Thursday, 29 October 1987 The PRESIDENT (Senator the Hon. Kerry Sibraa) took the chair at 10 a.m., and read prayers. The PRESIDENT —I wish to inform honourable senators that, due to an industrial stoppage at the Government Printing Office, the production of the Senate Notice Paper has been affected. Accordingly, the Senate Table Office has prepared an abbreviated Notice Paper for today's sitting. The Journals of the Senate for yesterday's sittings have also been prepared and limited copies are available from the Table Office. The stoppage will also affect the production of the Senate Hansard, which will not be available until the dispute is resolved. I will keep honourable senators informed of any developments. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned expresses concern that some scientists in Australia are intent on undertaking destructive experimentation on human embryos. This subject was examined exhaustively by the 1985-1986 Senate Select Committee on Senator Harradine's Human Embryo Experimentation Bill which received 270 submissions and more than 2,000 pages of evidence. The report of the Senate Committee recommended in October 1986 that the Commonwealth Government make unlawful any destructive experiment which frustrated the development of the human embryo. Your petitioners therefore request the Senate and the Government of the Commonwealth of Australia to: Implement without delay the major recommendation of the Senate Select Committee to outlaw destructive experiments on human embryos. And your petitioners as in duty bound will ever pray: by Senators Bjelke-Petersen (from 150 citizens), Black (from 538 citizens), Colston (from 185 citizens), Harradine (from 126 citizens), Reynolds (from 244 citizens) and Sheil (from 291 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 Senator Bishop (from 11 citizens). To the President and Senators 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 resubmitted to Parliament. As in duty bound your petitioners will ever pray. by Senator Gareth Evans (from 20 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth opposition to the introduction of any form of national identification system especially a system known as Australia Card. Your Petitioners request that the Senate in Parliament assembled should oppose any Legislation designed to impose such a system on the people of Australia. And your petitioners as in duty bound will ever pray. by Senator Walters (from three citizens). To the Honourable the President and the members of the Senate assembled. The humble petition of the undersigned citizens of Australia sheweth that whereas: 1. The present Australian national flag is not distinctively and uniquely Australian and is confused with other national flags. 2. The people of Australia have never had an opportunity to express their views on an appropriate Australian national flag in a referendum. 3. The present Australian national flag does not properly represent Australia as a sovereign independent nation. 4. The present Australian national flag falsely proclaims Australia as a colony, homeland, protectorate, dominion or government department of Great Britain. 5. The first condition in the flag competition of 1901 required that the design should show Australia's loyalty to the British Empire. The British Empire no longer exists. 6. A public opinion poll held in 1984 using the Gallup Method revealed that 52% of Australians surveyed wanted a competition for a new design for the Australian flag. 7. There is no inherent link between Australia proclaiming a unique and distinctive flag and the political issue of Australia moving to a republican form of government. 8. The adoption of a truly Australian national flag would serve as a focal point for Australia's bicentennial celebrations in 1988. Your petitioners therefore pray that your honourable house will: (a) Appoint a Committee of the Parliament with representatives from both Houses and all parties to invite and consider proposals for the design of a new Australian national flag, and (b) Require that Committee to make recommendations on the form of a minimum cost referendum at the time of the next general elections, in which the electors will be given the opportunity to vote for a flag from a selection of at least three designs which will include the present Australian national flag and the winner of the Ausflag-Bulletin-2MMM.FM competition of March 1985. And your petitioners as in duty bound will ever pray. by Senator Gareth Evans (from 35 citizens). Petitions received. Senator GARETH EVANS(Victoria-Minister for Transport and Communications) —On behalf of the Minister for Justice (Senator Tate), I give notice that, on the next day of sitting, he will move: That the following Bill be introduced: a Bill for an Act to amend the Commonwealth Legal Aid Act 1977. Senator VALLENTINE(Western Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) congratulates Greenpeace International and the Institute for Policy Studies in the United States on the publication of Neptune Paper No. 1-The Nuclear Arms Race at Sea; (b) notes with concern the increasing prominence naval nuclear weapons play in the military strategies of both the Soviet Union and the United States; (c) expresses fears at the dangers of naval operations involving nuclear weapons because the oceans are borderless, and therefore that such exercises carry potential for direct confrontation, misunderstanding and accidents; (d) is alarmed by the deployment of more than 15,000 nuclear weapons at sea including 8,800 submarine-launched ballistic missiles; (e) is worried at the imbalance of Australian-United States joint naval exercises, half of which take place outside the area of Australia's primary defence interest as identified in the 1987 White Paper; and (f) affirms that Australia should not be assisting nuclear navies of any nation in their provocative and destabilising manoeuvres. I seek leave to table the document referred to in the notice of motion. Leave granted. Senator VALLENTINE —I table the document. Assent reported. Bill received from the House of Representatives. Motion (by Senator Gareth Evans) agreed to: That the Bill may proceed without formalities and be now read a first time. Bill read a first time. Senator GARETH EVANS(Victoria-Minister for Transport and Communications)(10.05) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The document read as follows- This Bill contains amendments to the Migration Act 1958 to implement decisions taken in the Budget context to recover some of the costs associated with the provision of various services under the portfolio for Immigration, Local Government and Ethnic Affairs. The 1987/88 Budget expands the level and quality of services provided to the community and to the clients of the Department of Immigration, Local Government and Ethnic Affairs. In order to help fund these improved services some existing fees for Departmental services are to be increased, and this legislation introduces some new fees. This reflects the Government's concern that some of the costs of the services of benefit to clients should be borne by the user, and not the community as a whole. The increased revenue proposed also reflects the demand by clients that the Government provide faster and more efficient services. Such improvements are not always possible without resources being increased-resources which have to be funded. As announced on Budget night, there will be a fee, which will be set initially at $240, for reconsideration of certain decisions taken under the Migration Act. This is the same amount as the fee for lodgment of appeals with the Administrative Appeals Tribunal. In order to protect public revenue, the clause of the Bill that relates to the Scheme-Clause 9 (a)-will, on enactment of the Bill be taken to have come into operation on 16 September 1987. The details of the scheme will be prescribed by regulations, which will specify The types of decisions which will be able to be reconsidered under this procedure; Who will have standing to apply for reconsideration; The time limit in which such a request will have to be made; and The limited circumstances in which the fee will be refundable, The Budget also provides for an augmentation of the resources devoted to reconsideration of decisions under the Act. The membership of the Immigration Review Panel has been increased from 32 to 157 and the Panels now meet in all mainland state capitals. The resources of the Department of Immigration, Local Government and Ethnic Affairs allocated to the Review Task have been more than doubled. These steps have been taken to provide improved service and overcome the present backlog of cases. As honourable senators know, the Immigration Review Panel was established in 1982. It is independent of the Department of Immigration, Local Government and Ethnic Affairs and recommends to the Minister for Immigration, Local Government and Ethnic Affairs whether decisions which have been appealed should be maintained or changed. The Review system is essentially directed to providing an avenue for Australian Citizens and permanent residents affected by a refusal decision made overseas in respect of an application by a close relative or a sponsored employee, to seek the reconsideration of that decision. In some cases, the actual person who is the subject of the refusal decision-especially where that decision is made in Australia-will have a right to seek a review under these arrangements, provided that he or she was legally in Australia at the time the refused application for further temporary stay, or resident status, was lodged. Simultaneously with the introduction of the fee, the range of reviewable decisions has been significantly widened. Among the decisions that will be prescribed as reviewable, following a request by an eligible appellant, will be: Refused migrant entry applications, with the exception of people applying to settle in Australia under the refugee or special humanitarian programs; Refused applications for permission to come for a temporary stay in Australia, apart from those in relation to persons coming to study; Unsuccessful applications for the grant of resident status; and Refused applications for extension of stay by persons in Australia on a temporary basis. Decisions not prescribed will not be reviewable under the legislation, but will be subject to existing arrangements. The fee that has now been introduced is refundable to appellants where the decision-maker on appeal is of the view that, on the basis of the information available to the earlier decision-maker, a favourable decision should have been made by the earlier decision-maker. To explain these new arrangements, the Minister for Immigration, Local Government and Ethnic Affairs recently wrote to all members and senators. Representations concerning these prescribed migration decisions-if they are to be effective-will need to relate to a formal request for reconsideration. That is, no effective action on a request for reconsideration will be taken unless statutory requirements have been fulfilled, including the payment of the notified fee. Where a valid request for reconsideration has been made, representations from honourable senators will be able to be considered by the Minister for Immigration, Local Government and Ethnic Affairs and by the Immigration Review Panel. As I have mentioned, the introduction of the fee is in the context of the new arrangements to provide a much improved and speedier service for reconsideration of decisions. The estimated cost of providing the review mechanism in 1987-88 is $5.9 million dollars. The estimated revenue from the fee is $1.44 million dollars in 1987-88 and $1.92 million dollars in a full year. These changes are not meant to affect the recommendations about the review process made in 1985 by the Administrative Review Council. Those recommendations will be considered afresh following the report of the Committee to Advise on Australia's Immigration Policies. Clause 7 of the Bill establishes the mechanism whereby a new immigration clearance fee-for-service can be collected and paid to the Commonwealth. At present, the full cost of undertaking immigration clearance services at ports of entry is borne by the Australian taxpayer. These costs are increasing dramatically each year, because the number of persons travelling to Australia is increasing, and because of improved clearance services. In order to recoup part of these costs, it was announced in the Budget package that passengers over 12 years of age arriving on international flights and who require immigration clearance on arrival will, from 1 January 1988, be required to pay a $5 immigration clearance fee. The fee is to be collected by international airline operators who bring the passengers to Australia. In turn, the operators will pay the fees collectable by them to the Commonwealth. The amount of the fee payable by airlines will be a debt due to the Commonwealth. Revenue generated from the fee is estimated to total about $17 million dollars in a full year. It will be used to offset The cost of immigration inspection of passengers at airports; The costs relating to passengers who are refused entry; The cost of facilities to detect fraudulent immigration documentation; The cost of issue of visas; The salaries and other costs of airport staff; and General administrative overheads. Consultation with the airline operators is taking place to ensure that the legislation and mechanisms to impose the charge will impose as small an administrative burden as necessary on the airlines. The Bill also seeks to introduce a system of ``on-the-spot penalties'' for airline and shipping companies bringing foreign nationals to Australia without proper immigration documentation. At present, carrier companies commit an offence under the Act and, if found guilty by the courts, are liable to a maximum penalty of $2000, for each foreign national they bring into Australia without proper immigration documentation. Clause 6 (b) provides that the maximum penalty will be increased to $3000. The level of the maximum penalty has stood at $2000 since the offence provision was established in 1979. Clause 9 (c) of the Bill will provide power to establish a mechanism whereby, as an alternative to proceeding in courts, it will be open to the Department of Immigration, Local Government and Ethnic Affairs to serve a notice on the carrier stating that it is in breach of the Act and requiring it to pay a prescribed amount as a penalty. The system, which is to operate from 1 January 1988, will provide that the maximum penalty will not exceed $1500-which will be half the maximum penalty which can be imposed by the courts. As publicly announced on Budget night, it is intended that initially the penalty will be $1000. The option will, however, still be open to the Department to institute proceedings before the Courts under Section 11c of the Act. Clauses 6 and 8 make amendments to section 11c and section 57 to facilitate the production of evidence in court in the event of prosecution under section 11c. The present system of instituting prosecutions is both time consuming and costly, even though the factual issues are relatively straightforward and simple. The number of prosecutions able to be initiated by the Department of Immigration, Local Government and Ethnic Affairs is very small, which is of concern given that the number of people arriving without documentation is increasing. Overseas experience indicates that a system of ``on-the-spot'' fines acts as a powerful incentive for international carriers to check more adequately their passengers' documentation prior to boarding and helps to reduce the number of inadequately documented passengers arriving at borders. It is not, of course, proposed to impose the penalties where a carrier can show that it had taken all reasonable steps to ensure that passengers had valid documentation when they boarded the aircraft or ship. A final matter dealt with in the Bill is that amendments are to be made to the provisions in the Act dealing with requests for entry permits and visas. In order for a valid request to be made, it will be necessary for any prescribed fee to be paid, and the request to be made in writing in accordance with the relevant form approved by the Minister. This was also announced on Budget night and will, on enactment of the Bill, be taken to have come into operation from 16 September 1987. The amendments-Clauses 3, 4 and 5-will clear up an anomaly identified in a recent court case, which cast doubts on the requirement that the prescribed fee actually was payable. The need to lodge applications in accordance with the relevant form will help overcome problems which officers of the Department of Immigration, Local Government and Ethnic Affairs have experienced in identifying whether in fact a person is making an application. Of course, in the vast majority of cases, applicants have always paid the relevant fee and lodged their application on an official form. This amendment is merely designed to help underpin that practice. Similar arrangements will be put into place, by way of Regulations, in relation to requests for reconsideration of decisions. I present the explanatory memorandum to this Bill. This contains details of the amendments I have outlined. I commend this Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Debate resumed from 28 October, on motion by Senator Ryan: That the Bills be now read a second time. Senator HAINES(South Australia-Leader of the Australian Democrats)(10.06) —The package of legislation before the Senate at the moment deals with a number of proposed changes to provisions in the taxation laws and laws relating to the Medicare levy. The package consists of Taxation Laws Amendment Bill (No. 3) 1987, the Income Tax Amendment Bill (No. 2) 1987, the Medicare Levy Amendment Bill 1987 and, in addition, a less controversial piece of legislation, namely, the Sales Tax (Exemptions and Classifications) Amendment Bill 1987. The Taxation Laws Amendment Bill (No. 3) contains measures that are designed primarily to prevent abuses of the new dividend imputation system introduced as part of the Government's tax reform package. That package has been an ongoing package since this Government took office and in many areas it has received a considerable amount of support from the Australian Democrats. There were certainly a significant number of inequities in the tax legislation when the Hawke Government took over. The introduction of, for example, capital gains tax legislation and fringe benefits tax legislation received our full support. Indeed, I have been interested to note in recent editions of magazines such as Personal Investment Monthly that industry has accepted quite well now things such as the fringe benefits tax because in many instances it has meant more certainty in salary packages for senior employees. Of course, we also supported the end of negative gearing when the Government introduced that, accepting the argument that was put by the Government at the time that it was unfair to have a tax concession of that sort which essentially assisted the wealthy in the community and provided no direct benefits to the needy. It was with some concern, therefore, that we noted in the recent Budget that the Government moved to reintroduce negative gearing for property developers on the ground that there was a shortage of rental property on the market for low income people. It is our argument that, had the Government used the several hundred million dollars annual savings that it got from the abolition of negative gearing to provide direct assistance to those in need at the low income end of the housing market, it would have achieved a far better result than has the reintroduction of the negative gearing capacity for people involved in property speculation, which provides tax assistance to those whose incomes in the main are well over $50,000 a year and provides very little opportunity for access to low cost rental housing for those people who are currently living in poverty. One of the other measures that the Government introduced, which I think had the support of everybody in this place, was a dividend imputation system to allow shareholders to receive dividends tax free where the company paying the dividends has already paid company tax. That was well overdue and, as I have said, received considerable support in this place. Unfortunately, what that did in turn was to provide an opening for a potential tax abuse. It provided an opening for new avenues of tax avoidance for dividend strippers who seemed to think they were in a position to get the double benefit of both a tax deduction for the cost of shares purchased in a dividend strip and a rebate on the dividends distributed on those shares. The Taxation Laws Amendment Bill (No. 3) seeks to prevent such abuses by denying the tax benefit of dividend imputation where the dividends are paid as part of a dividend stripping enterprise or operation. We certainly support the Government's intention to put a stop to that sort of loophole that it could have opened up through the introduction of dividend imputation. I add in passing that the legislation also includes changes to the capital gains tax area, superannuation deductions and gift provisions of the income tax law. The main problem, as far as the Opposition parties are concerned, appears to be the starting date that is stipulated in clause 8 of the new provision relating to stripping. I do not think anybody in this place supports real retrospective tax legislation; that is, I think very few people would feel that there is a need to introduce legislation that would make retrospectively illegal something that was legal, if somewhat questionably moral, at the time it was undertaken. Several governments in the past have tried to introduce retrospectivity in tax legislation, with varying degrees of success. In general, I think we all acknowledge that what governments should do when they run across an area of tax abuse is move immediately to indicate that they are aware of that area of abuse and announce that they intend to close it off. Of course, the proper thing for them to do then is to announce that they will be closing off that area of abuse as of the day that they make the statement about their awareness of it, even if sometimes, because the issue is complex, it takes a little while to get the legislation drafted and before the Parliament. To make people aware of the fact that a government is going to close off a loophole, and then allow people to take advantage of that loophole during the time that the Government is preparing the legislation is outright idiocy. I do not believe that a general warning, or even a specific warning, by a government with regard to its intention to close off a loophole or loopholes is an element of retrospective legislation. It is appropriate in the area of tax avoidance that governments announce immediately what their plans are with regard to closing those off. I think it is important that we realise that the ingenuity of tax lawyers and accountants is such that it is often clearly necessary for a government to offset potential losses to revenue by signalling or foreshadowing amendments to tax laws. The announcement by the Treasurer (Mr Keating) on 4 June of this year, with regard to abuses of the new imputation system of company tax, fits into this category. Indeed, the Press release specifically pointed out that the Government was doing this. In that Press release the Treasurer said: In deciding to release the draft Bill, the Government was conscious of the legitimate needs of business to be able to plan for and order their affairs without the uncertainty of not having seen safeguarding provisions which would, of necessity, have to operate from 1 July or earlier. The decision to release the draft has accordingly been taken even though some technical provisions are not fully settled. For example, the draft Bill would deny the intercorporate dividend rebate on dividends paid out of profits on the revaluation of assets which are effectively disposed of in certain avoidance arrangements. These provisions will be extended to also apply in situations where entities are interposed between a company that revalues its `taxable' assets and the company shareholder which disposes of shares in that company. I cannot, therefore, understand the Opposition's attitude in this regard. Had the Bill attempted to make the relevant or operative clause, that is clause 8, operate from 10 December of last year, the date of the imputation legislation announcement itself-that is, prior to the announcement that the loophole was to be closed off-there could have been an acceptable argument that a retrospective element applied. I do not agree with the Opposition that there is any element of retrospectivity in having the date of 4 June operate as distinct from 23 September, which is the Opposition's preferred date because that was the date that the Bill was introduced into the Parliament. The Press release issued at the same time as the draft Bill, and presumably to the same people as received the draft Bill, gave clear guidelines regarding the Treasurer's intention to cut off further avoidance via the imputation provisions. I think it would be appalling if any government were discouraged or dissuaded from releasing draft legislation for comment if it felt that, after consultation, the Parliament would only agree to the contents of the Bill as specified in the Press release rather than a new and improved model. A draft Bill, I suggest, is just that, and governments of all persuasions issue draft Bills. They issue them for comment, they accept those comments and they then make whatever adjustments are necessary. When a Press release indicating that an additional loophole is to be closed off is issued at the same time as a draft Bill, I think that it would be a very stupid tax lawyer or accountant indeed-in fact, an incompetent one-who would continue to advise clients to rearrange their affairs in a way that was likely to leave them open to a charge of tax avoidance. The Opposition amendments, as I say, are therefore designed to change from 4 June to 23 September the date from which the legislation takes effect. We will not, as I have already indicated, support that proposition because I believe in this case, in respect of a specific instance of tax avoidance, it is appropriate for that 4 June Press release to be taken into account, since it specifically foreshadowed the changes that would be taking place to the draft Bill at the same time as that draft was released. As I said, I would hate to do anything that would discourage a government from taking the perfectly proper action of consulting the industry concerned-the people likely to be affected-through the use and release of a draft Bill. Tax evasion ought not to be tolerated and I think the method that the Government has used to go about this matter in this case is reasonable. On the general issue of tax avoidance and inequitable taxation systems, I mention that there has been comment recently about the need for a wealth inquiry, to be followed, some would suggest, by a wealth tax. I would like to make it perfectly clear that there is no way that we would support a wealth tax either following or introduced instead of or before some kind of wealth inquiry. But I do think, notwithstanding any talk to the contrary by other people in the last week or so, that we still need in this country to have some sort of inquiry into wealth-not into who owns it and what ought to be done to take it away from them, but into how some people are able to take advantage of what are basically inequitable tax law while others cannot. At that stage we ought to look at further problems in tax legislation, of which I suggest negative gearing is one, that distort the system so that some people are able to avoid or evade their taxation responsibilities while others are not. There is a problem, too, that has been raised with my office with regard to clause 42 in the Taxation Laws Amendment Bill (No. 3). I point out that that clause clarifies section 14zka of the Taxation Administration Act 1953 and is intended to guard against a potential total loss of revenue of the order of some $250m annually due to problems that the Commissioner of Taxation is having with regard to collecting penalties from people who have avoided paying tax. That is largely due to problems with the statute of limitations. The Senate Standing Committee for the Scrutiny of Bills has made no comment at all on this clause although it has made passing reference to clauses 38 and 43 with regard to the retrospective element that legislation by Press release introduces. I will be saying more about this matter in the committee stage. The changes that the Government proposes in clause 42 are probably reasonable ones for this Parliament to accept. The Medicare Levy Amendment Bill, which is the second of the Bills we are debating cognately today, amends the Medicare Levy Act 1986 to declare and impose the basic rate of Medicare levy for 1987-88 and all subsequent income years. It does something similar to what the Income Tax Amendment Bill (No. 2) does in changing the status of legislation and in doing so removing from the Parliament its capacity to debate some fairly important issues with regard to health care and the taxation system. Both in this Bill and the Income Tax Amendment Bill (No. 2) imposing income tax rates for 1987-88, the Government is attempting to change legislation which must currently be introduced into the Parliament on an annual basis into standing legislation which would have to be introduced into the Parliament only when the rate scales are changed. In another place the Opposition parties made quite appropriate comment about the need for parliamentarians, in doing their duty as representatives of the people, to fully debate issues of the day. Not to have significant legislation introduced as it ought to be introduced denies parliamentarians that possibility. For example, not to allow an annual debate on the Medicare levy and tax rates is to increase the power of the Executive at the expense of the Parliament. I believe that it is our responsibility to conduct a thorough debate to make the community aware of the policies of the Executive. There is something faintly hypocritical about some Opposition members, who have taken the stance they have with regard to this matter, claiming that it is essential that members of parliament have the opportunity to bring these issues before the attention of the people, because in recent years they have very rarely done anything more than talk about the problems. In attempting to confuse the electorate generally about the difference between money Bills and supply Bills and Budget Bills generally, they have quite frequently bleated about the impact of certain pieces of legislation, including Medicare levy Bills, on the community but they have not done anything at all to mitigate that problem. Even last year, when the hike in the Medicare levy specifically broke one of the Government's election commitments that the levy would remain at one per cent, the Opposition was not prepared to do anything except carry on about it when it has constitutionally and quite properly the capacity to act to prevent the Government from taking that course of action. The levy, even at its increased level, does not raise anything like the full amount of money spent by the Government on health care although, contrary to what the Opposition and some sections of the media would have us think, there has not been a huge blow-out in health spending in Australia. However, I would argue that what health expenditure there is is often inappropriately directed. Health care expenditure as a proportion of gross domestic product runs at something like 7 per cent in Australia and that figure is currently lower than that of many Organisation for Economic Co-operation and Development countries. We certainly do not spend nearly as much money as we should be spending on preventive health services. Indeed, governments generally do not like to spend money on prevention in any area at all because it has a hidden value and, if anything comes out of it, they cannot point to specific achievements in the same way as they can, I imagine, when it is after the event expenditure. The number of services provided per capita annually has remained largely constant since before the introduction of Medicare, and the expenditure predicted by the Government each year in Budget estimates has remained pretty close to those assessments. One value of Medicare is that it has made available to several million people-some 16 per cent of the population-health insurance which otherwise would have been out of their reach through the private sector because they simply could not afford it. The major health costs which have increased dramatically over recent years have been those in relation to diagnostic services. That is due, at least in part, to the fact that the American disease of litigation appears to be creeping in here, in combination with increased patient demand, technological advances and the popular misconception that health resources are not finite and people are getting in for their share. To its credit, I believe that the Government has taken some small steps to reduce the misplaced financial incentives in the existing system which have encouraged the trend of charging pathology fees, for example, which were out of all proportion to the work involved in particular services. Given the fact that doctors are concerned about potential litigation and the increase in personal liability insurance costs, I can understand that they would want to try to cover all aspects through pathology services, but it has got out of hand and I think that in the main the Government has taken suitable and appropriate action to limit this. I understand that the Opposition will be moving amendments similar to those moved in another place with regard to removing the change of status to standing legislation of both the Medicare levy legislation and the Income Tax Amendment Bill (No. 2). We will support those amendments. It is important that these Bills are introduced into the Parliament annually, giving members of parliament an opportunity to discuss matters of interest to them and to their constituents. The introduction of a Bill such as the Income Tax Amendment Bill (No. 2) 1987 gives members of parliament the opportunity to debate fully government policies in the tax and economic areas in particular. At a time such as this, with the so-called stock market meltdown of the past week, it would have been quite inappropriate had the Income Tax Amendment Bill (No. 2) not been introduced because it had been reduced to the status of standing legislation. I point out that the problems experienced by the stock market here and elsewhere have been, at least in part, the result of taxation policies that have encouraged speculation and discouraged productive investment to produce goods and services which Australia can export, thereby reducing our reliance on imports. We have heard much comment in this place recently about the need for Australian investors to put money into plant and equipment so that we can develop a manufacturing sector and get away from our dependence on commodities, which, according to this morning's media at least, has been responsible for the lack of confidence in the Australian dollar and caused its drop against the American dollar when the American dollar was also dropping against other currencies. I agree that we need to move away from our historical dependency on commodities and move into areas where we improve our export markets and where we can replace our dependency on imports. Nevertheless, recent governments-not just the current Labor Government-have encouraged speculative short term investment rather than long term investment in more productive