Friday, 29 May 1987 The PRESIDENT (Senator the Hon. Kerry Sibraa) took the chair at 9 a.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the honourable the President and members of the Senate assembled. The petition of the undersigned respectfully showeth that: 1. The Watsonia Army Barracks contains a satellite communication dish, that sends to the United States the information, gathered by the ``joint high frequency stations'' in Australia and New Zealand, indicating the position of the Soviet naval ships and submarines. This information from Watsonia is combined with data from satellites and underwater sensors to calculate the location of the Soviet vessels with great accuracy. 2. This would make it possible for the US nuclear naval ships and submarines to destroy all nuclear Soviet naval ships and submarines, while the US nuclear submarines, naval ships and bombers launch their missiles in a ``first strike'' attack. 3. This makes Watsonia a potential nuclear target. A nuclear attack on Watsonia would have a disastrous effect on Melbourne. 4. The ``joint US-Australian'' bases in Australia endanger rather than protect us. They also add a new menace to nuclear arms race, that must be stopped. Your petitioners most humbly pray that the Senate in Parliament assembled should close the ``joint Australian-US'' electronic communication facilities in the Watsonia army barracks. by Senator Zakharov (from 90 citizens). To the Honourable the President and 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 A.C.T. or to their sale in the A.C.T. 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 186 citizens). To the Honourable the President and members of the Senate in Parliament assembled: We the undersigned, (i) are greatly disturbed by the dangers to health posed by passive smoking, and evidence of which is being documented daily by medical authorities around the world; (ii) note that environmental tobacco smoke has been identified as the major pollutant in aeroplane cabins, and that its direct threat to health is recognised in the special leave provisions for flight attendants specifically on grounds of upper respiratory infections; (iii) appreciate the government's undertaking to legislate for smoke-free travel on aeroplanes, but are dismayed at the apparent reluctance to follow up the Minister for Aviation's December announcement with action; and (iv) call upon the government to make smoke-free aeroplane travel a reality without further delay, and to ensure that smoke-free areas which cannot be contaminated by recycled pollutants, are available at all aerodromes. And your petitioners as in duty bound will ever pray. by Senator Reid (from 199 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 2 per cent discounting of Commonwealth Occupational Superannuation Scheme pension adjustments on 10 October 1986 to be a serious breach of trust by the Government. The Commonwealth has reneged on an established commitment as incorporated in Commonwealth legislation and benefit promise pensions are not being paid in full. In particular we resent the long-term effect of the discounting. The pension loss is compounded throughout the life of a pensioner and surviving dependants-into the 21st century for many. We consider this Government-induced penalty to be out of all proportion to the short-term ``extraordinary circumstances of the economy'' given as the reason for the discounting. Your petitioners most humbly pray that the Senate, in Parliament assembled, should urge the Government to: 1. limit the pension discounting effect of the Superannuation and Other Benefits Legislation Amendment Act 1986 to the period 10 October 1986 to 1 July 1987 so that pensions are restored to the 9 October 1986 level as a base for the 1987 pension adjustment; and 2. consult with organisations representing pensioners before changing the terms and conditions of Commonwealth Occupational Superannuation Schemes. And your petitioners as in duty bound will ever pray. by Senators Chaney (from two citizens), Childs (from 86 citizens), Parer (from 43 citizens) and Reid (from 20 citizens). To the Honourable the President and members of the Senate in Parliament. The humble petition of the undersigned citizens of the Wide Bay Electorate respectfully showeth that: The Social Security Amendment Bill 1987, Schedule 1, page 15, additional amendments of the Social Security Act 1947, part 1, omit- ``Subsection 6 (1) (definition of `de facto spouse'): Insert `and includes a person who, but for a law of a State or Territory prohibiting sexual intercourse between the person and another person by reason only of the age of either person, would be such a person' after `to that other person'.'', Substitute- ``Subsection 6 (1) (definition of `de facto spouse'): Insert `but does not include a person who is living with another person in a relationship prohibited by a law of a State or Territory' after `to that other person'.''. And your petitioners as in duty bound will ever pray. by Senator Button (from 105 citizens). To the Honourable the President and 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 10 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that whereas: (a) Aboriginal and Islander languages, which numbered approximately 260 when Europeans first arrived, are even more seriously endangered-already 145 have become extinct. (b) English-speaking population expansion and English-speaking mass media expansion threatens the survival of the remaining languages of Australia. (c) Aboriginal languages reflect an ethos that is truly Australian and unless steps are taken to implement language maintenance, this ethos will be lost not only to Aborigines but to non-Aboriginal Australians, and to the world. We humbly pray the Government to: 1. Through the Prime Minister's Department, provide $300,000 per annum for a guaranteed period of ten years to enable the Aboriginal community of Australia to establish a co-ordinating body to implement steps to prevent the extinction of the remaining languages, and to introduce programmes which will enable these languages to continue into the future for the sake of ALL Australians. This body will enable us to maximise existing financial, material, and human resources, and is the least expensive way of implementing urgently needed maintenance programmes. 2. Through the Prime Minister's Department, provide finance for the establishment of Regional Language Centres-ten are urgently needed-cost $200,000 each. And we pray you may be conscious of God's sovereign purposes for our nation and your petitioners in duty bound will ever pray. by Senator Teague (from 44 citizens). Petitions received. Senator GARETH EVANS(Victoria-Manager of Government Business in the Senate) —I give notice that, on the next day of sitting, I shall move: That the second reading of the Broadcasting Amendment Bill 1986 be an Order of the Day for the next day of sitting. Senator HAINES(South Australia-Leader of the Australian Democrats) —I give notice that, contingent upon the Chair declaring that the time allotted for the consideration of a Bill, or any stage of a Bill, has expired, I shall move: That so much of Standing Order 407b be suspended as would prevent further consideration of the Bill, or the stage of the Bill, without limitation of time or for a specified time. Senator COONEY(Victoria) —Pursuant to my notice of intention given on 28 May 1987, I now withdraw Business of the Senate, Notices of Motion Nos 1 to 5 inclusive standing in my name for today for disallowance of certain delegated legislation. Senator COONEY(Victoria) —I give notice that, 10 sitting days after today, I shall move: That the Cooperative Societies (Amendment) Ordinance (No. 2) 1987, as contained in Australian Capital Territory Ordinance No. 8 of 1987 and made under the Seat of Government (Administration) Act 1910 be disallowed. That Bankruptcy Rules, as contained in Statutory Rules 1987 No. 51 and made under the Bankruptcy Act 1966 be disallowed. That Bounty (Ship Repair) Registration Regulations as contained in Statutory Rules 1987 No. 53 and made under the Bounty (Ship Repair) Act 1986 be disallowed. That Fisheries Notice No. 177 made on 30 March 1987 under the Fisheries Act 1952 be disallowed. That the Pharmaceutical Benefits Declaration, dated 18 March 1987 and made under section 85 of the National Health Act 1953, be disallowed. I seek leave to make a short statement. Leave granted. Senator COONEY —The Standing Committee on Regulations and Ordinances has been examining a number of instruments of delegated legislation. It has written to Ministers, and to allow a full opportunity for its concerns to be addressed without prejudice to the Committee's scrutiny I have given these protective notices of motion on this the last day on which I can do so. I seek leave to incorporate in Hansard a short statement of the Committee's concerns. Leave granted. The statement read as follows- The Bankruptcy Rules increase the fees to be taken in the office of the Registrar in Bankruptcy by between 33 and 66 per cent. The last fee increase was in 1982 so that a further increase may well be justified. However, the Explanatory Statement gives no indication of the basis, reasonable or otherwise, on which these fee increases are made. Thus the Committee cannot reassure the Senate that the increases are not excessive and therefore at variance with the Committee's Principles, until some additional explanatory material has been provided. This protective notice is intended to give the Attorney-General, (the Hon. Lionel Bowen, M.P.), adequate time to respond to the Committee on this question. Fisheries Notice No. 177 is a very brief instrument which prohibits the taking, processing or carrying of Epinephelus daemelii (black cod). It appeared to the Committee that this was a completely unqualified and indefinite ban on such fishing at all times in all Commonwealth waters. The Fisheries Notices, was not accompanied by any explanatory document briefly describing the purpose and effects of this ministerial enactment. Without an adequate explanation the Committee is unable to reassure the Senate that the prohibition is not such an unreasonable deprivation of livelihood that it is at variance with the Committee's principles that personal rights should not be unduly interfered with by delegated instruments. The Committee has invited the Minister for Primary Industry, (the Hon. John Kerin, M.P.), to brief the Committee on the background to this Notice. The Minister has also been invited to consider the possible advantages of directing his officials to transform into explanatory notes the background and briefing documents prepared for him prior to his making Fisheries Notices. This protective notice is intended to give the Minister adequate time to respond to the Committee on this issue. The Bounty (Ship Repair) Registration Regulations regulates applications for registration for the receipt of bounty. The names of an applicant's subcontractors are to be submitted to the Minister along with the application. A refusal to register an application is subject to review by the Administrative Appeals Tribunal. Where, after registration, unforeseen technical or other problems arise and a repairer wishes to make use of the services of another subcontractor, Ministerial approval is again required. However, an unfair or unjustified refusal to permit the use of a particular subcontractor at this stage is not subject to review. An unreasonable decision could be made which could cause commercial damage to both the repairer and the subcontractor. The Committee has invited the Minister to consider whether on principle some further right of review should not be made available for aggrieved repairers and subcontractors. This protective notice is at present intended to give the Minister for Industry, Technology and Commerce, (Senator the Hon. John Button), adequate time to respond to the Committee on this question. The Cooperative Societies (Amendment) Ordinance (No. 2) 1987, in modifying the application of the Companies Act to the winding up of cooperative societies, is made to operate retrospectively for over 3 years to 1 January 1984. The accompanying Explanatory Statement does not indicate why retrospectivity was needed in the first instance; why such a lengthy period of retrospectivity was chosen; why the application to co-operative societies of previous modifications of the Companies Act have not proved wide ranging enough; what practical implications arise from this latest retrospective modification of laws; what doubts may have existed as to the validity of previous winding-up actions; or whether any society, or individual or class of individuals may be prejudiced by the retrospective operation of this delegated legislation. The Committee is hopeful of obtaining full explanations from the Minister (the Hon. Gordon Scholes, M.P.) and this protective notice is, at present, intended to give the Minister adequate time to respond to the Committee on these questions. The Pharmaceutical Benefits Declaration of 18 March 1987 permits certain drugs and medicinal preparations to be pharmaceutical benefits. Certain drugs may be benefits only with the authority of the Secretary of the Department of Health. A refusal to issue an authority may mean that the drugs in question are not available at reduced cost for the treatment of patients suffering from particular illnesses. The Committee has invited the Minister for Health, (the Hon. Dr. Neal Blewett, M.P.), to advise the Committee on the implications of refusals to authorise the use of certain drugs and whether any avenue of appeal or redress exists to underwrite the quality of difficult decisions that could have important consequences for individuals. Senator HAINES(South Australia-Leader of the Australian Democrats) —I give notice that, contingent upon the Chair declaring that the time allotted for the consideration of a Bill, or any stage of a Bill, has expired, I shall move: That so much of Standing Order 407b be suspended as would prevent the questions being put in respect of any amendments circulated by the Australian Democrats or the Opposition, and that such questions be put accordingly. Senator HARRADINE(Tasmania) —I give notice that, contingent upon the Chair declaring that the time allotted for the consideration of a Bill, or any stage of a Bill, has expired, I shall move: That so much of Standing Order 407b be suspended as would prevent further consideration of the Bill, or the stage of the Bill, without limitation of time or for a specified time. Senator VALLENTINE(Western Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate (a) notes the vote scheduled to take place in the Republic of Belau in the United Nations Trust Territory of the Pacific Islands on 2 June 1987; (b) notes, too, that this is the 8th time that the people of Belau have had to vote on the proposed Compact of Free Association with the United States since 1979; (c) commends the 15,000 people of Belau for having the world's first nuclear free constitution; (d) deplores the refusal of the United States to acknowledge the democratic wishes of the people of Belau to have a nuclear free constitution confirmed in 7 previous elections and the bullying tactics being used to force them to vote against it on 2 June 1987; and (e) urges the Australian Federal Government to remind the United States Government that it is supposed to be committed to democracy and should therefore accept the voice of the people of Belau and not make them go on voting until they accept the constitution that the United States wants but the people of Belau do not want. Senator REID(Australian Capital Territory) —I give notice that, on the next day of sitting, I shall move: That the Senate (a) take note of a project undertaken by Year 9 and 10 students from the Caroline Chisholm High School who have provided their labour to construct an adventure trail for disabled children which includes access for wheelchairs at the Birrigai Outdoor Education Centre; and (b) congratulates these young people for their effort and community spirit. Senator HARRADINE(Tasmania) —I give notice that, contingent upon the Chair declaring that the time allotted for the consideration of a Bill, or any stage of the Bill, has expired, I shall move: That so much of Standing Order 407b be suspended as would prevent the questions being put in respect of any amendments circulated by the Australian Democrats or the Opposition, or Independent senator or Independent senators, and that such questions be put accordingly. Bills received from the House of Representatives. Motion (by Senator Tate) agreed to: That the Bills may proceed without formalities, may be considered together and be now read a first time. Bills read a first time. Senator TATE(Tasmania-Special Minister of State)(9.07) —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- CUSTOMS TARIFF AMENDMENT BILL 1987 The Customs Tariff Amendment Bill 1987 which is now before the Senate contains a wide variety of Amendments to the Customs Tariff Act 1982. Two clauses in the Bill contain actual amendments to the Customs Tariff Act 1982 but the main amendments are contained in the Bill's 12 Schedules. Schedule one to the Bill, operative on and from 1 April 1986, provides for changes in the duty treatment of certain goods of New Zealand origin. The operative date of this Schedule was selected to give the maximum period available, under Customs regulations, for the payment of refunds of customs duty on the goods involved. Agreement has been reached between the Australian and New Zealand governments that child safety and booster seats used in motor vehicles are not covered by the provisions of the furniture arrangement or the interim arrangement on motor vehicles under the Australian New Zealand Closer Economic Relations-Trade Agreement. Accordingly such seats should have been subject to the normal liberalisation provisions of article 4 of the agreement. The applicable 10 per cent tariff should therefore have commenced phasing from 1 January 1983 and have been removed on and from 1 January 1984. The relevant change in this schedule totally removes the duty. The current 5 per cent duty on ballpoint pens and parts therefore of New Zealand origin is also being removed. This change follows consultation under ANZCERTA to provide liberalised arrangements for these goods. Schedule two to the Bill, operative on and from 1 October 1986, contains a number of changes associated with the Government's sectoral policy for passenger motor vehicles. This schedule extends the validity period for 1986 base quota for motor vehicles by two months to 31 March 1987 while the validity period for all new motor vehicle quotas is being extended to 18 months. The 18-month period for new motor vehicle quotas permits three months anticipation before the calendar year and a three-month carryover after the conclusion of that year. The 1987 single period tender scheme commenced on 1 October 1986. As the successful tender premium rate was zero, the general tariff rate to apply is 57.5 per cent-the base quota rate. The 1987 multiple period tender scheme operates for each of four periods of 18 months commencing on 1 October in each of the years 1986 to 1989 inclusive. Vehicles imported in each of these quota periods will attract a general tariff rate of 60.5 per cent, three percentage points higher than the base quota rate. The final change in this schedule involves the rate or duty to apply to under-quota imports of passenger motor vehicles qualifying for developing country preference. In accordance with the principles of the revised Australian system of tariff preferences for imports from developing countries which formed part of the Customs Tariff Amendment Act 1986, all new quotas are to have a margin of preference of five percentage points. This is a change from the 7.5 percentage points applying to quotas in existence at the time of implementation of the revised developing countries preference scheme. Schedules 3, 7, 9 and 12 to the Bill, operative on and from 16 October 1986, 17 January, 14 February and 14 March 1987 respectively, alter the rates of customs duty applicable to certain refined petroleum products. In each instance the customs tariff rates are varied in line with changes to the rates of excise duty applicable to equivalent locally produced goods. Schedule 4 to the Bill, operative on and from 1 November 1986, contains the first steps in the implementation of the Government's decision on the Industries Assistance Commission's report on the chemicals and plastics industries. Duty free entry is provided for fertiliser grade phosphoric acid. This will enable Australian manufacturers to increase their output of high analysis phosphatic fertilisers in response to the changes in subsidy arrangements announced in the Budget, and to maintain supply to farmers at competitive prices. In addition, an item is inserted into the concessional schedule to the Customs Tariff Act to enable the issue of a policy by-law to permit the importation of high density polyethylene resin for use in the extrusion of film for bag production, at a general tariff rate of 20 per cent. This by-law is necessary because of a serious shortfall in the production of this resin in Australia. In the absence of the by-law, high density polyethylene bag manufacturers would have had to pay a general tariff rate of 45 per cent until the end of January 1987 and then pay a rate of 25 per cent until the end of December 1987. This would cause serious disruption to employment and investment in the industry. The by-law will only be necessary until the end of December 1987 as on and from 1 January 1988 the general tariff rate for the relevant provision in Schedule 3 to the Customs Tariff Act will become 20 per cent. I will provide greater detail on the new assistance arrangements for the chemicals and plastics industries when I come to Schedule 8 to the Bill. Schedule 5 to the Bill, operative on and from 17 December 1986, implements the Government's decision on the Industries Assistance Commission's interim report on citrus fruit. The Government has decided to reintroduce the rates of duty which applied to citrus fruit juices of tariff sub-item 20.07.2 in Schedule 3 to the principal Act, prior to 10 December 1986, until 9 December 1987. The rates will then phase down on and from 10 December 1987. The Industries Assistance Commission's final report on the fresh fruit and fruit products industries is due in early 1988. Schedule 6 to the Bill, operative on and from 1 January 1987, contains a variety of amendments. The first set of amendments provides for the phased reduction of duty to free on certain rubber goods of New Zealand origin. This action follows mutual determination by Australia and New Zealand under the Australia New Zealand Closer Economic Relations-Trade Agreement. This schedule also implements a decision taken in the context of the Government's consideration of the post-1988 assistance arrangements for the textiles, clothing and footwear industries. The general tariff rate of 25 per cent on knitted fabrics laminated with expanded or foam rubber is reduced to 2 per cent. A series of amendments made in the context of the current textiles, clothing and footwear sectoral policy is also included. These cover- variations to the developing country exclusions from preference which are made annually; the insertion of the 1987 tender quota rates of duty following the settlement of the relevant premium tender quota rates; the extension of the validity of the 1986 quota allocations; the phased duty reductions in certain items for goods of New Zealand origin which are made in accordance with article 5 of the ANZCERTA; and changes providing special provisions in relation to footwear from New Zealand and handmade footwear from developing countries to avoid large variations in duty rates which could occur because of currency fluctuations. Amendments of Schedule 3 and Part II of Schedule 4 to the Customs tariff Act regarding passionfruit products also form part of this schedule. These changes complete the implementation of the new forum island countries preference scheme which came into operation for all other goods on 1 July 1986. The final amendments in this schedule cover phasing arrangements under Article 4 of ANZCERTA and the deletion of redundant phasing rates in Schedule 3 and Part I of Schedule 4 to the principal Act. Schedule 8 to the Bill, operative on and from 1 February 1987, commences the implementation of the main part of the Government's decision on the Industries Assistance Commission's report on the chemicals and plastics industries. The amendment in clause 4 of the Bill is consequential on a change in this schedule. Schedule 8 provides the first step in the phasing-in of the long term rates to apply to the chemicals and plastics industries. Most general tariff rates above 25 per cent fall to 25 per cent. Rates on certain basic chemicals are, however, reduced in the first phase to 20 per cent. Also included in this schedule are new provisions in the Customs Tariff Act to enable the implementation of policy by-lays: To permit the duty free importation of caustic soda for use in the production of alumina and for use in the processing of specified rare earth compounds and metals; and To continue the duty free entry of certain films and plates used in educational, religious and related activities. The final change in this schedule is the amendment of the definition of refined glycerol. In its decision on new assistance arrangements for the chemicals and plastics industries, the Government accepted the Industries Assistance Commission's major recommendation that a maximum long term tariff rate of 15 per cent be implemented. This and the related tariff changes contained in these arrangements will be phased in over three to five years. In reaching its decision, the Government recognised that Australia's chemicals and plastics industries have recorded a relatively strong economic performance over many years. This decision should encourage the establishment or expansion of efficient manufacturing facilities and of higher value-adding activities in Australia, thus providing the opportunity for our chemicals and plastics industries to become successful competitors in the international market-place. If there was one significant thread running through the evidence gathered during the inquiry into these industries, it was the general acceptance of the need for change. The combination of the new assistance arrangements and the recognition of the changes necessary to achieve and sustain growth should underpin the process of restructuring and provide a sound environment for new investment. Schedule 9 to the Bill, operative on and from 14 February 1987, contains a change to implement the Government's decision on the Industries Assistance Commission's report on electric lamps. The Government has accepted the Commission's recommendation that all electric lamps and parts therefor under reference be dutiable at a general tariff rate of 15 per cent. Schedule 10 to the Bill, operative on and from 1 March 1987, implements two tariff changes on which decisions were taken in the context of the Government's decision on the textiles, clothing and footwear industries' post-1988 assistance arrangements. The general tariff rate on knitted towelling and knitted towels increases from 35 per cent to 60 per cent while the general tariff rate for interior textile blinds increases from 2 per cent to 25 per cent. These changes are being made to remove anomalies which permit the goods involved to be entered at rates lower than those applying to substitute products. These changes were deferred from their earlier operative date of 1 January 1987 in order not to penalise importers who were irrevocably committed to overseas purchases or who had goods `on the water'. Schedule 11 to the Bill, operative on and from 10 March 1987, implements the Government's decision on the Industries Assistance Commission's report on the power electronics industry. The Government has decided on a uniform general tariff rate of 20 per cent for most power electronic goods under reference. Static converters, rectifiers and rectifying apparatus become dutiable at a general tariff rate of 25 per cent for one year and then phase to the long term rate of 20 per cent. All programmable controllers become free of duty and subject to bounty assistance. The Government has decided not to change the tariff rates on electro-mechanical relays and switchgear as it believes that these goods are not ordinarily considered to form part of the power electronics industry. The 20 per cent rate for the power electronic goods industry aligns its assistance arrangements with those of other electronics-based activities, particularly the communications industry. The last amendment in the Bill is contained in clause 3. This amendment merely corrects a drafting error which was contained in the Customs Tariff Amendment Act (No. 3) 1986. Financial Impact The decreases in refined petroleum product excise and customs duty rates effective from 16 October 1986, 17 January and 14 February 1987 are expected to result in decreases in revenue of about $85m, $5m and $176m respectively in 1986-87. The increase effective from 14 March 1987 is expected to result in an increase in revenue of about $30m in 1986-87. These changes exactly offset the changes in revenue from crude oil excise and royalty. It is very difficult to quantify the financial consequences of a decision as complex as the one on the chemicals and plastics industries. Nevertheless, it is likely that as the new tariff rates are phased down the loss of revenue, assuming unchanged import levels, will be of the order of $35m to $45m a year. Part of this loss of revenue is likely to be compensated for over the longer term through growth taking place within the industries. The Government's decision on electric lamps is likely to increase revenue by approximately $3m in a full year. This increase takes into account a reduction in revenue of about $0.5m caused by the lower general tariff rate of 15 per cent of fluorescent lamps. The net impact of the power electronics industry decision is expected to be an increase in revenue in the order of $10m in a full year. This additional revenue is largely attributable to the new general tariff rate of 20 per cent of goods such as variable speed drives which were previously duty free. It is estimated that the direct financial impact of the decision on citrus fruit juices will be an addition to government revenue totalling approximately $235,000 during 1987. The reduction in duty on knitted fabrics laminated with expanded or foam rubber will result in a loss of revenue of the order of $0.7m in a full year. The changes on knitted towels and towelling and textile blinds will result in increases of approximately $1.3m and $1.5m respectively in a full year. The duty reductions for rubber goods, child booster and safety seats and writing implements of New Zealand origin are expected to be modest. There is expected to be minimal financial impact caused by the other amendments in the Bill. A summary of amendments for each schedule to the Bill has been prepared and copies are available from the records and tables office. I commend the Bill. EXCISE TARIFF AMENDMENT BILL 1987 This Bill proposes amendments to the Excise Tariff Act 1921 to incorporate into that Act all excise tariff proposals tabled in this Parliament as at 1 April 1987. The majority of the amendments at clauses 5 to 11 of the Bill involve alterations that have occurred since 1 October 1986 to the excise duty on certain refined petroleum products and naturally occurring LPG. The alterations to the excise on petroleum products have been made as a consequence of the policy since 1 March 1986 of fully offsetting changes in revenue from crude oil excise and royalty by corresponding across the board changes in excise duty on petroleum products. The net result is that, as crude oil prices change, Government revenues remain the same overall and petrol price changes are kept to a minimum. Consistent with this policy, the proposals in this Bill reflect that on 1 October 1986, 1 January 1987 and 1 February 1987 the import parity prices of indigenous crude oils were increased in line with upward movements in world oil prices and changes in the Australian exchange rate. Corresponding reductions to the excise rates on refined petroleum products were subsequently made with effect from 16 October 1986, 17 January 1987 and 14 February 1987 respectively. On 1 March 1987 the import parity price of indigenous crude oil was decreased in line with a downward movement in world oil prices and an increase in the Australian exchange rate. Corresponding increases to the excise rates on refined petroleum products were made with effect from 14 March 1987. I should mention that customs duties are also levied on imports of most petroleum products at a rate equivalent to the rate of excise levied on the same products. The alterations to the excise on naturally occurring LPG at clauses 5, 7 and 11 of the Bill are made in conformity with the Government's LPG excise policy which provides for the excise rate on LPG to be calculated on the basis of 60 per cent of the amount by which the average realised wholesale price for naturally occurring LPG exceeds $147 per tonne. Other excise alterations at clauses 3 and 4 respectively of the Bill involve a reduction in the top marginal rate of excise on old oil and the introduction of a mechanism to permit the collection of a duty differential on certain manufactured goods. The top marginal rate of excise on old oil was reduced on 1 August 1986 from 87 per cent to 80 per cent of the Bass Strait import parity price. This reduction was made at that time to offset a substantial decline in world crude oil prices which had severe ramifications for the cash flow and financial viability of all Australian crude oil producers. When reducing the top marginal rate we indicated that the position would be reviewed if world oil prices recovered to $20 per barrel. The price has in fact recovered beyond this level but we have decided to leave the arrangements in place for the time being pending the outcome of a major examination of the revenue measures applying to the oil industry generally. We expect to make an appropriate announcement on this matter shortly. The only other proposal in this Bill is the mechanism to collect a duty differential on certain manufactured goods. Under section 24 of the Excise Act permission may be given for the use of imported goods upon which duties of customs have not been paid to be used in the manufacture of excisable goods. For example it is common for imported tobacco to be used in a blend with Australian tobacco in the manufacture of cigarettes. If the rate of customs duty that would have been payable on the imported product exceeds the rate of excise duty payable on the mixed goods, as is sometimes the case, then it is our not unreasonable policy to collect the duties of excise on the mixed goods plus an amount of duty on the imported component equal to the difference between the rate of customs that would have been payable on the imported component and the rate of excise duty on the mixed goods. The provisions of clause 4 of the Bill propose to implement this policy. Financial Impact Statement The decreases in refined petroleum product excise rates effective from 16 October 1986, 17 January 1987 and 14 February 1987 are expected to result in decreases in revenue of about $85m, $5m and $176m respectively in 1986-87. The increase in refined petroleum product excise rates effective from 14 March 1987 is expected to result in an increase in revenue of about $30m in 1986-87. As I mentioned earlier, these changes are expected to offset the changes in revenue from crude oil excise and royalty. The alterations to the LPG excise at clauses 5, 7, and 11 of the Bill are expected to result in a net reduction in revenue of about $50m in 1986-87. At the time of our announcement in July 1986, the reduction in the top marginal rate of excise on old oil to 80 per cent was expected to reduce excise revenues by approximately $67m in 1986-87. However we were confident that this reduction would be outweighed by net revenue gains flowing from increased production and a resumption of exports of crude oil from Bass Strait. This confidence has proven to be well founded. Exports of Bass Strait crude oil resumed in August 1986 and to date have exceeded 25 million barrels. These exports have contributed about $300m by way of excise revenues and more than $500 million to our balance of payments, a very important contribution at a critical time. Finally collection of duty differentials pursuant to clause 4 are estimated to be in the vicinity of $200,000 in a full year. I commend the Bill to the Senate and present the explanatory memorandum to the Bill. CUSTOMS (VALUATION) AMENDMENT BILL 1987 This Bill proposes amendments to the provisions governing the valuation of imported goods in the Customs Act 1901. Those provisions are designed to give effect to the GATT valuation code to which Australia is a signatory. The measures in this Bill are the first stage of the Government's two-pronged legislative attack against certain avoidance and minimisation practices used by importers in valuing goods imported into Australia. By way of background I should mention that the Australian Customs Service, with the aid of the Attorney-General's Department, has been conducting a comprehensive examination of the effectiveness of the valuation provisions in the Customs Act. That examination has brought to light a number of apparent loopholes and avoidance practices being exploited by importers. I should emphasise that we are not accusing all importers of engaging in avoidance practices. However, experience has shown that some importers have entered arrangements that are designed solely to reduce assessable customs value and thereby reduce duty liability. The Government is therefore of the view that any opportunity for abuse must be removed as soon as it is discovered. Because of the need to protect the revenue and ensure delivery of correct tariff assistance to local industry, we have decided to correct the inadequacies in the Act that have been revealed to date. Because of the complexity of some of the arrangements it is necessary that the amendments be done in two stages. The first stage is covered by this Bill. The second stage we expect to introduce into the next sittings of the Parliament. The Government cannot tolerate deficiencies in the law which permit practices resulting in the erosion of the revenue and existing assistance levels. This ultimately places an undue burden on the Australian taxpayer who has to make up the difference, and substantially affects local manufacture and employment. Let me demonstrate the known avoidance practices by several examples. One is a practice commonly known as transaction splitting, whereby the importer pays part of the purchase price to an associated company of the vendor, ostensibly for services rendered in relation to the goods. Clause 4 of the Bill extensively redrafts key definitions of the Act designed to eliminate this practice. Further, it has been discovered that in cases where a price threshold affects the duty rate, some importers are combining transactions for two different types of goods. By price averaging the two, some importers are succeeding in deliberately understating the true value of one of the goods, thereby minimising or avoiding duty. Clause 5 of the Bill is designed to stamp out this practice. As another example, the examination has revealed that the deduction normally allowed for commission paid to the importer's buying agent is being manipulated by the misrepresentation of an alleged agency relationship, whereas the true picture is that the middle man is in fact the agent of the vendor, or in some cases, the vendor himself. Clause 6 (c) of the Bill will close this loophole by allowing only commissions paid to genuine buying agents acting solely for the purchaser to be deducted from the customs value. Incidentally, the deduction of buying commission from the customs value of the goods is required by the GATT valuation code. Other amendments in the Bill tighten and clarify the existing provisions to ensure certainty in the valuation process. Clause 4 (d) proposes to restrict deductions from customs value allowed in respect of purchaser's rebates, to those rebates which have actually been received at the time of entry of the goods. The Customs Act currently permits interest and any other cost or charge pursuant to a financing arrangement, to be excluded from the value of imported goods. Clause 4 (f) amends the Act to provide that only interest paid under a finance agreement is to be an allowable exclusion, in accordance with the GATT valuation agreement to which Australia is a party. Finally, the Customs Act provides for duties to be recovered as Crown debts. However, the current provisions restrict the time limit for the redetermination of values to 12 months. This Bill seeks to remove this limitation to facilitate the recovery of any duties owing through the use of schemes which misrepresent the true value. To arm the Australian Customs Service with the capacity to deal with the kinds of avoidance practices revealed by its examination, the Bill proposes at clause 9 the removal of the 12-month limit. The Bill also proposes certain other machinery amendments which are set out in the explanatory memorandum which has been circulated. As indicated earlier I give notice that the examination of valuation legislation is continuing and, as a second stage in the Government's strategy, we intend to introduce further amendments in the Budget sittings this year to eliminate any opportunity for avoidance or minimisation of the value of imported goods. Financial Impact Statement The financial impact of the practices I have just outlined is considerable. For example, by claiming a deduction for a buying agent's commission in respect of what is essentially the agent of vendor, it is estimated that one of major importers has saved about $4m a year. If all the major importers adopted the practice, there would be a revenue loss of about $90m. Deductions allowed in respect of interest under a finance agreement already amount to about $40m. If the provisions are not tightened, the loss to the revenue could involve an additional $40m. By closing these and other loopholes in the existing legislation to eliminate known avoidance and minimisation practices, it is estimated that at least $146m will be saved on an annual basis. This figure includes an estimate of the sales tax component on goods collected by the Australian Customs Service on behalf of the Australian Taxation Office. The effect of these practices on local industry has not been quantified but it is obvious that any erosion of assistance levels by avoidance and minimisation practices can only be detrimental to local industry and employment. I commend the Bill to the Senate and present the explanatory memorandum to the Bill. Debate (on motion by Senator Reid) adjourned. Bill received from the House of Representatives. Motion (by Senator Tate) agreed to: That the Bill may proceed without formalities and be now read a first time. Bill read a first time. Senator TATE(Tasmania-Special Minister of State)(9.08) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave not granted. Senator TATE —This Bill is an omnibus measure proposing amendments to various bounty and subsidy Acts. The major proposals contained in the Bill are: (i) Amendments to the Bounty (Textile Yarns) Act 1981, arising from the Government's textile, clothing and footwear decision late last year. These amendments propose to remove the present disincentive on local yarn producers who wish to engage in export production by extending the eligible production costs upon which bounty is paid to include a producer's overheads associated with export production as and from 1 July 1987; (ii) Amendments to the Fertilisers Subsidy Act 1986 to give effect to the Government's intention that locally produced fertiliser should be subject to the new assistance regime set out in the Act from 20 August 1986-the date of commencement of the Act; (iii) Amendments to the Bounty (Books) Act 1986 to acquit undertakings given to the Senate Standing Committee for the Scrutiny of Bills and the Parliament during the debate on this Act in the last sittings that certain determinations of the Comptroller-General of Customs under the Act would be subject to parliamentary scrutiny via the tabling and disallowance provisions applicable to regulations; and (iv) Amendments to the Subsidy (Cultivation Machines and Equipment) Act 1986, to remove the present impediment on manufacturers of equipment prior to the commencement of the Act from receiving subsidy on that equipment, where the equipment was held in the manufacturer's stock at the commencement of the Act. In addition, the Bill makes a number of technical amendments and effects a series of drafting changes to update the administrative provisions in various other bounty and subsidy Acts. These amendments are set out in detail in the explanatory memorandum which has been circulated. I shall now outline the major proposals in the Bill. Part IV contains the proposed amendments to the Bounty (Textile Yarns) Act 1981 relating to the extension of eligibility for bounty to a proportion of overheads associated with production for export. From 1 July 1987 companies eligible for the yarn bounty whose production is mainly-at least 50 per cent-sold in Australia will be able to claim bounty on 30 per cent of bountiable costs associated with production for export. This amendment has been introduced not as a subsidy to export production but to address an anomaly in the present Act which has penalised yarn producers who were exporting. Under the current bounty fixed overheads associated with export production are not included as part of a producer's eligible costs. The amendment to the Act will address this anomaly while maintaining the basic objective of the yarn bounty scheme. That objective is to support local production of yarns for use in Australia and, at the same time, provide downstream users access to yarns at minimum rates of duty. This is borne out by the requirement that a company's production must be domestically oriented to qualify for the bounty and by the fact that only a proportion of overheads will be eligible for bounty. The proposed amendments to the Fertilisers Subsidy Act 1986 are contained in Part V of the Bill. That Act introduced new assistance arrangements for fertilisers, giving effect to the Government's decision last year to remove the subsidies payable on imported fertilisers, and reallocate those savings by increased subsidy payments-via increased rates of subsidy-on locally produced phosphatic fertilisers. It was the Government's intention that the new higher rates for locally produced phosphatic fertilisers apply immediately-that is, from 20 August 1986. In fairness, however, to people already committed to consignments of imported fertilisers, the Act contained a provision to continue the previous arrangements on fertilisers exported to Australia before 20 August 1986. Although the transitional provisions of the Act gave effect to the Government's intention relating to imported fertilisers, there is some doubt as to whether the new subsidy regime would apply to locally produced fertilisers as and from 20 August 1986. The proposed amendments make it clear that this is the case. Part III of the Bill contains the proposed amendments of the Bounty (Books) Act 1986, the principal of which are the amendments in clause 10 which treat the Comptroller-General's declarations for the purposes of section 4 of the Act as if they were regulations, so that the Parliament's ability to scrutinise the declarations is preserved via the tabling and disallowance provisions applicable to regulations. The Senate Standing Committee for the Scrutiny of Bill drew the Government's attention to this matter when the Act was before this Parliament last sittings. The last measure which I propose to deal with here relates to the proposed amendments to the Subsidy (Cultivation Machines and Equipment) Act 1986 in Part VI of the Bill. That Act introduced new assistance arrangements for certain farm machinery as part of the Government's rural economic policy of 15 April 1986. In essence, those arrangements replaced tariffs on certain farm machinery with direct assistance to local producers and importers from that date until 31 December 1990. An important element of the new regime was that the assistance for manufacturing extend to all classes of `eligible' stock on hand at the commencement of the Act, so that this machinery would not be overpriced as against new machinery produced during the subsidy period. It has become apparent that the existing legislation does not have this effect. The proposed amendment in clause 21 of the Bill will correct the position by removing the present technical impediment on manufacturers of equipment prior to 15 April 1986 from receiving subsidy on that equipment where the equipment is held in stock on that date. Financial Impact Statement With one exception, the amendments in this Bill have no direct financial implications. The exception is the amendment to the Bounty (Textile Yarns) Act 1981 relating to the extension of eligibility for bounty to a proportion of a producer's overheads associated with production for export. Given the current low level of yarn exports, it is expected that an additional $300,000 in bounty payments under the Act will be made in 1987-88, the financial year when the extension commences. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Senator COATES(Tasmania) —Pursuant to order, I present the report of the Senate Standing Committee on Finance and Government Operations on the briefing note on interest rates tabled in the Senate by the Minister for Education (Senator Ryan) on 25 February 1987, together with the transcript of evidence. Ordered that the report be printed. Senator COATES —by leave-I move: That the Senate take note of the report. I seek leave to continue my remarks later. Leave not granted. Senator SHORT(Victoria)(9.15) —I do not wish to take too much time of the Senate on this matter. This report of the Standing Committee on Finance and Government Operations is an important one. It was done following the reference to the Committee of the whole question of a departmental minute tabled in the Senate on 25 February by the Minister for Education (Senator Ryan) in response to a request by Senator Chaney, the Minister having quoted from the document in answer to a question from Senator Archer about housing interest rates. The reference to the Committee was along the lines that the Committee inquire into and report on the basis on which Dr Hawkins, a senior officer of the Department of Housing and Construction, made his assessment of the outlook for home interest rates, which was essentially that home interest rates would not fall over the year ahead. As the Senate will recall, that view, although shared by this side of the chamber, was flatly denied and contradicted by the Government, and in particular by the Prime Minister (Mr Hawke), shortly after the report had been tabled. The Senate referred the matter to the Committee firstly to try to ascertain the reasons for Dr Hawkins's advice to the Government in the first place and, secondly, to ascertain why the Government had rejected that advice, bearing in mind that Dr Hawkins was a doctor of philosophy in economics and was in charge of economic policy advising in the Department of Housing and Construction on matters such as interest rates, and bearing in mind in particular that he was a key member of the Government's main advisory committee on housing, the Indicative Planning Council. That committee comprises senior representatives of such bodies as the Treasury, the Reserve Bank of Australia and other organisations very closely involved and concerned with the housing market and with interest rates generally. The views that Dr Hawkins had expressed in the minute from which Senator Ryan read, and which she subsequently tabled in the Senate, were not just Dr Hawkins's views but also those of the Indicative Planning Council. Indeed, the subsequent report of the Indicative Planning Council certified the views contained in the minute that Senator Ryan had tabled. The main point I want to make in relation to the report tabled by the Finance and Government Operations Committee is that the unanimous conclusions of the Committee state: . . . Dr Hawkins' assessment of the outlook for home interest rates . . .; was based on his judgment at the time as a senior official with sound credentials and knowledge of the housing industry; took into account then available economic information and the views of the short term forecasting committee of the Indicative Planning Council of which he is secretary; but did not, and could not, take into account the likely impact on market interest rates of the Government's announcement that an economic statement would be made in May 1987, and of that statement itself. Dr Hawkins's views were expressed back in February. The report continues: The Committee reports that because the Government indicated that it had already given its response on this matter in the Parliament and had nothing further to add, and its considerations on this matter were confidential to the Government and its advisers the Committee cannot reach a conclusion on why the document does not represent the judgment of the Government. Those conclusions were unanimous. But three members of the Committee, namely Senator Vanstone, Senator Vigor and I, expressed considerable concern at the attitude of the Government in relation to the latter part of the Committee's reference. We appended a statement to the report of the Finance and Government Operations Committee in which we expressed concern at the attitude of the Government as indicated by the Prime Minister. I want to read to the Senate-it is a very brief report-our expressions of concern. The report reads: Interest rates, while having an immediate effect on the housing industry, have far reaching effects that touch the lives of all Australians. The factors which effect interest rates are well known to those involved in forecasting their movements and the public in general. It seems extraordinary that the Prime Minister should respond to the Committee in the terms that he did, which are cited at paragraph 17 of the Report. Those terms in which the Prime Minister had replied to the Committee in writing on 11 May were: The considerations leading to the Government's decision to reject the judgment in the briefing note prepared by Dr Hawkins are confidential to the Government and its advisers and have not been made public. In those circumstances I could not agree to allowing officials to give evidence on those considerations. In our expression of concern we added that the comments of the Prime Minister: . . . seem inconsistent with the perception this Government seeks to create of being committed to open government and consensus. We believe a substantial proportion of the material taken into account in any forecasting of interest rates is a matter of public record and that it would be in the public interest for there to be a clear understanding of the basis on which the Government has made its assessment. Our concluding paragraph says: The Prime Minister's recalcitrance in using the guidelines-for the appearance of witnesses before parliamentary committees-as a means of preventing a proper assessment of this reference by the Committee does the parliamentary system and this Government no credit. That is the end of our statement of concern. I want to have that firmly on the public record. I believe that the Prime Minister and the Treasurer (Mr Keating) abused the parliamentary system by their attitude in this matter. The housing industry is a key element of our economy. It affects virtually each and every Australian. For a government-and particularly its Prime Minister-to say in writing to a parliamentary committee that it is not prepared to explain the reasons why it took a view contrary to that of one of its very important economic advisers in this area is quite extraordinary and totally unsatisfactory, particularly in view of what has happened to interest rates in recent days. We had a much vaunted statement by the Treasurer and the Prime Minister after the May statement that interest rates would fall, and there were indications that the market had reacted so favourably to the mini-Budget that we would have an election on that basis. Two days later the Commonwealth Banking Corporation put up its housing interest rate from 15 1/2 per cent to 16 1/2 per cent for many home loan borrowers. Senator Coates —Which ones? Senator SHORT —The Commonwealth Bank. Senator Coates —Yes, but for which customers? Senator SHORT —For certain of its customers-those who are not regular customers-it has put the rate up. In today's news Nobby Clark, the Managing Director of the National Australia Bank, one of Australia's three largest banks, has also confirmed that there is no likelihood that interest rates, including housing interest rates, will fall over the year ahead. So we are talking about a very important matter, partly on which the Prime Minister is taking his government to an election. Up to date he has cited reasons for an election which include the climate for interest rates even though that looks totally at odds with the facts. It is a very disturbing development for parliamentary debate and for the whole institution of parliament, and therefore for democracy, that such an approach can be made by the government of the day and particularly by its Prime Minister virtually to denigrate and ignore the wishes and rights of this Parliament. Senator CHANEY(Western Australia-Leader of the Opposition)(9.25) —I rise because it appears that no other senator wishes to participate in the debate. I will refer very briefly to the report. I believe that it is a matter of very great regret that the Standing Committee on Finance and Government Operations has had to report in a context, as the Chairman of the Committee said when he tabled the report, of pressures of time. Senator Coates —If the dissenting report had been available, it could have been tabled on Tuesday. Senator CHANEY —Those pressures arise because the Government has chosen to call an early election, thereby breaking its promise to the people that it would run its full term. The point is that we were under considerable pressure of time on Tuesday; I do not know how the Chairman's suggestion is meant to aid us. The important point is that the Committee deals with a significant incident that would warrant the detailed consideration of the Senate but time prevents us from doing that. I remind the Senate that the report deals with a statement that was made by a Minister of this Government on the question of housing interest rates. There is no question that is more fundamental to Australians' welfare than the issue of interest rates, in particular housing interest rates. If we consider the after tax income situation of Australians under this Government, we find that it declined steadily from the time Mr Hawke came to power. If we consider the incomes of Australians after tax and mortgage payments, we find an even steeper decline. The estimate is put forward by people in the industry that the cost of a housing mortgage for someone on average weekly earnings has increased from about 19 per cent of income to about 26 per cent of income under this Government. We are dealing with something that is quite central to the welfare of the Australian people. It is one of the Government's failures in this area, one of the key reasons for the declining living standards that are being suffered in the Australian community generally. Senator Ryan, as a Minister of this Government, made a statement on interest rates that was quite unqualified. She made a statement that, in general terms, indicated it was unlikely that housing interest rates would ease this year and that any easing would wait until next year. She then tabled the paper on which she based her statement and the Government, realising that it was politically sensitive, chose to denigrate the source of her information and to say that what Senator Ryan had said was not a matter of government policy. We are not dealing with a matter of policy but with the facts. Is it a fact that interest rates are seen as likely to fall, to rise or to remain static? I believe that the significant point of principle that the Senate would have debated, were time available, is whether the Senate should be able to rely on answers given by Government Ministers, because this incident suggests that if a Minister gives an answer and the Government finds it politically unpalatable it can proceed to distance itself from the answer by saying that it is an answer which is, in effect, non-operative-a sort of Nixonian approach to politics, which is very disturbing if one has any concern for the parliamentary system. Are we able to assume that Ministers of this Government are telling the truth when they answer questions? The second thing that concerns me about the whole incident is the attempt that was made by the Government effectively, to disparage the source of the Minister's statement and to cast doubt, on the competence of the official concerned to give an authoritative opinion on interest rates. I believe that every public servant in this country should look at the behaviour of this Government with respect to the report and the briefing notes that were tabled, because what is made clear by the report of this Senate Committee is that the official who prepared the paper was, in fact, acting with access to all those sources of information that one would expect a government to have on the future of interest rates. To suggest that Dr Hawkins was in some way in a corner of the Public Service from which we could not really expect the Government to obtain authoritative views on interest rates is a gross misrepresentation of the position. It is an implied slur on the public servant involved. But it is absolutely out of line with the truth. Senator Short has already referred to the academic qualifications of the author, but it is even more significant that the Senate Committee report makes clear that Dr Hawkins had access to all those sources of information which were available to the Indicative Planning Council for the Housing Industry and which are the key advisers to the Government in this area. We find that the forecasting committee of the Indicative Planning Council was made up of representatives of the Reserve Bank of Australia, the Treasury, the Australian Bankers Association and the Australian Bureau of Statistics. I simply single out those areas which would be regarded as most authoritative, I think, on the question of interest rates. Also involved are the Housing Industry Association, the Australian Finance Conference, the State Committee of the IPC, the Department of Housing and Construction and the Australian Association of Permanent Building Societies. Any suggestion by the Government that Dr Hawkins was preparing this report other than with access to the range of information that is available to government is clearly false. Clearly, it is a claim made for political reasons and it is a claim which I think is offensive to those public servants who serve this Government and who are entitled to slightly better treatment. It seems to me that if material is prepared for Ministers in the circumstances in which this material was prepared and it is used by Ministers at their discretion and they choose to adopt that material as the answer which they give-as her own answer in this case-if they choose to produce that material and to show it to the public, to then disparage the material and the author because it is politically advantageous to do so is a disgraceful thing for a government to do. I believe that it is a shame that we do not have some hours to go back over the history of this matter, to quote what Ministers said when they attempted to distance themselves from Senator Ryan's statement in the Senate, and to go over the fact that Senator Ryan herself cravenly adopted the words of the Prime Minister (Mr Hawke) once she was put under pressure on this matter. I believe that it stands as an example of a lot of what is wrong with this Government. Its bullying and its lack of regard for openness stand so much in contrast with its professed principles. I do not think anyone else wishes to join in this debate. I seek leave, Mr President, to continue my remarks later. Leave granted; debate adjourned. Motion (by Senator Gareth Evans) proposed: That, unless otherwise ordered and notwithstanding anything contained in the Standing Orders, the Routine of Business for the remainder of this day and for each subsequent day of the 1987 Autumn Sittings be as follows: (a) Petitions; (b) Notices of Motion; (c) Formal Motions-Discovery of Formal Business; (d) Government Business, Notices of Motion and Orders of the Day, or vice versa, as set down on the Notice Paper; (e) at 2 p.m., Questions; and (f) further consideration of Government Business, Notices of Motion and Orders of the Day, or vice versa, as set down on the Notice Paper. Senator CHANEY(Western Australia-Leader of the Opposition)(9.33) —On behalf of the Opposition, I indicate that we oppose the motion which has just been moved by the Manager of Government Business. I do not wish to speak at great length because clearly there is a great deal of pressure on us to deal with the business which has to be dealt with before the Parliament is dissolved. The effect of this motion is to remove from the program of this Senate, from this time on, all avenues which are open to the Opposition to bring forward matters which it believes should be considered by the Senate, apart from the retention of Question Time on each day. Question Time will remain, but the capacity of the Opposition to bring forward matters of public importance or motions of urgency is removed by this motion, unless the motion is subsequently set aside which requires a constitutional majority. I would hope that the Australian Democrats will not join with the Government in this exercise. I make the point that, in terms of the time of the Senate which has been taken up by the Opposition, the almost invariable practice during the session has been to have matters of public importance or urgency motions from the Opposition only on broadcast days. In my view, we have shown commendable restraint in allowing the Government to have priority for its business on most of the days which the Senate has sat because the bulk of the days are not broadcast days. If we look at this as a matter of parliamentary propriety-and I appeal to Senator Vigor to consider it as a parliamentary issue and not as a political issue-to suggest that the Parliament should be here solely to serve the purposes of the Government is really to ride roughshod over some of the fundamental principles that should concern every senator, including Government senators. We have consistently taken the view that we will not support resolutions which remove the right of the Opposition to bring forward matters which it regards as important. Take, for example, some of the things that we might regard as important. Suppose that we got a repeat of Mr Mick Young's abysmal performance and behaviour over our national security. Remember the facts: Mr Young takes part in some of the most sensitive discussions that are open to government, very limited discussions among limited numbers of people on matters that go to our national security. We have discussions which are by both law and tradition secret, and time after time Senator Evans, when he is asked a question on a matter of security, gets up and gives us the standard answer which is given by Ministers from Labor or Liberal governments: `I will not answer questions which go to the operations of the security service in this country', and so on. We can all recall Senator Evans this year giving answers in those terms. So we come back to Mr Young and to his behaviour: Having partaken as a senior Minister, as I think the President of the Australian Labor Party as well, and as a man of very great responsibilities, in the most sensitive discussions of government, he goes out for lunch with some of his mates and discloses some of the content of those discussions. Senator Gareth Evans —What has this got to do with it? Senator CHANEY —I am giving that as an example. The Manager of Government Business seems to have some difficulty in following the argument but, since he was not listening, that is quite understandable. The point I am making is that incidents such as that can arise, and the last thing that is going to happen is that the Government will make parliamentary time available to deal with those matters. It is only by the use of the procedures which are available to the Opposition under the Standing Orders to bring forward matters of that sort that the matter can become subjected to parliamentary scrutiny. Any number of matters may arise between now and the Parliament rising which properly should be brought before this Parliament, and the Government is giving itself, by this motion, the power to prevent that from happening. That is fine. If one is some sort of political apparatchik concerned merely to get to an election, that is terrific; and if one is, as the Australian Democrats are, prepared to do anything at all to get a double dissolution to ensure political survival, that might be satisfactory too. But I would suggest to you, Mr President, that in terms of parliamentary propriety it is absurd to suggest that the Opposition should have no right to bring matters forward. The Opposition will not support any motion of this sort which will deprive it of its right to meet its responsibilities. If, for example, there are further breaches of our national security and if we find that the management of foreign policy has been taken out of the hands of the Minister for Foreign Affairs (Mr Hayden) by the Prime Minister (Mr Hawke) and used just for partisan purposes in the lead-up to an election, we may wish to bring those matters before the Parliament for discussion. I wish to object in the strongest possible terms to these procedures. If the Australian Democrats are prepared to support the removal of the rights of private members in this way, I think that is quite improper and I think it is totally at odds with the principles which they profess to stand for. They have already shown that they are prepared to support the guillotine to achieve an election. I hope that they will not take this next step, which is to deprive us as an Opposition of any rights to bring forward matters which we think are in the public interest. Senator VIGOR(South Australia)(9.39) —I wish to answer Senator Chaney just briefly. I will be supporting this motion. I am a great supporter of Senate rights and parliamentary rights, and I do not think anybody-- Senator Gareth Evans —Don't we know! Senator VIGOR —Look, the Minister might lose the motion. I have been a senator for only a relatively short time, but what Senator Chaney has told us is blatant political nonsense. If an issue of the type that Senator Chaney mentioned, which is of real importance and which needs the attention of this Parliament arises, the Senate can still control its processes through the suspension of Standing Orders. Of course, the Australian Democrats would consider such a course on the merits. Senator Chaney —So much for minority concerns. What about a minority who sees a matter-- Senator VIGOR —If there are minority issues we will look at the matter on the basis of its merits. It is very important that we get this legislation through the Senate. We have a responsibility not only to the Parliament but to the people of Australia to give the Government supply. I am not completely certain that we are getting an honest picture from the Government in terms of what legislation is absolutely essential. I dissociate myself from the guillotine motions and I have not voted for them. I have voted against the gag at every stage during my stay in this Senate, and I do not wish to be associated in any way with that proposal. I believe that we have suitable safeguards and suitable procedures available, through suitable co-operation between us and the Opposition, to discuss any matter which a private member requires discussed. On behalf of my colleagues in the Australian Democrats I repeat that we will support the motion. Question put: That the motion (Senator Gareth Evans's) be agreed to. The Senate divided. (The President-Senator the Hon. Kerry Sibraa) Ayes . . . . . . . . . . . 35 Noes . . . . . . . . . . . 27 —— Majority . . . . . . . . . 8 —— Black, J. R McKiernan, J. P.Bolkus, M. Macklin, M. J. Button, J. N. Maguire, G. R. Childs, B. K. Mason, C. V. J. Coleman, R. N. Morris, J. Colston, M. A. Powell, J. F. Cook, P. F. S Reynolds, M. Cooney, B. Robertson, E. A. (Teller)Crowley, R. A. Ryan, S. M. Devlin, R. Sanders, N. K. Elstob, R. C. Sibraa, K. W. Evans, Gareth Tate, M. C.Foreman, D. J. Vallentine, J. Georges, G. Vigor, D. B. Gietzelt, A. T. Walsh, P. A. Giles, P. J. West, S. M. Haines, J. Zakharov, A. O. Jones, G. N. Alston, R. K. R. Kilgariff, B. F. (Teller)Archer, B. R. Knowles, S. C. Baume, Michael MacGibbon, D. J. Baume, Peter Newman, J. M. Bjelke-Petersen, F. I. Parer, W. R. Boswell, R. L. D. Reid, M. E. Brownhill, D. G. C. Sheil, G. Carrick, Sir John Short, J. R. Chaney, F. M. Teague, B. C. Crichton-Browne, N. A. Vanstone, A. E. Guilfoyle, Dame Margaret Walters, M. S. Hamer, D. J. Watson, J. O. W. Harradine, B. Withers, R. G. Hill, R. Richardson, G. F. Lewis, A. W. R. McIntosh G. D. Townley, M. Aulich, T. Jessop, D. S. Ray, Robert Puplick, C. J. G. Coates, J. Durack, P. D. (Senator Messner did not vote, to compensate for the vacancy caused by the resignation of Senator Grimes). Question so resolved in the affirmative. Consideration resumed from 28 May. Motion (by Senator Tate) agreed to: That consideration of the votes in group E be postponed until after consideration of the votes in Group F. GROUP F Department of the Special Minister of State Proposed expenditure $1,489,000. Department of Community Services Proposed expenditure, $3,846,000. Department of Social Security Proposed expenditure $4,327,000. Department of Health Proposed expenditure, $2,629,000. Senator TATE(Tasmania-Special Minister of State)(9.47) —I thank those honourable senators who have agreed to the raising of consideration of the votes in Group F above those in Group E. They have done so in deference to my personal timetable. I thank them for it. Senator Kilgariff —We are always helpful. Senator TATE —I thank Senator Kilgariff. Honourable senators will recall that during the deliberations of Estimates Committee F concern was expressed by many senators-in fact, they were expressing the concern of senators and members throughout the Parliament-about the project to provide all electorate offices with IBM-PC compatible microcomputers manufactured by HRC Technologies Ltd. My primary concern is to ensure that senators and members are provided with computing equipment which is adequate for their needs, which is reliably maintained and supported and which is delivered by the end of June for members and the end of July for all senators or in accordance with the priorities determined by the respective party leaders. Whilst attacks of an intemperate nature have been made on the viability of the company, I understand that recent reconstruction of the company involving its possible takeover by another firm may help relieve the question of financial viability and other problems which led to the questioning undertaken. My statement should not be taken in any way to suggest otherwise. Nevertheless, I consider it extremely important that the commitments I have given to honourable senators and to members of the House of Representatives be upheld. The contract between the Commonwealth and HRC Technologies gives the Commonwealth the capacity to order between none and 224 microcomputers. Some 81 have already been ordered. I have instructed my Department not to place any further orders as I have received many complaints about the performance of the company, particularly in respect of meeting delivery schedules. Problems experienced include ancillary equipment not being delivered, software not being delivered until well after the equipment delivery, different keyboards from those tendered being delivered, training not being properly performed, and generally poor quality control. I do not believe that honourable senators and members should be required to risk a continuation of that standard of service. I have therefore directed my Department, in consultation with the Department of Local Government and Administrative Services, to find a potential alternative supplier who can meet these requirements at a reasonable cost and provide an IBM-PC type unit which is compatible with the HRC equipment which has already been supplied and with the Cleveland equipment which the parliamentary departments are evaluating for use in the new Parliament House. I recognise that there are several honourable senators and some members of the House of Representatives who presently have DECmate IIs in their Parliament House offices and who have indicated a wish to have complete DECmate II compatibility in their electorate offices. I should point out however that DECmate II compatibility would only be a temporary issue since the Parliament is moving away from DEC compatible work stations to high local content IBM-PC compatibles. Senator Archer —Isn't it a shambles! Senator TATE —I am solving it. I am confident that an adequate alternative supplier can be found quickly and that, through consultation with honourable senators and members of the House of Representatives and between my Department and the parliamentary departments, acceptable solutions can be found to users' problems. I can assure honourable senators that compatible and suitable workstations will be provided to all electorate offices. To give some indication of a possible alternative supplier, Mr President has informed me that the Parliament's preferred tenderer for the supply of microcomputers in the new Parliament House is the Australian firm, Computer Corporation of Australia, which manufactures a high local content IBM-PC compatible microcomputer called the Cleveland. I have asked my Department in conjunction with DOLGAS to make its own urgent evaluation of the company and the suitability of the equipment so that this matter can be quickly resolved and the delivery of equipment to electorate offices can recommence in accordance with the undertakings I have given. Senator PETER BAUME(New South Wales)(9.50) —I thank the Special Minister of State (Senator Tate) for his statement. It now appears that HRC-Time will supply no more machines for members of parliament and, if I understand the Minister correctly, it is likely that the Cleveland machine may end up as the preferred machine, depending upon the processes which are undertaken. The concern of members of parliament has been that we should have compatibility between the machines in Parliament House and the machines in our electorate offices. The Minister now advises us that in the new Parliament House, if things proceed as he has indicated, that will be achieved. I remind the Committee that on 6 April, when Estimates Committee F began the examination of the additional estimates for the Department of the Special Minister of State, I raised at some length the question-- Senator Michael Baume —Very effectively. Senator PETER BAUME —I thank my cousin. I raised at some length the question of the adequacy of the supply to members' offices of machines by HRC-Time. There were some concerns about the hardware-as to whether things like the sheet feeders were adequate for the task-some questions about the processes which were undertaken and the supply of equipment, some of those matters to which the Minister referred, and some questions as to the software. I followed that up with a question to the Minister in the Parliament on 30 April, in which I raised some more specific questions on the basis that the central processing unit being supplied had on the back of it a label `Made in Taiwan' and appeared to be an Osborne machine. I asked the Minister whether that was consistent with the tender arrangements. That question now becomes really one of history. It is no longer relevant to the issues. New machines are to be supplied and I understand the Minister will be making new arrangements; there will be a new tender and new requirements. So I shall not pursue that question. I want to raise just two matters, though. Following the first question and the first airing of this matter in the Parliament, the 4 May issue of a magazine called Computing Australia had on its front page an article headed `Taiwan gets MP's dollars'. It was a story about the supply of equipment to Parliament House offices and it quoted me, among other people. Following that, I received a telex sent by Mr David Lloyd, General Manager, HRC Technologies Ltd, which was received in the Senate on 14 May 1987 and delivered to me. This telex is being made available to my lawyers. In that telex the company says in part: The comments made by Senators Baume and Cadman under the protection of parliamentary privilege have obviously been made without thorough research and quite amazingly without directing any inquiry whatsoever to this company. The questions we raised were questions seeking information and, indeed, the Minister has gone to some lengths to give us that information. The telex goes on to say: Notably Senator Baume has claimed- and I say for my cousin's sake that it was Senator Peter Baume who claimed- that there is a substitution racket operating with respect to the computers and that this company is under a scheme of arrangement. As to whether a substitution racket is operating, that is a matter of history. I did not ever say there was. I framed my parliamentary question to the Minister to say that we were concerned lest that could be the case. As to whether the company is under a scheme of arrangement, I made no such comment. I am sorry that HRC Technology has seen fit to publish a statement such as that. It goes on to say that it was a cowardly thing to do and that if I had said it outside of the Parliament it would have sued me. Unfortunately, Computing Australia in its 18 May issue saw fit to repeat the allegation that I had claimed that the company was under a scheme of arrangement and that HRC Technology would have sued me. HRC Technology may well care to examine the statements it has made about what I am alleged to have said. I certainly will be seeking advice about it. I thank the Minister for what he has undertaken. I thank him for the promptitude with which he has acted and the decision which he has given to this matter. If we end up with machines in the Parliament which are compatible with the machines in our electorate offices, if we end up with software that we can use and which will work, and if we end up with hardware which will do the job, we will be well satisfied and very grateful to the Minister. Senator GEORGES(Queensland)(9.56) —It does not pay to come to the chamber to become interested in debate. What the Special Minister of State (Senator Tate) has explained gives me considerable concern. I was not part of the Estimates Committee F investigation into this matter, but I was Chairman of the Joint Committee on Public Accounts, which was given the special responsibility of looking at computer acquisition by various parliamentary departments. From time to time snippets of information came to us, which worried us considerably, that the departments of the Parliament may be engaged in purchases without, shall we say, a proper examination of the important matters of compatibility, expense and the end results of such purchases. The view has always been taken that the Public Accounts Committee should not bring the departments of the Parliament under scrutiny. But what I have heard seems to indicate that the whole of the process of acquisition of computers for members of the Parliament should have been put before that Committee. Over the short period since it has been given responsibility it has acquired certain skills and understandings, and has had at its service a range of consultants. As a senator, I was aware of what the Senate was doing. What was happening did not seem to trouble me very much because with considerable speed honourable senators were given sophisticated equipment of a high standard, the process was under control, and it was being examined step by step by the officers of the Senate. Even though it was not coming under the scrutiny of the Public Accounts Committee, the procedures that the Committee itself had put into play to examine acquisitions by departments were being exercised by Senate officers. We discovered that competition had developed in the House of Representatives in its move to acquire certain equipment and, fortunately, it decided to follow the track that had been established by the Department of the Senate. But when it came to the acquisition of equipment for the Department of the Special Minister of State, we were alarmed to see that it was diverging from the path which had already been established by one of the departments of the Parliament. Once that track had been established there was a certain locking in, as we have found with other investigations, to a certain type of equipment. That is the problem with not examining properly what is being done. Once a purchase is made all subsequent purchases are affected by the first decision. That did not concern the Department of the Special Minister of State. It went on to acquire other types of equipment which at first glance appeared not to be compatible and which subsequently was rearranged so that it was compatible. But the compatibility was awkward, difficult and inefficient. That is the problem with compatibility. The most effective compatibility is to follow the track that has been set down; to use the same equipment. Compatibility often leads to difficulties. Even if the costs are as obvious as what has been said this morning, I would have hoped that the Minister and the Department would have abandoned what has been done and re-examine from the start, even though delays would result, the advisability of using the decisions made and expertise developed by the Senate and follow that track and provide senators with the equipment that has already been proven. Although some steps have been taken to correct it, I am tempted to suggest that this whole process should be examined by the Auditor-General and the Public Accounts Committee, not because of any recriminations but because it is necessary to find out what went wrong. It should not have gone wrong, and if we knew why it did, although we may not benefit, other departments may benefit from the mistakes that have been made. Senator Walters —But so much went wrong. Senator GEORGES —I have been listening only briefly, and I was not aware of the examination of the Estimates committee but a catastrophe has emerged from that that this Parliament's reputation cannot afford. It has already laid down guidelines for the departments, but it has failed in the acquisition of equipment for the use of Parliament and honourable members. A suggestion that should be followed is that the whole matter be referred to the Public Accounts Committee for examination and report. Senator ARCHER(Tasmania)(10.02) —I support very much what Senator Georges has been saying. From the time honourable senators first came upon the item, we could see it was unsatisfactory. Of course, in the early stages of dealing with the Estimates, Senator Gareth Evans, I think, was in charge and, as we all know, he is the Minister for unsatisfactory evidence at Estimates committee hearings. Clearly, the problem goes deeper and even if the Minister remains a Minister for only another six or seven weeks, it is necessary to consider why the system goes wrong. Certainly, an inquiry should be held into why we got mixed up in the mess that we are in and on whose advice we ultimately made the decisions that have been made. We must then go to the next step and ask why it is that people like us get into this sort of mess. We do not give the people outside this place much confidence if we cannot look after a simple thing such as our own affairs in our own offices. The problem is that, in looking after our own affairs, we are dealing with three or four departments. There is no way in the world the system we have can work and work efficiently. Every time we do anything, we must cross from one department to another, and from one group of bureaucrats to another. We are transients in the field and are crossing one another's tracks. We are getting no satisfaction and we must do better. Let us make an effort to find out who is responsible or how it came about that Ministers were able to be coerced into making decisions that were, right from the start, clearly wrong; why those things were then covered up and why it was pretended that there was no problem when a proper examination was needed. The whole business has been unsatisfactory. I commend those honourable senators who have done a certain amount of work under great difficulty to try to find out what was going on. Until now, they have been prevented from finding out anything that could avoid being disclosed and anything that could be covered up. I thank the Minister for what he has done in trying to get to the bottom of it. Senator MACKLIN(Queensland)(10.05) —I want to echo the remarks made by preceding speakers, as I am a senator who from the very beginning has been involved with trying to get computerisation of facilities for the offices of senators and members of the House of Representatives. As the whole thing unfolded it became fairly obvious to me that we had fallen not into a new trap but into the standard trap that most small businesses fall into. It seems extraordinary that that should ever have occurred, when we clearly know how to avoid such mistakes. I think that Senator Archer really tapped the central problem, namely a confusion in relation to departments dealing with this matter. I did not agree with the initial purchase in terms of the Department of the Senate, but I must say that the scrutiny of the Department of the Senate left nothing to be desired. It proceeded in a methodical and business like way and, as Senator Georges has said, we ended up with a high quality machine. However, I have to disagree, as I do not think it should have been that machine. In fact at that time I suggested that the choice should have come down to two machines, that is, the Apple Macintosh and the IBM clone, the Cleveland. I am rather pleased to see that my suggestion of 2 1/2 years ago is finally to be accepted. It is a pity that we could not have actually taken it off the top and thus saved all that money for the inquiry. Nevertheless, I think that the Department of the Senate was correct in its procedures. I think the difficulty that then occurred was that, obviously, there was very little liaison between the Department of the Senate and the Special Minister of State in relation to decisions made at that point. What I find odd is that both groups were seeking to serve the same clientele and yet thought that that clientele could be served by completely separate systems, with there being no discussions between one another, seemingly, until late in the day, and very little feeling on the part of the Special Minister of State's Department in relation to the decisions that had already been made. Ultimately I found that to be an extraordinary procedure. I agree with many of the remarks that Senator Georges made. It seems to be that it would be useful actually to find out where the thing finally went wrong to avoid further problems. In concluding my remarks, I would like