Monday, 23 March 1987 The PRESIDENT (Senator the Hon. Kerry Sibraa) took the chair at 2 p.m., and read prayers. The PRESIDENT —I inform the Senate of the death on 21 March 1987 of Mr Arthur Fuller, a member of the House of Representatives for the division of Hume from 1943 to 1949, 1951 to 1955 and 1961 to 1963. Senator WEST(New South Wales) —by leave-On Saturday Arthur Neiberding Fuller passed away peacefully at his home in Tumut, aged 93 years. He was born in that area in 1893 and served in the other place from 1943 to 1949, 1951 to 1955 and was elected again in 1961. He was a very outstanding gentleman, a man whom I had the pleasure of knowing and whose family I regard as friends. I also had the honour of standing as a candidate in the seat for which Arthur was previously the member. However, the boundaries had changed somewhat since that time and it was no longer one of the most marginal seats in Australia. In 1919 Arthur Fuller formed the Tumut branch of the Australian Labor Party. He was the secretary of that branch for 52 years and held continuous membership of the Australian Labor Party for 71 years. These are feats that most of us find overwhelming. I think they are very awe inspiring. As well as being a member of the other place he was a member of the Tumut Shire Council. He fought for and was very proud to belong to the Labor Party. He was proud of his achievements as a member of Parliament and he was also very proud of his area and district. In his maiden speech he spoke about one of his major concerns, water. He was to live to see the Snowy Mountains Hydro-Electric Authority conduct construction work in his area, to see the beautiful Tumut River pass by his home with such beautiful quantities of water and to see Blowering Dam and other dams that have been built in the area. Arthur Fuller is quoted as saying that he fought for four freedoms: Freedom from fear, freedom of choice, freedom from want and freedom of conscience. Those were the aims and objectives that he worked for throughout his life. He was known very well throughout the electorate. He was a friend of everybody. There are many stories about his driving from one town to another to meet a commitment but being late because invariably he would find a road gang or a group of fettlers working beside the road. He would always stop the car, get out and talk to them. He was certainly a man of the people and a man of whom we can be very proud. To his family I would like to pay my sincere condolences. I am sure that every member of the chamber will join me. Honourable senators-Hear, hear! The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled: the humble petition of the undersigned citizens of Australia respectfully showeth: The Hawke Labor Government's ID card proposal is the most far reaching and intrusive piece of Australian legislation ever, and that on all the evidence available will not tackle in the most cost-efficient and effective manner tax and social security fraud. Your petitioners therefore humbly pray that the Senate in Parliament assembled should: Reject Labor's ID card proposal to prevent a gross waste of taxpayers' money and a significant infringement of civil liberties. And your petitioners as in duty bound will ever pray. by Senator Collard (from 55 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: (1) That we are totally opposed to the introduction of the Labor Government's Identity Card. (2) That this form of national and compulsory identification will be intrusive, costly for taxpayers and business and will not be effective in combatting the growing problems of tax evasion, illegal immigrants or social security. (3) That we are deeply concerned at the Labor Government's inability to provide effective and efficient methods to combat tax and social security fraud without resorting to expensive, ineffective and authoritarian measures which are alien to the Australian way of life. (4) That we call upon the Labor Government to improve management systems within the Australian Taxation Office and other departments to crack down on tax evasion and fraudulent practices. And your petitioners as in duty bound will ever pray. by Senators Hill (from 18 citizens) and Reid (from 47 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth: That we consider the decision to curtail the landscaping at the New Parliament House is a false economy. The landscaping is an integral part of the building and environs which together will be one of the world's most exciting examples of architectural design this century. Incomplete it will be a monument to our lack of resolve as a nation. Your petitioners most humbly pray that the Senate in Parliament assembled, should urge the Government to: a. Reconsider the reinstatement of the landscaping according to the present plans b. Consider savings which may be made in other areas to ensure this may be achieved. And your petitioners as in duty bound will ever pray. by Senator Reid (from 42 citizens). 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 35 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth: That there is widespread community concern about the proposal to Irradiate food in Australia Your petitioners, most humbly pray that the Senate in Parliament assembled, should: 1. Block the introduction of food irradiation into Australia and 2. Ban the import of cobalt-60 and caesium 137 and caesium 134 to be used to irradiate food products, And your petitioners as in duty bound will ever pray. by Senator Vigor (from 131 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens respectfully showeth: That there is widespread community concern about the proposal to open a Soviet Information (Communist Propaganda) Centre and if it is allowed to be opened by the Hawke Government. it will have a far more pervasive and detrimental effect on the Australian community than any other such centre possibly could. It is appalling that this opening may have been contemplated. That the recent Soviet amnesty to some prisoners of conscience should not be taken as a sign that the Soviet dictatorship has changed from being an oppressive murderous regime to one that somehow can be called democratic. It has not changed and for all purposes is unlikely to change voluntarily as it is by nature an oppressor of the people it subjugates. That all governments in Australia and the Australian media should be aware and take note that Soviet is not Russian, (the Soviet Union is not Russia) and the dictatorial government of the USSR is communist, international and anti-Russian in its essence. In 1917 Russia and the Russian people were the first martyrs (victims) of the marxist-communist disease and that communism annihilates religion, violates human rights, tramples on human dignity and all freedom of speech is absent. The whole population of the USSR is equally enslaved by the communist dictatorship. (The Gulags are a living testimony to the system.) No people, no nation is free under communism. That in 1988 the Russian people inside the Iron Curtain and in particular abroad will be celebrating 1000 years of Orthodox Christianity. Your petitioners therefore humbly pray that the Senate will do all in its power to encourage- (1) all Governments of Australia (State and Commonwealth) together with the Australian media to speak the truth in defence of those who are persecuted and imprisoned for the truth of God, and extend a helping hand to their families, and (2) the government of the USSR to open all closed churches in the USSR, return them to the Orthodox Christian people and cease all persecution of religious people forthwith. And your petitioners as in duty bound will ever pray. by Senator Reid (from two citizens). The Honourable the President and honourable members of the Senate assembled. The petition of the undersigned in the State of Queensland showeth that the electoral system in Queensland, based on a 4 zonal weighted system, is an affront to democracy. The National Party under the leadership of Sir Johannes Bjelke-Petersen is always returned to Government with no opportunity for the voting public to bring about change. Your petitioners point out that under the Queensland voting system the National Party at the State Elections on 1 November 1986 managed to achieve 55 per cent of the seats with only 39 per cent of the votes. This demonstrates that 61 per cent of Queenslanders do not want a National Party Government yet received one. Your petitioners therefore earnestly pray that the Federal Government legislates as a matter of urgency to bring about a democratic system of voting in Queensland State elections based on the principle of one vote one value. And your petitioners as in duty bound will ever pray. by Senator Jones (from 61 citizens). The Honourable the President and honourable members of the Senate in Parliament assembled. This petition of concern to Australian citizens asks that if, there is to be legal process against alleged war criminals resident in Australia, the foundations of justice should be clear and equitable. 1. Let the term, ``war crime'', be first clearly defined. 2. Let specific prosecutions be swiftly launched against those individuals alleged to have committed them, thus releasing the rest of their co-nationals from unwarranted slur and suspicion. 3. Let an Australian tribunal hear the charges. Nobody should be deported to face the ``tender mercies'' of any foreign government. 4. Let the presumption of innocence until proved guilty be clearly established. 5. Let all evidence obtained from the Soviet or any other communist government be set aside and totally disregarded. 6. Let all the costs of any person charged and found not guilty be paid by the Commonwealth Government so that innocent people are not financially ruined in the course of establishing their innocence. And your petitioners as in duty bound will ever pray. by Senator Short (from 24 citizens). The Honourable the President and honourable members of the Senate in Parliament.The petition of the undersigned shows: That even though the ACT House of assembly requested that the ACT be declared a nuclear free zone the Federal Government has refused to allow this to occur. Your petitioners request that the Senate, in Parliament assembled, should resolve that the Government should declare the ACT a nuclear free zone as requested by the ACT House of assembly. And your petitioners as in duty bound will ever pray. by Senator Vigor (from 55 citizens). To the Honourable the President and Honourable members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth that: 1. There is no legal barrier to the importation of X-rated videos into the ACT or to their sale in the ACT 2. The Government has ignored the repeated protests of the Senate and the people of Canberra on this situation. 3. As a result X-rated videos are being sold from Canberra to other States, although they are banned in all States. Your petitioners therefore ask the Senate to put pressure on the Government to ban the importation and sale of X-rated video material. And your petitioners as in duty bound will ever pray. by Senator Reid (from 20 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- (a) the 50 per cent increase in claims on insurance companies for mortgage insurance due to mortgage defaults; and (b) that 1,000 new homes currently on the market in Canberra and are not selling due to the inability of potential purchasers to meet the higher interest rates which are creating high mortgage repayments, and which are also causing a lack of confidence in the market-place, calls upon the Federal Government to take decisions in the forthcoming mini-Budget to achieve a lowering of interest rates. Senator JONES(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes that the Queensland Government, through amendments to its Land Act 1962-84 presented to the State Parliament at 6 p.m. on Thursday, 19 March 1987 by the Lands Minister (Mr Glasson), has announced its intention to convert the present leases on the tourist islands on the Great Barrier Reef to freehold, thus giving the operators, many of whom are either members or supporters of the National Party, the opportunity to sub-divide sections of their islands at huge personal profit; and (b) urges the Federal Government to pursue with all possible vigour moves to block this cynical grab by invoking World Heritage legislation to protect the interests of all Australians. Senator GARETH EVANS(Victoria-Manager of Government Business in the Senate) —Papers are tabled in accordance with the list circulated to honourable senators. With the concurrence of the Senate, I ask that the list be incorporated in Hansard. Leave granted. The list read as follows- 1. Australian War Memorial-Annual Report 1985-86-together with the Auditor-General's Report-pursuant to section 36 of the Australian War Memorial Act 1980. 2. Federal Police Disciplinary Tribunal-Annual Report 1985-86-pursuant to section 86 of the complaints (Australian Federal Police) Act 1981. 3. Australian National Gallery-Annual Report 1985-86-together with the Auditor-General's Report-pursuant to section 42 of the National Gallery Act 1975. 4. National Library of Australia-Annual Report 1985-86-together with the Auditor-General's Report-pursuant to section 27 of the National Library Act 1960. 5. The National Museum of Australia-Annual Report 1985-86-together with the Auditor-General's Report-pursuant to section 63M of the Audit Act 1901. Senator CHANEY —I ask the Minister representing the Minister for Social Security: Given reports today and over the weekend relating variously to further reductions in family allowance or the use of the tax system to claw back family allowance in the May mini-Budget, will the Minister advise the Senate whether there will be any changes to family allowance entitlements and, in particular, any reduction of such entitlements in the May mini-Budget? Senator TATE —Even if I had such knowledge, of course I would not divulge it prior to final consideration of or deliberation on those matters by Cabinet in preparation for the 14 May statement. So I think my answer is no. Senator CHANEY —Mr President, I ask a supplementary question. I like the bit at the end of the Minister's answer when he said: `I think my answer is no'. Is the Minister saying that there will be no reductions in family allowance? Senator TATE —My answer is no, I will not be able to help Senator Chaney to have a preview of any Government decision in relation to this matter. Senator COLEMAN —My question is directed to the Minister representing the Minister for Foreign Affairs. In the light of the assertion of the former Opposition spokesman on foreign affairs, Mr Peacock-I understand he was sacked at 11 o'clock-that a future conservative government would scrap the South Pacific Nuclear Free Zone Treaty, I ask: What would be the reaction of our neighbouring states in the South Pacific which are signatories to the Treaty to such a move? Senator GARETH EVANS —I do not know whether Andrew Peacock's spirit still lingers on in the aftermath of his current political demise; but, if what he said, as reported over the weekend, about the South Pacific Nuclear Free Zone Treaty was not just his usual idiosyncratic posturing but rather a statement of Opposition policy, there is much for the people of Australia to be concerned about in that Opposition policy. Mr Peacock was reported in the Australian of 23 March to have said that a future conservative government would seek-as Senator Coleman put it-to renegotiate the Treaty of Rarotonga's provisions that involve what he calls `constraints on the deployment of allied vessels' and that `jeopardise elements of our alliances'. Mr Peacock was reported as not opposing the Treaty's prohibitions on dumping of radioactive wastes and on nuclear testing, and his objection appears therefore to be directed to the Treaty's prohibition on the stationing of nuclear weapons. If that is what he did mean, it is consistent with a statement that has still received insufficient attention, I think, made by Mr Peacock, when he was in his first incarnation as Leader of the Opposition, on 7 August 1985. He said that he was particularly concerned that the South Pacific Nuclear Free Zone Treaty would prohibit home porting within the zone, which he saw as a necessary consequence of banning the installation and storage of nuclear weapons. He called upon the Government to issue an assurance that the Treaty would not prohibit home porting by the United States. The only conclusion that one can draw from these various forays into policy-making in this area is that Mr Peacock and the Opposition favour the stationing of nuclear weapons on Australian soil. There is no other explanation; there is no other justification for the comments and for the criticism that have been directed against the terms of the South Pacific Nuclear Free Zone Treaty. Any such position in favour, as the Opposition is, of stationing nuclear weapons on Australian soil is utterly at odds with what this Government is prepared to contemplate, and it is utterly beyond that which the Australian people are prepared to tolerate. I go further to say that Mr Peacock is quite misleading in this newspaper article in suggesting, as he apparently did, that the Opposition's objection to the Treaty is reflected in the United States and British decisions-the British one made very recently, a couple of days ago-not to sign the protocols. Let me, for the record, make it clear that the United States has said that its decision not to sign `under current circumstances'-I quote that expression-is based on global considerations and does not reflect any criticism of the Treaty of Rarotonga as such. Again, the United States has placed on record its appreciation of the efforts of the Treaty to take account of United States and allied interests, and the United States has given an assurance that its practices and activities in the region are not inconsistent with the Treaty and its protocols. Again, the British Government also has in effect declared that it will abide by the requirements of the Treaty and its protocols on the manufacture, testing and stationing of nuclear weapons. The final part of the question went to the reaction of the South Pacific states to any such move-it will not be contemplated by this Government-to renegotiate the Treaty. This is a matter on which it is proper to allow those states to comment for themselves. But I can say, on behalf of the Minister for Foreign Affairs, that from the strength of their collective concern on nuclear issues as reflected in the Treaty it can certainly be assumed that they would be very disturbed indeed that Australia might seek, under an alternative government, to resile from obligations assumed under the Treaty; and, in particular, they could be expected to be very seriously concerned if, as the Opposition would wish, Australia moved to have nuclear weapons stationed in this region and thus increased the risk of the South Pacific becoming a theatre for nuclear confrontation. Senator Sir JOHN CARRICK —My question is directed to the Minister for Resources and Energy in one or other of his representative capacities, either that of Minister representing the Minister for Foreign Affairs or that of Minister representing the Attorney-General. The question concerns the recent court case involving the former British intelligence operative Peter Wright and his desire to publish a book of revelations of previously secret matters. The question also concerns Australia's arrangements with other countries to share secret intelligence information of common interest. Against that background, I ask: Do sufficient legal safeguards exist in Australia to prevent any Australian intelligence operative, whether active or retired, from publishing or disclosing either in Australia or elsewhere secret information the release of which is judged to be to the detriment of Australia or a country with which information is exchanged? What safeguards operate between countries exchanging such information to prevent disclosure of such information by an agent of a recipient country? In view of the current case, is the Australian Government contemplating any ne-cessary reforms? Senator GARETH EVANS —As Senator Sir John Carrick has implied in asking his question, this matter impinges on the responsibilities of the Attorney-General, the Minister for Foreign Affairs and the Minister for Defence respectively, and, in the circumstances, I think it would be appropriate for me to take that question on notice and seek a more detailed reply than I am able to give on the spot. Senator AULICH —My question is directed to the Minister representing the Attorney- General. I refer to reports of a taped conversation held on Saturday between the Victorian Liberal Opposition Leader, Mr Kennett, and the honourable member for Kooyong, Mr Peacock, in which both men are reported to have been severely critical of their Federal leader, Mr Howard. The conversation was, in theory, private but served as a basis for the sacking of Mr Peacock by Mr John Howard, his Leader. In that context what possible action can the Government take? Senator GARETH EVANS —I am advised by the Attorney-General-- Senator Chaney —Mr President, I raise a point of order. My point of order, quite simply, is that the question, as one would expect from the honourable senator who asked it, is rather open-ended. It is hard to know precisely what it is aimed at. If it is aimed at some allegation of illegality, it is in order. If it is aimed anywhere else, it is obviously out of order. I would ask you to ask the Minister to confine his remarks to that part of the question which relates to the duties of his Government. Senator Aulich —On the point of order, Mr President: Once again a point of order has been raised by the Leader of the Opposition. He often raises points of order to attempt to affect debate. I asked a specific question in which I used the words `in that context'-that is, the context that was raised in relation to an illegally taped telephone conversation which then served as a vehicle for the sacking of Mr Peacock. I have asked what action the Government can take in that context, so I believe the question is specific and is very much in the province of the Minister. The PRESIDENT —I will allow the question and remind the Minister in his answer to deal only with that section of the Attorney-General's portfolio that would deal with the question. Senator Watson —Can I speak to the point of order, Mr President? The PRESIDENT —Order! I have given a ruling on the point of order. Senator Watson —Can I have another point of order? The PRESIDENT —Yes, a further point of order. Senator Watson —It has not been raised in the debate so far. Senator Aulich has really asked for the expression of a legal opinion from the Attorney-General in relation to this issue. Senator Gareth Evans —On the point of order: I simply make the point that it would appear to be a matter of general public interest for people to know in the aftermath of this event what precisely the security is of car telephones and what provisions there are that may have some application. It is not a matter of casting any opinion as to what the law might be in its application to this matter. I do not propose to do so. The PRESIDENT —My ruling is exactly the same as I gave in relation to the first point of order. I will allow the question, but I will listen closely to the answer given by the Minister. Senator GARETH EVANS —Thank you, Mr President. The situation as I am advised by the Attorney-General is this: Car telephone systems, even when operated by radio, are part of the telecommunications system. The Telecommunications (Interception) Act 1979 covers all interceptions of communications passing over a telecommunications system, including the ones in issue here. As the particular interception that is in issue here does not appear to have been authorised in any way, the interception would be an offence under section 7 of the Act, although I do not, obviously, in the circumstances-nor does the Attorney-General-pass any definitive legal judgment about the circumstances of a particular case. Complaints about possible telecommunications interception-and I imagine there might be a couple in this instance-should be made to the Australian Federal Police, which is responsible for investigating breaches of Commonwealth law. I add that, while acknowledging both the illegality and immorality of this kind of telephone interception, the reality is that car telephone conversations are notoriously insecure and known to be insecure. For Messrs Peacock and Kennett to behave as they did with that knowledge justifies their removal from office on IQ grounds alone. Senator Chaney —Mr President-- The PRESIDENT —Order! Senator Chaney —It is always too late to take a point of order on a smart-Alick who is quick. Senator VIGOR —I refer the Minister representing the Prime Minister to recent national advertising headed `Expression of Views on the Roles, Functions and Priorities for the Advisory Council and the Office' which related to the Advisory Council on Multicultural Affairs and the Office of Multicultural Affairs. How much has the Government spent to date on advertising and recruitment in relation to the Office of Multicultural Affairs? Has the Government yet decided on either the general structure or the state of the Office of Multicultural Affairs and, if not, when are these details likely to emerge? Why is the Government only now seeking written submissions on the role and functions of the Office of Multicultural Affairs and the Advisory Council on Multicultural Affairs? Is the Government at fault and in a policy vacuum on multiculturalism, or is this another example of the sloth within the Department of Prime Minister and Cabinet which led to the problems in the Australian Bicentennial Authority and to the unlawful problems associated with the running down of the Advisory Council for Inter-government Relations? Senator BUTTON —I do not know the answer to that question. I ask Senator Vigor to put it on notice. Senator McINTOSH —Can the Minister representing the Minister for Defence confirm the basic details given in the leading article in the Times on Sunday of 22 March by Geoff Kitney, headed `Government enlists US aid to forewarn a Soviet hit'? If confirmed, does the Government intend to initiate arrangements for emergency services in these vulnerable areas? Senator GARETH EVANS —The Government can confirm that a report has been prepared which examines in some detail the risk of nuclear attack on the three joint facilities of Pine Gap, Nurrungar and North West Cape. The Prime Minister said on 6 June 1984 that hosting the joint facilities brings with it some degree of added risk of nuclear attack, and that assessment has been repeated by me and other Government spokesmen on numerous occasions subsequently. In the light of this assessment the Government believes that it has a responsibility to address the measures needed to protect the communities which might be affected by such attacks should they occur. The paper referred to in the Times on Sunday and in earlier articles some weeks ago in newspapers in the Northern Territory and South Australia is the first step towards providing such protection. The paper provides the detailed assessment of the nature and consequences of any possible nuclear attack on the joint facilities. This is an essential preliminary for any detailed planning of civil defence measures. The report is now being made available to State and Territory emergency services with a view to developing appropriate plans in consultation with the Department of Defence and the National Disasters Organisation. Senator KILGARIFF —I direct a question to the Minister representing the Minister for Defence. I refer to the Government's White Paper on defence, and particularly its emphasis on building up Australia's northern defence capability. Is the Minister satisfied that existing transport facilities by road, sea and air would be adequate to enable the implementation of the Government's policies, or will the Minister be conducting a review of transport facilities, and making appropriate recommendations to government to ensure that there is adequate associated transport support by road, rail air and sea to allow the Government to put its ambitious northern defence policies in place? Senator GARETH EVANS —That is a pretty ambitious question, particularly without notice. I shall have to take the matter on notice and seek an answer from the Minister for Defence. Senator ZAKHAROV —I address my question to the Minister representing the Minister for Arts, Heritage and Environment. In view of the Queensland Government's stated intention to grant freehold title to leaseholders of Great Barrier Reef islands, what action can the Government take to ensure that these areas retain their present status? Senator RYAN —The Minister for Arts, Heritage and Environment, Mr Cohen, has pointed to a number of steps that the Government could take in response to this appalling proposal emanating from the Government of Queensland in relation to the Barrier Reef islands. Mr Cohen has pointed to the inscription in 1981 of all the islands of the Great Barrier Reef on the World Heritage List. This listing was done with the agreement of the Queensland Government. Listing places an obligation on the nation to ensure that no action was permitted that would jeopardise the world heritage area. This obligation is met in Australia mainly by the provisions of the World Heritage Properties Conservation Act. Mr Cohen has pointed out that the sale of leasehold land would almost certainly reduce the ability of the Queensland Government to protect the area, even if the Queensland Government continued to wish to protect the area, which it appears it does not. Mr Cohen said that potential or existing developers should bear in mind that, while the islands are part of Queensland and are principally the responsibility of the Queensland Government, the provisions of the World Heritage Properties Conservation Act apply to any action that could damage the islands' environment. The provisions of the Great Barrier Reef Marine Park Act apply to any action on those islands that could cause damaging pollution to the Great Barrier Reef Marine Park. Further, corporations should be aware that the Commonwealth is fully responsible for all of the Great Barrier Reef below low water mark. So there are a range of ways in which the Commonwealth Government can take action to protect the islands of the Great Barrier Reef, actions which I believe would have the support of all Queenslanders and all Australians. Senator JESSOP —My question is directed to the Minister representing the Minister for Foreign Affairs. Is it a fact that a $600,000 slush fund exists in the Department of Foreign Affairs for the specific purpose of sponsoring visits of anti-apartheid advocates to Australia to place their views before the Australian people? Can the Minister say whether the cost of the impending visit of the President of the African National Congress, Mr Oliver Tambo, is to be paid for from this taxpayers' fund? If so, in the interests of presenting a balanced account of alternative methods for developing a post-apartheid society in South Africa, will the Government use the same fund to bring to Australia the internationally known anti-apartheid exponent, Chief Buthelezi, who is the chief of the KwaZulu and also the traditional first Minister to the Zulus, the largest ethnic language group in South Africa? Is the Minister aware that Chief Buthelezi is also the head of Inkatha, which is the largest political party in South Africa, and the chairman of the South African Alliance? Senator GARETH EVANS —If there is a fund to bring distinguished visitors to Australia-and I will have to seek further information from Mr Hayden in that respect-I am sure that it is nothing like the size of the fund that exists in South Africa to bring redneck supporters of apartheid, such as the questioner, to that country in order to take advantage-- The PRESIDENT —Order! I ask Senator Evans to withdraw that remark. Senator GARETH EVANS —I do not think that Senator Jessop would object to the expression `supporter of apartheid', but I certainly withdraw the word `redneck'. Senator Jessop —On a point of order: The President and the Senate are well aware of the fact that I am an anti-apartheid exponent. It is a question of what course of action should be taken to resolve that problem and that is how I differ from some senators opposite. The PRESIDENT —Senator Evans, I ask you to withdraw under standing order 418. Senator GARETH EVANS —Certainly, Mr President. On the part of the question that is directed specifically to a visit by Chief Buthelezi, again I will seek Mr Hayden's response to that specific matter. Senator GILES —My question is directed to the Minister representing the Minister for Employment and Industrial Relations. Can he advise the Senate of the state of the current negotiations between the Government and the Australian Capital Territory doctors? Senator WALSH —Mr Scholes announced last Friday that he had agreed to an Australian Medical Association request to meet the Australian Capital Territory doctors and a meeting was arranged by his office with the President of the AMA, Dr Jones. Dr Jones had agreed to meet Mr Scholes and Mr Willis on 23 March at 8 p.m.-that is, tonight-along with two other members of the AMA. Later last Friday Dr Jones asked the Minister whether the three-member AMA delegation could be extended to include the AMA's negotiating group. Mr Scholes also agreed to that request. The letter written by Mr Scholes to Dr Jones said among other things: I will be happy to meet representatives of the profession to discuss the Government's offer and the AMA claim. In the interim period the AMA inserted a full page advertisement in the Canberra Times which said at the bottom `the doctors want to talk'. Notwithstanding that advertisement and perhaps in keeping with the attitude of the doctors throughout this dispute and their misrepresentation of the facts-with the collaboration of the Canberra Times to a significant extent in misrepresenting the facts-having sought a meeting with the Government and having told us that it wants to talk, the AMA is now demanding as a precondition of attending the meeting that the Government be prepared to offer a figure higher than that already offered. I hope that finally the Canberra Times will publish this fact. If it does not do so I will write a letter to the editor and try to get it published by that means. The Australian Capital Territory doctors are demanding a $425 a week pay increase for a part time job-for a job on which the doctors spend one-quarter of their time they are demanding a $425 a week pay increase. I think it is about time the Canberra Times in particular and the Press in general reported that simple fact, particularly when the Canberra Times has seen fit to publish on page 2 of its issue today the assertion that the nation cannot afford a $10 a week pay increase. It cannot afford $10 a week, apparently, for people who are on $250 a week but it can, implicitly, afford a $425 a week pay grab by the Australian Capital Territory doctors for their part time job which occupies about one-quarter of their working time. I might add that I think it is about time that the Press in general stood up the Leader of the Opposition and asked him whether the Opposition supports this rapacious pay grab by the doctors union for a $425 a week pay increase for a part time-that is, quarter time-job. The Government had already offered the Australian Medical Association a 21 per cent increase in fee for service-a rate which would bring Australian Capital Territory doctors into line with the highest rates of fee for service available across Australia-but that is not enough for the doctors union, the AMA. Senator Walters —We would not give it to them. Senator WALSH —What does Senator Walters think about it? Does she support the doctors union in its demand for almost a 100 per cent pay increase? Senator Walters supports the doctors union. Senator Walters —Mr President, I raise a point of order. Senator Walsh asked me what I thought of the matter. I had already said that we would not give the increase to the doctors. The PRESIDENT —There is no point of order. Senator WALSH —I am pleased that Senator Walters would not give it to them. I just wish her temporary Leader had enough courage to stand up and say the same thing. So far, despite all his ranting and raving about militant unionism and compulsory unionism, he has decided to remain silent about the matter. An increase of $10 a week is too much for people on $250 a week but $100 a week is not enough for doctors for a part time job! The doctors union demands $425 a week. Turning to another fact that is worth noting in this saga of hypocrisy and misrepresentation, it was reported in the West Australian news- paper last Thursday under the heading `AMA call for closed shop': A former federal president of the Australian Medical Association-one of Australia's most politically conservative organisations-has backed the introduction of compulsory unionism- I emphasise, compulsory unionism- for doctors. Dr Lindsay Thomson said that he believed mandatory membership of the AMA was the only way to maintain high medical standards by self-regulation. For `high medical standards by self-regulation' read `bloated doctors' incomes' through the imposition of a closed shop and compulsory unionism so that doctors will be able to get away with demanding a $425m a week pay increase for a part time job. Senator Chaney —Mr President, I take a point of order. I suggest that the Minister has moved well into debating the question. He seems to become over-excited whenever he raises this matter. He is now clearly debating the whole matter and I would ask you to call him to order to allow us to move on to the next question. The PRESIDENT —The Minister is beginning to debate the question and I would ask him to answer as briefly as possible. I am also aware of some discontent about the number of questions that have been asked at Question Time. I ask all Ministers answering questions and all senators asking questions to be as brief as possible, and likewise with points of order. Senator WALSH —Certainly, Mr President. I note Senator Chaney's support for Dr Thompson's demands for a closed shop and compulsory unionism for doctors and I presume that that sentiment is endorsed by his Leader. Senator Chaney —On a point of order, Mr President: That is a gross misrepresentation of the point of order which was made. I seek a withdrawal. The Minister said that I have supported the closed shop proposal in a circumstance in which my Party has said it will seek a constitutional amendment to prevent closed shops, whether on the part of this organisation or any other. I seek a withdrawal from the Minister of the clear misrepresentation of what was said in the last couple of minutes. The PRESIDENT —Senator Walsh, the Leader of the Opposition has asked that you withdraw the remark. I ask you to withdraw. Senator WALSH —I certainly withdraw if that is not Senator Chaney's position. It is not my intention to misrepresent him, Mr President. I seek urgent confirmation from his Leader, if he is still there this afternoon, that that is also the policy of the Opposition-that the Opposition opposes the doctors union's attempt to get compulsory unionism and a closed shop. Senator BJELKE-PETERSEN —I refer the Minister representing the Minister for Health to recent Press reports that the Government proposes to introduce legislation to withhold Medicare benefits for pathology services carried out without the personal supervision of an approved pathology provider. Is the Minister aware that many country areas are dependent upon private pathology firms for the provision of a fast and efficient pathology service and that there simply are not enough pathologists available to have a resident pathologist in every laboratory? Does this mean that country people will be discriminated against, as this legislation could mean the closure of many of the country pathology branches? Senator TATE —I regret to say that I have no brief on this matter and I will have to refer it to the Minister for Health. Senator COLSTON —Has the attention of the Minister representing the Minister for Arts, Heritage and Environment been drawn to a weekend newspaper report that the Queensland Government is exploring ways to mine Shelburne Bay, despite Federal Government action to prevent this from occurring? Will the Minister outline the action the Federal Government has taken with regard to Shelburne Bay, whether the Queensland Government can circumvent the Federal Government's action and subsequently rape another area of Queensland, and whether the Federal Government has any control over exports of material which may be mined at Shelburne Bay? Senator RYAN —The Government announced in its statement of 20 March 1987 that it has decided not to approve the Shelburne Bay silica sand proposal, under its foreign investment policy, as the proposed mine is contrary to the national interest primarily because of its impact on the environment. Should the project proceed, the Government has foreshadowed its intention to reintroduce export control powers on silica sand to ensure that silica sand mining in the Shelburne Bay area cannot proceed. This action is entirely consistent with the Government's commitment to protect areas of national environmental importance, such as Moreton Island and Fraser Island, from degradation. Of course, this is in marked contrast to the announced anti-conservation stance of the Opposition on these issues. I am aware of statements made in the past by Senator Collard, the Opposition spokesman on the environment, that a future coalition Government would exclude export controls for environmental purposes. This would mean quite clearly that, under a future Liberal-National Party government, there would be no environmental controls on mineral sand mining, except those imposed by the States. In the Queensland context this would be a very ominous development. The future of Fraser and Moreton islands would be at risk, and I hardly need remind honourable senators of events last year in relation to Lindeman Island for them to appreciate what protecting the environment means in Queensland. Senator ALSTON —I refer the Minister for Finance to the recent report of the Auditor-General in relation to the Williamstown naval dockyard which found that, despite threats, inquiries and investigations, `the Dockyard is still a long way from producing the relevant accounting, financial and management information required to facilitate the efficient operation of the Dockyard'. In view of the recent refusal by the Minister for Defence to rule out the possibility of the privatisation of the Williamstown dockyard and the widely reported sympathy of the Government's Expenditure Review Committee for the disposal of such statutory bodies as defence factories, airport terminals and even that holy cow, Australian Airlines, is the Australian community now entitled to assume that the Government has finally removed its ideological blinkers and now concedes that substantial commercial and competitive benefits would flow from the transfer of a wide range of government instrumentalities to the private sector? If this is so, on what basis would the Government propose to assess the net present value of such assets? Senator WALSH —I am not sure to what period the extract quoted from the Auditor-General's report refers; nor, consistent with what Senator Tate said earlier today and consistent with what I have said over a two-year period, am I going to speculate about what matters may be before the Expenditure Review Committee in the context of either a Budget or an economic statement before the Budget. I will, however, say something about privatisation as a general principle. I am already on the record as saying about a year ago that where there is an innate or natural monopoly, as with Telecom and Australia Post, I believe that it is best that such a monopoly be in public hands. I am not sure whether Senator Alston is a dry, a wet, a damp, a wringing wet or whatever in the Liberal Party spectrum or indeed whether he belongs to the Howard party or the Peacock party which is about to emerge. But certainly, many members of what was until this morning the Liberal Party-I understand that there may be two parties by now-are committed ideologically to selling off Telecom Australia, to the privatisation of Telecom. The consequences of that, if done in isolation of course, would be that there probably would be no telephone services outside the capital cities and the major provincial cities. There would certainly be no telephone services in rural Australia. Senator Newman —What a load of rubbish. What happens in America? Senator WALSH —People would be very lucky to have any in Tasmania. Of course, the reason there would be none is that attempts to recover costs fully from telephone or postal services in isolated areas are futile. If charges were put up by 100 per cent, say, which might be the figure needed to make the non-metropolitan and regional city telephone services viable now, many people would cancel their telephones. Charges would then have to be put up by another 50 or 100 per cent. In other words, we would be chasing a vanishing target because the service in those areas is innately non-viable. Senator Newman might say that that can be avoided by paying a private firm a subsidy from the Budget to provide services in those innately unprofitable areas. That, however, erodes the rationale for privatisation because under those circumstances there would be absolutely no incentive for any private firm to minimise costs. It would guarantee full cost or cost plus recovery. So, not for ideological reasons-I know that Senator Newman, like many of her colleagues, is blinded by ideology-but for purely sensible, functional reasons, there are very sound reasons why some services should not be privatised. Senator Chaney —Mr President, I take a point of order. I think the Minister was referring to Senator Newman. I ask that he withdraw that comment. The PRESIDENT —The question was asked by Senator Alston. I must admit that I do not know why Senator Walsh referred to Senator Newman. But I do not think a point of order is involved. Senator Chaney —I think the reference is quite gratuitous and should be withdrawn. Senator WALSH —I am happy to withdraw the reference to ideological bigotry. I note that Senator Newman did not object. The PRESIDENT —The Minister has withdrawn? Senator WALSH —Yes. Senator ELSTOB —Is the Minister representing the Treasurer aware of estimates recently published which indicate that a value added tax, known as VAT, levied on all private consumption expenditure except rent at a rate of 8 per cent would raise $11.2 billion in revenue? Is this figure reasonable? How much of that $11.2 billion would be collected from the following areas of private consumption expenditure: First, spending on health; secondly, spending on education; thirdly, spending on rail, train and bus fares; fourthly, spending on postal and telephone services; and, fifthly, spending on domestic gas and electricity bills? What is the sum of these five figures and what is its economic significance? Senator WALSH —I have seen published recently a claim that a VAT at an 8 per cent rate would raise $11.2 billion in revenue. Indeed, such a claim was made in a paper published by Senator Messner on 20 February this year. That figure is reasonable-indeed, I think it is correct-provided all consumption spending by the household sector, excepting only rent paid, that is every last dollar of consumption spending by the household sector, was included in the VAT base and taxed at that 8 per cent rate. It also includes the heroic assumption that there would be zero tax evasion and avoidance. Of that $11.2 billion total, $870m would be collected on health expenditures-doctors bills, hospital bills, prescriptions and so on. For that one would need to add a couple of hundred million dollars if the doctors union in Canberra had its way and got that $425 a week part time job pay increase that it is trying to extort from the taxpayers. If the doctors got away with that we would need to add another $200m or $300m to the $870m which would be collected from a VAT on medical services. An amount of $190m would be collected from education expenditures, excluding the cost of books bought by students or their parents; $130m would be collected from a VAT on rail, tram and bus fares-a $130m addition to the cost of public transport; $220m from an 8 per cent VAT on post and telephone services; and $340m from a VAT on domestic gas, electricity and fuel bills. If all those items that were identified in the question were added together, some $750m would be collected from those five areas. The significance of that figure is that the type of consumption tax which advocates of a VAT want, and the type which implicitly was defined in the paper circulated by Senator Messner on 20 February, is very much broader than most people imagine it to be. When most people talk about a VAT or a broad-based consumption tax, they do not anticipate that taxes will be levied on health services-on prescriptions-or that people who are paying a few dollars a week as a fee at the local parish primary school will have an 8 per cent tax added to that fee. They do not expect that pensioners will have 8 per cent added to the admittedly concessional fares that they now pay for public transport; nor do they expect pensioners to have 8 per cent added to their electricity bills while they are crouching over their radiators in a Canberra winter; nor do they anticipate an 8 per cent surcharge on postal and telephone services. In conclusion, for those figures to hold up-for an 8 per cent VAT to yield revenue of that magnitude-it is