areas. As I said earlier, the capacity for some people to continue negative gearing is a very serious area that needs to be attended to by this Government. People who were able to use negative gearing to borrow heavily to invest on Australian stock exchanges have not only had their fingers burnt but also caused many other people to lose money. That sort of gambling mentality, encouraged through the existence of negative gearing in that area alone, has a lot to answer for. There is no doubt that our tax regime has encouraged debt financing. There has been a distinct move away from equity to debt financing in recent years, allowing negative gearing on funds borrowed to take over other companies, even when those funds are borrowed from overseas. This has had a significant impact on the Australian economy across the board, if only because it has helped to increase our foreign indebtedness, some 60 per cent of which is owed by the private sector. It has also reduced the contribution that companies make to total revenue, because the tax deductibility of the interest on the borrowing has been used to reduce, or in some cases to negate entirely, company profits and hence company tax liabilities. So the average worker in this country is paying 24c to 30c in tax when major companies, through the use of negative gearing and other tax concessions, have been able to get their actual liability down to the range of 10c, 11c and 12c in the dollar. That is made worse when one considers that it is often the principals in those companies who argue that company tax and tax generally in this country are too high and who threaten to take their bat and ball to some other country, taking their companies essentially off-shore and denying Australia the productive capacity and employment opportunities that they currently offer. I suggest to those gentlemen that they look at the tax systems in a number of other countries, particularly our major trading partners, and look at some listings in the Organisation for Economic Co-operation and Development. If they do they will find that Turkey is the only place they can go which will give them any real sort of tax advantage, and that in itself will provide a number of other problems. A lot of the failure of confidence in the Australian economy has been a result of some of the less than helpful comments which have been made by some people who are already benefiting from the inequitable taxation system in Australia that allows wealthy companies and wealthy individuals to benefit in a way that ordinary families and individuals cannot. The system has contributed to the speculation in shares which drove the share market to crazy heights before the collapse that occurred last week. For example, people have stopped buying shares according to yield and, instead, have been buying according to whether or not they have been able to make quick and short term profits by buying and selling. If the Government abolished negative gearing on company borrowings and taxed the superannuation funds and other life funds which have invested overseas rather than in Australia, it would have the funds to encourage productive investment in labour intensive export and import competing industries. If the Government had done this earlier, Australia might have avoided the speculative domestic and foreign investments which promoted a share market boom. We might then have missed out on the disastrous effects of the share market bust, which may yet reduce the savings and take away the jobs of many Australians. Insofar as foreign investment came into Australia to profit from this speculative madness, it has now begun to leave Australia, not helped by the fact that the Hong Kong exchange was closed down, thus leaving many investors who had also invested there with only the Australian end of the market to sell out of. This has driven down our dollar and added to the serious liquidity problems of our financial institutions. I indicate now that the Democrats will support the Opposition's amendment to ensure that this legislation does not change status-that is, that it remains annual legislation, thus giving the Parliament the opportunity to discuss these issues of importance. Senator WATSON(Tasmania)(10.36) —The Senate has before it three Bills which deal with a wide area of taxation. The Income Tax Amendment Bill (No. 2) 1987 formally sets the tax rates for 1987-88 and all subsequent financial years according to the levels announced by the Treasurer (Mr Keating) in the September 1985 taxation package. The Medicare Levy Amendment Bill 1987 sets a basic rate for the Medicare levy at 1.25 per cent for this year and subsequent years. The Taxation Laws Amendment Bill (No. 3) 1987 deals with this very wide range of issues, again relating to taxation measures. The purpose of the Income Tax Amendment Bill (No. 2) is to amend the Income Tax Act 1986 to impose the rates of tax for 1987-88 and subsequent financial years. In effect, this Bill provides that income tax rates need not be debated on an annual basis by Parliament if no change in the rates is proposed by the Government. This practice of an annual review was actually introduced in 1976 by the late Eric Robinson when income tax indexation was introduced. I suggest that the Government should give consideration to the reintroduction of income tax indexation as it has the effect of keeping taxes down and keeping governments honest. Without such indexation, inflationary pressures and wage increases tend to force up the tax receipts of the Government and put undue pressures on individuals. It is important that the Opposition's proposed amendment to maintain the facility of annual scrutiny of the tax rates be supported. I commend the Australian Democrats for their support of our proposed amendment. Unfortunately, parliamentary scrutiny of the efficiency of government operations is being constantly eroded by this Labor Government. Let us look at a number of areas. Firstly, the Auditor-General is constantly obliged to operate with inadequate resources. Secondly, steps have been taken to transform the Loan Bill from an annual Bill to a standing Bill to reduce the opportunity for debate and therefore the chance for members of parliament to examine how moneys are actually being spent. Thirdly, the activities of our Joint Committee of Public Accounts are being checked. Recently we were informed that the staff of the secretariat would have to be reduced to one-third of its former level. This is despite the fact that the work load of the Committee has continued to increase and that it has a significant number of statutory responsibilities. Surely it is false economy to constrain the operations of the very committee that can keep a check on the inefficiencies and waste of public money. The Government appears to be doing everything in its power to keep from the public and the Parliament the details of its receipts and expenditures. What does it have to hide? That is the question that we surely must ask ourselves. Let us look at the increase in company tax rates to 49 per cent. In this Bill the rate of company tax is being officially raised to 49c in the dollar. This increase in the corporate rate is occurring at a time when other countries are in the process of reducing their company tax rates. In fact, I think British companies pay something like 35 per cent corporate tax at the moment. But still we find that the Australian Council of Trade Unions, in its publication Australia Reconstructed, and the Government are surprised by the lack of investment by business in new plant and equipment. It is not surprising that businesses are not investing as the Government and unions would have hoped, because we have increased the rate to 49 per cent tax at a time when other countries are lowering their tax rates. If Australia's huge overseas debt is to be reduced, investment in export industries is absolutely essential. The Government will not encourage such investment by putting up tax rates. The manufacturing industry is crying out for investment dollars to enhance its capacity to compete in the export area. However, with a corporate tax rate of this order, a fringe benefits tax, a capital gains tax, the disallowance of certain legitimate deductions and the multitude of other new taxes it is small wonder that investment is being constrained. Confusion over exchange rates and Australia's poor inflation rate has further affected investment in this country. It has been said many times in this chamber, and it bears repeating, that the Hawke Government is the biggest taxing government in Australia's peacetime history, despite its claims to have reformed the taxation system. Time will tell that the real impact of these new taxes will be on the economy. One has to look only at the profit result of the Commonwealth Banking Corporation, which is down substantially as a result of many of the policies of this Government, including the fringe benefits tax. In July 1985 the Government removed the Medicare levy limit and paved the way for a backtrack on the promise that was made to the people of Australia. I think that is rather sad. When Medicare was first introduced, we were told that the levy would remain at one per cent and that it would be fully self-supporting. But it has since become obvious that both of those claims have proved to be entirely false. The increase in the Bill of the levy to 1.25 per cent will substantially increase the cost to taxpayers for little apparent benefit. The Government should stand condemned for the confusion it has caused, for its mismanagement of Medicare and for backtracking on a promise that it made earlier to the Australian people. I turn to the Taxation Laws Amendment Bill (No. 3). The thrust of these amendments has the right intent of trying to overcome certain shortcomings in the existing legislation. That philosophy, as such, has some merit. Many of the measures will be welcomed by those who have been struggling with ambiguities in income tax law for some time now. But many of these provisions should have been included in earlier Bills. Unfortunately, the Government's enthusiasm for tax change is streets ahead of its ability to comprehend the consequences these revisions will have upon people, the business community and the level of taxes raised. One of the biggest indictments of this Labor Government is that its enthusiasm for change is such that it is unable to comprehend the consequences. This Bill makes quite a number of consequential changes. The Government intends to make amendments relating to gift provisions, provisional tax, dividend stripping, the introduction of certain income tax deductions and tax arrangements for certain educational allowances, and there are some inconsequential changes to what are known as the capital gains provisions. The fact that many of these amendments relate specifically to capital gains indicates what the coalition parties have been saying for some time about the capital gains tax-that it is riddled with uncertainties and ambiguities. In the two Acts that outline the capital gains tax we already have 124 pages of legislation. The Commissioner of Taxation has been required to make seven separate rulings in relation to the capital gains tax. Currently, amendments to the Act are before the Senate. This gives some indication of the vagueness of the original legislation and of the fact that the Government went into this without fully comprehending all its ramifications and unintended consequences. Unfortunately, these amendments are very complex by nature and tend further to complicate the income tax law, despite what I call their good intent. In new section 46e, for example, the Government appears to be operating on the basis of what Senator Walsh has referred to in another area in the Senate as an uneven playing field. He has referred to the uneven playing field in an economic sense in another area, not in relation to new section 46e. The whole scope of tax amendments should not be to raise additional revenue under these provisions of the Income Tax Assessment Act; rather they ought to be revenue neutral. Their aim should be to establish whether certain transactions are liable for assessment rather than to raise additional revenue. The Taxation Laws Amendment Bill (No. 3) which is now before us is not a taxing provision, but unfortunately it now has that impact. This attempt to make what I term clarifying clauses into taxing clauses is an unfortunate element that all too often is creeping into our Income Tax Assessment Act. If the Government persists in introducing what I term these new types of sections into the principal Act it will only cause further distortion in what has become a very distorted piece of legislation. The three clauses that give rise to these complications are clauses 8, 15 and 37. I am disappointed that everybody has spent so little time in trying to analyse and understand the impact of these sorts of clauses but, rather, has made dissertations about the economy. As I have said, clause 8 proposes the insertion of a new section 46e into the Income Tax Assessment Act to counteract schemes involving the payment of dividends after 4 June 1987 out of asset revaluation reserves. The complexity of this section is such that a full understanding of an earlier section, section 46a, is necessary before the meaning of section 46e becomes clear. The principal problem with this clause is that its application is considerably wider than that of clause 8 of the original draft Bill which was distributed by the Treasurer in June this year. Simply put, the new Bill that is before us today has a much wider scope than the earlier draft. I believe that it was either dishonesty or a negligent oversight on the part of the Government that this fact was not made clear in the second reading speech. Those taxpayers who, of necessity, have become accustomed to reorganising their business operations in line with what I term the constant flow of Press releases which have been issued by this Treasurer could well find that the changes they have made to keep in conformity with this constant stream of Press releases have put them behind the eight-ball. While people have made changes to their own affairs in good faith, in accordance with these Press releases, they suddenly find, when the new Bill comes forward, that these changes are deficient and that they will be up for a penalty tax and all the liabilities that will be imposed on them. This is just not fair and this is what I term the uneven playing field. It is loaded too much in favour of the Tax Commissioner and not enough consideration is being given to ordinary individuals who will have to work under this Act. The June Bill sought to deny the intercorporate dividend rebate to a company where a shareholder was in receipt of a dividend and subsequently sold his shares in the asset holding company. According to the legislation before us, this section has actually been extended to include the sale of shares by a person other than the shareholder to companies that are related to the asset holding company. This means that the intercorporate dividend rebate is now denied to a company where a shareholder receives a dividend and he or any other person or entity-and those are the relevant words-subsequently sells his share in the asset holding company or a company related to the asset holding company. This certainly represents a significant expansion of the conditions that were outlined in June this year. In addition, the first Bill applied only where a shareholder disposed of the share after the revaluation of the asset, whereas under new section 46e, paragraph (2) (a) (ii), the conditions of the new section 46e apply where the shares were disposed of after the revaluation of the assets concerned and, at the time of the revaluation, and even before the time of the revaluation. As a result of these revisions a situation may arise where unfortunately double taxation can occur. Again the dice has been loaded against the taxpayer. I cite an example of circumstances where there has been an undervaluation of assets, which is possible because stock, depending on its nature, can be transferred at a value a lot less than it was earlier. Given the vagaries of the primary industry market, we could imagine agricultural machinery stock being involved in such a situation where there is change in the ownership and structure of a business. In these sorts of circumstances of the undervaluation of assets at the time of transfer to a shareholder, this undervaluation may be taxed in the hands of the company-it certainly is-and the revaluation may then occur. Subsequently a shareholder may then receive an unfranked dividend and, therefore, would be required to pay full tax on that subsequent transaction. The revisions that I have referred to are significant and, if they are applied from 4 June, as the Bill provides, the Bill will be retrospective in nature. This is quite repugnant. The Opposition's amendment for a new operative date should be supported-not 4 June, as required in the Bill, as it is retrospective in character. People had no way of being able to work out their affairs; if they had followed those earlier Press releases, they would have been caught. This is completely unfair. It is bad legislation and it is certainly a bad practice. Irrespective of whether one accepts the revisions, fairness and equity surely dictate that these new conditions should apply from the date on which they were first announced. That operative date is not 4 June, but 23 September. No one should be condemned for carrying out his business in a fashion that he believed and knew to be within the law at the time. Therefore, I seek the support of this Senate for the coalition's amendment to alter the date of application of these provisions to 23 September. Legislation by Press release is simply not acceptable in this form, certainly when it comes to the complex issues which deal with income tax. It is a false assumption to accept that these piecemeal announcements make life easier for the taxpayer. More often than not, they merely increase the confusion surrounding the issues, especially when the legislation passed by the Parliament is different in substance from the original Press release. On too many occasions the Senate Standing Committee for the Scrutiny of Bills has had cause to remind this Government of the impact of using Press releases as a form of ad hoc legislation. Some consideration should be given to those who are struggling to comply with the increasingly complex tax legislation, particularly those who are called upon in a professional capacity to advise their clients on these sorts of matters. Let me turn briefly to clause 15. The purpose of this clause is to repeal sections 108 and 109 of the principal Act and replace them with the revised provisions which have been outlined in this clause. Sections 108 and 109 are actually designed to prevent tax avoidance by private companies and their shareholders through the use of what we might term disguised dividend distribution. It is a quite necessary provision and one that has been there for some time. This is a principle with which I have absolutely no quarrel whatsoever. However, I believe that the complexities involved in the drafting of this new piece of legislation have led to certain consequences unfortunately being overlooked. Some aspects of the clause remain ambiguous despite the fact that this Bill has been designed to explain more fully the aspects of the principal Act that have hitherto presented some very limited loopholes, which have been exploited and which have enabled evasion to take place. Therefore, I believe that the following matters deserve consideration. Let us look at the change in wording. In section 108 (1) of the principal Act the word `income' is used in the description of the term `dividend distribution'. It states: Distributions of income shall, for the purposes of this Act, be deemed to be dividends paid by the company . . . It is interesting to note that in the corresponding clause of this Bill, which is to replace the old section 108, the word `profits' is used in the same context. To identify such a distinction may appear to some to be a bit overenthusiastic. However, for the accountants who may read this speech or who may try to evaluate the clause, or for anybody with an interest in economic or financial matters, this is a significant distinction. I appreciate the problems that the Commissioner of Taxation may have had in circumstances where sections 108 and 109, or the proposed new section 46e, must be read in conjunction with section 44 (1) of the Act, in which it states `dividends can only be paid out of profits'. That is where there was a loophole because they had to be read together and one section related to income and the other to profits. Of course, we have to acknowledge that the Commissioner does have the absolute discretionary power to say that profits are deemed to have been made even though they have not been made. This is a quite extraordinary provision and shows the lengths to which the legislators have to go, or are prepared to go, in an attempt to squeeze the last dollar of tax out of taxpayers. So there is an inconsistency between the original section and the proposed new section that could possibly open another loophole for evasion. I believe that, as a result of these changes, we must now expect further amendments. I will certainly be asking for a ruling from the Taxation Commissioner in future to explain fully the Government's intent and the Taxation Commissioner's intent with respect to this clause, because it is quite unclear. The business community, the financial community, deserves more, particularly when the Government says that it is designing the legislation to improve an old provision. Already since January this year the Taxation Commissioner has been required to make 121 rulings. Honourable senators should note that. We are now up to ruling 2,450 in the list of income tax rulings alone. Honourable senators should take note of that. Miscellaneous rulings have reached a total of 2,037. The fact that we have over 2,000 rulings from the Tax Commissioner just shows how complex our Income Tax Assessment Act has become. In other words, as I mentioned with regard to the insurance legislation, the Government is abrogating its legislative responsibility and passing it over to the bureaucrats, in this case the Taxation Commissioner. The fact that he has given over 2,450 rulings is indicative of the fact that we are losing the opportunity to legislate and requiring the Tax Commissioner to determine more and more cases at his discretion. The question is: what is a legitimate intercorporate loan? Most people would agree that the thrust of the Bill, to overcome the shortcomings in existing legislation, obviously has some merit. It is only correct that tax avoidance tactics should be deterred. It is also correct that legitimate arrangements should not be restricted or hampered by regulations designed to prevent tax avoidance. However, there is some danger that the measures outlined in this Bill may-I submit that they will-create uncertainty as to what is legitimate activity and what is not. This is especially so with respect to intercorporate loans. This Bill does not tell us what constitutes a legitimate intercorporate loan. I appeal to the Tax Commissioner to give us a further ruling as to what constitutes a legitimate intercorporate loan. According to proposed new section 46e in the Bill, the Commissioner has the power to rule on the legitimacy of such loans. But I believe the open-ended nature of the discretionary powers of the Commissioner in this instance could well bring about a level of uncertainty sufficient to cause further investment uncertainty. At the very least in this case, another ruling should be issued by the Tax Commissioner to clarify in which circumstances intercorporate loans will be deemed legitimate. The circumstances should be outlined with all possible speed so that investment in this uncertain climate will not be hampered. The ability to decide on the legitimacy of intercorporate loans is not a unique exercise for the Taxation Commissioner. Many situations, outlined in the Income Tax Assessment Act, are determined at the Commissioner's discretion. In many of those cases, I submit that that is appropriate. It is also true that there are some cases in which the Tax Commissioner is given some extraordinarily wide powers. For example, under section 44 of the principal Act the Tax Commissioner has the power, in a situation where no profit has been made by a company, to decree for his own purpose that profits have been made. That is a quite extraordinary power-far too wide and quite unnecessary. The powers of the Tax Commissioner were further extended when the Taxation Laws Amendment Bill (No. 2) was passed in the last session of the Parliament. I spoke on that Bill and I remind the Senate briefly of the Bill's consequences. Under section 62 of that legislation, taxpayers are required to give assistance to the Australian Taxation Office rather than just to allow right of access. I accept the proposition that adequate measures need to be taken to make sure that tax avoidance is uncovered. However, these sorts of increased investigatory powers, and their extension to pay as you earn provisions, open up avenues through which people's civil liberties are threatened. That is wrong. The regulatory powers under section 62 of that Act went far beyond the original intention of this legislative chamber. My concern, therefore, is that the extension of those investigatory powers may foster an attitude of officialdom; that is, that, pursued to the extreme, they may infringe civil rights. The powers that I have mentioned are considerable and, unfortunately, we are increasing those powers quite unnecessarily. Therefore, I believe that the time has come for some thought to be given as to how far we are prepared to extend the already discretionary powers of the Tax Commissioner. By amending sections 108 and 109 in the manner outlined in this Bill, we are reinforcing the principle of giving the Tax Commissioner further extraordinary powers and reinforcing the unacceptable principle, outlined in section 44(1), of the Tax Commissioner being able to deem profits to have been made even when profits have not been made. That is an important issue that should be given further consideration. Unfortunately, I will not have time to go through all the detailed provisions of the other changes. Let us look briefly at clause 37 relating to provisional tax. This clause provides that for 1987-88 provisional tax shall be calculated on the basis of 1986-87 taxable income, increased by 11 per cent, and by applying the 1987-88 rates of tax and the Medicare levy. If we are to accept that this 11 per cent increase in provisional tax is to make allowance for the inflation rate, surely we must question the Treasurer's Budget projection that the inflation rate will fall from 9 per cent to 6 per cent by the middle of 1988. Therefore, there seems to be an excess tax recovery relative to what might be expected, given Mr Keating's estimate for the inflation rate. Are we to assume that the income of those people who pay provisional tax, that is, our entrepreneurs, is expected to increase at a much greater rate than that of wage and salary earners? The facts just do not bear that out. Is the Government trying to crib extra taxation revenue through provisional tax? That is the issue in question. I notice that people are tending to ignore that issue. The tax Bills that we have before us today are indeed complex and many unintended consequences could arise from them. I suggest that honourable senators take careful note of what is before us today. I urge the Taxation Commissioner to give rulings at the earliest opportunity to clarify three areas of ambiguity that have arisen as a result of this legislation. Senator COONEY(Victoria)(11.05) —During Senator Watson's most interesting and pungent speech, I took note of four matters which he raised and which I think had already been raised by others during this debate. I think it is worth commenting on them. The first matter he raised was about the announcement of legislation by media release. The second was that the company tax rate of 49 per cent is somehow bringing ruin to our financial and manufacturing industries. The third concerned the amendments in the Income Tax Amendment Bill (No. 2) 1987 and the Medicare Levy Amendment Bill 1987 which fix rates not only for this year but for subsequent years. The fourth comment he made was about tax rulings by the Commissioner of Taxation. Senator Michael Baume —It's just a discretion. Senator COONEY —That is right. Announcing proposed policy changes by media release can be bad but it can be necessary. For example, nobody would object, when a Budget is brought down, if the thrust of that Budget is announced to the world by media release. Indeed, that is the only way it can be done. So, to make a universal condemnation of announcing policy changes by media release is not to the point. Each case has to be looked at in the circumstances that arise at the time. The second point made was that the company tax rate of 49 per cent is the reason for Australia's economic problems. I think that is manifestly incorrect. Senator Watson —I said `in association with'. Senator COONEY —Associated with what? That is the problem. If the Opposition had wanted to develop that argument, it should have looked at our real problems. Senator Michael Baume —The Labor Government. Senator COONEY —I will tell Senator Baume what we are doing to help the economy of this country. Page 4 of this morning's Australian Financial Review reports on a survey by the Australian Chamber of Manufactures which indicates that the real problem is a lack of skills in Australia. If we compare Japan and Australia, we see that Japan is much more highly skilled than Australia. What this Government is doing, and doing with great vigour and, as will be seen in the future, with great success, is ensuring that Australia is properly equipped with the educational and skills base that is so necessary to develop our economy. I would like to quote from a speech given by the Hon. John Dawkins, MP, the Minister for Employment, Education and Training, on 16 October 1987, which no doubt all honourable senators have read: It is no coincidence that the recent ACTU report is entitled `Australia Reconstructed'. There is now a general public perception, largely due to the Government's efforts, that Australia today must undertake a process of structural adjustment at least as profound as that experienced during the 1940s. The deterioration of our external economic situation caused by our failure to compete in traded goods and services threatens our standard of living to an extent unparalleled since the war. Productivity improvements are essential. Education and training can play a vital role, directly conditioning the quality, depth and flexibility of our labour force skills. The Government is determined that our education and training systems will contribute to the process of economic adjustment, to the benefit both of individuals and of the nation as a whole. This Government is intervening, if you like, in those areas which are necessary for a successful economic recovery in this country. I must say with some sadness to those opposite who say that the whole thing should be left somehow to the market-place, where, by some process of good luck and good fortune, things will come good, that this Government does not take that approach. It looks at the areas of need, it looks at the situation as it is, and it sets out to provide for what is actually the richest resource any country has-its labour force, the citizens of the country-the education and the skills needed. To, as it were, belittle Australia's problems by saying that we are in our present situation because the Government collects a 49 per cent tax on the profits of companies really misses the point. I come to the third point. Both Acts I have mentioned are being amended to fix the levy for this year and for the future. Great objection is taken to that by both Senator Watson and Senator Haines-- Senator Michael Baume —And Senator Baume, too. Senator COONEY —And Senator Baume. If he takes an objection, it must have considerable force and therefore it must be answered. It is a little hard to see what the objection is. The Government, in effect, is saying, `We are now fixing rates which we undertake will persist, not for one year but for this year and the year after that, so that people can go about their business and do the planning that is so necessary for a stable economy and for the economic recovery of this country'. What is wrong in principle with a government saying that it will fix tax rates which will persist into the future-not only for the next year but for the year after that? If anyone is planning to invest in a company, to put a mortgage on a home, to take an overseas trip or to send children to school, he can be assured of the tax rates and the Medicare levy not only for next year but for years after that. But the Opposition says no-- Senator Watson —If you followed that logic, you would have tax indexation. Senator COONEY —No. Tax indexation has nothing to do with this amendment one way or the other. When the Opposition raises the question of tax indexation, in effect it is speaking against its own amendment and supporting the original legislation. Certainty should be given to the people of this country about the tax they will have to pay, not only for one year but for subsequent years. But the Opposition is not saying that. It is not saying it wants tax indexation; it is saying that it wants to have a go at this each year and keep the people of Australia in a terrible state of uncertainty so that they will never know what they will have to pay by way of taxation for more than a year at a time. I would have thought that, if the people of Australia wanted to plan for their future, they would be better off knowing what they have to pay by way of taxation than under the capricious system put forward by the Opposition and the Australian Democrats. Under that system, there would be a toss of a coin each year, and the amount of tax people had to pay would depend on how the coin landed. Senator Michael Baume —I have never heard parliamentary scrutiny described as the toss of a coin. Senator COONEY —That is the reality. I do not know whether Senator Baume has spoken yet, but I would like to know what he has in principle against giving certainty to the taxation system. Senator Michael Baume —I have a very strong objection to the way you are doing it. It is certain death your way. Senator COONEY —No, it is not certain death. I will tell the honourable senator what people will have to pay under our system, because it makes fairly good reading. From the very high rates of taxation that we inherited from the Fraser Government, and that we have struggled valiantly and persistently to overcome, we have got down to what we have now. At the low end of the scale for resident taxpayers no tax is payable on taxable incomes up to $5,100. So people can earn up to $5,100 and pay no tax. Senator Watson —Adjust it for inflation and see what you get. Senator COONEY —I will come to that. There has been an increase in the tax free threshold from the 1986-87 level of $4,890. On taxable incomes in the range of $5,101 to $12,600 the rate is 24 per cent. On incomes in the range of $12,601 to $19,500 the rate is 29 per cent. The rates for incomes from $19,501 to $28,000 and $28,001 to $35,000 have been reduced from 43 per cent and 46 per cent respectively to 40 per cent. The top marginal rate has dropped from 55 per cent-originally 60 per cent-to 49 per cent. Senator Watson asked about inflation. I will tell him two things about inflation. Inflation is coming down under the Government and the honourable