to congratulate the Special Minister of State, who I think has moved most expeditiously in this matter and to a great extent has taken control of the Department. I think it has been an exercise of a Minister actually running a department rather than a department running a Minister. I know that the Special Minister of State is a humble person, but I think this is a very good example of a Minister actually doing his job properly. I was very pleased with the statement that was made. I think that ultimately it was the only way out of the exercise. Essentially, the Special Minister of State has done what Senator Georges was urging-that is, basically, we are going to start again. That is really probably the best, the cleanest and, certainly it will end up to be, the cheapest way. I did a small exercise with regard to the costings that we had already forked out for the various systems, and I discovered that in fact we had paid twice what we would have paid had we gone into a retail store. That is not bad as an exercise for losing money, and I think that that is absolutely appalling. I hope that in the new movement we will end up with a compatible system between the electorate offices and the new Parliament House and that further developments will be done by a single group. I really do believe that the present arrangements are utterly absurd. In checking with most of the parliaments around the world I have discovered that indeed we are unique in being the only parliament where our parliamentary office is run by one department and our electorate offices are run by a separate department. I think that this suggests that a lot of money, energy and time of the bureaucrats could be saved by having one group to deal with this issue because, after all, we are doing the same job whether we are operating here or in our electorate offices. Senator PETER BAUME(New South Wales)(10.09) —I wish to draw to the attention of the Committee the report of Estimates Committee A to the Senate of May 1987. That report also adverts to this matter. Under the heading `Senate Information Systems' reference is made to the process which has been followed, and it observes that in its report of October 1985 the Committee-which I think is the Estimates Committee-warned that unless there was a co-ordinated approach to the supply of equipment to Parliament House and electorate offices there would be a multiplicity of incompatible systems operating by the time the new Parliament House was occupied. From the very beginning the Department of the Senate has been sensitive to the problem. It went down a particular road and it drew to people's attention the dangers of not providing compatible software. The whole exercise is an example of what can go wrong. It is a useful illustration of the way we should not proceed. I wish to support the remarks of Senator Macklin, who pointed out that now at least we seem to be proceeding towards the supply of the same equipment in both places-in the new Parliament House and in the electorate offices. When that is done we will have what we should have had from the very beginning. Senator HARRADINE(Tasmania)(10.11) —I have been involved in this issue almost since its beginning. I was present at the Estimates committee meeting and prior to that I was, and still am, on the Senate Standing Committee on Appropriations and Staffing. That Committee has been kept informed by Senate officers over a long period about this question of computers and information systems for members of the Senate. From recollection-I do not have the documents with me-in the Estimates Committee I asked officers from the Department of the Special Minister of State about the trials that they had given to their particular equipment. They indicated that there had been trials. I asked them how many senators had been given the opportunity to have these trials. The Special Minister of State (Senator Tate) may correct me if I am wrong, but I think the response was that no senators were given any opportunity of trialling the equipment that the Minister had determined they should use. It was most extraordinary that the Department of the Special Minister of State should attempt to impose upon senators equipment which they had not been given an opportunity of trialling. We had also been advised by our officers, months or perhaps more than a year ago, that there would be problems down the track if there were not proper consultations about the purchase of equipment. Senator Peter Baume —They had given those warnings. Senator HARRADINE —They certainly gave those warnings quite frequently, and almost frantically towards the end. They could see what would happen. What they thought would happen has in fact happened-regrettably, at the taxpayers' expense, and to the annoyance of senators-although it is neither here nor there whether senators get annoyed. This is an impairment of the efficiency of senators on behalf of their constituents. It is a matter of great concern which raises this very important question: Should the Department of the Special Minister of State be involved in anything to do with members of the Parliament? That really raises the question of whether the efficiency and effectiveness of members of the Parliament should be at the whim, or at the decision at least, of the executive government. That is the real issue. It will have to be faced by this and the other chamber in the consideration of certain proposals around the place for the appointment of a parliamentary generalissimo. Particularly in relation to this issue, we need to be considering our constitutional responsibilities as a parliament and as parliamentarians to determine how best we can undertake our tasks on behalf of those who elected us and not have them determined by a department of the executive government. That is the issue. I urge the Senate and the House of Representatives to consider seriously at this time whether a department of the executive government should have any responsibility at all when it comes to the rights, entitlements and duties of members of parliament. This is the opportunity to raise that question. The TEMPORARY CHAIRMAN(Senator MacGibbon) —The Minister, Senator Tate, wishes to catch an aircraft. Senator Harradine, I wonder whether you will yield the floor for a few minutes to allow him to make a brief statement. Senator HARRADINE —We are all in that position, I guess. Senator TATE(Tasmania-Special Minister of State)(10.16) —I am sorry, but I mentioned at the commencement of this debate-I was grateful to the Senate for giving me leave to have debate relating to Estimates Committee F brought on prior to debate on Estimates Committee E-that I am booked on a 10.30 flight. Senator Harradine —Are you really? Senator TATE —Yes, I am. In relation to Senator Harradine's general question, of course that requires consideration. As he says, there are moves around which will require the most earnest deliberation by senators and members in the other place about the points that he raised. The consultation which obviously will be necessary between the Senate, which is acting on behalf of the other place, too, in relation to the choice of computers for parliamentary offices of senators and members, and the Department of the Special Minister of State, at least under present arrangements, has, I believe, got off to a very good start. On the record, I thank the President, Senator Sibraa, for his convening a meeting some weeks ago which I think was fairly lively. In it one or two of us may have been a little ill-tempered. Nevertheless, we have reached a situation now where the provision of a compatible work station, computer, word processor within the parliamentary and electorate offices of senators and members can be achieved. That is a good result, even though there has been some heartache in getting there. I rose really to explain to the Senate why I have to leave. The TEMPORARY CHAIRMAN —Senator Harradine, have you finished? Senator Harradine —I think I have raised the point that has to be raised. Senator ARCHER(Tasmania)(10.18) —I wish to add one small thing to what I have already said on this matter. Mr Temporary Chairman, I recall very well an Estimates committee meeting at which you and I were trying to extract information from the Department of the Special Minister of State, and we had absolutely no success whatsoever. I believe that the problems that have arisen in the dealing between the departments is absolutely unacceptable and unrealistic. I hope that arrangements that are now in force will overcome that. Going back to those early days, I think there was still time then to have foreseen what could happen if equipment in our electorate offices and our parliamentary offices was not fully compatible. We could not get the Department of the Special Minister of State even to listen to us at that stage. We could not get it to concede that the equipment that we had had some bearing on the equipment that we needed. We could not get any concession from the Special Minister of State at the time that it was even important that the equipment should be compatible. I found it unacceptable then, I have found it unacceptable ever since, and I object very strongly to our having to deal with two departments to get equipment which has to be compatible. The only thing on which every member and every senator agreed was that the equipment we purchased had to be compatible. It was the one matter on which we could not get a concession from the Department of Special Minister of State or the Minister at that time. Senator Kilgariff —Are the departments compatible? Senator ARCHER —Clearly the departments are as incompatible as the equipment. I trust that from now on we will be able to have this matter dealt with in a mature and sensible way. It sounds as though we are getting somewhere now. Senator VIGOR(South Australia)(10.21) —I congratulate the Special Minister of State, Senator Tate, on having so quickly after he came to this portfolio solved a mess that has, in my view, been a festering sore for some time. I hope that he, or whoever is the Minister in the next Government, will solve the other festering sore and make certain that the people who look after the Senate, the Clerk and his staff, will have line management responsibility for the services which are provided to senators. Only when these services are centralised through one department which understands and services the needs of senators and is independent of the executive government can we hope to fulfil the role of a proper House of review. I totally support Senator Harradine in this matter. As a computer consultant I am reasonably pleased with the decision that has been made. I believe that eventually good systems will come out of it. However, it is unfortunate that the equipment is not necessarily fitted to the skills and needs of each of the senators concerned. The delivery of some of this equipment has meant not only what Senator Macklin has said-that is, that we have spent a larger amount of money than we should have in this area-but also that equipment has remained idle because various people, not used to computing, developed skills in this area with equipment that was probably more complex than was needed. Other people who were quite competent-I suppose as a former computer consultant I can put myself in this category-were denied those rights because of their junior position in the Senate, and the situation was made very difficult. We have to consider efficiency in the Senate and we have to look at the precedence rules. We should give people facilities on the basis of need rather than on the basis of some concept of perceived seniority. The effectiveness of this chamber depends very much on being able to extend to the fullest the intellectual and working capacity of every senator. That principle must be considered when offering these services. I now ask a question on the Australian Federal Police which comes within Group F, which we are considering as a whole. During the Estimates Committee hearing the Australian Federal Police supplied the Committee with statistics on the number of drug seizures through the mail system. In 1985 and 1986 about 20 per cent of the seizures nationwide resulted in prosecutions. Yet in New South Wales under 6 per cent of seizures resulted in prosecutions. This particularly low figure for New South Wales seems very strange. Is the low figure for New South Wales because New South Wales operators are more devious than those who operate elsewhere in Australia, or is it because of limited follow-up resources or less time to conclude the follow-up action in that area? Can the Minister or people from the Department explain why the statistics for New South Wales are so atypical of all the statistics? Can the Minister also explain why we have had only a 3 per cent prosecution rate in 1987? Is this because of the effectiveness of the Australian Federal Police in previous years forcing drug criminals into more impenetrable modes of operating through the mail or is it a question of the resources available for follow-up? Are cases automatically placed in the no further action category after a fixed period of time or is there any other standard which guides officers in making that kind of decision? This is extremely important. Australia is faced with a major underground crime wave, both in terms of computer crime and drugs. A lot of the money that is being spent in this area is being spent on drug detention-on trying to stop drug trading. I would be very pleased to get some response or at least an undertaking that such response will be available from the Department as soon as practicable. The TEMPORARY CHAIRMAN(Senator MacGibbon) —The question is: That the votes for Group F be passed without requests. Senator VIGOR(South Australia)(10.26) —Unfortunately Senator Walsh is the Minister present and he is not answering questions. I will continue to put my questions on notice. We have a problem of representation. Members of the Department are here who may be able to comment on these matters or at least be able to undertake to do something in this area. Senator WALSH(Western Australia-Minister for Finance)(10.27) —I do not know anything about it but I will pass the question on to Senator Tate. I cannot give any answer here. Senator VIGOR(South Australia)(10.28) —I thank the Minister for that undertaking. I would like to deal briefly with a couple of other departments. I commend the Department of Health for getting its higher duties staff numbers down from 31 per cent to 11 per cent between July 1986 and March 1987. It is an area in which I look forward to further improvement. Staffing is one of the problems that this Government faces. I also welcome the news that oral snuff and chewing tobacco will be banned under the Trade Practices Act from 30 September 1987-at least the manufacture and import of these things. It seems a bit strange though that retailers are being given a further year in which to offload these harmful substances. Can the Minister or people from the Department-and this matter must be very much uppermost in their minds-explain why that is happening? Can we learn also whether the National Health and Medical Research Council has been able to supply scientific evidence about the harm caused by nasal stuff as well as these substances? If the evidence has been supplied, what decision has been made on that basis? It seems very strange that we should let a harmful substance continue to be sold over this period. I repeat the two questions which should be fairly easily answered. First, are we improving further the numbers of staff on higher duties? Secondly, why is there the delay of one year once a substance is banned thus letting it still permeate through the system? Senator WALSH(Western Australia-Minister for Finance)(10.29) —There are some pretty detailed requests. I cannot answer them and I do not think that anyone here can. I will pass them on. Senator VIGOR(South Australia)(10.29) —I want to raise a few matters regarding the Department of Community Services. I hope that we get some answers before the election. In Estimates committee hearings in September 1986 the issue was raised of psychiatric patients under the new disabilities legislation being provided services which will not be covered under the definition in the new legislation and other arrangements that could be made for them. It seems to me that the statement `other arrangements can be made for them' in this disabilities legislation is not satisfactory. I would like to know what other arrangements have been made for psychiatric patients in each case. The Minister assured us that these people would not be dumped but, by the same token, we will try to get the State governments to take up what the Minister sees as being the State governments' responsibility. There seem to be enormous blurred edges in the responsibilities of those taking care of people undergoing rehabilitation, or caring for psychiatrically disturbed people or people who have psychiatric disorders as a result of an accident or something like that. I ask: Is it unfair that both governments may be doing nothing for a large group of people with significant disabilities? Examples of this could be epilepsy, road accident trauma, which I have mentioned, or congenital epilepsy. It has been brought to my attention that these people do not have access to any of these services. There seems to be a gap between State services and Federal services, and we need to do something about it. Is there any plan to do anything about it? We certainly were not given proper answers at Estimates Committee F. Another issue which I would like to outline is the attendant care pilot program. No medically qualified people are involved in this area. The whole structure of the attendant care program resulted from a very carefully structured report. The 24 patients who were mentioned in this area were selected to exclude severely disabled patients with various psychiatric disorders. If we are to act on very small samples of this type we need to use the in-depth knowledge in some very effective way. There is a problem with epileptic patients. What type of services are there for people who have road accident trauma, brain damage, or any of these things, in each of the States? I am sure that that is something that the Department should be able to answer because the Minister gave an undertaking that nobody would be disadvantaged. Senator WALSH(Western Australia-Minister for Finance)(10.33) —I do not know the details of those programs. I will seek a response from the Minister for Community Services (Mr Hurford). Proposed expenditures agreed to. GROUP E Department of Veterans' Affairs Proposed expenditure, $57,249,000 Department of Transport Proposed expenditure, $2,865,000 Department of Aviation Proposed expenditure, $4,805,000 Department of Territories Proposed expenditure, $8,159,000 Department of Local Government and Administrative Services Proposed expenditure, $4,322,000 Rent (Defence) Proposed expenditure, $2,000,000 Senator MICHAEL BAUME(New South Wales)(10.34) —In Group E we have the Department of Territories which is responsible for the Parliament House Construction Authority. I have already expressed in the appropriation debate my concern at the refusal of the Minister for Territories (Mr Scholes) to provide answers to questions that were not formally placed on notice in the sense that they were prepared, but also to extend that refusal to questions which were taken on board by representatives of the Parliament House Construction Authority for which answers were promised and there appeared to be no difficulty involved at the time in providing those answers. Yet we have been refused answers to those questions. In particular, one of the questions simply related to the provision of a report which had been kept secret by the Parliament House Construction Authority and which contained severe criticisms of the lack of cost control measures during the construction phase of the new and permanent Parliament House. It is intolerable that those questions were not answered. An assurance was given that answers would be provided. In addition, to an extent, a range of other questions were not asked at that Senate Estimates Committee hearing in order to meet the requirements of the Minister himself. The Minister said that he had somewhere else to go; he asked whether we would mind placing subsequent questions on notice. That was done, and the Minister has now reneged on his undertaking. Surely the Minister has an interest in this information coming forward because, presumably, it would assist him in his endeavours to ensure that there is no more waste and misspending on the construction of the new and permanent Parliament House and so that there is no more waste along the lines of the $200m that has been wasted. I would have thought that the Minister for Finance would have been particularly keen to ensure that this information was provided. I must say that I would very much like the Minister to provide here and now this information to which the Senate is entitled and which it was promised at the time the questions were asked. If it is not provided here now, I think the Senate has every right to demand a thorough explanation. Senator WALSH(Western Australia-Minister for Finance)(10.37) —The reply of the Minister for Territories, Mr Scholes, has already been put into the Hansard record of the Committee proceedings. Senator Michael Baume talked about waste. The plain fact is that a few honourable senators abuse Senate Estimates committees. By that I mean that they bring in pages and pages-reams-of prepared questions, usually on trivial matters, sometimes on quite puerile matters. It nevertheless requires a great deal of effort and cost to supply answers to these questions. I know that during at least one committee hearing I gave notice that the Government would have to consider whether limits should be imposed on the amount of effort and cost which would be devoted to answering what really amounted to, at best, trivial questions. Such a decision was made by Mr Scholes. Senator Michael Baume —Were the new Parliament House Construction Authority questions trivial? Senator WALSH —I, personally, do not know what they were; but I do know, and I think even the honourable senator knows, that there is one honourable senator who brings in reams of questions which are at best trivial and at worst puerile. Senator MICHAEL BAUME(New South Wales)(10.39) —This is a disgrace. The Government is hiding behind the kind of rhetoric that suggests that some kinds of questions were allegedly trivial to refuse to answer a series of proper, determined questions which specifically related to this Government's incompetence in the biggest building project that has ever taken place in this national capital. It is incredible that the Minister for Finance (Senator Walsh) should seek to hide behind that sort of nonsensical response, saying that, because there were trivial questions, serious questions should not be answered. That, he knows, is an absolute nonsense. The Minister, in his alleged determination to cut government waste, is no doubt embarrassed that he has to make such an inane response to such a serious matter. I gather from this that the Government has no intention of providing this Senate with details of the waste involved in the new and permanent Parliament House project and has no intention of providing this Senate with the McCain report. That is all it has to do. There is no expense involved. That is all it has to do, just provide the McCain report, for example, which we were promised. It is a report on the lack of cost control in the construction of the new and permanent Parliament House. We asked for details of how many major contracts-we did not want the fiddling ones-now exceed by over 25 per cent their tender price after taking into account escalations due to inflation and other matters or increased scope. I asked for that information, which is in fact an update of the information along exactly the same lines as was provided last September in the Estimates, so that the information would be honest this time instead of dishonest as it was last time, because last time it excluded 5,000 cost variations that had not been settled. I asked if the Parliament House Construction Authority, when telling us what proportion of total contracts these ones with variations of more than 25 per cent represented, would exclude those contracts from its calculations that had, in fact, not been resolved because of the existence of 5,000 outstanding claims for additional expenditure in this monumentally incompetent operation. The cover-up that is taking place now, with the connivance of the Minister for Finance (Senator Walsh), is a disgrace. It would seem to me that a refusal to provide information at this time clearly relates to an impending election. This Government, in its usual cover-up and deceptive way, is refusing to provide information that it knows will be politically embarrassing to it in the coming election. It follows a pattern of blocking, for example, the Waste Watch Committee wherever it can, refusing to provide details. The interesting thing in this case is that they were details and information-not trivial and no-one has ever pretended they are trivial; and the nonsense the Minister hides behind at the moment does not relate to these questions in any way-that did not seem to be a problem to the Authority. Hiding behind this claim means that these questions, which are not trivial and which go to the substance of the multi-millions of dollars of waste that this Government has been happy to preside over in the new Parliament House, will not be answered. Yet in the Senate Estimates Committee these questions were regarded by the officers, including the Chief Executive Officer of the Parliament House Construction Authority, as ones that merited answers, and the officers believed they could readily supply the answers and that no excessive amount of difficulty would be involved in providing the answers. The Minister will have to do better, for the sake of his own integrity in this place, than to give us the sorts of nonsensical answers he has just given to these questions, which are now being ducked by this Government in this disgraceful cover-up. Senator WALSH(Western Australia-Minister for Finance)(10.49) —In the spirit of ecumenicalism, might I say that I agree that the money being spent on the new Parliament House is a disgrace. It is a disgraceful waste of money. I regard it as an outrage, but let us point the finger at who started the outrage. Let us go back to the time when Senator Michael Baume was a back bencher in the Fraser Government. Let us go back to the way in which, firstly, the project was dishonestly costed. Secondly, a decision was made to follow the fast track construction method, which means more or less pouring the concrete before one properly finishes the engineering plans, causing the building to be overdesigned to be on the safe side and a whole series of errors to be made, which adds enormously to the cost. Finally, just for the icing on the cake of John Howard, Esq., M. Baume, Esq. and M. Fraser, Esq., the management system rewarded the project managers, effectively, for inefficiency, a variant of cost-plus. Senator Michael Baume —And what have you done about it? Senator WALSH —What have we done about it? It was too late; it had been going on for years and dozens of contracts had been signed. Some 12 months ago I personally went through this and found that little could be saved from the project by doing anything other than walking right away from it and leaving it as a sort of acropolis or parthenon of the south. I will see Mr Scholes about having the McCain report released and find out what he intends to do about it. Senator VIGOR(South Australia)(10.45) —It is a great pity that the Department of Territories has failed to answer most of the questions submitted to it on the understanding that it would do so. The Minister for Territories (Mr Scholes) has, I believe, shown total contempt for Parliament. The Department was one of the first to go to the Advance to the Minister for Finance, as early as last December, which proves that it probably did not have its expenditure in order. When the Department is not keeping close tabs on its expenditure, it is quite reasonable to ask about that Department's priorities and how they are set. The people who have been waiting for two years for licensing for travel agents or five years for model food legislation have a right to ask whether further delays are expected. Because the Government is not willing to bring such legislation and legislation to establish a self-governing body in the Australian Capital Territory into the Senate to give the people of Canberra a proper say in what they are doing, it is important that I take the responsibility of asking the right questions in the Senate. The taxi industry would like to know how much longer it will have to wait for its new ordinance and how many Government undertakings will be broken in that process. A lot of people are interested in when the noise control ordinance will be available and when the ancient, unworkable trading hours ordinance will be overhauled. These matters should be straightforward. They are not trivial; they are very important to individual Australians, to the people of Canberra. The main reason they have not been answered, and I support Senator Michael Baume in this, is that the information would be far too embarrassing in an election year. How a department could have estimated that it would spend $10,000 on answering such simple questions is quite beyond me. I have had the experience of the Department estimating a cost of $9,000 for answering questions about trips to the islands by various officers. When that was analysed, it was found that the bulk of the money was spent sending information up and down within the Department, removing information and editing it. When it arrived, it was full of errors because so many people had edited it. The Minister himself had to send it back, and he had to send it back again when I complained about the results. The whole performance of the Department has been unreasonable. It is important that this chamber scrutinise what is happening in the Public Service. It is its duty to do so, and honourable senators are not being given the information to be able to carry out those responsibilities. Obviously either problems occur with records in the Department or the Minister is simply being obstinate and is showing contempt for the Senate. I can see that he might well be annoyed with the Senate because it has not allowed him to get away with some of the more unreasonable proposals he has put to it. I will take an example outside of my own questions to illustrate the point. In a written answer, Senator Reid was told: Because drafting of answers occurs in different action-areas, until February 1986, the Department did not keep records of the resources devoted to providing these answers. Since then, action-areas have been recording the number of person-hours and the level of officers involved in answering questions on notice. This is facinating. The Department starts to collect time data and stops publishing estimated costs. Is that because the Minister changed his mind about the cost, or were people embarrassed by how much it was costing, supposedly, to answer questions? In view of the disarray within the Department, it is unfortunate that the Efficiency Scrutiny Unit has not been involved in looking at more of the activities of the Department of Territories. I would urge any new government to do that. It appears that there are many problems. During my time in this Parliament I have followed up those problems assiduously in the Estimates committees. In relation to a number of departments, I began with a number of broad brush questions. It is only with departments in relation to which I have found substantial problems that I have continued with the type of detailed questioning to which Senator Walsh seems to object and about which he and his Department should be doing something, in the interests of the people of this country. There is no reason why in the Estimates committees I should have to do the job that Senator Walsh should be doing in terms of reviewing what these departments are setting up. I note that the Department has managed to get its late payment of accounts down a little; originally, in the latter part of last year, bills were being paid more than 60 days late on up to 18 per cent of all occasions. I believe that this is now down to 4 per cent-but can this be confirmed by the people there? I believe that there are set targets for reducing the processing of backlogs and for dealing with claims within three weeks. Will these measures be effective? I hope that the new computing equipment will be able to produce further improvements in this area and enable the Department to capture important information which will thus make it more able to answer the general questions that are normally asked in relation to this area. I believe that the next step needed is to get a senior management team within the Department to take an interest in the sort of information flows that exist within the Department and to take early action when problems emerge. I want to refer to three problem areas; these relate to matters that are really important to the people of the Australian Capital Territory. I refer first to the matter of the administration of leases. This is one of the areas that perhaps Senator Walsh thinks is trivial, but on which thousands, if not hundreds of thousands, of dollars are being wasted and squandered because of insufficient control and very strange procedures. The Department of Territories has shamefully neglected its responsibilities in this area. For instance, the residents of Torrens Street, Braddon, have been fighting for 10 years to get some action in relation to businesses straying from their lease purpose clauses. On several occasions residents have had to go to the Ombudsman-again, that is another cost to the public. They have had to badger the Department, and they have collected evidence in the streets, and all the rest of it. Yet, very often the Department either did not want to know or neglected to make use of any of the available evidence, as it fumbled about in relation to these matters. We have also had the National Capital Development Commission ignoring its planning for inner Canberra by already allowing office and retail development well beyond what was expected to occur 20 years hence. When these failures have been challenged by residents and groups, such as the Conservation Council of the South East Region and Canberra, the NCDC and the Department have used their financial muscle in the courts, using taxpayers' money to hit at the individual, to hit at the people who pay that tax. They have made it clear that they will appeal against adverse decisions that are made and hope that no-one has the temerity or the money to keep on fighting. This is certainly not the way to run the Australian Capital Territory. I call for a full judicial inquiry into land planning and lease administration before the system falls further into disrepute. The people of the Australian Capital Territory have a right to know what the planning rules really are and what their costs will be as a result of the helter-skelter approach to development in Civic. These matters should be sorted out now so that people have an effective system which can be handed over very quickly to a new self-governing body which I hope any new government will introduce fairly quickly so that the Department will no longer be able to continue its procedures without any type of public accountability. Basically the last link of public accountability was when this senator or others asked questions at Estimates committees, and that has now been cut off by the Minister. It is isolationism and dictatorship; it is not the process of democracy. Another problem which surfaced during the committee hearings was the attitude towards firefighters. We all know about the problems. I have a letter from the previous Minister who wrote to firefighters after appointing Commissioner Kerr. I quote from the letter: The panel did not believe that any of the local applicants were suitable for appointment as Commissioner, but did recommend one for appointment as Deputy Commissioner. I am taking action to create the position of Deputy Commissioner to be filled from within the Brigade. I believe that this will strengthen senior management of the Brigade and provide greater opportunity for a career structure. That was Mr Uren's undertaking in October 1984. We now find Mr Scholes and his Department telling the firefighters that none of them is capable of being deputy commissioner. This breaks a written undertaking provided just before the last election. I think that the people of Canberra need to be reminded of that just before this election. It is the latest in a series of promises made to the firefighters and subsequently discarded. This type of behaviour is at the root of the lack of trust within the Australian Capital Territory Fire Brigade. Every time an episode such as this occurs we have more problems and the old grudges and scores come out to harden even further. Commissioner Kerr has certainly put a lot of effort into replacing obsolete equipment and in encouraging people to do various training courses. This is certainly a refreshing change from the bad old days. However, some of the recommendations of the committee of inquiry are being set aside in a way which will cause further friction in the long run. In Estimates committee we were asking questions about the way this was developing. We were trying to do something about public accountability, but we were denied the opportunity. An industrial liaison and disputes committee for the fire brigade appears to be some way off. We are not told when the brigade is expected to have a `stand alone' industrial relations capacity so that the Department will stop this type of interfering. It seems that the whole industrial scene in the Australian Capital Territory will flare up, with problems with the doctors as well, because of mismanagement and because there does not appear to be any interrelation between the Department and any accountability. We are not being told what action has been taken to improve the way in which responses are made to reports submitted by fire station officers. We have no information on how quickly there will be a corporate plan for the fire brigade with functional duty statements for firefighters and an administrative manual which deals with 1980s problems. We have asked for some details on this. Does the Government believe that its silence will lift the morale within the brigade? Will it provide the people of Canberra with a more effective service for fighting fires? Will we get any information on these matters before the next election? Unless we do, we can only assume that the Government is totally bankrupt of policies associated with the Territories. Does the Minister have any intention of getting answers to these questions or will we, like Senator Michael Baume, find that we are left with a continuing scandal of waste and lack of public accountability? Senator MICHAEL BAUME(New South Wales)(11.00) —Some comments made by the Minister for Finance (Senator Walsh) simply cannot go unchallenged. He talked absolute nonsense about the cost factor. If he were honest, he would admit that although a large amount of the cost of the new and permanent Parliament House resulted from decisions taken by the Fraser Government-and all of us would recognise that-under this Administration, with the Minister for Finance supposed to be restraining government expenditure and in control of waste, there has been a minimum of $200m in evident waste on top of the hundreds of millions of dollars of increased costs for the new and permanent Parliament House resulting from his Government's decision to increase the number of parliamentarians. For him to talk that arrant nonsense is another attempt by him to mislead this Parliament about his monumental failure in controlling the cost blow-out of the new Parliament House. I thank the Minister for his promised endeavours to see whether he can get from his, so far, totally unco-operative colleague the McCain report. I also point out to him that in the Senate Estimates Committee I had asked that the Parliament House Construction Authority might also state, alongside the McCain report's recommendations, just what it had achieved in terms of implementing them and why there are still 5,000 unsatisfied claims for extra payment over a whole range of contracts. Instead of the new Parliament House costing a total of $800m, even after taking into account the extra expense of increasing its size after construction had begun, it is a clear measure of the incompetence of the Minister for Finance that the bill is now $1,000m. I should mention for the benefit of Senator Vigor that the guillotine that has been imposed on us, with the agreement of the Australian Democrats, has limited our capacity to punish this Government by pursuing this matter for as long as possible and delaying the processes of the Senate until this Government comes clean. Had there been no guillotine, we could have, as is our duty, pursued this Government on the basis of its disgraceful cover-up of this matter. I regret that Senator Vigor's colleagues-not him-voted to prevent this Senate properly pursuing these matters, and pursuing them to the death. Now I raise another matter, particularly as Senator Walsh is in the chamber. That relates to his total misrepresentation yesterday of my concern about his Government's deliberate refusal to act in a responsible manner to resolve the Australian Capital Territory doctors' dispute. I refer now to the Australian Capital Territory Health Authority, which is a party to this. This Government, of which Senator Walsh is the Finance Minister, has agreed to offer visiting medical officers of the Department of Veterans' Affairs a pay deal which would equal-according to most estimates, it would be greater-the value of the pay deal for which the doctors in the Australian Capital Territory have asked as an interim measure. In other words, the Government is offering to Veterans' Affairs doctors a pay deal which is greater than the offer from Canberra doctors which it has refused to consider. The Minister is a phoney if he maintains that somehow I am recommending some disgraceful acceptance of some enormous ambit claim by doctors. That is totally false, and the Minister knows it. For the Minister's benefit, I draw his attention to an article in the Canberra Times this morning. If he is more interested in chatting to the Leader of the Government in the Senate (Senator Button) about his election strategy, that is up to him. He has an order of priorities. He will need to have many talks about an election strategy, because he will be desperately in need of something to help this tattered Government, this disreputable Government-this dishonourable Government-in this matter. If he is interested in what Mr Bissett said this morning, he will see that Mr Bissett has agreed that a settlement along the lines of the Veterans' Affairs deal may be the basis on which settlement of this dispute could proceed. As I understood that Canberra Times article-which I do not have in front of me, unfortunately-Mr Bissett was saying that that could be the basis. That is an absolute disgrace. Why did that not happen before? Why has this dispute gone on and on when the Government is now saying that it may well settle the matter at the level of the doctors' interim request, which the Government rejected out of hand? I mentioned double standards. One wonders whether there are any standards whatsoever, given the corruption by the Minister for Finance of the position that I had put when I was expressing my concern for the people of the Australian Capital Territory. I was not making any special plea for the doctors' ambit claim. That is up to them. At no stage have I recommended or spoken against the ambit claim. What I mentioned, of course, was that their ambit claim would cost about $7.5m and is for less than the cost of applying to the Australian Capital Territory the Macken judgment, which was an arbitrated judgment in New South Wales. I remind the Senate that the Macken claim was the result of the intervention into this area of the Prime Minister (Mr Hawke). His Press release announced the appointment of Macken to arbitrate. As the result did not suit the Prime Minister or the Minister for Finance, they are now blackguarding Canberra doctors for claiming even less than what the arbitrator decided would be appropriate in New South Wales, which decision was announced by the Prime Minister as a great victory. As I said yesterday, there are some technical differences in the manner in which Canberra doctors wish to receive payment. They would prefer a fee for service rather than a sessional payment. Those matters are of substance to them, but for the purposes of the Senate and the people of the Australian Capital Territory it is a question of how much money will be involved. This is of the essence. Estimates of the cost of the Australian Capital Territory doctors' interim request range from $6.3m to $6.9m, but the request was rejected out of hand by this extraordinary, double standards Government. Yet, as I said, application of the Veterans' Affairs deal-the offer made by this Government to VMOs at repatriation hospitals in New South Wales-would equal $6.9m if applied to Canberra. It is intriguing, as I have said, to see in this morning's Canberra Times evidence from Mr Bissett that this repatriation system may well be the basis on which settlement of this matter could take place. I ask the Leader of the Government in the Senate: What sudden burst of inspiration has encouraged the Government to start considering this now as a possible basis when for all this time it has been spending its hours blackguarding the doctors, refusing to consider their interim request