essential that the base of the VAT cover all the items I have enumerated, as well as a number of others. Senator ARCHER —Can the Special Minister of State advise the Senate of the nature and extent of the inquiry carried out as a result of a gross breach of security when the Russian Foreign Minister arrived recently at Canberra Airport? What steps have been taken, who is conducting the inquiry, when will it be completed and when will the Minister be reporting to the Parliament? Senator TATE —An inquiry into this incident was conducted at the request of the Prime Minister. I have forwarded a report on the incident to the Prime Minister. The elements of that report remain confidential at this stage but I will take the request of Senator Archer to the Prime Minister with a view, if not to making the full operational reflection on that incident available to the Parliament, at least to making it available to the shadow spokesman, who is Senator Archer. Senator WEST —I refer the Minister assisting the Prime Minister on the Status of Women to an article in today's Australian Financial Review which says that under a Howard-led government the Office of the Status of Women would be downgraded to that of an adviser. Will the Minister outline the implications and effect of downgrading the Office of the Status of Women? Senator Chaney —Mr President, I take a point of order. We have had two Ministers today refuse to answer questions which relate to the Government's intentions with respect to similar sorts of matters. Both Senator Tate and Senator Walsh, I think, have indicated that they will not answer questions of that nature. Mr President, I therefore ask you to watch these questions with particular care, because it seems to me that it would be quite absurd if Ministers were to come into this place totally unable or unwilling to answer questions with respect to what the Government is proposing to do and yet able, apparently, to pronounce at will upon things which may or may not be part of Opposition policy and which certainly are not Opposition policy in the case of the point which has been made by Senator West in her question. In light of the fact that again today, two Ministers have taken this very clear attitude in answering these questions, Mr President, I suggest that you rule the question out of order. The PRESIDENT —I have taken notice of what the Leader of the Opposition said. However, I regard the question as being in order. I think the Minister is entitled to answer a question within what the Minister accepts as an area of her responsibility. Senator RYAN —I think the proposal to downgrade the Office of the Status of Women to an advisory capacity, from wherever it emanates, is of public interest and concern. The work of the Office of the Status of Women has been of great significance for Australian women and, through the program of consultation with women throughout Australia, its work is very well known and highly regarded. For example, the Office of the Status of Women was closely involved with the development and successful passage of the Sex Discrimination Act and the Affirmative Action (Equal Employment Opportunity for Women) Act. As I said in my opening remarks, the Office was very closely involved in the consultation with women throughout Australia to seek their views on the formulation of an agenda for the Australian Government from now to the year 2000. If the work of the Office of the Status of Women were to be downgraded by its relegation to an advisory capacity, I think women throughout Australia could rightly fear that the Sex Discrimination Act would be dismantled. I think women throughout Australia could rightly fear that the Affirmative Action Agency of the Affirmative Action (Equal Employment Opportunity for Women) Act could be abolished and their fears would be based on not only reports in the Australian Financial Review today and other daily Press but also statements which have emanated from time to time from various Opposition spokespersons. Similarly, I think women throughout Australia could rightly fear that the greatly enhanced role played by women in policy formulation in such areas as care for the disabled, services for the disabled, rehabilitation, low cost housing, education and so on would be set aside. Mr President, I want to remain within the Standing Orders and not provoke Senator Chaney to another defence of his Party's policies. We understand why he does that; it is because he is so sensitive about the unpopularity of his Party's policies. I think it is a matter of concern to women throughout Australia to know that the work of the Office of the Status of Women, particularly the work involving consultation and formulating policy advice from women throughout Australia, will continue to have the highest priority under our Government. Senator CHANEY —Will the Minister Assisting the Prime Minister on the Status of Women give the Senate a clear and unequivocal undertaking that there will be no decision in the May mini-statement, or indeed in the next Budget, which will in any way touch upon the operations of the Office of the Status of Women or the operation of those organs of government which are concerned with the Racial Discrimination Act, the Sex Discrimination Act or the other pieces of legislation that the Minister mentioned in her answer? Senator RYAN —I suppose one could call it a good try on Senator Chaney's part, although I do not think it was a very good try. Senator Chaney is perfectly well aware that no Minister, in answer to questions at Question Time or on any other occasion-- Senator Chaney —Give us an unequivocal statement, you wet prawn. Senator RYAN —The sensitivity of the Opposition, which does not even know who its leader is today, is very well understood. It is really extraordinary that the Opposition, in the words of one of its own senators, is in a state of chaos. Who said that? Senator Walsh —Senator Jessop. Senator RYAN —Senator Jessop said on radio today that the Liberal Party is in a state of chaos, and all it can do is abuse Question Time by trying to engage in Budget speculation. Of course I will not comment-- Senator Chaney —Mr President, I raise a point of order on the grounds that it is an abuse of Question Time to engage in speculation. I would ask you to sit the Minister down until she gets it clear what she is doing. The PRESIDENT —There is no point of order. Senator RYAN —I, of course, will not engage in Budget-- Senator Button —Mr President, I ask that Senator Chaney be asked to withdraw his interjection that the Minister is a wet prawn. Questions without Notice Questions without Notice The PRESIDENT —Order! There are too many comments from my left hand side. I did not hear the interjection, but I ask Senator Chaney to withdraw it. Senator Chaney —I withdraw. Senator RYAN —It is very clear to the people of Australia, particularly the women of Australia, that our Government has an outstanding record in terms of legislation in programs which protect women and minority groups. Senator MICHAEL BAUME —My question is addressed to the Minister representing the Minister Assisting the Prime Minister for Youth Affairs. I refer him to a report today that $67m out of $103m allocated in Federal funding for job creation programs in New South Wales has not yet been spent by the New South Wales Government due to mismanagement within its Department of Employment and, in particular, that only $6m of the year's allocation of $26m for youth employment had been spent in New South Wales. Is this report correct? Does the Federal Government intend to do anything to ensure that its program is implemented, particularly for youth; or will it, as suggested in the report, simply cut next year's allocation to New South Wales, where youth unemployment remains so high? Senator BUTTON —I am not familiar with the circumstances. I will obtain an answer for Senator Michael Baume as soon as I can. Senator Robertson having addressed a question to the Minister for Education- Senator Chaney-Mr President, I raise a point of order. The Minister for Education has just said that it is an abuse of Question Time to engage in such speculation. I make the point that she has been asked a question on a hypothetical matter in an attempt to relate it to Opposition policy which is not Opposition policy, and, Mr President, I would ask you to rule the question out of order. The Minister's own comments were that this is an abuse of Question Time. The PRESIDENT —There have been a number of questions along these lines. I listened carefully to the previous question and it was in order. I am afraid for Senator Robertson that his question is out of order and I rule accordingly. Senator PARER —The Leader of the Government in the Senate has said many times in this chamber that he will not predict the level of interest rates in Australia, which are so detrimental to families and business. My question is: Does the Government have any strategy at all to reduce interest rates, which are among the highest in the world, and if so will he advise the Senate and the people of Australia what that strategy is? Senator BUTTON —I do not have to advise the people of Australia. All of them know what it is. It is only Senator Parer and people like him who do not. The Government's fiscal policy, which will be further displayed in the May statement, is designed to help reduce interest rates, and the Government's persistent attempts to deal with the trade deficit and the improvement which has been recorded in that regard will help, in time, with interest rates. That does not place me in the position of prophesy, and I will not speculate on falling interest rates. I just believe that interest rates will gradually fall in the middle and towards the end of this year. Senator JONES —My question, addressed to the Minister for Veterans' Affairs, relates to a newspaper article which appeared in the Brisbane Courier-Mail on 21 March which stated that the records showed that several war heroes were buried in unmarked graves for a period of 39 years after they had perished. Will the Minister give some assurances that the necessary action will be taken to have commemorations affixed to those graves? Senator GIETZELT —I am aware, as a result of the article which appeared in a Queensland newspaper, that there was a crash almost 40 years ago, in 1948, of a Royal Australian Air Force Lincoln bomber at Amberley and that the crew of 16 persons on board were killed. I am advised that 12 of those killed were unidentified and that, in accordance with the policies of that time, the Department of Defence officially recognised and commemorated their death. The remaining four who were positively identified, according to the then policy, became the responsibility of their next-of-kin. Since 1983 the Government has changed that policy and it now accepts that all in-service deaths are commemorated by the Defence Department. To that extent, of course, the question relates to the portfolio of the Minister for Defence. However, once that decision has been accepted by the Department of Defence, the matters come within my jurisdiction, as the Minister in charge of the Australian War Graves Office. No action was taken by the next-of-kin of several of those who were identified. The next-of-kin of one person, the late Flight Lieutenant Franklin, did take the necessary action to have a plaque erected. The Queensland branch of the Returned Services League, to its credit, decided to take responsibility for the other three persons, and commemorative plaques have now been erected by the RSL in Queensland. As a result, all of the 16 persons who were killed have been officially recognised in the Australian war graves section and the plaques will be maintained from here on by the Australian War Graves Office. Senator BROWNHILL —My question is directed to the Minister representing the Minister for Communications. In light of Telecom Australia's annual profit of $465m for 1985-86, an increase of $80m over the figure for the previous year, I ask: What justification has Telecom for making changes to charging times, especially the delaying of the cheap night rate until 10 p.m.? Considering that most people regard 10 p.m. as being far too late to contact anyone, why was this alteration made? How does this charge balance with Telecom's corporate objectives to provide services at an affordable rate and, wherever possible, to pass on savings to customers? Senator WALSH —I think the question can be dealt with from two perspectives. The first is the decisions which are made by Telecom for variations in charging rates-the relativities-throughout the day. I will seek confirmation of this point, but I would expect that the reason for the change in relativities is related to effective demand; in other words, Telecom seeks to charge relative prices throughout a 24-hour period or a weekly period which maximise revenue from the Telecom network whilst simultaneously providing the opportunity for people who will use the telephone system out of peak hours to do so for the lowest possible price. I will seek confirmation of that point. Implicit in the question is a belief that Telecom's declared profit should not be $80m higher than it was for the previous year. Telecom has a gross investment program of over $2 billion. I am not sure what the net investment is, but expect it would be about half of that amount. If Telecom is to be regarded as a business enterprise, or anything remotely resembling a business enterprise, one is entitled to expect that an additional return will be obtained on an investment as large as that. It has long been popular in Australia to point to Telecom's profits and conclude in a simplistic way that charges are therefore too high. What must be remembered is that Telecom has an enormous capital investment figure which, I think, is in the order of $4 billion. It may even be $5 billion. It is an enormous capital investment figure. If it is to be regarded as a business undertaking, it is reasonable to expect it to pay a return on that investment. Finally, if Senator Brownhill is concerned about telephone charges, particularly in country areas, he had better get the National Party to veto quick and lively the plans that Mr Howard and the rest of the Liberal Party are incubating to privatise it. Senator FOREMAN —I address my question to the Minister for Resources and Energy. I draw attention to an article in the Sydney Morning Herald of 18 March entitled `Oil exploration crisis claim'. In that article Mr Ray Braithwaite, Opposition trade spokesman, was quoted as saying that crude oil production would decline further because of `the present excessive and punitive tax regime'. Will the Minister state what is the current state of crude oil production and whether any decline has been because of taxation policy or a general fall in oil pricing? Senator GARETH EVANS —I shall be addressing some of these questions in more detail tomorrow in addressing the Australian petroleum exploration conference in Queensland, but let me respond to some of the matters raised by Senator Foreman. As to the quantity of production, total crude oil and condensate production in February averaged around 570,000 barrels a day, of which about 75,000 barrels were exported. This compares with the low reached in July last year of 390,000 barrels a day, with no exports, which resulted from the collapse in world oil prices. Current production rates are very near their peak because of two factors. One is the partial recovery in oil prices which has occurred since late last year. The second is the Government's decisions in mid-1986 to temporarily waive the crude oil excise altogether for on-shore fields, to reduce the top excise rate from 87 to 80 per cent off-shore and to introduce a concessional sliding scale for free market sales, including exports. These decisions have significantly benefited the Bass Strait exporters. The future levels of crude oil and condensate production in Australia depend on a number of factors, most importantly the rate at which recovery from our existing producing fields will decline and the incentive to explore and to proceed with the development of those fields which are not yet in production. As to that impending decline, I have never sought to conceal, nor did my predecessor in this job or my predecessors in other parties, that Australia faces a serious self-sufficiency problem. Production from existing fields has peaked and it will decline rapidly. On current indications production next year will average about 500,000 barrels a day and by 1991-92, five years hence, it will have halved. These production levels assume that prices will remain around their current levels, that is to say, just under $US18 a barrel. As to the incentive to explore and undertake new developments, that is of course principally a function of the outlook for crude oil prices, over which this Government obviously has no control. However, it is clear that governments must ensure that their taxation regimes, which are designed to ensure a fair return to the community as well as give encouragement to producers, allow a fair return to investors. In this respect the Government has adopted many initiatives which we will be debating in the context of the resource rent tax legislation shortly to come before this Parliament, and in the context of the Government's response to the two reviews of the oil industry-of excise taxation generally and marketing arrangements-which we are presently conducting. Senator TATE —Last week Senator Powell asked me a supplementary question concerning termination of funding under the national community health program for the Australian Medical Students Association. The Association wishes to make a submission to the Committee of Inquiry into Medical Education and the Medical Workforce. I undertook to provide further information about funding for AMSA. The Association has received funding at a modest level under the national community health program for a number of years. In 1985-86 AMSA received full year NCHP funding of $12,850. Part way through this financial year the Minister for Health decided to terminate or reduce ongoing funding for a number of organisations, including AMSA, but funding of $5,130 was provided for AMSA early in the year. This is a cut of $7,720 in 1986-87. No funding will be provided for AMSA in 1987-88. The Minister decided to terminate AMSA's funding on the basis that AMSA was the only student body of a specific health care discipline receiving such funding, and at a time of high competing priorities continued funding could not be justified. This is especially the case because a significant NCHP grant-some $150,000 in 1986-87-is made to the umbrella student body called SICH-that is, Student Initiatives in Community Health-which represents all student health care disciplines, including medical students. SICH, as well as AMSA, is known to be keen to contribute to the inquiry and SICH may decide to give any assistance necessary for a submission to be prepared by AMSA. I also note that AMSA has available to it other sources of revenue, such as AMA grants and advertising revenue, which may also be used for these types of activities. Senator SIDDONS(Victoria) —I seek leave to make a statement, Mr President. The PRESIDENT —Is this a personal explanation? Senator SIDDONS —No, it is a statement. It could be defined as a personal explanation. Senator Chaney —On a point of order, Mr President: The Opposition has no objection to any senator clarifying by way of a personal explanation a point on which he has been misrepresented or put in a false position. It may well be a statement, and we would like to assist Senator Siddons to make it, by leave, but without any notice of it, it is difficult for us to make a judgment. If this is a personal explanation, the Opposition is happy to give leave. The PRESIDENT —I suggest that Senator Siddons give a general explanation of what he intends to speak about. Perhaps then leave will be granted. Senator SIDDONS —It is in relation to my leadership of the Unite Australia Party. Leave granted. Senator SIDDONS —It has been brought to my attention that I have not officially advised the Senate that I am the parliamentary leader of the Unite Australia Party. I do so now. Accordingly I advise the Senate that the Unite Australia Party is a nationally organised party with branches in all mainland States, embracing the previous membership of the Advance Australia Party, the Australia Party and the UAP, and that I am its parliamentary leader. Incidentally, it is the only political party represented in parliament which opposes the present deregulation of Australia's financial institutions. Debate resumed from 20 March, on motion by Senator Gareth Evans: That the Senate take note of the paper. Senator KILGARIFF(Northern Territory)(3.13) —The paper before the chamber today is one of considerable significance. It is the first major review of Australia's total defence and security planning for some 11 years. The last one was the coalition's defence review. This is a comprehensive paper and time does not permit me to even begin to respond to all the issues that it raises. However, I wish to comment on a number of aspects of the White Paper and the tabling statement of the Minister for Defence (Mr Beazley). I note that in his opening remarks the Minister refers to the strategy dictated by the White Paper that Australia develop a defence force capable of meeting any hostile force within our area of direct military interest, with successive layers of military forces capable of detecting, identifying and gauging any hostile approach. I certainly support that principle but I have some grave reservations as to how this strategic objective can be achieved, given the present state of the Australian armed forces. A good deal of publicity has been given to the problem of the armed forces, with so many of their most experienced personnel resigning to take up more promising careers in civilian life. I note that the White Paper refers to the need to `attract, train and retain skilled men and women for combat and support roles', yet I do not see a live-wire recruitment campaign on offer. At a time when so many of our fine young people are unemployed, they should be given the opportunity to make a career in the armed forces. Indeed, the trades that they learn within the armed forces can make a career in civilian life later. There are some elements of this paper with which I take issue and others which I heartily support. But my support is tinged with concern and doubt about the capacity of the depleted Australian armed forces to stretch their resources to put these policies into place. Recently I received a letter from J. Whitelaw, National President of the Regular Defence Force Welfare Association. In his letter he says: I bring to your attention that there is a growing mood of exasperation and resentment amongst pensioners and serving members of the Government's action now that the long term effects are being understood. He is referring to pension discounts and the Superannuation and Other Benefits Amendment Act 1986. As he says, some 106,000 pensioners and some 400,000 contributors are affected. I suggest that this type of situation contributes to the lack of morale within the forces and has to be rectified. I seek leave to have this letter incorporated in Hansard. Leave granted. The letter read as follows- Regular Defence Force Welfare Association P.O. Box 166, Kingston A.C.T. 2604 (062) 73 3642 Patron: His Excellency the Right Honourable Sir Ninian Stephen, AK. GCMC, GCVO, KBE, Governor-General of Australia RDFWA Dear Senator Kilgariff, Pension Discount During the Parliamentary recess, which I trust you have enjoyed, this Association together with other organisations with an interest in Commonwealth occupational superannuation schemes, has taken stock of the situation resulting from the passage during the Budget session of the Superannuation and Other Benefits Legislation and Amendments Act 1986. I feel it proper to advise you briefly of the widespread concern about the Act. This concern is not limited to pensioners; it is echoed by contributors and their dependants. It is not confined to Defence Force schemes; it is shared by contributors and pensioners of the Public Service Superannuation schemes included in the Act. In all, some 106,000 pensioners and 400,000 contributors are affected. Our considerations covered a range of subjects. Inter alia we looked at: rights and trust, the need for certainty, the wage/pension nexus, cost savings, Government integrity, bi-partisan action, the handling of supply legislation and a permanently reduced base for future adjustments to pensions. This last is the matter of most enduring and general concern. The Government has averred we face a short term economic crisis. Sacrifices were called for and indeed imposed, such as the ``one time'' deferment of the social security pension increase. Defence and Public Service pensioners would no doubt accept a similar ``one time'' sacrifice with reasonable equanimity despite a generally held belief there has been a breach of trust. But they are called on to suffer a permanent reduction of their pensions from October, 1986 until death, or the death of their spouses-and the reduction is compounded as the years roll on. This is patently unfair. We submit that urgent legislation is needed to ensure the 1987 pension increases be based on the pension applicable as at 9th October, 1986. Thus pensioners will have made equitable sacrifice in 1986/87 but will not be required to make a continuing contribution for the rest of their lives. I bring to your attention that there is a growing mood of exasperation and resentment among pensioners and serving members at the Government's action now that the long term affects are being understood. We commend to you the need for legislation now to obviate life long effects from 1 July, 1987. Yours sincerely, J. WHITELAW, 13th February 1987...National President Senator KILGARIFF —I note that there is to be a housing program. That will be very acceptable, because housing has been very much a problem within the Services. Even so, that is not going far enough. If the forces are to be able to participate fully in assisting the Government's program there will have to be a marked difference in the Government's attitude to serving personnel in an effort once again to build up morale. To turn to the specific measures within the White Paper, I wish firstly to make some comment on what I believe are some positive steps in our defence planning. The stance taken in this defence paper on our relationship with the United States of America and, in particular, our joint defence facilities is a rational and logical one. The Government has continued to recognise the importance of Australia-United States co-operation. Although our own intelligence satellite is planned for Western Australia, a move which is certainly worthy of support, the Australian Government has acknowledged the benefit to both Australia and the United States of our joint participation in the operation of the existing facilities. Through them we contribute to our regional and global security. The facilities enable verification of arrangements and agreements between the United States and the Soviet Union. Arms limitation agreements between those two countries specifically provide for verification. The general purpose of the facilities at Pine Gap and Nurrungar contribute to this verification objective. Amongst the functions performed by the facilities are the provision of early warning by receiving from space satellites information about missile launches and the provision of information about the occurrence of nuclear explosions, which assists in nuclear test ban monitoring and supports nuclear non-proliferation measures. On this issue I wish briefly to answer the suggestion, repeated as recently as this morning, that the existence of the base at Pine Gap makes Alice Springs a nuclear target. This sort of alarmist claim totally ignores the harsh reality that, in the event of a nuclear conflict, whether Alice Springs is a direct target or not will make no difference to the future of those who live there. It is generally and widely accepted that the nuclear winter which would follow a global nuclear exchange would change climatic conditions to such an extent as to make the survival of the human race practically impossible. That being the case, our objective must be to prevent the first missile from ever being launched. The verification role played by the Pine Gap facility, I believe, contributes to this objective. This defence paper also recognises the importance of the ANZUS alliance and our long-standing defence relationship with New Zealand. On this point it is disappointing to see that New Zealand is no longer participating in the ANZUS defence arrangements. It is to be hoped that the already weakened ANZUS alliance will not founder on New Zealand Prime Minister Lange's unreasonable insistence that our United States treaty partner divulge confidential military information. Mr Lange's antics may have made him a household name but he has done a great disservice to all those who seek peace and stability for the Pacific region. One can only wonder at what Mr Lange has to say now with reports that a very sophisticated Soviet communication vessel was sighted off the New Zealand coast a little while ago. The paper also devotes some attention to other near neighbours with whom we have defence relationships. It particularly mentions Papua New Guinea, a country with which Australia has a very close defence relationship and commitment. I commend the Government's decision to continue this relationship and to provide specialist advice to the Papua New Guinea defence force and consult on regional defence issues. I also commend the Federal Government's decision to maintain our Royal Australian Air Force presence at the Butterworth air base in Malaysia by rotational deployment of FA18 aircraft which I understand will be based at Tindal. I hope that Australia's presence continues to be welcomed by both the state and the people, in view of our mutual regional defence concerns. We are fortunate, as this paper points out, to share a region with peace-loving nations with which we enjoy good relations. It is, however, important that we be ready in the event of any deterioration of relations between nations and any resultant threat to our own security. It has been suggested by some that this White Paper paints Indonesia as the enemy. I think this was stated on an Australian Broadcasting Corporation program just the other day. Of course, that is nonsense, and I certainly did not read that into this paper. Indonesia has an important part to play in South East Asia. It is a leading member of the Association of South East Asian Nations. It has shown quite recently its willingness to pursue peaceful relations with its near neighbours. It has signed a treaty with Papua New Guinea which hopefully will resolve the border dispute between those two nations. As a part of South East Asia and a country that shares sea borders with Indonesia, Australia has an interest in maintaining good relations with Jakarta, and I feel confident that these relations will be maintained and suggestions to the contrary will be shown to be ill-founded. Closer to home-in fact closer to my home, the Northern Territory-this defence paper has also put forward some important and overdue initiatives. As honourable senators will be aware, I have often mentioned my concerns about the vulnerability of Australia's vast northern approaches. I have called for an increased military presence and an upgrading of northern coastal surveillance facilities-as I guess 90 per cent of the population of the north have done. It is gratifying to see that the Federal Government has put forward a policy document which places far greater emphasis on northern defence. There are a number of elements of this northern basing policy. Recently the Government announced that it would be moving the second cavalry regiment from Holsworthy to Darwin to provide a reconnaissance capacity. I was pleased to see that the White Paper has announced that the unit's present tracked M113 vehicles will be replaced with wheeled armoured vehicles carrying weapons and surveillance equipment suitable for northern conditions and contingencies. I also welcome the announcement that the Government is considering the relocation of a brigade to the north-which would involve, if one includes support staff and accompanying families, some 6,000 to 7,000 people. The Northern Territory will soon be experiencing a substantial influx of military personnel as the new Royal Australian Air Force base at Tindal becomes operational. That is not very far away. The base will house our new FA18 aircraft and will be one in a chain of air bases across northern Australia. The other major element of the emphasis on the north is in the area of surveillance, with the development and deployment of the Jindalee over-the-horizon radar system. As the paper notes, the Australian Defence Force requires a capability to conduct surveillance of our vast sea and air approaches out over the Indian Ocean. There must be a capability both to detect and to identify, and if necessary to respond to, sea and air activity within our sovereign air and sea space out into the Indian Ocean. Jindalee has the capacity to sweep large volumes of air and sea space from a single location. The Government's decision to upgrade the existing Jindalee radar at Alice Springs will allow for testing of important new features, and is to be applauded. While Jindalee would enable broad sweeping surveillance, in its present form it is only capable of detecting sea and air activity. It does not have an identification capability. This is where the backup facilities such as those which will operate out of Tindal will be essential. It must be possible to seek out and identify the intruder. At this point it might be timely to resurrect another issue which I have occasionally raised in connection with coastal surveillance generally; that is, the possible use of airships in coastal surveillance. Until recently I suspect there were many who did not take this option too seriously. In fact, it was the subject of various cartoons. However, we now see that the United States Navy is about to spend millions of dollars on airships-possibly those built by the Bond Corporation-for surveillance purposes. The advantage of these craft over fixed wing aircraft is that it is claimed they have the capacity to stay aloft for up to 30 days. Even if they stayed aloft for two, three or four days this would be a great improvement on fixed wing surveillance aircraft today. It should be noted that airships are almost invisible to radar. They could prove to be a far more economical and effective means of surveillance than that provided by fixed wing aircraft. The difficulty with northern surveillance arrangements at present stems from the lack of surveillance flights and the predictability of those which are actually carried out. This is not meant as a criticism of the crews which carry out their instructions. It is a criticism of the inadequacy of the resources allocated to northern surveillance. It has been said that one can set one's watch by the surveillance flights over our northern coastline. One has to question the effectiveness of such arrangements. I urge the Federal Government to consider, or at least investigate, the possibility of using airships as a surveillance tool in conjunction with over-the-horizon radar. I mentioned at the outset of my remarks that there are some matters covered in this paper with which I take issue. One of those is the paper's failure to provide any real promise of the development of an Australian armaments industry. Australia could and should encourage an integrated and co-ordinated industry which would be compatible with the industries of our ASEAN neighbours. `Self-reliance' is a key word in this paper. One would have thought that, given the emphasis on self-reliance, more attention would be paid to the development of our own armaments industry. Another matter arising out of the report which gives some cause for concern is its downplaying, to an extent, of the significance of the Soviet Union in our sphere of strategic interest. I am very pleased to see that at this point Dibb's unrealistic conclusions were largely rejected. The Minister for Defence has obviously been unable to ignore the indisputable evidence of the Soviet military buildup in our part of the world. Cam Ranh Bay in Vietnam is the largest Soviet naval base outside the Warsaw Pact countries. It is the base for long range Bear and Badger strike bombers which are equipped with nuclear armed cruise missiles capable of reaching Australia. The presence of the Soviets in the waters of the Pacific and Indian oceans has increased alarmingly in recent years. Over the past two years it has increased to the point where the Soviets have some 30 to 40 per cent of all general purpose naval vessels, 28 per cent of major combatant vessels, 35 per cent of all submarines and 39 per cent of nuclear powered, nuclear armed submarines. The entire Soviet Pacific fleet consists of 826 vessels. The overtures of the Soviets to small Pacific nations have lent support to the belief that the Soviets are, indeed, turning their attention to the Pacific in a very big way. This is a situation of which Australia should remain watchful, particularly in relation to its impact on countries like the Philippines where the communist New Peoples Army, which opposes the Aquino Government, could well take up an offer of assistance from a sympathetic communist power with a strategic interest in getting a further foothold in the region. I think that anyone who takes note of the problems in the Philippines would be even more concerned following recent reports of the ambushing of Aquino forces. The New Peoples Army terrorists are getting increasingly strong. As I have said before, there have been very many casualties in the last few days. I would say that this insurgency is developing at quite a rate in the Philippines. The prospect of another Vietnam might seem unlikely to some but the possibility of Soviet interference in the internal affairs of the Philippines at some future time cannot be ignored. Getting back to the paper itself and its extensive and ambitious recommendations, I again commend its emphasis on northern defence at Tindal and Jindalee and the movement of personnel to the north. I take the opportunity to make the very important point that many of the initiatives outlined in the defence White Paper are the continuation of the sound defence policy decisions made by the previous coalition Government. It was a coalition Government which saw the Jindalee project commenced. It initiated the development of the Tindal RAAF base and the ordering of the FA18s. The coalition was also responsible for the decision to supply the Fremantle class patrol boats and develop patrol boat bases in Darwin, Cairns and other places. While I am pleased to see that the present Federal Government has picked up many of these major decisions, it is a pity that the Minister, in his tabling speech, has seen fit to play down the contributions made by the coalition, simply to get in a political jab. The Minister has implied that the coalition did not put its policy into practice. However, the impressive list of initiatives, to which I have already referred, puts the lie to that suggestion. I can only hope that the Minister is able to see that all of his government proposals are converted from paper talk to reality. I would also like to see the issues that this paper has ignored taken up by the Federal Government. For example, I note that the defence implications of a northern rail link have not been addressed. Given this renewed concentration on our northern defence, such a link would surely be a necessary adjunct to the rapid and efficient deployment of equipment. The sort of equipment which would need to be moved north would be large-tanks, trucks and fuel. Personnel deployment would also be facilitated by such a link. I indicated this concern today when I asked a question of Senator Gareth Evans, who represents the Minister for Defence. I asked whether the Government would be conducting a review of transport facilities and would make appropriate recommendations to the necessary authorities to ensure that there is adequate freight support by road, rail, air and sea to allow the Government to put its ambitious northern defence policies in place. There is a very real need for this whether we are looking at rail up through the centre of Australia, which I believe will prove to be economic and efficient, or the fact that roads in the north will have to be made into all-weather roads to bring about better movement of troops and defence material at any time of the year. Gove-Nhulunbuy-is cut off in the wet. This also happens along the base of the Gulf of Carpentaria from Borroloola to Normanton. All that country can be out of reach during the wet. So I believe that all-weather roads must be put in as a very real defence and development project in the north. On the issue of northern defence and the relocation of a full brigade to the north, I take this opportunity to put in a bid for the Northern Territory, which could offer a number of strategically located sites for further personnel establishments. Some southerners tend to think of the Northern Territory in terms of only Alice Springs and Darwin. There are, of course, many other locations which provide excellent bases for ground forces. I suggest that Mataranka is ideally suited for a brigade headquarters. As I have said, I support quite a number of the measures announced in this paper. But again I question the capacity of the defence forces to implement the theory into practice. I wonder whether a total review of the capacity of the defence forces, given their present levels of funding, is not warranted. Certainly I am convinced that steps need to be taken to alleviate the serious wastage problem which is leaving us with seriously depleted numbers of defence personnel. There needs to be a complete overhaul of service conditions. Perhaps it would be timely too for a review of the Department of Defence to ensure that, efficiently and without waste, it is possible for it to administer the enlarged responsibilities which are suggested in this paper. I believe that the ambitious objectives of this document will never be realised unless Australia has the men and women in its armed forces to implement those objectives. Senator ROBERT RAY(Victoria)(3.35) —I would like to begin my remarks this afternoon by congratulating the Minister for Defence, Mr Beazley, on the production of this paper. It has been some 11 years since the Parliament has had the benefit of a White Paper that clearly outlined the defence future of this country. We are very lucky to have a Minister with the capability of Mr Beazley. I often think that he could be paid nothing and would still be the Minister for Defence, because it is not only a job he is good at but also a job he loves doing. It is good to have someone as Minister who has such a wide and deep knowledge of the subject and is an enthusiast in the area. I am also pleased to note that for the most part the paper has received fairly wide bipartisan support. By that I do not mean to imply that everything in the White Paper meets with the approval of every senator on this side or the other side of the chamber; but, in general, the major thrust of the report is accepted by the two major political parties. That has consequences down the line, for no party is immune from the occasional electoral setback. It is good to know that defence policy will not switch and change in the breeze but that there will be a firm and positive defence capacity and policy over the next decade. That is very pleasing to me. It might seem ironic that so many people in the Australian Labor Party have been enthusiastic about the White Paper, given the fact that the Labor Party has a very firm and, I believe, very principled stand on disarmament. It sometimes seems ironic that we can advocate spending another $25 billion on conventional defence whilst, at the same time, stress that we are very firmly committed to disarmament. But the major priority in the disarmament field at the moment has to be in the nuclear area, where we as a government, through a whole range of world forums, have sought more and more to bring about disarmament. That is a long, hard process. There are no easy fixes for that. We cannot just automatically bring about a situation where the two super-powers and their satellites will suddenly disarm their nuclear capacities. We, as a middle-ranking country with a reasonable world-wide reputation-and certainly no one would doubt our general peaceful purposes-have played a role in a whole range of world forums, advocating nuclear disarmament and realising that it will be a long, slow process of trade-offs. There is no instant solution to disarmament. The United States and the Soviet Union will not just meet one day and get rid of their nuclear arsenals. It will be a long series of horse trading and negotiations. We have a very important role to prod both sides-especially the United States, because we are its ally-into that situation. But at the same time we would be absolutely blind if we decided, having pushed the disarmament issue in the nuclear area, to ignore the conventional defence of this country. We could be very irresponsible if we did that by just having some belief in world global disarmament. When we get nuclear disarmament we can then start to look at disarming our conventional weapons. This paper places great emphasis on self-reliance in Australia. That is distinguishable from self-sufficiency. The report places an emphasis on the fact that Australia may, in certain circumstances, have to stand by itself and that we should be in a position to defend ourselves. The report goes on, of course, to restress our relationship with the United States. We have had a relationship with the United States in two world wars and two other regional conflicts. I certainly am a supporter of our involvement in three of the four of those conflicts-but not the last one, and no one in my Party was a supporter of being involved in that last regional conflict. Nevertheless, it has been a very enduring alliance and it is one that I support. I do not believe that Australia would be any more productive by withdrawing from the United States alliance and the western defence area. A lot of people in Australia argue that we would be better off by doing so. I do not agree with that. I believe that we make a commitment in the world scene to the social systems that we regard as preferable-not ideal, but preferable. I certainly come down on the side of the United States rather than the Soviet Union. Paragraph 1.26 of this paper sums this matter up fairly well. It says: Australia's alliance with the United States is and should remain a genuinely equal partnership. Benefits accrue to both of us from our enhancement of the general Western security position. Australia benefits from the deterrent effect of the alliance and our enhanced self-reliant military capability. The United States benefits from the value of the joint facilities to the central balance, the intelligence exchange, and Australia's support for American military activities in our area. The development of our independent military capabilities and our defence activities in the region are also beneficial to US security concerns. This paper makes it quite clear that in the military sense we see a long term relationship with the United States. It should never be misunderstood what this paper and those in the Government are advocating. They are advocating an equal partnership; they are advocating our being an ally of the United States but not necessarily a totally non-critical ally of the United States. Sometimes the best role an ally can play is to give constructive criticism of a senior ally. I would hate the situation to evolve where we became just a toady of the United States, where we uncritically supported every decision of the United States. The healthiest relationship we can have with it is one of general support and general loyalty to the alliance but on occasions, as an independent sovereign nation, being critical of it when it makes mistakes, and vice versa. The paper goes on to examine in some depth our relationship with New Zealand. The last three or four years have been a fairly testing time. In some ways it is fairly unusual to find a Labor government in New Zealand and a Labor government in Australia going in slightly different directions. I am not a supporter of the Lange position on the visiting of nuclear ships; I am a supporter of many of the other activities in which he has been involved in New Zealand. His Government has been one of the most radical governments New Zealand has ever seen. It has swept aside a whole range of conventions and brought New Zealand into the twentieth century, into the competitive world, from which it has been hidden for too long. In general, the Lange Government in New Zealand has been very successful and very innovative, but I do not agree with its decision basically to pull out of ANZUS by refusing United States ships access to New Zealand. I say that because I do not believe we can opt out in this world. We have often heard the argument that somewhere some one must make a stand. I have some sympathy with that argument. Sooner or later, if one wants to bring about disarmament in this world someone has to make a stand but it has to be a stand that has some effect. To me, weakening of the Western alliance does not make war less likely; it makes war more likely. We do not expect any of the satellite countries in Europe in the Warsaw Pact suddenly to withdraw from that pact and weaken the Soviet position for to