senator can be assured that, with this Government's history and with the concern it has for all its citizens, if in fact there ought to be an adjustment for particular economic conditions that arise, it will act. The argument that says that we should not have a system which sets rates for more than one year is really based on the concept that somehow those rates are fixed as if in a written constitution. They are not; they are fixed by legislation, and if changes are to take place they can be accommodated in legislation. If honourable senators opposite want to debate tax rates at any stage they can; they do not need a Bill to do so. I am unable to see why we cannot go ahead on the basis of fixing rates over a period of time. Having been condemned for the fixing of rates for a particular period, we were then taken to task for allowing the Commissioner to make tax rulings because it was suggested that that leads to uncertainty. So in one breath the Opposition condemns a provision that would lead to certainty in tax rates over the years; in the next breath it condemns the practice of the Commissioner of issuing tax rulings because of the uncertainty that that causes. Let us have a look at the tax rulings. The tax rulings were and are internal rulings by the Taxation Commissioner for the purposes of his staff. Because of freedom of information legislation they have become public, and the public certainly acts upon them now. The point about the rulings is this: they have been going on for years and they are necessary for the operation of a proper taxation system. They are not new, and to suggest in some way that having the Commissioner make rulings is something new that this Government has introduced is just not correct. The Opposition has complained that the Taxation Commissioner has wide powers-and indeed he has. The reason he has wide powers is that that is the only way that tax avoidance schemes can be countered. Such schemes grew up because of the black letter law approach taken by His Honour the Chief Justice of the High Court of Australia, Sir Garfield Barwick, when he was interpreting tax legislation during the 1970s. Such legislation was tolerated, unfortunately, by honourable senators opposite and this has led to a tax avoidance industry which this Government has struggled to overcome. One of the weapons it has used is the giving, by necessity, of a wide range of powers to the Taxation Commissioner so that he can make sure that taxation avoidance does not go on in the way that it did while it watered the system in the past. They were the four points raised by earlier speakers. All of them seem to me but damp squibs when they are analysed out. Perhaps the major point made related to the question of how the economy is affected by the 49 per cent rate. It is major because it does at least turn our minds to the real issue that we in this country have to face-the development of a vibrant and growing industrial sector. The Government, as I say, is doing considerable amounts of work in that area, particularly in the field of education. It is an area where the government must intervene at particular levels. When we talk about how industry has developed over the years-say, from the 1966-67 period to the present-we should look at the rates of return on capital for all industries over that period because the figures are very interesting. The lowest return on capital for private trading corporations over that period was in the year 1982-83, when it was down to 10.7 per cent. With the advent of the Hawke Government the rate has increased ever since. It must, of course, increase more. One of the problems is that the capital investment itself over that period was very slack, so that Australian industry has been left with equipment that has not been sufficient for the task. This Government is turning that around. It has encouraged industry to develop. It is in that area where this Government will proceed to reconstruct Australia and Australian industry. To talk in terms, as it were, of turning the economy off and on in the way that the Opposition seeks to do is not a sufficient answer to that point. To oppose, as I say, a fixing of rates for the Medicare levy and taxation levels for an extended period, as is intended to be done by the Bills as a way of giving certainty to the whole system, and to proceed on the Opposition's amendment, is really to bring uncertainty to the system, which everybody agrees is not good. So the Opposition, in opposing this legislation and amending it to cut out the fixing of rates for a number of financial years, is bringing around the very disaster-that is, uncertainty-which it purports to want to avoid. Senator COULTER(South Australia)(11.23) —At the committee stage I shall move an amendment relating specifically to the Taxation Laws Amendment Bill (No. 3). That amendment will relate to the tax deductibility of advertising of tobacco and tobacco products. Of course, it bears also on the matter of the Medicare levy because, as I will show, the tobacco induced diseases cost this country very dearly both in terms of health and in terms of the direct financial burden on the health care system. Honourable senators will have noticed that recently the Victorian Government has moved to ban certain forms of advertising and to raise a tax on tobacco products so as to support sport and the arts which are currently supported more directly through the advertising of tobacco products in relation to those activities. Indeed, similar moves have been mooted in South Australia and Western Australia. It seems to me, therefore, very appropriate that a Labor Federal government should support these moves by removing centrally the tax deductibility from tobacco advertising. Tobacco and tobacco related diseases at present constitute one of the most serious forms of drug addiction in Australian society. The recent drug initiatives taken by the Federal Government indicated that roughly 80 per cent of drug related deaths in Australia are directly or indirectly related to the consumption of tobacco and tobacco products. Only 10 per cent were related to alcohol and only 2 per cent were in fact related to the taking of hard drugs. So, undoubtedly in the case of tobacco, we have an addiction problem of monumental proportions-one which is directly responsible for 23,000 deaths each year in Australia. Some 63 people each day die in Australia as a consequence of smoking. That is almost the number of senators in this chamber; it is certainly many more than the number of senators sitting in it at present. It is not only lung disease of which these people die, although that is one of the most common causes of death. Because tobacco contains a number of carcinogenic substances, there is an across the board increase in the incidence of cancer among those who smoke, particularly in relation to bladder and, to a lesser extent, bowel cancer. The likelihood of getting most cancers is increased in smokers. It is well known that heart disease is one of the consequences of smoking. There is a substantial increase in heart disease among those who smoke and this contributes substantially to the reasons for wanting to increase the Medicare levy. It is well publicised in literature the Senate received just recently that smoking is one of the risk factors which rate very heavily in relation to heart disease. I have seen photographs of peripheral arterial disease and recently I treated patients who lost limbs as a consequence of smoking. At various times one has seen quite peculiar pictures of people who have lost both legs and both arms and yet they are still continuing to smoke. It is a very serious and very disabling disease. Perhaps less well known is the fact that most diseases associated with the aging process reveal themselves at an earlier age among smokers. This is a consequence of the number of mutagenic agents which are present in tobacco, and a substantial body of opinion suggests that the aging process represents the increase in the number of mutations which occur in the body throughout life. Moreover, it is well known that tobacco products act as synergistic agents with respect to a number of other hazardous substances in the environment. Two which are well known are asbestos and uranium. It is well known that those who are exposed to asbestos and who also smoke suffer far more than just the simple additive risk of developing lung, bowel and bladder cancers-and a similar situation exists in relation to uranium mining. A number of other conditions exist. For instance, one could point to the general problem of photochemical smog in cities. Epidemiological studies show quite clearly that smokers in cities also have a higher expectation of developing those diseases related to smoking because of the synergistic effect of the other agents, coming largely from car exhausts but to some extent from industries which are present in cities. It is almost universally recognised that children of smoking mothers are more likely to be born undersize; they are more likely to be less mature at birth; they are more likely to be aborted; and they are more likely to suffer from and die of neonatal disease. There has been quite an extensive advertising campaign to try to convince mothers that they should not smoke during pregnancy. What is not so generally known is that because tobacco smoke contains a number of mutagenic agents the children of smoking fathers-that is, fathers who have smoked before they are responsible for the birth of a child-are more likely to be aborted and are more likely to be born with birth defects. As an aside, I refer to the sexist nature of the advertising which aims the anti-smoking campaign at women whereas it should really be aimed, to a large extent, at fathers before they father children. Having laid out that background, I turn directly to the cost which this imposes on society and, more particularly, the dollar cost because that is my reason for wishing to move an amendment which will effectively remove tobacco advertising from the area of tax deductibility. Much has been said about making the Australian economy more productive. Members of the Opposition in particular have remarked recently, in the light of the stock market crash, that it is terribly important to make the Australian economy more productive. The advertising of tobacco products is not adding to Australia's productivity. Even without the adverse effects on health, every honourable senator would recognise that advertising tobacco products is a useless activity in terms of productivity. Advertising tobacco products does not do one jot to increase productivity in this country. The second point I make is that the taxation law should not be seen in isolation-it should not be seen simply as a revenue raising measure-but should be integrated into other social and economic objectives. Therefore, it should be seen as an instrument of social policy. At present the company tax rate in Australia is 49 per cent. So the effect of tax deductibility for tobacco advertising is that 50 per cent of the cost of advertising tobacco and tobacco products is essentially paid for by the community because it is paid for out of avoided tax. That is a fact which many people, even in the anti-smoking groups, do not recognise. It seems quite remarkable that we should give tax deductibility to an activity which promotes the sale and consumption of a product which kills 63 Australians every day, seven days a week and 52 weeks a year and yet-honourable senators will recall that I asked a question of Senator Walsh about a week or so ago to verify this point-any public spirited person who wished to advertise the dangers of smoking would have to pay for that advertising out of the income on which he had paid tax. A gross distortion is built into this tax system in that those who profit from the sale of something which will kill 63 Australians every day are entitled to tax deductibility for the advertising costs of such a product whereas those who, for no other reason than a sense of public spirit, wish to advertise the hazards do not get tax deductibility. The tobacco industry and tobacco related diseases, through the morbidity and mortality they cause, are placing a crippling financial burden on Australian society. It is estimated that each smoker costs business in Australia $940 per year in sick leave and decreased productivity. That is a direct burden on the productivity of Australian industry. In 1981-82 the Medical Journal of Australia broke down those figures and suggested that more than $1,000m in social, health and medical costs was related to smoking induced diseases. It was made up as follows: $400m in the provision of hospital beds and care in hospital; $250m in costs related to deaths; and $350m in the social costs related to lost wages, lost productivity and so on. Directly in terms of advertising it is difficult to derive a reliable figure, but it is believed that somewhere between $100m and $150m a year is spent advertising tobacco and tobacco products. So the increased revenue that would result from the measure contained in my amendment-that is, to remove tax deductibility from tobacco advertising-would mean increased government revenue of $50m to $75m per year. However, to the extent to which this move would be successful in reducing the incidence of the diseases about which I have been speaking, there would be further substantial savings to the Australian Government by way of tax and other revenue. The tobacco industry is on record as saying repeatedly-and I think this point needs to be interpreted carefully-that curtailing advertising has not led to a reduction in tobacco consumption. In fact, just recently the tobacco industry claimed that various curbs on advertising had been associated with an increase in tobacco consumption. If for the moment one accepted that assertion at face value-which I do not-it would doubly prove that advertising as such is a useless activity, that we could do without it and there would be no decrease in the consumption of tobacco products. With that preamble, I think it appropriate that I read the amendment that I will be moving at the committee stage. My amendment to the Taxation Laws Amendment Bill (No. 3) 1987 provides: Page 10, after clause 9, insert the following clause: ``Losses and outgoings ``9a. Section 51 of the Principal Act is amended by adding at the end the following sub-section: `(8) A deduction is not allowable under subsection (1) in respect of expenditure for the purpose of the advertising or promotion of- (a) tobacco, substances containing tobacco, synthetic tobacco or any substance intended or designed for smoking; (b) cigarettes, cigars or other items intended or designed to be used for smoking; or (c) smoking pipes or any other accessories, items or devices intended or designed to be used principally for or in association with smoking.'.''. I would have liked to have included in the amendment a mechanism to prevent tobacco companies from advertising the advantages to tobacco advertising, because that is a move which the industry in Victoria has foreshadowed. Time and the difficulty associated with wording such an amendment preclude that, so my amendment simply seeks to abolish the tax deductibility of tobacco, tobacco products and smoking facilities. Senator REID(Australian Capital Territory)(11.38) —We are debating the Taxation Laws Amendment Bill (No. 3) 1987, the Income Tax Amendment Bill (No. 2) 1987, the Medicare Levy Amendment Bill 1987 and a cognate Bill. However, I will refer specifically to the Medicare Levy Amendment Bill, which will entrench the Medicare levy at the rate of 1.25 per cent, which has been effective since 1 December 1986. At that time the rate was increased from one per cent by an announcement in the 1986-87 Budget, despite the promise of the Prime Minister (Mr Hawke) of 13 November 1984 when he said: And I now give this undertaking that for the term of our next Government the Medicare levy will not be increased. Of course, that was not the only broken promise but it brought in considerable revenue for the Government. It was an extension of the concept of Medicare, of providing universal health care for all people. That would not have been so bad perhaps if it was not for the fact that the Medicare system has failed completely and that health care consumers who have relied on Medicare have been let down absymally. That is why I want to discuss it this morning-because I think it is important that people who have not faced the failure of Medicare understand what those in this country who are sick have been putting up with for some years. I will discuss the reality of Medicare. Fortunately many people in the community have not been sick and have not experienced the problems suffered by so many others. There is a waiting list for elective surgery in the vicinity of 100,000, which the Minister for Community Services and Health (Dr Blewett) rather cutely calls a booking list as though booking in for surgery is something one does if one thinks it is going to be a wet weekend or there is nothing better on. People on the list are waiting for surgery which they need to assist them to get on with their lives. For example, people are having to wait 18 months to two years for such things as hip replacements. A two year wait for surgery can have a serious impact on a family. What it really amounts to is that the very people that Medicare needs to help most-the elderly and the poor-have been left stranded by what is really a crumbling excuse for a health system. The Government has recognised that Medicare is in a parlous state because it recently allocated $25m extra to the States for their public hospitals to try to reduce these huge waiting lists and get the system moving a bit. So there is a clear recognition by the Government that the system that it set up has not been working and has not provided what is needed. At the same time, of course, we know that there are private hospitals with space, with beds and places that people could go to if they had private cover. Of course, many of them did have private cover until, unfortunately, they allowed themselves to be taken in by the rhetoric of this Government that the Medicare levy would provide all and that one did not need private cover; that is, if one was paying the Medicare levy and was in the system, one had no need to look beyond that for health care. The reality is that people have had to look beyond that, and the consequences for many have been serious indeed. Those people who could afford private health care cover but opted out of that system are also now on waiting lists for surgery in public hospitals. They need not be on those waiting lists for public hospitals but, because they are, they are keeping to the back of the waiting lists people who rely on the public hospital system and who are entitled to rely on it. The system is totally out of kilter and the people who are suffering most are those least able to help themselves in this area. Those who were receiving good health cover previously are now being messed around at every turn. Many people have dropped their private health care cover-many of them because, as I said, they believed in the rhetoric and many of them because they could not afford to pay the levy and maintain their cover. In December 1983 over nine million Australians, or 61 per cent, had private health care cover. It is now under eight million, or 48 per cent of the population, which is a reduction of some 1.8 million people. That has made the difference and has caused the incredible delays in the provision of proper medical treatment through the public hospital system. I will refer specifically to what has happened in the Australian Capital Territory (ACT). The ACT is a defined area where we can comprehend what has happened. It is a small area. I believe that the same thing has happened throughout the rest of Australia, but by looking at the ACT we can encapsulate what has occurred. There has been a chronology of disasters right from the beginning. I will not go back to the beginning, but I will set the scene in relation to what has happened this year, including the problems that nurses have had in getting their career structure and new pay structure put in place. The award was handed down in the Australian Conciliation and Arbitration Commission on 7 May and only in the past week has a settlement been reached. The nurses have had to take industrial action and they have been continually frustrated while working towards getting the Arbitration Commission award put into effect. At the same time there has been the dispute with the doctors who have been servicing the Medicare system, their services being withdrawn from March this year. That dispute is not yet finally settled. At the same time recently there have been problems in the area of service industries to the hospitals over the disposal of rubbish. There have been problems in the kitchens, problems with the doctors employed in the hospital system and problems in other areas involving professionals. I have decided to go through just one month in order to give a resume of various happenings, and the list is incredible. I start with 22 October when nurses threatened to strike in the ACT hospitals, the relevant Minister refusing to see them. They had walked out of the Royal Canberra Hospital at 3 o'clock that morning. On 24 October nurses walked out of several wards at Woden Valley Hospital over their pay and career structure arising from the award given on 7 May this year. On 25 October elective surgery was stopped indefinitely at Woden Valley Hospital after the ACT Health Authority stated that adequate health care could not be relied on there. On 26 September members of the ACT branch of the Professional Officers Association working in pathology laboratories of the Health Authority reimposed bans on the installation of a new computer system. That dispute had been going on for some time. On 2 October the Hospital Employees Federation (HEF) refused to collect hospital waste, nauseous waste being left in the hospital. Interspersed is the story of a 74-year-old patient being taken from Woden to Wagga Wagga Hospital. There have been many instances recently of patients being taken from the Australian Capital Territory to New South Wales-to Sydney if they can get a bed there, to Wagga if not. Of course, the doctors who treat Medicare patients in New South Wales are paid at a rate higher than the Government is prepared to offer to doctors treating Medicare patients in the Australian Capital Territory. That is the crux of the story. It is arguable that the amount being paid in New South Wales and the amount the doctors are seeking in the Australian Capital Territory is too high, and that has been stated. But how does the Government justify paying doctors treating Medicare patients in New South Wales at a higher rate than it is prepared to offer them to do the same work in the Australian Capital Territory? That has most of the community somewhat bemused. On 3 October Salvation Army volunteers fed patients, providing meals for 300 of them. On 4 October an HEF picket line was hampering undertakers doing their work in and out of the hospitals. On Monday of the long weekend garbage was piled up and food and cleaning were still being done by volunteers. On 7 October the dispute with the HEF ended and garbage was being collected. The bans had also affected the Jindalee Nursing Home and families had had to take meals in for their relatives. On 8 October the health inspectors threatened to impose bans in connection with the implementation by the Authority of a new career structure. On the same day there were disputes with the community nurses, who had a stop-work meeting to protest against the failure of the Health Authority to provide information on staff numbers to their union. On 9 October the Minister for the Arts, Sport, the Environment, Tourism and Territories (Mr John Brown) attacked the demands of private doctors for parity with New South Wales. That was not a particularly helpful intervention, but at least we knew that he knew that we had problems in our health care system. On 15 October the doctors passed a unanimous vote of no confidence in the Health Authority's running of medical services in Canberra's hospitals. On 16 October we were told that discussions with the nurses were continuing, and that it was believed that the dispute was near the end and that the career structure may be implemented. On 19 October we had the problem over the closure of beds. The Health Authority denied that it planned to close beds in the hospitals. Subsequently that issue expanded and the Health Authority admitted that it had not had detailed consultation with the unions over what was to happen. I believe that there is uncertainty as to how many beds are to be opened. We were told in the Estimates committee hearings that Royal Canberra Hospital was to be significantly refurbished, and for that reason some of the wards are being closed. On 20 October the HEF and the Royal Australian Nursing Federation (RANF) banned ward closures and wanted discussions with the Health Authority as to what was going on. Subsequently to that, we had the admission that there had not been adequate consultations. Then there was an announcement on 23 October that the Authority was conducting an investigation into an allegation that a private nappy service had been operated, without the Authority's knowledge, from the Authority's laundry facility at Mitchell. The local newspapers are filled daily with stories about the health situation. It cannot be said that the system is working smoothly or providing the service that people require and are entitled to rely upon. However, with the resolution of the nurses' dispute, there is some relief and the hope that things may settle down. But I think that we in Canberra will not for some time have a hospital service such as that which we have had in the past and on which we have relied. People in the surrounding region relied on that service and many came to Canberra for medical assistance. A recent newspaper article told of an anaesthetist who had moved to Canberra from Tasmania nine or 10 months ago and had expressed his despair at the system here, saying that he was thinking of returning to Tasmania, because he had never come across anything quite like the system that operates in the ACT or its inconvenience. It has had a serious effect on the services provided. Many doctors, and anaesthetists in particular, have left Canberra. That is one of the difficulties in having sufficient specialists in these areas to provide the service that is needed. That is why I suggest that we may not return to the sort of health care system that we have become accustomed to, and indeed have been used to. Individual patients continue to suffer, and I have had many such examples. At times the health care system is virtually non-existent. There are many other instances beyond the ones that I know about, such as that of a woman being transferred from one hospital to another while certain procedures were taking place. Another involved a little girl aged seven whose parents did not have private health insurance-they told me that they did not believe that they needed it and that Medicare would provide the services they needed. That young child had severe ear problems and her father had to go to the expense of having her treated in a private hospital. He had to pay for treatment to which he believed he was entitled as he was paying the Medicare levy. I know of a cancer patient in his late thirties who also had no private insurance. He told me subsequently that he could have afforded it, but did not believe he needed it because he believed that Medicare provided the health care service. He was diagnosed as having a particular type of cancer that was likely to spread rapidly and quickly. It was said that he should have a CAT-scan and surgery and get on with the treatment process. He was unable to do that in Canberra Hospital, and ended up going to Calvary private hospital and having the surgery, but had to pay $270 a day. He had to discharge himself from hospital after this major surgery at the end of a week because he could not afford to stay in the hospital any longer. At that stage he took himself home. It may be that, if he had waited for as long as it would have taken for the service to be available through the Medicare system, it would have been quite pointless in any event. These are the things that have been happening. There is the story of an invalid pensioner who was scheduled to have an implant in her right eye on 4 June. It still has not been done. The shortage of anaesthetists has meant that she is still waiting. As a consequence of her problem she overbalances easily and falls over. She is a widow who lives alone. Her son has now made arrangements for her to have the operation carried out privately in November. He will be paying for the operation so that his mother can get the help she needs-help that she cannot get from the Medicare system in the ACT at present. These stories are just the tip of the iceberg of problems faced by the people of Canberra. In addition, we should look at the reduction in the services available under Medicare. There have been many changes to the system and people are not getting as much as they were when it was first introduced. For example, there has been a reduction in rebates on fees paid for visits to consulting physicians. This is particularly significant for seriously and chronically ill patients who must go to follow-up surgery. It will cost them significantly more under these new arrangements. I have been contacted by people who can give proof of what it will mean to them. I was contacted by a man whose wife is suffering from brain tumours and requires frequent visits to specialists. People out there who are sick know what they cannot get now by way of health care which they were able to get in the past. I do not know what this Government assumes it should provide or what standard of care it regards as adequate, but it is very clear that the service provided now is far inferior to that which was available in the past. Another example is the reduction in rebates for treatment of certain types of skin cancer and warts. When one considers the figures existing in this country for skin cancer, one feels that that is a particularly foolish course to adopt. Many pharmaceuticals have been removed from the free list. There was the particular incident when those containing aspirin were removed. I understand that that decision was subsequently reversed by the Government. There has been the increased charge for prescriptions-from $2.50 when this Government came to office, then to $5 and now to $10. There has also been a reduction in the schedule fee for cataract removal, from $650 to $450, and for lens replacement, from $345 to $250. These are serious and significant matters for the people who suffer and who hope to rely on the Medicare system. It is little wonder that, when Government Ministers boast of the achievements of Medicare, their boasts have a very hollow ring for many Australians, particularly those in the ACT, who have come to know how little they can rely on Medicare for their health care cover. This Bill increases the financial burden on Australian taxpayers and families who must keep funding a clearly defective health care system. It is time that the Government recognised the failure of the Medicare system. It should re-examine the way in which health care is being delivered and set about restoring the system so that all families can have proper cover and can rely on getting the treatment they need when they are sick and when they need it. Senator SHEIL(Queensland)(11.58) —I, too, want to refer to the Medicare Levy Amendment Bill 1987 in this cognate debate. I was very sad and sorry to hear the litany of horror stories that Senator Reid has just put before the Senate. Of course, all of them were predictable and predicted as long ago as the introduction of the old Medibank system when Mr Hayden was the Minister for Social Security. I was sorry to hear those stories. This Bill is breaking Government promises by increasing the Medicare levy from one per cent to 1.25 per cent and removing the ceiling on the amount that people have to pay. The higher their taxable income, the more they have to pay and, of course, this applies to all taxpayers, whether they want Medicare or not. Their private medical insurance is not deductible and gap insurance is prohibited by law. There is no incentive at all for people to look after themselves. This is despite the fact that many people are still privately insured, which shows that they want their choice of doctor and hospital. If we look at the distortions and disruptions that this has caused-particularly in the public hospitals-we now see fewer numbers of out-patients. The casualty departments are full, but the out-patients departments-where people can get specialist and consultant care-are now right down because the application of the Medicare rebates encourages people to see consultants in their private surgeries. This means that we have less teaching material and a different type of patient going into hospitals, so that the medical students are seeing an atypical cross-section of illnesses in the community. As has been mentioned, literally thousands of beds have been closed in public hospitals in Australia, but not in Queensland, I might add. The effects of all these medical horror stories are not so bad in Queensland because we have maintained our free public hospital system in spite of the reductions in funding that we have suffered from the Commonwealth because of it. The delays in surgery have been mentioned and they are monumental, particularly in the southern States. The Government is putting money towards this now to try to cover the weeping sore that it has created. No doubt this will have a temporary ameliorating effect; but it is only treating symptoms, not the disease. General practice has suffered a gradual erosion and fragmentation but, more particularly, there has been a decrease in the scope of work that is done by general practitioners. We have seen enormous changes in the family general practice with the advent of entrepreneurial and business consortia in the profession. Specialised clinics are developing throughout the country and we are seeing the advent of alternative health sources. One of the worst features for general practice is that the development and delivery of new health initiatives-particularly in the high technology area-have been bypassing the general practitioners. The transfer of patients from the out-patients departments of public hospitals to the consultants' private offices has caused a jump in the incomes of consultants, which has caused government computers to cough. The Government decided that it wanted to reduce the incomes of consultants. The way it chose to do that was to restrict the benefits it paid to the patients. In doing so, of course, it threw the baby out with the bath water and this has turned out to be a most cruel and inhuman means of attacking the problem. The treatment of many chronic and serious illnesses has been restricted. Many of those patients need more than three visits to a consultant in any one year and their interim management cannot be handled adequately by their general practitioner. I refer to the treatment of diseases such as leukaemia, particularly today with the advent of bone marrow transplantation; to chemotherapy treatment; and to the treatment of certain cases of diabetes, arthritis and epilepsy. In fact, a whole list of these conditions came out of Estimates Committee D. Officers from the Department of Community Services and Health recognised that they had created enormous problems for many of the patients. I hope and trust that the Government is looking into ways of fixing these problems, but I hope it does not fix them with