of a 6.9 per cent increase and leaving the health services in the Australian Capital Territory in tatters? Was the Government trying to play politics in the run up to the election? Was it trying to suggest that the doctors were figures to be hated, for the Australian Labor Party to gain some cheap political benefit to maintain its electoral position in the Australian Capital Territory? Or was it simply to enable Senator Walsh to talk every day in Question Time about the greedy Canberra doctors who were requesting no more-in fact, considerably less-than the arbitrator happily announced by the Prime Minister determined for doctors in New South Wales? I remind the Committee that doctors stationed in the Australian Capital Territory who go to surrounding New South Wales hospitals are paid in New South Wales on the basis of the Macken determination. They come back to the Australian Capital Territory and are still paid on a nonsensical basis if they provide a service-which, I understand, at the moment they are providing only on an emergency basis. The Government stands totally condemned on this matter. It is now obliged to send patients to New South Wales, in some instances, where they are serviced by doctors who are paid on the Macken scale: The Government is quite happy to send Canberra patients to New South Wales where they are treated under a scale of costs which is unacceptable, according to the Government, to pay to doctors in the Australian Capital Territory. I have mentioned double standards. This is just an incredible situation. If the Government had any will, any decency, any determination to resolve this dispute, it would have done so. I can only suggest that the approach that it finds quite acceptable in its dealings with doctors through the Department of Veterans' Affairs should be adopted in the Australian Capital Territory unless there are compelling reasons against it. We have not heard any compelling reasons from this Government why the financial equivalent of the Veteran's Affairs offer should not be extended into the Australian Capital Territory. If this Government is to have any credibility in the Australian Capital Territory-which of course it does not have-in the run up to the election, I think it would be useful if it defended itself from what has clearly been a disgraceful lack of concern about the welfare of the people of the Australian Capital Territory while it is playing a particularly vulgar form of politics. Senator VIGOR(South Australia)(11.14) —I follow up the industrial relations point that was made by Senator Michael Baume. One of the most disturbing features of the Department of Territories not having answered questions-the Minister for Finance (Senator Walsh) has still not answered any questions-is that we do not have the ability to probe the industrial relations weaknesses in the Australian Capital Territory and the Department which are costing the Australian Capital Territory tens of thousands of dollars. This problem may spread and cause problems outside the Australian Capital Territory. The doctors dispute is only one dispute. It would be quite useful to know how many of the industrial relations staff in the Department have formal qualifications or direct familiarity with matters such as firefighting, transport, medical areas or garbage collection issues which seem to have been areas which have caused a lot of discomfort to the people of Canberra-- Senator Button —You've got a lot of expertise in that, garbage collection. Senator VIGOR —If these are the answers to questions the Government gives us, that is what we end up with. When the Trades and Labour Council of the Australian Capital Territory makes scathing criticisms of the failures of the Department to consult over major staffing matters, there are huge problems. The Auditor- General has been fairly scathing about the financial statement of the ACTION bus service and the delays and sloppiness involved. The Auditor-General's Office expressed concern that `some of the unsatisfactory matters identified in its 1985-86 report had been previously referred to the Department, notwithstanding departmental advice of proposed remedial measures'. It seems quite unreasonable that the Department should still not have answered some questions. We are not being told what has been done to clear up the continuing problems which appear to exist in the Department since these audit comments were made. We are also not being told what effect the explosion of commercial building activity in the Civic area has had on forward purchases of buses or maintenance of the aging fleet of the ACTION bus service. These are matters of considerable importance to the people of Canberra but neither the Minister nor the Department seems interested in providing this type of information. Apparently, we need to do a lot more than ask sensible and reasonable questions to get anything out of this group. For a long time Tony Vinson could not get anything sensible from the Department on the implementation of his report. Can we know what will happen and what recommendations have been rejected by the Government or the Department? Which recommendations of that report have been accepted? Also, we were given no explanation of why the Department and the National Capital Development Commission take quite different views of the medium term prospects of the Australian Capital Territory building industry. Maybe that is another reason why before an election the Government does not want to have any information or figures about the slump in the building industry. Furthermore, we have problems with a parking overspill in inner suburbs and we have no information about moving towards a parking fee trust fund. I am not surprised that the Department declined to provide information about the overseas travel of its officers. In the past these matters have been embarrassing. I hope that in the next Parliament there will be an attitude more in keeping with open government and that the Ministers of whichever party is in government will not carry on the same process of hiding information as has the Minister for Territories, Mr Scholes. The Minister should give us some undertaking about what is happening to solve the industrial problems in the Australian Capital Territory. I move on, because I have to refer to more departments. Not only the Australian Capital Territory has industrial problems. With the good luck of the Leader of the Government in the Senate, Senator Button, being in the chamber, I ask him about the prospects of the transport industry, which comes within the area of the Estimates. Some very disturbing information has come to us about the downturn in the road transport industry. From March 1986 to March 1987 there was a 28 per cent decrease in tonnage carried. To some extent that could come from rail freight competition but that does not explain it totally. The rail freight authorities are giving privileged rates to large companies, but have increased prices to wheat growers, who are forced to use rail. This is another way of passing costs from big companies, whom the Government seems to support, to small people. Currently, a lot of information is coming to us about the overloading of containers by large companies. What is the Department of Transport doing about monitoring this type of activity on Australian National to make certain that there is not overloading of containers? There is a desperate situation, which I am sure the Minister will be aware of, with transport drivers. The road transport industry has more than 50 per cent excess capacity. High interest rates are crippling the industry. There are no reserves. Even businesses going back to 1919 are in danger of going bankrupt. The car industry and a number of industries which provide a lot of the business for long range trucking have been affected. There has been the lowest number of vehicles manufactured for 10 years and the lowest number sold for 20 years. Car prices have moved way ahead of consumer price index increases. In 1982 a person on average weekly earnings required 29 weeks of gross pay to buy a car worth $10,000. In 1986, the same person required 34 weeks of gross income to pay $15,300 for the same car. Wages have risen by 32.2 per cent since 1982; the CPI has risen by 42.2 per cent. There seem to be real problems with the transport industry yet we are not getting any answers from the Minister. This area involves industry, commerce and transport, but the transport industry suffers whenever industry activity is decreased or whenever there is a real economic problem. This year's inflation rate is running at around 10 per cent, which is back to the 1982-83 levels when this Government came to power. If award wages rise by 4.8 per cent this year-that is, two wage rises the same as the last-real award wages this year will drop a further 5 per cent below CPI increases. There is a real problem facing the transport industry. What is the Department doing to study this matter? What is happening to solve these problems? What type of expenditure will the Government go into to enable readjustment in this particularly important industry? Senator REID(Australian Capital Territory)(11.24) —At Estimates Committee E hearings on the morning of 4 May, Senator Gietzelt read a statement from the Minister for Territories (Mr Scholes) indicating that too many questions on notice were being asked by senators and that the Minister had instructed his Department not to commit resources to answering the outstanding questions. That matter has been referred to today. At the end of the meeting the Committee discussed this matter and agreed not to pursue the answers to the outstanding questions. I am not arguing with that decision but some aspects of it need to be reviewed. I had asked questions on 2 April and 22 April and received answers to those I submitted on 2 April. We need to look at some of the areas in which there have been problems in the Department or in the Minister's area of responsibility over the year. There have been problems in public hospitals, with ACTION buses, the Australian Capital Territory Fire Brigade, water and sewerage, garbage collection, motor vehicle registration, parking, road design and maintenance and maintenance of Government buildings. These are matters that Committee members quite properly wanted to inquire about, as well as associated issues such as the number of people employed and the amount of overtime being worked, generally to try to get some understanding of how the Department was coping with these problems. I assume they could not have been predicted and budgeted for in the estimates last year. So in the supplementary estimates it really is not unreasonable to try to unravel these matters. It is somewhat of a pity that the Minister takes the attitude he does. Irrelevant and puerile questions, if such there be, can be highlighted and argued about. Many of us felt that, given the number of questions that, when asked in the past, were given the response `We will take it on notice', putting questions in writing would give us a better opportunity to get the answers at the time of the hearings and so more speedily deal with them. If we do not put questions on notice it may well be that the hearings will take a great deal longer. I agree that something needs to be done to sort out the matter and it must not be allowed to develop into a situation of confrontation or something of that nature, but the trend towards putting questions on notice arose from the fact that frequently the public servants present, quite reasonably, were not able to give immediate answers. Putting questions on notice was perceived as a way of speeding things up. The matter will need to be reviewed. An example of the difficulties is that we did not get the 1985-86 report of the Australian Capital Territory Health Authority until Tuesday this week-and we are just about at the end of this financial year. So to be asking questions in that area really cannot be regarded as unreasonable when we think of the difficulties patients seeking attention in Canberra hospitals have experienced, just about since Medicare came in and certainly more recently. I placed 20 questions on notice, and I do not regard that as being unreasonable in the circumstances. Certainly the attitude of the Minister for Territories is quite different from that of Senator Gareth Evans, who chided Senator Durack in Estimates Committee B on 31 March when he said: `If you have not remembered to pursue the matter, that is your lookout'. It is a somewhat inconsistent attitude. If we try to look after ourselves in Estimates Committee E we are told that we will not get answers, and if we do not in Estimates Committee B we are told it is our own fault. The present situation in the hospitals has gone on now since February. We have never urged the Government to just pay the amount the doctors have asked for, but we have asked for proper negotiations. It became very clear early on that the Minister for Territories did not have the authority to negotiate any settlement other than that which he had been told he could offer. I wrote to the Prime Minister (Mr Hawke) on 3 April. I asked him to call a meeting of all the relevant people-the Minister for Veterans' Affairs (Senator Gietzelt), the Minister for Employment and Industrial Relations (Mr Willis), the Minister for Finance (Senator Walsh), the Minister for Territories, representatives of the Health Authority and the doctors. The Prime Minister has had considerable experience in negotiating settlements. My disappointment has been that it was only this week that I got even an acknowledgment from the Prime Minister-and that signed by a member of his staff-admitting that my letter had been received. It is appalling that Medicare patients in this Territory have been left virtually without hospital treatment-although the doctors have been doing quite a bit, certainly in emergencies-and that the Government has taken no interest in attempting to negotiate even an interim settlement. Medicare patients in the Territory have been suffering because of this since February this year. We now find that veterans' doctors in the States have been offered an amount different from that which has been offered to such doctors in the Australian Capital Territory. That was disclosed yesterday at a meeting of the Health Authority. It is time that the Government took some interest in the plight of patients. As Senator Michael Baume has pointed out, cases that have to go to New South Wales to be treated are being treated by doctors who are being paid at a much higher rate than doctors in the Australian Capital Territory. Yet for some reason this absurdity has been allowed to go on by the Government and no attempt has been made to negotiate an interim settlement. It is clear that the Health Authority knows what has happened as the General Manager indicated yesterday what had occurred with the veterans' doctors. Offers have been made to repatriation doctors in the States and they are being considered. When these matters are settled they could be considered a well-established base for settlement in the Australian Capital Territory. It is quite clear that the Australian Capital Territory is an area that could be discarded by the Government as a matter of no concern. People have been suffering for the want of treatment. Many of them are in pain, not life threatening pain, many have difficulties, many are off work and have been considerably inconvenienced because they put their faith in Medicare and they have been left in a terrible situation over the past couple of months. We now find as a result of this that it has been quite deliberate. Senator MICHAEL BAUME(New South Wales)(11.31) —I want to go back to a couple of the matters that I raised concerning the Parliament House Construction Authority. Next week an efficiency audit into the Parliament House Construction Authority by the Auditor-General will be brought down in this chamber. I understand that it will reveal massive dissatisfaction by the Auditor-General with the whole process of administration of that structure. However, we will not be given an opportunity to debate this matter in this chamber because the Government has seen to it, as part of its pattern of cover-up of this disgraceful waste, that these items are not available for debate under the guillotine arrangement agreed to by the majority of the Australian Democrats-Senator Vigor being the only one who objected. It is incredible that this efficiency audit, which has been the subject of major conflict between the Parliament House Construction Authority and the Auditor-General, will not receive the attention of this chamber because of the Government's deliberate policy of cover-up. I ask Senator Button whether he would consider making an exception in the case of this extraordinarily important document so that proper attention can be given to it. I stress the importance of this document because of what the Auditor-General said at the conclusion of his comments on the Parliament House Construction Authority annual report. He stated: I shall be reporting to you separately about the audit of the Authority's accounts and records. Completion of that audit awaits receipt of certain additional information expected soon from the Authority. In the Senate Estimates Committee E hearings I understood from the Authority that that information had been provided. But, of course, because of this Government's usual cover-up it was not provided to this place or to Senate Estimates committees. Now we will not have the opportunity of discussing the efficiency audit which will expose those matters that the Waste Watch Committee has been revealing about the waste and lack of cost control on the new and permanent Parliament House. I must say that I have not seen that efficiency audit. All I know is that the nature of the disagreement between the Construction Authority and the Auditor-General has been so great that it has taken many months of negotiation, of questions and answers to result in whatever will be tabled in this place. It might not even be tabled in this place; I do not know what the arrangements are. It might be that this kind of report will not be tabled in this place because of the Government's determined and deliberate attempts to cover-up. I should just conclude this element by mentioning further evidence of the absolute nonsense that was being spoken by Senator Walsh when he was trying to pretend that it was not his incompetence or his Government's mismanagement that had caused the increases in the costs of the new and permanent Parliament House. Honourable senators should recognise that the recent 1984-85 annual report reveals that the budget for the new and permanent Parliament House at that stage, in August 1984 dollars, was given by this Government as $700m after taking into account the alleged disgraceful behaviour by the previous Government claimed by Senator Walsh. It was also after the increased costs that had been imposed on this project by this Government's decision to increase the numbers of people in the Parliament, thereby increasing the accommodation required from that which was decided in the original competition. In fact, construction had begun when this Government imposed a requirement on the Construction Authority to provide additional space. Even taking that into account Senator Walsh's Government acknowledged that the cost in 1984 dollars would have been $700m. Two years later that figure had blown out to $1,000m-an extra $300m on this Government's own estimates. Those figures were revealed on 28 February 1985, just over two years ago. That $300m cost blow-out, which has occurred entirely under this Government, represents a 40 per cent increase. I think it would be difficult for anyone to suggest that a 40 per cent increase over the last two years represents any reasonable rate of inflation. In fact, the Government was boasting how, in those two years, its inflation rate was magically lower. The figures for the first of those years showed it at about 5 per cent, as I recall it, before blowing out in the latest year to about 8 per cent. We do not get a 40 per cent rise out of that. We get a 40 per cent rise out of mismanagement, out of lack of cost control and continual cover-up. This Government is maintaining its policy of covering up this scandal by refusing to give honourable senators the opportunity to discuss the efficiency audit to be brought down next week, by refusing our requests at Senate Estimates committees for information, which it promised to provide, and by not telling us the additional details and the Auditor's response to them as outlined in his report. We have had nothing but deception from this Government on this project. I remind honourable senators that at one stage Mr Scholes claimed that the Parliament House Construction Authority had an outstanding industrial relations record-an absolutely incredible claim. When the facts eventually came out they demonstrated that Mr Scholes was embroidering the truth. The reality is that it has a rotten industrial relations record. At the Senate Estimates Committee hearing the Chief Executive Officer of the Authority acknowledged that it would be very difficult to establish whether it had a good industrial relations record because it was being used as the target by unions and it would be unfair to look at it in a comparative sense. As I recall it, he said at that Committee that a comparison could not be made. Yet we have the Minister saying that, by any standards, it has an outstanding industrial relations record. We are sick of the Government misleading the Parliament on this major project. I remind honourable senators that the latest annual report shows the industrial relations record to be such that 52 per cent of the available time for construction work on that project last year was lost, mainly because of industrial disputes but also because of what was described as inclement weather. As I said before, it intrigues me how inclement weather can limit one's ability to work when, as I understand it, the bulk of the structure was covered for that period. I understand what is involved in the definition of days lost; it can be complicated and so on. But the reality is that this Government has allowed this construction project to be the fall guy of union standover tactics. It has been the pacesetter. Deals were done with the unions in order to accommodate the special time pressures on this project so that it would be ready for the bicentennial. Of course, completion has now been delayed. Those additional payments were a waste of money because the project was not completed by that time. I acknowledge that the Construction Authority would have been in a very difficult position in its dealing with the unions and I accept that there would have been very strong pressure because of the magnitude of this project in a small industrial centre such as this. All I am concerned about is that there has been a pattern of deception by this Government-claims that it had an outstanding industrial relations record, claims that everything was going well and claims that problems were all the fault of the previous Government, when the figures and the facts clearly show that that is bunkum. Yet this Government, with its obsessive determination to cover up the facts, denies us the opportunity to discuss the efficiency audit into the project when it comes down next week. However, I can assure the Government that, even if it refuses to provide me a forum here, the media of Australia, I hope, will be interested enough to report on that audit-if we can get our hands on it. Senator Button —I have gone white at the prospect of you talking about it. Senator MICHAEL BAUME —The Minister has obviously gone sufficiently white to do what he can to block the chamber's opportunity of discussing this matter. Senator Button —Come on, don't be childish. There is an election on. Wake up to yourself. Senator MICHAEL BAUME —Yes, there is an election on; that is why there is this determined blocking of sources of information to the chamber. This has been a pattern aimed at such a situation. I suggest that the Minister's interjection that there is an election on underlines the reason for this disgraceful behaviour by this Government. Senator VIGOR(South Australia)(11.43) —I am surprised that the Minister for Industry, Technology and Commerce (Senator Button) has not deigned to answer any of the questions. He seems to be following in the footsteps of his fellow Minister, the Minister for Finance, Senator Walsh, in doing so. I believe that is a great shame because in the past we have not had this problem. I wish to bring to the attention of the Senate a couple of very simple questions relating to the Department of Aviation. I hope that after that the Minister will be able to answer, or at least comment on, some of the things that have happened, particularly in respect of the Department of Territories. We were told at an Estimates committee hearing-and I have here a document to this effect-that the Air Navigation Orders do not specify limits for baggage that passengers carry on to aeroplanes. They refer only to stowage of loose articles. I believe it is very important to get on to the public record a fact that surfaced in answers given to the Estimates committee-that the rules and regulations about the size of cabin baggage et cetera are specific decisions made by the airlines rather than part of the Government's regulations. I seek leave to have a document incorporated in Hansard in order to save time. Leave granted. The document read as follows- COMMONWEALTH OF AUSTRALIA DEPARTMENT OF AVIATION AIR NAVIGATION ORDERS PART 20 SECTION 20.16.3 Issue 7 AIR SERVICE OPERATIONS CARRIAGE OF PERSONS EFFECTIVE: Forthwith SUB-SECTIONS 1-Applicability 2-Definitions 3-Seats 4-Seat belts and safety harnesses 5-Adjustment of seats 6-Cabin attendants 7-Aisles 8-Smoking 9-Stowage of loose articles 10-Passenger service 11-Carriage of passengers in seats at which dual controls are fitted 12-Carriage of infants and children 13-Carriage of sick or injured persons 14-Carriage of handicapped persons 1-APPLICABILITY This Section of Air Navigation Orders applies to all Australian registered aircraft. 2-DEFINITIONS In this section, unless a contrary intention appears- An aisle is a longitudinal passageway between seats. A cabin attendant is a crew member, other than a flight crew member, who is qualified in the execution of emergency procedures in accordance with the requirements of Air Navigation Orders Section 20.11. A child is a passenger who has reached his third but not his thirteenth birthday. A handicapped person is a person requiring special attention because illness, injury, age, congenital malfunction, or other temporary or permanent incapacity or disability makes that person unable without special facilities or assistance to utilise air transport facilities and services as effectively as persons who are not so affected. An infant is a passenger who has not reached his third birthday. A passenger is a person who is not a crew member. 3-SEATS 3.1 (1) Each crew member and each passenger shall occupy a seat of an approved type- (a) during take-off and landing; (b) during an instrument approach; (c) when the aircraft is flying at a height less than 1000 feet above the terrain; and (d) in turbulent conditions Approval date: 12 October 1982 (Supersedes issue 6) SECTION 20.16.3 Issue 7 except (i) infants, children and stretcher cases carried in accordance with subsections 12 and 13 of this Section respectively; (ii) package dispatchers carried in accordance with Air Navigation Orders Part 29, Section 29.5; and (iii) parachutists carried in accordance with subparagraph 3.1 (2) of this Section. (2) Where a parachutist is not provided with a seat of an approved type, he shall be provided with a position where he can be seated and he shall occupy this position at the times specified in paragraph 3.1 (1) except when about to jump. 3.2-Each crew member and passenger shall occupy a seat of an approved type during agricultural operations and during acrobatic manoeuvres. 4-SEAT BELTS AND SAFETY HARNESSES 4.1-Except as provided in sub-section 12 of this Section safety harnesses, or seat belts where harnesses are not fitted, shall be worn by all persons at the times listed in paragraph 3.1 (1). Seat belts and safety harnesses shall be adjusted to fit the wearer without slack. 4.2-At least one pilot crew member shall wear a seat belt or safety harness at all times during flight. 4.3-When a cabin attendant is not required to be carried in an aircraft, and the passenger seating capacity is ten seats or more, an approved and serviceable electronic public address system shall be provided to enable the pilot in command to notify passengers when a seat belt or safety harness is to be worn. 5-ADJUSTMENT OF SEATS 5.1-All seats (with the exception of those specified in paragraph 5.2) shall be adjusted to their upright position for take-off and landing. 5.2-When it is desirable through illness or other incapacity that a passenger's seat remains in the reclined position during take-off or landing, that seat, notwithstanding the provision of paragraph 5.1, may be left reclined during take-off or landing if it is forward facing, there is no person occupying the seat immediately behind, and it will not impede the egress of any person in an emergency evacuation. 6-CABIN ATTENDANTS 6.1-Aircraft engaged in charter or regular public transport operations shall carry cabin attendants appropriate to their passenger complement as follows- (a) aircraft carrying more than fifteen but not more than thirty-six passengers shall carry a cabin attendant, except that aircraft- (i) having a passenger seat configuration of not more than nineteen; and (ii) carrying not more than nineteen passengers; and (iii) required to be crewed by two pilots need not carry a cabin attendant provided that duties and responsibilities of the flight crew concerning the briefing and control of passengers in normal and emergency operations are specified in the Operations Manual; (b) aircraft carrying more than thirty-six but not more than 216 passengers shall carry at least one cabin attendant for each unit of thirty-six passengers or part thereof; (c) aircraft carrying more than 216 passengers shall carry a number of cabin attendants as prescribed by the Secretary which shall not be less than one cabin attendant for each floor level exit in any cabin with two aisles; (d) notwithstanding the specifications of (a), (b) and (c) above, in an aircraft in which cabin attendants are required to be carried, there shall be not less than one cabin attendant in each separate compartment occupied by passengers, and, where the number of cabin attendants used in the emergency evacuation demonstration required by Air Navigation Orders Section 20.11 of this Part was in excess of the numbers required by (a), (b) or (c) above, the number of cabin attendants on an aircraft shall be not less than the numbers required by (a), (b) or (c) as applicable plus the excess number of attendants used in the demonstration. 6.2-Notwithstanding the requirements of paragraph 6.1 above, the number of cabin attendants required need not be increased when infants or children are carried and the total number of passengers exceeds the number of passengers permitted by- (a) the number of cabin attendants carried; or (b) the number permitted by the emergency evacuation demonstration required by Air Navigation Orders Section 20.11 of this Part including any increase allowed without demonstration provided that the number of excess passengers does not exceed five per cent to the nearest whole number of the lesser of (a) or (b) above and that the excess passengers are infants or children. 7-AISLES An aircraft engaged in charter or regular public transport operations, in which the carriage of five or more passengers is permitted and more than one crew member is carried, shall be provided with an aisle, which shall at all times enable the crew members to have unobstructed passage from front to rear through the compartment. 8-SMOKING Pursuant to Air Navigation Regulation 246 (2) (a), a notice(s) specifying the periods during which smoking is prohibited may be permanently displayed in the crew compartment and toilets of all aircraft and in the passenger compartment of aircraft which have only one passenger compartment and a maximum take-off weight of 5700 kg or less. 9-STOWAGE OF LOOSE ARTICLES 9.1-Loose articles in the cabin of an aircraft, including items of equipment and crew members' and passengers' personal effects, shall be stowed so as to avoid the possibility of injury to persons or damage to the aircraft through the movement of such articles caused by in-flight turbulence or by unusual accelerations or manoeuvres. 9.2-Except as provided for in Air Navigation Orders, Section 20.16.2, paragraph 4.2, all aisles, passageways and exits shall be kept clear of obstructions when the aircraft has passengers on board and is in flight below 1000 feet above terrain or, except when embarking or disembarking passengers, is on the ground. 9.3-All solid articles shall be placed in approved stowage at all times when seat belts are required to be worn in accordance with paragraph 4.1 of this Section. 9.4-Approved stowage for solid articles means- (a) under a passenger seat; or (b) in an overhead locker in accordance with the design weight limitation of the locker; or (c) in any other locker or rack, excluding overhead racks, which have been designed to contain solid articles in flight. SECTION 20.16.3 Issue 7 Note: In an aircraft with a maximum take-off weight in excess of 5700 kg passenger seats shall have provision for underseat stowage in accordance with the provisions of Air Navigation Orders Part 103 Section 103.10. 10-PASSENGER SERVICE Except when in use, all items provided for passenger service, such as food containers, thermos flasks and serving trays, shall be carried in their respective stowages and secured against movement likely to cause injury to persons or damage to the aircraft. In any case, all such items shall be stowed during take-off and landing. 11-CARRIAGE OF PASSENGERS IN SEATS AT WHICH DUAL CONTROLS ARE FITTED 11.1-Except as provided in paragraph 11.2, in aircraft for which the Certificate of Airworthiness specifies a minimum crew of one pilot, a person may occupy a seat at which fully or partially functioning dual controls are fitted if the pilot gives adequate instruction to that person to ensure that the controls are not interfered with in flight and there is satisfactory communication available at all times between the pilot and that person. 11.2-In respect of aircraft engaged in regular public transport operations, the seat referred to in paragraph 11.1 shall not be occupied by a person other than a licensed pilot or an employee of the operator of the aircraft unless approved by the Secretary. Details of such an approval shall be included in the Operations Manual. 11.3-The provisions of these paragraphs shall not be construed as limiting the exercise of the authority of the Secretary in accordance with Air Navigation Regulation 220A. 12-CARRIAGE OF INFANTS AND CHILDREN 12.1 (1) Where their combined weight does not exceed 77 kg, two children may occupy one seat if seated side by side. (2) When two children are carried in the one seat in accordance with paragraph 12.1 (1), the seat belt shall be adjusted to secure both of them at all times when seat belts are required to be worn. 12.2 (1) An infant may be carried in the arms or on the lap of an adult passenger or in a bassinet providing the bassinet is restrained so as to prevent it from moving under the maximum accelerations to be expected in flight and in an emergency alighting, and precautions are taken to ensure that, at the times seat belts are required to be worn, the infant will not be thrown from the bassinet under these accelerations. (2) When an infant is carried in the arms or on the lap of a passenger in accordance with paragraph 12.2 (1) the seat belt, when required to be worn, shall be fastened around the passenger carrying or nursing the infant, but not around the infant. (3) When an infant is carried in the arms or on the lap of a passenger in accordance with paragraph 12.2 (1) on an aircraft engaged in charter or regular public transport operations, the name of the infant shall be bracketed on the passenger list with the name of the person carrying or nursing the infant. 13-CARRIAGE OF SICK OR INJURED PERSONS 13.1-General When sick or injured persons are carried in an aircraft, all reasonable precautions shall be taken to prevent hazards to other occupants and particular attention shall be given to the handling of such persons in emergencies. 13.2-Carriage of Stretcher Cases. The carriage of stretcher patients in any aircraft shall be in accordance with the following requirements- (a) The stretcher shall be secured in the aircraft so as to prevent it from moving under the maximum accelerations likely to be experienced in flight and in an emergency alighting such as a ditching; and (b) The patient shall be secured by an approved harness to the stretcher or aircraft structure. Note: Psychiatric restraint equipment is not an approved harness for this purpose. 13.3-Carriage of Mentally Disturbed Persons. (1) A mentally disturbed person shall not be carried in an aircraft unless- (a) accompanied by an escort; and (b) a medical certificate has been issued by a medical practitioner certifying the patient's suitability for carriage by air, and whether there is a risk of violence from such a patient. (2) Where the medical practitioner, approving the carriage of a mentally disturbed person, certifies that there is a risk of violence from such a person, the following conditions shall apply- (a) only one mentally disturbed person shall be carried on the aircraft; (b) the person shall be under adequate sedation throughout the flight; (c) the person shall be accompanied by a qualified nurse (psychiatric trained where available) and one other attendant; (d) the person shall be secured to a stretcher in accordance with the requirements of sub-paragraph 13.2; (e) where the person is not restrained by psychiatric restraint equipment, a barrier, such as a locked door, wire screen or net, shall be provided between the person and the flight deck/cockpit; and (f) therapeutic oxygen shall be available. 14-CARRIAGE OF HANDICAPPED PERSONS 14.1-When handicapped persons are carried in an aircraft all reasonable precautions shall be taken to prevent hazards to other occupants. 14.2-The carriage of handicapped persons in regular public transport or charter operations shall be in accordance with the following requirements- (a) the operator shall establish procedures which will identify as far as possible passengers who are handicapped; (b) the operator shall ensure that handicapped persons are not seated in an aircraft where they could in any way obstruct or hinder access to any emergency exit by other persons on the aircraft; and (c) the operator shall ensure that individual briefings on emergency procedures are given in accordance with the requirements of Air Navigation Orders, Section 20.11. Senator VIGOR —I thank the Senate. I now move on to a matter which I have been pursuing very actively in this Parliament-the matter of non-smoking areas on aeroplanes and at aerodromes. I have had undertakings from the Government privately that its policy is that it would act on this matter if it got unequivocal support for its action from the airlines. A senior officer of the Department of Aviation told the Estimates Committee, in answer to a question: My understanding of the position is that the Government is prepared to move if the airlines are prepared to implement the bans. The airlines have always been prepared to implement any legislation so, in my view, that is not the actual situation. We have undertakings or statements from both the airlines that, if the Government legislated for the banning of smoking, the airlines would obey the legislation without any problems. It was even suggested that this would be welcomed. What would constitute a request from the airlines for non-smoking flights? Perhaps the Minister for Industry, Technology and Commerce, who is at the table, with his policy hat on, will be able to answer that question. Would a statement like `We would be delighted to implement a government ban on smoking in aeroplanes' be considered a suitable statement to make the Government move in this area? A Minister of Senator Button's seniority should be able to give a ruling on that. It is very important for us to consider this matter. I would like the Government to consider what it really does want from the airlines before it will actually implement legislation in this area. How about if the airlines said that any legislation for an end to smoking on aircraft would be `supported and strictly adhered to'? Would that be a reasonable statement? Such words were indeed used in a letter which was recently sent from Australian Airlines to an Australian Capital Territory resident. It seems to me that we could dwell on this point, but it would be useful for the Government to put on record what sort of a statement from the airlines it would be happy to have as a basis for introducing regulations. It would be also useful to have an undertaking that, if in fact such a statement did come from the airlines, the Government would introduce whatever legislation was necessary to stop this habit. Senator SHORT(Victoria)(11.49) —I wanted to support the comments that have been made by Senator Vigor and, particularly, Senator Michael Baume and others who spoke in this debate both today and also last night in the more general discussion about the behaviour of the Minister for Territories (Mr Scholes) in formally writing to Estimates Committee E refusing to provide information in answer to questions that his Department had earlier said would be provided in relation to a range of questions, many of which are of very considerable importance to the proper and appropriate consideration of the Territories portfolio. By not replying and by, in the form of a written letter to the Estimates Committee, absolutely refusing to reply, the Minister, as has been said by other speakers on this side, has really treated this Parliament, particularly this chamber, with disdain. The Minister is placing himself, by this response, above the Parliament to which he is reporting. We find that a totally unsatisfactory and improper use of ministerial direction and we are not prepared to pass the Estimates for Group E without the responses. Therefore, I formally move: That further consideration of the votes in Group E be postponed. Question resolved in the affirmative. GROUP B Department of Resources and Energy Proposed expenditure, $1,931,000 Attorney-General's Department Proposed expenditure, $10,482,000 Department of Immigration and Ethnic Affairs Proposed expenditure, $3,809,000 Department of Foreign Affairs Proposed expenditure, $13,774,000 Department of Defence Proposed expenditure, $48,044,000 Senator VIGOR(South Australia)(11.53) —Yesterday we postponed to a later date the consideration of Group B. There were two matters on which Senator Walsh refused to give any answers. One of them was the matter associated with the Department of Defence, raised by Senator Newman, and the second was a matter that I raised about the handover of the schooner Orionia to two Israeli nationals last year. I mentioned that evidence that was denied the Committee, on the grounds of legal professional privilege, was, in fact, made available elsewhere when that ground was about to be challenged. This seems to me to be a quite unacceptable circumstance. I have, in fact, obtained a copy of that material and I should like to incorporate in Hansard the letter of 29 April from the Senior Legal Officer of the Australian Government Solicitor to an officer in the International Law Enforcement Branch of the Attorney-General's Department. I seek leave, Madam Temporary Chairman, to incorporate the letter in Hansard. Leave granted. The document read as follows- ATTORNEY-GENERAL'S DEPARTMENT DIRECTOR OF LEGAL SERVICES WESTERN AUSTRALIA In reply: 86600179/3132 Please quote Your reference 22/5 Vessel ``Orionia''-Meeting on 23 April 1986 with Dr A. J. Hempel, Mr L. Etheredge and Mrs S. E. Marshall Mr J. Hunter International Law Enforcement Branch Attorney-General's Department Robert Garran Offices National Circuit BARTON A.C.T. 2600 I refer to the meeting between the abovenamed person and Mr P. Macliver and Ms C. Bahemia which took place at my office at 3.45 p.m. on Wednesday, 23 April 1986. This meeting was arranged after representations by Mr P. Drummond M.P. and Mr G. Campbell M.P. were made on behalf of the people from the vessel ``Orionia'' (``the Orionia family''). 