Friday, 9 October 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 President of the House of the Senate of the Federal Parliament assembled: We, your undersigned petitioners humbly pray that there should be knowledge of, and concern for the flood of abortions, repeat abortions and abortifacient devices which are depriving unborn Australian children of life, and which are being funded, at least in part, by the taxpayer. As in duty bound, your petitioners will ever pray. by Senator Michael Baume (from 12 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% discounting of Commonwealth Occupational Superannuation Scheme pension adjustments on 10 Oct 86 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 Oct 86 to 1 July 87 so that pensions are restored to the 9 Oct 86 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 Michael Baume (from 45 citizens) and Reynolds (from two citizens). To the Honourable the President and members of the Senate in Parliament assembled: The humble petition from certain citizens of Western Australia respectfully showeth that: In view of the number of expert witnesses and Government departments that have cast doubts on the cost, inadequate safeguards and purported benefits of the Health Department's claims for the proposed Australia Card and In view of the demonstrated inability of the bureaucracy in general, and the Health Department in particular, to protect the privacy of information entrusted to them and In view of the gross infringement of an individual's civil liberty that would be created by the proposed Card: Your petitioners humbly pray that the Senate in Parliament assembled will: Neither pass nor reject nor fail to pass the Australia Card Bill but rather refer the Bill to an open Senate enquiry that is held in public and that after all the facts have been considered a national referendum be held on the Australia Card Bill. And your petitioners as in duty bound will ever pray. by Senator Jones (from 367 citizens). To the Honourable the President and members of the Senate in Parliament assembled. We, the undersigned citizens, respectfully showeth: That we are totally opposed to the introduction of the Labor Government's Identity Card; That this form of national and compulsory identification will be intrusive, costly for taxpayers and business and will not be effective in combating the growing problems of tax evasion, illegal immigrants or social security; that we are deeply concerned at the Labor Government's inability to provide effective and efficient methods to combat tax and social security fraud without resorting to expensive, ineffective and authoritarian measures which are alien to the Australian way of life; that we call upon the Labor Government to improve management systems within the Australian Tax Office and other Departments to crack down on tax evasion and fraudulent practices. And your petitioners as in duty bound will ever pray. by Senators Michael Baume (from 611 citizens), Bjelke-Petersen (from 122 citizens), Chaney (from 11 citizens), Jones (from 50 citizens) and Lewis (from 14 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: The Minister for Foreign Affairs has refused an application from Human Rights-First the Child to allow tax deductibility of funds donated to this charitable organisation and that the rejection of this application is effectively crippling the work of this organisation at its Char Fassion Orphanage in Bangladesh. Your petitioners most humbly pray that the Senate in Parliament assembled should: Request the Minister for Foreign Affairs to reverse this callous and inhuman decision; Permit Human Rights-First the Child to raise funds that has tax deductible status to allow the continuation of the Char Fassion Orphanage in Bangladesh and; Commend Mr Fred Hyde for his selfless and philanthropic work at this orphanage with very little capital and few facilities. by Senator Reynolds (from 84 citizens). To the Honourable the President and members of the Senate in Parliament assembled. We, the undersigned citizens, respectfully show that we are totally opposed to the introduction of the Labor Government's Identity Card. by Senator Michael Baume (from 12 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 the proposed national ID Card and numbering system threatens the privacy of law-abiding Australians opening the door to computer matching of personal information, will cause inconvenience to rural people in particular, and will result in massive compliance costs for private business. That the Joint Parliamentary Select Committee Report of 1986 showed that the Australia Card will not be effective in combating taxation and social security fraud and illegal immigration, as its cost savings are based as faulty estimates. That accordingly the Senate and Parliament should reject the Australia Card Bill. And your petitioners as in duty bound will ever pray. by Senator Michael Baume (from 112 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of certain citizens respectfully showeth that: The Hawke Labor Government's I.D. card proposal is the most far reaching and intrusive piece of Australian legislation yet introduced, and that on all the evidence available it will not tackle in the most cost-efficient and effective manner tax and social security fraud. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: Reject Labor's I.D. card proposal to prevent a gross waste of taxpayers' money and a significant infringement of civil liberties. And your petitioners as in duty bound will ever pray. by Senator Michael Baume (from 83 citizens). The Honourable President and senators in Parliament assembled. We, your humble petitioners, pray that, in accordance with the wishes of a substantial number of the people of Australia, the Australia Card Bill be rejected, and we in duty bound will ever pray. by Senator Bjelke-Petersen (from 240 citizens). To the Honourable the President and members of the House of the Senate in Parliament assembled. This petition of undersigned citizens of Australia respectfully showeth that we strongly oppose the introduction of the `Australia Card' or any other form of National Identification Numbering System. We believe the introduction of a National Identification Numbering System is not only totally unnecessary but is a severe threat to our civil liberties and privacy. We condemn the Government's actions on this matter, particularly as no reasonable nor responsible justifications for the proposal have been forthcoming from the Government. We humbly pray that the House of the Senate, in Parliament assembled, should reject any proposal for a National Identification Numbering System. by Senator Bjelke-Petersen (from 99 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of South Australia respectfully showeth:- 1. We reject in principle the need for a national I.D. card on the basis that it will be a gross violation of individual liberty. 2. We reject the notion that the government can claim a mandate for the proposed legislation and state categorically it does not reflect our will. Your petitioners most humbly pray that the Senate, in Parliament assembled, should together with the House of Representatives take action to reject this proposed legislation. And your petitioners as in duty bound will ever pray. by Senator Bolkus (from 100 citizens). To the Honourable the President and members of the Senate in Parliament assembled: We the undersigned are deeply concerned at the impact of the proposed Australia Card legislation on the following grounds:- 1. We believe that it represents potentially undesirable interference in the lives of honest Australians and is a grave interference in the civil liberties of Australian citizens; 2. That it will not address the problems of tax evasion and social security fraud; 3. That it will create unnecessary expansion of the bureaucracy; and calls on the Senate to reject the legislation. And your petitioners as in duty bound will ever pray. by Senator Brownhill (from 6,301 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of South Australia respectfully showeth:- 1. We reject in principle the need for a national I.D. card on the basis that it will be a gross violation of individual liberty. 2. We reject the notion that the government can claim a mandate for the proposed legislation and state categorically it does not reflect our will. 3. We believe that, as with the proposed Bill of Rights legislation, the government's methods and arguments in promoting this legislation have been under-handed and undemocratic. 4. We believe as a matter of faith and judgement that the proposed legislation is anti-God and that its implementation will result in further attacks on individual freedom and responsibility, the family and the Church and that the real intent is the promotion of a powerful secular humanist ``big brother'' government. Your petitioners most humbly pray that the Senate, in Parliament assembled, should together with the House of Representatives take action to reject this proposed legislation. And your petitioners as in duty bound will ever pray. by Senator Brownhill (from 3,102 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth that the proposed Australia Card is an intrusion into the rights of the individual in a free and democratic country. Your petitioners most humbly pray that the Government not proceed with this legislation. And your petitioners as in duty bound will ever pray. by Senator Chaney (from 51 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 the proposed national ID Card and numbering system threatens the privacy of law-abiding Australians opening the door to computer matching of personal information, will cause inconvenience to rural people in particular, and will result in massive compliance costs for private business. That the Joint Parliamentary Select Committee Report of 1986 showed that the Australia Card will not be effective in combating taxation and social security fraud and illegal immigration, as its cost savings are based on faulty estimates. That accordingly the Senate and Parliament should reject the Australia Card Bill. And your petitioners as in duty bound will ever pray. by Senator Chaney (from 18 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: 1. We reject in principle the need for a national ID card on the basis that it will be a gross violation of individual liberty. 2. We reject the notion that the government can claim a mandate for the proposed legislation and state categorically it does not reflect our will. 3. We believe that, as with the proposed Bill of Rights legislation, the government's methods and arguments in promoting this legislation have been under-handed and undemocratic. 4. We believe as a matter of faith and judgment that the proposed legislation is anti-God and that its implementation will result in further attacks on individual freedom and responsibility, the family and the Church and that the real intent is the promotion of a powerful secular humanist ``big brother'' government. Your petitioners most humbly pray that the Senate, in Parliament assembled, should together with the House of Representatives take action to reject this proposed legislation. And your petitioners as in duty bound will ever pray. by Senator Jones (from 16 citizens). To the Honourable the President and Senators in Parliament assembled. We, your humble petitioners pray that, in accordance with the wishes of a substantial number of people of Australia, the Australia Card be rejected, and we in duty bound, will ever pray. by Senator Jones (from 103 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: 1. That we are totally opposed to the proposed introduction of the Labor Government's Identity Card. 2. That this form of national and compulsory identification will be intrusive and authoritarian, and alien to the Australian way of life. 3. That we are deeply concerned at the Labor Government's resorting to such a far-reaching and expensive measure to deal with the problems of tax evasion and social security fraud. We call upon the Government to improve management systems within the Australian Taxation Office and appropriate departments to tackle these issues. Your petitioners urge those members present to reject the Identification Card proposal. And your petitioners, as in duty bound, pray. by Senator Jones (from 19 citizens). To the Honourable the President and members of the Senate in Parliament assembled: The petition of the undersigned citizens respectfully requests that the Australia Card Legislation be rejected because the proposed system: 1. has been demonstrated to have no capacity to stop tax evasion, Social Security fraud, illegal immigration or to recoup the revenue lost through abuse of these systems as was claimed. 2. will impose a large financial impact on Australian citizens, and has been demonstrated by the Parliament's own Joint Committee to be not cost effective. 3. has been shown to have the capacity to actually aid and abet both illegal immigration and organised crime. 4. is designed to cause a great intrusion and disruption to the normal day to day activities of all citizens. 5. does not contain the very necessary barriers to invasion of privacy, and loss of personal liberties. 6. will in both the words of the Government and the HIC be enlarged to encompass far greater uses, and the compilation of much more information on the data base. And your petitioners humbly pray that in the light of the obvious and proven in-ability of the proposed Australia Card to achieve its stated objectives that the Government explain the reason why it is persisting in reintroducing this legislation. And your petitioners as in duty bound will ever pray. by Senator MacGibbon (from 317 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 the proposed national ID Card and numbering system threatens the privacy of law-abiding Australians opening the door to computer matching of personal information, will cause inconvenience to rural people in particular and will result in massive compliance costs for private business. That the Joint Parliamentary Select Committee Report of 1986 showed that the Australia Card will not be effective in combating taxation and social security fraud and illegal immigration, as its costs savings are based on faulty estimates. That accordingly the Senate and Parliament should reject the Australia Card Bill. And your petitioners as in duty bound will ever pray. by Senator Ryan (from 15 citizens). To the Honourable the President and members of the Senate in Parliament assembled, your humble petitioners showeth that the proposed Australia Card will have a dramatic impact on the lives of all Australians, and your petitioners therefore request a national referendum on the Australia Card Bill before the proposal is re-submitted to Parliament. As in duty bound your petitioners will ever pray. by Senators Michael Baume (from 2,268 citizens), Peter Baume (from 584 citizens), Bjelke-Petersen (from 267 citizens), Brownhill (from 4,775 citizens), Chaney (from 18 citizens), Jones (from 2,358), MacGibbon (from 622 citizens) and Newman (from 396 citizens). Senator MICHAEL BAUME(New South Wales) —by leave-I present to the Senate the following petition from 53 citizens praying that there be a referendum on the Australia Card Bill 1986: We the undersigned strongly oppose the Australia Card and ask that a referendum be held. Petitions received. Senator GARETH EVANS(Victoria-Manager of Government Business in the Senate) —Papers are tabled in accordance with the list circulated to honourable senators. With the concurrence of the Senate, I ask that the list be incorporated in Hansard. Leave granted. The list read as follows- 1. Australian Meat and Live-Stock Corporation-Annual Report 1986-87-Together with the Auditor-General's Report-Pursuant to section 49 of the Australian Meat and Live-Stock Corporation Act 1977. 2. Australian Meat and Live-Stock Research and Development Corporation-Annual Report 1986-87-Together with the Auditor-General's Report-Pursuant to section 46 of the Australian Meat and Live-Stock Research and Development Corporation Act 1985 and section 63h of the Audit Act 1901. 3. Australian Meat and Live-Stock Industry Selection Committee-Annual Report 1986-87-Pursuant to section 23 of the Australian Meat and Live-Stock Industry Selection Committee Act 1984. 4. Agreement between the Commonwealth of Australia and the Developer of the Christmas Island Resort and Casino-Relating to the Construction and Operation of a Casino/Hotel on Christmas Island. 5. Australian Archives-Annual Report 1986-87-Pursuant to section 68 of the Archives Act 1983. 6. Advisory Council on Australian Archives-Annual Report 1986-87-Pursuant to section 68 of the Archives Act 1983. 7. Department of the Prime Minister and Cabinet-Annual Report 1986-87-Pursuant to sub-section 25 (8) of the Public Service Act 1922. 8. Australian Science and Technology Council-Annual Report 1986-87-Pursuant to section 27 of the Australian Science and Technology Council Act 1978. 9. Australian Wool Corporation-Annual Report 1986-87-Together with the Auditor-General's Report-Pursuant to section 135 of the Wool Marketing Act 1987 and section 90 of the Repealed Wool Industry Act 1972. 10. Australian Bureau of Statistics-Annual Report 1986-87-Pursuant to section 24 of the Australian Bureau of Statistics Act 1975. 11. Australian Statistics Advisory Council-Annual Report 1986-87-Pursuant to section 24 of the Australian Bureau of Statistics Act 1975. 12. National Health and Medical Research Council-Report of the 101st Session, Brisbane, June 1986-Pursuant to clause 19 of the Order-in-Council which constitutes the National Health and Medical Research Council. 13. Advance Australia Foundation-Annual Report 1985-86-Pursuant to section 18 of the Advance Australia Logo Protection Act 1984. 14. Committee of Review of Standards, Accreditation and Quality Control and Assurance-Final Report. 15. Advance to the Minister for Finance-Statements of Expenditure for May, June, July and August 1987. Senator ROBERT RAY(Victoria-Minister for Home Affairs)(10.04) —I seek leave to make a statement relating to the new Parliament House, to move to take note of the statement and to incorporate the statement in Hansard. In the interests of providing honourable senators with detailed information, I also table further data and graphical representations of the project budget and the Parliament House Construction Authority response to the Auditor-General's report. Leave granted. The statement read as follows- It has been the custom of this and past Governments to regularly review progress on the new Parliament House project and to report on that progress to the Parliament. I will accordingly report on the nine month period to May 1987. During this period progress was at a sufficient pace to open on schedule in May next year and for the Parliament to be operational by August 1988. The building budget updated for the nine months to May 1987 now stands at $862.15 million while the budget for non-building items is $164.75 million. The total project is therefore increased from $987.4m to $1,026.9 million at May 1987 prices. This updating includes $24.6m for adjustment of the uncompleted portion of the project for the effects of inflation in the nine months period. This procedure has been applied throughout the life of the project. Additional components have been an allowance to cover the cost of industrial disputes, insolvencies of contractors and exchange rate fluctuations-costs outside the control of the Authority i.e. $9.9m, $4.6m and $.4m respectively, a total of $14.9m. The five components of the total revised budget of $1,026.9m are: the original 1978 building budget of $220m the original 1981 non-building budget of $82m the accumulated inflation escalation adjustment of $463m an allowance of $66m for costs beyond the control of the Parliament House Construction Authority for industrial disputation, contractor insolvency and exchange rate variations; and $196m for accumulated budget additions. The $196m comprises: $87m which should normally have been allowed for as contingency allowances including $36m for contract variations and contractors' claims, $8m for adverse ground conditions, $11m for changes to non-building items and $32m for associated fee costs on the foregoing items; $104 for approved extensions to the building including $4m for placing the eastern carpark underground, $41m for accommodating additional Senators/Members, $9m for minor user changes, $20m for sound/vision equipment and furniture, $33m for design/user refinements and $9m for associated fee costs on the foregoing items. The overall cost of these additional items was subsequently reduced by $12m following a reduction in costs in other areas; and $5m for reinstatement of landscaping. The conclusions from this disaggregation are: that the non-building budget ($82m) and the contingency allowance ($87m) ought to have been included in the original budget that it was not possible to escape the effects of inflation ($463m) that it was not possible to escape the costs of industrial disputation, insolvencies and exchange rate variations ($66m) which on a pro rata basis are probably less than would be experienced on most major construction projects anywhere in Australia, and that the only other additional factors are the $104m for approved extensions such as when the size of the Parliament was increased in 1984 and the $5m for landscaping. These figures therefore show that claims of ``massive cost over-runs'' are, in fact, a misunderstanding of the true nature of the disaggregation of the costs. All this is not to say that in some limited instances, cost over-runs or control lapses have not occurred, but it clearly refutes these sensational claims of unrestrained cost blow-out. The new Parliament House building has been created, designed, built, and furnished by Australians and Australian made products and artworks. It highlights the pinnacle of Australia's talents, products and natural resources and should be a source of national pride. The construction phase has almost been completed. Nearly all of the external pre-cast concrete wall panels are in place and a large proportion of the granite cladding of the curved walls is completed. The flagmast is finished. Work on the Forecourt is progressing rapidly. The western and northern sides of the site are almost clear and shaping of the landform is proceeding. Internally, the building is taking on final appearance. The staircases in the Foyer are complete, the House of Representatives Chamber is well advanced as are the offices in that wing. In many places built-in furniture is in place, equipment has been delivered and soon to be installed. Permanent power has been supplied to the north, south and east zones of the building and the central energy and air handling plant rooms have been commissioned. So the project is well advanced. We can expect it to be operational next year. This is an achievement considering the constraints of design time, together with providing the additions required to accommodate the larger Parliament. It is a building of which all Australians can justifiably be proud. The Project has, of course, as have previous major national, State, and private sector projects, been subject to some criticisms. I have already generally covered the ``cost blowout'' allegations made by some sections of the media. Also, the Parliament House Construction Authority has prepared a detailed response to the Auditor-General's report. This report was tabled on 2 June 1987. The report and the response will now be considered by the Public Accounts Committee in accordance with normal Parliamentary practice. Perhaps the most unfair allegations made against the project involve misrepresentation of the project's industrial records. I will not, of course, sanction unjustifiable work practices. However, some of these types of allegations have been proven wrong; in other instances, private sector industry practices have been wrongly presented as being peculiar to the new Parliament House site. It has been asserted that the project has been a pacesetter for wages and conditions. But the project has consistently been short of labour by up to 200 because of the attraction of other private sector projects in Canberra and interstate which offer more attractive financial rewards. Because of the nature of the project it has often been the pressure point for industry-wide issues. For example, the 14 week dispute in 1984 was caused by industry-wide pressure to obtain superannuation and severance pay. The Authority was congratulated at the time for not giving in to these demands and becoming a pacesetter. As everyone would know, the new Parliament House site was also a focal point during the very difficult period while the BLF was deregistered. The site industrial agreement has generally proved a successful way of resolving disputes resulting from on-site issues but cannot be expected to cope with industry-wide disputes. Given the nature of the project and the potential for disputation, the Parliament House project has a reasonable industrial record. There is little basis for claims that the project has ``an appalling industrial record'' or that it is a ``pacesetter'' in wages and conditions. With a few notable exceptions, most unions on the Parliament House project have acted responsibly within the terms of the site agreement to create a safe and satisfactory work environment which has in turn generated a team spirit and pride in the project. However, the Government is determined to continue the control that it has exercised over the past four years. This project if it is allowed to run the course it is currently on, will be completed on time. However, I must sound a clear note of warning. The run up to completion dates could be the most difficult and challenging phase of the entire project. The Government will not bow to blackmail either by unions or contractors. Industrial disputes or forced contractor insolvencies must not be staged in the belief that the Government would be willing to capitulate in order to have this building fully operational by August 1988. As I have said, this project has not been an industry pace setter. This position will remain. Building industry union claims should be processed within the Arbitration Commission's wage principles. Contractors and unions should note this and act accordingly to ensure the smooth completion of this magnificent project. The target dates for opening by the Queen are 9 May next year and for the new Parliament House to be operational from August. These dates will be achieved with clear co-operation and commitment from all involved. But if my warnings are disregarded, the opening will still be in May but the Government will make the necessary adjustments regarding timing of occupancy. Senator ROBERT RAY —I move: That the Senate take note of the statement. Senator SHORT(Victoria)(10.05) —We received only very recently the statement of the Minister for Home Affairs (Senator Robert Ray) and the accompanying document, which is the response of the Parliament House Construction Authority to the Auditor-General's efficiency audit report on the new Parliament House project. There is a great deal of material in the report which will bear further analysis and consideration by the Senate and by the wider community. The first point I make on the report, which itself is a response to the Auditor-General's very damning efficiency audit report of several months ago, is that in the Opposition's view it in no way answers the criticisms of the project that have been raised on this side of the Parliament and elsewhere in recent times. There is no doubt that for the new and permanent Parliament House this construction project, despite the size of it or perhaps indeed because of that, has suffered from inadequate procedures, management mistakes and governmental incompetence. No attempt by the Government or the Authority to rebut those allegations can deny the fact that this project has in many ways been bungled for a long period and, as a result, that has cost the Australian taxpayer a huge amount of money. We now have the situation that the total final cost of the new Parliament House is estimated in the Budget Papers to be in excess of $1,000m. Work done, particularly by the Opposition's Waste Watch Committee, led so ably and diligently by my friend and colleague Senator Michael Baume, over a lengthy period in 1986 and 1987 discovered that of that $1,000m-plus cost, wastes and unnecessary expenditure which should not have arisen totalled more than $200m. At a time when the Government is talking, quite correctly, about the need for major restraint in Government expenditure, to have a blow-out and wasteful and totally unnecessary expenditure of that amount, on top of the total outlay for the huge project which many people see as too high anyway, is a disgrace and an enormous cost to the nation. As I have said, the document which the Minister has tabled is the Construction Authority's response to the Auditor-General's efficiency audit report on the project. As the Senate will recall, that report was tabled in the dying stages of the last Parliament in June and did not receive the amount of attention that it should have received, because of the pressures of the unnecessary winding up of the Parliament for a totally unnecessary double dissolution election. There was some debate on it in the last day or so of the previous Parliament and it is something that the Senate should come back to, which we now have the opportunity to do today. The Auditor-General's efficiency audit report on the Parliament House project was a damning report. It found, and I quote from page 65 of the report: . . . that the Construction Authority's operations had not been carried out in an efficient or economic manner. The Authority did not appear to be pursuing adequately its corporate objectives to function as an efficient management organisation and to achieve all reasonable economies on the project. For example, the Authority could have been more active in ensuring that the detailed design would lead to the construction of a building that would be economic to operate and maintain. The efficiency audit report went on to criticise the method of pursuing many of the operations of the project, particularly the fast track method and other related issues. In my view, the Construction Authority's response, although I have not had the chance to study it as fully as it deserves, does not answer either that or many of the other criticisms levelled at it by the Auditor-General. Mr President, we should accept at the outset, as did the Auditor-General, that the building of the new Parliament House has been a massive and complex task undertaken in very difficult circumstances. It is the largest construction project of its type ever carried out in Australia and it broke a lot of new ground. Obviously, one would expect some problems along the way with a project of that size. It would be churlish of us, on either side of the chamber, not to recognise the impressive achievements that have been made. There is no doubt about that. Equally, it would be quite wrong and we would be abrogating our responsibilities as members of parliament if we did not draw attention to the problems that have arisen as a result of governmental mistakes, managerial mistakes and inadequate procedures. It is the view of the Opposition that the Construction Authority has not responded to the drawing out by the Auditor-General of those problems in a satisfactory way. But, I do not place the blame entirely by any means on the Authority; the Government has a great deal of responsibility to bear in this as well. One of the most extraordinary aspects of both the method of accounting in this project and the Construction Authority's defence of its position is the method of budgeting. The Authority, for example, says in its response that the project is on budget and will be within the approved budget, but that approved budget is a moving feast because it is a budget that is always varied to take account of cost increases or overruns, and they are automatically approved by the Government. That has occurred in the project for a lengthy period. Therefore, to say that the project is within an approved budget is to make a meaningless statement because that approved budget moves biannually and therefore has no relationship to the original budget. The Minister tabled in conjunction with the Construction Authority's report details provided by the Minister for Administrative Services, a table and a graph showing the composition of the building and non-building items in the budget, attempting to reconcile the original figures with the final cost of $1.026 billion. In the very brief time that I have had a chance to look at those figures, they seem to bear out fully most of the complaints and points made by Senator Michael Baume and others earlier this year. There are some examples too of the cost additions that have been caused by quite stupid Government decisions. For example, the attempt by the Government through the Expenditure Review Committee to halt all landscaping on the site earlier this year and the subsequent changing of that decision appear to have led to an additional cost, on top of the original cost, of $5m for landscaping. That $5m will be met by the Australian taxpayer, for two reasons: first, because the Government took a stupid decision in the first place; and, secondly, having pressure applied to it, it correctly changed its decision. If the Government had not made that wrong decision in the first place, the Australian taxpayer would be $5m better off. Other speakers from this side of the House will point in this debate to some of the other areas of this project about which we have continually expressed considerable concern. Senator Parer pointed out very assiduously many of the industrial relations rorts and other practices that have been associated with the Authority and the construction activity which, again, have cost the taxpayer very dearly. Senator MacGibbon, who is also a member of the committee concerned with this matter, has also been very diligent in pointing out some of the difficulties. I welcome the response from the Construction Authority to the Auditor-General's Efficiency Audit Report. However, I say to the Authority that, in my view, it has not gone anywhere near rebutting the very serious deficiencies pointed out by the Auditor-General earlier this year. When the history of this project is written, we will learn, hopefully, from the lessons of this project. In many ways, it has been handled in a manner very costly to the Australian public. I can well understand the views of many people in the community who, at a time when they are being asked to pull in their belts, very rightly say, `If that is the case, how is it that the Australian Parliament is approving the expenditure of this amount of taxpayers' money on the construction of an enormous building which is being handled with a considerable degree of incompetence and mismanagement, leading to an enormous escalation of cost?'. It is a project which I am sure we will all be very proud of in the end but one which warrants a considerable degree of criticism of the method used to reach that end. I thank the Authority for at least producing a response; I thank the Minister for tabling it. I draw attention, though, to the fact that many of the figures that have been provided in the table and graph, by the Minister, showing the Budget composition of various items should have been produced considerably earlier. The Opposition called for the release of those figures before the election. The Authority at the time, I think in an Estimates committee in response to Senator Michael Baume, said that those figures could be released without any great difficulty. Then on came the Government's clamp on the release of those figures pre-election. It was a disgraceful pre-election ploy to shield and to hide from the Australian people just what was going on in terms of the expenditure on the project. It is only now, after the election, that the Government has seen fit to release those figures. The determination of the Government to resort to devices such as this to prevent the Australian people from being properly informed on matters of great moment in advance of their having to register their vote, their choice at elections, is typical of the deviousness and dishonest devices that this Government has been employing for a long period to keep many of the facts about what is going on in the country away from the full light of public exposure. The Government is to be condemned for that. I hope that in the years ahead we will use the experience of the construction of this new Parliament House as a lesson to us all in various ways, particularly as to the great dangers that lie in store for us all when governments get involved in projects when they are not fully competent to undertake them. If we learn that lesson from this project we will benefit from it. Of course, that leads into the much wider debate of the whole role of government in economic activity in this country and I think we will hear a lot more of that in the period ahead. It gets to the whole question of commercialisation, privatisation and the proper role of the public sector versus the private sector, but that is a much wider issue than the matter for debate today. I will leave the other points of criticism and comment on the Construction Authority's response to my colleagues as this debate proceeds. Senator MICHAEL BAUME(New South Wales)(9.21) —The construction of the new Parliament House has been an impressive achievement undertaken in difficult circumstances. That is the judgment of its greatest critic, the Auditor-General. It is the judgment on the efforts of the Parliament House Construction Authority and all those involved in this enormous project. Yet this project has been subjected to immense criticism, and quite justifiably so, by people who, like me, hold the view that it is an impressive achievement undertaken in difficult circumstances. That does not and cannot be allowed to excuse intolerable waste, disgraceful inefficiency and a measure of covering up that is unacceptable to this or to any other parliament. The belated revelation by the Minister for Administration Services (Mr West) in his statement of the nature of the enormous blowout in costs is bad in the sense that it is late. It is worse in the sense that it seeks, once again, to mislead this Parliament. I am most disappointed to see in the enormous volume of documents that we now suddenly have, which we are given the opportunity of dealing with, if I may say so, at fairly moderate notice on this very important issue, that so much of the documents appears to be part of a polemic aimed at denying-fairly ineffectually, I might say-the conclusions of the Waste Watch Committee. The reality, of course, is that within this outstanding project there has been a level of waste and inefficiency, and the Auditor-General has demonstrated that. But the Minister has now put out a series of documents claiming that very little money has been wasted, that basically everything can be accounted for in a proper way and that to an extent this problem has emerged because inadequate provision was made right at the beginning for some of these items. The Minister says: All this is not to say that in some limited instances, cost over-runs or control lapses have not occurred . . . When one looks at the figures presented one sees no evidence whatsoever of any cost overruns or control lapses. It is as if everything was absolutely perfect, and we know that not to be the case. But let us look at the justification. The five components of the revised total budget of over $1 billion are given. At this point, I interpolate that the claim by the Construction Authority in response to the Auditor-General's efficiency report that it was common knowledge for some years that the thing would cost $1 billion is absolute nonsense. It was first revealed by the Waste Watch Committee. There was incredible silence from the Government and from the Construction Authority about what the real cost would be until the Waste Watch Committee revealed it. In any event, the justification for the increase from $220m, the original 1978 building target, to $1,026m is given roughly in this way: $765m of the final cost is made up of the original quote of $220m, plus $82m for the addition of non-building items in 1981, because they had not been included in the original quote, and the accumulated inflation escalation adjustment of $463m. That makes up about three-quarters of the cost of the building. But then there are other things. There is an allowance of $66m for costs beyond the control of the Parliament House Construction Authority for industrial disputation, contractor insolvency and exchange rate variations, and $196m for accumulated budget additions. In other words, about $200m has been added to the cost for one reason or another. Let us examine the `one reason or another' and look at the escalation adjustment of $463m, because both merit attention. The escalation adjustment of $463m hides a mountain of mistakes. It does not simply cover increases in costs. The Waste Watch Committee gave instances of contracts which had trebled in size. We tabled instances where contracts had exceeded their tender level by more than 25 per