another distortion because government interference over many years has distorted health care more and more. Instead of the Government reducing its role in health care, it keeps increasing it. So the distortions and dislocations increase. Bulk billing has turned many doctors into surrogate public servants without, I might say, the commensurate benefits that accrue to public servants-the `fat cats' to whom Clyde Cameron referred, who receive retirement benefits, study leave, trips and travel, compassionate leave, maternity leave or responsibility loadings. Instead of private medicine being in a position to lift the load from government, the costs of private medicine have been loaded on to the Government under the Medicare arrangements. We need to stop the rot. We need a clear division between private and public health care. The bulk of the people can and should look after the bulk of their illnesses for the bulk of the time. They have shown that they are willing and able to do so. The mechanism by which it can be done is private medical insurance. People have been prevented from doing so by the activities of successive governments. The principles of health care free at the point of delivery and community rating have been exposed as the rocks upon which all national health schemes would have foundered. National health schemes that have been instituted around the world, promising health care free at the point of delivery, all have one thing in common-they are all failures. There are four main divisions in medicine: medical education, medical research, preventive medicine and curative medicine. The more the Government puts into medical education, medical research and preventive medicine, the less it will have to put into curative medicine. It is in the area of curative medicine that private enterprise can lift the load from government. As I said, the machine by which to do this is private medical insurance. But the Government has thrown a spanner in the machine and kept it there for many years. Health is the most important priority of every person, but it is only about twelfth on the list of priorities of every government. The promise of health care free at the point of delivery will generate an enormous vote from the people but at the same time it will generate unlimited demand. The Government is then faced with funding it from a limited budget. An unlimited demand and a limited budget just cannot meet. They diverge. As demand increases and the money gets spent the Government finds itself in more and more trouble. The only way it can rectify the situation is to restrict services. That is what has been happening in Australia today and that is why Senator Reid was able to relate a litany of the real horror stories which abound in the community today. As costs go up and restrictions increase we wind up with dissatisfied patients, doctors, nurses, therapists and administrators. That is the swamp we have shambled into. Health services in Australia today are worst in the Australian Capital Territory. We are seeing doctors strikes, nurses strikes, staff strikes, all of which were unheard of before the medical profession started to negotiate with governments. Health care in the States is in an equally bad way except, as I say, for Queensland. The Government is directing doctors as to which tablets they can prescribe for which diseases, how many tablets they can prescribe, how many repeats they can prescribe, what conditions they can put people in hospital for, and how long they can keep them in hospital. We are talking about the Government's patients. The Government is controlling the situation by the benefits it pays to patients. There is no need for the Government to be involved. The Government is involved in paying. Once a third party operates between patients and doctors, therapists or any member of the medical services, we wind up with the dreadful distortions we are seeing in health care today. The Medicare Levy Amendment Bill is putting up the cost of medical services to the people in the country. Services are becoming progressively restricted. I do not know of anywhere in Australia where people are happy with the health care services they are receiving and the costs they are paying for them. This Bill entrenches the increase in the Medicare levy and removes the ceiling on what people have to pay. There is no encouragement for people to take out private medical insurance-in fact, quite the opposite. Attendance at hospitals has been distorted. Medical education is being interfered with in no small way, something that will be bad for the country. There is a lack of development in the new areas of technology in general practice, technology which would help patients immeasurably and make their access to care easier, quicker and more satisfying. The whole health care establishment is going the wrong way. Previously, under private medical insurance the movement of patients was from their homes to hostels, nursing homes and hospitals. Now the Government has decided that that is the more expensive way to fund medical care and so has turned it around, altering the insurance rebates. So the flow of patients is now out of the hospitals, into nursing homes and hostels and back into the patients' homes. Not that I disagree with that. All I disagree with is that the Government has put us through those hoops for all these years at such a great cost. I express my disappointment. I hope that after many years of predicting what would happen the Government will learn its lesson and reduce its role in the provision of curative medical services and concentrate on the areas where it really belongs, that is, medical education and research and preventive medicine. Senator LEWIS(Victoria)(12.13) —I rise to speak on a particular aspect of Taxation Laws Amendment Bill (No. 3) 1987 which has been raised by a constituent, a solicitor from the Victorian town of Swan Hill, Mr Richard Dwyer. Mr Dwyer's concern is with clauses 42 and 43 of the amending Bill which deal with section 14zka of the Taxation Administration Act. I will find it necessary to quote extensively from Mr Dwyer's letter to me, which I think is probably better than simply incorporating the letter. As I say, Mr Dwyer's concern is with the amendments to section 14zka of the principal Act. He claims that the amendments proposed would retrospectively give power to the Deputy Commissioner of Taxation to take legal action outside the statutes of limitation to recover additional or penalty tax on income tax under section 207 of the Income Tax Assessment Act where he presently does not have that power. Mr Dwyer points out that, following a 1986 Queensland Supreme Court case called Jonrich, section 14zka of the Taxation Administration Act was enacted to extend the time allowed to the Commissioner to institute legal proceedings for the recovery of primary tax. Mr Dwyer points out that he has no argument with that philosophy as it relates to primary income tax. Mr Dwyer said: But Section 14zka specifically did not extend the time for proceedings for the recovery of additional or penalty tax payable under section 207. The Court decisions clearly held that period to be two years from when the primary tax was due and payable under the Commissioner's assessment and the 1986 amendments did not alter that legal position. ... ... ... ... In introducing this amending Bill in the House of Representatives on 23rd September, 1987 the Minister assisting the Treasurer said the earlier ``modification'' was necessary-and by implication therefore this present ``modification'' is also necessary-``to counter abuses of the objection and appeal processes by those persons who sought to defer payment of taxes as long as possible and to then rely on the Limitations Laws to avoid payment of the taxes altogether''. Mr Dwyer is pointing out that that is fair comment as far as the primary tax is concerned, but his concern is with regard to the additional or penalty tax. He points out that the comments of the Minister for Employment Services and Youth Affairs and Minister Assisting the Treasurer (Mr Holding) show an appalling lack of knowledge of the objection system, to use Mr Dwyer's words, `as it has been manipulated, not by the taxpayer but by the Commissioner of Taxation'. Mr Dwyer then goes on in his letter to me to give the example of his own case where assessments going back as far as five years have been made. He gives the examples in his letter to me and then says: For all those periods ranging from 2 years and 5 months to 5 years and 3 months the Commissioner took away my rights to have my objections to his assessment considered within our legal system. And in each case when the Commissioner finally ruled on my objections and I then requested him to refer the objections to Boards of Review he took until 28th February 1986-a further delay on his part of 2 years and 4 months-to do so. Still to this date my objections have not been heard by the Administrative Appeals Tribunal, through absolutely no fault of mine nor from any manipulation whatsoever of the system by me. ... ... ... There is a very old saying in the Law ``Justice delayed is justice denied''. I think Mr Dwyer makes out a fair case with regard to many of the objections and problems that people have in getting their taxes assessed and their appeals dealt with. I come now to the problem Mr Dwyer alleges in relation to retrospectivity. He states: Now as the law stands today the Commissioner, if he has not chosen to do so-and he has not in my case until he issued Supreme Court proceedings against me on the 12th June, 1987-sue successfully in the Courts for recovery of additional tax in relation to any of those years, as all are well and truly statute barred-the first being 9 years old. That clearly is the law as it stood on the 12th June, 1987 and as it stands today. Yet this proposed amending legislation will it seems, change that law retrospectively and enable the Commissioner to sue me for additional tax going back for all of those nine years. Such retrospectivity-in relation to additional or penalty tax as distinct from primary tax is absolutely obnoxious and offends against all fairness and justice. If any fairness or justice is to prevail in the taxation system: (a) Why did the Commissioner not rule upon my objections within a reasonable time-is 5 years and 3 months reasonable? (b) Why did the Commissioner not refer my requests for Boards of Review hearings within a reason- able time-is 2 years and 4 months reasonable? (c) Why did the Commissioner wait till June 1987 to sue for what he claims was due in 1978, 1979, 1980, 1981 and 1982?. Mr Dwyer has his arguments with the Commissioner of Taxation and, no doubt, in due course they will be dealt with by the judicial system. My concern is this problem of whether this section creates a change of law retrospectivity in relation to the collection of penalty tax. The Opposition had a look at this and found it a very difficult question to answer. Of course, our problem is that we do not have the departmental expertise that the Treasurer (Mr Keating) and his officers have. Ultimately, I went to the Treasurer's office and spoke to one of his staff, who apparently sought some additional departmental advice. I have now received a response from the Treasurer dated 29 October 1987 and I seek leave to incorporate that response in Hansard. Leave granted. The letter read as follows- Treasurer Parliament House Canberra 2600 Senator A. Lewis Parliament House Canberra ACT 2600 Dear Senator I refer to your representations of 26 October 1987 on behalf of Mr Richard J. Dwyer LL.B of Dwyer Bennett and Mahon, Barristers and Solicitors of Swan Hill, Victoria concerning amendments to section 14zka of the Taxation Administration Act that are included in the Taxation Laws Amendment Bill (No. 3) 1987 at present being debated in the Senate. Section 14zka was enacted in 1986 to overcome the decision of the Full Court of the Queensland Supreme Court in the case of D. C. of T v Moorebank Pty Ltd. The decision is at present on appeal to the High Court. The Moorebank decision overturned an established principle that State or Territory limitation laws did not apply to the recovery of taxation debts. Section 14zka sought to extend the period under which action may be commenced under various State and Territory limitation laws to recover outstanding taxes and penalties. It was intended that this extension apply in relation to additional tax for late payment but for the lesser period that the limitation laws generally provide for the recovery of penalties. This would mean that action for recovery of additional tax for late payment could be commenced up to a date after the resolution of any dispute relating to primary tax depending on the period provided by the relevant State or Territory law for recovery of penalties. However, a technical argument has been put forward to the effect that section 14zka does not achieve this result in relation to additional tax for late payment. The amendments now proposed will do no more than clarify the intended operation. If the limitation periods specified by State and Territory limitation laws were not extended in the case of additional tax for late payment, there would be a clear incentive for taxpayers to continue to abuse the objection and appeal processes in the knowledge that, although the primary tax may be outstanding for several years, payment of the additional tax could be enforced in respect of only 2 years, with the effect that they have the use of interest free funds for a substantial period at the expense of the revenue. Additional tax for late payment will not, of course, be payable in the event that the taxpayer's objection or appeal against the primary tax is upheld. Accordingly, the clarifying amendments can only have application to statutory additional tax that accrues in respect of taxes that are found to be correctly payable. The amendments do no more than ensure that a taxpayer with a tax debt statutorily imposed by existing laws for the late payment of primary tax will not escape payment on a legal technicality. The same result will be achieved if the Moorebank appeal is decided in the Commissioner's favour. The amendments clearly do not impose a retrospective tax liability. They merely restore to the Commissioner the right to recover additional tax for late payment on the same basis as was accepted to be available to him prior to the Moorebank decision. Mr Dwyer proposes that where primary tax is paid before resolution of a dispute the Commissioner may commence legal action for recovery only within the relevant limitation period commencing on the date of payment of the primary tax. Mr Dwyer's proposal would have the effect that the Commissioner would be obliged, in order to protect the revenue, to commence recovery of additional tax for late payment within that period notwithstanding that it may be some time before the dispute is resolved. Agreement to the proposal would confer an unjustifiable benefit on taxpayers who may have entered into tax avoidance schemes and paid their primary tax rather than run the risk of a dispute being resolved in the Commissioner's favour and being exposed to additional tax for late payment at the rate of 20 per cent per annum (10 per cent per annum up to 14 February 1983). The proposal would do nothing for taxpayers who, in consideration for payment of half the tax in dispute under arrangements entered into prior to 1983, were allowed to defer payment of the balance of disputed tax pending resolution of the matters in dispute. They may well have incurred additional tax for the late payment prior to entering into such arrangements and would be entitled to claim discrimination if they did not also get some relief if the amendment proposed by Mr Dwyer, against the background of his own circumstances, were to be adopted. Mr Dwyer criticised the Taxation Office for the time taken to determine objections and refer decisions to the Tribunals or Courts. The Commissioner of Taxation, whose views I sought on this matter, advised that the delays must be viewed against the background of the volume of objections and appeals resulting from the tax avoidance scheme era of the late '70s and early '80s. In the early days the Commissioner's policy was to determine objections in representative cases with the view to obtaining decisions from the Boards of Review or Courts which would be acceptable to taxpayers with similar disputes. This meant that consideration of large numbers of objections was deferred pending Board or Court decisions in representative cases. In the event, appeals in many of the selected cases were abandoned by taxpayers at the last minute. Additionally, decisions in selected cases were frequently not accepted by taxpayers as applicable to the facts of their particular case. The present practice is to determine objections promptly and forward appeals against the Commissioner's decision to the Courts (or the Administrative Appeals Tribunal) as soon as possible. I trust the above explanation will assist you in replying to Mr Dwyer. Yours sincerely P. J. KEATING Senator LEWIS —I thank the Senate. Honourable senators will be able to read the Treasurer's response and make up their minds about the question of retrospectivity. It seems to me to be a very complex matter. I have just received the Treasurer's letter and I have not really had time to analyse it as fully as I could. My colleague Senator Michael Baume, who is handling this matter in the Senate, will ultimately take this matter further, as the Opposition determines, during the course of the committee debate. Senator WALTERS(Tasmania)(12.22) —Once again the Senate is debating the need for expenditure increases in the Government's Medicare policy that are way above the inflation rate. We all remember the gung ho days when the Australian Labor Party introduced Medicare. I wish to quote from Dr Blewett's news release at that time, because it is very interesting to go back to that period to see what this Government thought it would be able to introduce. Dr Blewett said: The introduction of Medicare is the biggest step ever taken by the Australian Government to ensure that every Australian has the best and cheapest medical and hospital care. He went on to say that Medicare would be funded by a one per cent levy or tax contribution. He said that, from 1 February 1984, nine out of 10 Australian families would actually pay less, or at least no more, for their basic medical and health insurance. It sounds beaut; it sounds fine. The Prime Minister (Mr Hawke) changed that a little when he sent out to every taxpayer a letter in which, in very glowing terms, he said that Medicare was `a system which will lower our inflation rate by reducing the cost of living for most Australians'. Then he said, `Two out of three'-not nine out of ten-`families will pay less for the cover they now enjoy'. That was quite a considerable variation. As I have said, it all sounded too good to be true, and that has turned out to be the case. It was all too good to be true. It was all cosmetics and typical of the rhetoric that this Government is so very keen on. Let us look at the claim by the Minister for Community Services and Health (Dr Blewett). It is interesting to be reminded of what has occurred since the introduction of Medicare. There was to be a one per cent levy on taxable income. We all remember that there was to be a ceiling of $700 of a taxpayer's taxable income. There was to be a threshold for low income earners. Patients were to receive 85 per cent of the schedule fee for every medical service, with a maximum patient payment of $10-do honourable senators remember that?-for each item, with a total maximum gap payment of $150 per annum. Those figures applied if the doctor did not bulk bill. Of course, doctors were encouraged to bulk bill. Private medical insurance was to be abolished and there was to be so-called free treatment at public hospitals for in-patient and out-patient services if they were delivered by the hospital doctors. That is what was supposed to happen. But what has happened since then? In July 1985 the $700 ceiling was abolished so that, no matter how high earnings may be, the levy remained at one per cent of taxable income. Of course, the levy has now been raised to well above that one per cent; it is now up to 1 1/4 per cent. The maximum patient payment was increased from $10 to $20-a greater increase than that in the rate of inflation. It did not rise with the rate of inflation; it went up by double that rate in August 1986. The pharmaceutical prescription fee increased from $4 to $5 in August 1985. Where are we now with the promised cheapest and best health care? It is no longer the cheapest and it is going up considerably. Senator Tate —The people prefer it to your proposals. Senator WALTERS —Senator Tate says that people prefer it. We will see-- Senator Tate —We did see. We saw it in July. Senator WALTERS —Senator Tate is now saying that that was why the Government won the election. What he is ignoring is that the majority of people in Australia voted for the Liberal Party of Australia rather than for the Australian Labor Party. Under the one vote one value system in the Senate, we have more senators than the Labor Party. Senator Bolkus —Rubbish! You have been up too late. Why don't you go home early? Senator WALTERS —Do not say `Rubbish'. The Labor Party has 32 senators and we have 34 senators. Senator Bolkus cannot deny that because it is a fact. Let us look at the promise of the best health care and at what has happened since that promise was given. The Government has limited physicians' services in their surgeries to one consultation and two follow-up visits. The Government says that from then on they must pass the patients on to the general practitioners for treatment. It was very interesting in Estimates Committee D a few days ago when Senator Peter Baume questioned Dr De Souza, a physician in the Department of Community Services and Health, about a couple of dozen diseases. Senator Baume asked whether such treatment was suitable for patients with those diseases. He mentioned such things as subacute bacterial endocarditis, resistant hypertension, haemolytic anaemia and so on. He listed a couple of dozen, and they are the tip of the iceberg. On each occasion Dr De Souza said that, no, one consultation and two follow-up visits by a specialist physician was not appropriate treatment for those diseases. In the end, Senator Peter Baume asked whether the Minister might be gradually becoming aware that the policy of this Government was to throw the baby out with the bath water. We were told that, yes, that really was the situation, that the Government was now negotiating and had seen that it had been entirely wrong and had been giving to the Australian people the worst possible treatment and that people who had diseases were not being treated satisfactorily under its system. Later the Government, in all of its wisdom, decided to abolish the schedule fee for the removal of warts. In all of its wisdom it decided that that should require a consultation with a general practitioner. Of course, it did not consult about this. Again, it made the biggest blue possible because it had forgotten, did not know or was completely ignorant of the fact that genital warts are a precursor to cervical cancer. When we asked about this, the answer we were given at the Estimates Committee was that yes, of course, the Government had been wrong again and that perhaps it was not giving the best medical care. We were told that that also would have to be looked at again. So the wonderful scheme that the Government put forward for the best medical care available has proved to be a complete sham and a shemozzle. I have details of the latest, 1987, cuts to physicians' services. They have been cut to ribbons, to shreds. The Government now has to renegotiate and, if it possibly can, to get out of the sticky situation in which it finds itself. General practitioners in this country have had their after-hours service fee, the extra consultation fee, abolished. There is now only one schedule fee for a general practitioner's consultation. Of course, so long as a call is taken after hours, they are permitted to charge an additional fee. This Government is completely unaware, lacks any understanding of and is not willing to consult with the medical profession. It goes in, boots and all, feet first, and then has to back off. The people of Australia are now receiving the worst possible medical care. General practitioners, who, I believe, have been insulted in an extremely cruel way, have been told that they overservice people at night. When we look at the latest figures in the Bulletin-I find this very interesting-we see that the Government's schedule fee for a home visit at any time, for up to 25 minutes, by a general practitioner is $26. What do we pay a television repairman? We pay $65. What do we pay a plumber out of hours? We pay $68.50. What do we pay a white goods repairman? We pay $50 plus. What do we pay an electrician out of hours? It is between $57 and $160. We even pay chimney sweeps $38 for an in-hours call, as they do not come after hours. But the Government is willing to pay general practitioners only $33 an hour, and it wonders why it is the Government under which the medical profession and the nurses, for the first time in Australia's history, have taken industrial action. As a member of the nursing profession, I take very strong exception to the fact that the lot opposite have caused my profession to go on strike for the first time. I think that their ideology alone has caused that to occur. Let us now look at the situation concerning obstetrics and gynaecology, about which I have some knowledge because my husband is a member of that profession. The Government brought down a global fee for obstetrics and gynaecology services. Its excuse for doing that was that it might stop interventional procedures by obstetricians. What a dreadful insult to say that an obstetrician will intentionally, to earn a few more bob, allow interventional treatment to take place. I believe you are an utter disgrace. What you have caused in the medical profession by your bulk billing is the emergence of the entrepreneurial types such as Edelsten. You smear the whole profession because you encourage that type of man to abuse the system. The ACTING DEPUTY PRESIDENT(Senator Colston) —Order! Will you address your remarks through the Chair, Senator Walters? Senator WALTERS —The Government encourages the Edelstens of this world to abuse the system. It is purely the ideology of the Government that allows it. Senator Bolkus —Mr Acting Deputy President, I raise a point of order. There is just so much that we can take from this particular speaker. For a senator of the Liberal Party to say that this is encouraged by the Labor Party is just totally out of order. The ACTING DEPUTY PRESIDENT —Senator Bolkus, I could not quite hear you. Will you please repeat your point of order. Senator Bolkus —I will not persist with it. The ACTING DEPUTY PRESIDENT —Apparently there is no point of order. Senator WALTERS —Obviously there is no point of order, because Senator Bolkus knows that what I am saying is absolutely true. As I have said, there is a global fee for obstetricians. That means that an obstetrician who for nine months looks after a lady who is having a baby, and then delivers the child, can charge one schedule fee for the whole lot. If that patient has hypertension and needs extremely urgent and continual medical care, the obstetrician is unable to add anything to that fee without disadvantaging his patient. He can of course, as any medical practitioner can, charge what he likes. But the majority of doctors-and we know this is a fact-are very careful to charge the schedule fee. Very few charge above it. This system is supposed to represent the best and cheapest medical treatment that we can possibly have. Let us look at the pharmaceutical area. We all know how many drugs have been taken off the pension schedule. We all know how limited some drugs have become on the subsidised list. What wonderful medical care! The Government even took APCs-Aspros-off the pension schedule, but I believe it has had to rectify that and to put them back on. Once again, it threw the baby out with the bath water. And for what? All for a lot of ideological nonsense that the Minister for Community Services and Health is indulging in. It is the same Minister who introduced the identity card legislation, the same Minister who said: Let me say as a socialist that it is the interests of the community that should come before the individual right . . . we shouldn't get too hung up as socialists on privacy because privacy, in many ways, is a bourgeois right that is very much associated with the right to private property. This is the good socialist jargon, good socialist stuff, which this Government continues to indulge in and which this Minister continues to use in trying to run the health system. It is wonderful ideological stuff! I have dealt with the medical side, so let us now look at the so-called best and cheapest hospital care. The system has resulted in disgraceful waiting lists in various States. Victoria has 26,288 people on waiting lists. A headline in a New South Wales newspaper the other day was `Need an operation?-Come back in four years'. The best and cheapest system has forced 64.4 per cent of families to take out private insurance. A recent survey conducted by the Australian Bureau of Statistics indicated that 46 per cent of couples with children, with a family income of $126 a week, are paying private health insurance. Can anyone imagine paying private health insurance on $126 a week? Honourable senators opposite should not look at me as though what I say were wrong. I am horrified, but, that is what the Australian Bureau of Statistics tells us-that 46 per cent of couples with children, on a family income of $126 a week, are paying for private health insurance. Why are they doing that? Why have they been forced into that situation? Only because, should an accident occur or should they become ill, they want to be able to get themselves and their children a hospital bed. They do not want to go on to the waiting list. So much for the best and cheapest hospital care available. The Government did not like those figures much the last time I cited them, and it still does not like them much. But what has it done? It has tried to force struggling families, that 64.4 per cent of families who have taken out private insurance, back on to the hospital queues. As soon as I resume my speech I will tell honourable senators just how the Government has gone about that. I seek leave to continue my remarks later. Leave granted; debate adjourned. The DEPUTY PRESIDENT —Under Sessional Orders, we will now turn to matters of public interest. Senator REID(Australian Capital Territory)(12.45) —Sir Richard Arthur Blackburn, a former Chief Justice of the Supreme Court of the Australian Capital Territory, died at the Woden Valley Hospital on 1 October 1987. He had a brilliant career and there are many people who mourn his passing. I wish to refer to some of the things that he did during his lifetime. At the time of his death he was 69 years of age. He was born in Adelaide in 1918 and his father was a distinguished soldier, Brigadier A. S. Blackburn. He attended St Peter's College in South Australia and the Adelaide University. He subsequently became a Rhodes Scholar in 1940, attended Magdalen College, Oxford, and was admitted to the Bar in London. His studies were interrupted during the Second World War when he served his country with great distinction. He subsequently maintained his interest in the Services and was the colonel of the regiment at the Adelaide University. Sir Richard had a distinguished career in all respects. After returning to Australia, he became the Bonython Professor of Law at Adelaide University in 1950 and I came to know him when I was a student of that faculty during the late 1950s. After he had held that position for some time, a position which many people might have thought a man would hold for the rest of his career, he left in 1957 and went into private practice. He was a barrister and solicitor of the Supreme Court of South Australia and an eminent member of one of the legal firms in Adelaide. He followed that path for the next 14 years. Sir Richard then became a judge of the Northern Territory Supreme Court. I am aware, having known him well, how much he enjoyed the Northern Territory in every respect. I was talking earlier to Senator Tambling, a senator for the Northern Territory, who told me that Sir Richard was the founding president of the Arts Council of the Northern Territory and the founding president of the Aboriginal Cultural Foundation, which subsequently became a foundation totally run by Aboriginal people. He and Lady Blackburn had an aircraft with them during the time that they were in the Northern Territory. They visited just about every possible place and they certainly enjoyed their life there and loved the people they met. In 1971 they came to Canberra and Sir Richard became a member of the Australian Capital Territory Supreme Court. He was a judge and then the Chief Judge of that court. In 1982 he became the Chief Justice of the Australian Capital Territory Supreme Court when the status of the court was changed. Sir Richard was also closely associated with the Australian National University for some 11 years, for eight of which as Pro-Chancellor. He became Chancellor on the death of Sir John Crawford. Sir Richard resigned from the Supreme Court of the Australian Capital Territory in 1985 because of ill health, but he retained his position as Chancellor of the university until the time of his death. Many tributes have been paid to Sir Richard. The Supreme Court of the Australian Capital Territory held a special sitting and speeches were made about him at a meeting of the University Council. Articles have also been written. He will be revered in legal circles for a very long time. I think I can sum up his career by quoting the words of the Vice-Chancellor of the Australian National University, Emeritus Professor Peter Karmel. He said: My strong recollection of Dick Blackburn is of a person of scrupulous fairness and of a total commitment to the world of knowledge and the search for truth. Somewhat conservative in his personal views, he respected people for their contributions to academic life without regard to political and other considerations. He was in every sense an upright man and a true scholar. Sitting suspended from 12.50 to 2 p.m. Senator CHANEY —My question of the Acting Leader of the Government in the Senate follows my question of yesterday. Can he now confirm that the Government is supporting before the Australian Conciliation and Arbitration Commission a rise of $6.50 from 1 January? Can he further confirm that the Government's position has not changed, notwithstanding the current severe economic uncertainty? Senator GARETH EVANS —The Commonwealth has this morning started its submission to the Commission. We have submitted our support for a further increase under the first tier of $6.50 to apply as from 1 January 1988. This is the equivalent of a 1.5 per cent increase in average weekly ordinary time earnings of adults and is based on the current published Australian Bureau of Statistics estimates. We could not support the $7 claim presented by the Australian Council of Trade Unions, which is a somewhat generous rounding up of the 1.5 per cent increase of its estimate of current earnings. Neither do we believe that a retrospective date of payment for the increase is appropriate. In the period since the second tier wage system was introduced, the Commission's expectations for the wages system and its contribution to the task of economic adjustment have been, in our judgment, fulfilled. Support for that system has been