Wednesday, 18 March 1987 The PRESIDENT (Senator the Hon. Kerry Sibraa) took the chair at 10 a.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled: The petition of the undersigned citizens of Australia respectfully showeth: That there is a need for an independent and Multi-Cultural 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 Powell (from 168 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 new Fringe Benefits Tax on the following grounds: 1. its severe and damaging effect on business confidence, investment and incentive, especially in the rural, mining and small business sectors. 2. its capacity to seriously worsen unemployment through the additional costs it imposes. 3. its extremely negative impact on the competitiveness of export industries at a time when the nation desperately needs to improve its trading performance. 4. in that it may compel many honest and 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. We therefore most earnestly petition you to repeal its Tax Legislation forthwith. Your petitioners, as in duty bound, will ever pray. by Senator Brownhill (from 24 citizens). To the Honourable the President and members of the Senate in Parliament assembled: The humble petition of we the undersigned citizens of Australia respectfully showeth that: The ever expanding exorbitant interest rates are casting farmers and city dwellers along with their wives and toddlers into dust and mud stricken roads, as they plod along without success, for alternative accommodation. Your petitioners therefore pray that your House eliminate this outrageous and unjust castigation of our population which is leading to the downfall of this country. And your petitioners, as in duty bound, will ever pray. by Senator Brownhill (from 24 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; 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: 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 17 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 Brownhill (from 15 citizens). To the Honourable the President and members of the Senate in Parliament assembled: the humble petition of the undersigned citizens of Australia respectfully showeth: (1) That 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 66 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of the undersigned respectfully showeth: (1) That the Government's proposed Identity Card is the greatest threat to civil liberties in the history of this country. (2) That the I.D. card will be a costly and unnecessary method of attacking tax evasion and social security fraud; and (3) That the proposal will impose yet another bureaucratic burden on the business sector. Your petitioners therefore humbly pray that the Senate reject the Government's legislation to introduce the Australia Card or any other identity card system. And your petitioners, as in duty bound, will ever pray. by Senator Parer (from 236 citizens). To the Honourable the President and Members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia showeth: (1) That we are totally opposed to the introduction of the Labor Government's Australia 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 Reid (from 42 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 Brownhill (from 46 citizens). To the Honourable the President and Members of the Senate in Parliament. The petition of the undersigned shows that Raoul Wallenberg was arrested by the Russians in Budapest on January 17th, 1945. He has been sighted on numerous occasions since, the last in 1986. Your petitioners pray that the House of Representatives in Parliament assembled should approach the Soviet Foreign Minister to seek the release of Raoul Wallenberg and his return to Sweden. And your petitioners, as in duty bound, will ever pray. by Senator Haines (from 52 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) Bill 1985. And your petitioners, as in duty bound, will ever pray. by Senator Macklin (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: Moreton Island is an invaluable natural resource for Queensland and the world and that mining on Moreton would gravely compromise its unique flora and fauna and its outstanding recreational, archaeological and scientific values. Your petitioners most humbly pray that the Senate in Parliament assembled should urge the government to use its proven constitutional powers to halt sand mining on Moreton by supporting the Moreton Island Preservation Bill. And your petitioners, as in duty bound, will ever pray. by Senator Macklin (from 160 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned shows: (a) The Film Censorship Board has classified the film `Hail Mary' for general exhibition subject to an `R' (Restricted) rating. (b) This film is a blasphemous and pornographic attack on the person of Jesus Christ, His Mother Mary, St. Joseph and the Archangel Gabriel. As such it is extremely offensive to Christian belief and values. (c) We believe that this film breaches regulation 13.1 (a) and (d) of the Customs (Cinematograph Films) Regulations in that it contains blasphemous material. Your petitioners pray that the Senate, in Parliament assembled, should: (a) Ban the film. (b) Improve the quality of censorship out of respect and reverence for the spiritual values of a sizable segment of the population and for the good of the nation. And your petitioners, as in duty bound, will ever pray. by Senator Reid (from 285 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Tasmania respectfully showeth that your petitioners are gravely concerned for the future stability of the Tasmanian forestry industry as a result of continued attempts to disrupt our vital industry. We humbly draw your attention to the continued efforts by the Tasmanian Government and all those persons who derive their livelihood from the State's forestry industry to abide by guidelines established as a result of several Environmental Impact Studies, State regulations and a Memorandum of Understanding between the Commonwealth and Tasmanian Governments. Your humble petitioners therefore call upon the Federal Parliament to do everything possible to ensure stability of our industry by informing the people of Australia of the moves being taken by the forestry industry in Tasmania to preserve the environment and to farm our forest resources for the mutual benefit of all Australians now and in the future. And your petitioners, as in duty bound, will ever pray. by Senator Walters (from 24 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth: That we consider the decision to curtail the landscaping at the New Parliament House is a false economy. The landscaping is an integral part of the building and environs which together will be one of the world's most exciting examples of architectural design this century. Incomplete it will be a monument to our lack of resolve as a nation. Your petitioners most humble pray that the Senate in Parliament assembled, should urge the Government to: (a) Reconsider the reinstatement of the landscaping according to the present plans. (b) Consider savings which may be made in other areas to ensure this may be achieved. And your petitioners, as in duty bound, will ever pray. by Senator Reid (from 17 citizens). Senator RICHARDSON(New South Wales) -by leave-I present to the Senate the following petitioning letter bearing 22 signatures requesting that the widespread public opposition to plant variety rights be recognised. Dear Senator Richardson . . . I have raised this petition in a matter of days amongst friends. And the opposition against any such Act being passed by Parliament, or needed by the Australian community is strong to say the least. Australia is a Wealth of Flora and is more likely to stay that way through environmental conservation than patent monopoly of large companies. You may think I am only considering our bushland but I am talking about our farm lands also. I and the others employ you not to allow a Bill such as this to be passed. Petitioning letter received. Petitions received. Senator MESSNER(South Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate-- (a) notes with concern the very large body of legislation which has not yet been presented to Federal Parliament but for which Press announcements have been made by the Federal Government and which includes the following: (i) the introduction of the imputation system of company tax, (ii) changes to the capital gains tax legislation, (iii) changes to the fringe benefits tax and income tax substantiation legislation, (iv) changes to the eligible termination payment provisions of the income tax law, (v) the introduction of operational standards for superannuation funds; and (vi) changes to the domestic income tax law to disallow companies from claiming business outlays as a deduction in Australia if the same deduction is claimed in an overseas country; (b) condemns the Government for the delay in presenting these legislative matters to Parliament as it is causing considerable uncertainty and confusion in the community; and (c) requests the Government to introduce the proposed taxation legislation into Parliament as soon as possible. Senator MICHAEL BAUME(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes the recent report from the Opposition's Waste Watch Committee outlining wasteful research grants by the Hawke Government and calling on the Government in its coming May mini-Budget to impose the same restraint on its grants for academic research as it is now requiring the rest of Australia to bear; (b) rejects the criticism by the Minister for Science (Mr Barry Jones) of the Waste Watch Committee's opposition to grants for such matters as `motherhood in Ancient Rome' at this time of economic crisis for Australia; (c) notes that the report to the Prime Minister of the Australian Science and Technology Council, tabled in the Senate on 18 March 1987, effectively supports the Waste Watch Committee by being critical of the criteria for existing research grants which it says `has prevented the overall research effort from being focused on areas of research of greatest potential value to Australia' and that `a greater proportion of Australia's basic research should be in research fields that have the potential to contribute to the nation's industrial capacity'; and (d) commends the Opposition's Waste Watch Committee for its efforts in seeking to stop the wasteful use by the Hawke Government of taxpayers' funds. Senator MACKLIN(Queensland) —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 alter the Constitution to extend the duration of the House of Representatives and the terms of service of senators. Senator SANDERS(Tasmania) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes with alarm that the Federal Government is considering allowing the release of contaminated water from the Ranger Uranium Mine into the environment of Kakadu National Park; (b) further notes that the Northern Land Council (on behalf of traditional owners) and the conservation movement have consistently opposed release of water to Magela Creek on the grounds that there is no proof that such an occurrence would not be detrimental, in the short or long term, to the wetlands of Kakadu National Park or to any other interests of traditional owners; and (c) strongly opposes any plan to release contaminated water from the Ranger Uranium Mine into the environment of Kakadu National Park and urges the Government to direct Ranger to implement a `no-release' water management system for the life of the project. Senator BOSWELL(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes that high interest rates, the depreciated dollar and massive sales tax increases are the major reasons for the 8.6 per cent increase in food prices during the last 12 months; (b) calls on the Federal Government to stop attempting a bureaucratically led recovery and instead concentrate on the real causes of price increases, such as lack of competition in the retail sector, high and counter-productive Labor taxes, high interest rates and an unstable dollar; and (c) condemns the Government's gimmicky and taxpayer-funded manoeuvres on controlling retail prices as being ineffective and a smokescreen for its own inadequate economic policies. Senator VIGOR(South Australia) —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 regulate smoking in aircraft and aerodromes. Senator CRICHTON-BROWNE(Western Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) condemning the Prime Minister (Mr Hawke) for statements he made on Sydney radio to the effect that there was nothing more that the Federal Government could do to assist Australian farmers; (b) noting that these statements were a deliberate attempt to mislead Australian farmers and the Australian public into the belief that the entire blame for the present rural depression lies in low export prices; and (c) noting that to conceal the part Federal Government policies have played in dramatically increasing farm costs and slashing farm incomes; (d) condemns the Federal Government for pursuing policies which have reduced farm incomes by increasing farm costs, noting in particular: (i) its maintenance record high interest rates at a time of record levels of rural debt, (ii) its introduction of new taxes and tax arrangements such as the fringe benefits tax, increased sales taxes on wine, new sales taxes on orange juice and flavoured milk and quarterly payments of provisional tax, (iii) its failure fully to pass on the reductions in world oil prices to the entire Australian community, leading to higher farm input costs, and (iv) its failure to take a firm stand against increasing wage costs or to support moves by the rural community to be exempted from wage increases on the grounds of incapacity to pay. Senator HARRADINE(Tasmania) —I give notice that, on the next day of sitting, contingent on the moving of a motion to debate a matter of urgency under standing order 64, I shall move: That so much of the Standing Orders be suspended as would prevent Senator Harradine moving an amendment to the motion. Senator HARRADINE(Tasmania) —I give notice that, contingent on the Senate proceeding to the consideration of Government Papers pursuant to sessional order, I shall move: That so much of the sessional order relating to the consideration of Government Papers be suspended as would prevent Senator Harradine moving a motion relating to the order in which the papers are called on by the President. Senator HARRADINE(Tasmania) —I give notice that, on the next day of sitting, I shall move: That the Senate noting that- (a) the spread of AIDS poses grave problems for individuals and Australian society as a whole; (b) AIDS is not confined to high risk groups such as homosexuals and intravenous drug users, but is spreading through those in the heterosexual community who engage in risk behaviour; (c) the major cause of the spread of AIDS is acknowledged by specialists in the area to be promiscuous behaviour; (d) faced with the deadly threat of AIDS, Australians are entitled to be told the facts of life in any AIDS Education Program rather than be misled by the promoters of condoms and the promiscuous lifestyles which is the major cause of the spread of AIDS; and (e) the deadly fact of life in modern times is that there cannot be a promiscuous society without AIDS, calls upon the Minister for Health (Dr Blewett) to explain a misleading media statement of 10 March 1987, by the AIDS Unit of the Department of Health, which asserted that the Parliamentary Liaison Group on AIDS had approved of the advertisements scheduled for release on 5 April 1987 when, in fact, the Group has not seen the advertisements and a request that the group be given the opportunity to peruse and have an input into them has, as yet, not been agreed to, and calls on all Australians to act with compassion and genuine humanity to all AIDS sufferers. Senator TATE(Tasmania-Special Minister of State) —Papers are tabled in accordance with the list circulated to honourable senators. With the concurrence of the Senate I ask that the list be incorporated in Hansard. Leave granted. The list reads as follows- 1. Interim response to the report of the Joint Foreign Affairs and Defence Committee on disarmament and arms control-text of a statement by the Minister for Foreign Affairs. 2. Letter from the Minister for Finance to the Superannuation Fund Investment Trust on aspects of the Government's policy in relation to South Africa-pursuant to sub-section 29a(7) of the Superannuation Act 1976-together with the Trust's response. 3. Stevedoring Industry Finance Committee- annual report 1985-86-together with the Auditor-General's report-pursuant to sub-section 30(3) of the Stevedoring Industry Finance Committee Act 1977. 4. Australian Research Grants Scheme-report on grants approved for 1987. 5. Improving the research performance of Australia's universities and other higher education institutions-a report to the Prime Minister by the Australian Science and Technology Council (ASTEC)-pursuant to sub-section 6 (2) of the Science and Technology Council Act 1978. 6. Australian Capital Territory Gaming and Liquor Authority-annual report 1985-86-together with the Auditor-General's report. 7. Australian Capital Territory Schools Authority-financial statements 1985-86-together with the Auditor-General's report-pursuant to sub- section 63m(3) of the Audit Act 1901. 8. Aboriginal Hostels Limited-annual report 1985-86. Motion (by Senator Richardson) agreed to: That the Select Committee on Television Equalisation have leave to meet during any sitting of the Senate on or before 23 March 1987. Bill returned from the House of Representatives without amendment. Motion (by Senator Tate for Senator Button) agreed to: That Government Business notices of motion Nos 1 and 2 be postponed until the next day of sitting. Consideration resumed from 17 February. The motion. Progress reported. Debate resumed from 26 February, on motion by Senator Button: That the Bills be now read a second time. Upon which Senator Michael Baume had moved by way of amendment: At end of motion, add ``, but the Senate- (a) expresses its concern over the excessive delay in the introduction of the legislation, relating as it does to measures announced as long ago as 19 September 1985; (b) deplores the creation of uncertainty and confusion among taxpayers and in the business community due to the failure of the Government to present these and other measures to the Parliament within a reasonable time after their announcement; (c) condemns the Government for imposing an excessive tax burden on business, thus inhibiting new investment in productive enterprises; and (d) further condemns the Government for its mismanagement of the Australian economy which has resulted in: (i) huge increases in food prices, which have increased by 8.6 per cent for the 12 months to December 1986, (ii) large increases in the average home loan repayment as a proportion of medium family incomes which proportion, for the September quarter 1986, was 26.7 per cent, (iii) falling disposable incomes for the majority of Australians caused by higher taxes as a consequence of taxpayers moving into higher Keating tax brackets, (iv) low employment growth and continuing high levels of unemployment, (v) continuing high current deficits, averaging in excess of $1b. per month on our balance of payments, and (vi) a record level of foreign debt, which has trebled since 1983, is currently approximately $100b., and is estimated to increase by a further 50 per cent over the next 3 years unless Government policies are changed.''. Senator MICHAEL BAUME(New South Wales)(10.15) —When this debate was adjourned a few weeks ago I was criticising what is in effect in this legislation a de facto increase in the taxation burden of Australian business. I was pointing out that this followed simply a whole range of additional burdens imposed on business at a time when there was an urgent need for expanded investment and increased growth and, therefore, the capacity to provide increased employment in Australian business, particularly in view of the dreadful balance of payments crisis now facing this nation, largely as a result of the Government's deliberate economic policies. I was pointing out that among these imposts was the capital gains tax introduced by this Government, which is doing so much to limit the growth of Australian business. I was quoting from the annual report of a government body-the 1985-86 annual report of the Management and Investment Companies Licensing Board, which was recently tabled in this Parliament-in which there was strong criticism of the impact of the capital gains tax. I quote from this report: The Board continues to hold a strong view that the development of a large and vital venture capital industry in Australia will be seriously jeopardised while such a high capital gains tax exists. The report goes on: Venture capitalists everywhere in the world achieve their profits from realising capital gains. The foreshadowed capital gains tax structure in Australia is higher than all countries with active and successful venture capital industries. Even worse, as presently structured, high risk venture investments may receive more adverse treatment than conservative investment. This sort of criticism by a government body of the Government's taxation measures against business is, I believe, enormously persuasive. This report goes on: The situation as it affects the MIC Program is anomalous. On the one hand, the Government is providing a tax incentive to the investor in an MIC, designed to attract funds for investment by MICs in young, high growth businesses. At the same time, the venture capitalist (the MIC) on whose performance future investment and the long-term health of the industry will be based, suffers a disadvantage. Venture funds are invested into high risk areas that traditional financial sources have not served. The Board predicts that the proposed capital gains tax will favour investments in inflation-paced activities and seriously retard the growth of the venture capital industry. That report to the Government by one of its own bodies has been studiously ignored. We have not heard any comment from the Government on that report and, of course, we will not because the report is so critical of this Government's anti-business tax program, of which this latest legislation is a secret additional factor. The Board, in its report to the Government, contrasted likely developments in Australia with past tax policies in the United States of America and in the United Kingdom. A report by the United States Treasury has acknowledged that the two-stage reduction-I underline the word `reduction'-of the capital gains tax rate in 1978 and 1981 led directly to increased capital formation and, strangely, increased taxation revenues in the long run, even though the rate of tax was reduced. The report states: There has also been in the USA a significant differential between the rates of income tax and capital gains tax levied upon individuals which has encouraged some entrepreneurial managers to direct their energies to wealth creation rather than to income earning activities. The Board will watch with interest the impact of proposed tax changes in the US. The report continued: Following a recent report on the UK Business Expansion Scheme (BES) introduced to stimulate investment in small business by way of tax relief for investors, the UK government early in 1986 complemented the BES by deciding that capital gains tax will not be levied on the first sale of BES related shares. There is a trend overseas towards reductions in or, in fact, the elimination of capital gains tax in specific instances, particularly in this area. In Australia, the Government is going down the track of continual attack on the private sector through the tax system. The MICL Board, in its report to the Government, stated that it: . . . considers that favourable taxation treatment of genuine venture capital activities would greatly stimulate the development of the non-MIC venture capital market in Australia. The report is very persuasive. It says exactly what the Opposition has been saying. It concludes in these terms: Since an MIC's profit is incurred by realised capital gains, the very existence of the present capital gains tax mitigates strongly against the raising of additional funds outside the Program in its present immature state. The Board believes that the present capital gains tax is the most substantial factor mitigating against the success of the Program, as investment in venture capital aspires to compete for investment dollars. It is heartening for the Opposition to see that an expert body such as the MICLB, which was appointed by the Government, has advised the Government of the stupidity of the policy with which the Government is determinedly persisting. However, the Government has not responded to this report. The Government appears to have no intention whatsoever of listening to the very wise words of advice that it has been getting from the Opposition on this score over such a long time. The Government has also been attacking the business community through the foreign tax credits system. The introduction of the foreign tax credits scheme is another in the long list of factors contributing to our deteriorating position as a tax competitive nation. With the growing internationalisation of the Australian corporate sector, it is paramount that the Government attract corporate assets to this country to provide valuable investment opportunities and employment growth potential. This is particularly so at a time when the Government, following the devaluation of the dollar, is encouraging business to try to increase its capacity to replace imports. However, its whole tax policy appears to be directed in the other way; that is, to discourage investment in this area. By requiring Australian multinationals to pay the full Australian company rate of tax which is already calculated on a company rate of tax far in excess of those applying in a number of other countries, the Government is in effect increasing the tax liability of those companies. This can only have the effect of forcing those Australian multinational corporations to relocate domestic operations off-shore with consequent disastrous implications for investment and employment. That is another example of the Government's inability to understand economic reality and of its determination to hit the one sector of the economy on which our future survival depends-that is, the private enterprise sector. There is also the non-deduction of business entertainment expenses. We have heard all about the free lunches, and so on. Let us look at this in a less emotional way than the Treasurer (Mr Keating) has. I must say that, in his talk about lunches and brown paper bags, he has demeaned what is a very serious issue. This measure, which was initially announced by the Government in its statement entitled `Reform of the Australian Taxation System', is severely impacting on the profitability of the business sector. In trying to curtail possible abuses in this area which were allowed to continue in the past, the Government has reacted by imposing yet another one of its blanket approaches to issues such as this. It is not really tax reform; it is just madness. It is completely illogical for the Government to implement such a measure knowing full well the implications for investment and profitability of the business sector. It is only a single-minded obsession by the Government to crush every single ounce of tax blood out of the business sector that has prompted it to act on this matter and on the others that I have mentioned. There is no doubt there was some abuse of the previous tax arrangement but one does not solve the problem simply by blocking such expenses altogether. It is absurd to say that some expenses are good and some expenses are bad even though they are all clearly involved in the earning of income. Of course, that should be the criterion involved in tax deductions. The quarantining of negative gearing provisions for rental property investments has also proved to be another cost burden for business. This measure has virtually wiped out the private rental market and has contributed to the effective doubling of the queues for housing commission homes in this country. Honourable senators may have heard Mr Walker, the New South Wales Minister for Housing, this morning being roundly critical of this Government on this very score. And he is a left wing member of the New South Wales Government. We can see that in this area the Government has made another of its monumental bloomers because it has been obsessive about attacking the private sector rather than concentrating on building it up so that it can, by its increased profitability, contribute even more to the tax cake. I mention the Government's proposals to introduce a system of dividend imputation for individual shareholders. When one considers them in isolation from all other legislative provisions, one may think that the proposed dividend imputation system will benefit shareholders and companies alike. However, when one considers them in conjunction with the foreign tax credit system, one can see that the dividend imputation system may, in fact, severely disadvantage domestic companies in their investment decisions by increasing their overall tax liabilities. This country urgently needs to generate the greatest amount of investment undertaking, either from domestic sources or from overseas sources. Further, the Australian corporate sector is seeking ways to become more internationally oriented; that is, to seek investments in overseas countries as an adjunct to domestic operations in order to capitalise on the growing investment opportunities being presented in the international arena. For this to be achieved, Australia must possess an attractive investment environment and, hence, taxation and other legislative matters should not unduly impact upon domestic or foreign decisions to invest. All these measures add up to the inescapable truth that Australia is becoming a tax uncompetitive nation and, hence, we shall not realise the investment and growth potential of which we are capable. This is because the Government continues to bludgeon the business sector with its anti-investment and anti-incentive taxes. The Government forgets that businessmen can look at the rest of the world and see how much better off they would be if only they were not in Australia. They can see how much more sensible it would be for them to expand in other nations and not to invest in Australia, despite the benefits of devaluation which exist. Of course, this is only part of the disaster that Australian business is facing but it is a disaster deliberately brought about by the Government's tax policies of which this legislation is simply another burden. Senator MAGUIRE(South Australia)(10.28) —No government anywhere is reforming taxation with more vigour, imagination and determination than this Hawke Labor Government in Australia. Today we are debating the Taxation Laws Amendment Bill (No. 5) 1986 and the Income Tax Amendment Bill 1986. As part of the tax reform package, the Government is introducing an instalment system for the payment of provisional tax by individuals to commence next financial year. Of course, provisional tax is payable where a person's non-salary income exceeds $999 a year. The new system of quarterly payments for provisional tax will apply to those individuals whose provisional tax liabi-lity exceeds $2,000 per annum. They will be required to pay the quarterly instalments in the year in which the income is derived. The important thing to bear in mind about this measure, which is part of the Government's taxation reform package introduced in September 1985, is that it will bring provisional taxpayers more into line with the ordinary wage and salary pay as you earn taxpayers in Australia. The new system of quarterly payments for provisional tax is designed so that the taxpayer will not pay more tax than is payable under the current arrangements for provisional taxation; only the timing of payments will be altered with the introduction of a system of quarterly payments. Those taxpayers who are liable for provisional tax and receive less than $2,000 per annum in non-wage and salary income will continue to pay provisional tax on the normal annual basis. Overall, some one-half of the 1.6 million provisional taxpayers in Australia will not be required to pay under the new system of quarterly instalments to commence next financial year. There is a very strong case on grounds of fairness and equity for introducing an instalment system for provisional taxation so that its payment more closely matches that of pay as you earn taxation in this country. For example, if a wage and salary earner is paid on a weekly, fortnightly or monthly basis, he or she will normally pay tax on that basis. After nine months of the financial year the cumulative tax instalment deductions from gross pay will approximate three-quarters of the total tax liability for the current year. In contrast, however, a provisional taxpayer currently has available the full amount of his or her income for the first nine months of the year. That is the big difference under the current arrangements in taxation. That is why reforms have been necessary. Senator Messner —What if he does not earn his income until the last three months? Senator MAGUIRE —There are items in that legislation which provide for people with unstable incomes. Possibly there are people in the Liberal Party of Australia, which is a very unstable Party at the moment, with unstable incomes. This is a very important reform and is long overdue. It brings provisional taxpayers more into line with the ordinary taxpayers, the pay as you earn taxpayers of Australia. The benefit to the provisional taxpayer from the availability of funds for the first nine months of the year under the present system far outweighs the cost of paying their annual tax instalments in advance by three months, which is the present arrangement. Of course there are wider economic factors involved in this reform. They are of a monetary policy nature in that they involve spreading provisional tax payments more throughout the financial year rather than having them bunched up in the last quarter of a financial year. At present some 90 per cent of provisional tax payments are made at the end of March and then through the June quarter in each financial year. This contributes to very large seasonal fluctuations in liquidity and they can be reflected in disruptive volatility in domestic short term interest rates. Such volatility imposes unnecessary costs on the private sector and hinders effective monetary management. I am very pleased indeed to see this reform being introduced as part of the Government's tax package. In fact, over the years that I have been in this place, on a number of occasions in Estimates committees and in this chamber I have raised with relevant Ministers the problems caused for monetary policy by the bunching of tax payments at particular times of the year. I am very pleased indeed to see that the introduction of quarterly payments for provisional taxation will, in fact, smooth out the Government's liquidity flow, will smooth out the need to issue securities to borrow funds for government activities through the course of financial years and therefore remove seasonal distortions and disruptions in interest rates. As I indicated, this legislation is an integral part of the Government's tax reform package. It has taken a Labor Government to bring in the most comprehensive reform of taxation laws in Australia. It was something that was fumbled-the buck was passed-by the Howard treasurership of 1978 to 1982, when there was no substantial tax reform. It has taken a Hawke Labor Government to introduce the most far reaching and fundamental tax reforms in modern history in Australia. The most important thing, despite the nonsense being parroted by Senator Messner this morning, is that the tax package restores fairness to the Australian taxation system-a long overdue measure restoring fairness and equity to the payment of taxation in Australia. The tax package essentially has done that by broadening the tax base and reducing the income tax burden on ordinary pay as you earn taxpayers, the ordinary wage and salary earners of Australia who bore the lion's share of the taxation burden under the Howard treasurership, when income tax in Australia, I regret to say, was a voluntary tax for the wealthy. The Government has achieved its far-reaching reforms of the taxation system by cracking down on tax evasion and avoidance practices. It has cracked down on the disguising of income in the form of tax-free capital gains-a way of circumventing the income tax laws by artificially creating gains. We have cracked down on devices by which wealthy people sheltered their principal incomes from taxation by getting involved in all kinds of negative gearing activities in respect of assets, usually property. They deducted interest payments on that property from their main income and therefore reduced their tax liabilities. Senator Messner —All you have done is cause rents to go up for those who cannot afford it. Senator Robertson —Madam Acting Deputy President, I take a point of order. I ask you to draw the attention of Senator Messner to standing order 422. We are long-suffering on this side of the chamber; but, heavens above, we want to give the speaker the opportunity to develop an argument without all the inane interjections coming from the other side. The ACTING DEPUTY PRESIDENT(Senator Giles) —The interjections are verging on the disorderly. I take the point that Senator Robertson raised and suggest to Senator Messner that his interruptions be toned down a little-if he is unable to cease them altogether. Senator MAGUIRE —Thank you, Madam Acting Deputy President. As well as cracking down on devices by which the wealthy sheltered their principal incomes-their incomes from exertion-from taxation, we have brought in a most comprehensive form of taxation, in the taxation of so-called fringe benefits. What a misnomer that term is. In some cases much of the total remuneration of high income earners was received in a non-salary form, such as the provision of company cars and the payment of private school fees for children of employees by employers. All kinds of reimbursement constituting tax-free remuneration were described, as I indicated, by the misnomer `fringe benefits' when they were such an integral part of the total remuneration of the wealthy groups in this community. We have cracked down on the tax-subsidised lunch, the so-called `free lunch'. We are all waiting to find out what the Liberal Party policy is going to be on that one. It seems to be fluid. Recently the Liberal Party seems to have been backing away from its pledge of 1985 and 1986 to reintroduce the tax-free lunch. Let us wait and see what is going to happen on that one. The practices we have cracked down on, such as the disguising of income as tax-free gains, the sheltering of income by using tax shelters and the provision of fringe benefits, were costing the community tens of millions of dollars every year. As a result, the pay as you earn taxpayers of Australia were forced to shoulder the burden more and more. As I indicated earlier, income tax had become essentially a voluntary tax for the wealthy. No responsible government could have tolerated a tax system which forced low and average income earners to subsidise the lurks and perks of the rich. That is what was going on. The Liberals did nothing about it. It took a Labor government to crack down on and destroy these lurks and perks. The measure we are debating today, the quarterly payment of provisional tax, is an integral part of the Government's tax reform package. Our tax reform package will close the loopholes and eliminate the rorts. The fringe benefits tax, the capital gains tax and the disallowance of entertainment expenses will ensure that high income earners pay their fair share of tax. The revenue raised by these measures will finance income tax reductions for ordinary pay as you earn taxpayers, the wage and salary earners of Australia. This point has been totally misrepresented by the Opposition. The Opposition has seized upon parts of the tax package. All it can see are the individual elements; it cannot see the totality of the reforms. It has seized upon parts of the package and tried to create the impression that the Government is raising taxation. That is the sort of fiction the Opposition is going on with in the community. Nothing is further from the truth. The Government is not raising the level of taxation. Senator Messner —It is. Senator MAGUIRE —Basically it is closing loopholes, eliminating rorts and redistributing revenue in the form of tax cuts. Senator Messner —You have raised total taxation. Senator MAGUIRE —Senator Messner claims that this Government has raised the total level of taxation. I invite Senator Messner to consult Budget Paper No. 1 and look at the share of taxation in gross domestic product under the Howard Treasury. I invite him to look at that because I can remember that, as a candidate for the House of Representatives in 1974 and 1975, the Liberals paraded around this country claiming that the tax burden was too high and that they would cut taxation. I remember those promises very well and no doubt Senator Robertson, who is here today, also remembers those promises. But the fact is that the share of Australia's gross domestic product going in taxation was 1.7 percentage points higher when Mr Howard finished in the Treasury than it was at the inception of the Fraser Government. That is a fact which is in Budget Paper No. 1. Senator Messner should go and read it, because the Liberals claimed that they would cut taxes. We had that scandalous election in 1977 with a fistful of dollars being retailed to us on television. Senator Messner was part of that Government which claimed that it would reduce taxation-and what did it do? The share of gross domestic product going in taxation in 1982-83 was 1.7 percentage points higher than it was when the Fraser Government came to power. I invite Senator Messner to check that figure. The Hawke Government basically is closing loopholes, eliminating rorts and redistributing revenue in the form of tax cuts. The Government is easing the burden on honest taxpayers by taxing the evaders, avoiders and tax cheats. That is very commendable-weeding out those in the community who are not paying their fair share and ensuring that the burden on ordinary wage and salary earners is reduced. From 1 December last all marginal tax rates were reduced under the Hawke Government's tax package. Those reductions in marginal rates meant that a taxpayer receiving some $400 a week received a tax cut in the order of $5.10 a week. Senator Siddons —But they have already lost that due to inflation. Senator MAGUIRE —The second instalment will be introduced from 1 July next. I hope that Senator Siddons can wait until 1 July, because the second instalment will produce further reductions in income tax rates. When Mr Howard was the Commonwealth Treasurer for five dark years from 1978 to 1982, the top marginal tax rate was 60c in the dollar; from 1 July it will be reduced to 49c in the dollar. That is the difference between the taxation practices of the Labor Government and the Liberal Government. The marginal tax rate paid by many wage and salary earners, which was 46c in the dollar under Mr Howard, from 1 July next will be 40c in the dollar. That is a significant, major tax reduction which will be available to the ordinary wage and salary earners. As I have pointed out on a number of occasions in regard to taxation, the bottom marginal tax rate-the rate in the lowest tax bracket-when Mr Howard was Treasurer in 1982 was 30c in the dollar. That is the best Mr Howard could ever achieve for the lower paid employees; a bottom marginal tax rate of 30c in the dollar. Under this Government's tax package the lowest marginal tax rate will not be 30c in the dollar or 29c in the dollar; it will be 24c in the dollar. That is a major reduction in marginal tax rates and those reductions will be available not only to pay as you earn taxpayers but also to those who are subject to the provisional tax laws dealt with in the amendment that we are debating today. As a result of the tax package the Government will be lifting the tax free threshold-that is, the exemption that is available to all taxpayers on the first dollars of their income-from $4,595 to $5,100 from 1 July. That is another major reform that the Liberals could never introduce. They were never able to deliver a tax free threshold in excess of $5,000. It has taken the Labor Government to exempt that amount of income from the income tax laws. As a result of the Government's tax changes and the alterations to the marginal tax rates no Australian will pay more than half of his or her extra income in taxation, because the top marginal tax rate will be 49c in the dollar. Along with the other reductions in the tax rates-from 46c to 40c in the dollar, and the bottom rate going down to 24c-they are clear proof of the Hawke Government's commitment to lower taxation. By 1 July we will have delivered three rounds of personal income tax cuts in three years. Mr Howard, the present Leader of the Opposition and the former Treasurer, claims that he can cut taxation. We are entitled to inquire who left the principal marginal tax rate at 46c in the dollar. He says that he will cut taxes, but he left ordinary wage and salary earners paying at the rate of 46c in the dollar. We will be reducing that rate to 40c in the dollar. Mr Howard was recently quoted in the Adelaide News as saying: I think the high marginal rates of tax are increasingly out of line with the needs for more incentive in our tax system. It is very important to note that the Liberal Party and the National Party of Australia are going about the community confusing the marginal rate of taxation, which is the tax paid on the highest or last dollars of personal income, with the average rate of taxation. The average rate of taxation is the average tax paid on every dollar of a person's income. When we look at those two concepts and distinguish them we can see that, while in a number of cases the marginal tax rates might be of the order of 40c or 46c in the dollar, the average tax rate-that is, the average across all income and not just income in the top bracket-is more like 20c to 25c in the dollar. When people parade around talking about flat tax and rates of 25c in the dollar, what they are really saying is that they will increase tax for everybody who has an average tax rate below 25c in the dollar. Of course, millions of taxpayers pay average rates of below 25c in the dollar. Senator Tate —Eighty-three per cent of Tasmania. Senator MAGUIRE —The Special Minister of State intervenes to say that a very high proportion of taxpayers in his State would be affected by that proposal and would face punitive increases in their income tax. Mr Howard had five years as Treasurer, from 1978 to 1982, to reduce marginal tax rates. But did he succeed in reducing tax rates paid by Australian taxpayers? He could not reduce the top income tax rate below 60c in the dollar. He left office in March 1983 with the middle tax bracket rate at 46c in the dollar. As I have pointed out here this morning, we have now set in train measures which will come to fruition on 1 July and which will result in the middle bracket rate being reduced to 40c in the dollar. That is the achievement of a Labor Government, compared with the dismal record of a conservative government. Yet Mr Howard, the present Opposition Leader, has the gall to claim that marginal tax rates under this Government are too high. He goes around the country saying that marginal tax rates under this Government are too high, yet we have delivered very substantial deductions in personal tax rates. The Liberal Party is talking about lower taxes, but in reality it could not deliver them when in office. I pointed out earlier-Senator Messner is frantically looking for the page reference at the moment; I will not help him with that-that the share of gross domestic product taken by taxation when Mr Howard was Treasurer rose by a whopping 1.7 percentage points. To repeat, at the end of the rule of the conservative government in 1983, the end of the Howard-Fraser period, the share of Australian taxation in gross domestic product was 1.7 percentage points higher than when the Fraser Government was elected in 1975 on a promise to reduce taxation. That is the record. The Fraser Government had eight years in office to reduce taxation, to lower the marginal tax rates. It could not deliver. Therefore, one has to be extremely sceptical and the electorate has to be enormously vigilant in scrutinising the policies being put forward by Liberal politicians who say that they will reduce taxation. Their very record in government indicates that they are incapable of reducing taxation. As Mr Howard's tax promises stand-I am having some difficulty working out which are operative and which have been deleted-they would add billions of dollars to the Budget deficit. That is the reality. Whatever is included in the tax promises that are operative, the fact is that it would still add billions to the Budget deficit faced by the Commonwealth Government. I have been hoping to hear what the promises are during this debate. I will be sitting here with my pencil and notepaper making a list of which taxation promises are still in force, and which expenditure policies are still in force and have not been vetoed by Sir Joh Bjelke-Petersen and the National Party. I will be listening very intently to hear which of these policies will be going forward to the Australian people at the next election. I am particularly interested to hear whether the Liberals will still propose a cut in the marginal tax rates to 25c and 30c in the dollar. That would add some $6,600m to the Budget deficit. Will the Opposition persist with its claim that it would reduce company tax rates to 35c in the dollar? That would add another $2,200m to the Budget deficit. Will it continue with its policy to abolish the fringe benefits tax? If it did so, that would add another $900m every year to the Budget deficit. Would it reinstitute the free lunch? I am very keen to hear about that one. Certainly, in 1985 and 1986 very gung ho statements were made by the Opposition spokespersons about the end of the free lunch and one got the clear impression that that would be back on the table as soon as a conservative government was re-elected. Would it reinstitute that? If it did, it would not cost $30m or $50m a year. If it went back into law on the same basis, it would cost $320m every year. That is what the Liberals could add to the Budget deficit. It depends on the assumptions made, but it is a very substantial figure. Would the Opposition restore negative gearing? We are waiting to hear about that. Would it reinstitute a process which enabled very wealthy taxpayers in this country to shelter their principal incomes from personal exertion, from taxation by being able to deduct interest payments on mortgages and so forth? If it did that on the same basis, it would add some $100m to the Budget deficit. We have had claims made about