cent after taking into account escalation and the additional scope that was required. Even those tenders that were overrun by that enormous proportion, 25 per cent, massively understated the truth because at that stage there were 5,000 unsettled claims for additional variations. Even as we debate this issue, I am still waiting for the full reply dealing with this, which the Government undertook to give-after, as Senator Short has said, having in effect covered it up before the election. I remind the Senate that during Senate Estimates Committee hearings in April this year, before the election, I asked for details of those contracts. The Parliament House Construction Authority agreed to provide them. Then the Government imposed a blanket ban on revealing that information. The Senate forced the Government to undertake to release that information. A motion was carried in this chamber, with the support of the Australian Democrats-and I thank them for it. Senator Robert Ray —It was not opposed. Senator MICHAEL BAUME —As the Minister says, it was not opposed-because the Government knew that if there were a debate on that issue, its position would fall. It knew perfectly well that such a debate would reveal clearly to the people of Australia the disgraceful behaviour of the previous Minister-not the present Minister-who covered up this information, who prevented it being released, because of the impending election. Since the election, the Minister in this chamber, the Minister for Home Affairs (Senator Robert Ray), has been behaving in a totally honourable way-and I thank him for it. He is now to provide this information. But we still have not got the details of the contract overruns. Where are the details of the contract overruns that the Parliament House Construction Authority and the Government undertook to provide in April of this year? Frankly, I am sick of the cover-up and the pretence in this document-that there is no area in which there is any substantial waste or loss, that one can quite properly and easily see where everything went, that they are just normal escalations and few extra things that the Government asked for. That is bunkum. This statement is bunkum. Let us look at what has really happened in regard to these escalations. If one adjusts the non-building items back to, say, May 1978, there was a reasonable starting point of around $280m. By March 1983-by the time the present Government took over-there had been something like a $240m increase through escalations. It is certainly a high rate of escalation, at a high rate of inflation. Given the revised basis, taking into account the questions of industrial disturbances, insolvencies and the exchange rate, if one accepts the Government's present view that there should have been some provision-let us assume a notional provision-one still sees in the first five years of the project that there was something like an 83 per cent increase in cost. At a time when inflation throughout the nation was regrettably very high-over that same period the consumer price index rose by about 58.2 per cent-the cost of the project rose by about 80 per cent and the inflation rate was almost 60 per cent, so there was not all that much difference. But what happened from then on? The inflation rate in the four years from March 1983 to May 1987 has been about 34.1 per cent, but the project budget has increased by about 87 per cent, if one adjusts these figures for the appropriate provisions. That is more than double the inflation rate. What was going on? Why did these costs increase by more than double the inflation rate? Over that period, by the way, the Canberra building cost index went up by something like 47 per cent. It seems to me that hidden in this escalation figure-the Government dismisses it and says there is nothing wrong with it-is a massive volume of cost overruns which, quite frankly, I believe merit very close attention. Let us now look at the $196m for accumulated budget additions. This comprises $87m which normally would have been allowed for as contingency allowances, and includes $36m for contract variations and contractors' claims, $8m for adverse ground conditions, $11m for changes to non-building items and $32m for associated fee costs on the foregoing items: thirty-two million dollars of fee adjustments on changes costing a total of $87m! If one subtracts the $32m one ends up with $55m worth of net adjustments and $32m worth of fees to look after these adjustments. What an incredible ratio! Does the Government expect us to take that seriously? Maybe there is a coherent explanation. If there is, let us have it in this kind of document. We should not be served up an incredible figure, an extraordinary ratio which seems to support the Auditor-General's comment that there is very little incentive to control fees and costs on that project. On top of that there is a figure of $104m for approved extensions to the building, including $4m for placing the eastern carpark underground, $41m for accommodating additional senators and members-thanks to the Labor Party for that-- Senator Robert Ray —Be honest. Senator MICHAEL BAUME —The Liberal Party voted against it. There is $9m for minor user changes, $20m for sound and vision equipment and furniture, and $33m for design-user refinements-which, I presume, means people changing their minds. The Government seems to be at it again. It has changed its mind about the Speaker's chair at this late stage. Government senators-Ha, ha! Senator MICHAEL BAUME —Is it not fascinating? This is a classic example of what has been happening. A decision was taken 18 months ago to maintain tradition and to take the Speaker's chair to the new Parliament House. However, the Australian Labor Party has a philosophic objection to the traditions of this Parliament and to our links with British tradition and the Westminster system. It has no concept of the importance of the British Parliament, as the mother of parliaments, or of the historic nature of this chair and its components. To the Government, that is all beside the point. The reality is that a decision was taken 18 months ago to take a specific course of action. Belatedly the Labor Government has, once again, changed its mind. This has happened repeatedly. I refer again to the $33m of design-user refinements, $41m for changing the size of the Parliament and $4m to change the siting of a carpark. Design changes are a significant element in these costs. It seems to me that there is one significant point in regard to all these changes. I repeat what the Minister said: All this is not to say that in some limited instances cost over-runs or control lapses have not occurred . . . Where are these cost overruns and control lapses in this ministerial statement? They are brushed under the carpet. That is what this statement does. We have to take the Minister's word for it that there are cost overruns and control lapses only in some limited instances. We do not know what they are. We do not know how significant they are. We are asked to believe a Government which has deliberately sought to hide this issue to prevent it coming up. Belatedly, having been forced, the Government is giving the appearance of coming clean. There are many other issues involved in this matter, and I hope that we will have an opportunity of discussing it at some length on another occasion. I make the point that the Chief Executive of the Parliament House Construction Authority has noted-it is contained in the Auditor-General's efficiency audit report: that equally as disruptive as user changes- that is, changes by the Government- are those which continue to be made by the Architect and the engineering consultants. Here we have change, change, change, bringing about cost, cost, cost. We would never know of that sort of thing just by reading reports such as the one presented by the Minister. I think it is worth mentioning that on page 60 of the response of the Parliament House Construction Authority to the Auditor-General's efficiency report, the Authority states: . . . in the period 1980-84 the project was below budget, allowing a small contingency amount to be built up. It was below budget! What has happened since? I think that is a question which really merits serious attention. Much of the material in this report warrants a great deal of attention. If only we had the detailed responses that were promised to us, but hidden from us before the election, in regard to what has happened to the contracts we might be able to adopt a more informed view on what these problems really are. All we know, on the basis of information given to us in September and October last year, is that they exist. The Authority certainly admits that some things have gone wrong. It ought to admit that some things went wrong with cost control because it admits it in its response to the Auditor-General's efficiency audit report. It stated: The Authority acknowledges the matters covered in sections 7.2.11 and 7.2.13 of the report. That report is the Auditor-General's report, which related to inadequate control of costs. The Authority continued: This is an example of Audit using reports and other initiatives of the Authority to suggest that it had found problems. In fact, these were matters which were identified and attended to by the Authority prior to the Efficiency Audit. So the Construction Authority admitted that there were problems about cost control. Of course, we do not see an example of it in the statistics we have been given. It admits that there were problems but says that it found them out. Of course, it did find them out because it appointed a cost control expert called McCain to find out what on earth was going wrong. His report was called Cost Control Systems Currently Operating During the Construction Phase of the New Parliament House, Canberra. Because I revealed its existence in the Waste Watch Committee, it has now at last become a public document. I thank the Minister, who allowed it to be released eventually in accordance with the undertaking given by the Parliament House Construction Authority that it would be released when I asked for it in April of this year. We got it this week. Let us look at what the McCain report said last year. It stated: The time is long gone when individual changes of mind or requirements can be accommodated and I would recommend that no such requests be accepted. Requests are still being made. The McCain report continued: The weakness of this situation- that is, in controlling costs- is the expenditure figures they receive from the various sources need not necessarily reflect physical progress-not being in a position to check same-the ultimate forecast cost to complete could be suspect. Boy, oh boy, he spilled a bibful there! Apparently the Authority had no idea at that stage, because its system did not provide for it, just how effective cost control was in terms of giving an idea of the cost to complete the project. McCain is critical of the inadequate nature of the cost control. He then referred to cost planners. All the Authority had in the project was a cost planner. Of course, a cost planner is useful in the developing stage, but one must have a cost controller once the construction phase starts. This project did not have a cost controller when the construction phase started. I remind the Senate that the construction phase was about 90-something per cent under this Government. There is not point looking back to the previous Government and saying, `It failed to do this,' or, `it failed to do that'. That Government appointed a cost planner and that cost planner's task should have crossed over to cost control. However, the McCain report pointed out to the Minister: Whilst they are referred to as cost planners, if the duties described in their brief had been the subject of a detailed written and agreed procedure with the Authority and then adequately manned to undertake such duties monitored by the PM- the project manager- they could easily have been developed as an effective cost control department. Provided of course, they had the full project management backing and authority to institute and monitor corrective action. Mr McCain continued: Discussion elicited the fact they did not have the authority, nor the structure, to impose any control on any of the departments from which actual costs emanate or are logged. What an incredible, extraordinary situation! This Government was happy to preside over the biggest building project in Australia, the biggest project in which this Government has been involved, this enormous $1 billion construction job, although the cost planners did not have the authority or the structure to impose any control on any of the departments from which actual costs emanate or are logged. But everything in the garden is lovely, because the Minister says so. This sort of bunkum is the reason why the Opposition will not wear this report. It is absolutely extraordinary. The cost control investigating consultant, Mr McCain, said: . . . It is too late on the Parliament House project to enjoy the real benefits of this important part of cost control. It is too late! He was called in too late to have an impact on cost control. That is why the Opposition and the Waste Watch Committee are so up in arms about what was going on in that project. The response of the Auditor-General to this situation was inadequate. The Government was not being told by its own Minister what was happening on that project. The Minister's performance is absolutely incredible. The Government did not know the extent of the disaster, did not know that there was no cost control and knew nothing in reality about what was going on there because the Minister chose not to provide details in the biannual reports at anything like a reasonable time. Here we have the reality: It is too late on the Parliament House project to enjoy the real benefits of this important part of cost control. There is a touch of irony about this, because the response to the Auditor-General's Office by the Authority complained that the Auditor-General's inquiry was too late to be of benefit in the construction of the building, but too early to be able to take all the lessons of all the mistakes. If everything in the garden is rosy, one could not imagine that the Authority would have anything to learn about, or anything to put into effect, from the Auditor-General's report if one takes its response at face value, or indeed that there are great lessons to be learnt, because everything was done so beautifully. The reality is that this project has had problems, as would inevitably exist in any major project. My concerns are simply that it has-it may be the Government's fault rather than that of the Construction Authority, I do not know-a tradition of not coming clean and of attacking anyone who dares to criticise it. As Chairman of the Waste Watch Committee, I was subjected to incredible attacks by Mr Peatey, who claimed on radio that the facts that I was presenting-he did not realise that I had got them from his own Construction Authority-were all wrong. I asked him kindly to outline where they were wrong, and I am still waiting to hear. He said it was impossible that there were the contracts that I had outlined, with volumes of 25 per cent-plus increases beyond scope variations and beyond escalations for inflation. He said that that was all nonsense; but I got that from his office. I want a real coming clean. We have got a step in the right direction, and if the Minister in this place has been a factor in that, I congratulate and thank him, but it is a very hesitant step in the right direction. It leaves an enormous number of questions unanswered and, as far as I am concerned, it is inadequate. However, I agree that there are some areas where I believe the Auditor-General was wrong in the conclusions that he arrived at, and where the Parliament House Construction Authority has a case. I am not dismissing it altogether. All I am saying is that I would be overjoyed to have the opportunity to get up and support the Parliament House Construction Authority in its entirety, if only it would not keep defending itself in an inappropriate way. All that we want in this place is the facts and the truth. I believe that the present statements do not provide us with those. Senator PARER(Queensland)(9.50) —Today we are discussing the response by the Parliament House Construction Authority to the Auditor-General's efficiency audit on the new Parliament House project. I am chairman of a committee on restrictive work practices that was set up by Mr John Howard. A study was done on a series of industries, concentrating on restrictive work practices. The first report was on the maritime industry and the second was on the construction industry. I would like to point out to the Senate that we produced these reports simply because of the major concern in the community at our lack of competitiveness and productivity, the effect on our balance of payments, what could be done about that and what were the major causes. One area of great concern was the growth that has occurred over a decade or two of restrictive work practices within industry. Part of the construction industry report dealt with the new Parliament House-about six out of the 34 pages. The purpose behind the report was simply to flush out into the open restrictive work practices which have crippled Australia to a large extent. Unless something is done about them, they will lead us to a position where our standards of living will continue to deteriorate further and further. I know that the view of many people has been that these matters should be kept under the carpet. Our view is entirely different. Such things should be flushed out for people to see and be put on the table and the opportunity should be given to do something about them. The general comment I would make is that these types of practices are endemic in Australia. They apply to almost any industry. The new Parliament House is a magnificent building. Future generations, no doubt, will admire and appreciate it. The point I should make-even though the report contains six pages of criticism-and the point I made all the way through, is that the new Parliament House is no different from any other construction site. But the concern I have is that it was accepted-although it is inevitable with a structure of this size and magnitude, paid for by the taxpayer-that it should be our responsibility to look at the issue. The Construction Authority and the construction manager had a special responsibility to make sure that the taxpayers' money was spent in the most efficient way. Because restrictive work practices are endemic in the construction industry and because the new Parliament House site is no different from other sites does not make these practices acceptable. This is the point we are trying to get across. We have an atrocious situation when the terms of work at the new Parliament House are accepted as the norm, because of standover tactics by a few people who are in positions of power in the trade union movement. I make it very clear that I am not attacking the trade union movement per se when I make these remarks, but I certainly am attacking people who have got into a position of power, abusing that power because they know they are above the law. I will recount a few examples from the report I issued on this new Parliament House. Every time, for instance, the construction costs exceed budget, the Authority gets a new, upwardly revised budget from the Parliament. Therefore, the Authority says, quite illogically, that construction costs are within project budget. Every time it receives an increase the project budget changes. That is a very happy situation for the Authority. But regrettably it is taxpayers' money we are talking about. In discussions with people on the site-both contractors and private employees-one of the difficulties we had in talking about practices was their own fear of reprisals. I have discussed this privately with the construction manager and the Parliament House Construction Authority and they deny it, but I can tell honourable senators from the discussions I have had with people that there are concerns that for those who had spoken out on previous occasions reprisals were so bad that they were nearly sent into liquidation or were concerned for their own physical being. The sorts of things that occur are endemic in Australia and in the construction industry, but this does not excuse them. In fact, an attendance allowance is paid to people at the new Parliament House simply to go to work. According to one contractor, both employers and unions will deny-and they have denied-the existence of the attendance allowance, but it is paid, it is commonplace and it is called something else. The contractors who have resisted paying the allowance are under increasing pressure to pay it and to backdate it as well. One source has indicated that just to backpay the allowance will set him back some tens of thousands of dollars. We have what is commonly called the `nicking off' system. Paying attendance allowance does not actually mean employees will stay at work. The building site is so large that some employees turn up in the morning, clock on, disappear down a corridor with a wheelbarrow, never to be seen again for the rest of the day. Senator MacGibbon —Incredible! Senator PARER —It is unbelievable, Senator MacGibbon, that this sort of thing is going on in this very place at the taxpayers' expense. The only time that employees are guaranteed to be on site is on pay-day. Employees have been known to stay away for two days simply because a handrail was missing. Strikes have been caused because there was no water in an urn and no toilet paper in the toilets. Work on the site proceeds at a snail's pace compared with other building sites around the country. So in that particular area it is different from some other building sites. Sources say that it can take a month to dismantle a crane and erect it somewhere else, but on other sites the job can be done in a couple of days. Crane drivers on the new Parliament House site are paid one hour's overtime each day as climbing time to get to and from their crane. When we first reported this it was claimed that two hours overtime was paid but I now retract that. It is one hour, as has been subsequently confirmed by both the Authority and the construction manager. More importantly, that climbing time now applies to people who work on fork-lifts. A person who works on a fork-lift on the new Parliament House receives one hour overtime for climbing on to his fork-lift. On investigation I found that that was agreed to by the construction manager and by the Parliament House Construction Authority. It was claimed that that was an economic deal because, if it were not agreed to, a crane would need to have a spare crew sitting around doing nothing while the crane driver was at work. By doing this, people could be interchanged from the fork-lift to the crane. From the Authority's point of view, and considering the industrial circumstances, it was probably not a bad idea, but that does not mean we should condone the fact that, in the first place, it would have had to have a spare crew sitting around doing nothing. Why could they not have had from the start a system for interchanging people between the fork-lift and the crane? Of course, featherbedding is rife. There are three men to a crane and tradesmen have two labourers to carry their plywood around for them. On the Parliament House site there are seven full time union delegates, paid by the Construction Authority through the construction manager, who do not carry out any physical work whatsoever, but are paid simply to carry out their union duties. That may occur on other sites-I do not know-but it seems to me to be an awful waste of taxpayers' money, and I do not know that it has achieved a lot. Strikes on the new Parliament House not only cost the taxpayer money but also severely affect contractors working on the project. One of the major cost increases outlined in the recent report related to the fact that there have been liquidations amongst the contractors. Over 200 contractors are involved in the construction, and it is alleged that many have been or are in severe financial difficulties as a result of the disruption and general industrial anarchy which has reigned on the site. The Parliament House Construction Authority claims that the cost of strikes has been $9m. I submit that the actual direct and indirect cost of these strikes is well in excess of that figure, because a large part of the liquidation costs would have occurred because of industrial disputes. The Minister for Administrative Services (Mr West), in his statement in the other place, incorporated by Senator Ray here today, says that he would not sanction unjustifiable work practices. What a joke! These work practices have been going on for the last four or five years, since the darn thing started, but the Minister says that he will not sanction them. What has he been doing? It is a wink and a nod job. He says in his statement: . . . some of these . . . allegations have been proven wrong . . . They were proven wrong. I made a mistake. Instead of two hours climbing time for a crane on time-and-half, it is one hour. The Minister goes on: . . . private sector industry practices have been wrongly presented as being peculiar to the new Parliament House site. At no time did any of us say that these practices were peculiar to the new Parliament House site. We said that they were applicable to the whole of industry; but at the new Parliament House site they have made an art form of them. The Minister goes on: The site industrial agreement has generally proved a successful way of resolving disputes resulting from on-site issues but cannot be expected to cope with industry-wide disputes. I understand that industry-wide disputes can be a problem. The Minister goes on to say that he believes that, given the nature of the project, it has had a reasonable industrial record. Senator MacGibbon —A $27m strike a year or so ago. Senator PARER —That was the strike that went on for some 14 weeks. An answer has just come before me to a request made by Senator Reid in an Estimates committee hearing in April last year. She asked for a summary of industrial disputation on the new Parliament House site. I will give a few examples of the disputes which occurred month after month. In September 1985 there were Builders Labourers Federation bans over trades assistants to fixers and glaziers; a BLF stoppage over the death of an employee; Federated Engine Drivers and Firemen's Association of Australasia bans arising from tower crane climbing times and crane shut-down procedures in high winds; and disputes and bans related to severance pay. Let us talk about severance pay. An agreement has now been reached between the Building Workers Industrial Union of Australia and employees for severance pay to be paid on the basis of a $20-a-week input from employers. Employees found that if they were paid severance pay on a weekly basis after a job had finished they were likely to have to pay tax on it. So they said, `We cannot have that. We will have to look at a way of avoiding tax'. We have had Senator Walsh coming in here and talking about tax evaders and welfare fraud, alleging that honourable senators on this side of the chamber support them. Yet here the Government, in connivance with these union representatives, is supporting welfare fraud and tax avoidance. They are saying, `Let us work out a scheme where you can get this money, paid for by the employer, and still get the dole. We are not going to act for the Government and take over the dole. Alternatively, we will give you a lump sum on only 5 per cent of which you pay tax and you can get the dole as well'. That is the connivance that is going on among Government members, those fraudulent people who, in one instance, complain about tax fraud and welfare fraud and, in another, aid and abet it. That dispute started in September 1985. In October 1985 there were continuing bans over trades assistants to window fixers and glaziers, and FEDFA bans arose from a tower crane climbing times dispute. There was another litany of disputes in November 1985. There were disputes in December 1985 and January 1986. I could go right through the list month by month. In August 1986 the FEDFA banned overtime and the interchangeability of drivers. Presumably, the union was claiming that a particular piece of equipment belonged only to its members and that no one else could use it; so there could be no interchangeability of drivers. That sort of restrictive work practice is crippling this country and is costing the taxpayer a fortune, as in the case of the new Parliament House. In the period between September 1985 and June 1987 I think that there was only one month during which there was not a dispute at the new Parliament House, and that was in December 1986. That is an absolute disgrace. The most despicable aspect is that it is all being paid for entirely by the taxpayers of Australia. Even though the Minister says that the project is no different from any other and that the workers on that site have a better record than that of anyone else, Senator Button is on record as saying, when this matter became a public issue because of the 7.30 Report, that there was no doubt in his mind that such things were going on at the new Parliament House. Senator Walsh, in his famed speech to the Labor lawyers of Western Australia, said that he also had no doubt in his mind that the new Parliament House was a scandal. The new Parliament House is a magnificent building. It will be admired by many Australians for the next 100 years or more. But I repeat my concern about the fact that it has been used as a milking cow by irresponsible people, people who got themselves into positions in the trade union movement knowing that they were above the law because they had seen their colleagues acting above the law, to rip off the taxpayers of this country to an enormous extent. The Minister has put out figures concerning the cost increases. In May 1978 the estimated cost of the building was $220m. We have seen the cost rise and rise; it is now over $1 billion. Let us see what happens between now and the supposed completion date as a result of the redundancy scheme. There is a vested interest in this job being prolonged. I do not think that even Senator Robert Ray would bet with me that that will not occur. If it does not occur, it will mark a change from the normal construction practice, to which I referred earlier, in most construction businesses throughout the country over a long period. I believe that the Parliament House Construction Authority has not done its job. The efficiency audit put out by the Auditor-General was the most devastating efficiency audit I have seen, certainly since I became a senator. I do not know how far back in time one would have to go to to find a more devastating efficiency audit. The Authority has attempted to respond to it. Some of the response was fair and reasonable. But generally the thing has got out of control; there has been no lid on it. Of course, a lot of this is not due to the Parliament House Construction Authority; my colleague Senator Michael Baume mentioned that an increase of $41m is associated with the extensions to the new Parliament House made necessary simply by the increase in the number of members and senators in this place. I accept the interjection made earlier by Senator Robert Ray during Senator Michael Baume's speech in that regard, but the Liberal Party of Australia opposed this increase in the number of members and senators in both places. Yet the Government went ahead and did it-to hell with the cost, and I refer here only to the cost associated with the new Parliament House. I also understand that a large slab of the cost increases that occurred were outside the control of both the construction manager and the Parliament House Construction Authority; they were due to the Government's chopping and changing in its views. For instance, sometime last year it decided to limit the extensions to the new Parliament House. This involved having the architect re-draw plans and make new plans-a change of direction-and, some time later, a change back to the original plan and the same exercise all over again. That is sloppy. So not all the blame can be laid at the feet of the Authority; a lot of the blame has to be laid at the feet of this Government, where the ultimate responsibility lies. As I have said a number of times, the new Parliament House will be a great monument to the future. Regrettably, it has associated with it cost increases and rip-offs of the taxpayer. I believe in my own heart that this is the sort of matter that warrants some sort of an investigation to see just where the real blame for this lies. It may not be too late for that. Certainly the blame lies ultimately with the Government itself. Senator COONEY(Victoria)(10.12) —In spite of the criticism from the other side of the chamber, we can be assured of one thing: come September next year Opposition members will gather their beds, chairs and desks and wander up to the new Parliament House. Up they will go. Senator McKiernan —Don't mention the chair. Senator Haines —Don't start talking about the furniture. Senator COONEY —I will come back to the furniture in a minute because I have something to say about that chair. Let us be clear about this: although honourable senators opposite have been very protective of the taxpayers' money being spent on this new House, as they should be, their consciences will not be such as to prevent them from joining in as we all troop up there ceremoniously led by our redoubted leaders to occupy the new House. No doubt we will all thank the taxpayers at that stage. But when I was listening to Senator Parer I got concerned about whether the House was there! Senator Parer said that all these work practices have delayed the building; they have done this and they have done that. But I will read from the statement to which Senator Parer earlier referred. This is the document in everybody's hands. It is a statement incorporated in Hansard by the Minister for Home Affairs (Senator Robert Ray) on behalf of the Minister for Administrative Services, the Hon. Stewart West, MP, the Minister in charge of this project. The second paragraph of this document states: . . . progress was at a sufficient pace for the new Parliament House to open on schedule . . . I said to Senator Devlin, `After hearing Senator Parer speak about all these practices and things, the House could not be there'. But Senator Devlin assures me-and he is a man whose opinions I respect-that up on that hill now is a building near completion, one which will be opened by Her Majesty the Queen in May of next year. But Senator Parer mentioned all these work practices and things. How did this building come about? Did Senator Parer rush up and build it? Did he brush aside all these people who were up there indulging in these awful work practices? Did he put it up himself-because somebody has? In fact, I must quote Senator Parer's words on this. He said that the House was a `magnificent building'-a magnificent building which was built by these workers. In the old days Australia was founded by the convicts, God bless them. They worked under certain conditions and they worked very effectively. We do not deny that. But things have changed and we really cannot impose upon the workers of today the conditions we imposed upon the convicts of yesteryear. I understand that perhaps Senator Parer thinks that we should. Senator Haines —They had free board and lodging. What more do you want? Senator COONEY —That is exactly Senator Parer's point. The other thing I think we could say about Senator Parer's speech is that he has worked hard on his restrictive work practices committee. He has searched for and found work practices and he has become very indignant about them. Apparently it is only on the basis of his recent examination that he has found these work practices. I can tell honourable senators that he worked in the coal industry for many years, but he was not able to produce here today any examples of these evil work practices from the time that he was managing. In those days, Senator Parer was a good manager and he did not have this trouble. I think if Senator Parer really analyses this well, he will find that if any of this trouble does occur, as he has pointed out, it is largely because of management. I am sure that if Senator Parer had been managing this site these practices would not have occurred. He has said, `Originally we said this was unique to Parliament House but we have done some investigations and we have found that these practices are not unique at all. Nevertheless, since we have done all this research and we don't want to throw out the research, what we will do is say, ``Even though the practices are common, they are very bad for Parliament House''.' What makes them bad is that the taxpayer is paying for it. That is fair enough. So he says to the Government, `Somehow, you change all these practices that have been going on for years. You, in some way, alter it. You get into the manager and into the workers and cure it all'. He gave an example of how work practices are bad-and I am sure Senator McKiernan will be very upset about this. He said, `One day somebody was killed on the site and the people stopped work'. He said, `Oh, isn't it a dreadful thing that, when somebody dies, the workers stop working?'