do so would make war more likely as one side would become weaker than the other. It is still very much a case of mutually assured destruction and a balance of terror keeping peace in the world in which we live. I do not believe that the New Zealand Government's decision to pull out of the agreement with the United States and to ban ships from visiting that country is a particularly productive one. Nevertheless, given our long history with New Zealand, we must maintain a good relationship with that country and a close working relationship in the defence field. Paragraph 1.29 of the White Paper states: It is important that Australia and New Zealand forces maintain and develop their ability to operate together. We will continue to promote defence co-operation and operational compatibility with New Zealand, reflecting the considerable potential for strengthening our defence relationship. I was very pleased to see that section in the White Paper because some people in Australian politics have suggested that we should virtually cut all of our defence links with New Zealand. That very much overlooks the long history and long relationship between Australia and New Zealand in military matters; going back to World War I and probably the Boer War. We have had a long history with New Zealand that should be maintained. I turn to some of the specifics of the paper. Developing the concept of defence in depth is one I certainly support. The paper goes into some detail about the sorts of early warning systems that Australia should deploy, especially in the northern area, and I welcome those measures. I also welcome the decision on the two-ocean policy for the Royal Australian Navy, something that has been long overdue. It is one of the reasons why at times, with all due deference to you, Madam Acting Deputy President, Western Australia sometimes feels so isolated from the rest of Australia, as though we had no concern for our fellow Australians in Western Australia. Madam Acting Deputy President, I assure you that we do have a concern, and this White Paper indicates that that concern is very serious. I also note the comments of Senator Kilgariff on northern defence. Senator Robertson has worked very hard to have many forces redeployed to that area. This White Paper can be taken as a testament to much of the work he has done in this area. It is sensible for us to deploy many more of our early warning systems and our other defence activities in the north of Australia. The paper mentions in brief the relationship between Australian defence and Australian industry. This is an area that has caused us some grief in the past. It is clearly preferable that, as much as possible, most of our defence equipment should be produced in this country. One of the reasons for our substantial trade imbalance, especially with the United States, is the fact that we are being forced to buy too much of our defence equipment overseas rather than producing it ourselves. I understand that a nation of 16 million cannot have the benefits of economies of scale that many overseas countries have. I also understand and have sympathy with those who argue that we do not want to become a mass exporter of arms, a la France or other countries. From an ethical point of view I can understand why we do not want to fund both sides in the Iran-Iraq war or anywhere else. Nevertheless, it remains an imperative that we build up our defence industries in this country and to do so they must become competitive with those in the rest of the world. I do not mind our paying 10 or 20 per cent above the odds for Australian defence equipment but we cannot afford to pay double or treble to produce in Australia what we could purchase overseas. Many of our ordnance factories and defence production areas have suffered through lack of investment and lack of long term guarantees. This White Paper may go a long way towards establishing those long term guarantees and bringing about a consequential development of Australian industry. The paper mentions conditions of service for defence personnel. This is an area about which we, as members of parliament, quite often receive major complaints. I think it must be very hard for people to serve during peacetime in the defence forces as it is very hard to define exactly what their role is and what sort of job satisfaction they get from that peacetime role. I am not suddenly advocating that the defence forces should be used in another capacity in order to get job satisfaction but problems are created. In particular, problems exist in the defence area about the conditions of service of spouses-be they male or female-who are constantly on the move. There is no doubt that if we want an efficient and competent defence force we must provide the requisite conditions to get the personnel in a reasonable frame of mind. We cannot treat them as second rate citizens. This White Paper concentrates very much on the defence area but allied to that must go our efforts in diplomacy. One of the great roles for Australia will be in bringing about a reasonably peaceful region around where we live. Senator Kilgariff mentioned potential dangers emanating from the Philippines. I make the point that many of the countries to our north in particular may well become trouble spots not because they want to be particularly aggressive to Australia; it is just that the social conditions in those countries make it an imperative for many of their people to rebel against the existing government. We have a role to play by seeing that those countries develop in such a way, economically and socially, that they will not at some stage in the future become a threat to Australia. We have our major task in that regard. The only other point on which I want to comment is a suggestion by Senator Kilgariff-it was a nice try-that we should build the Alice Springs to Darwin railway as a defence project. Senator Archer —Hear, hear! Senator ROBERT RAY —I do not think I will ever travel on that train no matter how many `hear, hears' come from the other side. It is like many other projects in Australia; it will always be proposed but it will never be completed. In conclusion, I congratulate the Minister for bringing forward for debate a document such as this. It contains a detailed outline of where we will be going in the next decade. I think it is a good aspect of government that it should bring forward a plan like this so that we have a clear idea of where we will be heading. The plan involves a very substantial amount of expenditure in a time of economic constraint, but I think it would be very short-sighted if we were just to cut back in the defence area because we cannot afford other things in other areas. It is the sort of short-sightedness that I think affected us grievously at the start of the Second World War. I would not like to see it happen again. Senator JESSOP(South Australia)(3.51) —This 1987 policy information paper which was tabled by the Minister for Defence (Mr Beazley) is, I think, very welcome for a number of reasons, mainly because it is overdue. I have heard it said today that the last such paper on defence that was brought before the Parliament was in 1976, by the Fraser Government. Senator Robert Ray —Started by us. Senator JESSOP —Well, we brought it in. This is a very important document and I commend the Minister for it. I welcome it, too, because it supersedes the report of the Dibb Review of Australia's Defence Capabilities and alters certain attitudes and policies contained in that report which caused some alarm amongst our colleagues. For example, the Americans had concern about our willingness to co-operate in regional defence. Our Asian neighbours, who accepted the Dibb report as an isolationist document, were concerned. I recall that last year when I was in South Korea, although I had not even seen the Dibb report, the South Koreans were well aware of it. The Ministers and bureaucrats that I was able to talk to on trade and other matters made the comment that they were concerned about the Dibb report and its isolationist, Fortress Australia concept. Not only was South Korea concerned but also our Pacific Forum partners, because they believed that the regional security that they had enjoyed under ANZUS was about to be abandoned, not only by New Zealand's withdrawal from the ANZUS treaty but also because of Australia's isolationist policy. Dibb's policy of denial was basically passive, and it worried the professionals who would have had to train a force which was not only strategically defensive but also tactically defensive. Some recent examples will suffice to demonstrate this point. The French, as some will remember, were decisively defeated by an inferior German force in 1940. There were many reasons for that defeat, but the main one was the defensive attitude of the French army which had evolved through its dependence on the Maginot Line defence system. The Soviet Union has a habit of issuing revisionist histories to suit the perceived needs of the time. One should therefore not be surprised that Stalin is now being attacked by the Soviet historian Professor Samsonov because he failed to warn the Soviet army, which was manning the boundary between it and the German forces in Poland, that the Russian army was about to be attacked by the Germans. So defensively minded was the Russian army that it could not detect by its own intelligence the massive German army operational movements involved in the preparations for Operation Barbarossa. An example of the important aggressive tactics, despite being strategically defensive, was the defence of Tobruk by the Australian 9th Division. With the sea at its back, and totally outflanked by the German army, the commander, General Moreshead, knew his division would be besieged for a long period. He set about controlling the land in front of his force knowing that he could only hold Tobruk if his force was tactically aggressive. In applying such a policy the general was applying his experiences from France during the First World War, where the Australian divisions earned an impressive reputation through aggressive controlling of no-man's-land. If the Government had accepted the Dibb proposal, despite improvements in intelligence gathering, it would not have been too long before Australia would have been denied hard intelligence about the areas around the north of Australia. Moreover, like Stalin in 1941, an Australian government concerned about its security would not dare make any deployment or activation of its forces for the fear of precipitating an enemy attack. For those reasons I welcome the measures announced by the Minister for Defence, which make the 1987 paper very much the same as that which was produced by the coalition Government in 1976, except for a few buzzwords which are aimed at placating Labor diehards. Senator Aulich —Ha! Senator JESSOP —The most obvious of these-it will not necessarily appeal to Senator Aulich-is the word `self-reliance' and the reference to the Guam Doctrine as though this was a watershed in defence thinking. Honourable senators will remember that President Nixon stated in Guam that the United States of America would be responsible for world security but that its allies should be prepared to defend themselves within that general cloak. Lord Grey, as far back as the 1850s, was propounding the same philosophies to the colonies of the British Empire. At that time the Royal Navy equated to the United States strategic force of today and it had the ability to maintain the freedom of the seas. Lord Grey argued at that time that the colonies had to be responsible for their own defences. The colonies generally were reluctant to accept the financial and manpower liabilities associated with such responsibilities. Nevertheless, by 1870 the last of the British regiments were withdrawn from the Australian colonies and we were on our own. At no stage since then has any country ever stated that it would defend Australia for us. It has been and still is our own responsibility. It is much easier for us to defend ourselves under the umbrella of ANZUS in our own re- gion, and within the general security afforded us by the North Atlantic Treaty Organisation and other Western defence arrangements. In return, of course, we must play our part in providing both regional security and maintaining our general alignment with liberal democracies of the West. In this connection, I noticed in today's paper comments by the Mayor of Port Augusta, Mrs Joy Baluch. She made the comment that she wants the United States out of Nurrungar. I wonder where Mrs Baluch has been all these years if she has suddenly just discovered that the joint facilities at Nurrungar base are linked with early warning systems. I heard Senator Robert Ray make the comment that it is important to have early warning systems in the northern part of Australia. I think it is vital that we are alerted to any possible attack, and just having that early warning system certainly does not mean that we will be subject to a nuclear attack in the future. As far as self-reliance is concerned, the paper is rather bewildering on the subject. The paper states: 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. In other words, our self-reliance is dependent upon help from others. I suppose that is just as it should be, but self-reliance is a misnomer in that context. In a world steadily becoming more self-dependent, defence, like manufacturing, is effective only if plans are made more on the basis of the geometry of capabilities. However, I welcome the Minister's plans to divert much of the capital equipment procurement to Australian manufacturing. That is an essential step. There are however, limitations due to the rundown of the Australian manufacturing industry, which has occurred despite the imposition of tariffs to protect those industries. In fact, I believe protection has led to increased demands for higher wages and to debilitating work practices. The Government has taken a risk in manufacturing the replacement submarines in Australia, but I believe that if the Government and the Navy play their part properly, Australian industry will not let the nation down. On the other hand, I look with some scepticism at the Minister's claims that Commonwealth factories and dockyards will be commercially proficient. For years now, measures have been taken to make Williamstown dockyard an efficient organisation, yet the Auditor-General's report to December 1986 makes it clear that the dockyard has not improved. I quote: The result of the audit was unsatisfactory. Overall, it is considered that the lack of internal controls and deficiencies identified in existing procedures and controls are such that the system cannot be fully relied upon to ensure: the accuracy and completeness of opening balances for work-in-progress accounts at 1 July 1985 the accuracy, adequacy and reliability of the cost accounting and financial records at the dockyard giving cognisance to the Dockyard's policy of complete accumulation of costs and full cost recovery, and the management reporting is prompt and meets the needs of Dockyard management. As late as 31 December the Auditor-General was moved to say: Given the major shipbuilding contract in progress and the further construction work in prospect under the Frigate Shipbuilding Program, Audit considers that high priority should be given to ensuring that the Dockyard's accounting and management information systems are sound. I can only hope that the Minister was serious when he claimed in his statement that `they will have to perform to the standards of competitive private industry and comply with specific production management agreements'. Some of my colleagues have drawn the attention of the Senate to the fact that both France and Great Britain have obtained 130 per cent of offsets with the Boeing company, whereas the Government is aiming at only 30 per cent. While I would like to see a higher percentage of offsets, I would be glad if we achieved the 30 per cent. It would be a great start to restructuring our manufacturing industries. With a better base, I am sure we can strive for and obtain higher percentages of offsets sometime in the future. As far as the equipment program is concerned, I welcome the frigate program, but regret that we are losing the capability for sustained surface operations. We lack ships with reasonable endurance. It is too restrictive to be continually bound by limitations of range and the need to have fleet replenishment ships on hand to extend the range of the fighting ships. I applaud the two-ocean naval concept because it does not preclude the concentration of the fleet when necessary, and does improve response time in the Indian Ocean. Our biggest problem, however, will still be having the ships available for service, rather than imprisoned in dockyards by union action. The Australian Labor Party has an extraordinary faith in intelligence gathering at the expense of weaponry, which probably explains the Government's determination to install Jindalee, and its lethargy in obtaining for the Royal Australian Air Force airborne warning and control aeroplanes. Without those aircraft the Air Force's capability to use its high technology is somewhat restricted. Having brought into service the FA18s, it is crass stupidity not to give them the battlefield control measures needed. If this is not done, the Minister cannot claim that we are the most powerful nation in our region. Unlike one of my colleagues, I am pleased that the Army is to get its own battlefield helicopters. Without the Army owning and controlling these aircraft, its full potential on the battlefield will never be developed. The RAAF does not understand the land battle, and has resisted for years the development of many uses of utility and support helicopters. The Army has been operating aircraft continuously since World War II. Of course, it owned and operated our only air force in the First World War. It fully understands the logistics concerned with crew training and maintenance for the Blackhawk. The Australian Army is technically as competent as the United States Army, which has developed and owned all battlefield aircraft since they were first brought into battle. I am not being critical of the RAAF, when I state that it is insensitive to the needs of soldiers. It is simply that the long term philosophy of the RAAF is attuned to the battle for command of the air, and it is applying the same philosophy to battlefield aircraft. As a result, soldiers in combat have not had the close gunship support that they should have been afforded. I welcome the moves to integrate the Reserve and active forces wherever possible. I believe, however, that the Army should have at least one battery of medium artillery as a regular force, in order to develop as quickly as possible state of the art artillery which is essential on the battlefield. As far as service conditions are concerned, I appeal to the Minister to ensure that conditions of service do not trail behind civil conditions, as they have in the past. Service officers have pointed out for years the effects of poor housing on morale. It did not need the work of Mrs Hamilton to bring such matters to the attention of the Government. Like the Dibb report, it simply wasted a lot of time. I believe the establishment of a defence housing authority will founder, as its predecessors foundered, from the hostility of bureaucrats in Defence and Treasury. Unless the Minister ensures that this does not occur, the housing program will not be fulfilled. As far as defence policy is concerned, there is a need to ensure that defence, foreign affairs and, in some instances, trade policy, are supplementary and complementary. There seems to be a lack of recognition of this. Why, for example, does this defence paper not refer to Japan? Similarly, we seem to have embarked on a policy of alienating France and the French Government. Despite the obvious importance of South Africa, we are alienating that Government, and supporting at the same time the forces whose main desire is to impose a marxist government on that country. Nor is there any mention of India. Yet India is building a very large strategic navy aimed at dominating the central Indian Ocean. This must have strategic significance for Australia, yet India is not mentioned in the paper. I conclude by stating that I welcome the paper, which changes the basic concept of Australian defence policy from that outlined in the Dibb report. I hope this will be the last time that the Chiefs of Staff Committee is ignored, while an academic is given the task of developing defence policy. Mr Dibb is undoubtedly a sound economist, but that hardly makes him a suitable replacement for the Chiefs of Staff Committee. Welcome as this paper is, a cohesive joint foreign affairs and defence paper is needed urgently. I urge the two Ministers involved, in consultation with the Minister for Trade (Mr Dawkins), to bring forward such a paper in as short a time as possible to enable an extended debate to take place on this very important subject. Senator AULICH(Tasmania)(4.08) —I rise to discuss the White Paper entitled `The Defence of Australia' and recognise immediately that it represents a substantial and rational approach to the defence of Australia. It has already received support from significant sections of those groups that are most interested in defence matters. For example, the National President of the Returned Services League, Sir William Keys, has described it as `a steady as she goes' recipe for defence policies and has welcomed the concept of defence in depth. Similar views in favour of the paper have already been expressed in the last few days by Opposition members. They recognise, of course, that this paper has taken a relatively realistic view of what Australia's strengths and weaknesses are, and that it proposes an approach that is balanced between self-reliance and a relationship with the United States military alliance that fills most gaps in our defence capacity. In case the universal support for this White Paper should make the solutions appear self-evident, it is worth reminding ourselves that Australia's defence policies have not always been based on either common sense or an overall effective plan. There have been structural and conceptual weaknesses that governments for many years have been unwilling or unable to address. Those weaknesses relating to our position in the United States alliance have been a continual problem, and only now are being addressed. It would appear that we have always worked on an umbrella principle that Australian forces will be committed as an adjunct to a powerful ally, on the assumption that self-reliance is less important than the requirement to be part of a greater allied force. The mistakes we made in Vietnam, for example, clearly indicated what sort of mistakes one can be led into if one thinks of being part of a larger umbrella rather than emphasising self-reliance and independence in foreign policy. Accordingly, strategy and equipment and weapons purchasing policies have been based on those mistaken assumptions in the past. The Minister for Defence (Mr Beazley) should be congratulated on encouraging the development of a White Paper that strikes the appropriate balance in ensuring that duplication is avoided, that we benefit from the alliance, and yet at the same time ensuring that our self-defence capacity is effective and based realistically on the type of defence budget that is sustainable and affordable. In defence organisation Australia has been bedevilled by force structures that have competed with each other, especially in the years of conservative governments when separate Ministers for the Navy, Army and Air Force reinforced that competition. It seems that those days are far away, but it is fair to say that the competition that bedevilled that period is still to a large extent present in our forces. Therefore, this White Paper has been a genuine and effective attempt to bring those competing viewpoints together to ensure that we have an overall, integrated approach to defence. The losers in those days of a defence umbrella and competing ministries were the Australian public and the armed forces in general. How else could we have arrived, for example, at the ridiculous situation where Australia was left with a totally inadequate minesweeping and mine detection capacity? This, of course, was in a country surrounded by water and vulnerable to the neutralising through mine laying of our major ports and shipping lanes. Similar purchasing policies were responsible for glaring weaknesses in our amphibious and airborne assault capacities, all associated with past mistakes. There was a tendency on the part of our armed forces to buy state of the art technology, in some cases described as toys for the boys, that has not always been suitable for Australia's demographic, geographic or strategic requirements. Successive visits by armed forces personnel in the past to supplier countries have left us with orders for an unnecessary aircraft carrier, since cancelled, and Leopard tanks in relation to which the agreed offsets policy could not be met and which tanks could not be available for immediate use in the event of a sudden attack in our north. I shall not go into some of the details that have been gone into in various committees as to the reason why the Leopard tank has been such a failure. Suffice it to say that those two fiascos-the Leopard tank and the aircraft carrier-were two examples of toys for the boys thinking that had come to dominate the defence agenda over many years, a domination which occurred as a result of there being no overall, integrated viewpoint about the way defence should have been operating. Minister Beazley has set his sights firmly on overcoming that outdated thinking, and the White Paper is a major step in that direction. Specifically the White Paper addresses a number of issues, and time does not permit us to address them all today. Firstly, I feel that it is worth mentioning the United States alliance-an alliance which in many political parties has been the subject of much debate. My guess is the certain Independents in this chamber will have a great deal to say about this matter at a later date. It is fair to say that it is still very fashionable to criticise Australia's role in that alliance. We have heard frequent criticisms directed at joint defence facilities, intelligence sharing, porting for American ships, and joint exercises. Many of the critics justify their views by recommending that Australia should follow the example set by Sweden, Switzerland and other neutral countries that are almost totally self-reliant in defence matters. Few bother to mention the fact that total independence along the Swedish and Swiss lines would involve a far greater commitment of national resources on defence than is financially possible or even desirable in Australia. I should like briefly to examine the defence position in Switzerland and Sweden, concentrating in particular on Sweden. For example, in Switzerland there is conscription into the army and the defence forces and no provision to protect conscientious objectors. I imagine that would find no favour at all on the part of many of those who oppose our approach to the American alliance but who put forward Switzerland's example as the appropriate one to follow. Also in Switzerland defence expenditure is offset through the massive export of arms to the rest of the world. That is another point that would not find favour with those people, particularly on the Left, who do not believe in the American alliance. Sweden has military conscription of between 7 1/2 and 15 months duration, with compulsory refresher courses. Some 50 per cent of Sweden's air force, 50 per cent of its navy and 80 per cent of its army are conscripts. There is massive defence expenditure in areas I shall mention. It is interesting to note that within 72 hours the Swedes could mobilise about 800,000 troops, many of them conscripts. Sweden has on its expenditure list-some are replacements, but it is fair to say that this is an accurate description of its present inventory-420 combat aircraft, a very significant air force, 12 submarines, two destroyers, 35 fast attack craft and numerous mine layers, mine sweepers and coastal patrol boats. About 3 per cent of Sweden's gross national product is spent on defence-very significant expenditure from a country which is smaller than ours, which is in a vulnerable area, but possibly no more vulnerable in the long term than Australia, and a country with a population far less than our own. It might be of interest to examine the per capital expenditure on defence as a comparison between Australia and Sweden. In 1981, $270 per capita was spent in Australia on defence; in Sweden the figure was $470. In 1983 Australia had lifted its expenditure to $292 per capita; the figure in Sweden came down to $350. In 1984 Australia again lifted its defence expenditure to a figure of $319 per capita, with Sweden dropping slightly to a figure of $340 per capita. Again, the comparison between the two countries shows clearly that Sweden is well ahead of Australia in per capita expenditure on defence. In 1981, 2.1 per cent of Australia's gross national product went on defence expenditure; in Sweden the figure was 3.5 per cent. In 1984 Australia increased its defence expenditure as a percentage of GNP to 2.8 per cent; Sweden was on 3 per cent. If we want to go down the track of being a neutral country with a totally neutral foreign affairs and defence policy, we have to expect extra costs to be involved. Those costs could be expressed in another way. All the assessments that I have seen as to the additional costs that would be involved if we decided to pull out of ANZUS show that they would be more than half our existing defence budget. If one believes in defending Australia adequately, one realises that Australia has to make a choice. Australia either has to be totally independent, like Sweden and Switzerland, or has to be self-reliant under the umbrella of the United States alliance. If we choose the totally independent option, like Sweden, we should expect first to have a 50 per cent increase in our defence budget and, secondly, we should be expected to tolerate military conscription. Both judgments would have to be made in a country that is not used to decisions on those lines. My guess is that those who oppose Australia being under the umbrella of the American alliance, but moving towards a greater self-reliant role, would not find either option supportable or in most cases suitable for Australia's sociological and defence considerations. The question is whether we must look at other aspects of the American alliance beyond that and see advantages in remaining under that umbrella. The first benefit that is clear to most people in terms of defence has to be the benefit of the intelligence gathering that accrues to the Australian Government. It has been said that wars are won or avoided by intelligence rather than force of arms. There is a good case to be made out that knowing the strengths and weaknesses of one's enemies and potential enemies is a basic first step not only in the winning but in the avoiding of wars. Thus, the sharing of intelligence, particularly satellite intelligence, would play a very significant role in the protection of Australia, both in peace time and in the event of hostilities breaking out. It would not be appropriate in this forum-and I think most honourable senators would understand this-to explain exactly how that intelligence sharing would work. However, I believe that most people in this chamber are aware that that would be a vital factor in Australia's favour in the event of a war. The second major advantage of our relationship with the United States at this stage is the favoured treatment we receive for the supply of defence items. Since a major factor in deterring potential aggressors is the known ownership and usage of effective weaponry, it is essential that Australia should already have access to such equipment, as well as information on a preferential basis. It is obvious to those who follow defence matters closely that Australia receives favoured treatment as a United States ally. This is particularly so in the supply of up to date weapons and equipment. In the defence world where state of the art technology is expensive and is developed over a long period, it is essential that Australia receives that preferential treatment. Notwithstanding the purchasing weaknesses or gaps which I mentioned earlier in my speech and which were very much a product of a lack of overall planning on the part of the armed forces and the Government, it is obvious that Australia is one of the major powers in this region by virtue not of its manpower but of the effectiveness of its weaponry. Finally I mention briefly the question of equipment, and the appropriate recommendations contained in the White Paper should be noted. I have mentioned the fact that Australia has a grossly inadequate mine detection, mine sweeping and mine laying capacity, and this is in a country where shipping lanes and access to trade are particularly important. Our capacity, according to this White Paper, will be increased. At present we have only one mine hunting ship but this capacity will be increased to many more in the future. Six new submarines will be built in Australia and we will watch this with special interest because it is the first time that this country has involved itself in a massive defence contract which will be an important part not only of our defence but also of the provision of offsets and the development of our industry at a particularly highly sophisticated level. The massive capital injection, for example, of $25 billion over the next 10 years which is mentioned in the White Paper will provide enormous benefits to industry as a whole, particularly in engineering, shipbuilding, electronics and aerospace. It is worth noting that only something like 30 per cent of money for new capital equipment has been spent locally in this country. That is a comment upon the disgraceful approach to defence supply that has prevailed with governments in this country in the past. To a large extent I think this has been caused by the division of responsibility between the various chiefs of staff and the ministries, coupled with the reluctance of conservative governments particularly to hammer out a genuine defence supply industry based upon an independent approach, such as that recommended in the White Paper. In short, I congratulate the Minister for Defence on setting in train the whole process which culminated in the Dibb report on the Review of Australia's Defence Capabilities and finally in this White Paper on the defence of Australia. It is fair to say though that no White Paper, no paper produced by anyone trying to predict the future, is sufficient in itself to guarantee iron clad protection of this country. We have before us a challenge to be flexible within the constraints of long term planning. We must look towards a genuine independence in defence supply and we must look at the areas of defence morale which can be affected by, for example, improved housing and opportunities for promotion and advancement within the armed forces, particularly for women, who are not given genuine equality in their search for promotion within the armed forces. We must also look at a greater planning and involvement of our civilian industry capacity in defence matters because in the end, in the event of a long term war, the keys are not only in intelligence manpower and weaponry, but also in the capacity of the country to organise itself at a civilian level, particularly at an industry level, to provide supply in such a vast country that will at any time keep our troops in a position of advantage. We must ensure that we will never be overcome by any shortage of supply in the particular areas in which we are fighting. Above all else, the White Paper is an integrated paper. It is the first occasion we have had in something like a decade to present to the Senate a genuine overall approach to the defence of Australia. The Minister should be commended for that. I welcome the generally purposeful and positive comments that have been made by Opposition speakers in this chamber, because it is only through this bipartisan approach to the defence of Australia that we, in this country, can be as effective as we ought to be. Senator HILL(South Australia)(4.26) —There are many subject matters raised in this White Paper on the defence of Australia which one could address. However, I wish to deal with the basic question of pay and conditions of service for service personnel. I almost choked when I heard the Prime Minister (Mr Hawke) refer last weekend to his Minister for Defence (Mr Beazley) as the finest in Australia's history. The record of this Government in relation to the key element of Australia's defence-that is, the people who give their working lives for the defence of Australia-has been deplorable. Anyone who has moved around the defence forces, as I have, both in this country and overseas is struck by the sense of frustration and disillusionment. Sometimes what might seem to us such small matters can cause this distress and disappointment. I remember that when I was visiting the Australian military contingent in the Sinai a few years ago the service personnel were disappointed that letters from Australia were taking several weeks to reach them. Obviously it was a matter of small management to ensure that letters got there quickly, but when I raised it with the defence forces on my return I was told that there was simply no satisfactory answer to this concern. That was simply not so; it was a lack of effort. I am struck by the different status that is given to those who serve our country and service men and women in the United States of America, where the community has a real pride in those who serve in the defence of the United States itself and elsewhere. I suggest that the standing and perceptions of the Australian military force depend a lot on the attitudes of our Government. If a government underpays its service personnel, if it houses them in poor or sub-standard accommodation, if it fails to give them the normal trappings of military office, then the status of those people in the eyes of the wider community is lowered. Little effort has been made by this Government to accord military personnel the status that they deserve in our society. There is no more honourable career, Mr Deputy President, as you will know more than most, than to devote one's professional life to the defence of what is so precious to us all. We tend to take for granted the fact that we live in a country in a state of peace and security. For many members of the new generation in this country-and if it were not for the fact that I am in this business, no doubt I would be in that category-contact with the defence forces is often negligible. Defence personnel are often separated, by the very nature of their business, from the rest of the Australian community. They live in military establishments and are given little thought by civilian Australia. Little thought is given to their conditions of service or to the shortcomings and difficulties of service. These obviously are matters to which the community should give consideration. I believe that it only emphasises the unique responsibility of governments in this regard. These men and women who make up our defence forces can draw little comfort from this White Paper on defence. True, there is the often cited rhetoric on page 90 of the White Paper in the following terms: Our people-the men and women of our fighting forces and our defence civilian staff-are our most valuable asset and a vital resource in the security of Australia. So often in reports such as this do we cite the rhetoric but there is little substance to support it. This is a report about strategies and about equipment; it is not a report about people. We notice simply by thumbing through the document that it contains photographs of ships, aircraft and guns, the equipment of the military forces to which this Government likes to make great reference, but few photographs of the men and women who are the truly critical aspect of our defence establishment. The people of our military forces in fact get only a few paragraphs in this document, and from it they get nothing new. That is little surprise given the Government's record of practice as opposed to its promises. It is no surprise to see that the separation rate from the Australian defence forces in 1985-86 was 12.3 per cent, the highest rate in the last decade. If members of the forces are cynical about this Government, I suggest that they have good reason. Their employer imposed a three-year wage freeze on them and then they received only a 5.9 per cent pay increase-something which other government servants would not tolerate. It was this Government that decided to tax the recompense of reservists. It failed to understand that that small benefit amounted not so much to extra money but to a community recognition of the importance to Australia of those who, after their normal employment, made a contribution to our security as reservists in the Australian defence forces. The disastrous history of that matter is well known-the crash in the number of reservists and the huge and enormously expensive advertising campaign which followed until the Government reversed its foolish position. Of course, it takes a considerable time to rebuild morale to its previous level. Thus, for a trifling revenue gain we have had an expensive lesson in terms of the effectiveness of reserve forces. There was even talk recently of the raising of the eligibility period for pensions from 20 years to 23 years. Fortunately, it appears that that suggestion has been dropped as, obviously, the flood of separations of which I have spoken would have become a torrent. Let me look briefly at the position of housing. Housing for members of the defence forces has been a long-standing source of contention. There seems to be a justified perception that defence housing is poor. Given that postings are a fact of life for members, it surely follows that their employer, the Australian Government, should do everything to assist its employees in relation to their housing. This Labor Government, which professes to have a bent in favour of employees, has certainly not shown it in the housing of the defence forces of this country. We hope that the new Defence Housing Authority will not be cosmetic. We hope that the $750m to be spent over the next decade will eventuate. We welcome the fact that the proceeds of disposals will be returned to the Authority rather than being paid into Consolidated Revenue, which we believe will create a positive incentive for the Authority in the management of its properties. In relation to housing loans, members of the defence forces are still awaiting news of changes to the defence service housing loans scheme. We were told to anticipate this review within the next few months but I remind honourable senators that it has been nearly four years since it was announced in the 1983-84 Budget. Still there are delays of 10 months and a maximum loan amount of $25,000. These two facts detract enormously from the low interest rates offered and, of course, the maximum loan offered goes nowhere towards buying a house in today's market. The cynical might suggest that the delay in arriving at a decision is merely a device to defer and avoid expenditure. Regrettably, it is not hard to be cynical when one looks at the record of this Government in this area. In relation to allowances, it has been only in recent times that the national wage cases have applied to the defence forces. Whilst their pay and some allowances are adjusted regularly, many allowances are merely subject to annual review and some are reviewed simply when someone thinks it is appropriate. Some such allowances may be minor, but some which we outside the forces might call minor have not been increased since 1981. On the other hand, rent increases, whilst defence incomes are unpredictible to say the least, are inevitably on a twice-yearly basis and, of course, are deducted immediately. It is interesting that few members of the public appreciate that much of what is provided to the defence forces, such as housing, is not given free and that the defence forces, as I indicate, are in a captive market and often not in a position to try other options as we outside the forces are able to do. I shall look briefly at the position of pensions. Once members of the defence forces retire, assuming that they have served 20 years, they are eligible for a Defence Force retirement and death benefits pension. If we take last year as a precedent, they then face the prospect of having their pension discounted. This is a most unsatisfactory attack upon long-standing retirement conditions and a most unsatisfactory attack upon what service personnel expect after a lifetime of making contributions towards their retirement. The DFRDB scheme is not applicable to those who join the forces late in life. If they do not serve 20 years they receive merely a gratuity. That matter should be redressed; it is long overdue. There are a host of other poor conditions that need to be redressed, not the least being the absence of interest when a refund of contributions is made. Most of us would clearly regard that as unsatisfactory. Why the terms of superannuation between the Government's civilian and military employees should be so different is certainly beyond the understanding of many of us. In this instance it is unfairly different to the detriment of the military service personnel. The option is for government to try to skimp now and pay more to train new personnel or to spend more now to retain its personnel and get training and separation rates down to reasonable levels. The Government's strategy on defence personnel management is failing. One needs only to look at the figures for 1985-86 when we lost 8,614 men and women from the Services. The losses of other ranks personnel based on recruiting and basic training costs will cost more than $91m to make up. The average cost of basic training is $8,500 per recruit alone. Officers, of whom we lost 984, are, of course, a pricey item to lose. The cost of training an officer cadet is some $70,000. The corresponding total cost of the loss of officers is some $69m. Every unnecessary loss of a member is the loss of a valuable resource to which Australia has devoted considerable assets. There has been a change of emphasis which is reflected in the personnel expenditure statistics in the White Paper. Personnel expenditure forms a steadily diminishing proportion of defence expenditure. In 1981-82 personnel expenditure was 54.3 per cent of the total; in 1985-86 it was only 43.4 per cent. In this financial year it will be below 40 per cent of total defence outlays. While a substantial part of this decline of expenditure on personnel can be matched with a growing capital equipment program-and, of course, to some extent can be matched with the decline of our dollar under this Government-we are finding ourselves in the position of having fine equipment while rapidly losing the fine men and women we have trained to use that equipment. The situation was put most effectively in an article by Peter Young in the Australian of 18 February of this year. I quote the last few paragraphs of his article on this massive haemorrhage of disillusioned officers: Quite obviously something has to be done and done quickly. No armed forces in the world can sustain the sort of losses we are taking without a dilution of expertise and operational capability-especially when so many of those who are going are young men and women of a calibre we can least afford to lose. What is needed is for Mr Beazley to take a second, harder look at the problem and find the money to fund imaginative solutions and crash measures to bridge the growing gap in the quality of life between the military and their civilian counterparts. But above all, the Government must accept the fact that the soldier is not just another unit of labour in the work force but a member of a unique profession of arms that demands a special recognition both in terms of pay and conditions, and national respect. That most aptly puts the problem that I am trying to communicate to the Senate today. There are special obligations that we, in the wider community, have to those who undertake a Service career. It is about time that was realised by this Government. These benefits may take the form of re-enlistment bonuses or improved superannuation, and certainly improved housing. There could be, with a little imagination, so many obvious opportunities open to the Government to indicate that respect which we should show for our Service personnel. An improvement in conditions may not mean a lot more money. One suspects that, with better management and long term planning and posting policies, there is scope for considerable savings which could go back in the form of direct benefits to Australian Defence Force personnel. This is the area of greatest neglect in the White Paper and calls for the most urgent remedial action. Senator RICHARDSON(New South Wales)(4.43) —The White Paper sets a course for a decade of development towards self-reliance. Such a strategy requires both a coherent defence strategy and an enhanced defence capacity. The program outlined in the White Paper, I believe, does meet these objectives. Before going into them in depth, I congratulate the Minister for Defence, Mr Beazley, on the White Paper. Mr Beazley is one of the better Ministers that this Government has had and, I might say, one of the better Ministers that any government has had since the Second World War. He is an extraordinary person who has done a remarkable job. Senator Tate —The Prime Minister said `since Federation'. Senator RICHARDSON —If the Prime Minister (Mr Hawke) said `since Federation', that must be right. The White Paper deals with the full range of defence matters-from policy strategy to force structure, industry, personnel, defence science and infrastructure-and I want to expand upon a couple of those elements today. The first is strategy. Defence self-reliance must be set within the framework of our alliances and our regional associations. As Mr Beazley said, I think in his Press release, the support they give us makes self-reliance achievable. Defence self-reliance is a pretty daunting task, given the vastness and harshness of our territory, the length of our coastline, the size of our fishing and resource zones, and of course our disproportionately small population. The strategy that we have developed can be described as one of layered defence, or defence in depth. It dictates an Australian Defence Force capable of meeting any hostile force within our area of direct military interest and involvement with successive layers of force capable of detecting, identifying and engaging any hostile approach. Obviously, in the broadest political sense that is defensive; however, that does not mean that Australia has abandoned its offensive military operations in the defence of territory and interests. An important role is given to offensive operations. Obvious examples are our long range strike capabilities, such as the FA18 aircraft, supplemented by in-flight refuelling; our enhanced submarine force; continuing commitment to the F111; and the substantial strike capabilities of the P3 Orion maritime patrol aircraft. Inherent in the defence paper and in the Government's implementation of defence self-reliance is the linking of a practical defence policy with our allies and our role in the region as a military power. At the heart of that, at its core, is Australia-United States co-operation. It is a basic element of an effective and efficient system of Australian defence. The first essential of any defence system obviously is good intelligence. Australia has significant indigenous capabilities in this regard, and the White Paper indicates that the Government intends to expand upon them. However, it is the access to complementary United States intelligence, and particularly access to United States satellite intelligence-which Australia obviously could not afford to duplicate-which completes our comprehensive knowledge of regional problems. The US relationship also makes a major contribution to the development of self-reliant capabilities through the purchase of major equipment, such as the frigates and the FA18s-obtained, it is worthy of noting, as a result of our favoured customer status. Access to the latest military technology and our status as a favoured customer with the United Kingdom will also retain our technological edge in regional terms. The US relationship gives us guaranteed access to ready resupply or to essential war stocks which would otherwise not be available or would be too expensive. Of course, the American alliance also provides a substantial deterrent. Whilst it would be irresponsible, indeed foolish, to depend on direct United States combat support for our security in the case of any conceivable threat, the possibility that such support could be forthcoming at any time would greatly complicate the offensive strategy of any possible aggressor. The availability of American intelligence, advanced technology and logistic support makes a self-reliant defence capability for Australia achievable and affordable. American co-operation enables the development of effective Australian defence with a realistic level of financial allocation. Of course, in any major defence embarkation such as the White Paper suggests, the burden on the taxpayer, how much the taxpayer can afford to bear over the coming years, is obviously of significance, no matter who is in Government. 