Thursday, 19 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, we the undersigned citizens of Australia respectfully showeth: that any decision by the Australian Broadcasting Corporation to reduce the local content of the programme, the ``Country Hour'', would represent yet another severe blow to Western Australian rural people; that even under current programming Western Australian country people receive little locally produced radio and in view of the inefficiencies in the operations of the ABC disclosed by the Auditor-General, your petitioners call upon the Government to improve the efficient operation of the ABC before it reduces the local content of important rural programmes such as the Country Hour. And your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from 65 citizens). To the Honourable the President and the honourable members of the Senate in the Parliament assembled. The humble petition of the undersigned electors of the Commonwealth of Australia respectfully showeth that: (1) Australians are offended by taxation evasion and welfare fraud which has the effect of increasing the taxation burden of honest Australians. (2) The community has shown its overwhelming support for the Government's decision to proceed with a national identification system known as the Australia Card. Your petitioners therefore pray that your honourable Senate will: continue the fight against taxation evasion and welfare fraud and restore fairness and equity to the tax and welfare systems by supporting the Australia Card Bill. by Senator Crowley (from 117 citizens). To the Honourable the President and members of the Senate, in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth that your petitioners are gravely concerned that in the International Year of Peace, young Australians face an uncertain future due to: 1. a continuing arms race between the super-powers which threatens to extend into outer space 2. military expenditure continuing at ridiculously high levels 3. continuing testing and stockpiling of nuclear weapons Your petitioners therefore humbly call upon the Federal Parliament to do everything possible to make our future more certain, by: 1. encouraging peaceful dialogue through diplomatic channels as the means of solving issues. 2. persuading all developed countries to spend less on armaments, and more on basic needs like food, health, shelter and education for all people of the world. 3. promoting the extension of agreements to reduce testing and stockpiling of nuclear weapons. And your petitioners as in duty bound will ever pray. by Senator Elstob (from 62 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 24 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth:- That there is widespread community concern about the proposal of the above said Bill ``National System for Therapeutic Goods for Human Use''. Your petitioners, most humbly pray that the Senate in Parliament assembled, should:- (1) Block the introduction of the above said bill ``National System for Therapeutic Goods for Human Use'' and (2) Continue to allow the free availability of vitamins, minerals, homoeopathic remedies, biochemic remedies and herbal remedies to the general public through the present distribution outlets. And your petitioners as in duty bound will ever pray. by Senator Bjelke-Petersen (from 53 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 undesir- able 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 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 Haines (from six citizens). To the Honourable the President and members of the Senate in Parliament assembled. We, the undersigned citizens of Australia, being concerned that the Australian Government, in breach of its own stated policies, has lifted the bans on the sale of uranium to France, demand that the Government re-impose the bans on such sales, and further, that the Government ratifies and strengthens the South Pacific Nuclear Free Zone Treaty to prohibit uranium sales within the region. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 51 citizens). Petitions received. Senator REID(Australian Capital Territory) —I give notice that, on the next day of sitting, I shall move: That the Senate, noting that- (a) 19 March 1987 marks the 2nd anniversary of the establishment of the Joint Select Committee on Video Material; (b) the Committee has to date failed to present any report to the Parliament; and (c) there are nine members and senators on the Committee, the majority of whom are Government members, condemns the Federal Government for failing to introduce legislation for a moratorium on the sale and distribution of X-rated video material in the Australian Capital Territory during the intervening period of the Committee inquiry, and calls upon the Government to now redress this situation by introducing legislation which will prevent the sale or distribution of X-rated material in the Australian Capital Territory pending the Report and to do so without further delay. Senator BOSWELL(Queensland) —I give notice that, eight sitting days after today, I shall move: That the Northern Prawn Fishery (Special Provisions) Management Plan, as contained in Plan of Management No. 12 of 19 January 1987 and made under the Fisheries Act 1952, be disallowed. Senator GARETH EVANS(Victoria-Minister for Resources and Energy) —by leave-On behalf of the Minister for Defence (Mr Beazley), I table a policy information paper on the defence of Australia and seek leave to incorporate a tabling statement in Hansard. Leave granted. The statement reads as follows- The problem confronted by all Australian defence planners is that while we are firmly part of the Western community of nations, our defence situation is unique and requires unique solutions. The Australian people expect that Australia should be able to defend itself. The Australian Government accepts its duty to provide Australia with defence forces able to meet that expectation. This paper sets the course for a decade or more of development of self-reliance in the defence and security of Australia. For Australia, defence self-reliance is set firmly within the framework of our alliances and regional associations. The support they give us makes self-reliance achievable. They, in turn, will draw added support from a self-reliant Australia which will be better able to discharge its responsibilities in the vast strategic region to which we belong. Self-reliance as a goal is based on a realistic assessment of our strengths, as well as on a rigorous appraisal of our weaknesses and deficiencies. It draws upon the skilful mobilisation of Australia's resources-physical, financial and human. The Australian Government's policy of self-reliance in defence requires both a coherent defence strategy, and an enhanced defence capacity. This paper defines that strategy, and details the program to increase our capacity. The policy paper covers the full range of matters before government in the defence area. It deals with policy, strategy, force structure, industry, defence science, infrastructure, personnel and resources. It is not possible in a tabling statement to give adequate weight to the full breadth of issues covered. Therefore I intend to given primary weight to those areas, which have attracted attention since the production of the defence review headed by Paul Dibb-the current Director of the Joint Intelligence Organisation. This tabling statement focuses primarily on matters of strategy and force structure and sets them broadly within the framework of international aspects of defence policy. The Government's policy of self-reliance requires a rigorous and specific military strategy. We need a clear conception of the way in which military forces are to be used to defend Australia, so that we can develop the capabilities we really need to do the job. The military strategy we have developed can be described as layered defence or defence in depth. This strategy dictates that we develop an Australian Defence Force capable of meeting any hostile force within our area of direct military interest with successive layers of forces capable of detecting, identifying and engaging any hostile approach. This strategy is, in the broadcast political sense, defensive. But the strategy is not defensive in the more specifically military sense. The strategy does not mean that Australia forswears offensive military operations in defence of its territory and interests. The policy outlined in this paper gives an important role to offensive operations as exemplified by our long range strike capabilities. These long range strike capabilities include an enhanced submarine force, F185 supplemented by in-flight refuelling, a continuing commitment to the F111 force, and the substantial strike capabilities of our P3C Orion maritime patrol aircraft. Taken together these forces constitute by far the strongest long range strike capability in the region. They provide us with the ability to operate against a full range of targets, not only in our area of direct military interest, and well beyond. The capabilities we need for defence in depth are determined among other things by our assessments of the capabilities we may face. In particular, it is important in setting priorities for force development to distinguish as clearly as possible those threats which can arise with little or no warning from those which would take some time to develop. It is essential that we give priority to developing the capabilities we need to meet threats that could arise with little warning, ahead of those which would take longer to emerge. The Government has carefully analysed the defence capabilities within our region, including those of the Soviet Union. Two important assessments emerge. The first is that no regional power has the capability to mount a major attack on Australia. Such an attack is defined as one involving the seizure and occupation of a substantial portion of our territory. Secondly, that the capability to mount smaller scale-but still serious-military operations against us already exists in our region. Our judgment that no regional country has the capability to mount a major attack on Australia is based on a rigorous assessment of the sort of military forces needed to mount such an attack, and of the military capabilities available in the region. A major attack on Australia would require a huge military effort backed by an extensive logistic system to sustain the attack. In particular, the forces required for a major assault on Australia go well beyond large scale land forces. Major maritime forces would also be needed, involving large numbers of high capability ships and aircraft. These forces do not now exist in this region, and could not be rapidly or secretly developed. I want to stress that our judgment on the likelihood of major assault is not based on an assessment of political intentions, but of military capabilities. Likewise, our assessment of the possibility of low level military action against our territory or interests is also based on the military capabilities in our region, and not on any expectation that our relations with regional countries will deteriorate to the point where they might be used. We are fortunate in sharing a region with peace-loving nations with which we enjoy cordial relations. Retaining that relationship is an important aspect of our diplomatic effort. Nevertheless political circumstances can alter more rapidly than those which change capabilities. It is important to be clear what sort of conflicts fall into the category of low level contingencies. `Low level' refers to military threats less than major assault or invasion, including some very serious contingencies which would demand an urgent and substantial military response. Threats such as mining of our major ports, attacks on our off-shore territories or in our resource zone, the interception of our coastal trade, and raids on vital northern installations and infrastructure, could cause severe damage to our national interests. The extent and remoteness of our territory and mari- time approaches make them difficult to protect against this sort of threat. No responsible government could leave Australia open to such attacks. We must have the ability to counter them. And because the regional capability already exists, we must have the ability to counter them with the force-in-being. The importance of low level contingencies poses a unique challenge to Australia's military planning. Nations in the traditional battlefields of Europe or the Middle East prepare primarily for the highest level of threat-that of invasion. Australia's force structure could not be sensibly planned on this basis. Preparation for low level threats requires unique planning and operational concepts. Nevertheless some of the assets we retain against the remote threat of a major assault or invasion-sometime in the future-would be of considerable use in lower level operations: Our FA18s with in-flight refuelling, our submarines and our frigates with Seahawk helicopters are examples. Likewise our surveillance capability requires much the same capacity for both high and low level threats. The problems of distance, harsh environment, and lack of infrastructure in many of the most vulnerable areas of the country in the north and north-west place demands on the Defence Force in countering low level threats. These demands would be just as substantial in planning and development terms, as distinct from resources, as countering a major assault or invasion. This is not the case in the military contingencies from which we traditionally draw lessons. The uniqueness of Australia's geography and defence position, and the unique demands of low level threats in our circumstances, need to be clearly understood if we are to provide properly for our security. The defence policy laid out in the paper I am tabling today gives due priority to developing the capabilities we need to handle low level contingencies. To do this, we need flexible and long range capabilities for maritime surveillance and interdiction to deny an adversary effective use of the sea-air gap to the north; we need comprehensive capabilities in areas ignored in the recent past such as mine countermeasures; we need a highly mobile army able to react to any incursions right across the continent, and we need ground forces able to protect military and civilian infrastructure and population in the most remote parts of the country. As I said, we need these capabilities now, we need them in the force-in-being. Again I am not suggesting that any willingness or intention to threaten Australia in this way exists in the region. But, as I have said, proper defence planning must be based on contingencies which reflect a realistic assessment of prevailing and developing regional capabilities. Inherent in the defence paper and in the Government's implementation of defence self-reliance is the linking of practical defence policy with our allies, and our role in the region as a military power. Australia-United States co-operation is important to basic elements of an effective and efficient system of Australian defence. The first essential of good defence is good intelligence. Our strict ordering of defence priorities is based ultimately on comprehensive regional intelligence. It is the possession of up to date intelligence on the whole of our area of primary strategic interest, and the knowledge specifically of the entire range of current or prospective regional capabilities, that provides the quantifiable basis for determining our defence priorities. Australia has significant indigenous capabilities for regional intelligence. However, it is access to complementary United States intelligence, and particularly access to United States satellite intelligence, which Australia could not afford to duplicate, that completes our comprehensive knowledge of regional capabilities. The American relationship also makes a major contribution to the development of self-reliant capabilities for our independent defence. Many of the most important items in our defence inventory are purchased from the United States. The FA18s, FFG frigates, and F111s are examples of equipment obtained from the United States by virtue of Australia's favoured customer status. In addition, other important capabilities, such as the indigenous Jindalee OTHR radar, draw on our access to US research and experience. This access to the latest United States military technology, and our favoured status as a defence purchaser-benefits otherwise confined to the NATO countries-means, effectively, that our Defence Force will retain a technological edge in regional terms for the foreseeable future. A particular aspect of our relationship with the United States that assures our capacity for self-defence is our guaranteed access to ready resupply of essential warstocks. Emergency warstocks of equipment and munitions would be prohibitively expensive to maintain ourselves. However our needs could be relatively easily met from United States stocks. Such support is also readily granted by an ally still making up its mind on a broader military and political contribution in a crisis. For these reasons we can be very confident that emergency resupply would be available. Such material support is a vital United States contribution to our self-reliant defence posture. The availability of American intelligence, advanced technology, and logistic support makes a self-reliant defence capability for Australia achievable and afford- able. American co-operation enables the development of effective Australian defence with a realistic level of financial allocation. The American alliance of course also provides a substantial deterrent. Whilst it would be irresponsible to depend on direct American combat support for our security, the possibility that this would be forthcoming would greatly complicate the offensive strategy of a potential aggressor. In developing the ability to look after ourselves, we also develop a range of capabilities with significant potential for allied co-operation. Our frigates with Seahawk anti-submarine helicopters, our FA18s with in-flight refuelling, our new highly capable submarines, our F111s, our new long range light patrol frigates, and a mobile and readily deployable army-these elements of a self-reliant defence force could clearly contribute significantly to joint allied operations in our region or further afield should the government of the day so decide. Defence self-reliance therefore, both allows Australia to provide for its own defence, and maintains our substantial capacity to make a practical contribution to Western security. Confidence in Australia's ability to defend itself, and in our capacity for allied co-operation, considerably enhances perceptions of Australia as a stabilising influence in our region. A self-reliant Australian defence policy therefore directly assists the protection of western interests through its contribution to regional stability. The stabilising effect of Australian self-reliance is far from our only contribution to Western security. Australia's military co-operation with the United States in a range of activities from joint exercises to the provision of port access and staging and training facilities is also a tangible indication of our support for the Western alliance. In particular Australia's hosting of the joint Australia-United States defence facilities at Pine Gap, Nurrungar, and North West Cape contributes substantially to the maintenance of global stability. The facilities at Pine Gap and Nurrungar play a central role in the verification of arms control and disarmament agreements as well as giving the United States confidence in its ability to detect missile launches and monitor nuclear explosions. The joint defence facility at North West Cape permits reliable transfer of messages to both U.S. ships and submarines operating in the Indian Ocean and Western Pacific as part of a complex system of communications supporting the global balance. The joint facilities in Australia contribute directed to mutual deterrence between the super-powers, a necessary intermediary stage on the path to complete dis- armament. More specifically, they have real significance in efforts to make substantial progress towards arms control. Their early warning function is important in the avoidance of accidental war and assists a stable central balance. Australia's military co-operation with the United States and our hosting of the joint facilities enhance global security by making nuclear war between the super-powers less likely. This contribution to world stability is obviously of direct and immediate benefit to our own prospects for a peaceful existence. The defence paper clearly indicates that other elements of the Government's defence policy also directly support regional stability and protect Western interests in our part of the globe. Australia's long-standing defence relationship with New Zealand and our common perception of security objectives in the South West Pacific and South East Asia will remain an important factor in regional stability. The ability of Australian and New Zealand forces to operate together and to support and sustain each other adds significantly to the joint defensive capacity of our two nations. In addition, our common concern to maintain the favourable strategic orientation of our region has led to a range of co-operative defence activities particularly in the South West Pacific. The Australian Government has stated clearly its complete disagreement with New Zealand's policy on port access for allied nuclear powered or armed vessels. The Australian Government looks forward to a full resumption of a trilateral ANZUS relationship as soon as this is feasible. Meanwhile, it is important not to lose sight of New Zealand's continuing contribution to security in our region. We have therefore been pleased by New Zealand's ready response to the initiatives I announced some weeks ago on the South Pacific and their willingness to involve themselves in a wide range of co-operative defence procurement with Australia. The Government regards it as important that New Zealand retains the military capability to operate with us both in our mutual defence and in aiding our neighbours in the South Pacific. The New Zealand Government's recent White Paper on defence and my own discussions with New Zealand Ministers, confirm the New Zealand Government's commitment to maintaining and developing a full range of defence capabilities compatible with our own. Australia has a continuing close relationship with Papua New Guinea in defence matters. Papua New Guinea is an important factor in our security, and we in turn have a long-standing commitment to Papua New Guinea's security. We will continue to provide specialist advice to the Papua New Guinea Defence Force and to consult on regional defence issues. The five-power defence arrangements-FPDA-remain relevant to our defence policy objectives of promoting strategic stability and security in our region. The FPDA were established in 1971 at the time of Britain's withdrawal from east of Suez to provide a framework to support the external defence of Malaysia and Singapore and for the development of their defence capabilities. Since that time, the two countries defence forces have expanded considerably and the formation and consolidation of ASEAN has reinforced the ability of each member to withstand external pressure and has fostered the development of a broad political and strategic consensus. With changing circumstances, including New Zealand's announcement of its planned withdrawal from Singapore in 1989, Australia is particularly important in maintaining the FPDA framework. Australia does this through our Mirage deployments, our P3C maritime surveillance operations, our naval deployments, participation in bilateral and multilateral exercises and other defence co-operation activities. As the Government has previously announced, a RAAF presence at Butterworth will be maintained after the withdrawal of the Mirage aircraft in 1988 by rotational deployments of FA18 aircraft, supplemented on some occasions by F111 aircraft. The Army rifle company will continue to be deployed to Butterworth as will RAAF P3C aircraft. It is important to understand that this activity is not seen as a leftover from an era long gone. This Government has had several opportunities to view the situation afresh and has concluded that there is substantial political value in our co-operation. The Soviet Union's naval and naval air presence at Cam Ranh Bay is a significant concern for Australian defence policy. The Soviet Union does not enjoy naval and air dominance in the region and in the event of global conflict its military assets in Vietnam would be very vulnerable to United States forces in the region. Nonetheless its presence is an adverse element in regional security. Its primary significance lies in the political influence it provides the Soviet Union. It gives added importance to our defence co-operative activities in the region, particularly our maritime surveillance of the South China Sea and the north-east Indian Ocean and our naval deployments to the region. In the South Pacific, Australia is a major regional power. Recent developments affecting the South Pacific have contributed to an increasingly complex political and strategic situation. Accordingly, the Government is working to explore and develop measures for defence co-operation among our island neighbours that will help ensure strategic stability and security in the region. In my parliamentary statement of 20 February 1987 on defence initiatives in the South Pacific, I announced these measures and noted the Government's intention to give defence relations with the island states the same priority we give our older-established relations with the nations of South East Asia. To this point I have been dealing with matters related to our area of strategic concern and our broader defence relationships. Important as these considerations are at this level they do not determine our force structure. That is determined as I established earlier by the requirements of strategy in our area of direct military interest. I will now examine this matter in more detail. The Government has accepted advice that a strategy of comprehensive defence in depth requires military superiority in the sea-air gap to the north and across the vast expanse of northern Australia. Defence in depth means that an opponent would founder on layers of deployed defence assets through and to our north. The first layer comprises high quality and comprehensive intelligence about military developments in our region, and a variety of surveillance capabilities to detect and track hostile intruders in our maritime and air approaches. I mentioned earlier our regional intelligence capability and I stress the benefits we receive from co-operation with the United States in this field. This Government plans to add to the tactical value of this information by constructing a network of up to 3 over-the-horizon radars in the north of Australia. Provision has been made in the defence program to supplement these with AEW and C capability. We propose to also develop a national system of air defence and airspace control. For the first time in our history these initiatives will enable comprehensive tactical surveillance of the great expanse of our sea and air approaches. A substantial new intelligence facility will be built in Western Australia, and the capabilities of our twenty Orion P3C maritime surveillance aircraft will be improved by the acquisition of new sensors. The second layer is a naval-air capability to destroy enemy forces in our approaches and to protect focal points and shipping lanes. For higher levels of conflict it means having forces able to strike at an adversary's bases and able to interdict his lines of supply. The key components of our strike and interdiction capability are the F111s and FA18s, and the submarines. Options are being considered to refurbish the F111s to reduce operating costs and to maintain them in service. The need for F18 aircraft to supplement the F111 fleet will be considered. The value of the F18s in the strike and air defence role is being enhanced by the acquisition of airborne refuelling capability using the RAAF's 707 aircraft. The strike capability of Australia's submarines fleet will be greatly increased when the current Oberons are replaced by new submarines specifically designed for Australian requirements and built in Australia. These will be among the largest, longest range and most lethal conventional submarines operating anywhere in the world when they come into service in the 1990s. The Government plans to substantially increase the size and capability of the Navy's fleet of surface combatants. It has initiated a project to build eight light patrol frigates with the range, speed and seakeeping to operate throughout our area of direct military interest and beyond. They will carry a helicopter, and be fitted with a range of modern sensors and weapons. With the two extra guided missile frigates, in addition to the four already in service, and our guided missile destroyers, the eight light patrol frigates will increase the Navy's fleet of surface combatants from 12 at present to 16 or 17. Equally important, the Government has decided to create a genuine two-ocean navy by basing half the fleet at HMAS Stirling in Western Australia. This will enhance the navy's capability to operate throughout our area of direct military interest. The anti-submarine capabilities of the Navy will be developed by the purchase of Seahawk helicopters and the development of surface and submarine towed acoustic arrays. The air defence capabilities of the ADF are being dramatically enhanced as the new F18s enter service, a system of airspace control is developed, and a line of air bases across Australia's north is completed. One squadron of F18s will be based at Tindal, bare bases have been or are to be established at Learmonth and Derby in Western Australia, and one is planned on Cape York Peninsula. The third layer comprises a flexible ground force with air and naval support able to react to any enemy incursion right across our territory and able to protect dispersed population centres and civil and military infrastructure. We will develop a highly mobile army for this layer with state-of-the-art battlefield helicopters. Priority will be given to the needs of dispersed army operations in the north. More of the Army will be based there, beginning with the Second Cavalry Regiment to be based in Darwin. Studies will begin on the relocation of a full brigade to the north. The role of the army reserves will be substantially widened. Specific units will be allocated vital installations and infrastructure in the north to defend in times of emergency. Their involvement in tank warfare and artillery will be increased. High priority is being given by the Government to the development of mine countermeasure capability. This is particularly important in meeting low level contingencies, as many nations in our region now have the capability to lay mines. Unfortunately Australia's mine countermeasures capability has been allowed to run down, and a major effort is now required to restore it. At least six inshore minehunters are being sought, and innovative minesweeping capabilities are being explored. Naval reserves will be expanded to undertake mine countermeasures in key areas. Lastly, several important initiatives are under way in the vital area of command, control and communications. A joint operational command system has been created by the appointment of maritime, land force and air commanders who report directly to CDF. Computer-based information systems are being developed to support the decision-making of operational and higher-level commanders. New communication systems to support operations and administration will be introduced, making use of modern technological developments including satellites. The use of cryptographic security will be considerably extended. This system of comprehensive defence in depth will give us the ability to counter those threats that are possible now and ensure our substantial capacity to deter fundamental challenges to our sovereignty that may arise in the future. To implement our strategy of defence in depth the Government is making sweeping improvements in our defence capabilities. These improvements will ensure that we possess a defence force structured, equipped, supported, and trained to assure our security into the twenty-first century. This program for our future force development is based on a rigorous analysis of Australia's unique defence environment. Equally, it is based on a totally realistic assessment of defence allocations. The 1976 White Paper foundered on an unrealistic promise of sustained and substantial real increases in defence spending. The present Opposition spokesman on defence acknowledged this when he said that: `The White Paper brought down in the early days of the Fraser-Anthony Government set parameters which would have enabled the ADF to meet more adequately any possible contingency in our region in the 1990s. Regrettably-Mr Sinclair went on to say-even the capital program that the White Paper envisaged was not matched by successive defence budgets. (RUSI Journal June 1985) The coalition's failure to produce a responsible and affordable defence program has left many Australians cynical about their country's capability to defend itself. This Government takes a wholly realistic view of the financial constraints on Australia's defence posture. This defence paper is being presented in a more stringent financial environment than that faced by any government in the Fraser years. All political parties are promising to cut government expenditure. It is against this reality that hairy-chested demands for more defence spending must be tested. We have developed a defence program which we are confident can be achieved despite these stringent conditions. Our confidence that the program can be achieved is based on the flexibility in the program over 10 to 15 years, and our record in increasing and maintaining the share of the defence budget which we devote to capital spending. Capital spending has been lifted to a consistent level of over 25 per cent of the defence vote, and this year it will reach over 30 per cent. By maintaining this level of capital spending, the program outlined in this paper can be afforded even without real growth in the defence budget overall. At current levels the defence budget provides nearly $40 billion for capital expenditure over the next 15 years, while the capital program outlined in this paper requires only a little over half of that sum. This allows the Government the flexibility it needs to meet further requirements for equipment and facilities, and to expand manpower and operating budgets, as circumstances demand over the next 15 years. These figures show that we can afford the defence we need, provided we focus carefully on our real priorities. What we cannot afford is everybody's defence wish list-nuclear submarines, aircraft carriers, more tanks. All these carry a price tag which cannot be met within the Opposition's views on public spending, and cannot be justified in the rational ordering of our defence priorities. The coalition's record on defence spending between 1976 and 1983 will make people very sceptical of any Opposition claims that they will increase defence spending when they are promising to cut everything else. The Government is committed to more efficient defence. As well as making better use of our reserve forces, the Government will conduct a range of management reviews to identify areas in which regular Australian Defence Force personnel can be replaced at less cost by civilians or the use of private industry. Better management and more effective work practices will also be introduced. A particular area where the Government is extracting significant cost savings is in its management of defence factories and dockyards. These measures are directly saving around $60m per year, which is equivalent to around 1 per cent real growth in the defence budget. All Government factories and dockyards will use commercial costing and pricing procedures from 1 July this year. They will have to perform to the standards of competitive private industry and comply with specific production management agreements. Excess capacity in defence factories is being discarded. The Albion explosives factory in Victoria has been closed and its important capabilities are being transferred to the Mulwala explosives factory in New South Wales. The aircraft engineering workshops at Pooraka in South Australia have been sold to private industry. The Government Aircraft Factories in Victoria are being converted to a government-owned company, Aerospace Technologies of Australia. Substantial work force reductions have been made at other individual establishments and in the office of defence production. The reforms I have just described go a long way to giving us the financial flexibility in defence planning essential at a time when all government outlays face some serious belt tightening. The basic point is this: This Government's clear strategic planning with an ordered conception of our defence priorities and its tough financial management mean we can have more defence without spending more money. A commitment to the defence of Australia must include a commitment to the industrial strength and financial well-being of the nation. I have described how our defence factories and dockyards will be encouraged to adopt a competitive and commercially oriented approach. Australian industry in general will be given extensive opportunities for involvement in defence projects on a competitive basis. Special briefings on the planned defence program will be provided to local enterprises. The offsets and defence designated and assisted work schemes will continue to be used to provide defence work for Australian industry. Specific measures to assist exports have already been introduced. And international collaboration between Australian and overseas firms in high technology defence projects will be actively promoted. The biggest boost to Australian industry, however, will come from the opportunities provided to local enterprises in the development of a self-reliant Australian Defence Force. A major beneficiary of this Government's defence policy will be the local shipbuilding industry. Australian companies will have leading roles in the construction of our new submarines and new long range light patrol frigates. The value of this construction work for local industry is many billions of dollars. It constitutes the largest shipbuilding program in Australia's peacetime history. It will bring considerable high technology skill in ship construction and maintenance to this country and substantially enhance our ability to support independent maritime operations. More generally Australian industry will be involved intensively in the support, maintenance and development of the Australian Defence Force. The Government is committed to making Australia's defence industries competitive and efficient so we can buy Australian without paying high cost premiums. The extensive defence work to be undertaken in Australia over the next 10 years will assist some important national aims. This country cannot afford to be saddled again with the sort of huge balance of payments slug imposed on us by the FA18 program which, despite good management of the project, in one year represented 4 per cent of Australia's balance of trade deficit. This Government's initiatives for defence-related industry will increase our self-reliance and benefit the Australian economy generally. The most valuable resource in our nation's security is of course Australia's defence personnel. The Government's capital investment program will give them the new equipment and facilities they need to play their proper role in the defence of this country. The Government will continue to allocate the largest share of the defence budget to defence personnel. We have already initiated, and plan for the future, a range of personnel policies to further develop a well trained and motivated defence force. This Government has established an independent and impartial wage fixing system for the defence force. We plan to spend $750m over the next 10 years on new housing for the Defence Force. This is one of Mr Sinclair's main criticisms and yet it was the coalition when in government that shamefully neglected housing for the services. We are providing the necessary resources to improve living conditions. A new Defence Housing Authority has been created through legislation introduced this sitting. And the problems of service families have been addressed by Sue Hamilton in a special report commissioned by this Government. Her recommendations to alleviate the problems service families face are being dealt with. This is the first defence policy information paper for 10 years. The Defence White Paper in 1976 recognised that self-reliance is the only responsible defence posture for Australia. The paper which I am tabling today establishes precisely what is required to achieve a self-reliant defence posture, and establishes that self-reliance is achievable within our alliances, and within our resources. At this point I think it is appropriate I pay tribute to the work of Paul Dibb. Whatever his critics might think of the product of his review it has set a new standard for defence debate in this country. Never again will those who wish to participate in the defence debate in this country simply be able to run off at the mouth with wish lists, persiflage and grandiloquence. The public has been educated to demand specifics. I should thank too the drafting team in the defence forces and Department who put long hours into this defence information paper. The program outlined is a prudent one, with clear-cut priorities. It is based on a realistic assessment of our circumstances and our important alliance relationships. We are a powerful nation in regional terms, but with some serious deficiencies. We could not now deny ourselves self-reliance in the terms set out in this White Paper. We know the goal is achievable. Senator GARETH EVANS —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Motion (by Senator Macklin) agreed to: That leave to 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. Bill presented by Senator Macklin, and read a first time. Senator MACKLIN(Queensland)(10.04) —by leave-I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- This Bill will give effect to proposed changes to the Constitution endorsed by the Australian Constitutional Convention at its Adelaide meeting in 1983. In particular, the Bill provides for the present three-year term for the House of Representatives to be increased to four years. There is general agreement within the community that the present electoral arrangements have resulted in Australia having far too frequent elections. The average term of Parliaments post-war has been two years five months and in the 21-year period from 1953 to 1984 there were no fewer than 13 separate national elections. There has been increasing public unease about the lack of sufficient continuity and stability in Government, with a resultant atmosphere of uncertainty and controversy and strong pressure on governments to adopt short term expedient policies to ensure electoral success. Of course, as the Business Council of Australia recently observed, the frequency of elections is not only simply a nuisance or an irritation, it also has major ramifications for sound government decision-making, for budgetary policies and, therefore, for the economic climate in which business operates. Indeed, Mr Eric Mayer, the Chairman of the Business Council's Government Expenditure Committee, argued that frequent elections have an adverse effect on government planning and decision-making and this, in turn, adversely affects private sector planning and business confidence. There is ample evidence to sustain this view. For instance, if the present Parliament runs for its full term, it will be the first time since 1980 that a Federal Government has delivered three Budgets during its term of office. It will be only the second time since 1972 that a government has brought down three Budgets in its three-year term of office. In the face of evidence such as this, it is difficult not to conclude that under our present three-year parliamentary term system, governments of all colours have had enormous difficulty reconciling careful and deliberate economic policies with the electoral imperatives of political survival. Undoubtedly, this helps explain why the four-year parliamentary term proposal has received such impressive support from all political parties, from a variety of institutions and political commentators and, increasingly, strong support from the business sector and the public at large. The Reid Committee of Review into Commonwealth Administration in 1982 expressed support for a four-year term for reasons of `better management and a more sensible lifestyle'. The 1983 Constitutional Convention in Adelaide endorsed a motion that the terms of Parliament be extended to four years-with senators' terms equal to twice the term of the House of Representatives. A Bill to that effect was passed by Parliament, but was never submitted to referendum. More recently, the Constitutional Commission has formed the provisional view that it should accept the proposals of the Adelaide meeting of the Australian Constitutional Convention. Of course, this considerable support for constitutional reform counts for nought if the people are never provided with an opportunity to enshrine the four-year parliamentary term in the Constitution. Clearly, the task for those in favour of electoral reform is to ensure that the question of four-year terms is put to the people as soon as possible. A frequent reason advanced by governments for not pursuing constitutional reform is that the task of reform is too difficult. The Australian Democrats do not dispute that constitutional reform has proved difficult in Australia. But this difficulty in turn also highlights the need for governments to be continually sensitive to opportunities for constitutional reform. As noted earlier, there is at the moment considerable public unease with the frequency of elections and the difficulties which governments experience in implementing consistent and responsible economic policies under the present electoral arrangements. This dissatisfaction is reflected in the results of qualitative research recently conducted by the Roy Morgan Research Centre for the Business Council of Australia. A survey conducted during the month of August 1986 showed that a referendum to extend the term of the House of Representatives from three to four years would have succeeded. Fifty-six per cent of electors said they would have voted Yes, including a majority in five of the six States. These results indicate a growing appreciation within the electorate that a three-year maximum term is too short. It is also probably indicative that electors in States whose parliaments have already been extended to four years are comfortable with the reform and are happy for the Federal Parliament to follow suit. If Australians are given an opportunity to extend the Federal Parliamentary term then this country will, according to a study by the Inter-Parliamentary Union, join 25 other democratic countries with four-year terms. There are, incidentally, 24 democratic countries-including Canada and Great Britain-with five-year terms. The four-year proposal will not alter the existing discretion of the Prime Minister to call an early election. Nevertheless, the change will provide greater continuity and stability in the electoral cycle, since the average span of Parliament may be expected to increase substantially. Given the strong bipartisan support of Federal members of Parliament for this proposal and the support of at least four State governments, there is no reason why Australians should not be given an early opportunity to vote on this proposal in the interests of better government in Australia. I commend the Bill to the Senate. Debate (on motion by Senator Robertson) adjourned. Motion (by Senator Vigor) agreed to: That leave be given to introduce a Bill for an Act to regulate smoking in aircraft and aerodromes. Bill presented by Senator Vigor, and read a first time. Senator VIGOR(South Australia)(10.06) —by leave-I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- The Air Navigation (Smoking) Amendment Bill seeks to guarantee all Australians clean air when in aeroplanes, and at aerodromes. The Bill seeks to remove the hazards of both mainstream and sidestream smoking by requi-ring that all smoking in airports or aircraft shall be carried out in specially and separately ventilated areas. It seeks to remove the known risks associated with passive smoking. Passive Smoking Passive smokers are people forced to breathe the pollutant smoke from cigarettes. The dangers of this are vividly described in the publication of the National Health and Medical Research Council, called `Effects of Passive Smoking on Health': Mainstream smoke is first inhaled by the smoker before being exhaled to contaminate the air. Sidestream smoke directly enters the environment and comprises the greater component of smoke generated by the cigarette. The lighted cigarette has been described as `a prolific chemical factory' producing more than 2,000 compounds. Of most concern are the several known human carcinogens and the numerous suspected carcinogens. Other toxic compounds include carbon monoxide, hydrogen cyanide and polynuclear aromatic hydrocarbons. Many of the compounds are found in substantially higher proportions in sidestream smoke than in mainstream smoke. Absorption of the constituents of tobacco smoke in significant amounts by passive smokers has been clearly demonstrated. Typical indoor ventilation is inadequate to remove these pollutants. The report goes on to describe the hazards to which people are exposed through other people's smoking habits: 1. The inhalation of passive smoke by healthy indivi-duals and those with pre-existing respiratory disease commonly causes acute irritation effects in the upper and, to a lesser extent, the lower respiratory tracts. 2. There are sufficient data to indicate that asthmatics may suffer acute effects following exposure to passive smoke. Those susceptible individuals with airways hyperactivity or atopy but not clinically asthmatic in particular should be investigated for the effects of passive smoking. 3. Few data are available regarding the effects upon both the upper and lower respiratory tract of chronic passive smoking in healthy individuals. The final recommendations of the National Health and Medical Research Council report `Effects of Passive Smoking on Health' read as follows: Council recommends that, in view of the evidence that passive smoking increases the risk of at least some diseases of childhood and adulthood, particularly disorders and diseases of the respiratory system, the following policies should be considered by Health Authorities in Australia as means of protecting the health of non-smokers. 1. Development of procedures, regulations, or laws facilitating or requiring the restriction or prohibition of smoking: a. within the work environment. The available evidence indicates that exposure to passive smoking is, on average, substantially higher at work than at home. An atmosphere free of tobacco smoke should be regarded as the workplace norm. Employers should be reminded of obligations to provide a safe working environment. b. In enclosed public places, hospitals, restaurants, and transport. In recommending this policy, Council notes the apparently successful approach in some States of declaring smoking to be prohibited in all public and work places unless specifically permitted. 2. Explicit inclusion in smoking-related health education material of information about the known or suspected effects of passive smoking upon health. This material should assist decisions in the home (including decisions about ventilation) as well as in the workplace and in public places. In making these recommendations, Council acknowledges that further research is necessary to confirm and elaborate these effects of passive smoking upon health. However, mindful of the delays involved, historically, in both accepting and acting upon the evidence of the serious health consequences of active smoking, Council considers that there is now sufficient evidence pertaining to the effects of passive smoking to require prudent public health action of the kind recommended above. The Bill implements the unanimous resolution in January 1986 of the Executive Board of the World Health Assembly, which affirmed: . . . `tobacco smoking and the use of tobacco in all its forms is incompatible with the attainment of health for all by the year 2000- and urged- those member States which have not yet done so to implement smoking control strategies to . . . ensure that non-smokers receive effective protection, to which they are entitled, from involuntary exposure to tobacco smoke in enclosed public places, restaurants, transport, and places of work and entertainment. Smoking in confined spaces is as dangerous as playing Russian roulette. There may be only one chance in 1,000, there may be only one chance in 10,000 depending on your condition, that you will suffer a consequent major disease. It is like Russian roulette played with a magazine with only one bullet in 1,000 or 10,000. If you get the bullet, you are dead. That is the real meaning of the term `low risk' in this context. Incidentally it is one bullet in six for smokers. Background This Bill implements the 18 December 1986 promise of the Minister for Aviation, Mr Peter Morris, to legislate for the prohibition of smoking on certain domestic flights. It is also in accordance with the section of the ALP's health platform adopted at the 1986 conference, calling on the Government to `further restrict smoking on public transport, including domestic aircraft, and restrict smoking in public places to define zones'. The 18 December statement of the Minister for Aviation announced a Cabinet decision authorising him to proceed to legislate for the prohibition of smoking on domestic flights of less than 90 minutes. There was general expectation that this matter would be attended to early this session. After all the Minister's Press Release said: The government has received many requests from airline passengers for smoke-free flights of less than 90 minutes. The number of passengers who request smoking seats on aircraft has declined steadily over recent years. On some flights, almost nine out of every ten passengers demand non-smoking seating. Smoking is already prohibited on nearly all other forms of public transport. The Minister's statement drew warm praise throughout Australia and yet the Government seems to be running away from its policy and announced intentions, allegedly because Ansett and Australian Airlines have not demanded the legislation loudly enough. However, both airlines did indicate that they would support and implement non-smoking on flights if the Government lived up to its responsibility and enacted the legislative restrictions. Kendall Airlines, which carries nearly a quarter of a million passengers per year, made the decision in 1979 to have only non-smoking flights. This policy has met with enthusiastic consumer acceptance, and very few complaints have ever been made. At the same time, thousands of dollars have been saved because air-conditioning filters do not require nearly the same levels of maintenance as when nicotine and smoke particulates clog them. In addition, the interiors of aircraft are not discoloured so readily and the basic costs of cleaning the planes after use are lower. There is also the reduced danger of fire on board while in flight. I believe that the example of Kendall Airlines is a salutary one for the industry, and that with East-West so keen to follow its example in a deregulated aviation environment, the vast majority of travellers will be able to enjoy the type of service that meets their requirements. East-West Airlines also has made strong representations to the Government to completely prohibit smoking on all flights, irrespective of their length. Any government worth its salt would have taken the policy decision on the overwhelming evidence now available, and acted to implement its intention straight away. When the matter in question is a prominent part of its health policy, the current attitude becomes even more perplexing. Honourable senators should reflect on the purpose of being in government if Ministers are unwilling to make straightforward decisions and ensure that they are put into practice. Purpose of the Bill This Bill is an expression of Australian Democrats policy that `prevention is better than cure'. In this context it is also a prime example of `keeping bastards honest' or, should I say, `keeping wimps honest', for the Government seems incapable of taking on the tobacco lobby in the interests of the people of Australia. A Democrat government would face the challenge of producing a healthier Australia, and would not flinch at attacking the antisocial use of a drug and its pushers. That is the type of government Australia needs. This legislation, if enacted, will improve the health of passengers and staff travelling on commercial airlines. It will relieve staff of a long-standing problem which is recognised in the current industrial award of flight attendants which allows six days' leave a year specifically for upper respiratory tract infections caused largely by continued exposure to cigarette smoke. It will protect the airlines from the consequences of legal action likely to be taken by staff and passengers if their health is endangered by passive smoking on air services. It will eliminate a very common cause of fires and general damage to aeroplanes. It will cut down the maintenance bills of the airlines and enable them to offer a better service to customers in aeroplanes whose interiors retain their initial polish. Provisions of the Bill The principle behind this legislation is that no Australian should be exposed to the risks inherent in passive smoking in enclosed spaces. If airlines want to designate planes solely for the smokers and perhaps charge them for the extra costs of cleaning and maintenance, they can try to get cabin crews who do not object to smoke inhalation. There is no prohibition on such practices, but they will have to occur in circumstances where the 80 per cent or more of customers who do not smoke are not endangered. The specific provision is that sections of a plane can only be designated as smoking bays if their ventilation is such that it is not possible for smoke in the air in the space to enter the air in any other part of the aircraft. It is theoretically possible to design planes in which more than one major air-conditioning system is present. However, this would add greatly to the weight of the basic aircraft, and reduce the capacity to take on cargo. It will be up to the airlines to assess the economics of such an approach, and to decide whether the extra cleaning and maintenance costs in any smoking section would require a two-tier fare structure. Quite possibly, the airlines will decide that the structural re-arrangements for two types of seating on one plane are not economically viable. In that case, it is open to them to run fully smoking planes on a cost recovery basis, alongside the fully non-smoking planes that most travellers want. The Bill provides a similar requirement for smoking rooms at aerodromes. It is apparently quite an easy matter to design the air conditioning at aerodromes to ensure that smoking and non-smoking sections are separate for the purposes of ventilation. It is only in recent years that air quality and general safety of the cabin environment have been thoroughly researched either in Australia or abroad. United States Experience In the United States, Congressional hearings in 1983-84 revealed contradictory information on airliner cabin air quality. Flight attendants and members of the general public testified about inadequate ventilation and other discomforting cabin environment problems. Airline industry and federal regulatory agency personnel suggested that current cabin standards were adequate to protect the health and safety of travellers. Under Public Law 98-96, Congress required the National Academy of Sciences to enter into a contract with the Federal Aviation Administration to examine cabin air characteristics and various safety precautions and make recommendations for improvements. The Committee of Airliner Cabin Air Quality conducted an 18-month study of air quality, cabin environment, emergency procedures, flight regulations and air travel records. The Committee found that the health and safety issues could not be separated. It made a major report `The Airlines Cabin Environment' which was published by the National Academy Press in 1986. The Committee noted that the flow rate of outside air varied from below 7 cubic feet per minute-cfm-per economy-class passenger to 50 cfm per first class passenger. Cockpit ventilation rates were often as high as 150 cfm per crew member because of the cooling required for the electronic equipment. The levels for economy-class passengers were adequate for oxygen supply but not necessarily for proper ventilation. The Committee suggested that more effort was required to keep down cabin ozone and microbial aerosol concentrations. It also recommended the introduction of: A ban on smoking on all domestic commercial flights, for four major reasons: To lessen irritation and discomfort to passengers and crew To reduce potential health hazards to cabin crew associated with environmental tobacco smoke To eliminate the possibility of fires caused by cigarettes To bring the cabin air quality into line with established standards for other closed environments. Environmental tobacco smoke-ETS-is the combination of exhaled mainstream smoke and the smoke generated by smouldering cigarettes. The Committee concluded that `ETS is a hazardous substance and is the most frequent source of complaint about aircraft air quality'. It pointed out that the high concentration of ETS generated in the smoking zone could not be dissipated by increasing ventilation in that zone. Neither flight attendants nor non-smoking passengers were immune from its effects. Even a quite high ventilation rate of 14-15 cfm per passenger meant that as much as 50 per cent of the cabin air was being recirculated and quite possibly full of contaminants. The Committee noted the extra dangers to flight attendants who were pregnant and said that it was `highly possible that eye, nose and throat irritation will increase among airline passengers as outside air ventilation rates are decreased and recirculation is increased to improve fuel efficiency'. It added that the amount of air required to get the smoking zone into reasonable shape `could exceed the engine bleed capacity and in all cases would reduce the range of the aircraft, the payload, or both. Injection of large volumes of air into the cabin would create unacceptable air velocities and result in passenger discomfort'. The Committee was left with the conclusion that only a ban on smoking on all domestic commercial flights could solve the very real problem of exposure to environmental tobacco smoke-passive smoking-and its associated risks. Australian Experience Similar work has been carried out in Australia. In November 1986 we saw released an occupational health and safety study of in-flight duties, commissioned by Ansett and Australian Airlines as part of award negotiations with the Australian Flight Attendants Association. The study, carried out by the Ergonomist Consulting Group Pty Ltd of Melbourne, was the first time that the working environment and conditions of cabin staff have been examined so comprehensively. The study found that the temperature and humidity inside the cabin were basically acceptable. However, it agreed with the complaints of flight attendants, equally forcefully expressed by smokers and non-smokers, about problems arising from cigarette smoke. The most common concern was about the accumulation of contaminants above shoulder height, just where flight attendants could not avoid it as they worked. Wearers of contact lenses were liable to experience irritation at work. In fact, the report stated: The only matter of significance found during the study concerned the quality of the air breathed during the flight and of the presence of contaminants likely to impair performance, health and (indirectly) safety. The dominating factor was cigarette smoke. The report concluded: We recommend that operators seriously consider a joint agreement to curtail the use of tobacco on all flights of less than 60 minutes duration as an intermediate step towards the eventual complete restriction of smoking on aircraft. It is not surprising that the latest industrial award of the Australian Flight Attendants Association, which has been campaigning strongly since 1983 for the elimination of the smoking hazard from aeroplanes, includes provision for 6 days sick leave each year specifically for upper respiratory infections. An important fact that emerges from all the work on ventilation is that the environmental tobacco smoke on flights of very long duration is even worse than on those of short duration. This is because of the constant recycling of contaminated air. The ventilation rates are kept down to conserve fuel and allow as great a payload as possible. Some industry estimates are that only 10 per cent of the air in the cabin is being expelled through the bleed holes at any time. This is worsened when nicotine starts to clog these minute air exchange facilities. The longer flights are, the more the cabin environment consists of recycled air because of this and the ventilation rates dictated by a desire to economise on fuel. Consequently, there is no justification whatsoever for allowing smoking on flights of long duration if they are to be curtailed on other flights on health grounds. This legislation deals with the problem thoroughly and not in some half-hearted manner which continues to put the health of flight attendants and passengers at risk. Dr Paul Magnus of the National Heart Foundation of Australia has stated that air-conditioners would have to operate at gale force to reduce environmental tobacco smoke pollution to safe levels. All the trends within the airline industry appear to be in the other direction for reasons of cost containment. In fact, on the most recent equipment less of the particulate matter is being filtered out than previously. Once there is a buildup of environmental tobacco smoke in the rear of a cabin, staff find that eye and nasal problems begin. Because there is lower oxygen at 35,000 feet, stinging of the eyes persists for the whole of the journey when someone has been unlucky enough to suffer in-flight harm. A Queensland flight attendant of 14 years service has written to me complaining that she is always working in the smoking sector: Apart from the well-documented problems with passive smoking, I have witnessed flight attendants who have suffered health problems, with sinuses and sore eyes. The attendant added: I feel that as an individual I have the right to work in a smoke-free environment. This is precisely the point made in a letter to honourable senators from the National Heart Foundation last November which spoke of `proper policies to protect smokers and non-smokers and improve general health and working conditions as restricting smoking in the workplace and other public places'. That letter goes on to say: The National Heart Foundation of Australia is deeply concerned about the effects of smoking, both active and