2. The meeting dealt with two main issues of concern to the Orionia family. The first was that the Attorney-General's Department had not sought any explanation or information from the members of the Orionia family in relation to the ownership of the vessel ``Orionia'' (``the vessel'') or the ownership of the contents thereof either before the Attorney-General issued his Direction on 13 February 1986 pursuant to sub-section 16a (3) of the Extradition (Foreign States) Act 1966 (``the Act'') or before the Department's decision that the property which Customs had taken possession of should be handed over to the duly authorised representatives of the Israeli company, Orionia Limited, apart from personal property. The second main issue and the one that occupied the majority of the meeting was the question of the ownership of the vessel. Consultation with the Orionia Family 3. In respect of the first issue it was pointed out that the Direction made by the Attorney-General was made on the basis of information supplied by the Israeli authorities and that there was no requirement under the Act to make any enquiries of the person (or persons) in possession of an article at the time of its seizure. Dr Hempel stated that the Orionia family did not dispute that the vessel was owned by Orionia Limited (Israel), but that this company was wholly owned by a Guernsey registered company also called Orionia Ltd (hereinafter referred to respectively as ``Orionia Israel'' and ``Orionia Guernsey'') 4. On 22 February 1986 the vessel was returned to Messrs Rahat and Itzhak, two Israeli citizens claiming to be directors of Orionia Israel. It appears from Mr P. Welch's Minute to the Attorney-General dated 10 April 1986 that the vessel was delivered up to these persons on the basis of an authenticated copy of a resolution of Orionia Israel of 24 April 1985 and an authenticated copy of a resolution of the company made in accordance with the resolution of 24 April 1985 authorising certain persons to take delivery of the vessel on behalf of the company. I presume that the resolution of 24 April 1985 is that contained in the document which I attach hereto headed ``Minutes'' which was supplied to me by Dr Hempel. Dr Hempel stated that this document was simply a document purporting to be the minutes of a meeting of the Directors of Orionia Israel and that it does not constitute any proof of such a meeting having taken place or of the resolutions purportedly made at such meeting. He maintained that it was simply a type-written statement signed by Mr J. Rahat which was undated and not signed by any other Directors of the company and that it was not the minutes of any validly constituted meeting of Directors of Orionia Israel. 5. The other major point raised by Dr Hempel in relation to the delivery of the vessel to Messrs Rahat and Yitzhak was that this was done without them producing any authenticated documentation that they had in fact been appointed Directors of Orionia Israel. He maintained that neither of the two documents referred to in Mr Welch's Minute related to the appointment of Messrs Rahat and Yitzhak as directors of the company. Dr Hempel considered that in order to comply with the Attorney-General's Direction to return the vessel to the duly authorised representatives of the company there should have been produced a certified copy of the document lodged at the Israeli Corporate Affairs office appointing Messrs Rahat and Yitzhak as Directors of the company. According to Dr Hempel there was never a valid appointment of Messrs Rahat and Yitzhak as Directors of the company as such appointment could only be made provisionally by Dr Hempel pursuant to a Power of Attorney granted by Orionia Guernsey, and had to be ratified by the Board of Orionia Guernsey. This was never done because Dr Hempel was never provided with copies of any documents to forward to Guernsey for ratification. 6. In relation to the property which is currently the subject of Supreme Court proceedings between the Orionia family and Orionia Israel, Dr Hempel, Mr Etheredge and Mrs Marshall were particularly upset that the department had been intending to hand over to Messrs Rahat and Yitzhak property which they claimed belonged to individual members of the Orionia family and not to Orionia Israel. They said the vessel was the home of the members of the Orionia family in addition to being a charter vessel and that consequently it had contained all their individual possessions. In many cases they had documentary proof of their ownership, yet as a consequence of the Department's actions they had been forced to institute legal proceedings for the recovery of their own property. 7. The history of the vessel as explained by Dr Hempel and Mr Etheredge and as outlined in Dr Hempel's letter of 6 April 1986 is not that of a vessel purchased by Orionia Israel as a luxury charter vessel complete with all fixtures, fittings and furnishings included in the purchase price. The vessel was purchased for the relatively small sum of #18,000 and substantial structural repairs and alterations were made by the Orionia family to enable it to be a home for the family. The vessel was then sailed to Israel by the Orionia family with all their personal belongings and ownership of the vessel was transferred to Orionia Israel. Dr Hempel claimed that in these circumstances only items that clearly belonged to the vessel should have been handed over to the duly authorised representatives of the company and that all of the property being stored by Customs belonged to members of the Orionia family and not the vessel. Ownership of Orionia Israel 8. The major part of the meeting was spent in discussing the ownership of the company Orionia Israel. Dr Hempel agreed that the vessel was owned by Orionia Israel but claimed that this company was owned by Orionia Guernsey. Dr Hempel and Mr Etheredge laid great stress on the fact that the Decision of the Beer Sheba District Court of Israel dated 24.5.85 referred to ``the agreement between the parties which has received the validity of a Judgment''. One of the respondents listed in the decision is ``Orionia Limited Gransi'' and Dr Hempel claimed that ``Gransi'' was a mis-translation of Guernsey. 9. Dr Hempel claimed that the agreement referred to in the Decision of the Beer Sheba District Court was the agreement whereby Orionia Guernsey agreed to pay US$150,000 to a Mr David Lewis (whose company, Acorn International Hotels, had fraudulently became registered as the sole shareholder of Orionia Israel) and that Mr Lewis would transfer ownership of the shares of Orionia Israel to Orionia Guernsey. The US$150,000 for the settlement was loaned to Orionia Guernsey by five Israeli investors, two of whom were Messrs Rahat and Yitzhak. 10. It is at this point that matters become somewhat complicated and unclear. Dr Hempel maintained at the meeting that he had signed a loan agreement or agreements on behalf of Orionia Guernsey by virtue of a Power of Attorney granted by that company on 12 April 1985, a copy of which I attach herewith for your information. Dr Hempel claims that he has never been provided with a copy of this loan agreement or agreements. Furthermore, Dr Hempel says that although it was proposed that a trust (the Oak Trust) be set up for tax purposes to hold all of the shares of Orionia Israel in trust for Orionia Guernsey he is not sure whether the Trust was set up as he has never seen any documents. Nor has he seen any documents in relation to the appointment of directors of Orionia Israel although he does not deny that he may have provisionally agreed to their appointment. Dr Hempel claims that his Power of Attorney required that all acts carried out by him on behalf of Orionia Guernsey had to be ratified by the Board of the Orionia Guernsey and that as he has never been given copies of any of the documents which he signed he has not been able to forward them to Guernsey for ratification. As a result there has not been any valid appointment of Messrs Rahat, Yitzhak or Ecker as Directors of Orionia Israel and no transfer of the ownership of the company's shares to any trust company. 11. Dr Hempel also referred to a statement by Mr E. D. Ecker of Volovelsky dated 3 September 1985 setting out the composition of shareholders in Orionia Israel. He maintained that there was never any agreement or intention to transfer shares in Orionia Israel to Mali Line Ltd or to Mr Rahat. This company and Mr Rahat are the owners of 59,000 and 29,500 shares respectively in Orionia Israel. The other shareholder of Orionia Israel is stated to be AV''H Trust Company Limited with 147,500 shares. Dr Hempel is adamant that there has never been any transfer of the beneficial ownership of Orionia Israel shares which have at all times been owned by or held in trust for Orionia Guernsey. If any shares are now beneficially owned by any company or person other than Orionia Guernsey then there has been a fraud committee against Orionia Guernsey. 12. I advised Dr Hempel, Mr Etheredge and Mrs Marshall that the Department was seeking instructions from the Israeli authorities in relation to the matters raised in Dr Hempel's letter of 6 April 1986 and in relation to the representations made by Mr G. Campbell M.H.R. and Mr P. Drummond M.H.R. I further informed them that it was the Department's intention to adjourn the hearing of the extradition proceedings if further information had not been received from Israel prior to the hearing date of those proceedings. I also advised I would notify the Department of the substance of the representations which they had made at the meeting. The meeting concluded at 4.45 p.m. 13. Dr Hempel, Mr Etheredge and Mrs Marshall gave the impression of being honest, sincere persons who considered that the Orionia family had twice been the victims of fraud, firstly by Mr David Lewis and secondly by the Israeli investors who had loaned the sum of US$150,000 to Orionia Guernsey. They are greatly concerned that if the vessel is now sold at substantially less than its value (which they estimate at approximately A$800,000) they will suffer an irrecoverable loss as they simply do not have the resources which would be required to commence lengthy legal proceedings in Israel. I confirm my previous advice that the vessel has been placed on the market through Matt-Tasker Brokerage of 43 Swan Street, North Fremantle. 14. I consider that there are several aspects of this matter which require further investigation and that copies of all relevant documents should be obtained, including the agreement referred to in the Beer Sheba District Court Decision, all Israeli corporate affairs documents in relation to the appointment of directors of and shareholdings in Orionia Israel since its incorporation, the loan agreement or agreements between the five Israeli investors and Orionia Guernsey, the documents establishing the HV''A Trust Company Limited and dealing with its shareholdings, and documents relating to the setting up of the Trust and its terms. Until copies of these documents are obtained the true position of the ownership of Orionia Israel and the vessel will remain a matter of conflicting claims and counterclaims. AUSTRALIAN GOVERNMENT SOLICITOR per: C. Baheine. Contact Officer: Mr P. Macliver Designation: Senior Legal Officer Telephone: 425 7134 29 April 1985 Senator VIGOR —I thank the Senate. Serious matters arise from this. Unsigned, undated, typewritten statements appear to have been accepted at face value as the minutes of meetings of directors of Orionia Israel without any checking. Paragraph 10 of the letter is quite interesting. It appears that a trust, the Oak Trust, should be set up for tax purposes to hold all of the shares of Orionia Israel in trust for Orionia Guernsey-which is what the whole matter is about. The whole of the area associated with this is fraught with real problems and it appears that the Attorney-General's Department has, in fact, operated in a quite unreasonable manner. There is not time, because of the guillotine that has been applied on this, to go into the full details of the information, but I seek from the Minister some type of undertaking that the Government and the Department will examine the astounding circumstances surrounding the matter. I am quite amazed that the schooner was handed over when there were enormous doubts about its ownership. We do not know at this stage whether all the documents mentioned in the letter have been obtained by the Department or whether the claims about the Orionia Guernsey company, which supposedly owned the shares of Orionia Israel, have been established or rejected as a result of further investigations. What is the situation concerning the Orionia case and the Department's attitude towards it? Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(11.56) —I understand the Department will be able to provide Senator Vigor with further information about the Orionia matter and will do that. Senator Vigor asked me a number of questions earlier on. I got up to answer them but, as the honourable senator was talking with other senators, I assumed that he was no longer interested and was merely indulging in a bit of windy rhetoric. Senator Peter Baume —Very Shakespearean. Senator BUTTON —Yes. It is about time, Senator Baume: Yet all experience is an arch wherethro' Gleams that untravell'd world, whose margin fades For ever and for ever when I move. Senator Peter Baume —That takes you back to your last year at school, does it? Senator BUTTON —That is right; and yours. That is what Senator Vigor's questions were all about, really. The fact of the matter is that he asked about the decline of growth rates in the transport industry. I remind him that this country had a roughly 6 per cent growth rate in 1985; that declined during the course of 1986 to a 2 1/2 per cent growth rate, and that is reflected to some extent in an industry like road transport. On the question of smoking on airlines, Senator Vigor talked about going round this point, and he can go round that point until he is blue in the face. The Government has already considered this matter and if the airlines wish to implement a smoking ban, they can. It is up to them. It is not strictly a matter for government-particularly in a situation where commercial operations are primarily involved. The CHAIRMAN —I call Senator Short. I must warn you, Senator, that at the most you will have only about 30 seconds. Senator SHORT(Victoria)(11.59) —The Group B estimates have come back following the deferment of their consideration last night. Answers were to be provided to the outstanding questions. I have not been made aware that all those answers have been provided. I seek guidance as to whether they have. If not, we would wish to seek further deferral of this Group. The CHAIRMAN —Order! It being 11.59 a.m., consequent on an order of the Senate, I put the question: That the votes in Group B and the remainder of the Bill be agreed to. Question resolved in the affirmative. Bill reported without requests. The CHAIRMAN —The question now is: That the remaining stages of the Bill be agreed to. Question resolved in the affirmative. Bill read a third time. The CHAIRMAN —The time allotted for the consideration of the Bills having expired, I put the question: That the remaining stages of these Bills be agreed to and that the Bills be now passed. Question resolved in the affirmative. Bills read a third time. Debate resumed from 27 May, on motion by Senator Gareth Evans: That the Bills be now read a second time. The DEPUTY PRESIDENT —Is it the wish of the Senate that there be a cognate debate on the Bills in Orders of the Day Nos 6 and 7? There being no objection, it is so ordered. Senator SHORT(Victoria)(12.02) —The Bills now being debated are a group of five Bills under Order of the Day No. 6 and two Bills under Order of the Day No. 7-the Taxation Laws Amendment Bill (No. 5) 1986 and the Income Tax Amendment Bill 1986. There has been earlier debate on the latter two Bills and the Opposition will pursue further debate on them in the Committee stage. I foreshadow two amendments to the Taxation Laws Amendment Bill (No. 5) 1986, but that will come at the Committee stage of the debate. The main Bills for debate at the second reading stage are the Taxation Laws Amendment (Company Distributions) Bill, the Income Tax (Franking Deficit) Bill, the Income Tax Rate Amendment Bill, the Taxation Laws Amendment Bill (No. 2) and the Bank Account Debits Tax Amendment Bill. Collectively, they comprise yet another instalment of the so-called Keating tax reforms of 1985. Collectively, but more particularly the first couple of them, they comprise what have been called the imputation Bills. In considering the legislation the Senate should remember that the package adds another 100 pages to the taxation law of this country. Other tax Bills from the tax measures of September 1985 have been introduced previously. This legislation is part of that package. Since 19 September 1985, when the Treasurer, Mr Keating, introduced his reform of the Australian taxation system, otherwise well known and appropriately known as the RATS system, an additional 831 highly complicated pages of taxation legislation have been introduced. Those pages constitute an addition of nearly 70 per cent to the total taxation law in less than two years. The general burden of all that has fallen on the community and, in particular, the business sector. On behalf of the Opposition, I move: At end of motion, add ``, but the Senate- (1) condemns the Hawke Labor Government for raising the company tax rate from 46 per cent to 49 per cent at a time when company tax rates around the world are being lowered; (2) notes that the Government's so called `tax reform' proposals have imposed an additional tax burden on business in excess of $2,000 million; (3) notes that these new business taxes have been imposed at a time when the level of business investment in this country has fallen to an appallingly low level and there is a rising tide of bankruptcies; (4) notes with concern that the interaction of the proposals in the Taxation Laws Amendment (Company Distributions) Bill 1987 with the foreign tax credit system and the new capital gains tax imposes a tax disadvantage on companies and on their shareholders; (5) notes that the Taxation Laws Amendment (Company Distributions) Bill 1987 also contains unnecessarily complex administrative and compliance procedures for companies, and therefore, (6) calls upon the Government to restore the incentive to invest by pursuing a more balanced economic policy and reducing the taxation and administrative burden on business''. I shall deal first with the Taxation Laws Amendment (Company Distributions) Bill, which is better known as the imputation legislation. From the whole package of measures brought in by the Government on 19 September 1985, we note that the overall additional burden on business is, as I said in the amendment I proposed, $2 billion. That is being imposed at a time when we are looking for business in Australia to invest in new productive enterprises. It is little wonder that a lot of takeover activity is occurring, that a lot of investment is going off-shore and that a lot of concern is being expressed about the lack of investment in any new productive enterprises in Australia when one considers the taxation regime-which has been the hallmark of this Government-that is being imposed on business. It is only through investment in new productive enterprises that jobs and the wealth to provide this nation with vitality and future growth will be created. Without that, wealth cannot be distributed to families, income cannot be created and the taxes necessary to look after the disadvantaged, the pensioners, the welfare beneficiaries and others in need in the community cannot be levied. The Government is setting out deliberately, coldly, callously-and stupidly-to kill off the goose that lays the golden egg before the golden egg of additional income and wealth has been created. Investment in Australia is a critical factor for Australia's future prosperity. The package the Senate is looking at has some good elements and, as I said earlier, the Opposition will not oppose these imputation Bills. Nevertheless, the whole raft of anti-business taxation that has been foisted on the business community in Australia in the last four years of the Hawke Government, but more particularly since the September 1985 tax package, has mightily set back the additional investment and productivity growth that we so desperately need and which the Government says it is seeking to achieve. If that is what it is seeking to achieve, it had better look very hard at the methods it has been employing because they have been totally counterproductive. In the whole of the package introduced by the Treasurer in 1985 only two measures could remotely be said to have promoted investment or helped the taxpayer. The first of those was the reduction in marginal rates of tax which, although insufficient, was still welcome although I must say that the impact of it on the family receiving average weekly earnings will still be negative in the sense that the December 1986 and July 1987 tax cuts will not restore the average Australian family to the tax position that it was in prior to the election of the Hawke Government in 1983. The average Australian family with young children would need an additional tax cut of $15 a week over and above the December 1986 and July 1987 tax cuts simply to be restored to the taxation position it was in prior to the election of the Hawke Government. Nevertheless, we do welcome the reduction in the marginal tax rates. The other measure from 1985 which is welcomed in the sense that it brings taxation relief for shareholders is the imputation system, which is an important part of the Bills before us. The Opposition welcomes the tax relief to shareholders of private and public companies who pay tax. Of course in this case, those shareholders who are not liable to pay tax will get no benefit, but we do welcome the benefits for those who are liable. However, I wish to draw to the attention of the Senate some serious implications of the package. We have been told by the Government that the total cost to revenue of the imputation system and related measures is $775m but that that will be offset by increasing the company tax rate from 46 per cent to 49 per cent-so the net cost is expected to be about $50m in 1987-88 and $300m a year thereafter. In other words, while shareholders will get some welcome benefit, a considerable additional burden will be placed on companies. Some aspects of the imputation provisions do not help companies and their shareholders. I draw attention to some of these as they are very important in the total scheme of investment and resource allocation and the best use of our resources here in Australia. The first point relates to the interaction of the foreign tax credit system, which has already been introduced by the Government with the imputation system. This interaction will prejudice those companies with substantial earnings from overseas operations. These companies will not be able to pay fully tax free dividends from this off-shore income and thus off-shore direct investment will be less desirable at a time when the Government is supposedly encouraging such investment. I am referring to those Australian multinational companies, those companies that are sufficiently energetic and innovative to establish new companies overseas, to develop new markets and to put capital overseas in relation to those markets so that we can get further growth and further earnings for Australian companies, and so that they can then repatriate profits to Australia. They are the companies that I believe we should be encouraging. We do not necessarily want to encourage off-shore investment-we want to encourage on-shore investment-but above all we want to encourage an overall pattern of investment for Australian companies that is in the best interests of this nation. This aspect of the relationship of the foreign tax credit system with the imputation system is going to militate against those companies. As an example, if a company pays 35 per cent tax in the United Kingdom-which is the going rate-the foreign tax credit system will require an additional 14 per cent tax to be paid in Australia on profits repatriated to Australia. It is only this 14 per cent Australian tax paid amount-an amount grossed up by 51 over 49, which is the technical formula involved-that can be paid as a tax free dividend to resident Australian shareholders. The 35 per cent that has gone in the form of United Kingdom tax, again grossed up by the formula of 51 over 49, would be fully taxable in the hands of individual shareholders if paid as a dividend. So clearly the interaction of another one of the Treasurer's impositions with this benefit has a net adverse effect on companies based in Australia and operating overseas as well. There is also a problem with the interaction with the capital gains tax. The benefit of the indexation of capital gains-which, of course, the Government has said to us is one of the major reasons why the capital gains tax is not as vicious as the Opposition, the business community and the rest of the community claim it is-under the new capital gains tax system largely will be lost, as it is not possible to pay a tax free dividend out of the indexed portion of a capital gain. For example, if an asset were purchased for $100,000 and subsequently sold for $150,000, and the consumer price index in that period had risen by 20 per cent, the sale proceeds would be $150,000 and the indexed cost would be $120,000, leaving a taxable gain of $30,000. If tax at 49 per cent is applied to that, the company would pay $14,700 in tax. The company then credits to its franking account-that is, to the dividend tax free account, with this amount to be available for payment to shareholders, as I have said, as a tax free dividend-the amount of tax, that is, $14,700 multiplied by the formula of 51 over 49, leaving $15,300. Of course, under law, the company is able to distribute dividends based on this capital sale unrelated to the indexation provisions of the capital gains tax. In the case referred to, the proceeds in cash are $150,000, and with the cost of the asset being $100,000 that leaves $50,000 profit less the tax of $14,700, so $35,300 is available for distribution. If this full $35,300 were paid out as a dividend, only $15,300 would be tax free and the entire indexed portion of $20,000 would be fully taxed in the hands of individual shareholders. So there we have an interaction between the capital gains tax and the new imputation proposals which disadvantages companies and shareholders where there is a capital gain subject to indexation. That is yet another example, I believe, of the Government introducing a range of very complex and very interrelated taxation proposals which, because of their complexity and their volume, means almost certainly that at some time counterproductive interactions will occur between one and the other. That is what we see in this case in relation to the interaction between the imputation system and the foreign tax credit system as well as the interaction between the imputation system and the capital gains tax-and there are other instances as well where those interactions do prove to be counterproductive. I think this is a very salutary example to us all of the pitfalls that are involved in the taxation system when one adds layer after layer to it, making what is already a difficult and complex area almost unbelievably difficult and convoluted. A third problem with the imputation system is that whilst the benefits of imputation rebates will pass through companies, trusts and partnerships with shareholders to the ultimate individuals, this will not occur for trusts which make a loss in a year. In other words, if a company or partnership is experiencing a loss, the benefit of the imputation rebate on dividends paid by the company in which shares are held will still be available, whilst for a trust shareholder experiencing a loss the imputation rebate will be entirely lost. There is no logic in this tax distinction between the two forms of potential beneficiaries. Other aspects of this Bill, including the removal of branch profits tax and dividend withholding tax, follow on automatically and sensibly from the imputation system. There are also other changes to the taxation of liquidations to which we have no objection. I wish to say a few words on some of the other Bills, including the Income Tax (Franking Deficit) Bill 1987 which formally imposes the franking deficit tax contained within the imputation legislation. That is an automatic follow-up Bill and again we have no objection to it. The Income Tax Rates Amendment Bill 1987 is a real problem; it is a killer. This is the Bill that increases the company tax rate from 46 per cent to 49 per cent. That increase of 3 percentage points is in fact an increase of almost 7 per cent in company tax. That will put Australia still further down in the league of international competitiveness. If Australia has company tax rates which are too high relative to those of the rest of the world, then companies simply will not operate here. Companies will not be formed and people will not bother to start up a business. Therefore they will not be in a position to employ people, generate income, earn profits or pay tax and the whole country will become poorer as a result. The lifting of the company tax rate to 49 per cent puts Australia in a very high tax league. It was already very high in that league before the lift. Let me give some comparisons. Australia's corporate tax rate is now 49 per cent compared with the rate in the United Kingdom which has been lowered recently by the Thatcher Government to 35 per cent. In the United States the corporate tax rate is 34 per cent. Senator Haines —But they have got rid of a lot of deductions. You can afford to lower your tax rate if you are not giving people deductions such as accelerated depreciation and so forth. Senator SHORT —I agree that one must look at this matter in totality, but the fact remains that the corporate tax rate in Australia is much higher than that in either the United Kingdom or the United States of America. In New Zealand, which is having considerable economic difficulties, the Labour Government there has recently increased the company tax rate to 48 per cent. That is still lower than ours. In Japan the rate is 42 per cent; in Hong Kong it is 18 per cent; and in Singapore it is 43 per cent. Some other countries have higher rates than ours. In Germany it is 56 per cent and in France it is 50 per cent. Canada with 46 per cent is about the same as we are, or at least it was the same before we increased our rate to 49 per cent. Those countries with tax rates lower than ours put their businesses in a better competitive situation relative to ours and that is something which must be seriously recognised. Senator Haines —You mean there are high rates of protectionism. Senator SHORT —No, I was not referring to the protective side of this matter at all. If we slug our companies, productive activities and enterprises in Australia we must inevitably face the consequences of lower growth, employment, income and wealth generation than would otherwise be the case. Thus we have a lower capacity to look after the living standards of all Australians. This is a very important factor that is hitting and hurting Australian industry. A recent study has been undertaken by the well-known and respected accounting firm, Arthur Young and Co. of Sydney on behalf of various potential clients. That company-and the person involved was a Mr Peter Knox-has said that a valid comparison of relative tax advantages has been provided by the work the firm did for off-shore companies considering investing in Australia and for domestic companies investing outside Australia. The company was asked to look at the relative situation and it concluded that, from the perspective of relative tax rates, Australia is not a favourable place for off-shore investment by overseas companies. A US company investing in Australia would have to look at keeping only 51 per cent of its earnings as against about 66 per cent in the US-perhaps a little less after allowing for certain regional taxes. When companies in America can keep 66 per cent of their earnings and those in Australia can keep only 51 per cent, why on earth would they want to invest here? Similarly, an Australian company which might pay 34 per cent of its US earnings under the foreign tax credit system must top up its US taxes with an additional 15 per cent to bring them up to Australian domestic company tax rates. However, in franking dividends under imputation, the company would only be allowed to do so to the extent of the Australian tax and would not be given any credit for US tax already paid. Mr Knox, of Arthur Young and Co. concluded: . . . the foreign tax credit and imputation were hurting smaller, high-technology private companies which had promising markets in overseas companies. These are the very sunrise-type industries that we are trying to promote. Then Mr Knox made a comment which we should listen to very carefully. He said: This amounts to a tax on ingenuity. The very thing that we want to encourage in this country is entrepreneurship, ingenuity and innovation. We want people to have the opportunity to get up and have a go. If people have new ideas we want them to get in there and develop them, to grow and prosper and therefore provide benefits, not only to themselves but also to all Australians through their enterprise and activity. The combination of the tax system and the proposals that are now before us amounts to a tax on ingenuity. The details of individual taxation measures are very complex and difficult to follow and one cannot look at them without looking at the overall burden of taxation. The new taxes that have been levied on the business community by this Government since September 1985 amount to an additional $2,000m. In other words, the Treasurer has the extraordinary distinction of taxing businesses an extra $2 billion as well as adding to the taxes of ordinary Australians. A family on average weekly earnings with dependent children has had its average rate of taxation increased under this Government from 17 1/2 per cent to 20 1/2 per cent, even after all the tax reforms. The top marginal rate of tax for the family on average weekly earnings will have gone up from 30 per cent to 40 per cent. It is not a question of businesses being taxed more so that individuals can pay less. Under this Government, both businesses and people individually are being taxed more in order to fund the extraordinary extravagances of the Government. That is the simple, undeniable fact and it is the reason for the inexorable and enormous growth in taxation that has occurred in this country over the past four years. That total burden of taxation on any nation will weigh increasingly heavily, be it company tax, personal tax or any other form of taxation. Unless we lower the overall burden of taxation in this country we will never have the dynamic, vital, striving country that is essential for our future growth and development and for which we are so superbly placed in the world to move forward into the next century. We are placing great constraints and hobbles on our opportunity to expand and grow in a way that is nothing short of criminal. The package of Bills also includes the Taxation Laws Amendment Bill (No. 2) 1987. I would have liked to comment on other aspects of that and other legislation, but time has defeated me. The abolition of Division 7, for example, is welcome. It is a necessary follow-on from the imputation system. To summarise, we have before us from the Government another 100 pages of highly complicated legislation which will simply be an additional burden on business and another death blow to investment in this country at a time when we need the opposite. I hope very much that that will be reversed in the years ahead. It will certainly start to be reversed in six weeks when the new Liberal-National Party government takes over because, above all else, it will restore incentive, prosperity and enterprise to this country. Senator MAGUIRE(South Australia)(12.31) —Today we are debating a number of major items of legislation dealing with the taxation of company income. I want to address my remarks particularly to the Taxation Laws Amendment (Company Distributions) Bill 1987, the Income Tax (Franking Deficit) Bill 1987 and the Income Tax Rates Amendment Bill 1987. These Bills will give effect to the most significant business taxation reforms in this country since World War II and in essence will eliminate the double taxation of company dividends. It is such a major reform-the greatest since 1975 and I support the legislation. In practical terms it is a unique reform in business taxation in the world. The Taxation Laws Amendment (Company Distributions) Bill will amend the tax law to introduce from 1 July next the full imputation system of company tax which the Treasurer (Mr Keating) announced last December. That is a major reform in business tax which has been welcomed by many participants in Australian business. Once again the Government will be able to go to the people, on 11 July, with a major tax reform under its belt. The new company tax system is formally known as imputation because tax paid at the company level will be imputed or allocated to shareholders by means of credits attached to the dividends that they receive. Such dividends will be known as franked dividends. Franking credits generally resulting from the payment of company tax will be allocated to dividends. An amount equal to the imputation credits attached to franked dividends will be included in the assessable incomes of the resident individual shareholders who will then be entitled to a rebate of tax equal to the amount included in their incomes. That means that dividend incomes will effectively be tax free in the hands of shareholders if they have already borne company tax at the rate of 49c in the dollar. As honourable senators will be aware, under the old company tax system in Australia tax on dividend income was paid twice in effect-once on the company surpluses and once on the personal income of the recipient shareholder. Dividends will be taxed just once under the Government's new imputation system. No wonder major and key business figures throughout Australia have been supporting Labor's tax reforms. In his address this morning Senator Short of the Opposition referred to them as the `so-called tax reforms', but many people in the business sector and the rest of the community are well aware of the scope and magnitude of the tax reforms which have been brought forward for the Australian people by the Hawke Labor Government. Under the imputation system if a company makes a profit of, say, $100,000 and as a consequence pays company tax of $49,000 it will now be able to pass on to shareholders tax-free dividends worth some $51,000. In contrast, under the old company tax system a company paid tax on its profits at the rate of 46c in the dollar, and the after-tax profits distributed to the shareholders were then taxed at the shareholders' marginal tax rates. Assuming the tax rate was the former top rate of 60c in the dollar which was applied when Mr Howard was Treasurer, a shareholder's income from dividends was effectively taxed at a rate of not 60c in the dollar but 78.4c in the dollar. Even if a shareholder had a marginal tax rate of 46c in the dollar-the middle rate-the marginal tax rate on dividends in effect would have worked out at not 46c in the dollar but more than 70c in the dollar. Under the new system, the company tax rate will be aligned with the new top personal marginal tax rate of 49c in the dollar. Honourable senators will recall that, as part of the Hawke Government's tax package, it has cut marginal tax rates across the board. The top marginal rate, for instance, has been cut from 60c, which it was under Mr Howard as Treasurer, to 55c in the dollar at present, and from 1 July it will be reduced to 49c in the dollar. The net effect of that is that no Australian personal taxpayer will pay more than half of his or her extra income in income tax. The effect of imputation credits is to eliminate further tax on dividends after company tax has been paid. In one of the examples that I gave, the effective tax rate paid by a shareholder falls from 78.4c in the dollar to 49c in the dollar. If the shareholder's marginal tax rate is less than 40c in the dollar under the new regime, the shareholder's tax credit will exceed his tax liability on the dividend. It is interesting and very pleasing to note that this excess credit can be used to reduce tax on the taxpayer's other non-dividend income. However, if the shareholder has no other income on which tax is paid, a cash refund of the imputation credit will not be paid. Dividends which are paid out of untaxed income will remain taxable, as under the present tax law-that is, they will also be taxed at marginal tax rates when received by the resident shareholder. Other key features of this legislation are that dividends received by companies from other resident companies will continue to be free of company tax. However, where such company dividends are qualifying dividends under this legislation, the imputation credits may be passed through company structures to benefit, ultimately, individual resident shareholders. Qualifying dividends will be exempt from dividend withholding tax when paid to non-residents. However, dividends paid to non-residents out of company income which has not borne company tax will be liable for the existing 15 per cent dividend withholding tax. The issue of bonus shares will generally be regarded as the payment of a dividend for the purposes of the imputation system and will be treated under the tax laws in the same way as other dividends. This will mean that such issues will be subject to tax in the hands of an individual recipient but will carry imputation credits where eligible. One of the key features of this legislation is that Division 7 of the Income Tax Assessment Act, which imposes a penalty on private companies that do not distribute a minimum proportion of their taxable incomes, will be abolished in the next financial year, subject to certain transitional rules being adhered to. The Income Tax (Franking Deficit) Bill will amend the income tax law to impose on companies the liability to pay franking deficit tax. The Income Tax Rates Amendment Bill amends the income tax law to declare the level of company tax at 49c in the dollar in respect of incomes in 1986-87 and subsequent years. The tax on current year incomes will be paid during 1987-88. I turn to the question of the costs to revenue of these major, historic reforms of business taxation which have been introduced by the Hawke Labor Government. The gross cost to government revenue of the changes involved in introducing imputation is some $775m in a full financial year. Against that will be set the increased revenue which the Government will collect from 1 July from the rise in the general rate of company tax. Overall, the net benefit to taxpayers, the net benefit to the shareholders of businesses, from these changes will be a full $300m in a complete financial year, a very major benefit to the business sector and shareholders. Earlier today Senator Short claimed that the rise in the company tax rate would be a real killer. But here we can point in black and white to a situation in which, as a result, on balance, of a range of government reforms to business taxation in a full financial year the business sector will not be killed by these reforms; it will be $300m better off, and that is a very major reform of business taxation in Australia. Of course, that is on top of the $4,500m cuts in personal taxes which have been delivered to taxpayers by the Hawke Labor Government. That program of tax reductions began with stage 1 in 1984; stage 2 was introduced in December 1986 and stage 3 of the tax cuts will be delivered to Australian taxpayers on 1 July next. Those tax reforms have involved an increase in the tax free threshold, that is, the amount of tax exempt income available to all taxpayers. They have also involved major reductions in the marginal tax rates and rates in the individual tax brackets. The 43c in the dollar tax rate will be reduced to 40c on 1 July; the 46c in the dollar rate existing at the moment will be cut to 40c in the dollar on 1 July; and, as I mentioned earlier, the existing 55c in the dollar tax rate will be reduced to 49c in the dollar also on 1 July. Those moves have been welcomed by the electorate. Last week I had the opportunity of going around the outback areas of my electorate talking to the people about the tax changes and they were very warmly welcomed indeed. No doubt they will be even more warmly welcomed after 1 July when people see the effect of those tax changes on their weekly or fortnightly pay cheques. The new tax system, which removes the double taxation of dividends, was very strongly recommended in previous major reports on Australia's financial and taxation system. I refer to the Asprey Taxation Review Committee of 1975. That Committee was appointed by the McMahon Liberal Government; it was not appointed by the Whitlam Government, although it certainly reported to it. It strongly recommended the ending of double taxation of company dividends, as did the 1981 Campbell Committee of Inquiry into the Australian Financial System. In contrast to their pro-business rhetoric, the Liberal and National parties ignored the recommendations of these inquiries during Mr Howard's period as Treasurer between 1977 and 1983. Again I point out that the Asprey report was the result of a decision by a conservative government-the McMahon Liberal Government. It recommended that double taxation of dividends be scrapped, but Mr Howard, who, as Treasurer of this country, had the opportunity in five Budgets to do something about it, ignored the advice of that Committee. Despite the Liberal and National parties' bleatings about lower taxation and stimulating business activity, they did not remove the double taxation of dividends when they had ample opportunity to do so. Mr Howard was not successful in cutting personal income tax rates. He could not reduce tax on shareholders during the five years he was Treasurer. His record as Treasurer is very stark; it is there for all to read in black and white. The proportion of Australia's gross domestic product taken by taxation rose over the period of the Fraser-Howard Government. The share of Australia's gross domestic product going in taxation was 1.7 percentage points higher at the end of Mr Howard's term as Treasurer than it was at the beginning of the life of the Fraser Government. There is no reason to believe that Mr Howard can go out on the hustings and say that he can deliver tax cuts. He says that he will campaign on taxes, but his record and his period in office show that he clearly is incapable of cutting taxes. Debate interrupted. Sitting suspended from 12.45 to 2 p.m. Senator BUTTON(Victoria-Leader of the Government in the Senate) —by leave-I inform the Senate that Senator Tate is absent from the chamber for Question Time today as he is representing the Prime Minister (Mr Hawke) at the opening of the Life Education Centre in Sydney. Any questions in this chamber which would normally be directed to Senator Tate in relation to his portfolio or those he represents should be directed to Senator Ryan. Senator CHANEY —My question is to the Leader of the Government in the Senate and the Minister for Industry, Technology and Commerce. I refer the Minister to my question yesterday about industrial blackmail aimed at Victorian metal trades employers, in defiance of the Australian Conciliation and Arbitration Commission and the national unions approach to second tier wage negotiations in the industry. I refer also to the Minister's extraordinary reluctance to directly condemn the actions of his Senate ticket colleague and former Communist Party member, John Halfpenny, who has organised this disgraceful action. Has the Minister, as he promised yesterday that he would, checked on the facts? If so, does he now agree that they are exactly as I stated yesterday, with the exception that since the time of my question strike action has been taken against one more company, bringing to seven the number of firms suffering strikes or bans, with a further 23 under threat of strikes or bans? Can the Minister also confirm that the Halfpenny inspired action is directly opposed to the statement of Deputy Commissioner Keogh on 7 May that negotiations between employers and employees on the issues should `continue in an environment free of industrial action'? Is the Minister aware that the Halfpenny campaign was raised before Mr Keogh in Sydney yesterday and that a conference has been called for Melbourne next week to discuss it? Will the Minister, now that he should know the facts, unequivocally condemn this action and use whatever influence he might have with his Senate ticket colleague, John Halfpenny, to bring this gross abuse of union power to a prompt end? Senator BUTTON —Yesterday I said that the matter was before the Conciliation and Arbitration Commission. Senator Chaney today is able to confirm that fact and I am grateful for that. Talks are to take place next week relating to the matter. Insofar as the other part of the question is concerned, there has, of course, always been a difference between this Government and the Opposition in the approach to industrial relations issues. For example, it was only a week ago that I was being urged to do particular things in relation to the Port Kembla steel strike which today was resolved and the workers at Port Kembla have returned to work. A Minister in any government in such a situation can make inflammatory statements which do not necessarily produce any results. Since Senator Chaney raised the question with me I have taken certain steps in relation to those matters. I do not propose to indicate what those steps are but I simply say that steps have been taken with a view to resolving these matters as quickly as possible. If I make announcements in the Senate about these kinds of matters, that is not necessarily productive in getting the issues resolved-and that is what I as a Minister and this Government are concerned about, as I will continue to be. Senator CHANEY —I ask a supplementary question. Does the Minister agree that this action taken by Mr Halfpenny is in defiance of the very substantial majority vote of his union and in defiance of the Arbitration Commission's statement that negotiations are supposed to `continue in an environment free of industrial action'? If he agrees, is he prepared to indicate his public disapproval of action which is being taken by a man who shares with him the privilege of being an endorsed Australian Labor Party candidate for the Senate in the forthcoming election? Senator BUTTON —It is often said that politics frequently is about half truths. Unfortunately, industrial relations matters often are not. It is easy in a question of this kind to target Mr Halfpenny as an individual and say that he is responsible for all these things. Senator Chaney —Do you deny that? Senator BUTTON —I do not know and the honourable senator does not know either. As I said yesterday, I have no hesitation in condemning action from whatever source which brings about disruption to industry in defiance of majority decisions of trade unions and particularly in defiance of the Arbitration Commission and any of its rulings. I have done that over several years and I continue to do it. I say to those people who may be in breach of an industrial arbitration ruling on this matter that I strongly condemn that action. Senator ZAKHAROV —My question is addressed to the Minister representing the Minister for Foreign Affairs. Does the Minister know when the French Government intends to hold a referendum on self-determination for New Caledonia? Does he know what questions are to be asked of those voting and who will be entitled to vote? Does this referendum meet the requirements of the United Nations decolonisation committee as an act of self-determination? Senator GARETH EVANS —The precise timing of the referendum to be held in New Caledonia is not yet known. It depends on the outcome of an examination by the Constitutional Council in Paris of the enabling legislation that was passed by the French Parliament. However, it does seem very likely that the referendum cannot now be held before the second half of September at the earliest, as distinct from the original anticipation of having it several months earlier than that. In broad terms it seems clear that the options to be put to the voters in the referendum are: First, independence; or secondly, continued association with France with a statute of internal autonomy. As I understand it, there will be little or no elaboration of the precise implications of the options, particularly the independence option, nor will there be the kind of independence in association with France option that has been utilised elsewhere, most notably with the Cook Islands and New Zealand and which has been thought by many people to be one further possible alternative which might reasonably have been put to the New Caledonian people. All residents of New Caledonia who have been resident for three years or longer will be entitled to vote. That applies some obvious restriction on the entitlement to vote-which, of course, is welcome. France has made clear that it will not co-operate, however, with the United Nations decolonisation committee in the pursuit of its policy towards New Caledonia. Despite a few small points that can be made in favour of the referendum, such as the three-year proposal, it certainly is the clear view of both the Australian Government and the South Pacific Forum governments that the referendum proposed does not accord with the usual United Nations decolonisation principles or practices. Those principles or practices were spelled out-or one view of them-in a communique issued by the Forum Foreign Ministers who met in New Zealand at the beginning of March when the following points were made, and I quote from the communique of that meeting: In reaffirming their view that independence for New Caledonia is inevitable and desirable the Forum countries base their position on UN principles and practices which are fundamental to a free and genuine act of self-determination. These require: (a) a free, honest and genuine choice in any act of self-determination; (b) the inclusion in the franchise for the act of self-determination of only those who can demonstrate long term residence in and commitment to New Caledonia. It should ensure that the rights and interests of all inhabitants are guaranteed, with special recognition of Kanak rights. (c) all options being open; including status quo, integration, internal self-government, associated independence, or unqualified independence; (d) political education for the people so that all options are understood and in particular no options are seen to carry punitive consequences. No doubt, the whole New Caledonia question will be further considered at the Forum commencing today and the continued applicability of the sorts of positions that were articulated at the Forum Foreign Ministers conference will be reconsidered in the light of recent developments. But as we understand it, that is the position on the referendum and that is the nature of the Australian Government's reaction to that proposal as it stands at this stage. Senator Chaney —Mr President, I ask you to ask the Minister to table the papers from which he has quoted. The PRESIDENT —Will the Minister table the papers? Senator GARETH EVANS —I will table the full version of the document from which I quoted. I do not propose to table the basic notes to the answer but I will certainly table the particular document from which I quoted. Senator ALSTON —My question, which is directed to the Minister for Resources and Energy, refers to reports that today the Minister is to take part in talks with representatives of the Miners Federation and the Australian Council of Trade Unions about a series of planned 24-hour stoppages by some 30,000 coal miners in Queensland. Has the Government been able to persuade the coal miners to abandon unconditionally their destructive action in an industry which has a strike record more than 40 times worse than Australian industry generally, despite significantly better wage levels, or has the union merely agreed to go to ground as the Government has done with its industrial relations package and simply postpone the strikes until after 11 July? Has the Government given-or if the meeting has not been held will it be giving-the unions any guarantees or indications that, if it just happens to succeed in the next election, it will bring back its legislation to override the Queensland Government's laws banning strikes in export industries? Senator GARETH EVANS —What I can say on this subject is best summarised in a joint Press statement that Mr Willis and I issued very shortly after the meeting we had this morning with representatives of the mining unions and the ACTU. The Press statement is as follows: We met today with representatives of mining unions and the ACTU to discuss current economic difficulties in the coal mining industry, and in particular the implications for the situation in Queensland of the deferral of the Government's Industrial Relations Bill. We re-affirmed the commitment made by the Minister for Employment and Industrial Relations in his statement of 26 May that the Bill, when reintroduced after the election, would contain provisions that ensured it would override intrusive and inappropriate legislation by State Governments, such as that recently passed by the Queensland Government. We discussed with the union representatives interim measures which might be pursued pending the enactment of the Commonwealth legislation, and indicated that we would give further consideration to such measures over the next few days. We have agreed to have a further round of discussions on the general industry situation late next week. Senator ROBERTSON —My question is also directed to the Minister for Resources and Energy. Is the Minister aware of the outcome of exploration access negotiations between Queensland Mines Ltd and the Northern Land Council in the Northern Territory this week? Senator GARETH EVANS —I have been informed that Queensland Mines Ltd and NLC representatives agreed, during a meeting in Darwin yesterday, on a framework for the first agreement to be negotiated under the amended provisions of the Aboriginal Land Rights (Northern Territory) Act, which was passed by the Senate just this week. The agreement reached yesterday will provide exploration access to exploration licence 2508 covering an area surrounding the existing Nabarlek mine. It provides a welcome signal that the amending legislation, which was approved in this chamber just a couple of days ago, and in particular the new level of understanding with the land councils which preceded its introduction, will serve, as we all intended, to break the log jam of exploration applications which has built up in the Northern Territory in the 11 years since the original Act came into force. The QML negotiations have been dragging on for some considerable time and are a very apt example of just the sorts of difficulties that have existed for so long in the Northern Territory under the mining provisions of the Fraser legislation of 1976. The fact that a meeting held so soon after the passage of the legislation, and in the atmosphere generated by the consultations of industry, government and the land councils which have occurred so recently, could generate such obviously productive results is a very welcome indicator of how we are likely to have a much more satisfactory outcome in the Northern Territory in the future. Senator SANDERS —My question is directed to the Minister representing the Minister for Aboriginal Affairs. Is it a fact that the Tasmanian Aboriginal Centre responded to all the queries and conditions of grant of the Department of Aboriginal Affairs, and answered all the queries from the Minister in relation to services and expenditure? Is it also a fact that the TAC assured the Minister that no Commonwealth funds were involved in Michael Mansell's trip to Libya and his subsequent speaking tour of Australia? Is it further a fact that the Hobart office of the DAA previously recommended to the central office of the DAA that the quarterly approved funds for April-June 1987 be released to the TAC? As the Minister delayed releasing the funds for a long period, specifically what answers supplied by the TAC did he consider inadequate and what are the details of the alleged complaints? Finally, as the TAC has not been found guilty of any wrongdoing, was the failure to release funds a politically inspired move to punish the TAC and all Tasmanian Aboriginal people merely because Michael Mansell is himself a Tasmanian Aboriginal who disagrees with Government policy? Senator RYAN —As I told the Senate last week, Mr Holding has instituted a series of inquiries into the operations of the TAC. I am still waiting for a detailed response from Mr Holding of the kind sought in the honourable senator's question and I will ask Mr Holding to reply as soon as possible. Senator COLEMAN —My question, which is directed to the Minister for Veterans' Affairs, relates to the difficulties being faced by hospital administrators, both Commonwealth and State, in recruiting and retaining various nursing staff in the various States. The Minister will be aware that the problem has been more significant for the repatriation hospital system because in most States Commonwealth pay rates have tended to fall behind the relevant rates paid by State hospitals over the last few years. Will the Minister outline any efforts being undertaken by his Department to alleviate that situation? Senator GIETZELT —Senator Coleman has drawn attention to the very serious shortage of nurses in the repatriation system. I add that there is a serious shortage of nurses in Australia, not only in the repatriation system but also generally. For example, the New South Wales Government has just spent almost half a million dollars seeking to recruit nurses into the State hospital system. I am led to believe that only 11 people responded, which indicates the substantial problems that we are having getting sufficient nurses who are prepared to come and work under the conditions in which they have worked for many years. The particular problem in the repatriation hospital system was that the rates of pay were substantially lower than those paid to nurses in the State hospital system. So the inevitable took place. Many nurses left the repatriation hospital system and went to work for higher rates of pay in the States that had increased salaries for trained nurses. We had, therefore, an insufficiency in terms of nurse numbers and in terms of training, and of course there is no career structure to attract women into the nursing profession. I think that has probably resulted for two reasons. Women have a greater variety of careers available to them now than they may have had 15 or 20 years ago. This also reflects the failure of past governments, particularly the previous Liberal-National Party Government, to recognise the problem that was developing over many years as a result of their non-interventionist and non-training policies. These governments not only did not recognise the problem but also did not introduce a career and wage structure that would have rectified the problem before it got out of hand. I was confronted with that problem when I became Minister in 1983. The Government was also confronted with the difficulties of the wage pause period. The only way in which the Government and the Department could deal with the question of nurses' salaries was under the anomalies provisions of the Australian Conciliation and Arbitration Commission. It took several years to resolve that point. It has now been resolved in favour of the nurses and they have been awarded matched rates. Senator Coleman would appreciate that this means that I am now able to offer the same rates of pay to repatriation nurses in each State as the State Ministers have been able to offer in their State hospital systems. Arising out of that decision, the Department is writing to all of those nurses who previously worked in the repatriation system-those who left it for family or other reasons-pointing out that we recognise the career structure nature of the industry and that there has been an imbalance in the salaries, and suggesting that they might seek their interests by returning to work in the repatriation hospital system. If that happens, the fears that have been expressed by Senator Coleman will not be realised and we will be able to carry out our obligation to provide nursing care in the repatriation hospital system. Senator BROWNHILL —My question is directed to the Minister representing the Prime Minister. I draw the Minister's attention to an article in today's Australian Financial Review in which it was reported that an Australian Bureau of Statistics survey has painted a bleak outlook for business investment growth for the next year and beyond. Given that real household disposable income has fallen by 2.1 per cent; private consumption has slumped from more than 4 per cent annual growth to 0.5 per cent since late 1985; retail sales are down; motor vehicle registrations are down by more than 30 per cent; and business investment is likely to show no real growth in the next 12 months, I ask: Is this the job the Prime Minister claims he wants more time to finish? Given that there are no indications for business optimism, how will an early election in place of a responsible Budget provide impetus and confidence to our failing economy? Senator BUTTON —Pretty well everybody in this country, except perhaps Opposition senators, knows that we are in difficult economic circumstances and will continue to be in difficult economic circumstances for a while to come. The question which, of course, must be predominant in the minds of the Australian people is: Who is best able to handle difficult economic circumstances in this country, and who is not? I made the point in Question Time earlier this week that it is not only people in this country who will be passing a judgment about who is best able to manage the economic circumstances of this country in the foreseeable future; it is people overseas who are making the judgment. This question was asked of a New York money market man: What would happen if a Howard-Bjelke-Petersen government was to be elected in Australia? The answer was: I have to say it would be a disaster. The dollar would drop through the floor. That is what he said. Before 10 July when the electoral advertising blackout takes effect, honourable senators on the Opposition benches have to decide whether they will put themselves forward as a group of courageous economic managers, with their wimpish record in the past-whether they will try that piece of face-or, alternatively, whether they will put themselves forward as a collection of bleeding hearts, picking up every ratbag organisation in the community in search of a bit of support. Honourable senators opposite have to decide that question. That is a very big problem for them. I assure Senator Brownhill that, when this Government is re-elected, he will be able to continue to ask me questions of the sort that he just asked a minute ago. But the real answer to the honourable senator's question is: Who is best to solve these problems? Senator Chaney —Ask your millionaires. Senator BUTTON —Senator Chaney, who is interjecting, asked me in this place a fortnight ago what the Government was going to do about increasing the value of the dependent spouse rebate. A fortnight later he finds himself in a party which leaked its tax policy to test it out, to test the water-and what was in that policy? There was the abolition of the dependent spouse rebate. That is the difference-the Opposition does not know what it is doing from one week to the next. That is the sort of problem which has led to this silly question. Senator McKIERNAN —My question is directed to the Minister representing the Treasurer. I refer to an article in this morning's Canberra Times newspaper reporting the announcement by the Federal President of the Australian Small Business Association, Mr Peter Boyle, that the ASBA would support candidates `committed to business principles' at the forthcoming Federal election. A number of tax policy proposals which would have serious implications for the interests of small business have recently been floated by various political and academic organisations, and it is not surprising that the ASBA has chosen to take an active role in the election context in seeking to protect its member's interests. The PRESIDENT —Order! Ask the question. Senator McKIERNAN —I ask the Minister: Will the Government take action to warn the small business community of the implications of the taxation policy proposals which would threaten this important business sector? Senator WALSH —There is, of course, no doubt that some of the tax options being peddled by various groups in the country, particularly those being peddled around by the Liberal Party of Australia and Professor Porter's National Priorities Project, would have very detrimental effects on small business. The most obvious of those options, of course, is the introduction of a value added tax, usually referred to as VAT. If that were to happen, for example, every business enterprise would have to register with the Australian Taxation Office and obtain a VAT number. Every registered trader would have to pay tax on all inputs and charge the tax on outputs. Senator Messner —That was in Keating's White Paper. Senator WALSH —There was no recommendation for a VAT in the White Paper at any stage. Each small business would have to pay the Tax Office the difference between the output tax and the input tax at prescribed intervals and provide appropriate supporting documentation. In the case of small shopkeepers, VAT would have to be paid on all goods bought from wholesalers, electricity, phone bills, repairs to equipment, advertising and so on. A shopkeeper would have to keep track of all invoices and keep records of the VAT numbers of his or her suppliers-not only his or her own VAT number, but records of the VAT numbers of all of his or her suppliers. Where VAT is paid on something that is used partly for private use and partly for business use-such as an electricity or phone bill, where there is some physical association between the business premises and the residence-there would have to be a division of the VAT into claimable and non-claimable parts. The appropriate records would have to be kept for that as well. Of course, the Tax Office would have to employ a very large number of additional people in order to police effectively such a tax. I find it a little surprising that the Australian Small Business Association does not seem to have considered these sorts of things and does not seem to have thought through very well at all the real interests of its members. Finally, another thing I would advise small business and the community in general to be very wary of is falling for this seemingly slick proposition that public expenditure on health services for people other than pensioners should be transferred from the public sector to the private sector. The effect of Professor Porter's proposition on health policy-endorsed by the National Farmers Federation-would be, as I said yesterday, to push up the consumer price index by anything up to 6.7 per cent in one hit. Senator WALTERS —My question is also directed to the Minister for Finance. I ask whether the Minister recalls telling the Australian Labor Party conference in Hobart last year: If we had still a public debt interest payment with the same level of outlays as it was in 1982, we would in this financial year have about $4 billion extra to either cut taxes, increase welfare spending or whatever else you wanted to do with it, but because we have run a sequence of high budget deficits we are lumbered with a crippling public debt interest payment which restricts the ability of this government and governments for the foreseeable future to deliver the programmes they would like to deliver elsewhere. Does the Minister stand by those words? If so, does he agree that had not the present Government run this `sequence of high Budget deficits' there would have been no need for the recent mini-Budget, which sought to cut exactly the same amount referred to by the Minister-$4 billion-from government spending? Does he agree that if the Hawke Government had not been such an irresponsible big spender he would have had the money, and again I quote the Minister, `to either cut taxes or increase welfare spending instead of having to inflict the pain of the mini-Budget on the community'? Senator WALSH —I do recall saying something very similar to that which Senator Walters has quoted. If the honourable thinks she is embarrassing me by repeating it, I advise her to think again. It is true that public debt interest currently requires about 10 per cent of total Commonwealth outlays-a figure of just over $7 billion, I believe, for this financial year. It is not, incidentally, the $55 billion that the Opposition shadow spokesman for finance asserted it to be in his first Press release issued after he took over the shadow finance job. Not even if John Howard had remained Treasurer would interest payments on public debt be as high as the $55 billion that Senator Short claimed it to be in his first Press release in his new capacity. The substance of Senator Walters's question is that if there has been a number of Budget deficits of course public debt increases and interest payments accumulate with it. The high Budget deficits started in 1982 and the prospective Budget deficit that we inherited from John Howard for the 1983-84 financial year was almost $10 billion. In one year that prospective Budget deficit that John Howard left behind as a sort of nasty surprise in the little, secret black box for this Government would have accumulated 20 per cent or thereabouts of total Commonwealth debt, but that is not the only thing this Government inherited, of course. In its last year in office the Fraser-Howard team presided over the most serious economic collapse that Australia has seen since 1930. In just one year the Fraser-Howard team destroyed a quarter of a million jobs and left this Government with a double-digit trifecta-I think that is the word-of a $10 billion deficit, inflation running at 11 1/2 per cent and unemployment running at 10 1/2 per cent. Since Senator Walters has developed an interest in reading my speeches, I commend to her a number of other speeches I have given over the past few years that also draw attention to the fact that because of that collapse of the economy, presided over, if not engineered, by John Howard, there are effects on both the outlay and the revenue sides of the Budget. On the outlays, obviously, if a quarter of a million people lose their jobs in one year-as they did in the last year when John Howard was Treasurer-that entails outlays at present rates of the order of $1.5 billion on unemployment benefits. That is about what it costs to pay unemployment benefits to a quarter of a million people, and a quarter of a million people lost their jobs during the last year of the Fraser-Howard Government and did not get jobs anywhere else. So we had tacked on to that inheritance of the prospective deficit increased outlays of $1.5 billion because of the increased unemployment left to this Government as a legacy by the previous Government. The story does not stop there. It also means that that quarter of a million people who previously had been employed, receiving wages and paying taxes were receiving unemployment benefits and in most cases probably paying no tax at all. So, to take account of that one needs to add, probably, something between $700m or $800m to the $1.5 billion that is already there. Of course, the effect of that major recession ushered in by Mr Howard as Treasurer has continued, although with diminishing annual effect, ever since and has been a major contributor to the public debt interest payment problem. Senator WALTERS —I wish to ask a supplementary question. I refer to the Minister's pathetic attempt to rationalise his Hobart statement and I ask: Is it not a fact that, as a proportion of gross domestic product, the first two Hawke-Keating Budget deficits were considerably higher than the last Fraser Government deficit? How can he in any conscience use the big spending of his Government as an excuse to the Hobart conference for the fall in living standards that his Government has inflicted on Australians yet refuse to acknowledge this cause to the Australian people? Senator WALSH —I shall reply very briefly. The Budget deficit, the outcome, for the 1982-83 financial year, the last year when Mr Howard was Treasurer, was, I believe, of the order of 2 1/2 per cent of gross domestic product, which is very much higher than the 1 1/2 per cent or thereabouts that will be the outcome of this year's deficit and, of course, very much higher again than the less than 1 per cent impending deficit for next year. The 1982-83 Budget had no economic strategy behind it; just a political strategy aimed at buying off and buying up a sufficient number of pressure groups-that was the theory behind it-to ensure the re-election of the discredited Fraser-Howard Government and, in buying off that large number of pressure groups, the devious strategy adopted by the then Treasurer was to pay most of the bribes through the taxation system. The effect of that, of course, was to send the bill into the next financial year. In other words, the bill for all, or most, of John Howard's bribes in the 1982 election Budget was picked up by this Government in 1983-84. That was a major factor in the almost $10 billion prospective deficit this Government inherited from Mr Howard when he was last the Treasurer. Senator CHILDS —Can the Minister representing the Minister for Primary Industry advise the Senate of the action the Government proposes to take to deal with the threatened interstate trade war in the dairy industry? Senator WALSH —I did have a note on this, Mr President. I saw one earlier today but I do not seem to have it with me and I am not sure just what action the Government proposes to take. But I should like to make one comment: It is sometimes said, and, indeed, said with some truth, that to secure a supply of milk for every day of the year, or at least every second day of the year, when the production cost varies because of seasonal factors throughout the year, some price premium must be paid over and above that which would be required to produce the same quantity of milk at any time during the year at the discretion of the supplier, instead of being, as with all milk quotas, an obligation to supply stated quantities of milk on every day or every second day. That is a valid point. It does not, however, explain why the milk quota, per se, often has a very substantial market value if its transfer on an open market transaction is permitted. As to the rest of it, I shall have to seek Mr Kerin's response. Senator DURACK —I refer the Minister for Resources and Energy to the answer he gave earlier in Question Time today concerning an agreement for a new exploration licence which has been entered into between Queensland Mines Ltd and the Northern Land Council over an area surrounding the existing uranium mine at Nabarlek in Arnhem Land. I ask the Minister: In the event that a uranium deposit is found in that exploration area, will the Hawke Government permit the development of that mine for uranium and the export of uranium from it? Senator GARETH EVANS —I do not think anyone is entitled at this stage to make any assumptions as to whether the development of any ore body containing uranium that might be found in the area adjacent to the existing Nabarlek mine would be consistent with the Government's three mines policy. That would really depend on all the facts of the matter as they emerged following the exploration and following the actual finding of some ore body. I stress that nobody has yet found any new ore body. Generally speaking, Australian Labor Party policy has never acted to prohibit the kind of exploration that is now expected to proceed in this area. Senator COOK —Has the attention of the Minister for Industry, Technology and Commerce been drawn to Press reports on the release of the report of the Japanese investment mission to Australia this year? The mission is reported as criticising performance and export attitudes in Australian industry. Is the report in fact critical of Australian management and employees and of government policy? Does the report indicate that Australia has little hope of attracting investment from Japanese industry? Senator BUTTON —The answer to the earlier parts of the question is yes, the Japanese investment mission's report is critical of a number of aspects of efficiency in Australian industry and so on. The answer to the second part of the question is no, there is no reason to expect that there will not be significant Japanese investment in Australia. The newspaper reports in Australia, which were headed with somewhat flamboyant titles, do not really reflect the report of the two mission leaders, Mr Amaya and Mr Hiroe. For example, in answer to the second part of Senator Cook's question, Mr Hiroe, in his reports, drew this conclusion: The undercurrent indicates that the time is steadily ripening for Japanese investment directed towards Australia. Mr Amaya, in his report, had this to say: The task that faces the nation today- that is, Australia- is to re-shape and give new discipline to this sector- that is, manufacturing- and to make out of it a sturdy secondary industry which can meet and win against international competition. The broad thrust of the mission leaders' remarks about the state of manufacturing in Australia is, of course, to be considered in comparison with the more sophisticated manufacturing economies of countries such as Japan. The report says that there have been many significant and important changes made by the present Government in the last three or four years, but it also says, as I have said on numerous occasions in the Senate, that there is a long way to go, that there is a long haul towards increasing competitiveness and growth in the Australian manufacturing sector. Senator Chaney —It would help if we didn't have Halfpenny, wouldn't it? Senator BUTTON —It would have helped, Senator Chaney, if we had not had the Fraser Government for seven or eight years. Again and again the report refers to the lack of an export culture in Australian manufacturing. It refers to generations of time that were lost under previous conservative governments in this country in addressing these issues. The greatest loss of all, loss of opportunities, occurred in the period of the Fraser Government, when energy was devoted to the sort of mythology of talking up resources booms as the El Dorado solution to this country's problems. That was the period of lost opportunity in Australia which Mr Amaya comes back to again and again in his comments about the lucky country syndrome and that aspect of the Australian culture. Mr Amaya says that many of the difficulties this country now faces are based on past policies of successive governments in relation to protectionism and the attitudes of government which played an important part in introducing insular attitudes into management and work practices throughout Australia. I very much welcome the report of the Japanese investment mission because I regard it as a realistic document. It is, of course, a document with a Japanese perspective. When he was in Australia, Mr Amaya said that there is no country which Japanese investment missions go to which has a good industrial disputation record compared with that of Japan. It has achieved an economic miracle. As everybody knows, that is the reason why Japan is the most cash rich nation in the world, and it is one of the reasons why so much foreign investment is being sought there. Mr Hiroe, for example, made the point that he admired the contents and significance of the policy measures recently undertaken to revitalise Australian industry. Importantly, he said that the restructuring appeared to be receiving utmost priority and to be an almost nationwide aspiration. He saw the turnaround in policy in the last few years as nothing less than dramatic and the outlook for Australia as being full of promise. When I announced the election in this chamber at 5 o'clock on Tuesday, at the end of that speech I said, in the words of the Prime Minister, `Let us get on with the job'. That will be echoed and is reinforced by the realistic approach to this Government's economic management adopted by the investment mission. Opposition senators interjecting- Senator BUTTON —I am being shouted down by interjections. Senator Newman —Do you remember laughing your way through that statement? Senator BUTTON —Again, the rabble, as it were, in the Opposition shouts. That is all they can do. The big problem the Liberal Party has is whether anyone will believe it will do what is necessary to fix Australia. I doubt it would bring in the sorts of tough measures about which the Government is talking. The Liberal Party has a problem of credibility. They are not my words; they are the words of Ian McLachlan, the President of the National Farmers Federation. They are the words he used two weeks ago. Senator HAMER —My question is addressed to the Minister representing the Minister for Transport. Does the Minister recall providing an answer to a question of mine at a recent Estimates committee when I asked about the possibility of extra costs arising because of the new program of inspections of foreign ships to enforce International Labour Organisation standards and some additional ones of our own? How many such inspections have been carried out? Does the Minister recall saying that no extra staff would be required and no additional costs would be involved as the inspections would be achieved by adjusting the work priorities of existing staff? Is the Minister aware that the marine surveyors involved in the inspection of substandard vessels have now been awarded a pay increase of $3,600 a year, backdated to 3 February, in recognition of the extra work load that has been imposed on them since the new program of inspections of foreign ships started? How does the Minister explain the discrepancy? Senator GIETZELT —I recall Senator Hamer raising a number of these matters during the Estimates committee hearings, but they are matters about which I am not able to give him concise or precise answers. However, I am quite happy to take these matters to the Minister and seek his response. Senator VALLENTINE —Is the Minister representing the Minister for Foreign Affairs aware of a report from the British scientist, Dr Julian Perry Robinson, in which he claims that the French Government has been working on a straight copy of the United States 155mm binary nerve gas artillery shell since 1975 and that it has been testing this weapon on the Kerguelen Islands in the southern Indian Ocean? Can the Minister tell the Senate whether the Government has any evidence of such testing on the Kerguelen Islands and whether it has raised the issue of chemical weapons development with the French Government, given Australia's commitment to a ban on chemical and biological weapons development? Senator GARETH EVANS —I am advised that Dr Julian Perry Robinson is an acknowledged authority on chemical warfare. He has written extensively, and over many years, on chemical warfare issues. We are not aware of the report which apparently suggests that France is working on a copy of the United States 155mm binary nerve gas artillery shell, but we do know that in 1986 France foreshadowed that it would resume production of a deterrent to chemical warfare capability. The Government has no evidence that France has tested chemical warfare on the Kerguelen Islands. Australia has had numerous discussions with the French Government about chemical warfare, and specifically about the development of a comprehensive convention banning chemical weapons. The French Foreign Minister, Raimond, reconfirmed France's commitment to a chemical weapons convention during an address to the conference on disarmament held in February this year. Senator VALLENTINE —Mr President, I ask a supplementary question. Should I take it from that response that the Government has not made a specific approach to the French Government on this particular question? If not, will the Government do so? Senator GARETH EVANS —I was asked whether this Government had raised the issue of chemical weapons development with the French Government, given the commitment to the ban, and I have said that, yes, we have had many discussions about that with the French. Senator MacGIBBON —My question is directed to the Minister for Education. The Minister recently indicated that demographic studies show that demands for tertiary places in Australia will peak in 1990. The Minister would also be aware that the same document indicated that growth in demand in Queensland would continue until the year 2000. What plans does the Minister have to correct the great shortfall in tertiary places in Queensland, as the token improvements made under her administration are denying tens of thousands of capable Queenslanders the opportunity of obtaining a tertiary education? Clearly, such a position of inequity with respect to the rest of the Commonwealth cannot be tolerated for the next 13 years until the year 2000. Senator RYAN —I am glad that Senator MacGibbon understands that we will be in government for the next 13 years and, appropriately, he related the question to the longer term. However, in answer to the question about what the Government plans to do about the shortfall in relation to higher education places in Queensland, I point out that I have told the Senate on a number of occasions that the Government intends to continue to do what it has been doing; namely, to give preferential treatment to institutions in Queensland, in recognition of the shortfall that Queensland has suffered in the past. I have told Senator MacGibbon and other senators from Queensland before that now and in the last few Budgets we have given Queensland 22 per cent of the new places that we have made available, although Queensland has only 16 per cent of the eligible population. Senator Teague —There will be no new places next year under your Government. Senator RYAN —There will be no new places if the Liberals even manage to get in because the only new places that the Liberals are prepared to give are the ones for which people have to pay $10,000 a year. I do not know that the students of Queensland are crying out to do that. Quite clearly, of the 38,000 new places that we have created while we have been in government a more than straight per capita share has gone to Queensland. If Senator MacGibbon wants to know why it is that Queensland still has a shortfall in relation to other States-which it does, despite our positive and preferential treatment-I can indicate to him that it is because when higher education funding was a State responsibility the Queensland Government gave this matter a very low priority. So, having regard to the history of this matter, the blame must be laid at the foot of Queensland governments. Of course, during the period of the Fraser Government there was no growth; there was an actual contraction of higher education funding. Only since we came to office has there been Federal funding of higher education growth, and Queensland is getting more than its fair share. The Government intends to persist with this policy of preferential treatment for Queensland so that Queensland students eventually will have the same opportunities as students in other States. I remind Senator MacGibbon that it is also open to State governments themselves to fund extra places. The Victorian Government has done this; it has funded 1,500 extra places for two years and, as a result, the unmet demand in Victoria is much lower than in any other State. So from the Commonwealth's point of view the solution is to continue growth in higher education and to continue preferential treatment of Queensland. But maybe it is time that Senator MacGibbon took up the matter with the present Queensland Government. Senator MacGIBBON —I ask a supplementary question, Mr President. Does the Minister not understand that despite the increase of 20 per cent in new places allocated to Queensland the gap is actually widening? The Government is not coping with the problem. What is the Government going to do about the deteriorating situation? Senator RYAN —I have made the position quite clear. There may be unmet demand-none of us will deny that-but I remind honourable senators that the unmet demand would be what the demand is currently assessed to be plus another 40,000 places unmet had the Liberal policies been in place. We have presided