forthcoming from both unions and employers. In terms of the amount and timing of a further first tier increase, we have adopted a position which we believe is economically sustainable, prudent in the current economic environment and industrially rational. This is in marked contrast to the Opposition which, consistent with its position in 18 out of the last 20 national wage cases, has stated that there should be no national wage increase whatsoever-which shows how little honourable senators opposite care for the living standards of workers or the industrial realities of the labour market. Senator CHANEY —Mr President, I ask a supplementary question. The Minister managed to avoid the question asked. I ask the Minister, in light of his answer, whether he agrees that in February of this year the Commonwealth signified its support for a second increase under the first tier to apply from a prospective date in 1988. If this is the case, quite clearly 1 January is the earliest possible date from which, on the Government's previous position, this rise could have applied. I ask: Will he tell the Senate whether the Government has in any way changed its position on what should be argued before the Commission over this period of several weeks when there has been such concern about the economic uncertainties facing Australia? Senator GARETH EVANS —I think Senator Chaney can work that out for himself. Senator DEVLIN —My question is addressed to the Minister representing the Minister for Veterans' Affairs. What steps has the Department of Veterans' Affairs taken to serve the veterans in country areas of Tasmania? Senator REYNOLDS —I am glad that Senator Devlin is interested in veterans in Tasmania. I am glad to announce that experienced officers of the Department of Veterans' Affairs do in fact make regular visits to country areas of Tasmania. Senator Devlin is very concerned that veterans in country areas of his State receive the same kind of attention as do veterans living in the major centres. The officers that visit do so so that beneficiaries and relatives may learn of services available and discuss any problems that they may have. Of course, this is very much in line with this Government's policy of decentralisation and considering the needs of people living in regional Australia. Today, coincidentally, officers of the Department will in fact visit the Swansea and Triabunna Returned Services League of Australia clubs where individual interviews have been arranged. Senator Chaney —Come on, be serious. Senator REYNOLDS —Is Senator Chaney not interested in the veterans of Tasmania? These visits are two of 30 being made in Tasmania in 1987-88 and the Tasmanian branch office has the capacity to serve up to 8,000 country clients. The program is particularly important in Tasmania, where two-thirds of the State's 11,000 clients do in fact live outside Hobart. So far this calendar year the Tasmanian office has interviewed 540 people under the country visits program. Two hundred and sixty-seven interviews have been conducted since 1 July in some 13 trips. It concerns me very much that when these issues concerning regional Australia are raised the Opposition does not seem to have any interest. I am very surprised. I think Senator Newman is nodding. I think she is in fact very interested. I pay tribute to her for being interested in what is happening to veterans in regional areas of Tasmania. Senator STONE —I refer the Minister representing the Treasurer to his answer to a question that I asked on 20 October in which he suggested that one way in which the share price collapse could adversely affect the Australian economy would be if it induced-and I use his words-`a significant withdrawal of capital from Australia'. I ask, firstly: In view of our continuing large deficit and current account of our balance of payments, does the Minister agree that the consequences of which he spoke do not require a significant withdrawal of capital, but merely the drying up of new capital inflow? Secondly, in the light of events yesterday and again today in our foreign exchange market, does the Minister agree that capital transactions do now appear to have turned adverse? Senator WALSH —That may be so. If it is, I would not know, because I have not seen any information on what capital movements in and out there may have been in the last week or so-nor do I think such information would be available this early; it will probably not be available for some weeks at least. Perhaps Senator Stone is referring to the decline in the exchange rate, which when I last inquired was around 68c-I think it has gone up a bit since then-which was, of course, a decline of a couple of cents on the level of the day before. If he is referring to that, there is some division of opinion, I think, on the importance that should be placed on a short term movement in the exchange rate. There is a quite respectable body of opinion which argues that exchange rate markets are likely to overreact, or to overshoot, probably in both directions. It is probably difficult to prove, with any certainty, even after the event in some cases, whether that is an accurate statement or not. But in regard to the point I made that this view is supported by quite a number of people who believe they have some expertise in this area, I refer to the submission which Senator Stone, as Secretary to the Treasury, of course, made to the Campbell Committee of Inquiry into the Australian Financial System on 23 April 1981. Parts of this submission, incidentally, were published on 29 October 1985 in the Australian Financial Review in an article written by Michael Stutchbury. Stutchbury wrote: On April 23, 1981, the then Treasury Secretary, Mr John Stone, made a last-minute and closed-door attempt to persuade the Campbell Inquiry into the financial system not to recommend freeing of the Australian exchange rate. Mr Stone, as he then was, in response to those who had placed a great deal of weight on exchange rate movements, is specifically quoted as having written: On the contrary, I think those markets- that is, exchange rate markets- display considerable volatility with the exchange rate they set liable to fluctuate for reasons not closely related to economic developments which will determine exchange rates in the long run. Many people would agree with that. Indeed, I think I would agree with it, too-at least to such an extent as to say that it would probably be unwise to react hastily to one day's, or even one week's, movement in the exchange rate. Senator STONE —Mr President, I ask a supplementary question. While thanking the Minister for part of his answer, I point out that today there are well attested reports, from which the Minister could satisfy himself, that yesterday the Reserve Bank of Australia massively supported the foreign exchange market. I ask the Minister-- Senator Gareth Evans —Mr President, I raise a point of order. This is not a supplementary question; it is a series of supplementary statements and is manifestly out of order. The PRESIDENT —Senator Stone, will you ask your supplementary question? Senator STONE —I ask the Minister: To what does he attribute this development in the exchange market unless it does derive from a large capital outflow? If so, does the Minister now agree that one of his critical tests that he stated has been satisfied and that corrective policy measures would therefore now seem to be required? Senator WALSH —I do not know-Senator Stone has given no indication that he knows and I do not believe anybody knows at this stage-what capital movements took place yesterday or even last week. It will be about four or six weeks, if not longer, before there are any official statistics on that. He asked me whether I attributed the developments in the stock market to capital movements. The answer is that I do not because I do not know what capital movements there were. Probably one could attribute them as accurately to animal spirits as to anything else. Senator MAGUIRE —My question is also directed to the Minister representing the Treasurer. I refer to this week's information which showed a very welcome decline in Australia's annual price inflation rate to 8.3 per cent. In view of the fact that for the past two quarters the consumer price index (CPI) has been below 2 per cent and that the December 1986 quarter consumer price index was 2.9 per cent, does the Government expect a further fall in the annual inflation rate in the year to December? What progress has been made by the Hawke Government in keeping down cost of living rises as measured by the consumer price index? Senator WALSH —In response to the last part of the question, the Hawke Government made quite spectacular progress in getting the consumer price index, which is usually read as the inflation rate, down. When this Government came into office Australia's annual inflation rate was a staggering 11 1/2 per cent. By the middle of 1985 it had fallen to just over 5 per cent, that is, it was halved in a couple of years. Senator Chaney —Then you put it up again. Senator WALSH —That is true. I am not going to try to hide the facts the way Mr Howard succeeded in hiding them for a while, facts which Mr Stone, the then Secretary to the Treasury, wanted him to reveal in the week before the 1983 election. I refer in particular to the fact that we were facing an impending Budget deficit of nearly $10 billion. In the short term Mr Howard succeeded in hiding that fact which the then Mr Stone wanted to reveal but Mr Howard lost control of the situation in the following week. It is true that after the middle of 1985 the inflation rate moved up again. However, it was not caused, as many people on the ideological Right or the ratbag Right would have one believe, by wages blowing out. It was the consequence of the effect on import prices of the decline in the value of the Australian dollar which, in turn, was very substantially attributable to the decline in Australian export prices. In other words, the same factor which was driving up inflation in Australia was driving it down in some other countries and that common factor was the decline in commodity prices. In more recent times, as Senator Maguire said, the annual inflation rate-that is defined as the September quarter rate compared with that of the September quarter of the previous year-has come down to 8.3 per cent. Given the size of the CPI increase in the December quarter of 1986, it is reasonable to expect-indeed I think one could count on it-a further significant fall in the annual rate for the year ending December 1987. Senator HAINES —My question is directed to the Minister representing the Minister for Defence Science and Personnel. I refer the Minister to the defence services policy on the acquired immune deficiency syndrome (AIDS) and ask the following question: Have personnel in any of the three Services ever been tested for AIDS antibodies either with or without their knowledge? Have any positive results of such tests ever been passed on to non-medical authorities such as the person's commanding officer or to service police without the knowledge or consent of the individual or individuals concerned? Were such test results ever used by service police as a basis for questioning service personnel about their sexual contacts? Have any service personnel ever been discharged voluntarily or otherwise as a result of such questioning? Finally, does the Minister agree that, if any of these practices have occurred, they constitute a gross breach of privacy, and will he see that such practices are prohibited in future? Senator ROBERT RAY —I am informed that to the best of the knowledge of the Department of Defence no defence personnel have been tested for AIDS without their knowledge of such testing. However, it is conceivable that individual medical officers may have included AIDS testing amongst other tests for purely clinical purposes without the knowledge of such patients but we regard that as a most unlikely event and we do not think it has occurred. It is true that if positive testing occurs information is passed on to two different areas. The honourable senator asked whether that had been done without the knowledge of the person concerned. I have not yet been able to ascertain an answer to that part of her question. There are two areas to which such information would be passed. One would be the administrative management area which deals with the level to which a person is posted because of certain conditions. That is, if someone has a medical condition he may not be suitable to be posted to all areas in the defence forces. That is the first step. The second step is, as the honourable senator would know, if someone is AIDS positive some investigation is made as to the contacts that person has had in order to try to prevent the spread of the disease. Senator Haines —By the service police? Senator ROBERT RAY —I am coming to that. The service police have carried out that role in the past. The honourable senator asked whether people have resigned from the service as a result of the activities of the service police. I am not able to say whether that is true. However, I can say that some personnel have voluntarily resigned, or elected to leave the service, having been identified as AIDS carriers. The final point to the honourable senator's question-I think this is her final point; I did not write it down-was whether we will continue the practice of using the service police. We will certainly continue the practice of investigating further contacts made by AIDS carriers and at the moment that will be done by the service police. In view of the concerns the honourable senator has raised in regard to that matter, I will ask the Minister for Defence Science and Personnel whether she will consider a more appropriate method of carrying that out. I think the honourable senator would agree, though, that some attempt has to be made, if we are to contain this particular disease, to carry out further investigations once someone is found to be carrying the disease. Senator GIETZELT —Has the attention of the Minister representing the Minister for Industrial Relations been drawn to a letter published in today's Australian Financial Review written by Mr John Hay, the national chairman of the Australian Free Enterprise Foundation, Brisbane? Is it true that Mr Hay, in that letter, recommends a number of fundamental changes to Australia's wage determination system? Does the Government intend to act on any of Mr Hay's recommendations? Senator WALSH —One of the more alarming features of the so-called New Right in Australia in general is its intellectual sloth. That is paraded in Mr Hay's letter in an obvious way-in fact it is so obvious that I would have thought that all the ideologues of the far right would have been able to pick it up. If I may digress for a moment, I was asked to speak in Perth just before the Budget was brought down in relation to a Budget essay competition conducted for some years by the Rural and Industries Bank of Western Australia, I think, for year 12 high school economics students. One of the entries recommended among other things that we should have a completely deregulated labour market and a 15 per cent cut in award wages. That fails to recognise that the two propositions are mutually exclusive. If you have a deregulated labour market, you do not have any award wages. Such right wing prejudices showed through to an alarming degree in all the essays. This same right wing prejudice in relation to wages also shows through in Mr Hay's letter. Mr Hay's letter contains an eight-point formula for overcoming our economic problems, the first of which states, `Deregulation of the wages market'. The seventh point says, `A minimum 44-hour week and a reduction in annual leave to three weeks'. If we really have a deregulated labour market, we do not have a minimum or maximum working week or any minimum or maximum leave period stipulated at all, as well as not having any wages stipulated. So what Mr Hay betrays as well as intellectual sloth-and again this is a lamentably common attribute of the ideological right-is a belief in certain nostrums regardless of what the evidence from the real world suggests about their validity. It assumes because of that that a deregulated labour market necessarily means a lower wages outcome. That was tried in Australia in 1981-82 when the Fraser-Howard Government walked away from any responsibility for a national wages policy, saying, `Let it be settled in the market place'. As a consequence, wages blew out by, I think, 13 per cent in 1981 and 14 per cent in 1982 because of the 11.5 per cent inflation rate subsequently inherited by this Government and caused by a wages blow-out. That was one flirtation Australia had with a government abandoning any responsibility for a national wages policy. In the United Kingdom in spite of a high unemployment rate, above 10 per cent and ultimately rising above 13 per cent-and I think it has come down somewhat from 13 per cent since then but not because unemployment has fallen but because of creative accounting and changes in the definitions employed-real wages in the years following 1982 increased by about 5 per cent, I think, from mid-1983 to mid-1985. In Australia in that same period, with the wages accord working very well and with a government which accepted some responsibility for wages policy and worked to have a wages policy successfully implemented in spite of economic growth proceeding at a rate which was high by Australian standards and with unemployment falling to a significant extent, real wages fell by about 5 per cent. In summary, there are two things. First, the arguments put in the letter are internally unsound and inconsistent to the point of mutual exclusivity. Secondly, the letter betrays again the simplistic and ideological belief of the far right that a wages outcome will necessarily be lower under a free market operation than it would be under a successful national wages policy such as Australia has had in the past few years. They continue to hold tenaciously to that belief regardless of the empirical evidence from all around the world which either calls it into question or flatly refutes it. Senator ALSTON —Is the Minister for Finance aware that the Commonwealth Banking Corporation annual report tabled yesterday shows a disastrous 40 per cent decline in after tax profit for the Commonwealth Bank despite a significant increase in earnings on overseas transactions and a 28 per cent profit fall for the Commonwealth Savings Bank which it blames principally on the 13.5 per cent housing loan ceiling? Is it a fact that the Commonwealth Banking Corporation has formally requested the Federal Government to provide it with dividend relief for the next two years which on present levels of profitability would amount to some $150m? In view of the extremely parlous state of the Australian economy and the Government's clear unwillingness or inability to expand the capital base of a number of public trading enterprises, what steps does the Government propose to take to enable the Commonwealth banks to compete more effectively with the private banks? Is the Government prepared to consider partial privatisation along the lines of the recent sale by the Bank of New Zealand of 13 per cent of its shares on a non-voting rights basis? Senator WALSH —I was asked whether I was aware of the Commonwealth Banking Corporation's annual report. The answer is no. In fact I must confess that I did not even know that it had been released. In relation to the question of its decline in profitability compared with the previous year, I will take Senator Alston's word on that-for the time being, anyway. I do not know how it compares with other trading banks, and I suspect that not all of them will have yet published their annual reports. However, the financial year 1985-86-and I think that is the financial year used by the Commonwealth Bank but I am not certain about the other trading banks-was a year of extraordinarily high profits. It is no great surprise that the Commonwealth Bank's profits have fallen from that level, any more than it would be surprising if the profits of other trading banks had fallen. On the question of equity capital, the Commonwealth Bank has approached the Government. In other words, I know the answer to the question but I am not sure, although there has been a Government response, that the Treasurer has made that information public or that at this stage he believes it is appropriate to make it public. I will check that out and, subject to the Treasurer's agreement, I will let Senator Alston know as soon as possible. Senator AULICH —My question is to the Minister for Home Affairs. Has the Minister's attention been drawn to statements by the Tasmanian Premier, Robin Gray, urging that the Bureau of Meteorology cease publishing minimum temperatures for Tasmania on the ground, believe it or not, that it harms tourism in that State? Does the Minister intend to comply with this request? Senator ROBERT RAY —One thing that I like about Tasmanians is that they have memories like elephants. It was just a few years ago that Senator Aulich departed the Tasmanian Parliament only to be blackballed by the then incoming Premier Gray from getting a job in the Education Department. Apparently Senator Aulich sat around for five years waiting to get square, and it appears that today is the day. Although I have some administrative responsibility for the Bureau of Meteorology, I do not think that I could urge it to cease giving minimum temperatures for Tasmania. However, as Senator Richardson could affirm, it is a magnificent venue for tourism. In any event, I do not see why people-especially Victorians-would like to go up and sit around in Cairns where the temperature is 25 degrees and with ocean waves rolling in. Victorians like to go to Tasmania because of the similarities in the weather. In conclusion, honourable senators should note that the Australian Labor Party's biennial conference will be held in the great city of Hobart for the second time in a row. I would like to thank the Premier of Tasmania for again giving us a $2,000 subsidy to go to his great State. Senator SHEIL —My question is addressed to the Minister for Transport and Communications. A clerical industrial dispute in the Aviation Medicine Branch of the Department of Transport and Communications has affected the renewal of flying licences since 14 October. No new medical information is being put into files and no medical clearances will be given over the telephone. This ban has been agreed to by the Administrative and Clerical Officers Association (ACOA). When will the Minister intervene to ensure the continuation of this most essential function of the Department, the non-renewal of licences having important implications? Senator GARETH EVANS —Senator Sheil was kind enough to give me some advance notice of his question, and I have to hand advice in the following terms: ACOA members of the Aviation Medicine Branch have placed bans on the entering of results of medical assessments undertaken in the branch on to computer systems. As a result, licensing officers in the regions of the Department do not have access to results of medical assessments. The bans also affect the informing of applicants of the results of their medical assessments. About 250 medical assessments are processed per day, of which about 200 do not require further action in the branch, and consequently these are not affected by the bans. It is the remaining 50 or so that require further medical assessments that are affected. The Department has been assured that the bans will not be enforced if safety matters are involved. The bans relate to the establishment of the Department of Transport and Communications out of the former departments of Aviation, Transport and Communications. Negotiations are continuing with the ACOA to resolve outstanding matters and to have the bans lifted as quickly as possible. I personally will monitor the situation in the light of its being brought to my attention, and will intervene at some appropriate stage if I feel that it would be helpful to do so. Senator CHILDS —My question is directed to the Minister representing the Treasurer. What economic indicators are available to assess the job prospects of the unemployed in the various States? What do these indicators show? Senator WALSH —The best indicator of job prospects as distinct from the level of unemployment, I think it would be generally agreed, is the ratio of job vacancies to the unemployed-a better indicator of job prospects than the absolute level of unemployment, because it provides a clear picture of the relative slackness of the different labour markets or the same labour market over a period. The September edition of the Australian Bulletin of Labour contains an up to date analysis of those ratios across the States. The highlights of that analysis are that the Australian average number of job applicants for unfilled vacancies is 12. The figure varies very considerably from State to State, and the spectacular State figure is that for Queensland, which has a ratio of 31:1 as against a national average of 12:1. A quick calculation is that, if Queensland were taken out of the rest of the country, the average in the other five States would fall to about 10. In Queensland it is 31. The next highest is Tasmania, with an unemployed to job vacancy ratio of 20. Returning to Queensland, the Bulletin of Labour notes that this vacancy to unemployment ratio for Queensland is the lowest it has been for some time, drawing attention to the fact that the employment prospects in Queensland are particularly gloomy, and have been for a very considerable time. Senator PANIZZA —My question is directed to the Minister for Local Government. It follows the Minister's answer to a question asked earlier this week by Senator Knowles, when the Minister acknowledged that local government authorities would lose revenue because of the change to the quarterly system of payments. Does the Minister agree that most councils-I estimate 85 per cent-work on an overdraft basis in the first three months of the financial year because by then the previous year's funds have been used and new rates are not yet forthcoming? Does the Minister further agree that councils were further disadvantaged this year by the fact that the grants were paid later than usual? Finally, if the Government will not change the quarterly payment system, will it at least agree to paying the first instalment in July, even if it is an interim payment? Senator REYNOLDS —I thank Senator Panizza for his question and I am pleased to hear that there is some interest in local government on the other side of this chamber. In answer to the question, I am afraid that I become very confused about the Opposition's stand on financial management. Senator Stone is always coming into this place and talking to us about how we have to have further economic restraints and cutbacks. He talks about a mini-Budget, yet half an hour later other honourable senators come into this place criticising the Government for taking responsible measures. I explained in a response to Senator Knowles earlier this week that the Government's stand in regard to quarterly payments was economically responsible. It is a stand that has been accepted by a majority of responsible local authorities throughout the country. If Senator Panizza cares to discuss this issue with a number of local authorities, he will find that they are aware of the need for economic restraint and are prepared to contribute to it. The third part of Senator Panizza's question related to overdrafts and the regularity of payments. It is true that this year, and following the Self National Inquiry into Local Government Finance, a new system of distribution throughout the country on a much more equitable basis, a needs basis, was introduced. As a result of this, and partly because we had a Federal election in the middle of the year, as I am sure honourable senators opposite recall, there were certainly delays this year because it was the first year of implementation. I am pleased to advise Senator Panizza and all local authorities that in future payments will be made on a regular basis, because the new system will be in place. The payments will be made by the middle of August, again in November, again in February and again in May. I am sure from the words that I am getting back from local authorities that they accept that they have to act on a responsible basis. It is a pity that members of the Opposition have not decided whether they will back Senator Stone in regard to economic restraint and the number of policies he has always put forward, or whether they will continually attack this Government for sensible economic restraint and sensible measures to achieve this. Senator GILES —My question is directed to the Minister Assisting the Prime Minister for the Status of Women and for the Bicentenary. I refer the Minister to the Heritage 200 program and ask whether she can tell the Senate on what basis the selection is to be made of the 200 Australians to be honoured by memorial plaques in the Parliamentary Triangle. Senator RYAN —The Heritage 200 program is an initiative of the Australian Bicentennial Authority (ABA). Its purpose is to identify and honour 200 Australians who have made the most outstanding contributions to making Australia what it is today. The program received nationwide publicity, calling for nominations from national organisations, major service clubs, professional associations and the general public. Some 1,800 nominations were received. Nominations are being assessed by the Heritage 200 Committee, which is an independent body appointed by the ABA. It is co-chaired by Dame Beryl Beaurepaire and by Mr Alan Coates. Opposition senators interjecting- Senator RYAN —I realise that I have reassured honourable senators opposite with that last statement, and those who believe in equal opportunity will be reassured. The Committee's decision on the 200 program is proposed to be announced in May 1988 to coincide with the unveiling of the plaques. The proposal for the design and siting of the plaques within the Parliamentary Triangle was tabled in the Parliament on 26 October 1987 for consideration by the Joint Standing Committee on the New Parliament House and approval under the Parliament Act 1974. The estimated cost of this project is $200,000, which is being provided by the ABA. Senator BOSWELL —I address my question to the Minister for Finance, as the Minister representing the Treasurer and as a farmer. Does he realise the uncertainty for rural taxpayers in the conversion or extension of grazing leases? Under a ruling from the Australian Taxation Office in Brisbane-which differs from rulings of the Tax Office in Canberra and Townsville-will such a taxpayer be subject to capital gains tax upon extension or conversion of such a lease, the original of which was initially granted prior to the commencement date for the capital gains tax on 19 September 1985? If such a conversion or extension is subject to capital gains tax, what basis for the cost price will be adopted by the Tax Office? Has the Minister for Primary Industries and Energy not admitted that this is an unintended consequence of the legislation, and when will this matter be remedied? Senator WALSH —I do not know about the alleged conflicting rulings that have been given by various deputy commissioners of taxation, but I have a note from the Treasurer's office. I understand that the lessees of these pastoral leases have a right or understanding that on or before the expiry of the lease that lease will be renewed. In the event of its not being renewed, compensation is payable to the lessee-in this case, by the Queensland Government, I expect. Comments have been made on that basis. In respect of the renewal of a pastoral lease granted or assigned to the lessee before 20 September 1985, there will be no capital gains tax liability at the time of the renewal of the lease. A later disposal of the lease, following renewal on or after 20 September 1985, may give rise to a capital gains tax liability, calculated on a cost base that includes the market value of the lease at the time of renewal. Senator BURNS —Can the Minister for Local Government tell us what the Government is doing to encourage participation by local government as a positive response to the World Heritage listing of the north Queensland wet tropics? Senator REYNOLDS —I am pleased to inform the Senate that the Office of Local Government is working very closely with the Department of the Arts, Sport, the Environment, Tourism and Territories and has prepared a draft regional plan for consultation with local government in regard to the proposed world Heritage area. That plan identifies possible alternative employment and enterprise creation opportunities in the area. I have discussed that draft regional plan with a number of councils. Thirteen of the 14 local councils came to Cairns to a meeting at which my colleague Senator Richardson and I spoke to them about the importance of local government involvement in discussions about the future of the area affected by World Heritage listing. Since that time officers of my Department have met with all local government authorities, regional organisations and Aboriginal communities in the proposed listing area. Information was obtained about possible future employment projects and development strategies for each local area in the short, medium and long term. The input of local councils and other community groups, as well as the advice of other Commonwealth agencies, will be incorporated into a revised regional plan which will be discussed with Senator Richardson. I am sure that Senator Richardson would agree with me when I say that it is a great pity that the Queensland Government has not responded on the same basis as local authorities in the area. Local authorities have been very responsible and concerned to discuss the impact of World Heritage listing. That does not mean that they all agree with Senator Richardson and me. In fact, a number of them have indicated quite clearly that-- Senator Boswell —None of them do. Senator REYNOLDS —That is something that I think you should go and find out for yourself, Senator Boswell. Senator Boswell —I have been up there and I cannot find one person who agrees with you. Senator REYNOLDS —It is strange that whenever anything positive is put forward from this side of the chamber we get this raucous behaviour from the likes of Senator Boswell. I would have thought that Senator Boswell, as a Queenslander-unlike his colleague Senator Stone-would have had some particular interest in this matter. Obviously, he is more committed to playing the larrikin than to listening and learning about the important plans that Senator Richardson and I have in regard to World Heritage listing affected areas. I take this opportunity to again remind the Queensland Government that it is a great pity that local councils have had to show the way in terms of co-operation, consultation and putting forward positive suggestions. The Queensland Government has so much to benefit from a reasonable approach to this issue. Senator MacGibbon —That is not the truth. That is why they are writing to me. Senator REYNOLDS —I understand that my good friend Senator MacGibbon might be agreeing with me. That is unusual, but I welcome it. All I can say is that local authorities are responding very sensibly and favourably. Senator Richardson and I look forward to working with them and we still hold out some hope that eventually the Queensland Government-probably when it finds itself a new leader-will start to respond to Senator Richardson's initiatives. Senator MacGibbon —I raise a point of order, Mr President. I claim to have been misrepre- sented. The PRESIDENT —Order! There is no point of order. You may claim to be misrepresented after Question Time. Senator HILL —Is the