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. I would like to go through the various layers of this defence in depth to show just what the Government has in mind. The first layer comprises that high quality comprehensive intelligence that I referred to earlier-a direct benefit of the alliance with the United States. We plan to add to the tactical value of this information by constructing a network of up to three over-the-horizon radars in the north. Also, we will develop a national system of air defence and air space control, and-this has received much publicity in recent days-the Government plans that a substantial new intelligence facility be built in Western Australia. The second layer is a naval-air capability to destroy enemy forces in our approaches and to protect focal points in shipping lanes. The key components of that strike capability obviously are the F111s, the FA18s and the submarines. The value of the FA18s strike and defence capacity will be enhanced by the acquisition of airborne refuelling techniques using Royal Australian Air Force Boeing 707 aircraft. This will be a tremendous boost to our strike capacity. When it is coupled with the submarine program, we can really see what the second layer is about. The new submarines will be among the largest, the longest ranging and the most lethal conventional submarines anywhere in the world. They will increase the size and the capability of the Navy. The project to build eight new light patrol frigates is also worthy of note. I know that later on we will debate where they should be built and who should get the benefit of that. However, I know that the Government will see the wisdom of building them in New South Wales. When these frigates are fitted out with the most modern weapons and technology and the most modern sensors, we will have a navy whose size and capability is increased to a point where the objectives of the second layer of that defence can be met. Equally importantly, the Government has decided to have a genuine two-ocean navy by dispersing half of the Navy to HMAS Stirling in Western Australia. This is long overdue, particularly in view of activity in the Indian Ocean in recent years. This will enhance the Navy's capability of operating anywhere in our area of direct military interest. The anti-submarine capabilities of the Navy will be developed by the purchase of the Seahawk helicopters and the development of surface and submarine towed acoustic arrays. The Seahawk helicopters are a key element in developing the Navy's capability. Despite the constraints of recent Budgets, the Seahawk helicopters have been protected. I am sure that the Government will continue to view the matter in this way. One squadron of FA18 aircraft is to be based at Tindal. Air bases are to be established at Learmonth and Derby in Western Australia and one is planned for the Cape York Peninsula. When one looks at all of that, obviously our capability is greatly enhanced. We can see some of the real changes that the Government has in mind when we come to the third layer-the role of the Army. What we are now talking about is a flexible ground force. I think Australia has been in need of such a force for decades. Many governments have talked about it but no one has ever got around actually to doing anything about it. If we are to protect our dispersed population centres, the concentration of the Army in New South Wales and Victoria has to change. We are to develop a highly mobile army and for this layer it will have state of the art battlefield helicopters. Priority needs to be given to dispersing Army operations to where they are needed and obviously that is in the north. I think many more of our Army personnel will be based there. It is also worth looking at the initiatives that are under way in the vital areas of command control and communications. Computer based information systems are being developed to support the decision making of operational and high level commanders. This new communications system will support our operations and administration. Again, this development is long overdue. It is pleasing to see a White Paper which actually sets down some sort of time table when we can all expect to see the benefits of the work that has been done. The benefits for Australian industry are really the exciting part of this defence White Paper. We are embarking on the largest and, if you like, longest defence capital investment program in peace-time history. This program will be tremendous for Australian industry. We now have 33 per cent of the defence vote being given over to long term investment, all of which will produce Australian jobs and Australian wealth. At current levels, the defence budget provides nearly $40 billion for capital expenditure over the next 15 years. That is a very significant boost for Australian industry at a time when so many people have urged purchases from overseas. It is great to see our Government, the Hawke Government, deciding to end any thought of this by making sure that much of the benefit will flow to Australian industry. Benefits will flow to Australian industry from these defence projects not just in terms of important technology, new skills et cetera but also, of course, in the area of quality control which has for so long been overdue in many Australian industries. We can expect to see a real boost in this area. Participation can lead to ongoing work in repair, maintenance and adaptation and to work on civil production for export. I would like to refer to the two elements of Australian industry involvement. Defence designated and assisted work-or DDAW, which is one of those quaint little acronyms that we see so often-involves government insisting on elements of defence purchases to be manufactured, assembled or set to work in Australia. The second element, of course, is the offsets program. This program has been revised and I think we all acknowledge that it needed revision. The offsets program in the last decade, particularly in the last six or seven years, has not worked well. This Government has set about ensuring that the real commitments of it are now met. Technology transfer and work to the value of 30 per cent of the import content of a project valued at $2.5m or more must now be placed with Australian industry. That phenomenal benefit is, again, long overdue. It can only lead to the revitalisation of so many Australian industries that have been under pressure in recent years. One can contrast this with past projects. The FA18 program had very little or almost no local content. Such an arrangement will not be possible with future defence purchases under the new rules outlined by the Government. New projects involving the submarines and the light patrol frigates will have very high local content and there will be particular benefits for the industrial sections of our country. Looking at the direction of programs, it is clear that South Australia, New South Wales, Victoria and Queensland will all benefit from those defence initiatives. The Government, in looking at that area, also has to look at the management of defence factories and dockyards. A lot of people have been highly critical of this area in recent years and that is something that the Government has to look at very closely. There have been difficulties at Cockatoo and Williamstown which nobody could have avoided hearing and reading about far too often over the last five to ten years. The major beneficiary of the self-reliance policy will be the local shipbuilding industry. Our local companies will have leading roles in the construction of submarines and long range light patrol frigates. It is in that area that we are really looking at the injection of many billions of dollars. This largest shipbuilding program in Australia's peace-time history will revive the industry, which has been lying dormant for so long. It will bring considerable high technology skill in ship construction and maintenance to this country. We have been losing out to Singapore and Taiwan for far too long in the area of ship maintenance. This program will substantially enhance our ability to support independent maritime operations. I also have to stress that we are finally going to look at real competition for defence contracts. This is a great departure from past practice where too often work was allocated on a non-competitive basis. Firms got exclusive contracts. Sole sources were established and often that meant high costs and poor performance. Now defence work will be allocated on a competitive basis with incentives for improved performance. This is a major program of great benefit to all Australians. I commend the white Paper to the Senate and hope that it is not merely looked at in political terms but is looked at for what it is-a document of real vision. Senator NEWMAN(Tasmania)(4.58) —Like so many honourable senators who have spoken before me, I rise first of all to say how glad I am that we have a defence White Paper before us. It is 11 years since we had the last one. It is very important that Australia has an ongoing debate on defence matters. I welcome both the report of the Dibb Review of Australia's Defence Capabilities and the defence White Paper. It is very important that we see in our news- papers and that we have in our parliaments informed debate on matters of such basic importance to the future of the nation. I give credit to both Mr Dibb and to the Government for the production of these documents. There are some matters of detail which I wish to criticise today but, nevertheless, I feel that it has been a most worthwhile exercise to have the whole subject reviewed for so long and so publicly. I hope that it will not be 11 years before we have another White Paper. It is very easy to forget defence and to cut back on funding for defence in times of peace. It always seems to me that defence is like insuring one's home. If one does not insure, one is always sorry the day after the fire. Self-reliance is the basis of the White Paper and it fulfils four major objectives for defence policy. First, it gives us a capacity for an independent defence of our country. Secondly, it gives us strategic stability and security in our region. Thirdly, self-reliance helps us to meet our treaty obligations. Fourthly, it contributes to strategic stability at the global level. These emphases, I believe, are acceptable to all of us. I am very glad that the emphasis given in the Dibb Review of Australia's Defence Capabilities has been retreated from in the White Paper. It concerned me, as it concerned so many of my colleagues, that we were in fact, if not in name, retreating into a Fortress Australia policy. I am glad to see, at least in the strategic assessments in the paper, that we are looking much further afield. Even if the capabilities in the report do not necessarily go all the way with the wider outlook that is shown in the White Paper, it is a better line to be following as a nation. It is the continuation of a line we saw back in 1976 with the last White Paper. We saw it again in 1984 with the report of the Joint Committee on Foreign Affairs and Defence. If we look at the wording of the White Paper we will find something of a cut and paste job, in some respects. Quite often familiar phrases and paragraphs are repeated down those 11 years. From a continuity point of view it is a wise and balanced report. I am very glad to see the emphasis again on the United States alliance. It is extremely important to us that we have access to military intelligence from the United States, to its technology and logistics support. Its alliance with us helps in the deterrence sense against anybody who might be looking at us to see whether we are weak. It also helps to make our defence of our country achievable and affordable. I am also glad to see the emphasis given to regional commitments. Such matters as joint exercises, port access, and staging and training facilities have been emphasised and I am very happy to see all of them. Priority is given to air and sea defence in the area of our direct military interest and there is an important role for a long range strike capability. This, too, I welcome. Many speakers before me have talked about the concept of land defence. I do not intend to canvass that issue again here. I am glad particularly that it does not preclude offensive operations in defence of our territory or interests. I feel very much that that was a weakness in the Dibb report. The capabilities do seem to have been determined by an assessment of the threats we are likely to face. They rely on an assessment of a favourable strategic situation-that there is no possibility of a major attack in the short term and that no regional power has the capability to mount a major attack on us at this time. Such an attack would involve the seizure and occupation of a substantial portion of our territory. The thrust of the White Paper is to make sure that we have the capability to meet sudden minor threats. Priority has been given to the threats which could arise without much warning. I am concerned, however, that even in the White Paper there is still not sufficient recognition of the uncertainties which face us with the expansion of the Soviet Union into South East Asia and the South West Pacific. I noticed that the New Zealand defence White Paper also referred to the uncertainties. Of course, New Zealand's actions do not support its concern about uncertainties. If it were sufficiently concerned for its own well-being it would not have turned its back on its ANZUS partners to the degree which it has. I regret very much that because of this matter, we no longer have quite the same relationship with New Zealand as we had before. I am concerned about the intention by the Russians to assert global power status; we have watched for some years now the changing methods by which the Russians are seeking to extend their spheres of influence. We would be very naive if we did not look at what is happening at Cam Ranh Bay and in South East Asia-the attempts to get closer to our Association of South East Asian Nations neighbours, the attempts to give economic assistance to our South Pacific neighbours and become involved with them. All these matters affect our strategic concerns. We must not put them out of our minds. We have political instability and the potential for violence in countries near us like New Caledonia and Vanuatu. The situation in Pacific countries in general could easily change overnight so we must not become complacent just because we talk about a period in which there seems to be no particular threat. I turn now briefly to force structure. The White Paper confirms resources of the order of 2.6 to 3 per cent of gross domestic product. As others have before me, I express grave doubts that this commitment can or will be met. We all know that we are facing a May mini-Budget. If it is going to be economically responsible there will have to be very savage cuts in national spending. We also face an August Budget. Once again, the Government will not be able to retreat from stern measures. The defence budget should have great priority in any assessment of expenditure by the Commonwealth Government. Nevertheless, it would be unrealistic to expect it to pass unscathed, as the Minister seems to say. It may be a case that he is simply whistling in the wind, but I have my fears that he will not achieve his financial target. This is a budget with the largest capital investment in defence history-33 per cent of the budget is for long term investment. I will come to that later. I want to survey briefly some of the items in the force structure. On surveillance, the Jindalee decisions were announced earlier in the year. I welcome the announcement in the White Paper that the airborne early warning and control systems will be included in the five-year defence plan. Unfortunately, the wording in that section of the paper leaves me with some concern as to how strong a commitment there is from the Government. I shall be watching that area closely. The major items to do with the Royal Australian Navy have already been announced by the Government. I welcome the concept of a two-ocean navy. It is a very wise decision and probably is long overdue. I also welcome the mine countermeasures and the decision to increase the numbers of our submarines and surface combat ships. All these are desirable measures and I do not intend to dwell on them. A number of items concerning the Royal Australian Air Force were mentioned by the Minister for Defence (Mr Beazley) prior to the release of the White Paper. I do not feel that it is appropriate for my purposes to go into them in detail. But I am glad about the aerial refuelling decision, which gives extra capacity to our aircraft. However, I will look very closely to see whether the types of aircraft which can benefit from aerial refuelling will be increased. It is a pity that the decision was made only for one type of aircraft. The decisions on the squadron of FA18s to be placed at Tindal and the network of northern airfields are also very wise. I am more concerned with some of the decisions relating to the Army. The emphasis on high mobility to react across the continent to protect military and civilian infrastructure and the population in the most remote parts of the country is very sensible and long overdue. But there are some areas which I feel should be noted. We have M113s which are very aged. There is no proposal for their replacement. In the light of a requirement for high mobility I would have thought that that would be given some emphasis. There is no suggestion as to how the logistics support will be developed for such a mobile force in remote areas. How will stores be got to the force? How will the shells be provided? What will happen about providing engineering support, for instance? At the moment an engineering troop cannot travel around Australia without civilian support to carry its bulldozers. It is one thing to move it around the eastern coast with civilian support. Where will that support come from in very remote areas of far northern Australia? I would like to have seen more spelled out about that. We are very short on detail in relation to this northern force. What is the Government going to do about the conditions of service for the servicemen who will be serving in the northern force? Will they be taking their families to the north? If so, what will they do about housing? As we all know defence housing has been of a very poor quality over many years. Will defence servicemen be given super-quality housing in difficult living conditions? Will they get the sort of accommodation that mining families get in Western Australia? It is a very expensive undertaking. Will they simply be sent there for a month or so and their families left down south? Does this mean that we will need a larger force so that units can be exchanged? What will be done about education and wives' careers if families are sent north? What will happen to the social lives of single men? The social angles will have to be thought through. When the White Paper refers to a study being made about the forces to be deployed in the north, I wonder whether that study will include these matters as well as the purely military ones. The White Paper mentions medium artillery but how can it be got to the north and how will it be moved around there? I turn to the Blackhawk helicopters decision which, I think, was a wise decision. In the light of Vietnam experience it is very much needed for the command and control of the Blackhawk helicopters to be under the Army. Some debate is continuing in some quarters about where the maintenance of these helicopters should be undertaken. However, as far as the general rule goes, I think it is very wise that these helicopters be under the command and control of the ground forces which need to use them in battle. I intend to speak about the reserves later. Looking through the Army section I see that a number of items are stated to be matters for further study, for further investigation. For example, this relates to the tanks, to the artillery for the regulars and reserves and to the capabilities for Army aviation. The Department of Defence has had a very long time to work up this White Paper. In one sense it has had 11 years but it has certainly had nine months since the Dibb report was brought down. I feel we are being short-changed to some extent by being told that there will be studies. Are studies being conducted into why some of our forces right now do not have enough sandbags? Are any studies being conducted as to why some of our men do not have enough biros? I do not want to pour scorn on the White Paper but it looks very glossy when the reality on the ground for some of our servicemen is not at all glossy. We are going through shortages; we are having cutbacks in training. It is one thing to talk about the future but I feel not enough emphasis is placed on the nitty-gritty that we have to face if we are to have an efficient and meaningful defence force right now, not just in the future. I turn to the question that so many of us have debated on this White Paper-the real deficit in this paper. We have a White Paper of 112 pages. Of the 112 pages, eight relate to service personnel. Of those eight pages, three contain graphs. In the Dibb report there was very little emphasis at all on personnel and this chapter has to be some sort of a front job to try to remedy that situation. The Government is facing a very difficult situation. Efficient, educated and well trained personnel have to be the most important part of our defence forces. Personnel are leaving the defence forces in droves. Servicemen are expected to be able to cope with expensive and technical equipment and yet we are losing them and we are losing the money it cost to train them. This afternoon Senator Hill gave the costs of training new personnel. Some $91m, I think, will be the shortfall in 1986-87. It costs us nearly $8,500 to train a male and just over that for a female. The Budget estimate for recruiting in 1986-87 will be $27m in advertising and administrative costs. So losing personnel is a very expensive exercise but nothing in those eight pages gives us anything new. If one were looking to see what would be one's future in the defence forces, I think one would have to be very disappointed by the proposals put out for personnel. The paper states that we need to provide trained defence personnel for the acquisition and operation of new equipment and facilities and for the maintenance of essential combat skills. Also honourable senators should not forget that the Australian population is aging. The falling birth rate reduces the pool of young people to be recruited. It is very dangerous to let go the pool of personnel which we already have when they have been trained. Over the last few years there has been a continual drop in the number of apprentices being trained. We will be the poorer for that. The White Paper shows that manpower will be reduced from 34 per cent of the defence budget by 5 per cent in the next five years. That will take our proportion of the defence budget to one of the lowest of that of any nation. I cannot help wondering whether the Minister is secretly glad to see the resignation of some of these men. It makes his ability to acquire capital equipment that much easier. Many issues affect the problems we are having with personnel and they were addressed last year in the Hamilton Review of Effect of Service Life on Spouses. We have not seen sufficient action by the Government to implement the recommendations of the Hamilton report. Committees have been set up and this is a great way of doing things in the Defence Department. When in doubt, set up a committee. Something like five committees have to prepare the case for the Defence Force Remuneration Tribunal hearings. To set up a committee is a way of life. We have had committees and so far only the cheapest recommendations have been implemented. I want to see what the Government will do about the families who have educational problems and the spouses who need support and employment opportunities. Still no funding has been provided for the National Consultancy Group of Service Spouses of which the Minister is so proud. What will happen about these matters? The wage fixing system of the Defence Force Tribunal is a great improvement on what it was but it is still not good enough; it still needs reform. Cases before the Tribunal have become adversarial. There is no longer the opportunity simply to find out the facts. It has become the case that the Department is speaking with two voices-two loyalties-one of which is the Government's. It is very interesting to see that although the Minister says it is nothing to do with him, that servicemen can win some and lose some when they go before the Tribunal, now that there is a shortage of submariners, when the submarine allowance case came before the Tribunal the advocate made very little objection at all to the allowance being increased and at last a meaningful submariner's allowance was awarded. I have to think that the advocate got his riding instructions from the Government and it is just not good enough for the Government to say that it has no control over the Tribunal, that it is quite independent. The Government has an input and it should acknowledge it. As a result, service people have been the ones who have suffered. In evidence that was given in 1981, servicemen worked from 44 to 45 hours a week; they are now working 52.5 hours a week. Of course they get no overtime; we all know that but their service allowances have not kept pace with inflation and we are waiting very keenly to see what will be done about it. Another little thing that niggles servicemen about their conditions of service is the ongoing problem about Medicare levies. For example, a soldier who has a working wife contributes to the Medicare levy and so does she. All of the complaints over several years have not so far been able to get that matter fixed. That is one more thing that should not happen to the men who defend us. I am glad to see in the White Paper that the Government has pledged that the basic entitlements of the Defence Force retirement and death benefits will not be reduced. There is a commitment to ensure that improvements in superannuation benefits will be passed on. But let us not forget that only last year the Government ripped 2 per cent off the benefits of the servicemen and the veterans-and that is after they have to pay 5 per cent of their salary compulsorily into a scheme which only gives them a pension just a little bit better-only fractionally better-than the old age pension. So the Government has a long way to go on superannuation benefits for servicemen before that condition of service ceases to be yet another cause for concern amongst the defence personnel. It is a most unsatisfactory scheme in my view. In the area of housing, of course, last week the Government at last announced that it would set up the defence housing authority. Of course, the Government first announced this measure back in January 1986. It has taken a devil of a time to see the light of day. I only hope that it will fulfil the promise which so many hope for from it. We have 22,941 defence houses in Australia and, of those, 60 per cent are considered by the Department to be substandard. If that were not bad enough, the Government has just announced that rents for service houses will be raised on 1 April-including all the substandard houses. They will be raised by 7.5 per cent, which is greater than the increase in the service wages. So I think the Government, which is both the employer and the landlord, has been very tough on our servicemen. The Government can talk about improving conditions of service all it likes but, when it continues to leave servicemen living in substandard accommodation and take money from them unfairly, I believe, in rent for that accommodation, servicemen will believe the Government only by its actions. When the defence housing authority is established and running, I hope it will improve things for servicemen. But the average cost of building defence houses is so high. The estimated average cost of construction on defence land is $91,000. Items have appeared in the Army newspaper from servicemen asking: `How come a service house at Watsonia can cost something like $100,000?'. The writer asks: `Are we being ripped off?'. This money comes out of a defence vote and is debited to the Department of Defence. I believe that somewhere along the line the servicemen are being ripped off; they are not getting sufficient good quality houses, which they need. At the rate that the Government is putting money into housing, even with this new authority, it will be far too many years before we can really get any meaningful improvement in the number of houses. We will have to look, I think, at much more innovative ways of acquiring housing for the defence forces, and I think we should be encouraging private ownership by servicemen themselves. There are ways of assisting in this regard, and I am looking to see what the Minister for Veterans' Affairs (Senator Gietzelt), for instance, intends to do with the defence service home loans scheme. I think he could make a meaningful contribution to defence housing if he were only prepared to be innovative enough with the scheme which he administers. I am looking very keenly to see what the input from private enterprise will be with the expressions of interest which should have been before him by now. Let me very briefly refer to the reserves. I think this is an area where, once again, the Government should get credit for giving a much more meaningful role to the reserves. This is now only just beginning, but I think it is very important, if we are to raise the morale of the reserves, that they see that they have an active job to do and that, in the event of a war situation, they know what their responsibilities will be. It is of inestimable advantage for them, in the long training times in peace-time, to feel that they are doing a worthwhile job, even though it is often tedious and boring. In support of that same angle, I think that the legislation which has been brought down to allow for a limited call-out of the reserves in situations short of full scale war is long overdue, and I welcome that as well. But I still have to say that there has been no apparent commitment to increasing the level of training, and little attention has been given to making sure that the reserves are well equipped. There has been talk about tanks and artillery but, on a more basic level, what is happening about spares and equipment? We have to agree that the role is important, but the training time and the equipment are crucial. The Government does not really understand why it loses the reserves as fast as it advertises to get them. I point out to the Government that the role will take it some of the way, but in the area of training time and equipment the Government will have to do better. There is not much time for me to refer to the industry section of the White Paper, which is a very important section. I do not think that we have gone the whole way yet in improving the situation with defence and private industry. But it is a start, and I would like to see even greater efficiency with our defence industries themselves. I am concerned that a four-page Press release has come from Senator Button-it was in my mail today-all about the involvement of private enterprise in defence industry; yet when I asked him a question last Friday about buying food grown and manufactured in Australia, he turned away my question with a nonsense answer. We are being exhorted as a nation to buy Australian and we are being expected to bring down imports so we can improve our balance of payments. The defence White Paper talks at length about such things, saying: Wherever possible Australian firms will be prime contractors on major projects. It says also: Australian industry will be called upon to involve itself more intensively in the support, maintenance and development of Australia's Defence Force. It is a bit of a mockery when we find that our farmers, who are going broke, will not necessarily provide the food and the Australian food industries will not necessarily process it, simply because the job might be done more cheaply in New Zealand. I hope that the Government will look at that matter seriously. One item which does not appear anywhere in the White Paper is the question of mobilisation in a time of war. I realise that the subject of the war book is something about which the Defence Department does not choose to speak too publicly, but I am worried that there may not be an up to date list maintained, always up to date, about our capacities relating to our ports, airfields, roads, factories, fuel storages, et cetera. Neither in the Dibb report, I think, nor in the White Paper was this question canvassed even in the smallest detail. I worry that perhaps this aspect is not as up to date as it should be. It is extremely important that this aspect not be neglected. I simply summarise by saying that I welcome so much of the White Paper, particularly because it allows for this sort of debate, both in the Parliament and in the community, but I have grave doubts about the financial assumptions on which it is based, and only time and the Budget will tell. But the fatal flaw, as far as I am concerned, is that the Minister is putting toys before the boys, and he will live to rue that day. Senator ELSTOB(South Australia)(5.28) —I rise also to congratulate the Government and the Minister for Defence (Mr Beazley) on bringing down this White Paper on the defence of Australia. It is an important document. I have always felt that this document should have been brought down earlier, but I am very pleased with the whole of its contents. The Australian people have always expected Australia to be able to defend itself, and the Australian Government most certainly accepts its duty to provide Australia with the defence forces able to meet that expectation. This White Paper, of course, will determine for a decade or more the development towards self-reliance in the defence and the security of this nation. I, like so many other members of the Senate and the House of Representatives, have served on the Joint Standing Committee on Foreign Affairs and Defence. It is one of the great committees of this Parliament. Over the years there has not been a great deal of political partisanship on the Committee. Rather, the members of that Joint Committee have looked to the defence and security of this nation. I simply pay tribute to that. I congratulate all of the members and senators who serve on that Committee. They put in many hundreds of hours of work, of which the public would be totally unaware. I am very pleased with the overall acceptance of this White Paper. It is very gratifying to see so much agreement from members of all political parties and from people outside those parties. One needs to look back over the years at the planning that has probably gone into this document. I, along with other members of that Joint Committee, was asked by the government of the day-it was a Liberal government-whether we should support the building or acquiring of aircraft carriers. That Committee recommended that we not proceed with the purchase of aircraft carriers. It would have meant that Australia would have had to purchase or build three aircraft carriers-one to serve in the Pacific Ocean, one to serve in the Indian Ocean and one to be serviced or refitted. The actual cost would have been astronomical. We worked out that the cost at that time would have been in excess of $2 billion. Most certainly, the running of those carriers would have put in jeopardy the whole of our defence capabilities. The cost would have been too great for the Australian population to bear. Mr Deputy President, I know that that is a great loss to you as an old Navy man. I realise that you may have an argument which is different from mine. But I think that when Australians look at the overall benefits of this White Paper, the way in which we have organised our defence forces and the new equipment that is coming on-stream, they will feel proud of their defence forces. Some people in this Parliament do not go along with the fact that we should have such a very good defence force. Defence, as we all know, is very costly. People of every political persuasion would very dearly like to reduce that cost. But once that was done, people in this country would be very vulnerable. There is always someone out there who is ready to take over one's country. With the purchase of the 75 FA18s, we have purchased one of the finest fighters in the world. It is a multi-role fighter and is capable of carrying Harpoon missiles. It is also capable of fighting in a dogfight fashion and carrying air-to-air missiles. It has a multi-role use. It is, of course, the desire of Australia to have that type of aircraft. Most certainly it is superior to anything that our neighbours have. We also have 23 F111s. They are bomber aircraft, and they are the most capable bombers in this region. They are extremely costly to run, but they will most certainly be in service for a very long time. I would support their being kept in service. Unfortunately, this aircraft is out of production. It may pay Australia at this time to look seriously at purchasing another 25 FA18s, because eventually the F111s will go out of service. This is one of the reasons, I suspect, that the Department of Defence decided not to go ahead with in-air refuelling of the F111s. We are going ahead with the in-air refuelling of the FA18 aircraft. I think that is the right decision because they are much newer aircraft and they will serve this nation well past the year 2000. I am very pleased that Australia has also purchased the Blackhawk helicopters and given the operation to the Army. It was found in Vietnam that the Air Force operated helicopters did not always serve the Army in the best manner. The Army must fight day and night. Unfortunately, helicopters were not always available to take out wounded troops or give support to those ground forces. I have always maintained that the Army should have control of helicopters, because today they are taking the place of tanks and other armoured equipment. This paper is not saying that we will do away with armoured equipment, but in a highly mobile defence force-and that is the way we have planned it-it is essential to have helicopters. If ever our troops were in trouble in fighting in any part of Australia, most certainly the armoured equipment would be brought in at a later time. But often today it would be too late. One must use helicopters in the role of gunships. They are as capable of firing missiles as any tank. They will be invaluable as a fighting tool for our defence ground forces. We will build for the Royal Australian Navy six submarines that will be very capable for our type of region. The diesel electric submarine that we will build is one of the quietest and most efficient submarines that we could possibly use. The new homing torpedo that the submarines will have means that they will be very deadly weapons. They will also be capable of firing the Harpoon missile, which will add to the defence of this country. They will be built in Australia. As a South Australian, I hope that they will be built in South Australia. The South Australian Government, the unions and industry have got together very successfully to compete for this project. They have put forward a proposition that we believe is possibly the best in this country. We believe that the submarines must be built on time and on price. That is essential for the future of this nation. Too often in the past, in regard to our defence equipment, there have been overruns in price and time. That simply cannot be tolerated. If we are to build our defence equipment-and I believe that many benefits will flow from that-we must make sure in the future that all of this equipment is built on time and on price. A lot of work has gone into the submarines project. Undoubtedly, a lot of work will go into the new light frigates project, of which eight will be built. This will all help industry. The work does not stay in the industries in which these defence projects are being built. Already, in regard to the FA18 offsets work, industry has learnt to handle the carbon fibres of which much of this aircraft is built. It is a new material and most certainly this material will go into production for civilian use. Australia is starting to enter these high technology industries. We are now building the rotor blades for helicopters, which is a very highly technical area. A lot of work is being done in our defence factories. It is essential that we do this sort of work. It is, I believe, outrageous that we should simply buy equipment overseas, because we do not gain any experience. I am very happy to see that this position is altering. We are changing our rifles. We have decided after nearly four years of probably the toughest evaluation that we will build the Steyr rifle here under licence. It will be built at Lithgow. I used the Steyr rifle in a demonstration at Duntroon. Indeed, I have used many rifles in the past, ranging from the old .303 to the Bren, and many rifles since. The Steyr is one of the best rifles I have used in my life. I am sure that when eventually our defence forces get to use that rifle they will agree with my assessment. I hope that the rifles and other equipment will never be used in anger, and I am sure that every honourable senator agrees with that sentiment. However, experience has shown that if defence forces are not provided with the best equipment eventually somebody will attack the country concerned. Indeed, that is what happened in the Second World War. I have seen the tragedy of men going to war with second rate equipment. If people had seen our pilots flying the Wirraways and trying to fight Zeros with those machines, or our troops operating with .303 Enfield rifles trying to fight an enemy who had much better equipment, they would realise the truth of what I am saying. I believe that the fact that a country has good equipment and well trained troops prevents war. I honestly believe that if England had been better equipped and its forces better trained in 1939 the Second World War may never have broken out. I doubt whether Hitler would have invaded all the European countries he did if that had been the case. People should never forget that lesson. It has been the hope of every defence representative I have spoken to that we shall never go to war, but it is agreed that Australian forces should have top equipment. There is agreement on that score on all sides of the political spectrum. That is an excellent attitude and I hope that it will continue. I am sure that the Australian people are pleased with what is happening in terms of defence in Australia. Certainly there have been criticisms and any problems should be ironed out. We can always improve our performance. There have been problems in keeping trained personnel in the armed forces, and the debate continues. I believe that tax free sums should be paid to personnel that the nation needs to persuade to sign on for further engagements. I can see such a suggestion being implemented in the not too distant future. I have always believed that Australia is probably one of the best aircraft carriers. Therefore, I am pleased that a new airstrip to accommodate the FA18 is being built at Tindal, with a base at Learmonth, and an airfield at Derby which will be completed in 1987. A further airstrip is to be built on Cape York Peninsula and our forces also have the use of civilian airstrips in that area. These facilities will be of immense value to our fighting planes that will defend this country, if ever that happens. We now have sufficient airstrips that our forces can use if ever invading forces come into this country. Those forces will have to come by sea and we have the capability to destroy that enemy at sea. Many Australians I have spoken to do not believe that, but perhaps they can be brought to understand the defence capabilities of this nation. I believe that these matters should be explained in greater detail to the public and that they should be made to realise that Australia is capable of defending itself. It is a great pleasure to me as an Australian to see that over the years throughout our history we have always paid our defence bills. We have never asked for any help. Three weeks after the ending of the Second World War we had paid back our lend-lease. I am a great supporter of the ANZUS Treaty and always will be. Some people in the community do not agree with that view, but I have always been a supporter of that concept and I make no apology for it. I believe that the great majority of Australians support the ANZUS Treaty. Reference is made in the White Paper to the ANZUS Treaty and it is true to say that the majority of people in the major political parties have no disagreement on that score and that is an excellent state of affairs. Australia should also be encouraged to defend itself. It is possible that our allies may not be able to come to our help at a given time, and it always pays to have sufficient arms to defend our country. That is what this White Paper is all about. Certainly our defence forces need improvement in the area of mine hunting and that aspect of defence is being taken care of. Australia lacks mine hunting equipment, but in a short space of time that deficiency will be rectified. Some 70 helicopters are to be acquired for the Army. I believe that eventually we will need 100 helicopters and another 25 FA18s. Certainly we are well on the way to achieving a satisfactory defence force and we could defend Australia against most comers. A committee on which I served examined this possibility some years ago and I believe that we could defend our nation against every nation, except the United States and Russia. We do not believe that either of those countries would attack Australia, and that is based on a careful assessment. I believe that politicians should read the reports because the matter has been investigated by people of all political persuasions. That is the prevailing attitude about the future and I believe that it is satisfactory. I fully support the White Paper and congratulate the Government and the Minister for Defence, Mr Beazley, on its production. It can only be for the good of the defence of this nation. Senator MICHAEL BAUME(New South Wales)(5.48) —Before I make my contribution to this debate, I would like to pick up a few of the remarks made by Senator Elstob. I was disappointed in his assessment of aircraft carriers. Far more detailed thought and analysis should have gone into the unfortunate decision to reject the concept of aircraft carriers than Senator Elstob's simple point that as we would have needed three it would have disrupted defence purchasing in coming years. Senator Elstob —That committee was a joint committee. Senator MICHAEL BAUME —I am not objecting to the nature of the committee. All I am concerned about is its conclusion. The conclusion that one must inevitably have three aircraft carriers simply does not stand up against the experience of the way in which other seagoing platforms-for example, converted bulk carriers and so on-can be used as an auxiliary to the carrier concept. As we saw in the Falklands war, bulk carriers can be a platform for one of the most effective style of aircraft that we have seen for many a long day-the jump jet type of aircraft, the Harrier. I hope that developments in that field of aircraft will encourage people such as Senator Elstob and the members of the Joint Committee on Foreign Affairs and Defence to keep an open mind on the question of carriers. There is no doubt that Australia, being an island continent, is in a particularly vulnerable position if it does not have the benefit of aircraft carriers. It is nonsense to say that there is a worldwide trend against carriers; on the contrary, there is a worldwide trend toward them. For example, the Indian navy is equipped with aircraft carriers, but the Royal Australian Navy cannot afford them. I looked with concern at the concept of putting isolated, undefendable strips of concrete and large amounts of equipment in areas of Australia which are very remote. Effectively, these would be stable, constant aircraft carriers which were less capable of being defended and certainly less useful than real carriers. Senator Elstob suggested that we need another 25 FA18s on top of the 75 that are coming. I think that that is a most extraordinary policy view. In view of the uses to which these highly sophisticated aircraft are likely to be put in Australia, such an increase represents very much a sledge-hammer to crack a nut approach. I now wish to deal with my main concerns about this defence review and this Government's approach to defence in general. I quote from the Dibb report of the Review of Australia's Defence Capabilities. One of the most disturbing remarks that could possibly be made about defence in Australia was made in this report. It said: . . . the Department- that is, the Department of Defence- and the Australian Defence Force (ADF) do not agree on the appropriate level of threat against which we should structure the Defence Force. Ultimately, of course, the Government will determine the size of our defence forces, but when there is no common understanding between the Government's military and civilian advisers about what the Australian Defence Force should be structured to do, decisions about our defence priorities cannot be properly informed. That is the background against which there was clearly a need for a defence White Paper, but unfortunately the defence White Paper comes down with what seems to me to be the most old-fashioned and, in effect, unacceptable approach to defence. With its concept of self-reliance it said: The first aim of defence self-reliance is to give Australia the military capability to prevent an aggressor attacking us successfully in our sea and air approaches, gaining a foothold on any part of our territory, or extracting concessions from Australia through the use or threat of military force. I am afraid that that does not represent my first aim. My first aim-and, I hope, the first aim of every Australian who thinks about this matter-would be deterrence. The first aim of a defence force should be to deter a potential aggressor. It is only when deterrence fails that one then seeks to prevent an aggressor attacking us successfully. This Clausewitz sort of approach-that the way to solve one's defence problems is to fight a battle-seems to be monumentally old-fashioned and out of date. The Chinese sage-I suppose that one could call him that-Sun Tzu, said: To win without actually fighting is the acme of skill. And again: The highest form of generalship is to baulk the enemy's plans rather than defeat his forces in battle. In that situation it seems inevitable that we should look at the appropriate ways of making certain that that takes place. I regret that in this White Paper, as in so many other documents, there does not seem to be an effective answer to that question. For example, when we hear the case against aircraft carriers it relates to their alleged vulnerability to being sunk. I would have thought that British experience in the Falklands would have damaged that to some extent. When talking about aircraft carriers, there is no discussion of the impact that they have as a deterrent. In our region there is no more evident display of strength than a carrier with effective aircraft on its deck making friendly visits and steaming around. During the period of confrontation with Indonesia, the British kept an aircraft carrier off the western end of Java and that certainly caused a degree of concern to the Indonesians during that unfortunate period, which I trust will never be repeated. However, it concerns me that this Clausewitz sort of approach-is there a detectable threat and how do we match that threat itself; how do we fight an opposing army?