repealing the assets test for social security and veterans' pensions. If it restored that situation, we would be looking at another $160m on the Budget deficit. When we look at all those measures and hear the figures-and I am eagerly waiting to hear which of them are still operative and which have been scrubbed as a result of the rampaging through the countryside by Sir Joh Bjelke-Petersen and his acolytes-we will be able to tot up the figures and see that they would add not millions of dollars but billions and billions of dollars to the Budget deficit. Senator Robertson —Where is the money coming from? Senator Tate —A good question. Senator MAGUIRE —Where is the money coming from? That is the particular question that has to be raised and the honourable senators ask that now. How is Mr Howard proposing to pay for these tax promises, for his proposed expenditure cuts? It is a very pertinent question. We are waiting very eagerly here with pencils poised to do the sums and to see whether they are correct. There is no doubt that the Opposition is very short on answers on its policies. It is not game to retail them to the electorate. It is very short on those answers and it is very light on detail. Mr Howard ducks and weaves at any question which requires specific details about how to pay for his tax promises. That is the reality at the moment. He claims that the fine print of his tax policies will be released later in the year. I invite the Australian electorate to scrutinise that fine print at length and in great detail because I am sure that it will be very fine print indeed, that all the sums will not add up, and that we will find the conservatives coming into an election mode making all kinds of outrageous claims about problems in the country and how they will be solved by slashing taxes and slashing government spending. As I have indicated, there is no detail available. We have to be very vigilant in scrutinising the fine print and ensuring that Liberal and National Party politicians are put on the spot on all occasions and asked where the money is coming from. Senator Messner —We would be very happy to do it. Senator MAGUIRE —Perhaps we could invite the conservative spokespersons in the chamber in this debate to retail to us the Opposition's particular policies, the details of those policies, the annual costings and the effect on the Budget deficit. We are all eagerly waiting for the details and waiting to hear what the remaining speakers on the speakers list today will be telling us about how they are going to pay for their policies. I see that the vast majority of the speakers today will be from the two conservative parties. I think there are assumed to be three conservative parties-the Liberal Party and two National parties. We will be listening eagerly to hear where the money is coming from. We will want to know about the fine print and particularly how the conservatives are going to pay for their outrageous policies and programs for the forthcoming general election. Mr Howard certainly has offered one means of paying for his tax promises. I am not sure whether it is still operative, but he wanted to introduce a consumption tax. I remember very clearly that Mr Howard wanted a consumption tax and that he wanted to scrap the taxes that this Government has very courageously imposed on the wealthy groups in this community. He wanted to scrap the Hawke Government's crack-down on tax avoidance and to replace that with a consumption tax, which would affect all Australians. Of course a consumption tax would push up prices across the board. While we have a conservative Opposition complaining about inflation, at the same time it appears to have a policy to introduce a consumption tax. Of course that would add quite a few percentage points to the consumer price index. It would also push up inflation. When Mr Howard was Treasurer in 1981 and 1982, he increased sales tax by 66 per cent in two Budgets. No wonder we had double digit inflation when Mr Howard was Treasurer-11 1/2 per cent inflation. They are the very relevant and pertinent points about the Government's tax reform package. That package has restored progressivity to the tax system. It is based more fairly on an individual's capacity to pay. There will be more fairness in the Australian income tax system as a result of the reforms introduced by the Hawke Labor Government. We have closed tax loopholes, we have cracked down on evaders, we have cut marginal tax rates, we are easing poverty traps and those who can afford to pay will pay more. Fairness has been restored to the Australian tax system-a long overdue measure-and it took a Labor government to do it. Senator SIDDONS(Victoria)(10.58) —We are debating the Taxation Laws Amendment Bill (No. 5) 1986. This Bill is notable more for what it leaves undone than for what it in fact does. It touches the tip of the iceberg, so to speak, without really attacking the fundamental problems underlying the tax system in this country. We heard a lot from Senator Maguire about how the Australian Labor Party, while in government, had attacked the loopholes and the lurks and had brought down a fairer tax system. If that were true I would be delighted. Unfortunately it is very far from the truth. The fundamental problems of taxation have not yet been attacked by the Labor Government. For instance, the much talked about cuts in the marginal rates of personal income tax have been virtually negated simply because there is no indexation of the tax threshold. So inflation has taken over all of the promised tax cuts. The fact is that as a percentage of total income the tax which individuals pay is much higher this year with the tax cuts than it was last year before the tax cuts, simply because inflation, running at 8 per cent, has overtaken the benefits of those tax cuts. Whilst this Bill attacks one or two abuses of tax avoidance in the corporate sector it does not really come to grips with the fundamental problem of the artificial schemes which are being used by raiders on the stock markets of this country to avoid tax and therefore to beat the market. There is no doubt that taxation is the fundamental issue concerning Australians today. The unfortunate thing is that the debate has been about generalities and there has been no fundamental assessment of what the political parties are offering and what is reasonable and what is not reasonable. In the few minutes that I have available to me I want to take some time to look at some of the details and to see where we are going and where we can go. Let us look first at personal income tax. Although marginal rates have been reduced somewhat, on incomes of $25,000 or $30,000 per year-the level of the average Australian income-the marginal rate is still 40 per cent. That is a marginal rate which was designed no less than 20 years ago to attack the millionaire. A 40 per cent marginal rate of tax is far too high for the Australian on the average income. Senator Robertson —Talk about average tax. Senator SIDDONS —I am going to do that in a minute. I thank the honourable senator for that interjection. I intend to talk about the average tax rates. That is the only way to look at the matter. I have some figures here in a very carefully detailed submission on tax by the Unite Australia Party. It is available to any honourable senator who wants to look at it. The proposal has been very carefully costed. I will use the figures I have in front of me to point out how misleading some of the statements are. Let us look at the much talked about 25 per cent flat rate tax of the National Party of Australia. This was first floated by Sir Joh Bjelke-Petersen at the Australian Taxation Summit some 18 months ago. He advocated a flat 25 per cent marginal rate of tax, plus a rebate of $1,150 to those people below an income of $25,000. Let me call out some figures. The Unite Australia Party is saying that the maximum rate of marginal tax should be 35 per cent, no higher, and that the company tax rate should also be 35 per cent, no higher. We have shown how those tax reforms could be funded as well as the fundamental reform of indexing tax for the tax threshold each year. Under the Government's existing rates-the rates that have just been introduced-on an income of $25,000 a year the total tax paid as a percentage of income would be 22 per cent, a tax of $5,500. Under the Unite Australia Party's proposal, the total tax paid on a $25,000 annual income would be only 18 per cent of total income, a tax of $4,500. The interesting thing is that at that rate of income a flat tax of 25 per cent, with a rebate of $1,150, would represent a 20.4 per cent rate of tax or a tax of $5,100. So we see that a 25 per cent flat rate of tax, as advocated by the National Party, in fact is almost as high on incomes of $25,000 a year as the present Government tax. The point I am making is simply that that is still too high. The Unite Australia Party has said that we should get that down to a level of 18 per cent of total incomes at about the average income level. Total taxes at the various income levels as advocated by the Unite Australia Party have been worked out and costed, and the cost of revenue would be $9 billion. The cost to revenue of reducing company tax to a maximum rate of 35 per cent would be $1 billion. So it would cost a total of $10 billion to introduce fundamental tax reforms for both personal income tax and company tax. How can this be financed? Senator Tate —Yes. Senator SIDDONS —Right, the essential point. First of all we have a balance of payments problem in this country. It is absolutely scandalous that the Government allows imports unrestricted access to this country. I have said many times that we are importing tanker loads of orange juice from Brazil while our orange growers are letting their oranges fall to the ground because they cannot afford to pick them. If they do, it costs them $15,000. If they operate their properties in the Murray Valley this year, it will cost them $15,000. That is the Department of Agriculture's estimate of what it will cost them to pick their oranges, given the current price that they will get for them. Yet we are importing orange juice from Brazil in tanker loads. We import all kinds of luxury items-Swiss cheese, French perfumes and so forth. These are luxuries which we do not need when the country is on the brink of bankruptcy. Surely the Government should tackle this problem directly, but it is not doing so. It says: `We will deregulate all the financial markets. We do not need to control what is going on'. When the country is going broke, the first thing one has to do is to stop spending money and stop borrowing money. I would have thought the country was in such a perilous position that it was about time that the Government said: `We will tackle our most urgent problem directly. We will do something to slow down the rate of imports into this country'. That could be done very simply by a 6.5 per cent tax on luxury imports, which represent probably at least one-third of our total imports. That would raise $450m, which is very short of $10 billion, but it is a start and it is attacking our balance of payments problem. There is no doubt that there are abuses in the company takeover code. This legislation should tackle the fundamental abuse of the tax legislation that is being used by corporate raiders to take over companies that are producers in this country. The corporate raiders beat the market because they can use tax lurks. If those abuses were stopped, $1.25 billion would be raised. That is what it is costing revenue at the moment. But the big revenue earner, believe it or not, is in a very simple area-debit transfer taxes. Every cheque that the average citizen writes out today is taxed. Small debit transfers are taxed. Very small debit transfers are taxed at up to 15 per cent. Very large debit transfers are virtually not taxed at all. So the average Australian, the small business person who is writing out cheques all the time, is taxed continually on every one of those cheques by a rate as high as 15 per cent. But big businesses, particularly international businesses, are virtually not taxed at all on their debit transfers. If an 0.2 per cent tax were imposed on all debit transfers, that would raise no less than $8.8 billion-an enormous amount of money. That tax could be readily introduced. It is non-bureaucratic. But the important point is that it would make big business, international business, pay its fair share of tax and take the tax burden off small businesses and average Australians who are writing out cheques every day of the week. Is that not fair? Does the Special Minister of State (Senator Tate) not think that the Government should give consideration to that sort of tax? Senator Tate —Yes. Senator SIDDONS —Well, I would be delighted if it would do that. We should look at real tax reform and at reducing the maximum marginal rate of personal income tax to 35 per cent and reducing the company tax rate to 35 per cent. Senator Haines, on behalf of the Australian Democrats, was quoted in the Australian yesterday as saying that she wants to increase tax on companies because they are not paying enough tax and that she wants to introduce a consumption tax. Those two taxes would increase our problems. A consumption tax would increase the cost of living, and certainly an increase in company tax would do the same. The whole tax debate has to be looked at carefully. It has to be looked at in detail. It will be a great pity if the Australian public is hoodwinked by rash claims about what should be done in tax reform without a constructive debate. I will be delighted if other senators who speak in this debate really tackle the problem and come up with some constructive ideas and do not spend the time throwing mud at each other. We have heard debates on the economy so often. What do we hear? We hear from the Liberal Party of Australia that when it was in government it did this, this and this. The Australian Labor Party returns the compliment by saying: `We are in government and we have done more than the Liberal Party ever did'. It is point scoring. What we need in this place is a constructive debate in which figures are looked at and debated and in which constructive solutions to our very serious economic problems are debated in depth. We are here to look for solutions, not to win points. The country is on the verge of bankruptcy. It is about time that the seriousness of the situation took hold of politicians in Canberra and that they looked for solutions. I have some figures here for a constructive tax proposal. It is costed and is available to any honourable senator who wants to look at it and say what is wrong with it. I invite them please to do so and to be my guest. The figures are available. I have said that this Bill is more notable for what it leaves undone. I have further pointed out that in the Unite Australia Party's tax proposal $1.5 billion or thereabouts in additional revenue can be gained by closing takeover loopholes. What does this Bill do? First of all, the Government has said that redeemable preference shares are really a form of debt financing rather than equity financing. This Bill states that any fund raising by way of preference shares or any shares at all that are issued for a period of less than two years will be treated as debt for tax purposes. One does not have to be very clever to get around that amendment. Presumably, all one has to do is to have redeemable preference shares issued for a period of two years and one day to get around the legislation. I am afraid that the abuses of our tax legislation relating to debt financing as opposed to equity financing are still wide open. This legislation does nothing to close that rort. Takeovers are a serious matter for the simple reason that under present legislation a raider can very easily beat the market. A company that is trying to expand by increasing its productive capacity, by investing a certain amount of its resources in research and trying to develop new products for Australia that can be exported around the world, finds that all these things cost money. This has the effect of reducing profitability somewhat in any particular year. The raider can come along and say: `Right. We will offer double the market price of the shares'. This has happened in many cases. Has it ever occurred to people why raiders can do that? They can do it because mechanisms are available to them that enable them to circumvent the paying of any corporate tax. They can treat interest on debt as a legitimate deduction from their corporate tax and they can spread their interest commitment over all the activities of their company. A corporate entity can earn money from activities as diverse as making beer or making clothing. However, it can spread its debt raising interest commitments across all its activities. That is done by applying artificial structures which have the effect of bypassing the true intent of sections 46 and 50 of the Income Tax Assessment Act. It is a form of negative gearing, but it is a very important form of tax avoidance. Very large corporations that have grown dramatically in a very short period of time are getting away with paying virtually no company tax. They are 49 per cent better off than the company paying its fair share of tax. It would be great if in this legislation the Government had attacked these abuses of sections 46 and 50 of the Tax Act. It could have. It addressed these two sections in order to bring in reforms on redeemable preference shares, but it has done nothing about reforming the big abuses which are going on and which responsible financial journalists have estimated are costing the Government at least $1.5 billion. Why is not the Government doing anything about this? That is a good question. I am afraid that too often this Government has attacked small business and left the large corporate raiders and the large overseas companies unscathed. If all companies were paying their fair share of tax and if we got genuine, honest tax reform we would restore incentive in this country. While typists and toolmakers are paying marginal rates of tax at 40 per cent they are not going to work overtime, make an effort to work harder or contribute to getting this country out of the very severe mess it is in. They look around and see large companies making fortunes overnight and paying little tax. They see that they have to pay a 40 per cent marginal rate of tax. Immediately this has the effect of killing any incentive. The sorts of reforms I am talking about could be easily implemented and would have an immediate and dramatic effect on the whole community. Instead of that the Government has touched the fringes; it has not gone for the jugular and it has not gone to the essential problem. The Government talks about tax reform and about cutting down on lurks and perks, but it has not cut down on the major lurks and perks that are around. This raises the question that what is really needed in this country is a fundamental change of economic direction-about a 180-degree turn in economic direction. We have to do fundamental things such as encourage export oriented manufacturing. We have to deregulate the financial markets to do something about the high interest rates. At present interest rates in Australia are 18 per cent while in Japan they are 4 per cent. We will not get our interest rates down to levels comparable with our competitors unless we reregulate the financial markets and by that I mean reregulating both the banking system and the non-banking financial system. In this country we cannot have the luxury of complete deregulation. That is the policy we have been pursuing and it is a policy that has been absolutely catastrophic. It is a laissez-faire policy which reflects that governments have no real responsibility. If the Government changed its attitude and said that it was going to manage the economy in the interests of all Australians, it would do things such as assisting in export financing. In Japan, for instance, it is possible for companies to get very low interest loans from government on production of an export order. That is a very simple but innovative way of getting companies interested in exporting. Japanese companies virtually financed their whole expansion on government money just by being able to produce a firm export order. These companies received low interest loans to the extent of their export orders. The Government should do much more about the recruitment and training of skilled workers. Above all, the Government should do something to encourage the introduction of employee participation so that we break down confrontation in industry and get everyone working in the one direction. I have spoken before about the importance of this. It cannot be underestimated. While we have confrontation in industry and while we have a work force that is demoralised or not motivated, we will never develop a manufacturing sector in this country which can be internationally competitive. The solutions are very simple. The manufacturing sector has to be prepared to allow the work force a slice of the action. It has to be prepared to say to the workers of Australia that it will introduce profit sharing schemes and employee share ownership so that employees are a part of the activity and are sharing in the rewards of their efforts. Unless the Government takes the initiative and encourages the introduction of these sorts of schemes in Australia, we will talk about it until finally we fall over the edge of the cliff-we will talk about it and we will do nothing. These initiatives will not be introduced by a government that continues to say that it is for complete deregulation of the Australian economy and for the internationalisation of the Australian economy. The net result of those policies inevitably will be that Australia will be a satellite of Japan and that we will lose our independence as a nation. I asked in this place a little while ago whether the Government was moving to disband the Foreign Investment Review Board. I got a very ambivalent answer. I do not know whether the Government is or is not moving to disband it, but I do know that many overseas organisations would be delighted to see the Foreign Investment Review Board disbanded. They would then have open sesame to buy whatever wealth producing industries they liked in this country, and at bargain prices because of the devalued dollar against other currencies. Do we want to maintain our independence? Do we want to be able to manage our economy? We will not be doing that if we say to Japan, Singapore, the United States of America and the United Kingdom: `Come in, there is no restriction; buy up whatever wealth producing industry you like'. That is the policy that has got us into this trouble-we have been selling our assets. One of the big factors in our balance of payments is the so-called invisibles. If we look at the debt breakdown of our overseas trade we shall find that about two-thirds of that debt relates to the invisibles, which means paying interest and shipping costs and sending dividends overseas. We have got to the point where, because we cannot service the interest on the money we borrow, selling our assets is no longer an option. We can no longer afford to let a company come in and buy up an industry and then sit back and watch the dividends from that industry go overseas for ever and a day. No overseas company will buy an Australian company unless it can get its money back in a period of about five years. So let us look at that. If a Japanese company takes over an Australian-owned company whose dividends have been distributed to Australian shareholders, no doubt it would have the intention of getting its money back in the form of dividends in a period of five years. We will get a capital inflow for the initial purchase but it will be dissipated in five years, and then for ever and a day those dividends will go to Japan and will not benefit the Australian economy one iota. That has been the trend and it has been accentuated by the policies of the present Government. But the tragedy is that the Liberal Party also is saying: `Let us have more deregulation and a more open economy. Let foreign companies come in and buy up our assets'. The Liberal Party is saying that, the National Party of Australia is saying that and the Australian Democrats are saying that. No political party in this country seems to be concerned about Australia maintaining its national independence. We cannot be an independent country if we are beholden to foreign capital markets or if we adopt the policy that to pay our bills we must sell off our industries. I am afraid that all this adds up to the need for a reassessment of the underlying principles that are being used by the Government and the underlying principles that are being advocated by the National Party, the Liberal Party and the Democrats. We need to reassess where these policies will lead us in a very short time. I was amazed to see that when the Labor Party came to power it adopted a policy for a more de- regulated economy than could ever have been adopted by the Liberal Party. When the Liberal Party was in power at least it saw the need for the continuation of the Foreign Investment Review Board. It appears that the Labor Government is saying that we do not need the Foreign Investment Review Board; we do not need to assess which of our wealth producing industries are being taken over by other countries. Senator Button —Senator, could you leave the spooky part of it alone for a minute and just tell us what you are talking about in terms of- Senator SIDDONS —I thought that the honourable senator would understand fully what I am talking about. Senator Button —I understand. Senator SIDDONS —I will say it in a few simple words. Deregulation has not worked. Allowing market forces to run the economy has not worked, it is not working, and it will never work. Unless the Government wakes up to that, we are headed for disaster. We cannot continue with the present policies. Senator Button —It is not a market force economy; you know that. Senator SIDDONS —You could have fooled me. We have had deregulation of the banks, open sesame for foreign banks, no attempt to control the non-financial institutions of this country, and the Prime Minister (Mr Hawke) saying that he wants to internationalise the economy-whatever that means. He is on record as saying it. Senator Button says that it is not a market force economy. If it is not, I do not know what it is. It is the laissez-faire approach: Let money flow where it will; do not try to control it and do not accept any responsibility to encourage the productive use of the precious capital that we can still raise overseas. The Government intends to make no effort to encourage that capital into productive areas. It is quite happy to let $5.5 billion go into the speculative stock market. The ACTING DEPUTY PRESIDENT(Senator Bjelke-Petersen) —Order! The honourable senator's time has expired. Senator SHORT(Victoria)(11.28) —We are debating the Taxation Laws Amendment Bill (No. 5) 1986 and the Income Tax Amendment Bill 1986. Most of the remarks in this debate by all speakers have been devoted to the first of the two Bills. The Bills have several purposes. The main one is to introduce an instalment system for the payment of provisional tax. However, the Bill also contains amendments to the capital gains and losses provisions of the income tax law to exclude from those provisions foreign exchange gains and losses under certain hedging contracts. The Bill will also implement a decision announced earlier to treat shorter term redeemable preference shares as debt for income tax purposes. Finally, the Bill will exempt from tax the income of the British Phosphate Commissioners Banaba Contingency Fund. The first thing to be said about the Bills concerns the inordinate delay in bringing in some of the provisions. For example, the very important proposal to introduce a system for the payment of provisional tax by instalments was first announced in the notorious RATS statement-entitled `Reform of the Australian Taxation System'-made by the Treasurer (Mr Keating) on 19 September 1985, 18 months ago. The proposals to treat foreign exchange gains as assessable income and to allow an income tax deduction for foreign exchange losses of a capital nature were announced as long ago as 18 February 1986, over 12 months ago. The proposal to treat shorter term redeemable preference shares as debt for income tax purposes was announced as long ago as 7 April 1986. I would point out that that latter decision was not announced in this Parliament. It was announced to the people of Australia in the form of a Press release in April 1986 at a time when Parliament was not sitting. Those delays, I think, introduce some very serious considerations that this Parliament must take into account. In many ways, the Bills can be said to contain a significant element of retrospectivity, if not in a legal sense then at least in a practical sense, in that announcements which were made were followed, in some cases well over a year later, by the legislation to give effect to the proposals. No one knew-not even the Government or its advisers-at the time of making the initial announcement what would be in the final legislation. To have the sorts of delays that we are getting under this Government-I must say that we on this side of the House were not immune from criticism on that score when we were in government-is unacceptable. The situation has deteriorated dramatically under this Government. The delays that we are getting between the announcement of decisions and legislation to give effect to those decisions are getting longer. That is very debilitating and confusing and it provides a great deal of uncertainty and unfairness in our taxation and other systems. It also raises the very important question of the role of the Executive relative to the role of the Parliament. As the Senate Standing Committee for the Scrutiny of Bills pointed out in its report on the Bills which we are considering today, the practice of Executive announcement followed a long way down the track by parliamentary legislation or enactment carries with it the assumption that citizens in our society should arrange their affairs in accordance with announcements made by the Executive rather than in accordance with the laws made by this Parliament. The implication in that, very clearly, is that Parliament runs the risk of becoming an anachronism and a mere rubber stamp for executive government. That extremely worrying trend is occurring in this country. It is quite contrary to the whole system of parliamentary democracy and it undermines the very core of our democratic traditions. Despite the fact that the Government has had so much time between the announcement of the decisions and the introduction of the legislation, it has still produced, so far as the Opposition is concerned, a very shoddy Bill in terms of its drafting and the thinking through of some of the key provisions. It is for that reason that the Opposition seeks to refer important parts of the Bill to a Senate committee for further consideration. That is a considerable indictment of the Government. It has had all this time to consider introducing legislation which is good legislation, and quite patently it has not done so. The Bills have been introduced at a time of great pressure on the Australian economy. The Australian economy is in crisis. If any doubt is attached to that, we just have to look at the facts and ignore the Government's spurious rhetoric which claims that it has produced policies which have led this economy of ours to a restructuring and a base for further developments which is positive. The facts speak for themselves, and they point to a totally different position. Let us consider some of the facts. Inflation in this country is now running at about 10 per cent, and on many counts it is rising. Even at 10 per cent, it is four times higher than the average inflation rate of our major trading partners. In some cases it is vastly higher than four times higher. For example, the inflation rate in Japan, our major trading partner, is zero. In West Germany the inflation rate is negative; over the last 12 months there has been a decline in costs by more than one per cent. In the United States, another major trading partner of ours, the inflation rate is 1.3 per cent and the average for our major trading partners is only 1.7 per cent. How on earth can we compete as a nation and do all the things that this Government is trying to con us into believing that it is doing when we have an inflation rate of 10 per cent and our major trading partners have an average inflation rate of 1.7 per cent? The only conclusion that one can draw from that is that we are becoming more and more uncompetitive by the day. One of the important aspects of our inflation rate is the level of interest rates in this country. We now have-- Senator Button —I hope you can deal with all the other points so simply. That is simplistic. Senator SHORT —I will be interested to hear the Minister's responses. I am sure they will give great weight to these points because he, as a responsible Minister having one of the most senior economic portfolios in this country, has a responsibility that he has not been exercising up to date to explain to this country just why the policies of his Government are leading us to bankruptcy as a nation. Let us have a look at interest rates. In this country today we have interest rates that are higher relative to the rest of the Western world than ever before in our history. The prime interest rate in Australia today is something like 18.5 per cent. The prime interest rate in Japan is 3 3/4 per cent. In Canada and France the rate is 7 or 8 per cent. In the United States it is about the same. Our interest rate structure is miles out of line, and disastrously out of line, with that in the rest of the world. That has enormous implications for the development of our country. It is one of the basic reasons why investment in this country is lagging so badly that we are not even replacing the capital stock on a depreciated basis. It is an explanation perhaps for the fact that this year we have the highest number of bankruptcies in our history. Last year we had the previous record level. When the Treasurer was asked about that he said: Look you make no point about bankruptcies of small businesses, they are on all the time. What one must look at is the buoyancy of the economy and the buoyancy of business in particular and that's what this government has delivered. What absolute nonsense! What a cynical statement! Most important of all, that statement completely ignores the realities of business and all the other implications that flow from those bankruptcies. We have a level of foreign debt exceeding $100 billion. That is a figure that no one can comprehend. It is a figure four times what it was when this Government came to office. Putting it into meaningful terms, it is a figure of $6,250 for every man, woman and child in this country. Senator Brownhill —Even the newborn. Senator SHORT —Even the newborn, as Senator Brownhill points out. The day a child is born in this country he inherits a debt to the rest of the world of $6,250. Senator Button —Of which what percentage is private company debt? Senator SHORT —I will come to that. Senator Button —You are very dishonest with these figures; you know that. It was a totally dishonest figure. Senator SHORT —Senator Button's statement completely demonstrates his total lack of understanding of the problems facing this country. It does not matter a damn whether the debt is private debt or government debt. The fact is that we have to incur that debt because of the record level of current account deficit that we have as a result very largely of the policies of this Government. I will come back to that. This Government has been trying to con the Australian public for months by saying that the problem of our balance of payments is caused by falling export prices. There is no denying that, in part, that is correct but it is only a small part of the total problem and I will come back to that later. It we are talking about a bit of sophisticated consideration of these issues and a bit of honesty in economic debate in this country, I suggest the Minister look to his own house. A family of four in this country-say, a husband and wife and two children, a normal sized family-has a foreign debt, when looked at in that sense, of $20,000. The level of taxation in this country is higher than ever before in our history. The much vaunted trilogy promise of the Prime Minister (Mr Hawke) at the 1984 election that he was not going to let the level of income tax as a proportion of gross domestic product increase for the next three years was broken in each successive year. He has not honoured that commitment in any year. Perhaps we should not be too surprised about that because very few promises that this Government has made since coming to office have been honoured. As well as our foreign debt we have a government debt. That is a debt that the governments of this nation owe. It has to be repaid. It is of the same order of magnitude as our foreign debt-more than $100,000m. All this has happened at a time when we have virtually no real growth in the domestic economy, and that is accepted even by the Government. It has happened at a time when housing approvals are down by 20 per cent over the last year or so. There is no real growth in retail sales. In 1986 car sales in Australia were at their lowest level for almost 20 years and the decline in car sales was the biggest drop we have had, certainly since the end of the Second World War and probably in our history. That is in percentage terms, not in volume. As I said, investment in plant and equipment is falling at a time when the restructuring that the Government so cynically talks about demands increases in investment, not decreases. Last week we had yet another very large wage increase, against all economic rationality. Even the Australian Conciliation and Arbitration Commission seemed to recognise this in its judgment but it gave the increase in a dangerous attempt once again to buy industrial peace. I totally support the call by the Victorian Employers Federation and other employer bodies for the granting of no second tier increases unless they are totally met from fully substantiated productivity increases. I also note in passing that the Hawke Government was a key supporter, indeed a sponsor, of this economically damaging and entirely unwarranted further blow to economic growth and price stability in this country. The Government's support for that wage decision last week just highlights the hypocrisy and the political cynicism in the Government's totally cosmetic announcement last week of its intention to establish some form of consumer prices bureau. That decision is cosmetic because it cannot achieve anything. It is politically cynical because the Government knows that it will not achieve anything. The best evidence for that is the appointment of Barry Jones as the prices Minister. If the Government were really serious about this attempt to look at prices it would surely have appointed a senior Minister and one with a demonstrated track record. I do not say this in any personal sense at all but Mr Jones's track record politically is strewn with bungled hurdles. The Government's decision is hypocritical because the Government itself has been responsible for the very price rises that it seeks to monitor, or whatever it seeks to do. It has not spelt out just what it is proposing to do. The Government is responsible for these price rises because its economic management has been quite appalling. Its failure to exert internal discipline on its own finances has been the major cause of our present crisis. As I said earlier in response to Senator Button, the Government has been trying to camouflage the real causes of our crisis by blaming them on falling prices from many of our traditional exports, leading to our enormous balance of payments deficit. I do not deny that some of the causes of our problems do lie in our deter-iorating terms of trade. But the equally undeni-able point is that the major part of the problem lies not in that direction, but with the fiscal, monetary and wages policies of the Hawke Go-vernment. One major manifestation of those crippling policies is the enormous cost burdens imposed on the business sector in Australia by the Hawke Government in the past couple of years. The number of new taxes and the increase in taxes on the business sector have been absolutely staggering. We have had the capital gains tax, the fringe benefits tax, the elimination of even the most legitimate of entertainment-type expenditure from tax relief, the elimination of negative gearing, the automatic indexing of many excises, the increase of 7 per cent in company tax rates to a figure now of 49 per cent and a whole range of other imposts. Senator Button —An increase of how many per cent? Senator SHORT —An increase of 7 per cent; 46 per cent to 49 per cent equals a 7 per cent increase. Not only business has suffered from these tax increases, but also average wage and salary earners, farmers, families and particularly two-parent single income families with dependent children have suffered. Not only has the Hawke government reduced the standards of living of all Australians in the past four years; it has reduced most the standard of living of those Australians least able to bear the brunt of its attack, including taxes. The Bill that we are discussing, the Taxation Laws Amendment Bill (No. 5), adds yet further burdens to business. This is especially so in respect of the proposals for changes in the payment of provisional tax. The effect of the changes that are being proposed-essentially a proposal that provisional tax be paid quarterly rather than towards the end of each financial year, using the Government's own figures which could, in some ways, be regarded as an underestimate-will be to bring forward provisional tax collections into 1987-88, the first year of application of the proposal, and to increase tax revenue by some $90m. Depending, as the Government says, on interest rate assumptions, it is also estimated that annual expenditure savings of up to a further $100m will result from the need to issue fewer treasury notes. That is another burden on business because it is a prepayment, if you like, relative to the present situation of what business and all provisional taxpayers pay in provisional tax. Somehow or another business and taxpayers will have to find that additional $100m. It is either in the form of income forgone through the investment of what they will now be paying in taxes, or in other ways. Whichever way one looks at it, it is an additional impost of $100m on the community because it will raise an additional $100m in revenue for the Government. We on this side of the chamber say that it is about time the Government stopped continually slugging taxpayers of all types, started getting its house in order and meeting its necessary commitment to reduce the deficit, a commitment which it is failing lamentably to do by reducing spending. The worst way in which the Government can attempt to solve the difficulties of this nation, particularly in terms of the Budget deficit, is to increase taxes. The only responsible way is to decrease revenue and expenditure. That is precisely what this Government seems to be unable to do. The implications of the Government's proposal on provisional tax will be disastrous for all those people with fluctuating incomes. That includes a wide range of small businesses and, in particular, farmers. That is why the Opposition totally supports the view of the National Farmers Federation which has requested the Treasurer and the Government not to go ahead with these new provisional tax arrangements because, to quote the NFF, `they are totally inappropriate to agricultural income patterns'. The NFF points out that not only farmers but also others, such as authors, consultants and actors, often receive their annual income over a short period each year. Under the new arrangements they would be required to predict their annual income and pay tax instalments on it, sometimes before receiving any income at all. Because of the unpredictability, not only in terms of the receipt of that income during the year, but also the total amount of income they are going to receive, they will run a very grave risk of having to pay significant penalties-of the order of 20 per cent-through underestimating their provisional tax commitments. That is enshrined in the Bill. In our view that is also an iniquitous and inequitable proposal. We will resist that very strongly indeed. Let us look at not just the farmers and the others I have mentioned; let us look at a person who is a manufacturer of seasonal goods. For example, what about a person who makes surfboards or swimming gear or who specialises in, say, winter clothing? Senator Brownhill —What about Easter eggs? Senator SHORT —Or Easter eggs or anything that is of a seasonal nature. If those people underestimate their provisional tax liability by more than 10 per cent-that is not a wide margin, as I said-they will have demanded of them by the Commissioner of Taxation a penalty rate of 20 per cent. How will the provisional taxpayer find the money to pay that additional tax? The only way he will be able to find it, particularly if he is a business person, is to pull in his horns so far as his business activities are concerned. That is the last thing that this country wants. At a time when small business across the nation is reeling under the effects of inflation which, as I said is five times the average of our trading partners, the additional cost impost of this legislation is simply lunacy in terms of any type of economic rationality. This Government is the largest taxing and highest taxing government we have had since Federation. It has caused enormous pain to average income earners and wage and salary earners around the nation. Its interest rate policy has pushed interest rates for housing to an unbelievable level. The minimum rate one will pay on a new home loan is 15 1/2 per cent; only five years ago that figure was 10 per cent; and back in the 1950s the rate was 3 1/2 per cent. The enormous escalation in interest rates and the enormous inflation that has occurred to cause larger borrowing requirements is putting essentials and goals of Australians, such as housing, out of the reach of all but the wealthy. It is saddening to look at the increase in average home loan repayments since the 1984 elections. Honourable senators might remember that in the 1984 election the Prime Minister gave every intimation that he was going to get the economy under control. We were told that interest rates were going to come down and that we were going to live in the land of milk and honey. Let us look at average home loan repayments since the 1984 election. In my State of Victoria, average monthly home loan repayments are now $609 per month. At the time of the 1984 election, only two and a bit years ago, they were $405. In Senator Brownhill's State of New South Wales they are now $678 per month. At the time of the 1984 election they were $472 per month. A similar pattern exists in all States. Overall, the average level of home loan repayments has gone up in the last two years by 35 to 45 per cent. Not only has it gone up in that sense but also in the last five years the percentage of average, after tax family income spent on home mortgage repayments has doubled. In other words, today the average wage and salary earner pays on an average home loan repayment more than twice the percentage of the after tax income he paid as little as five years ago. They are the sorts of figures that are causing-very rightly-all Australians to feel an enormous squeeze on and deterioration in their living standards. We are going backwards. We are going down the road to national bankruptcy. The Government knows that. Every Australian knows that. It is about time we started to take desperate action to correct this situation because, if we do not, we are not going to have a nation in the future for our children and our children's children. The Bills we are debating today are yet another part of the bludgeoning attack by this Government on the living standards of every Australian. The Government deserves to be criticised very roundly indeed for them. Senator BROWNHILL(New South Wales)(11.56) —I take this opportunity, in debating the Taxation Laws Amendment Bill (No. 5) 1986 and the Income Tax Amendment Bill 1986, to highlight the very desperate position rural Australians are in because of the taxation and other policies this Government has enacted since it has been in power. We all know that tax revenue in real terms has increased at an annual rate of some 4.9 per cent in the four Hawke Government years and that tax receipts as a percentage of gross domestic product increased to a record of 25 per cent in 1984-85. They have risen even more since then. We all know that this Labor Government is the biggest taxing government in Australia's peacetime history. Senator Short has made these points very clearly already. Even with the so-called tax cuts this Government has told the people it is going to give them, it will still require an additional $15-a-week cut, on top of the latest cuts, to reduce the income tax burden of a single income family to the level which applied in March 1983. It will require an additional $8 tax cut to put a single person back in the same league park he was in in 1983. I believe that this legislation is just another fiddle at the edges of reform. This particular fiddle is typical of the others. It is not thought through and no consideration has been given to its implications. Provisional tax is always a touchy subject for any business because, let us face it, none of us likes to pay tax. However, tax is one of life's necessary evils. Farmers, like other self-employed people, are liable for provisional tax in the years when they actually make an income, although this is happening less and less in the present economic climate. Making the payments quarterly will have a very adverse effect on some primary producers. Many will be required to make payments of the tax in advance of earning their income. Senator Short has already made the point about others in the community who will have to pay tax on income that has not even been earned. Farming is a very seasonal occupation, with expenditure very heavy for many months of the year and no income for several. Then, if the crop is successful or the wool clip gets sold, a cheque arrives in the mail-often representing the total yearly income of that particular property. So, unlike many other businesses, where cash flow is constant, cash flow in farming is particularly irregular. It is also particularly difficult to estimate income as a farmer. So many variables are outside the control of the farmer. There is the weather, there are the prices farmers will receive for their produce and there is also Government intervention. We do not know when this Government will intervene next in our lives. Irrespective of a businessman's skills, it is impossible for him to know what the price of beef at the saleyards will be even