance schemes were proliferating. They were proliferating for two reasons: Firstly, because the Barwick-dominated High Court of Australia had consistently given absurd interpretations of the Income Tax Assessment Act in such a way that the Commonwealth was defrauded of hundreds of millions of dollars worth of revenue annually; and, secondly, because there was in office at that time a government which was at best negligent and a Treasurer who was at best negligent, who habitually ignored the pleas from the Commissioner of Taxation for amendments to the law to stop the income tax base being further eroded. At that time it was the practice of the Australian Taxation Office, when disputing these paper schemes, which sought basically to wipe out taxable income through claiming absurd deductions against that taxable income-or even more simply, I suppose, they sought to define taxable income out of existence-to disallow the returns and the deductions which had been claimed by the taxpayer and then to select test cases, because these schemes were so widespread that they involved literally tens of thousands of taxpayers. So, rather than taking to court all of those taxpayers, the practice of the Tax Office at that time was to select two or three test cases. The legal proceedings pursuant to that, of course, could be dragged out for a considerable time. It was very common at that same time for those taxpayers who had been selected as test cases to withdraw from the action and pay up literally minutes or hours before the case was actually to come before the court. The Tax Office at that time took the view that there was no need actually to require the money to be paid in. As Senator Messner and Senator Michael Baume have both pointed out, the Commissioner, had he in the harshest way enforced the law, could have required that the Commissioner's assessment of the tax liability actually be paid and initiated immediately action for recovery. The Commissioner chose not to take that action because at that stage there was absolutely no reason to believe that there was a limit on the time during which the Commissioner could subsequently issue a writ for recovery of the tax liability which the Commissioner had assessed. There was no reason to believe, right up until the Queensland Supreme Court case of a couple of months ago, that there was any time limit on the Commissioner's issuing that writ for recovery of the liability which the Commissioner had assessed as being due. Of course, had the Commissioner at that time issued writs actually to recover the money--(Quorum formed) I think it should be noted for the record that the Opposition is attempting to bring quite improper pressure to bear to silence me from revealing the facts about this issue and the Opposition's attitude to it. Members of the Opposition know that there is an event of special significance to the Australian Labor Party Senate Caucus on tonight and they are habitually calling quorums in order to require people to leave that special event. They then threaten members of the Labor Party that unless I cease dropping the truth on the Opposition they will continue to do so. I was saying that had the Tax Commissioner in the late 1970s chosen to issue writs to recover the tax which the Commissioner had assessed as being due, the very first people to complain about it would have been the same people who are complaining about this legislation. They would have complained that it was unduly harsh and so on. Since there has been reference to the judiciary in this case, it is pertinent at this time to quote the Acting Chief Justice of the High Court of Australia. In October 1982 Justice Mason said: I was informed that it is a somewhat unusual course for the Deputy Commissioner to commence proceedings for recovery in a Court relying on a notice of Assessment which is under challenge in proceedings under Pt. V of the Assessment Act. It is to be hoped that this is so. Senator Messner —Who said that? Senator WALSH —Mason, in October 1982. He continued: The institution of proceedings for recovery on a notice of assessment which is challenged in proceedings under Part V may operate oppressively and unfairly to a taxpayer. That is the signal that was coming from the court at the time. If the charge is being made that the administration of the Tax Office was negligent in the late 1970s, whose ultimate responsibility was that? Of course the answer to that is beyond dispute: The ultimate responsibility rested with the then Treasurer, John Howard, who is now the Leader of the Opposition. So if there is any validity in the charge that the administration of the tax law was slovenly at that time, the ultimate responsibility for that rested fairly and squarely with the then Treasurer, John Howard. Another spurious point raised by the Opposition is that it is improper for the Government to legislate on a matter which could still conceivably be resolved by the present appeal to the High Court. Unfortunately for the Opposition, there is a precedent for legislation dealing with matters prior to their determination by the High Court. It concerns the Nilsen case in 1978. The then Treasurer was none other than the same John Howard who has been implicitly accused of slothful oversight of the administration of the Income Tax Assessment Act by his colleagues in the Opposition. For those honourable senators who are interested, his speech can be found on page 2953 of the Hansard of 16 November 1978 and relates to the case on appeal to the High Court of Australia regarding Nilsen Development Laboratories Pty Limited. He stated: . . . the action of the Government in this area was one of those unfortunate things that, because of potential revenue consequences, governments find it necessary to do. He continued later: Very simply, the Government was faced with the real dilemma that in a freak fashion a quite major threat to the revenue was involved. He continued that the Government had the option: . . . either to act as it has done or to find some alternative revenue raising measure, which, I put to the House, would have been a lot less equitable than the decision that was ultimately taken. That is what John Howard said in 1978. I do not know how many members of the Opposition who are across the isle at the moment want to join the rest of their colleagues who have been publicly bucketing the present Leader of the Opposition and the direction which policy is taking under him. Senator Walters —Nobody is bucketing John Howard. Senator WALSH —If Senator Puplick had said that, I might accept it, Senator Walters, but I do not accept it from you. I want now to deal with the amendment moved by the Opposition to the motion for the second reading which, if I may say so, displays intellectual sloth and moral humbug to an unusual degree, even for the Opposition, wrapped up, of course, especially in the debate in the House of Representatives, by sanctimonious rhetoric from some of the more pompous members of the legal profession-a profession, incidentally, sections of which have undoubtedly facilitated tax evasion to an alarming degree over the last 10 years and which has a great deal to answer for. The amendment moved by the Opposition is in three parts. The first part states: . . . Commissioner of Taxation should be subject to the statutes of limitations in the same way as any other citizen of Australia. The fact is that, under this legislation, the Commissioner of Taxation will still be subject to a statute of limitation. The effect of the Bill is that from the time any disputed tax matter has been finalised-that means, conceivably, in the High Court-the Commissioner would have six years, not an unlimited time, as the Opposition asserts, in which to issue a writ for the recovery of the debt which would then be legally settled. The legislation does not, as the Opposition has repeatedly claimed, enshrine an unlimited recovery time. The effective running of the limitation period from the date any dispute as to liability is finalised will more closely equate the position of the Commissioner with that of the ordinary citizen who wishes to recover money owing to him or her. The reason for that, of course, is that when a private citizen takes action to recover money the establishment of proof and the legal machinery actually to recover the debt run in tandem. They are part of the same court action. With respect to taxation liabilities the position is different. Firstly, if there is an appeal a court, or some lower legal body, must make a ruling on whether the Commissioner's assessment is correct or whether the taxpayer's objection is correct. After, and only after, that is done, and on the assumption that the judgment is awarded in favour of the Commissioner, can action for the recovery of the debt owed be taken. So the Opposition's argument is false. The second part of the Opposition's amendment states: . . . a 6 year period from the date of liability falling due should be sufficient time for the Commissioner of Taxation to initiate action for recovery of tax or to take appropriate legal action to safeguard his rights . . . The Bill does not seek to alter the period in which to recover tax debts under State Acts if the High Court holds that the Commissioner is subject to such a limitation period. If the limitation period is held to apply to tax recovery actions, the effect of the amendment is that this period will commence at the time the issue of liability to pay the tax is finally settled. It ties in very closely with the first point. Of course, there is $900m at risk. The reason it is at risk and the reason that phrase is used is the uncertainty as to what final determination the High Court will bring down. That is why the phrase `at risk' is used. Before leaving the second point-I did touch on this before-the Opposition said: `Why didn't the Commissioner use the power available to him under section 204?' That is, why did the Commissioner not take action immediately to recover the money, to collect the debt which he had assessed as being due-that is, the tax liability-prior to the legal resolution of the claim? The answer to that is that there was no perceived legal need to do that at the time these actions were taken and because at that time and afterwards such action was clearly being discouraged by the High Court and would have drawn squeals of outrage from the members of the Opposition who are now purporting to oppose this Bill on principle grounds. The third part of the Opposition's amendment is the silliest and most erroneous of the lot. It asserts: The Bill retrospectively applies an unlimited time for taxation liability to a certain group of taxpayers. It is wrong on a number of grounds. Firstly, because