-seems to dominate defence thinking here and now. I am very concerned indeed that because of this kind of thinking there has been a diminution in the resources going to that part of the Defence Force which provides the greatest effective deterrent in our region, and that of course is the Navy. I do not wish to be disparaging of the other sections of the Defence Force, but after many years of the other two segments of the Force getting much larger amounts of money than the Navy, we have a situation that is far from satisfactory. We have an army of 32,000 which, I understand could only produce a company group within seven days and it would take four weeks to field a brigade. Despite the considerable resources that have been allocated to the Royal Australian Air Force, it still has some degree of a credibility problem in its two principal strategic missions-strategic air strike and national air defence. By comparison the Navy is still able to maintain about two-thirds of the fleet at no more than four hours notice to deploy, fully prepared for combat. The Navy's major weakness is that it has inadequate protection against air and submarine attack and that, of course, is due to the lack of naval aviation at sea; in other words, this Government's decision not to proceed with the acquisition of an aircraft carrier. The need for deterrence to be the primary objective and the failure to respond to that need as evidenced by the funding of the Navy out of the Defence Vote can be seen by looking at recent equipment purchase figures. Over the last 10 years the Army has been allocated overall, not simply for equipment, almost $2,000m more than the Navy and the RAAF has been allocated almost $3,000m more than the Navy. If one compares those amounts with the oft quoted figure of $1,500m for the cost of purchasing an aircraft carrier, its aircraft and all the necessary shore back-up, one sees that it is simply half the difference of the funding for the RAAF over the Navy for the last 10 years. The key point that would emerge from that is that the purchase of an aircraft carrier and support facilities-a floating platform such as a converted bulk carrier-would eliminate the one serious deficiency the Navy now has, and that is inadequate protection against air and submarine attack. I must admit to being disappointed that once again Australia appears to be going down the road, not of deterrence, but of seeking to repel boarders. I accept that the Minister for Defence (Mr Beazley) has quite properly said that a wider concept of self-reliance than has been adopted in the past rejects the narrow concept of continental defence. There is no doubt, it seems to me, that the fairly narrow approach taken by Mr Dibb has been broadened by the Minister, but not entirely satisfactorily. He has gone down that road, which is the essential road, but has not gone down it far enough. Nonetheless, it still relates very much indeed to defending-to fighting an actual war, fighting an opponent-and that is the basis upon which this paper has been prepared. But, for heaven's sake, every analysis in the past that has looked at the potential attacker has been consistently wrong. I do not need to outline what happened before the Second World War. Everyone realises that the concept of a perceived direct threat has consistently been nonsense, and this is one of the unfortunate attitudes that has been perpetuated. The Dibb report used hypothetical threats, as did Mr Katter in his report some years ago, as the basis for his proposals for the future development of Australia's defence strategy. One thing has cheered me up on this score, and that concerns Mr Dibb's statement that the Soviet Union's activities in the South West Pacific represented no threat to Australia and New Zealand at present or for the next decade. At least the Minister now appears to be disagreeing with that proposition. I just hope that there is a greater awareness that the approach now being adopted is not a satisfactory one. On the other hand, let us acknowledge that the Government's decision now to assist our neighbours in the small nation states to improve their maritime surveillance systems, to increase RAN ship deployments in the area, to engage in, defence co-operation, including training, advice and technical support, to assist with both hydrographic and land surveying tasks and to double the RAAF's P3 Orion patrols-doubling the number of five-day deployments from five to 10 each year-is not an enormous decision to get excited about, but at least it is a move in the right direction. I think it is important to note that the Minister for Defence has rejected the Dibb conventional defence wisdom that Australia need not worry about potential threats to its sea lines of communication. The Minister has referred specifically to the fact that the island countries of the South West Pacific lie across important lines of communication between Australia and Japan, our major trading partner, and the United States of America, our major ally. They also lie across important trade routes and approaches to Australia's east coast, where many of our major population centres are located. An unfriendly maritime power in the area could place in doubt the security of overseas supply to Australia of military equipment and other strategic materiel. That is very sensible stuff and I must say that I am glad to see it. What concerns me is that, having acknowledged the problem, the Government has not gone down the track of seeking to solve it and instead, as I said, think in terms simply of getting a military capacity to prevent an enemy from attacking us successfully. Clearly, the best possible defence force we can have is one that is never called upon to fight because it has effectively deterred anyone from wanting to attack us. As a result, I have a personal regret about the nature of this paper and the direction we are taking. I am also very concerned, as was Senator Hamer, about the Government's ability to put even the limited objectives in this White Paper into effect in terms of the capital program. We have here clear evidence that it is most unlikely that the capital program suggested by the White Paper can be met within the resources available. There will be continual pressure on the defence forces to limit their requirements, particularly if we have members of the Government suggesting that those limited resources be used to buy another 25 FA18 aircraft on top of the 75 already purchased. I believe that in that event we will be going further down a course that is the wrong course for Australia. Admirable though the FA18 aircraft is, I am quite sure that, as Senator Hamer said, if the capital requirements of the Defence Force had been looked at as a whole-what we want, how much capital we have and what sort of a defence force we have overall-the FA18 would not have been purchased. I support Senator Hamer very strongly on that. I repeat that I am very concerned indeed that at this stage we still have Government members of a defence committee talking about the need to purchase more. I suggest that there is a basic need for rethinking, which does not exist in this paper; about the directions of our defence policy and in particular this question of deterrence. I agree once more with Senator Hamer that one of the major things one could do of benefit to Australia would be totally to re-organise the Department of Defence. It seems to me that where we have the sort of situation that Dibb outlined, where there is no agreement between the defence forces and the Department about how we should structure the forces, we have to decide that one has to go or be massively changed. It is intolerable for a government to be advised so totally differently by the defence bureaucrats and the defence professionals. This situation has not been addressed in this paper, and I believe that it is absolutely essential that it be addressed very speedily. In conclusion, I simply repeat that I am concerned that the Navy, certainly the most effective of the deterrent forces, has done so badly in the past and that it appears to continue to be limited, to be put in the shade by developments in the other forces, particularly the Air Force. I regret, and I think Australia will live to regret, that the number one priority in our defence policies has not been the deterrence which wins wars without ever having to fight them. Debate (on motion by Senator Tate) adjourned. Senator HAMER(Victoria) —by leave-On a Sydney radio program, whose remarks were later picked up by a number of newspapers, my position on the Australia Card was totally misrepresented. I should like to make it quite clear that the reporter concerned did not consult me before the statement was broadcast on Sydney radio and it was repeated without any further checking by a number of newspapers. I should also like to make it quite clear that I have no intention of separating from my Party on the issue of the Australia Card. Senator LEWIS(Victoria)(6.10) —I move: That the Senate take note of the paper. The tabling of this report once again raises the issue of the whole sorry saga of the interference of the Minister for Veterans' Affairs (Senator Gietzelt) in the management of this important national institution, the Australian War Memorial. It seems clear to me that the annual report of the Australian War Memorial has been subject to a cut and paste job to exclude as far as possible any mention of Air Vice-Marshal James Flemming, who was the Director of the War Memorial-although he still rates a mention in the appendices. That is perhaps a measure of the Minister's pettiness and obvious antipathy towards Air Vice-Marshal Flemming. We have the sorry record of this Minister's actions towards a man with a distinguished war record and, indeed, a record of action as Director of the War Memorial-such as one would expect from a man of the character of Air Vice-Marshal Flemming. He did so very much for the War Memorial in the period he was there. Apparently there was some form of personality clash with the Minister, and the result is that Air Vice-Marshal Flemming has been dismissed on what is, at most, a technical breach. Clearly, there has been no natural justice, in the ordinary sense, accorded to Air Vice-Marshal Flemming by this Minister and this Government. The Opposition has at all times called for a full, open and proper judicial inquiry into the allegations against Air Vice-Marshal Flemming, and continues to do so. In view of the Minister's actions, one can appreciate the embarrassment of the Council of the Australian War Memorial in having to prepare this report to the Minister, but that does not excuse the failure to give recognition to the former Director. We have also expressed our concern about and our strong belief in the need for an independent and traditional role for the Australian War Memorial. There has been no independence here. The Minister has stood over the Council and heavied it into acting as he demanded. We all know that that is what the Australian Labor Party means by `independence'. It is simply a euphemism for `obedience'-`Do what we want you to do, or else'. It is hoped that the Council will stand up firmly in defence of the independence and traditional role of the War Memorial. The statement on page 1 of the report, that the Memorial's role as a major museum should complement but not overshadow its purpose as a national memorial of Australians who have died, firstly, on or as a result of active service or, secondly, as a result of any war or warlike operations in which Australians have been on active service, has been put in, no doubt, as an attempt to allay the concerns of many war veterans and others about the rumours as to this Government's attitude towards the Australian War Memorial. There is grave concern that the primary role of the War Memorial may be changed. In particular, there is grave concern about some suggestions that it might be converted into some form of peace memorial, or that its surrounds might have some form of peace memorial park put in in order to attempt to change the original purpose for which the Australian War Memorial was built. I simply say to the Government that we on this side of the chamber hope that these rumours in fact have no foundation. Question resolved in the affirmative. Senator COONEY(Victoria)(6.15) —I move: That the Senate take note of the paper. This handsome report of the Australian National Gallery was produced under section 42 of the National Gallery Act 1975. This Act was introduced and passed by the Whitlam Government, although it was a culmination of the work that had been done by various governments. On 10 September 1965 the then Prime Minister, Sir Robert Menzies, announced the establishment of the National Art Gallery Committee under the chairmanship of Sir Daryl Lindsay. The Committee's report was presented to the new Prime Minister, Mr Holt, on 14 March 1966 and he tabled it and paid tribute to it in a ministerial statement on 1 November 1967. The Committee suggested that construction of the Gallery might commence when the National Library was due for completion, in 1968. As it turned out, it was under Mr Whitlam's Government that the Gallery went ahead. It is now a beautiful building, containing great works of art, just opposite the High Court building. It is noted in the report that Mr Whitlam, who introduced in the other place the Bill to set up the Gallery, has now been elected Chairman of the Council of the Australian National Gallery. He was appointed last year, and he took up his appointment on 1 January 1987 when Mr Gordon Darling, who had given great service to the Gallery over the years, retired. I think it is in order to congratulate Mr Whitlam on his chairmanship of the Council. No doubt he will achieve great things. Another point I want to make is that section 7 of the Act passed in 1975, setting up the National Gallery, gave powers to the Gallery which included a power to lend, hire out or otherwise deal with works of art. The report indicates that the Gallery has let out many works of art to many galleries around the country during the last year. Section 7 also allows the Gallery to accept gifts, bequests and assignments. Perhaps this is almost an advertising plug for the Gallery, but it ought to be brought home to people that they can give works of art to the Gallery and that bequest or gift, however it comes to the Gallery, will be acknowledged. The people who go round the Gallery and look at the works of art will see tribute paid to those who have given works of art. Perhaps private enterprise ought to be encouraged more to give works to this great gallery which is situated, as I have said, so well on the shores of Lake Burley Griffin. The report says that private people and private concerns have given works of art to the Gallery, although I understand that it is in need of more such assistance. Esso Aust Ltd sponsored an exhibition of Arthur Boyd works and the Chase Manhattan Bank made a donation to the Gallery. So it goes on. People can and do go to the Gallery to see great works of art. I think that as a result of an exhibition last year something like $10m was brought to Canberra. So, it is a body that has served the capital well and served Australia very well, and it is a tribute to the people of Australia that the Gallery exists as it does. It is a symbol of aspiration and of the higher qualities of life that are not normally debated in this chamber. I commend the Gallery and the report. Debate (on motion by Senator Collard) adjourned. Senator COLLARD(Queensland-Leader of the National Party of Australia) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator COLLARD(Queensland-Leader of the National Party of Australia) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Bills received from the House of Representatives. Motion (by Senator Tate) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of the Bills being put in one motion at each stage and the consideration of such Bills together in the Committee of the Whole. Ordered that the Bills may be taken through all their stages without delay. Bills (on motion by Senator Tate) read a first time. Second Readings Senator TATE(Tasmania-Special Minister of State)(6.22) —I move: That the Bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- RADIO LICENCE FEES AMENDMENT BILL 1987 The purpose of this Bill is to amend the Radio Licence Fees Act, in accordance with a Government decision, to improve arrangements relating to the assessment and collection of licence fees from companies licensed to broadcast commercial, including supplementary and remote, radio services. The amendments complement amendments made in the Broadcasting Amendment Bill (No. 2) 1987. The Radio Licence Fees Act provides for substantial fees to be payable by commercial radio licensees based on the gross earnings derived by the licensee company from activities related to broadcasting. The fees, which are payable on each anniversary of the original grant of the licence, are assessed as a percentage of the gross earnings during the accounting period preceding the anniversary. A sliding scale is provided so that the percentage rate increases for higher levels of gross earnings. The proposed amendments can be summarised as follows: The definition of `gross earnings' in the Act is clarified by limiting its application exclusively to income received from the licensee's broadcasting activities. The Bill also seeks to correct an anomaly in the legislation which enables licensees to vary accounting periods in relation to gross earnings, but does not empower licence fee assessments to be made for periods other than the standard 12 months. The amending provision will allow for the calculation of licence fees based on a period other than one year where a licensee obtains Australian Broadcasting Tribunal approval under sub-section 123 (2) of the Broadcasting Act 1942 to alter the dates of its annual accounting cycle. The amendments are not intended to alter significantly the amount of fees payable to the Commonwealth. They will remove from consideration, as part of `gross earnings', those earnings derived from the non-broadcasting activities of licensees and make it clear that earnings are only assessable in respect of advertisements and related matter broadcast by a licensee. The Australian Broadcasting Tribunal, which is the delegated collection agency, expends a great deal of time and effort in determining whether licence fees are assessable for non-broadcasting activities yet earnings from these activities constitute only a small percentage of total gross earnings. This, in turn, has created a frustrating administrative burden for licensees. The net savings effect of the amendments should be significantly more than the anticipated cost of $30,000 to $35,000; the latter cost arises from employment of an extra person by the Tribunal to cover the additional work load involved in a more comprehensive assessment of licensees' returns. A small loss in revenue will also arise from the narrower definition of assessable earnings. I now turn to the detail of the proposed amendments. Gross Earnings The definition of `gross earnings' in section 4 of the Radio Licence Fees Act has caused considerable difficulties in its interpretation by the Tribunal. The Tribunal has attempted to clarify the definition by specifically listing the component items of gross earnings in its licence fees return form. The definitions of these items were based on legal advisings and included such matters as sale of programs, hire of facilities, and recoupment of landline expenses. Some licensees, however, contested the validity of the Tribunal's interpretation in relation to such items. On the other hand, it was considered that an attempt to list in legislation all the various items which could be included in `gross earnings' would result in a continuation of time consuming problems of interpretation and administration. The provisions in the Bill provide a precise definition of gross earnings which is tied to revenue received by licensees from their broadcasting activities only; that is, revenues which arise out of the transmission of programs, including advertisements, to the general public. Receipts from a licensee's non-broadcasting activities will not be taken into account for licence fee purposes. In addition to the examples I have already mentioned, the items which will not be assessable under the amended definition of `gross earnings' include amounts earned from the production of advertisements, recoupment of expenses incurred by licensees on behalf of advertisers, and receipts from the sale of programs by licensees in transcript form. Assessment periods Licence fees under the Radio Licence Fees Act are currently assessed on the licensee's earnings over a 12-month period. However, sub-section 123 (2) of the Broadcasting Act 1942 permits a licensee to adopt another accounting period, while the period of assessment remains fixed at 12 months. As a result, where an accounting period is put back, a gap will arise between the end of the former period and the commencement of the following period. This will have the effect of excluding an amount of gross earnings from licence fees calculations. Conversely, where the licensee brings the accounting period forward, the assessment period will overlap and gross earnings will be double counted in licence fee calculations. This inability to make assessments for periods other than the standard 12 months drew adverse comment in the Auditor-General's April 1985 report to the Parliament. In one instance observed by audit, following a change in accounting dates from 30 June 1982 to 30 September 1982, licence fees were paid for the period 1 October 1982 to 30 September 1983 but were not paid for the period 1 July 1982 to 30 September 1982. The amendments in this Bill will allow greater flexibility to accommodate such changes in accounting periods by allowing for the calculation of licence fees over a period of more or less than one year. The amendments will ensure that all periods are assessed, and are assessed at the appropriate percentage rate on the sliding scale. The approach taken in the Bill is to take account of all earnings between the end of the last assessed accounting period and the end of the new accounting period as assessable gross earnings. For the purposes of determining what percentage rate should apply on the sliding scale set by the Licence Fees Act, the gross earnings figure for that period-which may be more or less than one year-is converted to represent an annual rate. The percentage set in the Act for that annual rate is then applied to the gross earnings for the period. Transitional amendments The Bill includes a consequential provision to ensure that the amendments outlined above apply equally to broadcasting station licences which have not yet been converted to the new service-based licensing system under the Broadcasting and Television Amendment Act 1985. By virtue of section 11 of the Broadcasting Stations Licence Fees Amendment Act 1985, the Broadcasting Stations Licence Fees Act, as it was before the first of January 1986, has continued application to such old system licences. The measures in this Bill will provide greater certainty in the assessment and collection of radio licence fees, will be difficult to circumvent and will lead to greater ease of administration both for the tribunal and affected licensees. I commend the Bill to the Senate. TELEVISION LICENCE FEES AMENDMENT BILL (No. 2) 1987 The purpose of this Bill is to amend the Television Licence Fees Act 1964 to improve arrangements relating to the assessment and collection of licence fees from companies licensed to broadcast commercial television services. The amendments complement amendments made in the Broadcasting Amendment Bill (No. 2) 1987 and in the Television Licence Fees Amendment Bill (No. 1) 1987, which was introduced and passed by this House in the Budget sittings 1986 as the Television Licence Fees Amendment Bill 1986 and is currently before the Senate. Honourable senators will recall that in 1986 I introduced the Television Licence Fees Amendment Bill (No. 1) 1987 as part of the package of equalisation legislation. That Bill amends the definition of `gross earnings' which is central to the assessment of licence fees. This Bill provides for the calculation of licence fees based on a period other than one year where a licensee obtains approval to alter the dates of its annual accounting cycle. Honourable senators will note that the Radio Licence Fees Bill 1987 which I am introducing concurrently with this Bill includes both the amendment to the definition of gross earnings and the change in assessment periods. For details of the relevant amendments contained in this Bill I refer honourable senators to my speech on the Radio Licence Fees Bill 1987. The provisions in this Bill differ from the equivalent provisions in that Bill only in that they apply to television licences rather than radio licences. The improvements to the provisions for assessments and collection of licence fees contained in this Bill and the others in this package represent commonsense administrative improvements rather than any dramatic change of policy direction. Although I have referred to the equalisation legislation, honourable senators should note that these amendments are in no way tied to that legislation. These amendments introduce amendments which will be of great value irrespective of the passage of equalisation or other major government policy initiatives in relation to broadcasting. I commend the Bill to the Senate. BROADCASTING AMENDMENT BILL (No. 2) 1987 The purpose of this Bill is to amend the Broadcasting Act 1942 to implement a Government decision to impose penalty fees for the late payment or non-payment of radio and television licence fees. These fees are payable by licensed broadcasters under the radio licence fees and television licence fees Acts 1964. The Bill complements amendments in the Radio Licence Fees Bill 1987 and the Television Licence Fees Bill (No. 2) 1987. Neither the broadcasting Act nor the licence fees Acts presently contain any penalty provisions for the non-payment or late payment of licence fees. The only sanction available to the Australian Broadcasting Tribunal, which is the delegated collection agency for licence fees, is the ultimate and disproportionate sanction of revocation, suspension or non-renewal of a licence. The Bill provides an additional sanction through the imposition of a monetary penalty calculated as a percentage of the amount owing. The provisions will provide for a small amount of additional revenue from penalty fees for late payments and will assist in ensuring collection of the full revenue due to the Commonwealth. I now turn to the detail of the amendments. Section 6 of the radio licence fees and television licence fees Acts provide for licence fees to be paid by licensees on each anniversary of the date of commencement of the licence. Sub-section 86 (11d) of the Broadcasting Act empowers the Tribunal to refuse to renew a licence if it is satisfied that the licensee has failed to pay the amount due under the relevant licence fees Act. An equivalent provision, paragraph 88 (1) (b), deals with suspension or revocation. Use of this ultimate sanction would be so drastic that there is, in effect, no effective penalty for late or non-payment. In the past, the Tribunal has expressed concern that some licensees were allowing time to elapse after an assessment had been issued before paying their licence fees. Any delay in payment of fees is, of course, a cost to the Commonwealth in terms of interest foregone. The amount of revenue due to the Commonwealth in the form of broadcasting licence fees is quite considerable. The total licence fees payable by commercial radio stations during the period 1 July 1985 to 30 June 1986 was $7,396,452 and for commercial television stations during the same period the amount was $60,915,505. The principal provisions in this Bill are contained in clause 5. New sub-section 123a (1) provides for the imposition of a penalty fee at the rate of 20% p.a. on overdue fees. The penalty provisions operate only where the fee becomes overdue by two months, but in these circumstances the penalty fee is calculated from the due date. The existing provisions in section 123 of the Act allow six months from the end of each accounting period for the licensee to prepare accounts and documentation. Consistent with these provisions, new sub-section 123a (6) provides that the due date for the purpose of the penalty fee provisions will not be before six months after the end of the accounting period. New sub-section 123a (2) provides for the Minister, or an authorised officer, to remit the penalty fee. The decision to remit must take into account such factors as whether the delay was due to the fault of the licensee, whether the licensee had sought to minimise the delay and whether there are special circumstances which mean it would be fair and reasonable to remit the fee. Honourable senators should note that the penalty fee and associated remission provisions are closely modelled on relevant provisions in sub-section 207 (1a) of the Income Tax Assessment Act 1936. Clauses 3 and 4 of the Bill amend sections 86 (licence renewal) and 88 (licence suspension or revocation) to take account of the new penalty fee provisions. Instead of the licensing sanctions of the Tribunal being applied for a failure to pay fees, the Tribunal must consider whether there has been unreasonable or repeated delay in licence fees payment. In considering whether to exercise these licensing powers, which are still the ultimate sanction for failure to pay licence fees, the Tribunal will clearly be required to assess whether the exercise of power is warranted in the individual circumstances of each case. Clause 6 of the Bill is a technical provision to ensure that the amendments in the Bill apply equally to old system licences; that is, licences which have not yet been converted to the service-based licensing system. The provisions in this Bill form part of a package of measures to introduce greater certainty and more efficient administration in the assessment and collection of radio and television licence fees, in particular, this Bill will help to ensure full and prompt recovery of fees owing to the Commonwealth. I commend the Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Tate) read a first time. Senator TATE(Tasmania-Special Minister of State)(6.23) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- This Bill makes provision for the establishment of a Commission of Inquiry to examine and report on matters relating to the Lemonthyme and Southern Forests areas in Tasmania. The Lemonthyme area defined in the Bill includes part of the upper catchment of the Mersey River. The findings of the Commission will assist the Government in giving effect to Australia's international obligations under the World Heritage Convention to take appropriate measures for the identification, protection, conservation and presentation of areas of World Heritage. The Inquiry will examine whether the two areas are or include areas which are of World Heritage value or which contribute to the value of a World Heritage area. The Inquiry will also report on whether there are other areas in Tasmania with forestry resources capable of exploitation in a way which would fulfil certain criteria. First, the manner of exploitation would need to cause no detriment to the Tasmanian forestry industry. Secondly, the exploitation of such areas would need to be an environmentally and economically prudent and feasible alternative to the exploitation of forestry resources in any areas of World Heritage value identified within the Lemonthyme and Southern Forests areas. The Bill also provides for interim protection of the two areas during the period of the Inquiry. This protection takes the form of a prohibition, except with the consent of the Minister, of certain activities such as the cutting down of trees, construction of roads and excavation works. Before turning to the provisions of the Bill in greater detail, I would like to deal with the two fundamental issues which lie behind this legislation. The first is this Government's commitment to the protection of the environment, and the second is the sustainable development of the resources of this country within the context of such environmental protection. One of the most important expressions of the desire of mankind to protect the environment in which we live has found its form in the International Convention concerning the Protection of the World Cultural and Natural Heritage: the World Heritage Convention. This Convention was adopted by the UNESCO General Conference at its seventeenth session in Paris on 19 November 1972. The Convention came into force on 7 December 1975. It promotes co-operation among nations to protect areas and buildings which are of such universal value that their conservation is of concern to humanity generally. Australia was one of the first countries to ratify the Convention in August 1974. Since then the number of Parties to the Convention has steadily increased. 92 countries from all parts of the world are now Parties. Parties to the Convention commit themselves to help in the identification, protection, conservation and presentation of World Heritage properties. They recognise that the identification and safeguarding of those parts of the World Heritage which are located in their own countries is primarily their own responsibility, and agree that they will do all they can, with their own resources and with whatever international assistance they can obtain, to ensure adequate protection. They agree, amongst other things, to ``adopt a general policy which aims to give the cultural and natural heritage a function in the life of the community and to integrate the protection of the heritage into comprehensive planning programs''. Parties also undertake to ``take the appropriate legal, scientific, technical, administrative and financial measures'' necessary for world heritage protection. In addition to the international obligations which the Convention places on individual countries, it provides a system for identifying the world's natural and cultural heritage properties and a system of collective protection for any such properties that may be in danger. The Convention also establishes a representative list of properties having outstanding universal value as cultural and natural heritage. This list is known as the ``World Heritage List''. The Convention is intended to ensure that, unlike most of the seven wonders of the ancient world, properties which form part of the World Heritage will be conserved in perpetuity. There are now 247 places on the World Heritage List. They include the Pyramids of Egypt, the Grand Canyon of the United States, the Taj Mahal of India, Chartres Cathedral in France and the Sagarmatha National Park (containing Mount Everest) in Nepal. Australian properties on the World Heritage List are the Great Barrier Reef, Stage 1 of Kakadu National Park, the Willandra Lakes Region of Western New South Wales, the Lord Howe Island Group off the coast of New South Wales, the Australian East Coast Temperate and Sub-tropical Rainforest Parks (the New South Wales rainforests) and the Western Tasmania Wilderness National Parks. This latter property is one of the last remaining temperate wilderness areas in the world and one of only eight places which meet the criteria of outstanding universal value in relation to both cultural and natural criteria. Honourable Senators will appreciate the unique value of this area. This Government has always acted responsibly in regard to its commitments under the World Heritage Convention. The Australian community increasingly looks to the Commonwealth to continue to protect Australian properties which form part of the World Heritage. In most cases, this is being achieved in close collaboration with the States and Territories. I turn now to the series of events which have necessitated this action by the Commonwealth in relation to the Lemonthyme and Southern Forests. In late 1985 when the Government considered the environmental impact of Tasmanian woodchips exports, it was particularly concerned both with the sustainable utilisation of forestry resources and with the protection of National Estate significance and World Heritage values. With this in mind, the Government's decision allowed woodchip exports under specified conditions set out in the Memorandum of Understanding between the Commonwealth and Tasmania signed on 12 June 1986. Under that Memorandum of Understanding a consultative mechanism was established to facilitate co-operation with the industry and with the Tasmanian Government. In accordance with that mechanism, all new logging proposals in National Estate areas were to be brought forward by Tasmania for consultation with the Commonwealth. Unfortunately, however, towards the end of last year, Tasmania allowed forestry activities to be undertaken in sensitive National Estate areas, including areas which may form part of the World Heritage. Despite requests from the Commonwealth, Tasmania continued to allow forestry operations in these areas. The Commonwealth was most particularly concerned about logging in the Lemonthyme and the possibility of logging in the Southern Forests. These areas are immediately adjacent to the eastern boundary of the Western Tasmania Wilderness National Parks, an area which is already on the World Heritage List. It is likely that the Lemonthyme and Southern Forests may themselves be or include areas of world heritage. The Commonwealth was concerned that logging operations could therefore have a damaging effect not only on the Western Tasmanian Wilderness National Parks but possibly on World Heritage values in the Lemonthyme and Southern Forests areas themselves. As soon as forestry operations commenced in sensitive areas in late 1986, the Commonwealth attempted to pursue with Tasmania the Memorandum of Understanding mechanisms for consultation, negotiation and the settlement of disputes. The Government suggested that no logging take place in the sensitive areas of the Lemonthyme and Southern Forests pending a review of prudent and feasible alternatives. An open and comprehensive review would be seen by the whole Australian community as a responsible course of action, and could establish circumstances in which the forestry industry could continue to operate in Tasmania with assured future supplies, but without unduly damaging important heritage values. In taking legislative action, the Government fully recognises the importance of the forestry industry and its need for long term government and public support. The International Union for the Conservation of Nature and Natural Resources (IUCN), the expert international body which advises the World Heritage Committee on natural environment matters, is also concerned about the situation in Tasmania. IUCN reported recently on the World Heritage area as part of its responsibility, on behalf of the World Heritage Committee, to monitor areas on the World Heritage List. The IUCN recommended that a review of the adequacy of the boundaries of the World Heritage area be undertaken. IUCN further advised that, in its opinion, the optimum boundary should include the full range of the natural and cultural features of the South West Tasmania ecosystem. The views of IUCN strengthen the concern of the Government about forest operations near the boundaries of the area already inscribed on the World Heritage List. In spite of repeated approaches by the Commonwealth, the Tasmanian Government has refused to agree to mechanisms for establishing a public review to resolve whether there are alternative forest resources to those in the contentious areas. The Tasmanian Government has also refused to place a moratorium on forestry operations in the contentious areas. Given its obligations under the World Heritage Convention, the Government has been left with little alternative but to enact legislation to establish an Inquiry into the World Heritage values of the Lemonthyme and Southern Forests and into prudent and feasible alternatives to forestry operations which would adversely affect those values. The issues are complex, but there is a need to settle the debate once and for all. It would be nonsense to suggest, as the Tasmanian Government has implied, that the review would mean the end of forestry in Tasmania. It simply involves a cessation of operations in the Lemonthyme and Southern Forests in certain areas for a limited period. The Bill provides for payment of compensation for losses directly resulting from that cessation. In establishing an Inquiry the Government is addressing the question of obtaining optimum development and benefit to the community of a valuable resource without unnecessarily degrading heritage of outstanding universal value. I turn now to the Bill itself. There are two major aspects. First, in Part II, it establishes a Commission of Inquiry to report within twelve months. Secondly, in Part III, it provides interim protection, for the duration of the Inquiry, from damaging or potentially damaging activities in the Lemonthyme and Southern Forests areas. The areas which form the focus of the Inquiry (that is, the Lemonthyme and Southern Forests areas) are defined in the Schedules. The Southern Forests area excludes areas already being logged or in which the Commonwealth has agreed forestry operations might proceed. An important definition is that of a ``qualifying area'', which is any area, the whole or part of which is within the Lemonthyme or Southern Forests areas and which itself forms part of the World Heritage or which contributes to the integrity or values of areas of World Heritage. Qualifying areas do not, however, include areas already inscribed on the World Heritage List. The function of identifying areas which contribute to the integrity or values of a World Heritage area is important. Activities in areas adjacent to World Heritage areas such as logging, forest fires or water pollution could have a damaging or destructive effect on those World Heritage areas which Australia has an obligation to protect and conserve. They could also have a damaging or destructive effect on the manner of presentation of those world heritage areas. The Commission of Inquiry will be asked to report on the extent to which the Lemonthyme and Southern Forests areas are, or include, qualifying areas. The identification of such qualifying areas has not been wholly confined to the areas defined in the schedules for the reason that the boundaries of those areas may inadvertently omit small areas of world heritage. The Inquiry will also be asked to report on the extent to which there are environmentally and economically prudent and feasible alternatives to the exploitation of forestry resources in those qualifying areas. Consideration of alternatives will include delays in resource exploitation. In establishing the guidelines for the Inquiry, the Government has had a number of considerations in mind. There is naturally concern for the future of the timber industry in Tasmania and the Inquiry will be directed to search for alternatives that imply no diminution in the activities of that industry, taking account of recent trends and possible future developments. The Inquiry will also be asked, where appropriate, to look at the opportunities for deferring logging of the sensitive areas for as long as possible. In pursuing its task the Inquiry will always keep in mind the need for sound forestry management practices to be employed and for a sustainable yield to be achieved. If some logging in sensitive areas may be necessary to avoid detriment to the industry, the Inquiry will be asked to determine how this might be carried out with least damage to the values of the areas. Thus the Inquiry