. Perhaps in the past Senator Parer may have taken a day off work to go to a funeral. I do not know. Senator Robert Ray —He wasn't in the Senate on the opening day of Parliament. Senator COONEY —Not because somebody died, surely? Look at these disgusting work practices-workers stopping when one of their co-workers dies! This is the example that Senator Parer gives. I do not want to make any comment on his approach to life, but I just say that that is a common work practice throughout Australia. When my father died I took a day off and went to his funeral. I know that Senator Parer would not do the same, but I would like him to think that there is another element in the world besides economics. I get moved. I have a heart and a soul, and they are moved by these things. Senator Parer says, `Oh no, the workers cannot take a day off to go to a funeral', or if somebody gets killed on the site, he says, `Don't stop work'. Senator Parer —Madam Acting Deputy President, I raise a point of order. I think Senator Cooney is misrepresenting me. The ACTING DEPUTY PRESIDENT(Senator Powell) —Senator Parer, you will have an opportunity when Senator Cooney has finished his speech to claim that you have been misrepresented. I do not think that is a point of order. Senator COONEY —Senator Parer is a man for whom I have the highest respect. He, like me, is being paid at the taxpayers' expense and, like me, he tries to do the right thing by the taxpayers. As I recall, he said, `The workers stopped work because of the death of a member'. That is what he said; he might be able to check it. I take it from that, in the context that the honourable senator put it, of working and work practices, that he was criticising that as a work practice. I am not too sure whether the work practice the honourable senator was criticising was the death or the stopping of the work. But I can tell honourable senators that if it is the first it is terribly difficult to avoid. Senator Michael Baume —It is to be discouraged. Senator COONEY —It is. The other person for whom I have a great admiration is Senator Michael Baume. Senator Parer demonstrated the great work he had done in analysing and parsing out how the workers of Australia are a hopeless, inefficient lot. These are the people who have got to get their children fed. When I observe them they go responsibly about their work, they go home, and they try to feed their children and send them to school. They try to bring them up as decent citizens, so that they can vote in elections. These are the sorts of people I look upon as workers but apparently, in Senator Parer's view, they are to be condemned. In Senator Parer's view the ordinary, decent Australian is not worth looking at. In any event, let us leave that matter because we have Senator Michael Baume and his Waste Watch Committee. I want to join with Senator Baume in saying that he has worked hard and efficiently. That Waste Watch Committee is one of the great achievements of the Opposition. Senator Baume spoke about the Waste Watch Committee, and although we concede on this side that it is a great thing, we really should have been speaking about the ministerial statement which dealt not so much with his Waste Watch Committee-I would have thought that we ought to have a statement on his Committee-but with the new Parliament House. That is what we were talking about. The new Parliament House is a magnificent building. Nobody denies that. Nobody denies that what we have for Australia-this has been put in the statement; it was not criticised-is a new Parliament House building which has been created, designed, built and furnished by Australians and Australian made products and artworks. It highlights the pinnacle of Australia's talents, products and natural resources and should be a source of national pride. Senator Michael Baume —Especially the New Zealand carpet. Senator COONEY —The New Zealanders, as the honourable senator says, are really fellow travellers of Australians. We love the New Zealanders. I am not going to condemn and criticise that great nation across the Tasman Sea. Just because every now and then they beat us at some sport, I am not going to get nasty. If they can beat us on one thing, such as the carpet, I will still accept them-as would any decent rugby follower. I accept that they beat us on the carpet. But the general thrust of the building highlights the pinnacle of Australia's talents and should be a source of national pride, and what do we get today? People opposite do not look upon it as a source of national pride; they look upon it as a political point scoring exercise, introducing, as they themselves have condemned, politics into this debate. I know that Senator Robert Ray, who is sitting in the chamber, was quite hurt by the fact that they have brought politics into the discussion on the new Parliament House, this source of national pride. Senator Baume got very concerned about the chair. He said, `This breaks with great English tradition'. I think that is right. Just looking through the Constitution, it refers to the Statute of Westminster Adoption Act 1942. Let us abolish the Statute of Westminster because really that breaks the grand tradition we had as a convict colony with England on top of us. Perhaps we ought to abolish the Constitution itself, or get the English Parliament to do that. Senator Sanders —Madam Acting Deputy President, I raise a point of order. I ask you to examine the relevancy of this part of the debate. The ACTING DEPUTY PRESIDENT —There is no point of order. Senator COONEY —It is very relevant. Senator Sanders, whose one great concern is the environment, is in commune with nature. It just shows honourable senators how good he is, because he can commune with nature in this chamber. He is away with the birds and away with the clouds; away with all the spiritual things-dancing, as it were, as a sprite amongst the sylvan trees. I will tell the honourable senator the relevance of it, and he should listen carefully. Senator Baume is saying that we ought to take the chair up the hill, because if we do not do that we will be breaking with tradition, we will be breaking our ties with England. How far do we take that argument? Do we say, `Look, we ought to bind ourselves to England to the extent that we ignore the great progression we have made from the times when we were a colony to the times when we were a nation'. In other words, it is time that we, as a nation, realised that we should leave this historical chair-there is no doubt about its great history-down here in this historic building and then take the next step in our history and go up there as Australians facing a new century, facing the changes which must take place. We cannot live in the past. History is a developing thing-it changes. If we had lived in the past we would never have got any anywhere. We would not have a Constitution or a Statute of Westminster; we would still be a colony inhabited by those people who made great contributions to our past, the convicts. That is the relevance of it, Senator Sanders. The honourable senator should listen. I know he is a man who has great spiritual dimensions, but besides having spiritual dimensions he has to have a practical approach to what is going on. We then had mention of the slick cover-up. This must be the first of these reports that have been delivered to the Parliament. The document begins-this has not been denied: It has been the custom of this and past governments- `past governments', including the Fraser Government, under which this all started- to regularly review progress on the new Parliament House project and to report on that progress to the Parliament. There is no doubt that there have been regular reports to the Parliament and, through it, to the nation as a whole about the progress of this Parliament House. That is undeniable. Nobody from the other side can at any stage point to a cover-up. The very fact that the Auditor- General has reported is an indication that the whole thing has been open to public scrutiny. How can Opposition senators say that there has been a cover-up when the whole thing is reviewed by the Auditor-General in any event? The very stuff that the Opposition is using to criticise the whole thing comes as a result of the openness that the Government has shown towards the way that this building has been put up. Senator Michael Baume —After the Waste Watch Committee showed all. Senator COONEY —I will give the Waste Watch Committee a good point because at least Senator Michael Baume and Senator Short have done some work on this. But nobody else in the Opposition has. There are just the two of them. They ought to be praised because nobody else from the Opposition has really looked at this. The Opposition is so indignant about it all but only two of its members have even looked into it. Senator Robert Ray —A stepping stone to the shadow Ministry. Senator COONEY —It is just a stepping stone to the shadow Ministry. Senator Short is quite properly in the shadow Ministry, and I want to see Senator Michael Baume back in the shadow Ministry. Let us go through this. Criticisms have been made and what the Minister has done, in his honest fashion and at the first opportunity, has been to say that the Government will explain the situation. Of course, now that the explanation has been put out, people have said, `Oh, yes, you say that, but we don't believe you'. It is easy to deny. But on page 3 of the document is an explanation that nobody has effectively dealt with. About the cost it states: The conclusions from this disaggregation are: that the non building budget ($82m) and the contingency allowance ($87m) ought to have been included in the original budget. That is all right. That is a matter of accounting and has been fixed up. The next point is: . . . it was not possible to escape the effects of inflation . . . Senator Michael Baume analysed that and, as was pointed out to me by Senator Ray, when talking about inflation he demonstrated quite effectively, as a sideline, that the rate of inflation under the Fraser Government was much greater than it has been under this Government. In any event, and leaving that aside, the fact is that inflation has occurred in this country. The next point in the document is: . . . it was not possible to escape the costs of industrial disputation . . . Senator Parer says that it is possible. But it is beyond dispute that industrial disputes do occur. The document goes on to say that it was not possible to escape the costs of insolvencies and exchange rate variations. I do not know how one avoids insolvency in the building industry. Insolvency in the building industry is a fact of life. It goes on all the time. To say that in some way the Government should have put the new Parliament House away from the effects of insolvency is just living in the clouds, living amongst that verdant forest in which Senator Sanders so happily roams. The document states that exchange rate variations of $66m are probably less, on a pro rata basis, than would be experienced on most major construction projects anywhere in Australia. When Opposition senators went through this document, why did they leave that point out? It ought to be read out. The full paragraph states: . . . that it was not possible to escape the costs of industrial disputation, insolvencies and exchange rate variations ($66m) which on a pro rata basis are probably less than would be experienced on most major construction projects anywhere in Australia. We have heard three speakers from the Opposition, all of whom were armed with that document, and none of them challenged that statement. I will just read those few words again: . . . are probably less than would be experienced on most major construction projects anywhere in Australia. In spite of their ability to read every word in that document, the three Opposition senators who have spoken so far have not chosen to contradict that great statement. The next point in the document states: . . . that the only other additional factors are the $104 million for approved extensions such as when the size of the Parliament was increased in 1984 and the $5m for landscaping. Now we have had the great criticism, `Look, you should not have increased the size of the Parliament'. The new Parliament House will be there for centuries. Senator Parer mentioned 100 years, but I hope that it will have a longer life than that. It will be a great monument. There has been talk about the British tradition. The new Parliament House will last as long as Westminster. We could be looking at 1,000 years, yet we have had put this miserable-that is really the only word to describe it-argument that the House should not be of a size to accommodate the inevitable increase that will take place as this country grows, and grows in its greatness. Opposition senators, in the approach that they take, will be unable to sing with any sincerity Advance Australia Fair. They are right against that. They want the meanness in their speeches to pervade us all. They want to cramp the House and not make it an expansive place in which proper government can be given to Australia. The paragraph after the conclusions states: These figures show that claims of `massive cost over-runs' are, in fact, a misunderstanding of the true nature of the disaggregation of the costs. The Minister has been candid, and it is worth while taking this into account. But all this is not to say that in some limited instances cost over-runs have not occurred. Control lapses have also occurred. But the document clearly refutes those sensational claims of unrestrained cost blow-outs. In this statement the sensational claims are rebutted, and so they should be. It takes a meanness of spirit to search the books and, as it were, to search the circumstances under which this building is taking place, in order to find out areas of criticism. Anybody who has had a house built has to have been very lucky not to have had all sorts of problems with the builder. All sorts of difficulties occur in the building of a house. This is the most massive building that has ever taken place in Australia. Clearly, there would be some difficulties. But I think it is now admitted that to extrapolate all those difficulties and practices and say that they are unique and that somehow the problems involved in the building of this building are unique is simply to stare reality in the face and deny it. The Minister has acknowledged, clearly, that there have been problems, but he has rebutted, as he should, the sensationalism that has taken place. Of course, this great building, this unique construction, this symbol of Australia's greatness is the subject of sensationalism. Any attack on that sort of thing does make the headlines and the leading articles. But all of the criticisms have been dealt with and it has been shown that, although there have been difficulties, those difficulties are by no means exceptional. Again, reading from the document, it states that the building highlights the pinnacle of Australia's talents. That is what ought to be acknowledged. We have heard the criticisms. But let us look at the magnificence of this building and of the work both by management and by the workers who have been so criticised. It is a building which we can look at with national pride and which has been admired the world over. The workers who have been so highly criticised have been part of the effort to bring this unique construction to its completion on time. Let us hope that, when we go up there next year, even Senator Parer-certainly I know that Senator Baume and Senator Short will-will say, `Let us bless the workers who have given us these new surroundings'. Let us acknowledge the greatness in which they have done this. Let us acknowledge the great vision that politicians, not only from this side of the House but also from the other side, have shown. We are often criticised, but this building will be a symbol to us all and, through us, to the Australians who have had the good sense to elect us all to this place. Instead of the Opposition compromising the opening so that people are dissatisfied and think that there is a conspiracy about the whole thing, that somehow it is a tainted project, let us look at it rather as the project that it really is, a magnificent symbol of the Australian people, a magnificent symbol of the faith that we have in the future-it does symbolise that-a magnificent symbol of all that is great in this country, and let us go to the new building with joy and not with some sort of miserable cantankerousness in our hearts. I do not want to anticipate what Senator Haines will say, but I hope her words are said with the joy she is capable of showing and not with the tendency she sometimes has to score political points in this area. We should acknowledge this new House for the great project that it is. Senator HAINES(South Australia-Leader of the Australian Democrats)(10.36) —In the time that I have spent in this place I have learnt that two things more than any others will produce lengthy and sometimes entertaining debates. Senator Sanders —That was very entertaining. Senator HAINES —Yes, I acknowledge that Senator Cooney is always worth listening to. He can often talk for 25 minutes and say very little at all, but it is almost always entertaining. For that we owe him a debt of gratitude since there are people in this place who can talk for 25 minutes and say a great deal and not be entertaining at all. We do need Senator Chaney, the chaff, along with the wheat from time to time. The two things that produce excited and lengthy debate in this place are changes to Standing Orders and anything to do with the development of the new and permanent Parliament House. In fact, on the first subject I have seen and heard some excellent contributions from honourable senators speaking about whether we ought to be entitled to read our speeches in this place. Interestingly enough, most of those contributions were made by speakers arguing that we ought to be able to read speeches, but not having even a note in their hands. So in this place there is nothing if not a mass of contradictions. Over the last few years the new and permanent Parliament House has produced some of the most interesting debates because, after all, we are the ones who for our sins will be living and working in the new and permanent Parliament House for as long, as Senator Cooney said, as the electors allow us to do so. We have a right to question, to criticise, to comment and to argue. We have had debates in this place, for example, on whether we ought to use rare woods in the building. We have discussed the use of cloth around the walls of the building, what is likely to happen with natural light coming in, with wear and tear and so on. We have discussed whether our corridors ought to be carpeted and whether the noise level ought to be taken into account. We have debated ranges of colour schemes. To the best of my knowledge, the people who have been in control of this entire system have paid very little attention to us. I had a discussion the other day with somebody who is involved in the project and who was commenting on the fact that we have natural light coming into the chamber. He said, `You people deserve natural lighting. You should not have to sit in a bunker'. As I said to him, we are here in hot daylight for about four of the 14 hours we are in the building. Senator MacGibbon —Yes, but they have blocked off all the windows. Senator HAINES —They have here, indeed, but of what use is having natural lighting in the new and permanent Parliament House if we will be spending only a third or less of our time in the chamber in those daylight hours? It is a fine idea but it will not work in practice because we are simply not in the position of taking advantage of it for any significant time. Yet it will cause quite a significant problem for the cloth that will be used in the building, for the carpeting and so on. Inevitably, additional costs will arise out of that sort of decision. So we have a right as users of the new building to get up here from time to time to discuss its development, the length of time it is taking, the fittings and so on. Today we are talking about a very significant blow-out in the cost. Madam Acting Deputy President, I stand here as something of a latter-day Cassandra-a Cassandra vindicated because back when the new and permanent Parliament House was first being debated one of my colleagues, Colin Mason, predicted that the blow-out would be from $220m to in excess of $1 billion. He was howled down as being unnecessarily pessimistic and critical. Anybody who thought about it ought to have realised that a blow-out of this magnitude was almost inevitable, given that we were looking at a complex project that had to be dealt with under a very tight time schedule. That brings forward all sorts of problems with lack of capacity to negotiate, problems of delays-in themselves causing problems-and, therefore, the possibility for pressure, if not actual blackmail, to apply in costings and so on. it was inevitable that there would be a factual basis for Senator Mason's predictions of nearly a decade ago that this project would blow out. Indeed, costs more than doubled in the Fraser Government years between May 1978 and March 1983. From March 1983 to May 1987, during the Labor Government's years, the budget has almost doubled. Almost 10 per cent of that increased cost in the years 1983 to 1987, I might add, has been due to the increase in the size of the Parliament for which we can thank not only the Labor Government but also the help it has received from members of the National Party of Australia in this place who supported Labor in its desire to increase the numbers of members of the House of Representatives and hence required the maintenance of the nexus in the Senate, giving us something like an extra 36 members of parliament all told. The Parliament House Construction Authority (PHCA) has pointed out on page 10 of its summary of responses to audit findings that it has been known for some time that the budget would exceed $1 billion and that this information has been well publicised. I am not so sure about that: it certainly was not acknowledged until it got to the point where it could not be hidden any longer. It was not acknowledged back when this project was first argued for. The fact that 10 per cent of the increased costs in the last four years has been due to the increase in the size of the Parliament of course makes a mockery of one of the requirements of the design-namely, that competitors must do more than satisfy the immediate user requirements; they must also address themselves to the issues which will determine the success of the building in the long term. Among those factors included was a requirement for flexibility-the ability to accommodate growth and change. Yet the increase in the size of the Parliament has led to a $43m additional expenditure and we have again, according to the response of the PHCA to the audit findings, a problem in housing 180 additional parliamentary staff, estimates having indicated that those people will not be accommodated in the new building in 1988. The response from the PHCA to that criticism was simply to say that the building is built in accordance with the brief approved by Parliament. But, the brief approved by Parliament was for flexibility-for room to accommodate growth and change, and presumably at reasonable rather than at exorbitant cost. The brief also includes among its factors a requirement regarding circulation. A system was required to provide for complex movement patterns of a large number of people. We have managed in this place to move a large number of people around in what I suppose must be complex movement patterns, if that is what they are called, with very few problems at all. Why there should be additional costs attached to this for the new and permanent Parliament House is beyond my understanding. In addition, the competition documents required that Parliament House must be more than a functional building. It should become a major national symbol in the way that the spires of Westminster or Washington's Capitol dome have become known to people all over the world. I have no doubt at all that the building is going to become well known, and deservedly so; it is a most attractive and a most unusual building. Senator Sanders —It has tennis courts. Senator HAINES —It might have tennis courts but it does not, to the best of my knowledge, have child care facilities, which are of considerably more use to the people who occupy the building but for which no provision was made, despite repeated requests over the years for some attention to be given to this matter. We can afford to make expensive additions to the Parliament House to accommodate another 36 parliamentarians at a cost of $43m, and we can afford to put in tennis courts, swimming pools, saunas, gymnasiums, and so on. However, we cannot afford to put in child care, not just, I might add, for the children and grandchildren of members of parliament when they visit here, but also for the staff of members and senators and for the people who work long hours in this place such as the Hansard staff, the parliamentary dining room staff and others, all of whom require those sorts of facilities. So that example, kindly presented to me on a plate by Senator Sanders, makes something of a mockery of the fact that this building is supposed to be more than just a house for members and senators; it is supposed to be something that can be used by all the people who come here. In fact, it is not a functional building. It is not a building that is usable in the sense that the Australian Federal parliamentary system has come to believe that we need. This building might be old and decrepit and added on to, and we might have to put buckets in the corridors to catch the drips when it rains-- Senator McKiernan —It doesn't catch them all. Senator HAINES —No, it certainly does not catch them all, and Senator McKiernan said that one. I recall that last year water got into the electrical system and the entire building was blacked out for which, no doubt, those people who were listening to the broadcast were duly grateful for a time. In any event, it is a building in which contact is easily made between members and senators, between backbenchers and ministerial staff, and between Opposition and Ministers. Now we are about to give ourselves a building in which there is an Executive bunker, in which not only are Ministers cut off from access to and by ordinary members and senators, but also they are cut off from their own back bench. I am not heavily into conspiracy theories as you would well know, Madam Acting Deputy President, being a friend and colleague, but I perceive in this an attempt by members of the Executive to make themselves less approachable, less accountable, to not only the Opposition parties, but also their own back bench. In any event, the layout in the rest of the building is odd. The Government party room, for those honourable senators who have not seen the plans, is between the office of the Leader of the Australian Democrats and the office of the Leader of the National Party of Australia. So there are not going to be too many party meetings that can be held without those of us on the Opposition benches knowing what is going on. From my memory of the plans, there are two ways into the party room: one is to come past the office of the Leader of the National Party and into the corridor leading to my office; and the other is to walk through an open courtyard and go in the back way. Presumably that gives some flexibility in pleasant weather but not too much when it is coming down by the bucket load as it frequently is in this place. It is hardly a user-friendly building. I think that makes all the more appalling the fact that this blowout has occurred. It would have been bad enough if the building had been going to fulfil its basic function of housing members of parliament in any meaningful and useful sort of way but, apparently, it is not even going to do that. Legitimate concerns have been expressed by the Auditor-General and by others here with regard to the cost blowout and with regard to the fittings. Senator Barney Cooney mentioned the furniture a while ago and promised that he would come back to it but did not. The furniture, too, has been a source of problem. Large amounts of money have been expended on ergonomic prototypes and when we have gone to a committee room to test them, it has turned out that they tend to chop one's knees off if one is one height and one's shins if one is another height, and to take one's fingernails off when one pulls out the little sliding desk thing if one is not very careful. Senator Sanders —You are not supposed to have dragon lady type fingernails. Senator HAINES —I do not have dragon lady type fingernails. If one does not have fingernails it takes off the top of one's fingers. So one has a choice. Those sorts of things have cost a large amount of money. I can remember an earlier debate in this place when I, along with others such as Senator MacGibbon, was complaining about these costs, asking why the authorities did not go to a car manufacturer to find out how to design the best sort of seating that would suit most shapes and sizes-and heaven knows we have a wide variety of those in this place. The old furniture has done us reasonably well. There should have been a more sensible and less expensive way of going about finding furniture to put in the chambers and elsewhere than the one that was adopted by the Authority. So there are legitimate criticisms with regard to this cost blowout. Certainly, inflation has taken its toll under both the Fraser regime and this one, but beyond that there are inexcusable blowouts in expenditure that must be addressed. The Government cannot get by simply by waving its collective hand and saying, `Ah! But this would have happened everywhere else'. It would not have happened everywhere else; it need not have happened everywhere else. I think it behoves the Government to listen to those of us who have complained about it in the past and who are still complaining about it, in an attempt to put a lid on it now before we see another $200m go down the drain between now and next June when the building is supposed to be opened. Senator COLLINS(Northern Territory)(10.52) —Madam Acting Deputy President, I had decided not to speak in the debate today because of the length of time that it has gone on but I will not detain the Senate very long. Senator Haines —You said that yesterday but went on for 20 minutes. Senator COLLINS —A short speech for me is when I sit down before the light goes on. Senator Haines —Now we know the definition. Senator COLLINS —That is the definition. I was provoked, in fact, by something said by Senator Michael Baume earlier this morning that alarmed me somewhat and by another debate in the other place yesterday that astonished me. I had some spare time yesterday so I thought that I would slum it a bit and I went over to sit in on the House of Representatives for a while. The debate was raging yet again on shifting the chair up the hill. Senator Haines —Did you learn anything? Senator COLLINS —Not a thing. Passions were running hot in the Opposition. I had this vision of a team of Opposition members physically carrying the Speaker's chair up the hill at some time later this year. It alarmed me somewhat. I was just a little concerned that some of the extraordinary rhetoric that is attached to this relatively small matter could sway the minds of people to reverse that very sensible decision not to remove the chair from the chamber. There were what I would call over the top statements made about it. The most extraordinary, I thought, was the comment made in the other place by the Leader of the National Party of Australia (Mr Sinclair) when he said that the Government's decision not to take the Speaker's chair was an indication that it was abandoning the rule of law process that exists in Australia. The reason I am concerned about it is that the South Australian Government-I do not know which one it was at the time-made an excellent decision to convert the old South Australian Parliament House into a constitutional and political museum of South Australia's political history. It has done a superb job. Senator Messner —You are wrong. Senator COLLINS —What does the honourable senator mean by saying that I am wrong? I have been through the thing three times. Senator Messner —No, there was an intervention of 30 years when it was used as government offices. Senator COLLINS —I would say that the intervention-- Senator Puplick —What has that fact got to do with things? Senator COLLINS —I was, in fact, going to be brief. Honourable senators opposite would assist my by letting me be brief. Whether there was an intervention when government offices occupied that building is irrelevant. The fact is that the original Parliament House in South Australia now stands as a constitutional and political museum for South Australia. I have been through it and I have taken Northern Territory school children through it on three occasions. Despite the petulant interjections from honourable senators opposite, I say again that whoever was responsible for determining that matter should be commended for it. Senator Maguire —Don Dunstan. Senator COLLINS —It probably was Don Dunstan. It is an excellent museum. But the fact cannot be denied that the Speaker's chair in the House of Representatives chamber is, without question, the most significant feature in that chamber. It would be absolutely criminal to remove the Speaker's chair from the House of Representatives chamber if these chambers are to serve the purpose that I hope they will of fulfilling the role of acting as a constitutional and political museum for Federal politics in Australia. Some extraordinary events have taken place in these chambers over the years and I think it would be absolutely criminal to tear that chair off its foundations and move it up to the new chamber, apart from the fact that it would look absolutely incongruous in the setting of that new chamber. I noticed the other day in the Canberra Times what I thought was a very entertaining article indeed. The correspondent for the Canberra Times talked about the historical nature of that chair. He understood that it was constructed from timber taken from the wooden legs of matelots who had fought against the Spanish in the armada and from pieces of the dog kennel of King George III. I know that that is not the case, but it is constructed from timber from the House of Commons; the arm rests being made of timber from the Victory, Nelson's flagship. When I sat in the chamber the other day listening to the debate it came home to me just how that chair absolutely dominates the House of Representatives chamber-it is the most significant feature in the room. It would be absolutely criminal for us to think that these chambers would serve any useful purpose as part of the political history of Australia if that chair were removed. I strongly support the decision that has been taken not to remove the chair from the House of Representatives chamber, and I hope that that decision stands. Question resolved in the affirmative. Senator ROBERT RAY(Victoria-Minister for Home Affairs) —by leave-I seek leave to incorporate in Hansard a statement relating to the defence budget. Leave granted. The statement read as follows- The Defence Budget for 1987-88 is the first in which the delineation of Australia's Defence Force for the 1990s and into the 21st century can clearly be separated from the concepts and strategies of the 1950s and 1960s. The Australian Defence Force of the future will be more capable; a co-ordinated fighting machine, rather than three largely separate services; and equipped and trained to prevail against any credible threat in Australia's area of direct military concern. This Government believes in a self-reliant defence of Australia. It believes that our people should know that this is possible. That Australia can do it, can afford to do it, and must do it. This Government believes that our service men and women should know that they are members of an organisation that has clear cut direction; that they are at the heart of the most fundamental of national responsibilities-the security of the nation; and that the Government takes its responsibilities for defence seriously. The Australian Defence Force now has that direction and, as demonstrated in this Budget, the Government will provide the resources for the reconstruction of our fighting capabilities. Efficiency improvements in the last two years are now providing a dividend to defence. Further funds for high priority activities will flow from management changes now being undertaken. Each of the three Services is being re-equipped with the best and most appropriate weapons, missiles, transport and support equipment that money can buy. The command and control of the ADF is being refined and centralised under the Chief of the Defence Force because the Government intends that, should Australians again be called upon to fight, they will for the first time fight as an Australian Defence Force and under Australian National Leadership, rather than as part of some larger nation's force. Our national surveillance capability is being revolutionised, based on Australian technological excellence in the Jindalee over the horizon radar. The role of the reserve forces has been given higher status than at any time since World War II. In any future time of national military crisis the reserves will be critical to our survival. The rejuvenation of the reserves, the improved recruiting and particularly improved retention show that this is recognised. Industry has been brought into the Australian defence network. At some cost to the defence budget the capability of Australian industry to produce, support and maintain defence equipment has been dramatically upgraded in the last few years. The submarine project will take this process even further. Within the ADF the new posture of self-reliance, the emphasis on the north and the strategy of defence in depth have required rethinking of old ideas at all levels. The opening of a new RAAF base at Tindal, the expansion of HMAS Stirling to be the base for half the Australian fleet, the transfer of battlefield helicopters to the Army, the requirement to manage over 100 major equipment projects and to bring the new weapons, systems and equipment into service are all providing new pressures in the ADF. The fact that the cost of the new equipment program demands constraint on personnel numbers does increase the pressure. I am pleased to be able to report to the Parliament that the ADF is responding very well. Australia's service men and women did not join up for an easy life. They joined for a challenging life and to serve their country. There is growing evidence now that the Australian public understands the vital role our service men and women are playing. The public is throwing off the mental shackles that years of miseducation on our alleged inability to defend ourselves imposed. The enormous support defence open days and displays now draw is but part of this evidence. Among young people there continues to be a strong desire to join the forces. We must make sure that the enthusiasm that brings them in continues to motivate them through their service career. To keep that enthusiasm our service people need to be aware not only of the challenges but also the opportunities. Our re-equipment program is producing opportunities for involvement in the use of advanced technology. Service conditions are changing, albeit slowly, to reflect the realities of the community expectations on lifestyles. That those changes are occurring has not been fully understood in the Services or the community. To explain the changes and to ensure that the conti-nuing needs of service personnel remain in focus in Government decision-making were the major reasons for appointment of a Minister directly concerned with this area. The opportunities are there for fully satisfying service needs. This year's Budget follows one of the most extensive and far reaching periods of review and reassessment in Australia's defence history. In a little over three years the Government has provided shape and structure to the concept of defence self-reliance and an ordered and rational approach to fill the gaps in capability. The same ordered and rational approach has been applied to defence management, both in the Defence Department and Defence Force. By seeking efficiency from improved management and rigorous internal review and control, Defence is able to shift resources to enable the Government to correct the deficiencies identified in the White Paper and to get more capability at the sharp end. The defence budget for 1987-88 is $7,404m. The Budget is a 2.7 per cent increase in dollars and a 1 per cent real reduction compared with 1986-87. I would add that these figures must be seen against the backdrop of the 2.4 per cent real reduction in Commonwealth outlays in the overall Budget for 1987-88. These statistics demonstrate a continuing strong commitment by this Government to our defence requirements. In the past four years defence spending was insulated from the effects of currency fluctuation while we shaped the strategy and direction for defence self-reliance and put in place the machinery for the management improvements that produced an efficiency dividend. These two key initiatives enable this year's Budget to be held at $7,404m without affecting the blueprint for the next 15 years provided by the Government's 1987 defence policy information paper. On 19 March this year I presented in this place the defence of Australia policy information paper. In conclusion I observed that `whatever his critics might think of the Dibb Review it has set a new standard for defence debate in Australia. Never again will those who wish to participate in the defence debate in this country simply be able to run off at the mouth with wish lists, persiflage and grandiloquence'. I said, `The program outlined in the White Paper is a prudent one, with clear cut priorities. It is based on a realistic assessment of our circumstances and our important alliance relationships. We are a powerful nation in regional terms, but with some serious deficiencies. We could not now deny ourselves self-reliance in the terms set out in the White Paper. The goal is achievable'. The central message of this defence budget is that the White Paper is on track and will stay on track. Defence self-reliance is realised through a strategy of defence in depth. It gives priority to meeting any credible level of threat that could occur at relatively short notice in Australia's area of direct military interest, that is, the area in which developments can most directly affect our security. It means that any potential adversary knows that he will be faced with a comprehensive array of military capabilities, both defensive and offensive. The Government believes that our focus on credible contingencies strengthens the priority needed to be assigned to the major elements of our capital equipment vote. To be distracted from this course could thus leave holes in Australia's total defence capability. The Dibb Report and the White Paper have shown the direction that the ADF should go to take it out of the 1960s and into the 21st century. Force structure developments have emphasised intelligence and surveillance, strike and interdiction, upgrading maritime warfare and mine countermeasures capabilities, increasing the Army's capability for dispersed northern operations, enhancing command, control and communication systems and streamlining administration and logistics. The emphasis on these areas is being reflected in the type of equipment being introduced into the ADF. It is access to adequate intelligence and effective surveillance that gives the defence forces of a relatively unpopulated country such as ours a chance to respond to threats in timely fashion. Timely intelligence is necessary to allow us to respond appropriately to any developing threat. Some of our most effective indigenous scientific developments are associated with attacking these problems. In this regard, I would like to emphasise the contribution of the Defence Science and Technology Organisation in developing capabilities that are appropriate to Australian strategic requirements. For example, DSTO is developing a towed acoustic array which is a sensor to be used from specialist surface ships and from our new submarines and which will provide wide area surveillance in important ocean basins and focal areas. Australia is a world leader in this field. The emphasis on surveillance capability is highlighted by the continued development of the Jindalee over-the-horizon radar. This is the world's most advanced long range radar and represents a wide area surveillance capability that is essential to the ADF's force structure. It is another of the developments of DSTO's of which we can be justifiably proud. This year $16m is being spent on upgrading the Alice Springs site and I hope later this year to announce the next phase of this important project-the acquisition