a week ahead, much less three months ahead. Most farmers usually do not earn any money from July to January. Previously they paid provisional tax in March, after income had started to come in. Now they will be expected to pay earlier and in quarters when there is no income whatsoever. The interest rate on the money they will have to borrow to pay their tax is something like 20.25 per cent. So, farmers will be slugged one way by this Government with the quarterly provisional tax requirements and another way with the high interest rates which have been foisted upon them by this Government. There is also the question of late and inaccurate payment and estimates of the tax. Because the estimates will now need to be done four times a year, the opportunity for error is increased and the possibility of late payment is also increased. Whilst it can be argued that penalties will only be proportional-if one is late once one pays only a quarter of the penalty which might have applied if one were late under the old rules-the fact remains that someone who has never been late before because it was a once a year job may now incur penalties because the estimates and payments of the tax have to be made so much more frequently. There will also be additional charges for accounting, which probably has not been mentioned so far in this debate. These changes to the provisional tax payments will raise something like an additional $90m during the financial year. This comes at a time when interest rates, as I have already said, are 20.25 per cent and we do not know where they are going. In fact, we were told in this chamber the other day that they may not fall until the middle of next year. So, there will be no help on interest rates until that time-if then. Many businesses will be forced to borrow at these high rates in order to pay their provisional taxes. This all comes from a Government which claims to have the best interests of the taxpayer at heart. All it is doing is helping to prop up a bankrupt Government, a Government that has a domestic deficit blow-out, a Government that is not taking much interest in what is happening in rural communities. The Government does not really care from whom it is going to extract the extra income which it needs to keep its Budget deficit under control. The Opposition is very aware of the appalling state of taxation in Australia at present. We know that we cannot afford to make any mistakes in developing the right mix. We know that Australia can no longer afford-if ever it could-the luxury of policy-making on the run, as this Government has done, particularly in the area of tax reform. We also know that Australians will not be fooled by a pea and thimble trick, that they want real tax relief, that they want a fairer and more equitable taxation system and that they are not getting it from this Government. Australians know that fiddles at the edges, such as the Taxation Laws Amendment Bill (No. 5), are just another shuffle. They know that this measure will help no one except the revenue collectors, that it will ease no burdens for the businessman and that, along with other taxes such as the fringe benefits tax and the capital gains tax, it simply means that we will pay the Government more and more. All these additional taxes are knocking incentive out of an already slugged export income producing sector-the farming sector of this community. Let us consider the cost to the community of the fringe benefits tax. It costs probably some three times more than it is estimated to cost the community. I do not think anyone yet has even considered the full cost of the fringe benefits tax-its cost in terms of accountants and time, quarterly returns, assessment costs and the cost of the bureaucracy that is needed to administer the tax. The rural community is hurting very badly at the moment. Its ability to pay more is no longer an option. In recent weeks the city media have at last started to highlight the real tragedies involved in agriculture. Repossession of farm machinery is no longer unusual; it is becoming a daily occurrence right across Australia. Farmers are being evicted from their homes and farms, banks are foreclosing and farmers are committing suicide. It is happening all over Australia and it is happening at this very minute. The Government knows it, but it chooses to ignore it. I do not really know whether it thinks that the rural sector is not likely ever to vote for it in big numbers again, so the farmers are not worth helping, but I assure the Government that the rural community is not happy with what the Hawke Labor Government is doing to it. I do know that the farmers of Australia provide our much needed export dollars. They have played a major part in the development of this country and they will continue to do so, whether or not we are able to revitalise our manufacturing industries. The average indebtedness in the grain sector has been estimated at $250,000. I was told the other day by the Rural Assistance Board in New South Wales that probably that figure is now closer to $280,000. World commodity prices are falling and the debt is not likely to be reduced in the short term, especially with interest rates as they are, slugging those people who are producing a standard of living for all Australians. For all farmers the largest component of their debt is interest rates, but other costs have also contributed. The cost of farm labour has risen by some 50 per cent since 1980, government charges have risen by over 80 per cent, inputs such as fertilisers have risen by nearly 50 per cent, freight charges have risen by something like 53 per cent and electricity charges have risen by 66 per cent. Those costs have hit the efficient and inefficient farmer equally. The size of the cost spiral is such that even the best, most financially well geared producers have suffered a major setback. These quarterly provisional tax requirements will slug them once again. The Government appears to have ignored all the calls for help that have come from the rural community. Senator Walsh has even suggested that there are not enough farmers to worry about. But to allow thousands of grain producers to go out of business is economic suicide. To allow them and other farmers, through high interest rates, to work themselves deeper and deeper into debt is to commit Australia to a financial morass from which we may never recover. The rural sector cannot wait until 14 May in the forlorn hope that the Government will provide some relief. They need that relief now and they must get it now. The ability to provide relief is in the hands of the Federal Government; only the Government can redress the balance in the economy. Farmers and farmer organisations have called on the Government to review rural adjustment arrangements. Even the Minister for Primary Industry (Mr Kerin) is aware of the problem and acknowledges that something needs to be done and to be done immediately. But still all we get from this vampire-like Government is fiddly attempts to extract more and more blood from a very anaemic private sector, and now by way of the quarterly provisional tax instalments. This tax legislation is virtually irrelevant to the rural sector. Farmers have been slugged so much by this Government that yet another impost will just add to the pile. Nearly two years ago the farmers of Australia rallied and called on the Government for help. Nearly two years on they are still waiting for that help. For many the waiting became too much and they chose either to walk off their farms or to take other more drastic action. I am not sure what more farmers have to do to make this Government wake up to the appalling mess it has created. I am not sure how many small businesses have to close and how many more workers have to get thrown on the unemployment heap before we get some action. What I do know is that Australians need more action from the Government, more than just fiddly legislation such as the Taxation Laws Amendment Bill (No. 5), to solve their problems. They need incentives, not disincentives like this legislation. Senator HAINES(South Australia-Leader of the Australian Democrats)(12.10) —The Bills we are debating are the Taxation Laws Amendment Bill (No. 5) and the Income Tax Amendment Bill. There are essentially three separate parts to this legislation. The first part deals with short term financing arrangements, the second deals with taxation of foreign exchange gains and losses, and the third deals with changes to the provisional tax payments system. I want to look at each of those sections separately and at the problems which are inherent in the changes proposed by the Government in this legislation; problems which have been raised with us by various sectors of the community. We believe that the Government does not have adequate answers to those problems, nor has it made adequate provision for them in this legislation. I want also to consider some alternatives, as far as our amendments to the legislation are concerned, should we get into the Committee stage. I say `should we get into the Committee stage' believing that in fact the Taxation Laws Amendment Bill (No. 5) is so fraught with problems-the sorts of unintended consequences that the Treasurer (Mr Keating) has mentioned in the past about other Bills-that it should be looked at before it passes the second reading stage and goes into the Committee stage. It should be looked at by an appropriate standing committee, such as the Standing Committee on Finance and Government Operations. In any event, we will deal with that at a later stage. I understand that the Opposition has some plans of its own, although I do not know precisely what they are and I suspect that is because it does not know precisely what they are. Members of the Opposition have been talking about amendments and about referring parts of the Bill to a committee. That would be likely to delay the legislation in toto. I heard a moment ago that the Opposition is now looking at some other arrangement. I will proceed by discussing the various parts of the legislation and the various options that are open to the Senate, should it have a mind to act sensibly for a change. The first part of the legislation deals with an amendment to short term financing arrangements. It relates to an announcement made by the Treasurer on 7 April last year that short term redeemable preference shares issued after 5 o'clock on that day would be treated as debt for income tax purposes. I find it rather extraordinary that it is 18 March 1987 and we are dealing with legislation to put into effect an announcement made by the Treasurer almost 12 months ago. It says something for the efficiency, or lack of it, of this Government that the legislation has taken so long to come before this chamber. Having said that, I point out that the Australian Democrats generally support the treatment of short term redeemable preference shares as debt, as that is clearly their purpose. We have no particular quarrel with the Government lifting the veil on this sort of transaction and saying essentially, as the Government is in this legislation, that dividends payable on short term redeemable preference shares are equivalent to the interest paid on borrowings and the Government thinks it ought to tax them accordingly. As far as we are concerned, to do otherwise would involve the loss of a considerable amount of revenue through what has become an ingenious device to frustrate the Government's tax policy. Our amendments support the principle of what the Government is proposing to do to short term financing arrangements. Arrangements to avoid tax, such as the use of short term redeemable preference shares, are instances where the Government, I should have thought, may justifiably proceed by ministerial announcement; although it should not have left the action for some considerable number of months following the announcement. However, we would attach an additional proviso or two to this sort of legislation following a ministerial announcement. The first is that the ministerial announcement should clearly detail the manner in which the law governing such arrangements is to be altered. The second is that the legislation, when it finally is produced, should be faithful to the ministerial announcement and, as I said, should be introduced at the earliest possible date following that announcement. As far as I can see, this is not the case with the amendments to the law governing redeemable preference shares. It certainly is not a case of the Government introducing the legislation as quickly as possible because it is now almost 11 months since the Minister's announcement and, more importantly, the Bill before us is not limited to short term redeemable preference shares issued after 5 p.m. on 7 April 1986, if the number of telexes on this that we have received are to be believed. For example, one that was sent to me is a copy of a telex that was sent to the Treasurer relating to short term financing arrangements in the legislation. It states: We refer to our previous representation to your Office and to a report on page 42 of today's Sydney Morning Herald. In the newspaper report the Government is said to have claimed that it should have been ``apparent to anybody issuing redeemable preference shares that they might have been affected by the proposed legislation when the announcement was made''. Leaving aside for the moment such qualitative statements as `should have been apparent' and `things that might have been affected', we are faced with the problem that this legislation is not what people could have reasonably been expected to be confronted with after so long. The telex goes on: We have been instructed to make representations to the government in the strongest terms that the essence of a healthy business climate is certainty in the legislative climate in which industry is to operate. Your announcement of April 6, 1986, was explicit in foreshadowing legislation that would apply to ``redeemable preference shares'' which were ``issued after the date of the announcement''. The Bill (if enacted) would apply to shares other than redeemable preference shares and also to shares that were issued before the date of the announcement. It moves on to say: The announcement of an intention to legislate in a given area should not be seen as a licence to introduce any legislation in that area retrospective to the date of the announcement. I acknowledge the enthusiastic support of that statement from Senator Watson. The telex goes on: If the Government's attitude is correctly reported, no activity in a given area could with prudence be undertaken by businessmen- or presumably by businesswomen- once any legislation was foreshadowed by Government that touched in any way on that area. If legislation is to be introduced which is retrospective to the date of an announcement it ought to correspond to the legislation which was proposed in the announcement. I do not think that it is too much to expect governments, with all the resources available to them, to ensure that there is some nexus between the contents of the announcement and the contents of the legislation. The telex finishes by saying: The essence of the rule of law is that persons, be they businessmen or not, are subject to laws which are reasonably clear. Otherwise, instead of rule of law, there is a system of arbitrary power. I would have thought that nobody in this place, in the other place, or in any political party, whether it aspires to government or not, would want a system of legislation in this place that effectively means that we have an arbitrary system of justice and legality. The effect of sub-section (1) (c) of the proposed new section 46c and the definition of short term finance arrangements in clause 7 together extend the Bill to non-redeemable shares issued prior to the Minister's announcement. As the Bill is in fact deemed to have come into effect at 5 p.m. on 7 April 1986, this legislation is, as far as we are concerned, retrospective insofar as it exceeds the Minister's announcement of that date. We will therefore be supporting-if the Opposition moves it, and moving if it does not-the reference to the Standing Committee on Finance and Government Operations of that clause and others to ensure that the final form of the Bill contains no retrospective element. I would like to take this opportunity to say to the Treasurer that this should indicate to him a flagging of our intention with regard to proposed legislation regarding approved deposit funds. The 12 January-it might have been 13 January-statement regarding ADFs and roll- overs has caused at least as much confusion in the superannuation funds as the 7 April 1986 announcement did with redeemable preference shares. I certainly support the statement in this telex that I just read out that the business sector-along with everybody else in the community, I might add-is entitled to expect some certainty of operation to apply within the legal system and within the Government's legislative framework. The second area that this Bill looks at is the taxation of foreign exchange profits and losses. I think it is important to say that if Australia is going to have an unregulated financial system under which Australian companies can borrow directly from overseas lenders as easily as the ordinary citizens would like to be able to borrow from their local bank-I am not sure whether they can these days, but they certainly used to be able to and they would like to go on being able to-logically the expenses or profits associated with that borrowing should be subject to normal tax treatment. Allowing foreign exchange losses to be tax deductible and taxing foreign exchange profits brings a measure of certainty-that same certainty that was talked about in the previous telex-to foreign currency dealings in what is at present a relatively unstable currency. This legislation is, I would have thought, therefore desirable given the unregulated financial system introduced by this Government. The Australian Democrats in the main do not support a financial system which is as unregulated in areas as the one which this Government has introduced and which I presume the Opposition would extend. It seems to us that the effect of the deregulation has not been what was apparently intended, that is, a massive inflow of investment funds for Australian industry. What seems to have occurred instead is a massive inflow of borrowings for unproductive takeover activity and a shift by foreign investors away from direct investment into share trading. That is of no particular value at all to Australia's short or long term economic improvement. Australia's annual payments to overseas investors and lenders are now equal to its entire export income from all minerals and metal ores. Another $20m per day is flowing out of the country, mainly from superannuation funds and life offices for investment in foreign bonds and shares. I raised this matter only a few days ago when I was speaking to the Newcastle Chamber of Commerce and Industry. I raised the ire of the superannuation funds by suggesting that if they want to invest off-shore they ought to be prepared to forgo that other regulation which helps them-the tax concession. Give them the tax concession by all means if they invest on-shore; give them the right to invest off-shore, but do not assist them to do that by giving them a tax concession. What is essentially achieved is that money is going out of the country for investment at a ratio of about 4:1 in relation to money which is being invested in the country. That, of course, is causing all sorts of problems, including the possibility for these people to speculate against the Australian dollar. I see that Senator Watson is agreeing with what I have said. It is also, of course, depleting the amount of domestic funds available for local borrowings. That means that demand has gone up beyond that which can be met, and as a consequence interest rates are rising. These sorts of areas of the financial sector have to accept either regulation across the board or total deregulation. They cannot have a bit each way according to what suits them; that is, benefit from deregulation so that they can invest off-shore on the one hand, and benefit from the regulation that allows tax concessions to apply for those particular life and superannuation funds on the other hand. Senator Watson —You would have to have a lower rate of tax, wouldn't you? Senator HAINES —Well, we either abandon it altogether if people invest off-shore or, as the honourable senator says, give it a lower concessional rate. Either way, it should not be regarded as being of equal value to the Australian economy if these people invest off-shore as if they invest on-shore. I think it is as simple as that, because this exodus of Australian investment funds is occurring, as I think we all realise, at a time when investment in Australian industry is so low that our economic growth will be at or below 2 per cent over the next few months. That is going to do absolutely nothing for employment, for increased productivity and for any sort of assistance to our trade figures that increased exports would produce. So we are not going to oppose the capital gains and losses amendments that are in this legislation because they are an integral part of this system. However, we regret that large overseas borrowers such as the Bond Corporation and the Bell group of companies will still be able to claim the cost of overseas raisings as a business expense against the inflated profits they derive from their essentially unproductive takeovers. Senator Watson —They do it now through a finance mechanism. Senator HAINES —Indeed they do, and they are having a jolly good time. Senator Watson —To allow the capital deduction. Senator HAINES —Yes. I appreciate the distinction, Senator, although it is compounding the problem that we currently face with these people who are able to use the negative gearing provisions to borrow from the international money market at quite significant interest rates and to deduct those interest repayments from tax. They are essentially getting a taxpayer-sub- sidised new asset from the takeover or from their share rate with no increase at all in productivity, employment or export earnings. I think we have to look seriously at what damage that is doing both in the short term and the long term to Australia's economy. The third element of this Taxation Laws Amendment Bill (No. 5) relates to the Government's proposed amendments to provisional tax payment. Again, the principle that those subject to provisional tax should pay in a manner equivalent to pay as you earn taxpayers is one with which the Democrats do not want to disagree. On the surface it is an equitable scheme, but that principle does not necessarily lead to our support for the amendments proposed by the Government. I think the way it is going about it is a touch ham-fisted, to say the very least. The amendments will require provisional taxpayers to pay by means of quarterly instalments-on 1 September, 1 December, 1 March and 1 June-rather than in full on 31 March. Taxpayers who derive more than three-quarters of their taxable income after 1 December may instead elect to pay their tax in two half-yearly instalments, on 1 December and 1 June. As I said, this will result in a more equitable taxing of those whose incomes are spread evenly throughout the year, but only if their incomes are spread evenly throughout the year, and of those whose incomes are predominantly bunched, say, in the second half of the year. There is no reason why those who earn their incomes other than through salaries and wages should have the advantage, as they have had for many years, of incomes for up to nine months without payment of tax. There is not much point in trying to solve that inequity if a further inequity to another group is introduced in the process. The fact that tax under the present system is delayed, forces government borrowings at the present cost of about $90m per year, which of course is borne by all taxpayers. I understand that the Opposition intends to move an amendment, or at least it did intend to. I am not sure if it still does because there has been a bit of toing and froing. I will be at least generous enough to say that I can understand the problems faced by the Opposition in this. But I understood that the Opposition either intends or intended to move an amendment that would permit all provisional taxpayers to elect payment at 31 March rather than by quarterly instalment. I believed a week or so ago that it was going to permit some provisional taxpayers the option of paying at 31 March rather than quarterly and that it has found itself in such a bind in trying to draw the line that it has made this a catch-all. Senator Watson —We are going to do both. Senator HAINES —The Opposition is going to do both. That is the third version and I will wait with some anticipation for Senator Watson's comment on all of this. If what the Opposition wants to do is to move an amendment so that any provisional taxpayer can choose to pay annually or quarterly, the Democrats will not be supporting that amendment. Optional quarterly payment of tax by all taxpayers is simply going to allow big business up to nine months use of profits before any tax is due on those profits. As far as we are concerned, if this debate proceeds immediately to the Committee stage, and I sincerely hope it does not, we will be moving an amendment that will permit taxpayers, whose taxable income was $100,000 or less in the previous year-that is essentially the business taxpayers-to elect to make quarterly payment. We indicated some weeks ago that we would be supporting choice for farmers and others on uncertain incomes. Senator Watson —Subject to our amendment. Senator HAINES —Yes, that is the amendment that the Opposition moved, I think in the other place. What we intended to do was to take that original amendment of the Opposition and add it to the sort of small business which runs into difficulties often with paper work. I will leave it to my colleague Senator Sanders to give an example of just how some small business people can be driven to the wall by this final straw. We draw the line very much at extending the choice of payment to either a quarterly or annual payment to everybody, because I believe it is simply exchanging one anomaly for another. I suggest that there is some ground for arguing that small businesses, whose profit and cash flows are irregular, would experience difficulties estimating their taxable income for a particular year and/or meeting quarterly provisional tax payments, which is why under certain circumstances, for certain small businesses, we would like to see choice being available. Obviously not all small businesses will be in this position. Some will have regular cash flows and stable profits and will experience minimal difficulties meeting quarterly provisional tax bills. However those small businesses which are struggling to establish or to consolidate a market-as I said a moment ago I will leave it to my colleague, Senator Sanders, to give a classic example of that-or which are highly vulnerable to fluctuations in the economy, may experience considerable difficulty. I think it would be of great benefit to this sector, the small business sector, which I think across the board we regard as vital to this country's economy, if a measure of choice existed regarding the timing of provisional tax payment. The cost to the Government is likely to be considerably less than the $90m projected savings from the introduction of the quarterly payments system. Our amendment will, therefore, provide some benefit to small businesses. As I said, we are prepared to support the Opposition's concern for the farming community, which is currently facing extreme difficulties. To the extent that it provides a windfall gain to a beleaguered sector of the community, I think it is a small price to pay to ensure that struggling small businesses, including farms, are not crippled by the need to borrow in order to pay provisional tax on income which they have not as yet received. One other issue I would like to touch on during this debate in this area is that of provisional tax on pensioners' savings, which has caused some concern. I realise it is not covered in this legislation, but I think it is a matter which should be raised as far as equity is concerned. Pensioners must at present pay provisional tax where their income exceeds $1,000 per annum. This limit was established in the days when $1,000 was worth significantly more than it currently is. Savings of an amount as small as $8,000 placed in a bank account at 12 1/2 per cent per annum would be enough to render a pensioner liable for provisional tax. Seven hundred pages of tax legislation have come before the Senate since the Government embarked on its tax reform. A government concerned with equity in taxation laws should have found space to amend the provisional taxing of pensioners. Those pensioners whose savings are in bank accounts will likely include the large number of low and middle income earners who are not fortunate enough to have superannuation coverage. So they are being hit in all directions. They are thus doubly penalised-first, through not having superannuation cover and, secondly, through not being able to take advantage of tax sheltered arrangements such as immediate annuities which would allow interest on savings to be taxed only when a withdrawal is made. If the Government wants to encourage individuals to provide for their old age, it could provide some justice to those who have set aside modest retirement savings. The simplest method would be to lift the provisional tax threshold for pensioners. The actual benefit to pensioners would be at least to protect their savings from the ravages of inflation as bank interest on savings deposits constitutes little more than compensation for savings lost through inflation, at least at the present rate. Senator Watson —Index them. Senator HAINES —Certainly, Senator. There are far more things that we should be indexing than we currently are; tax thresholds are a classic case, as well as these sorts of issues relating to levels of income above which provisional tax must be paid. While I consider that this Bill is probably well intended in a number of areas, it is fraught with problems. It needs to be looked at prior to passage so that we are not faced with the Treasurer (Mr Keating) bouncing into another place in a few months and saying: `Whoops! There have been a number of unintended consequences and we will have to amend the Taxation Laws Amendment Act (No. 5) which we dealt with only a few months ago'. That sort of silly nonsense does not inspire any confidence in anybody, much less the population who have to suffer from the changes. I argue that the point at which this Bill should be sent for review by a committee is prior to our going into the Committee stage; otherwise we will be faced with the silly situation, in debate on the various clauses at the Committee stage, of trying to get agreement on what it is best to do to ameliorate or eliminate some of the problems that we all foresee. It would be better to send the Bill to a committee immediately. I heard on the grapevine this morning-we know what grapevines are like around this place-that there is a possibility that the Opposition will consider sending the Bill to a committee after its passage. That surprises me because I think that would be rather silly. First of all, it would not achieve a great deal because the Government would be under absolutely no pressure to do anything. The Standing Committee on Finance and Government Operations, like all standing committees, has a Government majority on it. If it wanted to drop this piece of legislation, once passed, to the bottom of the barrel, unfortunately it could do that. If the Government wants to proclaim it while it is still being looked at by the Committee, it can certainly do that. If the Government lets the Committee look into the legislation, the Government can still cheerfully ignore the report, no matter what the Committee recommends. In any event, there is no requirement for the Committee to call before it the sorts of people who could offer it the most assistance. We will move a motion to refer the legislation to a committee. Our amendment would leave out all words after `that' and insert the words `that the Taxation Laws Amendment Bill (No. 5) 1986 be referred to the Standing Committee on Finance and Government Operations for report by 4 May 1987', on a range of matters. As I am running out of time, perhaps I can seek leave to continue my remarks until I have finished reading through the amendment, or I can circulate it. The ACTING DEPUTY PRESIDENT(Senator Giles) —You will need to wait until the other amendment has been dealt with before you can move your amendment so perhaps it is more appropriate for you to seek leave to continue your remarks. Senator HAINES —I am not quite sure that I understand. I thought that the other amendment, moved by Senator Michael Baume, was simply an amendment to the second reading motion. The ACTING DEPUTY PRESIDENT —That is the case, but you cannot move your amendment until that original one has been dealt with. Your time has expired. Senator HAINES —I wanted simply to seek permission from the Senate for an extension of time so that I could finish reading out my amendment. If you want me to give it to a colleague later on, after Senator Baume's amendment has been dealt with, Madam Acting Deputy President, I am happy to do that. The ACTING DEPUTY PRESIDENT —That is probably the most reasonable way to deal with it. Senator WATSON(Tasmania)(12.41) —The Senate is debating the Taxation Laws Amendment Bill (No. 5) 1986. It deals with three principal changes to the Income Tax Assessment Act. The first change affects the provisional tax aspects of income tax so that, instead of paying provisional tax once per year, a large number of taxpayers will in future be required to pay by four equal instalments. The second change relates to the assessability of capital gains and deductibility of capital losses from foreign exchange transactions. The third change relates to short term redeemable preference shares involved with short term share based financing arrangements. The first of these changes amends section 221ya dealing with provisional tax. In so doing, it details in an extraordinarily complex manner the treatment of provisional tax. I would even go so far as to say that it is perhaps one of the most complex pieces of legislation put before the Senate in the taxation field for quite a number of years. In addition to the traditional definition of provisional tax, we now have four new aspects of provisional tax. We have what is known and defined in the amendment as applicable provisional tax. That is in addition to ordinary provisional tax. We also have basic provisional tax and, thirdly, varied provisional tax. Interpretation of this Bill will be particularly difficult for the layman due to the excessive intricacy of the document. Ordinary taxpayers will be forced more and more to go to their lawyers and accountants to determine their liabilities and responsibilities for income tax. So, despite pleas by most members of this chamber for our tax laws to be simplified, the Government is hell-bent on making the tax law more complicated rather than on simplifying it. The complexities arise even before the reader has negotiated the interpretative sections. For example, we are served up, in clause 14 (a), with the following definition: `varied provisional tax amount', as at a particular date in relation to a year of income, means the amount determined (or last determined, as the case requires) before that date, in accordance with section 221yda (as affected by any reduction under section 221ydc or any alteration under section 221yg). Who could basically follow that, unless he is a lawyer? How can a small businessman hope to cope with legislation containing these sorts of technical definitions? The purpose of this inordinately complex piece of legislation is to bring forward the payment of provisional tax. Sitting suspended from 12.45 to 2 p.m. Senator CHANEY —My question is to Senator Button in his capacity as Minister for Industry, Technology and Commerce and as Minister representing the Minister Assisting the Treasurer on Prices. I refer him to the Prime Minister's threat last week to penalise car makers with respect to local content if the Automotive Industry Authority believes that price increases are unreasonable and that such a move-and I quote Mr Hawke-`would have a substantial adverse impact on the motor vehicle producers' profitability'. Does the Government believe that there have been excessive increases in local car prices and, if so, is it suggesting that manufacturers reduce prices? Does the Minister support moves to decrease the profitability of producers, who have just suffered their worst year for 15 years and who constitute the majority of companies in the transport equipment sector of the economy which, according to this month's Australian Bureau of Statistics figures, suffered a 70 per cent drop in profitability in the past 12 months? Is this threat of punitive action the Government's only response to the car industry crisis other than this Minister's `all we can do is cross our fingers and hope' statement of a couple of weeks ago? Senator BUTTON —On the general question of the motor vehicle industry let me say that in the context in which I made the remark about crossing our fingers and hoping-I do not think that is quite the correct interpretation of what I said, but it is near enough; I do not wish to dispute the substance of the allegation-I was at pains to make the point that the motor vehicle industry in the last two years has been characterised by sharply increasing prices at the same time as there has been considerable restraint in the Australian community in respect of incomes. I suppose there are some exceptions to that; for example, the performance of particular companies which import very highly priced cars which have retained market share as a result of sales to the wealthier section of the community. But generally speaking, restraint in incomes has been quite apparent, and quite essential in terms of the Australian economy, and that has come at a time when prices of vehicles have increased significantly. That is the context in which the motor vehicle industry finds itself at present. I think the provisions of the motor vehicle plan can only assist companies to adjust to that process of a difficult market situation. Insofar as the price of motor vehicles is concerned, in respect of some companies there has been some evidence of price taking in the past 18 months when they might have been better advised to seek to increase market share by restraining price increases. That is essentially their business, but for some of them that may well have been a better strategy. Insofar as the future is concerned, of course the Automotive Industry Authority will be keeping an eye on automotive industry prices in the same way as the Steel Industry Authority keeps an eye on steel industry prices. I think it is important that that happen in the general process of restructuring the industry and so on. I do not think I can take it any further than that. That is the Government's strategy and we will stick to it. Senator CHANEY —I regret that practice admits only one supplementary question. The Minister referred to the increase in the price of motor vehicles being in excess of the general movement in the consumer price index. Before the Government made its threats to the motor vehicle industry did it do any analysis on the extent to which those increased prices relate to costs inevitably incurred because of the devaluation-bearing in mind that for all but one maker imports are a significant element of manufacturing-the changes in sales tax, of which there have been two, the cost of the switch to unleaded petrol and other government caused increases in the cost of motor vehicles? Before the threats were made was any analysis made of the extent to which those higher than CPI price rises could be attributed to those government caused factors? Senator BUTTON —In relation to the motor vehicle industry I did not refer to CPI increases and automotive industry car prices in my answer to the question, as I recall. Senator Chaney —You said that there had been a greater rise than the general CPI increase. Senator BUTTON —I do not think I said that, but it does not matter. I do not want to argue about it. The increase in motor vehicle prices has been far in excess of the CPI and the basic reason for that is the devaluation. It is not true, as Senator Chaney said in his supplementary question, that only one manufacturer-- Senator Chaney —One car. Senator BUTTON —That only one car has a local content which reduces the effects of the depreciation significantly on that company. A number of high content cars are made in Australia, but the fact is that the prices of the imported components are very significant because they are key components in the motor vehicle. Of course the Government has taken into account the effects of the depreciation on motor vehicle prices. When I answered the first part of the question I assumed that Senator Chaney would understand that. I am also asked in the supplementary question whether we have taken into account a range of other factors in the course of making an assessment of these matters. The answer to that question is yes. There have been a number of increased costs to the motor vehicle industry which have been debated here for some time. The particular items to which Senator Chaney referred were the sales tax on luxury motor vehicles, the increased sales tax in the last Budget and unleaded petrol. I think we have been through all of that debate before. The decision on unleaded petrol I think is just a consequence of the way that the system of government generally operates in this country. I do not think it was the smartest decision that governments of a variety of political persuasions have made. I think it was a Liberal government which adopted the legislation following a decision of the New South Wales Government. Senator CHILDS —My question is directed to the Minister for Industry, Technology and Commerce. Has the Minister's attention been drawn to an article in today's Australian Financial Review entitled `Concerted effort needed to turn the $A depreciation to advantage'? Does the Minister agree with the conclusions of the survey by the National Institute of Economic and Industry Research, mentioned in the article, that the domestic market focus of foreign-owned enterprises in Australia had `greatly inhibited a speedy export-oriented investment response to devaluation'? Can the Minister outline the action that the Government has taken and is proposing to take to persuade foreign-owned manufacturers to invest for a concerted export drive? Senator BUTTON —Senator Childs's question might be put in another way-why has not the J-curve operated as quickly in Australia as some people thought it might? That is another way of putting the same question. Senator Puplick —He was not game. Senator BUTTON —He is not a man lacking in courage. That is a very rude remark to make about a senator. I am aware of the article by Michael Stutchbury in the Australian Financial Review today. I have not seen the study to which it refers, but according to that article the study by the National Institute of Economic and Industry Research suggests that foreign ownership of Australian industry has been a factor behind Australia's comparatively poor investment in export activities. I think a variety of factors are responsible for poor export performance. Most of them can be associated with the policies of former coalition governments which were wimpish about restructuring industries and saw the solution to industry problems in made to measure tariffs for every industry which asked for them. The Institute's survey of 45 larger companies found that only 27 per cent of the foreign owned manufacturers surveyed saw investment opportunities in export, compared with 66 per cent of Australian owned companies. All of that 66 per cent referred to export potential as a spur to investment. In some ways, I would agree with the Institute's view that the domestic market focus of foreign owned enterprises in Australia has inhibited a speedy export oriented investment response to the devaluation. This focus on the Australian market has not been confined to foreign corporations trading from Australia. There has been a past preoccupation with domestic markets rather than world markets; not just foreign companies per se. I refer to industry policies of the past which have encouraged that sort of attitude. The notion until two or three years ago of what I would call good corporate citizenship by foreign companies in Australia was totally absent from government policies and the environment for industry set by government. Now that foreign companies operating in Australia are increasingly having a different attitude to these things, I would hopefully suggest that the improvement in manufacturing exports shown in yesterday's figures is some evidence of that, as, it is evidence, similarly, of better performance by Australian companies. That is all I can say to the honourable senator at this stage. Some of the implications are right and some are not. Senator DURACK —My question is directed to the Minister representing the Minister for Transport and Minister for Aviation. I refer the Minister to the Government's decision to award the new coastwatch contract to Amman Aviation rather than to continue with the previous operator, Skywest Airlines Pty Ltd. I refer to comments by the Australian Federation of Air Pilots that Amman has `never been heard of in the industry'. Is the Government concerned that this will make it difficult for Amman to recruit suitably qualified pilots? Is it a fact that the successful tenderer does not have an office, is not a registered company and is still awaiting delivery of aircraft to be used in this vital surveillance service, and that when the aircraft finally arrive they will have to undergo modifications? What steps were taken to ensure that Amman had the technical, financial and human resources necessary to perform the service? Senator GIETZELT —I became aware of the issue raised by Senator Durack a few minutes before Question Time today by reading the Canberra Times. I think that the best response that one can make, having regard to the fact that there is no information in my briefing papers, is to say that the proper tendering arrangements were carried out when the Government dealt with this matter. There is a difference of view between the successful tenderer and the person who did not get his price in line with the person who won the contract. Consequently, there has been a reaction by Skywest. The Minister gave an assurance that proper tendering arrangements had been carried out in these matters. I will ask the Minister whether he wants to make any further comments. Senator DURACK —I ask a supplementary question, Mr President. The Minister said that he did not have a briefing paper or information about this. I would like him to tell us how he knew that proper tendering procedures had been followed. Senator GIETZELT —Because that is government policy, and that is what Mr Morris said. Senator FOREMAN —I draw the attention of the Minister representing the Minister for Foreign Affairs to an article on the front page of yesterday's Australian Financial Review entitled `Awakening Vietnam looks to Australia for trade'. In that article it was reported that Vietnam is considering the expansion of its trade to increase production and relieve abject poverty. Such developments seem to follow on the heels of reforms in Vietnam and reforms in Vietnam's chief ally, the Soviet Union. Will the Minister state whether or not the Government sees these steps as positive, and whether or not Australia would support Vietnamese moves to trade more widely and generally be more responsive to the international trading community? Senator GARETH EVANS —The Government has been encouraged by recent signs that Vietnam is seriously addressing the question of economic reform, including the broadening of international trade, in an endeavour to increase the economic welfare and well-being of its people. The Australian Government is committed to developing a more normal and comprehensive relationship with Vietnam. We believe that it is not in the interests of Australia or our region that Vietnam should be isolated. We believe that the development of our own bilateral relationship with Vietnam serves to encourage Vietnam to play its full and responsible role as a member of the regional and international community. Australia's links with Vietnam have expanded over recent years in a number of areas, including trade. It is clearly in the interests of Australia, the region and Vietnam itself that Vietnam be encouraged to trade more widely. The Australian Government, therefore welcomes the initiative taken by Vietnam to trade more widely and, in particular, to develop two-way trade with Australia. Consistent with normal international trading practice, the Australian Government is prepared to consider ways of assisting that process. The PRESIDENT —Order! I draw the Senate's attention to the presence in the gallery on my left of ex-Senator Lajovic. On behalf of all honourable senators, I welcome him to the chamber. Honourable senators-Hear hear! Senator HAINES —My question is directed to the Minister for Resources and Energy. Is it a fact that the Commonwealth is considering allowing an ongoing arrangement that would let the Ranger uranium mine release contaminated water into stages 1 and 2 of Kakadu National Park at regular intervals? If so, how can the Government claim that it will do all it can to protect Kakadu National Park, while setting up a regime allowing water containing sulphur, uranium and other contaminants to flood stages 1 and 2? How can the Government justify accepting the recommendations of a working group-composed of the Office of the Supervising Scientist, the Northern Territory Department of Mines and Energy, and Ranger-which did not consider the social implications of release of contaminated water, although `best practicable technology' is defined under the Northern Territory Uranium (Environmental Control) Act to include `social considerations'? Finally, why did the Government ignore the opposition expressed by representatives of traditional owners through the Northern Land Council in making a decision about water management of Ranger? Senator GARETH EVANS —The Government has made no decision on this matter yet. Any decision that is made will be one that is entirely consistent with the concerns of this Government and the community generally to ensure the environmental protection and preservation of the Kakadu region in an absolutely unsullied state. It is inconceivable that we would make any decision here which had adverse environmental implications. Beyond that, it is entirely premature for me to nourish in any way the speculation by Senator Haines-prompted, no doubt, by other entirely speculative and for the most part totally inaccurate newspaper articles that have appeared in recent