will be able to assess forestry resources within Tasmania which might be available as an alternative to damaging areas of World Heritage. In setting out the functions of the Commission of Inquiry, the Bill recognises the need not to cause detriment to long term forestry operations and employment of persons in Tasmania. Provisions for conduct of the Inquiry, the powers of the Commission, offences, and administrative matters draw largely on the provisions of the Royal Commission Act. The Bill also provides for protection of the Lemonthyme and Southern Forests areas during the period of the Inquiry. Without the consent of the Minister it will be unlawful for anyone to carry out forestry operations or other potentially damaging activities prescribed by the regulations in those areas. There are at present some mineral exploration and small scale mining activities proceeding in the Lemonthyme and Southern Forests. Certain mineral activity will be allowed in these areas during the inquiry period in accordance with agreed Tasmanian guidelines for minerals activities in conservation areas. It could be expected that the appropriate consents for such activities, including fossicking, will be issued at the time the Act comes into effect. Apart from these exceptions, the prohibitions will apply until 42 days after the end of the inquiry period, or in any case 42 days after the date of the notices following the final report. In the event that part or all of the areas are identified by an interim report of the commission as being `definitely not' qualifying areas, the prohibitions will cease in areas so identified on the date of the public notification of these areas following the interim report. This notification is required to be given within 14 days of the Minister receiving the interim report. Provisions are also made for compensation to be payable to persons who refrain or are prevented from carrying out actions made unlawful by this legislation and therefore suffer direct loss or damage. In the case of persons, other than those directly engaged in actions made unlawful by the legislation, who have a good case based on losses arising from the operation of the legislation, the Government will consider compensation, as a matter of policy. On two recent occasions, in December 1986 and January 1987, the Government has stated its determination to protect contentious National Estate areas in Tasmania which may be of World Heritage value and its intention to undertake a review of alternatives to forestry operations which might damage these areas. The Government agreed that negotiations should be pursued as far as possible with Tasmania with the objective of reaching agreement on this matter. Since little progress has been made in these negotiations, Ministers have felt compelled to introduce this legislation. However, even at this stage, the Government would be prepared to proceed in co-operation with the Tasmanian Government if it would agree to suspend logging in sensitive areas while an inquiry take place. Mr President, the course of action proposed in this Bill is not one which the Government would have sought to employ if it had a choice. This Government's record on environmental and heritage matters has consistently been one of co-operation and consultation with the States and Territories. Indeed, the Government thought that it had established just such a mechanism with the memorandum of understanding relating to Tasmanian forestry operations. The Commonwealth would much prefer to move in co-operation with the Tasmanian Government and so will, over the next few weeks, continue to seek the Tasmanian Government's agreement to a co-operative approach. If agreement could be reached, the Commonwealth would not proceed with the legislation. As long as there seems to be no prospect of coming to an agreement with the Tasmanian Government on this matter, however, Commonwealth legislation, as a matter of last resort, is the only responsible course left open to enable Australia to give effect to its international obligations. I commend the Bill to the Senate. Senator TATE —I table a revised explanatory memorandum relating to the Bill. Debate (on motion by Senator Kilgariff) adjourned. Senator RICHARDSON(New South Wales) —Pursuant to order, I table the report of the Senate Select Committee on Television Equalisation, together with the Hansard record of the Committee's proceedings. Ordered that the report be printed. Senator RICHARDSON —by leave-I move: That the Senate take note of the report. I am sure honourable senators will be well aware that the Committee, which was set up by the Senate some weeks ago, had forced upon it a timetable which made life difficult. To be able to meet the tabling of this report by today's date has required considerable sacrifice on the part of the Committee's secretariat. On behalf of the Committee I should like to thank the secretariat, in particular Susan Gibb, who acted as Secretary of the Committee and who did a magnificent job under great difficulties; Peter Hallahan, who assisted her; not to mention Kathleen Gibson, who had to give up lunches and dinners over several days to make sure that the report could be typed so that it could be presented today. I want to place on record not just my thanks but those of all the Committee. They did a stirling job. We did not include in the actual report mention of the job they did, but it is worth noting. Over the past two months the Committee has had before it an inquiry of some magnitude. As an indication of the magnitude of the task, the Committee received 75 written submissions, it conducted seven public hearings and two in camera hearings during which oral evidence was taken from 79 witnesses. These witnesses represented 35 organisations and four individuals. The Hansard record of inquiry amounts to in excess of 2,200 pages. In fact we received literally yards of material. If we were to pile it up upon the desks, I am told that it would measure two metres high in two piles. So some of the submissions were weighty. As I think is recorded in one of the dissenting reports, one submission alone was more than a foot in height. So this Committee has had its work cut out in respect of this inquiry. Over the course of two months it has required more than the average bedtime reading. The focus of the Committee inquiry was the Government's proposal to provide three commercial television services in most of regional Australia, to ensure that they were comparable to those services that are available in capital cities, to create larger, more viable markets in regional Australia in which this process could occur and to encourage competition between owners-something that has not had a place in regional television in Australia since its inception some decades ago. Within this framework the Committee had to consider, of course, the two-station rule, whether it should stay or whether it should be replaced and, if so, what restrictions should be placed upon the industry. I might say, acting on the basis of the Press release of the Minister for Communications (Mr Duffy), the industry itself took some action on the two-station rule within a few weeks of the Committee's inception. After those few weeks, of course, the two-station rule, at least in practice out there in the real world, had been left well and truly behind. We had to consider whether media interests should be grandfathered. The report on that is to be contrasted with the dissenting report-the report coming down in favour of a grandfathering clause and one of the dissenting reports not. Cross-media ownership was also considered. We took some evidence on that. But in the main, I think it is fair to say that the bulk of the evidence that the Committee looked at during those two months concerned equalisation and aggregation. Indeed, much evidence was taken on the technical aspects of that-band 2 clearance and ultra high frequency and very high frequency transmissions. For those honourable senators not familiar with all of that-and I was one just two months ago-they will become experts if they have the time to read those 2,200 pages of Hansard. Actually, in the end the Committee, having looked at that aspect for some time, having given it great thought, came down in favour of asking the Minister to get an international expert to consult and to referee between the advice given by the Department of Communications and that given by the many other experts who were called before us. We felt that even though we had become more expert than we had been when the Committee began we were not yet expert enough to manage to grapple with all of the evidence and then act as a referee ourselves. Senator Kilgariff —Very wise. Senator RICHARDSON —I think that is probably the truth. Some would say it was cowardice, but I think it was probably the appropriate way out. In looking at the size of markets in which competition could take place, the Committee also had a look at the aggregated markets which the Minister announced last year. It received evidence from regional operators and interested bodies from all over Australia on just what an aggregated viable market might have been. Sitting suspended from 6.30 to 8 p.m. Senator RICHARDSON —Due to time constraints I would like to turn to the Committee's main recommendations-those on equalisation, aggregation, the two-station rule and cross-media ownership. I will start with equalisation. The Committee's recommendation is that the Government should seek to provide three commercial television services throughout regional Australia as soon as practicable. The salient fact is that only one service is available for some 1.7 million Australian households possessing television sets; that is, 35 per cent of the television viewing population. Often that service is on air for only limited periods. Often programs are inferior-not cherry-picked for the best, but picked for the cheapest or the worst. Sometimes the better programs are not shown until months or even years later. Sometimes they are not broadcast at all. Regional television ownership is heavily monopolistic and heavily concentrated. There are 36 regional commercial television licensees enjoying a monopoly in their broadcast areas. That is a situation that no government should allow to continue. An overwhelming number of Australians now regard television not as a luxury but as an essential part of their daily lives. If there is to be any sort of equalisation for 1.7 million households, it should happen as soon as possible. For all the arguments against equalisation, aggregation and the rest, when regional television representatives came before the Committee and argued that any move along these lines would be economically disastrous for them, some of us pondered the figures and wondered who was telling the truth. The reality is that since the date of the Minister's announcement, share market prices have revealed that the value of those regional operators has gone up significantly-not in some cases, but in every single case. The Committee looked at the paths to equalisation-which I think is the most important part of the report. The Committee looked at two paths-aggregation and multi-channel services. When the Committee examined those two paths it came down with a recommendation for aggregation. That meant that the four much larger markets would be approved to make sure that the stations could become viable. Obviously, there were arguments about time-tables. For those unfamiliar with the argument, they were the time tables for the aggregation of approved markets: Southern New South Wales by 1989; Queensland by 1990; northern New South Wales by 1991; Victoria by 1992-with full equalisation being achieved in every case by 1996. The preferred approach of the Committee was via aggregation. For all those people who have ever talked about equating services in the city with those in the country and giving a real choice to country viewers there always seems to be a reason put up, or a delaying mechanism, not to do it today. The Committee had a look at those approaches that have been adopted over the years. The Committee believed that the introduction of competition into those markets as soon as possible was essential. Aggregation does not displace existing licensees. It avoids the necessity of issuing new licences. Therefore it avoids the costs and delays in Australian Broadcasting Tribunal inquiries. Obviously, if one looks at the length and expense of the last lengthy inquiry in Perth, the avoidance of such inquiries in these markets and the reasons for that are pretty obvious. The Committee decided that the introduction of a wider range of program choices by competitive services in regional markets should happen as soon as possible. It involves little legislative change, minimal bureaucratic intervention and, most of all from the point of view of the Committee, it involves two things: Competition right from the start; and maximum speed-the delivery of services to country viewers at a date in the foreseeable future, not in the never-never. The multi-channel services path-the MCS path-was inappropriate for a number of reasons. When we looked through all the reasons and tried to boil them down, I guess the Committee's main objection was the delay in introducing competition. We had no faith that multi-channel services would mean genuine competition and hence a genuinely better product for country viewers. It was the viewers that we saw as the real consumers, the ones we were trying to assist and look after. The MCS option protects existing monopolies in regional areas. We could not justify that under any circumstances. The Committee also received evidence that if the MCS path were used, it would bring about a very considerable increase in costs if the licensee at some stage down the track was to proceed to equalisation via aggregation in those approved markets. Representatives from NBN gave evidence that costs would increase by 32 per cent. No matter whom one believes, it was obvious that in every case the costs would go up a great deal. Many of the regional licensees were opposed to aggregation. But even those opposed had to concede that the present markets were just too small to support multiple services. If that is the case, there really is only one way to go-larger markets. Those four approved markets, with almost one million viewers each, provide the opportunity for three services and for those three services to be viable. The Committee was of the view that those who argued for aggregation via MCS-in particular some of those operators-were doing so in the hope that at the end of the day they could resist aggregation forever. What they were really about was protecting their monopolies. At no stage of the game did they ever want to face the cruel, cold winds that blow when there is competition and the rules of the market begin to apply. In the end, to seek the introduction of aggregation via that method by 1996 would no doubt have resulted in those companies simply using the interim period to lobby whatever government was in power to protect their interests by making sure that aggregation did not go ahead. Let us look at why the Committee took the next step of saying `Should we abolish the one in, all in rule?', that is, the rule that provided that in an approved market where one of the three proposed licensees wanted to aggregate, all were forced to aggregate. There were many submissions before the Committee and many people gave evidence arguing against that rule. In the end, the Committee rejected the argument that there is something undemocratic or nasty about it. It simply bore out a brutal commercial reality, something that too many companies were seeking to avoid. However, as it became obvious that in each one of the four markets at least one operator wanted to aggregate anyway, the Committee saw no reason to proceed with that rule given that it would have no real effect. Therefore the Committee sought to encourage aggregation immediately. Most of the evidence and the greater part of the time was spent in examining that problem. In some ways it is unfortunate that it is the rest of the report that, I fear, will gain more of the publicity over the coming days; that is, those parts of the report which relate to the two-station rule, audience reach and restrictions on cross-media ownership. However, given that that obviously will receive a great amount of publicity, it is appropriate for me tonight to at least cover those sections of the report and state the Government's position and the Committee's position. The recommendation was that the Government should proceed with its plan to abolish the two-station ownership rule, provided the Government introduced the alternative restrictions on ownership which are recommended. As I have already mentioned, in the very early days of the Committee in the market-place the two-station rule was made to look rather absurd with people having up to three or four stations almost before the first time we met. Obviously, worries about concentration of ownership are important in a democratic society. The interests of the people are not necessarily served by allowing too great a concentration. However, the method of avoiding such concentration will always be controversial. The Government is seeking diversity of ownership-the Committee agreed with that-and it sought diversity in television production and editorial values, something I think we all find difficult to disagree with. The basic problem of the two-station rule was pretty obvious-it was a structural imbalance. It equated those who owned stations in Sydney and Melbourne with those who owned two small country markets and that could never last. So the Committee has recommended in favour of the abolition of the two-station rule. It is worth noting that the six Sydney and Melbourne commercial stations now broadcast to 43 per cent of the national viewing audience. They gross 55 per cent of total television advertising revenue, they supply over 50 per cent of the programs broadcast in Australia, and they account for over 60 per cent of total program expenditure. The rule operated to preclude new players from building up sufficiently large audiences to support independent program production. In effect, Sydney and Melbourne had already become the dominant influences in the commercial television system. So for those reasons the Committee recommends alternative restrictions upon ownership other than the two-station rules, and these boil down primarily to the 75 per cent audience reach rule and to cross-ownership restrictions. Briefly, I will cover the 75 per cent audience reach rule. The recommendation reads: That the Government implement its proposal to introduce a rule restricting the maximum permissible audience reach to 75 per cent of the Australian viewing audience. The vast majority of submissions to the Committee supported some form of audience reach rule. It gets down to whether one supports a rule of less than 43 per cent, a rule of 43 per cent or 75 per cent. In the end the necessity to grandfather interests of existing licences with interests in both Sydney and Melbourne stations provided such difficulties that the Committee rejected the 43 per cent proposal. It does not consider that interests held prior to 27 November should be divested as divestment has not been the practice in the past and it has never been taken into account in the commercial realities of this country. The 75 per cent rule drew criticism because it may lead to a tendency towards networking. If I had the time I would love to get into an argument on that matter. I do not believe-nor did the Committee believe-that networking is necessarily undesirable. There is general agreement that networking can be more efficient and it will increase in the future no matter what the ownership rules, no matter what governments do. Networking offers advantages to the community and the television industry. But its economic rationality will be very hard to avoid in the coming years in an industry often beset by cost problems. In practice television stations now already enter into co-operative arrangements that look very much like networking and we had quite a bit of evidence on this. In looking at cross-media ownership I think it is worth giving just a couple of figures. In 1984, 20 out of 36 commercial television stations had some level of cross-ownership. In seven of the regional areas of Australia the one company controlled most of the local media. In 1986 at least one company held a prescribed interest in both a commercial television licence and a radio licence in 22 out of 50 television markets. Accordingly, the Committee recommended that the Government prohibit the issue of a commercial television licence to any person who already owns either a monopoly commercial radio station or a daily newspaper whose main circulation is in the area which would be serviced by that television licence. The other recommendation to which I will refer briefly concerns the UHF and VHF argument. In the end the Committee opted for a recommendation that the Minister take on board an international expert to decide the matter. The Committee received a tremendous amount of evidence from the Department of Communications and every so-called expert in the field. They all gave evidence and in the end we asked for an independent referee to help the Minister make the decision. In closing, I take the opportunity of thanking all members of the Committee, something I did not do earlier. In meeting until 3 o'clock in the morning tempers often become frayed and life can become more difficult. Fortunately, due to the fairly calm and peaceful personalities involved, there were very few problems. I thank all members for their co-operation. Tonight I have not been able to refer to the dissenting report. No doubt I will be able to do that next Wednesday night. Senator LEWIS(Victoria)(8.15) —I rise to speak to the motion that the Senate take note of the report of the Senate Select Committee on Television Equalisation. I follow the Chairman, Senator Richardson, and start by congratulating him on his chairmanship of the Committee. He did an excellent job. As he has just said, the relationship among the eight members of the Committee was really first class. I do not recall any major disagreements of any kind, including of a personal nature, arising among us. It is always very interesting that members of Senate committees have such an excellent relationship whereas in this chamber the swords are out-both the broadswords and the short, sharp knife, if possible. Nevertheless, on a Senate committee the attitude is always much better and it is a pleasure to serve on them. As I have said, I thought the Chairman performed very well. At one stage he made some critical comment to me about chopping him off in mid-stream. That is one of my characteristics, I suppose. I enjoyed the company of my colleagues. The Chairman even took me out for a meal to one of his select restaurants in Sydney. It was one of those restaurants where, I gather, if one is an Australian Labor Party politician one is welcome. I had to be snuck in. Nevertheless, the Chairman took my money when I offered it to pay for the meal; he did not say that he would shout me. As all honourable senators would be aware, we had first class staff, and they performed magnificently. As Senator Richardson said, we sat until the early hours of the morning hearing evidence and the ability of our staff to perform in producing material that we requested was, in many cases, quite miraculous. I thank all of the staff-the typists as well as the executive staff, if I can call them that. I also thank most sincerely my staff for their contribution, and I include a couple of people who were co-opted for various little jobs I asked them to do. I also thank the witnesses. It was a most incredible committee investigation because we had over 70 submissions, one of which was accompanied by a metre of additional material, and they were most significant. The witnesses were really first class. The evidence of Huw Evans was first class. I have not referred to him in my report; I think my colleague Senator Puplick has done so. We also had evidence from the chief executive officers of companies who are obviously top notch entrepreneurs and managers and Australia can be proud of these business people. The technical experts, notwithstanding the areas of disagreement, were first class. I thank all of those people. I also congratulate the Government's staff from the Department of Communications, and in particular Mr Sebire from Telecom Australia, who gave some very genuine and sincere evidence about how he and Telecom would overcome the problems which they would face as a result of the Government's requirements. It was clear that he was honest and genuine. It was also clear that he worried departmental officers, but he did not worry members of the Committee. He just laid it on the line that if the Government provided the instructions in time, if the Government provided the money in time, if the sites were able to be acquired in time, Telecom would do its job in putting up the transmission equipment. That is not a bad sort of an effort, because we are talking about putting up something like 300 pieces of transmission equipment, whether they be transmitters or translators. That really is an enormous task and, under the Government's aggregation scheme, that will be required to be completed by 1992. Quite frankly, I and other members of the Committee had our doubts about whether that could be achieved. Nevertheless, Mr Sebire pointed out that Telecom would be able to achieve this, subject to those things I mentioned earlier. The Department of Communications, of course, had the unenviable task of defending the Government's proposals. That was difficult for it. There is much emotion in this industry. Sometimes the departmental officers were under heavy pressure and sometimes they were under much industry criticism. A number of frank admissions were made by departmental officers for which we were very grateful, and I must say that overall in the end I thought that the departmental officers were very fair. I certainly do not make any major criticisms of them. They have their difficulties and I thought that overall they came out of it quite well. The Broadcasting Amendment Bill (No. 2), in my view, turned out to be a real bucket of worms. It heaps more regulation on top of the bureaucratic control which already surrounds this industry. It gives the Minister powers of patronage of a kind usually associated with eighteenth century English Prime Ministers. In fact, it could prove to be a most expensive folly which locks licensees into huge capital outlays at this stage-I am talking about hundreds of millions of dollars-for a plan that may be rendered obsolete by rapid technological change. It effectively locks out regional viewers from the benefits of immediate future technology for at least the next decade, because under this scheme regional television viewers in Australia will be locked into a series of UHF stations on the terrestrial network-in other words, along the ground-and satellite services or fibre optic services are gone. Those services and that equipment are advancing so rapidly that to be talking about locking these people out of these systems for the next 10 years is, as I have been saying, in my view, an expensive folly. Further, it is not only the regional television stations that have to spend hundreds of millions of dollars. In fact, with the works required of Telecom, the taxpayers of Australia will be spending hundreds of millions of dollars on this equipment. One cannot help asking whether that expenditure is justified at this time when the country is in dire economic straits. I see that Senator Walsh is in the chamber. I do not know whether or not he is aware of this, but his Minister for Communications is about to require the taxpayers of this country to spend some hundreds of millions of dollars on putting into place UHF equipment around the country-some 300 transmitters and translators. All this money is about to be spent, and has to be spent, overseas, because all this equipment has to be imported from Japan. The situation is that the Japanese are so far ahead in this technology that no other country is actually even producing it. All of the other countries have gone right out of the system and the Japanese have remained in what is called the terrestrial system-in other words, the land based system-because they believe that they can provide this service to Third World countries. We, of course, under this Government's proposal will be the first Third World country to receive the equipment. The other nations that used to be in this industry have opted out pending future developments of satellites. Even more important than satellites are the new fibre optics, which in fact, as far as I have been able to ascertain, may very well prove satellites to be another expensive folly. When this evidence was given, I immediately said: `Why can some Australian manufacturers not move into this area and start to produce this equipment?'. But, if one thinks about it, it becomes clear that, with about $300m worth of transmission equipment to be sold or installed in Australia over a period of about five or six years, that is not a contract which is sufficiently large for any Australian manufacturer to tool up for or even to produce the equipment under licence. Even if one could persuade one of the Japanese expert companies to license an Australian manufacturer, the whole contract is not sufficiently large and there is not sufficient possibility of future additional contracts to make it worth while for an Australian manufacturer to enter the industry. Senator Haines —Even with all the associated depreciation allowances? Senator LEWIS —Even with all the advantages of depreciation allowances and all the rest of it. That was the evidence. The contract would end because, as I said, probably only the Third World countries will move in the terrestrially based equipment, and of course, the Japanese will be able to supply them without any difficulty. So the Australian contract would be sort of a one-off project and to tool up for a $300m contract would really not be worth while. That was the evidence and it seemed to me to make sense, disappointing as it was. This Government is in effect requiring the expenditure of some $300m worth of equipment not because of some market based, market driven requirement, but simply because the Government has decided that this is the way it will go at this stage. Of course, one wonders why it is requiring the industry to go along this path. I say this because one has to look back at the provision of the satellite. The satellite has to be paid for, and the satellite at the moment is sending down signals which are being picked up by the major networks in Australia. The major networks are then sending those signals out to the metropolitan stations and on relay to the regional stations. Clearly there is a need to sell the whole signal. I would suggest that the networks have probably said to the Government: `If you want us to take all of that signal from the satellite, you have to make sure that we have the opportunity to market it'. At the moment the regional stations are cherry picking; they are taking only one of our programs because there is only one station in each regional area, whereas if the Government makes it three stations in each regional area they will have to take all of the signals which are coming down from the satellite, and we will have a chance of recovering some of the money that we are paying for the services supplied by the satellite. There was agreement in the Committee that immediate steps should be taken to ensure increased and improved television services to regional viewers. The disagreements arose on what the best means of doing so were. Under the Government's plan licensees were given no genuine alternative to direct aggregation, which was the Government's preferred option. What is meant by aggregation? The Victorians would understand if I were to explain it in these terms: The television stations of Albury-Wodonga in the north-it is really in Albury, but it considers itself now to be a Victorian station-and Bendigo and Ballarat would be aggregated into one market of about a million people, and in each of those three areas the other two stations would be able to establish a UHF, or ultra high frequency, service. So in each of those three areas there would be three regional commercial television stations supplying a signal, so the people would apparently have a choice of viewing. I am sure that in due course on Wednesday, when my colleague Senator Puplick speaks, he will talk about what that choice is. In effect, if I can continue to talk about Victoria, the area of Mildura was excluded and the area of Geelong was excluded. The Committee agreed unanimously that Geelong should be given a UHF station. I hope that the Minister will take up the recommendation of the Committee. But Mildura was excluded, and the Committee has recommended that perhaps it could be included with South Australia. Let me point out that there is no suggestion of any free market forces operating here. The Government is requiring this aggregation service to commence. There is no suggestion of new players coming into the field. With due respect to my colleague Senator Richardson, it is nonsense for him to talk about market forces. There are no market forces here. All that is happening is that a monopoly which exists in each of the three regions is being converted to an oligopoly, as the three existing stations in those areas will be supplying three signals to the aggregated market instead of one signal being provided to each of the smaller markets. Of course, it is totally deceptive for the Government to talk about market forces. The Government claimed that it was offering the regional television stations an option. It said: `If you don't want to go directly into aggregation, we will allow you to take the MCS path'. That refers to the multi-channel service. Under the multi-channel service each of those three stations would be allowed initially to operate an additional service to its own monopoly region. In my Victorian example, the station at Ballarat would be able to provide not only a service on BTV6, but also an additional service on, say, BTV9 or whatever the figure might be. It would really be able to broadcast two services in the one area. Most of the regional television stations pointed out that in that way they would be able to provide a greater choice and they would be able to provide it much more quickly than an aggregated market. I certainly acknowledge that there was a lot of merit in those arguments. I am not disagreeing with those arguments. But the point is that the Government has made sure that that so-called alternative cannot happen. Mr Westerway, the Acting Deputy Secretary of the Department, acknowledged to us when we asked him about it that in each of the aggregated markets there was one trigger station which would require immediate aggregation, and the Government had insisted upon the `one in, all in' rule. In other words, if one of the three companies wanted to aggregate, the other two must. Senator Puplick —Trojan horses everywhere. Senator LEWIS —Trojan horses, as my colleague says. The result is that there undoubtedly would be aggregation. The Government and the Department were not satisfied that maybe there would be trigger companies in each of these areas, so they added other advantages to direct aggregation and disadvantages to the MCS path. So, although the Government is talking about choice, there is no real choice. Senator Sheil —Poison pills. Senator LEWIS —Poison pills, my colleague from the National Party of Australia said, and he is quite right. In fact, there could be no doubt that a genuine option to follow the MCS path without a penalty would have provided additional services to regional viewers in a much shorter time. My colleague Senator Puplick had a slight difference of opinion with my colleague Senator Sheil and me about that, as the recommendations will show, in that Senator Sheil and I thought that a genuinely market-driven scheme could be devised whereby market forces would operate in a much better way than had been mooted previously. We have tossed in a few ideas that I hope will result in some original thinking in this area. I see that Senator Walsh is in the chamber. I ask him to look at our dissenting report and the alternative scheme referred to in the dissenting report to see whether he finds some merit in that dissenting report to mention to his colleague Mr Duffy, because that would be a much more genuinely market-driven scheme than the nonsense which Mr Duffy has been talking about until now. If the Government were honest and acknowledged the major flaws revealed by this inquiry, it would withdraw this legislation which, quite frankly, I think is a shonky piece of legislation, and it is manipulative. The Government should allow some genuine market-driven forces to decide on the best means of providing improved services to regional viewers. Finally, let me explain that when honourable senators read this report they will find that it is a bit difficult to follow all the recommendations, because there is a great variety of recommendations. There are the recommendations of the majority of the Committee and then there are three-- Senator Puplick —And the Chairman has the casting vote. Senator LEWIS —Then there are three dissenting reports of the other four members of the Committee. As my colleague Senator Puplick said, the only reason that there is a majority report is, of course, that the Chairman of the Committee had a casting vote. Senator Richardson —He exercised it wisely. Senator LEWIS —Wisely, the Senate set up the Committee so that the Government senators would have a majority and the Chairman would have the casting vote. Actually, I drew up the motion so that it would be that way. I acknowledge that the Government should have the majority on a Senate select committee, and it has exercised its majority in this case. Of course, the truth is that the numbers in the Senate are against the Government. If the parties on this side of the chamber adopt the dissenting reports, the legislation will not be passed and, in my view, in those circumstances, rather than go through that course, it would be far quicker if the Government withdrew the legislation and had another look at it. Senator POWELL(Victoria)(8.37) —I, too, rise to speak to the motion that the Senate take note of the report of the Senate Select Committee on Television Equalisation. I note that, as the terms of reference of this Committee clearly show, this Committee, in essence, was really tackling two particular tasks. The terms of reference state: The Broadcasting Amendment Bill 1986 and the Television Licence Fees Amendment Bill 1986 be referred to a select committee for report, by 28 February 1987- that was subsequently, of course, extended- on the provisions of the Bills and their implementation- That, I suggest, is the first area in which the Committee had a responsibility. The second area was as follows-and I continue to read the terms of reference: in the light of new broadcasting and technology developments and the Government's policy statements on ownership. In that scenario I want first to address the second aspect of the Committee's undertaking, that is, that all of the work that the Committee was doing-and the Chairman and Deputy Chairman of the Committee have already outlined the enormous amount of work that was before the Committee-was in the context of shifting sands, if one likes, because the Government's statement in November on proposed new ownership and control rules in the media caused an enormous upsurge in changes in ownership. It was against that background that the Committee had to operate. It was a background which caused a great deal of public concern. It was not just a concern for this Committee. Among members of the public concerned about that environment at the time that the Committee received submissions, and subsequently when the Committee considered the specific issues of the legislation, was Sir John Norris, who conducted the Victorian Government's inquiry into the ownership and control of newspapers in 1980-81. I quote briefly from an article by Sir John Norris which appeared in January-in fact, at the time that the Committee was at the height of its deliberations-in the National Times on Sunday: The proprietors of the press and of the electronic media are engaged in an industry which is, in a major respect, unique. They supply to the community the information upon which the public largely depends for its knowledge of most current affairs, at home and abroad. That knowledge, and the commentaries upon and analysis of news furnished by the media, particularly the press, constitute the background against which most people consider issues and which determines their initial reaction . . . It is therefore important that the information supplied to the readers, viewers and listeners is correct. It is also important that they should have placed before them as many rational views as possible on the problems with which they are faced. Sir John Norris went on to address that issue to point to the fact that concentration of ownership in the media was anathema to any responsibility in that area, and he pointed out specifically: It is essential to appreciate that economic forces exert a strong influence towards concentration of ownership and control. At the very time of the Committee's deliberations, the operation of economic forces was demonstrating that to be accurate. We, the Australian Democrats-and I individually-share the views expressed by Sir John Norris and a whole lot of other people on the whole issue of media ownership and control-an issue upon which the Government had made certain proposals, but upon which we had before us, and still have before us, no specific legislation. For that reason on 25 February the Australian Democrats attempted in this chamber to extend the scope of this Senate Select Committee so that it could fully inquire into these proposals and their likely effects, in the interests of the Australian public. This attempt was thwarted jointly by the Government and the Opposition. Now that the only inquiry which has been possible, albeit limited in nature, has reported its findings, major aspects of the debate have been delayed and will not come before the Senate until later this week. Since the majority report is along party lines and rests upon the casting vote of the Chairman, as has already been noted, it could have been expected that a number of other Committee members may have wished to give their reasons for agreeing with that report at the time of tabling, when most of the interest in this report is concentrated. I note the presence in the galleries tonight of a number of people with major concern with this report. I draw attention to Senator Puplick's dissent. Apart from myself, he is the only other member of the Committee to oppose the outrageous proposal for a 75 per cent audience reach for television licensees. In addition, Senator Puplick also takes a strong stand-a stronger stand than the majority report-on cross-media ownership proposals, as I do. In the context of the turbulence in the media ownership area, it would have been important to have had a major contribution in this debate tonight while attention is focused very much on this report. Aspects of the majority report, and unfortunately of one of the dissenting reports, lead to the conclusion that the prospects of any responsible action being taken when government legislation on ownership and control rules finally comes before the Senate are dim. The fact is that on the lines of the reports that we have before us and of current political developments, I for one do not have a great deal of confidence that we shall be in a position to reject what I believe is an outrageous proposal for the nebulous reason, as Senator Richardson said, that Sydney and Melbourne are already dominant, which seems to be some kind of an argument for a 75 per cent rule. I have rejected those arguments, as has Senator Puplick. My only concern is that the Liberal Party spokesperson on communications has not done so, nor has the National Party representative on the Committee. That does not augur well for those concerns expressed by Sir John Norris and by a number of other people in the community on that matter in particular. I would like to move to my own report and take some time to explain and expand on some of the recommendations. I have said in the report, as I have said already in this debate, that I believe what the Committee was forced to do was less than it should have been able to do in the environment in which it was sitting. The framework was limited, and therefore what the Committee was able to do was effectively limited. I believe that, understandably perhaps, there was great emphasis on matters of technical concern, that there was an emphasis on some of the more specific areas which led, in the time and resource constraints of the Committee and the individual members of it, to a lack of concentration on some of those broad issues which should have been met in the interests of all Australians. My first recommendation is that immediate priority should be given to the establishment of a second television service in each region. That recommendation refers directly to the legislation that is before the House today which, in my final recommendation, I urge should be rejected. My belief, following the submissions to the Committee, is that if we are to provide for people outside Melbourne and Sydney and the other capital cities a wider variety of television experience, we must do it not in the way the Government has suggested or in the way in which the majority report has suggested. There was put before the Committee by the Government and in evidence from the Department of Communications a proposition that the number three somehow has mystical significance. It is simply that government policy has become one of providing for three services. I was not persuaded by the evidence that under the proposed program three services were either necessarily economically viable or even possible to be implemented, particularly in some of those markets for which implementation was to come further down the track. For that reason I believe that the beleaguered supplementary licence system, or a variation of it, could and should be used to bring services to country people in particular, and to people in other regions who do not have the three commercial services which most of the major capitals have. The criticism in the majority report and in some of the evidence before the Committee on this matter is not substantiated. The history of supplementary licences has been somewhat beleaguered-introduced in 1980, the provisions extended in 1982, but then restricted in November 1983 without ever any licences having been granted. Yet in evidence before the Committee two conflicting pieces of evidence were tendered. I point to the evidence of the Bond Corporation in which it, objecting to the supplementary licence scheme, proposed that regional television needed fewer operating groups, not more. The Committee in its report says that the Bond Corporation's assessment of the value `may have been influenced' by that network's market position. I would say that is probably the understatement of the year. On the other hand, Regional Television Australia has reported that a great many regional licensees remain convinced that the supplementary licence concept remains the best means of bringing additional television choice to regional areas. I agree with that position and believe that when this legislation is rejected by the Senate, if indeed the Government brings it back to us, all efforts should be made to pursue that course. That is the substance of my first recommendation. I am rather astonished and I believe it is somewhat inconsistent that the majority report should state that supplementary licences are not necessarily an undesirable interim measure en route to aggregation and then recommend that the provisions for the granting of supplementary licences should be deleted from the Broadcasting Act 1942. I find that inconsistent and I urge the Government to look closely at this as the means for providing broader services to regional Australia. In that process it is very important-and another of my recommendations relates to this-that we have accurate information on what regional people want. One of the deficiencies in our Committee hearings was that we had nothing other than anecdotal evidence to back up the Government's policy of the magical number three. The evidence which came forward as a result of the proposals for new licences for Perth was the nearest we had to that and I believe that an effort must be made to find out what people want, other than by listening to what people tell politicians as they travel the country. Another of my recommendations is that an audience reach rule replace the two-station ownership rule. I believe that the 75 per cent idea is outrageous; a 35 per cent limit is adequate. That provides the opportunity for any licensee to have a variety of ownership in both a major area, if it has one there, and in regional areas as well. I stress that under no circumstances should a figure above 43 per cent be used. Another recommendation which I have not made formally, but which I urge upon regional licensees, is to counter those arguments which were put before the Committee by the major players that it is necessary to have such a high level of ownership concentration-which Senator Richardson rather cutely called a `restriction' of 75 per cent-in order to provide enough resource for quality Australian productions. Some of the regionals have already recognised and performed in this area. They