the question of a tax liability is determined in the first instance by the Commissioner and ultimately on appeal by the courts, running as far as the High Court, the question of tax liability is not affected by this legislation at all. What is affected by this legislation is that people who have been found by the Commissioner initially and by the court subsequently to have a tax liability will actually have to pay up pursuant to that tax liability. That is the Government's position-that there should be no doubt that people who have gone through all the legal processes and who have been legally and un- equivocally established to have a tax liability should have to pay. The position of the Opposition is that people who have run through all that, because of some capricious ruling from a court in Queensland, some fortuitous decision that, contrary to all previous experience and expectation, there is a time limit on the issue of a writ for recovery of debt by the Commissioner, should be able to get away with evading the liability which had long been assessed. Indeed, one might question what is meant by an unlimited time for tax liability. This Bill does not retrospectively or prospectively apply any taxation liability. I have two final points. I note with satisfaction and thank the Australian Democrats for their support of the Government on this, thereby ensuring that the Opposition will not get away with it. I also commend Senator Haines for having given a very lucid exposition of what this Bill is about. If the Opposition were to get away with what it is attempting to do tonight there can be no guarantee that at some time in the future in the case of the State of Queensland a special Act might not be slipped through the Queensland Parliament at 24 hours notice limiting to two weeks, two hours or two minutes the time period, the statute of limitations, which is allowable and specifically aimed at the Taxation Commissioner. Senator Watson —Oh, come on. Senator WALSH —I say to the honourable senator that when we are talking about the Parliament in Queensland that is not a possibility which should be ruled out. Legislation has been rammed through the Parliament in Queensland before in a matter of hours. If there are a number of major donors to the Bjelke-Petersen Foundation who would benefit from such legislation, I do not think any sensible person could rule out the possibility of such action being taken; in other words, of the Commonwealth being hostage to the caprice or malevolence of a particular State parliament. Finally, the effect of the Opposition's amendment, if it succeeded, would be that people who devised and used shonky paper tax avoidance schemes in the late 1970s which subsequently were disallowed by the Australian Taxation Office and who were assessed by the Commissioner of Taxation to have a tax liability, who following assessment abused and misused all avenues of appeal and who finally lost in those avenues of appeal and had established incontrovertibly in the legal sense that they had a liability to pay tax, and against whom the Australian Taxation Office is now taking action to recover that debt, would get out of paying the debt which the courts had determined was due. In short, this is a shoddy attempt by the Opposition to rationalise the protection of its friends. It would be extremely naive to believe that the Opposition's stance is not a function of its desire to protect the late 1970s tax avoiders who abound in the Liberal Party from finally having to pay the liabilities which they should have paid years ago. Question put: That the words proposed to be left out (Senator Messner's amendment) be left out. The Senate divided. (The President-Senator the Hon. Douglas McClelland) Ayes . . . . . . . . . . . 26 Noes . . . . . . . . . . . 33 —— Majority . . . . . . . . . 7 —— Archer, B. R. Kilgariff, B. F. Baume, Michael Knowles, S. C. Baume, Peter Lewis, A. W. R. Bjelke-Petersen, F. I. Messner, A. J. Boswell, R. L. D. Newman, J. M. Brownhill, D. G. C. Parer, W. R. Carrick, Sir John Puplick, C. J. G. Chaney, F. M. Sheil, G. (Teller)Collard, S. J. Short, J. R. Crichton-Browne, N. A. Townley, M. Durack, P. D. Vanstone, A. E. Guilfoyle, Dame Margaret Walters, M. S. Hamer, D. J. Watson, J. O. W. Aulich, T. McIntosh, G. D. Black, J. R. McKiernan, J. P. Childs, B. K. Macklin, M. J. Coates, J. Maguire, G. R. Coleman, R. N. Mason, C. V. J. Colston, M. A. Morris, J. Cook, P. F. S. Powell, J. F. Cooney, B. Ray, RobertCrowley, R. A. Reynolds, M. Devlin, R. Robertson, E. A. (Teller)Evans, Gareth Ryan, S. M. Foreman, D. J. Sanders, N. K. Gietzelt, A. T. Tate, M. C. Giles, P. J. Vigor, D. B. Grimes, D. J. Walsh, P. A. Haines, J. Zakharov, A. O. Jones, G. N. Hill, R. Bolkus, N. Alston, R. K. R. McClelland, DouglasWithers, R. G. Richardson, G. F. Jessop, D. S. Sibraa, K. W. Teague, B. C. Button, J. N. Reid, M. E. Georges, G. Question so resolved in the negative. Original question put: That the Bill be now read a second time. The Senate divided. (The President-Senator the Hon. Douglas McClelland) Ayes . . . . . . . . . . . 33 Noes . . . . . . . . . . . 26 —— Majority . . . . . . . . . 7 —— Aulich, T. McIntosh, G. D. Black, J. R. McKiernan, J. P. Childs, B. K. Macklin, M. J. Coates, J. Maguire, G. R. Coleman, R. N. Mason, C. V. J. Colston, M. A. Morris, J. Cook, P. F. S. Powell, J. F. Cooney, B. Ray, RobertCrowley, R. A. Reynolds, M. Devlin, R. Robertson, E. A. (Teller)Evans, Gareth Ryan, S. M. Foreman, D. J. Sanders, N. K. Gietzelt, A. T. Tate, M. C. Giles, P. J. Vigor, D. B. Grimes, D. J. Walsh, P. A. Haines, J. Zakharov, A. O. Jones, G. N. Archer, B. R. Kilgariff, B. F. Baume, Michael Knowles, S. C. Baume, Peter Lewis, A. W. R. Bjelke-Petersen, F. I. Messner, A. J. Boswell, R. L. D. Newman, J. M. Brownhill, D. G. C. Parer, W. R. Carrick, Sir John Puplick, C. J. G. Chaney, F. M. Sheil, G. (Teller)Collard, S. J. Short, J. R. Crichton-Browne, N. A. Townley, M. Durack, P. D. Vanstone, A. E. Guilfoyle, Dame Margaret Walters, M. S. Hamer, D. J. Watson, J. O. W. Bolkus, N. Hill, R. McClelland, Douglas Alston, R. K. R. Richardson, G. F. Withers, R. G. Sibraa, K. W. Jessop, D. S. Button, J. N. Reid, M. E. Georges, G. Teague, B. C. Question so resolved in the affirmative. Bill read a second time, and passed through its remaining stages without amendment or debate. Assent to the following Bills reported: Bounty and Subsidy Legislation Amendment Bill (No. 2) 1986. Wildlife Protection (Regulation of Exports and Imports) Amendment Bill 1986. Science and Industry Research Legislation Amendment Bill 1986 Australian Security Intelligence Organization Amendment Bill 1986. Criminology Research Amendment Bill 1986. Debate resumed from 18 November, on motion by Senator Grimes: That the Bill be now read a second time. Senator GRIMES(Tasmania-Minister for Community Services) —I suggest that it would be sensible to debate the Customs and Excise Legislation Amendment Bill (No. 2) 1986, the Excise Tariff Amendment Bill (No. 3) 1986 and the Customs Tariff Amendment Bill (No. 3) 1986 cognately. The ACTING DEPUTY PRESIDENT(Senator Giles) —Is it the wish of the Senate to debate these Bills cognately? There being no objection, it is so ordered. Senator CHANEY(Western Australia-Leader of the Opposition)(9.00) —The Customs and Excise Legislation Amendment Bill (No. 2) 1986, the Excise Tariff Amendment Bill (No. 2) 1986 and the Customs Tariff Amendment Bill (No. 3) 1986 contain a range of tariff and excise changes in several areas. Without any doubt at all the key areas of interest relates to the very considerable increases in excise on petroleum products which are imposed under this legislation. It is worth remembering that in 1983 this Government opened its batting on the petroleum debate by saying that on accession to government it would reduce the price of petrol by 3 cents per litre. That was, of course, one of the dramatic promises which was broken by this Government. It ranks with the promise that there would be no capital gains tax and the many other promises that have been broken by the Hawke Government since 1983. From the point of view of the Australian economy, from the point of view of the Australian consumer, and from the point of view of the Australian taxpayer the approach of the Government in this area has caused very considerable pain and distress. We have had a massive rise in the excise on petrol. It has risen by 11 cents per litre in the time that this Government has been in office. It has been a dramatic imposition on consumers, motorists and industries. I will come back to that a little later. I will deal firstly with the general scope of the legislation. The most important changes which are incorporated in both the Excise Tariff Amendment Bill and the Customs Tariff Amendment Bill relate to the excise and duty payable on petroleum products. The changes implement the Government's decision to recoup any loss in revenue from the crude oil levy as world oil prices fall, as well as its recent Budget decision to increase the excise rate over and above the amount necessary merely to offset revenue shortfalls. The Opposition will not be voting against this legislation because it implements long standing government policies and recent Budget decision. The Opposition has withheld voting against legislation which would increase the deficit which we already believe is too high, but we are very strong in our criticism of the Government for not passing on to consumers in full dramatic fall in world oil prices which has occurred over the last year and more. The Excise Tariff Amendment Bill deals with the excise on petroleum products as outlined. It also implements part of the Government's resource rent tax package as well as the Budget decision to increase the excise payable on manufactured tobacco. Major provisions of the Customs and Excise Legislation Amendment Bill include a proposal to expedite the payment of rebates of excise duty on exports and domestic free market sales of Bass Strait crude oil, and a belatedly introduced clause, introduced as an amendment in the House of Representatives, which makes it an offence to bring narcotics into Australia, either as a transit passenger or otherwise. Obviously, the Opposition does not oppose that change, although we wonder why it took so long for the Government to bring it forward. The Customs Tariff Amendment Bill (No. 3) covers a multitude of tariff amendments ranging from cultivation machinery and agricultural chemicals, sulphur, electric motors, generating sets, lawn mowers, furniture from New Zealand, books and cheese as well as tariff changes related to the excise changes on petroleum and manufactured tobacco already outlined. As I said, the Opposition will not vote