weeks-about the possible course of decision-making in this process. However, I will respond further to one specific aspect of her question, and that is the definition of `best practicable technology'. Of course social factors are part of the definition of `best practicable technology' and of course the Government would not accept a recommendation from the Office of the Supervising Scientist or anyone else as to what 'best practicable technology' was unless it was satisfied that social criteria as well as purely technical and scientific ones were satisfied as part of that definition. Senator HAINES —Mr President, I have a supplementary question. Given that partial response from the Minister, can he say when his decision on the matter is likely to be made? Senator GARETH EVANS —It would make sense to have a decision before the dry season is under way because just about any of the options for dealing with the future of water release in Ranger-certainly most of the options under active consideration at the moment-would require some dry season excavation works and it would make sense accordingly to enable those to get started as soon as possible. I would hope that a decision on this matter would be made within a matter of weeks. Senator DEVLIN —Is the Minister representing the Attorney-General aware of the response from the Tasmanian Premier, Robin Gray, to the call by his Federal parliamentary leader, John Howard, for the Tasmanian Parliament to abide by the Constitution by accepting the Australian Labor Party nominee for the forthcoming Senate casual vacancy? What is the Government's reaction to that response? Senator Durack —Not another one. Senator GARETH EVANS —I know that it hurts, Senator Durack, but we will not hurt you at quite so much length today. We do not need to because Mr Gray's response speaks for itself. It was made today on the Australian Broadcasting Corporation World Today radio program and it was in the following terms: John Howard has got his view and I've got mine which is supported by the Tasmanian parliamentary Liberal Party. Let's not worry about what Mr Howard says. Mr President, that is a striking affirmation, is it not, not only of the linguistic influence which is wielded by the Queensland Premier on his southern acolyte but also of the kind of authority that Mr Howard now wields on the national Liberal Party stage. Senator Walters —I raise a point of order, Mr President. The failed Attorney-General has just made a ridiculous statement because Mr Batt came to Canberra pleading with Mr Hawke about the logging in our State and came home and called him a blundering hypocrite. That just shows what authority Mr Hawke has over his leader in Tasmania. The PRESIDENT —Order! There is no point of order. That was a statement. I call Senator Gareth Evans. Senator GARETH EVANS —The kind of influence that Mr Howard wields over his Tasmanian members and supporters I think can be likened to the kind of influence that General Custer had over the Indians; it is that extensive. What Mr Gray said was a striking affirmation furthermore not only of the authority of Mr Howard these days but also of the extent to which Mr Gray was prepared to acknowledge the latter day conversion of Senator Chaney to the path of true constitutional rectitude on this matter. Finally I say, stating the obvious, that Mr Gray's response is a striking reaffirmation of the congenital inability of him or his Government to accept the democratic choice of the Tasmanian people in supporting an ALP candidate for the particular position and a striking demonstration again of his utter inability to behave with any semblance of constitutional decency and propriety in this matter. Senator PUPLICK —The Minister for Industry, Technology and Commerce will be aware of the enthusiasm in private enterprise research and development activities expressed for the Government's 150 per cent tax concession scheme for such research and development and the support given to this scheme by the Opposition. Is the Minister aware that a number of significant recipients and potential recipients of this taxation assistance are expressing real concerns that the rulings being given by the Australian Taxation Office and the monitoring of expenditure by the Tax Office are having the effect of subverting the intentions of the scheme and reducing its real effectiveness and value to industry? Has his attention been drawn to such apparent nitpicking requirements as those which require the actual specific costs of an individual scientist's salary rather than a global figure of total salary expenditure outlaid on a project to be calculated and vouched for; or the requirement for precise assessments of salary costs to be made where a scientist works primarily but not exclusively on a project designated for the taxation concession support? Will the Minister arrange for his Department to liaise with the tax concession recipients to establish the extent to which petty bureaucracy within the Tax Office is reducing the real and potential efficacy of this scheme and take all necessary steps to minimise this without in any way allowing public money to be improperly expended? Senator BUTTON —Senator Puplick asked whether I was aware of concerns about a variety of matters associated with the 150 per cent tax concession for research and development. The answer to that question is yes. A month ago, I think, I instructed that steps be taken to try to clarify a number of issues relating to this matter which are basically associated with companies' concerns about increasing self-assessment for taxation purposes and the fear of penalty for wrongful self-assessment in respect of the research and development concessions. There are a number of detailed matters; Senator Puplick referred to one of them of which I was aware. My Department is liaising with the Tax Office. The other point which follows from that is that I think a letter was sent last week to a number of registered companies advising them of the actions which have been taken and further material will be sent on a regular basis to keep them in touch with developments. Senator REYNOLDS —I address my question to you, Mr President. Have you been advised of any pending alteration in the composition of the National Party of Australia which would affect its entitlements as a recognised party and the seating arrangements of members in this chamber? What lead time is required by the Senate to implement the necessary changes which will result when Queensland National Party senators, as directed by their State branch, are required to desert the coalition benches? Senator Puplick —On a point of order, I put it to you, Mr President, that it is in fact contrary to the Standing Orders to ask questions which are of a totally hypothetical nature, let alone to attempt to embarrass you as the occupant of the highest office in the Senate. The PRESIDENT — I do not think the first part of the question was hypothetical because it was asking me about a statement of fact. The question does not embarrass me. I will be able to answer it and I intend to answer it. In reply to the first part of Senator Reynolds's question as to whether I have been advised of any alteration in the composition of the National Party which would affect its entitlements as a recognised party, the answer is no. As to the second part of the question about what time would be required to implement changes, I believe it would require very little time. Senator BJELKE-PETERSEN —My question to the Minister representing the Prime Minister concerns the bicentennial medallions to commemorate our 200th year which were to be presented to primary, secondary, pre-school and kindergarten children. Is it a fact that a decision has now been made by the Government not to issue the commemorative medallions to the pre-school and kindergarten children? Does the Minister concede that this decision has meant that the most receptive group of young Australians will now be denied an opportunity to begin to appreciate the importance of this occasion in our nation's history? Senator BUTTON —I appreciate Senator Bjelke-Petersen's question. I do not concede anything because I do not know anything about the topic at all but I will obtain an answer for her as quickly as possible and let her know. Senator COOK —Has the Minister representing the Minister for Employment and Industrial Relations seen reports in the local media about claims by the Australian Capital Territory branch of the Australian Medical Association for increased remuneration for treatment of Medicare patients in Canberra's public hospitals? Can the Minister advise the Senate of the impact on outlays if the AMA's claims were met? What would be the impact on the economy if the Australian Capital Territory doctors pay claim spread throughout the work force? Senator WALSH —If the claim of the Australian Capital Territory branch of the Australian Medical Association were granted the cost to the Budget for that item would almost double. That is because the Australian Capital Territory branch of the AMA, or the doctors union as I think it ought to be known, has demanded an 85 per cent pay increase. The doctors unions was offered a 21 per cent pay increase and said that that was not nearly enough. It is demanding 85 per cent. Twenty-one per cent, by the way, is about what, or slightly more than, George Crawford and his mates are trying to secure. We hear a lot of condemnation of George Crawford, but we do not hear so much condemnation from the other side about the doctors union. If that 85 per cent pay claim which the doctors union is demanding were to flow right through the work force, the wages bill in 1987-88 would increase by something close to $140 billion. If it were to happen, one could also expect an inflation rate of something above 60 per cent; that is, if the doctors union's pay claim were to spread throughout the economy. The pay claim which the doctors union has submitted includes a 50 per cent penalty rate for working shifts or, more precisely, for work performed between 6 p.m. and 8 a.m. The doctors union in this Territory is demanding a 50 per cent loading for shift work. It also includes a demand for $180 a day non-appearance money. I use that term advisedly because there are some awards, or at least there used to be some awards, where attendance money or appearance money was paid to people even if there was no work. The doctors union, however, is demanding $180 a day-money to sit at home and answer the telephone if it happens to ring. Senator Gietzelt —It is the nature of the industry. Senator WALSH —Yes, as Senator Gietzelt said, it is the nature of the industry. If the telephone happens to ring between 6 p.m. and 8 a.m., in addition to the $180 non-appearance money which the doctors union is demanding, the doctors union says that they should receive a 50 per cent penalty rate for any work which they might actually perform. There has been some reference by the doctors union to the arrangements in New South Wales under the Macken determination, a determination that was extorted by the doctors union in New South Wales from the New South Wales Government under duress. This Government, of course, does not accept that as a reasonable determination, and had it applied in the Australian Capital Territory it would have been opposed by the Government at that time. It would not be a reasonable determination under any circumstances, let alone under the present circumstances. The claim of $180 a day by the Australian Capital Territory branch of the doctors union for non-appearance money is, of course, quite modest at $7.50 an hour compared with the $11.90 an hour which the doctors union in New South Wales managed to extort. The New South Wales pay claim extorted last year also includes a 36 per cent holiday pay loading. I note with considerable disgust, but not surprise, that one of the principal personalities involved in that extortion racket by the New South Wales branch of the doctors union last year was none other than that well known figure from the Australian Society of Orthopaedic Surgeons, Dr Bruce Shepherd, which Society is affiliated, would you believe, with Andrew Hay's Australian Federation of Employers. Not that Dr Shepherd has any monopoly of hypocrisy, because members of the Opposition have been totally silent in response to this outrageous demand from the Australian Capital Territory branch of the doctors union for an 85 per cent pay increase, a 50 per cent penalty rate for shift work, $180 a day non-appearance money and a 36 per cent holiday pay loading. I invite any member of the Opposition, but in particular those members of the Opposition who are very free with their oral and written criticism of the alleged irresponsible actions of other unions, to denounce the Australian Capital Territory branch of the doctors union for its reckless and irresponsible claims on taxpayers' funds. I invite them, and I challenge in particular those who are so free with their mouths and their pens about much less irresponsible claims which occasionally come forward from other sections of the union movement, to stand up here or anywhere else and denounce this attempt by the Australian Capital Territory branch of the doctors union to extort the Australian Government and the Australian taxpayer. The PRESIDENT —Order! I wish to acknowledge the presence in the President's gallery this afternoon of an Indonesian parliamentary delegation led by the Deputy Speaker, Dr Murtono. I welcome the delegation to the Senate. On behalf of all honourable senators. I trust that their visit to Australia is both beneficial and enjoyable. Honourable senators-Hear, hear! Senator SHORT —I refer the Minister for Finance to statements in last weekend's Press by the General Manager of the Australia Council, Mr Max Bourke, in response to criticisms by the Opposition's Waste Watch Committee, of which I am proud to be a member. I ask: Is the Minister aware that Mr Bourke is reported as saying that criticisms of Australia Council grants of millions of dollars of taxpayers' funds to such groups as painters and musicians in residence at trade unions, to kite makers and to gay and feminist groups are unfounded and that there is `no need for cuts in such grants'? In view of repeated claims by the Hawke Government that it is exercising major restraint in government spending and that all Australians must accept reduced living standards, how does the Minister for Finance justify such expenditure of taxpayers' funds? Does he support Mr Bourke's defence of these expenditures? Senator WALSH —I thank Senator Short for his question, particularly as it follows the question which I was asked immediately beforehand by Senator Cook. Senator McIntosh —It was a dorothy dixer. Senator WALSH —No, it was not a dorothy dixer, Senator McIntosh, but it might well have been, because it illustrates the essential irrelevance of this Opposition and in particular of its Waste Watch Committee, which trivialises the question of public expenditure while remaining absolutely silent about the outrageous demand by the Australian Capital Territory branch of the doctors union to get an 85 per cent pay increase entirely at taxpayers' expense. When will the Waste Watch Committee condemn the Australian Capital Territory branch of the doctors union for its attempt to extort from the Australian taxpayer an 85 per cent- Senator Michael Baume —We attack government spending. You have not spent it yet. Senator WALSH —Will you condemn it, Patrick? Will you condemn it, Senator Baume? Will the honourable senator condemn the doctors union for its attempt to extort an 85 per cent pay rise from the Australian taxpayer, a pay rise which, if successful, and which, if it flowed through to the economy, would add in the next financial year something close to $140 billion to the national wage bill and induce an inflation rate in excess of 60 per cent? There is not a murmur from members of the Waste Watch Committee about the attempts at extortion by the Australian Capital Territory branch of the doctors union, not a murmur of dissent from them now, not a murmur of dissent from them in the past and not a murmur of dissent from them, I predict, in the future. They are quite happy-Senator Michael Baume and all the rest of that bunch of dissidents sitting on the back bench who are trying to usurp those positions on the Opposition front bench. That is as far as they will get, the Opposition front bench. Most of them will not make that, and they do not deserve to make it, either, even in competition with some of the incumbents. There is not a word from any of them about the things that really matter, such as extortionate wage demands by the Australian Capital Territory branch of the doctors union. All they can pick on is a few trivial matters from time to time which in total do not amount to a few million dollars; they pick up from time to time some grant which has a funny name and from time to time they come out with their Sunday Press statements condemning particular projects which they say this Government has authorised when, in fact, upon investigation they are found to be projects authorised by the Fraser Government when Mr Howard was Treasurer. Senator Michael Baume —Rubbish. That is a total lie. That is absolute nonsense. Senator WALSH —We know how reliable the honourable senator's word is. We know all about those Patrick Partners prospectuses the honourable senator used to write. Senator Michael Baume —Total nonsense. The PRESIDENT —Order! There are too many interjections. I also ask the Minister to address the Chair and not answer interjections. Senator WALSH —Certainly, Mr President. In reply, insofar as it deserves a reply at all, as far as I am concerned, irrespective of what Mr Bourke says, all items of public expenditure are under scrutiny. That has been the practice of this Government. In closing, I invite Senator Michael Baume, if he is to make a personal explanation as he usually does at the end of Question Time-he makes lots of personal explanations because he has a lot to explain-to take the opportunity to do something really worth while and condemn the Australian Capital Territory branch of the doctors union for its ruthless attempt to extort an 85 per cent pay rise from the Australian taxpayer. Senator SHORT —Mr President, I ask a supplementary question. I note Senator Walsh's totally irrelevant answer, his total non-answer and his non-addressing of the question. I ask him again to answer the two specific questions I asked: Firstly, how does he justify the expenditure of taxpayers' funds to which I referred? Secondly, does he support Mr Bourke's defence of this expenditure? Senator WALSH —I do not know whether Senator Short wants me to repeat all the invitations I have issued, but I invite Senator Short as well to declare publicly his view on the attempt by the Australian Capital Territory branch of the doctors union-- Senator Chaney —I take a point of order, Mr President. A high degree of licence is allowed in this place as to how Ministers choose not to answer questions, but two quite specific and limited questions have been put to this Minister. To say that he has raved on would be a polite way of describing what he has done for the last five minutes. Quite simple questions have been put to him again. I suggest, Mr President, that if you cannot require him, because of the practice of this place, to answer the question you at least prevent him from debating in a way which is thoroughly offensive to everybody. The PRESIDENT —There is no point of order. I have no power as to how the Minister shall answer the question. However, the Minister shall not debate the question. I ask Senator Walsh to reply as quickly as possible. Senator WALSH —Certainly, Mr President, although I do not believe that I was debating the question. The global funding for the Australia Council will be considered in the context of the 1987 Budget, as it has been considered in the context of every Budget since this Government has been in office. However, unless there is a change of policy, as distinct from the level of funding, which has-if I recall correctly-applied under both previous Labor and coalition governments ever since 1973 or 1974, the itemised distribution of whatever global amount of funds is provided to the Australia Council will be left to that institution and its advisory committees. Senator McKIERNAN —My question is directed to the Minister representing the Treasurer. In the Bulletin magazine of 10 March 1987 there appeared a table of statistics indicating the estimated impact of what was termed the `Bulletin Version of Howard's Scheme'. This scheme included an 8 per cent value added tax and a 4 per cent increase in rebates, benefit amounts and thresholds. I ask the Minister: Would a 4 per cent increase in social security benefits be sufficient to compensate low income Australians for the cost of living increases brought about by the introduction of an 8 per cent value added tax? Senator WALSH —There are two relevant considerations. The first is: By how much would the consumer price index be increased if an 8 per cent VAT were introduced? The second is whether a 4 per cent increase in rebates, benefit amounts and thresholds would be adequate compensation for that. At the margin the effect on the CPI of an 8 per cent VAT is arguable. However, there is little doubt that the CPI would be increased by more than 6 per cent, were an 8 per cent VAT to be introduced. Therefore, it follows that a 4 per cent increase in rebates, benefits and thresholds would not compensate for the higher CPI induced by the introduction of an 8 per cent VAT, with the possible exception of the tax-free threshold for people whose incomes were just above the tax-free threshold. It would provide compensation there, but it would not provide compensation for other rebates or for benefits. If Mr Howard were willing to give us more details of the specific VAT he plans to introduce, we could perhaps give Senator McKiernan more precise estimates of the CPI-- Senator Chaney —Mr President, I take a point of order. I did not object to the original question because I think that in the end the actual question asked was in order. It related quite specifically to whether a specific figure would cover a particular adjustment to the tax system. I suggest, however, that the Minister is now making comments on what he is suggesting might be the tax policy of the Opposition. That seems to me to be quite outside the range of the question that was specifically put to him. In accordance with previous rulings that you have made, Mr President, had a question been asked in those terms you would have ruled it out of order. The PRESIDENT —The original question was in order; but I have noticed that the Minister is getting into the area of the hypothetical, saying `if a policy is this, if a policy is something else'. I ask him to direct his reply to the original question. Senator WALSH —Certainly, Mr President. I will not deal with the tax policy of the Opposition, which has now been vetoed by the National Party. I will deal with the question in the terms in which Senator McKiernan asked it: Would a 4 per cent increase in allowances be sufficient to compensate people for a VAT at an 8 per cent rate? The answer to that clearly is no. Many low income Australians who are dependent on private sources of income would be badly affected, as well as those who receive allowances. This category includes a widow bringing up children on life assurance money from her husband's death, a disabled worker or traffic accident victim living off the proceeds of a compensation claim, a retired worker with a pension from a private superannuation scheme and a retired self-employed couple living off the lump sum realised from selling the family business. These people are not welfare beneficiaries. The effect on them of an 8 per cent VAT would be equivalent to a 6 per cent or 6 per cent-plus capital levy. That is something which those, such as the Opposition Leader, who purport to be concerned about what Menzies once described as the forgotten people ought to take into account. For those who are on social security pensions and benefits, a 4 per cent increase in benefits would not offset the effect of an 8 per cent VAT which would have the effect of imposing a 6 per cent straight capital levy on a widow bringing up her children on life assurance money, a disabled worker or traffic accident victim living off-- Senator Walters —Ha, ha! Senator WALSH —Let us note for the record that Senator Walters thinks it is very funny that a widow bringing up children on the lump sum which may have been granted as compensation following her husband's death should be subjected to a 6 per cent capital levy. Senator Walters thinks that is a laughing matter. Likewise, a 6 per cent-plus capital levy would be the effect, on a retired worker on a pension from a private superannuation scheme or a retired self-employed couple living off the proceeds of the sale of their business, of an 8 per cent VAT. Senator POWELL —Is the Minister representing the Minister for Health aware that the Committee of Inquiry into Medical Education and the Medical Workforce has no student representation, despite strong requests by the Australian Medical Students Association to be represented on the Committee? Will the Minister confirm that the Committee of seven will be breaking up into sub-committees and working parties, thus undermining the Minister's official excuse for rejecting the participation of medical students, which is that a committee larger than seven would be inefficient and unwieldy? Does the Minister have any rational grounds for excluding the consumers of medical education and future medical practitioners from participating in the work of this Committee? As the Committee itself cannot co-opt members and a ministerial decision is needed to expand its size, is the Minister prepared to reconsider his refusal to allow medical students a representative on the Committee? Senator TATE —In answer to Senator Powell I refer to a brief I have. I hope she understands. The Minister for Health made his decision on the composition of the Committee after consulting with his colleague, Senator Ryan. The competing interests of sectors with an interest in medical education and the medical work force were weighed up and the Minister decided, in the interests of efficiency, that a smaller expert membership would produce better results for the inquiry than a larger and more diverse membership. I will not confirm that the Committee will break up into sub-committees because the Committee itself has not made such a decision. It is likely that some components of the Committee's work will be handled by sub-groups; however, the major deliberations and discussions on the main issues must necessarily be undertaken by the whole Committee. Consumers of medical education-by which, one presumes, Senator Powell means medical students and future practitioners-have ample opportunity to participate. The Committee has advertised nationally for submissions from interested organisations and individuals, and many organisations have received letters advising them of the inquiry. Where submissions raise issues and views which the Committee wishes to pursue, it will also consult with the relevant bodies. The inquiry has in fact stimulated widespread interest from the community at large and the Committee has received expressions of interest from about 500 organisations and individuals, both within and without the medical fraternity. As I said in answer to the first part of the question, in deciding the composition of the Committee the Ministers concerned considered it both unwieldy and unnecessary to have a committee consisting of representatives from every interested sector. After all, it is a committee of inquiry and its central task is to inquire into the views of the many and diverse sectors of the community with an interest in medical education and its impact on health. Senator POWELL —I have a supplementary question. In relation to that part of the Minister's response which suggested that medical students might participate through submissions, is the Minister aware that funds which hitherto had been provided to the Australian Medical Students Association through the national community health program grants were discontinued this year and that the request of the Australian Medical Students Association for funds for research last year was refused? Does the Minister not agree that this is a classic catch-22 situation, with the students being refused membership of the Committee while being told that they could make a submission for which they do not have the research facilities because of cutbacks in Government funding? Senator TATE —I regret that I was not aware of those facts, if they are facts. I will try to find some more detail for Senator Powell. Senator RICHARDSON —Is the Minister for Industry, Technology and Commerce aware of remarks made by Mr Bob Oser, national director of taxation services for Price Waterhouse, about business tax which are reported in today's Australian Financial Review? Does the Minister agree with Mr Oser's reported concern about the Opposition's tax promises and with his views on the Government's tax reform measures? Could the Minister also indicate whether Mr Oser's views are widely held in the business community? Senator BUTTON —The report in today's Australian Financial Review has been drawn to my attention. Mr Oser, a tax expert, apparently has expressed concern over the uncertainty created in the business community by coalition promises to scrap elements of the Government's tax reforms, while failing to outline details of its entire tax package. While the Opposition thrashes around on these issues, I remind the Senate that the Government has undertaken unprecedented tax reform measures. Opposition senators interjecting- Senator BUTTON —I pause for a moment to listen to the interjections, just to confirm the suspicion I have often had that the Opposition is thrashing around still looking to deal with the symptoms rather than the cause. There is no doubt that that is so. The Opposition flaunts itself around this country, trying to pick up any element of tax policy it can get from any fringe group in the community and closet it all together and call it a policy, but it is a very difficult thing for it to do. I remind honourable senators of the steps taken by the Government, in particular the new company tax imputation system which will commence on 1 July this year and will provide the most significant business tax reform in the post-war period in Australia. This new system, known as full imputation, will mean that profits will be taxed once at a company level, but not a second time at the personal level when those profits are distributed as dividends. This is a revolutionary change for business, as well as for ordinary shareholders, and will give Australia one of the most advanced and efficient tax regimes in the world for business purposes. The combination of personal income tax cuts, imputation and other complementary changes will result in reductions in the tax burden for shareholders and small business people by up to 40 per cent. This will be an enormous benefit to the entire community, but particularly to business people. This is combined with the $4.5 billion worth of personal tax cuts, $2 billion worth of 5/3 depreciation and $140m worth of research and development tax concessions this year. The direct cost of imputation credits and the abolition of Division 7 of the Income Tax Assessment Act will be almost $500m in a full year. Senator Chaney —In Ballarat last night they talked of nothing else but this. Senator BUTTON —Senator Chaney says that in Ballarat last night they talked of nothing else but this. I am fascinated by that. I do not think that people in Ballarat would have thought that there was much point in talking to Senator Chaney about this. The gross cost of all these changes will be met in part by the 3 per cent increase in the company tax rate to 49 per cent on 1 July this year. However, this will still leave a net benefit to taxpayers of $300m a year. Senator Messner —What about the fringe benefits tax and the capital gains tax? Senator BUTTON —I turn to Senator Messner on this issue, preoccupied as he is with the abolition of the taxpayer-supported free lunch. On top of the $4.5 billion personal tax relief, these concessions will be paid for in part by closing the holes in the income tax base relating to capital gains, fringe benefits and the substantiation of tax deduction claims. There is an increasing understanding of these benefits. As Mr Oser is reported to have said, the business community has started to adapt to tax reforms, in particular capital gains and fringe benefits taxes, except when the business community is psyched up by the Opposition, which is concerned to create an issue of this matter. In the reported view of Mr Oser the existing tax regime is preferable to the uncertainty generated by the coalition's vague promises and inadequate explanation of what changes would be made to other elements of the corporate tax system. Mr Oser, if he had the benefit of interjections in this place, would add that as another factor generating uncertainty. Mr Oser's views are quite widely held. From 1 July 1987, when the imputation system will be introduced, more members of the business community will see real benefits in the considered and comprehensive approach this Government has taken. As Constance Campbell, the director of a financial consultancy, wrote in the Weekend Australian: The imputation system is a fundamental restructuring of our taxation system . . . it is astonishing that comment and discussion about tax reform can continue without cognisance of the watershed changes that have occurred as a result of this and other tax-package reforms. Senator Messner —But where is your legislation? You have changed it once or twice already. How do we know what we are going to get? Senator BUTTON —I appreciate that Senator Messner has on open mind on these issues, both at the back and at the front, but, if he would cease interjecting for a moment and listen to what I have just said, that commentator said it is extraordinary that the discussion about tax reform can continue without an understanding of the watershed changes that have occurred as a result of this and other tax package reforms. Senator Chaney —Every shop and factory is agog about this. Senator BUTTON —Senator Chaney is telling me that everybody is excited about this. I am not excited about it; I just think that it is a very important reform. I would be much more excited about it if the Opposition showed some understanding and appreciation of those changes which have been made. There has not been a question here on tax matters which has been based upon anything else than greed of a particular fringe group. That is what questions on tax matters are about in this chamber. Some better understanding of the changes which have been made is very important. Senator Chaney —I ask the Minister to table the paper from which he quoted. The PRESIDENT —Will the Minister table the document? Senator Button —Yes. Senator WATSON —Will the Minister representing the Minister for Primary Industry inform the Senate of the cost to the taxpayer of a series of glossy pamphlets recently circulated in the NSW Farmers Journal detailing this Government's rural policy initiatives? Does the Hawke Government intend to continue the practice of advertising its policies in publications produced by the Australian Government Publishing Service at the taxpayers' expense? Senator WALSH —A particular description has been put on the information sheet, pamphlet, or whatever it was, by Senator Watson. That is his description. I suspect that it is a rather biased and somewhat inaccurate description of some information which was apparently enclosed with some country newspapers in New South Wales. I have not seen the information sheet, nor do I know what the cost of it is. I will try to get an answer to Senator Watson about those matters. I note, however, that it is very necessary that somebody provide to the farming community, many of whom are suffering very low incomes, a fact which is a function overwhelmingly of the price of wheat and not of anything else-- Senator Newman —Nothing to do with your Government? Nothing to do with you? Senator WALSH —I did not know that Senator Newman was the full bottle on agriculture as well as on everything else but, being the full bottle on agriculture, no doubt she will know that the real price of wheat in Australian dollars is now about half what it was in 1979. If we express it in United States dollars-in other words, take a world price in United States dollars-it is somewhat less than half the level which prevailed in 1979. I am sure that Senator Newman, given her expertise in agriculture, will appreciate the fact that a decline in price over an eight-year period of around 50 per cent squeezes wheat farmers' gross incomes-or at least that proportion that they derive from wheat-by about 50 per cent, and it squeezes their net incomes by a lot more than 50 per cent. Senator Michael Baume —And what do interest rates do to them? Senator WALSH —I thank Senator Baume for that because it gives me an opportunity to educate members of the Opposition-assuming of course that they are educable, and that is a pretty heroic assumption. Some 35 per cent of farmers do not owe any money; they actually have cash. Their incomes rise if interest rates go up. Another 50 per cent of farmers owe less than $14,000 so the level of interest rates is of little consequence-almost negligible-so far as those farmers who owe less than $14,000 are concerned. We now have 85 per cent of the farming population which either holds net cash balances or owes less than $14,000. There is a residual 15 per cent-many of whom are wheat farmers, the great majority of whom have substantial debts because they bought land at very high prices a few years ago-who are in great financial trouble. As Andrew Robb, the Director of the National Farmers Federation, was good enough to announce two weeks ago, discussions with the New South Wales banks and the NFF have revealed that around 50 per cent of New South Walwa grain growers would not, in the coming season, be able to service any of their debt-please note-either capital or interest. In other words, if the interest rate was zero those farmers would still be going backwards. Senator Newman —Their liabilities have been galloping away under your Government; that is why. It has been cumulative over the last few years. It is getting worse and worse, and you know it. Senator WALSH —I would have thought that even somebody as innumerate as Senator Newman often reveals herself to be would understand that under those circumstances the fundamental and, in quantitative terms, overwhelmingly important problem is-- Senator Archer —Is interest. Senator WALSH —The problem is the decline in the real price of wheat. Senator Archer insists on saying that the problem for 35 per cent of farmers who hold net cash balances is interest rates. I would be interested to know how he reaches that conclusion. The price of wheat is a problem for many of those 35 per cent of farmers who hold net cash balances, but the higher interest rates go the higher their income goes. The other 50 per cent who owe between zero and $14,000 are hardly affected one way or the other. So the various ill-informed comments that have come by way of interjection from the Opposition demonstrate about as effectively as it could be demonstrated the need for farmers to be more accurately informed than they are informed by members of the Opposition or assorted other people who are their fellow travellers. The PRESIDENT —I inform the Senate that I have received the following letter, dated 18 March, from Senator Parer: Dear Mr President Pursuant to Standing Order No. 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 take immediate action to ensure that Australians have genuine freedom of choice, without coercion, to join, not to join or to resign from a trade union. Yours sincerely Warwick R. Parer Senator for the State of Queensland Is the proposal supported? More than the number of senators required by the Standing Orders having risen in their places- Senator PARER(Queensland)(3.06) —I move: That in the opinion of the Senate the following is a matter of urgency: The need for the Government to take immediate action to ensure that Australians have genuine freedom of choice, without coercion, to join, not to join or to resign from a trade union. I want to make it perfectly clear from the outset that this is not a union bashing exercise. It is to do with what should be but is not in Australia the inalienable right of every individual to join, not to join, or to resign from any organisation, be it a trade union, a trade organisation, a professional organisation, a political party or a club. What is the real situation in Australia? The Government hedges and waffles on about this matter at every opportunity. Yesterday in this chamber the Minister for Industry, Technology and Commerce (Senator Button) in answer to a question from me said that there was no law or regulation that made trade unionism compulsory. The Prime Minister (Mr Hawke) on 18 September last year said: . . . neither under the law of the country nor under the policy of the Government, is there the practice of compulsory unionism in this country. What a remark from a man who has shown us by so many other actions that he just cannot be trusted. What a remark from a man who for so many years was the chief enforcer of compulsory unionism in his role as President of the Australian Council of Trade Unions. Who did he think he was fooling? As President of the ACTU he was renowned for waiting until a particular closed shop company or a closed shop industry had been bludgeoned to its knees by industrial blackmail and then he came in to deliver the coup de grace. He would strut about Australia bragging of yet another win. Every irresponsible act of that President of the ACTU is haunting us today. It is the reason we became uncompetitive in the world markets, and it is the reason why whole industries disappeared from the face of Australia. It is why thousands of jobs were lost and why a decimated manufacturing industry is having great difficulty in responding to the collapse of the dollar or, if you like, the J-curve. Mr Hawke, as President of the ACTU, enforced compulsory unionism and closed shops in Australia. A leopard does not change its spots. For him to say that it is not the policy of this Government to practise compulsory unionism just adds to his credibility. It enhances the growing view throughout Australia that this man and the Labor Government itself cannot be trusted. The Minister for Employment and Industrial Relations, Mr Willis, on 20 February sought to persuade the Parliament that closed shops were voluntary. He said that they were arrangements freely entered into by employers and employees, when it is known by all Australians that the creation and maintenance of closed shops was and is foisted not just on employees but also on employers by militant trade union action. On 23 February this year the Minister for Employment and Industrial Relations, Mr Willis, carried on the fantasy by saying: We do not have a legal system which imposes unionism on unwilling members. However, we do have a system where there are awards which provide for preference to trade unionists. There is a distinct difference between preference to trade unionists and compulsory unionism. What on earth does that mean? I will tell honourable senators what it means. It means that preference arrangements discriminate against employees. It means that individual Australians have the choice of getting a union ticket or joining the dole queue. Those people do not have any recourse against that discriminatory treatment. If this is not compulsory unionism, I am darned if I know what is. However, there might be a glimmer of hope. Three weeks ago the Victorian Equal Opportunity Board found that Mr Franz Hein in Melbourne had been treated unfairly when sacked for refusing to join a closed shop union controlled by one Mr John Halfpenny. Late last year a matter was brought to my attention concerning the Victorian Road Construction Authority's contract tendering process. This is typical of most State governments throughout Australia. The tender involved the supply, delivery, spreading and compaction of asphalt in Ingles Street, South Melbourne and the contract was put out by the Victorian Road Construction Authority. I would like to give honourable senators some of the specifications of that contract because the prices were to include, among other things, firstly, that: The work under the Contract forms part of a major Road Construction project . . . is subject to the West Gate Freeway (South Melbourne Section) project site agreement . . . Secondly, it is stated: The Project Site Agreement requires all labour engaged at the work site to be a member of the appropriate union. I repeat, `all labour engaged at the work site'. Thirdly, it is stated that: All persons, prior to commencing any work on site, shall report to the RCA Project Office . . . for issue with an identity card . . . The identity card shall be signed by the recipient prior to being sealed in a plastic cover by the RCA. The fourth requirement is that: Identity cards will only be issued to persons nominated by the Contractor and having appropriate Trade Union membership and long service leave registration. The fifth clause states: All drivers delivering materials within the Project Site limits shall be a member of the appropriate union and carry evidence of their membership. Another clause within the site agreement itself states: Contributions will be made by contractors on behalf of all employees to the appropriate ACTU-approved superannuation scheme: BUS, CEC or AUST. CEC is a new one on me. We have promotion by the union controlled superannuation funds. Their officials run around the countryside saying that because their funds are so good they are getting record membership. The members have no choice. They either have to pay up or they cannot appear on site. This sort of thing may appear to be something out of George Orwell's 1984, but it is not; it is Australia 1986. Senator McKiernan —Tell us what your Premier thinks about it, your own Premier in Queensland. Senator PARER —Senator McKiernan interjects, and the only remark I would make to him is that everybody knows that the Australian Labor Party has no interest whatsoever in the young or the aged. By his interjection he is obviously showing no respect whatsoever for the aged. This sort of repressive attitude is more in keeping with the practices we would expect in a totalitarian state. It is all very well for Senator Button to say, as he did to me yesterday, that there are many practices at Broken Hill with which he does not agree. I think it is worth while drawing to the attention of the Senate just what does happen at Broken Hill. Every quarter the local newspaper, the Barrier Daily Truth, produces an article showing the badge show rules for the day. It is worth recording some of those rules. They state: That, it be an instruction to all members of affiliated unions that they shall not work on a shift with any non-unionist (other than a recognised staff official) or with any member of an affiliated union not in possession of the recognised badge. . . . . No member shall commence work until such member has been okayed by the head steward. No member of an affiliated union shall commence work until the `all clear' signal is given by the head steward. . . . . Members are asked to report to the stewards when they know of anyone who misses the badge show. Dob in a member, dob in a mate. They continue: Members are requested to note the new rule in reference to returning on another shift when sent home on Badge Show day. Members must wear badges in a conspicuous place visible to stewards for the whole of the working shift. The article continued: This means that, if a man has obtained a badge from his union and has forgotten it the steward shall be authorised to allow the man to return home to get his badge. On his return, he must show the badge to the steward before starting work. Another rule states: Any member of any union failing to display his badge, or failing to pass the appointed places, or committing any breach of the foregoing resolution shall be fined. . . . . In the case of a member's being absent from work on badge show day he must present an OK ticket to the steward within two days, the onus being on the man to find the steward. . . . . Any member found guilty of working on badge show day without a badge shall be fined the equivalent of a day's pay. Senator Lewis —Where is this? Senator PARER —This is in Broken Hill, New South Wales, Australia. It is 1987 in Australia; it is not an East European totalitarian country. The difference between Broken Hill and the Victorian Road Construction Authority is that at Broken Hill badge show day occurs every three months, but on building sites throughout Australia evidence of union membership must be carried at all times. To say that in practice union membership is not compulsory in Australia is a lie. Union membership in Australia has grown to over 55 per cent of the work force, not because of the voluntary association of individuals but because of compulsion and coercion. The union movement is a monopoly fostered by this Labor Government which pursues its interests regardless of the law. The traditional justification for compulsory unionism-and I believe this will be espoused by Labor senators opposite-is that if all employees in the work force benefit from trade union activities they should pay for it. We have heard that old story, that old chestnut, for years. Do these same people demand that before they receive medical treatment the doctor produce evidence that he or she is a member of the Australian Medical Association? As some honourable senators would know, some are and some are not. For instance, do they demand that all farmers should be members of the National Farmers Federation? Of course not, and I could go on and on. The real reason for compulsory unionism is the ideology of collectivism, which means that the rights of the individual are subject to what the union leaders, and not the members, see as the collective interest. As the President of the Australian Council of Trade Unions said at the time of the Mudginberri dispute, which concerned an agreement between the employer and employees for higher wages and productivity: It isn't a question of the supremacy of individual rights. It is a question of how one collectively represents that grouping of individual rights to ensure that the outcome is in the best interests of the community as a whole and that's what the trade union movement stands for. The real reason that a Labor government cannot and will not do anything about the infringement of individual rights is that the Labor Party and its members and senators are the political arm of the trade union movement. The Labor Party, and particularly the Hawke Labor Party, is the servant of monopolistic trade union leaders and not of the individual electors of Australia. This Government has quite correctly deregulated financial markets. As a major trading nation we have to be competitive overseas. Why is the union movement concerned about action that could be taken by the Government to ensure that every individual has the right to join, not to join or to resign from a trade union? If the freedom of choice existed, and if unions were perceived to be doing their job, they would have nothing whatsoever to be concerned about. However, if unions initiated irresponsible strikes, and by their actions put jobs at threat, individuals would vote with their feet and leave. In other words, unions should be subject to the same competitive forces as apply to the rest of the economy. If a product is good, people will buy it; if not, they will not. There is something inherently wrong with a product when individuals are compelled to buy it. I defy anyone to challenge the basis of that logic. Trade unions started, with great difficulty, as voluntary organisations over 100 years ago. The difficulties they encountered and the penalties they incurred were just as heinous as the penalties incurred today by individuals who do not wish to be in a union. So we have gone 180 degrees. What started as voluntary association has become compulsory in Australia for practical purposes. It is this that I believe has caused the backlash that exists in Australia today against the trade union movement across the board. Last year polls were taken out by Roy Morgan Research Centre Pty Ltd, the Melbourne Age, the Herald and the Australian. All came to similar conclusions. What were the results? Seventy-eight per cent of people believe that unions have too much power. Fifty-four per cent of people feel that unions have far too much power. This is the interesting one: Eighty-three per cent of all Australians want voluntary unionism, as do 77 per cent of all trade unionists. The reason for that is that they do not have freedom of choice. The choice is: Be in a union or do not have a job. There are clear messages in these figures for the Government, which has been hell-bent on facilitating union power per se. We are supposed to live in a free society. That is doubtful. We certainly live in a competitive world; that is certain. What should the Government do to rectify a basic infringement of individual freedoms in Australia? It should ensure that unionism is truly voluntary, instead of just saying that it is when we know that it is not. It should end industrial coercion to enforce and maintain closed shops. It should remove the power of the Conciliation and Arbitration Commission to grant preference clauses which entrench compulsory unionism. Article 20 of the Universal Declaration of Human Rights, adopted by the United Nations, states: Everyone has the right to freedom of peaceful assembly and association. No-one may be compelled to belong to any association. That is the basis of this urgency motion. Irrespective of where they sit in this chamber, I urge all honourable senators who genuinely believe in the freedom of individual Australians to support it. Senator ROBERT RAY(Victoria)(3.25) —I must agree on one point today. This is a very urgent matter. It must have taken the Liberal Party of Australia and its coalition partners a long while to find one issue on which they could agree. It does not surprise us on this side of the chamber that that one issue is union bashing. They could not bring up any other issue today and have the united support of those opposite. Australia has had a tradition of substantial union membership in the work force, always running at well above 50 per cent. The latest figures indicate that 57 per cent of the Australian work force belongs to trade unions. As we have a mixed economy, it is not surprising that many workers find that the only way that they can survive is through the protection of a trade union. One has only to look at the examples of many countries overseas. Where there is a weak trade union movement, many of the employees in those countries are totally exploited and treated as economic slaves. I often wonder whether that is the type of society that the Liberals would like to see introduced into this country. If they had their way, they would destroy the trade union movement in this country totally and utterly. There are some very fundamentally good reasons why we as democrats in the true sense of the word should encourage the trade union movement. It has had a great history of protecting workers' wage levels. In this country we have been able to establish the standard of living of our citizens through the trade union movement. It has had a great record at establishing humane working hours. We can all recall when the eight-hour day came in-not that it was in our lifetime, but from the reading of history-and the conservatives opposed it. They then opposed a 44-hour week and a 40-hour week, and now they oppose the 35-hour week. It does not matter what the objective circumstances are at the time, the conservatives, such as those who sit opposite, always oppose such changes. Trade unions have also had a great history of protecting working conditions of employees in this country. In areas such as safety on the job, it has been the trade unions that have spearheaded that movement. The trade unions have had a great welfare role in the past. Where in the past governments have not provided sufficient welfare services, unions have supplemented them. Finally, of late, unions have had a very proud history in bringing superannuation to their members. To protect the interests of their members, unions have to use a variety of methods. Of course, the ultimate sanction in those methods is the strike weapon-a weapon always opposed by those opposite. I cannot recall one member of the National Party of Australia or one Liberal who has ever supported one strike in this country, whatever the reason for the strike. Senator McKiernan —What about the doctors? Senator ROBERT RAY —I meant `by a bona fide trade union', for the honourable senator who said: `What about the doctors?'