passive, on the community. Smoking is the major avoidable risk factor for cardiovascular disease, chronic lung disease and several important and fatal cancers. Passive smoking increases the risks of serious harm, such as lung infections in young children, lung infections in children and adults, lung cancer, and a worsening of health in those with existing heart and lung disease. Although active smoking is by far the greater concern, passive smoking is an important public health issue in its own right. Furthermore, passive smoking is not a matter of choice in most instances, and often occurs against the expressed wishes of the non-smoker. These views are supported by other leading medical scientific agencies such as the Royal Australasian College of Physicians, the Thoracic Society of Australia, the World Health Organisation, the United States Surgeon General and the United States National Academy of Sciences. The National Health and Medical Research Council stated last year, in its influential report `Effects of Passive Smoking on Health', that because of the evidence of passive smoking increasing the risks of diseases of the respiratory system and other disorders `an atmosphere free of tobacco smoke should be regarded as the workplace norm. Employers should be reminded of obligations to provide a safe working environment'. Conclusion This legislation will achieve precisely this for the airlines. It also provides better travelling conditions for airline passengers while cutting the maintenance and cleaning costs that the airlines incur. It complements the steps being taken around the nation to provide smoke-free services on long distance coaches and trains. The legislation is sensitive to the civil liberties of smokers and non-smokers alike, and deserves support from all honourable senators prepared to take on the responsibility to do what is right without fear or favour. This Bill is right. It will save lives, it will save money for the airlines, it will save money for the taxpayer, it will save much discomfort for crew and passengers alike. I urge honourable senators to support it, for the sake of the people whom they represent. Debate (on motion by Senator Robertson) adjourned. Motions (by Senator Gareth Evans) agreed to: (1) That, unless otherwise ordered, the order of General Business for consideration this day pursuant to sessional order be as follows: (a) consideration of Government papers; and (b) General Business order of the day No. 365-Economic Management in Australia. (2) That intervening business be postponed until after consideration of General Business order of the day No. 383-Casual vacancies in the Senate. Debate resumed from 18 March, on motion by Senator Haines: (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. Senator Robertson-The Special Minister of State, Senator Tate, has been unavoidably detained. I ask that he be permitted to continue his remarks later in the debate. Senator Peter Baume-Mr President, is not the better procedure for Senator Tate to come in and seek leave at the appropriate time? The PRESIDENT —Yes, that is the appropriate procedure. That is the way that we will handle the situation. The next speaker on the list is Senator Durack. Senator DURACK(Western Australia)(10.09) —I regard this as a completely unsatisfactory situation. I strongly protest against the Senate being treated in such a cavalier fashion by the Government, and in particular by the Special Minister of State (Senator Tate), who is supposed to be speaking at this moment on behalf of the Government. The Government has chosen the order in which it wishes to proceed in this matter. Senator Haines made a speech last night and she was followed by Senator Tate. He made some quite extraordinary remarks in the short minute and a half that he spoke. He was proceeding down a track which was totally at variance with all constitutional understanding and about which I wanted to hear a lot more before I was obliged to speak. Anyway, there are ways and means of dealing with that subsequently. My major protest is that the Government allowed this debate to be brought on yesterday so that Senator Haines could do its dirty work for it at 7 o'clock last night when the proceedings were being broadcast. The Government allowed that debate to go on even though it was a General Business matter which, in the ordinary course of events under agreements that exist, would not have proceeded in this chamber until the Democrats had the right to deal with their General Business matters, which they do not have today. We have that right today. The Government, however, was anxious to grab the issue raised by Senator Haines and to make as much political capital as it possibly could. We have heard Senator Gareth Evans here at Question Time on two days running making extravagant statements about this matter and going on ad nauseam about it. The Government did this deal with the Democrats to bring it on last night to enable Senator Haines to speak, which she would not normally be allowed to do. The debate resumed this morning as the first item of business at the choice of the Government and the Minister is not even here yet. Senator Walters —Is he still in bed? Senator DURACK —I think he is-- Senator Gareth Evans —The Minister is in a Cabinet meeting, I am told. The PRESIDENT —Order! Senator Gareth Evans —He is on his way into this chamber at the moment and I ask that Senator Walters withdraw that imputation, Mr President. It is offensive. The PRESIDENT —Order! Senator Durack —Mr President, I raise a point of order. Senator Gareth Evans has no right to jump to his feet and make a statement while I have the call. He ought to have been sat down smartly. The PRESIDENT —He has no right. I tried to sit him down and he has now resumed his seat. I call Senator Durack. Senator DURACK —I resume without further interruptions-- Senator Gareth Evans —Mr President, I raise a point of order. I was on my feet making a point of order, Mr President. I repeat the point of order: Senator Walters, by way of interjection, imputed that the Minister was still in bed. That is a reflection on his character and capacity-for punctuality if nothing else-and I ask her to withdraw it. The PRESIDENT —In the circumstances, I ask Senator Walters to withdraw the remark. Senator Walters —Senator Gareth Evans has just said that the Minister is in Cabinet. I would like to ask where the duty of a Minister lies. Is it to the Parliament, to this place, or is it to Cabinet? If he is meant to be in this place he should be here for the debate in this place. The PRESIDENT —Order! Senator Walters, that has nothing to do with the matter. I asked you to withdraw. Senator Walters —I withdraw, Mr President. The PRESIDENT —Thank you. I point out to Senator Gareth Evans that he did not stand on a point of order. I call Senator Durack. Senator DURACK —Perhaps I will now be able to resume, unless Senator Tate, who has now arrived, wishes to proceed with his speech, which I would prefer to happen. The PRESIDENT —Senator Tate, do you wish to resume the speech you started last night? In that case Senator Durack would have to seek leave to continue his remarks. Senator Tate —Mr President, I would like to complete my remarks. Senator DURACK —I seek leave to continue my remarks later. Leave granted. Senator TATE(Tasmania-Special Minister of State) —by leave-Mr President, first may I apologise to the chamber for my not being available at the time listed for the resumption of this debate. Last night I was saying that I thought it was very important that the principle which is embodied in the motion proposed by Senator Haines be affirmed by this chamber because I thought it was quite properly a matter for this chamber. My remarks at that stage were directed to saying that the matter was probably not justiciable. I did not see a High Court effectively proposing an order which would require a chamber of a State parliament or a joint sitting of a State parliament to be convened and to vote in a particular manner for the nominee of a particular political party. Therefore, it was very fitting and proper that the matter be dealt with by way of this chamber giving its view as to the conventions that should apply. Senator Durack, I believe, challenged me as to whether it was proper to speak of the convention in terms of this motion. I think it is valid, because I do not believe the convention necessarily arises through long adherence. I believe the convention is one of those understood matters which underpin and give some sort of practical, effective, civilised meaning to the actual written words of the Constitution. Insofar as those understandings are not in black and white, they can be called conventions. But I do believe that it is very important that this chamber be involved in the affirmation of that principle, which is that a casual vacancy should be filled by the member of the political party duly nominated by that party to fill that place. The problem, though, has arisen because of the actions of the Premier of Tasmania, Mr Gray. It is to that practical, concrete repudiation and cause of division and confrontation which I wish to address most of my remarks in the very few minutes I wish to take. Really, I could take as my text not so much the words of the motion-although, of course, I support them-but the text from Mr John Howard on 16 March on the AM program, where he said: . . . I have no doubt that at the end of the day the person appointed to replace Senator Grimes will be a person nominated by, and acceptable to, the Tasmanian Branch of the Labor Party because that is what the Constitution says must happen. We know from yesterday that Mr Gray has not got a great opinion and says: `You do not need to worry about Mr Howard's views on this constitutional crisis that has been artificially created'. But Mr Gray, in not paying attention to Mr Howard's clear interpretation of the situation and in running off to Queensland and dealing with Sir Joh Bjelke-Petersen and getting his advice from Sir Joh, is in fact misinterpreting the mood of not only the Australian people in general, but the Tasmanian people. The editorial in the Launceston Examiner of Tuesday, 10 March states: In the seventies the Premier of Queensland, Sir Joh Bjelke-Petersen, rejected an ALP Senate nomination thereby breaking a sensible, civilised convention in favour of the grossest form of political expediency. It went on to say: Few Tasmanians would want their State to follow that sordid, miserable and undemocratic path. I think that just about sums up the actual mood of most Tasmanians, despite the assertions of Mr Gray that he has Tasmanians behind him on this issue. Of course, it is not even an original idea of Mr Gray. Not only does he follow in the footsteps of Sir Joh and Mr Lewis of New South Wales, but of course in this particular matter he follows an obscure member of the Legislative Council, Mr Shaw of Macquarie, who first floated the idea, and Mr Gray leapt on to it as an opportunity. The nub of the issue is that we have here a grave assault on constitutional proprieties which make our democracy a habitable place. We are not, in a democracy, simply talking about rule by the majority. The fact that Mr Gray has a majority in the House of Assembly does not give him a right to trample on the voice of those electors who wanted a Labor Party representative, selected through the Labor Party's democratic processes, in the Senate as a casual vacancy replacement. But Mr Gray is such a confrontationist that the idea of being a true conservative, of conserving those things which are of true value in our democratic political system, is beyond him. He is constitutionally incapable of it-if I may indulge in a slight pun. The fact is that a senator is not an ambassador or emissary of the Premier or the State government or the State parliament. If that were the case, instead of a Senate being assembled here from time to time to deal with legislation, we could have merely the Premiers Conference being convened from time to time in a legislative role. At the moment, the Premiers come to Canberra from time to time to deal with the distribution of funds. They meet in the House of Representatives chamber. Let them walk across to this side of King's Hall and meet as a legislative chamber if we are going to have a situation where senators are to be regarded as mere ambassadors on behalf of State governments, Premiers or even State parliaments. Under the Constitution we know that is not the case, and the senators, of course, represent a certain quota of electors. I do not believe that Mr Gray is merely playing some sort of game to embarrass the Labor Party, as Senator Watson suggested last night. I think there is more to it than that. It is quite clear that if Mr Devereux were not the person selected by the State Parliament but some other member of the Labor Party were to be so dis- honoured that person would be expelled from the Labor Party and, under the terms of the Constitution, could not take his or her seat in this chamber. There would therefore be a continual casual vacancy until the Tasmanian Parliament nominated and put forward a member of the Labor Party whose membership would not be stripped away by the Party subsequent to being put forward by the State Parliament. That would leave Tasmania underrepresented in this chamber. It is interesting to hear from such an advocate of States' rights as Mr Gray that he would be willing to see a situation of continuous stalemate, of a continuous casual vacancy-a deadlock virtually-which I do not believe could be very satisfactorily resolved in the courts. It would leave Tasmania underrepresented in this chamber and in my Party room, because there are many other issues on which Mr Devereux, if he were to be the person, could make a very valuable contribution within Party forums quite apart from in this chamber. It is the role of this chamber in having a full representation of 12 senators from Tasmania that should be paramount to a person who claims to be concerned about States' rights as vehemently as Mr Gray claims to be from time to time. We would be one short on this side of the chamber because of the continuous casual vacancy. I wonder whether that is not the aim of the exercise-to strip us on this side of the chamber of one representative. I certainly do not know that there has been any undertaking from the other side that a pair would be automatically granted in that situation. Senator Jocelyn Newman is about to make an intervention, which reminds me that when she was put forward in the Tasmanian Parliament as a replacement for our esteemed former colleague Senator Peter Rae there was no question of the Labor Party not going along with that nomination, as was the properly observed practice both in the Victorian Parliament recently and in the Parliament of New South Wales where, as I recall, the Premier and Mr Greiner both nominated Senator Sue West as a replacement for our former esteemed President. The fact is that Senator Jocelyn Newman came up through the normal processes-I suppose that I should call them democratic processes-of the Liberal Party. Mr Devereux has been nominated through the same normal democratic processes of the Labor Party. It is very important that the convention which was observed in Senator Newman's case be observed in this case. As the Mercury of Tuesday, 10 March editorialised-and this gets to the heart of what is going on: Likes and dislikes of ideologies are facts of political life; they are, however, irrelevant to the present debate, which should not be about forestry, but which should be about filling casual vacancies in the Senate. The only attitude which really matters in the debate is that of the ALP. It wants Mr Devereux to replace one of its members in the Senate. It arrived at this decision democratically, and its wishes should be paramount. Any serious attempt to bring about a result different from the one sought by the ALP risks destroying the attempts supported in a referendum by the people of Australia to try to strengthen parliamentary stability through the Constitution. Both Tasmanian newspapers I have quoted from reveal the real nub of the matter and give a very clear indication of a view of the activities of Mr Gray which would be well supported by the Tasmanian community: In other words, that Mr Gray is creating a diversionary crisis, an artificial crisis, which has in the end a resolution which must be in accordance with the wishes of the Tasmanian branch of the Labor Party. Mr Devereux will take his seat in this chamber and, I have no doubt, will make a very valuable contribution to its deliberations. Senator Walters —I sincerely hope so. Senator TATE —Even Senator Walters expresses a hope that that will be the outcome, but why does she not support this motion as an indication of the true constitutional provision which should prevail? I would like to see what she does when it comes to the vote. My remarks were to be very short. I bring them to a close simply by saying that I believe that it is well that this chamber should deal with the matter rather than the High Court of Australia. I do not think it is justiciable, anyway. Therefore it is fitting that this motion, giving some articulation to the convention underlying the natural sense of what was done by way of a referendum proposal passed by the overwhelming majority of the Australian people in each State, should put into words, which we can affirm, the correct principle to apply in this situation. Senator DURACK(Western Australia)(10.25) —I had commenced my remarks in the absence of Senator Tate, but I am pleased that Senator Tate returned to the chamber in time to complete his remarks. Notice of the motion we are addressing was given by Senator Haines the day before yesterday, and it was introduced last night, accompanied by a long speech from Senator Haines, before the adjournment. The motion, for which she seeks to obtain the support of the Senate, contains two propositions. The first is that, in the case of a casual vacancy occurring in the term of a senator, in the Senate's opinion the 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. The Opposition supports that. If the motion were simply in those terms, we would support it. However, another limb of Senator Haines's motion singles out the Cain Labor Government for having been so good about replacing Senator Missen, when he died, with a Liberal. In the first place that was all that the motion stated, but subsequently Senator Haines added some further words, after the reference to the Cain Labor Government, `following a long line of similar instances'. Those words were added by Senator Haines after she gave notice of the motion, so she realised fairly quickly that that aspect of the motion singling out Mr Cain was rather gratuitous and unnecessary. The motion goes on to deplore the threatened actions of Premier Gray in ignoring the spirit of the Constitution in this regard. The Opposition believes that that limb is quite unnecessary. It is quite wrong to single out one instance, as the motion does, and to deplore what are called the threatened actions of Premier Gray in ignoring the spirit of the Constitution. I have circulated an amendment which I propose to move to delete the second limb of Senator Haines's motion. I will address the reasons for that later. I will initially address the first part of the motion, which the Opposition will support. There has been a good deal of discussion in this debate, both in this chamber and elsewhere, about the convention that has developed to require that a State parliament, in choosing a person of the same political party to fill a casual vacancy, should act on the nomination of that party. It is interesting to note that debate, because it seems to be taking place as though there had never been an amendment to section 15 of the Constitution in 1977. It is interesting also to look back and read the debates in this chamber of February 1975 when the first major issue of this kind arose in Australia, when the Whitlam Labor Government appointed the then Senator Murphy to the High Court of Australia, creating a casual vacancy in the Senate. The then Premier of New South Wales, Mr Lewis, threatened, and ultimately carried out the threat, to replace Senator Murphy with a person other than a nominee of the Australian Labor Party. The Leader of the Government in the Senate at that time, Senator Wriedt-also from Tasmania-proposed a motion in these terms: (1) The Senate is of the opinion that proportional representation for the Senate calls for maintaining the status quo in Party representation when casual vacancies are filled by the choice or appointment of a person pursuant to section 15 of the Constitution, and that if a senator is succeeded by a senator of another Party, proportional representation is destroyed. (2) The Senate notes that since the introduction of proportional representation in 1949, the States have without exception filled vacancies by the appointment of senators belonging to the same political parties of the vacating senators. (3) The Senate views with the greatest concern reports that the long-established convention may not be followed in relation to the filling of the vacancy now existing in the representation of the State of New South Wales. We had a very lengthy debate in the Senate on 12 February 1975, the next day, in the course of which Senator Withers, who was then Leader of the Opposition in the Senate, moved an amendment, the purpose of which was to acknowledge the position and the power of State parliaments in these matters, and also to replace the word `convention' with the word `practice'. Senator Wriedt, on behalf of the then Government, accepted the amendment from `convention' to `practice'. So even though this was a matter which had been followed repeatedly from 1949 to 1975, Senator Wriedt and the Whitlam Government were prepared simply to accept as a practice rather than a convention that the vacancy should be filled by a senator from the same party. That was the issue at that time. The issue challenged by Premier Lewis was that the person should be of the same party. Following the kerfuffle in February 1975 about the replacement of Senator Murphy the issue subsequently arose about the replacement of a Queensland Labor senator who died, Senator Milliner, by Senator Field from Queensland. Because these issues arose in 1975 the Fraser Government, after it was elected at the end of 1975, called a meeting of the Constitutional Convention, which was held in Hobart at the end of October 1976. The question was dealt with at that Convention and a view was expressed widely-indeed, it was widely held in the Senate-that there was a very firm practice of replacing senators with senators of the same party. As a result of that Constitutional Convention, the Fraser Government believed that the matter should not be left simply to practice-or to convention if that is what one wants to call it-but should be enshrined in the Constitution. It proposed a number of changes to the Constitution in a referendum in May 1977. As a result of the overwhelming support by Australians, the present section 15 of the Constitution was included to enshrine the principle that a casual vacancy in the Senate must be filled by a member of the party of the senator whose position has become vacant. The Constitution makes that perfectly clear. The Constitution goes further and provides that if a person ceases to be a member of that party after he or she has been chosen by a State parliament, he or she has got to be a member of that party when he or she is sworn into and takes his or her place in the Senate. As I said, that was a proposal that was widely considered, widely debated and widely supported and it was inserted into the Constitution almost 10 years ago. I think we have been told in this place by Senator Gareth Evans, and certainly by others, that in fact over this near 10-year period 13 casual vacancies have been filled under that new section 15 of the Constitution. The interesting thing about section 15 of the Constitution is that it has retained, and retained with the support of the Australian Labor Party at the time, the principle that the vacancy is filled by the State parliament, or the State government if the State parliament is not sitting. That has always been the principle of section 15 and that was what the Opposition desired to point out in 1975-that in fact the State governments, up until the 1977 amendment, had complete freedom of action as a matter of law, although we agreed that it was desirable that the practice of replacing a person by one from the same political party should be followed. As a result of the 1977 amendment proposed by the Fraser Government, the powers of the State parliaments have been very greatly circumscribed. Indeed, I can remember in 1977, when representing the then Attorney-General, putting that legislation through the Senate. It was very much supported, it always has been supported, and it always will be supported, by my side of politics. As recently as a few days ago that principle was again supported by both the Leader of the Opposition, Mr Howard, and the Leader of the Opposition in the Senate, Senator Chaney. Senator Chaney's statement on the matter was issued last Friday, 13 March. In that statement he very clearly expressed his support for what Mr Howard had said, and gave his view that the principle should be followed that not only should the person be a member of the same political party, as the Constitution requires, but also that the State Parliament should accept the nominee of the party organisation to which the retiring or deceased senator belonged. That is the way in which the person of the same party is chosen, namely, by the party organisation and not by the State parliament. As I said, Senator Haines's first proposition is one which in general terms we agree with and support. We would point out that it says that a person chosen to fill the vacant place: In accordance with section 15 of the Constitution should be- not `must be' but the person `should be'- the member of the political party duly nominated by that party . . . As I pointed out, section 15 of the Constitution does not say `must be', and I am pleased that Senator Haines has chosen the word `should' instead. I would also like to point out that there are some very obvious exceptions to that rule. What we are really saying is that it should, in normal circumstances, be that person. For instance, section 15 of the Constitution recognises the fact that there may be no member of a party available at the time. There may even be no party as the party may have disappeared. We keep on thinking that the only political parties in Australia are the Australian Labor Party, the Liberal Party of Australia, the National Party of Australia and the Australian Democrats. But, of course, Senator Vallentine was elected to this place by a party which, as far as I know, has all blown up since she was elected. Who would replace Senator Vallentine if she retired or resigned? So there is an obvious case even in our present situation. One must recognise that numbers of parties come and go in this country. I think Senator Haines told us that when she first came here she was appointed by the Liberal Movement. That party has disappeared from the political landscape. Any practices or conventions under the Constitution have to be flexible. We cannot have hard and fast rules. When we say that a person should be nominated by a party, it assumes many things: It assumes that there is a party; it assumes that there is somebody available; and it assumes that the party meets and appoints somebody. It must also assume that that person is a qualified person under the Constitution and not otherwise disqualified to be a member of the Senate. So there are four instances that readily come to mind as to why we cannot have some hard, fast and absolute rule for which Senator Haines contends and for which I am sure Senator Tate and Senator Gareth Evans contend in a totally unthinking way. There must be qualifications. We are not in the business of drafting a detailed proposition. Senator Haines has put up a general proposition with which we agree very readily. But I simply want to point out that there are clearly some exceptions to it. I am sure that if Senator Haines thought about it a little more, she would acknowledge that-and perhaps even Senator Evans might acknowledge that. I do not know whether Senator Tate would acknowledge it, because he has come in here and contended for some extraordinary view of what is a constitutional convention-he says that it is now a convention-that the nominee of the party must be accepted. This is a pretty strong view. Conventions are much stronger than practices. It is a convention which has apparently developed in the space of less than 10 years. Certainly over those 10 years 13 cases have followed the same practice, the one with which we all now agree. But to claim that to be a convention is an extraordinary proposition. Even more extraordinary was Senator Tate's definition of a convention which would not require any more than one case to occur. In fact no case at all may occur; it may happen by agreement amongst people even though a situation has not arisen. Senator Tate's views on what is a convention are very strange indeed. I have just had the opportunity to look at the report to the Australian Constitutional Convention in 1980 by one of its standing committees. The paper, by Dr Cheryl Saunders and Mr Ewart Smith, who was then a Deputy Secretary of the Attorney-General's Department, identifies the conventions associated with the Commonwealth Constitution. This is the first attempt that I am aware of actually to draw together what are constitutional conventions over the period of 80 years of our constitutional history, many of which have now been adopted by the Australian Constitutional Convention. But Dr Saunders and Mr Smith were very cautious in how they approached the question of what are and what are not conventions. Chapter 1, paragraph 1.2 states: In preparing the paper we have not been concerned to draw fine distinctions between conventions and customary practices which may in time achieve the status of conventions. There is considerable disagreement amongst authorities as to the tests by which conventions properly so-called can be identified . . . I think the attempt by Senator Tate in this debate to erect this proposal in Senator Haines's motion as a constitutional convention must dismally fail. I have said that the Opposition is not prepared to support the second limb of Senator Haines's motion and I now formally move an amendment to delete that limb. I move: Leave out paragraph (b). The reason I move that is two-fold. I have already dealt with this point. The Opposition thinks it is quite gratuitous simply to single out for praise the Cain Labor Government. It makes one wonder about the Australian Democrats when they single out the Cain Labor Government. It is typical of the Democrats to single out for praise a State Labor government for its action in one out of 13 instances where a casual vacancy has been filled. Senator Sanders —We are socially aware. Senator DURACK —Senator Sanders is now saying how socially aware they are and all the rest of it, but he is only compounding the felony. That is quite ridiculous. I know that Senator Haines had second thoughts about this paragraph. She must have been embarrassed about it because she has this lame addition `following a long line of similar instances', but she leaves the Cain Government there for specific praise. That is really a quite unnecessary and gratuitous statement which it is ridiculous to have in a motion at all except in that it is a revelation of the thinking of the Democrats. The motion then goes on to deplore the threatened actions of Premier Gray in ignoring the spirit of the Constitution. It is interesting that she regards it only as `the spirit of the Constitution' and not even a practice, which is very different from Senator Tate who gives it the status of a convention. She talks about it being `the spirit of the Constitution'. Premier Gray has been expressing some views as to what his powers are. I think that as a matter of law what Premier Gray has been saying is quite correct. Certainly the constitutional amendment in 1977 preserves the power of State parliaments in respect of casual vacancies to the Senate subject to the terms of the Constitution. A State is only circumscribed as a matter of law by the need to replace a casual vacancy with a senator of the same party, not necessarily nominated by that party. We are simply agreeing that it is a desirable practice. It has been followed in 13 cases and it should be followed again by Premier Gray. He should replace the senator from Tasmania in that fashion, but the vacancy has not even occurred yet. It may never occur. For all we know, Senator Grimes may change his mind. But certainly Mr Gray has been saying that he may not accept the nomination of the Labor Party when it is presented to him, but it has not yet been presented to him. The Party may have met and may have chosen Mr Devereux, but that nomination has not been presented to Mr Gray for attention under section 15 because the situation has not yet arisen. It must be remembered that Mr Gray is making his statements in the context of a major threat by the Hawke Labor Government to the powers and the independence of Tasmania. It has done that on numerous occasions. Of course, it did it in the Franklin dam case and it passed legislation through this Parliament in 1983. That action made not only Mr Gray very sensitive but it made most Tasmanians furious and it particularly made furious the Tasmanian members of the Labor Party who were going to lose their jobs. Senator Walters —We got rid of the Attorney-General. Senator DURACK —Yes, that is right. He flew over Tasmania or something at the time and took spy photographs. I thank Senator Walters for reminding me about that. The fact is that Mr Gray's comments are in the context of further legislation in this Parliament-I understand that it will probably come into this Senate today for debate on Monday-that will enable the Hawke Labor Government to repeat the same assault on the interests and rights of Tasmanians. Mr Gray's attitude on the Hawke Government's actions in that respect is supported by the Labor Party in Tasmania-- Senator Gareth Evans —Mr Acting Deputy President, I take a point of order. This has absolutely nothing to do with the substance of the motion before us. I suggest, Mr Acting Deputy President, that you call Senator Durack to order. The ACTING DEPUTY PRESIDENT(Senator Morris) —Senator Durack, I ask you to speak to the motion. Senator DURACK —The motion we are asked to support deplores the actions of Premier Gray. What I am saying about Premier Gray's actions is highly relevant. Mr Gray is supported by the State Labor leader of Tasmania, Mr Batt; the Tasmanian unions, whose members' jobs will probably be threatened again; and the Australian Council of Trade Unions. No wonder Mr Gray is very upset about the proposed nominee of the Labor Party and has been expressing some pretty strong views about it. As the Leader of the Opposition, Mr Howard, has said over and over again, he is quite satisfied that, at the end of the day, Mr Gray and the Tasmanian Parliament will follow not only the Constitution, which they must follow, but also the practice that has developed whereby the State Parliament accepts the nominee of the party concerned, subject of course to the sorts of qualifications which are obvious and which I have already indicated. As I have said, the Opposition supports the prin-ciple of the motion moved by Senator Haines, but we do not support the totally unnecessary gratuitous and offensive remarks that are contained in the second limb. Senator SANDERS(Tasmania)(10.52) —We have heard a quite dry discussion of the legal arguments-the pros and cons. It is time that we evaluated the motives of the Premier of Tasmania for taking the action which the motion deplores and find out who is the Premier of Tasmania, what he is attempting to do and why he is doing it. The Premier of Tasmania has used such tactics over and over again, because he must divert the attention of the people of Tasmania from his own inadequacies and failures. Known to many as `Floppin' Robin', the man who cannot get anything off the ground, or perhaps the Tasmanian tanglefoot, his Administration has been dogged by a series of failures. Tasmania generally has the highest unemployment in the country. It has the highest youth unemployment in the country. Senator Puplick —I raise a point of order. Mr Acting Deputy President, you gave a ruling on what Senator Durack was saying about matters related to the internal politics of Tasmania. I press you to give precisely the same ruling on the relevance of Senator Sanders's remarks to the motion. The ACTING DEPUTY PRESIDENT)-Senator Sanders, I ask you to stay within the bounds of the motion before us. Senator SANDERS —I note that the motion deplores the actions of Premier Gray. If we are to discuss the motion, we must consider the Premier's actions and the reason that he is taking them. The reason is that he is incapable of managing the State; therefore, he has to run diversionary tactics. If we are to discuss the motion adequately, we must find out the reasons for his actions. That leads us to ask what other diversionary tactics he has used. He has constantly utilised the controversy in the State over the conservation issue. First of all, it was the dam issue, and that put him in power. In passing, I note that if the Hawke Government had not interfered in the Franklin dam dispute, the dam would have been built and we would have been left with a massive white elephant. The Hydro Electric Commission now says that we did not need to build the dam; we do not need the power. So the Hawke Government did Tasmania a great favour by stopping the dam. The Hawke Government's intercession in forestry is in the same league. Tasmania could be a world leader in economic output and employment, but the policies of the Premier have been such that the State is in the doldrums. Robin Gray has the policy of keeping Tasmanians underemployed. He does that to provide a large group of docile workers to the companies which come from the mainland and overseas to use our resources. The DEPUTY PRESIDENT —Order! When Senator Morris was in the chair he directed you, Senator Sanders, to remain within the terms of the motion. The only part of the motion that is relevant to the performance of Premier Gray is the words `and deplores the threatened actions of Tasmanian Premier Gray in ignoring the spirit of the Constitution in this regard'. That is the area to which you should address your remarks if you wish to refer to Premier Gray. Senator SANDERS —I think that the Constitution calls for the well-being of the people of Tasmania and the people of Australia. Therefore-- The DEPUTY PRESIDENT —That is ingenious, but not relevant. The motion contains the words `in this regard'. Senator Hill —Have you finished your speech now? Senator SANDERS —I have never been one for long-winded speeches in this place. Tasmania has suffered in the past, and will suffer in the future, from the actions of Premiers who do not put the people to the fore. We have seen that happen over and over again. What we are seeing in terms of Robin Gray denying the nomination of the Australian Labor Party's person is an extension of his usual ploy of creating diversion in the community. The potential candidate for the Senate, Mr Devereux, is the ALP's only nominee. He has been accepted by all factions of the ALP in Tasmania, and as such he should be appointed without any hesitation by the Premier. But the Premier has chosen to cast Mr Devereux in the role of a greenie-a despised greenie, a person who is anti-logging, a person who might want to preserve some trees for Tasmania. The troglodyte members of the Tasmanian Liberal Party who sit on my right in this chamber want to flatten every tree in the State for their industrial bosses. Mr Devereux takes the view that the Federal Government is correct in calling a temporary halt to logging in areas of the State. The hysterical outburst by Robin Gray is entirely unjustified. We have seen in Tasmania the creation of a despised group by a ruling power. That has occurred again and again in history. Robin Gray has done it now. He is trying to smear Mr Devereux with the tag `greenie'. It is unfortunate that it is causing not only trouble in the Senate and in the constitutional areas but also polarisation in Tasmania. Mr Gray is bringing Tasmania closer and closer to a totalitarian State. He has banned Press coverage of actions at Farmhouse Creek. Now he is trying to keep from happening the appointment of a man with whom he does not agree in political terms. He has made Tasmania into a national laughing stock. That is unfortunate because Tasmania is in a very parlous and dangerous state. Our democracies are rapidly being eroded. One of the democratic tenets would be the convention of appointing a senator from the party in which the seat has been vacated. Over and over again Robin Gray has been trampling on the delicate fabric of democracy with his size 12 gumboots. It is up to us in the Senate to make a strong statement that we will not put up with it; we will not tolerate this intrusion into the liberties of the people of Tasmania and Australia. Therefore, I urge the Senate to support the motion. Senator WALTERS(Tasmania)(11.00) —Whenever I follow Senator Sanders in a debate in this place I really feel quite sick. His whole philosophy for our State is that we should get back to basket weaving, that we should not have any development at all but live the alternative lifestyle. That is not as I see our State and consequently I disagree with most of what Senator Sanders says. The Opposition supports the first part of Senator Haines's motion concerning casual Senate vacancies. Senator Durack has already indicated that we do not support the politically motivated side of the Democrats' motion which seeks support for the Cain Victorian Labor Government. The first part of the motion reads: 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; I support that part of the motion. It does not have much relevance because it is not part of the Constitution. It is just a view from this Senate and I certainly go along with it. The Government has done a deal with the Democrats in bringing up this motion for debate at this time, particularly last night when the proceedings of the Senate were being broadcast. The Government has done this for political motives alone. To underline the political advantage the Government sees in dealing with this matter I quote from the Hansard of last night. Senator Haines had been repeating herself when speaking to her motion which is fair enough, but after she had spoken for about 20 minutes Senator Tate interjected: Do you want to take up all my broadcast time? He was not interested in a proper debate; he was just concerned that his broadcast time was being taken up. The Government is interested only in the fact that it is good political stuff to have this matter broadcast and it looked for one minute as though the Australian Labor Party was not going to get any air time. I agree with those opposite who have said that this is exactly what Robin Gray is doing too. It is good political stuff for the Premier of my State to bring up before the people the reasons that he does not want Devereux here. But let the Government not be so pious when it is talking about the Premier acting in a political way because that is exactly the reason it did a deal with the Democrats, particularly yesterday when the proceedings of the Senate were being broadcast. It was so that the people of Australia could hear this good political stuff. This was underlined by the interjection of Senator Tate when he asked Senator Haines: Do you want to take up all my broadcast time? He was not concerned that it was interfering with his debating time, only his broadcasting time. It is good political stuff but let the Government not be quite so pious about it. Setting aside this good political stuff, I underline that I support the intention of the Constitution. Why would I not support Mr Devereux being appointed to this place? I bet Senator Aulich did not vote for Mr Devereux. Senator Aulich —That is a rotten-- Senator WALTERS —It is a what? Senator Aulich —That's right. I'll leave it. Senator WALTERS —Yes, I know it is right. I bet he did not because Mr Devereux is a good leftie. He is a very strong leftie and Senator Aulich is a bit worried about having another good leftie here about whom we on this side of the chamber can point out to the Tasmanian people and say: `Look who is in control back home'. The lefties have put up a candidate who is anti-Tasmanian, anti-forestry industry and anti-Tasmanian jobs in that forestry industry. That is who the Labor Party in Tasmania has put up. It has not put up someone who agrees with the State Opposition, who agrees with Mr Batt. He came to Canberra to plead with Bob Hawke to leave the logging along, to let Tasmania develop its own industry. When Mr Hawke denied Mr Batt that choice, we had the spectacle of Mr Batt coming home and calling Mr Hawke a blundering hypocrite. Mr Hawke is so lacking in leadership that he cannot control his past President of the ALP. Mr Batt is not just the leader of the Labor Party in our State; he is a past President of the ALP. Mr Hawke is so lacking in leadership that he cannot control his leaders in the States. So of course-- Senator Gietzelt —Of course, it is a democratic organisation, that's why. Senator WALTERS —Democratic! Do not let us talk about that. Do not tell me not to worry about that because it worries me very much that there is no democracy in the Labor Party. At the moment Labor is in government. A Government senator will follow me in this debate. I do not know whether Senator Aulich is on the speakers list for the Lemonthyme legislation. It will be interesting to see whether he speaks on that. There will be no democracy on the Government side because Government senators are caucused. It does not matter what they think or what they say; they vote the way Caucus tells them. That is good democracy, is it not? At least in the Liberal Party we have true democracy and if we disagree with our-- Senator Gietzelt —I have not seen it in the last 16 years. You always vote as a bloc. Senator WALTERS —Have you not? Senator Gietzelt was in this place when I crossed the floor and voted against my own Party; so he should not tell such-- Senator Gietzelt —When? Senator WALTERS —On the referendum Bill. Senator Gietzelt knows that I have done this on many occasions. Senator Gietzelt —You certainly didn't in 1978. Your Party-- Senator WALTERS —Senator Gietzelt should not tell fibs. He is not telling the truth. In this Party we can carry out our-- Senator Aulich —Once. Senator WALTERS —No, not once. Senator Aulich should go and do his homework. He is a newcomer to this place. He really does not understand what goes on because he is a newcomer. The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Senator Walters, will you get back to the motion before the Chair. Senator WALTERS —I am just responding to interjections. The ACTING DEPUTY PRESIDENT —Senator Walters, you will not respond to interjections; you will speak to the motion. Senator WALTERS —Can I just say that there is no democracy in the Labor Party; so its members had better not talk about democracy. I am very keen to support this motion put by Senator Haines. Senator Watson —The first part, not the second part. Senator WALTERS —I have already said that. I am very keen to support this part of the motion put by Senator Haines because, as the leader of the next Liberal Senate team, I very strongly want Mr Devereux as leader of the next Labor Senate team. If he is, there is no way that we will not get our senators up. The Tasmanian people feel very strongly about 12 1/2 per cent of our State already being locked away in national park world heritage areas. The suggestion of locking away 33 per cent of our State that Mr Devereux is supporting is absolutely unacceptable and we will not have that situation within our State. The State that locks away the next largest area is Victoria, with 4 per cent. And we are asked to lock away 33 per cent by the Hawke Government and Mr Devereux. It is absolutely wicked. I see Senator Aulich nodding but honourable senators should watch the way he votes on that when it comes to the vote. That good democratic party will say to Senator Aulich: `You vote the way we do or you are out'. The Labor Party has already thrown out Senator Georges, so we have had a good demonstration of what it does. I have one remaining question to ask the Government. It is a pity Senator Gareth Evans is not present, because he is very experienced in this area. Is it true that F111s, in January, flew over the forestry area taking photos of the southern forests boundary? Senator Aulich —Oh, Shirley! We could buy tickets to the Theatre Royal. This is a comedy routine. Senator WALTERS —Let us have the answer. Senator Aulich will be speaking in this debate, and I should like an answer on that matter from him. It has great bearing on whether Tasmania has a right to look again at Mr Devereux's credentials. I support the first part of Senator Haines's motion. I support Mr Devereux being chosen by the good lefties of the Labor Party, and I also support the fact that Mr Gray will allow me the opportunity of fighting Mr Devereux at the next election. Senator HARRADINE(Tasmania)(11.11) —The Premier of Tasmania has a point when he raises for consideration the question of the nature of the Senate as a States House. That is a point which has been laboured in this chamber over a period of years. I am not going to belabour the point. It is all down in the various works, including Odgers' Australian Senate Practice. But let us remember that as elected senators from each State, we do have a responsibility to recall that this House is a House of review and is also a States House. Mr Gray, the Premier of Tasmania, has a point when he raises that issue, particularly in view of the fact that specific legislation is due to come forward which will affect the rights of the State of Tasmania. It will impose directions from the Commonwealth Parliament via the Commonwealth Government towards the State of Tasmania. It is also clear that the majority of members of the Parliament of Tasmania, including the official Opposition and the Government, are against that proposal being considered by the Government. But having made his point, I think that the Premier should observe the Constitution. He may have been right, in all senses of that term, prior to December 1977. The Constitution, however, was altered in 1977, as we all know. But it is illuminating to consider once more the question that was put to the people at that time. It is also illuminating to consider the reasons that were advanced both for and against the constitutional alteration at that time and published and forwarded to each elector. I know a bit about that particular case. In respect of a number of the questions, I was a member of the committee that drew up the No case. On the casual vacancy question, the Yes case simply stated: A Yes vote on this proposal will ensure that your choice of Parties at a Senate election cannot be changed as a result of accident, resignation, illness, or death of a Senator. Mind you, I am coming to my own case shortly, which will be somewhat illuminating. It continued: If the place, say, of a Liberal, Labor or National Country Party Senator becomes vacant, he will be replaced by another person from the same Party. It is fundamental to your rights as a voter that representation in the Senate should always reflect the wishes of the electorate. A Yes vote will guarantee your rights. It will confirm the principle that if a Senator dies or resigns, a Senator of the same political party will be appointed for the remainder of that Senator's term. A Yes vote will avoid the present situation under the Constitution where the balance of the Parties in the Senate can be altered against the wishes of the electorate. The No case was a much more substantial case and canvassed what precisely is a casual vacancy, and how casual vacancies are filled by the State Parliament. The next question that was posed by the No case was: Are the proposals to change the method of filling casual vacancies of any real significance? The answer to that was: `Yes'. Inter alia, the No case stated: The major parties, therefore, developed an understanding that upon the occurrence of a bona fide vacancy, the State Parliaments would select a replacement Senator who was a member of the former Senator's Party. Another question raised was: What is the argument all about? The answer given by the proponents of the No case was: It is one thing, to acknowledge it as a principle of political behaviour-an understanding between political parties. It is quite another thing, to write it into the Constitution as a rigid constitutional requirement. Both the Constitutional Review Committee of 1959, and the Hobart Convention 1976, considered the question of enacting the principle as a provision of the Constitution, and concluded that it was not possible or appropriate. The Constitutional Review Committee in its report said it was unable to find a form of amendment which would satisfactorily express the objective it had in mind-an amendment where a replacement Senator would be of the same party as the person he was replacing. The essential question, really, of the No case was then asked, after an amplification of what was just said: What are the objections to the proposal? The answer was: (a) The proposal does not make provision for a number of likely situations-for example: (i) where the outgoing Senator was elected as an independent, (ii) where the party which endorsed an outgoing Senator has ceased to exist, changed its name or amalgamated with another party, (iii) where there is not any member of the original party `available' to be chosen-whatever that means!! (b) Where a political party which endorsed the out-going Senator has expelled him, or he resigns from the party perhaps on a question of principle, the proposal ironically requires the State Parliament to select as his replacement, a member of his former party. (c) The proposal leaves undefined what is meant by a `political party'. It continues: (d) But most importantly, the proposal, in effect, subordinates the State Parliaments to the dictates of a political party. In conclusion, the No case says: The result is a dangerous subversion of the State Parliament in favour of control by political parties. Political parties have never been given such power, virtually to direct State Parliaments to appoint their nominee, or to appoint members to Parliament anywhere in democratic constitutions. That was so prior to 1977; it is not so now. The Premier of Tasmania must acknowledge that the situation has changed and that it is now a differ- ent ball game. As I said, he had a valid point to raise publicly but, that point having been raised, it is time to get on with the business. An interesting feature of this matter has been that the Labor Party nominee has been getting a lot of free publicity-and any publicity is good publi-city. In practical, common-sense, political terms-even from Premier Gray's point of view-it is now time to hang up the holsters. Going back to the question of the Constitution, what would happen in my case? What would happen if I were run over by a bus? I was not elected as a member of a political party. I was not elected as a member of the Senator Brian Harradine Group. I was elected as an Independent. Do I leave a political last will and testament? Senator Durack —That's an interesting idea. Senator HARRADINE —I am giving it due consideration. I am asking whether there are any takers. Seriously, I think I am the only senator who has been elected as an Independent. Others have joined the Independent ranks but they were all elected as members of some political party. I am seriously giving consideration to the development of a political last will and testament. I suppose that I will need a lawyer to draw up all the nice-sounding clauses, such as `if the deceased pre-deceases the other party in the will this will happen'. One could probably have a whole list of people: `If this person deceases, try that one', et cetera. This is how silly the Constitution has become. I am not sure whether I would be happy to let Premier Gray decide who would be my replacement. Senator Kilgariff —I wouldn't worry. I think you are indestructible. Senator HARRADINE —I wish the honour- able senator would not say that. It would be up to the Parliament to determine the issue. It goes back to the State Parliament. If I am not able to make a last will and testament to say who my replacement is to be, what right has a political party to say who its replacement is to be? If it is a question of a State parliament determining who will be the successor of a senator, who will fill a casual vacancy in the Senate, that is how it ought to be, but one cannot make fish of one and fowl of the other. Yet that is what the Constitution is doing. However, to return to the point at question, the matter has gone on long enough. The provisions in the Constitution are quite clear, whether we agree with them or not. Under those circumstances, I believe that we should not waste much more time on this matter. Senator AULICH(Tasmania)(11.24) —I will be brief because the issues concerned are pretty clear-cut. We have a convention in this country which on 13 occasions has been fulfilled by parties of various political persuasion. A significant number of people have indicated in their various State parliaments during the acts of filling vacancies that they support the convention and have no intention of ever changing it. This makes Premier Robin Gray appear to be one out. The action he has taken over the last few weeks has done a number of things which I find totally repugnant. Firstly, it has brought Tasmania into disrepute. Once again we have become the laughing stock of Australia, particularly in constitutional matters. Secondly, it has brought politicians into disrepute because again we are seen as venal, grasping adventurous people who concern ourselves with issues which should be resolved through the following of a convention. Instead we play brinkmanship. Many people who have problems relating to the economy, their own lifestyles and so on look to us and say: `What the hell are you doing? Why are you playing this sort of brinkmanship? Why is Premier Robin Gray making politics out of an issue that has been settled by people following convention on at least 13 occasions?'. In Tasmania this approach to politics has been very successful over the last four years. Premier Gray has proved that one can win for a time as a confrontationist. Malcolm Fraser proved pretty much the same thing in 1975. The only difficulty is that one's legitimacy eventually gets challenged because one does not have the broad community support which a more tolerant and understanding Premier would have. One is simply a person who wins the requisite 51 per cent of the votes in the community and tells the rest of the community to go jump. That is basically the way Premier Robin Gray has operated in regard to most of the issues he has touched. He knows that the questions of logging, dams and development versus conservation fall very much in his favour at the moment. But that will not always be the case. I detect a certain resistance to his approach to politics down there. It has been a long time coming, but it is coming. People will say: `What? Is rocking Robin at it again?'. I am starting to hear it now from people who have always been prepared to give him the benefit of the doubt, who have seen him as a strong Premier, interested in the development of the State and so. But these people are now starting to question his approach to politics. I have always found that type of political approach repugnant, damaging to the body politic and damaging to the long term development, not only of Tasmania but of Australia as a whole. Politicians-quite correctly in many cases-deserve their reputation as having a status just above the status of used car salesmen because of this type of thing, because we make issues out of matters which should never have been brought to the forefront. This matter involves, as I have said, an established convention which has been followed on 13 separate occasions since 1975. Yet somehow or other Premier Gray has to make it an issue. A look at the sorts of people who have supported the convention shows, as I have indicated, that the convention has cross-party support. Former Premier Rupert Hamer, Mr Kennett and Mr Howard have all indicated quite clearly where they stand in regard to this convention. Mr Cain, in filling the late Senator Missen's position, did not demur at all in following the convention. As I have said, on 13 occasions no questions have been asked about the right thing to do. Everyone knew what had to be done. Premier Gray has found himself totally out of favour with the media in Tasmania which in many cases has been reasonably sympathetic to him in the past. The Launceston Examiner and the Hobart Mercury have both come out and criticised him in editorials for politicking and bringing politics into disrepute. Many honourable senators opposite, including, as I understand it, Senator Watson, Senator Walters and Senator Townley, have indicated that as far as they are concerned the convention should be followed and the gamesmanship of the Premier of Tasmania ought to end. Even Senator Fred Chaney has come out, after much strong prompting by Mr Brown, his Deputy Leader, in favour of supporting the convention. Mr Brown said at the time that it was not Senator Chaney's responsibility to comment, following an earlier period when Senator Chaney decided that he would move into the brinkmanship game as well. We only have to look to Tasmania. The last time a Tasmanian vacancy was filled, the vacancy created by the resignation of Senator Peter Rae, the Labor Party had absolutely and utterly no problems, either privately or publicly, in putting up Senator Jocelyn Newman. Senator Newman is a person whose views I do not support. I tend to find her political views elitist and a little out of touch with the issues that confront the ordinary people in this country. I have no time at all for her politics, but on the whole I had no problems at all with her coming into this chamber. The Labor Party in my State had no problems. There was no mention publicly of any opposition to her appointment because we followed the convention. We as a political party do it over and over again and we are getting sick of playing the game by the Marquis of Queensberry rules. Every time the conservative groups decide that it is to their advantage to break convention, to break the spirit of the Constitution, and they do it, we sit back and say: `Fine, but we will continue to play the game'. Senator Haines —They would soon squeal if you did it to them. If one of their candidates were denied validation, they would squeal. Senator AULICH —Exactly. They are the upholders of the faith, of the status quo, of all that is good and shining in the Constitution; that is the way they have portrayed themselves. Senator Gietzelt —And law and order. Senator AULICH —Law and order and all those sorts of things; yet give them half an opportunity to take a political advantage out of breaking a convention or the spirit of the Constitution and they are in like Flynn. I find that sort of approach damages their credibility not only in this Parliament but in the community at large. I believe that this issue-- Senator Walters —I raise a point of order. I do not think Senator Aulich is aware that the Opposition is supporting the first part of the motion put by Senator Haines, because he is debating otherwise. The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Order! There is no point of order. Senator AULICH —Senator Walters can never prevent herself from interjecting when I am speaking and now she interjects by the use of a bogus point of order. The problem has been that Premier Gray has succeeded with his confrontationist policies in the past. People are getting heartily sick of this approach, this hypocrisy, this misuse of the Constitution and of his political position, and they will say so in the next three years. It takes time for people to wake up to the sort of person who occupies those positions in office. Let us look at why this is such a dangerous precedent. It is a dangerous precedent not only in terms of the Constitution but also in terms of the way people can use what is constitutionally available to them. What would happen, for example, if every Labor Premier in this country decided to retaliate against the Liberal Party or the National Party every time a vacancy came up? Think of the political and constitutional chaos that would follow from that sort of retaliatory decision on the part of those Premiers. Yet Premier Robin Gray barges on, assuming that we as a political party and the Australian Democrats will always play the political game the right way while he can go out and play a bandit on the highway. People are getting sick of that. The warning is very clearly there from our political party that in the end Premier Gray had better back down on this issue; otherwise he will be responsible for causing in the long term the breaching of the conventions which have been held in good sway on at least 13 occasions since 1975. I come to the real reason why Premier Gray is doing this. First of all, he is governed by a small, elite group of public servants; people he has appointed to his staff, who exert influence in a way that no other people behind a Premier in Tasmania have ever exerted influence before. I like to call them the brown shoe brigade; they are very much the Tasmanian version of the Queensland backroom boys. For the interest of the Senate, I point out that they are paid extremely highly. Premier Gray went out and recruited these people, mainly from political positions around the country. His own personal staff is at a level, particularly a salary level, far higher than any other Premier in Tasmania has ever had. These people, who have never been elected to any political office and who are politically active, are sitting behind the Premier egging him on. The danger is that these people, this brown shoe brigade, are not seeking and have never sought political office and are not subject to the spotlight being put on them, as is the case with normal politicians. We moderate and modify our behaviour because the media and the public at large are looking at the way we behave. That modifying influence is not present in the case of these backroom boys. Let us look at some of the people who staff the Premier's office. I will read out some of the salaries to give the Senate an indication of what importance Premier Gray sets by these people. The head of the office is Mr Andrew Tilt. He is presumably the Andrew who wrote the sweet memo to the Premier advising that all this brinkmanship should begin. His annual salary, as at April 1986, was $71,000. That is not bad-$71,000. One of the advisers is Mr Darcy Tronson, who had some connection with the Liberal Party in the past on the mainland. His salary is $67,000. Mr John Cleary, who is a special adviser-he was a failed Minister in the previous Government, so the Premier gave him a job-has a salary of $45,000. Dr John Davies, the man everyone has to go to see if they want anything out of forestry, has a salary of $58,000. One cannot see the Premier, who happens to be the Minister for Forests; one has to see Dr Davies. One does not get to see Robin Gray under this nice little arrangement. The Premier has a senior Press secretary, a Press secretary and a research officer who is related to that, plus a media adviser. These are just the people to sell the Premier's image, who are all on salaries of $40,000-odd a year; more than the majority of people in this place earn. Then there is the Government Liaison Service, which provides services around the State. The people in that Service have an upfront contact with the public at large. There is Mr John Barker, who stood as a Liberal candidate, on a salary of $34,000 and four other liaison officers in recently created positions. There is Mr Steven Salter, a former failed candidate; Mr Hay, a former failed candidate; and Mr Squibb, a former failed candidate. They are all Liberal Party hacks who have been given jobs at the public expense in Tasmania, all working not only for their own political careers at the public expense but also for the career of Premier Gray. What is basically the result of all that? The result is that Robin Gray is playing brinkmanship in Tasmania all the time because these unelected officials, the brown shoe brigade, are in there doing their bit to make sure that at every possible turn a political decision is made in that State rather than a statesmanlike or constitutionally correct decision. That has been the problem in Tasmania and that is the reason why Premier Gray is playing politics with this important constitutional issue. Basically, that is the story I need to put today before this House, so that those people who are unaware of just how incestuous Tasmanian politics have become and are unaware of just how stupid in some cases State politics in Tasmania have become can understand the reason for that. Premier Gray practises brinkmanship on every issue because he is advised by this group. I support the activities of the Democrats in this case in bringing forward this motion to put a spotlight on Premier Gray and the way he operates in Tasmania, in the fervent hope that somewhere along the line people in other States can observe what has been done to prejudice good government in Tasmania and to avoid it in their own States and in this House. Lastly, I go back to the memo written to Premier Gray by one of the brown shoe people who signed himself `Andrew'. Only in Tasmania would someone be able to recognise easily who Andrew was. The memo is from the Office of the Premier and is dated 9 March 1987. It is a wonderful memo from a public servant, the head of the Premier's Office, the sort of man who is paid at public expense to provide advice to the Premier of the State-not political advice about how to do the Labor Party like a dinner, which is basically what this is all about. This memo fell off the back of a truck, so there must be a fair degree of loyalty in this tight little coterie which is paid so highly. I presume that someone did not get a pay rise recently or has been sacked. The memo states: Premier Suggested relevant points for any press conference/interviews on Senate replacement. 