against these Bills for the reason I have said. I will deal briefly with the Customs and Excise Legislation Amendment Bill which contains two major amendments. First, a new mechanism is being introduced to facilitate the payment of rebates of excise on exports and domestic free market sales of Bass Strait crude oil. Second, the Government proposes an amendment at the Committee stage of the Bill in the House of Representatives which would close a possible gap in the law by making it clear that it is an offence to bring narcotics into Australia either as a transit passenger or otherwise. The Bill will not, I think, require a great deal of debate and certainly it will not be opposed by us. I wish to spend a little more time on the Excise Tariff Amendment Bill (No. 2). This is the Bill which legislates the changes in the excise rates on petroleum products and which gives effect to the Government's policy of not passing on any fall in world prices for crude oil. It also gives effect to the Budget decision to increase petroleum excise by 14.4 per cent and to raise a further $625m in 1986-87 and $715m in a full year. That decision alone adds 3c per litre to the retail price of petrol. One does not have to look very far to see why this Government is forced to load motorists with ever increasing prices of fuel, notwithstanding the dramatic drop in the world price. We find, of course, that this Government is steadily increasing the share of gross domestic product which is taken by government. The share of gross domestic product-the share of the totality of what is produced in Australia which has been taken by governments and is being taken in taxes by this Government-is steadily increasing. In 1984-85 the Government took a quarter of our gross domestic product in taxes. It increased the percentage in 1985-86, and it is up to 25 1/2 per cent in 1986-87. These higher excises and the high fuel prices being imposed on the people of Australia are a simple function of this being the biggest spending and highest taxing Government in Australia's history. The Government's policy of not passing on the fall in world prices is widely understood in the community. It is widely known that the price of crude oil crashed from $27.28 a barrel to $13.15 a barrel. The import parity price in Australian dollar terms has fallen from over $43 on 1 January to just under $26 when it was last set on 1 October. In other words, over the course of this year the world market price for oil has dropped from something over $43 a barrel to just under $26 a barrel and yet the price of petrol is continuing to rise because of this Government's taxing policies. If the crash in the world price had been passed on to consumers they would be paying some 11c a litre less for petrol now than they were in January. The Government instead has chosen to increase the excise rate by over 8c a litre. It is interesting to look at the changes that have occurred since the Hawke Government, with its penchant for tax increases, came to power. The excise rate has increased from a little over 6c a litre to nearly 20c a litre. That is a 14c a litre increase over the past 3 1/2 years. The average retail price of super grade petrol as measured by the Australian Bureau of Statistics in its publication `Average Retail Prices of Selected Items' has gone from 42.1c a litre in March 1983 to 51.5c a litre in September 1986. That is a 20 per cent increase over the 3 1/2 years of the Hawke Labor Government, but that 20 per cent increase in petrol prices has to be contrasted with the dramatic decline in the world price and it needs to be clearly understood that the reasons for the increased price is the Government's greed for taxes which of course is fuelled by its ever increasing expenditure. The Government missed a major opportunity to assist Australian competitiveness by passing on the fall in world prices to Australian manufacturing industry and to consumers. It is useful to look at what the increase in excise has meant both to industry and to the average suburban motorist. It is estimated that the increase in excise has resulted in the average suburban motorist paying an additional $5.80 a week in petrol taxes. It is interesting to put that fringe against the tax cuts which the Government introduced this week, three months later than it had promised. The tax reduction for an average wage earner is $8.46 a week. Of course, we have to deduct from that the Medicare tax increase which was imposed at the same time. That reduces the tax reduction to only $7.26. After allowing for petrol tax increases, which is just one of a number of Government imposts, only $1.46 is left. I can only say that it is not surprising that there is such widespread acceptance in the community that the tax cuts are a sham. What the Government has given with one hand it has taken away with the other. It must have been a sobering experience for honourable senators opposite to see the way in which the Australian media have responded to the tax cuts, not least the cartoonists of Australia who have made it quite clear that their perception is that what has been promised for so long is both too little and in fact illusory. Senator Michael Baume —There have been no spending cuts, either. Senator CHANEY —As my colleague Senator Michael Baume points out, there have been no spending cuts. That is the fundamental part of this equation from which the Opposition does not seek to escape but which the Government seeks to ignore. We cannot go on increasing Government expenditure in the way that this Government has without imposing these increased taxes which are such a feature of the Hawke-Keating regime. It may be that the Treasurer (Mr Keating) is not very efficient at lodging his own tax return but he has certainly shown considerable efficiency in producing new ways to impose taxes on the Australian people. He has not only managed to increase this excise tax from a little over 6c a litre to around 20c a litre but also to introduce new taxes such as the fringe benefits tax and the capital gains tax. Again, these are simply a function of the insatiable appetite of this Government for taxes, which is caused by its expenditure policies. I suppose the simplest way of expressing it is that in the first three Budgets one finds an increase in Government expenditure of something like $20,000m. That is a quite extraordinary monetary change. Whilst in real terms one might be able to make that look less, I think most Australians would believe that over the last 3 1/2 years this Government has taken an approach to government expenditure which has left the country in a desperately difficult situation. Senator Michael Baume —A lot of that totally new spending programs. Senator CHANEY —Again my friend and helpmate on this occasion, Senator Michael Baume, points out that much of this is new expenditure. The tax increase has had a major impact on consumers. It has eaten up most of the tax reductions which were delivered this week. But it has to be borne in mind that about 40 per cent of petrol consumption, and higher proportions of other products in this area, are used as an immediate input to production. Any of our employment creating enterprises that consumes part of this 40 per cent of total consumption will have their costs raised by indirect means. Of course, this increase in costs will be passed on to the consumer. So the average Australian taxpayer is not only paying the extra taxation on the petrol he uses but is also paying higher prices for goods that are produced where petroleum products are one input. There is this combined effect which leaves everybody obviously worse off. The Government is always trumpeting its good record on industry restructuring. One can only say that when the Government increases taxes of this sort, which put such a burden on industry, this is a distortion of the industry's choice of inputs and will lead to a less efficient industry structure. In this area, as in so many others, the Government is acting in conflict with its own policies. On the one hand it sets out to create an industry policy structure which will encourage investment, while on the other hand it imposes new taxes on employers-these fuel taxes in particular, along with capital gains and fringe benefits taxes-which discourage the very enterprise it is otherwise seeking to promote. The Industries Assistance Commission second draft report on taxation of petroleum products estimated that the ad valorem excise tax on petrol had risen from 26 per cent in January 1986 to around 80 per cent now-a most extraordinary change in the tax regime and one which this Government cannot be proud of and which many consumers and motorists resent deeply. It is the view of the Opposition that the Government has adopted a shortsighted policy that involves milking the motorist and disadvantaging the consumer. One has to ask why the Government does this. Of course, it goes back to the point I mentioned a few moments ago, the fact that this Government has a great greed for revenue. The Government will cream off from the petroleum sector some $7 billion in 1986-87. The revenue from the petroleum excise will increase by 95.9 per cent to $5.6 billion. The figures really defy the imagination. I think it is beyond the capacity of most of us to understand that the Government can increase the revenue from petroleum excise by $5,600m. This policy of maximising revenue has denied a possible increase in competitiveness to Australian industry and a reduction in our inflation rate which would bring us more in line with our trading partners. The fundamental point is that by adding to the costs of industry in this way, by adding to the costs of all consumers and to the consumer price index generally, we are contributing to the general malaise which afflicts Australia-our lack of international competitiveness. In a government which, through both its Minister for Industry, Technology and Commerce (Senator Button) and, indeed, over the last couple of days through the Prime Minister (Mr Hawke), is talking loudly about the need for Australian industry to be outward looking and internationally competitive, it is farcical that its tax policies, well represented by these Bills before the Senate tonight, are causing us to be even less competitive with those countries that are so busily taking our share of world trade. The Government's failure to take hard decisions to cut expenditures has been the underlying malaise. The fact is that this Government, after talking a great deal about the need to restrain government expenditure, has gone on adding to government expenditure, and has retained its record for the third year in a row of being the highest spending government in our history. That