over more growth in higher education in four years than the Fraser Government was able to cope with in seven years-dramatically more. In four years of the Fraser Government some 8,000 places were created, while the present Government has created nearly 40,000 places in the equivalent time. It may not be enough, and indeed we are looking at all possible equitable ways of increasing that growth, but I remind Senator MacGibbon that the record of growth in higher education places achieved by the Labor Government has been outstanding, and his State has been the major beneficiary. Senator GILES —My question is directed to the Minister for Education. I refer the Minister to the Government's policy for funding of non-government schools. Can she indicate whether the Government has any plans to rearrange these funding arrangements? Further, is there any truth in rumours that have circulated in South Australia that funding to Catholic schools will be cut? Senator RYAN —I am happy to say that I can kill those rumours immediately. I have heard that such rumours are running about and, indeed, my colleague Senator Elstob from South Australia drew this matter to my attention. But I can say quite clearly now that the Government has no plan, now or in the next Budget, to cut funds to Catholic schools. Our four-year funding scheme for government and non-government schools has given unprecedented stability and security to all schools in relation to their funding and planning, and we will not throw away the benefits of that system. In the preparation for the expenditure review statement, the May economic statement, the Government exhaustively examined all areas of spending in my portfolio. However, that examination confirmed my belief-and this has been reiterated by the Prime Minister on many occasions-that the four-year funding scheme is one of the proudest achievements of our Government. I should emphasise that the National Catholic Education Commission appreciates and commends our commitment to that scheme and it has welcomed and endorsed our policies. A letter from the Chairman of the National Catholic Education Commission states that the Commission is aware of my efforts and those of the Prime Minister to give the highest priority to the welfare and development of Australia's children through formal educational processes. The letter goes on to say: We- that is, the National Catholic Education Commission- appreciate your understanding of the importance of Commonwealth programs for children in Catholic schools which continue to operate at comparatively low resource levels. We further appreciate the Government's decisions not to reduce Commonwealth funding levels for any schools . . . The National Catholic Education Commission referred to a partnership that the Government has built up with Catholic systems throughout Australia. It is a partnership of mutual respect and regard. Our record speaks for itself. In every one of our Budgets Catholic schools have received increased funding. In the May mini-Budget there were no cuts in any program for any school, and the four-year plan stands. From what we can manage to work out, the policy of Opposition senators is for education cuts. Any rumours about cuts should probably be directed to those who claim to speak for the Opposition in these matters. Senator Teague —Mr President, will the Minister table the letter and the paper from which she quoted? Senator RYAN —I have the letter from the National Catholic Education Commission here, but I am not sure about it. I will make a phone call to the Commission and, if it is happy to have the letter made publicly available, I will table it. Senator Teague —On a point of order, Mr President: The Minister has quoted from a letter and she has cited its source. I would like her to table it as provided for in the Standing Orders. Senator RYAN —As a courtesy to the National Catholic Education Commission I will seek its agreement to this course of action. Senator Teague —Will you table it this afternoon? Senator RYAN —Oh! The PRESIDENT —Is the Minister claiming that the letter is confidential? Senator RYAN —At this stage I will claim that but, as I have explained, out of courtesy to the National Catholic Education Commission, I will seek its agreement to table the letter. Senator Teague —I also asked the Minister to table the other paper from which she quoted. Senator RYAN —No, it is confidential. Senator WATSON —My question is directed to the Minister representing the Minister for Employment and Industrial Relations. Is it the Government's intention to reintroduce the Industrial Relations Bill 1987 in its present form in the unlikely event of the Australian Labor Party winning the next election? Senator WALSH —I am not sure that I heard the beginning of that question because that harpie alongside Senator Watson was squawking. The PRESIDENT —Order, Senator Walsh! Senator WALSH —All right, I withdraw that. I did not hear the earlier part of the question very well but that probably does not matter. The Minister for Employment and Industrial Relations has already stated, as has the Prime Minister, that the Government will have further consultations with a number of people about that Bill. I have nothing to add to that. Bills received from the House of Representatives. Motion (by Senator Gareth Evans) agreed to: That the Bills may proceed without formalities, may be considered together and be now read a first time. Bills read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(3.04) —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- MUTUAL ASSISTANCE IN CRIMINAL MATTERS BILL 1987 This Bill was first introduced into the House of Representatives on 22 October 1986. The Bill is now being re-introduced in a significantly amended form. The most important of these amendments enable Australia to provide, and request, assistance concerning freezing and forfeiture of the proceeds of crime. I will refer later in more detail to this aspect of the Bill. This Bill will provide a legislative basis for Australia to enter into arrangements with other countries whereby it can request and grant assistance in criminal matters. The assistance will relate both to the investigation and prosecution of crime. This Bill represents a significant initiative of this Government in its fight against organised and international crime. At the conclusion of the Special Premiers Conference in April 1985 the Prime Minister committed the Government to actively pursuing opportunities for increased co-operation with other countries in combatting crime. The Final Report of the Royal Commission into the Activities of the Nugan Hand Group which was presented on 12 July 1985 recommended, inter alia, that the Commonwealth Government give consideration to up-grading the priority accorded to the establishment of modern mutual assistance agreements. At the 7th UN Crime Congress in Milan in 1985, Australia was instrumental in proposing, and having unanimously carried, a resolution calling for greater international co-operation in combatting organised crime and urging all Governments to give urgent attention to the development of mutual assistance arrangements. This Bill in particular will enable Australia, in co-operation with other countries, to deprive criminals of offshore havens in which to hide their profits. The Attorney-General's recent discussions overseas, particularly in the United States and Switzerland, have completely confirmed the need for legislation in this area if Australia is to effectively carry out its international responsibilities in combatting crime. The Attorney- General was impressed in the course of those recent discussions with the number of countries which expressed interest in the early completion of mutual assistance arrangements with Australia. In early 1985 the Attorney-General established a task force to extend and modernise Australia's extradition arrangements with other countries. In that short period of time the Attorney-General has signed 13 extradition treaties. Negotiations have also been opened up with another 27 countries. The task force has also commenced the process of developing mutual assistance arrangements with other countries based on this Bill. I would like to take this opportunity to express appreciation on behalf of the Attorney-General of the tremendous work done by officers of his Department and of the Department of Foreign Affairs in the development of legislation as well as treaties and other arrangements. The work of these officers has resulted in a treaty making process without precedent in this country's history. I am confident that the good work of the task force will continue. This Bill has been the subject of extensive consultation with the States and the Northern Territory. The success of this proposed legislation, and the international arrangements for mutual assistance, will depend heavily on close co-operation and understanding between the Commonwealth and the States. The Bill also ensures that rights of persons are properly protected in accordance with Australian standards of justice. The Bill reflects the principles of the Commonwealth Scheme for Mutual Assistance in Criminal Matters agreed at the Commonwealth Law Ministers meeting in Harare in July 1986. I shall now turn to the principal features of the Bill. Clause 5 of the Bill makes it clear that its object is to facilitate the provision and obtaining by Australia of international assistance in criminal matters in areas which include: (a) the obtaining of evidence, documents and other articles; (b) the provision of documents and other records; (c) the location and identification of witnesses or suspects; (d) the execution of requests for search and seizure; (e) the making of arrangements for persons to give evidence or assist in investigations; (f) the forfeiture or confiscation of property in respect of offences; (g) the recovery of pecuniary penalties in respect of offences; (h) the restraining of dealings in property, or the freezing of assets, that may be forfeited or confiscated or that may be needed to satisfy pecuniary penalties imposed, in respect of offences; (i) the location of property that may be forfeited, or that may be needed to satisfy pecuniary penalties imposed, in respect of offences; and (j) the service of documents. The Bill's real function is to provide a legislative basis for Australia to honour the obligations it will be assuming in treaties and arrangements thereby ensuring that other countries will honour their obligations to Australia. Clause 7 of the Bill provides that the Act may be applied to a foreign country specified in the regulations. Clause 8 is a particularly important clause in that it sets out circumstances in which the Attorney-General can refuse assistance. These exceptions to the provision of assistance are designed to ensure that national and State interests are safeguarded and that no injustice or oppression is caused to individuals. The substantive parts of the Bill also reflect the concern that Australia should not, in responding to a foreign request for assistance, unfairly disadvantage any individual. Part II of the Bill empowers the Attorney-General to authorise a magistrate in Australia to take evidence and have documents and articles produced for transmission to a foreign country for use in proceedings in that country. The person to whom the foreign proceedings relate is entitled to be represented at the hearing in Australia as is any other person giving evidence or producing documents or other articles at the hearing. The relevant authority of the foreign country is also entitled to be represented. Part III of the Bill deals with search and seizure at the request of foreign countries. The foreign country must specify the reasonable grounds which it has for believing that a thing which is relevant to a proceeding or investigation involving a serious offence against the law of that country is located in Australia. A search warrant may not issue unless the foreign offence carries a maximum penalty of at least 12 months imprisonment. Part IV of the Bill deals with arrangements for persons and prisoners to travel to a foreign country at that country's request or to Australia at Australia's request to give evidence in a criminal proceeding or to assist a criminal investigation. Most serious organised crime has international dimensions. It is accordingly vital that Australia have arrangements whereby persons overseas, whether prisoners or not, can be transferred to Australia to give evidence or assist investigations. Safeguards are built into the procedures established. For example the person is entitled to immunity from prosecution both in respect of offences allegedly committed prior to departure from the foreign country to travel to Australia to give evidence to or assist an investigation and also in respect of the evidence he or she gives except for perjury. The Bill will enable Australia to significantly ease the task of foreign investigation and prosecution agencies in cases where crucial evidence or witnesses are in Australia. Australia will also benefit by being able to make requests for similar assistance pursuant to the arrangements it will be entering into. For example Australia will be able to seek by compulsory process access to banking and other financial records in foreign countries. It is vital that Australia be able to give effect to foreign forfeiture and confiscation orders in relation to the proceeds of overseas criminal activity where those proceeds are located in Australia. In turn it is also vital that Australia be able to seek the forfeiture and confiscation of the proceeds of crime committed in Australia where the proceeds are found overseas. The proceeds of criminal activity, regardless of where found, should be denied to those persons who have obtained them and hopefully returned to the society which was a victim of the criminal conduct to which those proceedings relate. The major amendment to the form of the Bill in which it was originally introduced into the House of Representatives on 22 October 1986 is the addition of a new Part VI concerning the proceeds of crime. This Part will link in the provisions of the Proceeds of Crime Bill 1987 and permit, at the international level, forfeiture and confiscation by Australia at the request of foreign countries and vice versa. Part VII of the Bill provides for service of foreign criminal process in Australia. The Part also contemplates that Australian criminal process will in turn be able to be served in a foreign country. The Government attaches great importance to development of a comprehensive international framework of mutual assistance treaties and arrangements. Major crime is becoming increasingly international in scope. It is imperative that greater international co-operation and assistance be introduced into the investigation and prosecution processes to enable major criminal suspects to be brought to justice. This Bill provides the legislative backing for Australia to enter into these international arrangements. While it is not possible to estimate the resource and cost implications of this Bill, it is clear that Australia will derive considerable benefit from assistance from other countries. I should mention in this regard that Australia has already received significant assistance from a number of foreign countries. I mention in particular Switzerland where significant funds associated with Australian narcotics trafficking have been frozen. However, to extend and improve this kind of assistance Australia must be in a position to extend assistance to other countries. The cost of providing that assistance will be at least offset, and probably outweighed, by the value of the assistance Australia receives. I commend the Bill to the Senate. MUTUAL ASSISTANCE IN CRIMINAL MATTERS (CONSEQUENTIAL AMENDMENTS) BILL 1987 This Bill was first introduced into the House of Representatives on 22 October 1986. The Bill is now being re-introduced in a significantly amended form. The Bill now amends various Commonwealth Acts as a consequence of provisions in the Mutual Assistance in Criminal Matters Bill 1987. The Bill amends the Director of Public Prosecutions Act to enable the Director to appear and grant indemnities in proceedings under the Mutual Assistance in Criminal Matters Act 1987. The Bill repeals provisions in the Australian extradition legislation in relation to the taking of evidence for the purposes of criminal proceedings overseas since the substance of those provisions are now included in the Mutual Assistance in Criminal Matter Bill 1987. In addition, the Bill amends the Migration Act 1958 to make provision for the entry into Australia and departure of persons who are non-citizens whose presence is required for purposes connected with the Mutual Assistance in Criminal Matters Act 1987. The amendments to the Migration Act also enable deportation of such persons should they remain in Australia longer than permitted for purposes connected with the Mutual Assistance in Criminal Matters Bill 1987 and who have not acquired an entry permit or become an Australian citizen. The Australian Citizenship Act 1948 is amended so that persons permitted to enter Australia for purposes connected with the Mutual Assistance in Criminal Matters Bill 1987 shall not be able to take advantage of their presence in Australia for the purposes of applying for Australian citizenship. I commend the Bill to the Senate. PROCEEDS OF CRIME BILL 1987 This Bill provides some of the most effective weaponry against major crime ever introduced into this Parliament. Its purpose is to strike at the heart of major organised crime by depriving persons involved of the profits and instruments of their crimes. By so doing, it will suppress criminal activity by attacking the primary motive-profit-and prevent the re-investment of that profit in further criminal activity. All the evidence available to Government from Royal Commissions and other inquiries in recent years suggests that major crime, particularly drug trafficking and serious fraud on the revenue, is growing and is becoming increasingly international in scope. Traditional methods of punishment by imprisonment and fine are not enough. Stronger measures are called for. Further, measures are required to target not only the pushers and others physically involved in criminal activity but also those who direct, finance and reap the most reward from crime. The Bill provides a mechanism for the tracing, freezing and confiscation of the proceeds of indictable offences committed against the laws of the Commonwealth and of the Territories. The Bill confers on police new powers to assist in following the money trail, requires financial institutions to retain documents necessary to preserve the money trail and creates new offences such as money laundering and organised fraud. In addition, the Bill also provides the mechanism to enforce orders made under corresponding State laws which affect the freezing and confiscation of property located in a Territory. The Bill, when taken together with the Mutual Assistance in Criminal Matters Bill, enables Australian freezing and confiscation orders to be enforced overseas and orders made in foreign countries in relation to foreign offences to be enforced against assets located in Australia. These international measures of co-operation are vital in the fight against the growing internationalism of major crime. This Bill is the end product of a resolution passed by the Special Premiers Conference on Drugs as a result of which the Standing Committee of Attorneys-General agreed upon the terms of the draft model Bill after extensive consultation. South Australia, Victoria and New South Wales have enacted legislation broadly along the lines of the model scheme agreed to by the Standing Committee. The general regime of this Bill, insofar as it relates to the freezing and confiscation of assets, is also consistent with that model. However, this Bill goes far beyond the regime approved by the Standing Committee in providing new effective powers to permit law enforcement agencies to follow the money trail, creating new offences of money laundering and organised fraud, providing for the statutory forfeiture of property following conviction of certain serious offences and requiring financial institutions to preserve the money trail for subsequent taxation and law enforcement purposes. This Bill forms part of a package of Bills, each of which contains measures which significantly advance the fight against organised crime, but when taken together constitute a comprehensive package which is designed to effectively suppress organised crime in Australia. The package will include the Proceeds of Crime Bill now before the House, the Telecommunications (Interception) Amendment Bill, the Mutual Assistance in Criminal Matters Bill, a revision and codification of the laws relating to Extradition, and new legislation requiring certain cash transactions to be reported to a central Government agency. The Proceeds of Crime Bill represents a careful balancing of effective new powers for law enforcement agencies in the freezing and confiscation of assets against the need for adequate mechanisms for the protection of interests of third parties, who have an interest in property which is the subject of forfeiture but who have no involvement in the commission of the offence and no knowledge of the origin of the property. The scheme has been carefully designed to provide the greatest possible flexibility to law enforcement agencies to ensure that the legislation effectively meets as many different factual situations as possible. For example, search warrants and restraining orders may be sought immediately before charges are laid, or at any subsequent time. Confiscation orders likewise may be sought at the time of conviction and, in fact, form part of the sentencing process where sufficient evidence is available to bring confiscation proceedings at the time, and the matter can be expeditiously dealt with by the court as part of the sentencing process. In other cases, the application for confiscation can be made at any time up to six months after the date of the relevant conviction. Innocent third parties may seek to have their property excluded from freezing and confiscation proceedings as early as the hearing of the application of the restraining order, at any time during the currency of the restraining order, at the determination of the application for confiscation proceedings, and at any time within six months after confiscation. The regime of this Bill will be in addition to other Commonwealth and Territory legislative provisions which provide for the forfeiture of property or the imposition of pecuniary penalties such as the provisions in Division 3 of Part XIII of the Customs Act 1901. Contents of Bill The detailed explanation of the contents of the Bill is contained in the Explanatory Memorandum. Mr President, I wish only to refer at this stage to the more important features of the Bill: The Bill applies both within and outside Australia to enable courts to make restraining and confiscation orders in relation to property located outside Australia and profits derived and realised outside Australia; Confiscation orders under the proposed legislation may take the form of either forfeiture orders, or orders for pecuniary penalties, or a combination of both where this is appropriate; Once a forfeiture order is made, the property vests in equity in the Commonwealth. Registrable property does not vest in law until registration procedures have been complied with; Third parties who can establish that they were not in any way involved in the commission of the offence are able to seek exemption of their property from the operation of the forfeiture order, or to have the forfeiture order discharged in respect of that property. As a general rule, third parties must challenge the forfeiture order within six months unless granted special leave by the court; Pecuniary penalty orders, on the other hand, may only be made against the defendant. These orders require the court to assess the benefit which the offender derived directly or indirectly from the commission of the offence, assigning a monetary value to that benefit and making a pecuniary penalty order equal to that amount. Once such an order has been made it can be enforced as a civil debt and is provable in bankruptcy; The legislation contains provisions to enable courts to look behind the legal ownership of property to determine whether that property is subject to the effective control of the defendant, having regard to such things as share holdings or directorships of companies, any trust that has a relationship to the property, family and business relationships and the like; This Bill also provides for statutory forfeiture in limited circumstances. Where a person is convicted of a serious offence, defined to be a narcotics offence involving a trafficable quantity of drugs which constitutes a breach of Commonwealth or Territory law, an organised fraud offence, or an offence of money laundering the proceeds of such drug trafficking or organised fraud, that person is liable to have all property which is the subject of a restraining order six months after the date of his or her conviction forfeited by force of statute, unless the person can establish that the property was lawfully acquired; The Bill also deals with the problem of persons, or their associates, moving property beyond the jurisdiction once they become aware that charges are about to be laid. Part III of the Bill confers new and far reaching powers on police officers to seize property which is tainted and to hold such property for 14 days pending the making of a restraining order over the property. Such seizures can arise in three circumstances, namely, by consent, under judicial warrant or without judicial warrant in emergencies. Restraining orders may be made immediately before charges are laid. Under a restraining order, the court may direct that property specified in the order not be disposed of, or otherwise dealt with, by any person other than in accordance with the terms of the order or may require the Official Trustee to take custody and control of the property specified in the order. A court may make a restraining order where it is satisfied that there are reasonable grounds for believing that the defendant committed the offence alleged and that the property the subject of the application is either tainted property or may be required to satisfy a pecuniary penalty order; Restraining orders may be varied by a court on the application of any person holding an interest in property the subject of the order. Restraining orders may be registered on registers of title and, when combined with pecuniary penalty orders, give rise to a statutory charge over the property. Contravention of a restraining order constitutes an offence punishable by a fine of $10,000 or 5 years imprisonment or both in the case of a natural person and a fine of $50,000 in the case of a body corporate; Part IV of the Bill confers wide-ranging and effective powers on law enforcement officers to gain access to documents relevant to following the money trail and transferring tainted property. The first of these new measures is a production order, made by a person who is a judge of a Supreme Court, directing a person who has property tracking documents in his or her possession or control to produce such documents to a law enforcement officer or, alternatively, to make them available for inspection by such an officer. A breach of a production order constitutes an offence. Where it is inappropriate to seek a production order, either because property cannot be identified with sufficient particularity or because there are grounds to believe that a production order is unlikely to be complied with or may prejudice effective law enforcement, a search warrant may be granted to search for and seize property tracking documents; A major new initiative is the introduction of monitoring orders, made by a person who is a judge of a Supreme Court, directing a financial institution to give information over specified periods of time to law enforcement authorities about transactions conducted through accounts held by a particular person. Monitoring orders are only available in relation to serious offences (involving narcotic drugs, organised fraud or money laundering the proceeds of drug trafficking or organised fraud); As part of the process of enabling law enforcement agencies to follow the money trail and to assist in the investigation of tax evasion offences, the legislation places a statutory obligation on financial institutions to retain certain records. Records which relate to the opening of accounts must be retained in original form for 7 years after closure of the relevant account and all other documents necessary to reconstruct transactions in excess of $200 must be retained for a period of 7 years after the transaction in original or some other form, including micro-fiche. Consultation has taken place with financial institutions in relation to these measures; Part V of the Bill creates two new offences relating to money laundering. The first of these is a serious offence of engaging in money laundering where the person knows or ought reasonably to have known that property is, in fact, the proceeds of crime. Such a crime must be either an indictable offence against a law of the Commonwealth, or of a Territory, or a drug trafficking offence which was committed overseas which would have constituted an offence against Australian law had the offence been committed in Australia. The legislation also creates a less serious indictable offence of laundering property which is reasonably suspected of being proceeds of crime. This offence is very similar to the offence of possession of goods reasonably suspected of having been stolen, which exists in most jurisdictions and has proved to be an effective law enforcement tool against theft; The legislation also creates a new offence of organised fraud which is constituted by acts and omissions which constitute 3 or more public fraud offences from which the person has derived substantial benefit. Public fraud offences are breaches of ss 29d and 86a of the Crimes Act 1914 and ss 5, 6, 7 and 8 of the Crimes (Taxation Offences) Act 1980. This offence is specifically designed for persons who have been engaged in a pattern of conduct, over a period of time, from which they have benefitted to the detriment of society. The Government has not followed the American precedents which centre around concepts of sophisticated methods, organisation or planning and specific monetary limits. Some of the most effective fraudulent activity has resulted from schemes of utmost simplicity; The Bill also provides for the problem of dealing with absconders. In certain circumstances, a person who has absconded can be taken to have been convicted of an offence and be liable to confiscation proceedings. Before a confiscation order can be made against an absconder the court must be satisfied that the person has, in fact, absconded and that the person has either been committed for trial in respect of the offence or that a reasonable jury properly instructed could find the person guilty of the offence on the basis of the evidence put before it. Mr President, these are the major features of the Proceeds of Crime Bill. The Bill will give to law enforcement authorities effective and comprehensive means to carry on the fight against major crime. The Bill will also require our law enforcement authorities to develop more sophisticated skills in tracking, analysing and building up data on financial transactions of criminals. The development of these skills is essential to the success of the measures in this Bill. Financial Impact Statement I believe that this Bill will result in significant financial benefit to the Commonwealth, the States and foreign countries with which Australia has mutual assistance arrangements. I also believe that this Bill will return benefits which will greatly outweigh its administrative costs. The Bill provides mechanisms which not only deny to the perpetrators the proceeds of crime but also return those proceeds to society. The Bill will also provide mechanisms to return significant revenue to the Commonwealth. It is proposed that there be a special trust fund established to receive the funds generated under this legislation and apply those funds specifically to finance further measures by law enforcement authorities in their fight against crime. This would mean that not only will criminals be denied their profits but those very profits will be reinvested in the fight against major crime. As honourable senators will be aware, the Attorney-General has recently returned from a visit to the United States and Europe which involved discussions on measures to attack the proceeds of crime, international mutual assistance and extradition. He was particularly impressed with the way in which the United States is using legislation on proceeds of crime to deprive criminals of many millions of dollars and reapply that money in their fight against crime. He was also impressed, in his discussions with those countries, by the increasing recognition of the need to adopt measures of the kind contemplated in this Bill and to greatly increase international cooperation in this area. I commend the Bill to the Senate. PROCEEDS OF CRIME (MISCELLANEOUS AMENDMENTS) BILL 1987 This Bill contains a number of amendments to three Acts to ensure the effectiveness of the Proceeds of Crime Bill 1987. In the development of the Proceeds of Crime Bill 1987 the Government has been concerned to ensure that artificial devices cannot be used to defeat the operation of the legislation. One such artificial device which has the potential for defeating the operation of pecuniary penalty orders made against offenders is the mechanism of bankruptcy. During the currency of the bankruptcy all property of the bankrupt vests in the trustee of the bankruptcy and can therefore, in the absence of special provisions, be put beyond the reach of the Commonwealth and effectively laundered when the surplus property returned to the bankrupt after the risk of confiscation proceedings has passed. Bankruptcy Act 1966 One consequence of an offender becoming bankrupt prior to confiscation would be that any restraining order restraining all of an offender's property pending the making of a pecuniary penalty order would be likely to be revoked on application by the Official Trustee and no further restraining order in relation to that property could be put in place. The existence of a restraining order is a prerequisite to a court making orders for the examination of persons in relation to the affairs of a person under the Proceeds of Crime Bill 1987. To overcome this difficulty, which arises as a consequence of not being able to restrain a bankrupt offender's property, section 12 of the Bankruptcy Act is amended by clause 9 to specifically empower the Director of Public Prosecutions or persons entitled to bring applications for interstate pecuniary penalty orders to apply to the Inspector-General requesting that he exercise his powers to make enquiries and conduct investigations under the Bankruptcy Act. Section 58 of the Bankruptcy Act is amended to enable pecuniary penalty orders and interstate pecuniary orders to be enforced against property of the bankrupt which does not vest in the trustee of the bankrupt. Section 60 of the Bankruptcy Act is amended to ensure that proceedings under the Proceeds of Crime Bill can not be discontinued or stayed until all bankruptcy proceedings have been concluded. The amendment to section 82 of the Bankruptcy Act effected by clause 8 enables pecuniary penalties and interstate pecuniary penalty orders to be proved as civil debts payable to the Commonwealth in bankruptcy whether such orders are made before or during the bankruptcy. Section 148 has been amended to enable the DPP, or persons entitled under State law to apply for an interstate pecuniary penalty order, to apply to a court for an order preventing the distribution of the surplus of a bankruptcy back to the bankrupt. Where an order has been made by the court preventing the distribution of the surplus and a pecuniary penalty order is subsequently made against the bankrupt defendant, the Commonwealth would be in the position to enforce the pecuniary penalty order by way of warrant execution against the surplus held by the Official Trustee. Clause 10 amends section 153 of the Bankruptcy Act to ensure that a pecuniary penalty order debt is not extinguished upon the bankrupt's discharge from the bankruptcy. Cheques and Payment Orders Act 1986 The Proceeds of Crime (Miscellaneous Amendments) Bill 1987 amends the Cheques and Payment Orders Act 1986 to require the retention of cheques by financial institutions. The provisions of clauses 12 and 13 require financial institutions to retain cheques and payment orders in amounts in excess of $200 for a period of 7 years. The provisions mirror clauses 77 and 78 of the Proceeds of Crime Bill which require financial institutions to retain other documents necessary to reconstruct transactions conducted through the institution for the amount in excess of $200. Crimes Act 1914 Part III of the Bill contains a number of amendments to the Crimes Act 1914. The majority of these amendments increase penalties prescribed for offences which are relevant to preserving of the money trail for the purposes of confiscation of assets. Clause 14 amends section 18a of the Crimes Act to ensure that pecuniary penalty orders made under the Proceeds of Crime Bill are enforced under the regime set up in that Act and are not treated as other pecuniary penalties and enforced in accordance with State laws as if they were fines imposed by the Court. The maximum penalty for offences against sections 36, 39 and 43 of the Crimes Act has been increased 5 years. These offences deal with fabricating or destroying evidence and attempting to pervert the course of justice. It is likely that criminals will resort more frequently to activities constituting a breach of these provisions in light of the severe penalties which will flow from detection of criminal offences following the introduction of the Proceeds of Crime legislation. I commend the Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. Bill returned from the House of Representatives without amendment. Debate resumed. Senator MAGUIRE(South Australia)(3.06) —The elimination of the double taxation of dividends by the Hawke Government, which is provided for under the Taxation Laws Amendment (Company Distributions) Bill 1987 and allied Bills, was reported in the international magazine the Economist, dated 7 March 1987. That international business magazine stated: The whingers would do better instead to rejoice at another change brought in by the Hawke Government. The small but vocal minority in the business community will do both themselves and this country a favour if they stop their chorus of whining and whingeing and instead take advantage of the new company tax system and other Government policies which have benefited the business sector, such as the change in the value of the dollar. The article in the Economist went on to say that the new company tax system proposed in this legislation was `the purest imputation system in the world'. That is an accolade from the Economist magazine-one of the more important international business magazines. It went on to say that if such a system were applied to Britain it would probably do more to promote small shareholding than the flotation of British Telecom and British Gas put together. It is clear that informed observers and the authors of the Asprey Taxation Review Committee report and the report of the Campbell Committee of Inquiry into the Australian Financial System believed that there were significant benefits to be gained from the elimination of double taxation of company dividends. The most important benefit will be to encourage equity financing or share financing of Australian companies. This legislation will help to make share financing and equity financing relatively more attractive to businesses than the various alternatives that are available to them. It is a matter of historical fact that in Australia in the last few years there has been a very strong trend away from equity financing and share issues towards debt financing of companies and the borrowing by companies to finance expansions. In recent times Australian companies have tended to borrow relatively more from banks than other financial institutions to finance expansion, rather than raise the necessary finance through the stock market by share and equity issues. I refer to figures issued by the Reserve Bank of Australia which show that between 1979 and 1984 the total indebtedness of Australian companies more than doubled, from $23,000m to $52,000m-a very large increase. A large proportion of that growth involves indebtedness overseas, some have foreign owners of debt. As at 31 March last year Australia's gross external debt was estimated at some $80,000m. More than half of that amount-57 per cent, or $46,000m-was owed by the private sector. One of the large elements of that was the debt owed overseas by the Broken Hill Proprietary Co. Ltd. That company alone owed 4.8 per cent of Australia's foreign debt. Australian companies' preference for borrowing funds rather than raising equity has been the real reason for the blow-out in Australia's foreign debt. That has been the underlying trend in the Australian economy which has created this problem-the move that began some years ago away from equity in share issues towards borrowing to finance business activities. To make matters worse, a large percentage of this overseas borrowing has not been used to invest in new plant and equipment, it has not been used to expand Australia's productive base, but to finance takeover activities; to take over existing assets rather than add to the sum total of productive assets in the Australian economy. That is certainly a matter of concern to me as a senator. The Macquarie Bank estimates that Australia now has to pay some $6,000m a year in interest payments alone just to cover the liabilities of Australian business borrowings abroad. These are business borrowings, not government borrowings. This means that the nation as a whole must earn more export income to pay the interest bill on the foreign debt owed by businesses. At a time when some sections of business are exhorting the Government to reduce its expenditure, some corporate treasurers are exercising very little restraint indeed over their own companies' borrowing activities. I believe that the new company tax system should encourage Australian companies to move away from debt financing by removing the previous bias against equity financing. As I pointed out this morning, under the old company tax system which applied when Mr Howard was Treasurer, returns on equity investments were effectively taxed twice in Australia. They were taxed once as the surpluses of companies and again in the hands of shareholders. That was the reality when Mr Howard was the Treasurer. Debt instruments were taxed, just once-in the hands of the lender when he earned the proceeds from making a loan. Interest payments could be deducted against company tax while dividend payments could not. I am pleased to say that this legislation, which is before the Parliament now and which provides for dividend imputation credits for individual shareholders in respect of their dividend income, will help reduce the cost bias in the economy against equity investment. It is a very efficient measure. It will help improve the efficiency of the Australian economy by encouraging more investment financed by equities rather than borrowing activities. Scrapping this bias against equity investment meshes in well with the Government's strategy of restructuring the economy towards new export-orientated and import competing industries, to which Senator Button referred in Question Time this afternoon and which were diagnosed by the Japanese investment mission. With equity investment being more attractive it will be easier for business people to gain the necessary venture capital to start new enterprises. The elimination of the double taxation of dividends will also channel investment away from non-productive goods and services towards productive activities which produce regular and periodic flows of income and regular periodic surpluses which create employment and can reduce the trade imbalance. The other significant benefit from the elimination of double taxation of dividends will be a substantial tax cut for small business. Under the old company tax system an incorporated sole trader paid tax on his or her company income plus personal tax on the distributed profits when received. The new imputation system will not require the trader to pay personal tax on the distributed profits. This will reduce the tax bill of some small business people by almost 40 per cent, yet we have the nonsense from the Australian Small Business Association, which is entering into this election campaign with the absolute garbage and drivel that it retails around Australia, ignoring the fact that under this legislation-legislation which could not be introduced by a National Party-Liberal Party government and which could not be introduced by Mr Howard when he was Treasurer-this Hawke Government is delivering tax cuts of up to 40 per cent for small business people. Small business is probably the biggest winner from the Government's latest tax reform because tax imputation which is provided for by this legislation will give small business a very large tax cut indeed. It took a Labor government to do it, not the Liberals who are long on rhetoric but short on action. The introduction of the dividend imputation system from 1 July next is another stage in the Government's strategy to modernise and restructure the Australian economy. It will be one of the final measures in the Hawke Government's tax reform package which aims to improve fairness of the tax system