of computers and the development of specialist software. Our Navy and our maritime warfare capacities are undergoing a massive restructuring and improvement of capability. Individual programs generate excitement in Australian industry with the attractiveness of their new technologies but their importance to the new strategy is sometimes missed. Our Navy is developing the ability to protect vital choke points, patrol considerable distances, sweep our ports clean of mines and strike an enemy's forces at source. In the debate that surrounded the decision by the previous Government not to proceed with the aircraft carrier, endorsed by ourselves, the considerable potential of our maritime forces was obscured. A Navy with these tasks is going to look different from a Navy focused on force projection. However its role in the contemporary era will be more vital. The six new Kockums type 471 submarines to be built in Australia to replace the Oberons will be the largest, longest ranging and most lethal conventional submarines in the Western world when they enter service in the 1990's. The new submarines will increase our maritime surveillance capabilities, as well as providing a formidable strike capability. The great significance of our submarine fleet runs in tandem with the major upgrading of the maritime warfare capability of our surface fleet. It will leave us with a major increase in the number of platforms. The increased numbers are no accident. They are a result of addressing the enormously difficult problems of simultaneously confronting our need to defend the choke points to our north and south and develop a capacity to patrol further afield in areas such as the South Pacific. The size of the surface combatant fleet when this Government was first elected was related to keeping one aircraft carrier battle group operational. Not only was the concept inadequate for the strategy of forward defence and power projection applied in the 1950's and 1960's, but that size force-12 destroyers and 20 patrol boats-was clearly insufficient for the defence of Australia itself. This position is being rectified now with the creation of a rational structure of three levels with the numbers in each related to the tasks and capabilities required for maritime warfare within the strategy of defence in depth. This will be a substantial improvement in defence planning over the largely `rule of thumb' approach of the past. The surface fleet will contain three broad levels of capability. The highest level will be represented by the larger ships-destroyers and frigates; the second level by the new light patrol frigates and the third by the patrol boat force. At the highest level of capability, $116m is to be spent on two new FFG-7s being built at Williamstown Dockyard and $45m towards modifying three of the existing four FFGs to carry the new Seahawk helicopters. The first two of 16 Seahawks are scheduled for delivery in November 1988 with $141m in this year's Budget. Three of the guided missile destroyers are to be modernised at Garden Island dockyard at an estimated cost of $385m, with $72m in this year's Budget. The modernisation will upgrade weapons and sensors and generally extend the operational life of the ships. The first two ships will complete the modernisation program in 1988 and 1989, with the third to complete in 1990. At the middle level of the fleet of surface combatants, we plan to construct in Australia eight light patrol frigates for the RAN and up to four for the Royal New Zealand Navy. The new light patrol frigates will be suitable for dealing with lesser forms of military pressure and capable of extended patrols within our resource zones and proximate waters in our area of direct military interest. They will have superior range, endurance, sea-keeping and survivability compared with patrol boats and will be able to carry the Seahawk helicopter. They will be designed so that their sensors and weapons can be enhanced to enable them to contribute in more substantial contingencies. On 9 September I announced the selection of three ship designers to further develop their ship designs for the Anzac light patrol frigate project. A ceiling cost of $3.5b has been set for all activities associated with the procurement, outfitting and support of the eight ships for Australia. The Government has also given a high priority to the development of a capable mine countermeasures force to ensure that our ports can be kept open. Our strategic circumstances dictate that we need both a minehunting and a minesweeping capability. Minehunters are designed to use a forward-looking specialist sonar to hunt mines and then to detonate them using charges placed by a remotely piloted submersible vehicle. Minesweepers are needed to complement the minehunters by operating in deeper waters where the nature of the seabed makes hunting less effective. In the air, Australia's strike and interdiction forces can hit further, faster and harder than ever before. The Air Force is being re-equipped to play its role in the defence in depth strategy. This means high-technology aircraft, sensors and weapons with the range and power to find and destroy targets anywhere in our area of direct military interest. The Air Force will get another 18 F/A 18s this year, making a total of 44. By 1991, there will be 75. The F/A 18 is a combined fighter and strike aircraft which carries the best radar and weapons for Australia's air defence, ground attack and strike needs. One squadron will be based at a major new air base at Tindal, near Katherine in the Northern Territory. A major upgrade is being considered for the F-111s, to maintain and enhance the long-range, highly accurate land-strike capabilities which they provide the ADF. A new training aircraft, the PC9, is being built in Australia for the Air Force. It is the best basic trainer aircraft in the world, and it will allow the Air Force new, more flexible and more economical training programmes. A new air-to-air refuelling capability is being developed in the ADF to increase the range of the F/A 18s, and a string of bare bases is being built across Northern Australia from Learmonth to Cape York. Focusing on the defence of Australia rather than the defence of the Mekong has meant a substantial rethink in the Army. The Army is being re-equipped literally from the boots up to carry out its role of defending Australia. Tactical and strategic exercises are increasingly looking towards the areas in the north in which the ground forces will operate. In 1989, Exercise Kangaroo 89 across the north of Australia will be the biggest peacetime exercise ever carried out by the Australian Defence Force. The soldiers will have new individual and light support weapons-the 5.56mm Steyr and Minimi-with deliveries from Australian factories beginning in 1989-90. Operations will be supported by new field guns-the 105mm Hamel, again manufactured in Australia, and troops transported by Blackhawk helicopters in the biggest upgrade to Army mobility in the last 20 years. We are also considering the acquisition of wheeled armoured vehicles for operations in northern Australia, and the possible upgrading of part of the fleet of M113 light armoured fighting vehicles. Ongoing projects to upgrade Army mobility include the purchase of a further 600 four tonne Mercedes Benz Unimog trucks at a project cost of over $57m and the purchase of 330 Land Rovers at a total cost of $145m, of which $22m will be spent this financial year. Initiatives to upgrade our communications capability include a number of projects using the latest communications technology. Examples include new Raven tactical battlefield radios, cryptographic equipment as well as the continued development of the DISCON (defence integrated secure communications system) which is planned for completion by the end of 1991. Another important continuing communications development is the Defaussat project, which will provide an enhanced use of Aussat by defence, including field use by the ADF through transportable earth terminals. The system should be operational by 1989. The White Paper recognises that our people-the men and women of our fighting forces-are our most valuable asset and a vital resource in the security of this nation. A capable Defence Force needs capable people. But along with the need, indeed part of the need, for a capable Defence Force is the need for the Government and the community to recognise the special demands that are placed on servicemen and women and their families as a result of service life. In establishing the Defence Force Remuneration Tribunal, the Government broke new ground in pay fixing machinery. A range of pay and allowance matters are currently being addressed. We have a positive program in place to improve defence housing, and some key recommendations of the Hamilton report have already been implemented. I spoke earlier on the strategy of defence in depth. Let me give some detail on the changing focus in defence activity resulting from defence in depth. Any force hostile to Australia must attempt to advance in ships or aircraft. Accordingly, the program gives priority to the air and sea defence in our area of direct military interest; particularly to the north as this is the region through which major threats must pass. Australia's long range strike capabilities are being developed to respond-quickly and lethally-to early warnings far from Australia's shores. These include air and naval forces. Our air strike forces operating from bases in the north will comprise squadrons of F-111 long range strike aircraft; F/A-18 multirole aircraft and P3C long range maritime patrol aircraft. In all, over one hundred of these aircraft will be capable of carrying the Harpoon anti-ship missile; the F-111 and F/A-18 aircraft are also fitted for the Sidewinder air-to-air missile, and the F/A-18 also carries the Sparrow air intercept missile. Australia's long range forces are also capable of striking land targets such as enemy bases and force concentrations. The F-111s are the central element of our land strike forces and the Government is seeking advice on a major upgrade of these aircraft to maintain them in service. Installation of the precision target acquisition tracking and designation system in the F111 bombers is proceeding with 12 aircraft now modified and in service. Six million dollars has been allocated to the project this financial year. The effectiveness of the F/A-18s for long range missions is being greatly enhanced by the Government's decision to provide aircraft refuelling. The first of the RAAF's four Boeing 707 aircraft to be fitted with this capability will be available in late 1989 or early 1990. We are also completing a comprehensive network of air bases in the north to support these operations. In addition to the major airbase nearing completion at Tindal, a bare base exists at Learmonth in Western Australia and another is being built at Derby in north-west Western Australia. The Government also intends to build an airfield on Cape York Peninsula and to have it operational as early as possible in the 1990s. Recent measures to rationalise assets and boost northern surveillance capacity have included changes to patrol boat basing. Of the five Fremantle class patrol boats based at HMAS Waterhen in Sydney, one will transfer to Cairns, two to Darwin, and the remaining two will transfer to the reserves-one for the Sydney port division and one for the Melbourne port division. This shift is a good example that cost cutting and strategic concerns are often compatible if innovative management is brought to bear. The shift to Cairns is both good defence and good economics. The operational expenses of commanding the patrol boat fleet from Cairns are considerably less than from Sydney. The strategic advantages are that the patrol boats will have quicker access to, and extended cruising time in our northern waters. The Cairns command basing is likewise more relevant to the increased emphasis on patrol boat activities in the south-west Pacific. Another initiative is the Government decision to strengthen our northern defences by basing major elements of the Australian Army permanently in northern Australia for the first time in peacetime. Two cavalry regiment of 340 men and associated vehicles will be based in the Darwin area. This transfer will be complete by the end of 1992. The White Paper goal of greater defence self-reliance has resulted in greater priority being given to the reserve forces. One thing is crystal clear-we cannot achieve self-reliance without the reserves. Gone are the days of the reserves being seen as providing a basis for expansion during national mobilisation in some distant future. The reserves are an integral and essential part of our defence planning and of our force structure now. The role of the reserves is being substantially widened. Navy reservists will play a vital role in mine countermeasures to safeguard our ports and shipping lanes, while RAAF reservists will be integrated into various units of their host formations to provide an expanded capability. It is in the Army Reserve, which provides the majority of reserve manpower, that the introduction of a total force concept can most clearly be seen. `Total Army' means integration of regular and reserve forces at unit and formation level. This will allow elements of an upgraded reserve to enter the operationally ready first line, while the remainder will form the important base element for any rapid expansion at a time of increased tension. The Army Reserve will be required to assist in the surveillance of the country's north. In recent years increasing emphasis has been given to regional surveillance units in the north and north-west and these are predo-minantly reserve units. Access to local knowledge and skills in remote areas of Australia could prove vital for the early detection and countering of a military threat. In the more credible contingencies most likely to occur in the north and north-west of Australia, the Army Reserve will have a critical role in the protection of key areas, releasing regular units to conduct offensive operations. Such key areas would include protection of the Darwin-Tindal region, and the Learmonth, Derby and Cape York airfields, and other civil and industrial infrastructure. It is intended that the reserves take a greater responsibility for heavier capabilities, such as tanks and medium artillery, as part of the expansion base. One armoured regiment, for example, will become an integrated regular and reserve unit. The reserves now have a sense of purpose and they can take pride in the fact that they will be directly involved in the defence of Australia. Reserve recruitment and retention rates are both up. Total reserve force strength increased over the year from 25,977 on 1 July 1986 to 27,673 at 30 June 1987. The strength of the Army Reserve at 30 June this year was 24,632, which was 132 above the target strength of 24,500 for 1986-87 and closing in on the authorised ceiling strength of 26,000 which is to be achieved by 30 June 1988. The retention rates are comparable with other Western nations and, indeed, are the best figures in well over a decade. One further initiative is central to the Government's perception of the new role of the reserves. Legislation passed in June of this year for restricted call-out of reserve forces in situations other than in war or a proclaimed state of defence emergency is a key factor in defining the role of the reserves in the full range of credible contingencies. This means that reserves are now available to be used in the sort of low-level threat which could emerge with relatively little warning. Steps will be taken to protect reservists' employment following call-out. Although defence self-reliance is the major theme of the White Paper, the Paper makes it quite clear that this can be achieved only within our current alliance framework. The U.S. alliance does not suggest an unhealthy dependence on the U.S. rather it results from a mature recognition by both nations that their own self-interests are best served by the relationship. Much of the debate in the community on the value of the U.S. alliance remains sterile. There is too heavy a focus on very unlikely contingencies such as global nuclear war or on the reliability of either partner to guarantee uncritically a force commitment on the basis of the other partner's political judgment. This level of debate is misleading. The nature of an alliance partnership where a threat is not clear cut is always going to be more subtle and complex. In such circumstances the U.S. alliance allows us to maximise the options we have in any crisis that is likely to emerge. From Australia's point of view that results in defence, not dependence. If we were to be involved in a conflict our first request to our ally would be for that which is easy to deliver-intelligence, diplomatic support, supply of vital parts and so on. An opponent wishing to escalate the conflict further, would have to consider the consequences of involving the U.S. more fully. Although these questions are hypothetical in nature I raise them because they go to the heart of considerations which make defence self-reliance a realistic policy. More concretely, the alliance provides immediate benefits in the influence it gives us in the arms control process and the contribution we are able to make to deterrence through our co-hosting of the joint facilities. Another advantage Australia derives from our relationship with the U.S. is that we have access to technology, equipment and intelligence that would otherwise be unavailable to us. Consequently Australia is able to maintain a level of defence capability that enables us to realistically aim for defence self-reliance, and at a cost that is acceptable to peacetime governments facing periods of economic stringency. This Government realises that a positive contribution to regional security is an essential part of our contribution to the Western alliance. Consequently the White Paper focuses attention on the region of our northern approaches and to the south-west Pacific area. As a result of this emphasis Australia supports defence co-operation activities with regional countries which share a similar strategic outlook. As I announced in February this year, this Government now gives defence co-operation with our neighbours in the South Pacific the same priority as that given to our older and more substantial defence relations with the nations of South East Asia. This co-operation is being mainly directed towards assisting with the maritime surveillance of their exclusive economic zones. In the current year, additional resources will be devoted to this assistance, principally the Pacific patrol boat project, development of national surveillance centres, RAAF long range maritime patrols, and RAN ship deployments. The estimated cost for the defence co-operation program in 1987-88 is $58.3m. This represents an increase of $3.7m on last years expenditure. Through our involvement in the defence co-operation program and through the continued consultations and contacts with military and defence officials from nations within our region, Australia is able to actively promote shared strategic concerns and contribute to developing regional stability. This, in the long run, is the best form of self-defence. I turn now to the area of improved efficiency. It is apparent that the pursuit of improved efficiency and productivity is a considerable challenge in an organisation as diverse and complex as defence. At the same time, because of the extent of the community's resources we consume, there are major benefits both to the defence area itself and to the community at large if we can improve our capacity to meet our objectives in a more cost effective fashion. I see it as a major task to stimulate an appreciation of the importance of achieving the best possible value for expenditure of the defence dollar. The defence organisation is undergoing a period of rationalisation to tailor the organisation to meet the economic and strategic realities of the 1980s and the future. This is not a `cutting for cutting's sake' program but a responsible and orderly process of adjustment that makes it possible to contain defence outlay while building up defence capability. More efficient management will mean that resources will be shifted to where they are needed-to the sharp end. A leaner, more streamlined organisation will be created. As the organisation is trimmed, so costs will be trimmed-thus releasing more of the defence dollar to increase combat effectiveness. To this end, the Department of Defence has instituted a management improvement plan that has identified and set in train substantial changes to its structure aimed at improving its corporate management and the drive for greater efficiency. We are currently spending in the order of $2 billion per annum on new facilities and equipment. We are presently managing some 140 different capital equipment and facilities projects, each costing more than $5 million. Defence capital project management is marked on the whole by high investment, high risk, technical complexity and the potential for international collaboration. Managing the procurement of major capital equipment therefore presents the project manager with many challenges not shared by his or her contemporaries in other areas of management. Defence will continue to place a high priority on the training of project staff with continuing in-house training on all aspects of the procurement process, and by the establishment in 1988 of a masters degree program in capital project management at a tertiary institution. New demands for civil manpower are being generated at a time when the Government is conscious of the need to keep tight control over the numbers of personnel in public employment. A revised approach to manpower is being developed as part of the five-year defence program. The proposed strategy includes the following elements. We will meet the Government's `across the board' efficiency dividend. Three per cent of the 3.75 civil manpower reduction required over the next three years will be achieved in this financial year. We will continue a vigorous program of rationalisation of the workforce in the defence dockyards and production establishments. A high percentage of the manpower savings achieved in the Office of Defence Production and elsewhere in Defence will be used to strengthen high priority areas requiring additional staffing. We will pursue a program of conversion of some service posts to civilian ones using some of the civilian savings achieved from elsewhere, so as to release highly-trained service personnel for redeployment in accordance with Defence Force priorities. At the same time, there will be a cut of more than 1,300-to 38,369-in the approved average staffing level for civilians. And we will further develop our capacity to meet our existing and new commitments by a vigorous program of management improvement based reviews and studies, which will include the rationalisation of functions and the contracting out of certain activities. As the scope exists for overall productivity improvement in the use of our personnel resources, manpower and management arrangements will be major preoccupations over the next 2 to 3 years. Specific measures are being addressed across the entire organisation. The rationalisation of the work force in the Office of Defence Production, while achieving a better balance between the size of the work force and existing work load, is only partially complete and will be pursued rigorously over the next two years. The Government Aircraft Factories have now been established as a government owned company. Williamstown Dockyard is being sold as a going concern as part of the rationalisation process. Restructuring of the munitions factories has resulted in more direct working hours from less people. These rationalisation measures in the Office of Defence Production are being undertaken so that the extent of government subsidy to defence production establishments is reduced significantly and the funds saved are directed to other areas of defence priority. A review of defence logistics is currently being undertaken. This is aimed at: improving performance and effectiveness across the range of logistics functions, significantly reducing costs, reducing requirements for service manpower and thus making manpower available for other ADF priorities, rationalising, to the greatest possible extent, property holdings falling within the defence portfolio, rationalising systems and approaches to logistics, putting authority closer to the point of action. The longer term benefits and savings will be considerable. I expect rapid progress from civilian and service management towards changing some traditional approaches to defence logistics. There will in future be greater focus on: cost consciousness, greater authority being vested in individual service offices closer to the point of action (together with greater accountability for decisions actually made), introduction of more commercial approaches including the provision of some services by contractors. The heavy burden of day to day logistics works will continue during 1987-88. For example: Preliminary work on the basing of half of the fleet at Garden Island in Western Australia will continue, Work is underway to develop a bare base airfield on the Cape York Peninsula, Planning is well advanced on facilities associated with the move of the 2 Cavalry Regiment to the Northern Territory, New measures to merit better management of information throughout the department will be introduced, The development of a modern, common-core computer based supply system will continue, Logistic support arrangements with other countries in South East Asia and the south-west Pacific region will continue to be developed. Recent months have also seen major initiatives for management improvement within the services. Efficiency measures are to be effected across the board and the services are playing their part in ensuring that the defence dollar is wisely spent. It is indeed very much in the interests of every member of the Defence Force because the savings mean more defence capability not less. This equation is unprecedented in Australia's history. The new personnel resource strategy for the Defence Force outlined in the White Paper will be implemented in 1988. Part of this important initiative involves moving away from undue emphasis on the strength of the Defence Force on a particular day each year and towards the balancing of ongoing activities, recruitment and sepa-rations to produce an average strength over the year. More significantly, the new strategy identifies separate average staffing levels for the year for an operational force of trained personnel, and for a training force comprising personnel undergoing pre-employment training. When higher than normal separation rates are experienced, the training force will be supplemented to maintain the level and capacity of the trained force. These concepts will allow the strength of the training force to rise and fall in parallel with variations in separation rates while maintaining the trained force at the strength necessary to meet the objectives set for it by Government. The manpower resource available to the ADF in 1987-88 will provide an operational force with an average strength of some 63,000 trained personnel supported by a training force of some 7,000 and active reserve forces of 30,800. The planned average regular strengths for 1987-88 are: Navy 15,657; Army 31,746; Air Force 22,612. This strategy will improve the management of defence manpower by allowing service chiefs to allocate resources in a clear and defined manner. In this statement I have highlighted the main features of the defence budget and shown how it is tailored to meet the real defence needs of Australia. The significance of this budget is that it shows what can be achieved in improving defence capability when the Go-vernment gives clear guidance, sound strategy and defined priorities. This budget is not a formula for less defence, but a re-ordering of practices and procedures designed to get the utmost benefit for the taxpayer's dollar that will provide dividends through to the start of the 21st century. The 1976 White Paper mooted the notion of self-reliance but failed to grapple with the specifics-that is, the force structure necessary for such a defence strategy. And even that germ of an idea was not allowed to come to fruition because of the coalition Government's failure to implement any measures that would have given this country a self-reliant defence policy. Lance Barnard began the process of re-thinking Australia's real defence needs some 15 years ago and once again it is a Labor Government that has brought that period of review to a close. A revolution in defence planning and in shaping defence capability means that this Government is re-shaping the Defence Force for the 21st century and not leaving it and the Defence Force with the inappropriate legacy of the 1960s. Senator ROBERT RAY —I move: That the Senate take note of the statement. Senator MESSNER(South Australia)(11.00) —The statement that is before us today is certainly a statement on defence but it is not about the defence forces as such; it is about defending the reputation of the Minister for Defence (Mr Beazley). This statement follows the Budget of only a month ago and it gives us some outline of what money the Government expects to expend this year. There is not one new word in that statement, nor does it add anything further to the interests of the defence forces or Australia's defence at all. The whole statement has been put down merely as an attempt to make it clear that Mrs Kelly is apparently doing something within the Department of Defence, as the junior Minister, with Mr Beazley, who has disappeared without trace since the introducion of the report of the Dibb Review of Australia's Defence Capabilities about six months ago. Senator Robert Ray —You are joking. Senator MESSNER —It is merely a cheap promotional exercise obviously to shore up Mr Beazley's reputation. In the 27 pages of this document, if I can call it that, only one paragraph actually talks about the personnel who constitute the defence forces. This has to be a great oversight; it is certainly most extraordinary in light of the very acute problems that are obviously evident in the defence forces today. We have heard in this chamber my colleagues Senator Newman and Senator MacGibbon speak on the issues of defence morale and on occasions at length about the numbers in the forces. These issues are of great concern to Australia if changes caused by low morale are occurring within our total defence capacity. The number of people who are resigning from the forces is continuing to grow rapidly. During the first quarter of 1986-87 actual wastage was 128 compared with 98 in 1985-86. Over this period changes in staff personnel have cost the taxpayer some $350m. That is a large chunk of absolutely unproductive dollars that could otherwise be better used in the defence of the nation. Clearly, Mrs Kelly, who is Mr Beazley's junior, does not appreciate, or in any way understand, the magnitude of this problem. Let us just go through a few of the statistics. For the first six months of this year losses from the armed forces totalled 4,730 men and women, and in the full year it is estimated that that figure will reach 9,500. These figures are a record. By comparison, in 1986 the losses were 7,909; for the year before that, 5,853; for 1984, 4,600; and back in the golden years of the Fraser Government in 1983, 4,549. Under this Government the decline of, and wastage in, our precious defence forces has doubled. It is another record of the Hawke Labor Government about which we do not hear Mr Beazley, Mrs Kelly or Mr Hawke talking. It is no wonder that this is happening because the figures obtained from reliable Defence Department sources indicate that in July 1,000 people left the defence forces compared with 823 in August. So the number appears to be escalating rapidly and it is becoming quite frightening. That figure compares with about 700 in May and June this year. The June figure, which itself was a record figure, was greeted with outrage by all sections of the defence forces. The figures for July and August include a loss of 215 commissioned officers. We are seeing a rapid collapse of our Defence Force numbers. This means that in this current year we can probably expect 10,000 people to leave the defence forces. In percentage terms, that represents an increase of about 25 per cent over the last financial year. To put it another way, 25,000 Australian Defence Force people have walked away from the forces over three years, and that is rapidly approaching the total number who are actually in the regular Army at this time. That just shows the dimension of the problem that we are facing. On the projections available, the defence forces will probably also lose 12 1/2 per cent of their total officer corps this year. One in eight officers will resign. No defence force in the world can sustain wholesale losses on that kind of scale. I have some other figures which are of equal interest and importance to the Senate. I refer to the figures for pilots in the Royal Australian Air Force. This is perhaps the best example of what is happening because we all know how valuable pilots are and how expensive it is to train pilots for the defence forces. In the three months to September, between 70 and 80 pilots resigned. That compares with a yearly average of 47 over the past 10 to 15 years. So in three months we have lost nearly 80 pilots, compared with a yearly average over a 15-year span of 47. Even last year the figure was 107. This problem clearly shows the depth of concern in the defence forces which is not being properly addressed by this Government. The failings of this statement are monumental in that it does not address at all the most importance aspect of the whole Defence Force problem. One wonders what possessed the Government to introduce this statement, especially when the Manager of Government Business in the Senate, Senator Evans, who is supposed to be trying to work to some kind of legislative timetable, complains bitterly about the time taken in the Parliament by independent, Opposition and Australian Democrats senators in raising issues of real concern. Yet he wastes time on stupid reports of this kind which add nothing to the total fund of knowledge and which can be ridiculed, and will be ridiculed, by informed commentators and by those in the defence forces who really know the problems. It is pretty clear that neither Mr Beazley nor Mrs Kelly knows the problems. We have only to refer to some of the comments made by the Australian Defence Force chiefs, which are totally at variance with the carefully worded and very soothing statements incorporated in this statement. I refer to the fact that Mrs Kelly and Mr Beazley are tending to play down the morale problem which is rapidly developing within the defence forces and which, of course, is clearly evident in the present resignation rate. The Defence Force chiefs have been saying something totally different; that these resignations are having an enormous impact on the morale of our serving personnel in the defence forces. This is obviously in direct conflict with what the Ministers say. Clearly, we have first to ask whether the Ministers are properly in charge of their departments and are getting proper advice. It is clear from the words of the Defence Force chiefs that that is in question. Secondly, are they just wanking and trying to pull the wool over the eyes of the Australian community, as we are used to seeing the Prime Minister (Mr Hawke) do in matters such as the economy? Senator Tate —I am not sure that that is parliamentary, but I do not dare raise it. Senator MESSNER —Well, it is about time the Minister woke up. Obviously, statements such as this only bring into disrepute the capacity of Ministers in the Hawke Labor Government effectively to administer their departments. We are getting these kinds of useless statements, which add nothing to the general fund of knowledge and which certainly provide no real basis for debate in the Parliament. Nevertheless, my colleagues in the Liberal and National parties will be raising in this debate the most significant and difficult areas of concern, making sure that the people of Australia get the message about the failures of this Government in defence, just as it has failed in so many other areas, particularly in the management of the economy. Senator SANDERS(Tasmania)(11.09) —This post-Budget statement by the Minister for Defence (Mr Beazley) indicates that the Minister and his Government are completely out of touch with the military requirements of the late twentieth century, and completely out of touch with developments which are taking place worldwide. I am certain that they are following the line that their overseers in the United States of America lay down for them. It is obvious, in looking at this paper, that that is the case. On the first page the Minister states: This Government believes in a self-reliant defence of Australia. It believes that our people should know that this is possible, that Australia can do it, can afford to do it, and must do it. Excellent, good idea; self-reliance and an independent Australia is a wonderful idea. But are we independent? Of course not. Look at our equipment purchases. They do not suit our requirements; they suit the requirements of the United States. That is why we have FA18s and nuclear capable frigates. We are equipping ourselves, at great expense to the taxpayers, with American equipment to fight an American war with nuclear weapons. That is the US strategy, and for those who doubt it, let us look at what Captain Linton F. Brooks, a US National Security Council member, says in the recent edition of the proceedings of the US Naval Institute. He says that the American naval or maritime strategy is a nuclear strategy. It involves the horizontal escalation of any conventional war-in Korea, Europe or anywhere else-into a nuclear war. It has a policy of striking against Soviet ballistic missile submarines. Australia is involved in that in two ways. First, we have nuclear capable aircraft and ships and, secondly, we have the base at the North West Cape, which would give the signal for such strike action. We are implicated in all of that. It does not defend us in any way. In fact, it escalates the possibility of nuclear war and puts us right in the big league of nuclear warfare. There are some significant statements on page 19 of the Minister's statement concerning the `joint facilities'. It is interesting that the Hawke conservative Government simply does not have enough guts to admit that these are US bases. The US knows that they are US bases and it refers to them as such. But our Government is cute. It does not want to admit that they are US bases; it calls them the `joint facilities'. It states: More concretely, the alliance provides immediate benefits in the influence it gives us in the arms control process and the contribution we are able to make to deterrence through our co-hosting of the joint facilities. Somehow we have been sold this idea-although not many really believe it-that these bases are used for verification, and thus for peace. Is the North West Cape used for verification? Of course not; it is a communications base. It transmits information to US nuclear submarines. What about Pine Gap? Is it used for verification? Not really. Pine Gap is an intelligence gathering operation for the Central Intelligence Agency. It gathers intelligence all right, but it is not used for verification. What about Nurrungar? Well, it is not used for verification either. It is actually the first step in a star wars system. It operates infra-red detecting satellites. In terms of satellite technology, what we use for verification are not geostationary satellites, monitored from Australia, but polar orbiting satellites which pass over the United States and can release their information directly to the United States or any of its territories. Therefore, these bases are not used for verification. In addition, a development which is now taking place and which is apparently unknown to our Government is that the Soviets and the Americans are close to an agreement on on-site visitation of their nuclear facilities. If we have people standing around and looking at these facilities, any verification role that might exist in Australia-and I do not believe there is any-will be redundant. The truth, which everyone has accepted, although I do not think we really realise the ramifications-we have not thought it through-and which even our Prime Minister (Mr Hawke) has admitted, is that the bases make us nuclear targets. So, far from being a nuclear umbrella, they are a nuclear lightning-rod. Nothing in this statement gives us any inkling of who the enemy is. If we are to have a defence program, the Government ought to outline who the enemy is, but there is no such outline. We do not know who the enemy is. It is not spelt out in this paper. In fact, the Government is pretty coy about the whole thing in general. Is it perhaps the Soviets? Are the Russians the enemy? Do they covet our territory? Whilst they might come after the US bases on our soil or after