is the direct effect of the Government's policy of milking consumers through the taxation of petroleum products. However, in our national interest there is a further an more important long term effect and that is the negative effect that the enormous taxation grab is having on the oil exploration industry. The Government seems intent on blaming the fall-off in exploration on the decline in petroleum prices, ignoring the effect of the taxation take. The Australian Petroleum Exploration Association's activity and development drilling statistics report for the third quarter of 1986 provides some quite alarming information. Looking at our balance of payments situation and at the potentially high cost of petroleum imports, every Australian has to be alarmed at the drop-off in exploration activity and at the unhealthy state of our vital oil industry; which seems to be becoming more unhealthy month by month. This year it is estimated that 136 petroleum exploration wells will be drilled in Australia. That is the lowest level since 1980. It represents a huge change from recent levels of activity. On-shore exploration activity has dropped by 70 per cent. Off-shore exploration activity has declined, in metres drilled terms, by 63 per cent. On-shore development activity crashed by 90 per cent. Off-shore development activity remained at the same low level of two development wells drilled. Seismic activity on-shore was down 74 per cent and off-shore was down 30 per cent. Those figures are hard to absorb in a debate but they point out quite clearly that there has been an extraordinarily dramatic decline in investment in oil exploration and oil development in Australia. Given our relatively poor prospectivity and given the clear limits on our present reserves, that is a very serious predicament for this country. The figures are a sad indictment on the state of the industry in Australia, and taxation is in large measure the cause of that decline. I will look at what the industry is saying. Esso Australia Ltd has also stated that the combination of low oil prices and high government charges make it unable to justify investment in new exploration and development. It has deferred indefinitely $1 billion worth of planned developments. In most weeks it is possible to see media reporting of job reductions in the industry due to the decline in exploration. Other countries have made major concessions to the oil exploration industry to ensure that it does not collapse in changed circumstances. However this Government is totally unable to come to terms with expenditure, and that appears to have it impossible for the Government to consider effective reductions in industry burdens. Whereas the rest of the world is acknowledging the difficulties of the oil exploration industry and the need to make changes which will lighten the government imposed burdens on the industry, this Government is moving in precisely the opposite direction. What the Government needs to consider are the long term effects of maintaining a taxation regime that discourages exploration. Australia's level of self-sufficiency in petroleum will run down quite substantially over the next few years. From 1995 through to the year 2000 self-sufficiency in petroleum is predicted by some to be as low as 35 per cent. In a year in which there is constant concern about the balance of payments, in a year when we have braced ourselves after a massive deficit last year and when we see the deficit steadily increasing as the monthly figures emerge, the prospect of our having to import a substantially larger proportion of our oil and the prospect that those imports will be at a higher price level than exists at present are a quite daunting element when considering our economic prospects. There is no expectation even within the Government of a short term turnaround in the terms of our trade or in the balance of trade itself. In those circumstances, to be pursuing domestic taxation policies which almost certainly guarantee a worsening of that situation is indeed the height of folly. It represents the running of risks with our national economic welfare in the future which is an indictment of this Government. It is quite clear that, as things stand, we will have to make far more substantial payments to overseas suppliers for the oil that we will need. If we are to avoid that, exploration needs to be encouraged, and an appropriate taxation regime is needed to encourage that. The Excise Tariff Amendment Bill (No. 2) contains a provision relating to the imposition of a resource rental tax on oil production from the Jabiru field. We have been opposed to the imposition of a resource rental tax because it is quite clear that it lessens the prospectivity of oil exploration in the sense that, if the very few good discoveries are taxed on the basis proposed by the Government when it brought forward its proposition for a general resource rent tax, it would greatly lessen the incentive to conduct exploration in this country. What the Government is doing now is trying to introduce a resource rent tax on a gradual post-exploration basis. Of course, on occasions deals can be done with a particular supplier by providing a less punitive regime based on profits rather than on the gross return on the oil. But the general imposition of a resource rent tax on all future prospects would have a quite different effect, and the Opposition is concerned that the Government should not impose such a tax. In the end the most central concern that arises from all this legislation relates to the effect on the consumer of the Government's petrol taxation policies. The effect of those policies, which fly in the face of the undertakings given by Mr Keating, who of course was the resources and energy spokesman, and by the new Prime Minister, Mr Hawke, who promised a reduction in petrol price, effectively has been to milk motorists to the tune of over 8c a litre and indirectly to tax those products that the consumer buys and that use petroleum products as an input. The longer term effect of the decline in exploration is increased payments overseas and thus further problems for our balance of payments. In a crowded legislative week, in which we have a great number of major issues of concern to us, there is probably no single measure which more directly impacts on the immediate welfare of Australian consumers. Of course, most Australians are motorists or are directly involved in some way in meeting the cost of transport. What this Government is doing is adding to the cost of living in this country, to the whole problem of inflation, and rendering the country less competitive. It is doing all of this because of its gross expansion of government expenditure and hence its gross need for expanded taxation. I turn briefly to the Customs Tariff Amendment Bill (No. 3). It contains a series of matters that I will not deal with here. Some relate to the changes in the duty on agricultural chemicals which has been removed. We welcome that. We are concerned about the complaints from the industry that it has been short-changed in the swap. We debated that in debate on another measure. A number of things affect electric motors. I do not believe that I have time to deal with them. There is some concern about the 5 per cent duty which was previously applicable on imports of certain lawnmowers from New Zealand and the implementation of a decision after a review of the closer economic relations agreement with that country. The concern arises from representations we have received from a manufacturer of lawnmowers in Australia who believes that lawnmowers are entering Australia from New Zealand at nil duty, with engines made in the United States of America. I ask the Minister for Community Services (Senator Grimes) to give some consideration to this matter in his response to the second reading debate. It has been put to the Opposition that the mowers have been imported from New Zealand, that they have American motors installed and that those motors would normally carry a duty of 25 per cent. The situation is of considerable concern to the Australian manufacturers who see this as a means of getting around the industry assistance that has been provided for them. I ask the Minister to advise what the attitude of the Government is to this problem which is causing serious concern to an Australian manufacturer. These Bills could be debated at very considerable length, but I see that the time allowed to me has nearly expired. I merely say to the Senate that it is a matter of deep concern to the Opposition that the end effect of this legislation is to exacerbate considerably the serious economic problems that the country faces. When the Government stated in the Budget that part of the role of this Budget was to trim the living standards of all Australians, undoubtedly this legislation was a substantial element in achieving that noble end. I hasten to add that, in using the word `noble', I intend heavy irony. I do not believe it can be a matter of satisfaction to any of us that the economic management of this country is directed to a reduction in Australian living standards. The fact is that that has been rendered necessary by the economic policies of this Government. It has consistently ignored the suggestions and advice of the Opposition, which have been that unless we have a revival of production and industry in this country, unless we cease to rely on the force feeding of higher government expenditure, we will continue to decline economically. The sad fact of the current Budget is that that decline is clearly acknowledged by the Government. The even sadder fact is that this legislation, in common with the rest of the Government's Budget program, offers no hope to the people of Australia. With great reluctance we have to allow this legislation to be passed by the Senate. It imposes heavy burdens on taxpayers. But if we sought to throw out this legislation and thereby greatly to increase the already excessive government deficit, we would be doing an even greater disservice to the people of Australia. So it is with great reluctance that we will see this legislation passed by the Senate. But we believe that it is a clear indication to the Government that its economic policies are failing and that there is a need for a substantial change of economic direction in this country. Senator VIGOR(South Australia)(9.27) —Many of the amendments that are contained in the Bills that are before the Senate-the Customs and Excise Legislation Amendment Bill (No. 2) 1986, the Excise Tariff Amendment Bill (No. 2) 1986 and the Customs Tariff Amendment Bill (No. 3) 1986-can be considered to be housekeeping matters. In fact, they ratify changes to excise rates