. Members of the Opposition have never once supported a strike by a bona fide trade union. It is true that no one likes the degree of confrontation that sometimes exists in this country between employers and employees and between employers and unions. I argue very strongly that since the accession of this Government in 1983 we have seen a new era in industrial relations. Through the prices and incomes accord, we have far more co-operation between employers and employees. We have had the lowest number of working hours lost per working day and per year of any time in the past 20 years. I am very proud of that record. There is greater co-operation between trade unions and employers on such things as industry reconstruction. We have only to look at the recent negotiations that occurred in the textile, clothing and footwear industry to see that the unions, government and employers could work together to reach a result for the benefit of this country. The Australian Labor Party's policy in this area of union membership has always been crystal clear. Preference for unionists is in our policy and we are proud of that policy. I quote from clause 19, page 169 of our national platform: The encouragement of membership of registered organisations through the provision of preference to unionists. This is not something new or secret. We went to the electorate on this issue time and again. In 1983 and 1984 preference to unionists was a clear part of our policy. We have also noted that there is a provision for conscientious objection to trade unions. Some people take up that provision in the conscientious objection clause and opt out of a union by paying a sum of money to their favourite charity or to a charity nominated by the union. That is a common practice in certain areas. But we have very little sympathy for those who take all the benefits derived through the efforts of trade unions but who put nothing back in. The urgency motion today really reflects the fact that the Liberals just hate trade unions. I have pointed out before that I cannot recall one Liberal or National Party politician ever once supporting a strike or industrial action in this country. They are constantly trying to reduce the effectiveness of the trade union movement through draconian legislation. When legislation was first introduced into the national Parliament in 1903-04 to create the Conciliation and Arbitration Act the conservatives opposed it, and so paved the way for the first ever Labor government. History also indicates that in 1929, when the Bruce-Page Government tried to alter our industrial relations system, that again paved the way for the Scullin Government. That draconian anti-union legislation carried during the Fraser years soon saw that Government removed from office in this country. I realise that Liberals like to think that there are votes in union bashing. If anything, the historic record I have just gone through proves directly the opposite. It used to be very fashionable once to go out and bash the communists. That is not so fashionable these days because there are hardly any. There are about 32 different communist parties and they are so defenceless they are hardly worth bashing. The electorate no longer believes that sort of rhetoric, so the Liberals drop back to the old chestnut of trying to bash trade unions. I can remember the Liberal Party supporting a trade union only once, but it was not an Australian trade union; it was a Polish trade union called Solidarity. It did not support Solidarity because it was a trade union; it supported Solidarity because it was a tool against communism whereas we on this side of the House saw Solidarity as a great hope for Poland. We saw it as a great trade union of 10 million members. The bashing of unions by the Liberals and Jaruzelski is of about the same ilk. The Liberals would go down well in Poland in trying to destroy Solidarity. General Jaruzelski could probably come to Australia and learn a few tricks from those opposite. I have some suspicion about this particular motion. The Liberals, in theory, constantly talk about compulsion. Where was Senator Parer in the 1960s and early 1970s? What was his attitude to compulsory conscription in this country? Did he hide under a log or did he voice his views? Or is he suffering from the great Liberal disease of amnesia and has forgotten his past actions? Those opposite often want us to be consistent, but why is he not consistent about compulsion? Obviously Senator Parer does not like what he probably terms the stand-over merchants in the union movement. He is an expert on that. He and the rest of the Liberals in Queensland have been stood over by the best stand-over merchants in Australia's history-the National Party in Queensland. It has stood over them and told them what to do, and they have been too weak to fight. Maybe Senator Parer should go along and join the Australian Workers Union or some other great union and learn how to stand up for himself and how to fight instead of wimpishly copping it in the back of the neck year in and year out as happens in Queensland. I am a bit disappointed to see that Senator Parer has aligned himself with the white shoe brigade of Queensland, the uglies of the New South Wales Liberal Party or the born-again New Right of the Western Australian Liberal Party. That disappoints me. The Liberals should learn that if they want to defeat the Nationals and have some public integrity, they will not do it by being more hairy-chested than the other conservatives of this country but by standing up for some humane principles or the working people of this country instead of constantly denigrating them by their union bashing. The best examples in this country of compulsion do not exist in the trade union movement, they exist in his home State where unless one is a toady of the Queensland Government one does not get tenders or contracts; unless one is a toady of the Government one does not get soft loans at low interest rates; and unless one is a toady of the Government in Queensland one gets absolutely nothing. If Senator Parer is looking at the question of compulsion, he should look to his home State. I often wonder whether he comes down to this chamber with any pride at having to represent a State such as Queensland. I think in his heart of hearts he would admit that the worst aspects of compulsion exist in his home State where individuals are not even given the freedom to vote with equal weight, where if one happens to live in a country area one's vote is worth three times more than a person's vote in other areas. If Senator Parer is concerned for the future of this country, he should jump off the anti-union bandwagon and fight the real fight where it has to be fought. If he wants to be able to rise in this chamber with some sort of pride and say that he stands for consistent principles and against stand-over merchants, he should take them on in his own State first of all and defeat them there. He should not just pick on the people who need to band together to defend their conditions of work. When employees are dealing with multinational companies it is extremely difficult for them to defend their rights. In the labour movement we have learnt the hard way that unless we get together, we will get exploited and pushed through the floor every time. Unless we are willing to stand up for our rights, we will get drubbed. History has proved that time and again. I have never known an employer to walk up to a union and say that he was going to give a pay rise, unless some sort of negotiation took place or pressure was applied. I have very little time for those people in our society who are willing to take all the benefits but put absolutely nothing back into the system. As always, today we have heard this enormous dichotomy between the theory in the Liberal Party and the practice. It is always in favour of the `freedom' of non-compulsion, but when it is in government it compels people to join the Army and to go overseas and risk their lives for a war they may not believe in. Time and again history has indicated in this chamber the difference between Liberal theory and Liberal practice. Time and again we have had to expose those differences in this chamber. I again make clear the Labor Party's attitude to union membership. Preference for trade union members is in our policy and we go to every election on it. We would never support the deletion of the conscientious objection clause. Much is made of the fact-and Senator Parer alluded to it today-that there is a connection between the Australian Labor Party and trade unions. That is a real statement of genius. We were founded by the trade unions, and we do not hide that fact. He alleged that we are controlled by the trade unions. I put it to Senator Parer that it has been a long and established working practice going back to 1890 that the Labor Party and the trade unions have worked in partnership in politics. We do not have to hide that fact. We can come into this chamber and acknowledge that our Party influences our views, because we are not vanguardists; we represent the views of the Party and the Labor electors. We do not claim to be the total free spirit that the Liberals claim to be. The Liberals come in here and say that everything they do is an act of conscience. Many times before we have had to point to some of the ironies of that. Just the other day we saw that independent members of the National Party in Queensland, especially those with cold feet, had to have them warmed before they came down here. Those people are more subject to direction from outside this chamber than Labor Party members have ever been. I have never had to have the Premier of Victoria or someone else pull me in and tell me how I was going to vote up here. That has never occurred and it will never occur. I have never had to do that. Never have I been directed to vote in a particular way by someone outside the Labor Party Caucus in Canberra. When the conservatives have to vote in the National Party room, they get the Premier and Sir Robert Sparkes to call the boys in-I think that is the term used, with all due respect to you, Madam Acting Deputy President-they light up the blowtorch and they put it to the soles of the members' feet. Someone who for weeks has been saying that the coalition has to continue gets pulled in and suddenly he thinks: `Oops, my preselection is at stake, I am very sorry, I am now going to support the Premier of Queensland'. He then gets down here and wavers again. Then he goes back to Queensland and gets reprogrammed. Senator Parer says in this chamber that we are subject to trade union direction. That would be infinitesimal compared with the way in which his colleagues and friends in the National Party in Queensland are directed. I know how close he is to the National Party and how its future condition is in his heart. I know how concerned he is to see the National Party's vote increase in Queensland. His colleagues are subject to outside control and other controls that we are not subject to. So it is no good his coming into this chamber and saying that we favour compulsory unionism because unions tell us to do so. I have made our position quite clear. We are in favour of preference to unionists. I conclude by saying that the only thing urgent about the motion is that Opposition members trolled through the sewer of coalition policies wondering what they can bring up today to get everyone on the Opposition side to vote for, and they chose union bashing. I suppose we will be seeing a lot more of these motions because the Opposition cannot agree on anything else. Senator MASON(New South Wales)(3.41) —We are debating a motion brought forward by the Opposition in these terms: That, in the opinion of the Senate, the following is a matter of urgency: The need for the Government to take immediate action to ensure that Australians have genuine freedom of choice, without coercion, to join, not to join or to resign from a trade union. We tend to support the spirit of the motion. Indeed, it is our policy not to agree with compulsory unionism, though not for the same reasons as the Opposition proponents of what has been brought before us today. One cannot put forward such a proposition in isolation. Hence it is necessary to look briefly at the realities of the situation. I am a little concerned that nobody has really done that so far in this debate. In this country we have one of the creakiest, least effective industrial relations mechanisms possible. This has been due to a number of causes, including our federal system and the division of powers between the Commonwealth and the States. I am convinced that it is due even more to hide-bound attitudes on the part of both unions and employers. Australia has the most conservative group of employers and the most unenterprising group of industrialists in the world. That is part of our problem. We also have some of the most hide-bound truly conservative trade unions. That is another part of our problem. Our system owes far too much to the past and not nearly enough to the modern parallels of industrial democracy and collective bargaining which have been successful elsewhere in the world. We stand by and watch those countries outstrip us and succeed as we, as people put it, go down the gurgler. We are becoming a less and less successful and a less and less prosperous country with every day that passes. It is not too hard to see the reasons. I believe that the urgency motion today has been advanced by political groupings who, whatever they say, are in the business of union bashing and who espouse the confrontationist bitterness of the past. There is abundant evidence in our debates that that happens. One has to look with some sympathy at the history of the union movement. The appalling work conditions in which it developed so painfully need to be taken into account. The idea of compulsory unionism, of a necessary solidarity, was born of the type of unfettered market thinking which used six-year-old girls to pull skips in coal mines, as happened at the beginning of the capitalist era in England, and which was, in every sense exploitative. The environment in which organised goons, criminals, were used by industry to try to break the unions is well known. In the United States of America, Mafia gangs were used for the purpose. That background is not easily forgotten. Many fear a return to it if the unions are weakened. That spirit of confrontation is exceedingly damaging to any community. Even worse is the fact that in this country we have not only that system of confrontation but also a political system-a thoroughly outmoded two-party system-based on it. One side claims to represent the workers and the other side claims to represent the bosses. That is still a fact, whatever is said and whatever cosmetic attempts are made to conceal it. The Australian public is becoming very tired of it. The public sees it as increasingly unrealistic. I noted with some interest today a Morgan gallop poll showing that in my State of New South Wales, the largest State, an unprecedented figure of 17 per cent of the electorate now proposes to vote against either side of that confrontation. That is tremendous. More and more Australians will follow in that line. Only in that way lies our salvation. I do not believe that the Liberals and the Nationals, in the final analysis, see the industrial situation as so very different from what it has been. They still see it as confrontationist and competitive, and they see the trade unions as their enemy. That has been made obvious already. They see the motion which we are debating as a means of weakening the trade union movement and hence a means for employers to exploit their workers more readily. That type of motivation is bad, it is regressive, and it is not worthy of support. Until we in this country can get past it there is no real hope of better industrial relations. Worse still, it confuses issues, such as the one we are debating today, and removes them out of their proper context. Nevertheless, the Australian Democrats' policy supports this matter. Our policy, as voted on by our members, is as follows: We are aware of the union principles from the past that 100 per cent membership was essential for effectiveness. We are also aware of Item 20 (2) in the United Nations Declaration of Human Rights which states: `No one may be compelled to belong to an association.' We know too that many workers have accepted the benefits of unionism without paying dues. We will therefore legislate to give every union the right to impose a `Fee-for-Service' on those workers who do not choose to join it, but are working under wages and conditions which the union has achieved. We shall mount vigorous campaigns to urge members of unions to become aware that unions are by their constitutions, democratic-and to play a full part in the organisation and running of their union. We will insist on secret ballots as the fairest method for the election of all office bearers, with a required reasonable proportion of ascertainable eligible members taking part in the ballot. That principle is one which is frequently adopted in other countries. For instance, in Belgium the freedom of an individual to join or not to join a trade union has been upheld since an Act of 24 May 1921. Article 1 of that Act says: . . . no person shall be compelled to join or to refrain from joining any association. Article 2 explicitly adds: . . . a member `may withdraw from the association, in conformity with the rules, at any time; any provision of the rules which denies his liberty to do so shall be void. Similarly, in Austria: . . . every provision in a collective or works agreement intended to bring about a closed or union shop is unlawful and null and void . . . It is interesting, however, that in the Austrian law: it is also punishable to use force or threats to attempt to ensure that members of a free trade association are generally not employed in an establishment. That is an interesting point. The principle that persons should not be forced to belong to organisations is a healthy and reasonable one and it is so important that all elements in the Australian community should try to encourage methods of industrial relations which put the old days of bitterness and confrontation in the past. Indeed, it can be reasonably argued that organisations are all the better for not having the right to compel membership. That is one point that Senator Parer made with which I agree. The right to compel creates automatically conditions in which the organisation has no real compulsion on it to perform on behalf of its members and can indulge in standover tactics to allow particular groups in the community an unfair advantage over the rest of the community, as has been done in the last decade-fortunately, it has not occurred much recently-so cynically by the transport workers, who have used petrol strikes in our major cities as a form of blackmail to obtain advantageous conditions for themselves; not for the entire union movement-far from it. If membership of a union is not compulsory, the organisation has to make itself useful enough to attract membership. That is as it should be. If a union or an organisation says it should not do that, it places itself in a very difficult moral position. In fact, it is a de facto admission to a failure on its own part. That also cannot be compromised. I recall an interesting situation which was conveyed to me today by my colleague Senator Macklin regarding the teachers union in Queensland. I am told that up until 1977 membership of the union was compulsory and, naturally, the membership was about 99 per cent. However, over the next six years, voluntary unionism was phased in. It is interesting that as a result 95 per cent of Queensland teachers still belong to the union. It is not the case that because a union is not a compulsory organisation people will not join it. But there is one important principle that I have yet to make. I think it is so basic and important that all honourable senators will support me on it at the end of my speech when I seek to suspend Standing Orders, as I must do, to move an amendment to the urgency motion before us. I mentioned earlier that it is Australian Democrat policy to have a fee for service system. In other words, if the motivation of a person not to belong to a union is simply to duck out on paying its fees, that ought not to be tolerated. It is not right that any workers should benefit from wages and conditions resulting from the effort and money of fellow workers without making some contribution. However, workers sometimes feel that they do not want to contribute to a union because of the union's political links. Senator Robert Rae freely admitted the link with the Australian Labor Party. I note with some interest the action taken by Tasmania, Wally Tresyn, who decided he did not want to join the Building Workers Industrial Union. He paid the amount of his union subscription plus $4 to the Salvation Army. That is the kind of situation that we have in mind. The Democrats believe this principle should properly be recognised in the motion and an amendment circulated in the name of the Democrats would add to the motion a provision that people who elected not to belong to a union should pay a fee for service to the union or pay to a recognised charity an amount not less than the union dues. The argument has been advanced that having a situation in which all workers belong to a union makes negotiation easier. This is a totally spurious argument which could be advanced to support any form of totalitarianism and for that reason it ought to be rejected out of hand. As I said at the beginning of this speech, this motion is in cloud-cuckoo-land if it does not recognise that the principle of voluntary unionism can operate and be generally accepted only in a reasonable non-confrontative industrial relations climate. Over the years the Democrats have advanced the cause of collective bargaining and industrial democracy many times and we have heard the Labor Party and the Liberal Party recently pay a kind of pious lip-service to industrial democracy while making sure it is delayed or never happens. The term `industrial democracy' has been so abused that it needs definition. By it, I mean a system which permits workers to be on company boards, a fair and rational system of profit sharing and reorganisation away from pyramidal administrations to largely self-motivated and self-controlling work groups. These methods are working well in most of the advanced industrial nations of Europe and it is necessary that they be adopted in Australia as soon as possible. Further studies of the need for them is not necessary; they have been tried and proven already in Australia and would work here just as well. The basic principle of paying a person the same amount whether or not he is willing to work-not having any incentive-lies at the heart of most of this country's present problems. Productivity will rise significantly only when there is a financial incentive by way of bonuses or profit sharing to reward hard work and efficiency. If this is applied to a production group, that group becomes self-disciplining in that it will not tolerate lazy people who reduce the reward of all members of that group. I would have thought that that was so obvious that it ought to be agreed to by everybody concerned. At the request of the Leader of the Australian Democrats, Senator Haines, and pursuant to the contingent notice of motion standing in her name, I move: That so much of the Standing Orders be suspended as would prevent the Leader of the Australian Democrats (Senator Haines) moving an amendment to the motion. Question resolved in the affirmative. Motion (by Senator Mason for Senator Haines) proposed: At the end of the statement of the matter of urgency, add the following words: ``, provided that they pay to the relevant union a fee for service not less than their union membership fee, or to a charity an amount equal to their union membership fee''. Senator WALTERS(Tasmania)(3.54) —At the moment the Senate is once again debating the need for the basic human right as expressed in the Universal Declaration on Human Rights adopted by the United Nations General Assembly Article 20 which states: (1) Everyone has the right to freedom of peaceful assembly and association. (2) No-one may be compelled to belong to an association. That is the declaration of human rights and yet this Government proposed a Bill of Rights, as we all know. It attempted to have it passed by this Parliament. Of course, the people of Australia objected to it so much that the Government had to withdraw it. It claims to be interested in human rights and yet it demands compulsory unionism in Australia. For many years our policy has been to oppose compulsory unionism. Indeed, in 1982, under Mr Fraser, we tried to bring in legislation prohibiting compulsory unionism. Today Senator Robert Ray said that we have only just agreed on one thing and therefore we are debating it today. Senator Ray is only a new boy in the Senate and he would no doubt be completely unaware that that has been the policy of the Liberal Party of Australia for many years. Indeed, it has been debated in this place on many occasions. What possible excuse could any government give for allowing people to join or not to join an association? What possible excuse could there be for forcing people to belong to an association? The excuse is self-survival; a financial one. Without compulsory unionism the Government would be down the drain financially come any election. The unions and their compulsory membership give money to the Australian Labor Party. That is the reason the Government has for making sure that people in this country are forced to join unions. Senator Button was asked a question yesterday. My colleague Senator Parer referred to this. Senator Button was very careful in his answer to that question because he said there are no legal means of ensuring compulsory unionism in Australia. What he did not mention was the prevalence of preference to unionists. I indicated a little earlier what preference is and what preference does for unionists. As I said, in 1982 as a government we attempted to bring in legislation prohibiting compulsory unionism. At that time I sat on the Senate Select Committee on Industrial Relations Legislation with Senator Button, which I know he will remember well. Senator Harradine was Chairman of that Committee. I will give just a few instances with regard to some of the evidence that came before that Committee. In 1982 the Committee reported: The present state of the case law . . . shows that a preference award may validly: provide for preference to a unionist over a non-unionist. provide for preference of any kind . . . and awards show this to include preference in promotion-- so a union member can get promoted whereas a non-unionist does not- leave entitlement- so if a union member wants to leave at a certain time he gets it over a non-unionist- retention in employment, retrenchment, etc. So a non-unionist can be retrenched first whereas a unionist cannot. We were told in that Committee that preference implies choice, not compulsion. Is that not nice! But if a union member is employed before a non-union member there is not much choice involved. As far as I see it, it is compulsion. In 1982 we were told that there were 379 awards which contained preference clauses. We were told that 309 awards granted preference to union members at the point of engagement and termination. We were told that 10 awards prescribed that members of a particular union may be employed in particular work to the exclusion of other union members and that this avoided demarcation disputes. We were told that 14 awards prescribed that a union must be notified of any vacancy before the engagement of labour. An employer has got to tell the union that he is wanting to employ someone before he seeks other employees. The union says who will be employed and who will not be employed. Sixty-four awards prescribed that non-members of a union must join a union within a certain period after being engaged. Sixty-four awards stipulated that someone who is employed must join a union within a certain period after being engaged-and this Government says there is not compulsory unionism. It talks absolute rubbish. I suppose one can make all sorts of gobbledegook in those areas. We were also told that most States allowed for preference clauses. We were told that in Western Australia the Industrial Commission had lacked the jurisdiction to award preferences since 1980. At that time one of the unions also told us that when that was done away with in Western Australia, when the unions were no longer able to have award preferences, they lost 25 per cent of their membership; 25 per cent of their members decided that they would leave the union. So union preference amounts to compulsory unionism. Why should we not have compulsory unionism? I will tell honourable senators what is occurring at the moment. I will give just one incident on the waterfront. We have the case of a captain of a freighter. The union members came on board and requested permission to inspect the crew quarters. That inspection proved very costly. Indeed, the ship's owners were told that they had to pay $58,000 for improvements in the crew's quarters. Much to the surprise of the captain, his own quarters had to be improved. Going down the list I have, I find that many other ships are also held up in port by demands for cosmetic improvements such as painting of bulkheads, re-upholstering of furniture or repairs to cracked tiles. We have been told that we already have the world's worst reputation for shipping strikes. It has become a joke overseas. People are saying: `Have you heard the latest of what the Aussies are up to now on the wharves?'. We have indeed become a joke. For eight successive years Australia has topped the shipping insurers' strike club. Ships coming into our ports have been refused insurance because of these ridiculous situations in which unions create such tremendous expenses. These are the sorts of things that would be done away with if we did not have compulsory unionism on the wharves. An employer who was able to employ whoever he wanted and whose employees were not intimidated would be able to stop these dreadful work practices which we have heard so much about and which have tied up our wharves. As I have said, they have resulted in a situation where for eight successive years, for insurance purposes, Australia had the world's worst wharves. Ships that might have been coming in would not be insured and so they did not come. We would send some of our exports to Singapore so that they would be loaded in Singapore, rather than have a ship running the risk of coming into Sydney harbour or Melbourne harbour. The situation has really become ludicrous. It costs 44 per cent more to transport Australian steel from Port Kembla to Fremantle that is does to transport iron ore from Fremantle to Japan. Why is it that Japan can import our iron ore and coal and, over 8,100 kilometres of sea, return steel to us at a cheaper price than Broken Hill Proprietary Co. Ltd, our Big Australian? Why is it that BHP has to be subsidised by bounties against the efficiency of the Japanese market? One of our leading entrepreneurs has said: `Australia is a wonderful place to live in, but you can't do business here. I have got to send all my business off-shore because if you are in the export game, with our union reputation, it is impossible to guarantee supplies to our customers and that is something no business can live with'. While I was in Japan recently I tried to get long term orders. The Japanese will not give us long term orders. They will not allow their industries to go without because we cannot supply the goods. Indeed, a few years ago Japan used us as virtually its only supplier of wool, but because of the very destructive and long term storeman and packers dispute, Japan's wool mills ground to a halt. I was told by the Japanese that they would never again see themselves in a similar position and never again would they rely solely on Australia for wool. They now deal with 20 different countries for their wool because they are not prepared to put up with the industrial disputation, the industrial ransom, to which Australians are held. Until we allow union members to have more say in their unions-the only way they can do that is to say: `give us some say, or we will leave'-until we insist upon our union members being able either to join a union or to get out, then this country will never be able to export, will never be able to compete- Senator Cook —That's rubbish. Senator WALTERS —You know, Madam Acting Deputy President, at the moment the Government is saying: `Our main problem is not us, it is not the domestic economy; it is those dreadful overseas people who will not pay enough for our export goods. That is our main trouble. It is because those dreadful overseas companies will not pay the price that we need to live in the luxury to which we have become accustomed'. The situation is that until we compete with Japan, until we reduce our export prices, until we can compete with the 44 per cent difference in cost between taking our steel from Port Kembla to Fremantle and transporting iron ore from Fremantle to Japan, we will never survive. It is no use this Government trying to lay the blame elsewhere, other than at its own door. Senator AULICH(Tasmania)(4.08) —We are debating today the issue of trade unionism and the right of wage employees in this country to be represented effectively and responsibly by the trade union movement. It is pretty obvious today, and has been on other occasions, that this issue has always been surrounded by myths, laced with prejudice and often subject to political attacks for the purpose of simply winning votes out in the community at large. It is fair to say that attacks on the trade union movement have been an article of faith or a staple diet on the conservative side of politics for many years. This motion today is only one example of the way in which conservative politicians have attempted to disguise attacks on working people in this country by pretending to be moving towards an attack on the trade union movement or trade unionism in this country. A number of myths have been promoted deliberately by conservatives on the other side of the House. The first myth is that compulsory trade unionism exists in this country. What is the actual situation? Firstly, it needs to be said that something like 45 per cent, that is, nearly half, of the labour force in this country is not unionised. That is despite Senator Parer's viewpoint that if one is not in a union one does not have a job. He was promoting that as a universal truth. The 45 per cent of workers in this country who are not unionised give the lie to that bald statement; but then again we are talking about myths being promoted by the Opposition and not in this case the reality. The second point I wish to make is that in some industries, as a result of agreements between management and unions, preference is given to trade unionists. Those arrangements do not constitute, as everyone here knows, compulsory trade unionism. The third point is that there is a provision for conscientious objection under section 144 of the Conciliation and Arbitration Act, whereby people who object to being forced to join a trade union are permitted to make a compensating payment and are thus exempted from the need to join a union, provided that they satisfy the Registrar that their bona fides are complete. This provision is used many times each year by many individuals and has variations under various awards at a State level. The provision coincides and accords with the Labor Party's platform of recognising that individuals have certain rights, one of which is to seek exemption from union membership provided that there is a fundamental and bona fide objection to being a member of a trade union. There is the question of those people in the work force who have a less than fundamental objection to being a member of a trade union. Various terms have been used to describe people who have been quite prepared to live off the trade union movement, to accept the benefits of what the trade union movement is doing and the benefits of awards to which trade unions have been respondents and to which unions have contributed, but who at the same time refuse to join a trade union. In other words, they want the benefits but they are not prepared to take part in the trade union movement which brought about those benefits. I see no problems at all with those people being exempted-reluctantly-provided they pay an appropriate fee for service to the union for benefits obtained by the union's activity. After all, bargaining for wages and conditions is done in most cases by the appropriate trade union. It seems unfair that individuals who receive benefits from the union's activities should be able to receive those benefits at no financial cost to themselves. I refer honourable senators to the Senate Select Committee on Industrial Relations Legislation which produced its final report in October 1982, which canvassed this issue in some detail and whose conclusions were very much as I have outlined here. I may return, if time permits-- Senator Walters —Read the minority report. Senator AULICH —I will read some of that, if Senator Walters wishes me to, later. I will point to where Senator Walters has some problems, firstly, with logic and, secondly, with fairness. It is very important that honourable senators and the public at large understand that industrial relations in this country have improved immeasurably under the Hawke Government. It is fair to say that Australia's economic recovery has relied upon, and will rely upon in the future continued improvement in our industrial relations system. Let us look at the record. Firstly, the numbers of strikes and days lost through strikes have decreased dramatically since the Hawke Labor Government came to power. The figures which I will give to the Senate indicate quite clearly that the number of days lost through strikes was three times greater in the last full year of the Fraser Government than is currently the case under the Hawke Government. I refer to the number of days lost in terms of thousands of days. In 1981, 4,189.3 were lost; in 1982, 1,980.4 were lost; in 1983-when the Hawke Government came to power-the number of thousands of days lost dropped dramatically to 1,641; in 1984, there was a continued improvement to 1,370 and in 1985 there was a consistent drop for the third year in a row to 1,256 thousand days lost. This is statistical proof that in this country industrial relations are certainly improving. For the benefit of those people opposite who occasionally take a trip out of the country but see nothing, I say that this was recognised by representatives of the Japanese companies I spoke to in January who were very quick to tell me, from one end of Japan to another, that Australia's industrial relations record has improved dramatically and that as far as they are concerned Australia, as a provider of various raw materials and goods, has lifted its reputation, and industrial relations improvements were the cause. They were not shy about saying it. At this stage the only people who are shy about recognising that improvement are those who sit on the other side of the chamber. The second major factor that has been noted about the Hawke Government's labour relations is the co-operation between the trade union movement and the Government, especially at peak council level, in looking at the whole economy-not only at their own particular interests within the trade union movement but at the national interest as well. For example, the prices and incomes accord struck between the Australian Labor Party and the Australian Council of Trade Unions has been a model which has been recognised overseas as working in the interests of this country as a whole. The growth in the Australian economy which followed the election of the Hawke Government was not handicapped by a massive bout of wages-inspired inflation. Growth in real wages, that is, wages which have been discounted for inflation, has been negative-a factor which was very largely responsible for the recovery of this economy, especially the manufacturing sector. Publicly, and certainly privately, fairminded members of the business community have been prepared to recognise the sacrifice that has been made by workers in this country and the responsibility they have shown through their trade union movement. However, there are dyed-in-the-wool conservatives who, like heroin addicts, keep insisting on more. They keep insisting on more cuts and are constitutionally incapable of ever giving credit to the trade union movement or the Labor Government. The Liberal and National parties are certainly falling deeper and deeper into that category. The trade union movement is not perfect. It is composed of members who occasionally are prejudiced, emotional and over-protective of their own interests, just like employers, families and-dare I say it?