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. How about the next paragraph! It states: It is really very simple. Of course, that is for Premier Gray because he likes things put very simply. We go on another couple of paragraphs, where it states: This is a very clear issue. Of course, again, this is an attempt to get the point over to Premier Gray that even a person of his capacity could handle this issue publicly and score a few brownie points out of it politically. We can go through the whole memo and find such terms as `it is an acid test' and `my view is that the Labor Party is paralysed on this issue'. I feel far from paralysed. It has certainly stiffened my resolve to ensure that Premier Gray is not there at the next election. I might even step out of the Federal arena at some time and have a go in that area; I am getting to that stage. He says: It is just like the Gordon-below-Franklin-they are split down the middle and they don't know what to do. All of this comes from a public servant on-as at April 1986-$71,000 a year, a man who has such respect for the Constitution! As I said, he ends up signing it `Andrew'. So it is a nice little personal tete-a-tete, a nice little memo from Andrew Tilt-a man who had such enormous qualifications for that job; he was a political roundsman for the Launceston Examiner-to the Premier of his State, giving blatant political advice as a public servant, advice given by someone who is paid out of the public purse. Finally, I seek leave to table for the education of the Senate a list of the casual vacancies in the Senate filled in accordance with section 15 and section 21 of the Constitution, so that we have on record a clear indication of the way in which this convention was followed on 13 separate occasions, and which is now being challenged by Premier Gray. Leave granted. Senator AULICH —I thank the Senate. I finish on this point: Tasmanians are fast becoming the laughing stock of Australia because of the actions of Premier Robin Gray. We are fast getting a reputation of being a confrontationist State which is not concerned with resolving the major issues which face that State. We have enormous problems. We have problems which will not be solved overnight; they will be solved over the long term through co-operation between the State and Federal governments, between the parties themselves and within parties. We will not be able to do it while we play games here, breaching conventions, breaching understandings, and bringing ourselves into disrepute in the eyes of the rest of Australia. We do not want to end up as another Queensland, but at the moment we are fast moving that way as a State. Senator MACKLIN(Queensland)(11.44) —I do not wish to prolong this debate, but-- Senator Dame Margaret Guilfoyle —You are. Senator MACKLIN —If the honourable senator would actually listen for a while she would find out that I am not going to prolong it any longer than her interjections. After listening to the problems that a number of members of the Opposition parties have with the second part of our motion, I will move to amend part (b) to leave out-- The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Order! Senator Macklin, you cannot amend the amendment. We will have to dispose of the amendment that is before the Chair. Senator MACKLIN —It is not an amendment; it is a motion. The ACTING DEPUTY PRESIDENT —The honourable senator cannot move another amendment until we have dealt with the amendment before the Chair. Senator MACKLIN —There is an amendment before the Chair; I am sorry. I foreshadow that I will be moving an amendment to part (b) to delete the following words: That the Victorian Cain Labor Government, following a long line of similar instances, accept the Liberal Party's nominee to fill the casual vacancy left by the death of Senator Alan Missen- and to insert the words: the Queensland National-Liberal Government accepted the National Party nominee to replace Senator Sheil; the Queensland National Party accepted the Liberal nominee to replace Senator Martin; the Federal Parliament accepted the Liberal nominee to replace Senator Knight; the Victorian Labor Government accepted the Liberal nominee to replace Senator Missen and the Democrat nominee to replace Senator Chipp; the Tasmanian Liberal Government accepted the Liberal nominee to replace Senator Rae; and the New South Wales Australian Labor Party Government accepted the Labor nominee to replace Senator McClelland. This amendment would remove the problem the Opposition has with part (b) of our amendment, which merely gives some illustrations-- Senator Walters —Don't be so childish. Senator MACKLIN —Of the propriety of a whole range of governments other than those supported by Senator Walters, who would not mind running a ball for any constitutional convention. We are looking at those governments that have followed propriety, that have followed the correct course. We thought that the Opposition parties would have been able to see that that was a suggestion. However, they have sought to squirm on that stick and we have decided to spell those out thereby removing their objection. Question put: That the words proposed to be left out (Senator Durack's amendment) be left out. The Senate divided. (The Acting Deputy President-Senator D. J. MacGibbon) Ayes . . . . . . . . . . . 28 Noes . . . . . . . . . . . 37 —— Majority . . . . . . . . . 9 —— Alston, R. K. R. Knowles, S. C. Archer, B. R. Lewis, A. W. R. Baume, Michael MacGibbon, D. J. Boswell, R. L. D. Messner, A. JBrownhill, D. G. C. Parer, W. R. Carrick, Sir John Puplick, C. J. G. Crichton-Browne, N. A. Reid, M. E. Durack, P. D. Short, J. R. Guilfoyle, Dame Margaret Teague, B. C. Hamer, D. J. Townley, M,Harradine, B. Vanstone, A. E. Hill, R. Walters, M. S. Jessop, D. S. Watson, J. O. W. Kilgariff, B. F. (Teller) Withers, R. G. Aulich, T. Macklin, M. J. Black, J. R. Maguire, G. R. Bolkus, N. Mason, C. V. J. Childs, B. K. Morris, J. Coates, J. Powell, J. F. Colston, M. A. Ray, RobertCook, P. F. S. Reynolds, M. Cooney, B. Richardson, G. F. Crowley, R. A. Robertson, E. A. Devlin, R. Ryan, S. M. Elstob, R. C. Sanders, N. K. Evans, Gareth Sibraa, K. W. Foreman, D. J. Siddons, J. R. Gietzelt, A. T. Tate, M. C. Giles, P. J. Vigor, D. B. Haines, J. Walsh, P. A. Jones, G. N. (Teller) West, S. M. McIntosh, G. D. Zakharov, A. O. McKiernan, J. P. Collard, S. J. Coleman, R. N. Sheil, G. Grimes, D. J. Chaney, F. M. Button, J. N. Question so resolved in the negative. Senator PETER BAUME(New South Wales) —Mr Deputy President, I seek leave to make a very brief personal statement about the vote that has just occurred. Leave granted. Senator PETER BAUME —I thank the Senate. My name will not appear on the voting list as I did not arrive at the chamber before the doors were locked. This was because I was in the office of a Minister of State where the bells were not ringing. Senator MACKLIN(Queensland)(11.54) —by leave-I move the following amendment to paragraph (b) of Senator Haines's motion: Leave out all words before `and deplores', insert `that the Senate notes that the Queensland National-Liberal Government accepted the National Party nominee to replace Senator Sheil; the Queensland National Government accepted the Liberal nominee to replace Senator Martin; the Federal Parliament accepted the Liberal nominee to replace Senator Knight; the Victorian Labor Government accepted the Liberal nominee to replace Senator Missen and the Democrat nominee to replace Senator Chipp; the Tasmanian Liberal Government accepted the Liberal nominee to replace Senator Rae; and the New South Wales Australian Labor Party Government accepted the Labor nominee to replace Senator McClelland'. Senator HARRADINE(Tasmania)(11.55) —As I understand it, this amendment seeks to include all of the occasions on which vacancies have been filled since the referendum. Senator Gareth Evans —Only when it involved an opposition party. Senator HARRADINE —Only with an opposition party. But, of course, it does not deal with the question that I raised in the debate, and that is the inadequacy of the Constitution as it affects, for example, Independents, and the fact that the Constitution is not clear as to what it means by the word `chosen'. For example, if a senator's seat was declared vacant for some reason and if that senator had been first elected as a member of the Australian Labor Party and had subsequently-- The DEPUTY PRESIDENT —Order! Senator Harradine, we are dealing with an amendment moved by Senator Macklin. You are going rather wide of that subject. You are entitled to speak to Senator Macklin's amendment, but that is all that is before the Chair at the moment. Senator HARRADINE —Yes, I am; but I think this is an important point, Mr Deputy President, because Senator Macklin's amendment deals with the occasions when a State government is of a different political persuasion from that of the departing senator whose vacancy is to be filled. This amendment does not deal with the possibility of a circumstance where a member of a political party, say-I take it off the top of my head-a Labor Party member, had resigned or been expelled and had subsequently joined another party, say the National Party in Queensland, and had stood and been elected subsequently by the people of Queensland as a National Party member. In the event of a vacancy occurring for his place, would the Queensland Government be required to appoint a National Party member or a Labor Party member? The Constitution is not clear as to what is meant by `chosen'. Does it mean the person who is first chosen? I presume it does, otherwise it would say `re-chosen' or `re-elected'. I raise this point just to point out how silly in many respects this particular section of the Constitution is. Senator PUPLICK(New South Wales)(11.57) —I rise to speak on this amendment because I am absolutely wounded and mortified that, having in fact been the first person chosen under the change to the Constitution by a government that was of a different political persuasion, I have been left off Senator Macklin's list. This is a most terrible insult and I really do feel completely wounded about it. The other thing I wanted to draw attention to is that, as we all know, the Parliamentary Handbook is the most authoritative document dealing with political matters in this place. The first person who was actually sworn in as a member of this chamber after the amendment to the Constitution was Senator Haines. The Parliamentary Handbook says that Senator Haines was chosen on 14 December 1977. Although she replaced a person who had been elected from a party of a different political persuasion technically, that is to say, from the Liberal Movement, what did strike me as being very interesting-I want to correct the historical record because, as you know, Mr Deputy President, I am very concerned about the historical record-is the fact that the Parliamentary Handbook, when mentioning Haines, J., South Australia, goes on to list her political affiliations as the Australian Labor Party. Whether we have stumbled upon some secret of state as far as this is concerned, whether the truth eventually will out, and has outed in the Parliamentary Handbook, this is perhaps something that the editors of that journal ought to have drawn to their attention. Nevertheless, the important thing is that in their maniacal desire to find some way to cloak themselves in all sorts of rectitude, the Australian Democrats have managed to produce what purports to be an amendment. The principle of that amendment was to deal with those cases where a political party, in control of a State parliament, appointed somebody from a different political party to fill a casual vacancy which had occurred after the passage of the amendment to section 15 of the Constitution. As I have said, although I acknowledge that Senator Haines has apologised and Senator Macklin has had the decency to blush at their lack of research, lack of thought and lack of planning in drawing up this Australian Democrats' amendment, I am mortified and grievously wounded to find that, when I am the first person who qualifies in the Democrats' list, I have been left off it. That ought to be rectified at least in the course of the speech. I am almost tempted to foreshadow an amendment to the foreshadowed amendment in order to ensure that the historical record is correct. I do not think I will bother because, frankly, the principle espoused in the first part of the motion, which has been so admirably supported by Senator Durack and by other senators on this side of the chamber, has indicated just how unnecessary all the other amendments are. But it does seem to be typical of the Australian Democrats that their second amendment is not only unnecessary but also factually incorrect. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(12.01) — There is something to be said for Senator Puplick's anxiety on this matter because, if we are going to have a motion recording the view of the Senate on a matter as important as this, it is important that it not be a sort of incomplete laundry list that appears in the text of that motion. I shall move a further amendment which will make complete and accurate the list in question. Senator Haines —It was never intended to be definitive. It was intended to cope with their childish and petulant complaint with their claim to be the only-- Senator GARETH EVANS —It would have been sensible either to have a list that referred only to those cases where a government was appointing someone of an opposition political party or to have a list of all the cases, since the commencement of the new clause, where vacancies have been filled. Senator Haines —That is not what they were complaining about. They were grizzling that Cain had been the only one singled out. Senator GARETH EVANS —Just to have a few random ad hoc examples chosen to assuage the angst that had been expressed by the Opposition because only Cain had been singled out does not seem to me to be very helpful. Now armed, as I am, with a proper list, I will move that the amendment read along the following lines: That the Senate notes that the South Australian Labor Government in 1977 chose J. A. Haines, Liberal Movement, to replace R. S. Hall, Liberal Movement; that the New South Wales Parliament led by a Labor Government in 1978 chose C. J. G. Puplick, Liberal, to replace the Hon. Sir Robert Cotton, KCMG Liberal; that the New South Wales Government in 1978 chose K. W. Sibraa, Australian Labor Party, to replace the Hon. J. R. McClelland, Australian Labor Party; that the Victorian Liberal Government in 1980 chose L. W. Neal, National Country Party, to replace J. J. Webster, National Country Party; that the Tasmanian Liberal Government in 1980 chose J. M. Hearn, Australian Labor Party, to replace the Hon. K. S. Wriedt, Australian Labor Party; that the Australian Parliament led by a Liberal Government in 1981 chose M. Reid, Liberal, Australian Capital Territory, to replace Senator J. Knight, Liberal, Australian Capital Territory; that the Western Australian Liberal Government in 1981 chose J. R. Martyr, Liberal, to replace A. C. Rocher, Liberal; that the Queensland National Party Government in 1981 chose F. I. Bjelke-Petersen, National Party of Australia, to replace G. Sheil, National Party; that the Queensland National Party Government in 1984 chose W. R. Parer, Liberal to replace K. J. Martin, Liberal; that the Tasmanian Liberal Government in 1986 chose J. M. Newman, Liberal, to replace P. E. Rae, Liberal; that the Victorian Labor Government in 1986 chose R. K. R. Alston, Liberal, to replace A. J. Missen, Liberal; that the Victorian Labor Government in 1986 chose J. R. Powell, Australian Democrats, to replace the Hon. D. L. Chipp, Australian Democrats; and that the New South Wales Labor Government in 1987 chose S. M. West, Australian Labor Party, to replace the Hon. Douglas McClelland, Australian Labor Party; and deplores the threatened action of Tasmanian Premier Gray in ignoring the spirit of the Constitution in this regard. Senator Walters —But your first one is wrong. Senator GARETH EVANS —The first one is wrong? Senator Haines —That is the point. The reason I did not want to make the list definitive in the first place was the very reason that you have just exhibited. The first one is wrong. Senator GARETH EVANS —In that case I will seek leave to delete the first one from the list. Senator Haines —But you said that you wanted an exhaustive list. Senator Macklin —Change Senator Haines to the Australian Democrats; she was not in the Liberal Movement. Senator Haines —And Steele Hall was a Liberal at the time. Senator GARETH EVANS —I move: Leave out the words proposed to be inserted, insert: `that the Senate notes that the South Australian Government accepted Senator J. Haines, Liberal Movement/Australian Democrats to replace R. S. Hall, Liberal Movement/Liberal; the New South Wales Labor Government accepted C. J. G. Puplick, Liberal, to replace the Hon. Sir Robert Cotton, K.C.M.G., Liberal; the New South Wales Labor Government accepted K. W. Sibraa, Australian Labor Party, to replace the Hon. J. R. McClelland, Australian Labor Party; the Victorian Liberal Government accepted L. W. Neal, National Country Party, to replace J. J. Webster, National Country Party; the Tasmanian Liberal Government accepted J. M. Hearn, Australian Labor Party, to replace the Hon. K. S. Wriedt, Australian Labor Party; the Australian Liberal Government accepted M. Reid, Liberal, to replace J. Knight, Liberal; the Western Australian Liberal Government accepted J. R. Martyr, Liberal, to replace A. C. Rocher, Liberal; the Queensland Liberal-National Country Party Government accepted F. I. Bjelke-Petersen, National Party, to replace G. Sheil, National Party; the Queensland National Party Government accepted W. R. Parer, Liberal, to replace K. J. Martin, Liberal; the Tasmanian Liberal Government accepted J. M. Newman, Liberal, to replace P. E. Rae, Liberal; the Victorian Labor Government accepted R. K. R. Alston, Liberal, to replace A. J. Missen, Liberal; the Victorian Labor Government accepted J. R. Powell, Australian Democrat, to replace the Hon. D. L. Chipp, Australian Democrat; and the New South Wales Labor Government accepted S. M. West, Australian Labor Party, to replace the Hon. D. McClelland, Australian Labor Party'. The DEPUTY PRESIDENT —I put the question: That the words proposed to be left out (Senator Macklin's amendment) be left out. Question resolved in the affirmative. The DEPUTY PRESIDENT —The question now is: That the words proposed to be left out (Senator Gareth Evans's amendment to Senator Macklin's proposed amendment) be left out. Question resolved in the affirmative. The DEPUTY PRESIDENT —The question now is: That the words proposed to be inserted (Senator Gareth Evans's amendment) be inserted. Question resolved in the affirmative. The DEPUTY PRESIDENT —The question now is: That the words proposed to be inserted (Senator Macklin's amendment, as amended) be inserted. Question resolved in the affirmative. Original question, as amended, resolved in the affirmative. Debate resumed from 18 March, 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 WATSON(Tasmania)(12.10) —Yesterday, when addressing the Senate on the Taxation Laws Amendment Bill (No. 5) 1986, a Bill which seeks to amend matters relating to provisional tax payments, exchange gains and losses and redeemable preference shares, I especially warned the Senate of the inordinately complex nature of the amendments affecting provisional tax. That we now have four definitions of a variant of provisional tax is rather difficult to comprehend. If we look at one of those definitions relating to variable income tax, it requires reference to four separate income tax sections. Fancy a definition requiring a cross reference to four different income tax sections. What hope has the layman of trying to comprehend this extraordinarily complex provisional tax payments legislation proposed by this Labor Government? Where previously one payment was made, generally on 31 March, four instalments will now generally be required from many taxpayers. These payments will be required on 1 September, 1 December, 1 March and 1 June. But in the introductory year 1987-88, two instalments will be combined and payment will be due on 1 December 1987. The first instalment will be omitted and will be added to the December instalment. While the Government has taken great pains to emphasise the point that the implementation of this Bill would not derive any new revenue, it is completely misleading of the Government to say that it is revenue neutral. This is just another of the Hawke-Keating measures designed to transfer costs from the Government sector to individuals in the private sector. The Minister for Finance (Senator Walsh) acknowledged in his second reading speech that the collection of $90m would be brought forward to 1987-88 and that there would be annual expenditure savings to the Government totalling some $100m resulting from the need to issue fewer Treasury notes. Who is financing this saving? It is the private sector. What we see as a masquerade for tax reform will not benefit taxpayers at all but rather is another exercise by this Government of extracting tax revenue from ordinary individuals, as if they are not taxed high enough. Such a saving on the issue of Treasury notes will presumably be derived from a reduction in interest payable by the Government on these notes. It is quite considerable. Given that the current interest rates on Treasury notes is in the vicinity of about 13-odd per cent, resulting in savings of $100m, the total borrowings by the private sector-because it cannot borrow on such generous terms and at such low rates as the Government sector-is going to be considerably higher. It will be a staggering figure and a staggering cost to small business and to private individuals. If the Government is going to save $100m, logically a lot more money is going to have to be found and financed by the private sector. The important theme that the Government seems to have lost sight of, I repeat, is that this Government has the capacity to borrow a lot cheaper than the private sector which is effectively going to be in for another tax slug. I believe that it requires only an elementary deduction to realise that such an impost on the private sector, which is already reeling under the taxation system of the Hawke Government, will have a significant impact on business operations and on private people. To cope with these additional costs, the private sector will be forced to consider a number of options. Firstly, it will be forced to increase the price of consumer goods and services, a move that is going to aggravate the already unacceptably high inflation rate of this Government. Secondly, the private sector will be forced to reduce staff. Thirdly, in some cases it will be forced to cut investment. Australia's weakened economy cannot afford any of these three options. They are being forced upon us by this greedy Government which seems incapable of understanding the impact of its tax decisions on ordinary people. The problems inherent in the imposition of provisional tax instalments really do not cease here. As we have seen in the simplest examples, where an assessment is received prior to 1 December, tax will be paid in four instalments. However, I think most honourable senators will appreciate that there are situations where income is not derived uniformly throughout the year. Let us look at a few examples. Farmers do not receive their incomes uniformly throughout the year as pay as you earn people do, or as Senator Walsh does with his salary. For such people as authors, builders and consultants the formula laid down in the legislation will lead to major cash flow problems. The Bill only goes part of the way to solving situations where income is derived in lump sums or a series of lump sum type amounts. We acknowledge that there is this so-called 75 per cent rule in the Bill-just listen to this, in section 221yba (2c); that is how complicated this Government has made this Income Tax Act-which provides that the taxpayer must satisfy the Commissioner of Taxation that more than 75 per cent of his assessable income will be derived after 1 December in the year of income, and payment in two instalments would follow such advice. The big problem for most people is to predict with the degree of accuracy required by this Government how much income will be derived over the next 12 months because, particularly for those whose incomes fluctuate according to factors which are entirely beyond their control, it is a near impossibility. For example, in the agricultural sector we have problems with fluctuating commodity prices and unseasonal weather conditions. These factors-I could name a lot more-can really alter income expectations, which is what we must look at, quite drastically. In many cases the previous year's income does not necessarily cast a mould for the incomes that will follow in subsequent years. The guidelines in section 221yba (2c) simply are not good enough because they do not protect people with fluctuating incomes from paying tax on income which they have not yet received. It is for these reasons that we believe that taxpayers with variable incomes should not be subject to instalments of provisional tax, particularly those who are governed by Divisions 16 and 16a-the people whose incomes are subject to the averaging provisions; the farmers, authors, inventors and so on. Therefore, I support the amendment moved by the Opposition which will provide that these sorts of people whose incomes are subject to averaging will not be subject to quarterly payment instalments, but rather that provisional tax will be paid in accordance with the traditional system. The cumbersome nature of the system that will be required for the implementation of this provisional tax by instalments scheme is also a matter of great concern to accountants, lawyers and businessmen. In effect, the Australian Taxation Office will have to administer two systems concurrently. In fact if one looks at the variation in levying provisional tax, one sees that there will be more than two systems. In the first instance, as detailed in the Bill at hand, payments will be levied by instalment where the taxpayer's provisional tax liability in respect of the previous year's income exceeds $2,000. In the second instance, those taxpayers whose provisional income is $1,000 or more but whose tax liability is below $2,000 will be required to pay provisional tax on an annual basis. It is estimated that half of the 1.6 million taxpayers in Australia will continue to pay provisional tax on an annual basis. The important question to ask is this: How is the Tax Office going to cope with an even more complex system to administer when it is already experiencing extreme difficulty in trying to administer the current legislation? More skilled staff will be required. We have already seen a great exit of accountants from the accounting profession because of the complexity of the tax law and the complexity of company law. The position is getting beyond the comprehension of most ordinary people. That is to be regretted. There are long delays in the processing of assessments. What is needed in this country is genuine tax reform and a simplification of the taxation system. The Government is always talking about trying to simplify the tax laws. However, we find that under this Government the tax laws are becoming more convoluted than ever before. I say to the Government: How about trying to devise a simple tax system? Then its credibility will start to rise. Senator Walsh —When you get into government you will impose a VAT. Senator WATSON —We will be in government after the next election, Senator, and we will have a tax proposal before the Australian people. That will provide some choice; it will get Australia working again and it will provide some incentive for people to go out and earn a living. Currently, the provisional tax liability is determined from the previous year's assessment. In most cases it is not unreasonable to expect an assessment to be completed by the due date for the payment of provisional tax-that is, 31 March. However, under the Taxation Laws Amendment Bill (No. 5)-that cumbersome piece of legislation that very few people can understand-provisional tax liability for the year will continue to be defined under yet another section-section 221ya of the principal Act. Given the enormity of the task, the capacity of the Tax Office to have completed assessments in time for the calculation of the first instalment of provisional tax must surely be in doubt. That is the point. I would like the Minister to respond to that issue. Increasingly, under the new proposals taxpayers will be required to self-assess their provisional tax income, upon which instalments will be calculated. As we have already said, in certain occupations such predictions will be fairly difficult given the fluctuating nature of income. The accuracy of the estimates takes on particular importance in the light of-here is another good section-section 221ydb 1aa. Under this section, where an instalment is based on an underestimate of taxable income of more than 10 per cent-that is not much when we consider the fluctuating incomes of those to whom I have referred-additional tax will be payable at a rate of 20 per cent on the short fall from the due date for payment of that instalment to the due date of the next payment. Many people will get caught, and are getting caught, under that. So if a person underestimates his tax he will be penalised by that additional 20 per cent. I submit to the Senate that the penalty is far too harsh given that many people will experience genuine difficulty in predicting their income accurately. I am not talking about tax avoiders. Under those circumstances, I submit that a 10 per cent discrepancy would not seem to qualify as a substantial underestimate as Senator Walsh claimed in his second reading speech. How can one say that 10 per cent is a substantial underestimate? That is what is implied in his speech. The Hawke Government must try to appreciate and understand that ordinary taxpayers are not criminals, as it makes them out to be, and they should not be treated as such by the Government. I wonder whether the Government will be as diligent in the return of overpayments of provisional tax as it is in countering possible exploitation of the system. Even under the present system, it can take up to 18 months to make repayments where necessary. The next amendment affects redeemable preference shares and short term share-based financing arrangements. Proposed new section 46c of the Bill is basically a technique to stop tax avoidance by providing for the treatment of short term redeemable preference shares as debt for income tax purposes. In effect, proposed new section 46c will amend section 46 of the Act which concerns a rebate on dividends. Perhaps, as a genuine reform, the Government might like to look at section 46. Then it might overcome many of its subsequent problems. It should be noted that the provisions of proposed new section 46c are short term expedients to overcome practices that have been costly to revenue. We acknowledge that. But the point is that they will have a fairly limited lifespan given that 1 July 1987 is the date set for the introduction of an imputation of company tax. It will not last very long. Senator Walsh —But the lifespan of the amendment is 7 April 1986. Senator WATSON —No, the application of section 46 must inevitably have a lifespan. Senator Walsh would agree with that, would he not? Senator Walsh —The lifespan of the amendment is from 7 April 1986. Senator WATSON —That is right but with imputation on 1 July 1987 the effectiveness of redeemable preference shares will go out the door. The Minister has to acknowledge that. He would be up to scratch with that, surely. At this time, financing mechanisms such as short term redeemable preference shares will disappear. Senator Walsh —Yes. Senator WATSON —Right; so under the existing law, companies paying interest on debt finance are entitled to use it as a deduction for income tax purposes, while the company receiving the dividend is effectively taxed on it. Dividends are not deductible to the paying company, but under section 46 they are subject to a rebate that makes them free of tax, effectively, to the company receiving them. We acknowledge that some companies have been financing their operations by using short term redeemable preference shares as a substitute for debt in order to minimise their taxation burden. Therefore, we are now faced with legislation designed to remove the rebate eligibility on any share dividends used as part of the financing arrangements for an effective term of two years or less. The idea to try to overcome the problem is commendable. It is the sort of thing that a Liberal government would have done, and has done repeatedly in the past. However, I think that we should issue a warning. Again, this warning will have a fairly limited impact because of the nature of the imputation which is due to come in next year. In order to protect the position of shareholders, all companies should be made aware of the necessity of specifying a date in excess of two years before issuing redeemable preference shares. Companies may find themselves forgoing the dividend rebate automatically should they fail to stipulate a specific day. In respect of the provision of section 46c, I therefore would have to support the amendment which has been put forward by Senator Messner. It is our intention to submit this provision to the Senate Standing Committee on Finance and Government Operations because unfortunately we find that in the seven-month interim period between the official statement of the Treasurer (Mr Keating) on 7 April 1986 and 28 November, when the Bill first appeared in the House of Representatives-it is now March before the Senate has even looked at it-the Government's announced intentions with regard to the tax have undergone quite a significant transformation. Provisions of the new income tax legislation represent a significant departure from what any reasonable person reading the Treasurer's official statement could have expected. This is bad principle, it is bad government and it is bad law. When people are told of a foreshadowed change the subsequent legislation should reflect in detail and accurately that original statement. This legislation does not reflect that original intention and for that reason we should put it to a committee for further evaluation and further review. Contrary to what the ministerial statement suggests, the provisions of the legislation are not confined to redeemable shares in the strict and limited sense, but it will apply to any shares used as part of a financing arrangement for any effective term of two years or less. These flagrant differences between the ministerial statement and this legislation before this Parliament are to be condemned and deplored and they reflect gravely on the integrity of the Treasurer and of this Labor Party. Senator Messner —Didn't the Senate Standing Committee for the Scrutiny of Bills raise this question, too? Senator WATSON —It was also raised by the Scrutiny of Bills Committee, a bipartisan Committee of this Senate. There is no mention at all of the inclusion of such things as rollovers, draw-downs or extensions of facilities in the April statement. However, all these mechanisms do appear in the legislation that we have before the Senate at the moment. I draw the Senate's attention to proposed section 46c, paragraphs (a), (b) and (c). The point is that if a taxpayer took steps in April to bring financing practices into line with the Government's new directives, he would have understandably been somewhat taken aback to find that these conventional arrangements are now subject to the legislation. That is bad when that happens and it is a reflection on the Government. In practice, what this transformation means is that we are faced with a piece of retrospective legislation. Companies which entered into short term financing arrangements involving rollovers, draw-downs and extension facilities between April 1986 and 28 November are now penalised as they are no longer able to incorporate dividend rebates by the revision of the law which they could not have seen without referring to a crystal ball. I think that clock is wrong, Mr Acting Deputy President. The ACTING DEPUTY PRESIDENT(Senator Elstob) —The time is as indicated. Senator Watson, you had 25 minutes remaining for the continuation of your speech. The time has now expired. Senator Watson —I seek an extension of time. The ACTING DEPUTY PRESIDENT — Order! Senator Watson, your time has expired. I call Senator Sanders. Senator SANDERS(Tasmania)(12.35) —I do not often enter into economic discussions or discussions on taxation. I feel they are an unnecessary diversion from the real world-the cessation of nuclear hostilities and the protection of people's air, water, shelter and food. Senator Walsh —The fairies at the bottom of the garden. Senator SANDERS —The Country Party member in drag, Senator Walsh, is interjecting. I have become quite familiar with the situation. I had the misfortune to try to follow the injunctions of various Prime Ministers and to help Australia by producing an Australian product, by going into business for myself, becoming a small business person. I found it a very difficult procedure in many ways, certainly in Tasmania. One gets no help from the Tasmanian Government or from the Federal Government. Still, we persevered. We manufactured a slow combustion wood heater which found a niche in the market-place. We had a struggle, but after the first year we started to show a profit. We thought that was wonderful. We were employing people. We actually had our small operation set up in a place called Oatlands, Tasmania, which is a very depressed area. Ours was the only industry in town. After the first year we thought we were doing all right. We got hit with a tax bill. We thought we could survive the bill for tax on the previous year's income. Then we learned about provisional taxes. Senator Townley —Plus 11 per cent. Senator SANDERS —Yes. What kind of a country imposes a tax on next year's earnings? Provisional tax was brought in in the dim dark past as a one-shot inflow of income into the Government's coffers and it stands to this day. It is a complete negation of any governmental statement that the Government wants to support small business. Provisional tax does not penalise Broken Hill Proprietary Co. Ltd, Comalco Ltd or any of the big people; it penalises small business persons who are just starting out. It is a regressive tax. It stifles personal initiative. It stifles anybody who tries to give it a go. This is one problem we encountered. The other problem is that the tax laws in this country are so complicated that the Australian Taxation Office itself cannot interpret them. I see some smiles from the advisers in the chamber. Perhaps they can understand them. Certainly the normal business person cannot understand them. Senator Townley —Perhaps they cannot understand them. Senator SANDERS —Maybe what Senator Townley said is right; perhaps they themselves cannot understand them. A small business person who is struggling to do the right thing-to pay last year's taxes, to pay the provisional taxes-tries to interpret the legislation but cannot do it. He goes to the Tax Office, which says: `We cannot interpret it either, but if you do not pay that tax you are in big trouble'. Senator Watson —That is right. Twenty per cent. Senator SANDERS —Yes. What kind of system is this? What kind of government which claims to be acting in the interest of the people of Australia can bring in a law such as this? Before I became a politician I considered myself a well educated person. I have a bachelor's degree, a master's degree and a PhD. My mind has since turned to jelly but, even so, I cannot interpret this tax. Senator Watson —You are not the only one. Senator SANDERS —As Senator Watson says, I am not the only one. How is the average business person supposed to interpret it? He cannot. The Tax Office cannot. There is an urgent need in this country to go through all the regulations and to put them into English so that people can understand them. I think many people are being accused of tax avoidance when in fact they simply cannot understand their obligations because they cannot understand the law. I would like to see the Tax Office prepare easy to understand pamphlets so that the small business person does not have to hire an accountant to manage his business. What small business person can afford a full time accountant just to work out tax? I would like to see the elimination of provisional tax. I would like to see it phased out. I am sure if it were just chopped it would cause a great hole in the Government's Budget, but it should be phased out. I think perhaps in the first year we could exempt businesses employing fewer than 10 people; in the second year, fewer than 100; then maybe fewer than 1,000 and fewer than 10,000 and so on until the tax is completely phased out. Senator Walsh —Do you think PAYE taxpayers should be allowed to pay their tax 12 months late as well? Senator SANDERS —Yes, they should, as a matter of fact. Why should the Government get the interest on it? Why should the taxpayer not get the interest on it? That is what provisional tax is all about. The Government is getting the interest on this money a year ahead of time. Certainly, I would like to see provisional tax eliminated. If it is not to be eliminated, I would certainly like to see the elimination of the provision to have to pay it quarterly. Senator BOSWELL(Queensland)(12.41) —I rise to address the Taxation Laws Amendment Bill (No. 5) on provisional tax. I share Senator Sanders's concern for small business people, but I believe I understand the situation a little better than he does. He showed complete ignorance of what provisional tax is all about. I think most people would agree that with provisional tax one pays three months earlier and gets a nine months extension on next year's taxation. That is well recognised in small business circles. We find coming before the Senate yet again another tax Bill that falls most heavily on the group of people that this Government has made cannon fodder-the small business sector. This Bill takes $90m out of the small business sector and gives it to the Government. Senator Watson —More than that. Senator BOSWELL —I listened to the speech of the Tasmanian senator, Senator Watson. Obviously he understood it unlike Senator Sanders. When one adds the interest rates to the $90m, it certainly extends it somewhat. The $90m that the Government is saving is a transfer-- Senator Watson —It is $140m. Senator BOSWELL —It is $140m. I thank the honourable senator. The $140m that the Government is saving comes out as a transfer from the small business sector, and probably the rural sector, although not too many rural people are paying tax. This Government purports to stand up for small business. I have never seen this Labor Government stand up for small business. It represents the big unions, big business and the public sector, but it certainly has no concern for small business. I do not know whether it is a case of the Government not understanding small business. I think that is the case sometimes. How can a government go to the people of Australia and say: `We want to take $140m out of the small business sector and put it into government'? I suppose that is socialism working in its truest way. It would be taking away from the people and giving to the Government. I suppose, on reflection, that is what the Labor Party is all about. It is a socialist government committed to the redistribution of wealth. Government members say that in their Party and they say it in the Senate. I suppose that makes then honest. That is what they are all about-taking out of the small business sector and giving-- Senator Watson —It is the highest taxing government in Australia. Senator BOSWELL —It is the highest taxing government in Australia. We have had a capital gains tax-- Senator Watson —There is a new tax each week. Senator BOSWELL —Yes, there is almost a new tax each week. We have had capital gains tax, tax on business investment and all types of other taxes in the last 12 months. Every increase in tax that comes in-- Senator Walsh —What about a VAT? Senator BOSWELL —I have never mentioned VAT. It is not something with which the National Party is concerned. We are opposed to a value added tax and the National Party will never accept such a tax. So I do not want to hear any more reference to a value added tax. I seek leave to continue my remarks later. Leave granted; debate adjourned. Motion (by Senator Walsh) agreed to: That, unless otherwise ordered, till 2 p.m. this day, matters of public interest may be discussed by senators, provided that no senator shall speak for more than 15 minutes and provided further that should a division be called for, such division shall be forthwith postponed till a later hour of the day not being earlier than 2 p.m. Senator HAINES(South Australia-Leader of the Australian Democrats)(12.45) —The matter that I want to raise today relates to allegations of unsound loans, corruption of loan assessment processes and unfair allocation of project contracts that are being made against the Asian Development Bank from a variety of quarters. I suggest that those allegations should be of concern to Australia, if only because Australia has such a large financial interest in the Manila-based bank. This means, of course, that Australia has a responsibility, I would have thought, to help ensure that the ADB, which is the largest development bank in the Asian- Pacific region, is a sound aid instrument. To do anything else would, I think, be in contravention of the responsibility that governments have to the people of Australia when making these sorts of grants. Late last year we raised some of these concerns in the Parliament. The Government's response then was that there had been some difficulties in bringing forward ADB projects of uniform high quality but that Australia was working from within the Bank to improve the situation. In view of the coming annual meeting of the Bank's board of governors in Osaka at the end of next month, I would like again to raise the matter of reform of the ADB. At this stage I think I should point out that the Democrats do support the use of government multilateral aid agencies as a mechanism for providing development assistance. Our calls for accountability and, where necessary, reform ought not to be construed, Mr Acting Deputy President, as arguments for the abandonment of multilateral government assistance, but the fact is that the allegations against the Bank are extremely serious and come from several reputable sources. They make it impossible not to question the ability of the Bank at present to aid properly the economic growth and development of Asian and Pacific states-the very states whose need is greatest. The questions that must be answered include what steps are being taken by the Government to ensure that the ADB is an effective and efficient channel for multilateral aid and what steps are being taken to investigate allegations that have been made about the Bank. Answers to these questions would be timely, as I have said, in view of the coming annual general meeting. For the purpose of putting the concerns into context it might be useful, I think, to give just a brief history of the ADB, which was set up in 1966 to assist the economic growth and development of Asian and Pacific states through the provision of loans, equity investments, technical assistance and policy advice. The major shareholder in the Bank is Japan, followed by the United States of America, China, India and Australia. All in all, there are 47 member countries from the region, from Europe and from North America. Australia has callable shares in the ADB valued at around $US1.1 billion and paid-in capital in excess of $US135m. In this financial year Australia will contribute, the Budget Papers estimate, some $A27.6m to the Bank-a drop of a little more than $A1m from the figure of the previous financial year. That reduction is not of any significant magnitude, certainly nothing to get particularly excited about now. What we do need to recognise is that the Asian Development Bank has had a solid record of achievement since it was set up in 1966, except that in the last two or three years there have been more and more signs that at the Bank all is no longer well. It has been suggested that, as a result of a decline in the availability of suitable projects, the ADB is granting loans to countries for unsound projects; that granting of the loan has apparently become an end in itself. The decline in worthwhile projects is due, it has been alleged, to some countries in the region now being prosperous enough to do away with, or reduce, borrowing from aid agencies. Meanwhile, poorer countries which still do need substantial funds for development are deterred from borrowing because of high levels of overseas debt. Their economic position has been made especially difficult by the reduced growth rates of the developed world, the growth of protectionist measures by the developed world, and the decline in the terms of trade for the commodity exports of developing countries-leading, of course, to lower export revenues, current account deficits and slower economic growth. In this environment, it has been said the financial aid agencies compete among themselves to maintain their lending levels. In the case of the ADB, it is argued that this had led to a significant number of loans being granted for projects which will not generate sufficient returns to allow the loans to be easily repaid over time. The extent of a country's external debts is thus aggravated and that, of course, does not contribute to its development, long or short term, in any way at all. However, it has been claimed that the self-interest of Asian Development Bank officials is served by the placement of these loans, since they perceive their jobs to be resting on maintaining certain volumes of lending-hardly, I would have thought, Mr Acting Deputy President, a valid reason for granting loans. In fact, concern about loan quality was expressed at the annual general meeting of the board of governors of the Bank in Manila last April. There was criticism of it from the United States of America and I think that we should pay significant heed to a country like the United States when it makes critical comments about such lending practices. The story goes further because it is also claimed that project studies are falsified by ADB officials to enable loans to be approved by the board of directors. I think that it is worth while to draw on the experience of a former Bank financial analyst, an Australian, Mr Peter Nelson, whose allegations have during the last six months been recorded in the Australian Financial Review, Triple A, an Australian investment magazine, the Sydney Morning Herald, the Wall Street Journal and the Far East Asian Economic Review. His story is corroborated in varying degree by other people, including former Bank employees and unnamed present employees. One of my staff has had some correspondence and an interview with Mr Nelson, and has noted that the evidence which he has put forward to back his claims is quite extensive. In his view, Mr Nelson is not a crackpot. Prior to working for the ADB he worked for the Food and Agriculture Organisation in Africa for four years and is not an innocent when it comes to the workings of international governmental organisations. He is also a qualified economist and accountant and I know for a fact that he has written not only to me, of course, but also to people like the Prime Minister (Mr Hawke) and others about the goings-on at the Bank. I have no idea whether the Government is acting, or is prepared to act in any way at all, on Mr Nelson's claims but I do think that they should be on the record. The example that I would like to cite in particular relates to the Burma edible oil project. This entails the granting of a concessional loan of $US35m by the Bank for the establishment of an edible oil milling and refining industry organised around government-controlled trading co-operatives. Private farmers are to sell oilseed crops, mostly peanuts, to the co-operatives and the development is taking place in parallel with existing crushing and refining by private mills. Nelson was the financial analyst for the ADB's assessment missions to Burma to determine the strength of the proposal. The first mission took place in September 1984 and the final appraisal report of the project was approved by the board of directors in February 1986. The inception of the loan took place in August of the same year. Nelson says that numerous aspects of the project were suppressed, and figures distorted and invented, so that the project would look accept- able and gain board approval. This is no idle allegation. I would have thought that it was far too serious to be made lightly. These things occurred, despite his analysis and advice, during the appraisal missions and despite his protests as drafts of the report were being prepared. I have compiled a list, Mr Acting Deputy President, of the sorts of allegations that he says were concealed in the final report and would point out that those items are drawn from his memorandum, submitted at the time of the project assessment, to the President and Vice-President of the Bank. They run to some three pages and, although I have not shown them to the Minister for Finance (Mr Walsh), I would appreciate it if they could be incorporated in Hansard. Leave granted. The items read as follows- Insufficient raw material available to meet project targets; Unlikelihood of co-operatives being able to raise the projected and necessary capital needed to support loan funds, and ensure that the debt burden on the co-operatives is not excessive (ADB rules require a debt to equity ratio of three to one); Inappropriate and needlessly expensive equipment recommended for the project. Co-operatives are supposed to rent out equipment to individual farmers who will then produce the required raw materials. This equipment includes heavy, imported tractors. But they are not practical because the cost necessary to run such imported tractors is high, while there are local tractors available which can be hired at much cheaper rates; None of the co-operatives has run any large-scale operations and the co-operative which is running the refining and bottling plant has made large losses in years leading up to the project, and carries large debts. Yet the final report says that this co-operative could achieve a financial rate of return of 22 per cent on investment for the period of the loan; The new mills are to operate over three shifts a day yet current mills only run on one shift. Three, Nelson says, are not possible. Power cuts reduce a working week by at least one day per week and there is not enough fuel for stand-by generators; When accurate financial rates of return on investment for the period of the loans for each project unit, that is, for each co-operative as a unit, are calculated, there is a zero rate of return. Nelson says that a range of important costs are left out in the analysis in the final report. Further, he says, the co-operatives will not be able to absorb the loan because of lack of capital; The position is worse as far as a positive economic rate of return is concerned. Nelson says that the price of unrefined, dirty edible oil in Burma was four times the world market for clean oil at the time of appraisal. The project is an inappropriate use of resources from the point of view of aiding the Burmese; A condition of the project loan is that private sector oil mills should be able to avail themselves of the services provided by two co-operative workshops for the repair and maintenance of equipment and the supply of essential spare parts, as well as the replacement of obsolete extraction equipment. But Nelson says that in his visit to private millers, all of them said that the parts to be supplied under the project were too expensive and they would not use the co-operative workshops; Procurement of oilseed is to be at prices 20-40 per cent below prices paid by the private sector so that the co-operatives can make oil available to their consumer members at below market prices, according to the final appraisal report of the project (the report that went to the board for approval). Nelson says that the report's statement that there ``is without doubt'' a strong financial incentive for farmers to participate in the government's programs to increase oilseed production does not marry with the fact that the co-operatives will pay so far below market prices. He says that ``the compulsion to sell production or part thereof to the government at below market prices was in part what changed Burma in its rice trade from that of being a major exporter to that of a large importer;'' Nelson says that it could be argued that rather than create a new edible oil industry based on the government-controlled co-operatives, the most efficient and most beneficial action as far as the local people are concerned would be for loans to improve the existing private industry. He says that for the project to work, the Burmese Minister of Co-operatives must force private co-operatives to subscribe money which the people cannot afford. Senator HAINES —Mr Nelson's protests prior to final approval of the loan by the board led to an in-house inquiry and he records, again in a memorandum to the vice-president of the Bank at the time, 23 April 1986, that he was vindicated by the inquiry. Yet the board was not informed of the findings of the inquiry. It still received a doctored report and the loan was approved and the project begun. Mr Nelson is able to cite other examples of corruption of project analyses, but I think that that particular example should give the Senate a sufficient idea of the claims that are being made against the Bank. Finally, Mr Nelson alleges that strong Japanese influence at senior levels of the Bank's bureaucracy has resulted in Japanese companies being given an unfair advantage in tendering for ADB project contracts. He alleges that Japanese companies often get advance notice of tender specifications. For example, he says that he saw originals of ADB tender documents containing specifications for equipment for a project which included the name of a Japanese manufacturer. This name, he says, was `whited out' in the final document available to companies wishing to tender for the project. Clearly, he says, the specifications drawn up had been those that would be most suitable for the Japanese company. I believe that officers of the Department of Foreign Affairs are aware of this sort of practice on the part of the Bank. Such allegations should be set, I think, against the Bank's efforts in the last few years to redefine its role in the region. It faces many new demands, some of which might be conflicting. The needs of countries in the region have changed greatly since the 1960s. There is pressure for more attention to be placed on the development of social infrastructure and the impact of development on the environment. Many western governments, especially that of the United States of America, are no longer as enthusiastic in their support for multilateral mechanisms as they were in the 1960s. They question more the extent of their financial contributions and the effectiveness of the agencies. Meanwhile, the poorer developing countries see their economic plight made worse by the growing protectionist policies of wealthy developed countries and the extent to which some of these countries are accumulating surpluses on their external accounts, but not adopting sufficiently expansionary policies internally to increase the volume of their imports. The proceedings of last year's board of governors meeting indicate that Western countries, particularly the United States, are pressing the Bank to place greater emphasis on the stimulation of the private sector in borrowing countries and assisting borrowing countries in market-based economic reforms. They would like to see the ADB shift away from the funding of discrete projects to the placing of greater emphasis on the preparation of individual country strategies and policy advice. The effect of this policy debate on the Bank is, no doubt, very unsettling and confusing. It is not hard to imagine the uncertainty about the Bank's direction creating a climate that would be conducive to bad lending practices and corruption, but I would not necessarily have thought that that was any justification for what is being done. We believe that Australia has a distinctive role to play in setting a proper course for the Bank. This is by virtue not only of the size of Australia's contribution to the Bank, but also Australia's geographic location and culture. Making sure that the needs of small Pacific states are not overlooked, or not appropriately addressed, by the Bank is a case in point. Australia can act as something of an honest broker between the interests of developing countries in the region and the proposals of the Bank's European and north American members. We therefore look for a clear indication from the Government before the Bank's annual general meeting that it will be pressing for reform and improvements at the Bank. Sitting suspended from 12.59 to 2 p.m. Senator CHANEY —Is the Minister representing the Minister Assisting the Treasurer on Prices aware that in Sydney it now costs, on average, $267 a week to rent a three-bedroom, unfurnished house, which is an increase of more than 25 per cent over the last 12 months? Is he further aware that in Perth rentals for inner city units have increased by as much as 40 per cent in the same period? Does he agree with the New South Wales Minister for Housing, Mr Frank Walker, that the direct and major causes of the rental crisis have been the Hawke Government's decisions, such as the abolition of negative gearing on property investment and the taxation of capital gains? If the Government is really concerned about prices, will it take action in the May mini-Budget to reverse these Government decisions which are pushing up the price of accommodation and causing great hardship to many Australians? Senator BUTTON —I am aware in a general way of the information contained in Senator Chaney's question. I am aware that Mr Walker, on behalf of others, has made statements about these issues. Whatever the solution to the problems raised in the question is, the Government will look at the question. However, it will not look at the repeal of the capital gains tax or the abolition of negative gearing in the course of preparation of the May statement. Senator CHANEY —Mr President, I ask a supplementary question as I think the Minister's answer was rather confusing. I ask the Minister, who says that the Government will look at these matters, whether he is saying that the Government will examine the allegations of Mr Walker and many others, including Opposition members, that it is the Government's policies, including those I have mentioned, which have forced up the price of rental accommodation for Australians right round the country, although I mentioned in particular Sydney and Perth. Is the Minister saying that the Government will examine those matters but that, if it concludes that Opposition members, Mr Walker and the many other critics are correct, it intends to do nothing about it? Senator BUTTON —I thought that the implication of my answer, at least, would have been clear. In terms of the results reflected in the figures Senator Chaney gave about costs and rents, there is probably a very complex set of answers as to why those things have occurred. I am not for a moment saying that some Government policies have not contributed in part to those things. What I am saying is that in addressing the complex set of reasons for those results the Government would not, as a solution, be about repealing the capital gains tax or abolishing negative gearing in the context of the May statement. Senator ROBERTSON —The Minister for Veterans' Affairs will be aware of recent reports in newspapers that Australian war graves in France are to be bulldozed to make way for the cross-Channel tunnel. Can the Minister advise whether these reports are based on fact and, if not, explain the true situation? Senator GIETZELT —The disturbance of Commonwealth war graves, which includes, of course, Australian war graves, is a very sensitive issue and has been raised with me numerous times by honourable senators on both sides of the House. From time to time problems develop in the host countries. However, it is an area which perhaps the media and certain