and enhance the prospects of Australia's long term economic growth. The tax reforms are an integral part of a series of major policy measures designed to create the environment for business to become more dynamic and more outward looking. It is very important to note that, while there has been a lot of carping from the Opposition and a lot of negative comment from the Opposition and some vested interests in the community, the fact is that the capital gains tax which was introduced by this Government on 19 September 1985 also will have the effect of making the economy more efficient. I believe the capital gains tax, which is a tax on the increased value of an asset between the time of sale and the time of purchase, will help redirect investment towards productive income producing areas in the economy-those areas which produce regular income flows. In that way it will complement the effect of tax imputation on dividends in improving the efficiency of the economy. The capital gains tax, I believe, will help redirect activity away from assets which are in relatively short supply. They are the speculative areas of the economy, where people move in on assets, such as land and real estate, which are in relatively short supply with a better than average chance of making capital gains on those assets compared with other assets such as productive plant and equipment which this country so desperately needs. The capital gains tax will tend to focus and direct investment away from those speculative areas, such as central business district real estate-land and buildings. The reason for that was that capital gains in general in Australia were untaxed, apart from a couple of specific sections in the Income Tax Act which taxed particular capital gains. I believe that had a deleterious effect on the efficiency and the productive capacity of the economy. Both the tax imputation arrangements and the capital gains tax will make investment in income-producing assets more attractive. It will foster growth in the economy which, I am pleased to say, will be more soundly based. It will be based on real returns more than on speculative activities, as it has been in the past under a long line of conservative Liberal governments. The Hawke Government has introduced a range of specific measures to enhance business activity and growth in Australia. These include the implementation of restructuring plans in the steel, motor vehicle and heavy engineering sectors of the economy. These are major steps forward, something that I have been waiting for many years to see in this country. A dose of economic planning has been needed, given our very poor performance over the decades. It is pleasing for me to see that we now have at least some economic planning mechanisms in regard to the vitally important steel, motor vehicle and heavy engineering industries. As a result of those plans which are generating increased investment in those industries we can look forward to larger productive capacities, higher production and an underpinning of the future employment levels. A 150 per cent tax deduction for research and development expenditure has been introduced by this Government, in addition to direct research and development grants-very important steps forward in boosting business activity. There are special tax deductions for investments in management and investment companies-another form of research and development assistance. There is the 4 per cent depreciation allowance for new income producing buildings, including residential rental premises. With these measures before us the Government is effectively bringing its tax reform package to a successful conclusion. That package was launched after the National Taxation Summit in 1985. It began with a range of tax cuts in that period. We have had the abolition of the expense account lunches. I am delighted to say that the last free lunch has been eaten in Australia. It introduced the fringe benefits tax. It introduced the historic capital gains tax which, I have pointed out, will have a profound effect in improving the efficiency of the economy. With this legislation it is now introducing the arrangements for giving shareholders credits for tax paid by companies on company profits when shareholders list their dividend incomes in their tax forms. The final instalment of that tax package, as you will be aware, Madam Acting Deputy President, is the major reductions in personal income tax on 1 July next. There will be tremendous reductions under the Labor Government in average and marginal tax rates, with the top rate being reduced from Mr Howard's 60c in the dollar to 49c in the dollar, the middle rate going down from 46c in the dollar to 40c in the dollar, and the current 43c in the dollar going down to 40c in the dollar. They are tremendous reforms of the tax system. Those major cuts in personal income tax have been financed by our crackdown on tax avoidance-that is what it was-by the proliferation of so-called fringe benefits in the community. We have ensured that the last free lunch has been eaten in Australia. We are saving some $330m a year just by stopping that rort and disgraceful activity. That is helping to fund both this measure, the imputation scheme, and the personal tax cuts which begin on 1 July. These essential elements of the Government's program to improve the efficiency and flexibility of the Australian economy, I am sure, will be welcomed by the community which will see them as a means to ensure a more efficient, dynamic economy. I am sure that when it votes on 11 July it will be considering these factors very carefully indeed. Senator WATSON(Tasmania)(3.20) — Before the Senate is a package of taxation Bills-the Taxation Laws Amendment (Company Distributions) Bill 1987, Income Tax (Franking Deficit) Bill 1987, Income Tax Rates Amendment Bill 1987, Income Tax Laws Amendment Bill (No. 2) 1987 and the Bank Account Debits Tax Amendment Bill 1987-which deal with a wide range of initiatives. This package of Bills deals with a wide range of new obligations which are imposed upon taxpayers to assist officers of the Australian Taxation Office in their investigations. It also increases the corporate tax rate from 46 to 49 per cent and eases slightly the iniquitous substantiation requirements for log books. There is a move towards reducing the double tax on dividend income. Most of these amendments will have far reaching implications. It is unfortunate that the Senate does not have the opportunity to give the careful consideration which these important and substantive changes deserve. One of the principal results of the passage of this group of Bills will be to introduce a long awaited system of dividend imputation. It will give effect to a decision which was first announced by Treasurer Keating in September 1985 and which was substantially revised in December last year. In effect, from 1 July imputation will apply to those dividends paid from company profits that have been subject to the new 49 per cent corporate tax rate. Such dividends will be known as franked dividends and will attract an imputation credit. The essence of how these new arrangements will operate is that the tax paid at company level will be credited to shareholders. Pre-1987 profits and post-1986 profits that are free from tax will not qualify as franked dividends. Where companies are paid tax at a lesser rate for any number of reasons, dividends will attract proportionately fewer imputation credits, that is, the benefit for the shareholder will actually be less. If the shareholder receiving the benefit of the tax credit is subject to a marginal tax rate of less than 49 per cent and his tax credit is in excess of his liability on the dividend, he will be permitted to use the credit to offset other tax on other non-dividend income. In line with the December revision, the status of franked dividends will be reserved when passing through company structures and the ultimate beneficiaries will be individual resident shareholders. In general, dividends which are paid after 30 June 1987 will be eligible to be franked. However, dividends paid after that date for which the reckoning day, that is, the original date of the issue, is prior to 1 July 1987 are not eligible to be franked. While the revised system is an improvement on the first proposal of the Australian Labor Party that involved levying what is known as a compensatory tax, a number of the features of the proposals of these Bills is not entirely satisfactory. In effect, the Bill is perpetuating a tendency that has become obvious over the last five years to include increasingly complicated formula in our taxation laws. Throughout the Taxation Laws Amendment (Company Distributions) Bill a succession of formula is referred to for the calculation of such items as potential rebate amounts and franking deficits tax. A glance at the calculation required to find the required franking amount will clearly illustrate the complexities that are contained in this Bill. The fact that it takes over 100 pages in the explanatory memorandum to convey to the reader the essential meaning of a Bill which, in itself, covers only about 40 pages, gives a further indication-should it be required-of the intricacies of the proposals put before the people. What we really need is a simplification of our taxation laws. If the Government were really genuine about reducing double taxation on dividends and establishing equity for all taxpayers in respect of dividends, it would have given serious consideration to making all dividends, for example up to a certain amount, tax free. The principal areas of concern that I wish to address total seven. Firstly, the new regulations have the potential to cause significant shifts in investment patterns and very few people have addressed this aspect. Secondly, there is the complexity of the proposals. Thirdly, there are misleading claims with regard to shareholder benefits. Fourthly, there is the additional company tax and the extra administrative burdens that will be placed on companies. Fifthly, there is the loss of full benefits of indexing the capital gains tax in the distribution of dividends. Sixthly, there are provisions with regard to trusts in a loss situation which, I think, are inequitable. Seventhly, there are the consequences of the interaction with foreign tax credits legislation that imposes penalties on what I term the wrong sorts of companies. Firstly, I refer to the significant shifts in investment patterns. As outlined, one of the consequences of this imputation proposal that is of some concern is its potential to cause significant shifts in investment patterns. There could be a move away from rent, interest and royalty returns in favour of investments returning essentially tax free dividends, and this could well be discernible in the medium term. Whether this would be in the long term interest of Australia must be questionable. However, despite the fact that some good reasons exist for investment in areas that return tax free dividends, too great a shift in this direction could have long term repercussions, for example, in raising capital in certain other sectors. Some of the biggest losers from this change of direction could be institutional borrowers and the Commonwealth's loan raising facilities. Given the potential for loss and the current environment of budget deficits and expenditure cuts, I have my reservations as to whether these imputation proposals will continue for many years in view of the fact that the Government needs to find new sources of taxation revenue. While there is some justification for full imputation in the case of private companies, despite the entity convention and the separation of powers between companies and shareholders, I believe that the separation of powers between the company and shareholders is very much more at arm's length than is the case with private companies and their shareholders. Therefore, there is a case for some taxing of public company dividends in the hands of the shareholders. This could easily be achieved with a withholding tax to the extent of 20 to 25 per cent which is deducted by the company at source. By adopting such a procedure present collections from dividends could be increased as the possibility of taxpayers failing to disclose their dividend receipts would be eliminated. Such a measure might prove to be more palatable than, for example, a wealth tax which is certainly on the agenda of some of the colleagues of the Minister for Veterans' Affairs, Senator Gietzelt. There are also misleading claims regarding shareholder benefits. Claims about the benefits that will accrue to shareholders under imputation have, in many cases, been quite misleading. An end to the double taxation of dividends is to be welcomed and will no doubt go a long way, or part way, towards achieving its stated goal of increasing the availability of equity finance by making share investment more attractive. However, confusion has been created in the public mind by a plethora of articles dealing with this very complex proposal which has obscured the fact that not all dividend distributions will be tax free in the shareholders hands. Just how `tax free' dividends will be will depend on the tax strategies of the individual companies and their often complex domestic and international operations. For a shareholder to receive benefits under this new scheme the company, which is actually distributing the dividends, must have credits in its franking account. The circumstances in which these credits arise are outlined in Part IIIAA of the Taxation Laws Amendment (Company Distributions) Bill 1987. For full imputation to occur the company must be a resident of Australia for more than half the year of income, the shareholder must be a resident in Australia for benefit, and the company tax must be paid at the full 49 per cent rate on the profits on which the dividend is drawn. Should the company have accumulated profits, but, for example, incur a loss in the current year and therefore have a reduced tax liability, it will receive fewer credits and therefore will be able only partially to frank its dividends. Problems for the investor in finding out which companies will offer the greatest benefits from imputation naturally will arise. While the rules of the proposed legislation specify the minimum extent to which the dividend may be franked, companies are given some latitude as to the maximum extent to which the dividends may be franked. As a general rule, a dividend is franked to the extent allowed by the credits in the franking account at the date of the payment of that dividend. However, companies must pro-rate franking dividends where funds in the franking account are insufficient to fully cover all future commitments to dividend distribution. That means committed future dividends, as defined in the interpretation section of the Bill. It is possible, therefore, to imagine a situation in which shareholders may not get a fully franked dividend, even where a company pays the 49 per cent rate, due to the commitments to pay future dividends. Next, losses of tax credits to shareholders may also occur where dividends have been underfranked because clause 160apx provides that where the required franking amount is greater than 10 per cent of the dividend and the dividend is not franked, a franking debit will arise equal to the required franking amount. This will have the effect of reducing the franking account balance otherwise available for franking future dividends. Thus shareholders will suffer the consequences of an administrative error which has been made by the company. An extra burden is also placed on companies. The burdens of these proposals on Australian companies essentially are twofold. There is a steep increase in the company tax rate from 46 to 49 per cent, which is against the international trend. It imposes substantial administrative duties and costs. The Treasurer tells us that the cost of these changes will be $775m and will be offset in part by the increase in the company tax rate. This additional impost will be disastrous for companies trying to find funds for much needed investment in our straitened economic environment. It is small wonder that companies are considering, or have spoken about, moving their headquarters off-shore, including Elders and the Australia and New Zealand Banking Group Ltd. Companies that have shown the confidence to retain Australia as their base and have expanded their operations overseas in an attempt to win foreign capital will now be disadvantaged by the proposals before the Senate. So organisations that have learned to operate successfully in a deregulated and extremely competitive international environment unfortunately will be penalised. This is so because only profits on which Australian tax has been paid may be used to generate franked dividends. So where a company receives a significant portion of its profits from overseas, its capacity to distribute fully franked dividends to shareholders will be substantially reduced. Let me give a case in point. The ANZ Bank has successfully expanded operations by acquiring Grindleys Bank, which now forms part of its operations. In 1986, for example, nearly 40 per cent of its pre-tax earnings came from outside Australia. It is this type of activity that the Government has been promoting as a remedy to the long term problems which have been confronting Australian industry. Despite this, it is putting proposals forward in this package of Bills before the Senate today that will discriminate against such companies as the ANZ Bank. I apologise to it for singling it out, but it is one of many companies trying to do the right thing in pursuing this line. It is strange encouragement indeed to penalise them. In addition, this very complex legislation places a very heavy administrative burden on companies issuing dividends. They will now be required to remit more detailed statements to shareholders on payment of dividends. They will have to maintain a franking account in each franking year and carry out a reconciliation at the end of each franking year. They will have to retain these additional records pertaining to franking-type balances for a further seven years. So the intricacies involved in calculating the franking dividends mean that the maintenance of these records will be no simple task. However, it will be crucial for company directors to have up to date information on the state of the franking account to make appropriate decisions on dividend issues in the best interests of shareholders. The impact of this company distributions Bill will be to favour some companies over others. This is unfortunate-it discriminates. The encouragement to pay more franked dividends and thus attract greater shareholder interest will have the effect of draining companies of capital. That will be disastrous. Such a situation will operate in favour of established companies and at the cost of new companies. It is these new companies that require a very much greater proportion of percentage of their capital to be reinvested to establish themselves in the market. Shareholders surely will be more inclined to invest in companies that are distributing franked dividends than in those that are not. This may result in a catch-22 situation where the companies in most need of capital are the least likely to attract it. This is unfortunate. Private companies too, by and large, are likely to receive a greater benefit from the proposals of this package than are public companies. After the abolition of Division 7 tax they will no longer be liable to pay tax on their undistributed profits-and we welcome that. While the new regulations in theory would have the same impact on both private and public companies, the realities of their structures will mean that certain of the proposals will have their greatest impact on public companies. That is unfortunate. So not only will the additional burden be placed on companies, but the requirements that will be placed on the Australian Taxation Office will also be increased. Under Division 3 of Part IIIaa a company will be able to request an estimated debit determination from the Commissioner of Taxation when it anticipates a future reduction in its franking surplus. By reducing the franking surplus on that basis the company may avoid creating a franking deficit that may result in liability to franking deficit tax. The monitoring of the company's adherence to the new rules will also be a mammoth task. A less work intensive, less complex, piece of legislation to implement the franking of dividends would be much more appropriate when the pressure is on for a reduction in the size of Australia's public sector. Currently, one-third of our work force is on the government payroll. So the States are being forced into tightening up their public sectors, yet the Federal Government is proposing legislation that could well require even more workers to handle this new legislation before us. There is also the problem of the indexation of capital gains tax when income derived as a result of that gain flows through in the form of dividends. Under the provisions of this legislation, much of the benefit of the indexation of capital gains will be lost. I make that quite clear. This will be so where a company pays tax on the indexed proportion of capital gains and then distributes the entire capital gain to shareholders. In such cases, the franking credits that accrue to the company will be insufficient fully to frank the entire dividend distribution. Consequently, the indexed portion of the capital gain will be fully assessable in the hands of the shareholders if distributed as a dividend. Given the Government's claim that an asset which increases in value at no more than the rate of inflation bears no capital gains tax, the taxation of such a dividend flowing from such gains in the hands of shareholders seems to be quite contrary to the original intention not to tax capital gains. A further inconsistency that comes to light on closer scrutiny of this legislation is the condition that relates to trust in a loss situation. The underlying principle of the majority of the Bill is that shareholders will benefit from a tax that has been paid at the company tax level. In line with this concept, imputation rebates will pass through companies, partnerships and, in some cases, trusts finally to benefit individual shareholders. But in the case of companies and partnerships, in a loss situation, imputation rebates on dividends received by them will continue to flow on to shareholders. We read in part A of the explanatory memorandum at page 15: . . . no such benefit will flow to beneficiaries where a trust has no net income or incurs a loss. The logic underlying the distinction in this case of losses quite escapes me. Then we have the problem of the foreign tax credits. The major problem with the interrelationship of the new imputation regulations and the foreign tax credit system is that it results in investment overseas becoming a less desirable proposition for Australian companies and it discriminates against those companies that already gain revenue from overseas operations. It has become less attractive because the companies will not be able to pay fully tax-free dividends from this off-shore income, as I mentioned earlier. For example, a company with operations in the United Kingdom will pay tax at a rate of 35 per cent. When that company repatriates the profits from the off-shore operation to Australia it will be required to pay additional tax to cover the shortfall between tax paid in the United Kingdom and the new Australian company tax rate of 49 per cent. In this case, the extra tax payable would be 14 per cent. Under these regulations, franking credits will accrue only on the 14 per cent tax paid in Australia; therefore, the imputation credits flowing to shareholders will be considerably diminished. For investors wishing to gain maximum benefit from their shareholdings, companies that can offer only minimum imputation credits on dividends will certainly be a less attractive proposition. I would now like to take some time to comment on the more important features of the Taxation Laws Amendment Bill (No. 2) 1987. I wish to deal with the substantiation of car expenses. The relaxation of log book requirements to substantiate business car expenses is a welcome move, although I believe an alternative could well have been produced. The onerous task of maintaining detailed log books for the whole year will now be replaced by the requirement of a continuous record for a 12-week period. However, I would like to note that, although similar amendments to the fringe benefits tax legislation have been announced, this Bill does not make provision for such changes. Because of the shortage of time I will now move to the powers of the Commissioner of Taxation. The section of the Bill that is of most concern is that relating to the extension of the powers of the Commissioner of Taxation-I refer here to clause 62 of Schedule 4. The amendment will require taxpayers to give assistance to investigators in the Australian Taxation Office rather than just allow a right of access. This distinction is quite significant. I accept the proposition that adequate measures need to be taken to enable tax avoidance to be uncovered. However, there has been an increasing trend by this Government in its campaign to nail people, to cast the ordinary taxpayer as a criminal, and this is unfortunate. While these increased investigatory powers and their extension to pay as you earn provisions may appear on the surface to be reasonable, they open up avenues whereby the civil liberties of honest people may be infringed. I hope that my colleague Senator Puplick will elaborate on this later. I am sure that this prospect will be quite unacceptable to all honest, law abiding citizens. Of course, the existence of these powers does not automatically mean that tax officers will make unreasonable demands of taxpayers. I believe that they will not and, on the whole, this should not be the case. However, I remind the Senate that there have been a number of cases in the past where taxpayers have found cause to complain about their treatment by the Taxation Office. It is my concern that the extension of investigatory powers may foster an attitude in officialdom that, pursued to the extreme, may cause an infringement of individual rights. We should, therefore, be aware of this possibility and we should be cautious of enshrining in legislation the sorts of conditions that may give rise to it. Debate interrupted. The PRESIDENT —Order! It being 3.45 p.m., pursuant to sessional order, I put the question: That the Senate do now adjourn. Question resolved in the affirmative. Senate adjourned at 3.45 p.m. The following papers were tabled: Customs Act-Notice 1987-No. 5-Specified rate in respect to the diesel fuel rebate, dated 15 May 1987. Excise Act-Notice 1987-No. 5-Specified rate in respect to the diesel fuel rebate, dated 15 May 1987. Postal Services Act-By-laws 1987-Postal Amendment No. 2. Seat of Government (Administration) Act-Notice of Variation of the Layout of the City of Canberra and its Environs (88th and 90th Series), dated 28 May 1987. The following answers to questions were circulated: (Question No. 1597) Senator McIntosh asked the Minister representing the Attorney-General, upon notice, on 17 February 1987: (1) Would the Attorney-General advise the amount of legal aid that has been claimed by or paid to Michael Patrick Jess under the provisions of the Conciliation and Arbitration Act in connection with proceedings commenced by him in the Federal Court of Australia, Industrial Division, in Matter Nos. 1 and 9 of 1984. (2) Would the Attorney-General further advise why legal aid continues to be paid by the Government to Mr Jess or his solicitors in those Federal Court proceedings when-(a) the solicitor for Mr Jess has informed the Federal Court that they lost contact with him, yet they are still pursuing his action; and (b) a Judge of the Federal Court has given judgment that one of the legal actions begun by Mr Jess was ``instituted without reasonable cause''. Senator Gareth Evans —The Attorney-General has provided the following answer to the honourable senator's question: (1) Financial assistance under section 141A of the Conciliation and Arbitration Act 1904 was authorised in June 1984 for Mr Jess's costs of proceedings Nos. 1 and 9 of 1984. Mr Jess, the applicant in those proceedings, was successful. However, the Respondents (26 individuals and the Amalgamated Metals Foundry & Shipwrights' Union) lodged appeals (Nos. 11 and 14 of 1984) against those decisions. Financial assistance was authorised for Mr Jess's costs a respondent to the appeals. In October 1984, the appeals were allowed in part. After the appeals the original matters (Nos. 1 and 9 of 1984) came on again for rehearing before a single judge, who handed down his judgment on 23 July 1986. In the course of that judgment his Honour stated No. 9 of 1984 had been instituted without reasonable cause because it sought the same relief from the same respondents. His Honour then made a costs order against the applicant in respect of No. 9 of 1984. However, his Honour did not consider that No. 1 of 1984 had been instituted vexatiously or without reasonable cause. The following payments have been made by the Commonwealth in respect of Mr Jess's costs: 24/7/84 (Nos. 1 and 9 of 1984) ... $34,304.75 10/12/84 (Nos. 11 and 14 of 1984) ... $29,428.65 $63,733.40 Mr Jess's solicitors have not yet submitted their account for the rehearing. (2) Financial assistance has not been authorised for any proceedings commenced after the judgment delivered on 23 July 1986. However, Mr Jess's solicitors have applied on his behalf for financial assistance for an appeal against the costs order made on 23 July 1986. This application will receive further consideration on receipt of information requested from the solicitors by letter dated 8 September. (Question No. 1629) Senator Mason asked the Minister representing the Minister for Aviation, upon notice, on 19 February 1987: (1) Is the Minister for Aviation aware that in European countries such as Germany, France and Switzerland, aircraft landing fees are determined in part by the noise level emitted by the particular aircraft, that is, the higher the noise level the higher the landing fee. (2) Has the Minister's Department or any other organisation conducted a feasibility study into the adoption of tax incentives vis-a-vis higher landing fees for noisy aircraft or higher registration fees for noisy trucks or cars; if so, what were the main findings of this feasibility study and what is the government's reaction to them; if not, will the Minister request officers of his Department to undertake such a feasibility study and if so, when. Senator Gietzelt —The Minister for Aviation has provided the following answer to the honourable senator's question: (1) Yes. (2) The House of Representatives Select Committee on Aircraft Noise in its Report published in 1970 recommended that consideration be given to a variable airport charge related to the noise level of each aircraft. The Department of Aviation presented a submission on this matter to the later enquiry on the same subject, started in 1982, by the House of Representatives Select Committee on Aircraft Noise. Their Report tabled in November 1985 did not make any recommendations concerning noise related landing charges. The submission by the Department concluded that the imposition of a noise charge for the purpose of reducing aircraft noise would prove of little benefit. The reasons for introducing noise charges in European countries are not generally applicable to Australian conditions. In view of the conclusions of the submission and the lack of any recommendation by the Committee the Government does not intend to pursue this matter any further. No specific feasibility study has been conducted relating to the higher registration fees for noisy trucks or cars. However a report is currently being prepared for the Australian Environment Council and the Australian Transport Advisory Council on control of motor vehicle noise. The report is expected to take into account a number of non-vehicle measures including fiscal incentives. The report is expected to be finalised in 1988. (Question No. 1662) Senator Kilgariff asked the Minister representing the Minister for Territories, upon notice, on 17 March 1987: (1) Can the Minister for Territories provide advice concerning the proposed construction of a 200-bedroom hotel on Cocos (Keeling) Islands. (2) Has approval been given for the construction of such a hotel. (3) Who is proposing to develop this facility. (4) Is it anticipated that airport facilities on Cocos will require upgrading to enable air access for tourists visiting the Islands, and using the proposed facilities; if so, have proposals for the upgrading of the airstrip, and airport been considered and/or approved. (5) Who is to bear the cost of these improvements. (6) Will the Commonwealth pay for any of the airport upgrading; if so, what proportion of the cost will it meet. (7) Will the hotel developer meet any of the costs of upgrading airport facilities; if so, what proportion of the costs will the developer meet. Senator Gietzelt —The Minister for Territories has provided the following answer to the honourable senator's question: (1) to (7) No firm proposal for construction has been put to the Commonwealth. Discussions are being held with a Developer who has proposed a Chalet Style Resort. The proposal under consideration was submitted by Christmas and Cocos Island Tours Pty Ltd, a Perth based company, and was one of three proposals received in response to the Cocos (Keeling) Islands Council's call for expressions of interest in tourism. Before any decision is taken full regard will be had for the environmental, social, cultural, economic and administrative implications of the proposed development. Any need for future upgrading of the airstrip and airport facilities, and the associated allocation of costs, will be considered in the context of the detailed development of any firm proposal. Senator Gietzelt —On 6 May 1987 (Hansard, page 2395) Senator Archer asked me, as Minister representing the Minister for Transport, a question concerning shipping services between Tasmania and the mainland. I pointed out at that time that I would seek further information so as to provide Senator Archer with a more concise and precise answer. The Minister for Transport has provided the following answer to the honourable senator's question: The Government is aware of the impact that disruption in Bass Strait shipping services has on the Tasmanian economy, and is very concerned about this matter. The Minister for Transport this week spoke with Mr Foster of the Tasmanian Farmers and Graziers Association who outlined the gravity of the situation which has arisen as a result of industrial disruption at Webb Dock. The Minister has passed on this information to the Minister for Employment and Industrial Relations. The Government is most concerned at what happened at Webb Dock. Disputes of this nature undermine our reputation as a reliable trading partner and threaten the employment of other Australian workers. In respect of other industrial problems which have arisen in recent months, discussions have been held between the Government, the ACTU and the unions concerned. The ACTU has been using its good offices to help bring about settlements of these problems. The ACTU and the unions involved in shipping services to and from Tasmania recognise the importance of these services, and have a general policy of, as far as practicable, exempting Tasmania from industrial disputes. The recent dispute at Webb Dock in Melbourne has been settled and the terminal resumed operations on 8 May 1987. During the dispute other shipping operators maintained their Bass Strait services and ANL has rearranged its schedules to clear backlogs of cargo as soon as possible. This Government's commitment to improving the efficiency and industrial relations of our shipping and waterfront industries is well known. It has taken major initiatives to achieve these objectives through the Waterfront Strategy and the package developed through the Maritime Industry Development Committee. (Question No. 1480) Senator Vallentine asked the Minister for Resources and Energy, upon notice, on 11 November 1986: (1) How many seismic stations are there currently in Australia involved with the detection of nuclear explosions and where are they situated. (2) What is the Australian agency involved in running these stations and which are the co-operating agencies in the United States and any other countries involved. (3) If one of the co-operating agencies in the United States is the US Coast and Geodetic Survey, does overall control of the network remain the responsibility of the US Defence Advanced Research Projects Agency. Senator Gareth Evans —The answer to the honourable senator's question is as follows: (1) Seismic stations most commonly used at present are: (a) the Alice Springs Seismic Array (Joint Geological and Geophysical Research Station), Alice Springs, Northern Territory; (b) the Warramunga Seismic Array, near Tennant Creek, Northern Territory; (c) the World Wide Standard Seismograph (WWSS) and the Abbreviated Seismic Research Observatory at Charters Towers, Queensland; (d) the Seismic Research Observatory (SRO) at Narrogin, Western Australia; and (e) the Mawson seismographic station, Mawson, Antarctica. There are a number of other seismic stations in Australia capable of detecting nuclear explosions which are infrequently used for this purpose. (2) The agencies involved with the operation of the stations referred to in (1)-(e) are as follows: (a) the Bureau of Mineral Resources, Geology and Geophysics (BMR) and the US Air Force; (b) the Australian National University and the National Environmental Research Council (UK); (c) the University of Queensland; the BMR and the US Geological Survey (USGS) US Department of the Interior; (d) the BMR and the USGS; (e) the BMR and the Antarctic Division of the Department of Science. All the infrequently used stations referred to in (1) above are operated solely by Australian agencies. (3) Not applicable-see answer to (2) above. The authority responsible for analysing data produced by seismic stations in Australia, with a view to monitoring nuclear explosions, is the Australian Seismological Centre in Canberra which is part of the BMR and not responsible to any foreign agency. (Question No. 1642) Senator Sanders asked the Minister representing the Minister for Defence, upon notice, on 23 February: (1) Is the Government aware of recent press reports that the United States Institute of Policy Studies (IPS) has received documents from the US Defense Department which state that Britain, Australia and the United States carried out secret exercises at least three years ago to improve their ability to handle accidents or terrorist threats involving nuclear weapons. (2) What was the purpose of these exercises, and what scenarios were exercised. (3) What role did Australia play in these accidents. (4) The documents received by IPS revealed that Australia agreed ``to improve radiological monitoring and diagnostic capabilities'' for detecting a nuclear weapons accident and what action has Australia taken to meet this commitment. (5) What action would the US Nuclear Emergency Search Team based in the Pacific take in the event of (i) a nuclear weapons accident, and (ii) a nuclear reactor accident, in an Australian port. Senator Gareth Evans —The Minister for Defence has provided the following answer to the honourable senator's question: (1) Yes. (2) (3) and (4) The press reports are misleading. I am advised that the document on which they are based makes one brief mention of Australia and this refers to the participation by US officers from the US Armed Forces Radiobiological Research Unit in a 1984 seminar run by the Australian Department of Defence on the medical effects of nuclear, biological and chemical warfare. The officers attended under the auspices of the multilateral defence science Technical Co-operation Program, and gave a short presentation on the medical effects of nuclear weapons accidents. Such seminars are not related to any particular scenario or contingency, but rather reflect broad Australian interest in maintaining some expertise in the medical effects of a variety of weapons types. Australia has not participated in combined nuclear weapons exercises, nor have any such exercises been proposed. Australia has not entered any agreement to improve its radiological monitoring and diagnostic capabilities for detecting a nuclear weapons accident. (5) The US Nuclear Emergency Search Team is a US Department of Energy organisation, stationed in the United States. It is a specialised team designed to search for nuclear devices or materials in a variety of scenarios. In the unlikely event of a nuclear reactor or nuclear weapon accident in an Australian port, Australia could request US assistance in responding to the accident. The nature of any assistance would depend on the circumstances of the accident. (Question No. 1690) Senator Watson asked the Minister for Resources and Energy, upon notice, on 23 March 1987: (1) Is the Minister for Resources and Energy aware that as a consequence of their obligation to adhere to Federal Government policy a major Australian oil re- finer incurred extraordinary stock losses of $33.7m after tax in 1986. (2) Did this occur as a result of the falling off in price of Australian crude oil brought about by the Government's decision to continue the import parity pricing system at a time when international oil prices had collapsed. (3) What are the responsibilities of the Federal Government to fully investigate the economic implications of policy decisions made by the Government for Australian companies. Senator Gareth Evans —The answer to the honourable senator's question is as follows: (1) Yes. (2) and (3) The import parity pricing policy for Australian crude oil reflects the long established principle that the price of Australian crude oils sold under the Crude Oil Allocation Scheme are priced at the cost of their replacement with imported crude oil. Following the substantial fall in world oil prices early in 1986 and the consequent significant reduction in import parity prices for Australian crude oils from 1 March 1986, the Government gave consideration to the implications of the pricing decision for the holdings by Australian refiners of high cost crude oil and refined petroleum products. The Government decided to compensate refiners for their losses on liftings of domestic crude oil in February 1986 and an amount of $124.8 million was paid to the companies under the Oil Companies (Stock Loss Reimbursement) Act 1986. In addition, commencing in April 1986 the Prices Surveillance Authority provided refiners with compensation for their other losses by means of three surcharges (totalling 1.95 cents/litre) on the wholesale price of notifiable petroleum products. The surcharges remained in place until 13 February 1987. While the Prices Surveillance Authority does not reveal the calculations on which its decision to remove the surcharges was based, it is understood that the Prices Surveillance Authority was satisfied that the refiners had recovered the stock losses incurred during 1986 and that continuation of the surcharges was therefore no longer appropriate. (Question No. 1754) Senator Sanders asked the Minister representing the Minister for Defence, upon notice, on 30 April 1987: (1) Was the 1985-86 research program on `GPS Error Analysis' at the University of NSW, which was funded by the Defence Science and Technology Organisation, related to the NAVSTAR Global Positioning System; if so, was the research related to maximising the accuracy of NAVSTAR receivers. (2) What military applications are envisaged for the NAVSTAR system, and for the University of N.S.W research program in particular. (3) Was this research program initiated at the request of the United States Government. If not, how was it initiated. (4) What other assistance is being provided by Australia to the development and implementation of the NAVSTAR system. Senator Gareth Evans —The Minister for Defence has provided the following answer to the honourable senator's question: (1) The program concerned was related to the NAVSTAR Global Positioning System (GPS). It sought to quantify the performance of GPS in the Australian region in order to develop procedures for competitive evaluation of GPS receivers from various sources for supply to the Australian Defence Force (ADF), but was not related to the receivers per se. The accuracy of location provided by a receiver is of course a primary consideration in the evaluation process. (2) The ADF will use GPS for survey, navigation of air, sea and land platforms and this will increase the effectiveness of the ADF. Similar benefits could be expected by most military users. In the longer term the System could provide guidance for weapons acquired by the ADF if receivers can be made small enough. The precise timing of the GPS transmissions can provide synchronising signals for modern military communications systems. There is no direct military application of the University of NSW research, although it would underpin ADF use of the GPS as explained above. (3) This program was not initiated at the request of the United States Government. The research program is one of the many initiated in academic institutions by the Australian Defence Science and Technology Organisation to support that Organisation's work for the ADF. The School of Surveying at the University of NSW was awarded the research contract concerned because it is a centre of expertise in the field of satellite navigation. (4) The Smithfield TRANET Station in South Australia (also operated by the DSTO) is tracking the research and development satellites of the GPS. An ADF officer is attached to the GPS Project Office in the USA to assist in transferring GPS technology to Australia.