-politicians. But on the whole trade unionists, both at an official or officer level and at a membership level, have the same ambitions, hopes and sense of fair play as any of us. To attempt to paint them as ogres is simply puerile and damaging to the conduct of effective industrial relations. It creates a reaction which in the long term would allow for no improvement in industrial relations over the next decade. What is the real aim of the Liberal-National Party Opposition? Basically I suppose that we should look to the Reagan and Thatcher models. The conservative group in this country, being the imitative group that it is, one could say has taken those models and used them wherever it can. Its main aim is to reduce, and ultimately to destroy, the effectiveness of the trade union movement in this country, in the mistaken belief that somehow or other enterprise, initiative and profitability-all those good things that conservatives hold so near and dear-will suddenly blossom like a thousand red roses or, I should say, black roses or white roses. This is part of the conservative campaign around the world to elevate selfishness above the community interest and to promote greedy individualism at the expense of the community at large and is a long way from the Christian ethnic, for example, which many members on the other side of this House purport to support. Above all, it is aimed at denying the right of ordinary people in this country to sell their labour in the most effective way, and to improve their conditions in the most effective way. The only effective way in which that can be done in any country-a democracy or a dictatorship-is to have an effective trade union that can operate on their behalf. What would be the result if the ideological aims of the right wing in this country were ever to be achieved? The result would be chaos. In France, faced with a declining trade union membership and a dislocated trade union movement, employers have indicated quite clearly that chaos prevails there in terms of trying to come to agreements which people will stick to, agreements which will give stability to industry and to those who are prepared to risk a buck to go out and invest. The best support base for a capitalist economy is an effective and responsible trade union movement which is prepared to come to agreements it will stick to. This has been recognised around the world by people who have been faced with the problem of dealing with a dislocated trade union movement that is based upon a type of individualism that we do not see in this country, where there is no collective responsibility on the part of the trade union movement. Let us not be naive about this. All of us at some time or other have been employees of someone in the business world and we have not had a trade union to protect us. We know what the reality has been when we have been employees. We know that we have had conditions and wages which existed at the whim and will of that particular employee. Some employers are generous, but the majority, quite rightly, are interested primarily in profits. We cannot expect those employers to come to employees and say: `Here is a wage increase, here is a reasonable standard of living, because I believe that you are entitled to it'. That will not happen in most cases. The only way to ensure that we have a decent standard of living and that people are protected in terms of wages and working conditions is to have a responsible trade union movement to bargain on their behalf. The only way that the trade union can bargain on behalf of people is if it is a representative of a broad and large section of the work force. It cannot represent a small clique, such as in the United States of America where unions represented only 18 per cent of the work force and still purport to speak on behalf of the union movement. The only way is to have a large number of people in the union movement so that it is broadly based and representative and can make bargains that will stick in the interests of the community at large and investors in the community. As Senator Walters is leaving the chamber, I will speak to her departing back. She is not interested in knowing what this is all about. The two most effective exporting countries, Japan and West Germany, have a firm belief in responsible, organised trade unionism and they are showing us something about exporting effectiveness. When one goes to Japanese companies such as Mazda, NTT and to most other major companies and asks who is not a member of the trade union, they will say virtually no one. In some companies they will say no one. They recognise that a trade union movement is an effective part of any export drive or productivity improvement and that the co-operation of the trade union movement and the benefit of ideas coming from the trade union movement is a benefit to the nation as a whole. That is something that the Liberal Party of Australia and the Right of this country forget on every occasion. Members of the work force have something to contribute, and they will contribute most effectively if they are given the opportunity to organise in a responsible way. Giving preference to trade unionists is the way to do it; not compulsory trade unionism. We do not have that in this country. This Government stands firmly behind the idea that members of trade unions should be given preference wherever possible. For the most part the majority of wage earners in the work force have taken that into consideration and are backing the union movement. The Liberal Party will find out at election time how important they are. The ACTING DEPUTY PRESIDENT(Senator Giles) —Order! The honourable senator's time has expired. Senator ALSTON(Victoria)(4.23) —I rise to speak in this debate as a former member of the Australian Building Construction Employees and Builders Labourers Federation, and as one who did not volunteer for that role but was compelled to be a member in the very way that I would hope we can avoid in the future others being compelled to do. Senator Aulich referred to the departure of Senator Walters from the chamber and I hope that Senator Aulich is not going to do the same thing. He referred to Japan and West Germany as countries in which there is an effective and well organised trade union movement. He did not go on to tell us whether in those countries it is compulsory. The critical point at issue is whether one should have an effective right to opt out-not simply whether the words `compulsory unionism' appear in the Conciliation and Arbitration Act, but what is the case in practice. I start by referring to the remarks of the Prime Minister (Mr Hawke) in an earlier life when he was delivering his civil libertarian views on the subject. In November 1977, as President of the Australian Council of Trade Unions, he said: We have always been against compulsory unionism. If a person has a philosophical, ideological or religious objection, I think he should be absolutely free not to join. These are the parameters of this debate. It is a question of liberty and people's civil rights, not a question of whether we seek to diminish the role of trade unions or whether we have a philosophical objection to the way in which they sometimes go about their activities. This is not that sort of discussion. That is the red herring that forms the common thread in the voices we have heard raised against this motion today. I do not think that there is any hidden agenda or conspiracy theory that is credible. Therefore it is irrelevant to talk of this motion as being an attempt to reduce the role of trade unions. We are seeking, firstly, to acknowledge the validity and very real achievements of the trade union movement throughout the century and to say that the best and most effective way of retaining its support in the community, amongst both members and non-members, is to ensure that it performs. By doing that it will retain the respect and, therefore, the membership support of those who belong. In other forms of activity we find that all the moves are in the direction away from compulsion and regulation. It is fairly clear that following this Government's historic and correct decision to float the currency, the deregulation which has flowed through to many areas of the economy has been very healthy and has demonstrated to us that there is no free ride, that we must survive on our merits and that we want a performance related sector. If that is the case in that area, it is also the case in terms of protection. Tariff barriers are being lowered, but they are still much higher than they ought to be in some areas such as textiles, clothing and footwear and chemicals where we still find effective protection rates of the order of 50 per cent or more. But everyone in the community recognises that real competition involves reducing those barriers. Stock exchanges have been deregulated-not without some concerns on the part of those members of the club who have prospered for so long; nonetheless that is very healthy in terms of increased competition. In the area of the media we find that this Government is proposing to free up the system to the extent that an owner can control 75 per cent of the television viewing audience. Again, one would think that that is healthy. Certain other monopolies in the professions are being broken down. The conveyancing monopoly is gradually sliding away from the lawyers. Senator Gareth Evans —Not before time. Senator ALSTON —Quite so. In terms of price competition we find that there are some very real challenges in the market-place. Advertising is gradually being allowed. In all these areas people are being expected to perform and survive on their merits, but when it comes to the way in which trade unions conduct their business it is pretty much a closed shop. There is no sense of wanting to perform and therefore attract people to join and persuade them of the virtues of membership; it is still a determination to have them on board or else. The sort of humiliation that one has to go through to obtain a conscientious objector's certificate is evidence of that. It is of only fairly recent origin in any event, but it is nonetheless a very modest achievement. The Conciliation and Arbitration Act has always allowed the Australian Conciliation and Arbitration Commission to grant preference to members of organisations, but it is only since 1977 that conscientious objector provisions have been extended beyond the area of preference. It is now possible for one to obtain a certificate irrespective of preference. That provision was introduced in only 1956. Conscientious objector arrangements have been in place for about 30 years, but they are still very narrowly based. It is instructive to look at the report of the Hancock Committee of Review into Australian Industrial Relations Law and Systems to see the attitudes taken by some of the major players. There was certainly no thought on the part of the trade union movement that the whole notion of conscientious objection should be expanded. The Victorian and South Australian governments-both Labor governments, of course-took precisely the opposite view. They sought to narrow the entitlement. The Hancock report states: The Victorian Government said that certificates should be limited to employees who demonstrate an adherence to a coherent personal philosophy which has the implication of making membership of an employee association inconsistent with that philosophy. The South Australian Government submitted that the basis for granting certificates as conscientious objectors should be limited to religious grounds. So what did Hancock end up with? He ended up with three recommendations basically seeking to narrow the field even more. The first is that `the Registrar have specific power to revoke a certificate of conscientious objection when he subsequently becomes aware of facts, which, if known to him at the time of considering the application, would have led him to refuse to issue a certificate'. The second is the power for employers to opt out of employer organisations-in other words, to extend the notion of conscientious objection to employer groups. It is not a recognition for an instant of the inherent undesirability of the way in which the current arrangements work. So one is thrown back on examining what has happened in that area. Over the period 1956 to 1977, 238 applications or renewals were made, and of those some 60 per cent were granted, but there was only an average of 21.6 applications per year. In the five years from 1977 to 1981 the number increased dramatically so that the average has been about 207 applications per year. Of those less than half have been granted. In calendar 1986 there have been 344 applications. That, I would have thought, although they are fairly small numbers in one sense, demonstrates that there is a very much increased desire on the part of individual trade unionists to opt out of the system, to endure the calumny and the embarrassment that would be heaped upon them by their colleagues and nonetheless to assert the rights that they have. Their rights are undoubted. There is no doubt that the Universal Declaration of Human Rights allows one not to join a union. I think there will be a case brought into the international courts on this very matter in the not too distant future. Quite clearly, the Declaration and therefore the International Covenant on Civil and Political Rights, to which we are a signatory, oblige us to give effect to that entitlement. Article 20 of the Universal Declaration of Human Rights states: `No one may be compelled to belong to an organisation'. That means compelled in fact, not simply notionally. In practice people are compelled to belong. That is a vice that has to be acknowledged and about which something ought to be done very smartly. That is why we have moved this motion. We do not accept the amendment of the Australian Democrats. We oppose the provision in relation to the donation because again that is simply a device to raise the ante and make it all that much more difficult to avoid membership and to add to the humiliation. It is probably worth referring to one of the intellectual luminaries of the Labor organisation, a gentleman by the name of Evans, currently a senator in this place, in a pamphlet called `Conscientious Objection to Union Membership' delivered to the Industrial Relations Society of Victoria in 1979. He was forced to acknowledge that `as a matter of first principle, no one should be forced to join any organisation against his or her will'. He went on to trot out the free rider hypothesis and that is that `in the industrial context additional considerations of fairness come into play'. `Fairness' is his term and it is clearly quite subjective. I suppose being the captive animal that he is of those who dominate the movement in Victoria, he finds it necessary to add those sorts of specious qualifications. I suggest that it is simply a tawdry and narrow definition of self-interest. It demonstrates that those who propose it are not interested in freedom of association but rather in compulsion for their own purposes. Even Senator Gareth Evans, who seems to have been asleep in recent moments, in earlier times was forced to acknowledge the validity of that principle, which indeed the Prime Minister (Mr Hawke) has done. It then comes down to whether in practice there is that effective compulsion. Let there be no mistake about it: Compulsory unionism is alive and well in this country. It does not extend just to joining trade unions, which many people might have thought it did; it extends to a whole range of entitlements once one is a member of a union. Preference is granted to unionists. The ACTU in its submission to the Hancock inquiry said that preference must be given to unionists when deciding voluntary transfers, choice of dates for recreation and flexi leave, choice of roster changes, access to training facilities and, above all, promotions. So it is quite clear that what is sought there is to very much disadvantage those who have the courage not to belong. Where is the fairness in all that? We are not concerned here to diminish the role of trade unions. It is instructive to note that the very figure that Senator Aulich gave showing that something like 18 per cent of employees in the United States belong to trade unions whereas the level of unionisation in this country has historically been 50 per cent or more, and it is currently around 55 per cent. It is no accident that it is of that order; it is very largely a function of people having no choice but to belong. Some of the cases that have seen the light of day, such as the Frank Hein case in Victoria some years ago, are classic demonstrations of the extent to which people are sent to Coventry if they have the courage of their convictions and seek to opt out. They are very clear demonstrations of the extent to which the movement will go in punishing those who dare not to belong. It is a function of power and money when one talks about the greed of those who seek to oppose trade unions. That is simply a red herring. I do not stand here seeking to diminish or to downplay the very worthy role that trade unions have played over the years, but it is fair to say that they should continue to have to perform on their merits, and that is simply not what happens at present. Those who have been forced out of places because of adherence to those preference clauses have had that happen to them because the union movement has been prepared to hold the gun at the head of an employer. One can understand why, under that sort of pressure, an employer with obligations to other than that single individual employee will readily capitulate. The consequence of that, I suggest, is a very unhealthy environment and one in which we find that the great bulk of the community believes that there is an excess of trade union power, and therefore a situation of the making of the trade union movement itself. It is in its own power to rectify that. If one wants to talk in terms of image building I would have thought that the most positive way in which to set about a restoration of that image would be to demonstrate that there can be freedom of association, that there are very real attractions and worthwhile benefits to be derived from membership and therefore to persuade rather than coerce. But unless and until this restrictive requirement is removed we will not be able to say that in every respect this nation is able to uphold the civil and political rights of trade unionists in this country. Senator CHILDS(New South Wales)(4.39) —The Opposition has moved an urgency motion today with some audacity, I think. It is clear that it is in disarray and that it has stopped tearing each other apart on this occasion for a few hours so that Opposition members may gang up and attack trade unionists and, in particular, engage in their favourite sport, which is union bashing. The debate itself has shown that that is just what it has set out to do regardless of the nominal topic it has chosen. As far as I am concerned, it is an attack on ordinary wage and salary earners. I hope to show that that is what it is all about. This comes from the coalition parties. One half wants to give us a flat tax and have 80 per cent of wage and salary earners paying additional taxes, and the other half wants a consumption tax, which would be inflationary. They cannot agree on anything. The only thing that is certain is that wage and salary earners would lose under a coalition government. That is the matter we have to look at. Despite what Senator Alston has just said, there is just a thin veneer in what has been put to us that hides the fact that we are discussing the industrial relations policy of the Opposition and of course some economic matters-I cannot say economic policy as the Opposition does not have one. There is a hidden agenda and that is to make sure that those who are wealthy are advantaged and that those who are on wages and salaries are disadvantaged. I propose to prove that. The policies are designed for wealthy people. I am shocked that Senator Alston should talk about trade unions and refer to matters such as power and money because that is what the New Right offensive on the National Party and the Liberal Party is all about at the moment-power and money. If we consider the primitive, cruel millionaires who are dominating the New Right and who are trying to alter the agenda of the conservative parties, we have a complete example of a bid for power-indeed, a takeover bid by the Premier of Queensland. When we look at some of the people in that army which would give the wealthy in society far more money, we see Mr Copeman, Katharine West, John Stone, Hugh Morgan and Andrew Hay. I know that Senator Peter Baume would be interested in the description by one of his colleagues of this New Right group. Ian Macphee in the other place said that this New Right: . . . elevates selfishness to commanding heights and ignores the plight of less fortunate and less able members of the community. That is what Ian Macphee, representing those fine traditions of small `l' liberalism, has said about this move. Senator Peter Baume —Let's get back to civil liberties. Senator CHILDS —We have to be concerned not only with civil liberties when debating this urgency motion but also with the industrial relations policy of the coalition parties. The problem for Opposition senators-- Senator Parer —There is no problem. Senator CHILDS —Yes, there is a problem because the Opposition changed leaders. As soon as it changed leaders and as soon as the confrontation was over-Senator Alston has just agreed with the same proposal-Mr Howard, in his first statement as Leader of the Opposition, said: Deregulation of the labour market remains probably the greatest economic challenge that we have over the next five or ten years. So that is what this is all about. The reason the coalition parties want deregulation is to take from wage and salary earners in particular the money that they are entitled to. They want to advantage business people, particularly those at the wealthy end of the economic spectrum. I want to analyse some of the economic proposals that are behind this, because the Liberal Party platform is that the employees of companies with 50 or less employees would be forced into individual contracts. This is the sort of civil libertarian approach of the coalition parties. They are trying to force people-- Senator Parer —No, not force. Senator CHILDS —Well, they will certainly be forced in practice because employees are going to be negotiating with their employers for their salaries, other than the basic rudiments which will be set at a very low level. We know that there are legal difficulties. We know it will be very difficult to have any system that will in any way be enforceable between individual workers and employers. We know that there are practical problems because of the industrial relations chaos this will cause. Of course, this urgency motion can be understood only in the context of the pressure to smash the bargaining power of employees. This applies particularly to small business, but the same principle will apply as the size of the corporation we are dealing with increases. The small business sector is particularly significant because one-third of the work force-2.1 million people-is employed in it. The Opposition's proposal is to destroy the orderly arbitration system and to allow for the law of the jungle to take over. I suggest that this is in complete conformity with the confrontationist style of the New Right. I believe that individual small business people will actually reject this proposal because they want to make money, not war. Yet the ideologues in the coalition and outside it are out to cause confrontation because of their preconceived views. Business people need stability, and that is what this Government has given them. Australia cannot afford to follow the Opposition's ideological beliefs to deunionise this country. I also want to draw attention to the fact that the second bow of the Liberal Party policy is its belief that there should be enterprise unions. An enterprise union is an old company union; a tame cat union, or perhaps no union at all, is what the coalition parties are really after. Of course this idea is fantasy fulfilment stuff. Nevertheless, the coalition parties want to experiment with it and the real problem is that this will be to the disadvantage of all people employed either in industry or in commerce. Let us take the situation of a person employed in a small enterprise of about 100 employees. According to Liberal Party philosophy, a person in a factory or an office employing 100 people will have his civil liberties affected. Under the Liberal program, nationwide or State-wide unions will be kept out, because the coalition's aim is a union of 100 people. The point at issue is that the 100 people in that factory will be denied the negotiating skills of full time union officials, with their knowledge of what happens in similar situations in other enterprises. The 100 workers in that particular place will also lose the advantage of the legal, economic and other skills that the trade union gives to them. What ordinary person in an enterprise of, say, 100 people can stand up under those circumstances and argue effectively? But a trade union at this stage offers the people in such organisations all of that. Of course one of the most difficult things of all is the question of victimisation because it is not, as has been stated by some of the Opposition senators, a theoretical situation. We are talking about real industry where people are victimised daily because of their views. Civil liberties on the factory floor, I can assure honourable senators, are something that have to be fought for and the strength of the union prevents those people from being trampled on. I have not got time to read from a publication of the Trades and Labour Council of Western Australia headed `Robe River Report'. It details the experiences of individual workers who were victimised by Mr Charles Copeman as a result of the industrial dispute that he has waged. Of course, that is the sort of thing that unionism is all about; that is the reason the Labor Party believes in the principle of preference for unionists and it is why over 50 per cent of people employed in Australia are members of unions. They know that they need that support. Of course, we could well ask whether the coalition, according to its industrial relations policy, will say to employers that they should leave their unions. Will employers be denied the advantages that they currently enjoy, as is being proposed to the trade union side or to the wage and salary earner? Of course the employers will not be denied anything. As far as the coalition is concerned, employers will be given a free kick because under the Liberal Party's industrial relations policy, they will still maintain their industrial officers. The industrial officers, the legal experts and the economists will advise particular companies. There is no suggestion that the individual employer who employs, say, 100 employees will be cut off from the group manager, the State manager or all the resources of the company. He will have the benefit of the full time staff employed by that company-all those people who at present compete against the union representative in an enterprise of 100 people. Of course, it goes further because in many organisations that would be involved, whether big or small, national employer organisations, State employer organisations and even international advice would be available to the people in a particular enterprise. That is the reality of what the coalition is setting out to achieve. It has cheap statements about the question of the ability to opt out of the system when for years the arbitration system has allowed people genuinely to be able to opt out through the conscientious objector's provision included in the Hancock report of the Committee of Review into Australian Industrial Relations Law and Systems and which will be repeated because it is accepted as a realisable and sensible proposal. This is the sort of background that we have and which creates industrial harmony. That is the reason why the Government will oppose the Opposition's motion. I believe we will be able to support Senator Harradine's proposal, which is in line with the existing procedures that have stood the test of time. It is certainly in line with common sense. What we have to be concerned about is that the coalition, in its industrial relations policy, is setting out to take away the genuine freedom-we are talking about genuine freedoms-of wage and salary earners to be protected and to use their resources as they wish to get the best possible result. The coalition's policy is to stack the deck against wage and salary earners. The way that it does it is to attack trade unions. It is the trade unionists who can ask that they be given the opportunity of being represented with the best possible results. Indeed, I say to Senator Parer, who criticised collectivism, that, if the collective good or the common good were applied to the whole of Australia, it would be a very good place. The greed, the wealth and the privilege of the New Right and the people behind it are things that we will not allow to be foisted on this country as being the way in which we shall work. The vast majority of Australians wish to make sure that we have a compassionate and caring society. The extremists in the New Right and the coalition parties are opposed to every sense of decency and every question of equity, including civil liberties. Senator SIDDONS(Victoria)(4.53) —I rise to speak only very briefly on this vitally important question of union preference. It is not a new question. Indeed, in October 1982 the Senate Select Committee on Industrial Relations Legislation spent a large percentage of its time addressing this very question. That Committee, under the very able chairmanship of Senator Harradine, wrestled with this problem and came out with a very firm recommendation of what should be done on this very difficult issue which embraces human rights and the fundamental principles of our centralised system of conciliation and arbitration. There is no way that we can fix wages in this country without representation of trade unions. That is fundamental. But what do we do when trade unions are responsible for fixing wages on behalf of workers in a whole industry and yet people in that industry say: `We do not want to join the union'? There has to be equity on both sides. The Committee recommended a broadening of the definition of a conscientious objector. It was a suggestion that I put to the Committee. It was debated at length and the majority report of the Committee embraced the suggestion of simply broadening the definition of a conscientious objector to include also a person who holds principles or beliefs which prevent membership of unions. A person who has a legitimate objection to joining a union, other than a conscientious objection, could refrain from doing so. But a condition of that objection to joining a union would be that the union fees that would normally be paid to the union for representation before the Conciliation and Arbitration Commission would be paid to the Registrar. By this means we avoided the problem of an employee sitting back, not joining a union but getting the benefits of the union's representation on behalf of the whole work force before the Conciliation and Arbitration Commission and paying nothing for that service. My position very clearly is in line with the majority recommendation of the Harradine-chaired Select Committee on Industrial Relations Legislation in 1982. It was a very enlightened Committee which conducted a very thorough investigation of the whole of industrial relations problems. I am sure one cannot solve the conflicting problems of union preference without adopting a position that ensures that a fee for service is paid by those members in the work force who, for reasons that are reasonable and arguable, do not wish to join a union. They should be allowed to pay a fee for service in lieu of paying a fee to a union. Senator HARRADINE(Tasmania)(4.56) —I rise to foreshadow an amendment to the urgency motion to leave out the statement of the matter of urgency and insert the following: The need for Governments, employers and unions to have regard to the evidence submitted to and the conclusions reached by the Senate Select Committee on Industrial Relations Legislation in respect of trade union membership. Senator Siddons, who has just resumed his seat, played a prominent role in that Committee. I am very pleased that he has referred in this debate to the work of the Committee. The mover of the urgency motion, Senator Parer, was not here at the time of that Committee but I can assure him and every member of the Senate that the issues that have been canvassed very briefly here today were canvassed-- Senator Mason —His colleagues were, though. Senator HARRADINE —Yes, indeed. The issues that have been canvassed today were canvassed at great length before that Committee. Persons with interests in the industrial relations system, or without any interest at all in it, were given the opportunity to provide submissions, and they did so. I invite honourable senators to examine the report of that Select Committee on Industrial Relations Legislation and, perhaps even as important, to read the transcript of evidence which I suppose covers about 1,500 pages and which is very illuminating. Let me get to what I believe is the crux of the problem and the basis of this debate today. Much has been said about the freedom not to join a trade union. This motion is not really about that. This motion is in fact part of a systematic attack on the right of freedom of association. At this stage of high unemployment the position is that of a buyer's market. I think Senator Mason referred to the Opposition's attempts to go back to the times of unfettered market practices. Of course, it would then be a case of preference to non-unionists. The position now with manufacturing industries is that employment is declining. White collar employment will be the substantial area of employment. The multinationals, the New Right, and now the Liberal Party of Australia, are trying to free up-they are their words-the labour market. What will be the result of that, without preference to unionists? It will mean preference to the poor non-unionist who is prepared to take a job at substandard rates. In fact this is a recent policy of the Liberals. They want to enable individual employees to enter into contracts with individual employers. When there is a queue of maybe 100 people trying to get one job at an employer's premises the result will be that the employer will say: `The person who is not a unionist, who will work under substandard conditions and for substandard pay below award wages, will get the job'. That is an utterly disgraceful and most unfair situation. The origin of preference for unionists in this country goes back to the original Conciliation and Arbitration Act of 1904. The original award provisions were placed into awards to prevent the victimisation that occurred against non-unionists. Subsequent provisions in awards were made because of the recognition by the Commission of the need for representative trade unions. The fact of life in industrial relations is that trade unionists are required by the Act to pay for the costs incurred in obtaining awards which then benefit all workers. People have said that it is a fundamental right not to belong to a union. Are those people saying that it is a fundamental right of an individual worker to refuse to pay for the benefits that are obtained for him and which he receives? Is that what they are saying? It may be a freedom, but how it can be a basic or fundamental human right is beyond me. I am the first senator to stand up here in support of fundamental human rights, including the right of individual conscience. Section 144A of the Conciliation and Arbitration Act upholds that fundamental right. Not only does the Act give employees who have conscientious objections the right to be exempted from union membership but also it provides for such persons to be regarded as though they were members of a union for the purposes of award benefits. This motion tries to lump genuine conscientious objectors in with the freeloaders-the people who do not want to belong to a union because they do not want to pay. I do not believe in compulsory unionism but I do believe in giving preference to persons who undertake their duties and responsibilities to society. The trouble with the type of resolution we have from the Liberal Party here is that it puts too much emphasis on excessive individualism. The Liberals are not prepared to balance excessive individualism against the essential requirements of the common good. I was amazed when Senator Parer lauded the Equal Opportunities Tribunal in Victoria because I thought he was against Bills of Rights and organisations such as the Tribunal which, through non-elected individuals, determine the rights of citizens. The previous occasion on which an equal opportunities tribunal decided a question of rights was in New South Wales when it said that Dr Tralaggan could not give preference to a bona fide married couple over a de facto couple when renting his house. I believe that is the crux of the problem as far as the Liberals are concerned. The Liberals will not ensure that persons who do the right thing are given credit for doing so. I suggest that the Liberals study the report of the Senate Select Committee on Industrial Relations Legislation, together with all of the evidence. Amendment negatived. Senator HARRADINE(Tasmania) —I seek leave to move the motion that is circulated in my name. Leave not granted. Senator MACKLIN(Queensland)(5.06) —Pursuant to the contingent notice of motion standing in the name of Senator Haines, and on her behalf, I move: That so much of the Standing Orders be suspended as would prevent the Leader of the Australian Democrats (Senator Haines) moving an amendment to the motion. Question put. The Senate divided. (The President-Senator the Hon. Kerry Sibraa) Ayes . . . . . . . . . . . 37 Noes . . . . . . . . . . . 29 —— Majority . . . . . . . . . 8 —— Aulich, T. McKiernan, J. P. Black, J. R. Macklin, M. J. Bolkus, N. Maguire, G. R. Childs, B. K. Mason, C. V. J. Coates, J. Morris, J. Colston, M. A. Powell, J. F. Cook, P. F. S. Ray, RobertCooney, B. Reynolds, M. Crowley, R. A. Richardson, G. F. Devlin, R. Robertson, E. A. Elstob, R. C. Ryan, S. M. Evans, Gareth Sanders, N. K. Foreman, D. J. Sibraa, K. W. Gietzelt, A. T. Siddons, J. R. Giles, P. J. Tate, M. C. Haines, J. Vigor, D. B. Harradine, B. Walsh, P. A. Jones, G. N. West, S. M. McIntosh, G. D. (Teller) Alston, R. K. R. Lewis, A. W. R. Archer, B. R. Messner, A. J. Baume, Michael Newman, J. M. Bjelke-Petersen, F. I. Parer, W. R. Boswell, R. L. D. Puplick, C. J. G. Carrick, Sir John Reid, M. E. (Teller)Chaney, F. M. Sheil, G. Collard, S. J. Short, J. R. Crichton-Browne, N. A. Teague, B. C. Durack, P. D. Townley, M. Guilfoyle, Dame Margaret Vanstone, A. E. Hamer, D. J. Walters, M. S. Hill, R. Watson, J. O. W. Jessop, D. S. Withers, R. G. Knowles, S. C. Zakharov, A. O. Baume, PeterGrimes, D. J. Kilgariff, B. F. Coleman, R. N. Boswell, R. L. D. Button, J. N. MacGibbon, D. J. Question so resolved in the affirmative. Senator MACKLIN(Queensland)(5.13) —On behalf of Senator Haines, I move: Leave out the statement of the matter of urgency, insert the following: `The need for Governments, employers and unions to have regard to the evidence submitted to and the conclusions reached by the Senate Select Committee on Industrial Relations Legislation in respect to trade union membership.'. Question put: That the words proposed to be left out (Senator Macklin's amendment) be left out. The Senate divided. (The Deputy President-Senator D. J. Hamer) Ayes . . . . . . . . . . . 36 Noes . . . . . . . . . . . 28 —— Majority . . . . . . . . . 8 —— Aulich, T. McIntosh, G. D. (Teller)Black, J. R. McKiernan, J. P. Bolkus, N. Macklin, M. J. Childs, B. K. Maguire, G. R. Coates, J. 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. Richardson, G. F. Elstob, R. C. Robertson, E. A. Evans, Gareth Ryan, S. M. Foreman, D. J. Sanders, N. K. Gietzelt, A. T. Siddons, J. R. Giles, P. J. Tate, M. C. Haines, J. Vigor, D. B. Harradine, B. Walsh, P. A. Jones, G. N. West, S. M. Alston, R. K. R. Knowles, S. C. Archer, B. R. Lewis, A. W. R. Baume, Michael Messner, A. J. Bjelke-Petersen, F. I. Newman, J. M. Brownhill, D. G. C. Parer, W. R. Carrick, Sir John Puplick, C. J. G. Chaney, F. M. Reid, M. E. (Teller)Collard, S. J. Sheil, G. Crichton-Browne, N. A. Short, J. R. Durack, P. D. Townley, M. Guilfoyle, Dame Margaret Vanstone, A. E. Hamer, D. J. Walters, M. S. Hill, R. Watson, J. O. W. Jessop, D. S. Withers, R. G. Zakharov, A. O. Baume, PeterGrimes, D. J. Kilgariff, B. F. Coleman, R. N. Boswell, R. L. D. Button, J. N. MacGibbon, D. J. Sibraa, K. W. Teague, B. C. Question so resolved in the affirmative. Question put: That the words proposed to be inserted (Senator Macklin's amendment) be inserted. The Senate divided. (The Deputy President-Senator D. J. Hamer) Ayes . . . . . . . . . . . 36 Noes . . . . . . . . . . . 28 —— Majority . . . . . . . . . 8 —— Aulich, T. McIntosh, G. D. (Teller)Black, J. R. McKiernan, J. P. Bolkus, N. Macklin, M. J. Childs, B. K. Maguire, G. R. Coates, J. 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. Richardson, G. F. Elstob, R. C. Robertson, E. A. Evans, Gareth Ryan, S. M. Foreman, D. J. Sanders, N. K. Gietzelt, A. T. Siddons, J. R. Giles, P. J. Tate, M. C. Haines, J. Vigor, D. B. Harradine, B. Walsh, P. A. Jones, G. N. West, S. M. Alston, R. K. R. Knowles, S. C. Archer, B. R. Lewis, A. W. R. Baume, Michael Messner, A. J. Bjelke-Petersen, F. I. Newman, J. M. Brownhill, D. G. C. Parer, W. R. Carrick, Sir John Puplick, C. J. G. Chaney, F. M. Reid, M. E. (Teller)Collard, S. J. Sheil, G. Crichton-Browne, N. A. Short, J. R. Durack, P. D. Townley, M. Guilfoyle, Dame Margaret Vanstone, A. E. Hamer, D. J. Walters, M. S. Hill, R. Watson, J. O. W. Jessop, D. S. Withers, R. G. Question so resolved in the affirmative. Question put: That the motion, as amended, be agreed to. The Senate divided. (The Deputy President-Senator D. J. Hamer) Ayes . . . . . . . . . . . 36 Noes . . . . . . . . . . . 28 —— Majority . . . . . . . . . 8 —— Aulich, T. McIntosh, G. D. (Teller)Black, J. R. McKiernan, J. P. Bolkus, N. Macklin, M. J. Childs, B. K. Maguire, G. R. Coates, J. 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. Richardson, G. F. Elstob, R. C. Robertson, E. A. Evans, Gareth Ryan, S. M. Foreman, D. J. Sanders, N. K. Gietzelt, A. T. Siddons, J. R. Giles, P. J. Tate, M. C. Haines, J. Vigor, D. B. Harradine, B. Walsh, P. A. Jones, G. N. West, S. M. Alston, R. K. R. Knowles, S. C. Archer, B. R. Lewis, A. W. R. Baume, Michael Messner, A. J. Bjelke-Petersen, F. I. Newman, J. M. Brownhill, D. G. C. Parer, W. R. Carrick, Sir John Puplick, C. J. G. Chaney, F. M. Reid, M. E. (Teller)Collard, S. J. Sheil, G. Crichton-Browne, N. A. Short, J. R. Durack, P. D. Townley, M. Guilfoyle, Dame Margaret Vanstone, A. E. Hamer, D. J. Walters, M. S. Hill, R. Watson, J. O. W. Jessop, D. S. Withers, R. G. Question so resolved in the affirmative. Senator COONEY(Victoria)(5.30) —I move: That the Senate take note of the paper. This paper deals with an interim response by the Minister for Foreign Affairs (Mr Hayden) on a report from the Joint Committee on Foreign Affairs and Defence. It talks, amongst other things, about peace. The vast majority of people want peace, that happy state of things where everybody lives in harmony with each other and with the environment. Some say that peace and harmony can be ensured through a balance of terror. The argument is that engorging potential combatants with nuclear weapons will guarantee their non-use. This argument ignores the risk that some desperate possessor of the weapons will bring doomsday upon us. The Government does not accept that argument. It believes that the ordered reduction of weapons possessed by all potential protagonists throughout the world is the way forward. That reduction must be made within the parameters of reality. A world that has throughout history fought or threatened wars will not come to its senses quickly. But the enterprise to achieve reductions must be made. The Government, and in particular the Minister for Foreign Affairs, Mr Hayden, has taken very strong initiatives in this area. The first priority of the policies he has pursued on behalf of the Government is the establishment of a comprehensive test ban treaty which would outlaw all nuclear testing by all states in all environments for all time. The Australian Government sees that such a treaty is the first requisite towards ending the nuclear arms race. It has, therefore, been a leading activist for such a treaty at the United Nations and other world forums and in direct contacts with governments. It has co-sponsored United Nations moves on such arms control matters as chemical and radiological weapons, verification, the use of weapons in space, production of fissionable materials and effective methods of assessing the military programs of United Nations member states. The Government has taken other initiatives. It is worth quickly going through these initiatives. They are as follows: The Government has taken the initiative towards creating a nuclear free zone in the South Pacific; it has encouraged the establishment of a zone of peace in the Indian Ocean; it has initiated action at the United Nations Conference on Disarmament to prevent the arms race spreading into space; it has taken part in negotiations for a treaty to outlaw chemical weapons and given expert help to the United Nations in its investigations of allegations that chemical weapons were being used in the Iran-Iraq war, a most tragic war; it has taken initiatives to improve the capacity and extent of Australia's involvement in international arms control and disarmament by appointing Australia's first ever Ambassador for Disarmament and by setting up a peace and disarmament branch and a senior disarmament adviser position in the Department of Foreign Affairs. It has allocated $3m to the nationwide program of education and community involvement for the 1986 United Nations International Year of Peace. These initiatives have taken forward the process of obtaining peace throughout the world. As I have said, that process is going to be a long and difficult struggle, but it is one that must be undertaken. I have mentioned some of the Government's initiatives. Mr Hayden has been particularly active in this area and has taken strong initiatives to effect that state of affairs that we all want, in which we can live as one people throughout the world in harmony with each other and with the environment. Question resolved in the affirmative. Senator SHORT(Victoria)(5.35) —I move: That the Senate take note of the papers. These papers comprise a letter dated 2 December 1986 from the Minister for Finance (Senator Walsh) to the Principal Member of the Superannuation Fund Investment Trust which is the trust that really invests the proceeds of the Commonwealth superannuation scheme. The second paper is a response to that letter from the Acting Principal Member of the Trust, Mr Searson, on 31 December 1986. The Minister's letter of 2 December drew to the attention of the Superannuation Fund Investment Trust the Government's policy in relation to South Africa. It states: . . . the Government has placed a ban on all Government procurement from South Africa and prohibited placement, by departments and authorities, of Government contracts with majority-owned South African companies. Procedures to give effect to this policy have been issued by the Department of Local Government and Administrative Services as amendments to the Commonwealth Purchasing Manual. I have directed that these procedures be formally adopted within my Department. Pursuant to sub-section 29a (6) of the Superannuation Act 1976, I am writing to bring this policy to the Trust's attention and I would ask that the policy be considered by the Trust in the performance of its functions. Section 29a (6) of the Superannuation Act reads: If the Minister at any time furnishes to the principal member- that is, of the Trust- a statement of the policy of the Commonwealth Government on any matter that is relevant to the performance of the function of the Trust together with a request that the Trust consider that policy in the performance of its functions the Trust shall ensure that consideration is given to that policy. The letter from the Acting Principal Member of the Trust back to the Minister, Senator Walsh, on 31 December, stated: . . . consistent with the Government's policy, the Trust has agreed that it will avoid, as far as practicable, any direct dealings with South Africa or majority-owned South African companies. . . . . I might also mention that the Trust has made the general comment in its 1985-86 Annual Report that it adheres to Government announced policies on issues such as South Africa. I think it is worth drawing the attention of the Senate to the fact that the Superannuation Fund Investment trust is not required to comply with the requests of the Minister other than the request that consideration be given to the Government's policy. The issue here is one of potential conflict between the actions of the Superannuation Fund Investment Trust in its basic responsibility to act in the overall interests of its members and, by doing that, to get the best return on their contributions as is possible-there is that basic obligation on the part of the Trust-and adhering to the Government's policy in relation to a ban on dealings with South Africa. This was an issue that was raised when amendments to the Superannuation Fund Investment Trust were being considered last year. Members on this side of the chamber made the point, particularly when the Trust was having its membership increased very strongly by trade union representation, as to whether the interests of the members, the contributors to this fund, would be adequately protected. I express a note of caution and a note of concern in relation to the documents tabled today as to whether there is any suggestion that the Superannuation Fund Investment Trust may take investment decisions on behalf of its members which, because of a conflict with the Government's South African policy, may ensure less than the best returns that would otherwise be the case to members of the Fund. In the end that flows back to an additional cost to revenue. It is not entirely clear what the Trust's view is on that matter, but it is worth us, as a Senate, being aware of that situation. Question resolved in the affirmative. Senator SHORT(Queensland)(5.40) —I move: That the Senate take note of the paper. I wish to relate my comments on the report on grants approved for 1987 under the Australian research grants scheme to the criticisms that have been made in recent days by certain persons in the community of the comments of members of the Opposition's Waste Watch Committee last week about several of the grants that have been made under the Australian research grants scheme. There is some misunderstanding on the part of those critics as to what those members of the Waste Watch Committee-particularly Senator Michael Baume, who obviously will be speaking in this debate-had in mind. In my view there is no reason at all why one section of the community, particularly the academic community, should be in any way exempt from bearing its share of the burden that is borne by members of the community in meeting the basic need for restraint in government expenditure. That restraint is accepted by the Government and the Opposition alike. If that restraint is to be exercised equitably and fairly, and at the same time is to take account of the needs of our community, economy and society, there is no way that any one section of the community should be exempt from sharing in that restraint. That is the point that has been made by the Waste Watch Committee in recent days. It is accepted by most people. It seems to be accepted by the Australian Science and Technology Council, whose report has also been tabled today. A member of ASTEC is Professor Don Aitkin, who is also the Chairman of the Australian Research Grants Committee and one of the critics of the Waste Watch Committee. One of the fundamental points ASTEC makes in its report in regard to the allocation of funds for research in Australian academic institutions in recent years is that there are grounds for believing that the priorities and directions of fund usage could be changed in a way that would give the nation better value for its research money. ASTEC has criticised the narrowness of the selection criteria presently adopted by organisations such as the Australian Research Grants Committee. Funds under the ARGS have increased progressively in recent years. In 1987 there was a 17.6 per cent increase in funds-far in excess of most other items of government spending and of most items in the non-government sector. So it is very difficult to accept the proposition that calling for restraint and equity in the use of these funds, which is what the Waste Watch Committee has been calling for, imposes a philistine approach to this matter. It is a question of getting our priorities right in the area of research funding. Senator ARCHER(Tasmania)(5.45) —I, too, would like to speak about the report on the Australian research grants scheme. The increase to $32.38m in funding should be very good news-and it is. But we must see that this money is spent on achieving better value, and hopefully the best value possible, for the research dollar. A more venturesome approach needs to be taken by the Australian Research Grants Committee so that the jobs which are done are the ones most appropriate to the needs of the nation at present. Page 1 of the report states: A research project must be intended to be carried out principally in Australia . . . I think that is very important. Too much of this money has been going overseas. We must ensure that we get full value for our money. The report also says that we should pursue excellence. We need to try to achieve excellence wherever we can. Page 3 of the report refers to the desperate state of Australia's stock of research equipment, something we all need to be concerned about. Our research equipment is not being funded to the same degree as our researchers are being funded. Our research equipment stock has reached a desperate state. Sixty-one per cent of the grants which were applied for were awarded but only 36.1 per cent of the equipment requests were granted. We need to bear in mind that this is creating a very serious situation. In the course of my travels I have met a considerable number of recipients of grants under this scheme and have found them to be very impressive in a wide range of areas. However, continuity of grants is a matter of concern to many of them. They do not know soon enough whether they will be able to complete the tasks they undertake. The availability of appropriate equipment is of even greater concern. We are losing researchers overseas because of its non-availability. Many institutions are struggling to buy back expatriate Australians to do work in certain areas, but buying them back is not the same as being able to keep them here in the first place. Bringing them