which have been made in accordance with various industry agreements. However, there are other amendments which involve important social issues. Senator Chaney has spent some time talking about these. The Australian Democrats are particularly concerned with two of these issues. One of them has already been raised by Senator Chaney. The first of these issues is that of good economic management of Australia's resources. The Democrats' solution is not the Chaney solution; it is not the Opposition's solution. I would like to spend a little time looking at that. I do so by discussing the Customs and Excise Legislation Amendment Bill (No. 2) 1986, which is primarily concerned with the adjustments to excise rates on Bass Strait Oil. Oil is a scarce commodity and Australia's known reserves are limited. It is a commodity which we will have exhausted in only three or four generations, with very little regard for the conservation of this resource. It seems to be just a matter of ripping it out of the ground. That is the policy of both the Liberal Opposition and the Labor Government. World prices are currently depressed, but it can be expected that prices will rise in the future, as reserves start to run out. The Australian Democrats consider that the Government's proposal to subsidise exports of scarce resources when world prices are depressed is a commercial folly. We would be better advised to buy on the lows and sell on the highs of the market; if necessary, converting some parts of the assessed national gain into aid for industry. We must have a much longer term look at the way in which economics operates. This Government's short-sighted concern for our current balance of payments and its preparedness to give away scarce assets now in order to satisfy short term cash flow needs is very worrying for the country. It can mean only one of two things: Either the Government is looking only as far as the next election in its financial management of Australia, and it is prepared to sacrifice our long term well being for its personal ambition to be re-elected; or, and this is even worse, Australia is in such a desperate plight that we cannot afford to finance long term investment and that, as beggars, we can no longer choose what we sell and how we sell it, but must sell at all costs. I doubt whether Australia's finances are in such a calamitous state of emergency and suspect that the Government is guilty merely of mismanagement-in fact, of failing to understand the principles of sensible commercial operation and of putting self-interest before the interests of the nation. Oil is not a product. It is not manufactured; it is not renewable. Oil is an inherited resource which has taken millions of years to develop and accumulate. Our current dependence on oil for energy and our spendthrift use of oil has gone a long way towards using those millions of years of accumulated resource within the span of just a few lifetimes. To seek positively to export Australia's dwindling oil resources at a time when the return on such sales is so low is, in my view, commercial and economic folly. The Australian Democrats will be opposing clause 13 of the Customs and Excise Legislation Amendment Bill (No. 2) 1986, which seeks to reduce the excise duty rate on exports of crude oil from Bass Strait in order to encourage greater exports of Australian oil. It also seeks to give the Minister power to vary the excise level by mere gazettal of new regulations. This gives a Minister enormous powers and removes from the Parliament some of the controls which we have on such self-seeking exercises. Australia's demonstrated recoverable oil resources stand at around 230 million cubic metres. The present rate of production of about 185 million barrels a year in 1985 will reduce to 160 million barrels in 1988, falling to 100 million barrels in 1994-that is, assuming that no further major discoveries are made and that present rates of consumption of Australian oil resources are maintained. Under this type of regime our resources will be exhausted during the first decade of the next century-that is, within 15 to 20 years, assuming, as I said, that there are no further discoveries. Senator Chaney's solution is to search for oil in everyone's backyard or anywhere around the place. I believe that we have to go into a program of saving and conserving oil, as well as a program of exploration. The total known recoverable world oil reserves will indeed be exhausted at present rates of world consumption around the year 2030. At present rates of usage, areas such as the North Sea and Bass Strait will be the first major fields to dry up, leaving, in fact, the Middle East with a monopoly upon which the most extortionate price rises could be based. In other words, we will be totally at the mercy of the Middle East oil producing nations. This is really a problem. What we have to do is to conserve our oil and bring more oil in while the price is low. It will never be any lower than it is now. The other matter I would like to raise relates to the Excise Tariff Amendment Bill (No. 2) 1986. This is a matter of considerable social importance and it relates to the tobacco industry in Australia. This Bill is the second Bill in the group we are debating and it seeks, amongst other things, to amend the excise rates on manufactured tobacco. Also, it increases this excise to bring it into line with the excise rates applicable to cigarettes. Tobacco and cigarettes are dangerous products. I think that is admitted by people on all sides of the House. They cost Australia over $400m each year in hospital bed day costs alone, as well as causing horrific costs in terms of medical expenses and working days lost. Sound economics alone would suggest that we should discourage use of these products. The Australian Democrats plan to amend clause 14 (a) of the Bill to increase the excise on all tobacco products to a level which would be a much more effective deterrent to young people using tobacco of any form. It is the young who are particularly targeted by tobacco companies since they are particularly vulnerable when young and have a potential lifetime of addiction ahead of them, which of course means more profit to the tobacco companies. This Bill is also a hotchpotch of sundry amendments, the majority of which concern excise on crude oil and oil products. They remove tariff from oil and gas derived from Ashmore and Cartier Islands and Jabiru as they are now subject to the resource rental tax which replaces the excise. The Australian Democrats support the concept of resource rental tax as a system much more likely to encourage development of marginal oil and gas fields and to increase exploration. The introduction of this tax is a move for which the Government can be thanked. The resource rental tax means in effect that no resource tax is paid until the development costs are recovered. This gives an incentive to establishing more production in these areas. However, we have to use the product more effectively and introduce conservation programs for oil. As I said before, it is a very scarce resource. Other amendments alter the excise on petroleum products to ensure that Government revenue derived from these remains stable in the face of falling import parity prices. They also enact the 3c a litre increase in excise on petroleum brought in by this year's Budget. Members of the Opposition seem to shed a number of crocodile tears and to tear their hair out about these proposals but when it comes to the crunch they vote for them. This increase has been criticised by the Democrats as inflationary in its effects. We agree with Senator Chaney on its bad effect on industry and the standard of living of all Australians. However, on the other hand it promotes conservation of petrol and we have decided on that basis not to oppose it. The Customs Tariff Amendment Bill (No. 3) alters customs and excise rates applicable to a wide range of goods. In the case of refined petroleum products, the rates are altered in line with changes to domestic excise rates following the collapse and partial recovery of oil prices. This Bill brings customs and excise on imported oil into line with the fluctuations in domestic excise dealt with in the previously discussed Bills. Other excise changes bring tariffs on such items as electric motors, books, agricultural chemicals and sulphur for fertilisers into line with changes to bounties previously approved by this Senate. At this point I reiterate the Democrats' commitment to replacing totally tariffs on imports with bounties and subsidies for locally manufactured items and to supporting export industries. Where temporary support is needed for an industry a bounty should be applied. Where long term support is required in the national interest we should look to providing subsidies or government support through purchasing policy, or some other support scheme which will make the market more stable for that industry. We recognise the difficulties this poses in budgetary terms since tariffs on imports generate revenue whereas bounties are paid out of the public purse. However, eventually the two approaches have the same result but bounties and subsidies are much more specific in assisting where it is necessary. It seems much more sensible to apply bounties in the general revenue process rather than to use the blunt instrument of tariffs. Tariffs throw the cost of supporting protected industries on to related industries and, in particular, on to exporters, which causes a large number of problems and, as Senator Chaney has said, makes us uncompetitive. This deforms Australia's industrial investment market and particularly weakens our export sector so that eventually the whole community suffers. Our balance of payments figures go up because we are exporting less, thus a vicious cycle sets in. We are currently in that type of situation because of the policies followed by successive failing governments in this area. It is better to count the cost cleanly and to spread the cost of protecting important sectors of the Australian community over the whole community, and to support only where needed and to be very careful about that support. Even better, I would expect that a revenue earning tax on money leaving the country could be offset against the cost of bounties. This would stop speculative money, which currently washes in and out of Australia, destabilising the dollar and at the same time destabilising our export industries. We need to do something about this to protect ourselves against the general wash of money around the world at various times, such as window dressing for the insurance groups, and money laid off from various speculative measures in the stock exchange. A tax