Minister for Transport and Communications aware that only two international carriers other than Qantas Airways Ltd fly into Adelaide-and there are only 11 flights each week? Senator Robert Ray —You have been on every one! Senator HILL —I have no vested interest in this question. In such circumstances will the Federal Government not support flights to Adelaide by Thai Airways International Ltd, the Malaysian Airline System and Nippon Airways? Senator Richardson —Are they the next three trips? Senator HILL —This is actually very serious. With all the consequential benefits to the South Australian economy, what would be necessary to cause the Government to alter its currently obstructive attitude? Senator GARETH EVANS —The main thing that would be necessary is a rational and persuasive case being made out for further flights to Australia as a whole, as well as just to Adelaide, in the context of the current pattern of air service agreements which presently exist and which Australia will continue to negotiate on the basis of reciprocal advantage for the Australian carrier, Qantas. This is sometimes very difficult to achieve, particularly with some of the airlines that Senator Hill mentioned, which are only too happy to take advantage of Australian passengers flying into their particular headquarters locations around South East Asia and carrying them on to Europe without giving compensating advantages by way of access to our own carrier. These are always complex and difficult matters and there are rarely simple and obvious solutions to them. The particular problem of Adelaide which has been brought to my attention is one about which I will have discussions with representatives of that city in the near future. By that time I will be in a position to give a more detailed answer. But I simply say that one of the problems that we face in Australia is that rather too many international gateway ports have been established around the continent in recent years to satisfy perfectly understandable local aspirations for direct air services. That makes it very difficult indeed, given the size of our aviation market, to get the kind of frequency into every one of those gateway ports that would be optimal or desirable for the local community. I understand Senator Hill's concern, and that of a number of other people who bash my ear periodically about the lack of frequency into various others of the 11, I think it is, ports that exist around Australia, but there are practical limitations on the extent to which major increases in frequency can be achieved. Senator McKIERNAN —I ask the Minister for Transport and Communications: What is the reason for the Christmas Island aerodrome being approved for BAE146 aircraft only? Is there any foundation for the claim by the honourable member for Bruce that this is some kind of pay-off for Ansett-TNT which operates such aircraft in Australia? Finally, what worldwide purchase arrangements are in place for further purchases in the future? Senator GARETH EVANS —Despite his manifestly unprepossessing appearance, the honourable member for Bruce, Mr Aldred, has a well known and very unfortunate reputation for making squalid accusations, under cover of parliamentary privilege, which he then, far more often than not, is put in a position of having to withdraw. Senator Chaney —Mr President, I take a point of order. The Minister started his answer by simply being tasteless with his reference to the honourable member's appearance. Quite clearly, there is nothing in the Standing Orders to stop Ministers being extremely rude and crude, as the Minister chooses to be. But with respect to the latter part of his comments about the honourable member's statements, he is casting reflections on the honourable member and should be made to withdraw. The PRESIDENT —The Minister did reflect on the honourable member. I ask him to withdraw. Senator GARETH EVANS —I have great difficulty in doing so, Mr President, but I defer to your ruling and do so accordingly. Senator Chaney —Mr President, I ask for an unqualified withdrawal. The PRESIDENT —Order! I ask the Minister to withdraw. Senator GARETH EVANS —In deference to your ruling, Mr President, I withdraw. Senator Chaney —Mr President, I seek an unreserved withdrawal. The PRESIDENT —Senator Evans, will you withdraw? Senator GARETH EVANS —I withdraw. Having made that point, may I proceed to clarify the record-- Senator Chaney —Mr President, I ask you to sit the Minister down. He is clearly acting in contempt of your ruling and direction. I suggest that the only way that you will preserve order in this place is by sitting the Minister down. You asked him to withdraw three times. He then re-affirmed his reflection on the honourable member with his last remark. He should be disciplined. The PRESIDENT —Order. I asked the Minister to withdraw. The Minister withdrew. I advise him to get on with answering the question. Senator GARETH EVANS —Christmas Island Casino Resort Pty Ltd has been advised that the Christmas Island aerodrome would require upgrading if it were to support frequent scheduled airline services by large jet aircraft, such as Boeing 727s, 737s, 767s, or Airbus A300s. The developer proposed to the Commonwealth that operations to the island resort be commenced using BAE146 aircraft, pending future airport upgrading. Scheduled passenger flights by these aircraft have been approved subject to certain safety and operational conditions. Operations by other similar aircraft into the Christmas Island aerodrome could also be approved. However, the BAE146, which has four engines, is not subject to over water route limitations which apply to competing twin-engine aircraft such as the F28. By way of a little further background, the Christmas Island aerodrome has a slope, undulations and obstacles encroaching the flight path which would not be permitted at an airport supporting jet operations on the Australian mainland. Regular weekly charter flights by B727 aircraft to the island have been permitted in the past because they have provided an essential transport link to that remote community. Higher frequency operations by these aircraft would not, however, be approved because the travel is not essential in the same way and because alternatives are available, namely, the use of smaller and appropriate over water aircraft like the BAE146 and also the option of upgrading the airport at the developer's expense. I make it clear, in the light of the allegation which was made without any justification whatsoever in the House of Representatives the other night under cover of privilege and which has been the subject of further questions, I understand, in the other place today, that there is ample technical justification for the decision that has been made. It was made wholly on technical grounds without any reference to any other considerations. Those technical grounds are as I have described them. It is about time that Mr Aldred stopped perpetrating the practice he has made so manifest over the years of making allegations of this kind about sordid, corrupt connections, pay-offs and trade-offs. It is indefensible. It is inappropriate for anyone in parliamentary life to do this as a matter of course. Senator Alston —Mr President, I take a point of order-- Senator GARETH EVANS —He is the one who ought to be subject to the condemnation of this Parliament. Senator Alston —I take a point of order, Mr President. The Minister has been told on three occasions in the very near past not to cast aspersions on a member of the other place. He took the specific opportunity to continue talking over the taking of a point of order and to repeat that same practice. I ask that you direct that in future that conduct will not be tolerated in this chamber. The PRESIDENT —I listened carefully to what the Minister said. He was not reflecting on the honourable member. There is no point of order. Senator TAMBLING —My question is directed to the Minister for the Environment and the Arts. It follows the controversy created by the Minister for the Arts, Sport, the Environment, Tourism and Territories, Mr Brown, in pushing a loopy monorail system. The Minister would be aware that Senator Walsh and the Government have already denied support for the more feasible Darwin to Alice Springs rail link and the absolutely necessary Darwin airport. I ask the Minister to confirm that the monorail idea is simply a camouflage for the failure of the Government to remove the dreadful accident risks and solve the road safety problems on the Olgas road and that his recent announcement of only $300,000 for roadworks is only for resealing the existing Ayers Rock ring road. I further ask the Minister to deny that the National Parks and Wildlife Service and Minister Brown are also considering something similar to the stupid monorail system for the Kakadu National Park. Senator RICHARDSON —I have noted a degree of controversy on this question in the last few days which is hardly worthwhile. The honourable senator described the monorail as loopy. I am not sure in which sense he meant loopy. I do not think there was ever a proposal for a loop; it is for a straight line. I can repeat only what I said yesterday insofar as the monorail proposal is concerned: there is no concrete proposal before the Government. If any proposal ever eventuated it would be subjected to two things. Firstly, and most obviously, it would need the approval of the Uluru National Park board of management and, secondly, it would be subject to stringent environmental controls. Yesterday I expounded at some length on the difficulties with the road. It would require $6m to $8m to seal the road so that it is wide enough to allow tourist buses to pass each other in opposite directions at extraordinary speeds, which is the current process. Sufficient funds are not available to do that at present. I acknowledged that yesterday. We will do all that we can to continue to upgrade the road. While that is being done, it is obvious that the people in the National Parks and Wildlife Service who have the direct responsibility will look at other alternatives. That is how this proposal came up. I am not aware of a monorail proposal for Kakadu, where it would go and from where it would come. If and when I hear of such a proposal I will be very happy to inform the honourable senators of my views. But I think it may be somewhat more like this proposal in that it is not concrete now and is not likely to be in the near future. Senator McLEAN —Is the Acting Leader of the Government in the Senate aware that petrol price warring has reached the unacceptable situation whereby the price of petrol can vary by up to 13c per litre on a daily, hourly or block by block basis? Is he also aware that such a situation renders it virtually impossible for service station proprietors efficiently to manage their enterprises, as it is impossible for them to estimate with any accuracy the cash flows of their businesses? Is he also aware that service station proprietors are being subjected to a campaign of orchestrated coercion by oil companies which are demanding up front cash lease renewal fees? Finally, in view of the fact that there have been 14 public inquiries since 1973 which have failed to resolve these problems, can the Minister inform the Senate what action, if any, the Government intends to take to solve the problems? In particular, is the Government now prepared to move towards 100 per cent divorcement in the industry? Senator GARETH EVANS —I am overcome with a slight sense of deja vu when I get a question about petrol prices and volatility there-in. I will be happy to supply Senator McLean with a long and detailed paper on the economics of petrol retailing, which I had prepared in my last portfolio, but which I do not want to burden the rest of the Senate with now. As to the question about the possible desirability of further regulation of the retail petroleum industry, essentially that is a matter within Senator Button's jurisdiction. I know that he has something of a disinclination in the present economic and industry environment to introduce a greater degree of regulation here than exists already, but I will refer Senator McLean's question to him and see what further response he might wish to make. Senator GARETH EVANS —Yesterday, 28 October, Senator Peter Baume asked me whether I could assure the Senate that war crimes legislation would not create any criminal liability with retrospective application. I can give him that assurance. The War Crimes Amendment Bill 1987, which was introduced in the House of Representatives yesterday, does not create any criminal liability with retrospective application. Customary international law recognises the acts or omissions addressed in the Bill as war crimes. It has long provided for criminal responsibility to be imposed on persons committing the acts or omissions dealt with by the Bill and for their punishment. The Bill, therefore, extends to Australian courts jurisdiction to try to punish crimes recognised in international law as war crimes. It does not create offences retrospectively. The offences described in the Bill have existed for many years and many of them are cognisable by military courts under the War Crimes Act as it presently stands. Senator GARETH EVANS —Yesterday, Senator Reid asked me about some personnel problems within my Department alleged to exist in the context of the proposed creation of the Federal Airports Corporation. I have a lengthy response to her and I will supply her with a copy of it but I seek leave to incorporate it in Hansard. Leave granted. The response read as follows- From the outset the Government recognised the need to protect the rights and interests of employees transferring from the Department of Transport and Communications to the Federal Airports Corporation (FAC). In November 1985 in his Second Reading Speech on the Federal Airports Corporation Bill, the then Minister for Aviation, the Honourable Peter Morris said ``to ensure that their employment is not jeopardised the Government will require, as a matter of policy, that the Corporation offer positions to all staff whose functions are transferred.'' This commitment which was in the public record was widely distributed within the then Department of Aviation to all staff occupying positions whose function was transferring to the FAC. With regard to my Department's Airports Division which is located in Canberra some 105 out of 181 staffed positions were identified in May 1986 for transfer to the Corporation. After consultation with Unions and the FAC Chief Executive certain procedures were set down for offers to be made to staff whose functions transfer under the Federal Airports Corporation Act 1986. In April 1987 the FAC and my Department had completed the necessary consultative processes with unions including the negotiation of draft agreements on terms and conditions. This allowed the FAC to issue conditional offers to some 100 Airports Division staff then occupying the positions scheduled for transfer and for responses to these offers to be received. The completion of this offer process was held up for a number of reasons and the uncertainty concerning the future of international air terminals prompted certain unions to make resolutions in June which also deferred the offer process. On 15 September I announced a new target date for the Corporation's commencement of 1 January 1988 and my Department met with the ACTU recently to recommence arrangements for the transfer process to be completed and where offers and declined for appropriate steps to be taken. Finally could I add that I am aware that certain staff in the Airports Division have written to the Associate Secretary of the Department seeking clarification of a number of questions in the context of comments in my Aviation policy statement of 7 October 1987. In particular the implications of the creation of the Civil Aviation Authority (CAA) for Airport functions. The Associate Secretary met with staff on 22 October and further consultations with unions and the staff will occur as part of the CAA Implementation process. Senator GARETH EVANS —Yesterday Senator Wood asked me a supplementary question about Tibet. My answer to this is as follows: My attention has been drawn to the document to which Senator Wood referred, namely, a 1985 publication entitled In Exile from the Land of Snows and a subsequent document entitled Tibet Today: Current Conditions and Prospects, both by an American journalist, John F. Avedon, which assert that China has deployed nuclear weapons in the Tibetan autonomous region. I am advised that, following a careful examination of this material, there is no reason for me to alter my answer from yesterday, except to say that the information available to the Government does not confirm that China has deployed nuclear weapons in its Tibetan autonomous region. Senator GARETH EVANS —Yesterday Senator McGauran asked me a question about wheat sales to Egypt which I asked him to place on notice. Given the problems of the printing of Hansard, I think it is probably fairer to give him a response today, which I do now and seek leave to incorporate it in Hansard. Leave granted. The response read as follows- The Australian Wheat Board is continuing to receive credit insurance cover on its wheat contract with Egypt under which shipments continue through to the end of this year. It is the practice for the Government each year, prior to the Australian Wheat Board entering into contracts for sales of wheat from the new season's crop To review the level and conditions of credit insurance cover to be made available for these sales. This review is to be undertaken by Cabinet shortly and in the case of Egypt will be undertaken against the background of ongoing negotiations with Egypt to reschedule some $A400m in wheat debts relating to contracts entered into before 21 October 1986 As far as these negotiations are concerned, we have completed important preliminary arrangements with the Egyptian authorities and we have every reason to believe that a satisfactory agreement will be reached. As this matter is subject to consideration by Cabinet, there is little more I can say at this stage However, I would wish to make it clear that the Government values highly Australia's close and friendly relations with Egypt and appreciates that Egypt is a longstanding and valued customer for Australian wheat. I can assure the honourable senator that these factors will be taken into account in the Government's consideration of this question. Senator GARETH EVANS —Senator Haines asked me a question on 26 October about the telegram survey that was done by Australia Post and the breaches of privacy possibly involved in that. I undertook to follow up a series of matters of detail she raised with me. I now do so by seeking leave to incorporate a lengthy reply in Hansard. Leave granted. The reply read as follows- On 26 October, I undertook to provide Senator Haines with detailed answers to questions she asked me about the release of 1,500 copies of old telegram forms by Australia Post to a private market research firm. Senator Haines asked several specific questions and my answers to these follows: The first question concerned whether I agree that it would have been inappropriate for a low ranking officer, experienced or not, to have authorised the release of these forms. If Senator Haines reads the answer I gave her on 23 October, she would see that I described the officer involved as inexperienced, I did not refer to the officer's status. I should, by way of clarification, say that the officer concerned with this task relating to the transfer of the telegrams service from Telecom to Australia Post, is inexperienced in market research studies. It is clear, in hindsight, that the approach adopted should have been checked or cleared with a more experienced officer. Senator Haines than asked at what level of seniority this decision and authorisation was made at Australia Post and whether any action will be taken against the person concerned. The officer is classified at the class 10 level in the clerical administrative structure. As I indicated in my answer of 23 October, the officer concerned has been counselled and I should explain what this process involves. Section 61 of the Postal Services Act sets out in detail the disciplinary action that may be taken against an officer who is considered to have failed to have fulfilled his/her duties in one or more ways. Section 61 (2) provides that, when a supervisor believes an officer may have failed to fulfil his/her duties, the supervisor may seek an explanation in writing from the officer concerned. After consideration of the officer's explanation, the supervisor, if he/she decides the officer has indeed failed to fulfil his/her duties, may take further action including counselling the officer. Australia Post management is well aware of the seriousness of this matter but considers that, as the motives of the officer concerned were well-intentioned, disciplinary action in the form of a counselling is appropriate. The officer has been counselled and a record of this disciplinary action has been placed on his personal file. The final part of the question concerned whether Australia Post officers, who followed the instruction to release the telegram forms, are subject to any overriding protection under the Postal Services Act against prosecution under Section 91 as amended. Senator Haines correctly mentioned that Section 91 was recently amended and now refers to a postal article sent by post, courier or electronic mail service. However, as a telegram is not a postal article and is not transmitted by the electronic mail service, then Section 91, as amended, does not apply in this case. Senator MacGIBBON(Queensland) —by leave-At Question Time today I was grossly misrepresented when the Minister for Local Government, Senator Reynolds, claimed that I agreed with her position in relation to the local authorities in north Queensland. She misled the Senate when she did that because she would know very well that every one of the shires in that region has written to all Queensland senators protesting repeatedly about the treatment they have got from Senator Richardson and this Government. I view her action in claiming that I had supported her in her judgment of the situation as both irresponsible and despicable in a literal sense. Senator Gareth Evans —Mr President, on a point of order: the words `irresponsible' and `despicable' sound a little unparliamentary. Under the circumstances, I ask you to ask Senator MacGibbon to withdraw that reflection. The PRESIDENT —I think it was unparliamentary and I ask Senator MacGibbon to withdraw. Senator MacGIBBON —I withdraw, Mr President. Senator BOLKUS(South Australia) —I present the report of the Senate Standing Committee on Legal and Constitutional Affairs on the Administrative Decisions (Judicial Review) Amendment Bill 1987. Ordered that the report be printed. Senator BOLKUS —by leave-I move: That the Senate take note of the report. The Administrative Decisions (Judicial Review) Amendment Bill 1986 was referred to the parliamentary predecessor of this Committee, the Constitutional and Legal Affairs Committee, on 13 May 1987. Both the 1986 Bill and the Constitutional and Legal Affairs Committee lapsed with the dissolution of Parliament on 5 June 1987. On 15 September 1987 the Administrative Decisions (Judicial Review) Amendment Bill 1986 was reintroduced, in a virtually identical form, as the Administrative Decisions (Judicial Review) Bill 1987. The Administrative Decisions (Judicial Review) Bill 1987 was eventually referred to the Standing Committee on Legal and Constitutional Affairs on 24 September 1987. At the time, Senator Alston, who moved the reference to this Committee, advised the Senate that the Committee would endeavour to report as a matter of urgency. The Administrative Decisions (Judicial Review) Bill 1987 is intended to make two primary changes to the Administrative Decisions (Judicial Review) Act 1977. Firstly, the Bill would require the Federal Court to refuse to grant an application for review where the applicant possesses an alternative right to seek review unless `the interests of justice require that the Court should not refuse to grant the application'. Secondly, the Bill would place the onus upon any applicant with an alternative right to seek review to satisfy the Federal Court of Australia that `the interests of justice require that the Court should not refuse to grant the application'. In addition, the Bill would require that the Court should exercise this discretion to refuse to hear applications or to stay proceedings at the earliest possible opportunity or, in the Bill's terms, the earliest appropriate opportunity. These latter provisions are essentially statutory formulations of the existing law as it has been developed by the Federal Court. The Committee has no quarrel with the requirement that the Court exercise its discretion to refuse an application for review or stay proceedings at the earliest appropriate opportunity. Accordingly, the Committee has endorsed proposed sub-sections 10a (2) and 10 (2a) as contained in the Bill. Proposed paragraphs 10 (2) (c) and 10 (2) (d) would apply to virtually every application for review lodged under the Administrative Decisions (Judicial Review) (ADJR) Act. In reality, the requirement that the applicant possesses an alternative right of review is meaningless. It must be remembered that section 75 of the Constitution entrenches the right to obtain remedies against actions by Commonwealth officials by vesting original jurisdiction in the High Court of Australia over, among other matters, matters in which a `writ of mandamus or prohibition or an injunction is sought against an officer of the Commonwealth'. These common law actions were not, and could not be, abolished by the ADJR Act. The object of that Act was, as it were, to simplify the means of obtaining review. In virtually all cases, a person who could seek review under the ADJR Act could, by way of alternative, initiate common law proceedings. This avenue, therefore, would fall within proposed paragraph 10 (2) (d) of the Bill. Consequently, virtually all applicants would have to satisfy the Court that the interests of justice required that it should not refuse to hear the application. In a sense, this would mean that applicants would have to obtain a type of de facto leave from the Court. The Committee objects to this. The object of the Act is to provide simple remedies, and to streamline proceedings. As section 10 of the Act stands, the Court is able to dismiss applications where applicants have adequate alternative remedies. But the Court has interpreted this to mean that the application should be dismissed only when the respondent can satisfy the Court that it should dismiss the application. The Committee considers that this is the correct approach. We would have no objection to strengthening section 10 to require, as distinct from simply empowering, the Court to dismiss applications whenever the respondent satisfies the Court that the applicant has an adequate alternative remedy. But we emphasise that the onus should rest upon the respondent. It is unreasonable to require every applicant for review under the AD (JR) Act-the so-called simple method of obtaining judicial review-to satisfy the Court that it should hear his or her case. In many cases, it will be common ground between the parties that there is no need to consider whether the applications should be dismissed, notwithstanding the existence of an alternative remedy. We recognise that it is possible to abuse the administrative review system, and to exploit the various avenues of review for purely tactical reasons. We in no way wish to endorse or encourage such conduct. We are sympathetic to the need to strengthen the AD (JR) Act against abuse. However, we have concluded that the allegations of abuse of the AD (JR) Act have been exaggerated. The Committee does not dispute that there are examples of abusive litigation. The court cases which arose out of the Australian Broadcasting Tribunal's inquiries into the grant of a third commercial television licence in Perth are frequently cited as evidence of such abuse. This litigation is discussed in chapter 3 of the report, where the Committee notes that not all of these cases were initiated under the AD (JR) Act, and in no case was there any attempt to have the action struck out as an abuse of process. Without casting aspersions upon any of the litigants involved in the disputes over the Perth licence, I refer to this litigation here to remind honourable senators that would-be litigants who might wish to delay or interfere with other processes are able to initiate action under the common law regardless of what so-called restrictions may be placed upon the AD (JR) Act. In reality, one of the costs of a system in which natural justice is viewed as an entitlement is that some people will choose to abuse their rights by litigating for tactical reasons, such as to delay proceedings even where they have no hope of success. We have taken the view that it would be an over-reaction to blame the AD (JR) Act for this and to punish all applicants, however meritorious, by placing an additional hurdle in their way. Further, we think that it is important to note that such hurdles, even if imposed, are of little value in preventing abusive litigation. People who really want to hamper administrative action and are blocked from seeking review under the AD (JR) Act will simply resort to the common law to achieve the same end. And that is more expensive for all concerned. In general, the Committee agrees with the assessment offered by the Administrative Law Committee of the Law Society of New South Wales that provisions such as are contained in the Bill are: unlikely to have any practical impact on persons or corporations who are intent upon bringing judicial review proceedings for strategic purposes but are highly likely to penalise and discourage ordinary individuals who are genuinely aggrieved by Commonwealth administrative action and who at present have available to them a relatively simple, accessible and inexpensive means of challenging the legality of Commonwealth administrative action in the form of the AD (JR) Act. The Committee's objections to proposed paragraphs 10 (2) (c) and (d) are less to the general object of the amendment than they are to the means by which the object will be achieved. In the Committee's view, enactment of restrictions of the type proposed is unlikely to reduce the `abusive' use of the AD (JR) Act and, in day to day operation, is likely to discriminate against financially disadvantaged applicants. The Committee's recommendation, therefore, with Senator Stone in dissent, is that reverse onus provisions of the type contained in clause 2, proposed paragraphs 10 (2) (c) and 10 (2) (d) of the Administrative Decisions (Judicial Review) Amendment Bill 1987, not be enacted. However, in the Committee's view, placing the onus upon respondents and thus, as it were, formulating in legislative terms the existing common law would ensure that the Court has the means to dismiss summarily unmeritorious applications without unnecessarily disadvantaging applicants with justifiable applications. I seek leave to continue my remarks later. Leave not granted. Senator STONE(Queensland-Leader of the National Party of Australia)(3.14) —I wish to speak very briefly to the motion moved by Senator Bolkus in his capacity as Chairman of the Standing Committee on Legal and Constitutional Affairs. I am a new member of that Committee-in fact, the only member who did not serve on the former committee in the previous Parliament. Of course, for that reason, I have not had the advantage that other members of the Committee have had of having been present when evidence was given to members of the Committee at some considerable length on the matters referred to it under this reference. However, having done my best to assimilate the matter during my time on the Committee, I have chosen, as Senator Bolkus has indicated, to dissent from the majority view of the Committee on this matter, and would permit the Administrative Decisions (Judicial Review) Bill to go forward in its original form. I must confess that I have been influenced in that view by two considerations that I will mention briefly, apart, of course, from the issue in question itself. The first is that I have the feeling that in matters of administrative law there has grown up in Australia, and particularly in Canberra, I have to say, a somewhat too cosy enclave of persons interested in that subject. I use the term `interested' in both senses. The Administrative Review Council, for example, which has been one of the bodies instrumental in reviewing the question which was the subject of the Bill referred to the Committee, is a rather inbred body. In saying that, I do not wish to cast any aspersions whatsoever upon any member of that Council. They are all extremely upright, knowledgeable and proper people. Nevertheless, the Council does have a certain inbred quality. I make that comment in a constructive sense because it appears to me that, if we are to have an Administrative Review Council, it ought really to be more representative-I use that word without putting too heavy an emphasis on it-of what one might call ordinary Australia, and not so clearly heavily weighted towards representation from groups and bodies and, in many cases, individuals who are part of the administrative law process. I am saying that it is often the case, and quite properly, that the Administrative Review Council is asked to give advice about questions such as those that were before the Committee on this occasion. One really has to wonder who is guarding the guardians on such occasions. I raise that as a genuine matter of concern, and I leave that point there. My second observation from the papers that came before the Committee on this reference relates to the advice of the Attorney-General's Department. Again from my previous experience in this city, I had formed the view, which I do not think has been subjected to any basis for change in the interim, that the Attorney- General's Department, particularly that area of it responsible for these matters, had not generally been notable for taking any restrictive attitude towards the provision of avenues of appeal for litigants in the administrative law area or, indeed, in other areas. One might almost go so far as to say that that Department, and this area of it, has leant over backwards to provide as many avenues of appeal as possible in some cases. So, when I note advice from that Department which is in effect in support of the Bill, I am somewhat impressed by that aspect of the evidence before the Committee. In short, I have taken the view, which I have done with due humility, given my relative inexperience on this Committee compared with that of my colleagues, that I should dissent from the otherwise collective judgment and, in effect, re-commend that the Government's Bill be accepted. Senator COONEY(Victoria)(3.20) —I wish to say a few words following what Senator Stone said. I think he has been a very good member of the Senate Standing Committee on Legal and Constitutional Affairs. He has contributed mightily. He is able in expressing his opinions and has no hesitation in doing so. But he is not the only new member of that Committee. Others include Senator Schacht, Senator Powell and Senator Giles. Just as Senator Stone is a very welcome member of the Committee, so are all those honourable senators. I also take this occasion to congratulate Senator Bolkus on his election as Chairman of the Committee and Senator Hill, who is not here, as Deputy Chairman. They do a great job. Senator Stone said that the Administrative Review Council was an inbred body. He said more ordinary Australians ought to be represented on it. I suppose that is the sort of