back to do jobs which are dreamt up for them is not the same as having them do things spontaneously. Australia is a favourite recruiting ground for overseas corporations and research institutions. Communications between the Research Committee and the general public are not good enough. I am pleased to say that the Committee has recognised this and intends to improve in this area. There needs to be a considerable push in scientific research. I do not know about actual manpower requirements but there certainly needs to be encouragement in specific areas to ensure that people work in the areas of greatest need and opportunity, providing we can maintain a standard of excellence. I look forward to the Research Grants Committee and other organisations becoming part of a research council. I hope that will happen before the beginning of the next financial year. I commend the work done by the members of the Committee, particularly by the Chairman. I believe that the Research Grants Committee has done a pretty good job over a period but that it needs to tighten up. Senator MICHAEL BAUME(New South Wales)(5.50) —The Waste Watch Committee, of which Senator Short is a most valued member, pointed out last week a large number of grants which it suggested may well be inappropriate at a time when Australia is in such an economic crisis. These grants, including matters of immediate moment such as motherhood in ancient Rome, aroused some public interest with the result that members of the Waste Watch Committee were attacked as being philistines for daring to suggest that the academic community might well have imposed upon it the same restraint in financial terms that the rest of society is being obliged to bear. If the only response by the academic community, or sections of it, to this kind of suggestion that it should suffer the same burden as the rest of the community is to call people who make such suggestions philistines or to make other offensive remarks, it seems to me to be most unfortunate. The fact is that members of the Waste Watch Committee, all of whom are graduates of universities around Australia, strongly support research grants, particularly those which assist Australia's status and not simply its economic status. However, there are clear choices and preferences to be made and clear costs and benefits involved in every decision made concerning academic grants. It is interesting to note that in the annual report of the Australian Research Grants Committee, under the chairmanship of Professor Aitkin, the Committee says something that members of the Waste Watch Committee totally support. It says: There is no doubting the quality of Australia's best researchers, or the general standing of Australians in the international world of research and development. But that quality is not matched by quantity. On any comparative index, Australia's research output is small, and not appropriate- I stress these words- to a nation seeking to move from reliance on commodities to adding value to exports through the application of skill derived from R & D. In other words, the Australian Research Grants Committee is clearly emphasising the need for research aimed at a benefit-a clear economic benefit in this case-to Australia. That was basically what we were talking about in our criticism of these grants, because it seemed that there was a touch-if I could use that word-of self-indulgence in some areas of research at a time when we were facing a very difficult economic problem. For example, one sees from the table on page 20 of the annual report that grants have been allocated to the Australian history area, which I consider and I am certain the Senate considers to be a matter of enormous moment and great significance to this nation, particularly as we approach the bicentennial year. One would hope that Australian history would attract relatively large amounts of research money in the humanities area. I stress that we are not opposed to funding humanities research, but we see in the annual report that $245,000 in grants was allocated to Australian history while $304,000 was allocated to anthropology and prehistory and $312,000 was allocated to classical studies and classical archaeology. I am certain they are very worthwhile ventures but there seems to me to be some questionable criterion in the area of humanities about where Australia's research efforts should be directed. Asian and Pacific history, which one would assume would be of enormous significance, received only $185,000, which is less than the amount for classical studies, anthropology and so on. I intend to deal with some of the other criticisms of research grants when I speak on the next paper, which supports strongly the case put by the Waste Watch Committee that some of these grants have been misallocated. Question resolved in the affirmative. Senator CROWLEY(South Australia)(5.55) —I move: That the Senate take note of the paper. I am pleased to be the first senator to speak on the report to the Prime Minister (Mr Hawke) by the Australian Science and Technology Council entitled `Improving the Research Performance of Australia's Universities and Other Higher Education Institutions'. I am pleased to have the opportunity to rebut a few of the comments made by the speakers who addressed the previous report on the Australian research grants scheme. Their pleading for better understanding of what they said is a little like bolting the stable door after the horse has gone. They either had a very poor Press copy or they interfered in a sloppy way and castigated some of the research allocation money; so if Senator Michael Baume wants to criticise it, he will have to cop it. There are problems in the allocation of research grants which this report addresses very closely, but to stand up, as Senator Michael Baume just did, and deal with some kind of review of research by referring to the amounts of dollars allocated to it is very insufficient. To draw a conclusion from the fact that $100,000 was spent on Asian history, as compared with $300,000 for another sort of research, is to come to a conclusion based on insufficient analysis. We have not looked at how many people applied for grants, the methodology, who applied for grants, their credibility or credentials, or any number of things-precisely the sorts of questions that the bodies which allocate research money have been established to ask. While it is very important that we review the allocations and require accountability of all public dollars, particularly research dollars, moving as Senator Michael Baume seemed to in his criticism beyond what is reasonable and questioning the standards of research by referring to the names of the papers and the moneys allocated to them betrays a very insufficient method of critiquing research money. Soon after I was elected to the Senate I was asked to speak at the University of Adelaide about insufficient funding for post-graduate research in South Australian universities and in the whole country generally. What was reflected by the complaints and petitions of the academics who met that day was a response to seven years of the Fraser Government, in which time research moneys had not been increased, as they had not been for tertiary education. What we have seen since is a very impressive increase, but more particularly an understanding by this Government of the importance of research-not only applied research but also basic or pure research. This report is a very useful analysis of how funding for research is given and how it could be improved. There is no doubt at all that, as is illustrated by this report, the distribution of funding to research in two ways-that is, general funding through the Commonwealth Tertiary Education Commission to higher education institutions, and direct grants-leaves room for improvement. The principal recommendation of this report is that an Australian research grants council should be established to cover what is currently funded under the Australian Research Grants Committee, the national research fellowship scheme, the Queen Elizabeth II fellowship scheme, the marine science and technology grants scheme and the Commonwealth program for the promotion of excellence in research. In bringing those research allocations into the one Australian research council, more adequate funding, particularly of program grants, and redirection of funding to researchers would be achieved. I urge people with any interest in the funding of research to look at this very useful report because it picks up a number of issues raised by people promoting and seeking further support for research. Finally, in the minute left to me, I say, as this report says-and contrary to what Opposition senators have just said in relation to the previous paper-that some spheres of research in this country are of world excellence. One area of note is in vitro fertilisation research. Australian scientists are being sought by other countries precisely because of their expertise and ability in this area. It is something of a tragedy, as far as I am concerned, that we are not able to maintain their presence in this country, as compared with the encouragement, particularly financial encouragement, they are getting to go to other countries, especially America. We have a long history of excellence of research in the medical and agricultural areas and we can be very proud of that. We should not be in the business of punishing ourselves with criticism but doing as this report does and comprehensively reviewing it. The ACTING DEPUTY PRESIDENT(Senator Bjelke-Petersen) —Order! The honourable senator's time has expired. Senator VIGOR(South Australia)(6.00) —I commend to the Senate the report on the Australian research grants scheme. This report makes a number of important recommendations as an outcome of its critical examination of the role and performance of research in educational institutions. Australia spends relatively little time and money on research and most of that money comes from the public purse. The 150 per cent tax concession may change that emphasis. The report presages the development of an Australian research council. I commend that. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator REID(Australian Capital Territory) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator REID(Australian Capital Territory) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator REID(Australian Capital Territory) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. The ACTING DEPUTY PRESIDENT —The time allowed for the consideration of Government Papers has now expired. Consideration resumed from 26 February, on motion by Senator Chaney: That the Senate take note of the statement. Debate (on motion by Senator Michael Baume) adjourned. Debate resumed from 24 February, on motion by Senator Colston: That the report be adopted. Senator VIGOR(South Australia)(6.03) —It is indeed timely that the interim report of the Standing Committee on Education and the Arts has come before the Senate just as the Government has started another round of menaces to try to dismantle the Special Broadcasting Service. There has been an uninterrupted flow of Government misinformation on this subject right from the outset of this particular saga. It is useful to examine some of the distortions because they assist in clarifying the terms of reference which the Committee has put forward in this report. It is also important to put the media and the general public into the picture on where the proposed legislation stands. Once again, there are strenuous attempts to suggest that the legislation is somehow still before the Senate. I must tell everybody who is listening that the ABC/SBS Amalgamation Bill has been discharged from the Notice Paper. It did not receive a second reading. In fact, the Senate voted 30 to 28 that the Bill not be read a second time. The Bill has been defeated. One strand in this Government's unrelenting attack on multiculturalism has been broken. It is interesting that one of the lines of miscommunication currently being trotted out by the Minister for Communications (Mr Duffy), whom I would rename Minister for Miscommunications, is that the absorption of the SBS by the Australian Broadcasting Corporation could proceed without legislative authority. Senator Lewis raised in the debate last year whether the Government intended to proceed with the amalgamation by other than legislative means. Senator Walsh told us that the matter was still under study at that stage. He assured us that the Government's decision would not be influenced in the slightest by the second part of the motion adopted by the Senate. I quote from that motion: . . . a merger of the ABC and the SBS not proceed without explicit legislative authority. It seems as if the cowboy swagger in government ranks has disappeared. Obviously, someone has done the homework and realised that the matter is a good deal more involved than just getting an adjustment to the relevant appropriations. The Government has pinned its hopes instead on the report of the Senate Committee and has asked the Standing Committee on Education and the Arts to expedite its report on the Government's reasons for proposing to amalgamate the ABC and the SBS. Once again, the Government has set out to cripple morale within the Special Broadcasting Service. I believe that this is a quite unacceptable process for it to go through. The Government has announced a new provisional date of 1 July for the dismembering of the SBS. It has been prepared to nominate 1 December as a backstop to this particular time when questioned seriously about the practicalities of being able to knife the SBS in the way it is. The Minister has written to the SBS Chairman to try to frighten off witnesses who might expose the folly of the Government's plans by stating the financial and other facts which relate to the merger. The Committee has met and most of the evidence to this stage suggests that there is absolutely no basis for the claim of $2m savings which the Government imagined would come from the merger. Senator Button —That is not the point. Senator VIGOR —There seems to have been an attempt at massaging and manipulating the type of information that the Committee is supposed to get. I say to Senator Button that I consider that it is quite unreasonable for a Minister to try to stop people from the Australian Public Service putting reasonable information before a Senate committee. It is almost getting to the stage of contempt of the Senate. The whole of the tactics involved in this matter suggest that the Government has contempt for the Senate and that is something which I do not believe the people of Australia will put up with. Certainly, the multicultural community will not be happy with the Government's proposal to go ahead with a merger without proper legislative backing and against the express wishes of the Senate. It is extremely important to look at the types of flimsy justifications which the Government put forward. In the early stages there were claims that $2m in savings in the 1986-87 financial year would result from the demise of the SBS. In fact, $1m was sliced off the budget of both the ABC and the SBS at the last moment to accommodate the Government's vision in this area. During Estimates Committee proceedings everyone was keen to point out that his or her department or organisation had in fact nothing to do with this estimate of $2m. Senator Walsh cheerfully admitted that it was just a policy decision. Senior officials from the Department of Communications made it quite clear that the savings were really long term matters and that the $2m was not really expected to materialise in 1986-87. The Acting Secretary told Estimates Committee C: I think the savings envisaged by the Government in the decision were really projected for the future; they are not savings of immediacy in relation to this year's proposed appropriations. By the time the legislation was introduced in the House of Representatives the chest thumping about the $2m in savings was gone. The second reading speech included the following statement: The Government expects that there will be appreciable cost savings in the long term, and has in fact identified the objective of achieving some savings to the Budget in 1986-87. It seems that now, seven months after the original announcement, there is no concrete set of figures on the savings, despite the fact that there have been committees working within the ABC and the SBS on this matter. Because of the sort of figure that the Government's sources have been spruiking around the traps, we really cannot believe that there was anything but wishful thinking on their part. A lot of the claimed savings, if there were any, I believe could have been achieved by co-operation without destroying the autonomy of the SBS. The Connor report entitled `Serving Multi-Cultural Australia-The Role of Broadcasting' said that an ABC-SBS Steering Committee should look at co-operation and co-ordination of resources and facilities. The latest annual report of the SBS lists four areas that the ABC-SBS steering committee is in fact probing. These are: The sharing and exchange of professional staff, the use of ABC news copy by the SBS, the use of SBS sub-titling facilities by the ABC and the use of ABC production facilities by the SBS. There is nothing stopping this type of co-operation happening between autonomous organisations. Senator Button —That is rubbish. Senator VIGOR —Senator Button says: `Rubbish'. Indeed, the whole of the Government's case in this area is rubbish. What we are getting from the Government is proposals which will mean that the SBS-a lean, trim and efficient organisation-will be swallowed up by an organisation which this year had to ask for an extension to get its annual report in and which has had a total changeover in its financial staff because of the debacle that happened in the management of its own financial business. Indeed, the ABC at the last Supplementary Estimates hearings was seeking $12m extra just because it had not thought ahead in terms of forward buying of currencies, whereas the SBS required less than $200,000 to satisfy its extra requirements. SBS contracts are mainly in Australian dollars; quite the opposite of ABC contracts. The Government is going in exactly the wrong way to have the SBS swallowed up by the ABC. This is just continued evidence of the Government's determination to destroy multiculturalism in this country, and I believe that we will stand up against it at every possible stage. Senator COLSTON(Queensland)(6.12) —in reply-Unfortunately I was not in the chamber to hear most of the comments that were made by Senator Vigor as I was otherwise engaged at the time. But I heard some of them and I think it is important that I should make some mention of a few of the points that I did hear him raise. It seems to me that a lot of people have closed minds about what the report on the reference placed by senators before the Senate Standing Committee on Education and the Arts should bring down or what the Committee's actions will be. I do not want to canvass this to a great extent because the Committee is at present taking evidence. It would not be correct for me to make predictions about what the Committee will report or about the actions that it might take from here on. But it does seem to me to be a pity that people might come into this inquiry, or look at this inquiry, with closed minds in regard to amalgamation. Certainly some people are not happy about the Australian Broadcasting Corporation and the Special Broadcasting Service being amalgamated. If that is the case, they are quite entitled to their opinions, but as the Chairman of the Committee, I have gone into this inquiry with an open mind. I heard some evidence on Monday which I will refer to in a moment. Some of that evidence has suggested to me that we might report in one way, and some of it has suggested that we might report in another. But I have not gone into the inquiry with a preconceived position, thinking that we are going to report in a certain way in the end. It is very important for the members of the Committee to be of that frame of mind, so that they will listen to the evidence in a dispassionate way and then weigh up the evidence when the inquiry is completed. I think there are a number of people in the community who do have closed minds about the matter. Some of them have given evidence and I do not think that anything that we might report, one way or the other, will change their minds. But we, as a Committee, have to weigh up the worth of that evidence from people who do have fixed feelings one way or the other. I am not quite sure what Senator Vigor meant when he mentioned some letters. I am not sure whether he mentioned a letter sent to the SBS or to the Committee. If the letter was sent to the Committee, I certainly know that the Committee received a letter from the Minister for Communications (Mr Duffy), and he quite properly pointed out some aspects of the proposed amalgamation and what the Government's plans were. I made a comment at that stage, which I do not think was reported in the Press, when I was asked by journalists about that letter to the Committee. I said that we were happy to receive that correspondence but that the fact the Government indicated in the letter that it intended to proceed with amalgamation by 1 July would not sway this Committee one way or another. I said that we would carry out our responsibilities of conducting the inquiry and would report in the normal way. We would hope that we would report fairly quickly and we would hope that we would report well, but we would not be swayed by the particular amalgamation date that the Government suggested. So there was not any attempt by the Minister to make the Committee work in a particular way, and the Committee was not going to be swayed that way, anyway. Some comments were made about the public hearing that we had on Monday of this week. I am not quite sure that I heard all the comments that were made because, as I indicated in my opening remarks, I was not able to be in the chamber to hear them all. Yet most of the evidence that was given to us on Monday was given in good faith. We heard evidence from organisations which were quite keen to see the SBS stay as a separate organisation, and we accepted that evidence in good faith. But the evidence that was given to us by the Department of Communications and by the Australian Broadcasting Corporation was given to us in good faith. There was only one aspect of the evidence that I was concerned about, and I think I can say that in here without breaching the confidence of what happened at the hearings because I did mention at the hearings themselves that I was concerned about one aspect. I refer to the fact that the evidence in relation to the possible costs of amalgamation was not as firm as the Committee would have liked. I, and some of the other honourable senators on the Committee, indicated this when we were speaking to witnesses who were before us. I just mention that it has not stopped there. I did not quite hear what was said, but I think the comment was made that there was no evidence to say that there would be savings of $1m or $2m. But it has not stopped there, because we are about to ask the Department of Communications, the Australian Broadcasting Corporation and, I think, the Steering Committee if they will get us some hard figures and they intend to do so. So the figures will be coming to the Committee at a subsequent stage. At this stage I would just ask honourable senators to accept that whilst this is a controversial matter that the Committee is looking into, it is doing its very best. The witnesses who have come before the Committee are also doing their best to assist. If we think that we do not have sufficient information, we will ask for and try to get that information. If we do not get the information, we will just try again. If the information is not forthcoming eventually, we will report in such a way to the Senate. But I do not think that that will happen. It would be great if, while this inquiry is being undertaken, the Senate realises that the Committee will be doing its best and that most of the witnesses who come before us are quite genuine in their attempt to help in one way or another. The actual motion before the chamber at the moment is that the Senate adopt the report. By adopting the report, we will be adopting what the Committee has set out as its interpretation of the terms of reference before us. I would have liked to see this report adopted before we had our public hearing on Monday. We had been working on our interpretation of the terms of reference prior to its having been adopted by the Senate as a whole. We had to do this because to do otherwise would have delayed the inquiry by at least three or four weeks. I commend the report to the Senate and thank those people who have made a contribution to the debate. I suggest that the report be adopted. Question resolved in the affirmative. Debate resumed. Senator MICHAEL BAUME(New South Wales)(6.22) —This report is an unfortunate one, but the Joint Standing Committee on the New Parliament House had no alternative but to come up with the conclusions that it did. Those conclusions were that in effect the landscaping of the New Parliament House, which is an essential and integral part of the structure because of its relationship with the environment, is to be deferred in part because of lack of money and that other matters relating to the functions of the building should proceed with the limited funds available. It is important that the reasons that the Committee came to this regrettable decision be stated. I quote from the report, which stated: The Committee has always regarded the deletion or deferral of the landscape as a serious matter and has expressed this view in correspondence to the Prime Minister and in its November report to Parliament. The Committee regards the landscaping as essential and has stressed the need for it to be completed in accordance with the approved design as soon as funds become available. It also added that it should be noted that the reduced landscaping, which will now proceed, will allow for the building's surrounds to be graded and grassed and will provide minimal tree plantings-however, of a most unsatisfactory nature, I add. Another point that the Committee made was: Faced with the alternatives of a partly completed building with full landscaping or a functional building with minimum landscaping, the Committee considered that the provision of adequate functional accommodation must take priority. Of course, the important question is why the situation developed so that, because of a lack of funds, the building cannot be completed as it should be. Naturally, the simple answer is that large amounts of money have in effect been wasted on this building, as the Opposition's Waste Watch Committee demonstrated in a very detailed announcement earlier this year. To some extent this point has been acknowledged by the management of the Parliament House Construction Authority, who said that the fast track method of construction has probably cost about $100m. We say that the waste is about $200m. It is evident that there is justification for the building costing about $800m-which I know is an extraordinary amount compared with the $240m initially estimated-but there is no justification whatsoever, beyond serious mistakes, for the amount exceeding $1,000m. I add, by the way, that that amount became public and became authoritative only as a result of the activities of the Waste Watch Committee which could prove that it will cost $1,000m, and that has now been admitted. This fast track arrangement is of serious concern for the landscaping and is one of the reasons for the problem with the landscaping. Many non-essential items were proceeded with ahead of the landscaping, which is, of course, essential. In other words, fast tracking has meant that matters that could well have been deferred-for example, the collection of some of the art works-have been proceeded with. Things could have been deferred had there been a more rational approach to construction or if the Government had not required so many changes or other alterations for various reasons-for example, to the actual size of the building-as the building progressed. Changes were made after construction had started. But what concerns me particularly about this is what happened when the Waste Watch Committee drew attention to serious problems-for example, to things like a plumbing contract, supposedly for $1.7m, which by March this year had not been completed and had already reached $6m, and when we could point to things such as the 25 major contracts on the new and permanent Parliament House which had exceeded their contract price by 25 per cent, quite apart from the impact of inflation or any additional work that had been included in those contracts. It was clear that something was wrong with construction up there and with the manner in which it was proceeding. The Waste Watch Committee made comments on those things and released a very detailed document which outlined the specific contracts involved and revealed items from secret reports. One in particular was from a gentleman called Norman McCain, who was brought out from England to provide a report to the Parliament House Construction Authority about the cost control measures. That report has never been released. I say now to the Construction Authority that unless it releases that report, I shall make an application under the Freedom of Information Act to get access to that report. The response on radio from Mr Peatey, the Chief Executive, to these allegations made by the Waste Watch Committee was that I was wrong in fact, that the blowouts on these contracts did not exist, that there were not 25 major contracts that had exceeded their cost by 25 per cent, and so on. Mr Peatey has not yet been able to substantiate the denials he made on radio of the points that I had made. He has not put into writing or made any firm statement to back up the absolute nonsense he spoke in response to my very detailed and well documented revelations about the blowout in contracts on the new and permanent Parliament House. Instead of his examining what had really happened and revealing to the Senate what he regarded as the truth, we have had a most disgraceful campaign in which people have effectively been terrorised-former consultants, present consultants and others. I have been advised that people have been asked: `Did you speak with Senator Baume? Did you dare to reveal anything that is factual about Parliament House?' It did not matter to the Authority whether what had been said was right or wrong; people were asked only whether they had spoken to Senator Baume. This kind of harassment of contractors and other people-many of whom, as I understand it, did not speak to me but have also been pursued-is disgraceful. It fits in, unfortunately, with a letter I received some time ago from a friend who wrote to me as follows: Last week I raised the possibility of a friend of mine and a work colleague of his, joining you and I for lunch tomorrow to discuss the question of waste at the new Parliament House site. Unfortunately, they have both decided, on reflection, that the issue is potentially too hot for them to become involved even on an anonymous basis. They fear that any information may be traceable and that as a consequence, their jobs may be in jeopardy. When honest people have such worries which inhibit them-quite apart from their interests as taxpayers-then something is wrong. I can assure the Senate that something is wrong up there. Something has been wrong, and that is evident from the waste of something like $200m on this project. I believe that Mr Peatey must back up the denials he made on radio of the claims of the Waste Watch Committee. I believe that it is absolutely vital that this Parliament be properly informed and that we be given a substantive response to the substantive clear evidence provided by the Waste Watch Committee of the sort of waste of money which has brought about a situation where the landscaping now cannot continue because of a lack of funds. I believe this will be of major moment to the building. It will cost a lot more to complete the landscaping, so it is a false economy to chop out the landscaping saying that it will save money. When it is eventually carried out it will be much more expensive. I understand that many of the trees have already been purchased and are in nurseries, but now will not be planted because of the unfortunate requirement by the Government that spending be reduced, as stated in this report by the Joint Standing Committee. Question resolved in the affirmative. Debate resumed from 5 December 1986. Senator CHILDS(New South Wales)(6.32) —In dealing with the Senate Standing Committee of Privileges tenth report on the detention of a senator I move the following motion recommended by the Committee: (1) The Senate reaffirms its resolutions of 26 February 1980, as follows. (a) It is the right of the Senate to receive notification of the detention of its members. (b) Should a Senator for any reason be held in custody pursuant to the order or judgment of any court, other than a court martial, the court ought to notify the President of the Senate, in writing, of the fact and the cause of the Senator's being placed in custody. (c) Should a Senator be ordered to be held in custody by any court martial or office of the Defence Force, the President of the Senate ought to be notified by His Excellency the Governor- General of the fact and the cause of the Senator's being placed in custody. (2) That, where a Senator is arrested, and the identity of the Senator is known to the arresting police, the police ought to notify the President of the Senate of the fact and the cause of the Senator's arrest. The first paragraph of the motion simply reaffirms the resolutions passed by the Senate in February 1980 on the recommendation of the Committee. Those resolutions require a court to notify the President of the Senate whenever a senator is detained pursuant to an order or judgment of the court. In passing the resolutions the Senate took the view that it was the right of the Senate to be notified of the detention of any of its members. The Committee recommended these resolutions following consideration of a case in which a senator was arrested and detained without any notification being given. The Committee noted that the immunity of senators from arrest and detention, which only applies to a civil cause, did not arise, but that the Senate should be notified of any instance of arrest or detention of its members, whether in a civil or criminal matter. The second paragraph of the motion I have moved adds a new provision to the previous resolution whereby police are called upon to notify the President whenever a senator is arrested. In the original resolution the Senate, at the suggestion of the Committee, did not impose an obligation upon the police because it was thought that such an obligation might be difficult in practice and because arrested persons are usually not held in custody for very long before they appear before a court. The case examined by the Committee in the present report indicates, however, that there may be circumstances in which a considerable delay occurs between the arrest of a person and his appearance in court. The Committee therefore considers that their ought to be an obligation on the police to notify the President of the arrest of a senator. The Committee has not commented on the features of the law of Queensland giving rise to Senator Georges being held in custody for a considerable period before his appearance in court, although they should be a matter of some concern. The Committee found that there was no definite evidence that Senator Georges had been treated differently from other persons arrested in similar circumstances. If this had been so, it would have been a serious matter, involving harassment of a senator. As well as recommending the motion which I have moved, the Committee has suggested that the Senate give consideration to whether members of the Federal Parliament should be given some limited immunity from criminal process, in view of the possibility of State laws being administered in such a way as to deprive the Senate of one of its members for a considerable period of time. That is a matter which the Senate might consider in the context of the recommendations of the Joint Select Committee on Parliamentary Privilege and the Bill introduced by our former President. These matters were debated yesterday and there will be an opportunity in the future for them to be further debated. I commend the motion which I have moved to the Senate. Senator JESSOP(South Australia)(6.37) —I would like briefly to support the motion moved by Senator Childs to add to resolutions of the Senate of February 1980 an obligation upon police to notify the President of the Senate whenever a senator is arrested. As Chairman of the Committee of Privileges in 1980 I explained when I moved those motions in the Senate that the Committee had deliberately not sought to impose an obligation on police, but had concentrated upon requiring the courts to notify the President whenever a senator is remanded in custody. The basis of this recommendation was that, under common law, a person usually does not remain long in the hands of the police before appearing in court. The most recent case of Senator Georges, however, involved him being detained for over 24 hours by the police, who refused to grant police bail because he refused to be fingerprinted. As soon as he appeared before a magistrate, bail was granted. Implicit in the magistrate's decision was a finding that the police acted wrongly in insisting on fingerprints as a condition of bail. Notwithstanding bail being granted, Senator Georges was held for a further period. It is clear that, if persons are going to be held for considerable periods by the police before they appear before a court, police ought to notify the President whenever a senator is arrested. The Committee has also raised the wider question of whether senators and members should have some limited immunity from arrest in less serious criminal matters to prevent the processes of State criminal laws being used to remove a senator or member from the Parliament-that is, removed in a temporary sense. This would require very careful consideration and legislation would have to be drawn up to put it into effect. In the meantime, the resolution recommended by the Committee will ensure that the Senate becomes aware of the arrest of any of its members so that it can consider the circumstances in which a senator is detained by the police. I commend the motion to the Senate. Senator MACKLIN(Queensland)(6.40) —I support the motion moved by Senator Childs, Chairman of the Committee of Privileges, on which I also serve. I also totally concur with the points raised by Senator Jessop. I would like to make one further addition, and that is that the suggestion with regard to possible immunity for members of parliament may look like an ambit claim for members of parliament to escape the due processes of law. That is not the case. In fact, the Committee's deliberations were addressed to the point that the Senate, unlike the House of Representatives, is a very finely balanced House. It would be very simple for a State government to use the processes of the law to change the balance in this place, and hence materially change the operation of the Parliament. Let me outline a hypothetical case. In 1975 it would have been relatively simple, by the movement of a Labor government at that time, to re-establish Labor control of this chamber, and hence prevent what happened in 1975. It would be a relatively simple operation to change the balance in this place. A wide range of State laws could be used. Certainly, the amount of time that is needed, as Senator Jessop pointed out, would not have to be 24 hours; it could be a much shorter period. It is merely a case of removing a person for a sufficient time so that, say, supply could go through. I believe that that would be a serious distortion of the operation of this chamber and of this Parliament although, at that time, I might have thought that it was a good move. Fairly obviously, it would be a move which was completely contrary to the spirit of this chamber and to the Constitution. It would be a totally unwarranted intrusion of a State government into the determinations of the Federal Parliament. On this occasion, it is not a question of political play between Senator Georges, a former member of the Australian Labor Party, and a conservative State government. At any other time, it could be a Labor Party State government and a conservative member of this chamber. It is not a matter of particular partisan ideas; it is a matter of whether or not this chamber should be able to be held to ransom by a State government which wishes to use its power at any time in that way. It is an important issue. It is a mechanism which could be used. We might want to say that all current State governments would not use it. I am not sure that that would be the case. We are considering not only the present situation but also future occurrences. I hope that the Senate will support the recommendations and that it will look towards the added comments made by Senator Childs about the types of immunity that are currently provided. We debated that briefly when we debated a Bill yesterday. I hope that an opportunity will be provided at a later stage for more in depth discussion of that aspect. Question resolved in the affirmative. Consideration resumed from 5 December 1986, on motion by Senator Coates: That the Senate take note of the report. Question resolved in the affirmative. Consideration resumed from 4 December 1986, on motion by Senator Tate: That the Senate take note of the report. Question resolved in the affirmative. Consideration resumed from 4 December 1986, on motion by Senator Tate: That the Senate take note of the report. Question resolved in the affirmative. Consideration resumed from 3 December 1986, on motion by Senator Coates: That the Senate take note of the report. Question resolved in the affirmative. Consideration resumed from 3 December 1986, on motion by Senator Sibraa: That the Senate take note of the report. Question resolved in the affirmative. Consideration resumed from 3 December 1986, on motion by Senator Button: That the Senate take note of the report. Question resolved in the affirmative. Consideration resumed from 3 December 1986, on motion by Senator Sibraa: That the Senate take note of the report. Question resolved in the affirmative. Debate resumed from 3 December 1986, on motion by Senator Sibraa: That the Senate take note of the report. Senator KILGARIFF(Northern Territory)(6.45) —The Joint Committee on Foreign Affairs and Defence resolved to inquire into the situation in the Philippines in late 1985. Of course, only six months into its inquiry came the revolution in the Philippines which saw the demise of Marcos and the election of President Aquino. The timing of the inquiry was certainly fortu- itous. It has produced a useful and informative report which gives a valuable insight into the post-Marcos Philippines and the immediate issues confronting the Aquino Government. It is wide-ranging report. It examines the current political and economic situation in the Philippines, the state of Philippine-Australian relations, and the importance of the Philippines to regional stability and Australian interests. It is on the last of those three broad areas that I wish to make some comment tonight. However, before I address that specific issue I would like to make clear my support for the recommendations that the Committee has made, particularly on Australian aid to the Philippines. I am very pleased to see that the Committee has recommended: The Australian Government continue to recognise the importance of the Philippines in regional affairs and seek to policies designed to foster political stability and economic recovery in the Philippines. Further recommendations include the recommencement of the Samar aid project, once security conditions allow, and the possible extension of that project. I fully support that recommendation. The Committee has also made several other recommendations supporting additional assistance. I would certainly support such moves. I believe that it is in Australia's interests, certainly in humanitarian terms, to take more interest in the Philippines and to give it more aid. I have been to the Philippines recently. I visited the islands up near Cebu. It was absolutely appalling to see the conditions of the people in that area. The people are suffering from malnutrition. There is an incredible amount of tuberculosis and very little, if any, aid is going to that area. There may be another thousand places in the Philippines that are in similar circumstances. The point I make is that while we believe that certain things should be done about our problems in the Australian community we have a responsibility-firstly, because the Philippines is our neighbour and, secondly, because it is very long suffering nation-to increase our aid. I was pleased to see, while I was in the Philippines, that there were indications that the Australian Government, through the Minister for Foreign Affairs (Mr Hayden), was bringing about further aid. If that is the case, I commend the Minister for it. I turn to the particular aspects of the report relating to the importance of the Philippines to regional security. There are a number of matters which warrant Australia's attention and concern. As the Committee notes, the Philippines occupies a key location in South East Asia and East Asia. The report says: . . . prolonged instability in the Philippines, or the emergence there of a regime hostile to Australian and Western interests, would have serious consequences for our strategic environment, especially if this led to opportunities for intervention by or enhanced influence for the Soviet Union or its allies. Of course, the threat to the stability of the Philippines, and the success of the Aquino Government, comes from the communist insurgents of the New People's Army-the NPA-whose number, according to reports, had reached a staggering 20,000 by 1985. There are other reports that say that the number has reached about 30,000. The troops are very well equipped and well trained. As can be seen by day to day reports emanating from the Philippines, the NPA continues in various parts of the Philippines to ambush the Filipino Government's troops and other people who are sympathetic to the Government. The attempt by President Aquino to negotiate a ceasefire with the NPA failed and, again, we are reading in our newspapers almost daily of the ambush and murder of Philippine Army personnel by communist guerrillas. The dilemma for President Aquino in treading her delicate path between conciliation and negotiation with the rebels on the one hand and giving the military adequate room to defend itself and the Philippines on the other is a difficult one. Mrs Aquino also faces a problem of the supporters Marcos left behind. Whilst Mr Marcos may be in exile in Hawaii, there are still plenty of wealthy war lords left in the Philippines, some of whom maintain small personal armies. They pose two potential threats to the stability of the Aquino regime. The first is the threat of support for an attempted return to the Philippines by Ferdinand Marcos. Alternatively, they could simply back one of their own number or a person such as Enrile against President Aquino. The matter is extremely delicate to say the least. Leaving aside direct political threats, Mrs Aquino has also to deal with the disastrous state of the Philippines economy which, it has been shown, was bled dry by Marcos and his cronies in the last years of the Marcos regime. Literally billions of dollars were hijacked out of Government coffers by the Marcos family and Marcos's friends. I am not referring to millions of dollars but to billions of dollars. Billions of dollars of this money is invested around the world and there is now a commission investigating the situation to see what funds can be brought back into the Philippines. Senator Walsh —They are bigger crooks than the Queensland National Party. Senator KILGARIFF —I note what the Minister has said but there is a big difference in what Marcos did in the Philippines. I find it incredible that he is still living in a protected state in Hawaii. The Committee report notes: The Aquino Government faces a formidable array of problems in dealing with the economic legacy of the Marcos years. The most pressing needs are to improve economic policy formulation and management to revive business and investor confidence, to reschedule foreign debt and to formulate an appropriate budgetary strategy. This is essential if Mrs Aquino is to be able to offer the Filipino people hope of an improvement in their living conditions. For millions of Filipinos poverty, hunger, malnutrition, disease, unemployment and homelessness are a way of life. It is a very pitiful one. I was recently in the Philippines during the failed coup attempt by the so-called Marcos loyalists. I was left in no doubt that Mrs Aquino faces a monumental task. I certainly wish the people of the Philippines well in their attempts to rebuild their country and endorse the recommendations of the Joint Committee on Foreign Affairs and Defence that Australia assist in fostering political stability and economic recovery in the Philippines. Question resolved in the affirmative. Senator CROWLEY(South Australia) —I present the third report of 1987 of the Senate Standing Committee for the Scrutiny of Bills concerning the Australian Protective Service Bill 1986, the Australian Stock Exchange and National Guarantee Fund Bill 1987 and the Commonwealth Guarantees Charges Bill 1986. I also lay on the table Scrutiny of Bills Alert Digest No. 3 dated 18 March 1987. Ordered that the report be printed. Senator WATSON(Tasmania) —I present the 255th report of the Joint Parliamentary Committee of Public Accounts and seek leave to make a short statement. Leave granted. Senator WATSON —The Joint Committee of Public Accounts 255th report informs the Parliament of the Committee's activities for the period 1 January 1985 to 30 June 1986. It also provides a convenient medium for the 16 member Committee, drawn from three major parties-in both the House of Representatives and the Senate-to review its own activities and to suggest areas of public and financial administration which may need further review and reform. The period under review has seen us conducting a number of important and wide-ranging inquiries, which have highlighted the need for change in many areas of public administration. For example, in the health area there was an inquiry into medical fraud and overservicing in pathology services and in defence an inquiry into project management, while in the Public Service domain there have been several reviews of proposed major acquisitions of computing equipment. These inquiries are but a few of those conducted by the Committee. The Committee's duties have continued to grow and this report notes that the Committee is now charged with extensive reviewing of responsibilities in