veterans' affairs spokesmen ought to regard as emotionally charged and sensitive. As such they should get their facts straight before taking such a high profile. For example, in regard to the graves Senator Robertson speaks about in Calais, France, it has been suggested that some hundreds of Australian war graves may be affected by the proposed Channel crossing. That is very much an exaggerated claim. Only four Australian war graves would be affected, although I would not want to say that as only four graves would be affected I am not concerned about the other war graves in the vicinity. The proposal for the Channel crossing-referred to as `Chunnel'-would affect a war grave area largely Canadian in origin, which therefore comes within the responsibility of the Commonwealth War Graves Commission. In the war graves cemetery only four Australian war graves would be affected, and not hundreds, as has been suggested. The graves are those of four fliers of the Royal Australian Air Force who lost their lives during World War II. A lot of distress can be caused to the parents, wives and children of the Australian airmen who perished at that time in that place by placing too much emphasis on these matters. I have an assurance from the Commonwealth War Graves Commission and from the Director of the Office of Australian War Graves, Mr Clarke, that the matter is being constantly monitored and that no action will be taken by the French Government without adequate consultation with the Commonwealth War Graves Commission. In those circumstances I wish to allay any suspicion that the French authorities are not concerned and protective of our rights. Almost two years ago I had the opportunity to visit war graves in France. I have to say that not only are the Government of that country and the Commonwealth War Graves Commission concerned, but also many of the local communities have a very close attachment to the war graves in their particular villages or regional areas. Any suggestion that our interests and the interests of those who are buried in war grave cemeteries in France are not being considered should be dispelled. I regret the exaggeration that has gone on in regard to the issue. Senator LEWIS —My question is directed to the Minister representing the Minister Assisting the Treasurer on Prices and is about a price that I am interested in-the price of money. I ask: Does the Minister agree that the rate of interest people pay is the price of money? Is the Minister aware that under the Hawke Government the price of money has more than doubled for personal loans, that the price of money for businesses has risen by about one-third and that the price of money available to people on ordinary bank overdrafts has increased by almost 50 per cent? Given the Government's alleged interest in prices, I ask the Minister: When will the price of money come down? Senator BUTTON —I have indicated on a number of occasions that I would not speculate about interest rates in the Senate or anywhere else in public. The Government is, of course, conscious of the high interest rates which now constitute a burden for many people in various walks of life, as referred to by Senator Lewis. No government wants to sustain high interest rates-- Senator Lewis —Your Government is doing it deliberately. You are keeping them up. Senator BUTTON —When will we get from the Opposition some idea about what it would do about the causes of the economic malaise in this country, instead of the symptoms? If the Opposition is promising that if it were ever elected to government it would automatically reduce interest rates with a magic wand, it is mad and it will not be accepted anywhere in the community. Opposition senators come in here and talk about prices. What price a government under John Howard? What price Andrew Peacock this week? What price each of those people contending for leadership of the shonky political party which purports to be the Opposition in this country and which has no idea about any of these things? The answer to the question is: Who would be Opposition leader if we did? What about Joh? What price Joh as the next leader of the Liberal Party? In the May statement the Government will indulge in, if that is the correct expression, or introduce substantial fiscal cuts. This will help with the process of reducing interest rates. However, there are no magic wands; they will not be waved by this Government. It is no good the Opposition suggesting that it has them, either. Senator McINTOSH —My question, which is directed to the Minister for Resources and Energy, relates to yesterday's nuclear accident at Lucas Heights. Does the Minister have any further information as to the extent of the damage. In particular, what type of radioactive isotopes was released and what was the amount? Senator GARETH EVANS —I have some information about last night's fire which I am only too anxious to share with the Senate. The fire began at about a quarter to six last evening in hot cell No. 2, which is located in building No. 54, approximately 500 metres from the Hifar reactor building at the Lucas Heights facility. The hot cell in question is the size of a small room, measuring approximately 2 1/2 metres by 2 metres by 3 1/2 metres high, surrounded by approximately one metre of dense concrete. It has a window at its front, approximately one metre thick. That cell is used by operators using remote control apparatus, to separate molybdenum 99 for the production of radiopharmaceuticals for distribution to hospitals throughout Australia. The cause of the fire was, apparently, although this will have to be confirmed by a formal inquiry, spontaneous combustion of an activated charcoal filter approximately 25 centimetres long and just under 8 centimetres in diameter-about the size of a rolling pin. The air supply of the cell was immediately closed and the filter was left to burn out. Initially the flames were approximately 60 centimetres high, but quickly diminished and the fire did burn itself out in about one hour. Because of the very small size of the fire, the Australian Atomic Energy Commission officials decided to allow it to burn out itself, rather than opting to douse it with nitrogen gas, which is the other option available. The fire was never bigger than waste paper basket size. Reports, such as the one I heard on radio this morning, that seven fire engines fought the blaze, are more than a little astray. Any smoke that anyone thinks they might have seen coming from the facility was probably just the ordinary phenomenon of steam coming out of one of the water cooling towers that exist on the site. Such fumes as were generated by the fire were vented from the hot cell through the building's ventilation stack, which has a quite elaborate filter system to contain radioactive releases. There appears to have been a small release of some biologically inert noble gases, with short radioactive half lives, possibly including krypton-no relation to kryptonite-and xenon. The description `biologically inert'- Senator Messner —You are not a bad noble gas yourself. Senator GARETH EVANS —The description `biologically inert', which is an even more appropriate description of Senator Messner, which is ascribed to these noble gases, means that they do not interact in any way with biological systems and thus cannot be taken up by humans or any part of the food chain. In accordance with the authorisation issued by the New South Wales authorities, pursuant to the New South Wales Radioactive Substances Regulations, very low levels of airborne radioactivity are routinely released from a number of stacks on the site. This authorisation is set at levels that ensure that there is no hazard to members of the public or staff. The Atomic Energy Commission routinely operates well within this authorisation. Measurements made to date indicate that the amount of radioactivity that was released as a result of the fire did marginally exceed routine levels, but was still well within the New South Wales authorisation. There were, therefore, no health consequences to the public. This was confirmed by a Department of Health officer who visited the site during the evening. As to reports of contamination of individuals, it is the case that the operator present in the building at the time of the alarm and the shift manager both received extremely small amounts of contamination, being only slightly above normal background levels. The operator was contaminated on his fingertips, possibly as a result of moving into the rear of the cell area to close several doors, or possibly through handling filter papers which were later used to test air in the vicinity of the cell and which would tend to concentrate any radioactive material present. The shift manager recorded some contamination in a small part of his hair, again only slightly above normal background levels, although at this stage it is uncertain precisely how that was acquired. In the case of both men the contamination was within the normal National Health and Medical Research Council limits for radiation workers. The contamination was quickly removed by washing and posed no health threat. The operator opted to work on into the night to ensure that the deliveries of isotopes due to hospitals the next morning would be made on time. As to further reports and inquiries, I have received preliminary reports, oral and written, from the Atomic Energy Commission and the AAEC has set up a committee of inquiry into the incident. The committee will be headed by the chief of the Commission's health and safety commission, Mr Jim Button, and will include representatives of the State Department of Health, the Commonwealth Scientific and Industrial Research Organisation and the Sutherland Shire Council. The committee will begin its inquiry today and is expected to report in two or three days time. The only aspect of the incident, on the basis of all reports that I have received, that causes me any concern at all is the public concern that was aroused as a result of manifestly inadequate and insufficient information being readily available to callers as to what was going on. This led to at least one radio station apparently claiming last night that there was a Chernobyl-type graphite fire going on at Lucas Heights. Because the scale of the incident was so small, presenting no public danger whatsoever, the Lucas Heights emergency response plan, Aptcare, which involves among other things the rapid establishment of a media communications centre, was not invoked and the State Emergency Service was not, as honourable senators would appreciate, involved. Under normal operating procedures, the fire brigade was contacted and under its procedures it in turn alerted the ambulance and police services. It was no doubt the presence of all these agencies with various sirens wailing that aroused resident concern. I have asked the AAEC, shortly to become the Australian Nuclear and Technology Organisation, to look at the possibility of establishing a special communications line to handle public inquiries, especially from local residents, and especially to cope with incidents, such as the one last night, which have the potential to arouse concern, even though they are in fact quite minor and certainly not such as to justify full scale emergency procedures. Senator MASON —My question is directed to the Minister representing the Minister for Science. Is the Minister aware of recent reports made to the Congress of the United States of America on the serious depletion of the ozone layer in the atmosphere which screens out ultraviolet radiation from the sun? Is the Minister aware also that last year in Australia approximately 1,000 deaths resulted from malignant melanoma and more than 100,000 Australians developed non-fatal skin cancers? In view of this very front line position we have in regard to solar radiation and in view of the fact that even a small depletion of the ozone layer must adversely or even fatally affect thousands more Australians, will the Minister give a major priority to determining what Australia can do internationally to halt this depletion of the ozone layer and an equally high priority to making extremely strong representations to other countries, especially the United States, Europe and Japan, to cease immediately current activity which could possibly be contributing to this major catastrophe? Senator BUTTON —In answer to the last part of the question, I think that it would be very difficult to make representations to other countries about all those factors which might be contributing to the problem. Having said that, I must say that the only briefing paper I have from the Minister for Science for Question Time today relates to the Schneider platypus and not to the ozone layer. In those circumstances, I will have to refer the question to the Minister and obtain an answer as quickly as I can. Senator WEST —My question to the Minister for Veterans' Affairs relates to the proposed fate of the former Army School of Health property at Healesville. The property is surplus to Government requirements and considerable interest has been shown in its future as a possible tourist venue. Has the Minister any further information about the proposed fate of the property? Senator GIETZELT —Commonwealth property from time to time does become available for disposal because it is surplus to the Commonwealth's requirements. The Department of Defence has determined that that piece of land is available for other use, following the relocation of the Army School of Health to Portsea almost a year ago. A consultative committee has been established, chaired by my colleague Mr Lamb, the honourable member for Streeton, comprising representatives of the relevant Commonwealth, State and local government agencies together with four members of the local community. The Commonwealth policy is that the disposal of surplus land should in the first instance be made available to the State and local authorities as a policy matter. That committee has the responsibility of determining whether other public uses of the land have to be taken into consideration. However, the Minister advises me that the Commonwealth's decisions in respect to that committee's recommendations have not been finalised as yet, so, in the circumstances, until such time as the committee has made specific recommendation about the future use of the land I can only advise Senator West that the matter is being actively pursued. Shortly the Government is expected to receive the recommendations of the committee. Senator COLLARD —I refer the Minister representing the Minister Assisting the Treasurer on Prices to the fact that the Hawke Government has, firstly, increased the cost of doing business by an estimated $700m per annum by introducing the fringe benefits tax; secondly, increased the company tax rate from 46 per cent to 49 per cent; thirdly, tripled the excise on petroleum products since it came to office; and fourthly, increased revenue from the wholesale sales tax by $468m in the last Budget and the 19 September 1985 announcement. Does the Minister agree that these increases have a direct effect on consumer prices? What action does the Minister propose to overcome these Government-induced price increases? Senator BUTTON —As I pointed out, I think in Question Time yesterday-Senator Collard might have been involved in some internecine party brawl at that time, getting his feet warmed or whatever-and on previous occasions, the offsetting costs in respect of business taxation provide a net benefit to business of something like $300m in a full year in terms of various changes that have been made to the taxation system. I suppose that it is typical of this class of question from Opposition members that they single out tax increases and ignore the considerable reductions that have occurred in other parts of the taxation regime. Senator Chaney —Unlike the previous Opposition! Senator BUTTON —That is right. Having said all that, I find the suggestion that wholesale taxes have been increased reprehensible when applied to this Government. I find it extraordinary that the honourable senator and his Party, and the Opposition generally, are still locked in debate about whether to have a consumption tax or not. The price effects of that would be, of course, much greater than the changes in the wholesale tax regime, which basically provide a rationalisation of wholesale taxes compared with what they used to be. Senator COLSTON —I direct my question to the Minister representing the Minister for Employment and Industrial Relations. Is it a fact that the rate of unemployment in the State of Queensland is well into double figures and is the highest for any State in Australia? Apart from the general economic incompetence of the Queensland Government, is the Federal Government aware of any specific factors in Queensland which might be contributing to the unacceptable rate of unemployment in that State? Senator WALSH —The answer to the first question is yes. It is a fact that unemployment in Queensland is well into double figures and is the highest of any State in Australia. On the most recently available figures-the figures for February this year-unemployment in Queensland has reached 11 per cent. That is even higher than it was nationally when John Howard was Treasurer. When John Howard was Treasurer the national unemployment rate was 10 1/2 per cent, but in Queensland now it is 11 per cent-the highest in Australia. At the end of January this year, there were more people receiving unemployment benefit in Queensland that there were in Victoria-123,000 in Queensland against 113,000 in Victoria-notwithstanding the fact that Victoria has a labour force in total 65 per cent larger than Queensland. The Bjelke-Petersen machine tries to defend itself by repeating the southern dole bludger myth, but that will not work any more because there was a net loss of nearly 3,500 people in the key job seeker group, the 15- to 24-year-old age group, in Queensland during 1985 and 1986. It is true that 12,500-I am using round figures-people in that age group moved into Queensland, but nearly 16,000 moved out, so the young people are voting with their feet. They are, on balance, moving out of Queensland because the employment prospects are so bleak. The most obvious explanation for young people leaving Queensland-perhaps they might regard it as a geriatric State as well-is that the unemployment rate in the 15- to 19-year-old age group in Queensland is almost 30 per cent. It seems that Queensland is only a land of opportunity if one is a prominent member of the National Party, a member of the white shoe brigade, or has friends in the Queensland Cabinet. I note for the record that the way things are shaping up at the moment there might be an addition of one to the unemployed in Queensland after about the middle of next year, after the Premier turns up the heat on the soles of Senator Colston. Senator Colston —Collard! Senator WALSH —Senator Collard, I am sorry. My apologies, Senator Colston. Just as well I said that under privilege; it could have cost me a lot of money. There is a front page story in the Courier-Mail of yesterday which underlines the lack of opportunity for young people in Queensland. Queensland spends only $2.40 per head on employment and training incentives, despite the fact that the unemployment rate in the 15- to 24-year-old age group is almost 30 per cent. By comparison, Western Australia spends around $5.30 on the same programs, Victoria spend $5.80, South Australia spends $7, New South Wales spends $8, and so on. Senator Chaney —I ask the Minister to table the paper from which he has been quoting. The PRESIDENT —Will the Minister table the document? Senator WALSH —Yes. It is not a document; it is a couple of pages of notes. There is a Press clipping there too, if the honourable senator would like to read that. The PRESIDENT —The Minister has tabled the documents. Senator PETER BAUME —My question is directed to the Minister for Education. In view of a report today that one of her Labor colleagues is pushing for the doubling of the $250 higher education administration charge, will the Minister repeat her assurance and that of the Prime Minister's promise which were referred to in her Press release of 29 January this year that `the $250 charge would not be increased beyond cost increases allowed for in the legislation'? Senator RYAN —Any Press speculation on matters before the Expenditure Review Committee is pure speculation and no comment will be made on it by me or by any other Minister. In respect of the $250 administrative charge I have announced our policy, which is that it will be indexed in line with cost increases according to the education index. I point out to Senator Peter Baume that he is asking this question in the hope of arousing some anxiety or concern amongst higher education students or school students who are aspiring to be higher education students next year, whereas the real cause for alarm and anxiety has come about since Mr Peter Shack released the so-called education policy for the Liberal Party, which promises virtually all students who would be hoping to get a university place next year that they can have the privilege of paying the full cost for that place. If students are going to make their voting decisions on the basis of comparative higher education policies of the present Government and the Liberal Party, it is clearly in our interests that they should do so. About two-thirds of higher education students this year are required to pay a $250 administration charge. Under the Shack-Baume Liberal Party higher education policy an unknown number of students will be required to pay full costs-something in the vicinity of $10,000 to $14,000. Senator PETER BAUME —Mr President, I ask a supplementary question. I did not ask the Minister a question about what was going on with the Expenditure Review Committee: I merely asked her whether she would repeat an assurance which she gave in a Press release on 29 January which said: Senator Ryan reiterated the Prime Minister's promise that the $250 charge would not be increased beyond cost increases allowed for in the legislation. She went on to say: It is definitely not a backdoor way of reintroducing tuition fees. Will she simply give a reassurance that that promise still stands? Senator RYAN —I realise that my voice is rather weak today but Senator Baume obviously was not listening or was so embarrassed by my reference to the Liberal Party higher education policy that he failed to pay attention. I did reiterate that the policy of the Government in respect of the administration charge is that it will be indexed in line with cost increases under the education index. Senator GILES —My question is also addressed to the Minister for Education. Reports indicate that considerable demands are being made on funds available for loans to tertiary students. Is the Western Australian University Guild of Undergraduates correct in claiming a 40 per cent reduction in its grants for student loans? Senator RYAN —No, that claim by the Guild is not correct. I think it arises from a misunderstanding by Guild members of the manner in which our Government has built up student loans schemes over the triennium. The Government decided to allocate $11.4m in total for the program under the 1985-87 triennium. Of the total of $10.4m so far allocated under the program some 73 per cent was made available in 1985-86. In advancing most of the funds for the program early in the triennium the Government intended that the program be available to assist needy students as soon as possible. There remains $1m to be allocated under the program. The Commonwealth Tertiary Education Commission has recently sought information on the state of student loan funds. Additional allocations from the $1m will be made shortly to those institutions which have reported a shortage of funds. The University of Western Australia is likely to receive some additional funding. But it is very important that the Guild understands that the funds were not allocated to institutions on the basis of fixed annual grants, as is suggested by the Guild students' claims, but the total funds available were allocated across Australia on a needs basis. Senator Dame MARGARET GUILFOYLE —My question, which is directed to the Minister for Finance, relates to reports in the Australian Financial Review of yesterday and today regarding the Western Australian Government's Exim Corporation. Does the Minister share the concern expressed about the operation of that Corporation? In particular, has he sought to inquire how an unexplained $2.8m interest payment was earned by a corporation which, according to the last annual report, had no funds on deposit and only $350,000 in cash, investments and loans outstanding? Is the Minister concerned that Exim has still not lodged its financial reports which were due in December last year? Finally, is it a fact that the Commonwealth advanced $6m to Exim to acquire cattle properties for Aboriginals in the Kimberley? If so, is the Commonwealth concerned about the apparent lack of progress of that project? Senator WALSH —I have read some of the report in today's Australian Financial Review, although I did not read any of the report which was apparently in yesterday's edition. Towards the end of Senator Dame Margaret Guilfoyle's question she referred to the $6m that had been provided by the Commonwealth Government for the purchase of cattle properties in the Kimberley region. As far as I know, those purchases have been completed, but I will seek confirmation of that. Senator Chaney —They have not gone to Aborigines. They have bought the properties but they are just sitting there. Senator WALSH —I do not know where they have gone. I said that as far as I know the properties had been bought, but I will have that checked out and find out what is currently happening to them. I did read the section in today's edition which referred to the late lodgment of company returns. If I remember correctly, the Financial Review said that Exim would be ultimately fined for lodging those late returns. I think that compliance with company law of Western Australia is entirely a matter for the State Government. Apart from the $6m which was provided for the purchase of those cattle properties, I really do not think that what goes on inside Exim is anything to do with either my portfolio or the Treasurer's, but is a matter for the State Government. The Commonwealth is entitled to be involved only to the extent that Commonwealth moneys have been supplied for a particular purpose, and certainly it is legitimate to check out that the money has been used for that purpose. Senator MAGUIRE —My question is directed to the Minister representing the Treasurer. Has the Minister's attention been drawn to a transcript of an interview last night by the National Party member for the Victorian seat of Gippsland, Mr McGauran? It reads: For the time being remaining in Coalition will serve the anti-Labor cause best, although something like the consumption tax may, at a later date, provide the catalyst to end the Coalition. As the consumption tax is clearly on the present Opposition leadership's political agenda, can the Minister provide an assessment of the economic implications if such a tax were implemented? Does the fact that wholesale sales tax collections rose 66 per cent in the last two Budgets in 1981 and 1982 suggest very strongly that consumption taxes are still on the Liberal agenda? Senator Chaney —Mr President, I raise a point of order. I take the same point of order as I have taken with respect to a number of questions asked over the recent weeks of sitting. Once again I think the question is clearly out of order because it raises hypothetical questions about policies which are quite undefined in the question and to which any range of meanings could therefore be given. I would ask you to rule the question out of order. The PRESIDENT —A Minister cannot be responsible for, or comment on, what the Opposition's policies are supposed to be, but if the Minister confines his remarks to that part of the question that relates to his portfolio, I will allow the question. Senator WALSH —Certainly, Mr President. I think the matter is more within the portfolio of the Treasurer rather than mine. Senator Chaney —I rise with respect to the ruling that you have given, Mr President, to seek clarification, because it seems to me that the whole question is predicated on the reference to the Opposition's policy-or what the honourable senator claims to be the Opposition's policy-in a very broad way. It is hard to see how there could be any severance of the opening of the question from the rest of it. I would ask you, Mr President, to consider clarifying your direction and indicating what part of the question escapes the defect from which you admit the question suffers. The PRESIDENT —I will allow the question to go through. I will closely listen to the Minister's answer. If I believe the Minister's answer is out of order, I will pull him up. Senator WALSH —Mr President, the first question which was asked was whether my attention had been drawn to a transcript taken from a statement made by Mr McGauran on the Australian Broadcasting Corporation television news last night. To refresh the memories of honourable senators, after the series of delaying tactics, I repeat what Mr McGauran said: For the time being remaining in Coalition will serve the anti-Labor cause best, although something like the consumption tax may, at a later date, provide the catalyst to end the Coalition. So it is very clear what Mr McGauran's assessment of the Liberal Party's taxation intentions is. In normal circumstances I do not think Mr McGauran would be reported by the ABC on that or indeed any other subject. But I suppose that when the Federal National Party is split 14 to 12, what any one member of the National Party, particularly if he is in that group of 14, says or does is certainly a matter of considerable political importance. Therefore, like one or two other members of the parliamentary National Party in the last two weeks, Mr McGauran has had greatness and importance thrust upon him. Of course, the answer to the question about a consumption tax and the economic effects of a consumption tax, a value added tax or for that matter a major widening and deepening of the existing wholesale tax system depends on the size of the change that is made. But in general any tax of that type, be it VAT, a consumption tax or a major widening and deepening of the wholesale sales tax base, would increase the consumer price index by something less-but not too much less-than the percentage increase in the rate of tax. We have some experience from New Zealand-- Senator Chaney —I take a point of order, Mr President. My point of order is that the answer that has just been given by the Minister demonstrates the impossibility of his answering the question in the terms asked by the South Australian senator. When the Government put forward a proposal for a broad-based tax, the particular proposal put forward by the Treasurer, Mr Keating, involved an increase in the consumer price index of about half of the amount of the tax that the Treasurer was suggesting would be put forward. My point of order quite simply is that the answer that the Minister has given, saying that the amount of the CPI change would be close to the amount of any indirect tax, is quite obviously not true in the case of the indirect tax that was proposed by Mr Keating, and would not be true of any indirect tax proposal that included, for example, a removal of the wholesale tax. My point is that the Minister has already got to the stage in his answer where it is quite clear that he cannot give a sensible answer in terms of the question that was asked. The PRESIDENT —I uphold the point of order and I ask the Minister to conclude his answer as quickly as possible. Senator WALSH —Certainly, Mr President. Any changes to taxation which raise more revenue from indirect taxes would increase the consumer price index. Of course, the precise extent of that increase in the consumer price index would depend on the amount of additional revenue raised. In the case of New Zealand, where this has been done, the last report that I saw was that New Zealand had an annual rate of increase in the consumer price index of 18 per cent. Basically, the choice, if Mr Howard were to become Prime Minister, would be between a deficit of $14 billion or $16 billion or the imposition of a massive consumption tax, which would have a very severe impact on the consumer price index. Senator SANDERS —My question is addressed to the Minister representing the Minister for Foreign Affairs. I refer the Minister to the situation of 16 January 1987 when two Australian fishermen, John Chadderton and Alistair Annandale, escaped from Reunion Island and with Australian consular assistance fled to Singapore. I ask: Firstly, have these men or any other crew of their vessel Southern Raider been questioned by Australian Government officials about French activities on Kerguelen Island? Secondly, if so, does the information indicate that the French are increasing their activities there, including the development of facilities for either nuclear testing or the storage of nuclear waste? Thirdly, following the approach by the Australian Ambassador in Paris, has the Australian Government obtained any categorical assurance that the French Government does not contemplate and is not involved with nuclear activities on Kerguelen Island, including nuclear testing and nuclear waste storage? Senator GARETH EVANS —As to the first part of the question relating to the questioning of the two men concerned, Messrs Chadderton and Annandale, Australian Government officials have had contact with those two only in relation to their consular responsibility to them. The Government is aware of Press reports quoting Mr Annandale as claiming that France intends to set up a nuclear test site on Kerguelen. As far as the Government is aware, this claim is speculative and unsubstantiated. We are not aware of any claims or evidence that France could be planning to store nuclear waste on Kerguelen, which is the latest addition to the stock of claims made about French intentions there. As to the activities that may be planned by the French for Kerguelen, I cannot do much more than refer Senator Sanders to my responses to questions from Senator Durack on 17 February and Senator Vallentine the following day. I said on those occasions that the Australian Government is not aware of evidence to support these sorts of claims. The Government is not aware of evidence to support speculation that France is planning to move its nuclear testing program from Mururoa Atoll. I said then that as recently as 3 February, French President Mitterrand said: `Mururoa exists and will continue to exist. We need to be able to carry out nuclear testing there.' To the extent that I can say any more about the third part of Senator Sanders's question, I point out that in response to our inquiries about persistent speculation that France is planing to move the Mururoa testing program to Kerguelen, French officials have referred to President Mitterrand's recent statement which I just quoted as the most definitive position. While the French Government has not given a categorical assurance on possible activities on Kerguelen, the Australian Government's assessment is that a move of the testing program there would be unattractive to France on political grounds and because of the considerable costs involved in relocating the testing facilities. The Government has made it clear that in any event Australia would be as strongly opposed to French testing in the Indian Ocean as we are opposed to France's current testing program in the Pacific. Of course we will continue to monitor carefully French activities and intentions, to the extent that we can discern them, on nuclear testing and on the storage of nuclear wastes. Senator SANDERS —I ask a supplementary question, Mr President. In light of the Minister's answer when he said that the Government would deplore any nuclear testing activities, I ask whether the Government has any position on the storage of nuclear waste in the Kerguelen area. Senator GARETH EVANS —No, we do not have a formulated position on that. Clearly, there are quite different considerations that are applicable to that. Senator Chaney —I take a point of order, Mr President. I suggest that that is not a supplementary question. It relates to a quite separate subject. The PRESIDENT —Well, it referred at least to the same geographical area as the first question. That is why I allowed it. But the Minister has nothing to add to the answer. Senator ZAKHAROV —My question is to the Minister representing the Minister for Employment and Industrial Relations. Has the Minister seen an article on the front page of this morning's Canberra Times carrying a reply by the President-elect of the Canberra branch of the Australian Medical Association, Dr David McNicol, to comments made in the Senate yesterday by the Minister for Finance during Question Time in relation to the Australian Capital Territory doctors dispute over Medicare. Can the Minister clarify whether the figures that he used yesterday were, as Dr McNicol alleges, `disastrously wrong'? Senator WALSH —Yes, I have indeed seen the article. Assuming that it is a fair and accurate report of what Dr McNicol said, I hope that Dr McNicol's medicine is better than his arithmetic, although those of us who are familiar with the Hird case might put some doubts upon that. Senator Chaney —I take a point of order, Mr President. I know that there is nothing in the Standing Orders that protects private citizens against abuse, but I simply ask you to exercise some control over a Minister who has the benefit of parliamentary privilege and who uses it with gay abandon. The incapacity of this Minister to answer a question without slamming at a personal level the people who ever dare to disagree with this Government is a matter that is bringing this chamber into total disrepute. Whilst I acknowledge that the Standing Orders provide no protection for the citizen, I ask you, Mr President, to exercise some control in the name of decency. The PRESIDENT —No point of order arises. The Minister can answer the question in whatever way he sees fit. But I would hope that he would take no notice of the remarks that were made. I call Senator Walsh. Senator WALSH —I note for the record that I find it a little bit too much to be lectured about propriety by one of the thugs who participated in the misuse of the power of this Senate in 1975. The PRESIDENT —Order! Senator Walsh, I ask you to withdraw that remark. Senator WALSH —I withdraw the reference to thugs. Nevertheless, it remains a fact that Senator Chaney and Senator Peter Baume, who was jumping to his feet, were two of the people who took advantage of a Senate which had been corrupted by the actions of the Queensland Government. They were quite happy to enter into a coalition with the Premier of Queensland to corrupt the Senate. Senator Jessop —I rise on a point of order. I regard the Minister as being quite out of order because he is not answering the question that was put to him. I suggest that he be brought to order or sat down and shut up. The PRESIDENT —Order! The Minister has finished answering the question. Senator Gareth Evans —He hasn't got to it yet. The PRESIDENT —Senator Walsh, I ask you to answer the question as quickly as possible. Senator WALSH —Obviously the Opposition does not want to hear the answer. The present cost to the taxpayers of Australia of the Medicare arrangements for the services provided by private practitioners in the Australian Capital Territory is $4m. If the claim submitted by the Australian Capital Territory branch of the Australian Medical Association were granted, that cost would rise to $7.5m-an increase of nearly 100 per cent. The Government has offered an increase of 21 per cent, which has been rejected by the Australian Capital Territory branch of the AMA. It is insisting that the fee for service be based on the AMA schedule, that there be a 50 per cent penalty rate for shift work or, more accurately, for work performed between 6 p.m. and 8 a.m.-a 50 per cent loading for that quasi shift work-and $180 a day roster money for not necessarily doing anything at all except sitting at home waiting for the telephone to ring. If there were a call between 6 p.m. and 8 a.m., there would be a 50 per cent penalty loading for doing the work at that time. Alternatively, if they sat at home and did nothing at all, they would receive $180 a day for it. The doctors union in the Australian Capital Territory is after an increase of nearly 100 per cent in total income, compared with the Plumbers and Gasfitters Employees Union of Australia which is seeking about 25 per cent, for which it has been vigorously denounced by Mr Willis and I believe by a number of people on the Opposition side. But the Opposition is very selective with its indignation. It is very happy to denounce George Crawford and the Plumbers and Gasfitters Union but it will not say a word about the doctors union, which is pursuing a pay claim almost four times as great as that being pursued by George Crawford and the Plumbers and Gasfitters Union. If one looks at the effect of the doctors union's pay claim on the doctors, if the attempt to almost double the remuneration they receive for the services they provide succeeded, each doctor would receive on average an additional $22,000. Bear in mind that that is not their total income; they derive part of their income from treating Medicare patients and part of it from treating their private patients. I am not in a position, at least at this stage, to know the relativities of the two, but we do know that if the doctors union's outrageous pay claim were granted doctors' incomes from the Medicare portion of their total income would increase on average by $22,000. I note that the Opposition is mute. The Opposition has not a word to say about an attempt by the Australian Capital Territory branch of the doctors union to rob the Treasury, and for each doctor to walk away with an extra $22,000 a year in his hip pocket. There is not a word from the Opposition about that. This is the Opposition which talks about a wages freeze for ordinary people who do not even have a total income of $22,000 a year, and an increase of $22,000 for the members of the doctors union. The humbuggery of people like Dr Shepherd, who associates himself with the Australian Federation of Employers, while simultaneously backing claims-- Senator Chaney —I rise on a point of order. Clearly the Minister is debating the question and he should be brought to order. The PRESIDENT —The Minister is clearly debating the question at the moment. I call Senator Hill. Senator HILL —My question is to the Minister representing the Treasurer. We have not heard enough from the Minister. I draw the Minister's attention to the lowering of the statutory reserve deposit requirement of trading banks recently canvassed in the Press. What are the Government's intentions on this issue, bearing in mind that the 1985-86 annual report of the Reserve Bank of Australia admitted that `the SRD mechanism is not now actively used as an instrument of monetary policy', and further, that `the Bank will be ready to take opportunities to reduce the ratio'? Is the Minister aware that the report of the Campbell Committee of Inquiry into the Australian Financial System also concluded that SRD would be little warranted in a deregulated financial environment and further that some $3.5 billion, or some 7 per cent, of trading bank deposits deposited with the Reserve Bank attract only 5 per cent interest? Is the Government prepared to allow the Reserve Bank to release these funds to assist individuals and businesses in dire financial circumstances? Senator WALSH —I have seen Press reports of the type referred to by Senator Hill. I do not know whether the Treasurer envisages making any changes in the SRD ratio. I will refer that part of the question to the Treasurer. As to the second part of the question, however-the idea that since the Reserve Bank pays a rate of about 5 per cent on the statutory reserve deposits, that money ought to be made available at 5 per cent to some group or other which is deemed by some body or other to be a worthy person-it is just another brand of snake oil to peddle that sort of policy in the context that this is something that can be done painlessly, effortlessly and costlessly. The plain fact is that somebody else will suffer if some privileged group or people deemed by somebody or other to be worthy get credit at 5 per cent while everybody else pays something more than that. It is not costless. The rest of the community will ultimately pay the cost of that cheap credit provided to a particular group. If the Government does make changes, or if the Treasurer contemplates changes to the SRD, it will not be for that sort of purpose because this Government is not into the merchandising of snake oil, unlike either of the pretenders, although I should say `any' rather than `either' because there are at least three pretenders to the Prime Ministership. We have the Queensland Premier, Mr Howard and Mr Peacock, all of whom are merchandising snake oil. This Government is not in the business of merchandising snake oil. Senator BLACK —My question is directed to the Minister representing the Minister for Primary Industry. I refer to an article in the Courier-Mail of 7 March which reported the Leader of the Opposition, John Howard, as saying that the Government could help the rural sector by cutting government spending to ease interest rates, by scrapping the fringe benefits tax and by attacking the costs of grain handling and transport. What would be the effect on farmers if these policies were implemented? Senator WALSH —The effect on farmers of scrapping the fringe benefits tax would, on balance, be adverse, for these reasons: Only about 15 per cent or less of farmers pay any fringe benefits tax at all. So for 85 per cent there can be no first round benefit from a scrapping of the fringe benefits tax. If the revenue raised by the fringe benefits tax were not recouped somewhere else, the deficit would increase, exerting further upward pressure on interest and inflation rates. Although high interest rates would advantage some farmers, the majority of farmers would be disadvantaged by them. Of course, the higher inflation rate would disadvantage everybody. Senator Chaney —What if you reduce government spending? Senator WALSH —I have heard Senator Chaney's Leader talking about slashing $4 billion off government expenditure, and he has spelled out $32m of it. If Senator Chaney wants to fill in the rest of his Leader's credibility gap between that $32m and $4,000m, I invite him to do so. If he wants to add $800m or so for the fringe benefits tax to it, I invite him to do that as well. What is more likely to happen if any government abolished the fringe benefits tax would be that the revenue would be obtained somewhere else-say, from a broad based consumption tax or a value added tax, which would adversely affect all farmers and probably everyone else in the community. Another possibility is to reverse the decision made by the present Government to exempt entirely from refined petroleum excise distillate used on farms. When Mr Howard was Treasurer farmers paid an excise on distillate used on farms. This Government abolished that. If Mr Howard were to become Prime Minister, instead of Treasurer, as he was before, perhaps he would reimpose that tax on distillate used on farms in order to make a small contribution to recovering the revenue lost by the abolition of the fringe benefits tax. Senator Chaney —I raise a point of order, Mr President. Again, the Minister is clearly debating the question. I think that he should be asked to direct his attention to the question which was specifically asked of him and to answer it so we can get on with some business. The PRESIDENT —The Minister was making a quite lengthy answer to the question. I did not think that he had reached the stage of debating it. However, if he had continued much further I would have stopped him. Has the Minister finished his answer? Senator WALSH —I had almost finished, Mr President. It should be noted for the record that Senator Chaney invited the sort of comment and reply that he received by asking a question essentially by way of interjection. Scrapping the fringe benefits tax, bringing back the free boozy lunch and the tax deductible Mercedes, and paying pensions to millionaires will have severely adverse effects on almost all farmers and almost everybody else in the community. Senator BUTTON —Yesterday at Question Time, Senator Bjelke-Petersen asked me a question concerning the bicentennial medallions to commemorate our 200th year which were to be presented to primary, secondary, pre-school and kindergarten children. She asked: 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? I undertook to obtain an answer as quickly as possible. The answer is as follows. The Government has made no decision on this matter. Any decision is a matter for the Australian Bicentennial Authority. As part of its national program for the Bicentenary, the Australian Bicentennial Authority proposes to distribute a commemorative medallion to all the primary and secondary school children of Australia. It was not intended at any stage to distribute the medallion to pre-school and kindergarten children. Senator BUTTON —On 17 March Senators Chaney and Archer asked me some questions about newspaper reports relating to the Australian Customs Service. At that time I undertook to provide further information as I obtained it regarding the substance of the questions. I have a further answer which I seek leave to have incorporated in Hansard. Leave granted. The answer read as follows- Investigation officers have spoken to Mr Malkoun. He knows the identity of the officers whom he claims have made allegations to him about other personnel in Customs, but he has not identified them. From the viewpoint of the Australian Customs Service, it is intolerable for Customs officers to provide information anonymously and expect that the matter raised can be brought to a satisfactory conclusion while their anonymity is maintained. Similarly, the ACS cannot accept the position taken by Mr Malkoun. Nonetheless I am informed that the Investigation Officers are making every effort to establish the identity of the anonymous complainants. A question was asked about officers' concern about the Internal Affairs Unit. I understand Mr Malkoun has indicated that he has confidence in the Director of the Unit. However, at this stage Mr Malkoun claims that two officers have said to him they lack confidence in the Director. The Director of the ACS Internal Affairs Unit is well qualified in the investigation field-he was a former Commissioner of the Australian Capital Territory Police Force. He commands that utmost respect from other law enforcement agencies and there has not been one question about the probity of his Unit. I provided a response to Senator Archer about particular cases under investigation in the Australian Customs Service. I would like to add to those details. I can confirm that, following investigations by the Service, certain particulars were provided to the New South Wales Police which led to a former Customs officer being charged under State legislation with attempting to dishonestly obtain money. That case is currently before the Court and it would not be appropriate to comment further. I also mentioned that a Customs officer had been charged before the Queanbeyan Court. The officer was charged by the New South Wales Police with receiving and the case is due to come up on 6 April 1987. He has been suspended from duty. Another officer has been charged under the Public Service Act in relation to the alleged improper destruction of spoiled beer and the Collector of Customs New South Wales, in terms of the prescribed disciplinary proceedings, is considering what action needs to be taken against the officer. I believe that the management of the Australian Customs Service has made it quite clear that any complaint or suspicion against any officer regardless of his or her level will be vigorously investigated and the full impact of the law will be applied against any offender. The Comptroller-General of Customs maintains that the great majority of Customs Officers deplore any instance of corruption, whilst it is acknowledged that such cases can occur. I too have confidence in the integrity and dedication of the vast majority of Customs Officers. The PRESIDENT —In accordance with the provisions of the Audit Act 1901, I present the report of the Auditor-General upon audits, examinations and inspections carried out under the provisions of the Audit Act and other Acts, dated 19 March 1987. Senator VIGOR(South Australia) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator WATSON(Tasmania) —I present the 264th report of the Joint Committee of Public Accounts. I seek leave to make a short statement. Leave granted. Senator WATSON —From time to time, and not very often, the Public Accounts Committee has been forced into a situation of having to sit at the same time as the Senate. That is the background for this report. The report examines the question of concurrent sittings of the Public Accounts Committee and the Senate and is a response to part of a report of the Standing Orders Committee tabled in the Senate on 6 October 1983. Disagreement has arisen between the Senate and the Public Accounts Committee about whether the Committee has the right to sit while the Senate is sitting. The Senate is of the view that the Committee has no such right and cannot sit during Senate sittings without the authority of the Senate to do so. On the other hand, the Committee believes that it has a statutory right, under section 6a (1) of the Public Accounts Committee Act 1951, to sit whenever it determines. Because of the extreme difficulties the Committee would encounter in arranging sufficient meetings to enable it to carry out its program and not clash with the new Senate sitting hours, the Committee feels that it should formally make known its opinion on the question of concurrent sittings. The Senate has based its argument that the Committee is not entitled to sit without the Senate's authority on Senate standing order 300, which states: A Select Committee may adjourn from time to time, and, by Order of the Senate, from place to place; and may sit on those days over which the Senate is adjourned; but no Select Committee may sit during the sittings of the Senate. However, the Committee believes that it has legislative authority to determine when it sits under sub-section 6a (1) of the Public Accounts Committee Act 1951, which provides: The Committee may meet at such times and at such places within Australia as the Committee, by resolution, determined or, subject to any resolution of the Committee, as the Chairman determines, but shall not meet at any place outside Australia. The Committee has obtained advice on this matter from the Attorney-General's Department, the then Attorney-General, Senator Gareth Evans, and the Hon. Justice Paul Toose, CBE. All the legal opinions have been to the effect that the Committee is not a select committee of the Senate and that therefore Senate standing order 300 does not apply to it. The opinions have advised that the Committee is a statutory committee and, accordingly, is regulated solely by the terms of the statute under which it was established. A problem has never arisen with the House of Representatives on the question of concurrent sittings because that House has no standing order similar to Senate standing order 300 and it has a policy of allowing committees to meet while the House is sitting. In view of the legal advice the Committee has received, the heavy work load that it has had to complete, and the extra responsibilities that have been placed on it by this Government and this Parliament, the Committee believes that it has no option but to meet at such times as it deems necessary. Hopefully, the Committee's meeting times will not inconvenience the Senate and both the Committee and the Senate will be able to carry out their functions effectively. I commend the report to honourable senators. Senator GEORGES(Queensland) —by leave-I take the opportunity to speak to this report because, having been Chairman of the Joint Committee of Public Accounts for a number of years, I am fully aware of the difficulties which the Committee faces because of the Standing Orders of the Senate which ostensibly prevent the Committee from meeting while the Senate is meeting. This restriction has created great difficulties for the Committee from time to time. The program to which the Committee has to apply itself is substantial. The Committee and its four sectional committees can meet on these days in a sitting week. The problem could be solved quite easily by the Senate granting leave to the Committee to sit on particular occasions when there are important references before the Committee. However, over the past two or three years the Committee has had difficulty in obtaining such leave because the Opposition, although it recognises the difficulties that the Committee faces, has taken the view that that problem should be solved not by allowing the Committee to sit concurrently with the Senate but by altering the sitting hours of the Senate. As a result, the Committee has become the butt of a campaign by the Opposition to alter the sitting hours. The Opposition has a case; the sitting hours have been extraordinary in that they have not allowed the committees of the Senate to sit as frequently as they should. This has prolonged their programs and in many cases it has extended the life of those committees. Another committee of which I am a member, the Senate Select Committee on Animal Welfare, has had its program extended considerably because of its inability to meet while the Senate is sitting. It could be argued that the committees can sit in the non-sitting weeks but that is not easy. It means that committee members have to be brought in from all over Australia in the up weeks to sit on committees. Senator Haines —Which is expensive and time consuming. Senator GEORGES —Yes, and it creates a number of other difficulties. Quorums are difficult to establish because the ability of senators to sit on one committee is limited by the number of committees that demand their time. The Public Accounts Committee is established under an Act of Parliament. It is the parliamentary arm of the Auditor-General's Office. It examines reports which the Auditor-General puts down from time to time. The work it does is important. It needs to sit as frequently as possible. As a result of the contest that has developed between the Opposition and the Committee concerning the Committee sitting at the same time as the Senate is sitting, the Committee has taken the view that it will sit as often as possible and in some cases defy the Standing Orders. That puts senators on the Committee in a very difficult position. They know that they have a responsibility to the Committee and its work. They also know that they are obliged to obey the Standing Orders. No senator likes to sit on that Committee while the Senate is sitting. That has happened on a number of occasions. I can recall that many times I have chaired that Committee while the Senate has been sitting and the Committee has met in defiance of the Standing Orders. Senator Robertson —Shame! Senator GEORGES —Perhaps, but the work of the Committee had to be done. We would start-- Senator Boswell —What about the Senate? It is a committee. Senator GEORGES —If honourable senators take their work in the Senate or the Committee of the Whole seriously and consider it most important work and worthy of strong support, I suggest that they should look at the attendance in this Senate from time to time. On many occasions the Minister in charge of a Bill is at his place and there is perhaps one person on the Opposition side. I am not saying that senators are not occupied. They are possibly occupied sitting on party committees. There is nothing to prevent them from sitting on party committees while the Senate is sitting. Party committee meetings, which are valuable, take place everywhere in this House. One can no longer argue that the Senate demands the attention of all honourable senators. I could even go further and say that on one occasion when I walked into the chamber the President was in the chair and there was only one other member in the Senate. So one cannot argue that the Senate demands the attention of its members. Its members are occupied elsewhere. The Public Accounts Committee should be allowed to have access to its members just as other committees are. A practice has developed which is in conflict with the spirit of the Standing Orders in that a committee will meet informally for two or three hours-perhaps less, an hour or half an hour-while the Senate is sitting. The committee meets informally, has all its discussions, waits till the Senate gets up and then formalises all the work it has done informally while the Senate has been sitting. That is not in the true spirit of committee work. It is limiting and it is damaging. Let me get back to the Public Accounts Committee. It has been forced to meet at times when the Senate has been meeting. It has been aware of the problems that can emerge, it has been aware that it has to be careful that it is meeting without the full coverage of privilege and that it cannot examine witnesses as freely as it should. It cannot have witnesses before it as freely as it should because of the limitation which the Standing Orders place upon it. The Public Accounts Committee has put down a report in the Senate. It can no longer be ignored. The matter needs to be resolved, and quickly. Either we accept what the Opposition is saying, that the sitting times are unsuitable for the committee work of the Senate or, if the times are not to be changed, we will have to understand that the Public Accounts Committee will rest upon the legal opinions that it has received and will sit and will expect its senators to sit. If that happens the Senate should take the next step and try, in some way, to reprimand the senators who breach Standing Orders by sitting on that Committee. It is said that the Public Accounts Committee can meet without senators. That is not so, as far as I see it. If that Committee is meeting and has a quorum of members from the House of Representatives and takes the view that it can continue to sit although senators cannot sit, I would argue that that Committee is not properly formed. Any member of the Committee being refused, by some means or other, the right to attend the Committee would render the hearings of that Committee invalid. Senator Crichton-Browne —What is the point you are making? Senator GEORGES —The point I am making is that members of the Committee from the House of Representatives, in sufficient number to establish a quorum, could sit. If a senator is prevented by the Standing Orders from attending that Committee meeting I would say that that meeting would be invalid because the senators cannot attend; they are restricted by the Standing Orders. The point I am making is that clearly the matter needs to be resolved. The Committee cannot function properly in the present situation. It cannot continue to meet with some doubt as to the legality of its meetings. According to the report, the opinions that have been received seem to state clearly that the Standing Orders are not pre-eminent in this matter. Sooner or later the Government will have to respond to this report. The report has been put down and there needs to be a response to it. I suggest that the sooner that happens the better, otherwise we will have the continuance of this unsatisfactory situation where senators find themselves sitting in defiance of the Standing Orders of the Senate, which is something they hesitate to do. Senator ROBERTSON(Northern Territory) —by leave-I move: That the Senate take note of the paper. This is a matter that has come before the Standing Orders Committee on a number of occasions and we have made certain decisions. It is certainly a matter, as Senator Georges said, that needs to be resolved for the smooth running of the Senate. I do not think it is appropriate to debate it now. What we are looking for here is perhaps a Standing Orders Committee response rather than a government response. I seek leave to continue my remarks at a later stage so that we can get that resolution. Leave granted. Senator HARRADINE(Tasmania)(3.22) —I move: That the adjourned debate be made an order of the day for the next day of sitting. I take this opportunity to indicate that I understand what has been said about the difficulties that are experienced by members of this very important Committee, the Joint Committee of Public Accounts. It would be important to ensure that, whatever occurs, no precedent is set that would limit the opportunities of members of the Senate to participate in the affairs of this chamber, which I believe should be paramount. Senator Georges referred to the fact that very often there are very few senators in the chamber. That is very true. But, frankly, a senator is either preparing material or doing work in his office and has an ear on the loudspeaker, as I did just a while ago. I heard the debate and am now able to participate in it, although I am ranging a little wider in my remarks than the Standing Orders might permit. I just raise the point that that should be taken into account when consideration is being given to this matter. Question resolved in the affirmative. Debate resumed from 17 March, on motion by Senator Haines: That the Senate take note of the paper. Senator KILGARIFF(Northern Territory)(3.24) —The report before the Senate has been prepared for the Minister for Transport (Mr Peter Morris). It advises on the means by which he should distribute road grants in the future and also how grants not allocated in the land transport program legislation over the next three financial years should be allocated. The report is a very interesting one, and looking at some of its findings provides an insight into the different demands placed on roads throughout Australia. In determining how funds should be allocated, the inquiry looked at a number of ways in which the assessment could be made. It looked at providing Commonwealth funding on a dollar for dollar basis with the State and local governments, but rejected this on the basis that the Commonwealth's objectives are not necessarily the same as those of State and local authorities. I agree with the rejection of this form of funding formula, although for different reasons; it would have unfairly favoured the larger revenue raising States, against the smaller States and the Northern Territory. Another factor which was considered was `cost disability' which would take account of the particularly high costs of restoring or upgrading roads in particular areas, or cost increases that are more rapid than those occurring elsewhere. This factor is one which is particularly relevant to road building and maintenance in outback and remote Australia. The fact is it is simply more expensive, because of its remoteness and the higher costs of materials, wages and other costs, to construct or repair roads in the outback. The Committee of Inquiry into the Distribution of Federal Road Grants rejected this factor in the road funding equation on the basis that no reliable method of measuring cost disability had been brought to its attention. Nevertheless, I believe that it is an important factor which should be taken into account when Commonwealth road funding grants are being assessed. The Committee has ultimately come up with a formula