have put resources into significant production of local material. The work of the Australian Children's Television Foundation, for example, has been supported more recently by more regional licensees and I encourage people in the industry not to lay themselves open or make themselves vulnerable to pushers for more concentration. They should get into that area and support Australian quality local production. I am sure they will do so. I have recommended that cross-media ownership rules, which are rather stringent, be applied and, in fact, that there should be no cross-ownership at all. I am not persuaded by any historical arguments that, particularly in regional areas, the proprietors of the original print media in the area and then later the radio stations, have played such a large role in the establishment of television services that that therefore is necessarily the natural way of things. We must recognise the power and influence of the media and ensure that its ownership is as widely spread as possible. Further on in my recommendations I have referred to some specific issues which were before the Committee. I disagree strongly with the majority recommendation that in Tasmania the ENT Ltd licence be able to be sold. I believe that the existing licences should be consolidated. I do not see why one company in particular should receive some sort of compensation. There is no doubt at all that upon final aggregation all companies involved will, to some extent, find some change in their financial arrangements. To set this precedent would be to set a roller-coaster going which no one would be able to control in the future-that is, if what is sauce for the goose is sauce for the gander, which, in all justice, it should be. I support the issue of independent assessment on the technical aspects surrounding the UHF and VHF issues and the clearance of band 2. Other speakers in this debate, particularly Senator Lewis, have already referred to the dilemma faced by members of the Committee when we received what was obviously expert, but severely conflicting, advice. It is essential that from time to time the Government face the fact that it might have to incur some kind of expense. The Committee believes that there is already so much data on record that this process could be undertaken with minimal expense in a fairly short time. I recommend that that take place and that in the meantime provisions are made, in particular for NBN3 and WIN4 to be able to continue with their services. I have referred to my proposal that a national survey be carried out into viewer preferences. As I have said, we do not know what people want. I do not believe that we can or should subscribe to the assumption that because we have three major networks in the cities we must also have three major networks in the regional areas. My consistent concern during the Committee hearings was that in the area of localism, once the major networks got their hands on programs which go out across regional areas, it would be very difficult for those areas to sustain localism. As a Melburnian, I must say that we have already experienced this sort of thing, even though Melbourne is supposed to be one of the capital cities. At some point during the Committee's hearings I referred to the possibility that we might have networking for everyone from Sydney, or even from Los Angeles, so I do not think that Sydneysiders should feel smug about the fact that the only programs that have gone are World of Sport and a few others from Melbourne. If the present trends continue, then all Australian localism is at risk. In a further recommendation I say that the emphasis should always be on maximising diversity of choice and that that should always be the guiding principle in the regulation of the electronic media. I believe that the electronic media will always have to be regulated; I do not believe that we can assume that market forces will bring to bear the best possible result. I remind the Senate of Sir John Norris's remarks that economic forces exert a strong influence towards concentration and concentration is dangerous. Although I say that, I believe that the process of the issue of supplementary licences as a path towards eventual aggregation, which should take place at the same time across the board, is a market-driven solution of a kind-much more so than the Government's proposal, which is a legislated aggregation. As I have said in my report, I do not believe that this can be supported either economically or in the best interests of the community. Debate (on motion by Senator Robertson) adjourned. Date resumed from 25 February, on motion by Senator Gareth Evans: That the Bills be now read a second time. Senator MESSNER(South Australia)(9.00) —The Commonwealth Guarantees (Charges) Bill and the Australian Industry Development Corporation Amendment Bill introduce a new system of charging the Australian Industry Development Corporation for what might be described as the use of Commonwealth services in providing a guarantee to the AIDC when it undertakes its borrowing programs for its ongoing work in assisting the development of Australia. It is somewhat ironic that these Bills are now raised by the Government as a Budget measure in order to charge a certain borrowing fee, called a guarantee charge, against the AIDC in circumstances where interest rates are very much on the rise and of very topical interest in this country. Whereas the Australian Industry Development Corporation is provided with the blanket coverage of the Commonwealth Government to go into the market-place and to offer virtually gilt edged security for the borrowings that it might undertake, I guess there are many people in the home market in Australia suffering under the deliberately high interest rate policy of the Hawke Labor Government who wish that they too had some kind of Commonwealth guarantee whereby they could go to the building societies, the banks or whoever might be able to lend money and offer that guarantee so that they could bargain down the rates of interest that they would have to pay on their home mortgages. That is a facility available to governments but it is certainly not available to those in the community who are at present suffering very high interest rates. One is reminded that for a loan on one's house of around $50,000 for a typical term of 25 years one is forced these days to meet an extra repayment of $172 a month caused by this Government's deliberately high interest rate policy. I digress from the subject of the Bills, but I think it is relevant to note, and I make the point, that governments are in a very special and privileged position when it comes to borrowing money, as are their agencies such as the Australian Industry Development Corporation. Government bodies such as the AIDC, Qantas Airways Ltd and Australian Airlines, having behind them the colossal size and wealth of the Commonwealth Government with its ability to pay its bills by raising taxes on the people of Australia, must have enormous clout in the financial markets to bargain for cheaper interest rates. Many merchant banks, many borrowers of size in the Australian community, wish that they too could have access to such support. Indeed, it is an area of some contention in the community that government organisations such as the AIDC which, effectively, are competing with private enterprise in the money markets are provided with this kind of blanket coverage. Having made those introductory remarks, let me proceed to the matters before us. First, the Opposition notes that the Commonwealth Guarantees (Charges) Bill is a Budget matter. It is a Bill that arises from the Budget of last August. The matter is somewhat late but we are getting used to that with Government legislation in this place. We have been waiting for many months- Senator Robertson —You had seven years of it, didn't you? Senator MESSNER —We have been waiting for tax legislation to come forward, some of which is due to start on 1 July. The Government Whip, who is commenting, should really get his act into gear and speak to the Ministers in charge of this taxation legislation to ensure that they do their job properly and get the Bills into this place so that we know what we are doing and so that the people of Australia know what we are doing. This Bill, being a Budget Bill, is not one that the Opposition would choose to oppose in the normal circumstances. That is a rule that we have decided upon and consequently we will not be voting in opposition to this legislation. The Bill will impose a maximum Commonwealth charge on the Australian Industry Development Corporation of 0.5 per cent. The purpose of that is obviously merely to raise revenue. Perhaps the Government thinks that it can get away with this at a time when interest rates are so high and when it can afford, apparently, or bury that charge amongst the high interest rates that the AIDC is charging its customers. There is one feature of the Bills that is very interesting. The Australian Industry Development Corporation Amendment Bill 1986, allows the Corporation to opt out of the arrangements; that is, the AIDC can decide for itself whether it wants its borrowings guaranteed by the Government. As a result, the AIDC may not have to pay that charge of 0.5 per cent. That is a reasonable option. It also brings the Corporation closer to ordinary market practice and consequently is something to be welcomed. Albeit that it is a small concession to the principle that government organisations ought not to be in a privileged position when competing with private enterprise. We note that, and we say that that it is a good step forward. Clearly, the AIDC may choose not to enter into certain arrangements with the coverage of the Commonwealth and may indeed choose to do something which is in the general interests of the market rather than in the interests of the Commonwealth itself. Albeit we are not opposing the legislation, there are a number of concerns with it. First, the Bills contain an element of retrospectivity. As I have said already, the Commonwealth Guarantees (Charges) Bill seeks to implement a decision which was announced last August in the 1986-87 Budget. However, it has to be noted that the legislation is actually to take effect from the beginning of the current financial year. Hence there is an element of retrospectivity and consequently charges would presumably be imposed on the AIDC by the Commonwealth for guarantees given between 1 July last year and the date by which this legislation was designed to take effect. The third report of the Senate Standing Committee for the Scrutiny of Bills draws attention to this matter. I quote from that report: Sub-clause 4 (1) provides that the Act is to apply to borrowings undertaken on or after 1 July 1986 by the Commonwealth authorities listed in the Schedule. Thus, although the proposal to impose an annual charge on such borrowings guaranteed by the Commonwealth was announced in the Budget, it is to take effect from the beginning of the financial year. The Committee suggested that not only was the retrospective operation of the proposal obviously to the disadvantage of the Commonwealth authorities concerned, but to the extent that it was anticipated that the charge would be passed on to persons dealing with those authorities it might be said to be to the disadvantage of those persons also. The Committee therefore drew sub-clause 4 (1) to the attention of the Senate under principle 1 (a) (i) in that by giving the Bill retrospective operation to 1 July 1986 it might be considered to trespass unduly on personal rights and liberties. To that comment the Treasurer responded as follows: The Commonwealth guarantee charge and its date of application were announced in the 1986 Budget Speech. The charge is imposed only on Commonwealth authorities and in that sense does not impinge on the personal rights and liberties of individuals. He went on to say: The amount of the charge is small relative to the overall costs of authorities' operations and therefore will not have any significant effect on the cost to individuals of services provided by the authorities. Moreover, authorities cannot adjust their prices and charges retrospectively. I have to say that the Treasurer's response to the Committee is obviously totally misleading. Contrary to the opinion of the Treasurer, the Bill when enacted will impinge upon the personal rights and liberties of individuals. It is patently clear, for instance, that semi-governmental authorities will pass on that charge. Therefore, this does have significant implications for the consumer price index just at a time when the Government knows in its heart that it is important to keep prices down. This is another example of increased inflation resulting from increases in government charges coming not only from the state government area but, in this case, from the Federal Government as well. We have had other examples of this in recent times, such as the fringe benefits tax. All of these taxes and charges are likely to drive up prices and consequently have an effect on the consumer price index. That will feed into the rate of inflation and make this country increasingly less competitive in terms of the world market and therefore lead to a lower standard of living for Australians. I suppose the Government would say that this is one of the unforeseen consequences of this legislation, but indeed it is a consequence to which the Government ought to pay attention. One wonders what the chief prices detective, Inspector Clouseau Jones, might have to say in regard to this matter given that it is his brief to examine possible price and charge increases resulting from the imposition of this guarantee charge. I wonder, if he were asked a question in this place tonight on the cost effects of this measure, what his answer would be, given that there are enormous amounts of money involved in the raising of loans by Commonwealth corporations. Although authorities cannot retrospectively increase their prices and charges, as the Treasurer pointed out in his reply to the Scrutiny of Bills Committee, there is nothing stopping these authorities from increasing their prices and charges in the future at a rate to compensate duly for the retrospective effect of the legislation. In other words, these corporations can adopt a catch-up approach and put into their pricing structures in the future their interest rate costs, and the charges will then impinge on the general Australian community, whether through airline fares or whatever. They can recoup from future customers the costs that they have incurred in the past. So in that respect the retrospective element of this Bill does have consequences for the Australian people which the Government totally fails to explain or even to acknowledge. That is to be deplored. Nevertheless, as I mentioned earlier, the Australian Industry Development Corporation has been exempted from the compulsory use of the Government guarantee for the borrowing of funds. That is a welcome move. We believe that it will allow greater flexibility, greater financial freedom and greater integrity on the part of that authority. That matter, of course, is part of this cognate debate and is spelt out in the legislation affecting the Corporation. The Liberal and National parties welcome any measure that puts a semi-governmental authority such as the one we are discussing in this legislation on a more equal footing with its private sector counterparts. Clearly it is not in the interests of this country for the Government to prop up government enterprises in such a way that they can compete unfairly against the private sector. Senator Haines —Why don't they try finding out what private sector interest rates are like? Senator MESSNER —I did not quite catch what the honourable senator said, but no doubt she will inform us later during her remarks. The most likely effect of the legislation, therefore, will be that the AIDC will pay marginally more for its borrowings either because of a higher risk rating without the nominal guarantee or, alternatively, because it will be paying extra charge on the guarantee from the Government. If that is the result the Corporation will be placed on a slightly more equal footing, and we welcome that. However, let us have a look at a few other points that need to be raised. What in fact would be the position of the Government if the AIDC found itself in financial trouble? Sometimes we read of its investments or some of the loans it has made to private sector operators-the recent case of Mister Figgins Pty Ltd comes to mind-and that shows that it does on occasions make bad judgments about those kinds of loans. What would happen if the loans became so big that the AIDC found itself in financial trouble? It is unlikely that the Government would not honour its financial obligations if the AIDC did, in fact, run into financial trouble. If this is the case, the AIDC will not have lost its privileged position. Irrespective of the decision which the management of the Corporation makes as to whether it chooses to pay the fee and accept the guarantee or chooses to go into the market-place and not pay the fee, it still has the aegis, if you like, of the Commonwealth Government standing behind it, which clearly puts it in a privileged position in competition with the private sector. A few other questions remain unanswered. Why has the AIDC been singled out for that kind of special treatment? I would like to know the answer to that. A second question is: What effect, if any, will the removal of the guarantees have on the Corporation's borrowing costs? In other words, even without the nominal guarantee will the AIDC still be sheltered and advantaged by a de facto Commonwealth guarantee? I would like to know to what extent that is a factor in the management of the AIDC's finances and what effect that lesser aegis, which is not in the form of a formal guarantee, will have on its market-place activities. Consequently, it seems that quite probably, as I have set out earlier, the AIDC does in effect do better than its private sector competitors. Therefore, we have a long way to go before we can establish the AIDC as an independent enterprise that can compete on an equal footing with the business community. I have noted in recent times that the Government is apparently making a decisive change in its approach to the sale of government enterprises. In the last few days we have read of the proposed sale of Australian Airlines-something we have heard Labor members in this place and in the House of Representatives say for a long time they would never do. We have also seen comments made about the need for the Federal Government to face up to its responsibility to reduce its debt and its debt charges, which are now running at something like 10 per cent of every taxation dollar. Consequently, it is a great drain on the finances of this country and of the Government. There has been a change in attitude and we wonder when we will get a clearer statement from the Government as to what it intends to do about Australian Airlines-that is, whether it intends to sell it or not. The Liberal and National parties do stand for the sale of Australian Airlines and that has been a declared part of our policy. We believe that that is the right move at this particular time. We indicate that we should be moving to sell 49 per cent of Qantas Airways Ltd to the private sector as well, with the Commonwealth Government maintaining control. It seems now that not only is this Hawke Labor Government, in its failing days, its twilight days, starting to take on the industrial relations, taxation and expenditure reduction policies of the Liberal and National parties; it is also now adopting the Liberal and National parties' approach to a more open and freer market in the Commonwealth Government operating sector. We welcome that move, that change of heart on the part of the Hawke Labor Government because it shows that, devoid of ideas that it is, it is starting to pick up the better thoughts that are available to it through the Parliament when it sits down and listens to the very sound arguments of the Liberal and National parties. We hope that that continues to help the Government along its way towards the better management of this country before it falls over the cliff at the election, whenever that might be. Senator HAINES(South Australia-Leader of the Australian Democrats)(9.21) —As was stated by Senator Messner at the beginning of his contribution to this debate, the Commonwealth Guarantees (Charges) Bill 1986 gives force to a 1986 Budget announcement that Commonwealth semi-autonomous institutions would be charged by the Commonwealth when using a Commonwealth guarantee to secure borrowings. The intention of the charge is alleged to be: to ensure the effective cost of borrowings to authorities is more directly comparable to that faced by private sector borrowers, thus ensuring that authorities take full account of the cost to the community of their borrowings. I suppose we can say that this explanation is at least consistent with the much vaunted Government policy of reliance on market discipline to achieve the efficient use of resources although it is, as again Senator Messner mentioned, coming at a time of rising interest rates generally. So there is a certain irony to what the Government is doing. According to the legislation, the rate to be charged for the Government guarantee, which is about 0.5 per cent, gives those of us who are more cynical than most the idea that the main reason for the charge is a revenue raising one rather than any real desire to bring some sort of equity into borrowing capacities and so on between the public and private sector. My staff and I have had conversations with a number of people involved in these semi-autonomous institutions that borrow using a Commonwealth guarantee. Almost unanimously they argue that that half a per cent is several times the market worth of the guarantee that they use. This is particularly true of the Australian Industry Development Corporation and Telecom Australia, both of which I would point out have a AAA rating in their own right, independent of whether or not they can and do use a government guarantee. We would have preferred a more comparable increase with regard to the value of the guarantee of, say, a quarter of a per cent. But I gather that the Opposition regards this as a Budget measure and therefore something that has to go through come hell or high water. In any event, Telecom is requesting the Government to amend its statute so that the Commonwealth guarantee does not automatically apply to it as, of course, is going to occur once the Australian Industry Development Corporation Amendment Bill 1986, which we are debating cognately, goes through. As I said earlier, the AIDC, with a similar AAA rating to Telecom, is arguing that half a per cent is so far above the market worth of the government guarantee that it is not anticipating in future relying on the guarantees to secure borrowings. It will in fact, of course, because of the cognate legislation we are also dealing with tonight, have a choice as that legislation it to decide on the merits whether or not to take up the option of the government guarantee. I think it is rather ironic that the AIDC advertisements that we have seen proliferating recently by way of full page write-ups in our newspapers have been able to make a selling point of the fact that `no fees, commissions, or hidden charges' apply to depositors. One wonders whether in the future it is going to have to pass on to the many Australian industries it has helped this new cost if it chooses to accept the option of a Commonwealth guarantee, cut interest rates to its depositors or add a sort of charge or fee for service to those people. I think it is worth looking at the sorts of organisations, industries and areas that the AIDC has assisted. The advertisement that I referred to earlier lists quite a number of recipients. In offering 16 per cent per annum at call it makes the following points: AIDC is actively engaged in the development of Australian industry and Australian ownership in industry. AIDC provides finance and financial services to its clients. It goes on to say: With assets of over $2 billion AIDC works hand in hand with Australian industry, making a substantial contribution towards Australia's future. AIDC has made, and continues to make, substantial investments in manufacturing, mining, transportation, tourism and technology industries and assists in the promotion of new enterprises that have growth prospects. For example, AIDC has a one third interest in the Hyatt on Collins Hotel in Melbourne; AIDC is a major underwriter of AUSSAT, the satellite broadcasting and communications service which will be an important part of Australia's telecommunications system well into the 21st century, and AIDC has played a leading role in financing Woodside's participation in The North West Shelf Gas Project. These are just a few of AIDC's activities. We are talking about a semi-autonomous institution, as these bodies are quaintly called, that has made a significant contribution to Australia's development and which one hopes continues to make a significant contribution. As far as the specifics of this legislation are concerned, I would like to repeat the point that we think this charge is effectively a taxation measure, the tax being the difference between the actual value of the guarantee and the half a per cent being charged. Bodies whose loan raisings are subject to an automatic guarantee are the most disadvantaged by this legislation because they have to pay the impost regardless as they have no choice at all about whether to use the guarantee. It does not surprise me at all that Telecom is looking to get the same flexibility that the AIDC is going to be given through the accompanying legislation. I think we need to remember that something like 75 per cent of Telecom's loan raising are automatically guaranteed and that amounts to something like $750m this year. So, to be consistent with the stated intention behind this legislation, the Government ought to permit Telecom and the other semi-government institutions to elect whether or not a government will apply. In other words, if it is not just a fairly transparent attempt to raise a bit of revenue, the Government ought to extend the option of taking or not taking a Commonwealth guarantee to other semi-government institutions rather than simply giving that option to the AIDC. The other obvious concern that we have is that if Telecom and the other institutions concerned effectively have to pay a tax on their loan raising, this cost is going to be passed on to consumers and that, of course, is only going to cause the sorts of problems that Senator Messner touched on with regard to consumer price index increases, inflation and so on. The other option, of course, is that it could result in a cut in Telecom services at a time when sustained high expenditure for development of those services is necessary. What these Bills reflect in general, as distinct from the specifics contained in the clauses, is an increasing panic in government circles at the general problem of interest rates. As I said earlier, the Government claims that its intention in imposing this charge is to ensure that the effective cost to authorities of borrowings, that is, to the institutions mentioned, is more directly comparable to that faced by private sector borrowers. I would have thought that-and this was the interjection that I made, somewhat inaudibly apparently, to Senator Messner-that the Government would have been more concerned to remove those factors that increase the cost of borrowings, not only for the private sector but also for the public sector and for ordinary individuals and families in this country. As I have said almost countless times in this place, the Government could start by looking at why the domestic supply of finance cannot keep up with the demand from borrowers, and then do something to correct that problem. Among other things, it could take action to stop so much off-shore investment by Australian companies and, in particular, so much investment by the large life and superannuation funds. I am not suggesting, as one of their executives accused me the other day, that I am trying to stop those institutions from investing off-shore; all I am saying is that if they are going to persist in investing off-shore, this Government should remove some of the costly-as far as revenue is concerned-tax concessions that are granted. The life and superannuation funds, for example, get tax free status on earnings. If we allow them to invest anywhere they like, but they do not get that status if they invest off-shore, maybe it would encourage them to act in a way that is much more in the interests not only of the people they represent but also of the country as a whole. At the moment, something like $4 is being invested off-shore for every $1 that is being invested on-shore. The inevitable result, of course, is speculation in the Australian dollar. It also means that domestic demand for finance exceeds the domestic supply; so interest rates are pushed up. Furthermore, and again this is not a new suggestion, we could do something to lower our foreign debt if we removed the capacity to negatively gear on overseas financed non-productive takeover bids. We have seen a plethora of those in the last 12 months. Most of us are familiar with Robert Holmes a Court's $3 billion credit line when he was making his raid on the Broken Hill Proprietary Co. Ltd last year. Most of us are aware of the fact that the Bond Corporation borrowed something like $800m when it took over Packer's electronic media empire. Most of us are also aware that that money does not come for nothing, that the interest repayments are still a tax deduction and that this costs a significant amount to Consolidated Revenue when there is not one additional advantage given to this country by way of increased productivity, increased employment or increased export potential-and we have the disadvantages of a burgeoning foreign debt and considerable loss to revenue. I suggest that by a couple of fairly simple measures the Government could take action not only to increase Consolidated Revenue, thereby decreasing the deficit-which I might add people seem to overlook; the conventional wisdom seems to be that we decrease deficits only by cutting expenditure, but there are other ways of decreasing the deficit-but also to remove loss to revenue through tax concessions, given to the sorts of enterprises that do not do anything to help develop the country. That is one way of doing it. As I said, by taking these sorts of actions it will increase available funds for lending not only to business-both private enterprise and the sorts of institutions we are talking about in the debate on these Bills tonight-but also to ordinary Australians, individuals and families. If that happens, interest rates inevitably will fall. Who knows? We may even see some improvement in the attitude of foreign financial people to Australia as a credit risk. The dollar may even rise. If all goes really well we could see Australia regain its AAA rating. At the very least, we would have improved matters for Australian businesses, both public and private, and for the Australian individual or family, farmer, home owner or whoever, who is currently being pushed to the wall by increasing interest rates and demands from the banking sector to further increase them or be bought off by the Government yet again-all of which is doing nothing to improve Australians' confidence in Australia or international confidence in our economic condition or, indeed, our potential for growth and development. Senator SHORT(Victoria)(9.36) —The two Bills we are debating tonight, the Commonwealth Guarantees (Charges) Bill and the Australian Industry Development Corporation Amendment Bill, are separate Bills. They deal with different matters, but the AIDC Amendment Bill follows from the Commonwealth Guarantees (Charges) Bill. The purpose of the Commonwealth Guarantees (Charges) Bill is to provide for the imposition from this year, 1986-87, of an annual charge on borrowings or other raisings of money by Commonwealth public sector authorities which are guaranteed by the Commonwealth Government. It is a Budget Bill. The charge was announced in the Budget Speech. The Australian Industry Development Corporation Amendment Bill, on the other hand, flows from the Commonwealth Guarantees (Charges) Bill because it is one of the public sector authorities covered by the first Bill. The purpose of the AIDC Amendment Bill is to provide the Corporation with the option of not paying this new charge or levy. I will come to that later. As both Senator Messner and Senator Haines said, that is, in fact, a new tax. The purpose of the Bill is to enable the AIDC not to pay the levy on those borrowings which, at its option, it chooses to borrow without the aid or backing of a Commonwealth guarantee. As Senator Messner has said, the Opposition will not oppose these Bills. In particular, the Commonwealth Guarantees (Charges) Bill is a Budget Bill. We announced at the time of the Budget that the Opposition would allow the Government to have its Budget passed. Had this not been a Budget Bill we might have taken a much more seriously critical view of the Bill, because there are some aspects, particularly of the Commonwealth Guarantees (Charges) Bill, that certainly require elaboration and criticism. Before making those criticisms, though, I acknowledge the Government's endeavours, which we have supported, to free up the financial institutions markets and industry over recent years. It is a task in which it has progressed well but on the basis, let it never be forgotten, of the enormous work that was done under the Fraser Government, particularly at the instigation of the then Treasurer, John Howard, in establishing the Campbell Committee of Inquiry into the Australian Financial System, whose report has led to virtually all the developments that have occurred since that report was completed, in terms of deregulating and freeing up the financial system. So I think both major parties deserve credit for the achievements that have been made in that direction in recent years. History often forgets these things and credit often goes to the Government of the day. However, as I have said, let it not be forgotten that most of the ground work for the deregulatory measures we have seen in recent years were laid during the period of the Fraser Government. The Government, in describing both of the Bills we are debating tonight, has referred to its proposal as levying a charge on the borrowings or other raisings of money by Commonwealth public authorities. Let no one be fooled by these verbal gymnastics. Let there be no misunderstanding: The levy or charge is nothing other than a tax, and a tax is a tax is a tax. It is yet another imposition on the taxpayers of Australia; it is yet another cost burden on consumers and business alike. This new tax is being imposed at a time when Australia is reeling from the ceaseless financial hammer blows of this Hawke Labor Government. Those blows have already increased our tax burden to an all time record. Since this Government came to office, in four short years, taxation has increased by 59 per cent. Senator Messner —Fifty-nine? Senator SHORT —It has increased by 59 per cent, a figure that is unprecedented in Australia's history with the exception of the unbelievable increases that occurred in the Whitlam years. Senator Messner —That would make it the highest level of taxation since Federation, wouldn't it? Senator SHORT —As the honourable senator says, it makes it the highest level of taxation in both absolute and real terms that we have had in our history. Our tax burden is now at an all time high record and is showing every sign of continuing to increase. The community is also reeling from the blows which the Hawke Government has caused through producing the highest relative real interest rates in our history. If one looks at the level of interest rates in Australia today compared with those in our main competitor countries one finds an extraordinarily damaging and worrying picture. Prime interest rates in Australia today are 18 1/2 per cent. In Japan, our major trading partner, they are 3 3/4 per cent. Senator Messner —How much? Senator SHORT —They are 3 3/4 per cent. Senator Siddons —It was 4 per cent the last time I looked it up. Senator SHORT —I will take 4 per cent. The figure may have risen in the last week but that still leaves the prime rate in Australia 4 1/2 times higher than that in Japan. In countries such as Canada, France and the United States of America the prime interest rate range is in the order of 7 to 9 per cent; so the Australian figure is more than twice the figure in those countries. Even the United Kingdom-we used to look with dismay at its economic situation-has now got its house sufficiently well in order that its prime interest rate is only two-thirds of the rate that applies in Australia. The relative interest rates that apply here are the highest we have ever had in our history and they flow through to a whole range of activities and whole groups of the community who are being hit very hard by them. Perhaps most of all, but certainly not exclusively, are the young families with children who are seeking to buy a home. I refer not just to young families but to any families who are seeking to buy a home. It is salutary to look at what has happened to housing interest rates in Australia over the last 30 to 40 years. In 1950 the average housing loan interest rate was 3.9 per cent. By 1960 it had gone to 5.5 per cent and in 1970 it was still only 7.3 per cent. In 1980, after the Whitlam years, the figure was 10 per cent. Today we have a minimum housing loan interest rate of 15 1/2 per cent. When one takes the other financial arrangements that most home owners have to make to get the necessary finance together, that 15 1/2 per cent is certainly the lower end of the range. For most, interest rates are at least a couple of percentage points higher. Senator Messner —It will also affect loans for cars and household appliances. Senator SHORT —It affects everything that consumers buy on credit. There are even flow-through effects if one pays cash. The effects flow right through the economy. Senator Siddons —Could you tell us how the Opposition would get interest rates down? Senator SHORT —Very easily. Let me come to that matter before I conclude. To see an example of the flow-on effect, one only has to look at average home loan repayments. In my State of Victoria in the 2 1/4 years since the last election in December 1984, the average home loan repayment figure has risen from $405 to $609 per month. That is an increase of 50 per cent in home loan repayments which has occurred in 2 1/4 short years. For Australia as a whole the average figure is of a similar magnitude; it is certainly in the range of 35 to 45 per cent. Interest rates do not impact only on home buyers. Look at the desperate situation facing at least half of the rural producers in Australia today. Farmers are being foreclosed and are having to walk off their land largely because of the financial burdens that have been imposed on them through the interest rate structure in this country, an interest rate structure which has, without any equivocation at all, been imposed on the Australian population by the policies and fiscal irresponsibility of this Hawke Government. Senator Messner —You mean that it is a deliberate policy of the Hawke Labor Government? Senator SHORT —Whether it is deliberate is perhaps questionable, but is it an irrefutable fact that it is the policies of the Government which have led to this situation, and it happens so frequently that one can probably draw the conclusion that it is deliberate. If one looks at the situation facing most small business in the country and at the situation facing exporters who have to compete against the lower interest rates and inflation rates in other countries, one realises the enormous burden that is being imposed on the productive sector of this country as well as on the average home owner and family through the interest rate burdens and monetary policies of the Government. The Government's advisory body-the Economic Planning Advisory Council-is reported in today's newspaper as urging the Government to ease interest rates. It made the point, and very rightly so, that the Government must adopt tighter fiscal and incomes policy and reduce the current emphasis on monetary policy. That is the only way that interest rates will be got down, and that is a partial answer to Senator Siddons' question. Unless the Government exercises fiscal responsibility-that is in terms of its spending policies-it will never get interest rates down nor will it get down the level of inflation. The Treasury and the Reserve Bank of Australia have made the same point to the Government-that it must get its fiscal house in order. In a recent joint report to EPAC the Treasury and the Reserve Bank warned that no immediate relief is in sight from high interest rates. The Government's official advisory body on housing has made exactly the same point in its report on the short term prospects for housing activity released just a few days ago, after the Government had announced its May mini-Budget. It is worth quoting from the report of the Indicative Planning Council for the Housing Industry, the official advisory body on housing activity. In that report it is stated: Prospects for interest rates over the . . . period are difficult to assess. It goes on to say: Restraint in labour costs, a lowering of inflation and steady improvement in the balance of payments would provide the circumstances in which market interest rates would fall. It then goes on to make the point that the circumstances are unlikely to be such in the period ahead that that would happen. So even the Government's own official advisory bodies are warning it against the policies that it is pursuing and its fiscal laxity. This new tax, imposed through the charge under the Commonwealth Guarantees (Charges) Bill, will flow through to costs and prices. The Government authorities will pass on the tax. They will have no option but to pass on the tax in their prices for their goods and services. Senator Vigor —With a multiplier effect. Senator SHORT —With a multiplier effect, as Senator Vigor says. I thank the honourable senators in the chamber for their assistance to me in my remarks this evening. This charge is being introduced at a time when inflation in Australia is already at its highest level, relative to the rest of the world, almost in our entire history. Inflation in Australia has increased by 30 per cent in the four years since the Hawke Government came to office. It is on the rise again and there is no end to that rise in sight. Inflation in Australia is now running at an annual rate of 10 per cent. Let us look at how that compares with some of our major trading partners. In Japan, our major trading partner, the inflation rate is zero-no inflation in Japan. The inflation rate in the United States of America is 1.3 per cent. In West Germany the inflation rate is minus 1.2 per cent. That means that the absolute level of costs and prices in West Germany is actually falling. The Organisation for Economic Co-operation and Development average inflation rate-the average of the Western countries-is 1.7 per cent. So our prices are increasing at a rate almost six times that of the rest of the Western world. In a act of unparalleled hypocrisy the Prime Minister (Mr Hawke), a few days ago, appointed one of his Ministers, Mr Barry Jones, as the Minister Assisting the Treasurer for Prices. Mr Jones's new task is said to be or appears to be-to the extent that one can find out at all what it is supposed to be-to monitor price increases. In this he is to be assisted by the establishment of yet another bureaucratic organisation within the Commonwealth Public Service, the so-called Consumer Prices Bureau. What the Bureau will do has not been explained; nor has its relationship to the existing price monitoring body, the Prices Surveillance Authority, been explained. So the relationship between the two has not been explained and the reason for the establishment of the new Bureau has not been explained. It is simply typical of the actions of this Government when in trouble. The action of this Government when it is in trouble is invariably to create another bureaucracy. `Hang the cost to the taxpayer; hang the drag on productivity; forget about the wanton misuse of scarce resources; just let us bleed the taxpayer again. The poor old taxpayer will pay'. I say to the Government that the taxpayers of Australia have come to end of their tether and unless the Government recognises that and really takes steps to get the level of taxation down, rather than continually hounding taxpayers with further increases, this Government will lead Australia into a series of unparalleled difficulties and national bankruptcy. That is already happening very rapidly indeed. We have a foreign debt exceeding $6,500 for every man, woman and child in this country, and growing by $25,000 every minute of every hour of every day. Senator Messner —Luckily, they have not long to last. Senator SHORT —That is right. The Government's appointment of a Minister for prices is a classic case of sending the arsonist to be the fire-fighter. It is the Government itself which has fuelled our inflationary fire and which has been the inflationary arsonist, and that same arsonist, the Hawke Government, now has the gall to send itself to monitor the fires that its polices of economic irresponsibility and gross economic mismanagement have created. The DEPUTY PRESIDENT —Order! Senator Short, it would help the Chair if you would indicate which aspect of the two Bills before us you are referring to at the moment. You seem to be getting rather wide of the mark. Senator SHORT —Mr Deputy President, I am referring to the Commonwealth Guarantees (Charges) Bill, an important element of which, in effect, is to increase charges, interest rates and inflation, and therefore prices, in this country, and I am commenting in that context. The DEPUTY PRESIDENT —I see. It would help if you would periodically bring your remarks around to the subject matter of the second reading speeches on the Bills concerned. Senator SHORT —Mr Deputy President, thank you for your guidance. I appreciate that. So the effect of the Commonwealth Guarantees (Charges) Bill will be, as I said, to increase both interest rates and inflation. I would like now to say just a few words about the second Bill, namely, the Australian Industry Development Corporation Amendment Bill. The AIDC has grown significantly since its establishment around 1970 by, I think, the Gorton Government. It was known in its early days somewhat affectionately as the McEwen bank because in many ways it was the brainchild of that great Country Party leader and Deputy Prime Minister under Sir Robert Menzies, Sir John McEwen. The AIDC has had a chequered history over the years. I had the pleasure at one stage of being the Executive Secretary of the AIDC. That was in its early years and I have, perhaps for that reason, followed the Corporation with more interest than I may otherwise have done. But, as I said, the Corporation has had a chequered history. It has had its ups and its downs. In more recent years it has certainly been on an upward trend. It has produced increasing profit results, although looking at them as a return on funds used, the results perhaps do not bear comparison with some other financial institutions. Nevertheless, it has been on an increasing profit trend. Its borrowings have increased very considerably indeed. It now has outstanding borrowings of some $2,000m. It has a paid up capital of $87.5m-all government contributed funds because it is a fully owned government organisation. I have no objection, and the Opposition has no objection, to the Bill. It does make sense for the Corporation to be able to opt out of paying the new levy if it deems itself to be in a position not to wish to have that guarantee and instead to accept a presumably slightly higher market rate of interest. The point I would make is that the AIDC is now nothing more than a fully commercialised merchant banking operation. Its clients are nowadays really no different from the clients of private sector merchant banks. It operates in a very similar manner to the financial institutions in the private sector and I think that really raises the very real question, which perhaps was different in the earlier years when there were other defined objectives for the AIDC, of why the Government should continue to own the AIDC. Why should it be a publicly owned corporation rather than a privately owned corporation? It is not the role of governments in our free enterprise society to run commercial merchant banks, and I would hope that the Government will look very seriously at that point. We would certainly, I expect, be doing so when we are in government after the next election. Senator Reynolds —Ha, ha! You are an optimist. Senator SHORT —I am a realist, Senator Reynolds, not an optimist. As I understand it, the officials of the AIDC and senior executives themselves see a lot of merit in it being a privately owned corporation, and I think that is something that merits very careful consideration. Amongst other things-although this would not be the sole objective for such an exercise-it would return to the taxpayers of Australia at least $87.5m that is now tied up in that way. Senator Siddons —Don't we have enough merchant banks at the moment? Senator SHORT —I think we do. That is a matter for the market to sort out. There is no reason for putting the AIDC in a different position, in that sense, from any other merchant bank. Mr Deputy President, thank you