relation to the public accounts and public expenditure. The Committee, in its traditional role, examines the accounts of the receipts and expenditure of the Commonwealth, examines all reports of the Auditor-General including reports of efficiency audits and also reviews all Government responses to its reports, known as finance minutes. In recent years the Committee has been directed to review, at the discretion of Cabinet, major computing acquisition proposals put forward by the Australian Public Service. The Committee is also charged with the responsibility of examining the financial affairs of authorities of the Commonwealth and intergovernmental bodies. During the period under review the Committee has also been given two additional tasks: One is to assess the suitability of auditors to be appointed to statutory marketing authorities; and the other is to approve the guidelines for the form and content of departmental annual reports. Whilst this range of duties often gives the Committee a burdensome work load, it continues to be served well by a dedicated and hard working secretariat. The Committee acknowledges, with great appreciation, the contribution made to its work by the members of its secretariat and its panel of advisers. Mr Deputy President, on behalf of the Committee, may I take this opportunity to pay tribute to the work and leadership of Senator George Georges, who resigned from the Committee earlier this year. Senator Georges served on the Committee for over 7 years, being Vice-Chairman from 1980, while in Opposition, and Chairman from 1983. Senator Georges presented 61 reports to the Parliament on behalf of the Committee. The more notable of these included: Medical Fraud and Overservicing; HMAS Tobruk; Defence Project Management; Job Seeker-Computer Acquisition by the Department of Employment and Industrial Relations; and Project DESINE-Computer acquisition by the Department of Defence. I remind the Senate that Senator Georges, in his address of resignation, urged the Committee to continue to maintain its strong sense of identity and to ensure that the Committee's reputation and independence were carefully maintained. At the same time warned of petty restrictions being placed on work of the Committee by some officers of the Parliament. We are all aware, including the Government bureaucrats, that the Public Accounts Committee is the strongest and one of the most effective committees of the Parliament. The Committee's new Chairman, replacing Senator Georges, is the honourable member for Hughes, Mr Robert Tickner, M.P. I know it is his intention, as Chairman, to devote considerable time and energy to the Committee as it pursues its important work on behalf of the Parliament as a whole. On behalf of the Committee, I wish Mr Tickner well in his new role. As Deputy Chairman, I should also like to take this opportunity of thanking all the members of the Committee from both Houses and both sides of the Parliament who receive so little public recognition for their hard work which, at times, seriously impinges on their traditional electoral work. The work the Committee is allocated subject to confirmation by the full Committee to sub-committees. I wish to pay a special tribute to sectional committee chairladies-Senator Dame Margaret Guilfoyle, Mrs Helen Mayer M.P. and Mrs Ros Kelly. I commend the report to honourable senators. Senator FOREMAN(South Australia) —In accordance with the provisions of the Public Works Committee Act, I present the report relating to development of new utility helicopter facilities at the Royal Australian Air Force base, Townsville. Ordered that the report be printed. Senator FOREMAN —by leave-In summary, the Committee's report recommends the construction of on-base helicopter facilities at RAAF base Townsville, for No. 9 Squadron at an estimated cost of $19.3m. The construction of 15 new houses, estimated to cost $1.4m, should be deferred until the Department of Defence and Department of Housing and Construction have briefed the Committee on the general question of defence housing. The proposal examined by the Committee involves the construction of facilities at RAAF base, Townsville, for No. 9 Squadron. This Squadron is presently located in sub-standard facilities at RAAF base, Amberley, and its Iroquois UH-1H helicopters will be replaced by Sikorsky Blackhawk helicopters commencing in October 1987. One of the main functions of No. 9 Squadron is to support the Army's operational deployment force which is based at Lavarack barracks in Townsville. In view of its close association with the operational deployment force it is considered prudent to locate the two units in closer proximity to enhance the capabilities of both units and to eliminate non-effective transit flying time between Amberley and Townsville. The Committee examined the need for the proposed facilities having particular regard to the implications of the recently announced transfer of battlefield helicopters from the RAAF to the Army. It is envisaged by Defence that the transfer will take place over a period of five years. The Committee was assured by Defence that the facilities proposed will be required and utilised regardless of which arm of the Australian Defence Force will eventually have control of battlefield helicopters. On the basis of assurances that the proposed facilities will be fully utilised, and that there would be no changes to the design or the scope of the proposed on-base work, the Committee concluded that the design and location of the proposed facilities are satisfactory. The relocation of No. 9 Squadron from Amberley to Townsville will require the provision of an additional 113 defence houses. Defence propose to partly meet this requirement by transferring 42 surplus Army houses at Townsville to the RAAF, constructing 15 new houses for more senior ranks, and to provide the balance of 56 houses later. The proposed 15 new houses were a component of this reference. The Committee questioned Defence and the Department of Housing and Construction about a number of aspects of the proposed arrangements, including the standard of the houses to be transferred from the Army to the RAAF, the cost of the new houses, the method of their delivery, their location, and the extent to which representatives of prospective occupants would be consulted about design features. On the question of the standard of houses to be transferred from the Army to the RAAF, the Committee was advised that there is an ongoing program to partially upgrade existing defence houses in Townsville. About $1m will be spent on this during the present and next financial years. The Committee believes a return on the cost of partially upgraded existing houses is warranted. The estimated cost of providing the 15 new houses is $1.4m; this does not include the cost of land. The Committee believes this cost to be too high and is unconvinced that the houses could not be provided at a lower cost using other methods of delivery. Accordingly, the Committee proposes to take further evidence on this aspect when Defence and the Department of Housing and Construction provide a general briefing on defence housing later this year in conjunction with a proposed reference on defence housing at Watsonia, Victoria. The question of delivery methods, relative costs, standards of finish and the role of the new defence housing authority will be addressed in more detail at that briefing. The Committee will then present a supplementary report on the Townsville houses at the earliest opportunity following the briefing. Motion (by Senator Tate) agreed to: That intervening business be postponed till after consideration of General Business, Notice of Motion No. 313 relating to casual vacancies in the Senate. Senator HAINES(South Australia) —Leader of the Australian Democrats) (7.06)-I move: (a) That, where the place of a Senator who is a member of a particular political party becomes vacant before the expiration of the Senator's term of service, in the opinion of the Senate a person chosen to fill the vacant place in accordance with section 15 of the Constitution should be the member of the political party duly nominated by that party to fill that place; and (b) that the Senate notes that the Victorian Cain Labor Government, following a long line of similar instances, accepted the Liberal Party's nominee to fill the casual vacancy left by the death of Senator Alan Missen, and deplores the threatened actions of Tasmanian Premier Gray in ignoring the spirit of the Constitution in this regard. I chose in the second part of that amendment the particular example of the recent replacement of Senator Alan Missen with Senator Richard Alston because it was most similar to the case that we are currently looking at-that is, the situation in which a government of one political persuasion approved the nominee of a party with a different political persuasion. In that regard it was somewhat different from the casual vacancy of Senator West from New South Wales and slightly different from the casual vacancy of Senator Powell in place of Senator Chipp because there was no political representation from our Party in the State government concerned. I understand that the fact that I merely listed the Cain Labor Government's acceptance of the Liberal Party's nominee to fill that casual vacancy last year, indicating only that it was one of a long line of similar instances since the Constitution was changed, has caused some concern among some Opposition members, who feel that since the list in the second part of the motion was not a definitive list they are not in a position to support the second part of that motion. If that is the case-I find it a rather odd reason for not supporting the second part of the motion-I am quite happy to support an amendment to that part of the motion that would, in fact, include the names and conditions under which an assortment of us-many of us still in this place-have come into the place to fill casual vacancies, at least in the first instance, as replacements for honourable senators who have left here for one reason or another. Madam Acting Deputy President, I am perfectly happy to list your own replacement in 1981, being chosen by the Parliament of Queensland to replace Senator Sheil. I am obviously more than happy to mention my own replacement in 1987, having been chosen by the Parliament of South Australia to replace Senator Steele Hall. Senator Parer, again chosen by the Parliament of Queensland, replaced Senator Kathy Martin, as she was then, in 1984 and Senator Margaret Reid was chosen by the Parliament of the Commonwealth of Australia to fill the casual vacancy that was left by the most untimely and very unfortunate death of Senator John Knight in 1981. In addition to that, as I have indicated, Senator Richard Alston was chosen by the Parliament of Victoria to replace Senator Alan Missen. Senator Newman was chosen by the Parliament of Tasmania to replace Senator Peter Rae and, as I mentioned, Senators Powell and West were chosen respectively by the Victorian Parliament and the New South Wales Parliament to replace Senators Chipp and McClelland when they retired from the Senate. If it will satisfy Opposition senators, I am quite happy at the end of my comments to amend the motion to include that list. It is a definitive list, as far as I am aware, of senators who have replaced other senators following the change to section 15 of the Constitution in 1977. If Opposition senators do not want me to do so, I am perfectly happy to support them in their endeavours to do so. In general, however, in speaking to this motion I want to remind honourable senators of the background to the present most unfortunate situation, a situation in which we have the Premier of a State refusing to accept the nomination put forward by a political party in that State which is losing a senator and wishes to have that senator replaced by somebody from the same party. From the introduction of proportional representation in 1949 until 1975 it was invariably the practice, abided by on both sides of politics, for a Senate casual vacancy to be filled by a member of the party which had previously held that seat. There is a quite substantial list of casual vacancies which occurred between those years. I do not wish to raise all of them but it is a significant list. In all cases the State government concerned-no matter what political persuasion it was-bent over backwards to be fair in selecting a replacement to fill the casual vacancy- Senator Watson —There is no vacancy. How do you know it is not just gamesmanship to prove a point, to draw attention to an issue? Senator HAINES —My mind does not operate along the same rather tortuous lines as Senator Watson's mind. Let me simply go back to the statement that between 1949 and 1975 it was the practice adhered to by all State governments to replace a senator who died, resigned or retired with a person nominated by the party from which the original senator had come. In 1975 the matter of maintaining the status quo in the filling of casual vacancies came under challenge. The Labor Government's Attorney-General resigned from his position to accept a position on the High Court bench. Despite what I have mentioned twice as being a long established convention of filling casual vacancies with members of the same party, the Liberal Premier of New South Wales determined to break the convention. He announced that he did not consider himself bound by the convention and appointed a candidate with no party affiliation. I felt particularly sorry for the person concerned because he came to be known by the unfortunate epithet of `a political neuter' and I would not have wished that on anybody. It was hardly his fault. The Premier of New South Wales was trying to take political advantage of the close numbers in the Senate at the time, a position which does not apply at the moment, although he used the transparent and rather hypocritical argument that he was in a position to fly in the face of convention because it was not a normal casual vacancy, that is, it was not caused by death or ill health; it was a voluntary retirement by the senator concerned. The next departure from accepted practice took place later the same year. The perpetrator at that time was the Premier of Queensland, intent even in those days apparently on doing as much damage to the body politic as possible. It is interesting to note, I suggest to honourable senators, that on that occasion, too, the Premier's action was against the advice of his coalition partners in the Federal sphere. Mr Bjelke-Petersen's arguments in support of his actions were no more convincing than those of the Premier of New South Wales. He was unable to use the same argument as the Premier of New South Wales had used earlier that year because in this instance the vacancy had been caused by the death of a senator. The Premier's selected candidate was a member of the same party, namely, the Australian Labor Party, but was, as a consequence of accepting the Premier's offer of the casual vacancy in defiance of his party's decision, automatically expelled from the Labor Party. History records the rest. As honourable senators will recall, a writ was served challenging the candidate's eligibility to sit in the Senate but it had not been heard when the Parliament was dissolved on 11 November that year. I suggest to the Senate that these actions were dubious in the extreme. Both they and the consequent events of 1975 caused considerable social and political bitterness on all sides, so much so that even the Fraser Government was prepared in 1977 to put to a referendum a proposal to reduce the possibility of clashes by having half the Senate go to the country at the time of each House of Representatives election and another proposal to formalise the old convention on casual vacancies. In other words, Mr Fraser went to the people seeking their endorsement of the convention that had applied until 1975 by asking that the people agree to having the Constitution amended to enforce it. As we all know, the question of simultaneous elections was narrowly rejected but section 15 of the Constitution was amended accordingly. Senator Durack —Why are you so grudging about Fraser? Why don't you give him some credit for what he did? Senator HAINES —I thought I was giving Mr Fraser credit for what he did. Senator Durack —You are not; only in a most grudging way, just like Senator Evans the other day. He would not even mention it. Senator HAINES —If it suits the tender mind of Senator Durack I will point out that it was of sufficient concern to the Fraser Government to take these steps and, as we are aware, section 15 of the Constitution was amended accordingly. It is worth while stressing the fact that the amendment was drafted by the Fraser Government Cabinet because there are still members of that Cabinet in Parliament at the moment and they include the present Opposition Leader. It is important also to note that the proposal was passed overwhelmingly by the Australian people, including, I might add, those in the State of Tasmania. It was clearly designed to prevent the repetition of the 1975 Senate casual vacancy controversy. One would therefore have thought that would have been the end of the matter, that the problem had been remedied and that everything had been restored to an even keel. In fact, it is not so. We now have the Premier of Tasmania raising the whole unpleasant issue again and threatening not to appoint the ALP's chosen nominee for the Senate vacancy which will be caused by Senator Grimes's imminent resignation. I suggest that Premier Gray has made this threat because he does not like the candidate. In fact, he says that he does not like the candidate. It is quite possible that the Cain Labor Government did not like either of the candidates for the two Victorian casual vacancies that arose last year. After all, one was a Liberal and the other was an Australian Democrat. It is perfectly acceptable to speculate that perhaps Premier Cain did not have a particular fondness for either of those individuals, but he did not come even close to suggesting that he was prepared to reject either of those nominated candidates. In my own case, I would have to say that there was certainly precious little love lost between the Dunstan Labor Government in 1966 and the Liberal Movement whose candidate, Senator Steele Hall was elected to the Senate, yet it was prepared to follow the example of the 1967 Hannaford replacement precedent in putting me in as the casual vacancy. So it is difficult to see what sort of game Mr Gray is trying to play and who he is trying to please. Senator Sanders —Tanglefoot Gray may not even know what he is doing. Senator HAINES —Senator Sanders, who comes from Tasmania, probably knows more about Mr Gray's behavioural patterns than I do and I do not wish to comment further. Certainly it is patently apparent that he has been in a state of considerable uncertainty for some time now. He is uncertain whether to hang on to Premier Joh and emulate him and his record, and he is uncertain whether to support his existing Federal Parliamentary leader. He is uncertain about everything except that he does not want to follow the convention that was followed until 1975 and which was endorsed by the Australian people when changing their Constitution in 1977. If it is Mr Gray's intention to please anybody at all, I would say that he has failed significantly although, for all I know, he may have the support of the Premier of Queensland, for whom constitutional proprieties and conventions are irrelevant. Certainly the Federal parliamentary leadership of his own Party appears to have abandoned him, although I understand that Senator Chaney flirted with the idea of supporting what he was doing for a moment or two. The Government has condemned him, quite rightly, and we have moved this motion to demonstrate the strength of our opposition to the suggestion. We are concerned about his threatened action and the damage it would undoubtedly do if he were to carry it out. There has already been speculation about what could amount to tit for tat; mere retribution sometime down the track if somebody chooses to follow his precedent. It is possible, of course, that other State governments could follow his lead and in doing so turn on its head the preferred behaviour that the Australian people expressed in their support of the Fraser Government's referendum proposal in 1977. Mr Gray is trying to take advantage of a technical loophole in the 1977 amendments to the Constitution. While those amendments make it quite clear that a replacement senator must come from the political party from which the retiring, resigning or deceased senator came, the Constitution does not make it clear that the senator has to be an appointee of that political party. It does make it clear, however, that if the State government appointee changes party prior to taking his or her seat, the casual vacancy has to be filled again. Essentially, Mr Gray is trying to play some sort of elaborate game of bluff, because all he can succeed in doing is delaying the appointment. Senator Watson —It is just embarrassing the Labor Party. Senator HAINES —Indeed, this appears to be the purpose of the exercise. I would say that his behaviour is probably embarrassing Senator Watson's Party at least as much, but I take Senator Watson's point. A briefing document from Mr Gray's office which fell off the back of the proverbial truck suggested relevant points for any Press conference or interviews on the Senate replacement. These comments and suggestions were directed to the Premier in a briefing paper dated 9 March 1986, signed by somebody called Andrew. It does not say Andrew who; it just says Andrew. Among other things, he suggested that the Premier should make these sorts of comments: This issue is really one about whether the ALP in Tasmania supports Mr Hawke's attempts to put Tasmanian timber workers out of a job or not. It is really very simple: If they- that is, the Australian Labor Party- do not support Mr Hawke they can put forward a nomination to replace Senator Grimes who opposes the legislation that would ultimately lock up a further 284,000 hectares of forest. If they do support Mr Hawke, then they can continue to put forward Mr Devereux. This is a very clear issue. As far as Andrew was concerned, the Premier should make it quite clear that it was just not believable for Mr Batt and the Labor Opposition to say that they supported the timber industry, and then put forward in Parliament the name of a man who does not. The brief continues: If they continue to do this, then all Tasmanians can see that Mr Batt and the Labor Opposition are powerless. They are quite clearly controlled by a left-wing political machine that is pro-conservationist and against the interests of the Tasmanian worker. Mr Batt and the opposition have the chance to prove they are not controlled by the faceless left-wing machine men. Andrew recommended to Mr Gray: The only other conclusion that can be drawn if they do continue to support Mr Devereux is that Mr Batt and the Opposition really do support the Prime Minister, and their claims to the contrary are just insincere words. In other words, as Senator Watson said, it was supposed to be an attempt to embarrass the State Labor Government and to turn the Devereux situation-- Senator Watson —The Federal Labor Government, not the State. Senator HAINES —Both, Senator Watson. It was an attempt, as this briefing paper said, to turn the Devereux situation into a test case for the Labor Party in Tasmania. Senator Tate —Do you want to take up all my broadcast time? Senator HAINES —I am sorry, I would hate to deprive Senator Tate of the opportunity to have his say. This briefing paper goes on at some length to tell the Premier how to cope with the constitutional issue. Apart from the fact that I find all of these things highly unconvincing, I suggest that no arguments could successfully disguise the fact that what Mr Gray is indulging in is naked political opportunism. I suggest in that regard that his actions be unanimously condemned by this chamber and that all senators support the motion calling not only for the convention which applied until 1975 to be adhered to but also for the changes to section 15 of the Constitution to be adhered to by Premier Gray and any other Premier faced with a similar situation. Senator TATE(Tasmania-Special Minister of State)(7.28) —I wish to indicate on behalf of the Government that we will support the motion put forward by the Leader of the Australian Democrats (Senator Haines) because we believe it is very important to have this affirmation of a convention which I believe underlies and underpins the wording of the Constitution in relation to the understanding that a casual vacancy should be filled by the member of the political party duly nominated by that party to fill that place. Senator Durack —You are a constitutional lawyer. Tell us what a constitutional convention is. Senator TATE —A convention is an understanding in a civilised political society such as the Australian democracy which helps to supplement some of the written words in a document such as the Constitution. Senator Durack —How long does it take? Senator TATE —A convention can arise immediately there is a civilised group of politicians who are prepared to abide by those things which make our democracy habitable, and not a divisive, confrontationist arena, which is the only situation in which Mr Gray can operate. I am pleased that the Senate has an opportunity to pass this motion, because I suspect that in the end the matter is not justiciable. It is not a matter in which the High Court of Australia would want to get involved. I do not see how it could order a chamber of a State Parliament to vote for a particular person, so I think it has to be resolved at the constitutional level, supplemented by the political level, represented by a vote of this chamber. That is about all I have time to indicate at this moment. The PRESIDENT —Order! It being 7.30 pm, pursuant to order, I put the question: That the Senate do now adjourn. Senator MASON(New South Wales)(7.30) —I rise tonight on the adjournment to pursue a matter I have followed for the past nine years. I refer to the existence of dioxin contaminants at the former Union Carbide plant at Rhodes in the inner western suburbs of Sydney. I first raised the existence of this dangerous material in 1978. Its existence prior to that had been kept secret and no real effort to dispose of it had been made. That was regrettable, to say the least, and indeed irresponsible on the part of all concerned. However, since disclosures were first made the matter has been publicly ventilated many times, and I am glad to hear now that the 15 kilograms of dioxin stored on activated charcoal in drums at the old Union Carbide building in Rhodes has left this country for final disposal. It is probably one of the largest concentrations of dioxin in the world and, of course, one of the most dangerous chemicals in the world. However, there remains another major issue. There are, as I understand it, proposals to build a multi-million dollar development on the land at Rhodes which would include underground carparks. I am deeply concerned at recent statements from the New South Wales State Pollution Control Commission which have been quoted by the Minister for Planning and Environment, Mr Carr, that concentrations of dangerous chemicals which include the 2378 dioxin at the Rhodes site are too small to be harmful to the public. This is totally irresponsible and quite intolerable. I have today checked with responsible experts, who confirm my view that if major earthwork is carried out on the site it is virtually inevitable that the dioxin and other organochlorines will be released into the atmosphere as dust. In view of the high toxicity and carcinogenic nature of the substances involved, it is essential in the public interest that no soil disturbance be permitted on the land until the dangerous chemicals with which it has been saturated are removed. I am strongly supported in this view by Dr John Pollack, reader in histology at the University of Sydney, who is an acknowledged expert on the organochlorines. Dr Pollack has advised me that in several places in the United States of America and in Germany there are established procedures for cleaning chemical contaminants from soil through the use of specialised bacteria which are created by modern gene technology. In other words, it is quite possible, and it has been carried out, to engineer bacteria which will digest and remove these contaminants. The technology has been established. It is important to note that work in this area is also well advanced at both Monash University in Melbourne and Sydney University. To give the Senate some idea of cost, a 1985 cost in the United States to remove and process the material biochemically was between $60 and $120 per cubic yard. In view of the fact that Union Carbide expects to get between $10m and $20m for its property this seems a not unreasonable cost to expect of it. My proposal then is that Union Carbide activate the system that it developed for that industrial site before it is developed, and encourage people preferably from Sydney University or from Monash University-at least Australians-to clean this industrial site before it is developed. It is a reasonable proposition, one with which I think Union Carbide would agree, that the polluter should pay. Not only would this remove a permanent source of danger from the community and make the site safe to develop; it would allow Australian research to develop in an area which could provide us with a new and perhaps profitable industry in the high technology area. There is little doubt in many parts of the world that the patience of the public is very properly at an end with chemical companies who scatter dangerous substances about and then expect to collect their considerable profits without repairing the damage they have done. I wish to make two other points which bear on this matter. One is that I am assured that there are dangerous contaminants on the Rhodes site other than the 2378 dioxin. Phenol was manufactured at Rhodes and there is good reason to suppose that it is in the soil at well above the generally accepted tolerance of 100 parts per billion. I understand that there was also an analine plant at Rhodes, and contaminants from this are probably still in the soil. These, I am told, can also be removed by biochemical means. It is the responsibility and indeed the duty of the State Pollution Control Commission of New South Wales to see that this is done. Finally, I draw attention to the quite unpardonable air of secrecy and reluctance with which that Commission goes about its work-work which should be carried out promptly and responsibly and in the fullest possible public view. I recall that when I raised this matter first in 1978 officers of the Pollution Control Commission had the impertinence to suggest that no dioxin existed there and that I was making the whole thing up for political reasons. Fortunately, I had a letter in my possession from Union Carbide at that time admitting to the existence of the dioxin. I recount this incident as typical of the sort of obscurantism, the sort of dishonesty, that ought not to occur in a public authority with the responsibilities that the Pollution Control Commission has. However, since then, I have found the Pollution Control Commission evasive, unwilling to give any information and dilatory. The substances which it is supposed to control could be the cause of death or serious illness to many members of the public; there is no doubt about that. It is one of the most dangerous man made substances, if not the most dangerous, in existence. I suggest that at Rhodes the New South Wales Pollution Control Commission now has the chance to redeem that most unfortunate public reputation. Senator PETER BAUME(New South Wales)(7.37) —I want to raise tonight some details of the housing crisis which presently exists in New South Wales and of some administrative foolishness with which the State Government of New South Wales has been associated. One of my constituents in the Illawarra region of New South Wales, Mrs Wendy Stubbs, who was the Liberal Party candidate for Throsby at the last election, has drawn to my attention some inequities in the provision of public housing in New South Wales. Under new rules recently released by the Hon. Frank Walker, the New South Wales Minister for Housing, income eligibility limits have been altered to the extent that a couple with two children earning as much as $572 per week can now obtain a public Housing Commission home. An income of $572 per week is just under $30,000 per year. It is about $27,500 a year. This is well above the average weekly earnings, which are about $446 per week. Senator Walsh —What was it for? Senator PETER BAUME —This is for eligibility for public housing. Senator Walsh —What does the figure before that show? Senator PETER BAUME —I cannot tell the Minister that. This suggests that people earning up to $27,500 per year, or thereabouts, in New South Wales are eligible for Housing Commission housing. Mrs Stubbs has pointed out to me, quite correctly, that there are many couples in the region in which she lives who are not in public housing, who are paying off their own homes, who have been perhaps on low start mortgages which have not increased enormously with rising interest rates, and who earn much less than these limits of up to $572 per week. She has, for example, advised me of one couple with two children in her own area, which is Albion Park, who earn $402.48 a week. She says that this is a fairly normal family income for the area. This couple are paying off their home. Not only that; they are paying tax, and the tax on their top dollar is being paid at the marginal rate of 44c in the dollar, part of which is used to finance public housing for couples earning up to $572 per week. In the State of Victoria-and this may provide part of the answer that Senator Walsh was asking me for-the upper income eligibility limit is $467 per week, which is of course a much lower figure than the one in New South Wales to which I referred. Let us go back to that couple earning $402.48 per week. We find that couples earning $178 a week more than that-that is about $8,500 a year more-are benefiting from the taxes paid by their poorer neighbours and are using the public housing which is then made available. It is not surprising that the comparatively poorer couples in the Illawarra trying to own their own homes, trying to pay off their mortgages, wonder whether their sacrifices and their struggles are worth it. With the high incidence of tax impinging upon them all, the high interest rates which are reflected in average rates of mortgage repayments, which have increased by $200 a month in the last four years, they ask: `Why take the hard route of struggle and sacrifice in trying to buy a home when people on higher incomes, perhaps living down the road or next door, are able to get government assistance through public housing?'. Is it the purpose of the Government of New South Wales to make access to public housing the norm and to discourage people from going through the struggle of trying to own their own homes and providing for their own families in homes which they themselves own? It is this type of comparison which takes the heart away from people trying to help themselves. If they lose heart, they give up and of course more people will then turn to welfare. Further, by allowing the comparatively higher income earners access to welfare housing, which itself is limited-indeed, the public housing stock is limited-we remove the incentive not only for a large group of people to own their own homes, but also we increase the queues of people trying to get public housing and introduce new inequities in who should be at the head of the queue and who should be at the bottom. Today we see couples trying and failing to own their own homes. The number of couples defaulting on their mortgage repayments has increased 150 per cent in the last year. The number of loans more than four months in arrears has increased from 1,000 to 1,600 in one year, and 90 per cent of this increase occurred in my State of New South Wales. So the figures do support my proposition that people are losing heart. They are finding it impossible to cope. More people are finding it impossible to pay their mortgages, yet we find the Government of New South Wales encouraging more people to take the route to public housing instead of making sure that that public housing stock is restricted to the people on the lower incomes and in greater need. I come back to the point I made at the beginning about Mrs Stubbs' points. It is the lower income earners who are being disadvantaged by the Labor Government. I recall that when my son first became an apprentice he was on a first year apprentice wages. He was bringing home $120 or $130 a week and paying tax on that money. The tax was being used to pay not only the university fees of the children next door, but apparently, quite properly, to help provide some public housing. At the moment we have taken a homeless young man into our house. He is a first year apprentice and he clears $117 a week. He is paying tax and his tax is going to provide the housing stock for people earning up to $27,500 a year. It does not seem fair. These people are paying taxes to finance the public housing stock for more wealthy people while other people in great social need are having to wait longer as a consequence of the longer queues for the public housing that they need. Part of that extra wait is because more comparatively wealthy people are ahead of them on the waiting list. Yet Mr Frank Walker had the hide to say when the waiting lists were long: In fairness to low wage earners the eligibility level has to rise even though it will mean more applicants for public housing at a time of record demand. That is exactly what has happened. It is the really low wage earners-not Mr Walker's $30,000 or $27,500 wage earners-who are having to bear the brunt, who are having to wait longer for public housing. Comparatively better off people now have access to the public housing stock in my State and this means that the people lower down the income scale are having to wait longer. In conclusion, Mrs Wendy Stubbs from Albion Park and I are both concerned about the ramifications that all these factors will have upon the women in the area in which she lives. She knows many of the women who wish to take paid employment. That is their choice, and that is fine. But she also knows a large number of other women who, if they had their choice, would not be taking paid employment. But because of the financial pressures upon them and their families, especially if they are trying to buy their own homes, these women are being forced, whether they like it or not, out of their homes and into paid employment, often at a time when they would rather be at home caring for their families and particularly for the young children or the elderly for whom they are so important. It is my view, and it is my Party's view, that women should be able to make their own choice, but if their choice is to stay at home and to be full time carer at home, we should not place upon them such economic burdens that they can no longer exercise that choice. It is our intention to put into place economic policies that will allow women to make their own choices and to do so without being forced, as they now are, out into the paid work force. Of course, if people want to go out into the paid work force, that is fine and we encourage them so to do. The examples of the inappropriate priorities for public housing in New South Wales are quite relevant to a debate that is going on in this country right now when the housing industry is in crisis, when less Australians are owning their homes, when less houses are being built and when those who turn to the rental market find that there are no houses for them to rent or that those houses that are available are at rents which they can no longer afford to pay. Senator HAINES(South Australia-Leader of the Australian Democrats)(7.45) —I want to raise a matter tonight on behalf of a constituent, a Mr Walter Mesiti of South Australia. In doing so, I want to make a final appeal to the Federal Attorney-General (Mr Lionel Bowen) with regard to his Department's treatment of this man. Mr Mesiti appears to have been the victim of discrimination in the workplace, namely the Adelaide office of the Crown Solicitor. Briefly, Mr Mesiti's work history in that office is as follows: He joined the Crown Solicitor's Office in 1974. In 1978, he took over the prosecution section as Principal Legal Officer, acting at various times as Deputy Crown Solicitor and Director of Legal Services. He also lectured and tutored in law part time at the University of Adelaide. Early in 1985, the position of Principal Legal Officer, Taxation, was created. Mr Mesiti applied for a transfer to that position and was transferred on paper only because the taxation unit was not formed. Later he changed his mind and, again on paper, was transferred back to the prosecution position which, in reality, he was still occupying. In September 1985 whilst on sick leave, Mr Mesiti received a phone call from a Mr Nairn in the Department telling him that he, Mr Nairn, had transferred him to the special projects section. Mr Nairn, who occupies the position of Director of Legal Services, gave Mr Mesiti various reasons for this. But the one which upset Mr Mesiti the most was that he was told that he no longer had the confidence of the Director and that he, Mr Mesiti, was unable to manage the prosecution section and get on with people. There had never been any discussion or mention of any problems with Mr Mesiti's management ability. In fact, Mr Mesiti had acted in Mr Nairn's position on Mr Nairn's recommendation for a short period some three weeks earlier. Mr Mesiti appealed against the decision under the Public Service regulations and referred the matter to the Public Service Board. In the event, the Public Service Board could not look into the decision because it had not been made under section 50 of the Public Service Act. Mr Mesiti took the matter to the Federal Court of Australia hoping to obtain justice before an independent tribunal. As can be readily imagined, Mr Mesiti's health by that stage had been substantially impaired and as a consequence of the Federal Court action it deteriorated even further. He has now been invalided out of the Public Service. It is not, I suggest, an overstatment to say that his career has been ruined. Having had those matters drawn to my attention, and, I might add, being greatly disturbed by them since I was provided with quite a lot of documentary evidence by Mr Mesiti with regard to the previous circumstances, I made various representations on his behalf. Those representations have achieved nothing, as have Mr Mesiti's concerted efforts since what I suggest was quite a ruinous decision with regard to him. However, I am now even more appalled. I have been advised that the Attorney-General's Department is seeking to recover legal costs from Mr Mesiti for the proceedings he had undertaken over his transfer in 1985. It is a matter of considerable concern to me that the Department is apparently determined to pursue Mr Mesiti to the bitter end. He has suffered so much already in other ways that it is intolerable that the Department is now seeking to exact the heaviest possible financial toll. Again, when I learned of this decision, I made representations on Mr Mesiti's behalf, most recently to the Attorney- General. Again, these efforts have been in vain. The Attorney-General's response to me is nothing more than an attempt to justify the Department's actions in relation to Mr Mesiti and thereby to justify this appalling move to recover legal costs. As I said, I was provided with quite a list-some many inches high-of documents relating to Mr Mesiti's case. Having seen those, I am far from satisfied that that right is on the Department's side. The Board's investigation and decision remain open to question when even a judge of the Federal Court of Australia, in awarding costs against Mr Mesiti, expressed some sympathy for Mr Mesiti's predicament. His honour even mentioned that the Commonwealth might consider some ex gratia payment. I have decided to raise the matter here tonight because there are no other avenues that can be pursued by Mr Mesiti, or by me on this behalf. Senator Peter Baume —Estimates, Senator? Senator HAINES — I am not sure how-- Senator Peter Baume —You might think about it. Senator HAINES —It is an interesting possibility that had not occurred to me. I appreciate the suggestion and may well take it up. The difficulty is that the case for recovery of costs comes before the court tomorrow. I am particularly disturbed that so far all appeals by me on his behalf have been far from successful. I am also disturbed at the intransigence of the Attorney-General's Department, particularly in relation to the matter of costs. Even if the Department is not prepared to budge on the merits of the case, I suggest it reflects very badly on it to further victimise this man over the question of costs. The pursuit of an individual whose health and career have already been ruined is not worthy of any government department. As a last ditch attempt, I appeal to the Department's sense of fairness-I presume it has one-and urge it to discontinue these proceedings forthwith, notwithstanding the fact that they are due before the court tomorrow. Senator WALSH(Western Australia-Minister for Finance)(7.52) —I am not at all familiar with the matters that Senator Haines raised, but I will see whether the Attorney-General (Mr Lionel Bowen) has any response to them. However, I make the general point, without making any judgments or passing any opinions about that case, that vexatious litigation against the Commonwealth or against anybody else is certainly not something that should be encouraged. Indeed, I have considerable concern about the ease with which a number of people can get access to publicly funded legal aid with which to take action against the Commonwealth. It is something that needs to be very carefully watched and which this Governemnt is watching. I have noted the comments made by Senator Peter Baume. Of course, it is axiomatic that the higher the income cut-off point for access to public housing, the greater the number of applications there will be and the longer waiting lists are likely to be. The whole question of eligibility for and access to public housing in the various States will be examined by the Government in the very near future. In the case of New South Wales, whatever funds are available from whatever source could be used more effectively if the State Housing Commission built its public housing in suburbs less salubrious and less expensive than Potts Point, as I understand it does. That perhaps helps to account for the $27,500 income ceiling; people with those sorts of incomes might prefer to live in Potts Point instead of the rather more down market suburbs. In relation to the private rental market in Sydney and Melbourne, something both State governments could do in addition to what the New South Wales Government or Mr Walker seems to find most attractive-that is, complaining about the Commonwealth Government-is perhaps to look at some of the disincentives to the provision of private rental accommodation which arise from State government rules and regulations and occasional mutterings about rent ceilings and that sort of thing. They should examine their own policies and the effects of those policies rather than complain about the Commonwealth Government, as appears to be the first preference certainly of Mr Walker. Finally, people speculate from time to time as to how much additional public housing could be built if Mr Walker's personal staff was half the size it is. I do not know what the answer to that question is but I am led to believe that there would be some. Question resolved in the affirmative. Senate adjourned at 7.56 p.m. The following papers were tabled: Acts Interpretation Act-Correspondence and Statement relating to extension of specified period for presentation of the Fishing Industry Research Committee Annual Report 1985-86. Audit Act-Regulation-Statutory Rules 1987 No. 30. Australian National University Act-Statutes- No. 191-Enrolment, Courses and Degrees Amendment Statute No. 22. No. 192-Board of the Faculties Amendment Statute No. 2. No. 193-Admission to Status (the Faculties) (Repeal) Statute. No. 194-Academic and Ceremonial Dress Amendment Statute No. 12. Banks (Shareholdings) Act-Regulation-Statutory Rules 1987 No. 26. Bounty (Computers) Act-Regulations-Statutory Rules 1987 No. 27. Copyright Act-Regulations-Statutory Rules 1987 Nos 34, 35. Customs Act-Regulations-Statutory Rules 1987 No. 37. Defence Act-Determinations 1987- No. 7-Temporary Rental Allowance. No. 8-Overseas Living Allowance and others. No. 9-Overseas Living Allowance and others. No. 10-Overseas Living Allowance and others. No. 11-Trainee Leader's Allowance. No. 12-District Allowance. No. 13-Temporary Rental Allowance. No. 14-Vehicle Allowance. No. 15-Special Royal Navy Allowance Paid to RAN Members Posted to and Serving in Britain. No. 16-High Electricity Charges Allowance. No. 17-Overseas Living Allowance and others. No. 18-Travelling Allowance and others. Defence Act, Naval Defence Act and Air Force Act-Regulations-Statutory Rules 1987 No. 36. Excise Act-Regulations Statutory Rules 1987 No. 28. Extradition (Foreign States) Act-Regulations-Statutory Rules 1987 No. 29. Health Insurance Act-Regulations-Statutory Rules 1987 Nos 32, 33. International Finance Corporation Act-Regulation-Statutory Rules 1987 No. 39. Lands Acquisition Act- Land, etc, acquired for-Aviation purposes-Boulder, Western Australia. Statement by the Minister, describing lands acquired by agreement under sub-section 7 (1) of the Act, for specific public purposes. Public Service Act- Determination 1987 No. 9. Regulations-Statutory Rules 1987 No. 38. Radiocommunications Act-Standard-Statutory Rules 1987 No. 40. Seat of Government (Administration) Act- Determination under the National Memorials Ordinance, dated 10 March 1987. Ordinance 1987-No. 6 Cemeteries (Amendment). Torres Strait Fisheries Act-Regulation-Statutory Rules 1987 No. 31. The following answer to a question was circulated: (Question No. 1180) Senator Archer asked the Minister representing the Attorney-General, upon notice, on 5 June 1986: (1) How far has the former Mr Justice Watson proceeded in his investigation and review of Commonwealth criminal law. (2) When does Mr Watson expect to complete his review. (3) Does Mr Watson have instructions to deal with any, or all, of the matters covered in questions on Notice Nos. 836 to 881. Senator Gareth Evans —The Attorney-General has provided the following answer to the honourable senator's question: (1) Mr Justice Watson presented an initial report of his review in July 1986. This report will now be considered by the recently announced expanded body set up to review the Commonwealth criminal law. (2) The terms of reference for the expanded review body require it to report no later than 30 June 1988. (3) No.