using four indicators to determine the level of funding to go to the States and Northern Territory. Those indicators are axle loading, road occupancy and requirements for restorative works and for upgrading works. Unfortunately for the Northern Territory, only one of these indicators is favourable to its funding allocation, and what it has picked up on the swings it has more than lost on the roundabouts. At present the Northern Territory's overall percentage entitlement under the Australian land transport program and the bicentennial road developments is 2.3 per cent of the total funds available. While the use of the axle loading indicator alone would increase the Territory's allocation by 0.3 per cent, the good news ends there. The road occupancy indicator would see the Northern Territory lose 1.7 per cent, the need for restorative work would see the Northern Territory lose 0.7 per cent, and the upgrading indicator would mean the Northern Territory would lose its entire funding allocation. The formula which will determine funding is weighted so that the axle loading indicator and the restoration indicator carry twice the weight of the road occupancy and upgrading indicators. The bottom line for the Northern Territory is a reduction in its percentage of funding of 0.06 per cent, down from 2.3 per cent to 2.24 per cent. The Territory cannot afford any reduction in its overall funding allocation for roads. It has a vast area and many thousands of kilometres of roads to maintain. The Northern Territory has 2,700 kilometres of national highway, and 3,100 kilometres of rural arterial roads. These figures exclude local and urban roads which, of course, require considerable upkeep due to the volume of traffic they carry. The Territory's major roads are particularly vulnerable to damage from heavy vehicles such as the road trains which bring in almost all the Territory's consumer goods. Territorians do not have the choice of rail freight, and air freight is too expensive for the vast majority of goods coming in to the Territory. Road freight is the only way to get goods in. There is little doubt that the condition of Territory roads does suffer as a result of the damage inflicted by the fleet of road trains constantly on the move up and down the Stuart Highway, and along the rural arterial roads of the Northern Territory. I have already made mention of the additional costs involved in road construction and maintenance in the Territory. These are well recognised, so it is disturbing to see that the new funding allocations recommended by this inquiry would reduce the Territory's percentage of overall funds available. This would be consistent with the Federal Government's record on Territory road funding, which has seen the Territory lose almost a third of its entitlement under the bicentennial road program for 1985-86 as a result of a freeze on funding. In addition, road funding was further reduced by the Federal Government through its decision to reduce the proportion of the road tax which was put back into road development and maintenance. Last year the Australian Land Transport Amendment Bill was enacted to allow the Federal Government to take a greater cut of the levy for itself, leaving less for the Australian Land Transport Trust Fund. There seems to have been a winding back of spending on roads, and with this latest inquiry report the Northern Territory appears to be in the forefront of the assault. Senator BOSWELL(Queensland)(3.29) —As a senator representing the State of Queensland, I am concerned at the possible implications of this report by the Committee of Inquiry into the Distribution of Federal Road Grants. If it is accepted by the Minister for Transport (Mr Peter Morris), there is little doubt that Queensland and the Northern Territory will be adversely affected. The Cameron report sets out to provide a new formula for road funding in Australia, the first review of road funding formulas since 1977. It provides a series of indicators which are applied across road categories and across the States, to arrive at a set of relativities based on a chosen combination of indicators. These relativities establish the recommended proportion of road grants to the urban arterial, rural arterial and local road categories in each State. The indicators put forward in the report are highly dependent on traffic volumes and road lengths with the traffic data manipulated in various ways. The end result is that the recommendations are strongly biased towards the populous States with heavily trafficked road systems, and towards urban areas at the expense of rural areas. Application of the recommendations would mean a major redirection of funds to New South Wales, Victoria and South Australia from the other States. The Northern Territory and Queensland will be the major losers. At the present level of Commonwealth funding, the loss to Queensland would be $32m per annum, mostly from local roads. This will have serious repercussions for the people of Queensland, especially those who do not live in the heavily populated areas of south-east Queensland. Honourable senators who have driven through western and northern Queensland would agree that the roads, which are so important to this relatively isolated area, are not quite up to standard. Yet this report, if implemented, would lead to an even more unsuitable and insufficient road system. No consideration was taken in this report of the need to promote decentralisation in Australia, or the importance of having an adequate road system as infrastructure for further development. Neither was any consideration taken of the special needs and the importance of our rural industries. No consideration was taken of the enormous wealth that the people of northern and western Queensland generate, from which the rest of Australia benefits so much. No consideration was taken of the effects on local government or the employment generating role that roadworks fill. Mr Acting Deputy President, you will be aware that a lot of the work in the outer areas of western Queensland is done by local government and local councils. Often in the outer shires the only form of job creation and employment is with the local councils. If this report is implemented it will have very adverse effects in the area. This report needs very careful consideration and reappraisal by the Government to ensure that non-urban dwellers are not unfairly disadvantaged because they do not live in heavily populated areas. I know that this report will have very serious consequences for the people of Queensland. I ask the Minister for Transport, Mr Morris, to delay implementation of the Cameron report and to take into account the considerations I have mentioned in my contribution. Senator CRICHTON-BROWNE(Western Australia)(3.33) —I join my colleagues in commenting on the report of the Committee of Inquiry into the Distribution of Federal Road Grants. The Committee has recommended that shares of road funds should be determined by four main indicators of road funding requirements. These are: Axle loading, which measures pavement damage; road occupancy, which is a measure of total vehicle travel in passenger car equivalents; restoration, which refers to the funding needed to maintain a road in its original standard; and upgrading, which covers the funding aimed at raising the standard of a road to cater for the intensity of traffic use. In arriving at these recommendations one of the conclusions the Committee reached was that no compensation should be made for possible differences in road construction costs. At the outset I mention two changes under the present Federal Government which have made more acute the question of how the limited funds which are available for roads are distributed. These changes have affected the aggregate size of the pool of funds. The first was the decision in the 1983-84 Budget to index fuel excise. This decision resulted in the indexing of the special 2c per litre levy imposed on fuel by the Fraser Government and intended exclusively to fund the Australian bicentennial road development program. The extra revenue which the Government received was not devoted to roads but instead was kept for Consolidated Revenue. The calculation at August 1986 was that indexing of the 2c per litre levy made the payment 2.509c per litre. Using Budget estimates the failure of the Commonwealth, the present Government, to pay the indexation increases to the ABRD has resulted in a shortfall in road funding of $196,602,000. Senator Button —Shortfall against what? Senator CRICHTON-BROWNE —The shortfall in revenue which would normally have been available. Senator Button —What imaginary criterion is in your head? Senator CRICHTON-BROWNE —Simply providing the funding which comes from the indexation of the 2c levy-instead of slipping it into Consolidated Revenue, providing it for the purpose for which it was originally designed. The second of the two decisions was the decision last year to deprive the Australian land transport program of $50m by reducing the rate of excise previously earmarked to fund it. Of course, the fuel excise on consumers was not reduced, naturally enough. It was just that the proportion of it allocated to the ALTP was reduced with the Government, again, keeping the remainder. I note that these two funding arrangements related to the use a person made of the roads and the amount of fuel taxes paid to help sustain them. The report, while recognising that such a system of road funding did not answer all the questions, at least said that there was merit in the principle of spending on roads in proportion to where fuel is used. Similar user-pays solutions are suggested elsewhere and include suggestions such as a volume of traffic measure. It is regrettable that this Government has abandoned these two healthy principles. Another matter mentioned and rejected in the report was that road funding should be allocated with an eye to the cost disadvantages faced in certain regions. The report even went so far as to say that an assessment of disadvantages such as climate, distances and materials availability should not be undertaken even on State averages. The Committee said that this would be too hard to measure. The rejection of such an important principle in Federal-State funding has dangerous implications for Western Australia. Western Australia has but 9 per cent of the total Australian population, one-third of the Australian land mass, 28 per cent of Federal roads and 12 per cent of all roads, yet we receive something like 8.6 per cent of Federal Government funding and therefore we are very significantly disadvantaged. Not only are Western Australia's roads longer but also construction and main- tenance crews must travel further from centres of population to perform their work. Materials in many instances have to be hauled from the eastern States. The cost of living in many parts of northern Western Australia is far higher than it is in the cities and as a consequence larger salaries are required to be paid to obtain the skills of professional men. In many cases engineers have to be provided with housing. Also local governments are now exposed to the fringe benefits tax imposed by this Government. Question resolved in the affirmative. Debate resumed from 18 March, on motion by Senator Crowley: That the Senate take note of the paper. Senator VIGOR(South Australia)(3.38) —I commend the report of the Australian Science and Technology Council to the Senate. The 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 on research and development, compared to countries of similar size and wealth. What little is spent is mainly supplied out of the public purse. I hope that the 150 per cent tax concession will change this emphasis over time and commend the Government for this provision. Very little industrially-funded research and development is carried out in Australia, probably reflecting the high level of foreign ownership of Australian industry. On the other hand, it has been suggested that Australia's inadequate investment in research and development on its own behalf is partially responsible for our dependence on imported technology. It is note- worthy that even in countries where a large part of the research effort is industrially based, this is more and more dependent on funding from the public purse, and less and less dependent on private investment. The Australian Science and Technology Council recognises the essential part played by education-based research in universities and colleges of advanced education to the total national research effort. Thirty-five per cent of Australian research and development effort is carried out within educational institutions. The Commonwealth Tertiary Education Commission is responsible for all higher education funding in Australia, and it allocates a small proportion of its overall funding to cover research facilities within those institutions. This research is very broad-based, but spread very thinly and undirected, because of the close relationship between research funding and student numbers. In addition, teaching loads in these institutions are presumed to allow sufficient free time for academics to devote `spare time' to their own research, and to supervising research student projects. Research students are estimated to provide around 40 per cent of the academic research effort, or 14 per cent of Australia's overall research and development investment, and contribute substantially to the teaching program of the universities. ASTEC recommends substantially increasing the postgraduate award. In fact, I would like to see this post-graduate stipend at least doubled to bring it into line with the basic wage, to enable our highly qualified and productive research workers to compete in the market-place with a certain amount of dignity and to complete the requirements for higher degrees without sacrificing their ability to be ordinary citizens in society. There is no reason why good research should come from people who are as poor as church mice. University research is also funded directly through various special purpose granting bodies, who award funds for research mainly to individual projects which meet their criteria of excellence or applicability. There has been some questioning of this. Funding from both these sources has been declining in real terms, particularly as cuts in higher education expenditure have been, for the most part, at the expense of those funds earmarked for research. Australian educational institutions have established a number of really good companies which they have got off the ground to get themselves some money, but the current funding arrangements have made it very difficult for these funds to be used effectively in research. There has had to be some very creative accounting and I commend those bodies for that type of creative accounting. We need to have a good research policy. I seek leave, because of the shortness of time, to incorporate in Hansard one paragraph from the European File, which sets out the European Community's scientific policy in this area. Leave granted. The document read as follows- Stimulation of cooperation and scientific and technical exchanges: far too frequently European researchers communicate more freely with their American counterparts than with other Community countries. At the same time, young scientists often have problems finding jobs for which they were trained in their own countries, despite the underutilisation of equipment on other parts of the Community. In a special 60 million ECU program for 1985-88, the Community hopes to lay the foundations for a genuine European scientific community by giving research and travel grants, supporting the twinning of laboratories and promoting multi-disciplinary research. Priority areas include mathematics and computer science, advanced optics, certain sectors of chemistry, biocommunication, earth sciences, oceanography and scientific instrumentation. Senator VIGOR —I thank the Senate. This approach to co-ordinated national effort, and to technology transfer directly to industry, is proving highly successful in providing a career path for scientists and engineers into industry, as well as within the traditional publicly funded institutions. I also recommend that the Australian national research policy should consider regional co-operation in research and development, so that we can have a local regional economic community. Senator ARCHER(Tasmania)(3.43) —I too would like to speak on the report entitled `Improving the Research Performance of Australia's Universities and Other Higher Education Institutions'. I do not always agree with reports of the Australian Science and Technology Council, as those who listen to the Senate debates would know, but I do here in relation to direction, to the extent that I think ASTEC was a little timid and has taken only a few faltering steps towards meaningful reform. I think that it felt that it did not dare go much further than that for a start. The rationalisation of a number of research schemes, as proposed in the report, is significantly in line with Opposition discussions and gets my full support. I believe that there are far too many and they are far too fragmented. If the education body must start at all, it has to proceed from where the next range of researchers are coming from. Funding must be directed towards projects of national priority and genuine excellence. The freeing of academics and researchers to engage in wider fields is also very necessary and must be encouraged. There are too many good academics who are tied to their benches in various places and we are losing their capacity in the wider world. In the rush for project research that seems to be on at the moment we should be careful that we do not lose sight of the basic fundamentals. I was interested to note that item 6 of the summary states: Basic research also plays a major part in establishing a nation's credentials within the international scientific community. We all realise that, but there are times when we choose to overlook it. If we do not do some of this basic research, we will have nothing to exchange with other people. Item 9 states: The role of universities . . . is in the training of research workers. I repeat that because it is important. We are inclined to lose sight of the real purpose of these organisations. The distribution of dollars for research work has to be better. We have to have greater specialisation and greater concentration. I totally support the idea of a research council, as far as it goes-as I said, it does not go far enough. The request for an increase in funds is contained in one of the recommendations on page 9 of the report, which asks for an additional $20m for 1987-88. I regret that it is unrealistic. It is most unlikely that it will come. ASTEC has to recognise the fact that while it had an increase last year, and while I hope that it will get an increase this year, it has to work out how it can get better value for its money than it has in the past. As it is, we are in the position where the proposed Australian Research Council would be forced to shuffle approximately $45m a year and thus would be restricted in building and supporting project teams and urgent equipment purchases. That is why it is disappointing that ASTEC did not recommend that the Commonwealth Tertiary Education Commission research funds should be included in the Australian Research Council. There is no good reason why the $40m that CTEC distributes through its special research scheme, equipment grants and recurrent funds used for research should not also have been directed to the new ARC. Without any increase in taxpayer funding, the ARC could distribute approximately $85m based on two principal criteria-excellence, and national need or priority. That surely is where the money that we have available must be spent. Until the question of CTEC research funds is addressed there will continue to be two classes of university researchers; the first group whose research is funded after competitive assessment on the criteria of national priority and excellence, and the second group which is supported simply on the basis of student enrolment numbers. As far as possible, our research grants should be distributed on identical criteria, by competitive assessment. A critical factor in improving the performance of higher education research is breaking down the vicious circle that forces academics to split their time between research and teaching. We have to be able to make it possible for these people to participate in both areas. Equally important is the need to lift the restriction currently hindering researchers' capacity to interact more closely with industry and the wider community. For too long we have been reticent about formulating priorities on which we should distribute our research funding. Research of greater relevance will be an essential ingredient in improving the technological capacity of Australian industry. Senator HARRADINE(Tasmania)(3.48) —This report deserves much more than the five minutes that is allotted to each senator. Obviously a great deal of work has been done by members of the Australian Science and Technology Council. The recommendation for the establishment of the Australian Research Council needs to be considered thoroughly by reference to all of its ramifications. Not having the time to deal with all of the issues involved, I refer simply to one question which was raised in the debate on this subject yesterday. I refer to the comment made about research moneys for reproduction technology. I am not sure whether that comment was made by the speaker having regard to some suggestion by some people within the bureaucracy of ASTEC to take that question over and to give it some sort of priority, but if that is so I would like to issue a note of caution about that particular question. This area of reproductive technology has got into trouble mainly because it has been considered by the authorities as being an area for the scientists and the medical practitioners alone. That is one of the reasons that we got into trouble. I suppose it is one of the reasons that other people have got into trouble in other areas of endeavour. This question was addressed by the Family Law Council, which made a report to the Attorney-General (Mr Lionel Bowen) entitled `Creating Children-A uniform approach to the law and practice of reproductive technology in Australia'. After considering all the factors involved, the Family Law Council indicated that there should be a national council on reproductive technology one of whose functions would be, as stated on page 113 of the report: to monitor and make recommendations concerning present and future medical research and the practice of reproductive technology. In so doing, the national body should have the power to require notification of all developments in reproductive technology, including current and proposed research, and developments in practice and procedures Clearly, this is a question which is beyond the sole scope of scientists and medical practitioners. The Senate Select Committee on the Human Embryo Experimentation Bill 1985 had an extraordinary statement made to it by Professor Roger Short representing the Australian Academy of Science. I asked Professor Short in respect of human embryo experimentation and in respect of in vitro fertilisation why, in that situation, had the usual protocol not been followed: namely, that the first hypothesis is tested on an animal model and when that is found to be safe and effective the knowledge is applied to humans. I asked why this had not been done on non-human higher primates-the relevant animal model. He responded-and it is in the transcript-`Because they are an endangered species'. The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Order! The honourable senator's time has expired. Question resolved in the affirmative. Debate resumed from 18 March, on motion by Senator Reid: That the Senate take note of the paper. Senator REID(Australian Capital Territory)(3.54) —The annual report of the Australian Capital Territory Gaming and Liquor Authority deals with a considerable amount of money. It deals with the Australian Capital Territory Totalizator Agency Board operations, it deals with the poker machines, their licensing and turnover tax, and it deals with liquor licensing. The report indicates that the Authority turned off $557,895 for the year by way of distributions to Consolidated Revenue. I want to deal particularly with aspects of liquor licensing. Under the constitution of the Authority it issues, renews, suspends and cancels liquor licences, issues and cancels liquor permits, issues directions to licensees in various circumstances and calculates and collects liquor fees. The report deals more substantially with the numbers of permits issued and the numbers of licences, et cetera. It also goes on to deal with the question of under-age drinking. It is in the supervision of drinking that this becomes relevant. It indicates that during the year 161 minors were detected consuming liquor either on licensed premises or in a public place. It goes on to deal with that and the fact that Authority inspectors do what they can to supervise drinking, and in particular the activities of minors. I do not think any senators or members of this Parliament would disagree with the fact that it is an important area of its activity and that the increase in teenage drinking in particular is something that needs to be monitored. Police also take an interest in this problem, but the number of police available in the Australian Capital Territory is extremely limited. It is not an activity that they have the resources to pursue, so it is the inspectors of the Authority who are important in monitoring under-age drinking. The inspectors have increased the amount of after hours work over the year, which explains the increase in the number of people who have been apprehended. The report goes on to say: The Authority is greatly concerned at the extent of the problem- that is, under-age drinking- and for this reason a large portion of its inspectorial resources were devoted to this particular area of responsibility. One might say: `Why does it not increase the amount of inspection that goes on if that is its view?' But unfortunately it is not in a position to do that. It has other areas where the inspectors have duties in relation to the transfer of licences and the inspection of premises. It indicates that the principal reason for the lack of a schedule, in one area in particular, was the inability to keep pace with one, if it did exist, because of the time demands placed on inspectors by under-age drinking. So we get back to the same problem of a lack of resources in the area of inspectors for general inspections and supervision of under-age drinking. The problem arises because the Authority gets its inspectors from the Department of Territories and that Department's budget is restricted. It has, as it says in this report, only `relatively meagre overtime funding'. We have learnt just recently that the Department has to cut back $1m in the next few months of this financial year to meet its budget in relation to funding and, of course, it is in the area of overtime that cuts will be made. That has to happen. The matter I specifically want to highlight is that Consolidated Revenue received $5,440,958 from liquor licensing fees, representing an increase of 9.5 per cent over the previous year. Why then can there not be a specific allocation of funding to the Gaming and Liquor Authority to ensure that its responsibilities in the inspection of licensed premises where minors might be drinking are carried out properly and adequately? It seems quite absurd on the one hand to talk about the problem of under-age drinking, to gobble up nearly $5.5m worth of licence fees into Consolidated Revenue and on the other hand to restrict the allocation, through the Department of Territories, of the resources which can be allocated to inspectors to supervise this very important problem. We have our priorities quite wrong and this must be redressed. Senator VIGOR(South Australia)(3.59) —The latest-and once again late-report of the Australian Capital Territory Gaming and Liquor Authority, GALA, gives some insight into the problems confronting the Australian Capital Territory while the Department of Territories bumbles along untrammelled and the Minister for Territories (Mr Scholes) keeps well away from any type of proper administrative oversight The Australian Capital Territory definitely needs self-government. We need an elected body in the Australian Capital Territory which would make it possible for the types of problems that Senator Reid has brought up today to be aired in a better and more appropriate forum than the Senate. I would like to take up a few little points from the report. The choicest lament in this report is the following statement on page 3 of the report: With regard to the investment of Poker Machine Control operations moneys (Sections 92 and 45) the Ordinance is silent. However, at the request of the then Poker Machine Licensing Board, the then Minister approved on 20 September 1978 the amendment of the Poker Machine Control Ordinance 1975 to clarify the position. Such amending legislation is still to be implemented. This does not seem to be an isolated case in the Australian Capital Territory. The wheels of industry turn very slowly in the Department of Territories, especially when the Attorney-General's Department gets an opportunity to delay the process during the actual drafting of ordinances. But a delay from 1978 when it was said it would be ready, until now, is a little long. It will be interesting to pursue this type of activity in the Estimates committee hearings. Why these matters rarely, if ever, come to any type of satisfactory conclusion needs investigation. It may mean that people will be better employed supervising young people's drinking habits rather than sitting in their offices supervising the flow of papers associated with ordinances, because nothing seems to happen anyway. In this case the Auditor-General twice drew attention to the investment practices of the Authority and commented that some of them appeared to be outside what is permitted within its ordinances. Only in July 1986 did the Attorney-General's Department furnish the Authority with advice about its legal position under the Poker Machine Control Ordinance and other ordinances. This may indeed not even have happened had it not been for the inquiry held by the Senate Standing Committee on Finance and Government Operations. It should be automatic that a body which disagrees with an opinion of the Auditor-General should have access to the best possible advice within the Public Service on the legalities associated with these matters. The Department of Territories should not stand idly by and let these acts of omission happen. I believe that the problem of the secondment of staff from the Department of Territories to GALA which has been brought out excellently by Senator Reid, needs to be solved. The report states that there has been `little progress during the year under review towards finalising and passing the consolidated legislation' which would enable the staffing situation to be sorted out properly-yet another problem. The Authority notes that one of the consequences of this is that the ability to tackle extra under-age drinking is indeed seriously affected. The Authority's licensing section staff are all on secondment from the Department of Territories and subject to the overtime restrictions as set out by Senator Reid. Already the Department of Territories has had access or recourse to the Advance from the Minister for Finance. The Australian Capital Territory Trades and Labour Council has expressed its want of confidence in the senior managerial staff within the Department over the manner in which the crisis has unfolded. This is again another matter which will have to be ventilated through the Estimates committee. I believe we have to make certain that we solve these problems and that they are not left in the bottom drawer in a safe place just because the Australian Capital Territory community is denied a voice in running the day to day affairs of this Territory. Question resolved in the affirmative. Debate resumed from 18 March, on motion by Senator Reid: That the Senate take note of the paper. Senator REID(Australian Capital Territory)(4.04) —These financial statements were a short time ago in draft form in the annual report of the Australian Capital Territory Schools Authority and we now have the actual statements. I want to refer to that part of them which relates to the activities of the warehouse of the Authority which has now been closed. It was closed at the end of last year as a cost cutting measure as a result of the cuts in funding for the Australian Capital Territory Schools Authority and the staffing level that it had to adopt. This has caused a considerable amount of hardship and inconvenience for a number of the schools which are now faced with purchasing supplies at greatly increased cost to that which they were paying when they purchased them through the warehouse. What we really want to know is: Was the warehouse financially self-sufficient or not? That is a crucial question. Unfortunately, the financial statements do not make that clear. There is a statement of trading operations of the warehouse for the year ended 30 June 1986, indicating a profit of $24,840 which was transferred to the statement of activity, and which is shown there as part of the income of the Authority. But the statement also indicates that the warehouse operating overheads, including salaries, are incorporated in the statement of activity under `Administration Expenses'. But under that item they are not identified on their own, so it is not possible to tell exactly what the costs were. Most people think that the warehouse was closed merely to save a few staff positions so that these people could be used in other areas; maybe that is the case, maybe it is not. But if the warehouse was in fact operating financially independently the number of staff positions ought to be quite irrelevant and the activities of the warehouse should perhaps be continued. I ask the Authority to produce figures which show exactly what it did cost to run the warehouse. It should have been financially self-sufficient. If it was not, that is a matter which ought to be known. If it was, why were those staff positions taken merely for that reason and why was the warehouse not allowed to continue operating, given the very short notice that the schools had of its closing and given the difficulties many of them have been faced with since and the significantly increased charges and costs that they are now facing in acquiring goods which they would previously have bought from the warehouse? I hope that the Authority will produce these independent financial statements relating to the warehouse at the Supplementary Estimates so that the school community in the Australian Capital Territory can have a better understanding of what in fact went on. Question resolved in the affirmative. Debate resumed from 18 March, on motion by Senator Reid: That the Senate take note of the paper. Senator KILGARIFF(Northern Territory)(4.07) —I am very pleased to be able to make a few comments today on the tabling of the Aboriginal Hostels Ltd annual report. It is a report which I believe is of a very high standard. It details the success of this Aboriginal enterprise, and is a tribute to the people involved in Aboriginal hostels throughout Australia. No one is more deserving of credit for the performance of Aboriginal Hostels than I believe the Chairman of the organisation, Lois O'Donoghue, who has worked incredibly hard, along with her board of directors, and its Manager, Neville Perkins, to see Aboriginal Hostels Ltd realise its aims and objectives over the years. It has had a hard road to follow. Lois O'Donoghue is a great Aboriginal Australian whose work and dedication have been recognised through the awards of Commander of the British Empire, the CBE, and Australian Medal, AM. Those who work and deal with Lois on a day to day basis need no convincing of her commitment to the Aboriginal people. The achievements of Aboriginal Hostels Ltd are impressive. As the report shows, the company has provided 180 hostels with some 4,019 beds across Australia during 1985-86. Accommodation was offered to some specific categories of people including tertiary and secondary students, supporting mothers, aged persons, transients and town campers and alcohol rehabilitees. The company also provides multi-purpose hostels. The company has managed to keep the cost of the accommodation it provides incredibly low, particularly in view of the inflationary problems facing the nation today. The average cost to Aborigines or Islanders staying at the company's hostels is something like $6.16 per night. Hostels are provided throughout Australia in cities and towns, in country areas and in remote localities. In spite of difficulties in some locations, the company has persisted and the graphs on page 3 of the report indicate the company's impressive history of growth over the past five years. The difficulties in providing this sort of hostel accommodation have sometimes arisen out of vandalism and damage to the hostels. I live alongside the Sid Ross Hostel in Alice Springs and I am well aware of the activities of the hostel. I have also, unfortunately, seen the hostel suffer at the hands of vandals. Thankfully, it has been renovated and fully restored by Aboriginal Hostels to provide comfortable and adequate accommodation for Aboriginal people. It appears now to be under very responsible management. As I have said, the report of Aboriginal Hostels Ltd is an impressive one. It is one that other Aboriginal organisations would do well to follow. It has accounted for itself and its activities fully in its annual report, as clearly indicated by the Auditor-General. Unfortunately, there are still Aboriginal organisations that do not display this same high level of accountability and cannot boast the same impressive performance as Aboriginal Hostels Ltd. I can only recommend to them the example set by Aboriginal Hostels and urge them to follow this excellent example. I have spoken before on the subject of accountability in this phase of activities in Australia because a vast amount of money is spent in Aboriginal areas and there is far too little accountability. There is too much wastage. Money is urgently needed down in the dust, as I describe it, where Aboriginal people are suffering from malnutrition and living in poor circumstances, but the money is not getting down to them. The Government should ensure that other Aboriginal organisations are accountable to the same extent as Aboriginal Hostels Ltd, which has a very high standard of accountability. I hope that Aboriginal Hostels Ltd will be able to continue to extend its role of providing the many facets of accommodation, both in remote areas and in towns and cities, and at the same time continue to increase its mainline activities. It is under continuing pressure to provide more rooms and facilities. I commend the organisation for its 1985-86 annual report. Question resolved in the affirmative. Debate resumed from 19 February, on motion by Senator Parer: That the Senate, condemning the Hawke Labor Government for its mismanagement of the Australian economy which has resulted in- (a) huge rises in the cost of living, particularly in food prices which have increased by 8.6 per cent for the 12 months to December 1986; (b) the highest interest rate regime in the Western world, in particular, home loan interest rates which are at their highest levels since the Great Depression, resulting in a drastic downturn in home ownership in Australia; (c) huge increases in the prices of motor vehicles of approximately 40 per cent since 1983 which are a direct result of misguided Government policies, the depreciation of the Australian dollar and the introduction of the fringe benefits tax, resulting in lower sales and reduced opportunities; (d) falling disposable incomes for the majority of Australians caused by higher taxes as taxpayers move into the higher Keating tax brackets; (e) lack of job growth and continuing high levels of unemployment, particularly amongst our youth who are experiencing an unemployment rate between 21 and 23 per cent; (f) continuing high current account deficits, averaging in excess of $1b. per month on our balance of payments caused by inappropriate cost containment policies; (g) low levels of investment in new job creation industries such as import replacement and export industries; and (h) rapidly increasing foreign debt which has trebled since 1983, currently approximately $100b. and is estimated to increase by a further 50 per cent over the next 3 years unless Government policies are changed, calls upon the Hawke Labor Government to introduce a mini-Budget to include lower and flatter rates of income tax, significant reductions in Government expenditure, and the abolition of the fringe benefits tax, capital gains tax and the lump-sum superannuation tax. upon which Senator Vigor had moved by way of amendment: Leave out all words after ``include'', insert ``lower rates of income tax for Australians, and measures to-encourage export-directed industries with a high value-added; control flows of speculative capital in and out of the country, including introduction of a tax on moneys leaving the country; implement a significant and cost-effective reduction in Government expenditure; close off the taxation rorts of transfer pricing and negative gearing on interest paid on money borrowed for company takeovers; and calls on all parties and all Australians to unite in an effort to overcome the current economic crisis facing Australia.''. (Quorum formed) Senator MESSNER(South Australia)(4.14) —The motion that we are about to debate was moved on an earlier occasion, at my request, by my colleague Senator Parer. I will just refer to the text of the motion so as to refresh the memories of Government senators on the importance of this debate. I see that Senator Vigor has just entered the chamber; no doubt he will want to take part also in this matter of importance and urgency. The substance of this important motion is as follows: The Senate-condemning the Hawke Labor Government for its misconduct of Australia's economy, which has resulted in rapid rises in the cost of living, particularly in food prices; the highest interest rates in the Western world, which is undermining home ownership in Australia; rapid increases in prices of motor vehicles of the order of 40 per cent since 1983, caused by Government policies, devaluation and the fringe benefits tax, resulting in lower sales and reduced job opportunities; falling disposable incomes for Australians caused by higher taxes as taxpayers move into the higher Keating tax brackets; a lack of job growth; continuing high deficits averaging in excess of $1 billion per month on our balance of payments, caused by inappropriate cost containment policies; low investment in new job creating industries; rapidly increasing overseas debt, which has trebled since 1983 and is predicted to increase by a further 50 per cent in the next three years unless policies are changed-calls upon the Hawke Labor Government to introduce a mini-Budget to include lower and flatter income tax rates, reductions in Government expenditure, and abolition of the fringe benefits tax, capital gains tax and the lump sum superannuation tax. Having conveyed that motion to the Senate, I feel as though the speech has already been made. Certainly, the major points that are at issue in the Australian economy today are highlighted in the motion. What the Opposition is saying is that the Government is grossly mismanaging our economy, as it has over the last four years, in exactly the way in which it is set down in the motion. Let us just examine some of the points made in the motion. The first relates to the rapid rises in the cost of living. Everybody knows as they do their shopping each week in the supermarket what is happening to the price of goods in this country. We know that inflation is now running almost at the annual rate of 10 per cent. People might say: `What does that mean to me?' Many people understand what it means to them because they know that the dollar is buying significantly less in the supermarket today than it was a year ago. We find that prices are not going up just because of the activities of supermarkets or of retailers in marking them up. The rises come as a direct result and effect of this Government's policies. Let us just consider a couple of those policies. Let us consider what has happened with government charges. We have seen increases with new taxes coming into existence. The fringe benefits tax has added significantly to the cost of business and must be reflected in the prices of goods sold in the community. We are seeing increases in the cost of living as a result of fuel prices and petrol prices for the family motor car. Every six months there is automatic indexation of the excises applicable to fuels. As a result, petrol prices rise automatically in line with that increase in the tax. That is government policy. It is not just something brought about through the greed of businessmen, as the Government would have us believe. It is brought about by direct government policy introduced in 1983 by Mr Keating as the Treasurer which, of course, has the direct result of forcing up the price of fuel. Anything that forces up the price of fuel forces up the cost of living because the price of goods that are purchased, whether they are produced within factories in Australia or outside, is driven up as a result of any increase in the cost of fuel because of the effect on freight costs. Senator Walsh —What do you think about doctors trying to double the price of their services in the Australian Capital Territory? Senator MESSNER —This Government's Medicare levy has driven up the cost of health care in this country enormously. The cost of health insurance has gone through the roof under this Government. Already in only the last few weeks we have seen increases of the order of 25 per cent in private health insurance, as a direct result of this Government's Budget last August. Senator Walsh should not talk to us about health expenses. It is the Government which is causing high health costs and he knows it. Senator Robert Ray —Not so loud; we are trying to sleep here. Senator MESSNER —Perhaps Senator Robert Ray would like to sleep outside. Maybe he could get better treatment from the doctors out there. Let us continue with some of these charges that are affecting the prices of goods in this country. Clearly devaluation of the Australian dollar has caused enormous increases in the cost of goods and materials in this country. That has occurred because this Government has conducted a policy over the last several months and years of deliberately forcing the Australian dollar down. That has been its policy. We have seen the dollar crash from about 100c to the United States dollar in 1983 to about 65c or 66c today. That is a 33 1/3 per cent change in the value of the Australian currency. It is causing enormous increases in the costs of materials and goods imported from overseas. Those imported goods are part of the goods purchased by Australian families every day. It is reflected in the cost of goods on supermarket shelves, and so drives up prices. This is a direct result of government policy. This is not some kind of activity or conspiracy by businessmen or anybody else to drive prices up; this is government policy in action, and it is the cause of the inflation in this country which is affecting the standard of living of every one of us. The Government stands condemned on that issue alone because, by driving the cost of living up, it is reducing the income that is available to families to pay off their debts or to set aside for later development, additions to their homes or whatever. The capacity of families to look after themselves is being restricted. Families will need more disposable income to put aside in order to look after themselves because, again as a direct result of this Government's policies, interest rates on their house mortgages are going through the roof. We now have the highest interest rates in real terms that this country has seen for 50 years. Young couples are unable to build or buy new homes. People who are already half-way through their mortgages are finding that more and more of their monthly income is being swallowed up in higher payments to the building societies or the banks. Consequently, they have less and less money left over to meet the increased prices of goods in the supermarkets. Is it any wonder that people feel that their standards of living are dropping? Of course standards of living are dropping. This is also having other effects. It is reducing the capacity of the building industry to increase the number of jobs in the Australian community. That means a slowdown in economic activity. The Government has already acknowledged that the estimate in last year's Budget of the number of homes expected to be built has fallen from something like 145,000 to about 120,000, as set down in the report of the Indicative Planning Council for the Housing Industry last week. The Government would have us believe that this tragedy is about to end, that there will be a turning of the corner and that interest rates will start to fall. But that lie was debunked in this place by the Minister for Education (Senator Ryan) a few weeks ago when, by quoting from a government document, she admitted that interest rates were not expected to fall at least until the end of this year and probably well into 1988. That has been confirmed by later information. Again, this is not some accident of history or because some greedy businessman is trying to rip off the public; this is government policy in action. It is the Hawke-Keating Government's policies that are bringing about these results. This mismanagement of the Australian economy by the Hawke Government is destroying the standards of living of Australians. In the tax area look at the effect of the abolition of negative gearing and the introduction of the capital gains tax on the rental market for people who are unable to purchase their homes and who are forced to rent. In recent articles it is now said that the average cost of rental of a three-bedroom house in Sydney is up to $256 a week and rising. The statistics show that less than one per cent of homes are vacant and available for rental in the Sydney metropolitan area. That is reflected all over Australia, in Perth, Adelaide, Melbourne and Brisbane. Rents are rising dramatically and people will find it increasingly difficult not only to find houses in which to live but also to be able to afford the rents which are being demanded in a shrinking market supply. That again is a direct result of this Government's policies. Senator Vigor —What would a coalition government do about it? Senator MESSNER —Senator Vigor will know when I come to that point a little later because that is an important part of this motion. The problems people have in the rental area in Australia have come as a direct result of government policy. We have seen the abolition of negative gearing. That was supposed to save the Government something like $50m a year in taxes, so it said, but it has driven up rents to an exorbitant degree. It is costing the community an enormous amount, far greater than that. But I would like to know what is happening to those on social security who are renting in the market-place. Quite clearly they will find it extraordinarily difficult to meet their rent out of their social security payments. That means that eventually the Government will be forced to provide increased rental assistance through the social security system for those people, but at what cost? It will be at an enormous cost. The average rent has to go up by only $5 a week and the Government will lose more than double the amount of money it saved through the abolition of negative gearing by virtue of that increased cost to the community. It will cost $130m a year on the social security budget to recompense those people. That just shows the stupidity of this kind of government management. This Hawke-Keating Labor Government is destroying the Australian economy. Let us look at the motor vehicle industry. We know what the fringe benefits tax and interest rates have done for that. The market has declined by an average of 28 per cent in the last year. Many dealerships all over the cities and towns of Australia have closed as a result and jobs have been lost in that industry. Motor vehicle prices have gone through the roof and people are no longer able to afford new vehicles. Clearly the market is going to be destroyed as a result, with consequent losses in manufacturing industry as well. That has special consequences for my own State of South Australia because of its heavy manufacturing base in motor vehicles. Where does all this stem from? Is it just some kind of aberration or some kind of outside influence that is affecting Australia? Of course, the Government would argue that it is, but it is not. Clearly, all these things have occurred because our cost of living and of manufacture has been driven up to such a high degree by this Government's policies that we are unable to compete on international markets. We are unable to export enough goods at the right price to be able to offset the cost of our imports. As a result, we are finding a greater gap develop between the cost of buying imports and the value we get for our exports. That means that every month we are going down the drain at the rate of $1,000m-something like $4,600 a minute. That is the rate at which this country is rapidly going down the gurgler. We have to find enough money every month to be able to meet that deficit. It is just the same as a family living beyond its income. If we do not have the money in the bank we have to borrow it. That is what Australia has been doing since the Hawke Labor Government came to power. It has been going to the world markets and saying to the people who are saving in Japan, America and Europe: `We have to borrow from you so that we can afford to pay you for what we have bought from you'. We are doing that at the rate of $1 billion a month. The level of borrowing that we have undertaken since this Government came to power in 1983 has gone from about $33,000m to about $105,000m. That is the measure of what this Government has done to this nation-to put us and our children into debt. That debt can be repaid only by our exports and productivity in future. Senator Vigor —Who has the debt? Senator MESSNER —Senator Vigor will acknowledge that the debt is growing at an enormous rate. That situation has the effect of not only taking money out of the hands of future generations but also putting higher cost burdens on to the Australian taxpayer every day. We know that the Federal Government's borrowings alone, which are part of that $100 billion-plus, amount to a charge on the Federal Government Budget of $7,000m to $8,000m a year. That means that 10c of every dollar that is raised by the Federal Government in taxes goes to meet the interest and servicing requirements on the Federal Government's debt. That amount is growing at a rapid rate each year. We have seen it more than double in the last two years. The taxes that are capable of being raised by the Australian Government are being mortgaged to overseas lenders to the tune of 10 per cent a year. Before we start to pay for social security, education, defence and health, we have to pay 10c in the dollar to service the interest on our overseas debt. What could be more condemnatory of this Government's management than to realise that before we get out of bed every morning we have to pay overseas lenders 10c of every dollar that we raise? That is incredible. It is the crux of the Government's problem. It is the reason why we have an unstable dollar and a dollar that is floating down. It is the reason why there is pressure on the Australian economy which is feeding through into inflation and causing the cost of living of the average Australian to continue to rise and which is driving up the cost of services and goods in the supermarkets. That is how the Government is destroying the Australian economy. Let us consider the Government's policies on tax. The Government introduced the so-called reform of the tax system. The Government said: `We will impose new taxes on you so that we can give you some tax back in exchange'. That is nowhere near the truth of the matter. Indeed, the new taxes-the capital gains tax, the fringe benefits tax, and so on-will raise about only 30 per cent of the total needed to meet the Government's tax cuts which are to be put in place on 1 July this year. That means that two-thirds or more of the cost of the tax cuts will have to be found merely from inflation. The Government intends to take out of the hands of people, money which they have received by way of wage increases through inflation and say: `Having taken that amount, we will give you back the same amount of money'. That is all the Government is doing. Inflation is taking money out of the hands of people and the Government is handing it back as a tax cut. People are not gaining; they know that. They know how stupid the tax cuts which were introduced on 1 December were. They were insignificant compared with the problems that people have in meeting their liabilities each week. They know that all they are getting back is what they have lost already through inflation. That is all the Government is doing. It is trying to cover up its lack of adventurous spirit in this area in order to give some kind of impression that it is dealing with the tax problem. It is doing no such thing at all. We know that because the total amount of tax being collected by the Government is now at the highest level it has been under any government in this nation's history. It has now reached 29 per cent of the gross domestic product, and obviously that figure is not declining. Clearly, this Government is a high taxing government. It seeks to tax people more and more by the introduction of more and more taxes. Clearly, that is destroying the ability of families to look after themselves. They should be left with more money in their hands so that they can save for the future. The Government claims that taxes are part of its success story since it came to office. Yet the average single income family on average earnings of around $23,000 a year would have faced, when Fraser went out of power, a tax rate on the next dollar earned of 30 per cent. Today a person in that position suffers tax at the rate of 40 per cent. If he goes to a slightly higher level and earns in excess of $25,000, which is soon likely through the increased inflation that will occur under this Government, the rate leaps to 46 per cent. The increase in the marginal rate of income tax payable by an average single income family has risen by over 50 per cent since this Government came to power in 1983. This is a deplorable history, a deplorable story-a saga of failed governments and lost opportunities. In no area has this economy improved under this Government. In fact, it has slid back. In the last few weeks the disastrous announcement was made that investment is collapsing under the weight of costs imposed by the Government and the imposition of new taxes such as the capital gains tax and the fringe benefits tax. Earlier Senator Vigor challenged me to say what the Opposition will do about this situation when it comes to government at the end of the year, or whenever the election is held. There might well be an election within six weeks if Senator Vigor's Party sticks with the Liberal and National parties and opposes the identity card legislation that is coming forward. I hope that it will. In that event, we may well have an election on 9 May. Senator Walsh —Do you guarantee that all your lot will vote against it? Senator MESSNER —Does Senator Walsh want an election on 9 May? We will face the Government in an election on 9 May, if the Government chooses to hold one. I look forward to meeting Senator Walsh on platforms and talking about tax. Let us focus on a possible election on 9 May. If the Government goes ahead it would nicely avoid having to put its cards on the table in the statement to come on banana republic day, 14 May, when it is due to tell us what it will do in its mini-Budget. At the same time it would have imposed an extra cost of $40m on the community just to run the election. Whereas the Government says that it is going to find ways and means of saving $2 billion in Budget expenditure, it is going to try to avoid having to do that and spend $40m on running an election campaign. That is a very incongruous situation if ever there was one. I hope even this Government wakes up to the stupidity of that before it is forced to go down in a flaming heap in the election, whenever it might be. I return to Senator Vigor's question about what the Liberal and National parties will do in government. We are looking firstly to a radical change of the taxation system. We believe that we should have lower and flatter rates of income tax. We believe-- Senator Walsh —And a VAT. Senator MESSNER —Not a VAT. I am glad Senator Walsh interjected. I put the lie to that straightaway. We are not interested in a value added tax at all. Senator Walsh will get a surprise when he sees our proposals for the broadening, gradually and predictably, of the indirect tax base. He will wonder why he did not think of it. Senator Walsh —Ah, not a VAT; a general consumption tax. Senator MESSNER —Not at all, a gradual broadening of the indirect tax base is our commitment. I will say more on that later. I would love to have a debate on that with Senator Walsh a little later during the election campaign. Most of all, we have to recognise that there is only one way in which the total burden of taxation in this country will be reduced and that is by reducing the total burden of government expenditure. That clearly is an area that deserves attention. The Government must reduce its overall level of expenditure in order to bring down the total level of taxation. That is our commitment. We will be detailing at a later stage during the election campaign how we will be attacking those particular matters. They are the keys to how there will be a proper and real change in the taxation system in this country. We will not apply the kind of cosmetic approach which the Government has adopted-the meaningless approach which is only to impose further costs on business, drive up inflation, reduce the standard of living of every Australian and hand back to people part of what has already been taken from them in inflation. That is the Government's strategy; it is not the strategy of the Liberal and National parties. The Government will see when we put our campaign manifesto to the people how clearly we will set out those matters. Senator Walsh will be amazed at the clarity and simplicity of our proposals which will leave him stranded in the ground that he is now bogged down in. Since Labor came to power it has made an absolute shambles of the Australian economy. Senator Siddons —When shall we see the proposals? Senator MESSNER —I told honourable senators that; when we get close to the election campaign. I reiterate the promise of the Liberal and National parties that we will, upon coming to government, immediately abolish the fringe benefits tax, the capital gains tax and the lump sum superannuation tax. That is our firm commitment and they are the promises, together with our broader taxation policy, which we will be going forward with at the time of the election. Senator BOLKUS(South Australia)(4.44) —It is quite obvious from what Senator Messner said that at this stage the electorate does not have any choice when it comes to economic management. It is also obvious why the present Leader of the Liberal Party, Mr Howard, is in immense trouble within his Party. For the last half hour or so we have had a tirade of empty rhetoric without substance and without recognition of reality both present and past. We have had from Senator Messner a great indication why Opposition Leader Howard is in trouble. Mr Howard made a great and grave mistake when he took over the Opposition leadership. He did not recognise the talent that was available to him on the back bench-Senator Michael Baume, Senator Hill and others. He insisted on persevering with Senator Messner and Mr Carlton, the lightweights of economic policy formulation. He is now paying the price for it. Not only have they not come up with the goods in terms of economic policy but also they have proven to be a great burden for the current Leader of the Liberal Party to handle. It is little wonder that we are now talking about leadership changes because the Howard team has not come up to scratch. It could not win a mini-league game and that is quite apparent to everybody. Anybody listening to this debate would think that Senator Messner was standing in the chamber waving a wand with which in one instant he, with his coterie of friends, could fix up Australia's economic problems. He said that it would be easy and simple and that all we have to do is this, this and this to fix them all tomorrow. The reality is that whether Senator Messner, the Government or the Australian Democrats say that the problems can be fixed tomorrow, the people will not believe it. They recognise that the problems are deep rooted and have been there for the last 20 years at least. They do not believe Senator Messner when he gets up and says that he will fix the problems-the quick fix, the Joh Bjelke-Petersen snake oil remedy. It demeans us as senators and this institution for Senator Messner to get up time and time again with this fantasy rhetoric of his. The stark reality is that the electorate has two options. It has the performance presented to it by the Hawke Government over the last four years and the alternative presented by the Opposition. On the one hand we have policy formulation in public involving constituent groups within the electorate. We have a policy geared towards redistribution and equity and one that understands the long term and short term problems of our economy, whether they are industry problems, problems between employers and employees or taxation problems. The Government has worked assiduously in involving the community in meeting the challenge of those problems. On the other hand we have a coterie of lascivious, greedy, white-shoe operators in Queensland pushing around the Liberal Party. The once-great Liberal Party is being dictated to not by the National Party, not by members of this Parliament but by a group of grubby little businessmen in Surfers Paradise who sit around in dark rooms filtering through bottles of French champagne, forcing their ugly, greedy politics on the electorate. Senator Reid —You are very well informed. Senator BOLKUS —If Senator Reid does not believe it, I shall quote something from her current leader, John Howard. Let us see what John Howard said about the Queensland Premier and his group of advisers, who will get theirs in due course. On radio 3LO on 19 February, John Howard said: I have probably more in common with the Queensland Premier on many issues than some other Liberals. I am very close to him on unions. In fact our views are identical. Our views on family values are very close indeed and both of us want lower tax. It's not policies that are in dispute at the moment, Let me underline that. He said: It's not policies that are in dispute at the moment, its political power. That's what its all about. That indeed is what it is all about. The current Leader of the Liberal Party has locked himself right in to Joh Bjelke-Petersen policies and that is what we expect. They are policies which have been developed by the Mike Gores of this world, by the tax avoiders, the people who ran the Liberal Party when it was last in government and they are there set to prey again. Senator Messner —You do not support the family. Senator BOLKUS —The pity for Senator Messner is that when the coup comes he will be replaced by the Senator Baumes of this world. Alternatives have been mentioned. Somewhere early in Senator Messner's speech he said that on every conceivable level of economic activity this Government has slipped backwards. I can understand that his recollection of recent facts might be difficult and may in fact be more difficult when it comes to the history of the Government in which he participated, the Fraser Government, which was tossed out in March 1983. Let us have a close analytical look, without the rhetoric that Senator Messner fantasises over, at some of the indicators that he mentioned. The reality is that for five excruciating years John Howard, failed Treasurer, left behind a legacy of huge Budget overruns-he could not add up-widespread policy reverses, a general stagnation of the economy and a sustained credit squeeze. He floated policy after policy on the wages front. Let us look as inflation. Under John Howard we had record high inflation, 11.2 per cent, together with an unemployment rate of 10.3 per cent. Let us not forget that. The Hawke Labor Government, in its first three years, delivered a break in the inflation rate. Admittedly, we have been confronted with world economic problems, a slump in world trade and so on, but everyone in this Parliament should recognise the implications of those things. It is just evidence of economic illiteracy if the Opposition cannot understand that. Let us compare the current inflation rate to the inflation rate under the Fraser Government, under John Howard as Treasurer, of 11.2 per cent. In 1982-83 it was 11.5 per cent. It is an improvement, Senator Messner. It is one that evidences, once again, the Opposition's illiteracy in this area. Let us talk about growth, because growth is the God of economic policy these days. John Howard excelled himself and will be remembered in the economic history books because he was a Treasurer who gave us not growth but negative growth. He took the country backwards. In the first three years of the Hawke Labor Government the economy grew strongly and at a sustained rate. That is the comparison we have to look at. When we look at whether we have slipped backwards or not, that is the comparison-5.4 per cent growth in 1983-84, 4.4 per cent in 1984-85, and 3.7 per cent in 1985-86. That is to be compared with negative growth under Mr Howard. Let us look at monetary policy. This is one area where John Howard could not get his facts right and could not get his sums right. There were two years in the Fraser Government where the Government achieved its money supply projections. They were years before the current Liberal Party leader was Treasurer. The current leader overshot his expenditure targets for every one of his Budgets and it should not be forgotten. If we are talking about economic incompetence, the person who cannot add up must be the most incompetent of the lot. Senator Walsh —He reckons that he can count now though. Senator BOLKUS —That raises a rather interesting point, Senator Walsh; he reckons he can count. It has been brought to my attention that Mr Howard's numbers man in this place is Senator Messner. The evidence of the fact that John Howard is in great problems at the moment is the speech we heard half an hour ago. Tony Messner could not add up on the economy, and it is quite obvious from the way Andrew Peacock is stalking around this place at the moment with Michael Hodgman as bridesmaid that he cannot count numbers either. Let us look at unemployment rates. I will just go back to the economic record of this Government compared to that of the previous Government. Under the Hawke Government we have had increases in unemployment, not at a time of economic stagnation, but at a time when the labour force participation rate has, in fact, risen, and risen by 1 1/2 per cent. So if honourable senators are looking at areas and economic indicators, they are there-unemployment, economic growth, employment, inflation and labour costs. All those indicators are there and all of them are evidence of progress. We have not been slipping backwards. But we are presented by this supercilious attitude of `This Government is no good; we have the answers'. Senator Vigor asked for the answers; Senator Siddons asked for the answers. We are all waiting for them. On 19 February we got some of them. On about 20 February there was a release from Senator Messner's office late on a Friday afternoon-this was in order to pick up the Press on Saturday morning-of a costing of the Opposition's policies. It was released to highlight the inadequacies of Joh and Joh's policies-the policies that are identical to those of current Opposition leader, Mr Howard. We have got the costing of the policies. Senator Messner said: `It will not cost us much, just $870m'. Where in that costing are all these policies that Senator Messner has mentioned during his contribution this afternoon? How does he pay for abolition of the capital gains tax? I will go through the list. In fact, Senator Messner and the Opposition have made 13 promises. Senator Messner —Three. Senator BOLKUS —We are back to three now, are we? Which ones are they? Senator Messner —Capital gains tax, fringe benefits tax and lump sum superannuation tax. Senator BOLKUS —So all the rest are forgotten. Senator Messner —That's right. Senator BOLKUS —We have been promised `that substantiation would be dropped'. It has been forgotten. Tax deduction and deductibility of entertainment expenses-are we going ahead with that one? Senator Archer —You tell us. Senator BOLKUS —We are going ahead with that one, are we? It was not in the final costing that was produced by whizz kid Senator Messner. The Opposition promised to restore negative gearing for property investment. It was not referred to; it was not costed. Senator Messner —Who said that? Senator BOLKUS —The honourable senator said that. The honourable senator can go back to the quotations if he wants to. The Opposition promised implementation of income splitting at a cost of $2.85 billion. That has, once again, been forgotten; it is out of the 20 February document. And we go on. Repeal of the wine sales tax was forgotten; it was not costed. It is very easy for Senator Messner to tell us that all his promises will cost $870m and that he would decrease public expenditure; but the reality is that in that document, the one that explodes Opposition policies, we find that much of those populist policies that Senator Messner is running around the country trying to seduce voters with have been forgotten. They have not been costed and they are not on the agenda. The Opposition said: `We are going to fully rebate the excise on fuel, abolish automatic fuel excise indexation, abolish meat inspection charges, and repeal the wine tax'-all those promises. The Opposition also promised to introduce a child care rebate, and to restore income equalisation deposits. On the list goes. Where are the promises now? What is the adequacy of Opposition costing now? Senator Messner —Mr Acting Deputy President, I raise a point of order. I think that since we are being challenged on this matter and it is a matter that would assist Senator Bolkus to understand the thrust of the debate, we should say that the Leader of the Opposition, Mr Howard, in his reply to the Budget, said quite clearly that there were only three commitments-this happened last August and Senator Bolkus should go back and check it out-the abolition of the lump sum superannuation tax, the fringe benefits tax and the capital gains tax. The one other thing that has not been mentioned is the abolition of the assets test on pensions. They are our only commitments. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! There is no point of order. Senator BOLKUS —There is obviously no point of order but, once again, we get highlighted the problem that members of the Opposition have in their economic policy. Senator Messner might say that today, but for the last 12 months Opposition people have been running around the country in South Australia making all sorts of promises along the lines that I have mentioned. They have not been disputed by the leadership; in fact, they have been embraced by the leadership over that time. But when it comes to harsh economic reality, the figures do not add up. Senator Messner's interjection now, contrary to statements from his office the day that that statement was released, pins the Opposition down to three policies now. So let us stop the hypocrisy on all the others, Senator Messner. We will challenge him on that. It is no wonder, therefore, that out in the community people are not only confused, but have written the Opposition off. Even the Australian on 10 January, in an article about Opposition tax policy, stated: Pick a tax policy, any tax policy. If you are buying conservative you can have an old federalist tax policy or you can have a new centralised one, and you can have either in any one of several tiers or any degree of inclination in flatness. It is the silly season for politics and the Liberal and National parties are excelling themselves even by their previous best efforts. It is no wonder the credibility of the Opposition is as low as it stands now. Members of the Opposition put themselves up as economic managers. As I have shown so far in my contribution, the record shows that their performance in this job was one of disaster. I will not say much more other than to make the point in closing-I know other speakers on the Government side want to speak as well-that I made when I started off. The electorate will not be conned by superficial responses. Not only that; they will not be seduced by policies that promise economic and industrial disruption, policies that promise economic redistribution from the poor to the wealthy, and policies that do not stand up to the light of scrutiny. It is no wonder, therefore, that people around this place are running around expecting a change of leadership in the Opposition. Hopefully, with that leadership change we shall get some more-- Senator Vigor —Mr Acting Deputy President, I raise a point of order. I believe that we are actually discussing the amendment moved by me to the Opposition's motion. That has hardly been mentioned by the speaker. He is now addressing himself to something-- The ACTING DEPUTY PRESIDENT — Order! There is no point of order. Both the motion and the amendment are before the Senate. Senator BOLKUS —I thank Senator Vigor for giving me half a second to catch my breath and make the final point. What we have got to recognise, Senator Messner, is that the root cause of the problem that the economy faces does not go back to the last two or three years; it goes back to 30 years of coalition policy. Successive coalition governments were prepared to turn the Australian economy into a common agrarian economy, a Third World economy selling mainly food products and unprocessed materials. There was no concern about performance or structure of our manufacturing base, our employment base or our services sector. All that 20 or 30 years of disregard has given us a legacy that is not easy to redress, but this Government is prepared to meet that challenge. Senator SIDDONS(Victoria)(5.00) —I asked Senator Messner to say when we were going to see the Opposition's policies on the management of the economy. He answered: `You will see them closer to an election'. The fact that there could be an election at any time-I read a prediction about May in the media this morning-would seem to me to make that a very precarious policy for the Opposition. However, it is even more irresponsible for the Opposition to have no policies at all which can be debated constructively in this chamber when the nation is in such a perilous situation. We are on the brink of bankruptcy. We run the danger of having our lines of credit cut off. We run the danger of becoming a satellite of Japan because we will be in debt to Japan to such a degree. Yet the Opposition refuses to give us a constructive proposal as to where Australia should head from here. That is irresponsible. We heard from Senator Bolkus, who is no longer in the chamber, that we had 20 or 30 years, I think he said, of Liberal-Country Party mismanagement which turned our economy into an agrarian economy and dissipated our industrial base. That is very true. However, I do not see too many constructive suggestions from the Australian Labor Party as to how we can rebuild our industrial base. It is obvious to most people, and certainly to the general public, that unless Australia rebuilds its manufacturing base and its industries and it exports manufactured goods we will never pay our own way again; we will never get out of debt. But the Government has been very slow. I would have thought that a Labor government would have attacked the problem aggressively and come up with innovative policies to get industry moving again. But so far nothing has happened. Investment in industry is stagnant. There has been no new investment in manufacturing for the last decade-a fact which has not changed since the Labor Party came to office. Our industrial development is still stagnant. It is true that the dissipation of our industrial base started in the early 1970s under the Liberal-Country Party Government but the Labor Party has done nothing to change the situation. Debates which talk about generalities and get involved in mud-slinging get nowhere. They will not get anywhere until the Opposition comes clean and says how it would manage the economy. From what Mr Howard and the Opposition spokesperson for the Treasury have said, I can conclude only that the Opposition is advocating an almost identical policy to that being applied by the Labor Party and advocated by the Treasury, namely, that market forces should have free rein in the economy and that governments should not interfere or assist in controlling, directing or encouraging the economy in certain directions. The message of the Unite Australia Party is very clear and straightforward: We have to manage the economy. Unless we do that we will never get out of the situation we are in. Unless we control the overseas money markets Australia will inevitably become a satellite of overseas finance. We are very close to that happening now. I wish to cite a few figures to illustrate the seriousness of the problem we currently face. We are told that we must have foreign capital; that is the only way we can balance our Budget. Australia is hooked on foreign capital like a drug. We think we have to have it. We think we cannot live without it. Other countries do. Ninety per cent of the capital that has gone into developing Australia over the last two decades has been Australian money, Australian capital. Only 10 per cent of it has been foreign. Unfortunately, that 10 per cent of foreign capital has been directed at buying out our wealth-producing industries. That has to stop. We have to stop borrowing money. We cannot do it straightaway, but we could have a plan over a five-year period to get free of foreign capital. Why we have to do so becomes very clear when we look at a breakdown of the balance of trade figures. In 1986-87 the balance of trade is $4 billion, but the balance on invisibles is $10 billion. Invisibles, as we all know, are things such as interest, dividends and services such as shipping and insurance; however, particularly dividends and interest. Our dividend and interest bill is so high because of the money we have borrowed and because of the degree of foreign ownership of Australian industries. Foreign ownership means simply that all the dividends go out of the country and Australia has to find the foreign exchange to pay for the transferal of those dividends to the overseas owners of our wealth-producing industries. So we have to stop borrowing money. We do not need it. Other countries can survive without it. India does not go round borrowing money. Japan does not go round borrowing money. They export. It is very largely an Australian disease which perhaps some Latin American countries have also. But Australia, in particular, has been saying for 20 years that we cannot develop without foreign capital. We can, and now we must. We have no alternative. Interest rates are another fundamental problem. Let us consider the situation. Interest rates in Japan run at 4 per cent; in Germany, at 4.7 per cent; in France, at 6 per cent and so on. In Australia interest rates are 18 per cent. Why are interest rates in Australia 18 per cent? It is simply because we are trying to bribe foreigners to send capital across to Australia. We are trying to encourage foreign money to flow into the country. We have to do without foreign capital and reregulate our financial institutions. There is no other way we will get interest rates down. There is no other way we will control interest rates on housing, important investment and so on without regulating the financial institutions of the country. That means regulating the banking system and the non-banking financial system. The Government does not need any new legislation to do this. All it has to do is say to the banking system, through the Reserve Bank of Australia: `We want to encourage investment into productive areas. Make loans available to entrepreneurs who want to develop an industry but be hard on people who want loans to import luxury goods and so forth'. One can very easily control investment in this country through the banking system but one has to reregulate it. One has to go back to the practice of the 1960s and early 1970s. Senator Messner —What would that do to the dollar? Senator SIDDONS —I do not think it would do very much to the dollar at all. As well as reregulating the financial system we have to introduce exchange controls. Those two things go together. In that way we can prevent large amounts of money being withdrawn from the country. Senator Messner —Thank God you won't be in government. Senator SIDDONS —Senator Messner sits there with a smirk on his face. He has spent half an hour saying nothing about how the Opposition would manage the economy. If he has a better solution, I would love to hear it. I would love to debate it with him. I am putting forward a practical solution to our problem. The Opposition might not like additional controls on the economy. It might not like to go back to exchange control. But if Senator Messner can tell me an alternative, I would be delighted to hear it. There is no alternative. Time has run out. We have borrowed as much as we can borrow. We have to stop borrowing and reintroduce exchange controls to protect the Australian dollar. We have to build our industries. How can we do that? We have to do it by direct government assistance very selectively applied to those industries that show the greatest potential to earn export dollars for the country. We have to direct government assistance with rifle-shot accuracy to those industries which will show the greatest benefit to the country. In the past the Government has brought in such things as an investment allowance to assist industry, but that was spread so thinly over both secondary and primary industries that it achieved virtually nothing in re-equipping our industries. We cannot afford these broad brush solutions. We have to be selective as to where government assistance is directed. This means that governments have to pick winners, and if they pick winners they will also pick losers. But any assistance to industry by the Government should be very carefully assessed on very carefully laid down criteria. There should be a very definite time limit. If the particular assistance is not effective it should be withdrawn straight away. Criteria that the Government could use for assistance could include such things as profitability, export orientation, local content and perhaps the market share that that industry enjoys. The Government could use those four criteria and work out a score on each one. If an industry has, say, a high score on the first three and a low score on the fourth, obviously it would be a good candidate for government assistance. These things can be done and have to be done if we are to rebuild our industrial base quickly. What sorts of assistance to industry do we suggest? Low interest finance on the production of an export order is an example. The fact is that many Japanese industries have virtually financed their development simply by showing export orders to the Government, which in turn has given them low interest finance to the extent of those export orders. That is a very simple approach which was very effective in Japan. I believe that there should be a facility for concessional finance to those industries that can show that they have the potential to earn export dollars. There should certainly be a commitment on government purchasing policies. If 5 or 10 per cent of government purchases were directed towards Australian production or Australian sourcing, $1 billion to $1.5 billion would be saved on our balance of payments debt. The Government should give direct assistance in marketing, export finance and patent protection on new and innovative ideas and inventions. It should have local content rules for resource and infrastructure projects. It should have new initiatives in recruitment and training of skilled staff. I know that other senators wish to speak in this debate, so I conclude by saying simply that while Senator Messner and his colleagues may not like the idea of re-regulation or the Government directly co-operating in assisting industry they certainly like the idea of the Government sitting back and letting market forces do what they will. They philosophically agree with the laissez-faire approach of the nineteenth century, but these policies have been tried and have been a dismal failure. These policies are being used by the Government currently and on the evidence they are a disaster. The Australian people realise this, which is why politicians are held in such scorn by the population at large. The people know that there is something wrong. We in Australia inhabit a whole continent, the only continent in the world which is governed by a single, unifying government. We are sitting in this country, surrounded by enormous natural resources, with a very low population for the size of the land. Australia has everything going for it, yet the country is riddled with debt. A large percentage of our work force is standing idle and the Government is more or less helpless against the money markets of the world. The people of this country know that there is something wrong. They are confused as to what the solution should be and they will continue to be confused as to solutions until there are some constructive debates in this place. There cannot be a constructive debate in this place when the members of the Opposition sit there and say: `We have policies, but they are under wraps. We will not let you know what they are until there is an election'. How can we discuss a constructive policy in an election atmosphere? It is the absolute height of irresponsibility for the Opposition to say: `We don't like the solutions that the Unite Australia Party is coming up with. We have better ones, but we will not tell you what they are'. That is irresponsibility. The sooner this Parliament gets down to debating the alternative approaches to economic management, the sooner this Parliament will get some measure of respect from the population at large. Senator BROWNHILL(New South Wales)(5.16) —This debate is about Senator Parer's motion which condemns the Hawke Labor Government for its mismanagement of the Australian economy, which has resulted in many things that have been very detrimental to everyone who lives in this very good country of ours-or it was a very good country prior to 1983. The debate is about the high cost of living, the highest interest rates in the Western world and it is about the rise in the cost of motor vehicles. For example, in 1983 a farmer could sell 35 steers to the local butcher and buy himself a utility but in 1987, even with the rise in the price of beef, it takes 52 steers to buy a utility for use on his property. This debate is about falling disposable incomes, the lack of growth in employment that the Hawke Labor Government is foisting on us, continuing high current account deficits, low levels of investment and rapidly increasing foreign debt. The motion of Senator Messner calls on the Government to lower and flatten the tax rate, reduce government expenditure and abolish the fringe benefits tax, capital gains tax and tax on lump sum superannuation. The consumer price index in this country is running at 9.2 per cent or worse, which is four or five time the rate of those overseas countries with which we trade. Food prices have gone up in the last 12 months by some 8.6 per cent. A survey conducted recently by my office in Tamworth showed that, while the national food prices rose by an average of 2.6 per cent over the previous three months, in Tamworth the food prices rose by 8 to 10 per cent. That is a lot more. Rural Australians have had to suffer, because of high freight and the fact that they choose to live outside metropolitan areas. Let us look at interest rates, which concern and affect everyone in the community. They affect you, Mr Acting Deputy President, in purchasing a motor car or paying off a house. Just recently we have had another rise in interest rates of some 0.75 per cent. That has a direct effect on the soaring CPI, which is disturbing to us all. This Federal Government has intervened in the money market, which it said was a free money market. By propping up the dollar it has contributed in no small manner to this escalation of interest rates. Interest rates for the ordinary farmer are running at about 20 per cent. That is a completely unsustainable level of interest rates for people who are producing an income off the land which gives us and everyone else a certain standard of living. The rural community is having many problems coping with high interest rates. We can see how unfavourably our interest rates compare with those of other countries. For example, the long term interest rates in Japan are 5 per cent; in West Germany, 5.6 per cent; in America, 7.2 per cent; in France, 8 per cent; in Canada, 8.7 per cent. How can we compete on the overseas markets with countries which have interest rates like that when our Australian Labor Party Government, led by Mr Hawke, is foisting upon us interest rates in excess of 20 per cent? I think it was mentioned here earlier that the interest rate for people buying machinery on hire purchase is something like 26 per cent. There is no hope for the rural communities if high interest rates continue. The Housing Loans Insurance Corporation, the largest mortgage insurer in Australia, has had a 150 per cent increase in claims. The HLIC is a last resort after lending authorities have tried all other avenues to accommodate borrowers who are finding housing repayments difficult. Therefore, for the HLIC to have a 150 per cent increase in claims means that an alarming number of Australian families are simply handing their house keys to the banks and walking away homeless. People who were paying $500 a month are now paying something like $600 a month in repayments. How can anyone aspire to the Australian dream of owning a house with interest rates so high and so unremitting every month? The number of approvals for new homes fell by 6.3 per cent in the three months to last November. That is no wonder with interest rates as high as they are. The Bureau of Agricultural Economics indicates that 25 per cent of farmers are in real debt. The are in real trouble. That percentage represents some 30,000 farmers. The number of farmers at risk at the beginning of 1986 was 12,000. Therefore, the problem has increased dramatically in the last year. These producers, these farmers, who raise income which gives everyone a certain standard of living in our country, are having trouble meeting their interest, lease and hire purchase commitments. They are, therefore, losing equity. As well, they are suffering from stress. Just recently we heard of people committing suicide and of other persons walking off their properties. In fact, just the other day I visited a property in New South Wales where the farmer had got to the stage where he did not have any more equity in his property. It was not as if he was not a good farmer-he was a very good farmer-but over the last three years his debt had escalated to such an extent that he could no longer meet his repayments. That particular farmer has three young children and will have to walk off his property if he can. One of the problems, of course, is how he can get off his property. Does he walk into his bank and say, `I can't do any more' after the bank has already told him that it will no longer give him an extension of his overdraft? Does he declare himself bankrupt? What does he do? Many people do not understand the problems and traumas which this Government has caused good young people with the high interest rate policy it has followed since 1983. Senator Kilgariff —Is that happening to many? Senator BROWNHILL —Yes, it is happening to many farmers. It is happening to farmers all over New South Wales and I think the banks are now starting to understand the problem. The Government, however, is very unsympathetic and does not understand the problem whatsoever. The average farm debt has risen to 71 per cent in the last three years. Fifty-one per cent of farmers are not generating enough income to service their debts, and 22 per cent are not able to meet their interest bills. A survey conducted recently by the agricultural consultancy group Hassell and Associates Pty Ltd in central western New South Wales shows that in only two of the last five years farmers have had net cash returns. During the drought of 1982-83 average farm debt was about $73,000, and net cash returns showed a loss of $27,000. In 1986-87, despite improved seasonal conditions, farm debt had increased to an average of $110,000 per farm, and net cash returns now show a loss of $32,000. Things are a lot worse for grain farmers. The average debt of grain farmers was estimated late last year at about $250,000. That has escalated very quickly to $280,000. It is all very well for a government to sit back and say, as the Minister for Finance (Senator Walsh) has said at times: `Let some of those farmers go broke. It will be right. Do not worry about them'. But we have to worry about them because they produce export income. They are human, just like some of the people in this Parliament. Senator Messner —Which side are they on? Senator BROWNHILL —This side. They produce a certain standard of living for everyone in the community. It is high time this Government took heed of what is happening in the country and did something about it. The big worry this year is that many people will not be able to afford to sow crops. If they do not sow crops they will not harvest and the land will remain idle. That will affect our current account deficit because we will not have as much produce to export. If there is no commodity price recovery and no interest rate reductions, the lending institutions will not be able to continue to support the growing number of indebted farmers. This is something the Minister for Primary Industry (Mr Kerin) was talking about in the other place. He said yesterday that there was not a great deal of need for extra finance for the rural community. He had better have another look. If assistance were given by this Government in some form or other-and one of the best forms would be the reduction of interest rates with the Government getting its sticky fingers out of our pockets-everyone would be much better off. The Minister would be well advised to look at what is happening in the rural community. Machinery is being repossessed. The same farmer I was talking about a little while ago actually gave his tractor back. He did not have it repossessed; he gave it back to the hire purchase company and said: `Do what you will with it', and the company did. It did not even try to get the highest price it could for it; it just took a couple of bids and apparently the tractor was sold. This gentleman has not even been told whether the tractor has been sold. The Government should take account of what is happening and do something about it. This situation has been caused by the high interest rates which this Government has allowed unabated in the last few years. The Land last week stated: The real solution to the farm debt crisis can only come from lower interest rates resulting from macro-economic reforms, but as that scenario is a long-term one, some immediate stop-gap action is needed. There are too many good farmers sliding into irretrievable debt, through no fault of their own, for the situation to be allowed to continue indefinitely. It goes on: The Federal Government leaders, judging by their lack of response to the NSW Farmers Association's call for a $20 million boost to Rural Adjustment Scheme funding, are evidently content to let events take their course and accept foreclosures as a painful but inevitable part of `restructuring'. That is all very well, but when we want to drive around the cities in our cars and when we want to have taxes paid by people so that we can sit here in the Parliament and enjoy a salary that the farmers would love to have as a total income to run their big properties, we must realise that if the farmers were not there producing that income for this country we could not enjoy our present standard of living. The major trading banks have recognised that there is a problem and they are meeting with the National Farmers Federation. They have estimated that the total rural debt is something like $10 billion-and that is without non-institutional debt. With the non-institutional debt the total rural debt would probably reach some $15 billion, and that is a debt crisis that this Government should be well aware of. What is the Government doing about it? Is it suggesting interest rate rebates? Is it suggesting increased rural adjustment funds? Is it offering, particularly to the grain industry, the sort of emergency package that was provided by the Fraser Ministry to the beef producers when they were in financial strife? That assistance allowed the beef industry to capitalise on the present high prices to help the Australian economy. Of course the Government is not offering that. What other disasters are down the track for the Australian farmers due to this Government's policies? A collapse in land prices is inevitable if something is not done about interest rates. The infrastructure of country towns is under threat. The whole community will come to a halt. Service industries are also suffering financial stress. There has been a terrific reduction in turnover and therefore in staff. Machinery dealers in country towns are having the same problem of financial bankruptcy caused by this Government's policies. The motor vehicle dealers are in the same position. If anyone doubts any of this, he should visit some of the country towns and cities in my home state of New South Wales. Part of Senator Messner's motion called for the repeal of the fringe benefits tax. Despite Government claims that this legislation is incidental and of little consequence to the majority of honest taxpayers and that it affects only the fat cats, the tax dodgers, the fact is that the tax is hurting a wide range of people in the community. I recently conducted a survey of small businesses in five regional towns and cities in New South Wales. That survey shows that 48 per cent of those businesses have suffered a reduction in turnover, that 36.4 per cent had reduced their staff and that 63.7 per cent had reduced staff benefits. That is not too good for the people who are working in the country communities, and that has been caused by this Government's fringe benefits tax. Only 12.1 per cent of those businesses surveyed assessed the fringe benefits tax as having no direct effect on their business. If this Government wants an early election, it must start talking about the fringe benefits tax and it must try to sell it. I can tell the Government that there are people in the New South Wales country areas who are ready to chop off the heads of Australian Labor Party people as they walk around those areas. It was interesting that nearly 30 per cent of those businesses had cut out all staff benefits, which in effect means that people now have a package of benefits which contains less than it did 12 months ago. Since the introduction of the fringe benefits tax they have been worse off. Honourable senators must remember that these benefits are not all in the luxury car and expense account bracket. These are just good, honest people working on farms in the country areas. Their benefits include commissions, telephone assistance, rental rebates, and staff discounts. This motion was proposed a month or so ago, and in that time, while the economy has become sicker, the Government has been remarkably silent about any solutions. We, and the rest of Australia, must now wait for the 14 May economic statement. I recall that last year farmers were in a similar situation and were promised a solution in the April 1986 rural statement-and what a sham it was. They got nothing then, and I cannot help thinking that that is precisely what they will get from this year's Budget re-write. The Opposition condemns the Government for its incompetence. The people of Australia also condemn it for its callous lack of response to those in trouble. Senator COONEY(Victoria)(5.35) —We are debating a motion about the economic management of Australia. The Senate has been asked to condemn the Hawke Labor Government for its mismanagement of the Australian economy. A series of symptoms is given to try to show that the economy is sick. The motion then calls upon the Hawke Labor Government to introduce a mini-Budget to include lower and flatter rates of income tax, significant reductions in government expenditure and the abolition of the fringe benefits tax, the capital gains tax and the lump sum superannuation tax. Senator Messner has said just about all that can be said about the state of the economy. I think that, as far as the Opposition is concerned, that is about all that can be said, because in trying to address the economic problems that this country presently has-there is no doubt that it is in difficult times-what the Opposition proposed was vague. The Opposition first calls on the Hawke Government to introduce a mini-Budget. It does not go into any definition as to what that might include, except to say that, amongst other things, it should include lower and flatter rates of income tax. Of course, this Government has given lower rates of income tax and it will give lower rates still as from 1 July. The top rate that will then be paid will be 49c. Therefore, those who pay lower rates will be enabled to pay still lower rates. So there will be a reduction from 46c to 40c in the dollar and the bottom rate will go down to 24c, whereas it was 30c when this Government came to power. These sorts of statements have been made again and again in this chamber. No doubt this almost wearying debate will go on and on. The cure for the economic ills of this nation deserves proper and deep consideration, which has not been given by the Opposition in this debate or in other debates. The Opposition has given only a fairly vague remedy. It has said that the Government must lower tax rates, and it has already done that. It wants flatter rates of income tax. That gives us a clue as to what the Opposition is all about. Any flatter rates of income tax would mean, of course, that those who are in a position to pay proper rates of tax will have to pay less, and that those who are at the lower end of the economic scale will have to pay more. So the first prescription that the Opposition gives for the economic troubles of this country-this comes out from the terms of the motion-is to impose a greater imposition upon the poor and the weak in the community. Senator Messner —Mr Acting Deputy President, I raise a point of order in the form of a question. Is it in order for Senator Cooney to misrepresent totally the Opposition's position when it quite clearly means, in the statement that is part of the motion, that there would be lower taxes paid by everyone in Australia? I put it to you that he is misrepresenting our position when he says that the poorer would pay more while the richer would pay less. That is totally false, and I believe he is out of order in so saying. The ACTING DEPUTY PRESIDENT(Senator Morris) —There is no point of order. Senator COONEY —I will take the honour- able senator up on that. I am simply referring to the motion that he had put before the House; and he said himself that it just about says it all. If we look at the terms of the motion, what else are we to conclude? Senator Messner says that we should have lower and flatter rates of income tax. I take it that lower means a lesser rate than is presently paid. But, as Senator Messner knows, when we talk about rates of tax, that includes a concept of an average tax across the various rates. There is plenty of evidence to show that the result of flatter rates of tax is that those people who formerly paid more-that is, those who are better off-would pay less and those who-- Senator Messner —Would you not allow that that is not what we are saying? Senator COONEY —Thank you, Senator. Can I take what Senator Messner has said to be an addendum? Can I take it that in the course of debate he is assuring us that if the Opposition ever came to power the flatter rates of tax would mean that absolutely everybody in the community would pay less tax? Senator Messner —Yes, now you are right. Senator COONEY —It is very helpful that Senator Messner has said that. It would be very helpful if at some stage-I certainly do not say now, but in the course of the year-he could produce more statements like that and produce evidence and figures so that we can be reassured of the Opposition's position. One happy result of this debate is that we now have some precision in the statement of claim which Senator Messner so happily presented. We now have further and better particulars. The next thing for which Senator Messner asks is significant reductions in government expenditure. We will certainly go ahead with that. But what is significant? Is it $1m or $10m or $1 billion? At some time convenient to the Opposition-I certainly do not want to rush it into these things now-and perhaps before the next election, could we be given some details and perhaps some further and better particulars of what a significant reduction in government expenditure means? Then perhaps we can debate it with more precision. For example, Senator Maguire has often spoken to me about that. He is desperate to get just some details-not a great deal, but some-to enable us to understand the situation. Senator Messner calls for the abolition of the fringe benefits tax, the capital gains tax and the lump sum superannuation tax. But the question is: If we abolish those, where will we get the money from? Perhaps we could go into privatisation to get that money. Perhaps we could privatise this chamber. Senator Boswell —We could not sell it if people had to listen to you. Senator COONEY —On the back of Senator Boswell's seat we might see `Boswell Batteries'. Perhaps we could sell advertising space within the chamber and, as it were, privatise the seats in the Senate chamber. I just suggest that; the Opposition may want to take that idea up. We could also have `Crichton-Browne's Credit Union' on the back of Senator Crichton-Browne's seat so that when he got up we would all see that advertisement. We could also have `Messner's Machinery'. That is the sort of thing that we could have in this chamber. That certainly could be a way to raise money to keep us all here. In other words, we could sell advertising space. Senator McKiernan —What would you do for Senator Vigor? Senator COONEY —Perhaps we could have `Vigor's Vitamins-the jumping Senator Vigor, a man of vigour, vim and vitality'. That is what it will come down to shortly if we go into privatisation. Under such a scheme we could sell the airlines, the banks and all sorts of things. Perhaps we could abolish government altogether. Senator Maguire —We could sell prisons to long term prisoners. Senator COONEY —Yes, we could sell prisons to long term prisoners. The point is that the money has to be raised somewhere. Senator Brownhill has just made a plea, an eloquent plea, on behalf of the farmers. But if we are to help the farmers, where do we get the money from? That is the great difficulty. He said that the $20m put forward now for restructuring is not enough. He put forward a vigorous case on behalf of his constituents. But where will we get the money to help the farmers? He said that parliamentarians are better off than farmers. I certainly agree that parliamentarians are better off than some farmers. But, on the other hand, we note now that wool farmers, for example, are getting quite a good return under this Government for their wool. Will any credit be given to the Government for that? Senator Boswell —Why would you claim credit for that? Senator COONEY —I will tell Senator Brownhill how we claim credit for that-with the sort of argument that he uses. He says when things are going bad that it is the Government's fault. Senator Brownhill has brought up a very good point. Senator Maguire —Boswell. Senator COONEY —I am sorry, Senator Boswell. They are still together. The Brownhill-Boswell combination is still a combination, is it not? Senator Boswell —It will be a formidable combination for a long time, too. Senator COONEY —Senator Boswell says that it is a combination that will go on for a long time. I am sure that Senator Brownhill would agree that the Boswell-Brownhill combination will continue as a force. What Senator Boswell is saying is that we cannot claim credit for the increase in the price of wool and the turnaround that has occurred in the wool industry because they are due to other factors. I am happy to accept that argument. But why does he not use that argument when other things that are problems come before us? In other words, he says that high interest rates and all the taxes that are necessary are the Government's fault. He says that the fact that the housing industry is not doing as well as he would like is all the Government's fault. He says that all the bad things are due to the Government simply because they are bad, but the good things are not due to us. Senator Boswell —Who put the Wool Corporation into place? That was the thing that kicked the wool industry along. Senator COONEY —I am happy with that. Senator Boswell is saying that when we look to see whether things can be approved of or not we go back into the history of them. I am happy to do that, too. But if we are going to go back to the history of things, why do we not go back to the history of this country when too much emphasis was placed upon the production and sale of commodities? Let me make this quite clear. Primary producers clearly have contributed mightily to the country's wealth over the years, and let us hope that they will continue to do so in the future. But too much emphasis was placed on the development of primary industry at the expense of industries which added value to the commodities. An illustration of that was given on the Sunday program on Channel 9 last weekend. In discussion on the Commonwealth Scientific and Industrial Research Organisation, it was pointed out that that organisation failed to develop a computer industry where one was offered and instead went towards producing a mechanism to make it rain. That happened in 1951 and after all this time nothing has been done. But that illustrates how the emphasis in this country has been placed upon the commodity producing sector and not enough on that sector of the economy that produces value added goods. That is a perfectly good illustration of what I mean about history. Senator Boswell mentioned that the Australian Wool Corporation has helped the wool industry, which is a matter of history, but he does not look at history to work out whether the present problems also come from historical sources. They clearly do come from the sorts of decisions that were made by governments in the past, particularly by governments of the colour that he represents. All I want Opposition members to do, when attributing things on one side of the ledger-that side that deals with what is good-is to make the same attributions on the other side by acknowledging what has happened because of the history of the development of the economy in this country. This is exactly what this Government is doing now: It is struggling with the legacy of the past-and struggling, may I say, very well. It has been said here today that this Government has not done enough about employment. Figures have been cited here again and again, and I cite them once more. Three-quarters of a million jobs have been created under this Government. Senator Boswell —But they are government jobs. Senator COONEY —No, that is not the evidence at all. Some of them are government jobs. Whether or not they are government jobs seems to me to be irrelevant. Senator Boswell —They are government jobs financed by the farmers on high interest rates. Senator COONEY —One cannot do that. That is the difficulty of the Opposition's position. Senator Boswell is saying that the farmers are the only people to worry about. But I worry about everybody. I love both the farmers and the city people. Senator Boswell's confrere, Senator Brownhill, for whom I have the greatest regard, says that these people in the city are driving around in cars but do they ever think about country people? I think we have to have great regard and respect for everybody. We will not get on in this country if we simply say that the only people we care about are the farmers or the city folk. We have to care about everyone. That is what this Government does, night and day, year in and year out. It cares for all. Senator McIntosh would agree with that. We do an injustice to the country as a whole if we sectionalise the community into farmers, city dwellers, union people and management. Somehow we have to co-operate as a nation. Senator Messner —Well why do you hit the retired people and the pensioners all the time? Senator COONEY —We do not hit the retired people all the time. We have done a lot for those people on pensions. We have considerably increased payments to all those who receive pensions. I think it is absolutely correct that we should worry about the poorer sections of the community and those in need, but in this chamber in regard to people who are less well off in the community we create an environment where hatred, ridicule and contempt are poured upon them. For example, people on unemployment benefits are very much in that group. We create an atmosphere where we say that we have to get after these social security recipients. It falls ill from our mouths on the one hand to say that we should be helping the poor when on the other hand we are creating an atmosphere where they are brought into disregard. We sometimes attack those who are less able to help themselves, and this is particularly so of the Opposition in respect of its attitude towards trade unions. When talking about those who need protection, we are talking about those whom unions represent, and by and large represent very well. The Opposition often says here that people need encouragement and that for that reason, as this motion says, the Government should abolish the fringe benefits tax, the capital gains tax and lump sum superannuation tax, but then the Opposition wants to crush the unions so that people can be paid less. It seems remarkable to me that those best able to afford to pay tax should be given more and more rein so that they can have incentive and encouragement, but those least able to withstand the economic rigours of the community have to receive less and have to take reductions in their conditions and pay so that the community can recover. From the remark made by Senator Messner it seems that there is an inconsistency and perhaps a confusion in the minds of Opposition senators. If they listen to the speeches of honourable senators on this side, no doubt their minds will become clearer. I am sure that by the end of this debate, when Opposition senators have heard the many speakers from this side-Senator Richardson and Senator McKiernan-- Senator Crichton-Browne —I am next. Senator COONEY —Yes, and Senator Crichton-Browne. At the end of this debate matters will be much clearer to the community as a whole and I think they could be made even clearer if, as time goes by, we get further details of what the Opposition might do. The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Order! The time for General Business has expired. Debate resumed. Senator BOSWELL(Queensland)(5.55) —When I was speaking on the Taxation Laws Amendment Bill (No. 5) 1986 before lunch I said that it was going to remove $140m from the business sector and transfer it to the Government. We have just heard an eloquent speech by Senator Cooney as to how the Australian Labor Party is going to solve the problems of not only the farmers but also the underprivileged and small business, and that it was truly going to be an egalitarian party that represented all sections of the community. The ink is hardly dry on his speech and I have risen to speak to another Bill, the main essence of which is to take $140m from the business community and place it in the Government's coffers. I would never attack Senator Cooney because I like him as a person but his speech indicates that he has no understanding of business. Between the time that I was speaking on this Bill this morning and the resumption of the debate I researched the Australian Labor Party's small business policy. I was interested to see that one of the resolutions in it is that a Labor Government would legislate for optional quarterly provisional tax payments. Here is another Labor Party promise that will be broken. If this Bill passes the Senate, as I believe it will, we are now faced with the prospect of the Labor Party pushing on to the business community compulsory, not optional, quarterly payments of provisional tax. Even Senator Cooney must be disappointed to again find smashed another of the planks of the Labor Party platform. I often wonder about the Labor Party's policies. I cannot imagine why anyone would want to pay quarterly provisional tax. As provisional tax stands now, people get nine months' free tax and pay three months in advance. Whoever wrote this policy just does not understand anything about business. I am glad to see that Senator Cooney is nodding in agreement. I do not want to attack the Labor Party's small business policy but I do not think it stands on its own feet at all. The people who will mainly be affected by this increase in provisional tax are the people who have already suffered. They pay capital gains tax and fringe benefits tax. This has cost Australian business $600m. The Government has abolished entertainment expenses, which has cost the restaurant industry $350m. We again find that it is a small section of the community which is becoming the target of this Government. The Government has put a fine toothcomb through every benefit that primary producers received and it has taken away every benefit that it is possible to take away from them. It is now targeting the business area. Let us look at what some of the Western countries do for small business. Those countries are not inflicting a further tax bill on small business every three months, taking capital out of business and inflicting on it a continuation of forms-more red tape-to be completed every quarter instead of every 12 months. People subject to the tax will have to visit their accountants not just once a year but four times a year. They will have to provide their returns, their cheque books and their profit and loss accounts. I suggest that a person does not visit an accountant without paying much under $100. So that is another $400 of profit that will be removed from small business and business people. I would have thought that a party which claims to represent all sections of the community, as Senator Cooney claimed the Australian Labor Party does, would have made more of an effort to understand what is going on. I believe that many of the Labor Party's problems, when it comes down to the wire, stem not from vindictiveness but from pure, simple ignorance. It does not understand business. It is does not understand it, it should seek assistance from those who do, or go to a consultant. For some misguided reason that I have never been able to understand, a few people in business vote for the Labor Party. I suggest that the Labor Party should round up those people and ask them about their problems. Then it might be able to formulate some policies that apply to the business sector. At the moment, the Labor Party is so far from base that it does not understand. The United Kingdom Government charges business a company tax at the rate of 25 per cent, Canada charges company tax at the rate of only 15 per cent. Senator Cooney's egalitarian Labor Party, the party which looks after all sections of the community, has increased company tax 3c-from 46c to 49c in the dollar-when every other country in the world has tried to encourage business and the private sector and has tried to lift its economy and employment by helping small business. The Senate would be well aware that the United States of America was led out of its economic recession by a small business recovery. What we are getting is the complete reverse. All small business has been affected by the Hawke Government's tax policies. One of the things that are worrying me is the report of the Hancock Committee of Review into Australian Industrial Relations Law and Systems. I do not want to get diverted on to the Hancock report. However, the Government is trying to push everyone into the net of the pay as you earn tax system. Last year, it tried the fishermen. I stood up in the Senate and pointed out how stupid it was to try to tax deck-hands under a PAYE scheme. Deck-hands can work for three weeks and not make a cent; yet they can go out for a day and make $3,000 or $4,000. They may be restricted to the port because of bad weather or machinery breakdown. Yet they can go out for six or eight weeks and not go into port. The Government did not understand that. The Minister for Industry, Technology and Commerce, Senator Button, was in the chamber at the time and he said that he would take the matter on board. I think that he did something about it, and I give full credit to him for doing so. The Government is now trying to push every sub-contractor, bricklayer, painter, plumber and builder into the PAYE net. It continues to tighten the noose around small business. It has been doing that for four years, and it has just about reached the end of the rope. I would not care if the Government called a double dissolution tomorrow on the Australia Card legislation. I would welcome it. It would love to go out there and fight on the Government's economic policies. I would say that the Labor Party would be reduced to a very small party in the Senate and the House of Representatives. Senator Crichton-Browne —What date would you like? Senator BOSWELL —I do not care when the election is held. I am ready to go out and take the Government's policies to the people. I would fight any election on what the Government has done to small business and the rural community, and I would be certain to come in a winner. The Government has pushed people right to the edge of the precipice. Not only has the Government adopted economic policies which have been a disaster and have resulted in 22 per cent interest rates and high inflation, but also it has restricted everyone. It has taken the incentive out of small business; it has taken incentives away from the rural community, and it has taken the work ethic away from every person who has been able to and wanted to get up have a go. It has broken their hearts, so now they just sit there and say; `What on earth is the use of going out there and trying to produce, trying to make money and trying to pay tax?' People have just about thrown in the towel. They are waiting for a change of government at which time they will change their their attitude. When the legislation is considered in the overall context of the Government's economic policy, one sees that it is a relatively mild form of attack. Nevertheless, it is still another nail in the coffin of the business community. One of the details that we should consider at the moment is that the Labor Party is increasing the costs on business, on retailers, by making them conform with sales tax, withholding tax and prescribed payments tax. Now the Government intends to make members of the business community go into their accountants four times a year, which will cost extra money. The Government has the temerity to say that it is the greedy manufacturers, the greedy primary producers and the greedy retailers who are putting prices up. That is the greatest hypocritical statement that I have come across. It is the Government that has put prices up by inflicting all these taxes on people. Then it says to the Australian public: `It is not our fault. We have not done a thing. It is the greedy manufacturers, the greedy retailers'. The Government has even put a tax on the kitchen sink. Sales tax has gone up 20 per cent. The Government has even taxed lavatory pans. That is how basic it can go. The Government has taxed kitchen sinks, lavatory pans, tools, milk and flavoured milk. It has even taxed bird seed. Yet it say that it is the greedy retailers and the rotten manufacturers who are putting prices up. It is absolutely diabolical for the Government to do that. I do not think that it understands. Small business people have phoned me saying: `The Government is blaming us, but everything we do receives a tax on it'. The Government has increased import duties, sales tax and company tax. It has introduced a fringe benefits tax. Yet it blames the one sector of the community that is trying to make money. The Government does not realise what it is doing. Senator Peter Baume —They are creating wealth too. Senator BOSWELL —Of course they are, and the Government should be encouraging them to do so. The Government, as with its economic policies, blames everyone except itself. Senator Cooney said a few minutes ago that the reason the Australian economy is down and interest rates are high is that commodity prices are falling. Australia is not looking for excuses; it is looking for results. If those opposite cannot provide the results, they ought to make way for someone else who can. They blame overseas commodity prices, the European Economic Community, America, retailers and manufacturers-everyone except themselves. When are they going to admit that if they are not part of the solution they are part of the problem? When they admit that Australia can start to return to some sort of economic viability. Why did they not address the problem of monopolies when Coles was bought out by Myers? That sort of thing creates price increases because it reduces competition in the market-place. When 70 per cent of retailing is done through Coles, Myers and Woolworths it puts tremendous stress on the manufacturers because they have nowhere else to reach the market if they do not go through the major retailers. The major retailers are demanding such large discounts that there is no profit in manufacturing industry. Those are the issues the Government has to address to get prices down. Senator Button made a mealy-mouthed statement that monopolies are not in the best interest of Australia but he is not prepared to do anything about the problem. Government senators cannot continue to blame everyone else in Australia. That is what they have done for the last four years and it just will not wash. I have strayed from the terms of the Bills somewhat. This legislation will inevitably add to the costs of the business community. It might help the accountancy profession, although it has so much work that it cannot handle it, because of the number of other taxes this Government has inflicted on the business community. I suppose this involves only $140m and is a fairly mild attack by the Government on the small business sector. It will not do much more damage, I suppose. It is just one more nail in the coffin. The business sector of Australia is hanging on praying for an early election so that it can cast its vote against this Government. Senator VIGOR(South Australia)(6.14) —The Taxation Laws Amendment Bill (No. 5) 1986 and the Income Tax Amendment Bill 1986 deal with three different tax reforms, closing tax loopholes through short term financing arrangements, taxing foreign exchange gains and losses as income rather than capital transactions, and increasing the Government's revenue by changing its cash flow, by requiring quarterly rather than annual provisional income tax payments. The legislation also peripherally gives tax deductibility to income from investments by the British Phosphate Commissioners which cover any compensation claims for mining operations on Banaba, formerly Ocean Island, which were closed down in 1980. The British Phosphate Commission is being wound up following cessation of mining on Christmas Island and its previous immunity from tax is being lost as a result. Senator Haines and Senator Siddons have already raised some of the problems with this legislation and they have proposed certain remedies to some of those problems, in particular the difficulties we see involved with the foreign exchange amendments and the scope they open up for substantial tax evasion. This leads me to believe that these provisions should be referred for investigation to the Senate Standing Committee on Finance and Government Operations, as the Opposition has proposed. The Australian Democrats believe that investigation before the vote is taken on the legislation is extremely important. I fully endorse the remarks made by many other senators concerning the difficulties which are currently being faced by small business. The major problem which small business has these days is that it is being completely bound up in red tape by bureaucrats who create more and more red tape to justify their existence. Most of the brave new tax changes which the Tax Summit was going to bring in have foundered on the rocks of bureaucratic excesses. The quarterly provisional tax payments will improve the Government's cash flow but will not help the cash flow of the people who have to make the payments. They will also increase the amount of associated paperwork which is yet another imposition upon small business. There will be yet more red tape and paper work and yet more stress on this most valuable sector of the Australian economy. The farmers, who earn between 50 per cent and 60 per cent of Australia's export profits, depending on the vagaries of world trade, and the small business people, who are the major employers in Australia, are going to bear the main brunt of this. This is why the Australian Democrats want to give them the opportunity to get out of that requirement if it suits them. The cost to Government of the extra impositions on these sectors may exceed the apparent cash flow benefits. Through putting this extra load and pressure of red tape on farmers and small businesses, it may force more bankruptcies, redundancies and business closures. I