any nuclear powered or armed ships of the US fleet in our harbours, they are not our enemy and they do not covet our territory. Even if they did, does anyone in this chamber or in this Government think they have the capability of launching an amphibious assault on Australia when they can barely maintain an operation in Afghanistan which entails only taking trucks across the Soviet border? It is patently foolish to believe that the Soviets could be a military threat to us. What about the Japanese? Incidentally, as we have said over and over again, the ANZUS Treaty was set up in the 1950s to protect us from the Japanese. The Japanese were about to re-arm. Australia and New Zealand were quite nervous about this, and they talked the United States into a treaty to protect them from the Japanese. Are the Japanese our enemy? No. They own the company. They get everything they want here. They do not have to occupy it. They have created their great dream for a co-prosperity sphere in the Pacific. They have actually completed their program here. They are not our military enemy. So who is the enemy? The political awareness shown by politicians not only in Australia but around the north Atlantic area is interesting. I recently returned from a delegation to the meeting of the North Atlantic Assembly in Oslo, which was a meeting of politicians involved in the countries which make up the North Atlantic Treaty Organisation (NATO). In the one short session devoted to the Pacific, we-the Australians and the Japanese-were lectured by a number of highly placed English lords. The Japanese were lectured on the subject that they should re-arm, that they were not spending enough on armaments-only 1.5 per cent of their gross national product. They were told that they should re-arm. I think that the Japanese were polite enough not to show their surprise and disgust at that. But it is the thinking of politicians that we must re-arm constantly. In fact, there is a movement in the other direction which is not reflected in this statement or any other statement by this Government. The fact is that disarmament is proceeding apace. We have heard of the intermediate range nuclear forces (INF) negotiations, which will come to fruition. There will be a reduction in those forces. There will also be a reduction in the strategic nuclear weapons forces. This is very threatening to the defence establishment, and it was very threatening to NATO. During the North Atlantic Assembly meeting, we were told over and over again that we must guard against disarmament. There was a dual message: we must guard against disarmament, but if it happened, it would happen because we had a lot of weapons and it could not be in any way attributed to the activities of the peace movement-which, of course, is absolutely false. It was the peace movement that brought about the disarmament negotiations in the first place. These military planning establishments fear the outbreak of peace. They worry about conventional warfare. They say, `If we lose our nuclear deterrents, we will need more conventional forces'. Incidentally, while I was in Brussels being briefed by the NATO staff in their headquarters, we were told by Mr Merrill Walters, the NATO Director of Nuclear Planning, and a United States colonel named G. R. Akam that NATO's flexible response depended on nuclear weapons. Their opinion was that a nuclear war could be limited and winnable. A limited and winnable nuclear war! I asked these military planners, `How do you limit it?' They said, `We can do that. We have ways'. I do not believe that they have ways. This is the sort of thinking that is reflected in this defence statement. But there is a change taking place. In East Berlin on 28 and 29 May this year, the Warsaw Pact nations got together and decided on a policy of military sufficiency. This reflects the Gorbachev line of reduction of nuclear weapons; but he is also going for a reduction in the number of conventional weapons. One may be sceptical as to his motives, but if one looks closely one will see that they are purely economic. One does not have to look any further than that. It takes a lot of money to maintain a large conventional force; it takes a lot of money to maintain nuclear weapons. He would like to cut back. Military sufficiency, in the Warsaw Pact lexicon, means a defensive posture-a posture in which they maintain enough troops and enough weaponry to repel an attack, but do not intend to launch one. This has massive ramifications for Europe. There are 450,000 allied troops on the ground in Europe. If the Warsaw Pact starts to pull back its troops, these troops will also be pulled out. Having spent a month in Europe, I know that the Europeans are universally sick and tired of being in the main area of potential nuclear conflict. They want out. People around the world are saying, `Enough. Enough of this nonsense of the military planners controlling our future. It is time for the people to take over'. And the people are taking over. What should we be doing? We should be taking cognisance of the onrushing advent of world peace, at least in a super-power sense. It is foolish for us to ally ourselves as closely as we are with the nuclear capability of the United States when, in fact, the United States will not help us in any foreseeable conflict in the future. The only potential enemy that anyone has been able to identify in this area is Indonesia. I am not saying that we shall be going to war with Indonesia, but defence analysts have said that Indonesia is our only potential enemy. Can these forces that we now have help us in a battle with Indonesia? No; not much. Can we count on the United States to come to our aid in any battle with Indonesia? No, we cannot. Certainly, under ANZUS the Americans are not required to. They are required to hold consultations with us. They did not step in in the 1960s when Indonesia moved into West Irian, and they would not step in in a battle with Indonesia. Why would they not step in? Because of their own interests in Indonesia, the oil and the tin, and the fact that they do not want to interfere with Indonesia and perhaps allow Indonesia to become communist-led. They will not come and help us. Many people say, `Well, the Americans helped us in the battle of the Coral Sea'. But that was not merely because they wanted to help Australia; they needed to use Australia for a base. It was not pure altruism. Certainly, they like Australians; but as we have seen in the wheat deals and other agricultural happenings in the United States, when it comes to United States interests, they come first. United States political interests take precedence over any friendship with any other nation, including Australia. What do we need? We need to divert our defence budget away from all these nice, expensive toys for the boys that the Americans are selling us, to a more home-grown defence force which can actually defend Australia. What we have is skills in the bush. We need, perhaps, a highly mobile reserve force that can be mobilised quickly. We need the capability of transferring this force around the country. We do not have it at the moment. We need transport aircraft, close ground support aircraft and helicopters. Then we need a defensive posture. Instead of using an offensive concept, in which we project our power by means of FA18s, F111s and over-the-horizon systems, all we really need is a defensive weaponry system. Our military planners have not yet learnt the lesson of the Falklands war. They are still going for big ships and big submarines. The lesson was that one $250,000 Exocet can sink any ship around. To launch an Exocet one does not need a very sophisticated platform. It can be launched from a shrimp trawler, an F27 aircraft, or almost anything. We should be more flexible in our acceptance and our use of modern weaponry. We now have shoulder-carried weapons which can knock out aeroplanes quite easily. It is a lot cheaper by far to have a defensive posture rather than an offensive posture. It takes far fewer troops and far less expenditure of money. But it takes a commitment to the idea that we will no longer simply furnish a back-up to the United States nuclear strategy. We need to declare our independence from the United States, from any power on earth, and opt for a completely Australian-oriented defence strategy. We do not have it now. This Government does not recognise it. I only pray that, before it is too late, we do recognise it and we do take some steps to give ourselves true military defensive capability. Senator MacGIBBON(Queensland)(11.25) -The post-Budget statement on defence entitled `Defence Budget 1987-88' presented by the Minister for Home Affairs (Senator Robert Ray), who represents the Minister for Defence (Mr Beazley), is an empty, bombastic document. Parts of it are false and, in its general sense, it is totally misleading. It is totally misleading because it attempts to portray that the Australian defence forces are in good shape, that morale is high and that they have great capability. Nothing could be further from the truth. The defence forces today are facing a crisis of a magnitude that we have never before seen in peacetime in Australia. The defence of Australia is the most important duty that a government faces. However, the post-Budget statement on defence contains parts that are false and it is bombastic and childishly party political. There is no place for party politics in the defence of this country. The problems that face us are common to the defence analysts of all political parties. The support of all Australians is required in working for a stable and secure country. Therefore, to indulge in the childishness in which the Minister for Defence indulges in the closing paragraphs of the statement is absolutely beneath contempt. While I am on the subject of contempt, I am sorry that Senator Sanders gets the opportunity to speak here when he is so incorrect factually in most of the nonsense he puts forward in the defence field. The basic point of this document is that the Australian Labor Party is living up to its traditions. It treats the Australian defence forces with contempt and starves them financially. This document is an attempt to camouflage the savage cutting in funds that has taken place in the four and a bit years since this Government came to power. I would like to illustrate that by referring to a couple of points. The final five-year defence plan approved by the Fraser Government provided for an average rate of real growth in total defence outlays of 6.3 per cent for the period 1982-83 to 1986-87. When this Government came to power it revised that 6.3 per cent real growth figure down to 4.5 per cent. In the Government's May 1985 economic statement it cut the 4.5 per cent real growth down to 3.1 per cent. In the notorious May 1987 economic statement the growth rate was taken into a negative position. In other words, defence funds have been cut and they have been cut to a staggering degree-in the Minister's own words-of $1.5 billion. In the next three years $1,500m will be taken out of the defence vote. That reflects this Government's priorities in defence. We have not only had funds cut back. At present, circumstances are such in regard to long term contracts-contracts which the Government inherited; it did not initiate them-for the purchase of the FA18 and frigates that the amount of money in the annual defence budget going to new capital equipment has almost doubled. Again, in the Fraser years of 1982-83, the percentage of government expenditure on capital equipment and defence was 17.4 per cent. By 1984-85 it had grown to 25.9 per cent. I have not seen the figures for this year, but probably close to 27 per cent or 28 per cent of the defence vote would be going to capital equipment. That approximately 10 per cent capital equipment increase to 27 per cent or 28 per cent in a roughly constant defence budget means that things such as training, conditions of service and operational readiness of the Services have suffered because the Government has not increased the vote, as it needed to do. The facts of life are that a defence force and a defence capability are expensive. They cannot be bought on the cheap. The name of the game is to decide the priorities and to get those priorities as efficiently as possible. The budget cutting has had an absolutely catastrophic effect on morale. Despite what the Minister, with his adulation of equipment, is always saying, there is no more important factor in defence than the men and women who wear the uniform of the Australian defence services. They have been utterly devastated by the contempt of this Government for their conditions of service. If we accept the Minister's assessment in the defence paper of a total permanent strength of 63,000 men and women in the Australian defence forces, since Labor came to power we have seen a resignation figure in excess of 33,000 men and women, which represents over half the personnel. Those service people who have left are middle ranking officers in the mature part of their service. At great expense to the Commonwealth they have been trained in the various arms of the Services. We have lost senior non-commissioned officers. When we start losing senior NCOs we pay a grievous price. I regard those WO1s, and their equivalents in the Navy and Air Force, as the finest members of the Australian community. They are mature, sensible and enormously capable people who simply cannot be replaced in a hurry. These senior NCOs represent the heart of any service. They are leaving in their droves. They are leaving because, for them, service in uniform under this Government is utterly pointless. We are also losing technicians. These are people who serve in the three armed Services out of a sense of commitment to their country, knowing full well that as electronic engineers and technicians in civilian life they could earn two or three times the amount they presently earn. These people are happy to work for their country while they feel it is all worth while. But they know now that it is not worth while, and they are leaving. Senator Messner raised the matter of the resignation of pilots. We are facing a scandalous situation here. For 20 years the loss rate of pilots from the Royal Australian Air Force averaged 42 pilots a year. In the last three years of the Labor Government we have seen 60, 70 and 107 resignations of pilots from the Royal Australian Air Force. In the three months of this financial year, that is in July, August and September, between 60 and 70 pilots have resigned or have applied to resign. We simply will not have any pilots in the Air Force at the rate we are going. This great Service, this very professional air force, simply cannot operate at present because of the loss of pilots. We have three fighter squadrons, one strike squadron and, in support, a training squadron with a reconnaissance capability in No. 6 squadron. We have No. 10 and No. 11 squadrons, the maritime reconnaissance squadrons; we have two C130 transport squadrons and a Caribou squadron. We have 10 squadrons in operational command. Probably we have a pool on strength of 15 pilots in most of those squadrons at any time. That represents 150 pilots. However, we lost 107 pilots last year. I know that there are probably 200 or 300 other pilots in the Air Force pushing desks, but they are not operational. They are people who have gone through the active flying part of their lives. They are senior officers and people in administrative roles. The cost to Australia of all of this is catastrophic. It cannot be defended. Our first line of defence is the air. We have lost the people in whom we have invested millions of dollars in training. Probably it costs $2m or $3m to train a pilot. They cannot be replaced overnight. The tragedy is that we are now in a position in which the capabilities of the Australian Defence Force have been lost, probably for a generation-for 10 or 15 years-because we have lost key personnel. We cannot train them overnight. We cannot build up the doctrine and the capability the Defence Force must have if it is to be ready for instant service. The training cost of all this is enormous. We are in a position of being short of money and people. However, because of the very high rate of resignations we have to devote an undue percentage of the defence forces to training. Therefore we have fewer personnel available for an operational role and we have a greatly increased budgetary cost. It is all so silly. All it needed was a little more money. Let us look, for example, at something that the Air Force had to do in relation to pilots. Last year the defence forces had to pay $39m in fringe benefits tax. Could anything be more absurd than a government department having to pay fringe benefits tax? Yet the defence forces lost $39m from their budget. If that had gone into supplementing the pilots' incomes we would have retained 90 per cent of those pilots. It probably would only have needed a few thousand dollars a year in the form of a decent flying allowance for these people to keep them in the Services, and we would not have had any trouble. On page 2 of today's Australian a new Minister, Mrs Kelly, is quoted as saying that the defence forces had to accept the fact that high wastage rates were good for morale. I do not know Mrs Kelly, but she must be as silly as Senator Ryan. To say that high wastage rates are good for morale is just as silly as Mr Hayden saying in the early days of the Hawke Government that inflation is good for us because our house is worth more or Mr Whitlam saying, when he was spending all the money we had in foreign reserves, `We do not need foreign reserves. They mean nothing to us'. It is no wonder the Services are in total despair when a Minister responsible for them says that high wastage rates are good for morale. Senator Newman —What a nonsense. Senator MacGIBBON —It is absolute nonsense. I think it is criminal incompetence to have such people in a ministerial position dealing with departments about which they simply know nothing. Let me turn to the statement. I do not want to go through it in detail; it does not justify that. On page 5 of the Minister's speech he stated: The central message of this defence budget is that the White Paper is on track and will stay on track. On the previous page he stated: I am pleased to be able to report to the Parliament that the ADF is responding very well. The Australian Defence Force is responding so well that it is voting with its feet. Under this Government we are experiencing huge and unparalleled resignations from the Services. The central message of this defence budget that the White Paper is on track and will stay on track is arrant nonsense. Nothing could be further from the truth. The White Paper was a good paper because it was prepared by professionals, unlike the Dibb Review of Australia's Defence Capabilities which was characterised by its professional vacuity. The White Paper demands a certain minimal level of support in a budgetary way and it simply has not had it. Instead of the defence vote getting an increase of about 3 per cent per year in real terms, which is the bare minimum needed to support the White Paper's predictions, it will be cut by $1,500m over the next few years. In the next part of the Minister's speech he deals with equipment. That section is padded out. Some of his claims are quite incorrect. He talked about the Jindalee project. This Government has an obsession with the Jindalee over-the-horizon radar system, and it has an obsession with it because it seems a cheap option for satisfying the essential requirement of knowing who is coming and going around the northern half of Australia. That is an absolutely fundamental requirement, but Jindalee will not satisfy it. Jindalee is a great development. Over-the-horizon radars go back almost to the dawn of radar, certainly to the late 1940s. I do not want to go through the technicalities of it, but Jindalee is still in its development phase. It probably needs five to 10 years of work because the great difficulty with it is the software programs and computer systems which analyse the signals that come back. In no sense will Jindalee, even when it is fully developed, be an effective surveillance system. It is a very coarse and crude system. It will tell us in certain conditions that someone is out there; it will not tell us in all conditions that someone is out there, and it certainly will not identify people, whether they be friend or foe. Nor will it identify what they are doing. We have to follow up the warnings and look at them in detail. Other systems have to be provided, such as an airborne early warning system. If the Government had not had the hide to take $39m off the Department of Defence last year with the fringe benefits tax, we could have had one airborne early warning aircraft. The Government is not concerned with knowing who comes into this country. I do not wish to take much more of the time of the Senate in going through this statement, but there is not a word in it about the bloated number of public servants in the Department of Defence and the effect that that is having by eating up money which should be going into operational capability, and the fact that these people second guess the professionals in the defence service. A classic example of this is the decision on the PC9-the new basic trainer for the Royal Australian Air Force-to which the Minister refers in his statement. The Air Force wanted the PC7, which was a much cheaper aircraft and perfectly adequate for the role of a trainer. However, for some reason the civilians-this was established at an Estimates committee hearing-wanted the more sophisticated PC9. The cost of the PC9 is about $1.5m to $1.7m, as against $700,000 for the PC7. Again, if the difference in that contract money had been paid as a flying bonus for the Air Force, we would not have lost the huge number of pilots we have. The Minister made the following statement about the PC9: A new training aircraft, the PC9, is being built in Australia for the Air Force. It is the best basic trainer aircraft in the world, and it will allow the Air Force new, more flexible and more economical training programs. That is wrong. The PC9 is probably the most expensive training aircraft in the world and its very expense imposes very high costs on the Air Force. It will not provide a more economical system of training. We have here an aircraft whose performance is better than that of a World War II fighter. It is better than that of a Mustang or a Spitfire. We cannot take an 18-year-old who has never flown and put him in an aircraft which has those capabilities, and which costs nearly $2m, and say, `Go and teach yourself to fly'. It does not happen that way. So we will have to have a basic trainer inserted below this one, and it was not the Air Force's intention to have a basic trainer below the alleged basic trainer replacement. So we have the cost of that, and we also have the cost of operating the PC9. It is a quite sophisticated aeroplane, though it really is nothing more than a training aeroplane-it has a huge engine, and its operating costs on an hourly basis are very high. Again that money has to come out of the defence vote. I would argue that we do not need that capability in a training role. I come back to the point at which I started. There is nothing in this statement which refers to Public Service interference in the Department of Defence. The failure of this Government is to recognise that the people in the Australian defence forces are human beings. The only statement Minister Beazley ever makes is that he is buying this bit of equipment or is looking at that bit of equipment. He is obsessed with toys. He has no concept that there are human beings involved who need to be supported, who need to be made to feel that they are doing a worthwhile job. These are great Australians. They are genuine patriots who are prepared to suffer all sorts of hardships and disabilities to serve the defence of this country and to keep all the rest of us safely in our beds at night. They are not people who want to be the high income earners of the Australian community. They are prepared to accept lower salaries, lower returns and all the rest of it if they feel they are doing a worthwhile job. But all they get from this Labor Government is endless kicks and the cutting of their conditions. The Government is now cutting their housing grant when they end their service. When service personnel apply for a reasonable increase in their field allowances and so on they are cut back by the appeal court. The civilian component of the Department of Defence, secure in its luxury at Russell Hill, is arguing, against the service personnel, for lower standards and is saying, `No, these fellows don't need that allowance increase'. At the end of the day they get someone such as Mr Beazley or Mrs Kelly as their ministerial representation. Even Helen Mayer, a failed House of Representatives candidate, is somehow getting into the loop as a consultant for the Department. No wonder service personnel are leaving; no wonder they are seeking careers outside the Australian defence forces. Today we have a crisis in the Australian Defence Force and this statement in no way recognises the situation that we are in. At best, it is a pathetic effort of self-deception; at worst it is a total sellout of Australia's defence for some damned disarmament document. Debate (on motion by Senator Tate) adjourned. The DEPUTY PRESIDENT —Messages have been received from the House of Representatives acquainting the Senate of membership of the Joint Statutory Committees on Broadcasting of Parliamentary Proceedings, Public Accounts and Public Works. Report of Standing Committee on Legal and Constitutional Affairs Senator JONES(Queensland)(11.46) —Pursuant to the order of the Senate of 8 October 1987, the Senate Standing Committee on Legal and Constitutional Affairs reports to the Senate the Australia Card Bill 1986 (No. 3). I move: That the report be printed. Senator PUPLICK(New South Wales)(11.46) —It needs to be clearly understood that, although this motion formally notifies the Senate that the reference of matters regarding the Australia Card to the Legal and Constitutional Affairs Committee on 23 September has now been dealt with, and, by virtue of a resolution passed in the Senate yesterday, the Committee is indicating that it has discharged its responsibility as far as that resolution is concerned, nevertheless yesterday the Senate also resolved to refer to the Committee certain ongoing matters connected with the Australia Card, with the principles which were behind the establishment of the Australia Card in the first instance. That Committee will now be looking at a number of matters, including the future of the proposed births, deaths and marriages register in the event of the failure of any of the States to assist with the provision of information; the extent to which new crackdowns on welfare cheating and tax fraud and new upgraded computer systems have obviated the original need for the system; the response to reports from the Australian Federal Police and the Review of Systems for Dealing with Fraud on the Commonwealth; the cost issues; the effectiveness of the Data Protection Agency; the need for privacy legislation; the extent of personal data held on Australian citizens by government departments and agencies; the security of the holding and transmission of that data; various questions on penalties and material available from overseas; and the usefulness of any card numbering system in achieving the objectives of reducing the extent of the cash economy, organised crime and large scale tax evasion and welfare fraud. Therefore, I think it important to place on the record that, although the Australia Card reference of 23 September has now been discharged and by this report brought back to the Senate, and although the Australia Card legislation-the actual Bill-has been withdrawn from Parliament by resolution yesterday, nevertheless the Australia Card Bill, although gone, is not forgotten. The ongoing inquiry that will be undertaken by the Legal and Constitutional Affairs Committee will allow people to make submissions to the Committee on those issues which were of concern during the course of the debate about the original Australia Card legislation. I would certainly hope, as do all members of the Opposition, that people in the community who have a concern about the issues raised, those of privacy, cost, security of data, tax evasion, welfare fraud, organised crime and all the other aspects, will understand that they will be in a position to make submissions to the Legal and Constitutional Affairs Committee, to seek to appear as witnesses before the new inquiry and to seek to participate in the activities of that investigation, which has to report back to the Senate by 1 May 1988. Therefore, I simply wanted to put on record that, although it appears, if one simply looks at the report, which is to be ordered to be printed, that the Australia Card legislation has been discharged from the Legal and Constitutional Affairs Committee, that refers only to the reference given on 23 September, and that Committee is now required to produce a much more detailed report on the issues which were behind the introduction of the Australia Card legislation in the first place. I know that the Committee will undertake that task with some enthusiasm. I have noted the muted excitement with which the Chairman and other Australian Labor Party members of the Committee have accepted the reference being made to them. I know the considerable interest with which the senators on this side who will be the Opposition's representatives on that Committee-Senators Alston, Hill and Stone-are looking forward to undertaking that task. I am sure that, when the Committee reports on 1 May 1988, it will be making it abundantly clear that the reasons that the Government put forward for introducing the Australia Card in the first place are once again shown to be false and specious. The Government's cost estimates were wildly out-- The DEPUTY PRESIDENT —Order! The motion before the Chair is that the report of the Committee should be printed. I have allowed you some latitude to develop your argument, Senator Puplick, but now you are going too far. You should wind your remarks up or confine them to the motion that the report be printed. Senator PUPLICK —You are quite right, Mr Deputy President, to say that the motion before us is that the report be printed, and I welcome the printing of this report, which discharges the obligation given to the Senate Committee on the first occasion. I simply reiterate the point that this matter is no longer to be thought of simply as having been discharged permanently from the attention of the Senate. The Committee which will undertake the investigation and report on 1 May will have all these other things before it and undoubtedly will produce, as the Legal and Constitutional Affairs Committee of the Senate always has, an absolutely outstanding report which will explore fully all the issues, conclude that the original Australia Card legislation was unnecessary and demonstrate that future legislation will be equally unnecessary. Question resolved in the affirmative. The DEPUTY PRESIDENT —Pursuant to order of the Senate of 8 October 1987, the Australia Card Bill 1986 [No. 3] is laid aside. Motion (by Senator Tate) proposed: 1. That the Senate concurs in the Resolution transmitted to the Senate by Message No. 6 of the House of Representatives relating to the appointment of a Joint Standing Committee on Foreign Affairs, Defence and Trade. 2. That the provisions of the resolution, so far as they are inconsistent with the Standing Orders, have effect notwithstanding anything contained in the Standing Orders. 3. That the foregoing resolution be communicated to the House of Representatives by Message. Senator NEWMAN(Tasmania)(11.53) —I am very keen to support this motion, especially as, only this morning, we had before us from the Government a paper which revealed the real necessity for an active Joint Committee on Foreign Affairs, Defence and Trade. The disappointing effort made in this Parliament by the Minister for Defence (Mr Beazley) in his statement `Defence Budget'-simply a snow job-is a clear indication of why we need parliamentary committees of energy and vigilance. The Government and the Minister have talked loud and long about what they will do for defence. When it comes to the point, as my colleagues Senator Messner and Senator MacGibbon have said, the Government is just not prepared to front up with the money. I would be the first to agree that the Department of Defence needs to encourage efficiency and a good use of resources. In many ways, especially in the past, the resources have not been used to the best advantage and there has been waste of various kinds. The Dibb Review of Australia's Defence Capabilities and then the White Paper led us to hope that things would be better in the future. The Minister for Defence was loud in his claims that this Government would do the right thing by the defence of this country. Yet, in the very first Budget after his White Paper we find a real cut of one per cent in the defence vote. I remember very clearly the criticism by the Australian Labor Party of the former Fraser Government-- Senator Tate —Mr Deputy President, I take a point or order. I know that Senator Newman was perhaps upset at the fact that with the intervention of these formal matters she was unable to make her remarks on the post-Budget statement by the Minister for Defence. I understand that but I ask you, Mr Deputy President, to make sure that her remarks are devoted to the setting up of the Joint Committee on Foreign Affairs, Defence and Trade and that she is not using this occasion to make the remarks she might have otherwise made if the debate had not been interrupted. The DEPUTY PRESIDENT —Senator Newman, so far your remarks have been in order but I was listening to them with some concern. The motion is a formal one to set up a committee. It would be appropriate to discuss in general terms the desirability of having such a committee, but any specific matters of current defence policy would be beyond the scope of this motion before the Chair. Senator NEWMAN —Thank you, Mr Deputy President. I accept the ruling, of course. I hope that this Joint Committee will look at a number of matters which were referred to in the Minister's statement. He has referred to a number of equipment matters. I do not intend to hold up the business of the Senate for an undue time today. I hope the Committee will look at such things as whether we should have a navy that can only sit around the coast of Australia and that cannot protect our sea lanes of communication. Senator Tate —I just ask you, Mr Deputy President, to consider your previous remarks and indicate whether the honourable senator is straying beyond the terms of the motion. Senator Lewis —Mr Deputy President, the Minister for Justice has alleged certain reasons why Senator Newman is making a speech. He does not know why she is making a speech; he only knows the subject which she is addressing. The subject before the chamber is the consideration of message No. 6, the appointment of a joint foreign affairs, defence and trade committee. Senator Newman, as you so rightly pointed out, is addressing that subject-the appointment of a committee. If the Minister for Justice wants to continue along the path he is taking, he may do so, but the rest of the business for today will be delayed by other tactics. I suggest that the Minister for Justice allow Senator Newman to get on and make her speech. Then we can get on with the business of the day. Senator Tate —I am not going to be threatened by you. (Quorum formed) The DEPUTY PRESIDENT —On the point of order raised by the Minister for Justice, Senator Tate, I repeat my earlier ruling that Senator Newman is entitled to discuss the desirability of a joint foreign affairs, defence and trade committee being set up. She is entitled to discuss in general terms what the role of such a committee should be. She is not entitled, for instance, to discuss the defence statement recently tabled by the Minister, except in general terms as far as it affects the workings of the joint committee. Senator NEWMAN —I hope that this Committee will look at some of the problems associated with the Defence White Paper, the Dibb Review, an assessment as to how far out our ships should go, what capacity our strike planes should have, and what having our Army in the north will do to logistic support. I hope that the Committee will be able to look at those matters. I hope very seriously that this Committee will look at the appalling separation rates in our defence forces, which my colleagues have referred to earlier this morning, and will act when it is made aware of the fact that Army wives are going to public meetings. This fact was set out in the Telegraph newspaper this morning. It is unheard of for them to be articulate in the public arena. They make up a most conservative and quiet community but their tempers are roused. I hope the Committee will look at what this Government has done to the defence service home loans scheme and to Defence Force retirement and death benefits. There is not sufficient time for me to explain all the other areas that I feel the Committee should look at. But it took two weeks for us to get 150 men off the coast of Fiji, with no fire and air support. A committee should look as just what that means in terms of our ability to rescue Australians who are off the coast of Australia. What would have happened in Fiji if those forces had met resistance? These are very serious questions about our ability to protect our citizens and our sea lanes of communication. It is appropriate that these areas be looked at by a major parliamentary committee. If the Government is not prepared to look at these matters, as is clearly evident by the debate earlier today on the Minister's statement-it is a complete and utter snow job-parliamentary committees must take that watch-dog role. The way the Government has been prepared to mouth the right things and not back that up with money is not good enough. I know that Senator Tate is concerned that I should canvass these views but they have to be made public. This Government is failing the citizens of Australia in the most important job any national government can do; that is, protecting the nation. Question resolved in the affirmative. Senator TATE(Tasmania-Minister for Justice)(12.03) —I move: (1) That the Senate concurs in the Resolution transmitted to the Senate by Message No. 7 of the House of Representatives relating to the appointment of a Joint Committee on Electoral Matters, subject to the following modifications: (a) paragraph (2), leave out the paragraph, insert the following paragraph: ``(2) That the committee consist of 10 members, 3 Members of the House of Representatives to be nominated by the Government Whip or Whips, 2 Members of the House of Representatives to be nominated by the Opposition Whip or Whips, 2 Senators to be nominated by the Leader of the Government in the Senate, 1 Senator to be nominated by the Leader of the Opposition in the Senate and 2 Senators to be nominated by any minority group or groups or independent Senator or independent Senators,''; (b) paragraph (5), leave out ``who shall have a deliberative vote and, in the event of an equality of voting, the Chairman have a casting vote''; (c) after paragraph (6), insert the following new paragraph: ``(6a) In the event of an equality of voting, the Chairman, or the Deputy-Chairman when acting as Chairman, shall have a casting vote,''; and (d) paragraph (7), leave out ``3'', insert ``4'', (2) That the provisions of the Resolution, so far as they are inconsistent with the Standing Orders, have effect notwithstanding anything contained in the Standing Orders. (3) That the foregoing Resolution be communicated to the House of Representatives by Message, with a request for the concurrence of that House in the Senate's modifications of the Resolution transmitted to the Senate by that House. The modifications to this motion are intended to accommodate membership requirements of independent senators. Senator SHORT(Victoria)(12.04) —On behalf of the Opposition I support the motion moved by the Minister for Justice (Senator Tate). I assume that he is referring to two documents, including the modification to message No. 7 that came from the House of Representatives, because that modification increases the membership of the proposed committee from eight to 10. The DEPUTY PRESIDENT —That is the correct motion, Senator Short. It is headed `Substitute copy'. Senator SHORT —The Opposition welcomes this motion for a variety of reasons. First, we welcome the change from the Joint Select Committee on Electoral Reform, which has existed in recent years, to the Joint Committee on Electoral Matters. This reflects two things. First, it reflects the very valuable work that the Joint Select Committee did, particularly in 1983, when it produced the most comprehensive report which, to my knowledge, has ever been done on electoral reform issues in Australia. That report led to fundamental changes to the Commonwealth Electoral Act in 1984-changes which brought in such matters as public funding of elections