on money leaving the country would also tax net imports, thus protecting export industries dependent on imported components and simultaneously encourage export-related industries in Australia. I believe that this would be a much better measure than the types of measures we have in this legislation. Despite all the above arguments I commend the Government for its moves towards replacing tariffs with bounties. It is moving in the right direction. It seems to be learning. However, Australia's balance of payments crisis demands more decisive action. Action has to be taken to lower high interest rates. Action has to be taken to control the high foreign capital inflows which discourage productive investment. Action must be taken to build strong secondary and tertiary industries to exploit our natural resources and inventiveness in a much better way. I commend the Government on the positive way in which it is encouraging closer economic relations with New Zealand. I feel that the small problems, such as the one raised by Senator Chaney about lawn-mowers imported from New Zealand, can be solved by suitable measures. I join Senator Chaney in asking the Government to answer the queries about what the Government intends to do to solve this problem. The Australian Democrats support this legislation and these amendments and endorse wholeheartedly the move to form a common market in our region with New Zealand and to extend this common market beyond New Zealand to include our South Pacific neighbours. I believe that we have a future in the South Pacific and Indian Ocean region and we have to develop the types of common markets that will make Australia an active trade component within a very active part of world trade. This is a very important step which the Government must take. It must consider this measure rather than concentrating on increasing taxes more and more and increasing our bureaucracy, which seem to be the main things it has been doing while it has been in office. I will not repeat the arguments that have been put forward by Senator Chaney but just finish off by saying that these excise measures will add to the costs for every Australian. In fact, some of the measures-the ones that we will be opposing by amending or deleting clauses-act to the long term disadvantage of the Australian economy and the Australian people. Senator GRIMES(Tasmania-Minister for Community Services)(9.45) —in reply-I thank honourable senators for their contribution to this debate. I would not, for one minute, attempt in summing up on this legislation to answer or deal with all the problems raised by Senator Vigor. I just make the comment that there are two positions in opposition in this Parliament: One is the position of those in opposition who may, some time, however far away it may be in government; the other is the opposition of those who will never be in government. We have had a very good demonstration of that tonight in comparing the speeches of Senator Chaney and Senator Vigor. Quite frankly, I am not interested in the quick fix, sudden solutions to all our problems which were put by Senator Vigor tonight. I just want to make some general comments about what has been said. Senator Vigor —They were anything but quick fix; they were long term. Senator GRIMES —There is nothing too long term about anything the honourable senator suggests in this place because he will not be here long enough to look at the long term effects of what he is suggesting. For all the huff and puff we hear in this place about Australia's petrol prices and excise policies, the simple fact of the matter is that Australian petrol prices have fallen by about 6 per cent in real terms since this Government took office. Comparing petrol prices in this country with those in other Organisation for Economic Co-operation and Development countries-Senator Vigor and Senator Chaney know this-we are amongst the lowest priced countries, and we are amongst the lowest taxed countries in the world in this area. In fact, the last time I looked we were about second or third lowest in prices and about third or fourth lowest in the sorts of taxes we apply to petroleum products in this country. We, as a government, have made no bones about the fact that we have had to make some difficult decisions. We have had to adjust the excise taking into account the general price decreases in crude oil across the world scene. Therefore, we have had to adjust excise prices up. But the simple fact of the matter is that the costs of petroleum products to people in this country are still low by international comparison. If Senator Vigor and others say that we have pitched our excises too high, they have got to suggest some other areas in which we can raise that sort of revenue. We have never pretended that this is other than a means of maintaining government revenue. We have not tried to kid the community or the Opposition. It does not help if Opposition senators or Australian Democrats senators rant and rave, in the way they do, but make no suggestions about alternative means of raising revenue. That happens in this place regularly. Senator Vigor —Are we suggesting transfer pricing be attacked? Senator GRIMES —Oh, for God's sake! Senator Vigor asked: Is allowing the export of crude oil incompatible with Australia maintaining an acceptable level of petroleum self-sufficiency? My answer to that, quite simply, is no. In judging the Government's decision to allow the export of crude oil and the impact on Australia's level of oil self-sufficiency, it is necessary to place in perspective the amount of oil involved. Australia's export surplus from Bass Strait is only anticipated to last for the next few years and, in total, is not expected to exceed in volume terms an amount equal to about six months of Bass Strait production. The Government believes that its policy of allowing exports of crude oil surplus to domestic requirements represents a fair balance between the interests of the Australian community and the oil industry, which must be adequately rewarded and have the opportunity to market any oil discovered if it is to continue to invest in the risky business of oil exploration in Australia. One gathered from Senator Vigor's remarks that there was probably no reason at all to continue exploration in Australia. He seems to consider that there is not going to be any further discoveries of oil. It just reminds me of the days, some 25 or 30 years ago, when it was believed that Australia had no oil. Speeches were made in this place and in another place stating that Australia had no oil and we had to do something about it. In fact, we have considerable oil reserves and we ought to consider doing something about that. We have to conserve the oil and have a balanced energy policy. That is what we are trying to do but it does not help to suggest that we should shut off all exports and clamp down on the activities of those who are already operating. Senator Vigor —You should not subsidise them. Senator GRIMES —For God's sake, what does the honourable senator mean by saying that we should not subsidise the companies? He is suggesting that we should shut down oil exploration because he and his colleagues believe that we should have not only a conservation policy but also a preservation policy. (Quorum formed) I thank the Senate. Senator Chaney and others mentioned the fall in exploration activity. There has been a fall. One would be surprised if there had not been in the light of the reduction in crude oil prices throughout the world. We have reacted to this reduction in activity by removing the excise on off-shore production for produced crude and lowering the top marginal rate on old oil from 87 per cent to 80 per cent. This is expected to place the industry in a more favourable position to increase levels of activity with consequential improvements in profit-building, employment and involvement. Senator Chaney raised the matter of importing lawn-mowers from New Zealand. In the light of Senator Vigor's comments I understand that that is of very great moment. Duties on goods from New Zealand are governed by the provisions of the Australian-New Zealand closer economic relations agreement. The purpose of the agreement is to accord duty-free trade between the two countries. In the normal course of events lawn-mowers would have been duty-free several years ago. However, an intermediate goods situation has existed between the countries. New Zealand has had access to duty-free imported mowers. Previously Australian manufacturers had to pay duty at 35 per cent. This has now been reduced to duty at 25 per cent. This has caused the matter of duty on New Zealand lawn-mowers to be reassessed. Because the disadvantage has been reduced the duty has had to be removed. That explains completely the situation. Finally, we have heard some very interesting, very esoteric and very complicated speeches here tonight, particularly from Senator Vigor, who as usual has presented us with a blueprint which, if implemented tomorrow, would solve all of Australia's economic problems then. Senator Chaney, in a much more measured and sensible speech, has realised that things do not happen quite like that, that change sometimes has to be gradual, even for those of us who are revolutionaries. That being so, I thank honourable senators for their contributions tonight. I thank them for their support for the legislation and I thank them for the realistic approach that they have taken, which is that in fact this legislation is sensible in the present economic circumstances. I appreciate the contributions they have made to the long term interests of this country, and I appreciate that in the next few years they will put forward their programs which will solve all our problems and that we will have no difficulties at all in a few years. We have contributed to the economic welfare of this country by making a sensible and balanced approach, and I am glad that those opposite have recognised this. Question resolved in the affirmative. Bill read a second time. Clauses 1 to 12-by leave-taken together, and agreed to. Clause 13 (Rebate of duty in respect of stabilised crude petroleum oil). Senator VIGOR(South Australia)(9.57) —The Australian Democrats will be seeking to disallow clause 13 of the Customs and Excise Legislation Amendment Bill (No. 2) 1986. This clause enables the Government to vary excise rates on export of crude oil from our Bass Strait oil fields, merely by gazetting such changes by regulation. The Government has signalled its intention to lower these excise rates to encourage greater levels of oil exports while world oil prices remain depressed. Despite the endeavours of Senator Grimes to convince us that this is not an