commend the Australian Democrats amendment to allow elective rather than mandatory quarterly provisional tax payments by farmers and small businesses. I believe that big business can handle the payments. It has creative accountants who have been spurred on by the ever more imaginative bureaucracy of the Treasury Department. At some stage we have to cut through all of this to cut out the encouragers of tax rorts and to cut out the people who egg them on by making the taxation law such a thick-in more ways than one-document. I share the concern of honourable senators about the long delays between the announcement of the tax measures and their passage through this place. Even though there has been this long delay the Australian Taxation Office, as in the case of the fringe benefits tax, jumps the gun and gives people false information. This creates even more chaos within the community. I share Senator Michael Baume's worry, which he has expressed in his proposed amendment to the second reading motion, about the long term economic viability of Australia Incorporated. The problem is caused mainly by action of both this Government and the previous Liberal coalition governments. Their failure to manage the economy is the major cause of the current business uncertainty. People can put up with taxes with a stable environment but the type of thing that is happening now with ever-changing laws, with a complete quicksand of legislation which even the Taxation Office cannot answer questions on-I have had a number of complaints of this type-means that business really has dire problems in trying to keep up with the law. More and more people are being forced into the hands of accountants. These pieces of legislation are no different from the rest. They are convoluted and still have inherent problems. I hope that by looking at the legislation in the Finance and Government Operations Committee we can elucidate some of the problems and maybe couch the legislation in wording which is understandable to ordinary people. They are the people we are here to represent. That is why I believe we have to pass this legislation on to a committee. There has been a real problem with the Australian taxation system. The Government's attempts to patch it up are, as far as I can see, making it worse and worse. The fringe benefits tax is an example. The principle of the tax is right. It is reasonable that people should pay tax on whatever form of remuneration they get, if we are going to have an income tax. However, the application is wrong and the masses of red tape that are involved in actually satisfying the requirements, if taken seriously, are really damaging. It is very difficult here and now to realise the effects of having all these taxation measures coming in. People are being forced to go more and more to accountants. It seems to me that there is a collusion between the accountants in Treasury and the private sector accountants to make their jobs more important and more significant within the community. Australia needs more productive people, more value added in the community. I do not believe that there is any value added in having people poring over papers trying to find creative tax solutions. There is a cost to the community in all this. I believe that the Government should look very closely at the large number of people in Treasury-I think it is growing-who are involved in both the collection of taxes and the handling of economic advice. Frankly, we are not getting the solutions. It was shown in the debate during General Business this afternoon that the solutions are not forthcoming. They are not forthcoming from the politicians in the coalition, nor from those in the Labor Party. As the amendment moved by Senator Michael Baume to the second reading motion and the Government's response show-this amendment will pass this Senate-the current Government's economic policy is indeed in tatters. The reason for being worried about all of these new taxes is quite clear. We firstly must have statements of taxes which are simple to understand; that is, somebody must realise that he has a liability and be able to assess that liability. We have been making noises-when I use the word `we' I am talking as an Australian Democrat. We have been saying: Do something about the transfer pricing rorts which exist in our system. There is a requirement for everybody to pay tax on his income. What happens is that income is transferred overseas where it avoids tax. Very clever accounting procedures mean that the profits are not made in Australia, these profits are made on the high seas or they may be made in some tax haven overseas. The Australian Taxation Office has told us that it is quite unable to pursue those types of matters. I do not see how, in accounting terms, it can actually, under this Bill, collect, specify and know the right details necessary to collect the foreign exchange losses and gains tax. I would really like the Treasurer (Mr Keating) to explain this. The second reading speech is almost silent on the subject. It assumes that somehow we can probably put on a larger number of extra public servants to check these types of things. A tax has to be collectable. It has to be on a recognisable entity. It should not be easily avoidable. The nature of the PAYE system, which has been so successful in collecting tax on the income of ordinary working Australians, is that the tax is collected at source and is collected before the person receives the income. It is somebody else who actually acts as a collector for the Government. It does work as a taxation measure. It is to try to get equity with this system that we have provisional tax in the process. Associated with PAYE we have a whole group of accounting practices, computing programs and the like which allow us to handle these matters. The introduction of a quarterly collection of provisional tax is introducing a whole new bonanza-an unproductive bonanza, as far as the Australian community is concerned-in the computing industry by getting people to have forward estimates of budgets. It is known perfectly well that people in large companies such as Shell and Broken Hill Proprietary Co. Ltd-I could go on mentioning these companies-have got the wherewithal, and run their businesses on the basis of long term budgets, forward plans of production and all this type of thing. All right, we would like to get our small businesses doing this, but a small businessman who is looking for the next day's crust and is actually operating a small job shop in the back streets of Woodville in my State, or in the back streets of one of the major cities, has to go through a complete reorganisation of his administrative procedures in order to fit in with what are arbitrary rules applied to his accounting procedures by the Taxation Office. It would not be too bad if this was the only set of arbitrary rules being thrust upon people but, in fact, it is just one of many. The Taxation Office must not think that it is unique in applying this burden on Australian industry. Dozens of licences are required by State instrumentalities. There is a vast amount of paperwork. I have seen various estimates suggesting that even a small backyard type of businessman can pay as much as $4,000 just to be able to comply with the red tape associated with all of these new measures. There is no way that the Public Service can expect people whose dedication it is to produce a good product for a very small local market in their area and to provide a service, be they plumbers, builders or people of this nature. There is no way that we can expect them to grab an enormous bureaucracy and put it on top of them. There is no fast track package in this area which allows these businessmen to be able to do it. We have teachers, doctors, engineers and tradespeople-skilled workers who are quite unwilling to take the risk of becoming entrepreneurial. They stay within the PAYE system. It is good for the Taxation Office because the tax is collected early, but it is no good at all for Australia incorporated, it is not the type of thing that will lead to risk taking and to entrepreneurial activity and it is not the type of thing that will get us out of the jam we are in with a $100 billion-plus national debt. What is happening is that we are killing small business-the goose that lays the golden egg. This legislation alone is not killing it; the Government is killing it by millimetres, by very small measures every time. The measures are small in themselves, but we have 26 departments in the Federal Government alone putting this type of pressure on small business and nobody is talking about it, nobody in government is doing anything about it. Sitting suspended from 6.30 to 8.00 p.m. Senator VIGOR —Before the suspension of the sitting I was outlining some of the problems of our very complex tax system. One of the main problems is that the Government announces taxation measures in advance of legislation and, if a tax measure has a fixed date for its introduction, the Parliament ends up being squeezed to make decisions under great pressure. One of the nice things about the present legislation is that although the measure for the quarterly payment of provisional tax was announced at the same time as the fringe benefits tax, back in September 1985, it does not suffer from the problem of coming into effect at a fixed time, 10 months later, in July 1986. The Parliament did not see the fringe benefits tax legislation until eight months after its announcement in May 1986, which meant that only six weeks was left for community consultation, debate and passage through both Houses of Parliament, the latter depending on the sitting of the two Houses. The legislation was rushed through Parliament, which was still in the dark as to the rules and regulations which would make the tax work. An explanatory booklet was prepared and mailed out at enormous cost to every small business in Australia so they could prepare their accounting books for the next tax year. The booklet was rapidly withdrawn when it was found to be substantially inaccurate because the Parliament had not passed the measures exactly as the Government had proposed. It was another stuff-up by the Government and by Treasury and wasted an enormous amount of money. However, not quite as much money was wasted as was wasted as a result of the subsequent public outcry due to the public's ignorance of the legislation and the later contradictory information which was rushed through to each of the taxation offices. There was an enormous amount of confusion. Very few people deny that a tax on fringe benefits, on payments in kind, is an essential part of a fair tax system. However, the way in which the fringe benefits tax was introduced and the fact that it was announced in advance without the Government knowing how it was to operate caused enormous problems. The reason for the introduction of the tax was to deter high income earners from avoiding tax by being paid in kind-in long term, low interest loans, in luxury houses and boats, in the payment of private school fees for employees' children, in free jaunts around the world and in free rides of various kinds. When the legislation came into Parliament its associated regulations caught many small business people in rural areas. The effect has been particularly nasty on people living in rural areas because the Government has made taxable things it regards as benefits but which are necessary to attract the right people to work in unreasonable conditions. The whole issue of the application of a fringe benefits tax to people in remote and rural areas was not properly thought through before the legislation was introduced. The Taxation Laws Amendment Bill (No. 5) 1986, which is before us now, has been before us for only a short time. In that time there has been a reasonable amount of outcry and comment by people about it, similar to the outcry which occurred when the fringe benefits tax was first introduced. Because this Bill has no specific starting time of operation it is possible for us to consider it at leisure within a Senate committee. I believe that we should support its referral to such a committee. Tax policy should be thought out properly before it is announced. Announcing tax policy before knowing what that tax policy is all about has an enormously destabilising effect on business. The details of the legislation must be known when the tax legislation is passed. I have no argument with the need to make such changes effective from the date of announcement, except where the legislation is not ready to go before Parliament. Governments should not make statements that they are going to do something when they do not even have before them the first words of the legislation drafted. That has quite obviously happened in this case because it has taken so much time for the legislation to be presented to us. For example, decreases in sales tax announced in 1975 became effective two days before the announcement was made and passed into law only two months later. Had there been two months between the announcement and application of the sales tax reduction there would have been a complete breakdown in commerce for those two months as buyers waited for lower sales tax before purchasing. There was a reason for making the application of the measure immediate. It was essential for the stability and viability of a major sector of the Australian community that a measure to decrease sales tax take effect immediately, even though the legislation could not pass into law immediately. The delay between the announcement of the legislation and its passage into law was only two months. The gap between its announcement and public knowledge of its detailed terms was very short. Had time gone on and had there been uncertainty as to exactly what items were affected by the sales tax change, business would have been destabilised-as it has been by the combined efforts of this Government and the Treasury in the case of this whole package of legislation of which this Bill is one element. We are still waiting for the imputation legislation. We are still waiting for legislation to tidy up the mess in the fringe benefits area. We have not even had foreknowledge of it in this Parliament. I expect that it will be slipped through very quickly in the dying days of this session. I hope that it is not, because the people of Australia deserve better. There is no way Australia can operate effectively unless the Government acts in a planned and organised way. I call upon the Minister to give us a timetable for the other measures contained in the momentous announcement in September 1985 and for the changes which were announced in the 1986-87 Budget. When are we going to see the full associated legislation? What is the timetable? It has not been announced, which is quite unsatisfactory. The Labor Government came to power on the basis of its promises of economic reform and of full consultation and involvement of the people in the process of government. It promised justice and equity for the disadvantaged. Yet we are seeing a complete back down on these principles. The Government has caved in to pressure from big media interests, big business and major foreign military and economic nations. We do not know what type of tax system we are going to have. Most of the economic measures that are being forced upon us, are being forced upon us by implied threats from the gnomes of Zurich. Australia's economic problems stem from a number of causes, not all of which are directly under the Government's control. However, poor management, particularly poor fiscal management, adds to difficulties for Australian business and makes it very difficult for people to operate effectively in these areas. High interest rates are hitting us particularly. Farmers and exporters are suffering most from high interest rates. Coupled with low export prices, they are bringing them to their knees. Yet at the same time we are slipping in this extra burden of red tape and extra provisional tax requirements. That is why we say that we want to make certain that small business is exempt from this requirement. We have a real problem, as a small country, in relation to debt. More than 50 per cent-almost 70 per cent-of our national debt is in private hands, not in government hands. The person who controls 75 per cent of the nation's print media is a member of that debtor class. He has borrowed a large amount of money for takeovers, which is how he has got into that position. This Government is notorious for bowing to large media pressures, encouraging concentration of media ownership, and selling-out local, regional and multicultural television to make certain that our media is controlled. We have a problem in that our economic policy can be totally distorted by just one or two words from people in that type of position. Small people have the power to determine whether this Government should be re-elected. We have a real problem, when issues such as the Government's inability to introduce strong measures to produce real revenue from the very large business concerns, such as those of the media moguls and the takeover merchants who control our country. The Government seems to be quite unable to tax those people. We have negative gearing on takeover funds for those people, but we do not have negative gearing for the small person who is buying and renting a flat for his or her retirement or who is renting out a house while he or she is away on leave. We have a problem because this Labor Government is bowing to these types of pressures. It is time to elect to government people who have not sold out and who will not sell out their principles for campaign funds and media support. We have to elect people who have the courage to tackle the real financial, fiscal and economic problems of this country; to get Australia going and to cut out the large amount of red tape which is stifling our industry. Senator CRICHTON-BROWNE(Western Australia)(8.14) —The Senate is debating cognately the Taxation Laws Amendment Bill (No. 5) 1986 and the Income Tax Amendment Bill 1986. The Taxation Laws Amendment Bill (No. 5) 1986 will introduce five changes to the tax laws and the Income Tax Amendment Bill 1986, which consists of but three clauses, will be enacted in consequence of that. The five changes are: To provide for the payment of provisional tax by four quarterly instalments each year, rather than one payment; to bring into the definition of assessable income gains and losses made on certain foreign exchange transactions; to make other consequential changes to the capital gains legislation; to change the law in respect of dividends paid on short term redeemable preference shares, so as to treat those dividends as if they were interest and to tax them; and to exempt from tax income the British Phosphate Commissioners Banaba contingency fund. Before discussing the elements of this Bill, there is one matter that ought quite properly to be raised right from the start. In my view, this Bill represents yet another example of this Government's announcement of a taxation proposal, waiting months and sometimes even years before it introduces the legislation, then backdating it to the time of the announcement. As all decent and respectable senators are, I am opposed in principle to retrospective taxation laws. Of course, I recognise that it may be necessary on special and rare occasions for governments to announce that a measure will apply from a certain time and then to pass the necessary legislation at a later date. Providing that government gives a sufficiently clear indication of the nature of its proposal, the legislation follows closely on the tail of the announcement and the legislation is not significantly different from the announcement, it is reasonable to make legislation apply from the date of an announcement when the circumstances make it absolutely imperative. Naturally, the more technical the subject and the more that is at stake, the more tightly that government must abide by those rules, particularly in terms of the detail contained in the statements. This Government has not done that. This Government made an announcement on a highly technical subject of taxation, where there are millions and millions of dollars at stake, then it dallied for months before it revealed the legislation that it proposed to enact. The decision to make gains and losses on foreign borrowings assessable and deductible was announced on 18 February 1986, more than one year ago. Despite the fact that this legislation has not been passed by the Parliament more than one year after the decision was first announced, it is to be backdated until 18 February 1986. The amendments which are now being made in respect of short term redeemable preference shares were announced on 7 April 1986 and are to be backdated to that time. In the case of the amendments to redeemable preference shares, the Government has compounded its sins. It has stated its position in this explanatory memorandum and then varied it again in the legislation. In the Press release of the Treasurer (Mr Keating) on 7 April 1986, the changes that the Government said it would make are narrower than the legislation it now proposes to enact. This legislation, for that reason, is purely retrospective because the taxpayers had no warning of it. It was not even government by fiat; it was government by confusion and government by legislation backdated to a date which was not the date of appointment in the first place, in terms of the announcement. On page 4 of the Treasurer's Press release he said that the changes to the law will affect only shares issued after 5 p.m. Eastern standard time on 7 April 1986. Turning to the Bill, the definition of `debt dividend', clearly indicates that the legislation catches such shares if they were issued before 5 p.m. on 7 April. If I am wrong, I will be grateful to learn that I am wrong. The definition states that the legislation will operate to catch short term rollover finance agreements involving preference shares already issued. That is different from the Treasurer's statement which used the words `shares issued after 7 April 1986'. As a result, the Treasurer and the Government will have misled many people who unwittingly relied upon his statement. While on the subject of the Government misleading the taxpayers, I draw the Senate's attention to page 14 of the explanatory memorandum which says that where a shareholder already holds a preference share it will only be subject to this Bill if it is first issued for a short term finance arrangement after 7 April 1986. In contrast, the Bill before us indicates that it will be caught if it is used to extend a short term finance agreement, not only if it is the first time that it has been used in such an arrangement, but also if it is extended. My view is that the Government has quite improperly misled both the taxpayers and the members of this chamber on two counts; firstly, by introducing retrospective legislation far beyond the limits which we indicated in the Treasurer's Press release, and secondly, by using an explanatory memorandum which does not set out the provisions of the Bill accurately and in fact is not a reflection of the Bill itself. The final section which has been subject to extensive delays is that which deals with provisional tax. The proposed introduction of quarterly payments of provisional tax had its genesis, as we all know, in the September 1985 tax reform statement, as it was called by the Government, and that was about 17 months ago. It is hard enough, in my view, for the average taxpayer to understand complicated tax laws, particularly small business people who, in my view, just cannot be expected fully to comprehend the implications of legislation, never mind seek to find their way through a maze of confusing and conflicting statements. When one looks at the question of quarterly instalments, one will realise that it is almost impossible for a small business to calculate its tax liabilities so as to plan for a future without the assistance of an accountant. That is a reflection of Government legislation. Even this is not possible when Governments do not produce legislation for an accountant to examine. I suspect that every member of parliament has had representations by and from accountants asking what the Government intends and proposes to do. I now turn to the substance of the Bill. Of the three major changes, the Opposition has no objection to the treatment of foreign exchange gains and losses as assessable income as a matter of principle. It does not object to the changes made in respect of redeemable preference shares-again on principle. In other words, we support the thrust of the proposal; but we do not support the legislation itself. While I approach any proposal to impose tax with an initial reluctance, I am only opposed to the measure in this Bill-other than the qualifications already cast-which requires provisional tax to be paid quarterly. The taxation of foreign exchange gains and losses is a recognition of the contemporary economic environment in which Australian companies now live. Raising loans overseas by companies for development and expansion is but a part of modern corporate life, and the gains and losses which go with these loans should equally be regarded as normal commercial transactions and treated in the same way as other gains and losses are treated or, for that matter, the way interest on loans is treated, provided that nothing more is cast upon them by the tax net. When gains are made under this proposal they will be taxable, and when losses are made they will be correspondingly deductible. The payment of dividends on short term redeemable preference shares has been used as a form of taxation minimisation-as distinct from the expression that Senator Walsh would use for it. It has quite properly been used in the form which the legislation has provided, but the Government has sought to change that. In normal circumstances where a company raises a loan it receives a deduction for the interest it pays on the loan. The creditor is assessed for the interest he receives on the loan. An avoidance procedure has arisen whereby a company seeking short term funds does not raise them by a loan but by the issue of redeemable preference shares to another company. When a dividend is paid for what is in effect interest, it is not taxable because of the exemption given to inter-company transfers of dividends, thus the ordinary taxation which one would expect to be levied on interest thus accruing is avoided. If we are to have a fair taxation system it is difficult to argue against these measures in principle, rather than as this legislation proposes. The quarterly instalments of provisional tax are viewed by the Opposition quite differently. This Bill introduces a requirement to pay provisional tax in quarterly payments on 1 September, 1 December, 1 March and 1 June each year. For the year 1987-88 the first payment will be made on 1 December for the preceding two quarters. In cases where income is received heavily bunched into one part of the year, an exception is proposed. If more than three quarters of the year's income is received after 1 December, provisional tax is to be paid in two instalments, one on 1 February and the other on 1 June. From the Government's point of view this is a particularly convenient change. It makes it easier to manage monetary and interest rate policies. It is far more advantageous to have provisional tax paid in four small amounts than to cause the liquidity rundown which occurs when it is paid in one large annual amount. However, it holds no such advantages for the businesses which have to pay the tax. The predominant payers of provisional tax are small businessmen. This measure represents yet another broken tax promise made by the Prime Minister (Mr Hawke) and this Government to small business. I remind the Senate that on February 1983, in a document entitled `Labor's Policy for Small Business-An Action Program', a document which was issued in the run up to the 1983 election by Bob Hawke, it clearly says on page 1 that a Labor Government's action program will include `legislation to allow . . . optional quarterly provisional tax payments'. I would underline the word `optional' because if there is one thing that quarterly payments of provisional tax will not be for the vast majority of small businessmen it is optional. The Government has broken its promise because it has introduced in this legislation compulsory quarterly payments of provisional tax. It will be immediately obvious to any small businessman that the quarterly payment of provisional tax will significantly increase the cost of complying with the tax. The first hint of this comes in the explanatory memorandum to the Bill itself. When one looks at the effect it is having on Government in terms of costs, one can understand that those costs will be reflected back into the business community. The Australian Taxation Office is to incur additional administrative costs for quarterly instalments of provisional tax of $1m for 1986-87, $7m for 1987-88, and $5.4m in the subsequent years. Taxpayers will now be responsible for making payments to the Australian Taxation Office four times per year rather than once. This will be an additional cost to them. It is almost always the case that the additional cost to business will be several times the cost to the Government of administering the tax. As with the fringe benefit tax, this is a cost which the Government chooses conveniently to ignore. It is as if the Government takes the view that because the cost is not apparent to private enterprise, it assumes that it does not exist. Naturally, there is a further cost to business with the tax and this involves the drawing forward of provisional tax payments. The financial statement attached to the Bill indicates that provisional tax payments amounting to $90m will be brought forward as a result of this measure. The Government is therefore putting additional strains on small business cash flows when businesses are battling to cope with record high interest rates-and there are record numbers, as we all know, of bankruptcies throughout this country. Another problem is the difficulty of making an accurate estimation of future income far earlier in the year than under the present arrangements. As provisional tax now exists in general terms, a taxpayer has his income from a past year increased by 11 per cent as the basis for his provisional tax in the coming year. If he estimates that this will be more than his actual income, he is able to submit a variation form. The variation form must be submitted before provisional tax is due; that is, before March of each year. Under the new arrangements the first instalment is due in September and the taxpayer must make an estimation of his income and decide whether to submit a variation form in August. Estimates will be far more difficult to make, leaving taxpayers in the position of submitting a variation form and running the risk that their income will be higher than their estimate, exposing them to a possible penalty or to paying more provisional tax than is necessary. Of course this is typical of the history of this Government when it comes to matters attaching to small business and taxation. It is stating nothing but the obvious to say that the Hawke Government is the highest taxing Government in Australia's peacetime history. It is worth examining how the Government has hit the small Australian taxpayer on a low income. In this category there are not only small businesses but workers also. There are those of the socialist bent who might like to believe that the increase in the taxation burden has been on those with high incomes and, in keeping with their belief that Australia should be equalised by chopping down the tall poppies, they would say that this is not a bad thing. Of course the facts are not so. There are some things which are undeniable. Over the last 25 years, since 1961 or 1962, taxation, as a proportion of gross domestic product, has risen almost 40 per cent. This is in real terms, expressed as a percentage of gross domestic product. In 1961 the taxation paid averaged 21c for every dollar, or slightly more than 4 shillings in the pound. The present average is 31c in the dollar. The Commonwealth tax take has increased from 18.8 per cent of GDP in 1961 or 1962 to this year's Budget estimate of 25.5 per cent. This is an increase of 6.7 per cent, or about one-third of a percentage point per year on average. At the end of the coming financial year the Hawke Labor Government will have been in office for four full financial years. During this time taxation, as a percentage of GDP, has risen from 23.6 per cent at the end of 1983-84 to the Budget forecast of 25.5 per cent, a rise of 1.9 percentage points or an increase of almost two-thirds of a percentage point of gross domestic product per year. Thus far we can say that the rate of increase in taxation imposed by the Commonwealth Government as a percentage of gross domestic product, under the present Labor Government, has been twice the average rate experienced over the preceding 20 years. As has been recognised by the Opposition parties, it is direct taxation which drains the incentive to work and to invest from both employees and employers alike. While the level of direct taxation has fallen as a percentage of total taxation imposed by State and local governments, it has risen as a proportion of Commonwealth taxation. Despite the fringe benefits tax, the capital gains tax, the abolition of negative gearing and the other tax reform measures, of which the introduction of quarterly payments of provisional tax is but one, the Government has failed in its stated objective of reducing its reliance on personal income taxes. In the Treasurer's first Budget in 1983-84 income taxes were estimated to constitute 61.2 per cent of total Commonwealth taxation receipts. In his 1986-87 Budget they are estimated to constitute 62.9 per cent of total Commonwealth taxation receipts. So much for the supposed deal of accepting taxes such as the fringe benefits tax and the capital gains tax in return for some reduction in Commonwealth dependence on income taxes. The same failure is revealed in terms of the effort by this Government to reduce the high rates of marginal taxation. In his tax reform statement the Treasurer said that the highest rate of marginal taxation would soon be cutting in at only one and a half times average weekly earnings. With the expected wage increases this year a person on one and a half times average weekly earnings will still be paying the top marginal rate of taxation. What is perhaps even more dramatic is that through the effects of inflation, assuming a wage increase of around 3.6 per cent-I think that is a modest calculation-almost 550,000 taxpayers will cross an income tax bracket in the first six months of this year. Over half a million taxpayers will be paying more tax this year than they were last year. Of course it is this bracket creep which puts the lie to the claims of the Prime Minister (Mr Hawke) and the Treasurer about income tax reductions. With time, despite the reductions in income tax rates, people will be paying a larger and larger percentage of their income in tax as they go into higher tax brackets. So during the period of this Government the total Australian tax take has been inexorably and inevitably on the increase. The rate of increase under the Hawke Government has been at a higher than average rate. The fashion in which the Government has extracted that tax has been by the method which is most detrimental to incentive to work, to earn, to strive, to achieve and to seek reward; and that is through direct income tax. This applies whether a person is a small businessman or a blue collar worker. This sadly is the reality of income taxation in Australia at the moment. Under the present tax scales a person on average weekly earnings is well inside the tax bracket and, even after the Treasurer's spurious tax cuts, will be required to pay 40c tax on each extra dollar earned. In fact, we will be inside this bracket once we earn a mere $19,500 or only 85 per cent of average weekly earnings. Finally in my discussion of income tax, I turn for a moment to those who have been described as the Aussie battlers, the people whom this Government has so often but so falsely claimed to represent. In the last 20 years the amount which a person on average weekly earnings with a wife and two dependent children pays in income tax has increased from 6 per cent of his total earnings in 1961-62 to 17.6 per cent of total earnings in 1985-86. The slice of income which is lost to taxation has almost tripled in that 20-year period. While there may be some reductions in the tax rates recently introduced, particularly in more recent times, the failure of the Government to tackle the question of bracket creep means that within one year at the outside the proportion of income forfeited to taxation will again increase. These are not wealthy people in any shape or form. Raising two children on average weekly earnings and paying off a house is perhaps now an impossibility. This can occur only with both partners working, such is the state of the average Australian family. It is, as I said, the battler-it is the person with whom the Labor Party has claimed to have some affinity- who has been hurt so much by this Government. The Government's last Budget must now put an end to the suggestion that it is representative of the people. Fully aware of the effects which its ravenous taxation policies were having on families, it nevertheless decided that it did not have the courage to reduce spending so that it could reduce taxation. It increased spending and it increased taxation by an even greater margin, by 11 per cent in fact. This Government does not seem to have the courage to cut spending. It spent millions of taxpayers' dollars in the hope that it could cultivate unto itself support groups in the social welfare lobby and in the public sector. Perhaps that was pragmatism. I rather think that perhaps it was due to the strait-jacket of its socialistic ecological commitment. Be that as it may, the result is the same. I do not know whether it has cultivated these people. I know only that in the attempt it has been prepared to walk over Australian families and Australian business. It has killed the incentive to work and the incentive to invest. It is driving thousands of those who are already in business to the point of bankruptcy and beyond. For every one of those people I can only wonder how many more people, if taxation rates were lower, would have been prepared to start a small business. But as things are at present they cannot see sufficient return and they simply do not bother. How many people are now out of work and who could have been employed? How many opportunities has Australia lost? How many more will it lose before it has a government which is dedicated to the reduction of government spending and the reduction of taxation? One thing is absolutely certain and it is something of which the vast majority of Australians are now conscious. It is that they will not have a government committed to proper, responsible and reasonable tax reform until there is a change of government from the socialist Government that they now have to a non-Labor government with an undertaking, a commitment and a preparedness to provide incentive to ensure that blue collar workers, middle income earners and small business people are provided with incentive to work. Senator MESSNER(South Australia)(8.42) —The Taxation Laws Amendment Bill (No. 5) 1986 touches three important matters: First of all, it introduces a new system for the payment of provisional tax in quarterly instalments for taxpayers whose provisional tax liability exceeded $2,000 and who previously had paid on a lump sum basis, normally in the early part of April in the year following the year of assessment. The second aspect of the Bill relating to redeemable preference shares has been well treated by my colleague Senator Crichton-Browne. The third element relates to exchange gains and losses. I do not intend to go over the same ground that my colleagues have covered to point out the deficiencies in the legislation affecting the last two mentioned items that we believe cause difficulties not only to the professional community but also to taxpayers generally. We believe that the best course for handling this legislation is to refer the parts of the Bill relating to those matters to the Standing Committee on Finance and Government Operations for its inquiry and report. The element of retrospectivity in respect of redeemable preference shares was well covered by my colleague Senator Crichton-Browne. When brought to the attention of the Standing Committee for the Scrutiny of Bills, the Committee commented on the matter. Consequently, we believe we are fully justified in pursuing that reference. I point out that that matter, which was essentially an anti-avoidance measure, was first announced by the Government on 7 April 1986-nearly one year ago. Of course, it is becoming common-place under this Government to expect that legislation takes an inordinate amount of time to get before the Parliament. That in itself is causing a great deal of concern in the community generally. We have what is known as legislation by Press release whereby the Government makes its announcements and subsequently-some time well into the future-we receive the legislation and are forced to examine it against a time lag of some 12 months. In this case that has led to difficulties because, quite clearly, the legislation does not match the original Press release, as Senator Crichton-Browne pointed out during his address. That is to be deplored and I draw the attention of the Senate to the continuing practice of the Government of changing legislation by Press release. This leaves business and the community generally in a great state of uncertainty when dealing with matters set out in the Press releases. We do not condone that kind of activity, especially when there is such a long lead time from the date of announcement of the measure to the actual enactment of the legislation. This problem also arises and is somewhat worse in the case of the foreign exchange gains and losses. That announcement was first made on 18 February last year. So it is now 13 months since that was first announced, during which time the community has been in blissful ignorance of the full details of the law. Consequently, we now find numerous discrepancies between the original intention, as stated in the Press release, and the legislation brought down by the Government a few weeks ago. Clearly, this is not good enough. Clearly, there are issues that need to be addressed. Again, we believe that this justifies our view that we should refer those parts of this Bill to the Standing Committee on Finance and Government Operations for report. That motion has not yet been moved, but will be moved at a later stage in the course of this debate, although it may be overcome by other events. Senator Haines —You never know in this place, do you? Senator MESSNER —We never know in this place; we will have to wait to see the outcome of those other events. The last item relates to provisional tax. Without going too deeply into this matter, it is quite clear that there is a vast amount of community concern about the Government's intention to move from a lump sum provisional tax system to a quarterly payments system. That has been noticed by the Opposition, and I understand particularly by the Australian Democrats. In the course of the last few weeks there has been a rising tide of concern about this matter. Clearly, the Government will be disadvantaging the business community. There will be a transfer from business to the Government. There will be savings to the Government, but an extra cost on business, of more than $100m a year. This comes about because, while the Government will save some $100m in interest charges for the financing of its arrangements from the beginning of a financial year through to the normal time at which it would collect provisional tax payments, business will have to pay that amount. It will lose its access to that money in the whole scheme of things. So this is an extra cost on business, coming on top of the fringe benefits tax, on top of the capital gains tax, on top of the loss of deductions for entertainment expenses of a legitimate kind and on top of numerous other measures affecting business. This must add to the cost of living in this country and the cost of operating a business. It clearly raises the total tax take of the Government. We know that the tax take by this Government is now at the highest level ever since Federation and is approaching 28 per cent of gross domestic product. It has risen inexorably since this Government came to power in 1983. It seems to be part and parcel of this Government's approach to put higher and higher charges on business and the community generally. Of course, this is contributing greatly to the reduction in the standard of living of the Australian community. I do not wish to go on at length about this matter. There will be a later discussion on the details of the problems that arise with provisional tax. I understand that the Australian Democrats, like ourselves, are contemplating amendments to ensure that primary producers and others who are on income averaging systems will be exempted from the quarterly instalment system. We support that. There are some differences of view between ourselves and the Democrats as to whether or not this should be open ended or whether there should be limitations on the amount of the provisional income. The Democrats have a view, as I understand it, that the maximum provisional income should be $100,000 in order to allow people an election off the quarterly system so that they maintain their lump sum status. We say that people who earn incomes above that level are very few in number. On the latest statistics I think only about 500 people a year are affected. In our view that is not the point. Where we believe the Democrats are wrong is that clearly, by introducing such a blanket level at $100,000, that small number of income earners who have income above that level will seek to enter into avoidance schemes in order to reduce their incomes below $100,000 and consequently render themselves available for the concession that we have in mind. Consequently, that is a poor piece of legislation making, if I might say so, and for that reason we are not supportive of the Democrats' amendment. We believe that they are only opening up the law for further abuse. I do understand, though, that the Democrats would like this legislation in toto-that includes the provisional tax part-to be sent to the Senate Standing Committee on Finance and Government Operations. If they are successful in having that motion carried in this place, we will not proceed with our Committee stage amendments to give effect to the scheme that I have just outlined. So at this stage it is premature to develop the arguments further until we see the outcome of the decision here on the motion for the second reading. My colleague Senator Michael Baume has moved an amendment to the motion for the second reading. The remarks I addressed in my speech a little earlier referred to several of the matters raised in that second reading amendment, chief of which is the very considerable extra burden that this Government is seeking to impose on business through its various taxation measures. I instance those again: The fringe benefits tax; the new and increased amount of company tax, which is now to rise from 46 per cent to 49 per cent; the capital gains tax; the negative gearing proposition; and the abolition of the deduction for legitimate business expenses. I conclude there and await anxiously the outcome of the second reading deliberations. Senator WALSH(Western Australia-Minister for Finance)(8.54) —I will not speak at great length but I will make a couple of general and specific points about the Taxation Laws Amendment Bill (No. 5) 1986. I have long noticed that provisional tax is a subject about which there is a good deal of misunderstanding and misrepresentation. This Bill essentially establishes neutrality, so far as is possible, in the timing of taxation liability between PAYE taxpayers and non-PAYE taxpayers. Very contrary to what Senator Sanders said during his speech in the second reading debate, the plain fact is that on average people who pay provisional tax do not pay taxation in advance but three months later than PAYE taxpayers. They also have additional advantages in that taxpayers have the option of varying provisional tax downwards and they are allowed a significant margin of error without penalty. Taxpayers are under no obligation to vary provisional tax upwards even though it may be clear to the taxpayers that an upwards revision in the provisional tax assessment would be appropriate. The provisions in this Bill would eliminate that three months deferral advantage which non-PAYE taxpayers currently have over PAYE taxpayers. Senator Watson —You are just trying to get more money. You are not interested in equity. Senator WALSH —It is a plain fact that it establishes neutrality, so far as that is possible, between PAYE and non-PAYE taxpayers in respect of the time at which their obligation to pay tax falls due. Insofar as it eliminates the advantage of that three months deferral which non-PAYE taxpayers currently have on average, it will bring forward the collection of revenue for the Commonwealth and for that reason it will have some saving on public debt interest. Many speakers mentioned during the second reading debate-indeed, it was the major reason cited why the Democrats are to move for the referral to a committee after the second reading motion has been carried-the effect of this legislation on people whose income fluctuates during the year. Farmers are one such group who are subject to that sort of fluctuation on a fairly predictable basis. The Bill already makes provision for the provisional tax liability to be paid in two payments instead of four by people in such categories. Payments would fall due on 1 February and 1 June; in other words, two months removed either side from the present obligation date of 1 April. Moreover, and contrary to what I think some people said during the second reading debate, if there is an underestimate by the taxpayer of the provisional tax due, the taxpayer is not automatically subject to the penalty interest of 20 per cent for the period that the amount was underpaid. The Commissioner of Taxation has discretion to vary or waive penalty if, to put it in plain language, the taxpayer can put forward a reasonable excuse or justification for having made such an estimate. Senator Watson —How often does he exercise that discretion? Senator WALSH —I do not know. I will try to find out if I can. So much for the timing of the provisional tax. The other major provision of the Bill is the announcement by the Treasurer (Mr Keating) on 7 April last year on the use of redeemable preference shares as an alternative to borrowings. Redeemable preference shares were clearly being abused to the advantage of both the nominal shareholder and the company which was issuing these nominal shares because tax was effectively avoided on the income paid. Therefore, it was possible for the lender to gain a better after tax return and for the borrower to effectively get a discounted interest rate because, instead of borrowing money, what was functionally a borrowing transaction was called the issue of redeemable preference shares and tax which would normally have been paid on interest was avoided. In other words, it was a tax rort. The Treasurer served notice on 7 April last year that that rort would be ended. It does not particularly surprise me that the people who have always been friends of tax avoiders-that is, members of the Liberal and National parties-are trying to undermine the Treasurer's efforts in announcing on 7 April that that loophole would be closed. That is also to be examined by the Senate Standing Committee on Finance and Government Operations. Senator Watson —All we want is legislation that ties in with the Treasurer's statements. That is all we want. Senator WALSH —Senator Watson's lot allowed bottom of the harbour operators to rob honest taxpayers of hundreds of millions of dollars. Their Attorney-General hibernated for five years while a file recommending prosecution of one of those tax evaders, who just happened to be a big noise in the Western Australian Liberal Party, was allowed to sit in the bottom drawer. He did absolutely nothing until the McCabe-Lanfranchi and Costigan reports revealed the magnitude of the theft which had been organised and practised over a number of years by many leading Liberal Party members in Western Australia and elsewhere. Given that record, it is not at all surprising that members of the Opposition are trying to assist their tax evading and avoiding friends outside the Parliament to continue to practice in a different form the theft that they practised without any hindrance or obstruction through the late 1970s and the early 1980s. It does not surprise me at all that they are doing that. Their National Party colleagues are under instructions from outside the Parliament, from the white shoe brigade-that gaggle of convicted criminals which is directing Petersen and the Queensland National Party in trying to have him installed as Prime Minister in order to repeal-- Senator Sheil —Mr Deputy President, I raise a point of order. I object to the Minister saying that the Queensland Premier is directed by a gaggle of criminals in Queensland. I ask him to withdraw it. Senator WALSH —There was Minuzzo, and Brych. Ray managed to get off. The DEPUTY PRESIDENT —Order! It is a reflection on a member of another parliament and it should be withdrawn. Senator WALSH —I withdraw. It is not surprising that members of the Liberal Party are attempting, and will I understand subsequently attempt, to open up a 15-month window for tax avoidance by effectively emasculating the provisions in this Bill, notice of which was given by the Treasurer on 7 April last year. However, I understand that Senator Michael Baume has an amendment to the second reading stage which is the sort of amendment one would expect a member of the Waste Watch Committee to move. I observe again, as I have before, that it is a pity that the Waste Watch Committee did not apply its collective mind-the Waste Watch Committee is a bunch of malcontents sitting on the Liberal Party back bench who believe that they should be sitting on the front bench and they set up the Committee to improve, as they saw it, their prospects of getting on the the front bench, particularly the one with the big mouth who is sitting opposite me now-to the doctors union's attempt to increase its members' remuneration for their part time jobs, to get a $22,000 a year pay rise for their part time job, instead of picking on the trivia that it normally picks on and running media stunts in the way it does at least once a week. This comes from the same people who say that there ought to be a wages freeze; that people on $250 a week should not get a $10 a week pay rise. However, they say that members of the doctors union should get a pay rise of $425 a week for their part time job. It would be a $1,000 a week pay rise if it were converted to a full time equivalent. It is a pity that members of the Waste Watch Committee could not apply their minds to that. The Government will be voting against Senator Baume's amendment. I understand that following the carrying of the motion that the Bill be read a second time, the Australian Democrats will be moving a motion, of which notice has been given-I do not know whether it has been read out-which seeks to refer the Bill to the Senate Standing Committee on Finance and Government Operations for report by 4 May. The Government will support that amendment-reluctantly, because it is quite clear that if the motion was not carried, we would have a prolonged Committee stage debate on the Bill, and I understand that-- Senator Michael Baume —Where your arrogance would be revealed. The DEPUTY PRESIDENT —Order! Senator Michael Baume, you are interjecting too much, and you are not in your seat. Senator Michael Baume —No; I am in charge of the Bill. The DEPUTY PRESIDENT —Well, you are still out of your seat. Senator WALSH —Oh, he has got himself on to the front bench! The leader of that gaggle of malcontents on the back bench has managed to get himself on to the front bench, however temporarily that may be. Senator Michael Baume —If you had been here listening to the debate you would have noticed that. Senator WALSH —I had more important things to do than to listen to the histrionics and the posturing and posing of people such as Senator Michael Baume. It is a pity that Senator Michael Baume is not as anxious to talk to the media about what he thinks of the doctors union's attempt to grab a $415 a week pay rise for a part time job as he is to blab to the media about anything else that comes into his head. If the Government did not support the motion of which the Democrats have given notice, after what would presumably be a lengthy, boring and repetitious Committee stage debate, starring Senator Michael Baume, the temporary occupant of one of the Opposition front bench positions, a motion that has a similar effect would be moved anyway at the third reading stage and the Bill would still be referred to the Committee. The Bill is to come back to the Senate by 4 May. The Government does not believe that the referral is necessary, but we will not oppose it. The motion of which the Democrats have given notice requires examination of both the Treasurer's statement of 7 April last year and the effect on provisional taxpayers. In respect of that I say, on behalf of the Government, that the Bill will go off to the Committee. I cannot forecast what recommendations the Committee might come back with, but I can state, definitively, that the Government will not, in any subsequent proceedings before the Senate, accept any amendments which gut the Bill; in other words, any amendments which open up that 15-month window of opportunity for tax avoiders to continue misusing redeemable preference shares through the device of rolling them over. The Government will not accept any such amendment-got that? Senator Crichton-Browne —What did the Treasurer's original statement say? What did he say about rolling over? Senator WALSH —Everybody knew what the intention of the original statement was. It was to end that rort which no doubt many of Senator Crichton-Browne's best friends were up to their ears in. That was the very clear intention, and that is what the legislation should reflect. The Democrats' forecast motion specifically refers to taxpayers whose income is subject to fluctuation throughout the year, and so on, about which I have already spoken. I do not know what the F and GO Committee might subsequently recommend on that. The Government does not believe that amendments are necessary. However, if there are minor amendments which have an insignificant effect on the timing of the revenue collection, we will think seriously about them. The redeemable preference shares question is an issue which is not negotiable. This Government, throughout its life, has adopted a tough and consistent policy aimed at imposing fairness in the taxation system. One component of that policy, of course, was to put an end to the wide variety of practices which had flourished when John Howard was Treasurer by which tax cheats robbed honest pay as you earn taxpayers. The redeemable preference shares rort was one device which had sprung up in late 1985 and early 1986 and the Treasurer gave clear notice on 7 April that the Government was going to put an end to it. As far as the Government is concerned, that issue is not negotiable. Question put: That the words proposed to be added (Senator Michael Baume's amendment) be added. The Senate divided. (The Deputy President-Senator D. J. Hamer) Ayes . . . . . . . . . . . 36 Noes . . . . . . . . . . . 30 —— Majority . . . . . . . . . 6 —— Alston, R. K. R. Lewis, A. W. R. Archer, B. R. MacGibbon, D. J. Baume, Michael Macklin, M. J. Baume, Peter Messner, A. J. Bjelke-Petersen, F. I. Newman, J. M. Boswell, R. L. D. Parer, W. R. Brownhill, D. G. C. Powell, J. F. Carrick, Sir John Puplick, C. J. G. Collard, S. J. Reid, M. E. Crichton-Browne, N. A. Sanders, N. K. Evans, Gareth Short, J. R. Guilfoyle, Dame Margaret Teague, B. C. Haines, J. Townley, M. Hamer, D. J. Vanstone, A. E. Hill, R. Vigor, D. B. Jessop, D. S. Walters, M. S. Kilgariff, B. F. (Teller) Watson, J. O. W. Knowles, S. C. Withers, R. G. Aulich, T. Grimes, D. J. Black, J. R. Jones, G. N. Bolkus, N. McIntosh, G. D. (Teller)Childs, B. K. McKiernan, J. P. Coates, J. Maguire, G. R. Colston, M. A. Morris, J. 