and a variety of other quite fundamental alterations. The Select Committee also produced a valuable report following the 1984 election which reviewed the changes that had been introduced prior to that election. This was a practical review to see how the changes worked. Secondly, the translation of the Select Committee into a standing committee not only reflects the importance of the work that the Joint Select Committee has done but also reflects the continuing importance of electoral matters to this House and to the Australian public. The terms of reference of the proposed Joint Committee are: To inquire into and report on such matters relating to electoral laws and practices and their administration, as may be referred to it by either House of the Parliament or by a Minister. As I interpret those terms of reference, and I hope this is how the Parliament will interpret them, they are sufficiently broad to encompass all the types of electoral matters that were considered by the previous Joint Select Committee because, with the passage of time-and it is four or five years since those changes were recommended by the earlier Select Committee and implemented-there is a need for continuing review of some of their fundamental bases. For example, I think we need to have another look at the whole question of public funding. There is a difference of view between the two sides of this chamber about the desirability of public funding. We in the Liberal Party of Australia have made no secret of our opposition to it in the past and that is something we should have a look at in the future-as a party and as a Parliament. Another issue that we have not looked at for a long time is the whole question of compulsory versus voluntary voting in the Australian system. I am not necessarily advocating a change from compulsory to voluntary voting, although I personally have some sympathy with that point of view, but I think these are issues which should be looked at in an evolving democracy. I hope that these considerations will be debated and reviewed by a committee such as the one we are now establishing. The Prime Minister (Mr Hawke) has been talking about extending the referendum to include an extension of the parliamentary term. Again, I would hope that that matter would be an issue for this Committee. If we are to have worthwhile, ongoing and desirable reform of electoral issues the support of all major parties will be needed, particularly if referenda are involved; otherwise there is no way in the world those referenda proposals will be passed. I hope that this Joint Committee will provide a forum for rational, intelligent and all-party-not necessarily bipartisan-consideration of some of these issues. We welcome the establishment of this Joint Committee of the House of Representatives and the Senate. We agree with its proposed membership and its terms of reference. We look forward to participating in a constructive way in its operations in the future. Senator SCHACHT(South Australia)(12.10) —I rise to support the motion. I have been approached to serve on the Joint Committee on Electoral Matters and I look forward to being able to participate in its work. When I was State Secretary of the Australian Labor Party in South Australia I was asked to give evidence before the Joint Select Committee on Electoral Reform in 1983-84 on the matters it was then considering. I believe that the Joint Committee's recommendations, which were adopted by the Parliament, were some of the most significant reforms on electoral matters at the Federal level in this country's history. I believe that the commitment to establish clearly in legislation one vote one value was an extremely important measure. I also believe that, despite some people in the community having queries about it and opposing it, public funding was a very important reform. The new Joint Committee will have to look not only at the operation of public funding, as it has been now for two elections, but also at wider issues-that is, the cost of elections. As a former State Secretary of the Labor Party in South Australia I am fully aware of the horrendous problems that all political parties-whether they be Labor, Liberal, Democrat or one of the minor parties-have about running effective campaigns and in respect of the money needed. There is now a case emerging for limits to the amount of expenditure, particularly in relation to the electronic media. Television and radio costs-particularly television-are escalating not at an arithmetic rate but at a geometric progression. That is a matter that is going to affect the operation of democracy in this country-when the ability of political parties to put their platform before the people is affected by their ability to get money. It is quite legitimate for this Committee to investigate ways of limiting the amounts of money expended. I do not know whether it is constitutionally possible to do it in a way which covers every possible avenue, but it certainly is one that I want to take up when I am on the Committee. I also believe that in the area of electoral reform we have a further need in this country to debate, argue and commit the Australian community to the concept of equality of representation. It is well known in this chamber that there are still three States that have, in some form or another, what one would call `gerrymandered electorates', some form of limited franchise or malapportionment of boundaries. There is the well-known case in Queensland, the Western Australian situation and there are some queries about the upper House in Tasmania. The Joint Standing Committee, as a permanent committee, has an obligation to educate the Australian people about the fact that if one wants democracy in this country all people must be treated equally in their opportunity to participate in voting and electing. I hope that as a matter of urgency the Committee can deal with the particular problems in those States and with the recent events in Queensland, where there have been amazing allegations of corruption in the police force. I always remember the then Premier of South Australia, Don Dunstan, who fought against the gerrymander in South Australia for about 20 years, saying, `You only get good, clean, honest government when you have good, clean, honest electoral systems where it is known that if 51 per cent of the people vote for a party that party will form the government. If a government believes that it can be elected, irrespective of the majority wishes of a population, you will then get an arrogant and ultimately corrupt government'. The situation is that in Queensland something is clearly very much amiss in the way that State is being administered. Finally, I think that this Committee, as a permanent committee, will, over a period, be able to establish a body of opinion, of expertise, that will be used not only at the parliamentary level but also in the community and possibly in academic institutions. There is an ongoing need for the community to be aware that democracy is never 100 per cent perfect or static. There will always be debate about how it should operate. The Electoral Matters Committee will enhance that debate. I am surprised that it has taken us 87 years since Federation to establish such a committee. I believe that the Parliament and the Australian people will be well served by its establishment. Senator HARRADINE(Tasmania)(12.15) —As a member of the former Joint Select Committee on Electoral Reform I support this motion. On three matters I wrote a dissenting report in respect of recommendations that were made by the former Committee. One of those matters of dissent was the list system of voting in the Senate. The first test of a fair electoral system is whether it truly reflects the intention of the voter. When I asked the Australian Electoral Commission whether it had done a survey to ascertain whether the list system of voting truly reflected the intention of the voter, the Commission indicated that it was too late for it to conduct such a survey, some months having elapsed between the time of the election and the time that I raised the matter. Two days after the recent election I raised the same question with the Electoral Commissioner: How many people who went into the voting booth and voted No. 1 in the party ticket box knew precisely where their preferences were going? Senator Sanders —Are you saying that the Australian electorate is not very smart? Senator HARRADINE —I am saying that the parties have been very smart in bringing forward this electoral system. I do not know whether Senator Sanders's party still supports this method of voting, but it is particularly clear to me, at all events, from my survey of electors, that many of them did not know where there preferences were going when they chose to put a No. 1 in the box on the top of the ballot paper. This is a matter which we should not be at cross-purposes about. We ought to be doing a survey to find out whether people knew where their preferences were going and what the ultimate result was of putting a No. 1 in the box at the top of the ballot paper. Surely this is a legitimate question. I am not fussed about it. In my State I received more votes than any other Senate candidate below the line. Having raised the question with the Australian Electoral Commissioner two days or there- abouts after the recent election, I will be interested to know what has been done by the Electoral Commission to ascertain whether the first test of a fair electoral system has been met by the list system of voting. The motion passed by the House of Representatives effectively excluded me from membership of the Joint Committee on Electoral Reform. One has to get up early around this place. I noticed what had happened. To the Government's credit, when I raised the matter with it, it understood the argument I put forward that a fair consideration of electoral systems should be non-partisan. I acknowledge the fact that the Government is now amending the message from the House of Representatives to increase the size of the Committee by two to enable me to be a member of the Committee, as I was before, and for the Government to have an extra member on the Committee to balance it. I acknowledge my appreciation of the Government's action. Question resolved in the affirmative. Motion (by Senator Walsh) agreed to: (1) That the Senate concurs in the resolution transmitted to the Senate by message No. 9 of the House of Representatives relating to the powers and proceedings of the Parliamentary Joint Committee on the National Crime Authority. (2) That the provisions of the resolution, so far as they are inconsistent with the Standing Orders, have effect notwithstanding anything contained in the Standing Orders. (3) That the foregoing resolution be communicated to the House of Representatives by message. The DEPUTY PRESIDENT —The President has received letters from the Leader of the Government in the Senate, the Leader of the Opposition in the Senate, the Leader of the Australian Democrats and Senator Vallentine nominating senators to be members of certain standing committees and joint parliamentary committees. Motion (by Senator Walsh)-by leave-agreed to: That: (1) A Procedure Committee be appointed to consist of the following senators: The President, the Deputy President and Chairman of Committees, the Leader of the Government in the Senate, the Leader of the Opposition in the Senate, Senators Evans, Haines, Jones, MacGibbon, Ray and Reid. (2) The senators indicated, having been duly nominated in accordance with resolutions of the Senate appointing the respective Committees, be appointed members of the following joint committees: Foreign Affairs, Defence and Trade Senators Bolkus, Crichton-Browne, Hill, Jones, MacGibbon, Macklin, Maguire, Morris, Schacht, Tambling and Vallentine. National Crime Authority Senators Alston, Bolkus, Hill, Jones and Macklin. Motion (by Senator Walsh)-by leave-agreed to: (1) That, in accordance with Standing Order 36, a Publications Committee be appointed to consist of Senators Archer, Aulich, Devlin, McKiernan, Panizza and Watson. (2) That the Committee elect a Government member as Chairman. (3) That the Chairman may from time to time appoint a member of the Committee to be Deputy- Chairman and the member so appointed act as Chairman of the Committee at any time there is no Chairman or the Chairman is not present at a meeting of the Committee. (4) That in the event of an equality of voting, the Chairman, or the Deputy-Chairman when acting as Chairman, have a casting vote. (5) That the provisions of the Resolution, so far as they are inconsistent with the Standing Orders, have effect notwithstanding anything contained in the Standing Orders. Debate resumed from 7 October, on motion by Senator Gareth Evans: That this House consents to termination by the Commonwealth of the Airlines Agreement 1981. upon which Senator Messner had moved by way of amendment: At end of motion, add: ``, and notes the long overdue adoption by the Government of a substantial part of the Coalition's aviation policy; further notes the Government's de facto decision to privatize Australian Airlines, which is the inevitable and proper consequence of the deregulation of the airline industry; and condemns the Government for: (a) the time lost since the first day that notice of termination of the Two Airlines Agreement could have been given (January 1987) and the effect this has had on the postponement of the commencement of deregulation of the Australian airline industry; (b) its inaction during this period in not preventing the removal of competitors in the airline industry, which will substantially reduce competition; (c) the repeal of legislation which the previous Coalition Government had in place to convert the then Trans Australia Airlines (TAA) into a company, thereby reducing the ability of TAA to readily adjust to the new deregulated environment; (d) the absence of pre-1990 informal measures to facilitate deregulation; (e) its failure to provide the necessary infrastructure at Australia's airports, especially Kingsford-Smith Airport in Sydney, so as to cope with present and, more importantly, future congestion; (f) not completely deregulating domestic and international airfreight carried by Australian airlines; and (g) creating unnecessary uncertainty amongst Australian Airline employees as to their future''- Senator MacGIBBON(Queensland)(12.24) —The motion before the Senate is to abolish the two-airline agreement, an agreement which in some form or other has been around since 1952 and covers the operations of the two major airlines in Australia. The practical consequence of this motion, which is long overdue, is formally to give notice that the legislation covering the operation of the two major airlines in Australia will be disbanded. It also means inevitably that Australian Airlines-or Trans Australia Airlines (TAA) or whatever one wants to call it-will be sold. It does not matter how much the Australian Labor Party, and particularly the far Left of it, dissemble on that point; the simple facts of life are that Australian Airlines has to be sold as a consequence of this motion. There are many ironies in this. Those of us who have been here for some years will remember the debates that went on in the past about the sanctity of Australian Airlines as a government airline. That, of course, is partly understandable from the Labor Party because Australian Airlines was a creature of the Labor Government in the post-war era. The very Acts that have been on the statute book to protect the place of the two airlines in Australia were introduced to protect the airline owned by the public, namely, Australian National Airways (ANA) and, later, Ansett Airlines of Australia, from the great powers of a Commonwealth-owned airline. The very fact that they were set up to protect Ansett or its forebears against the powers of TAA has resulted, over the passage of years, in a gross erosion of the strength of TAA, to the point where today it is a very weak airline. One of the great problems which the Government has to address is how it is to keep competition in the Australian airline industry when it pulls off this legislation. But that is a problem for another day. The origins of the two-airline agreement go back to 1952. After the Second World War, the largest airline in Australia was Australian National Airways, but it must be remembered that, up to the start of the Second World War, the airline structure in Australia was a collection of very small and very weak airlines. The hostilities of the Second World War created a great demand for air services. Because of the work which the airlines did for the defence forces, both ANA, as it was then, and Ansett grew enormously, as did some of the other large airlines at the time, such as Guinea Airways. Guinea Airways was once the largest freight carrier in the world, with its operations in New Guinea, up to the time of the Japanese invasion when it immediately lost a large part of its custom. In the post-war era, Australian National Airways was the dominant force and the Labor Party started TAA. In its early days, TAA was a great asset for the Australian public. It was very well managed and it had a lot of enthusiastic and very capable staff. It did a great thing in injecting competition into the airline industry, so much so that legislation was required to make sure that it did not dominate and create a monopoly in the transport world. The argument that was used against TAA in those days still applies today; that is, that, being government-owned, it did not have to pay a dividend; it had no hungry shareholders screaming for a return on their capital. The argument went that it could resort-it never did-to unfair commercial practices, run at a loss, thereby driving its competition out of the market-place, and end up with a monopoly. Such a situation has never arisen. But, as a defence against that, the various two-airline Acts have been in place. When the legislation was first introduced it was a reasonable move. But those times have passed. Some of us on this side of the chamber argued very strongly against the last such piece of legislation, the abolition of which we have been given notice of, when it passed through the Senate in 1981. Some of us were unhappy about that legislation. I believed then that it did not provide any commercial competition between TAA, as it was then, and Ansett. I prophesied then that we would face increasing fares. The present legislation guarantees the financial survival of the less able of the two airlines. That means that the more able one gets enormous profits but, most importantly, that the poor old travelling public are the people who suffer. Air fares in Australia are very high. The air service that is available to us is first class with respect to safety. The aircraft are clean and comfortable inside, but they do not fly at the times a large number of Australians want to travel. An even larger number of Australians simply cannot afford to travel. In a big country such as this there is a need to have a range of air services operating so that people can travel from Perth to Cairns, for business or commercial reasons, without having to go to the bank to borrow a few thousand dollars. That leads me to the failures of the present legislation. The present legislation has failed because it does not provide any commercial competition. One of the other consequences of the legislation, which is not generally perceived in the public place, is a virtual domination of the air transport world in Australia by the Ansett Transport Industries (ATI) group. Very few small airlines are still in existence in Australia and very few commuter operators do not have some involvement with Ansett. This has some pretty profound consequences. I will be very interested to see what legislative practices the Government follows to control Ansett's operation in what will be very close to a monopoly situation after the legislation is abolished. This taking over of small airlines has been going on for a long while. Queensland Airlines was taken over by Butler Air Transport, which in turn was taken over by Ansett. Ansett itself took over the old ANA after Ivan Holyman died of a heart attack in Honolulu. MacRobertson Miller Airline Services, a big carrier in Western Australia, was taken over by Ansett. Substantial interests in a lot of the commuter operators, such as Lloyd Aviation, Aeropelican and Kendall Airlines-probably the three biggest in the country at that level of operation-are held by Ansett. So Ansett dominates that part of the industry. In addition, through its associate, Thomas Nationwide Transport Ltd, it has a very big interest in surface transport and, of course, its hotels and resorts involvement is quite massive. The whole of the travel industry in this country is very much dominated by Ansett. My objection to that is the fundamental one that where there are monopolies there is no competition and, at the end of the day, the consumer suffers. I am not suggesting for a moment that there are not 100 different competitors in the hotel and resort business. Obviously, a huge number are competing with resorts such as Hayman Island, which operates at the top end of the scale, and so on. We must look at the situation in terms of passenger traffic. According to the latest figures I have been able to get, Ansett has 49.8 per cent of the Australian airline traffic, Australian Airlines has 42.5 per cent and 7.7 per cent of the traffic is carried by East-West Airlines Ltd, which has been bought by Ansett within the last month. So something like 57.5 per cent of the Australian airline traffic is now carried by Ansett, leaving only 42 per cent. That is getting close to a 2:1 ratio. Unless steps are taken we will end up with a dominant ATI operation on air travel and a very weak opposing airline-Australian Airlines, or whatever it is called after it is sold off. In my judgment, Ansett is one of the best airlines in the world today. If one forgets about the cost of its fares, it is an exceptionally good airline. I believe that it ranks with some of the best in the world. It has new, adequate and appropriate equipment. It is well managed relative to Australian Airlines, although, in airline terms, on an absolute scale, it is not well managed insofar as it costs so much to run. It is well capitalised and it has good links with the international capital markets, so it can fund its operation. It has good staff and good morale. In contrast with that operation is the Australian Airlines operation, which is largely characterised by being very run down. It has old equipment. Some of that equipment is appropriate for its tasks and some of it is not. Australian Airlines is starting a re-equipment program. Once upon a time the thing that built TAA, as it then was, to its position of greatness in the Australian airline scene was its ability to select the right equipment at the right time. I cite as examples the purchase of the Convair 240s, the first pressurised aircraft in Australia, and the purchase of the Viscounts, the first turbo-prop aircraft. The flair that TAA showed for picking the right things at the right time, which built the airline up, has sadly now been lost. There is no argument that the failure to upgrade the DC9 and 727 fleet at the right time was one of the things that caused TAA's passenger traffic to fall off. The purchase of the Airbuses was not an inspired move at all in a financial sense. It bought two more than it should have bought. I do not know what has happened to those two aircraft; they were on long term lease at one stage. Also, the decision of this week to defer the nine A320 Airbuses should never have had to be taken. The original decision to place the order was made at entirely the wrong time for that sort of equipment. In a general sense, the management of Australian Airlines is poor. It is woefully undercapitalised, which is not the fault of the management, but the undercapitalisation poses big problems for this Government when it comes to selling it. Australian Airlines has good staff but it is fair to say that its morale is bad and it has been for years. The Government cannot throw out the two-airline agreement, as it proposes to do, without doing something about Australian Airlines. As I said earlier, at the end of the day the position is that we have a government airline which can run at a loss and an airline owned as a public company which cannot afford to run at a loss. The only way the playing fields can be evened up and all balanced out is to sell Australian Airlines. I do not care how much the Minister for Transport and Communications (Senator Gareth Evans) weaves around the point, dissembles and says that the Government will look at the problem; that is the fact of the matter. The Minister is intelligent enough to know that it is inevitable that Australian Airlines will go into public ownership at some time after this agreement is abolished. The Minister's statement finds no criticism from this side of the House insofar as it goes. The Minister is just picking up the policy that we had in place when the present Government came into power. We had started down the path of transferring TAA to public ownership, hopefully through a system which would have allowed the employees to purchase a significant part of it. We had arranged to restructure TAA from a statutory authority to a public company. That plan was abandoned by the Australian Labor Party when it came into power and now it will have to reverse its decision. My criticism of this statement is that it exemplifies the tunnel vision of the Minister. He sees all the problems and flaws in the Australian airline system as stemming from the fact that we have a two-airline agreement-and such is not the case. The two-airline agreement does cause us a lot of problems; that is true. But the problems of the Australian airline industry are very much wider than those coming from the two-airline agreement and there is no sign that anyone in this Government or in the Department recognises that they are much more widely based. These problems simply will not be solved, as the Minister says they will, by deregulation alone. As someone who has been involved in aviation for a large part of his life, I am the first to get up on a soap box and complain about the overregulation of Australian aviation. I do not know any field of activity in any country which is as overregulated as the Australian aviation scene. There is a huge cost for the nation in the system we have. But I am also not in favour of the catch-as-catch-can total deregulation proposals based on the American system that are floating around. As one who goes to America regularly, I would argue that in many ways the deregulation of the American airways has led in some senses to a diminution of the service available to the public. It is true that it provides competition and it is true that the public gets a break on air travel, which never ever happens in Australia. The discount and stand-by fares we have here, while welcome, are really meaningless in the sum total of things, whereas air travellers in the United States do get some genuinely good breaks. One is able to fly between Washington and Los Angeles for about $100 return. That is the equivalent of flying the Sydney-Perth route for $100 return. These discounts are available on special occasions. Certainly one cannot walk in and buy a ticket on that basis at any time, but if one watches the papers that opportunity presents itself. My argument is that the Australian public never gets the opportunity of significantly cheap fares, and that is very much a consequence of the two-airline system. There is not time today to go through the defects of total deregulation. I merely put on the record the fact that I certainly do not favour total deregulation. The circumstances in Australia really are quite different from those in the United States. We simply do not have the population to support such a system. But I want to come to the reason I see the Minister's statement about total deregulation as being very naive and simplistic. The Minister said that he will retain legislation only with respect to airline safety. Airline safety is absolutely paramount. But, with the best will in the world, safety cannot be legislated for. We can have safety requirements, but running a safe airline system does require regulation other than specific legislation dealing with the maintenance of aircraft and the flying of them. It has wider implications. Inevitably it involves the Government in regulating to some degree air fares and route structures. The Government cannot avoid that point; yet there is no recognition of it in what the Minister said. We certainly do not need an independent air fares tribunal. I agree with that being abolished. But in some way we have to monitor what is going on. Otherwise we get airlines losing money and, whilst it is not the business of the Government to stop airlines or anyone else in private industry from going broke, a responsibility for governments with respect to airlines arises from the fact that an insolvent airline is always unsafe. A profitable airline is a safe airline, but an unprofitable airline cannot be a safe airline-and the link between profitability and safety is a nexus that cannot be broken. So, while we can legislate as much as we like for specific safety procedures-such as the changing of engines at certain times, fuel quality and pilot training and procedures-inevitably the wider issues of safety involve an oversight in some way by the government of what is being done with respect to route structures and fare structures. I do not know the answers to those problems. All I say is that I recognise that it is a problem of very great difficulty. Although I cannot provide the answers, I am telling the Senate that it is quite impossible for Senator Gareth Evans or any other Minister in this place to wipe his hands of safety issues once legislation which relates specifically and in a restricted sense to air safety alone has been passed. It just does not work that way. Let me get on to some of the other problems of the Australian airline industry that are not affected by the two-airline agreement. The principal one, of course, is the maintenance of the curfews at so many airports in Australian capital cities under which between the hours of 11 p.m. and 6 a.m. no major airliner is able to operate there. The time between 11 p.m. and 6 a.m. is seven hours-out of a total of 24 hours in a day. The airlines have very expensive equipment which has to be amortised and used to the hilt before it becomes obsolescent. Because of the great costs involved in air travel, advances are always being made in the mechanical efficiency of aircraft. The amount of fuel burnt by an aircraft on the major trunk routes is considerably less now than it was 15 years ago, by any measure. Modern aircraft are much more productive and much more efficient. But airlines dealing with airliners that cost anywhere between $50m and $80m and which have a service life of only 10 or 12 years cannot afford to allow their equipment to be locked up, unable to be used, for seven hours out of every 24. Mr Deputy President, I seek leave to continue my remarks later. Leave granted; debate adjourned. 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 Ryan is absent from the chamber for Question Time today as she is attending a conference in Melbourne. Any questions which would normally be directed to Senator Ryan in relation to her portfolio or those she represents in this chamber should be directed to Senator Tate. Senator CHANEY —My question is addressed to the Leader of the Government in the Senate in his capacity as Minister representing the Minister for Industrial Relations. I again refer the Minister to strong criticism by Mr Justice Ludeke of the building industry $20 a week severance pay agreements, criticism to which I referred in a question directed to the Minister on 23 September. The Minister undertook to obtain a further reply which has not yet been received. I refer also to the Minister's admission in an answer on Wednesday to Senator Parer that the Government was concerned about the failure of these agreements to satisfy either its wages policy or the wage fixing principles of the Australian Conciliation and Arbitration Commission. Is the Minister aware that these agreements came into force a week ago; in other words, we are not talking about some prospect off into the future? Is he further aware that the Western Australian Minister for Labour, Productivity and Employment, Mr Dowding, has warned building employers in that State that introduction of the scheme without Arbitration Commission ratification would breach the State's code of conduct for the building industry and render employers ineligible for government contracts? Are signatories to these already operative agreements also in breach of the Federal Government's code of conduct for the building and construction industry? What action will the Government take, other than polite letters after the horse has bolted, to enforce its code and to ensure that this matter is brought speedily before the Commission? Senator BUTTON —As I indicated in answer to a question-I think it was to Senator Parer a day or two ago-the Minister wrote to the proposed parties to the various agreements in the building industry and informed them that they did not meet with the approval of the Government and sought renegotiation of those agreements. I understand that that is still the position. If there is any further information that I can provide Senator Chaney with in relation to that matter I will seek to obtain it today and do so. By the way, I was not aware of Mr Dowding's intervention. Senator JONES —Has the attention of the Minister for Justice been drawn to statistics from the Federal Attorney-General's Department which show the number of bankruptcies in Queensland has risen by nearly 100 per cent in the past three years? What has been the comparative rate of bankruptcies between the Australian States in the financial years 1983-84 to 1986-87? According to the latest information, what is the bankruptcy situation in Queensland in regard to the first half of 1987 compared with the same period last year? Senator TATE —I regret to say that there is a bankruptcy in my briefing as far as this question is concerned. I am unable to answer. I will have to take it on notice and get the honourable senator a better answer. Senator REID —My question is directed to the Minister representing the Treasurer. I refer to the announcement of the Treasurer last week concerning changes to the regulations governing acquisition of urban residential property by foreign investors. Is the Minister aware of difficulties being experienced by both real estate agents and legal practitioners dealing with foreign purchases of real estate in obtaining clarification as to the precise details of the changes to the foreign investment regulations and that, for example, in Canberra Treasury is already advising of a two to three week delay in considering applications for approval of purchases by foreigners? Does the Minister realise that these difficulties and delays arise from the fact that the Government is attempting to legislate by Press release and enforce the new provisions before the legislation amending the Foreign Takeovers Act has even been introduced into the Parliament? When will the legislation be available? Senator WALSH —I was asked whether I am aware of certain complaints. The answer to that is no, I am not. I am not sure whether this question is prompted by an article in today's Australian Financial Review, a summary of which has just been handed to me and some of which is relevant to the question asked. It was suggested in the article-quite wrongly-that prior consultation with companies is practicable when policy changes of this nature are undertaken. That is a suggestion that the Government rejects. I am also advised that any company gravely affected by changes to government regulations has the option of making representations to the Government. A number of representations have been received and they are being handled quickly. As to the other parts of the question, I do not know the answers. I will refer them to the Treasurer and supply an answer as soon as I can. Senator GIETZELT —I direct my question to the Minister for Home Affairs. Can the Minister advise the Senate on progress with the preparation of the two-party preferred votes for all divisions in the House of Representatives? When will the election summaries for the House of Representatives and the Senate, known as the greens and the reds, be available for circulation? Senator ROBERT RAY —In answer to Senator Gietzelt's question, I have been a little delayed by industrial problems in the Australian Electoral Commission. Therefore, I cannot give the precise date when the preferred vote figures will be available, but it will be some time within the next four weeks. The cost is minimal. The Commission really provides information almost for political professionals or academics. Most of the work is done by existing Electoral Commission staff, though on occasions some casual staff are employed to complete that process. I imagine that some time in the next month those election results will be through. I hasten to inform Senator Gietzelt that there will be no late swings; none of the results will alter. I am considering having talks with the Commission to see whether, after this occasion, the results can be presented in a different form so that we get preferred vote figures for each booth rather than for divisions as a whole. Having been a scrutineer on the odd occasion, I do not imagine that presenting them in this form will add much to the cost of the operation. I am sure that all House of Representatives members, and probably most senators, would prefer to get the figures in a booth by booth form. In recent years there has been some resistance to that by divisional returning officers. I am sure that after discussions with them we can overcome that resistance and that the figures can be produced in that form following the 1990-91 election. Senator POWELL —My question is addressed to the Minister representing the Minister for Social Security. Given that there has been tax reform which has significantly reduced marginal tax rates for higher income earners, given that a review of corporate taxation aimed at reducing corporate tax rates is under way, and given that 10 per cent of Australians own 60 per cent of the private wealth in this country while at least two million people still live below the poverty line, I ask: Has the Minister noted the call by the Uniting Church in Australia for an inquiry into wealth and does the Minister agree that the need for such an inquiry is now greater than ever? Can the Minister inform the Senate whether he is taking any action to initiate such an inquiry as a prelude to raising real incomes and opportunities for the poorest of Australians? Senator RICHARDSON —I would have thought that the Labor Government has an un- equalled record both in taxation reform and in help for disadvantaged persons in the community. The introduction of the fringe benefits tax and the capital gains tax did much to stop the haemorrhaging of tax revenue and the mounting inequities for pay as you earn taxpayers, both of those problems having grown at such a rapid rate under the previous Fraser-Howard Administration. Senator Puplick —Rubbish. Senator RICHARDSON —Even Mr Costigan said it was the only industry that grew under the Liberals. I think he used the expression that it was reminiscent of the heady days of the Victorian gold rush. The reduction in marginal tax rates was thus part of an improvement in the equity and progressivity of personal income tax provisions. Those measures are now, by and large, accepted right across our community, including through most of the business community. Our continuing efforts to assist pensioners and social security beneficiaries and working families also provide, I must say, a sharp contrast with the efforts of previous administrations, in particular that run by John Howard. Comparisons of the election programs of the Government and the Opposition bear the real testimony to that. There is no question, certainly in the minds of all those who are underprivileged in this society, that the Liberals would turn back the clock. The Government is already taking action to raise the real income levels of low income families and from the Budget up to one million children from 500,000 families can benefit by up to $28 per week per child. With respect to the latter part of Senator Powell's question, on the call by the Uniting Church for an inquiry into wealth, I would say, first, that the Government is appreciative of all that the Uniting Church has done in recent years to bring forward the plight of underprivileged in our community. I have had many dealings with it on that question. Senator Puplick —You are not only a born again greenie; you are a born again Christian. Senator RICHARDSON —I have never described myself as a born again greenie; that is what others have said. There is of course no need for me to be born again as a Christian. I understand that a group of officers from the Australian Bureau of Statistics has been meeting for some time to conduct an examination of the available