important measure, we are still selling, even if it is only six months of Bass Strait oil, a reasonable amount of oil at a lowered rate. If we simply held on to it for a little longer, we could get a higher price, and that makes quite a bit of sense. The Australian Democrats consider that this move by the Government reflects its commercial incompetence in the management of Australia's financial affairs. I believe that any trader worth his salt works on the principle of buying when the market is low and selling when the market is high. Our oil is a scarce resource. Oil is a commodity which, more than any other, should be conserved while export prices remain uneconomical, and it should be reserved for the time when oil will undoubtedly be scarce, and no one here denies that. The Minister for Community Services (Senator Grimes), in his reply to the second reading debate, said that I had claimed that there was likely to be no more oil discovered in Australia. That is not the case. I recognise that we have a large number of areas in which oil could be found, but that is not a reason for rushing helter-skelter into using it and trying to export it. The Australian Democrats deplore this measure of economic and resource mismanagement and we deplore the further attempts to sell off cheaply the birthrights of all present and future Australians. (Quorum formed) Senator CHANEY(Western Australia-Leader of the Opposition)(10.01) —The arguments which have been put by the Australian Democrats for the non-support of this clause are only very superficially attractive. Senator Sanders —Getting a higher price later is superficially attractive! Senator CHANEY —I must say that if I wanted to put someone in charge of Australia's affairs the honourable senator would be at the very end of the queue. The sort of bushy approach that is adopted by the honourable senator from Tasmania is reminiscent of the Club of Rome. I have little doubt that there is only one person left in the world who still believes what the Club of Rome set down 10 years ago-namely, that we face a world which will run out of resources. Senator Sanders is a wonderful little fly in aspic. He sits there, locked into the past. Whilst we have the inanities that we have been hearing from him, we will never get any sense in this country. In the days of the late Sir Robert Menzies we had an embargo on the export of iron ore. That was based on the proposition that there was a great shortage of iron ore and that we would never really be able to be sure of our supply. That attitude is generations old. It is a sad fact that 10 or so years ago a group of people who came from Senator Sanders's school sat down in Rome and drew up a whole lot of nonsensical predictions which have been proved to be totally wrong. What we get from people like Senator Sanders is the suggestion that, if we place as our first priority the idea that resources must be conserved because they are scarce, we will help solve the long term problem. The reality is that ever since the Club of Rome made its predictions it has been proved utterly wrong by the fact that, with an increase in prices for resources, there was a massive exploration and production effort. One of the parts of Australia's current problem is that we now have a surplus of most of the commodities in which we deal. If we are to encourage oil exploration in Australia, we have to accept the fact that exploration money, whether it is Australian or foreign, is mobile. It will be invested in oil exploration where the best returns are likely to be achieved. That may be in China, New Guinea, North America or Australia. The idea that we can say to people who are prepared to put up money and search for and discover oil that, once found, must be kept in the ground until some moment when apparently politicians or bureaucrats will determine that the price is right, is to fly in the face of any hope that we in this country have of attracting exploration expenditure. I am sorry that the points have been raised in such a harum-scarum way by Senator Sanders because they do less than justice to the arguments that were put by Senator Vigor. Senator Vigor's argument is 100 per cent wrong. If accepted, it would mean that Australia would become an even less attractive place for oil exploration. There are a number of things that make this country unattractive for oil exploration. As I said before, one is the lack of prospectivity for oil. We are a difficult target and therefore we are less attractive than some other areas. That is one of the reasons why we see Australian explorers, among others, looking elsewhere. It is a difficult area; we accept that. It is important that we attract exploration money to this country. A second area of concern and one that is man made and can be changed is the taxation regime. As I said in my speech on the second reading, the very high taxes on oil represent a disincentive to explore for oil in this country. A third area that would amount to a disincentive would be if we said to people `Come to Australia and explore', or if we said to investors: `Put your money into oil exploration, but do not expect to be able to produce the oil when you find it unless the Government decides that it is timely'. There is no way in which that would be attractive to the sort of investment which is required if we are to maintain self-sufficiency in oil. The fact is that the oil pricing policies of the Fraser Government represent a very important plus for Australia. They succeeded in restoring the faith of oil explorers in this country as a target. We had useful finds on a regular basis during the 1980s, not the sorts of finds that we would hope for, the hundreds of millions of barrels that would give us an easy self-sufficiency, but valuable pools of oil have been found and it is a really high national priority, in the Opposition's view, to be attracting more exploration in this country so that we can have some hope of continuing self-sufficiency. I think Senator Vigor put his point forward very seriously, and I was rude to his colleague Senator Sanders in a way that I would not wish to be rude to Senator Vigor because he put his argument in a much more sincere and straightforward way. I say to Senator Vigor that, in the Opposition's view, to achieve his objective one needs to take precisely the opposite view. To achieve the objective we have, which is to ensure continuing oil self-sufficiency and to avoid the stark problems of even greater balance of payments problems that we face if the present oil taxation regime continues, we must, as the present Government is doing, permit people who have put their money into the industry to see a return on that money. That is the simple argument which leads us to move away from the superficially attractive idea that we lock up what oil we have in Australia now and conserve it as long as possible. That, I think, is a formula for just long, slow strangulation of our industry. We are saying that the Government is right to be permitting the sort of flexibility that it is permitting with respect to exports. We are very sorry that it allies with that correct approach an approach which puts on the industry taxes which in a sense cancel out the positive attractions for investment that this part of the Government's policy represents. We will not be supporting the amendment moved by Senator Vigor. No doubt the Government will not be supporting it either. I make a plea for an end to the sort of luddite, antiquated approach represented by the sorts of interjections we have had from Senator Sanders who, if he had his way, would have us moving back into a new dark age. Senator GRIMES(Tasmania-Minister for Community Services)(10.08) —The Government, to nobody's surprise, will not support the approach taken by Senator Vigor. I think it is very sad to see people in this place who claim to be radical taking such a conservative approach, which is the conservative approach taken by Senator Sanders. Senator Sanders —Conservationist, you mean. Senator GRIMES —It is not conservationist; it is preservationist. Senator Sanders wants us to lock it up. Senator Sanders —For you and your kids. Senator GRIMES —Perhaps I can say this: Whose kids are going to use the oil? Senator Sanders —Hopefully our grand- children. Senator GRIMES —Our grandchildren? What about our great-grandchildren? Why not keep it for the great-grandchildren or the great-great-grandchildren or the great-great-great-grandchildren? This is a silly, nonsensical approach. It is not helped by Senator Chaney who goes on as though we are a huge taxing country as far as oil production is concerned. In fact, in that area Australia is the second or third or fourth lowest taxing country in the world. We really have the situation here of these people pretending to be radicals when in fact they are conservatives. Senator Chaney spoke about the horrendous taxing policies of the Government, but in fact in this regard we are a low taxing country. I should point out to Senator Vigor, who as Senator Chaney said at least put up a serious argument and not a hyperbolic and rhetorical argument, as Senator Sanders did, that it has been Government policy since 1983 to pay rebates on free market sales of crude oil. This has been done since 1983 by way of regulation. Tonight we have heard from Senator Vigor on this. He has had many opportunities to object to this policy in the past but he has not. He has only just discovered it. He sat down in his office with all that paper around him and said: `Oh, here is a good argument. I will use this argument tonight'. It has been going on since 1983 and he has not said a word about it in all that time. Suddenly, tonight, he has discovered the great nirvana. It is absolutely typical of the nonsense that goes on in this place. Senator Vigor —I was not here in 1983. I was elected in 1984. I have been misrepresented. Senator GRIMES —I said it has been going on since 1983. The honourable senator has had opportunities long before tonight, but he has just suddenly discovered it. Tonight he has given us a lecture on how to solve not only our economic problems but also the world's economic problems. I am sorry, but we do not believe him, the electorate does not believe him, and the Australian Democrats' preselection committee in South Australia does not believe him. That is what it is all about. Earlier this year the Government became concerned about the revenue and the balance of payments impact of reduced oil production that occurred together with the reduction in oil prices. It should be noted that the value of crude oil exports in the 12 months ending December 1985 was second only to the value of coal exports in earning foreign exchange for Australia. That