for your indulgence. Perhaps I did range slightly widely, but I think the remarks I made were relevant to both Bills which, as I say, the Opposition does not oppose. Senator VIGOR(South Australia)(10.01) —The Commonwealth Guarantees (Charges) Bill 1986 introduces a new tax, as we have been told on a number of occasions tonight. The Australian Industry Development Corporation Amendment Bill 1986, which we are debating at the same time, makes certain that this tax need not necessarily be applied to the moneys which flow through the hands of the Australian Industry Development Corporation. The Commonwealth guarantee for the AIDC has been in place since the AIDC legislation was amended in 1983. In regard to the other authorities there have been similar changes since the advent of the Hawke Labor Government. To this point the statutory authorities, including the AIDC, functioned without the benefit of an explicit guarantee from the Government; it was an implied guarantee. Through this Bill the functions of statutory authorities will simply revert to the pre-1983 situation, except that they will now have to pay a charge if they call upon the guarantee. The AIDC was set up to facilitate and encourage the establishment, development and advancement of Australian industry and to encourage Australian ownership of Australian industry. It is classed as a development bank. It is a merchant bank, but it had some aims which were slightly different from the general run of merchant banks. The AIDC borrows funds in financial markets in Australia and overseas at minimum cost, while maintaining an appropriate spread of borrowings and maturities and a controlled risk exposure. It finances and invests in high risk ventures. It is actually helping the development of Australian industry. It is a very important aspect that it should have a slightly different approach to its financing operation than a standard merchant bank approach. The AIDC achieves these objectives by providing risk capital for new businesses and entrepreneurs, and for restructuring or expanding existing industries. The AIDC also promotes such developments by providing advisory services, and has a positive role to play in ideas formulation and in producing active development programs in new and infant technologies. The Corporation has been operating successfully in a deregulated and intensely competitive financial market, despite a subdued investment climate. In these conditions the AIDC achieved net profits, after tax, in 1985-86 of $19.1m. Out of the after tax profits at the end of the financial year 1985-86 the Corporation paid $8.6m to the Commonwealth, which represented a return of 9.8c per dollar of capital invested. The last year has been another year of dramatic growth for the Corporation. Financial commitments to Australian industry have more than doubled for the second successive year. The Corporation's new commitments rose to $1,599m-an increase of 112 per cent over the last year. This is nearly six times that of two years ago, as Senator Short said. The AIDC's loans as at the last balance date totalled $2.2 billion, with development banking assets of $2,011m and development investments in ordinary equity of $91m. Of this, $42m is pure venture capital investment. The AIDC activities contributed to the desirable growth of Australian manufacturing, resource and service industries, with emphasis on export and international competitiveness. It is extremely important that this should continue. The charge that is proposed in the Commonwealth Guarantees (Charges) Bill is 0.5 per cent. The highest estimate of the value of a government guarantee to these corporations is about 0.2 per cent of loan funds. So, even if we looked at commercial guarantees, there is a 0.3 per cent component which is just raw tax. That tax will actually be passed on by the AIDC to the companies which it has been set up to help. These are the burgeoning manufacturing companies-companies such as the whitegoods industry and the wine and automotive support industries, which it has helped particularly-to make certain that new developments actually happen and are advanced in Australia rather than being directly imported from overseas. The dramatic growth in the Corporation's activities over the past few years could not have occurred unless there was a growing demand in industry for the skills and services that the AIDC has offered. With a government in favour of deregulation and an opposition which seems to believe that privatisation is a solution to most of Australia's economic problems, I would indeed want to support the role that the AIDC has been playing. I believe that the list of companies in the Commonwealth Guarantees (Charges) Bill is a list that may be under risk of being targeted for privatisation. We find amongst them Aussat Pty Ltd, the Australian Telecommunications Commission, the Commonwealth Serum Laboratories Commission, the Health Insurance Commission, the Pipeline Authority, Qantas Airways Limited and the Snowy Mountains Engineering Corporation. All of these organisations at some time have been thought of as being targeted for privatisation. The Australian Democrats would not support that type of activity, as we believe in a strong public sector and a strong private sector in a mixed economy. We do not believe that the straight impost of 0.5 per cent which is being imposed on those companies selectively in the public sector by the Government will be anything but a direct charge which will go through the operations of the company, be charged to every consumer, and contribute substantially to inflation in Australia. I do not believe from experience that the existing private banks are willing to provide the financial assistance that is needed for Australia to develop a strong trading, industrial and technological infrastructure. It is important that the Government be involved in this area. All of these companies are offering that type of backbone to the Australian economy. It is crucial for Australia to have an organisation such as the AIDC which can foster Australian enterprises and ideas so that these may be kept and developed in Australia and the benefits flow on to all Australians. Now, more than ever, it is especially important that we aim to reduce the level of foreign ownership of our resources, otherwise the value added on all the products that we are extracting will be repatriated to that organisation's headquarters overseas. If we do not control the technology, we do not receive the benefits from that technology. The AIDC gives us an opportunity to be able to control Australian technology in Australia. The AIDC supports Australian ownership of Australian industries. It has played a leading role in the commercialisation of new and improved technologies in Australia by providing specially tailored financial packages and management expertise directly related to the needs of Australian conditions. It also adopts an ongoing supportive role designed to see a venture firmly established as a viable entity with a sound future. With all the recent suggestions that privatisation of Australian Airlines and of other statutory authorities is being considered by the Government, I wonder whether the schedule in this legislation contains a hit list of concerns that eventually will be at least part privatised. Senator Short's statements suggest that we may be facing such a prospect if the Opposition ever reaches government. I say to Senator Messner that I do not believe it is in the interests of all Australians to sell off those aspects of our economy which are profitable and to leave only in the public sector those aspects which are not profitable. It is eventually the taxpayer who has to cover those charges. This legislation is putting a direct charge on those corporations in the private sector which they will pass on to their consumers, hence making them less attractive to their clients than their private counterparts where they have not got monopolies, as is the case of Telecom Australia. I would like to examine some of the effects of this legislation on the AIDC and other statutory authorities. The fundamental purpose of the AIDC is set out in the 1970 Act is to assist in the provision of financial resources required by Australian companies to encourage and develop industries mainly in the manufacturing, processing or treatment of goods or in the recovery of minerals. Legislation enacted in 1983 extended the Corporation's role to include all industries, including the service industries and industries developing technologies. These will indeed be important to future employment growth in Australia as well as to foreign exchange earnings. We have no such control over any of the other merchant or development banks in Australia. Even the Commonwealth Development Bank has somewhat wormed itself out of this activity. The amended Act also put new emphasis on promoting the creation of new industries and enterprises that have good growth prospects-sunrise industries. It helped facilitate reconstruction of existing industries for greater long term viability and competitiveness. There was no change in the Act regarding the commercial operations of the AIDC in 1983. To help the AIDC achieve these objectives, a Commonwealth guarantee was given under section 35 of the Act. That gave it an advantage-which was about all the Government was giving it-over other banks. Now it is being charged over the odds for that guarantee, and I am told that the Corporation is unlikely to use this facility. I have managed to obtain from the AIDC's staff some type of indication that the Corporation can only borrow with a guarantee at about 0.1 per cent lower in the market-place, despite the estimate of 0.2 per cent implied by the `value of the guarantee'. Somewhere between 0.3 and 0.4 per cent of the loan of this clawback by the Government is just raw tax. The Government says that the main consequence of the charge will be to ensure that the effective cost of borrowing to the statutory authorities is more directly comparable with that faced by private sector borrowers. If we are putting the AIDC and these other organisations under the same financial pressures as those faced by private sector operations and still imposing on them the requirement of having to be responsible to parliament, we are disadvantaging public sector organisations compared to their private sector counterparts. They have extra costs which the private sector components do not have in terms of their accountability requirements to government. In reality, with the fluctuations in interest rates in the market-place, especially the crippling rates that we now have, we need to inquire which rates for statutory authorities are borrowing rates to be compared. If the comparison of rates is between the AIDC or other statutory authorities and the rate charged to merchant banks, then the rate differential is the real value of the guarantee. In practice, the effect on the Corporation's operations of having the Commonwealth guarantee is negligible, and therefore the authorities are paying the same rates. We are reliably informed that the effect for medium to long term bond issues is worth about 0.1 per cent, but for the short term it is almost non-existent. There is a definite disadvantage. If the Commonwealth Guarantees (Charges) Bill passes, which will no doubt happen unfortunately, because the Opposition has taken the mindless view that it is a Budget measure, and the Government is determined to push it through, the Democrats can do very little. However, we certainly support the AIDC having the option to opt out. I believe that the Government is unlikely to get any revenue from the AIDC through this type of measure because it is just not economic. The AIDC will not take up the guarantees, and hence they might as well not be there. Therefore, the second Bill is fairly useless whereas the first Bill is just a taxing measure. The various Finance Department fund-raising regulations of the statutory authorities specify the type of fund raising that the authorities may engage in. Telecom, Australia Post, the Australian Capital Territory Electricity Authority and the Snowy Mountains Hydro-Electric Authority come under Parts A and D in the schedule to the Commonwealth Guarantees (Charges) Bill. They have an automatic guarantee that is applied to some borrowings only. In these cases the regulations are such that for certain types of borrowings, such as issue inscribed stock, there is a requirement for an automatic guarantee. If the authorities decide to issue bonds, then no guarantee applies. Thus, it becomes a market decision as to the type of borrowing activities that these authorities use. In fact, this Bill will distort the options that are open to those authorities because they will probably select, on the basis of our figures, as the optical market choice, a method that does not carry an automatic guarantee. If they choose the guarantee, then that price will automatically flow on to the various people they are serving. Hence, the statutory authorities whose market decisions have in the past been optimal methods which carry an automatic guarantee may now be even further disadvantaged by the charge. They may now choose less appropriate methods with a high opportunity cost rather than pay the charge to the Government. For those authorities whose loan raising activities carry an automatic guarantee the charge will add yet another burden, which has no other place to go but to the consumer. This will either make the authorities uncompetitive in the market-place or simply raise their monopoly prices. They will now be forced to pay through the nose for the privilege of having a guarantee which was given to them to help revitalise Australian industries, or possibly to meet various social objectives such as making services available to Australians at a reasonable cost. I uphold that costs will definitely be passed on to the consumer. Perhaps consumers will see a rise in the cost of postal charges or in electricity prices in the Australian Capital Territory. Telecom's policy decision to charge for directory assistance may even be directly traced to this type of measure. It may be one of the first of the avoidable imposts which the Government is putting on people by way of the back door through this Bill. The Government estimates that the revenue raised by the charge on the AIDC will be $3.4m in 1986-87. I wonder how the Treasurer (Mr Keating) estimated that that amount of revenue would be raised because it certainly will not be raised at all if the AIDC does not take up the guarantee. That is what I would do-not use the guarantee-if I were in the commercial position to apply this Bill. The Commonwealth Bank will be faced with a levy of 0.25 per cent on long term borrowings. In the past overseas borrowings tended to be more medium to long term; that is, more than one year. However, with the prevailing economic conditions, a larger and more profitable short term market has evolved in which the Corporation has become more involved. For the levy to be imposed on long term borrowings of more than one year, when the main activity is now in the short term markets, common sense tells us that the optional charge will not raise the expected revenue for the Government from the Commonwealth Banking Corporation either. It appears that the Government is using an `efficiency' argument as an excuse to impose an extra charge. With the decline in the economy, it is hunting in every nook and cranny for funds. Maybe the Government has taken heed of the view of the Economist of 21 March 1987 which stated: Australia is a third world economy with a first world standard of living which risks becoming a third world economy with a third world standard of living. These Bills are an indication of the extent to which the Government will stoop to dredge new sources of revenue. The pity is that it will not touch more substantial areas, such as the tax deductibility of tobacco promotions, the problems of transfer pricing, negative gearing on takeover capital nor the tax rorts of the large corporate sector that is currently being subsidised through `corporate welfare' through which this Government and the Opposition are willing to support the private sector. The Government wants to cut welfare to individuals and hand it over to corporations. That is quite unsatisfactory. Senator Siddons —It is scandalous. Senator VIGOR —It is scandalous, as Senator Siddons says. To redress the current situation of depressed world prices for commodities, both agricultural and mineral, and the severe adverse effect on the Australian balance of international payments and the Australian economy generally we need a vigorous effort. This Bill is moving in the wrong direction. It is taking money away from areas which are helping the development of the Australian community and industry. Telecom, with Aussat Pty Ltd and the Overseas Telecommunications Commission, can actually help the development of an Australian electronics communication industry, if it is given a chance. But the Government is clawing back money all the time-$92m in loans last year and now this type of slow claw back of funds through the 0.5 per cent on the guaranteed loan funds. Even the loan funds are being hit at. We oppose the imposition of another government charge on authorities which when passed on will mean than prices will rise for ordinary Australians. That is the scandal of this legislation. As we know that both the Opposition and the Government will vote to pass this legislation, the Australian Democrats will not waste time tonight with any sort of grandstanding. Suffice it to say that if the Democrats were in government we would offer some real solutions. We would actually offer incentives to small Australian industry. We would allow the AIDC to continue with the socially and economically useful aspects of helping out small industry which it was set up to do. We would not support all this drizzle of little taxes which are gradually drenching industry and putting out the flame of enthusiasm which could have existed in Australia. I believe that it is a scandal that the Government is trying every possible way to raise taxes indirectly. This is just such a measure. It is a mindless measure which actually achieves the opposite of what Senator Button is trying to do in his innovative industry plans. Senator Siddons —It shows a bookkeeper mentality. Senator VIGOR —Yes, it shows a bookkeeper mentality, as Senator Siddons says. I believe that the Government would get much more return if it were prepared to invest in the future and not try clawback operations of this type. We must start controlling as much of the technology that we use as possible in order to generate the greatest possible national wealth. Imposing a charge as a revenue raising exercise will hinder the AIDC's ability to achieve its objective as effectively as its present performance indicates. If it has to go to other means and does not use the Government guarantee, the Government will not get the revenue and the AIDC will be less efficient. If it does use the guarantee, the charge will hinder the economy by putting that burden on small entrepreneurial industry. This charge will also hinder the statutory authorities in achieving competitiveness in the market-place and will place yet another burden ultimately on the consumers in the form of higher costs. I suggest that this legislation is nothing more than a raw taxation measure, the charges from which will boost prices in the community. I am thoroughly disappointed with the fact that both the Government and the Opposition are indistinguishable in supporting this extra burden on every ordinary Australian. Senator MICHAEL BAUME(New South Wales)(10.28) —When speaking to the Commonwealth Guarantees (Charges) Bill 1986 and the Australian Industry Development Corporation Amendment Bill 1986, Senator Vigor said that he wanted a real solution to this problem whereby, in effect, Commonwealth semi-government authorities have some kind of interest rate beat on their private sector competitors. There is a real solution to this and that is to stop having so many government authorities which are involved in competing with the private sector. The simplest and most efficient way to go about this would be to return to the private sector those ventures which receive the benefit of a Commonwealth guarantee in their borrowings, for which benefit they now have to pay. Those ventures should return to where they belong as commercial enterprises-the private sector rather than the government sector. We all know perfectly well that it is unfair and unreasonable for a body such as the Commonwealth Banking Corporation, for example, to borrow overseas with a government guarantee and therefore at a better rate than any other Australian bank overseas because of the existence of that guarantee. What will happen now? The Commonwealth Bank will be obliged to pay the Government a fee on its overseas borrowings when it uses that Commonwealth guarantee. The same applies in borrowings in the local private sector. As the Government quite rightly says in this instance, the favourable interest rates paid by Commonwealth authorities are due to the fact that their borrowings are guaranteed by the Commonwealth and that gives them an advantage. The main consequence of the charge proposed in this legislation will ensure that the effective cost to authorities of borrowing is more directly comparable with that faced by private sector borrowers, thus ensuring that authorities take full account of the cost to the community of their investment decisions. Debate interrupted. The PRESIDENT —Order! It being 10.30 p.m., I put the question: That the Senate do now adjourn. Senator TEAGUE(South Australia)(10.30) — I wish this evening to refer briefly to Austudy and in particular to the answer the Minister for Education (Senator Ryan) gave in reply to my question in Question Time last Friday, 20 March. I refer the Senate to Hansard, pages 1093 and 1097. I indicated to the Minister that I would raise this matter tonight and I am very glad that she is present in the chamber. The question I asked concerned a one-page insert into the Austudy application form to general secondary students which indicated that parents had an option of having the allowance paid either to their student children or to themselves. I seek leave to table the one-page insert as I am not aware that any senator besides myself and the Minister have seen it. Leave granted. Senator TEAGUE —In particular I asked on Friday whether this insert breached the Student Assistance Amendment Bill passed with amendments last October which stated that payments would be made to students and not to parents. I refer in particular to amended clauses 10 and 11 of the legislation. During the passage of that amendment Bill the Opposition moved a precise amendment which would have made the allowance payable to the parent save for exceptional circumstances. We continue to advocate this parent payment for two reasons. First, it is parents who are in need and who are paying the costs involved in their student children's studies and the parents are the ones who should be helped financially. Secondly, the reason we have every year until now made these payments to parents is that governments, we believe, should respect the integrity of the family and should not, through financial payments, disrupt family relationships. At the time, the Minister said that she had given consideration to our arguments in favour of having benefits for secondary students paid to the parent rather than the student. However, she opposed the amendment on the grounds that the payment would have been penalised by income tax if paid to the parent and that any necessary changes to the Income Tax Assessment Act to avoid this penalty would have been contrary to the thrust of Government policy. I had advocated in the debate that by a simple amendment to the Schedule attached to the Income Tax Assessment Act we could overcome the problem that was in the Minister's mind, but she replied that this sort of ad hoc changing of schedules was itself contrary to the thrust of Government policy. It was with great surprise, therefore, that in the break before the last sitting week in my constituency of South Australia I came across an Austudy application form for the general secondary allowance that contained the insert which offered parents the choice, only from the beginning of second term this year, of having the payment made to them as parents. In other words, the Minister has accepted the Opposition's arguments and backed down from the policy that she set out in October. In reply to my question she said that since the passage of the legislation she had received: . . . a large number of representations from parents who said that they would be concerned to have the payments made directly to their teenage children and would like the option of receiving the payments themselves. She said that the possibility of having payments made to the parent where the payments were taxed as though they had been made to the student has been investigated with the Australian Taxation Office and that a scheme had eventually been worked out. The Minister on Friday referred to `initial advice' from the Taxation Office and used the words `at that stage' in another reference to the Taxation Office. These two references, even though they may now be corrected, are still not clear to me and I do not believe that they are clear to the Senate. She said that this process had taken some time and so a late notice to parents had to be inserted into the application forms. This hesitation about policy has, I understand, led to further delay in the availability of the Austudy application form being circulated to schools. As is well known, it was quite late this year for a number of reasons, this being one of them. The Minister also said that `every effort' had been made to circulate the information about the new option as widely as possible, but I do not accept that because I have not heard the Minister on any public occasion, apart from last Friday when she answered my question, refer to this option of parent payment. She has not, to my knowledge, issued a Press release or any circular to schools or to parents concerning this change of policy. I will be happy to be informed by the Minister if the knowledge given to me and to my colleagues and constituents with whom I have checked this matter has been updated. In fact, the wording of the insert and the silence that has accompanied the change of policy indicates that the Minister wants to discourage parents from applying to have payments made to them. It appears that the insert is intended as a method of saying to concerned parents, `Yes, parents can have the option of having payments made directly to them', but this sounds very hollow on the Government's part. The instructions on the form state that if parents wish to exercise their rights they must fill in the details requested on the insert-that is, tick a box-and attach the insert to the application form. After all that, the insert says that another form will then be sent to the parent. In other words, parents are being fobbed off and deterred with this badly publicised and, I think, hastily drafted last minute insert. That is not the only point I wish to raise. Immediately after Question Time the Minister added to her answer and said that an amendment to the legislation would be made in time for these payments to be made in second term. The beginning of second term, as is well known, is just after Easter, and that is less than a month away. She said that such an amendment was not actually necessary. There were a couple of versions of that in her answer on Friday, but if it was not necessary it was because the present legislation says that payment shall be made to a person determined by the Minister. I have yet to be convinced of that. She also said that to reinforce her decision she will be introducing an amendment in time for the payment to be made to parents at the beginning of second term. I would like to know why an amendment is being made if it is not necessary. I also put it to the Minister that the legislation at the time of the debate last October was quite clear to the Opposition in that it stated that payment shall be made to the student. But my major request is this: I ask the Minister to simplify the method by which parents can have the payments made to themselves and to remove the barriers and disincentives contained even in the presently contemplated method of application. There have been two delays involved here-first, the availability of the application forms many weeks after the usual time and after the beginning of first term; and, secondly, the availability of this parent payment option, which even at the best reckoning can be from the beginning of second term but which I fear will be delayed even beyond that time. Part of my question last Friday relating to the delay went unanswered. I ask again: Did the insert cause delays in sending out the Austudy application forms? Were the inserts included in all the forms relating to general secondary allowances? It is not clear whether they were in all of them. They were in some of those distributed in South Australia. More urgently, now there is this second area of delay-the delay in the availability of the forms that the parents will be filling in for payment from the beginning of second term. If it is the case that amendment to the legislation is necessary for payments to be made to parents, how will the Minister get the amendment passed in time for second term which is now, as I have said, just a few weeks away? The amending legislation would need to be introduced this week and passed by next week. It is painfully obvious that the Government could well have listened to and agreed with the Opposition in October last year. The mess in which the Minister now finds herself shows that it was the Opposition that was in tune with the thinking of the parents and families of Australia, not the Government. If the Minister does not clarify all these matters and if she does not remove all the barriers in the way of parents wanting to pursue even the present tortuous route, the Government's approach will be seen as hollow and eventually empty. The present notice to parents approach amounts merely, some would say, to a public opinion poll-`Pick a box if you wish to register your request to receive a possible way to apply'. Yes, it is as vague as that. The barriers that I believe need to be removed to make good the Minister's professions on Friday are these: Firstly, amend the legislation to make it lawful to make payments to parents, in particular in sections 10 and 11 of the Student Assistance Act; secondly, distribute clear information to parents in the Austudy explanatory booklet and in the main application form; and, thirdly, require parents to sign all Austudy applications for general secondary students and in particular to sign that part of the form where the parent payment option is set out. If the Minister fails to do this and yet, after some weeks, reports that only a minority-she said on Friday that that was her expectation-of parents have ticked the box, we will all know that the whole exercise was designed from the start to get such a dismal result but at the same time allow the present Government the quarter-truth of saying that an option was extended-an option that few knew about and that fewer could do anything about. I ask the Minister, who has listened to my remarks tonight, to respond to me in the Senate on all of these questions as soon as possible and in any event during this fortnight of sittings. Senator KILGARIFF(Northern Territory)(10.43) —I am happy to see that the Minister for Education, Senator Susan Ryan, is here tonight, for I too wish to take up a few minutes of the Senate's time this evening to raise an issue which came to my attention a few weeks ago at the beginning of the academic year at university campuses around Australia. My attention was drawn to a publication of the Australian National University Students Association. The publication is the ANU orientation handbook-entitled `A Guide to New Students'-to acquaint them with the university. These sorts of publications are produced on virtually every campus around Australia. Aside from the information on university clubs and sporting groups, there are a number of other sections. The one which concerns me most is the one entitled `Drugs'. I am certainly not opposed to students being provided with useful and accurate information about drugs-far from it. However, I feel that the information in this booklet falls far short of the mark. It outlines some general points about drugs: 1. Drugs are not study aids. Use them as a form of recreation, not a way of life. 2. Know what you're taking-no unnamed powders, unmarked bottles of pills, etc. 3. On your first time with a particular drug (or combination of drugs) make sure you're with someone who's done it before. No one could suggest that these gems of wisdom do not directly or impliedly condone drug use, or at the very least treat it as an accepted practice. There will be many who say that it is indeed an accepted practice, and that fact should be faced. In response, I have to say that, while I accept that there are very many young people who are tragically involved in drug taking, that is no reason for us to treat it as acceptable and normal. Particularly when one considers that this publication is specifically aimed at first year students, one has to think of the impact it will have on young people-17, 18 and 19-year-olds, many of whom may not have already had contact with drugs. Will it give them the impression that drug taking is the norm at university? Will they believe that drug taking is not as dangerous as they have been told it is? They will if they read on through this article. Before I go to the other snippets contained in these pages, I should make what I believe is the critical point about this whole matter, and that relates to the funding of this publication. It is paid for with funds levied under the Australian National University Act, and compulsorily paid to the ANU Students Association. Undergraduate students at the Australian National University are subject to a form of compulsory unionism, sanctioned in the Federal legislation which governs the university. Students coming to the university must pay a general services fee to the university, which it disburses to the ANU Students Union, the ANU Sports Union, and the Students Association. Students have the option of joining these bodies, but they do not have the option of refusing to pay the fee. It is a compulsory union fee, and part of it was used to fund the publication to which I have referred. So, we have the Federal Government endorsing compulsory unionism on the ANU campus, where student funds are used, in this instance, to produce a publication promoting drug use. This certainly cannot sit comfortably with the Federal Government's drug offensive, and one wonders how the Federal Government can justify its compulsory student unionism policy when one sees students' fees being put to this use. Students have been forced to pay for advice such as: Acid- referring to lysergic acid diethylamide- is occasionally cut with strychnine-in small doses. This won't harm you but will give you the odd stomach cramp and make you grind your teeth a bit. `Coming down' can sometimes be depressing, so dope can be a useful aid here. They are also told that cocaine will `Make you feel creative'. There are many other similar examples of drug use being treated as mundane and run of the mill. Students at ANU, thanks to the Federal legislation which forces them to pay money to the ANU Students Association, do not have the option of saying that they will withdraw their funds from publications like this. The Federal Government should see that they do have that option; or, if the Government is so intent on seeing money go to funding this sort of publication, it should take some responsibility for the end product. I seek leave to table the pages from this document to which I have been referring; that is, the 1987 ANU orientation handbook. Leave granted. Senator KILGARIFF —Finally, Mr President, I draw the Minister's attention to this matter because I feel that had she been aware of the situation she would have taken some action. It is a serious matter. Frankly, in these days when quite a number of organisations, including the Government, run various drug offensives in an endeavour to break down the use of drugs, every means should be adopted to try to ensure that our young people are not introduced haphazardly, or introduced at all, to drugs. I believe that the Minister for Education, Senator Ryan, should on behalf of the Government answer some questions relating to this matter. In asking these questions I draw the Minister's attention to the contents of the orientation week handbook of the Australian National University Students Association. I draw her attention specifically to the section entitled `Drugs'-to the five pages of information on drugs, how to use them, where to get them and how much they cost. Is the Minister aware that this book contains such pearls of wisdom as `On your first time with a particular drug (or combination of drugs) make sure you're with someone who's done it before' and `acid'-referring to LSD-`is occasionally cut with strychnine-in small doses. This won't harm you but will give you the odd stomach cramp'. Is the Minister aware that this book was provided to first year students only some few weeks ago? How does the Minister justify the use of student union fees, which are compulsorily levied under her Government's policies, to fund this publication? Further, how does the Minister reconcile her Government's drug offensive campaign with a situation whereby students are forced by Government policy, which allows the ANU to levy student union fees, to provide the funds for publications which advocate drug use and advise young people how to go about this? Senator RYAN(Australian Capital Territory-Minister for Education)(10.52) —In the adjournment debate tonight Senator Teague raised a lot of issues surrounding the development of policy which enables parents of 16- and 17-year-old students eligible for Austudy to redirect the payment to themselves starting from the second term of this year. Many of Senator Teague's comments were misguided and misinformed. I will arrange for a complete account of the policy development and all the issues surrounding it to be made available to Senator Teague. Senator Kilgariff drew to my attention-I must say that it had not been drawn to my attention before-the contents of an orientation week publication produced, I gathered from his remarks, by the Australian National University Students Association. While not condoning in any way the contents of the publication as they were described by Senator Kilgariff, I point out to him that there is no appropriate way in which a Commonwealth Minister for Education can censor a publication that comes from a body within an autonomous institution. If Senator Kilgariff has concerns about this publication, and I can understand that he has, I believe that he should take those concerns directly to the publishers of the handbook-the student union itself-and discuss his concern with it. Also, he may wish to pursue the matter with the governing council of the Australian National University, on which I believe the Opposition has a representative member. I remind Senator Kilgariff that it is a tradition in this country, pursued by both parties when in office, that universities are autonomous institutions and their publications are matters for internal decision-making and not for Federal censorship. However, if he pursues the course of action that I have advocated, he may get some satisfactory result. Question resolved in the affirmative. Senate adjourned at 10.53 p.m. The following papers were tabled: Acts Interpretation Act-Statement relating to a further extension of specified period for presentation of the Fishing Industry Research Committee Annual Report 1985-86. Australian Bureau of Statistics Act-Australian Bureau of Statistics-Proposals 1987- No. 1-Services industries surveys. No. 2-Survey of wholesale trade 1986-87. The following answers to questions were circulated: (Question No. 1165) Senator Archer asked the Minister representing the Special Minister of State, upon notice, on 5 June 1986: (1) What measures have been taken by the Government to ensure that the Australian Federal Police obtain ``the best person for the job'' following its response to recommendations 41 and 42 of the Stewart Royal Commission of Inquiry into Drug Trafficking concerning the appointment of senior police officers from outside the police force where the Government stated: ``the Government considers that the essential criterion should be who is the best person for the job''. (2) Are advertisements being placed throughout Australia in an effort to attract suitably qualified officers from other forces to senior positions in the Australian Federal Police; if not, why not. Senator Tate —The answer to the honourable senator's question is as follows: (1) and (2) The Australian Federal Police (AFP) has moved through a series of reviews of recruitment and training practices to improve the standard of the Force and ensure the appointment of the best person for the job. The AFP is not currently considering the introduction of lateral recruitment. (Question No. 1584) Senator Vigor asked the Minister representing the Minister for Communications, upon notice, on 10 December 1986: (1) Who has responsibility for the destruction of stamps, within Australia Post. (2) How are stamps destroyed and where does this destruction occur. (3) What reconciliations must be carried out before the destruction of any stamps can be authorised. (4) What steps are taken to ensure that all stamps returned to the State distributors' offices for destruction are in fact destroyed. Senator Walsh —The Minister for Communications has provided the following answer to the honourable senator's question, based on information provided by the Australian Postal Commission: (1) Prescribed procedures vest responsibility for destruction of postage stamps (after their receipt by Australia Post) with Stamp Destruction Boards, which are comprised of Australia Post staff. These procedures also specify that destruction of waste and sheets damaged during the stamp printing process is the responsibility of Australia Post staff. This material is generally destroyed by guillotine on the printer's premises. If large quantities are involved, destruction is carried out at a commercial pulping plant under security conditions. (2) Destruction in States other than New South Wales is generally by way of a shredding process performed on Australia Post premises. In New South Wales, and in other States when volumes are substantial, destruction is carried out at commercial pulping plants under security conditions. (3) A computer system is used to control stocks of postage stamps held by distributing areas, post offices and post office agencies. Stock movements are recorded on the system to enable a balance to be determined. Physical stock-takes are performed monthly to verify the balances held. Stamps returned from post offices and post office agencies for destruction are supported by a statement showing the value returned by denomination. The stamps are checked against the statement before being destroyed. Details of the stamps destroyed are entered into the computer system to update stock balances. (4) Prescribed procedures specify that the presence of two Australia Post officers during the destruction process is mandatory. Where in-house destruction facilities are utilised, two officers open articles containing stock for destruction, check the contents and destroy the stock immediately by shredding. Where in-house destruction is not practicable, stock is required to be stored in a secure location on Australia Post premises pending the accumulation of a sufficient quantity to transport to the destruction facility. Entry to the storage location is restricted and requires the presence of two officers. When a sufficient quantity is on hand, the stock is transferred to the destruction facility under armed escort and subsequently destroyed. Australia Post officers are required to observe the destruction process to ensure that the stamps are completely destroyed. (Question No. 1606) Senator Macklin asked the Minister for Industry, Technology and Commerce, upon notice, on 18 February 1987: (1) Can the Minister for Industry, Technology and Commerce inform the Senate of the number of trips he has made to Japan since March 1983. (2) Can the Minister advise the number of Japanese investment missions which have visited Australia during this period and which the Government feels it played a major role in organising or facilitating. (3) How many investment contracts have actually been signed by the Japanese, as a consequence of these contacts and visits, and when were they signed, what were their value, what did they involve and which Japanese and Australian companies were involved. Senator Button —The answer to the honourable senator's question is as follows: (1) I have made three trips to Japan since March 1983. These took place in May 1984, June 1985 and November 1986. The purpose of my trip in May 1984 was to have discussions with senior Japanese Government and business representatives on industry policy issues, including the introduction of the new motor vehicle plan. In June 1985 I attended the Australia-Japan Ministerial Committee Meeting in Tokyo and in November 1986 I led an Australian investment mission to Japan. (2) The only Japanese mission to examine general investment prospects in Australia since March 1983 which the Government has played a major role in organising and facilitating was the MITI-sponsored Japanese Investment Survey Mission which visited Australia from 6-16 February 1987. (3) The objective of the exchange of investment missions with Japan was to develop a much better understanding of investment opportunities in Australia and the substantial improvements that have occurred in the investment climate. The conclusion of specific agreements is, of course, a matter for individual commercial negotiations. These will take time, however, during the recent mission particular interest was expressed in the computer software, processed minerals, pulp and paper and automotive components sectors and proposals for investment or technological exchange in these areas are currently being examined by Japanese and Australian companies. Senator Walsh —On 25 September 1986 (Hansard, page 841) Senator Morris asked me, as Minister representing the Treasurer, the following question without notice: I direct my question to the Minister representing the Treasurer. Is it correct that the Australian Taxation Office in Sydney is entering into a contract on a trial basis to have some of its data processing work keyed by private contractors? Is it also true that the work could be done for the same cost or less in the Taxation Office itself and that the approximate cost of this scheme, $55,000, will be taken from funds allocated for salaries and wages? If this is true what security arrangements will be undertaken to ensure that the confidentiality of information provided by taxpayers will not be jeopardised? The Treasurer has provided the following answer to the honourable senator's question: The Australian Taxation Office in Sydney did enter into a contract to have some of its more routine data processing work keyed privately. The contractor's price was based upon a rate of $19.50 per thousand which is considerably less than the estimated $32.00 per thousand (excluding overheads) it costs the Australian Taxation Office to do the same work. Funding in 1986-87 is being made from salaries and payments in the nature of salary. No staff have been affected by this decision because the Taxation Office was not able to recruit the necessary staff to do the work. The contractor and his employees all completed secrecy declarations and are bound by the secrecy provisions of the income tax law in the same way and to the same extent as are people employed by the Commonwealth. Senator Tate —On 9 December 1986 (Hansard, page 3587) Senator Crowley asked Senator Ryan as Minister representing the Minister for Health, a question without notice concerning a recent survey by the Department of Sport, Recreation and Tourism on `Physical Activity Levels During Winter 1986'. Specifically, she sought comment by the Minister for Health on the disparity of figures across the nation. Senator Crowley also asked that the survey be brought to the attention of the Better Health Commission. The Minister for Health has provided the following information: The survey undertaken by the Department of Sport, Recreation and Tourism used a random sampling technique in which 3699 Australians aged 14 years and over were questioned about their physical activity over the two week period immediately prior to interview. The conclusion drawn by the media that Tasmanians were the laziest did not take into account that Tasmania has a colder, wetter winter than other States, particularly Western Australia. Tasmanians could therefore be expected to partake in less outdoor activity during winter. 59% of Tasmanians surveyed did exercise which, allowing for the climatic differences does not differ significantly from the national average of 68%. A detailed discussion on the results of the survey are contained in an information paper entitled: `5th Survey of Physical Activity Levels of Australians', available from the Department of Sport, Recreation and Tourism. The term of office of the Better Health Commission has now expired. However, the survey has been referred to Departmental officers responsible for following up the work of the Better Health Commission.