databases on wealth. For all of the reasons that I have outlined over the last couple of minutes I have not taken any action myself and at the moment there is no proposal before the Government for a wealth inquiry. Senator FOREMAN —I draw the attention of the Minister for Justice to an article in the Canberra Times of 2 October entitled `$1.5m cut in Federal Police budget'. How does the Minister reconcile that article with his statement on Budget night that the Australian Federal Police's budget had been increased? Senator TATE —I thank Senator Foreman for his question, which draws my attention to an article in the Canberra Times of Friday, 2 October headed `$1.5m cut in Federal Police budget'. I must say that I was quite astonished when I read that headline because the article claimed to find some support for that headline in comments made from my office, a claim which I know to be utterly unfounded. The fact is that, whilst at some early stages of the Budget process some savings were required of the Australian Federal Police-along with all other elements of the portfolio and indeed all other elements of government administration-which amounted to, I think, $1.26m, at the end of the day and as a consequence of this Federal Government's very strong supportive role in relation to the Federal Police, which it regards as its pre-eminent law enforcement agency, the Australian Federal Police ended up with an increase in its funding of some $10m. Indeed, if I may give the exact figure, a total of $150.669m was provided, compared with expenditure last year of $141.305m. In addition to the provision of more financial resources which can pay for operational matters and which in particular were directed to enhancing the computer capacity of the Australian Federal Police, there was an addition of some 104 in average staffing level, which I think all honourable senators would agree represented, in the present budgetary climate, a very significant advance for the Australian Federal Police. It represented, as to 94 of those persons, the third year of a program which was initiated by the Prime Minister in 1984 and which has led to an increase in resources and staff for the Australian Federal Police, plus an additional 10 or so staff to deal with other matters arising out of the anti-organised crime package which was passed by this Parliament in the latter week of the autumn session earlier this year. So altogether, the Australian Federal Police, as I think was made manifest during the Estimates Committee hearings yesterday, was well placed as a result of this Government's support, both in terms of resources and of staff, to continue the battle against organised crime. As I have said, it is recognised as, is acting as, and is securing success as the Government's premier law enforcement agency. Senator BOSWELL —I refer the Minister for Transport and Communications to his Government's failure to fulfil its previously stated commitment to ensuring that all remote telephone connections be converted to an automatic system by 1990. Is the Minister aware of the widespread frustration and anger felt by 18,000 people still waiting to be connected under the rural and remote area program, especially as many of these people agreed to what they thought would be a temporary downgrading in their services while waiting to be connected to the automatic system? Does the Minister agree that the situation is discriminatory and that people who live in these areas are entitled to a telephone service which is the equivalent of that received by other Australians? Can he give an undertaking to investigate this matter and ensure that the Telecom Australia rural and remote area program is completed by 1990? If not, will the Minister accompany me to remote Queensland so that he can experience personally the hardships and frustrations of living and trying to run a business without a telephone, at its worst, or with an inferior party line, at its best? Senator GARETH EVANS —I have had some irresistible invitations in my time and I have had some resistible ones. I have to say that Senator Boswell's latter suggestion falls into the latter category. I was not aware about the frustration and anger of the 18,000 citizens to whom he referred, but I have been suitably touched by his plea on their behalf today. I will investigate the matter and get back to him as soon as I can with what, I hope, will be a satisfactory answer. Senator MORRIS —I direct my question to the Minister representing the Treasurer. Is it true that the Australian Bureau of Statistics unemployment figures for September, published yesterday, indicate that Queensland is the State with the highest unemployment rate in the country? Are the economic policies of the Queensland Government holding back Australia's overall economic performance? Senator WALSH —The figures published yesterday show that the unemployment rate in Queensland for September was 9.3 per cent, which is higher than that for any other State and very much higher than the national figure of 7.7 per cent. In only four out of the 48 months-since the National Party Government policy speech-has the unemployment rate been below the national average. For 44 out of the 48 months it has been above. That was more than three years ago. Ever since February 1984, Queensland's unemployment rate has been above the national average. It has had the highest unemployment rate of any State for seven months during 1986. So far, for this calendar year, Queensland has had the highest unemployment rate of any State in five of the nine months and in three of the other four months it was equal highest. To present the picture from a slightly different perspective, when the policy speech was made, on which ultimately the National Party Government was elected in 1983, 14.9 per cent of Australia's unemployed were in Queensland. That figure has now risen to 19.2 per cent. It is pretty clear that there is going to be one extra involuntarily unemployed person next week, which certainly will not be a good thing for the Australian Labor Party. It would be much better for the Labor Party if he kept his job as long as possible. Some people might see it as a good thing for Queensland, but there will be that additional involuntarily unemployed person there next week. I think it is based on the mistaken belief that if just one of those people was removed from that corrupt National Party machine which governs Queensland the machine itself would be cleansed. Of course it will not. Senator MESSNER —I refer the Minister for Transport and Communications to the Government's decision to introduce a tendering system for the issue of new broadcasting licences which is forecast to raise $22m in the current financial year. In the light of the absence of legislation to date to implement the Government's proposal and the fact that legislation is unlikely to be introduced into the Parliament before the end of October, which will mean that it is highly doubtful that the Government would be able to apply the proposed new arrangements to those service areas where it expects to raise all the revenue this year, especially for the Gold Coast, can the Minister explain how the $22m which is estimated in the Budget will be raised? Further, does the Minister agree that, if legislation is not in place within two to three weeks, it would create severe administrative problems both for the Australian Broadcasting Tribunal (ABT) and for the various applicants for the Gold Coast, Geelong, Shepparton and Gosford licences if they were subsequently required to operate under the proposed new arrangements? Senator GARETH EVANS —I do not accept any of the premises on which that question is based. It is intended to introduce the legislation in the next sitting period and, unless it is met with obstruction from the Opposition and the Australian Democrats in this place joining together, that legislation should, of course, go through in a reasonable period and enable arrangements to be put in place for the licences to be issued, one would have thought, early in 1988. No particular complexity is envisaged about the processes that will operate under the new legislative regime that was announced in outline on Budget night. Obviously there is more detail that can be and will be filled in at the time of the introduction of the legislation itself. But, basically, it is a two-tier process, the first tier of which will involve the Tribunal assessing the suitability of the licensees by reference to criteria which will be very similar, if not precisely identical, to the criteria already in the legislation and around which the licensees have already built their applications. There will not be a necessity to substantially amend or modify the applications to meet the initial suitability assessment criteria. The second tier of the system will involve simply the opening of envelopes-the sealed bids of those licence applicants who are assessed to be suitable as at stage one. That is not a time-consuming process. All in all, there is absolutely no reason to make the series of assumptions that Senator Messner seems to have made in drawing his very negative conclusions. Senator MESSNER —Mr President, I ask a supplementary question. I thank the Minister for his answer. But is he aware that the first licence-that of the Gold Coast-will not be finalised until at least before the middle to end of February 1988, and that will then be followed by the three other licences which will obviously be finalised some time well into 1988? How then can he justify his claim that he will be able to get $22m this financial year? On the point of viability, is it not a fact that the ABT will need to know how much is being tendered before it can establish the financial viability of the applicants? Senator GARETH EVANS —I know that Senator Messner is a frustrated administrator and he is just busting to get his teeth back into a ministry so that he can wreak the kind of havoc that he and his predecessors have in the past, but I just assure him that if he leaves the matter in the competent hands in which it presently is, within the present administration of the Broadcasting Tribunal and the Department of Transport and Communications, it will be perfectly possible to perform in accordance with the timetable that we have obviously relied upon in making our budgetary assessments. Senator WOOD —I ask the Minister representing the Prime Minister whether it is true that Ratu Sir Kamisese Mara flew into Australia yesterday under an assumed name and was met by officials of the Department of Foreign Affairs and Trade at Tullamarine Airport in Melbourne. Is it not true that Ratu Mara had a half hour telephone conversation with the Prime Minister and the Foreign Minister while he was in Australia? Since the Government must have been aware of Ratu Mara's intended visit in advance, was this information conveyed to Dr Bavadra's envoy during his meeting with the Foreign Minister on Wednesday afternoon? Since Ratu Mara is a private citizen of Fiji and does not represent any legally elected government or body, is preferential treatment being given to him in that the Australian Government refused to meet with Dr Bavadra, the legal Prime Minister of Fiji, earlier this year? The Prime Minister will be aware that Ratu Mara has accepted the demands made by Colonel Rabuka for a racist constitution, a constitution rightly condemned by the Prime Minister. Why then are the Prime Minister and the Foreign Minister holding talks with Ratu Mara? What status does the Australian Government accord Ratu Mara, and will it be supporting his credentialling at the Commonwealth Heads of Government Meeting in Vancouver? Senator BUTTON —Senator Wood was kind enough to give me notice of this question at 1 o'clock today, and I am seeking an answer. I hope to be able to provide it by the end of Question Time. I do not accept all the assumptions underlying the question. It is very much directed to a question of fact, and I will seek to obtain an answer. Senator SHEIL —Is the Minister for Transport and Communications aware that the Trade Practices Commission and the May Independent Review of Economic Regulation of Domestic Aviation both concluded that barriers to entry are of such magnitude that the airline industry is not fully contestable and that, of existing regional airlines, only East-West Airlines Ltd had sufficient financial resources to contest the trunk route network? In view of the takeover of East-West by Ansett Airlines of Australia, does the Minister agree that the Government's deregulation proposals are likely to result in a decrease in competition, with adverse effects upon Australian consumers? Senator GARETH EVANS —No, the Government does not agree that there is any likelihood of a decrease in competition as a result of deregulation. What will happen as a result of the East-West takeover by Ansett depends very much on the outcome of proceedings and procedures presently in train before the Trade Practices Commission, and no assumptions should be made at this stage as to the outcome of those proceedings. I have indicated on a number of occasions in the last few days that there are obvious difficulties in contemplating the arrival on the Australian aviation scene of a major new third force, a fully equipped fleet owner operating 30-odd aircraft, which is presently the case with both Ansett and Australian Airlines. There is no doubt about that unless, as I have said on one or two occasions, there is a billionaire around with a smell of kerosene in his nostrils and a disposition to tear up $100 bills at a rapid rate. It may be difficult to find an entrant into the Australian market on that scale. But there are plenty of market opportunities, simply because of the scale of the Australian aviation industry. Senator Chaney —East-West would have been a handy competitor, would it not? Senator GARETH EVANS —I ask the honourable senator to hold his expectations about East-West. As I have said, a lot depends on the outcome of the proceedings-and there are a few other things he ought to be holding too-before the Trade Practices Commission. Senator Crowley —Holding what? Senator GARETH EVANS —His breath, I mean. A lot can be said and speculated upon so far as the competitive environment post-deregulation is concerned. I think a reasonable expectation at this stage is that the competition, apart from that provided by each of the present players against the other-and that is something we are obviously keen to shore up; that is what the whole strategy about Australian Airlines is about-is likely to arise from niche entrants, people taking advantage of particular market opportunities, whether in the regional, commuter or feeder airline areas, or perhaps even on major trunk routes, involving the importation of a handful of wide-bodied aircraft on the model of the United States People's Express or something of that kind. There are many ways in which scenarios of this kind can unfold post-1990. I am not sure how productive it is to speculate about them. But to suggest that this body of policy that we have now announced and will put in place will somehow amount to an environment which is less competitive than that which prevails at the moment, is to quite profoundly misread the situation. Senator COOK —My question is directed to the Minister representing the Treasurer. Has the Government examined proposals reported in today's Sydney Morning Herald that marginal rates of income tax could be lowered to the point where the incentive to provide fringe benefits is reduced and the fringe benefits tax could be abolished? Is the proposal within the bounds of fiscal responsibility? If so, will the Government implement it? Senator WALSH —In regard to the last part of the question, I do not think one could say with any certainty whether the proposal is within the bounds of fiscal responsibility until more details are available as to what is being proposed. What we can be quite certain of, of course, is that the policies put forward by both Opposition parties before the last election were way beyond the bounds of fiscal responsibility. On one side of the ledger there were promises of enormous tax cuts which were not matched with specified expenditure cuts. That applies equally to Senator Stone's policy-as it really was, of course, although it was presented by the present Queensland Premier-and to the Liberal Party policy, except that in Senator Stone's contribution the internal arithmetic was consistent, unlike that of the official Opposition policy. I have seen the article in the Sydney Morning Herald. As I said, it does not give any details of the level of a proposed consumption tax or of the proposed new income tax rates scale. Without those details one cannot really be sure whether it is responsible. It appears that the story came out some time after the 6 p.m. announcement by the Premier of Queensland yesterday that he was going to retire in 10 months time. It now seems that he will retire very much earlier than that-about next Wednesday. I noticed that Senator Stone welcomed the announced retirement. Indeed, to use his own words, according to today's Australian, the retirement announcement by the Premier was `very much to be welcomed'. I think that Senator Stone would equally welcome the earlier and involuntary retirement of the Premier which now seems likely to occur next Wednesday, which would be even more welcome than his planned voluntary retirement 10 months hence. There are other quite irresponsible, false assertions in the report in today's Sydney Morning Herald, the most spectacular of which is that there would be no need for fringe benefits taxes if the marginal tax rate was lower. One would have to be very naive to believe that, once people have devised some trick, some way of defining their income out of existence, and have got away with it-as they got away with it for the best part of a decade, in the late 1970s and early 1980s, during most of which period, of course, Mr Howard was Treasurer-because the marginal tax rate had come down from 49c to 40c, 30c or even 20c, they will suddenly stop defining their income out of existence and pay whatever rate of tax they are obliged to pay, or ought to pay. For that suggestion to work, the marginal tax rate would have to come down to zero or very close to it. Even in Senator Stone's pre-election proposition, the marginal tax rate was 25c in the dollar. He only specified about $4.5 billion of the necessary offsetting expenditure cuts. By 1991 $22.5 billion would be required. In short-- Senator Knowles —In short? Six minutes so far! Senator WALSH —Should I say, in summary-there is one thing in the report which, if correct, I would welcome, and I believe every member of this Government would welcome it. That is that one Liberal is quoted as saying: We believe there are going to have to be top-to-bottom changes to the tax policy, otherwise we'll face the same question at the next election: where's the money coming from? If that is indicative of a shift towards fiscal responsibility by the Liberal Party-in marked contrast to its behaviour up until now-that will be a change, if it really happens, which I think everybody should welcome. Senator BISHOP —My question is directed to the Minister representing the Minister for Administrative Services. Is it a fact that the union featherbedding practices which have been a major ingredient in the massive overrun of costs of the new Parliament House have now flowed on to other building sites in the Australian Capital Territory? Is he aware that the new Hyatt hotel is one construction site which is suffering from these practices and that the Hyatt company, which has been reluctant to pay the costs of these practices, has been told its project will not be completed on time as a result? Further, is the Minister aware that the Hyatt organisation has interviewed, selected and promised jobs in the new Hyatt to 300 potential employees but is unable to engage or train them because it does not know when the new hotel will open? Finally, is the Minister aware that the Hyatt has flown four of its top employee relations officers to Canberra to counsel these potential employees, most of whom are local residents? Will the Minister take steps to eliminate from that site the practices which were born and nurtured in the new Parliament House building, and, by so doing, set an example for other construction sites in the Australian Capital Territory? Senator ROBERT RAY —Basically, Senator Bishop's question is based on false assumptions. It is unfortunate that she probably has not read the statement by the Minister for Administrative Services which we tabled in this House today and much other material relating to this area. I would be the last person to stand here and say that every work practice in the building industry is justified. It is quite clear from the comments of Government Ministers on a number of occasions that they have urged an improvement of work practices-be they in terms of a productivity trade-off or other things in the building industry. One thing I can say with a degree of certainty is that many of the work practices to which the honourable senator referred were not nurtured, as she said, on the new Parliament House site. Whilst there may be some unsavoury work practices on the new Parliament House site, the general evidence is that they are no worse than anywhere else and, in many cases, nowhere near as bad. The new Parliament House construction site has not been a pacesetter in this regard. Problems that have occurred on that site have reflected problems generally in the building industry. Senator Bishop went on to make some comments about the development of the Hyatt hotel. I do not know the exact details relating to those parts of the question she raised. However, in my general experience, the sooner Canberra gets a Hyatt hotel the better so that we can at least have one first class hotel in this city. I will go no further than that but I do not think many senators in this chamber would disagree with me. I will talk to the portfolio Minister, Mr West, in regard to the questions relating to the Hyatt hotel and will try to get the honourable senator a prompt response. Senator BLACK —I ask the Minister for the Environment and the Arts whether he can clarify reports that the Federal Government is appeasing some conservation groups by, for example, greatly increasing their funding and by nominating the wet tropical rainforests for world heritage listing? Senator RICHARDSON —I have heard some of the reports referred to by Senator Black in his question. I think that some of them emanate from a speech by Mr Downer in the other place. I think probably they bear some witness to why he is no longer the shadow Minister for Environment and the Arts. He still seems to be plagued by the same difficulties he had when he was shadow Minister. How he could get so much wrong is a bit of a mystery. However, I will attempt to correct some of his claims. He claimed that funding to the Australian Conservation Foundation (ACF) and the Wilderness Society had increased by 20 per cent in nominal terms and by about 13 per cent in real terms. I am sure that those groups wish that those claims were true but they are not. Grants to individual conservation groups have not yet been determined. He broadened that statement by saying that grants to voluntary organisations are to be increased by 20 per cent this year as part of some prearranged election pay-off. The general figure for total outlays for grants to voluntary conservation groups has been determined. The increase was 1.17 per cent, hardly a great pay-off to conservation groups. I just have to say that he got it wrong again. He claimed that for the first time the Budget Papers did not give a breakdown of how that sum would be distributed to conservation groups. He said that the ACF and the Wilderness Society will get increased funding of 20 per cent. As I have said, the breakdown just has not been determined. He got not only the administrative side of his former portfolio wrong but also the technical facts wrong. He claimed that 75 per cent of Queensland rainforests are already within the national parks. Don't we wish that that were true? Of course it is not. One of the reasons why the Government acted to protect the rainforests of north Queensland was that only 16 per cent of them were within national parks. Unfortunately, Mr Downer was not able to distinguish between timber reserves and State forests. A considerable number of rainforests are within timber reserves but not within national parks. Were they within national parks the Government could have considered its position although, given the record of the Queensland Government on national parks, I am not so sure. We all recall Lindeman Island where there was a national park which some years ago the Government wanted to ditch for some developers. All I can say is that we will not allow all of those areas, including timber reserves, to remain in State forests that are so vulnerable to logging. The truth is that up to the election the policy of the Liberal Party of Australia on the question of world heritage listing was that it would agree to it provided the Queensland Government also agreed. Like Mr Downer, we all await breathlessly to hear what decision the coalition will make, whether Senator Stone or Senator Puplick will prevail. I am not sure whether the views of the Premier of Queensland are all that relevant any longer. I will take some steps to contact Mr Ahern and see whether there might be a change to the situation in Queensland. Senator ARCHER —I refer the Minister for Justice to a Press release of 6 June 1986 from the former Special Minister of State, Mr Young, announcing the Review of Systems for Dealing with Fraud on the Commonwealth, which reported recently. In that Press statement Mr Young stated: Fraud prevention by departments is hampered by lack of accurate information. He continued: Figures ranging from $4 billion a year to as high as $30 billion have been cited. These figures could be exaggerated. The simple fact is we just don't know. Is it a fact that, despite the completion of the review, we still do not know the extent of fraud against the Commonwealth? Does the Minister believe that effective action against fraud can be instituted without any assessment of the extent of the problem? Did the review make an attempt to determine the level of fraud, as Mr Young had implied it would? If not, why not? Senator TATE —The recently tabled report of the Review of Systems for Dealing with Fraud on the Commonwealth is, I think, now accepted by honourable senators on both sides of the chamber as being evidence of this Government's determination to tackle fraud where it is occurring within government agencies. It represents our putting our own house in order, which I think is welcomed by all those who have taken some care to acquaint themselves with the situation. Senator Archer mentioned a date back in 1986 when the former Special Minister of State, Mr Young, made some comments about the need to overcome the somewhat wild and exaggerated differences in the claims that are made about the extent of fraud on the Commonwealth which range, as Senator Archer mentioned in his question, over many billions of dollars. The range of the various extravagant claims that are made indicates that there is a need to come more precisely to grips with the types and extent of fraud against the Commonwealth. That is why this latest review was established and has undertaken to bring about within government agencies a system of prevention, detection and investigation of fraud. We believe that it will lead to a much needed relieving of pressure on downstream agencies like the Australian Federal Police and the Director of Public Prosecutions, and resources in the court system, which are at present overwhelmed by matters which ought at best to be prevented or otherwise dealt with by detection and investigation within the Commonwealth agencies concerned. I hope that that will be the case. The clearest example of that is the situation that obtained for many years, where the Federal Police were undertaking many thousands of staff hours of work to deal with cases where social security cheques had been sent in the mail to recipients who claimed that the cheques had been stolen or not received and so were entitled to emergency relief payment over the social security counter. The fraud involved in that method of payment was such that the Federal Police were totally overwhelmed. When the Government moved to making such payments direct to bank accounts, a tremendous load was lifted from the shoulders of the Federal Police and that has enabled them to concentrate on more important and extensive frauds against the Commonwealth. That is an example of what we hope will flow from the work of the fraud control committee. That committee is being set up as a result of this review and it will vigorously and rigorously supervise the implementation of those measures which the review recommended. The Government accepted all the important recommendations of that review, bar some review of certain secrecy provisions which are being looked at in accordance with the real misgivings and disquiet that have been aroused in the community concerning privacy issues. Senator ARCHER —Mr President, I wish to ask a supplementary question. I thank the Minister for the information that he provided, but he did not make any effort to answer the question. In view of the considerable difference in the nature and the extent of the recovery operation, depending on whether the assessed extent of the fraud be $1 billion, $5 billion or $20 billion, I ask the Minister: In what general areas does the Government assess the figure to be? How much money is it? Senator TATE —The Government has made no assessment across the board of the extent of fraud against the Commonwealth in monetary terms. The White Paper presented to the National Taxation Summit dealt with an estimate of the extent of fraud against the Commonwealth in relation to the tax system, and that was estimated to be about $3 billion. That has always formed the major part of the basis of the claims about fraud against the Commonwealth, ranging from $4 billion to $5 billion to $9 billion to $11 billion, depending on the extravagance of the Press release put out by various organisations. That fraud against the tax system, which is something with which the Australian Federal Police are not particularly competent to deal, has always formed the major basis of claims about the extent of fraud against the Commonwealth. Senator Archer —How much are we looking at? Senator TATE —I am telling the honourable senator. Insofar as the Commonwealth has made any assessment, it has been in relation to the tax fraud against the Commonwealth and it is in the region outlined in the White Paper and presented to the Tax Summit. Senator VALLENTINE —My question is addressed to the Minister representing the Minister for Defence. I ask the Minister whether he has read the article in the Australian Financial Review magazine for September 1987 by Brian Toohey entitled `Sub-contracting our Navy'. If so, could he tell the Senate whether it is true that somewhere between $500m and $1 billion could have been saved on Australia's new submarine contract if the capability for espionage activities performed on behalf of the United States Navy were dropped? Could he further say whether it is true that in the past, Australia's submarines have carried out patrols off the coast of the Soviet Union in the North West Pacific, to which the article refers? If so, could we know what such activities have to do with the defence of Australia, and why should the Australian taxpayer subsidise such dangerous activities on behalf of the Unites States in this way? Finally, is it true that the United States Navy wanted Australia to build conventional submarines rather than nuclear submarines because the former are much quieter and therefore more useful for staying on silent patrol within range of Soviet bases in the northern Pacific? Senator ROBERT RAY —In answer to the first part of the question-whether I have read an article by Mr Brian Toohey-the answer is no. When I organise the priorities of my life I guess that I would rank that somewhere between having lunch with Wilson Tuckey and having lunch with a child murderer. Fortunately, someone in the Department of Defence has read the article. I might just say, editorialising, that it is the brand of character assassination and paranoia that Mr Toohey normally exhibits. Some claims do appear in that article. The honourable senator has isolated three points to which she would like a response. In answer to the first part of the question, the capabilities of the new submarines meet the characteristics required to satisfy Australian needs as laid down in the 1987 Defence White Paper tabled by the Minister for Defence this year. With reference to the second question, as to where the submarines go, the Minister for Defence does not comment on the operational activities of Royal Australian Navy submarines. The answer to the third part of the question is a straight no. The capabilities of the new submarine reflect Australian national requirements, and no others. Senator WATSON —My question is directed to the Minister representing the Attorney-General. Are there any parts of the off-shore constitutional settlement package that remain outstanding? If so, what further proclamations are required? Can the Minister explain the reasons for the elements that are still outstanding? Senator TATE —I will have to refer that question to the Attorney-General and obtain an early reply. Senator McKIERNAN —My question is directed to the Minister representing the Minister for Community Services and Health. Has the Minister's attention been drawn to an article in the West Australian newspaper on 2 October 1987 entitled `Special child-care centre faces axe' and a report later that day on the Australian Broadcasting Corporation television program the 7.30 Report on the same subject? The article states: The Federal axe threatens Perth's only child-care centre taking chronically ill children. It further alleged that Federal funding for a new building to replace the present premises at the Princess Margaret Hospital had been refused, as had a claim for an extra $100,000 in funds to cover the extended hours of operation of the centre. I ask: Are the claims made in the article and on the 7.30 Report accurate? If not, what is the situation? Finally, I ask: Have any of the reporters made any attempt to confirm the details contained in the respective news items prior to broadcasting and going to print? Senator TATE —I happen to have a rather full brief on this matter. I will acquaint Senator McKiernan and the chamber with the contents of it. The Princess Margaret Hospital child care centre in Perth is one of 19 centres across Australia which have been receiving Commonwealth Government subsidies over and above what other child care centres receive. In April 1986 this temporary assistance was made available for 12 months to high cost child care centres after changes were made to child care funding arrangements. One hundred and eighty six centres were offered transitional assistance at that time. Transitional assistance was intended to help centres adjust to the new funding arrangements. All except a handful of centres managed to take the necessary steps to reduce their costs and fees to acceptable levels. This small group, which included the Princess Margaret Hospital Centre, received a second offer of transitional assistance for a further six months. That six-month period expires on 30 September. The Princess Margaret child care centre and the other centres have known for 18 months that their additional subsidies were temporary. The Princess Margaret centre will continue to receive its normal child care funding of operational subsidies and fee relief. In addition, as an extended hour centre, it also now receives twice the standard operational subsidy for the extended hours component of its services. To further extend transitional assistance would be inequitable and unfair to the vast majority of other high cost centres which have taken effective steps, not always painlessly, to reduce their costs. However, the case of the Princess Margaret centre is different from the other high cost centres in that it has also recently asked the Government for a capital grant of $728,000, more than twice the usual cost of a child care centre, to relocate. I would like to point out that when funding was originally approved for this centre it was on the firm understanding that the centre would need to be moved from its present temporary premises to new premises as part of the new hospital, funding for which is a State government responsibility. The Government believes that it has fulfilled its obligations to the Princess Margaret Child Centre. We recognise that it performs a valuable service to Perth families and that it has a specialist role caring for children with special problems. These factors have been taken into account in determining its funding. Finally, I am assured that no attempt was made by either the ABC's 7.30 Report or the West Australian newspaper to check their story with the responsible Minister. Senator PUPLICK —My question is directed to the Minister for Industry, Technology and Commerce and relates to certain comments made by Mr Kelty about salary increases. By how much has Mr Kelty's salary increased since the Hawke Government came to office as a direct result of the Government's appointment of Mr Kelty to various boards and commissions, such as the Board of the Reserve Bank? By how much has Mr Kelty's gross salary been inflated by matters such as sitting fees, travel allowance and free overseas trips as a result of his government appointments? Is it a fact that Mr Kelty's gross salary has probably increased by in the vicinity of 30 to 50 per cent since the election of the Hawke Government? Senator BUTTON —Senator Puplick might be surprised to find out that Mr Kelty's salary does not come within the province of my portfolio or, indeed, that of any Minister. I will endeavour to obtain an answer by arranging for somebody to ring Mr Kelty and ask him some of these questions or, alternatively, Senator Puplick could do it himself. Senator CHILDS —My question is directed to the Minister representing the Minister for Foreign Affairs and Trade. In view of the deteriorating situation in Fiji, including the recent closure of trade union offices by the military, will the Government consider implementing import and export bans on Fiji and strengthening its warning to prospective Australian tourists intending to visit Fiji? Senator GARETH EVANS —The Government has made very clear its attitude to the current events in Fiji. We have condemned Colonel Rabuka's second coup on 25 September. We have made it clear that we do not recognise the republic declared by him on 7 October or any government established by him. We continue to recognise the executive authority of the Governor-General. We have taken action to reinforce that condemnation of the coup by suspending the aid program with the exception of training costs for on-going students from Fiji. We have done it by continuing the suspension of the defence co-operation program and by noting that the nature and level of our representation in Fiji is now under review. What we have not done is to implement trade or economic sanctions and it is the Government's policy not to do so in this situation. We simply do not see economic sanctions as being practicable. There might be a short period when they would have an impact but Fiji would be able to put alternative supply arrangements in place quickly, as was demonstrated during the period of trade unions bans after the first coup. Fiji put considerable effort into diversifying sources of supply away from Australia and New Zealand with a manifest degree of success although admittedly it was not conclusive because the bans were lifted and Fiji's efforts then ceased. Another consideration is that Fiji is a major transhipment point for goods and services to many of the smaller island countries in the South Pacific. They would be more likely to be affected earlier and more severely than Fiji by Australian sanctions. Prima facie it would be extremely difficult to supervise effective sanctions on exports of Australian goods, for example, to ensure that commodities shipped from Australia to other destinations were not then subsequently transhipped to Fiji. Generally speaking, sanctions are only likely to be effective when they are broadly based and have a wide measure of international support. It is our judgment that any attempt by Australia to co-ordinate an international campaign to bring about such sanctions in the context of Fiji is highly unlikely to be successful. Senator COULTER —I draw the attention of the Minister representing the Treasurer to moves by the Victorian Government to ban tobacco advertising and to the counter-threat by the tobacco industry to mount a massive advertising campaign designed specifically to defeat the Victorian legislative moves. Firstly, is it true that the tobacco industry will be able to claim this overtly political advertising as a tax deduction? Secondly, is it also true that citizens who advertise a political view not linked with a commercial