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. Foreman, D. J. Tate, M. C. Georges, G. Walsh, P. A. Gietzelt, A. T. West, S. M. Giles, P. J. Zakharov, A. O. Chaney, F. M. Evans, GarethSheil, G. Coleman, R. N. Durack, P. D. Sibraa, K. W. Hill, R. Button, J. N. Question so resolved in the affirmative. Original question, as amended, resolved in the affirmative. Bills read a second time. Referral to Standing Committee Senator HAINES(South Australia-Leader of the Australian Democrats)(9.18) —Pursuant to Standing Order 196a, I move: 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 the following matters: (a) whether the provisions of the Bill relating to short-term redeemable preference shares extend beyond the terms of the Treasurer's announcement of 7 April 1986; (b) whether any parties relying on the clear wording of the Treasurer's 7 April 1986 announcement will find their legal rights retrospectively affected by passage of the Bill in its present form; (c) the form of amendment, if any, necessary for the Bill to conform to the limits of the Treasurer's announcement; and (d) whether the provisions relating to quarterly payment of provisional tax will be unduly onerous on provisional taxpayers whose income is subject to fluctuation throughout the course of a year and, if so, whether amendment of the Bill to provide election of payment of provisional tax in full at 31 March can achieve relief for those taxpayers only. Senator Walsh referred to this motion in his summation of the second reading debate. During the second reading debate on the legislation there was considerable discussion about various clauses and about the sorts of issues that ought to be looked at by the Senate Standing Committee on Finance and Government Operations. It seemed that both the Australian Democrats and the Opposition parties had a number of amendments that they wished to move to a number of clauses in the Taxation Laws Amendment Bill (No. 5) 1986. As was discussed during the second reading debate, the Bill deals with only three specifics-dividends paid instead of interest under short term financial arrangements, foreign currency exchange gains and losses and changes to the provisional tax payment arrangements. t The Australian Democrats have a number of amendments to clause 7 which relate to the question of debt dividend and to short term finance arrangements. We also have amendments to the provisional tax change section in clause 16. I understand that the Opposition also had amendments planned, certainly to clause 16 and I think also to clause 7. So given that the only proposed section that does not seem to be creating a fuss is that dealt with in clause 9, relating to foreign currency exchange gains and losses, it seems sensible at this stage to refer the Bill, as Senator Walsh said, using a fairly little known standing order, standing order 169a, to the Senate Standing Committee on Finance and Government Operations following the second reading motion and prior to discussion in the Committee of the Whole. I think it has saved a long and tortuous debate and, therefore, a fairly lengthy time delay which could be more profitably used by this chamber in looking at some of the rest of the legislation that is before us. The date set for reporting is 4 May 1987. That date was set in order to enable the Senate to deal with the report coming from the Standing Committee on Finance and Government Operations on the Bill and any amendments that may be required to that Bill prior to the Senate rising in June, therefore not impeding the Government's potential revenue raising for the 1987-88 financial year. I commend the amendment to the Senate and wish the members of the Standing Committee of Finance and Government Operations a great deal of luck in ploughing their way through the sorts of problems that have been raised with us about clauses in this Bill. I hope that we can see a report by 4 May which will satisfactorily sort out some of those problems. Question resolved in the affirmative. Motion (by Senator Walsh) agreed to: That consideration in Committee of the Whole of the Income Tax Amendment Bill 1986 be made an Order of the Day for the next day of sitting. Debate resumed from 8 May 1986, on motion by Senator Grimes: That the Bill be now read a second time. Senator COLLARD(Queensland-Leader of the National Party of Australia)(9.25) —The Environment Protection (Impact of Proposals) Amendment Bill has been around in the Senate for some considerable time. As a matter of fact, when I found out it was coming on for debate at long last, I immediately had to refresh my memory as to what the heck it was all about. This is a Bill that we will not be opposing, as it makes a fair bit of sense. I think it must be said at the outset that this Bill concerns actions and decisions of the Commonwealth Government and its authorities, lest anybody tries to read into it more than it actually involves. Some of its implications can concern airports, railways, ports, highways, buildings, coal, iron ore, uranium mines and woodchip export projects. The original Bill was introduced and passed in 1974. This Bill is the result of the benefits of several reports from parliamentary committees, not the least of which have been the House of Representatives Standing Committee on Environment and Conservation and the Senate Standing Committee on National Resources. The fact that these committees have reported and made recommendations and that the Government has seen fit to pick up some of those recommendations is to the good of us all. The Act will continue to provide for the preparation, public review and submission to the Commonwealth environment Minister, whoever he may be at that time, of environmental impact statements for proposals which are of major environmental significant. However, one amendment, with which we agree, provides for the preparation of what will become known as public environmental reports or PERs. These will be for proposals with less complex or less important environmental implications. There may be many such proposals that do not warrant the preparation of an environmental impact statement or an EIS as we have all come to know it. This is normally a pretty comprehensive document. It requires considerable time and resources to prepare. Indeed, quite often it costs a considerable amount of money. The PER will be simpler and much less costly than an EIS, but it will still provide a sound basis for public comment and for Government consideration on projects which are obviously of a lesser nature than the major ones which will provide for an EIS. The Minister for Arts, Heritage and Environment (Mr Cohen) will still require the supply of information to enable him to consider the need for an EIS or a PER. Section 10 of the Act will enable any person to write to the Minister asking what action has been taken or is proposed to assess a proposal under a provision of the Act. The requirement for the Minister to respond promptly was considered pretty vague. The House of Representatives Standing Committee reported on this matter. It indicated that a period of three months for the Minister to reply should be specified. The Act, of course, will be amended accordingly. These amendments seem to be a valid attempt to streamline and thus cut the costs of providing environmental impact information on projects. Looking at the legislation, two areas of concern were brought to my attention. Unfortunately, there are no officers in the chamber, but the first area of concern was that the Bill does not clarify what was really entailed in the PER, nor does it make clear at what level of impact it would apply. There has also been some concern expressed at the total ministerial discretion with all environmental impact statements. The Australian Conservation Foundation feels that it would be helpful if it would detail at what level of development it was mandatory to provide an environmental impact statement, but those are really minor considerations. We in the Opposition say that it would be good to get a comment from the Minister on these matters, but we do not consider them of any great significance. It is certainly not significant enough to hold the passage of this legislation. As I indicated, the Opposition will not be opposing this legislation. Senator SANDERS(Tasmania)(9.28) —The Environment Protection (Impact of Proposals) Amendment Bill could be an important Bill. Unfortunately in its present form it is not particularly significant. In latter years the environment has not received the attention that it should. A tidal wave of environmental awareness took place in the late 1960s and early 1970s and a number of Bills were passed around the world in those years which actually did have teeth and which gave implemented methods of looking after the environment. Since those days expediency, and perhaps greed, has taken precedence and much of the legislation has been altered and amended, making it inoperable. This is unfortunate because more and more we find that the world as we know it and our environment are under great threat. It seems that the human race has been an evolutionary experiment which has failed. We do not seem to be able properly to handle our technology in such a way as to preserve our environment. I could go through a list of horrors but I think honourable senators would be aware of the great dangers facing our world. Unfortunately, they feel that other issues are more important. They claim that the real world is a world of economics and political in-fighting. Unfortunately for them and for us all the real world is the environment which supports us. The ozone layer is being depleted by the propellants in spray cans and the fluorocarbons which are being issued into the atmosphere. When the ozone layer is depleted it will no longer be able to filter out ultra violet light, which will have grave consequences for us. The build up of carbon dioxide in the atmosphere is having a green-house effect, a warming effect, which will not only increase the warmth of the agricultural areas round the world, making some areas perhaps marginally profitable, but also melt the polar ice-caps, which will cause the sea levels around the world to rise. These are very profound effects, yet nobody really worries about them. They are outside the normal time frame of politicians. Politicians think in terms of perhaps three years, or less in some instances. Nobody really worries about these things, but they are with us. As an environmentalist I am not really worried about the environment per se. The environment has been around for about 4.5 billion years, give or take a few, and the environment-an environment-will survive. Unfortunately, the environment that does survive will not support human life. Really, I am a humanist. Most environmentalists are. The environment is, after all, a life support system. In all of our legislation and in our thinking about the environment we need to shift the burden of proof. At the moment the burden of proof is on the environmentalists to show that some operation will be hazardous to the environment. The burden should be on the other foot; it should be on the polluter, the developer, to show that whatever he intends to do will not have any effect on the environment. This Bill addresses none of these issues. Another thing that is urgently needed in Australia is a mechanism whereby people who are not economically affected by a project can still appeal against it and protest on behalf of the environment in the courts. We need standing to sue so that environmental groups or concerned citizens can carry these actions. At the moment it is necessary to find someone whose economic interests are affected. It would have been attractive to try to amend this Bill by inserting a standing to sue clause but we knew that it would be absolutely impossible to get such a thing through. Sometimes developers talk about balance and weighing the environment against the economic situation. The scales now are so far on the economic side that any real balance would cause great screams on behalf of the miners, the woodchippers and developers in general. There is a saying in the United States, my former home where baseball is a game of great popularity, that mother nature always bats last, which means that mother nature or the environment will have the last say. With all our technology, all our skills and all our science, once we have so extended and stretched the system it will not come back. It will no longer be able to support us and we will be simply shrugged off this planet. An excellent television series was shown on the BBC, and later on the ABC, called Edge of Darkness. It was based on the gaia principle that the earth is a living organism which maintains its own climate and environmental systems and which will reject anything which interferes with them. At the moment the human race is having a great impact on the environment. I foreshadow several amendments to this legislation which falls into two basic categories. One amendment will make it possible for the Minister for Arts, Heritage and Environment to have control over the environmental impact statements which are required. The present situation is that the so-called `action' Minister, who is the Minister in charge of the area-in the case of woodchipping it is the Minister for Primary Industry (Mr Kerin)-has control over the EIS. The Australian Democrats feel that the EIS should be under the control of the Minister for Arts, Heritage and the Environment, who will then operate in consultation, perhaps, with the action Minister. The other thing we would like to see is impact statements being prepared by the Government, rather than by the developers. In the case of the Tasmanian woodchip situation we had the Tasmanian Forestry Commission and the woodchip companies preparing their own EIS which was later evaluated by the Government. This is like letting the fox draw plans for the chicken coop. It simply does not allow a balanced presentation about environmental damage. In order to fund the preparation of environmental impact statements we propose that the developers pay the Government for the cost of preparing the EIS. Therefore, if a developer wished to go into an area and alter the environment he would put a proposal to the Government, the Government would prepare an EIS which would be evaluated and the charges would be assessed to the developing organisation. We will discuss these proposals more fully when we get to the Committee stage. We will be supporting the legislation. We would like to see it much stronger. We would like to see the entire commitment to environmental matters given a higher status in the Parliament and in the country. However, at the moment all we can do is deal with the legislation which has come before us. We urge the Government to take a good look at our amendments and urge all honourable senators to support them. Senator WATSON(Tasmania)(9.38) —Most people would agree on the need to create mechanisms to ensure the responsible conservation of our environment, and to make some provision for consultation prior to the development of sensitive resources. As an instrument or mechanism to facilitate the flow of information between the environment Minister, the Government, Government departments and the public, the Environment Protection (Impact of Proposals) Amendment Bill at hand contains some new suggestions and helpful information. While expanded opportunities for discussion of environmental issues, through mediums such as the proposed public environment reports, seem at first sight only to be beneficial, we must be cognisant of the pitfalls and difficulties that may arise from such action and be prepared to guard against them. The unfortunate transformation of the Tasmanian logging debate from what should have been an informed and co-operative discussion on very important issue for our State into a battle of hardened opinion and confusion and an exercise in political expediency by the Hawke Government provides us with some valuable lessons. Decisions as to the future of our sensitive resources should not be open to manipulation, as they are at the moment. Environmental impact statements and the proposed public environment reports are designed to provide an authoritative and rational assessment of the environmental impact of a wide range of developmental proposals and the guidelines underpinning them should ensure this. Unfortunately, we have found that in the past the preparation of environmental impact statements has not been wholly equitable, with submissions being made by parties which could not always claim impartiality. In fact it has been conceded by the Australian Heritage Commission that areas which do not justify being listed on the National Estate on natural or cultural grounds have at some times attained such status. Given that the findings of the environmental impact statements and public environmental reports will have important ramifications for the future development of this important resource, the provision that governs the compilation of these reports should be clearly stipulated to ensure that there is a balanced assessment. As we have seen in the case of Tasmania, all too often constructive discussion has been prevented by what we might term emotive and sometimes misleading or confusing statements over this issue. It is important, therefore, that we have a simplified public environmental report, as proposed by this legislation, which is designed to be a less comprehensive document than the environmental impact statement. It is important that this does not become a medium for the expressions of opinion of any one particular interest group, be it developers on the one hand or conservationists on the other. The sensitivity of environmental issues has been amply demonstrated by what we might term the highly emotional nature of the logging debate in Tasmania. Unfortunately, the intransigence of opinion that has been generated has deeply divided some local communities in our State, and this is most regrettable. Illustrative of the point I am trying to make is a recent case where a logging company was told of a rare plant in an area which was earmarked for logging development. It sought the expression of opinion from the local conservationists and people who were protesting about the destruction of this rare plant, because it was prepared to set aside an area for the protection of this plant. Unfortunately, the logging contractor was denied specific information as to its location and consequently it probably got destroyed. That lack of assistance is unfortunate and is regretted, so this hardening of opinion has to be overcome. In other words, co-operation is the key to responsible management of our resources, but we are not finding that in Tasmania at present. We must have multiple land use programs that conserve our environment whilst simultaneously contributing to the well being of our economy. Environmental impact statements and public environmental reports should not be used purely as further mechanisms to close areas to new development. A lot of people see these impact statements as a means to this end. In Tasmania 13.2 per cent of the total land resource is already protected in national parks. That figure is approximately twice that of other States. Under Federal legislation 29 per cent of the State's land use is listed on the National Estate register, with a further 5 per cent on the interim list-a total of 34 per cent. Clearly, considerable areas of the State are subject to some form of protection. Currently considerable efforts are being made by the corporate sector which is engaged in environmentally sensitive operations to ensure the conservation of areas and of renewable resources. For example, forestry management plans for the Lemonthyme Forest include, and rightly so, detailed guidelines for such things as fire protection, landscape management and regeneration programs. I must say, regrettably, that in some cases industry practices are of a higher standard than those demanded by our local Forestry Commission. Careful visual management planning will keep the visual aspect of roads and logging in the Lemonthyme within acceptable limits. There are only two places on the usual walking tracks where logging can be witnessed at all. They are very distant and the effect on the panorama is therefore quite minimal. Further, annual archeological surveys under professional direction will be made of the areas which are planned for logging and roads. This will allow modifications to be made to planning procedures if significant features are located as a result of these annual archeological surveys. In addition to this, the Tasmanian Government is taking some positive steps to ensure that the environmental values are considered prior to forest development; another positive action. In fact, the new Forest Practices Act is designed to take account of such things as water quality and flow, soils, site productivity, flora, fauna, landscape and a number of archeological features. The general principle underlying the legislation is the necessity of obtaining relevant site information before timber harvesting or other resource development commences. While all these initiatives and efforts should be welcomed, there is always the possibility to further enhance and update existing practices. Unfortunately, cost is often cited as an excuse for the minimal effort to remove the buildup of remnant bark, to control vermin and ensure adequate regrowth where weather conditions have hampered the growth of seedlings. For example, wind drift can affect the density of plantings and where that happens it is essential that there be planting by hand rather than by air. Where such costs cannot be borne, I believe that initial development should not proceed. Tasmania's extensive forest resources make the logging industry a natural one for Tasmania. It has historically played a significant role in the economy of the state. Rather than seeking to sabotage the industry through the prohibition of its activities, the Federal Government and conservationists should be concentrating their efforts on monitoring existing practices and jointing in constructive discussion with a view to lifting existing standards of operation. Unfortunately, in the past industry has been tarnished by some operators who have generally been undercapitalised. They have been anxious to get the extra dollars and have failed to meet their obligations in regard to the environmental and aesthetic features. It is true that there are miles of broken fences, limbs in creek estuaries and damaged culverts and roads, which all bear testimony to some careless practices by a thoughtless few. Often, disproportionate costs have been left to subsequent owners or later generations to pick up. This is an additional burden on those who in many cases have gained little reward as a result of the initial clearing. All too often those who have had the benefits have not had to pay the full costs, which have been transferred to later owners or generations. While it is true to say that State governments, transport operators and bush contractors all seem to have received quite adequate payment or royalties for what they have done, the poor old farmers who are unorganised have had quite minimal returns, especially in relation to some of the subsequent clear-up costs. As a move to utilise the more efficient areas in which logging is already taking place, there should be greater use of mobile woodchippers. Existing practices, which require the removal of logs to remote processing plants, too often mean that logs which in the more distant and remote parts cannot be transported by truck, are not utilised due to their shape or small size. With the introduction of bigger trucks by contractors it is becoming less economical to transport small and misshapen logs to distant processing plants. They are tending to look for the bigger and better types of logs. The introduction of mobile chippers would allow the most productive use of the available resources, thereby making necessary moves to new areas less frequent. A further point I make on the implementation of public environmental reports is that there is a need to ensure that the rights of private land owners to responsibly develop their properties are not alienated. Some 92,000 hectares of private property in Tasmania is listed on the National Estate Register. This listing can often occur without the owner's knowledge. That is deplorable. There is no obligation to advise the owner of the specific reason for the listing. Therefore, it is vital that owners be no further restricted by simplified and possibly incomplete reports on proposed developments they may have an adverse impact on their properties. Responsible development and management and a commitment to multiple land use are essential if Australians are to gain maximum benefit in all ways from our resources. It is therefore important that the proposed public environmental reports do not become mechanisms for further restricting access to resources when their development can be carried out responsibly. Unfortunately, the emotive nature of the debates on environmental issues and the misinformation campaigns carried out by extreme elements indicate that care must be taken to avoid manipulation of reports such as environmental impact reports and environmental impact statements. This must be recognised and steps must be taken to ensure that the range of opinions on each issue is adequately represented. I commend the Bill to the Senate. Senator BROWNHILL(New South Wales)(9.53) —The Environment Protection (Impact of Proposals) Amendment Bill 1986 basically provides amendments to existing legislation that will strengthen its administrative efficiency. In the second reading speech the Minister for Arts, Heritage and Environment (Mr Cohen) said that the amendments were designed to provide greater emphasis on public involvement in carrying out environmental assessments under the Act, he went on: The object of the Act, which came into force in 1974, is to ensure that to the greatest extent practicable matters affecting the environment to a significant extent are fully examined and taken into account in relation to actions and decisions of the Commonwealth Government and its authorities. I have no objections to this at all. They are noble sentiments, and it is important that they be contained in legislation. The problem is, however, that the Act simply does not do those things and, I believe, neither will this amendment Bill. I am aware that the amendments have come about as a result of exhaustive work done by both the House of Representatives and the Senate committees which reviewed the original legislation with the aim of strengthening and correcting the weaknesses. I support the amendments that will, for example, require the furnishing of information to the environment Minister in order for him to determine the need or otherwise for an environmental impact statement. Other parts of the Act sound very laudable. For example, section 10 refers to the ability of any person to write to the Minister asking what action has been taken or is likely to be taken to assess a proper proposal under the provisions of the Act. The Act enables the Minister to direct an inquiry on any environmentally significant matter for which a Commonwealth action or decision would be required. A commission would conduct the inquiry and it would report its finding by a specified date. The amendments are designed to make the Minister more accountable to the public in relation to environmental impact statements. They provide that there be consultation between the Department of Arts, Heritage and Environment and the proponent during the preparation of an EIS and that there be an adequate reply. As I said before, I have no argument with any of those proposals-they sound terrific. But I do not really believe that they will change the situation very much. For many in the community, this legislation is not, was not, and may never be of any consequence to them. But there are five groups of people in my State of New South Wales to whom this legislation and related legislation is very important. The first group, in the Orange-Bathurst district, until recently lived for over two years with the threat of eviction because of Federal Government actions. I will return to this group in a moment. The second group, in the Singleton area, is still living in the shadow of the Federal Government's action over Army land acquisitions. The third group, in the Cobar area, were affected by the Army and the Federal Government's vacillation over land base acquisitions. The fourth group is being strangled at the hands of another Government department, this time the Department of Aviation. I refer, of course, to the people living in Badgerys Creek area. The fifth group lives around Jervis Bay. The last two groups of people to date have not suffered as long as the first three groups, but I have no doubt that unless this Government gets its act together a bit faster this group will have the same problems as the previous groups have. The argument of where a second international airport for Sydney should be located is certainly not a recent one. It has been going on almost as long as the serial Blue Hills and it has many similar characteristics. The big difference is that it involves real people. I do not wish to get into the argument over where Sydney's second airport should go. The fact is that after much grandstanding the Government announced that it would be built at Badgerys Creek. From my understanding of the matter, some residents got in early and made arrangements with the Department for their land to be acquired at a fair and reasonable price. This encouraged a few more people to enter into negotiations. A third group was forthcoming when rumours were around that there was to be a cut in the Budget allocations for acquisitions. Of course there were Budget cuts, so we are now told that there is to be a second airport at Badgerys Creek. Some residents have offered their properties and have contracts; others have offered their properties and have no guarantees as to when and at what price the Government will acquire them. People in an even larger group know that their properties are to be taken, but they do not know when or how much they will be compensated. In the meantime, they cannot sell their land, they cannot develop it; they are in a bureaucratic limbo. Will these amendments help any of these people? I do not believe that they actually will. Yet here we have an example of four or more cases in my home State of New South Wales where there should be some legislative protection for people affected by government action. Here we have an opportunity for the Federal Government-if it is genuine in its attempts to remove anomalies-to do all those laudable things the Minister said he wanted the Act and the amendments to be able to do; yet it has failed in its objectives. The Government cannot claim to be ignorant of the weaknesses of this legislation. People originally involved in the opposition to the desired acquisition plans of the Department of Defence for the Bathurst-Orange area have moved to examine the whole issue of land acquisition, blight, and the effects of bureaucracy on the ordinary citizen. They have approached the Federal Government attempting to bring the appropriate Minister's attention to what they see as weaknesses in the legislation. These people are not professionals; they are simply, for the most part, farmers, businessmen and generally concerned citizens who have experienced the injustices of the bureaucratic system and are making efforts to have legislation strengthened and improved. This legislation could not possibly have come at a more relevant time, considering the recent experience of the numerous people involved in the Bathurst-Orange fiasco. Those people have been through hell, created entirely by Federal and, to a lesser extent, State bureaucratic bungling. I am very proud of the small part I played in assisting them to buck the system. If it had not been for their persistent questioning, pursuing avenues anywhere and anyhow they could, it is very likely that the Government would still be considering the matter or, worse, have acquired a large parcel of land which was entirely unsuited to the purposes for which it was to be obtained. It is precisely because of that example and the others I have mentioned in Cobar, Singleton, and Badgerys Creek that I believe this legislation does not go far enough. If we as a Senate are genuine about improving the inter-relationships between the bureaucracy and the public, of protecting the private interest, then we must do more than provide mere words. We must not only be genuine, but we must also be seen to mean what we say. That is also why I cannot accept the Democrat amendments. They will simply cause more confrontation without any real purpose. While I am conscious that the Land Acquisition Reform Committee-LARC-is anxious that amendments be made to this legislation, I am also aware that they agree that this legislation is faulty from the start. For that reason I believe patching up shoddy legislation is not the answer. I would hope that this year the Parliament will have the opportunity to review the Land Acquisition Act, for it is that Act that provides the only real opportunity for improvement in compulsory acquisitions of private land. I think the Democrat amendments are just cheap window dressing and are doing little more than wasting the time of the Senate for their own ends. Senator RYAN(Australian Capital Territory-Minister for Education)(10.01) —I thank honourable senators for their constructive approach to this legislation, which is designed to overcome some specific administrative constraints in the Environment Protection (Impact of Proposals) Act 1974 and to improve other aspects of its administration. I think that during the debate it has generally been recognised as doing that. In response to Senator Brownhill's suggestion that the legislation has not led to any action in respect of the areas of New South Wales which he mentioned, I remind the honourable senator that the legislation does not give the Minister for Arts, Heritage and Environment any veto powers. The Minister may prepare environmental impact statements but the ultimate decision is still one for the Government. In the case of the examples that Senator Brownhill gave, environmental impact statements were prepared and taken into account, but government decisions were made. I understand that one is being prepared in the case of Jervis Bay and it will be taken into account. Whether or not it will lead to the Government changing its decision is a matter for the future. But there is the opportunity for information to come forward to the Government by way of this legislation, which it takes into account. But I do not think Senator Brownhill would be arguing for a veto for the environment Minister over other decisions of Government. Other than that, I thank honourable senators who have supported the legislation. I indicate that the Australian Democrats' amendments are not acceptable to the Government, and I commend the Environment Protection (Impact of Proposals) Amendment Bill to the Senate. Question resolved in the affirmative. Bill read a second time. The Bill. (Quorum formed). Senator SANDERS(Tasmania)(10.05) —by leave-I move: (1) Page 1, after clause 2, insert the following new clause: ``2A. After section 5 of the Principal Act the following section is inserted: Minister to give effect to objects `5A. (1) The Minister shall give all such directions and do all such things as, consistently with any relevant laws as affected by regulations under this Act, can be given or done by the Minister to ensure that procedures for the time being approved under this Act are given effect to in and in connection with any of the matters referred to in subsection 5 (1). `(2) Within 3 months after the commencement of the Environment Protection (Impact of Proposals) Amendment Act 1987 the Minister shall conclude with each Minister a Memorandum of Understanding which specifies guidelines for the identification of matters referred to in subsection 5 (1).'.''. (2) Page 2, after paragraph 3 (a), insert the following new paragraph: ``(aa) by omitting from paragraph 2 (b) `authorizing the Minister to direct the preparation or obtaining, and the submission to the Minister,' and substituting `the preparation by or on behalf of the Minister';''. (3) Page 2, paragraph 3 (b), proposed new paragraph 6 (2) (ba), lines 10 and 11, leave out ``authorizing the Minister to direct the preparation or obtaining, and the submission to the Minister,'', insert ``the preparation by or on behalf of the Minister''. (4) Page 2, after clause 5, insert the following new clause: ``5a. After section 24 of the Principal Act the following sections are inserted: Costs of inquiries, statements or reports `24a. Where an inquiry is conducted, or an environmental impact statement or public environment report is prepared, in relation to- (a) the formulation of proposals; (b) the carrying out of works and other projects; (c) the negotiation, operation and enforcement of agreements and arrangements (including agreements and arrangements with, and with authorities of, the States); (d) the making of, or the participation in the making of, decisions and recommendations; or (e) the incurring of expenditure; by or on behalf of an authority of Australia, whether alone or in association with any other government, authority, body or person, the costs of the inquiry, or of the preparation of the statement or report, as the case may be, shall be borne by the authority. Application for review `24b. (1) Application may be made to the Administrative Appeals Tribunal for review of a decision of the Minister to take any action, or not to take any action, in respect of a matter referred to in subsection 5 (1). `(2) Where the Minister informs a person in writing in accordance with section 10 as to what action, if any, has been taken, or is proposed, for ensuring consideration of the environmental aspects of a matter referred to in subsection 5 (1), the Minister shall inform the person that, subject to the Administrative Appeals Tribunal Act 1975, application may be made by or on behalf of the person to the Administrative Appeals Tribunal for review of the decision of the Minister to take the action specified, or not to take any action, in respect of the matter.'.''. The first amendment moved by the Australian Democrats confers new powers and responsibilities on the Minister for Arts, Heritage and Environment by new section 5a to be inserted into the Environment Protection (Impact of Proposals) Act. Proposed new section 5a. (1) gives the Minister the power to determine whether any matter is environmentally significant and to trigger the legislation if he decides that it is. Under the present Act, and indeed under this amending Bill, the Minister can initiate an environmental impact statement, an inquiry or a public environment report only when another Minister decides that a particular matter covered by his or her portfolio may have a significant effect on the environment. In fact, the Minister for the environment cannot even request information to help him to decide whether to hold an inquiry to request an EIS or a PER unless the action Minister gives the go-ahead. This turns the whole concept of environmental protection on its head. The Minister for the environment actually has no power to initiate a statement and can act only when an action Minister, such as the Minister for Primary Industry, decides that something is environmentally significant. This is an absurd restriction on the environment Minister and it demonstrates his status as a second class citizen within Cabinet. The Minister should be the watchdog over the collective actions of his colleagues who will frequently find a conflict of interest between the glory and status that new projects can bring and the environmental damage that those projects can cause. The environment Minister has no such conflict of interest, or should not have any such conflict of interest, and should be the one to hold the trump card in this legislation. This amendment has been proposed before, including in the policy of the Australian Labor Party, until it was mysteriously changed at the last national conference. In other words, the ALP itself saw the need to deny the environment Minister the major power in instigating EISs. But for reasons that I am not privy to-perhaps the Minister for Education (Senator Ryan) could explain this-the Labor Party saw fit to abandon this policy, which was eminently reasonable, and now it is apparently satisfied with the present situation, where the action Minister has the control. The amendment that I am proposing has been supported by the House of Representatives Standing Committee on Environment and Conservation and by members from both sides of the chamber in the second reading debate. My amendment uses the same wording as section 8 of the Act which requires the action Minister to apply the Act to matters covered by his portfolio. The amendment gives the Minister for the environment the responsibility to carry out his duties under the Act for all matters. He can then trigger the legislation to cover any matter that he considers to be environmentally significant. The power of the action Minister to trigger the legislation is left unchanged. Proposed new section 5 (a) (2) requires the Minister to complete memoranda of understanding-MOUs-with all Ministers within three months of the declaration of this amended Bill. The memoranda would specify guidelines to help action Ministers identify environmentally significant matters. This would step up the environmental awareness of the action Ministers and prod them into taking some action in their own areas. It is 13 years since this Act was proclaimed yet there are still Departments with which no memorandum of understanding has been concluded. One example is the Department of Primary Industry, which recently allowed the woodchip industry, exporting 250,000 tonnes per year, to be established in Queensland without any environmental legislation. Senator Boswell —Where was that? Senator SANDERS —I think it was the Hollow Tree Corporation. Senator Boswell —Where was it located? Senator SANDERS —In Queensland; I do not know the exact details. It is important that the outstanding memorandum be signed soon. Taken together, parts (1) and (2) of this proposed new section will allow the environment Minister to administer the Act more effectively than has been possible until now. Amendments (2) and (3) have another thrust. These amendments would make the preparation of EISs and PERs the responsibility of the Minister or an independent consultant appointed by him. At the moment it is done by the proponent of the project, which represents an obvious conflict of interest. We have seen, and I have mentioned earlier, the situation in Tasmania where the impact statement for the forestry operations there was conducted by the Forestry Commission which, by its own admission, has as its major goal the furtherance of the forestry industry in Tasmania and of the Tasmanian woodchip companies. It is patently ridiculous for any proponents of a scheme to prepare their own environmental impact statements. Environmental impact statements are reviewed by the Minister's Department with the help of the under-funded Australian Heritage Commission. The Heritage Commission is operating on a shoestring. In passing, I suggest that the Government take a look at the Heritage Commission and increase its staffing and funding to the point where it can look after Australia's heritage. The Heritage Commission would help in the preparation of these EISs and would also prepare a recommendation to Cabinet. Of course, this review process is not an independent assessment. The first part of amendment (4), to insert a new section 24a, requires that the cost of any inquiry, EIS or PER, be borne by the proponents of the project, whether a private company or a government authority. If the Government is to prepare these EISs, it is only fair that the developers or the proponents of the projects pay for them. Senator Robertson —Slow down a bit; you are giving me a headache. Senator SANDERS —I am sorry; I used to be a basketball announcer. Senator Robertson —A bit slower-sotto voce. Senator SANDERS —`Sotto voce' means with less force. Senator Robertson —I realise that. Both things-largo and sotto voce. Senator SANDERS —Largo and sotto voce; that tugs at the strings of my ethnic heart. At present the proponent of the EIS pays for the work it does, but not for the subsequent assessment work done by the Heritage Commission. In the case of a commission of inquiry, the cost is met entirely from the public purse. The environmental cost of any project should be part of the project's cost structure. Environmental concerns should be integral to business ethics. The second part of the amendment, proposed new section 24b, allows applications to be made to the Administrative Appeals Tribunal to review decisions made by the Minister under the Act. This will give environment groups a mechanism for compelling the Minister to fulfil his duties under the Environment Protection (Impact of Proposals) Act. At present the law does not give environment groups standing to commence legal proceedings in the public interest, which is a major defect. These amendments are sensible amendments, some of which have already been studied by various committees and some of which have been approved by members of all parties in the Parliament. They are eminently sensible and I recommend them to the Committee. Senator RYAN(Australian Capital Territory-Minister for Education)(10.13) —Despite Senator Sanders's very musical rendition of the Australian Democrats' amendments, we do not agree with his view that they are eminently sensible. In fact, the first three would really change the whole complexion of the Environment Protection (Impact of Proposals) Amendment Bill. The Minister for Arts, Heritage and Environment, Mr Cohen, addressed this concern at some length in his second reading speech. He pointed out that, after careful consideration, the Government decided that it was reasonable to place the responsibility for determining environmental significance on action Ministers. At the same time, the Government directed the preparation of memoranda of understanding to ensure guidelines and consultations for carrying out this responsibility. In accordance with the recommendations of the House of Representatives Standing Committee on Environment and Conservation, the Government has directed that MOUs be agreed between Ministers as quickly as practicable and that progress be notified in departmental annual reports to Parliament. I understand that the Opposition shares our view on this matter. Amendments (2) and (3) proposed by the Democrats have a similar purpose and similarly are unacceptable. I point out too that, if the Minister were to be responsible for the preparation of all environmental impact statements, rather than the action Ministers, that would impose a huge resource burden on the Department of Arts, Heritage and Environment. For that reason alone we regard it as not sensible. As to the cost of inquiries, there have been only two inquiries-one concerning the Ranger uranium mine and the other concerning Fraser Island. In both cases the Government bore those costs. The final amendment, on which I do not think Senator Sanders made any comment but which seeks an appeal to the Administrative Appeals Tribunal, is not acceptable to us. The AAT is not the appropriate tribunal-- Senator Sanders —At the moment there is no tribunal. Senator RYAN —Well, we do not think it is necessary, given the processes that are set out in the Bill. In conclusion, none of the amendments moved by Senator Sanders is acceptable. Senator COLLARD(Queensland-Leader of the National Party of Australia)(10.16) —I just indicate that we will not support the amendments. We believe that the Minister for Arts, Heritage and Environment should have discretionary power. Senator Ryan also mentioned the cost of inquiries. With the best will in the world, it is almost a nonsense amendment. With regard to appeals to the Administrative Appeals Tribunal, we are of the opinion that governments are elected to govern and that Ministers make decisions. If every decision that a Minister makes were to be hived off to the AAT, we might as well give the game away and let the AAT do the job. As with all of us, Ministers have to face the people every few years and must thus bear the consequences of their decisions. We do not think that the AAT should be the court of final report; rather the Minister's decision should be final. Senator SANDERS(Tasmania)(10.17) —I am disappointed that neither the Government nor the Opposition will support these amendments. I find their reasons a bit spurious. Senator Ryan said that it would cost too much to have the Minister for Arts, Heritage and Environment involved. As I pointed out, the developers would pay these costs. That would be a way of funding some of the functions that in fact are now done by the various government departments. Having private industry pay for these would decrease the burden on the taxpayer. Senator Powell —Privatisation. Senator SANDERS —It might even please those exponents of privatisation. The thing that worries me also in the comments of both the Government and the Opposition is the apparent lack of concern for routes of appeal for citizens. At the moment there is no real appeal process. As environmentalists we can try to influence a government through various lobbying efforts and perhaps even at the ballot box, but there is no appeal process. Of course, in the United States of America under the environmental policy legislation there is a very well defined environmental impact statement production process, appeal process and hearings process. These simply do not exist in this country. Unfortunately, this means that many concerned Australians are second class citizens. I simply do not accept Senator Collard's contention that governments are there to govern and that people should not have any input other than at elections when they can elect governments. Governments always have to be accountable to the people. Mechanisms should be set up for the people to protest, in an orderly and legal way, the actions of governments. The very big disadvantage of the system as it exists is that, taking the case of woodchipping, the Minister involved is the Minister for Primary Industry, Mr Kerin, who is a development oriented Minister. His job and his whole outlook is not environmental. His job is to make sure that industry goes ahead unhindered-in this case primary industry and woodchipping. To put such a person in charge of environmental matters presents the Minister with a massive conflict of interest. Our amendments would eliminate this conflict of interest. It is with some sadness that we observe that both the Government and the Opposition are opposing this. We feel that, perhaps in more enlightened times-in a few years when the environmental problems become so great as to be unavoidable and when they will perhaps take more precedence in this place than they do now-we will see more amendments to this Act. Perhaps in a few years down the track we will find that what we have suggested will be adopted. I am sorry that we cannot see that now. Question put: That the amendments (Senator Sanders's) be agreed to. The Committee divided. (The Chairman-Senator D. J. Hamer) Ayes . . . . . . . . . . . 6 Noes . . . . . . . . . . . 57 —— Majority . . . . . . . . . 51 —— Haines, J. Powell, J. F. Macklin, M. J. (Teller) Sanders, N. K. Mason, C. V. J. Vigor, D. B. Alston, R. K. R. Kilgariff, B. F. Archer, B. R. Knowles, S. C. Aulich, T. Lewis, A. W. R. Baume, Michael MacGibbon, D. J. Baume, Peter McIntosh, G. D. Bjelke-Petersen, F. I. McKiernan, J. P. Black, J. R. Maguire, G. R. Bolkus, N. Messner, A. J. Boswell, R. L. D. Morris, J. Brownhill, D. G. C. Newman, J. M. Carrick, Sir John Parer, W. R. Childs, B. K. Puplick, C. J. G. Coates, J. Ray, RobertCollard, S. J. Reid, M. E. (Teller)Colston, M. A. Reynolds, M. Cook, P. F. S. Richardson, G. F. Cooney, B. Robertson, E. A. Crichton-Browne, N. A. Ryan, S. M. Crowley, R. A. Short, J. R. Devlin, R. Tate, M. C. Durack, P. D. Teague, B. C. Elstob, R. C. Townley, M. Foreman, D. J. Vanstone, A. E. Gietzelt, A. T. Walters, M. S. Giles, P. J. Watson, J. O. W. Guilfoyle, Dame Margaret West, S. M. Hamer, D. J. Withers, R. G. Jessop, D. S. Zakharov, A. O. Jones, G. N. Question so resolved in the negative. Bill agreed to. Bill reported without amendment; report adopted. Bill (on motion by Senator Ryan) read a third time. The PRESIDENT —I wish to advise the Senate that, following representations from the Australian Broadcasting Corporation, the Joint Committee on the Broadcasting of Parliamentary Proceedings has agreed to delay the re-broadcast of Question Time in Western Australia on Monday, 23 March until 8.30 p.m., and on Tuesday, 24 March until 8.15 p.m. The delay will allow the continuous live broadcast of the Sheffield Shield cricket final until the close of play. Motion (by Senator Ryan) proposed: That the Senate do now adjourn. Senator REID(Australian Capital Territory)(10.28) —In November last year I presented a petition sent to me by Rear Admiral Max Reed and signed by a number of young parents living in La Perouse Street in Red Hill. The petition sought the placement of devices in the La Perouse Street area to restrict speed. The petitioners suggested roundabouts. They were concerned because of the number of accidents and near misses which had occurred there. At the same time I wrote to the Minister for Territories (Mr Scholes) pointing out that I had presented this petition and asking that he look into the matter. I received a letter about 2 1/2 months later from the Minister in which he answered the queries, in a sense somewhat clinically. He indicated that the National Capital Development Commission had looked into the matter and had reported that the area was no worse than 70 other intersections in Canberra. That, of course, is of little consolation to the parents of the young people who live in the vicinity of La Perouse Street and Monaro Crescent. The Minister advised that accident records show that there have been 27 accidents involving property damage only, seven accidents involving injury, but no fatal accidents between 1982 and 1985. However I feel certain that prior to 1982 there had been at least one fatal accident, if not more. The intersection is put at about 77 on the list of the worst 200 intersections in Canberra. There are a number of schools in the vicinity. The intersection is used by many school children, many of them riding bikes. The Minister says that the Commission informed him that remedial design measures for the intersection were being taken and pointed out that placing a roundabout there might put pressures on other areas. But I suggest that that overlooks the status of Captain Cook Crescent, which is a double highway not far away to which some of the traffic perhaps should be directed. That letter dated 18 February 1987 was written only a short time before a quite serious accident at the intersection which occurred on 9 March. The victim on that occasion was a 10-year-old boy riding his bicycle home from school. As at 12 March he was still in intensive care in the Royal Canberra Hospital. He suffered head injuries which will very likely leave him severely incapacitated for the remainder of his life. The parents of many of the young children who live in the area are concerned about the intersection. They would like it to be examined on a more personal basis than the way it has been examined and reported in the Minister's letter. It might be only the seventy-seventh on a list of about 200 but, as far as the people in the area are concerned, that is not sufficient reason for leaving it unaltered and unattended. I think a number of things could be done. I have mentioned Captain Cook Crescent, which is not far away. If appropriate steps were taken, it is possible that more traffic could be directed into that street, which is a double highway and which is quite clearly capable of carrying a greater load of traffic than La Perouse Street. A letter came to me from the parents of young children who live in La Perouse Street in Griffith. They ask how long it will be before the authorities take seriously what has occurred, how many more children may finish up with brain damage or, as they say, how many dead children does it require to justify the cost of three or four roundabouts in La Perouse Street. It is a matter that needs to be examined more closely than it has been. I do not think that we can wait until there is a more serious occurrence before steps are taken to make the area safer for everyone who uses it, but particularly for the young children who go through that intersection on a regular basis to school. Senator CRICHTON-BROWNE(Western Australia)(10.33) —I rise to comment on the Government's rather bizarre foreign policy on immigration from South Africa and the policy which provides that visas shall not be processed or granted from Pretoria. In the event that people wish to travel from South Africa to Australia they are required, first, to travel to Harare, Zimbabwe, to have their visa processed. That in itself causes enormous inconvenience to all involved. The delay in the granting of visas presently averages slightly in excess of 27 weeks. Because of the very considerable backlog, the amount of work involved and the fact that the Government has chosen not to provide additional staff in Zimbabwe to process the applications, a number of the applications are forwarded to Australia House in London. The net result is that there is a backlog in London and therefore, English people seeking to travel to Australia are finding themselves inconvenienced. So the backlog goes on and on. What one finds particularly objectionable about the policy is that when one approaches the Government to highlight the effects and the inconvenience it is causing the response, invariably and inevitably, is that if it is causing inconvenience, difficulty and hardship the policy is obviously working; that is the object of it. The object is to cause those difficulties for South African nationals. The nice irony of the policy is that it does not discriminate between whites, coloureds and blacks. Recently, when coloured people have applied for a visa to visit relations in Australia, they have been told that they cannot be granted a visa from Pretoria. When they ask why the Government responds: `Because we are here to help you. What we are seeking to do is to cause you so much inconvenience, trouble, anxiety and anguish that ultimately your Government will be enlightened as a result of this difficulty and change its total attitude towards apartheid'. I find it absolutely bizarre that a country's foreign policy would be such that it would visit hardship upon those to whom it seeks, allegedly, to provide relief. There are the inevitable and invariable reasons why people in South Africa seek visas to visit Australia. By and large, the reason is that they have relations in Australia. South African nationals, of whatever race, have relations in Australia and they seek to visit them. From my experience, the reason primarily, is for special events, such as the birth of a relation, the marriage of a relation or the illness and perhaps on some occasions the subsequent death of a relation. If it gives any comfort the Government ought to be aware that, in a number of cases, relations in South Africa have sought to visit Australia to be beside their loved ones who are suffering illness but the delay in the granting of the visa has been such that the relation has died before they arrived. The occasions on which people have sought to visit Australia for the purpose of attending the marriage of their close relations are well documented and well known to the Government because, on the occasions that it has been contacted by people who have been inconvenienced and sought relief on compassionate grounds, invariably the Government has denied them any relief. It seems to me that the policy reflects the global attitude of this Government towards foreign affairs, particularly regarding countries such as South Africa. It is a reflection of its prejudice, subjectivity, small-mindedness and lack of understanding of what is likely to motivate South Africa to move away from apartheid and separate development. I find it absolutely amazing that any Australian government of whatever persuasion or colour should introduce a policy that visits upon the very people that it seeks ultimately to help-- Senator Button —You are not suggesting that we are black, are you? Senator CRICHTON-BROWNE —You mean your constituents? Senator Button —You are not suggesting that governments are blacks. You said any government of any colour. Senator CRICHTON-BROWNE —Any political colour, Senator. In Senator Button's case, it would be pink, not black. Senator Robertson —Most Anglo-Saxons are. Senator CRICHTON-BROWNE —Some bleed blue blood and some bleed pink blood. The Government has a policy, presumably for consumption by Third World countries, which denies the very people it seeks to help-the coloureds and the blacks-entry into this country, unless their name is Oliver Tambo. Then they can get in with government assistance, government cars and government funding as official government guests, without any inconvenience. But if one happens to be an ordinary poor old coloured from outer Johannesburg or a black from Soweto, one cannot get in because one cannot get a visa. I find it absolutely absurd and bizarre. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(10.40) —I have noted the views of Senator Reid and Senator Crichton-Browne about the respective matters which they have raised and I will advise the Ministers concerned of what they have had to say. Question resolved in the affirmative. Senate adjourned at 10.40 p.m. The following answers to questions were circulated: (Question No. 1570) Senator Morris asked the Minister for Industry, Technology and Commerce, upon notice, on 5 December 1986: Will the Government act to ensure that goods substantially made in Australia, but having any imported ingredient or component, are labelled to show the country of origin of all ingredients or components and each country in which any part of the manufacture or packaging may have occurred, in view of the current `Australian Made' campaign? Senator Button —The answer to the honourable senator's question is as follows: No, the Government does not consider that as part of the `Australian Made' campaign manufacturers should be compelled to disclose on their product labels any imported ingredients or components or the name of each country in which any part of the manufacture or packaging may have occurred. The Commerce (Imports) Regulations, made under the Commerce (Trade Descriptions) Act, already require specified imported goods to be labelled to show country of origin. In addition Item 2, Third Schedule of the Customs (Prohibited Imports) Regulations prohibits the importation of articles bearing marks in language other than that of the country of origin unless the name of the country of origin is marked on the article in English. With respect of the food industry the Model Food Standard Regulations, adopted by most State governments, require that the country of origin be disclosed on food labels. They also specify that a food not wholly made or produced in a single country is deemed to have been made or produced in the country where it last underwent preparation that changed its nature. Therefore, margarine manufactured in Australia using imported oils or soft drinks made here using imported concentrates are required to indicate that they are of Australian origin. The National Health and Medical Research Council which develops these Regulations is considering liberalising the labelling requirements so that manufacturers can be more explicit and say for example `Made in Australia using imported ingredients'. This will remove any inconsistency in the application of the provisions of the Trade Practices Act and the Food Standard Regulations and enable the consumer to receive more accurate information on food labels. The Government's `Australian Made' campaign provides for the certification of goods as `Australian Made' according to rules drawn up by the Government and administered by the Advance Australia Foundation. Those rules provide that the `Australian Made' certification mark, the distinctive green and gold logo, will only be applied to goods where at least 75% of the total factory cost of manufacturing those goods has been incurred in Australia. Special consideration will be given where the materials or components used in manufacturing are not available in Australia and there are public benefit considerations which should be taken into account provided that 50% of the total costs of manufacturing are incurred in Australia. Furthermore before granting a licence in respect of a product the Foundation is required under the rules to take into account guidelines issued by the Trade Practices Commission with regard to what constitutes misleading or deceptive labelling of the origin of goods under the Trade Practices Act. That Act does not require that goods be labelled with their place of origin. However, where a representation is made, such as `Made in Australia', the Act prohibits false or misleading representations. The Commission's guidelines indicate that the nature, as well as the extent of the work done in Australia, has to be considered if consumers are not to be misled. Under the Commission guidelines there would probably be few products with 75% Australian direct labour/material content that would not qualify to have the `Australian Made' logo. Senator Walsh —On 11 November 1986 (Hansard, page 1861) Senator Watson asked me in my capacity as Minister representing the Minister for Primary Industry a question concerning logging in the Jackeys Marsh area. The Minister for Primary Industry has supplied me with the following additional information: The Commonwealth Government did not claim that operations in the Jackeys Marsh area were not being carried out in accordance with the Jackeys Marsh-Quamby Bluff State Environmental Impact Statement. Jackeys Marsh is listed for inclusion on the Register of the National Estate. Accordingly, forestry operations in Jackeys Marsh-Quamby Bluff are subject to specific clauses in the Memorandum of Understanding between the Commonwealth and State Governments. The process of consultation to take place between both Governments in respect of the Jackeys Marsh area is outlined in Clause 27, which states in part ``the Forestry Commission will advise ways in which registered values have been taken into account and, if planning so allows will take account of comments from the Department of Primary Industry''. The State, before commencing logging did not give the Commonwealth an opportunity to comment or advise on ways in which registered values had been asked into account. Senator Walsh —On 13 and 20 November 1986 (Hansard, pages 2137 and 2603) Senator Haines asked me, in my capacity as Minister representing the Minister for Primary Industry, questions concerning the National Estate and in particular logging in the Jackeys Marsh area in Tasmania. The Minister for Primary Industry has supplied me with the following additional information: On 15 December 1986, the Government announced that it would oppose forestry operations in contentious National Estate areas of Tasmania until it is satisfied that National Estate values are protected or there are not feasible alternatives. With respect to Jackeys Marsh, the Government said logging could continue for the remainder of the season in the present coupe, as surveys of plant species had been carried out and steps had been taken to protect these plant species in the immediate logging area. On 24 February 1987, the Government announced its decision to introduce legislation, relating to the Lemonthyme and Southern Forests areas, to establish a Commission of Inquiry to review the possible World Heritage properties of those areas. The Inquiry will also determine whether there are prudent and feasible alternatives to logging in areas found to have, or contribute to, World Heritage values. Senator Button —On 17 February 1987 (Hansard, page 72) Senator Lewis asked me the following question without notice: Does the Minister agree that the tax burden on Australian businesses is one of the many factors holding back our manufacturers? What will the Government do about this burden on them?- The answer to the honourable senator's question is as follows: No. I do not believe that Australia's taxation regime imposes a comparatively larger burden on Australian manufacturing industry than the taxation regime of other OECD countries. Nor is it appropriate to compare Australia's corporate taxation regime with those of newly industrialised companies (NIC's) in Asia. Government tax collections are, on average, a much smaller proportion of GDP in NIC's than is normal for OECD countries, due to substantially lower levels of government expenditure. The taxing policies of NIC's would not be transferable to Australia, nor indeed any western country where the level of Government provided infrastructure and social services is higher. In any case, it is doubtful whether the adoption of some features of NIC tax regimes, such as Singapore's 10 year tax holiday for pioneer companies, would be in the national interest. There is some concern that tax holidays do not contribute to genuine industrial development but merely attract footloose foreign firms looking for tax breaks. Overall, our effective company tax rate compares favourably with other OECD countries and is likely to be lower than the level that will apply to manufacturing firms in the US, UK and Canada under their new taxation regimes. While Britain, Canada and the U.S.A. have lowered nominal tax rates on corporate income to around 35%, this has only been possible by broadening the corporate tax base, and creating a greater neutrality within the tax system. This has meant that many of the tax shelters and tax concessions upon which much of their manufacturing sector is built, have been or will be abolished. For example, although the US Federal company tax rate has been reduced from 46% to 34% it is at the expense of the abolition of the investment tax credit and less generous depreciation provisions, the closure of many tax shelters, a higher capital gains tax and a statutory minimum tax of 20% on company profits. This means that company tax collections are estimated to rise by $120 billion over 5 years. For manufacturing industry in particular, the effective rate of tax is likely to actually increase. In considering the impact of other countries' tax regimes, it is important not only to look at Federal company and personal income tax (or Dividend Withholding Tax) levels, but at the total level of income taxes imposed. Some countries, eg, the U.S.A., levy corporate and personal income taxes also at State and local levels. In the U.S.A., for example, in addition to the proposed 34 per cent Federal company tax, a State level company tax applies in most States which, although deductible against the Federal income tax, raises the average company tax burden to around 38 per cent. The remaining 62 per cent is taxed in most individual shareholders' hands at proposed rates between 28 per cent and 33 per cent. This leaves something between 12 per cent and 45 per cent of the original income which, in turn, may attract State and city taxes at rates exceeding 10 per cent. The total US tax will therefore often exceed 60 per cent without the benefit of accelerated depreciation. Britain and Canada have also offset reductions in nominal corporate tax rates by scrapping accelerated depreciation and certain other taxation benefits, and consequently, their effective rate has not decreased. Although Australia would appear to be going against international trends by raising the company tax rate to 49% from 1 July 1987, we have in place generous concessions such as the 5/3 accelerated depreciation and 150% deduction for Research and Development. In any case, the small increase in the tax rate merely compensates in part for the cost of the full imputation system that will alleviate eligible corporate income from double taxation. Imputation reduces the overall tax rate on income generated by companies to a maximum of 49 per cent; dividends out of any such income freed from tax at the company level will be subject to personal tax in the hands of individual resident shareholders at a maximum marginal rate of 49 per cent. This contrasts with the situation in the UK, for example, where the partial imputation system taxes company income distributed to individual shareholders at rates of up to 63 per cent. The US has retained a classical system and full double taxation continues to apply to dividends. The US 15 per cent DWT rate alone applying to dividends to non-residents out of income subject to the proposed 34 per cent company rate, will lift that rate to 43.9 per cent. Associated with the introduction of imputation are further reforms to business taxation, such as the abolition of the Division 7 tax on retained earnings and the 5% Branch profits tax. In order to pass the benefits of imputation on to foreign shareholders, and thereby increase the attractiveness of foreign investment in Australia, franked dividends (ie, dividends paid out of company income that has borne tax at the full statutory rate) will be exempted from the 15% dividends withholding tax when repatriated overseas. A related scheme of major benefits to Australian high technology manufacturing industry as mentioned is the government's initiative with the 150% taxation concession for Research and Development. This is unparalleled in any OECD country, in both size and scope, and significantly reduces the burden of costs associated with research and development activity. When the breadth of the income tax base, the interrelationship between the company and personal taxation, and the impact of State and local income taxation are taken into account, the Australian corporate taxation system is quite attractive relative to corporate taxation in other comparable countries. Imputation is the most important reform of business taxation undertaken by any Australian Government. When combined with accelerated depreciation allowances and the extremely generous 150% taxation concession for Research and Development, Australia will have a taxation environment very conducive to investment, particularly in capital intensive and high technology manufacturing industries.