is important. If the honourable senator wants to talk about our balance of payments, he has to consider that oil played a part in that. However, in the period April to June 1986 only one export cargo was made and domestic crude oil production levels fell accordingly. In response to this situation the Government has introduced further concessional excise arrangements for free market sales to stimulate a resumption of these types of sales. That is a sensible thing to do. Since that has happened, Bass Strait production levels have increased. Sales have totalled some 14.7 million barrels, to the value of $288m. So that has had an effect on our balance of payments. These sales will result also in an increase in Government crude oil excise revenue of about $170m. It may be that our good colleagues sitting there say that this is all nonsense, that what we should do is lock it up, put a tap on all the wells, not use the oil or sell it, so Senator Sanders's great-grandchildren may use it. Senator Sanders —It certainly will not be there at your rate of progress. Senator GRIMES —There are some of us who believe that in this strange world of ours we must accept that there are finite resources and therefore we have to look at alternatives. The problem is that the honourable senator does not accept alternatives, except for the stoves he sells. They are very efficient, but in order to use them to heat houses one has to chop down trees. This measure is about taking a sensible and balanced approach to the use of our resources, including our oil resources. That is why we take the sensible and balanced approach that we do. If the honourable senator wants to shut down the shop, if he wants to put a tap on every well in the country, if he wants to say that what we have we should hold forever, or until his great-grandchildren need it, he can take that approach. But that is not the approach of most people in this country and it is not the sensible approach of people who realise that this is an evolving world in which we will develop future facilities and use the brains, the sense and the resources that we have. If the Democrats want to take the extremely conservative approach that no, we should not use any of the resources we have now despite the fact that one of our problems is that the prices we can get for our resources are so low because, as Senator Chaney says, there is an excess of them, and if they want to say that the world has this terrible shortage and that we should shut up shop and not use any of these things, they can do so. I finally say that I can remember Senator Mason going to Queenstown in Tasmania-it is a place I like; copper is produced down there-and when he came out of Queenstown he said: `I have the solution to Queenstown's problems. It should be the area which produces solar panels for the whole of the South Pacific'. He suggested that Queenstown's problems were suddenly going to be solved by that area producing solar panels for the whole of the South Pacific. The people of Queenstown laughed, the people of Tasmania laughed, and the people of the South Pacific laughed-and they will continue to do so as long as the Democrats indulge in that sort of off the cuff solution to the world's problems and as long as they come into this place and say: `You are all wrong; you are all mad; I have got the solutions to your problems and unless you do this the world will fail and fall down'. As long as the Democrats take that approach they will remain where they are now-a small party whose only luxury is that it can promise what it likes in the absolute certainty that it will never have to carry out those promises. For that reason, I reject the approach taken by Senator Vigor. The CHAIRMAN —I call Senator Sanders. Senator Grimes —Oh, my God! What have I done? Senator SANDERS —(Tasmania) (10.17)-What Senator Grimes has done is to inject some common sense into this article, because I am afraid that, as usual, honourable senators in this chamber are completely out of touch with the real world, the world of finite resources and real consequences. Here it is all sham, all harangue and all abuse and ridicule of individuals. What we should be on about is the real world outside these hallowed halls, where real people live and have to worry about the future. I will put my argument into short words for honourable senators, in a little homily, because I know that some honourable senators do not really want to understand this. There is a saying that goes: Mother nature always bats last. One can express that any way one wants-in American baseball terms or in cricket terms. The point is that honourable senators can waffle on all they want about their technological fixes and about how we can always find something new-but the environment has the final say. The Club of Rome has never been proven wrong on that point. The Club of Rome said that if we continue to distort the world's ecological systems, we shall enter into an overshoot collapse situation. (Quorum formed) I was speaking of the Club of Rome and the predictions it made about overshoot collapse. It is overshoot collapse of the environmental system that we are most worried about. That comes about from the attitudes which have been expressed in this chamber over the years, tonight, yesterday and in the nuclear debate. Basically they go: `Lets's flog it off now. Forget about the consequences. Somehow technology will bail us out'. It will not. Already we have seen that the ozone layer is becoming depleted because of the addition of chemicals, fluorocarbons and the results of plastic manufacture, into the upper atmosphere. What do honourable senators say about that? Do they say that it is a laughing matter and that we can get along without an ozone layer? Do they even understand what an ozone layer is? I doubt it. If so, they would say that it was just something we invented because we had no concrete suggestions and we were living in cloud cuckoo land. We did not invent these problems and they do exist. There is massive pollution in the Rhine River and it has killed all the fish and aquatic life in it in just the last month because of the over-production and overdevelopment of the chemical industry. Acid rain blankets Europe and parts of North America and the list goes on and on. What we are doing is ignoring the lessons that our ancestors knew very well and that is that one wastes not and wants not and that a stitch in time saves nine. It is very easy to understand such sayings and honourable senators ought to understand what they mean. They mean that we do not spend more than we have; we do not harvest more than we plant. In other words, we plan for the future. This outfit is just cantilevering itself out over the abyss with its business as usual operation. Senator Mason —What about the one about casting your pearls before swine? Senator SANDERS —A number of pearls are being cast in this chamber. I would hesitate to call honourable senators swine but certainly a lot of truths are being said and, as usual, they are being ignored in this place. The Leader of the Opposition (Senator Chaney), who is not even in his own seat, is trying to interject. Senator Mason may like to elaborate on what I say. He had an excellent idea which was met with abuse in this chamber. Senator Coleman —Mr Chairman, I raise a point of order. I just ask whether Senator Sanders is speaking to a Bill and, if so, which one because I am damned if I can follow what he is saying. The CHAIRMAN —Order! The question is that clause 13 stand as printed. Senator Sanders's remarks are on the periphery of that clause. Senator SANDERS —Clause 13 has to do with the preservation of oil and resources. Senator Coleman —It has nothing to do with the ozone layer. Senator SANDERS —The honourable senator has certainly got snarky since she had to vote against her policy last night. Senator MacGibbon —Mr Chairman, I raise a point of order. Senator Sanders is engaging in irrelevancy and tedious debate. The CHAIRMAN —Senator Sanders is speaking to clause 13. He is in order in what he is saying so far. Of course he must confine himself to the point of clause 13; he must not get too wide of the mark. Senator SANDERS —Thank you, Mr Chairman. I am just covering the points that were brought up by previous speakers, including the Leader of the Opposition and the Minister for Resources and Energy (Senator Gareth Evans). A derogatory reference was made to my colleague Senator Mason who suggested that Queenstown, Tasmania, be used for the manufacture of copper sections of solar water heaters and that is an excellent idea. The mine is closing and there is no use for it at the moment because nobody listened to suggestions such as those made by Senator Mason which would diversify the industry in the area. Nobody listens to common sense in this place; very few listen outside. I am afraid-I take no pleasure in the fact-that we will come to find that the Club of Rome was correct, that those who worry about the environment are correct and that we should have saved our resources for the future. Question put: That clause 13 stand as printed. The Committee divided. (The Chairman-Senator D. J. Hamer) Ayes . . . . . . . . . . . 58 Noes . . . . . . . . . . . 6 —— Majority . . . . . . . . . 52 —— Archer, B. R. Jones, G. N. Aulich, T. Kilgariff, B. F. Baume, Michael Knowles, S. C. Baume, Peter Lewis, A. W. R. Bjelke-Petersen, F. I. MacGibbon, D. J. Black, J. R. McIntosh, G. D. Boswell, R. L. D. McKiernan, J. P. Brownhill, D. G. C. Maguire, G. R. Carrick, Sir John Messner, A. J. Chaney, F. M. Morris, J. Childs, B. K. Newman, J. M. Coates, J. Parer, W. R. Coleman, R. N. Puplick, C. J. G. Collard, S. J. Ray, RobertColston, M. A. Reid, M. E. Cook, P. F. S. Reynolds, M. Cooney, B. Richardson, G. F. Crichton-Browne, N. A. Robertson, E. A. (Teller)Crowley, R. A. Ryan, S. M. Devlin, R. Sheil, G. Durack, P. D. Short, J. R. Elstob, R. C. Sibraa, K. W. Evans, Gareth Tate, M. C. Foreman, D. J. Townley, M. Gietzelt, A. T. Vanstone, A. E. Giles, P. J. Walsh, P. A. Grimes, D. J. Walters, M. S. Guilfoyle, Dame Margaret Watson, J. O. W. Hamer, D. J. Zakharov, A. O. Haines, J. Powell, J. F. Macklin, M. J. (Teller) Sanders, N. K. Mason, C. V. J. Vigor, D. B. Question so resolved in the affirmative. The CHAIRMAN —Order! It being after 10.30 p.m., under sessional order, I put the question: That the Chairman do leave the chair and report to the Senate. Question resolved in the affirmative. The Chairman having reported accordingly- The ACTING DEPUTY PRESIDENT(Senator Giles) —The question is: That the Senate do now adjourn. Question resolved in the affirmative. Senate adjourned at 10.32 p.m. The following paper was tabled: Public Service Act-Determination 1986 No. 89.