activity are not able to claim a tax deduction for advertising expenses? Thirdly, does the Minister think that this discrimination is fair? Fourthly, will he move to support his Victorian colleagues by removing the tax deductibility of tobacco advertising? Senator WALSH —The last part of the question I will refer to the Treasurer. What the Victorian Government chooses to do in Victoria is the Victorian Government's affair. As to one of the earlier questions, whether the tobacco industry, if it mounted a massive advertising campaign of a political nature, would be able to claim that as a tax deduction, it probably would because of the difficulty of defining `political'. But I will get a more definitive answer from the Treasurer than that. I would think that any private citizen who ran such a campaign would not be able to claim it as a tax deduction. To give an example, I think it was two days ago in here I answered a question about the Queensland Cane Growers Council which apparently provided a large amount of money to the National Farmers Federation to fund the National Farmers Federation's anti-Labor campaign in the run-up to the last Federal election. The ultimate source of those funds would be the deduction from the cane growers' deliveries to sugar mills, which would be an allowable deduction for those growers. I say that in order to point out some of the difficulties which are encountered when an attempt is made to deny tax deductibility for advertising expenses for what is, prima facie, a political campaign but which is associated with an industrial issue as well. Senator BUTTON —Earlier at Question Time today Senator Wood asked me a question about whether Ratu Sir Kamisese Mara had visited Australia under an assumed name. It is not known whether he visited Australia under an assumed name, but he did transit Australia on his way to London as an emissary of the Fiji Governor-General, Ratu Sir Penaia Ganilau, whose executive authority the Government continues to recognise-a position which I am sure is supported by the honourable senator who asked the question. Ratu Mara was met by an official of the Department of Foreign Affairs and Trade at Tullamarine Airport and shown the normal courtesies extended to visiting dignitaries. I can confirm that while in Australia Ratu Mara had a telephone conversation with the Prime Minister and the Minister for Foreign Affairs and Trade. Ratu Mara transited Australia at very short notice. I am not able to inform the Senate as to whether that information was available to Mr Hayden when he met with Dr Bavadra's colleague on 7 October. As I have already mentioned, Ratu Mara was shown the normal courtesies extended to visiting dignitaries. He was not given preferential treatment. As the honourable senator knows, Dr Bavadra did not visit Australia. I am not aware that Ratu Mara is seeking to be accredited at the Commonwealth Heads of Government Meeting at Vancouver. The Australian Government's position on the present situation in Fiji is very clear. It has been spelt out on numerous occasions over the past couple of weeks. We continue to recognise the Governor-General's executive authority. We want to see a return to a parliamentary system in which the rights of all Fijian citizens are properly recognised. Senator REYNOLDS —Yesterday Senator Newman asked me a question about a review of the defence service home loans scheme. I undertook to take the question on notice and I have now obtained a reply. Senator Newman sought information as to whether a determination had yet been made. The answer is no. Secondly, she asked when the results would be made public. I am advised that the Government has announced a proposal to replace the loan with a non-repayable, non-taxable cash grant of $10,000. The proposal is subject to consultation with the Returned Services League of Australia and other interested bodies. The Government intends to have the review completed by the end of 1987, when a public announcement will be made. Senator Newman asked a supplementary question as to whether the proposals announced in the Budget would achieve the objective. The answer to her supplementary question is that the proposed $10,000 grant would represent the lump sum equivalent of the interest concession that a borrower receives on an average defence service home loan. The proposed grant scheme would have the following advantages to the recipient: Firstly, the recipient would no longer have to take out expensive bridging finance; secondly, it would avoid, in most instances, the need to arrange a second mortgage and, therefore, save on loan establishment fees and the like; thirdly, it would reduce the deposit gap and increase the beneficiary's equity in the property; and, fourthly, as it is not tied to a particular property, the benefit would be fully portable from home to home. For the typical borrower, the grant would reduce the total amount of the repayments that would be required to be made to finance a home purchase. The PRESIDENT —I have received a letter from Senator Alston proposing that a matter of public importance be submitted to the Senate for discussion, namely: The Government's shameful and politically motivated deferral of the overwhelming case for immediate privatisation of Australian Airlines and its refusal to open the domestic airline industry to genuine competition. I call upon those senators who approve of the proposed discussion to rise in their places. More than the number of senators required by the Standing Orders having risen in their places- Senator ALSTON(Victoria)(3.07) —I bring this matter of public importance before the Senate because I believe that, to date, there has been only a superficial understanding of what has really been presented to the Australian community by Senator Evans as Minister for Transport and Communications. What we have been offered is not open skies; rather, a mirage. There has been no sell-off of Australian Airlines; but there has certainly been a sell-out. If one talks in terms of open skies, the end result is that it is all sunshine for Ansett Airlines of Australia and all rain for Australian Airlines. Firstly, I want to examine the supposed committee of review that has been established by the Government for the purported purpose of considering the need to expand the capital base of Australian Airlines and to look at certain efficiency requirements that there might be. The reality is that this is a meaningless and empty charade. There are five members of the committee, one of whom is Mr Kelty. Perhaps we will be told in the near future just how much he will get for his services on this board of review. If one were to approach it in terms of the service that will be rendered by that committee, his return should be absolutely naught, because that committee is a fraud. It is to report back prior to the Australian Labor Party national conference. Quite clearly, it is designed to legitimise a decision that has already been taken to privatise, at least in part, Australian Airlines, and it consists of a number of the Government's best friends. Hopefully, it will lock in people such as Mr Kelty. Hopefully, it will have the support of that long time champion of the public sector, Dr Wilenski. No doubt it has on board Mr Harris, who is one of the golfing tutors of the Prime Minister (Mr Hawke), because he will be the Chairman of Australian Airlines in due course. Just to show the degree of hypocrisy that attaches to the establishment of this committee, which will report on the blindingly obvious in due course, for political purposes, I will refer to some of the remarks that are already on the public record by people such as Mr Harris and the retiring Chairman of Australian Airlines, Mr Neil Smith. In April this year Mr Smith said that he would not object to partial sale of the Government's domestic airline to help make it more competitive. He complained about the scheme that would allow interlining rights. As one might expect, he was not terribly enthusiastic about the prospect of competition from Qantas Airways Ltd. He also opposed the relaxation of import controls. But Mr Smith made it blindingly clear that Australian Airlines was in desperate financial trouble. In fact, he revealed that a leading Australian financial company has recently reported to Australian Airlines that it could justify, and needed, a capital base of $300m. I will deal further with this matter in a moment, but the reality is that it has a capital base of something like $130m. Applying the real earnings in the last financial year from its activities as an airline and disregarding the returns from sales of assets, the airline is probably not worth much more than that. It is clear-and it is known to everyone on the record, including blind Gareth, no doubt-that this airline is in desperate need of an immediate capital injection of the order of $170m to $200m. That is well known to Mr Neil Smith, and it is certainly well known to Mr Ted Harris. In an article of 27 August he is reported as having said that the airline must either be privatised or have all government restrictions lifted to allow it to compete. He said that it faced a tough task-that is fairly polite language, I would have thought-competing against Ansett. He said that, as far as he was concerned, it was very necessary that a lot of the constraints on Australian Airlines be removed. What does all that mean? It means that this committee has been established to report on what is already on the public record from at least one of its members and on what must be well known to the Government. It is clearly a politically motivated decision to disguise the reality. The reality, of course, is that the Government will go down the privatisation path, despite the hypocrisy contained in a whole welter of statements that have been made over the last two years on the topic of privatisation. Let me touch on several such statements. In May 1985 in the House of Representatives, Mr Keating said: No matter where one looks, whether it be at TAA or the other authorities, there is no case for the Opposition's argument in economics . . . The Labor Party will fight tooth and nail to keep these public authorities in the hands of the Commonwealth . . . We are not about wrecking them and selling them. On the same day, he said that the sale of `Trans Australia Airlines . . . is simply vandalism of Australia's great public authorities'. I suppose he will come along and say that of course he did not mention Australian Airlines. Mr Hawke said: . . . the Government's position is clear. We will not sell the government-owned, publicly controlled institutions which are there to look after the rural people too. From Mr Hawke we also heard that privatisation: is a one-off fire sale, a sale of the century, of your assets-the assets of the people of Australia. They would transfer them into the hands of a privileged few, to the cost of every one of us. Need I go on? Senator Gareth Evans —You don't need to go on. You can sit down. Senator ALSTON —I would have thought that Senator Evans was long ago convinced of the necessity for such an action in whole or in part. But let me quote the breathtaking statement made today by one who aspired not so long ago to join us, that is, Mr Halfpenny. Mr Halfpenny made allegations that there was a very close relationship between Sir Peter Abeles and the Government to the extent that he regarded what has recently transpired as `Abelising' the industry. He has called for a Senate committee of inquiry to investigate that relationship, and I am only sorry that he cannot be with us here to chair the committee in due course. But, whilst I am not an avid subscriber to conspiracy theories, looking at the outcome I find it very hard to resist the temptation to question the whole series of coincidences that have resulted in Ansett Airlines being a mile in front. Of course, the ultimate beneficiaries are the Prime Minister's mega-mates. It is no coincidence, I would have thought, that in the last few days we have had two very interesting announcements that can be juxtaposed against each other. The first was the announcement by Australian Airlines that unfortunately it was not able to proceed with the purchase of $650m worth of Airbuses. Poor old Mr Strong had to hawk his body around Europe, pleading to be allowed to get out of the contract. Eventually he was told that as long as he kept his deposit in place he would be allowed to buy them at some later date. So Australian Airlines cried poor, absolutely bankrupt, and could not do anything to purchase. On the other hand Ansett Airlines has told us that it is going ahead with a $1 billion purchase of Airbuses and the like. It has stitched up the business. It is going to be awash with aircraft. It will be very well placed indeed to take all other competitors to the cleaners. So what do we find? We find that Australian Airlines will suffer that most agonising fate-death by slow strangulation. The confirmation of this is an announcement made only today by the Minister that the Trade Practices Act will, if necessary, be used to stop Ansett ruling the skies. If that is not an admission that this whole policy is designed to create a one horse race-- Senator Stone —Under another chairman, perhaps. Senator ALSTON —Perhaps indeed. One can only hope that the next chairman will not have such a close interest in the outcome. It is a tragedy that Senator Evans confirms the disaster of this recent announcement by indicating that it will be necessary in due course to take more regulatory action. That is a tragedy, because what we should be all about is further competition in the industry. Indeed, Senator Evans is acutely aware of the David and Goliath contest that is about to emerge. Without pre-empting the outcome of the Trade Practices Commission decision in relation to East-West Airlines Ltd, it is quite unlikely, I would have thought, that we will have a result that will be more competitive. If that is the case, Senator Evans will then be put into an even greater quandary, where he will either be forced to overturn the Trade Practices Commission decision or somehow hope that greater competition will emerge in due course. I just want to take a moment to highlight the disparity between the state of poverty that Australian Airlines has to endure and the state of wealth of Ansett Airlines, which, in recent months, has not only gone from strength to strength in terms of its net profit operations but also owns, currently at least, East-West Airlines. It has taken over Lloyd Aviation, which is a rapidly expanding airline; it controls Kendall Airways, which operates in three States; and it has taken over Aeropelican Air Services Pty Ltd, which flies charters between Sydney and Newcastle. What do we find when we look at Australian Airlines? It is going in the opposite direction. It has had to sell off Air Queensland after a disastrous investment of some $30m. Its main profits in the last financial year have come more from the sale of assets and a miserable $2m from some six resorts that it operates in Queensland than from any commercial activity in relation to the operation of airlines. In the last financial year its supposedly record profit was $39.16m, but only $10.56m of that sum was earned by flying passengers. On that basis, if one applied a price-earning ratio of 12 : 1, Australian Airlines would be worth $126m compared with its current capital base of $130m. So if one separates out the actual running of the airline and looks at the profit that has been derived, the downturn is of the order of 65 per cent in profits over the last 12 months. The Government has been told by Australian Airlines that it is in desperate need of the capital injection. We know that the Government will be extremely reluctant to provide that in its present category as a public enterprise because it will have an adverse effect on the public sector borrowing requirement. What is the obvious alternative? It is to put it out to the private sector and to allow those funds to be obtained in the capital markets. It will do that in due course. As night follows day, this Government will privatise Australian Airlines. The delay is for the sake of pacifying and appeasing the union movement. It has nothing to do with the interest of the Australian community, nothing to do with airline consumers and nothing to do with this poor little outfit that is bleeding to death. It is all for the sake of trying to persuade Mr Kelty and his mates that somehow privatisation is not anathema and that it has something going for it, and that, hopefully the union movement will be ruled by its head and not its heart, as Senator Evans now seems to think is an acceptable approach to these decisions. The reality is that Australian Airlines has both hands behind its back whilst, to mix metaphors, Ansett Airlines has been given a free kick in the goal square. It is abundantly obvious that Australian Airlines will not be able to go anywhere in the next few years, while Ansett Airlines will go from strength to strength. If we look at the ramifications of the policy decisions that have been announced, they have been put forward under the rubric of open competition. `Open skies' is the sort of headline that has no doubt warmed Senator Evans's heart. But that is nonsense. This is not open competition at all. It is a closed door policy. We find that there will be no competition from outside this country. There will be a limit of 15 per cent foreign investment in domestic carriers. There will be no entitlement whatsoever for any foreign airline to operate on domestic routes, not even little New Zealand Airlines. Whereas, of course, New Zealand was happy for us to go in and make its airlines more competitive, we are not prepared to do the same. Where will the competition come from? Senator Evans is on the record as saying all sorts of things such as, `There won't be great changes', `We do not expect that much will happen as a result'. That is almost `steady as you go' stuff. He is hosing down any prospect of significant competition. He does not want to see the sorts of decent discount fares, new routes, new airlines, carriers and operators that sprang up in the United States of America. Let us not be misled by the furphy of bankruptcies that have occurred there. As those who believe in competition well know, the right to go broke is a very important aspect of competition. There is no natural monopoly in the operation of small carriers and commuters. If one is talking about a People's Express type of operation, all one needs is one aircraft. One does not even have to own it; one can lease it. So it is a nonsense to talk about a natural monopoly. Senator Gareth Evans —If you do that you will go broke in three months. Senator ALSTON —Let them try. If they make the commercial judgment that they will inevitably go broke in three months, why would they take it on? That is absolute rubbish. No one would pretend for a moment that people would go into business just to go broke-except poor old Australian Airlines, which has no choice but to go quietly and slowly broke over the next three years. New Zealand will not be allowed in. What will there be in place to stop predatory pricing and the like? The history of Ansett Airlines is such that it has done everything in its power to put East-West Airlines Ltd out of business-not just the ultimate takeover. Senator Stone —And a good deal of what ought not to be within its power. Senator ALSTON —Indeed, and by means of court actions and otherwise, it made very sure that there was no prospect of East-West being able to survive as a viable alternative. Of course, East-West was the only one that did offer any significant prospect of real competition. Of course, we have had Senator Evans saying that there will be no significant change. Presumably, that means that he does not envisage any serious competition. Of course, East-West used to charge cheap air fares, was quite happy to gate-crash some of the trunk air routes and was a viable competitor. Now it looks as though it has disappeared. It will always remember that, when it tried to expand, it faced a severe shortage of airport terminal space. Ansett is on the record as saying that it will fight tooth and nail to ensure that it is not forced to share airport terminals with other competitors. There has been very strong resistance from both Ansett and Australian Airlines to any importation of aircraft, expansion of routes or proposals for cheap new services on key routes. So it is quite clear that the leopard is not going to change its spots just because there has been some sort of announcement that the two airlines policy should come to an end. It should have happened long ago, as we know, and it will now come about. This is essentially a timid and cautious decision and one for which the Government deserves no credit. The reality is that there will be virtually no competition in the airline industry. The lead in the saddlebags of Australian Airlines is unbelievable. It will still be required to comply with the superannuation requirements and the industrial regulations red tape that prevails. Senator Evans will not give an answer as to whether the Loan Council requirements will be lifted. In all sorts of ways the industry will still be regulated and controlled. All air fares will be subject to review by the Prices Surveillance Authority. Trade Practices legislation will be invoked if necessary. The Trade Practices Commission will, to the best of its ability, I suppose, try to restrain Ansett. But the prospects are not very good. Senator Evans clearly agrees with that. So in all sorts of areas what we find is that there has been no encouragement at all for Australian Airlines to become really viable and competitive. Every opportunity has been provided for Ansett to go from strength to strength. That is not what we need in this country at present. The Government should have had the courage, the intestinal fortitude, to allow in competition, if necessary from overseas and at the very least from New Zealand. I quote from an article in the Australian Financial Review by Gregory Hywood, a well known-nigh notorious-acolyte of the Government in many areas, and particularly of the Treasurer (Mr Keating). Yet what did Mr Hywood have to say about Senator Evans's disastrous series of announcements. He called it a cautious compromise. He said: By preventing the entry of major foreign carriers into the market, the Government has closed off the only realistic source of competition. The main concern of Labor appears to have been to protect the major players, minimise the political fallout, yet gain the kudos of increasing competition. The decision contains little of the boldness which underpinned Labor's decision to allow the entry of . . . foreign banks . . . the primary aim was to not disadvantage particular existing operators. . . . . Ansett is particularly well looked after on the domestic routes. All- that is all the existing competitors- are protected from the uncertainty of powerful outside competition under the new regime. Senator Evans conceded this yesterday when he said the changes would produce `niche competition' . . . from small operators on feeder routes. This is fringe player stuff. This is not in the main event. This is not competition. Mr Hywood goes on in the same vein, and one could expatiate at length if the time were available. It is not just the Financial Review and the Half- penys of this world, it is not just those who are perceptive enough to realise who the one great beneficiary of this fraudulent exercise is, it is the people of Australia and the consumers of airline services who will most regret what has happened, the ball having been dropped in such a scandalous manner. I only regret that Senator Evans, who would appear to be a champion of change and prepared to take initiatives, has not taken the opportunity in this instance. The ACTING DEPUTY PRESIDENT(Senator Powell) —Order! The honourable senator's time has expired. Senator GARETH EVANS(Victoria-Minister for Transport and Communications)(3.27) —Madam Acting Deputy President, it takes a fair bit of cheek to become a politician, to thrust oneself into the public gaze, to demand to be taken notice of and then to assume that people will take one seriously. It takes even more cheek, I guess, to be an Opposition politician, because everyone knows that one often has to stand up in this place and oppose things for the sheer hell of it; oppose things which one knows are right and which one would do oneself if one had half a chance. To generate the kind of synthetic indignation that we have just heard from Senator Alston really does take a degree of cheek and brazenness that is entirely appropriate for a competent member of an Opposition. (Quorum formed) I was saying that it takes a fair bit of cheek to be a politician; it takes lot more cheek to be a good Opposition politician, but to produce the kind of proposition that we have before us today requires a degree of cheek that is not a common or garden variety-it is stupendous, it is gothic proportion cheek. To shed crocodile tears for Australian Airlines, the socialist enterprise that the parties opposite and every other tory party since Menzies have been trying to kick the legs out from under; to assault the Labor Government for alleged shortfalls in its aviation deregulation package; to do so when the parties opposite have been in government for 27 of the 35 years of the existence of the two-airline policy, when they were there from 1952 through to 1972, the first 20 years of it, and well and truly after the policy got out of its childhood into its adolescence and there was a mature system which manifestly no longer justified that degree of bureaucratic interventionism, and when they were in government again from 1976 to 1983 and still did absolutely nothing about deregulating the industry, about moving down any of these paths they are getting so excited about today-all that requires the kind of cheek for which they ought to be locked up and the key thrown away. The Age editorial yesterday put it about as nicely and neatly as it possibly could be put when it said: While the Liberal Party has huffed and puffed about the benefits of freer commercial competition and less official control, the Government . . . has moved further towards economic deregulation than any of its predecessors. I think Senator Alston should be ashamed to show his face in Victoria when the people of Victoria, having read an editorial such as that, will realise just how synthetic, how hollow, how hypocritical, how empty, how frustrated and how envious his speech was here today. The matter of public importance says that there has been a refusal to open the Australian aviation industry to genuine competition. What absolute nonsense-nonsense on stilts, as Jeremy Bentham would say. Only Senator Puplick would recognise the allusion, I appreciate, but at least he has got a guffaw out of it. Senator Stone —On the contrary. Senator GARETH EVANS —Maybe Senator Stone, too. His erudition is already getting a bit faded around the edges. What we are really doing, of course, is removing four basic controls to create a competitive environment. We are removing controls over imports; we are removing controls over capacity; we are removing controls over fares; and, above all, we are removing controls over route entry. What else is that but opening up the Australian airline industry to genuine competition? We are reinforcing that competitive environment by applying the Trade Practices Act and indicating a willingness to go as far as it becomes necessary to do, if weaknesses show up through a subsequent course of judicial interpretation, to ensure that there are effective anti-dominance provisions operating in that legal area, the effective operation of anti-anti-predatory pricing and all the rest of the things that are crucial to ensure competition. We are making arrangements to ensure guaranteed access to terminal gate entry for potential new entrants. We are, in all those ways, creating a competitive environment that will, in fact, operate as such and produce genuine and real advantages over time for Australian consumers. But the nub of the complaint seems to be that we are not allowing in foreign airlines; we are not allowing in international aviation operators to make a major splash on the domestic stage. True it is that we are not. We are not excluding, by the way, foreign investment completely. Senator Alston —No, 15 per cent. Senator GARETH EVANS —It is not 15 per cent. Senator Alston should get his act together. It is as much investment as the Foreign Investment Review Board (FIRB) is prepared to allow on a case-by-case analysis, provided that investment is not by an existing international aviation operator running services to Australia. If there is foreign capital out there, if there is a foreign airline out there in the Ozarks or Arkansas or Central Europe, or somewhere else, that wants to do the thing Ansett Airlines has done in New Zealand-that is, establish a domestic operation in Australia-it will be perfectly welcome to do so, subject to ordinary FIRB constraints. The 15 per cent is just a limitation on the degree of ownership or investment that can be made by international operators coming into Australia. Why have we set that restriction? Why have we set a limitation on foreign airlines coming in? I will tell the Senate why. First, it would create a manifestly unfair competitive environment for the domestic operators. Consider a situation where United Airlines, with its 50 million passengers a year and 373 planes, considered coming into the Australian market as a marginal cost operation, having elsewhere amortised its infrastructure costs, its fleet costs. Consider American Airlines, with its 46 million passengers a year and 330 planes, or Continental, with its 600 planes, choosing to do it. How then would any of the domestic operations have a chance of surviving in that sort of environment? How would we weigh the benefits of the competition that would flow from that entry against the damage and havoc that would be caused to the domestic Australian industry as a result? That is one consideration, but by no means the only one. Secondly, how do we justify allowing the entry of foreign international airlines into Australia in an environment where those other countries running those airlines themselves lock international competitors out? The American system was not an open skies system; it was a closed system so far as foreign airlines were concerned. Qantas is not allowed to fly inside America; no other international airline is. Qantas is not allowed to fly domestic routes in any other part of the world and that is the norm in international aviation. It is a cut-throat business and those sorts of barriers apply everywhere, even in countries having the most intense alleged philosophical commitment to the kind of competitive environment that honourable senators opposite are talking about in a wishful, fantasy sort of way. The third reason we are keeping foreign airlines out is simply the necessary consequences that would flow so far as the Australian domestic airlines' own competitive response would be concerned. The only way they would want to go in that kind of situation would be international. Ansett has made no bones about that and I believe that it would not be possible for the Government to resist such a claim being made on the grounds of fair and equitable commercial opportunity. Accordingly, we would have an undermining of the single designation policy which has been at the absolute heart and centrepiece of our international aviation policy for the last goodness knows how many years and there is a very rational reason for that. To allow a fragmentation of our international airline operations, to allow a domestic operator to take the eyes out of the few really profitable routes that there are, such as trans-Tasman and Australia-Japan in particular, would not produce, in my analysis, net gains for the Australian aviation industry or the Australian economy. It would create a fragmentation situation which would be increasingly unsustainable. I regret that Senator Alston has been obliged, by the weight of this argument, to leave the chamber. I can understand why he should scurry for cover. It is not a situation that is manageable, that is acceptable in an international aviation environment where all the emphasis is the other way-not towards fragmentation but towards consolidation and towards the creation of mega-enterprises. It is a much longer and more complicated argument to spell it all out, but the only point I simply make to summarise all that is that there is a much more complex and delicate interrelationship between the domestic and international aviation markets and environments than the Opposition seems prepared to acknowledge. Perhaps it is more than it is even aware of. Many considerations also apply. By way of parenthesis perhaps I should just add some of the more romantic solutions that are perpetrated, for example, as far as our little Kiwi battlers across the Tasman are concerned. Senator Stone —Why don't you let them in? Senator GARETH EVANS —Senator Stone asks: Why do we not let them in? Because it is an international airline and all the same considerations to which I have referred apply. If that were to occur, it would create exactly the same sort of competitive response by Ansett. It would be a marginal cost operation if they were to come in in their own right. Were they to buy a piece of the action that might change the circumstances somewhat, but it would still have the capacity that any international operation has to spread its costs and not be able to be running in a truly competitive operation. Moreover, it is just naive to have this perception that we owe some sort of obligation to our trans-Tasman cousins out of some kind of sentiment rather than hard-headed economic analysis. The truth of the matter is that the balance of commercial advantage, in terms of the international aviation agreement that presently exists between Australia and New Zealand, lies squarely and wholly on the New Zealand side. There are many more opportunities for the New Zealand carrier, Air New Zealand, to take Australian passengers on routes, for example, across the Pacific, than there are for the Australian airlines to take New Zealand passengers. There is an imbalance and all the abstract purist argument in the world that one might hear on occasions like this from the Senator Stones of this world does not alter that set of dynamic real world realities and the implications that would flow from opening the skies in the way that has been suggested. It just does not make sense. Let us come to that part of the proposal which deals with privatisation that perhaps attracted even more synthetic indignation and even more huff and puff, using the language of the Age, than that about the competitive environment. We are told that this is a shameful and politically motivated deferral of the overwhelming case for immediate privatisation. The proposal, to the extent that it makes any grammatical sense, assumes what has to be proved and that is not something that can be assumed. It has to be proved that privatisation is the answer to the problems, such as they are, of Australian Airlines. Two reasons are usually advanced for privatisation: First, managerial efficiency and the benefits that will flow from it in terms of the dynamic environment of the private sector compared to that of the public sector; and secondly, the particular question of capital funding and capital needs. We are addressing both of those questions in the context of Australian Airlines and it is simply not to be assumed that privatisation is the only way through the problems that Australian Airlines has. As far as managerial efficiency is concerned, this is something that is absolutely at the centre of the strategy for Australian Airlines that was mapped out in my statement earlier this week. We are tackling the problem head on, recognising that there is a problem and that Australian Airlines has to be leaner and tauter, that it has to have a much greater degree of managerial freedom, it has to have a much greater degree of commercial responsibility, it has to be relieved of a number of the more idiotic Public Service shackles and controls that people such as Senator Stone have spent most of their adult life mapping out and applying to organisations like this-- Senator Stone —You will have to do better than that. Senator GARETH EVANS —And sometimes in denying the results of their week's work when they have a foot up on the bar on a Friday evening. Nonetheless, they have been doing it for a generation or more, and that is the legacy that Australian Airlines now has and that is the legacy of which it must be relieved. Our policy, as articulated earlier this week, is designed to do just that. Incorporation will take place as soon as possible with all the benefits that will flow from that. Senator Stone —Is that the situation you repealed when you first came to office? Senator GARETH EVANS —That is right. Unlike the Bourbons opposite who learn nothing and forget nothing, we are capable of learning from experience, of re-analysing situations and changing our minds when the weight of argument, the weight of analysis, the weight of evidence, points that way. We have changed our minds. We have thought about it and we have come to the view that incorporation would be a highly desirable step to take. It would create a situation where the directors become fully accountable, fully responsible, in a normal commercial environment for the consequences of their decisions, and this in itself, quite apart from the particular controls and things, the removal of which are associated with the incorporation strategy, we believe will create a whole new ethos within the organisation, which will be thoroughly helpful in achieving the sorts of objectives we are talking about. Associated with that incorporation, we are talking about the simultaneous removal of a number of discretionary Public Service, public sector, controls and limitations which presently apply-the approval of contracts of quite small amounts of money, detailed terms and conditions of borrowing and leasing arrangements having to be approved by the Government; the investment of surplus money having to be approved; the choice of auditor having to be approved; dividends having to be recommended; and provision of insurance against risk. All these things we will strip away, and it is long overdue. It is something that could have been done at any time in those 27 of the 35 years that the two airlines agreement has been in operation. But it was not done by the Opposition and now it comes in here and sheds crocodile tears and displays synthetic indignation about the way in which we are doing it now. We are doing it for a good reason. We are doing it because we believe it will result in greater managerial efficiency. It does not necessarily follow at all that we have to privatise to achieve these sorts of results. All of these things can be done consistently with maintaining fully 100 per cent public ownership. Beyond that we are looking at a series of more significant and far-reaching controls-on industrial relations co-ordination, on superannuation schemes that are applicable, on salary caps through the Remuneration Tribunal and, of course, on the borrowing restrictions, the Loan Council ceilings and so on that are presently applicable. It may well be that most, if not all, of those restrictions can also be stripped away in the context of not a shift to a privately owned organisation. But while it remains in the public sector we are looking intensely and closely at those possibilities and the results of that analysis will be known in a few months time. Beyond that there is, of course, the second leg of the argument about privatisation, and that is the question of capital funding. Capital funding has a couple of dimensions to it. One is borrowing and the other is injections of equity. Again, on the borrowing side, there is a question as to the extent to which borrowing capacity would be aided by relief from the present Loan Council restrictions. It is not necessarily incompatible with the organisation remaining in the public sector that those Loan Council restrictions be lifted. Whether that can be achieved is something again, as I said a moment ago, we are looking at. To that extent, borrowing would, of course, be much easier. It is not the end of the matter because gearing ratios are still important for an organisation like this. One does not want to be too heavily indebted and have too much of one's capital tied up in that way. So the question of equity injections will remain important. It is the case that Australian Airlines will need $200m plus or minus of equity injection in the next two to three years. Whether or not there proves to be difficulty in accommodating that need within the existing budgetary arrangements is a matter for decision by the Government. It is not a matter on which conclusions can be assumed. It is a matter of the kinds of priorities that we want to apply. Debate interrupted. The PRESIDENT —Order! It being 3.45 p.m., under sessional order I put the question: That the Senate do now adjourn. Question resolved in the affirmative. Senate adjourned at 3.45 p.m. until 2 p.m. on Tuesday, 20 October