thing we say no matter what body we are talking about, whether it is a committee of economists, psychologists or whatever. We all seem to believe that professional bodies other than our own are inbred and that there ought to be more ordinary people on them. But that view is an ungenerous one, given the work that a body such as the Administrative Review Council does. Cheryl Saunders is an outstanding lawyer and a member of the faculty of law at the Melbourne University. She has worked mightily on this Council. Indeed, next Thursday, she is going to launch a pamphlet in Senate Committee rooms 1 and 2-if I can do a little advertising for her. All senators and their staff are welcome to come. She will give us a pamphlet which will explain the work that the Administrative Review Council does as well as the work that is done by the administrative law review bodies. Senator Stone asked who was guarding the guardians. That question could be asked in respect of any body that is set up to protect our liberties. The Ombudsman, the Administrative Appeals Tribunal and the Administrative Decisions (Judicial Review) Act are all part of a package that was set up by the Fraser Government to ensure that the ordinary citizen of whom Senator Stone spoke will be able to stand up against the Executive force that might otherwise overwhelm her or him. I want to put an opposite point of view to that put by Senator Stone, which I think he put very fairly and very candidly. Were this package of bodies and legislation not there, the lot of the citizens of Australia would be much worse than it presently is. With this package the citizen is able to challenge the decisions of the Executive which he or she feels do not do him or her justice. I conclude by saying that there is a contrary view to that put by Senator Stone, and I think on the whole that the system we have is a good one. Senator ALSTON(Victoria)(3.24) —I also wish to speak briefly on the report of the Senate Standing Committee on Legal and Constitutional Affairs. I think the recommendation of the Administrative Review Council was the genesis of the original Administrative Decisions (Judicial Review) Bill, but it was not the finishing point. The Bill went beyond the original recommendation. I do not want to get into the business of defending the Administrative Review Council. Indeed, I take on board some of Senator Stone's comments about the dangers that attach to specialist bodies advising on their own particular areas. They can very quickly become arcane groups which have views that are simply not able to be understood by the outside world. This is a fairly technical piece of legislation and therefore I think we need to look at it on its merits rather than simply consider how it came to be before us. I say in passing that it would be my suspicion that the Attorney-General's Department did not have access to the range of submissions before the Committee. I think we all started out with some apprehension, given the range of applications that emanated for a third television licence in Perth. But when I delved into the matter a little further my concerns were assuaged considerably, because it seems on close examination that what emanated from all of those 17 applications over a three-year period was a considerable tightening up of the practice and procedures of the Australian Broadcasting Tribunal. Although it was a contest between megalitigants who had no compunction at all about hauling themselves and their opponents off to the Administrative Appeals Tribunal (AAT) and the Federal Court of Australia at every conceivable opportunity, I think the end result was that they themselves bore the burden of costs and rendered a public service, perhaps unintentionally, in defining some of those procedural areas. To then propose legislation based on what is in a sense a collective single instance seems to me to be a dangerous approach. Therefore, when one considers that this legislation is only tinkering at the edges, it becomes really a gallant attempt, and no more, to try to limit the rights of access of applicants to the AAT in respect of judicial review of administrative decisions. Having read Senator Stone's dissenting report, I wish to mention the second half of that report, in which he expresses some concern about the vagueness of language and the difficulties that would confront those with the onus of proof in satisfying the Tribunal that these matters could not be dealt with elsewhere. That is a very valid comment, and I do not think it needs to be taken in isolation, because there are a number of other undesirable aspects to the Bill that will have the end result of making it much more uncertain and difficult terrain for applicants who do not have unlimited access to funds and might therefore be dissuaded from taking actions to assert their rights. It seems to me that at the end of the day-as Senator Bolkus outlined-if the Act were simply to require that a matter be dismissed when the respondent had established that an applicant had alternative remedies, there would be little difficulty. But to reverse the onus, and to put an applicant through a very uncertain number and quantity of hoops, seems to me just to make the area even more complex and not provide a more satisfactory solution. What is proposed here may have started out on the right track, but ultimately it does no more than confuse the area and simply puts another difficulty in the way of those seeking remedies and, of course, it does not take away the right of anyone to approach the High Court of Australia under its original jurisdiction, or indeed the Federal Court under the Judiciary Act. Whilst that is the case, it can ultimately have no binding effect, because it will simply mean that, if a litigant is dissuaded from approaching the AAT in this manner, that litigant will go elsewhere, and the people who are likely to be able to afford elsewhere are the very people that perhaps provided the original basis for the Bill. This legislation is not going to catch those players-and I do not accept that they are guilty of any tactical or other offence, although I think all of us would recognise that applicants at all levels and in all jurisdictions very frequently use litigation for the purpose of tactical delay. That is not a practice that should be encouraged, and I think it is generally discouraged by the courts by orders of costs-and to the extent that interest can be paid at commercial rates, there should be very real disincentives to ensure that tactical opportunities are not taken at the expense of substantive issues. But I do not regard this particular provision as doing much to remedy that abuse. All it will do is unnecessarily complicate an already very complex area. Question resolved in the affirmative. Senator REID(Australian Capital Territory)(3.32) —I move: That the Senate take note of the paper. The paper relates to the relaying of the commencement stone which was laid when Canberra was named. It is to be relaid substantially in the same place next year, on the seventy-fifth anniversary of the naming of Canberra. I refer to the matter merely so that the Senate will note that fact and the event that will take place next year. Question resolved in the affirmative. Senator ALSTON(Victoria)(3.33) —I move: That the Senate take note of the paper. I would like to commence by drawing attention to the following comments contained in this annual report: The ground rules governing the performance of commissions and boards of statutory authorities remain less than precise and there are issues relating to control and accountability which have not been resolved in the public debate which has been taking place. I regard that as a very proper acknowledgment by the Commission that there is a need for a public debate in a whole range of areas affecting the viability of the Australian Telecommunications Commission, the nature and extent of its operations and indeed the nature and extent of competition that should be allowed into the telecommunications industry. It is valid to note also that the Commission itself draws attention to several onerous provisions that currently bear upon it. In particular, it is only in the last financial year that Telecom Australia has for the first time been required to pay a charge of 0.5 per cent per annum on all new borrowing guaranteed by the Government. The cost in that financial year was $2.2m. The Commission takes the view that that is higher than it need be in line with commercial rates. One could validly say that it is an unnecessary charge. It may well not achieve its objective in any event. Even if there were no charge at all it could be said that Telecom has an unfair advantage in that there are those in the outside world who might expect competitors to fear that a government would always come to the assistance of such a public enterprise. In reality, of course, there is absolutely no danger at all attached to Telecom borrowings because they require ministerial approval. This is simply another mechanism for raising funds and in that sense I think it is quite unnecessary and unfair. It is the nature of the regulatory powers that I think requires further examination. Telecom at the moment is judge and jury in its own cause, and that, I think, is a very undesirable state of affairs. Telecom urges publicly and privately that it be freed from a number of statutory constraints. It notes that in the last financial year it was necessary for it to obtain the approval of the Treasurer (Mr Keating) for the entering into of some 82 contracts and other government arrangements. That again would seem to be an unnecessary burden. It notes that there will be a decrease in a range of services. One can only assume that that is because of a lack of access to the necessary funds to allow for expansion and to maintain its service provisions. It is an unsatisfactory state of affairs that will hopefully be cured in the not too distant future when the Minister for Transport and Communications (Senator Gareth Evans) presents a report on the future of the telecommunications industry. But I note with some concern that the Minister's Caucus colleagues are already endeavouring to head off any reforms at the pass. They have taken strong exception to the removal of the first telephone monopoly. It would seem to me that if the Government is going to take that sort of advice it is going in precisely the wrong direction. There are very many areas in which I think healthy competition could be allowed with no detriment to Telecom and in fact as an incentive to competition. I have no doubt that if Telecom were required to compete with the private sector in the areas of customer premises and equipment and value added services it would more than hold its own. The first phone monopoly does not seem to have any foundation in economics. There is absolutely no natural monopoly aspect attaching to it. There are no economies of scale that would mean that only one service provider could provide the service efficiently. Therefore I think that one can identify quite a number of areas in which Telecom's monopoly could be whittled away. That is not to say that Telecom itself should be privatised in whole or even in part, but rather that it should be substantially deregulated, that it should be allowed to compete on a level playing field and that it should not be subject to a whole range of financial and other limitations which in many ways render meaningless the profit figures and other performance indicators that are contained in the annual report. I acknowledge the very real achievements of Telecom. Question resolved in the affirmative. Senator ALSTON(Victoria)(3.38) —I move: That the Senate take note of the paper. The paper covers in a sense the same ground as the paper just dealt with, but it also highlights some of the very real difficulties under which the Australian Telecommunications Commission is labouring at present. It has instituted a new system of seeking public views on its performance. It is notable that, in the current financial year, 87 per cent of customers were satisfied with the telephone service installation commitment. Yet it is anticipated that that will fall to around the target figure of 80 per cent in the next financial year. That is not an isolated instance, and it is not the fault of Telecom. I readily acknowledge that Telecom has some of the highest technological capabilities of telecommunications authorities all over the world. But it is hamstrung by its inability to expand as rapidly as it might otherwise do. I think that is in large measure because the Government faces a very real crisis in providing funds for public trading enterprises. Because of the sheer magnitude of the task confronting Telecom, the Government has not been prepared to make those necessary funds available. It is a matter of some concern that, whilst it is acknowledged that Telecom has very real comparative advantages in the technological area, nonetheless its export arm, Telecom Australia (International) Ltd, has not managed to secure any firm contracts, although it does have some very real prospects in providing remote rural areas connections in Thailand. I think it is fair to say that there are a great number of export trading opportunities in the area of management consultancy and services that could well be provided in Third World countries. Whilst it is hamstrung by a lack of funds and whilst it is not able to operate as a purely commercial enterprise, it will not be able to get ahead in a way that it would like. Those who know would say that Telecom, if enabled, could hold its own in any company. There are other aspects of its monopoly powers that I think also bear further examination. Certainly there has been some relaxation in relation to interconnections of private networks to the common carrier network. Nonetheless one can go much further in that area. The common interest group requirement is again an unnecessary attachment. It is to be hoped that in the not too distant future there will be once again very real competition in that area. I note that Telecom expresses in veiled language a desire either to integrate or to take over the activities of Aussat Pty Ltd and the Overseas Telecommunications Commission. In my view that would be unhealthy. I would certainly hope that those two enterprises, if not privatised, will be encouraged by the Government to remain in healthy competition with Telecom. I welcome the service and business outlook paper, which is a very real addition to public debate in the area of telecommunications. It contains a wealth of detail which is very useful and, by and large, it paints a very favourable picture of the way in which Telecom's operations are conducted. Finally, I take the opportunity to refer to the optical fibre network which Telecom is busy installing between capital cities and on trunk routes and the arrangements it has entered into with VicRail and the Victorian Government. I am very pleased to be able to acknowledge in this place that a perusal of that agreement discloses that there will be free and open competition and that any other organisations seeking access to easements on railway lines in Victoria will not have to go through Telecom's right of first refusal and will be able to compete in that area. I hope the same will apply to freeway easements and electricity authority easements in due course. I commend the report to the Senate. Senator MESSNER(South Australia)(3.43) —I wish to talk about only one matter and that is a reference in the annual report of the Australian Telecommunications Commission to the effect that Telecom Australia is seeking to get this Government to remove the chains and rid Telecom of its restraints so that it can more effectively compete with private enterprise operators on the open market. This is a common-sense statement from the management of Telecom which demonstrates that an air of reality is growing within that organisation about facing the challenges of the future by developing a more effective and efficient telecommunications operation in this country. Telecom is both a regulator and a beneficiary of very tight government regulations which effectively install a form of monopoly on Telecom as it conducts its operations in this country. A sense of reality is now coming through and Telecom is seeking to throw off its shackles, which is a very healthy development. The onus is on the Government to pick up the challenge and seek to loosen the chains on Telecom so that it can more effectively deliver services to Australian consumers. It is significant that the management has seen fit to report on that matter and, in a public way, bring it to the attention of the Federal Government. The Minister for Transport and Communications (Senator Gareth Evans) is undertaking a review of the operations of Telecom and its interconnections with the Overseas Telecommunications Commission and Aussat Pty Ltd-the satellite operator. I hope that that is something which we in the Opposition can look to in the near future as a guide to this Government's thinking. Nevertheless, I again point out that there is an immediate challenge before the Government to move down the road of deregulating Telecom and towards a more effective operation by virtue of a direct request emanating from the Commission. Question resolved in the affirmative. Senator BJELKE-PETERSEN(Queensland)(3.45) —I move: That the Senate take note of the paper. I take this opportunity to congratulate the Australian Meat and Livestock Corporation on its annual report and on the efforts it is making to assist with the promotion and marketing of meat. The major features of the annual report we are looking at are the special efforts that have been made to oppose the introduction of United States restrictions on Australian lamb exports. In 1986-87 lamb exports to the United States were up 80 per cent. The Corporation also participated in 15 major international trade fairs. Another feature of the annual report is the comprehensive program of technical and appropriate promotional assistance to abattoirs, importers, retailers and end-users and the consultations the Corporation has had with industry and government representatives of the United States, Canada, Japan, the Middle East, the European Community and Taiwan to protect Australia's access to their markets. I am sure that we are all aware of the role that our meat and livestock producers play in the economy of Australia. The report tells us that during the year meat and livestock exports contributed significantly to Australia's trade balance. The value of meat exports reached a record level of $1,900m, which was up 23 per cent on the 1985-86 figure, and the value of live sheep exports was up 40 per cent to $240m. As part of a rural family, I suppose one could say, I know only too well the part that rural producers are playing in the economy of my State. I have a son who is a beef producer in central Queensland. He lives up that wonderful Claytons road that is talked about. Senator Walsh often refers to it as a wonderful bitumen road. I call it a Claytons road because it is a bitumen road which is not a bitumen road. Senator Tate —Why don't you put in a monorail? Senator BJELKE-PETERSEN —That is a very good thought. The only thing is that it might cost a little more and that might be a problem. I am not sure how we would get on putting cattle on to a monorail. Because my son John is in central Queensland, I know of the problems of drought there. So much of Queensland has been suffering very much indeed. One comes to Canberra every week and looks at the beautiful green grass that is all around. I think Senator Reid is very fortunate to represent such a lovely part of Australia, particularly when it has had such good rainfalls. Nevertheless, we live in hope that the dear Lord will continue to send us a little more rain. I read in one of the Queensland Country Life magazines just recently of a yard of 7,000 cattle in Toowoomba having to be sold as a forced sale because the country had been so dry. Even though parts of Queensland have had some rain, we are certainly not out of the woods yet as far as drought is concerned. Cattlemen everywhere in Australia are always making every effort to improve their herds. They go in for stud cattle in lots of ways and they set high standards. Just recently they had the problem of the pesticides residue and that means a levy will be imposed, which will mean further costs to them. Fuel costs for rural producers are just so heavy that I sometimes wonder how they meet all their commitments. We need freight equalisation-there is no doubt about that. I certainly congratulate the Australian Meat and Livestock Corporation on its efforts in promoting and marketing its product. I made a speech at a meeting in Toowoomba on one occasion and said that the Corporation should adopt the motto `Feed the man beef' because there is quite a lot of promotion for various other types of meat. Senator Messner —You were responsible for that? Senator BJELKE-PETERSEN —Yes, I thought it was a good motto, as a matter of fact, and I hope that it was adopted. I suppose another slogan could be `Feed the women meat' or `Feed all persons meat'. They are some of the thoughts that I want to pass on as we look at this annual report. Question resolved in the affirmative. Senator MACKLIN(Queensland)(3.53) —I move: That the Senate take note of the paper. Senator Powell had wished to address this paper. Unfortunately we thought that it would be called on at 3 p.m. and she had another engagement. Therefore, I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator WATSON(Tasmania)(3.55) —I move: That the Senate take note of the paper. The year 1986 was indeed encouraging for the wool industry. The chairman's report tells us that export income has risen by 25 per cent on last year's figure of $3.9 billion. Demand has been maintained and in some cases increased, despite the fact that the prices paid by overseas users have increased on average by 47 per cent. Wool is the only Australian commodity to dominate its world market. This is a success story of which the Australian Wool Corporation, I believe, should be justly proud. The current buoyancy of the industry, however, should not be a signal for complacency. While the wool industry is showing a preparedness to meet the challenges before it, the support it is receiving from the Government is, unfortunately, slipping away. On two separate occasions this year government support for the wool industry has been cut. First, in the May economic statement $5m was pruned from research funding. Secondly, after the fanfare surrounding the Budget had subsided, the wool industry realised that it would be $10m worse off in the coming year than it might have expected had the Government kept its side of a funding agreement announced in 1984. The agreement supposedly committed the Government to providing funding at the rate of 1.2 per cent of the gross value of wool production for five years. Despite this undertaking, the Government has backed out of yet another undertaking and will now contribute to wool production only at the same level as last year. While the wool industry is flourishing at present and appears to be able to absorb these cutbacks, this may not always continue to be the case. The industry can only hope that the Government will not backtrack on its Budget promise that this departure from the agreement is a one-off arrangement. Question resolved in the affirmative. Senator WALTERS(Tasmania)(3.58) —I move: That the Senate take note of the paper. I would ask the Minister for Justice (Senator Tate) whether the Government is seeking advice from the National Health and Medical Research Council (NHMRC) about the need for including the acquired immune deficiency syndrome (AIDS) on its schedule of notifiable diseases. As I understood it, the NHMRC supplies a list of recommendations which the States either accept or reject. Some of the diseases are notifiable by all States. All States have accepted on the schedule the following: anthrax, brucellosis, diphtheria, gonorrhoea, hepatitis A, hepatitis B, leprosy, malaria, poliomyelitis, syphilis, tetanus, typhus, cholera, smallpox, yellow fever, and so on. As the Senate would know, many of those diseases are treatable and, while the NHMRC still recommends that they be compulsorily notifiable diseases, the States have seen fit to continue to include them on their lists. Because AIDS has not been added to the list, we have a situation where various States have made their own decisions. We have a hotchpotch of notification, not the national approach that I think would be more appropriate. All Australians have been made well aware that AIDS is a fatal disease and is highly contagious via a person's bloodstream. If the NHMRC is sincere in its fight against this dreaded disease-and I do not doubt that for one second-I believe that it must include it on its schedule. I wonder about the reason for this lack of action by the Council. Perhaps it considers that it is best done in some other way. I know that the Council presently receives notification from the various States, but it seems extraordinary to me that the Council has not seen fit to make the recommendation on its schedule. It makes me wonder whether the Council is seeking the views of the Government before taking action. If it is, I would be concerned because I believe that the Council should be acting in an entirely independent fashion. If it is not, its reason for not doing so escapes a tremendous number of us in this chamber. Senator PETER BAUME(New South Wales)(3.59) —I wish to respond briefly to Senator Walters and indicate that I have great faith in the National Health and Medical Research Council (NHMRC). Senator Walters may be interested to know that there is a parliamentary liaison group on acquired immune deficiency syndrome (AIDS) which meets and considers, among other things, the available statistics. I know that other members of the Senate who are present at the moment are or have been members of that group. As a practising physician at one time, I suggest to Senator Walters that the requirements for notification were quite often honoured in the breach-in other words, many doctors for various reasons did not notify when they should have. I point out to the honourable senator that in dealing with AIDS we seem to be in possession of fairly comprehensive information. I think it is even more comprehensive in terms of statistics than most of the information available for other illnesses and other diseases. Whether or not AIDS is made a formally notifiable disease may be a valid question, but I would not-- Senator Walters —That is all I am asking. Senator PETER BAUME —Fine, but I would not want anyone to think that we are not in possession of fairly comprehensive information about the existence of AIDS. Senator Walters and I appear to be in agreement on that point. Senator Walters —I indicate that information is coming through. Senator PETER BAUME —Excellent, because I would not like to see an attack on a body which I believe appears to be doing a first class job for Australia in a first class way. Senator HARRADINE(Tasmania)(4.00) —I wish to speak on the report of the 101st Session of the National Health and Medical Research Council. The unfortunate part about having only five minutes to speak is that one cannot deal with all the matters with which one would like to deal. I would like to have some time to praise some of the very worthwhile projects and activities of the Council. However, because of the limited time, and because certain things in the report need challenging, I feel that it is necessary to zero in on those. Some of them are contained in the report under the heading `Medical Research Ethics Committee' on pages, 12, 13 and 14. I want to deal with a number of those, but in the available time I may have time to deal with only three. Those are the ethical aspects of research, human gene therapy and the allocation of $6,000 to Mr Russell Scott to attend another overseas trip, and the subject matter dealt with under administrative matters. I may have time to deal with only the first one. It reads: Ethical aspects of research: Human gene therapy. The Council- meaning the National Health and Medical Research Council- noted that a draft paper on this subject had been prepared by the MREC with the help of Professor David Danks. When finalised, the paper would form the basis of a supplementary note- presumably by the Medical Research Ethics Committee- providing research guidelines for human gene therapy. I raise this matter because I find it quite extraordinary that Professor David Danks has been contracted by the Medical Research Ethics Committee to develop this paper. I find that extraordinary because, in a submission to the Senate Select Committee on the Human Embryo Experimentation Bill, Professor David Danks said of gene therapy in the early embryo: This would involve the insertion of a normal gene into a defective embryo to correct the genetic defect. This process is technically possible already and genes inserted into a one call fertilised mouse egg have been shown to function satisfactorily in the mouse that is subsequently born. There is every reason to believe that the same process could be carried out in humans. However, there is a simple logical reason for arguing that this process will never be used in the treatment of human genetic disease. Couples who are at risk of having children with genetic disease run either 25 per cent or 50 per cent risks, never 100 per cent. Consequently, one would need some way of distinguishing a fertilised egg which will result in a normal child from one which would produce a baby with the disease. If this testing were available, then surely one would merely implant the fertilised egg which will produce a normal baby and not use the defective fertilised egg. I do not believe that early embryo gene therapy needs serious consideration among the range of experimentation on early human embryos that may be desirable in the future. I raise the question about utilising Professor David Danks, because he has that view on early gene therapy on embryos. As to the other question of what Dr Danks is about, in the other part of the submission he indicates that clearly the intention is not to cure the disease, but to eliminate the bearer. In it he says: At present the most effective strategy available for preventing birth defects is by diagnosis of the genetic disease in a foetus at sixteen weeks gestation by a process called amniocentesis or at ten weeks gestation by chorion villus sampling, followed by termination of a pregnancy that has been proven-- The DEPUTY PRESIDENT —Order! the honourable senator's time has expired. Senator HARRADINE —May I, in fairness to everyone, conclude? The DEPUTY PRESIDENT —Is leave granted for the honourable senator to complete the sentence? Leave granted. Senator HARRADINE —It continues: . . . that has been proven to be affected by a serious genetic disease. That is the end of the quote. I feel that it raises very serious questions about the adequacy of the Council in that particular contract. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator PETER BAUME(New South Wales)(4.06) —I move: That the Senate take note of the paper. This paper is the annual report of the Australian National University. I want to use the time available to me to say something about this great institution-sadly, an institution at present without a chancellor. Honourable senators will have heard Senator Margaret Reid at lunch time saying something about Sir Richard Blackburn, who died recently, and in due course the university will select a new chancellor. It is a very fine university. It is unique in this country, partly because half the university consists of the Institute of Advanced Studies, the other half being a normal university with faculties and undergraduate students. It is the most eminent university in Australia in terms of the honours which have been heaped upon its academic staff and in terms of the eminence in which they are held. It is a university with innovative management practices. I draw to the attention of honourable senators the practice which has now been introduced in the Institute of Advanced Studies at the university of taking from each school one per cent of its budget each year and reallocating that money. The schools themselves may get back the money, but it is then reallocated on the basis of competitive bidding from within the Institute. This represents an effort to open up certain administrative practices and the option of new funding even within a fixed budget allocation. But in the year ahead the university faces a further one per cent real cut in its available resources, and this is on top of the real cuts in resources which it has taken already. This is coupled with a requirement placed on Australian universities and colleges of advanced education to take in more students, to extend the places and opportunities available and to do so with fewer resources-fewer resources per institution in some cases. I suggest that there is a limit to the extent to which universities, in seeking to accommodate the Government's wishes, can do this-the extent to which they can extend their intakes of students with diminishing real term allocations of resources, the money they need to operate. The Government has to understand that whatever benefits there may be in economic terms from reducing the resources and allocations to an institution such as the Australian National University, there are also associated costs. These costs have to be understood. Costs may occur first of all in the teaching program itself, because the only way in which a university can carry out these functions in the end is by altering class sizes, staff-student ratios and so on. But there are likely to be real costs in terms of the educational mission of the institution-the mission that it performs on behalf of all Australians and on behalf of this society. Whatever the economic purposes of the university and whatever the economic functions of education may be, they are not the most important or the total functions of a university in Australia. There are functions which relate to liberal education, to the achievement of liberalising influences in our society which do not have immediate economic returns and which cannot be measured in economic returns. How are we to regard the teaching of Italian renaissance literature in Australia if we are to apply purely economic judgments? When a government says that it wants universities to be more economically aware, what is it saying? Is it saying that the teaching of some languages is to be devalued because there is no immediate economic return or that the teaching of Italian renaissance literature is to be devalued? I accept the relationship between economic functions and some kinds of learning, but they are not the only functions. Those of us who serve on the Council of this university, representing this Senate, share the concerns of our fellow members of the Council that the Government is asking too much. We will make the efficiency gains; we are already doing so. But there comes a time when this university can do so no longer. On behalf of all Australian universities, I ask the Government and the Ministers in the Government to understand the pressure under which they are placing Australian higher education. Question resolved in the affirmative. Senator MACKLIN(Queensland)(4.10) —I move: That the Senate take note of the paper. At a time when debate about education is notable for the very heavy use-as Senator Peter Baume has already said-of economic jargon about productivity and efficiency, competitiveness and responses to market forces, it is certainly refreshing to receive the report of the Committee to Review Australian Studies in Tertiary Education. Honourable senators should read it because it puts the whole debate about education policy in a much broader and, I think, a far richer context. Donald Horne wrote about this report when it was released. He said that we needed to encourage the habit of looking for Australian answers to Australian problems. Part of our economic failing is due to the fact that we, as a culture, have not encouraged creativity. We have not been innovative because we do not have a sufficient sense of the richness of our own society and culture. We have often followed slavishly the leads of other countries. The recommendations of this report would certainly help the debate on the education system at the tertiary level that we need for Australia now and in the ensuing years. I want to raise a couple of points in the very short time that I have. When the report was released-and I note that it was released around the time of the election-the then Minister for Education, Senator Ryan, said that specific recommendations would be taken up in this year's Budget deliberations. The outcome of those particular deliberations is not at all clear-except that the Government probably has decided not to accept anything. As far as I am aware, there was no direct reference to the report's recommendations in any public statement made by the Government at the time of the Budget or even subsequent to that. So I am afraid that this excellent report seems to have gone the way of a number of excellent reports that have been presented to this Government-they have simply been put on a shelf. Since this is a rather attractive report, perhaps the thought is that it will look good sitting on a shelf rather than being implemented. Obviously there are a very large number of matters in this report. I cannot canvass them all but I would like to raise one in particular. This relates to recommendation No. 29, which deals with the situation of a tertiary institution seeking to fill an academic post. The recommendation relates to bringing academic appointments into line with entrance requirements in other areas of employment. Fairly obviously, this is an area for a fair amount of debate in the academic community, and we need to go carefully in this regard. While I accept wholeheartedly the need for Australian solutions to Australian problems, here we are talking about a richness; we are not talking about parochialism. We need to be careful that we do not seek to cut off the Australian academic scene from that international body of knowledge and practice. We need a balance in this matter. I am very much aware that Australian academic positions in certain areas have been put under enormous pressure because of the tightening of education budgets in other countries. Hence, often when an academic position is advertised there may be a small number of Australians applying and a very large number of eminently qualified overseas applicants. That puts tertiary institutions under a great deal of pressure. I believe that these things can be handled with some sensitivity to the fact that we obviously need a reasonable Australian development. We need Australian perspective in all our areas of study and, at the same time, we need to make sure that, if there is the possibility of getting hold of an eminently qualified overseas specialist in some area, we should look very closely at accepting such a person so that our students can have the very best. I realise that the report canvasses those types of qualifications. I thought the matter was worth while raising because I know that it is an area that has caused a great deal of concern. Hopefully, it is an area where continuing debate may eventually arrive at a more satisfactory solution than the one we have at present. Debate (on motion by Senator Tambling) adjourned. Senator MACKLIN(Queensland)(4.16) —I move: That the Senate take note of the paper. This report to the Minister for Employment, Education and Training (Mr Dawkins) will be historic, since it will be the last report of the Curriculum Development Council, presuming that the Government continues with its announced plans for the abolition of the Council. It is somewhat ironic, as those senators who have been here for some time will remember, that during the Fraser Administration there was an attempt to get rid of this Council and the Senate majority-then comprising the Australian Labor Party and the Australian Democrats-resisted that. So the Curriculum Development Commission, as it was at that stage, continued in a somewhat limbo existence producing money from its publications but, in fact, not having a budgetary allocation. When the Labor Party was re-elected to office, the then Minister, with much fanfare, acknowledged that we were about to have back the Curriculum Development Council. It has now been killed off and we do not really know what is going to replace it. The present Minister, Mr Dawkins, has outlined a number of recommendations in a number of publications. These included The Challenge for Higher Education in Australia and the Budget-related paper Skills for Australia. The Government is probably pursuing the most fundamental change to the Commonwealth's participation in education since the days of the Whitlam Government. Undoubtedly, we will have a number of debates on this. I am sure Senator Peter Baume, who has recently spoken about the Australian National University annual report, will be prominent in those debates as he has been in the past, as will a number of other senators. I am concerned about this because the work of the Curriculum Development Council has been very well received, not only here but also overseas. It has developed a number of curriculum materials and has undertaken a number of studies that have received international recognition. It is one of the few bodies established by the Commonwealth which actually produces resources from the sale of its publications. When one looks at those one notes that the Council has done very well for a body which is seeking to address the very problems that the Government now says we need more research into. It seems odd in that way to be looking at the Council's abolition, particularly, because it will be replaced by this overarching National Board of Employment, Education and Training. I am not at all sure that this overarching board necessarily will have the attention to detail or be able to call on the good will and expertise that the Curriculum Development Council has been able to call on. I warn the Government that, if it feels it is able simply to wave a wand and elicit the good will of the education community for these innumerable changes that have taken place, that is not necessarily the case. There are many in the education community who object to the chopping and changing that the previous Government and now this Government have engaged in. The education community committed itself, for example, to the participation and equity program, which was supposed to be the very cornerstone of the Government's education policy, and then found in the next Budget that the program was reduced by half and in the following Budget abolished. The Government actually took out the program that two years previously it had called the cornerstone of its education policy. If that is not a cynical use of the people in the education community, who put a great deal of effort into developing programs and who in many cases reoriented their whole careers to take account of the Government's announcement, I do not know what is. Surely it was reasonable for them to have done so on the basis of the Government's announcement that the participation and equity program was the very cornerstone of the Government's education policy and to have thought that that would last at least for longer than two years. I have a number of other concerns I would like to raise but, unfortunately, time precludes me from doing so. Question resolved in the affirmative. Senator MACKLIN(Queensland)(4.21) —I move: That the Senate take note of the paper. The annual report of the Commonwealth Schools Commission is, again, historic because it is the Commission's last report. Surely this must be of concern to the Australian Labor Party if it has any heart. Let me quote Mr Whitlam, the Prime Minister who established the Schools Commission. In his book, The Whitlam Government, he described his Government's education policies as `designed to widen the educational options of all children and ensure that parental income and attitudes placed no restrictions upon the educational opportunities of any child'. Mr Whitlam said that the transformation of education in Australia was the most enduring single achievement of his Government. Yet the Labor Government which has succeeded the Whitlam Government is destroying it. It is extraordinary that the Schools Commission can pass, in such a wimpish way, from the educational establishment in Australia. It is not mourned, presumably, by anyone in the Government. Certainly, no Government senator has chosen to stand up here and talk about the achievements of the Commission. The extraordinary report of the Karmel Interim Committee for the Australian Schools Commission probably for the first time directed the minds of Australians to the need for across the board allocations so that every child in Australia, no matter whether that child be in private or in State schools, lived in the country or in the city, came from a high socio-economic background or had very poor, unemployed parents, would be given an equal opportunity to develop his talents and skills for the betterment of this country. The Karmel report was followed by a number of reports which directed our attention to a whole range of matters. Unfortunately, the Commission eventually became the handmaiden of the Fraser Government and of the Hawke Government in its early years. Rather than produce reports which stood outside governmental service and criticised fearlessly the Government, pointing to the needs which had not yet been fulfilled, it became the Government's handmaiden. We all know that every government is constrained by economic structures, that governments are not able to meet what we may consider to be the optimum situation. But at least there should be some voice in the community saying, `This is the optimum situation'. We are then able to judge the Government's ability to meet its demands against that criterion. That makes for good education debate. It may not be what any government, any executive, would want, but at least it makes for a rigorous education debate in the wider community. We can see how far short we have fallen from what we hoped we might be able to do. As I say, the Schools Commission was circumscribed by this Government. Eventually its reports became nothing more than one might expect from a government department. A government department is different from a commission. The job of a government department is to carry out the policy directives of the Executive, to give advice to the Executive as to how those policies might be carried out, to warn the Executive that some policy decisions may not be in the best interests of the country. If, at the end of the day, the Executive insists, the department's job is to seek the best ways to carry those policies out. A commission's job is not that. A commission's job is to report to the public on the needs and requirements of the education system. Unfortunately, the Schools Commission is to be replaced by a board which will not even bother reporting openly to the Parliament or to the public. For the first time since 1972 when the Whitlam Government established the Schools Commission and the other commissions we are about to disappear behind closed doors in this area. It is one of the most retrograde steps we have ever taken in any important area of debate in this country. I hope that the Government will see the error of its ways before it establishes the proposed board and will allow its reports at least to be made public so that we can have a general, open and public debate, rather than seek to cover this area in the mysterious corridors of bureaucracy and government. Question resolved in the affirmative. Senator MACKLIN(Queensland)(4.26) —I move: That the Senate take note of the paper. The report of the Commonwealth Tertiary Education Commission (CTEC) is another historic report in that it is the last report of the Commission, which is about to be abolished. Under the Government's proposed advisory structure, the advisory role carried out to date by the Tertiary Education Commission will be carried out by a higher education council which will give a secret report to a national board of employment, education and training, which, in turn will give a secret report to the Minister. Hence, another source of vital information in the general education debate will be taken away from us. The Government and the Executive may feel that this is fine, but I think it should be deplored by the Parliament. The Parliament has been able to rely on these reports for a critical assessment of how we are doing in the tertiary education area, an area which is so vital to the economic health of Australia. The higher education council will not have any real capacity to undertake research on its own cognisance. It will be a department operation. No longer will the higher education institutions-the universities, and the colleges of advanced education, the institutes of technology and, now, the universities of technology-have an opportunity to make known, openly and fearlessly, their requirements as they perceive developments in education. Whilst received with some misgivings by universities and other higher education bodies, the Tertiary Education Commission has proved to be a very useful device. The Acting Chairman of the Australia Vice-Chancellors Committee, Professor Brian Wilson of the University of Queensland, describes the `substantial in-house capacity' of CTEC as it now stands to `gather and evaluate information about universities and colleges'. He says that this is one of its great strengths. Unfortunately, that capacity is to be taken away. We do not know what will replace it but undoubtedly whatever does replace it is likely to be an in-house operation, although not in-house to the universities and colleges of advanced education but in-house to the Executive. The Vice-Chancellor of the Australian National University, Professor Peter Karmel, has remarked that there are conflicting tendencies in the movement undertaken by the present Government with regard to higher education policies. He was reported in an article which appeared in the Australian on 17 October as saying: The concern about efficiency and effectiveness- in higher education- has resulted in two opposite manifestations: First a wish to rationalise and co-ordinate by fiat, and second, a push towards deregulation and market orientation. I wish to emphasise the first manifestation, `a wish to rationalise and co-ordinate by fiat'. The Executive has done what all executives tend to do, that is, abolish organisations which stand apart from government, which make a critical assessment and give dependent information, making a direct decision without reference to anybody else. Question resolved in the affirmative. Senator WATSON(Tasmania)(4.30) —I move: That the Senate take note of the paper. I take this opportunity to congratulate the staff and students of the Australian Maritime College on a very successful year. Based in Launceston, the college was established as a result of a Liberal Party of Australia initiative in the late 1970s. The first students were enrolled in the college in 1980. In 1986, the college provided a range of courses for 666 full time students and 885 students attending short courses. On the academic level, the college continues to gain recognition and accreditation of its courses. This year, the bachelor of applied science, marine engineering, and the new graduate diploma in business, shipping, were each accredited by the Commonwealth Institutions Accreditation Committee for advanced education. Through its three schools, of fisheries, engineering and nautical studies, the Australian Mari-time College provides a range of courses to meet industry training requirements. In addition to its training functions, the college undertakes a wide variety of research and consultancy projects. Twenty-five such projects were undertaken in 1986. To mention but a few, the college's ship handling simulator was used for the simulation of the Broken Hill Proprietory Co. Ltd new transport ship Iron Pacific, for assessment of handling large ships in confined waters of the port of Newcastle. General consultancy projects managed by the college company included a hydrographic survey of Port Latta, Tasmania for Savage River Mines and a study of the impact on Australian shipping of certain legislation and financial conditions. In addition, a project was initiated in co-operation with Australian Shipbuilding Industries Pty Ltd of Western Australia, to determine the optimum hull design for a commercial fishing trawler, using the ship hydronamics centre. Debate resumed from 26 October, on motion by Senator Reid: That the Senate take note of the paper. Senator TAMBLING(Northern Territory) —I seek leave to continue my remarks at a later stage. Leave granted; debate adjourned. Senator HARRADINE(Tasmania) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. The DEPUTY PRESIDENT —Order! The time for consideration of Government Papers has expired. Senator CHANEY(Western Australia-Leader of the Opposition)(4.33) —I move: That the Senate- (a) records its agreement with the view expressed on behalf of the Government by the Minister for Industrial Relations, the Honourable Ralph Willis, MP, that `it is quite fundamental to our prospects of economic recovery that we keep increases in our labour costs broadly in line with those of our international trading competitors. Not to do so would jettison the great opportunities provided by the very large devaluation of the Australian dollar and place us in dire economic peril'. (b) notes that increases in our labour costs will, on the Government's own predictions, be substantially in excess of those of our trading competitors; and (c) expresses its disappointment at the Government's failure to understand that the decision to proceed with the national wage case on 28 October 1987 will contribute to the worsening of the problem the Minister has identified. The Opposition is bringing this motion forward for debate today on a day when the wages case is proceeding with the approval of the Government. We do so knowing that, at this stage, it is too late to influence the Government's decision, taken presumably over the last week, to proceed with this case. But we wish to proceed with the motion, nonetheless, because this is an area which is of fundamental importance to the economic management of Australia. We believe that the decision which has been taken by the Government is very wrong and we believe that it is important that our view should be on the record at this time. The sad fact for the wage and salary earners in Australia is that across the board money increases of this sort which are not based on productivity increases and on a real capacity to pay, will not produce better real wages for the working men and women of Australia and that is not just the Opposition's view. The reality is that, over recent years, whilst this Government has supported a succession of wage rises, the real wages of the workers of Australia have declined because the rate of inflation has been higher than the rate of wage increases and the wage increases themselves have contributed to that inflation. The reality is that our real wealth has been diminishing and, as a result, our real wages have been diminishing. There is no escaping the fact that if we wish to have a higher standard of living and if we wish the work force of Australia to have higher real wages-and that is what an increased standard of living requires-that can only occur if there is increased production of real wealth in Australia. The failure of the Government to achieve that is one of the signal failures of recent times. The Commonwealth gave a very early indication of what attitude it was going to adopt with respect to the wage increase that is now being considered as long ago as last February. The wage case was being argued last February. The argument which gave rise to the decision was made in March this year. In the record of that case the Commonwealth indicated: In the Commonwealth's view, the prospects for the viability of the system would be best ensured-in terms of both initial commitment and ongoing compliance with its requirements-if the Commission were to determine in this case a second increase under the first tier, to apply from a prospective date in 1988. In English, that means that in February this year the Government was arguing that it was likely that there would need to be a further across the board increase in wages which would take place some time in 1988. We were told in the Senate and in the House of Representatives today that the Government is supporting the increase at the earliest possible date consistent with that statement-an increase on 1 January 1988. Senator Gareth Evans in this place, in a rather oblique way, and the Minister for Industrial Relations (Mr Willis) in the House of Representatives in a much more direct way have both confirmed that, notwithstanding the very significant economic changes which have occurred since February this year, there has effectively been no change in the Government's position with respect to that wage rise. That is a rather startling fact. In our view, it is a very odd response for the Government that, notwithstanding the changes that have occurred, it sees no need to revise an attitude which it adopted in February this year. The purpose of this debate is to demonstrate why, in the Opposition's view, that obduracy on the part of the Government is wrong and it stands condemned out of its own Minister's mouth. Just a week ago it was common ground between the Government and the Opposition that changed circumstances had made the continuance of the wage case a matter which had to be reconsidered. Only seven or eight days ago counsel appeared before the Australian Conciliation and Arbitration Commission on behalf of the Commonwealth, instructed by this Government, and said: The dramatic instability in world stock exchanges, driven primarily by the slump in share values in the United States has created a very uncertain economic and financial environment. Senator Stone —What has happened since that time? Senator CHANEY —Senator Stone interjects and asks me, `What has happened since that time?'. I think the only fair answer to that question is that things have become even more uncertain. Senator Stone —A great deal more instability. Senator CHANEY —There has been a great deal more instability. Since Mr Merkel made that submission on the instructions of the Commonwealth Government, there has been a further decline in the stock market, a further period of uncertainty, a weakening of the Australian dollar and our concerns are far greater today than they were even a week ago. This is a very serious matter which goes to the future economic management of this country and to its welfare. For that reason I want to emphasise what appeared to me to be the clear admissions on the part of the Government itself: the case which the Opposition has been putting forward since the last Budget has been strengthened by the recent occurrences in the share market. We face a period of very considerable uncertainty which makes the automatic granting of wage rises to the whole of the Australian work force an exercise in economic folly. On 23 October, less than a week ago, the Hon. Ralph Willis, who is the Minister responsible for the conduct of the wage case on behalf of the Government, made it quite clear in an interview on radio in the Australian Capital Territory that very significant difficulties are emerging for Australia because of what has occurred on the international scene. I quote in part from that interview where Mr Willis said that what has happened on the stock exchanges has unknown ramifications for the real economy. Mr Willis, quite properly I believe, was unable to say precisely what the ramifications would be, but he was prepared to go on to say what some of the flow-on effects on the Australian economy might be. He said: For instance, if there was a big crash in confidence in share markets that could flow on to commodity markets which could mean changes in our terms of trade, a further reduction in our terms of trade, effects on our exchange rate, on interest rates, on investor confidence, on capital flow, on consumer confidence, I mean the whole array of effects could be very considerable . . . Again, I emphasise the fact that that is not a statement from a supporter of the Opposition. That is not a statement from some columnist or journalist. It is not a statement from some critic of the Government. It is a statement from a senior Minister of the Government who was a long-standing servant of the Australian Council of Trade Unions (ACTU). I adopt his words, because I agree with them, as expressing much of the uncertainty that now faces Australia in these very difficult times. Until a week ago it was common ground between the Government and the Opposition that there should be an adjournment of the case and that Australia faced a situation of very considerable uncertainty and risk. If anything, as Senator Stone's interjection pointed out, the situation has worsened since then. The American dollar has declined internationally, and at the same time the Australian dollar has declined against the American dollar. In other words, the apparent weakness here in Australia is greater than the apparent weakness of other countries facing similar difficulties. A little later I will talk about the comparative decline in the stock exchange, because Australia has shown a far greater decline than almost any other country. We are in a situation of developing and continuing uncertainty. What the Opposition seeks from the Government is a sober, reasonable and responsible response to the situation that Australia faces. We believe that it is vitally important that the Government should set itself to minimise the damage which the changed economic circumstances can work on Australia and to better equip Australia to deal with the difficulties that lie ahead. It is perhaps worth noting in this context that, even without the recent shocks, it was the view of the Opposition that there was room for very great concern about the economic settings established by the Government. We took the view that, in the circumstances that faced Australia-circumstances of growing international debt, continuing massive balance of payments deficits, continuing low investment and so on-Australia was already at risk before the international problems emerged over the last couple of weeks. We were totally in agreement with the words of Mr Willis, who addressed the ACTU Congress before the shocks to the stock exchange and who used the words which we have used in our motion. Mr Willis said: It is quite fundamental to our prospects for economic recovery that we keep increases in our labour costs broadly in line with those of our international trading competitors. Not to do so would jettison the great opportunities provided by the very large devaluation of the $A and place us in dire economic peril. Again, I emphasise that those words-words such as `dire economic peril'-were uttered prior to the shocks which have affected us over recent weeks. I stress those comments by Mr Willis because I want to emphasise that there is no partisan bias in the assessment which the Opposition has made in this place, in the House of Representatives and in our public statements elsewhere. The reality is that it is clear that Ministers such as Willis and Walsh share the assessments and the concerns which have been expressed by the Opposition. The odd situation that we face is that the Government is apparently not prepared to act on those concerns. I think any fair and objective observer would be deeply puzzled by the failure of the Government to act this week in the way that it acted last week. The Government has in no way publicly changed the assessment that was made last week. It has simply said, `We will proceed with the national wage case'. The reason for that is quite clearly that the Government does not see itself as being able to carry the trade union movement. It does not see itself as being able to withstand the bullying of the trade union movement on this issue. I think the Government's assessment is wrong. The reality is that in a time of crisis the nation will respond and the work force will respond. The Government has grossly underestimated the good faith of the Australian work force and its readiness to face up to action that will prevent Australia from facing increases in unemployment, higher inflation, reductions in real wages through that and the very many other negative circumstances which can flow from wage rises that cannot be afforded. This time of crisis is in fact a time of opportunity. It is craven on the part of the Government to be lying down in front of the threats of people such as Mr MacBean, who told us that any delay of the wage case would see a rash of industrial action by unions bypassing the Arbitration Commission to seek pay rises direct from employers. That was a reported threat from Mr MacBean on the 23rd of this month. The day before, Mr Crean is reported as saying: It would be ``an extremely dangerous situation'' if it was suggested on the basis of one day's trading on the stock exchange that a wages policy which had worked effectively for four years should be changed. We have had a lot more than one day's trading on the stock exchange now. We have now had some weeks of perilous trading. I believe that, if the Government was prepared to exercise the leadership that it was elected to show, it would be able to carry the Creans and the MacBeans of this world in the same way as, during a time of very considerable peril for Australia in the international recession in 1982-83, the then fairly unpopular Government of Malcolm Fraser, which was just a few months short of defeat, was able to carry the idea of a wage freeze. The reality is that circumstances provide an opportunity. The real tragedy for Australia is that the Government has not shown enough courage to grab the opportunity that has been offered to it. I emphasise that the Opposition is not arguing for a wages freeze. It may well be that, when the full assessment of the circumstances facing Australia is possible in a few months time, that sort of action is what we will be required to advocate. But what we are saying is that there should be no interference with genuine second tier negotiations. I remind the Senate that, at the moment, under the national wage case principles, the work force is entitled to negotiate wage increases of up to 4 per cent on the basis of genuine improvements in productivity obtained through changes in work practices and so on. Senator Stone —How genuine are many of them? Senator CHANEY —In this debate I may not have time to deal with that in detail, but I hope to come back to it. There is clear evidence that in some sections of the metal industry there have been some genuine attempts to come to grips with productivity increases that would warrant a wage increase. In the building industry there is one appalling example of the 4 per cent being used as something of a rort. I will not develop that at this stage; I may have time to come back to it. The important point I wish to make at this moment is that what we are saying is that a wage rise of the sort which is now before the Australian Conciliation and Arbitration Commission, which is in no way based on an assessment that there is an increase in productivity or capacity to pay for that wage rise, is a thoroughly destructive and dangerous thing to be undertaking at a time of very considerable uncertainty. They are our concerns, and our view is that the urging of postponement of that case was the clear and simple duty of the Government. That clear and simple duty has been totally ignored by it. It has caved in in a quite craven way to the views which have been expressed by the trade union movement. I wish to pick up a little more on the point which was again raised by interjection by Senator Stone. Of course, there are a number of elements in the second tier wage negotiations about which we are very greatly concerned. But we are also concerned that other rises have been obtained by the trade union movement using its industrial muscle. The building industry is the classic example. It is likely to get rises this year of about 16 per cent-a 4 per cent first tier rise, a 4 per cent second tier rise, a 3 per cent superannuation increase and 5 per cent severance pay. I mention that in the context of Mr Willis saying that we should have wage rises comparable with those of our trading partners. They demonstrate the extent to which this Government is prepared to sell out on the principle which was expounded so clearly by Mr Willis when the trade union uses its muscle on the employers and on the Government. All of this is happening in circumstances where, since 9 October, just a few weeks ago, the Australian dollar has again devalued by about 6 per cent against the yen and the pound, and by approximately 3 to 4 per cent against the United States dollar. All of this peculiar attitude towards the capacity of our economy to pay increased wages is occurring in those circumstances. I mentioned earlier in my speech that the decline in stock market prices was more significant in Australia than has occurred in most comparable markets. For example, in a table published today showing the declines which have been measured since Friday, 16 October, we see that there has been a 32 per cent reduction on the Sydney Stock Exchange, as against a reduction of just under 16 per cent in Tokyo. We find in London a 28 per cent reduction and in New York a 20 per cent reduction. So the decline in Australia is worse than the decline elsewhere. Who could imagine, who could even vaguely suggest, that the United States, Japan or the United Kingdom would be currently considering an across the board wage increase in today's circumstances? That thought is enough to de-monstrate the cloud-cuckoo-land approach which is being adopted by the Government in this matter. It knows and every member of the Australian work force knows that in no other country would this sort of approach be adopted. It is a peculiarly Australian syndrome for a system to believe, as apparently the Arbitration Commission is ready to believe and as the Government here is prepared to believe, that at a time of such critical difficulty across the board wage rises can be afforded. One of the elements of our motion today is that increases in Australian labour costs will, on the Government's own predictions, be substantially in excess of those of our trading competitors. I wish to turn to that to justify that assertion. If we look at the Government's own papers, and at the figures published by the Government as part of the Budget, we find that in 1986-87 our nominal unit labour costs increased by 7 1/2 per cent, and this compares with an average of around 3 per cent for our major trading partners. This year nominal unit labour costs will grow, according to the Budget, at about 6 per cent, which is still double the rate expected for our trading competitors. Although that is a very slight improvement on last year's performance, it is nowhere near enough. I remind the Senate that Mr Willis said there must be movement broadly in line with our trading partners. We have movements of something like twice the rate of our trading partners. The poor unit labour cost performance reflects the fact that wages have been growing too far ahead of productivity. In 1986-87 national productivity actually fell. For 1987-88 the Budget Papers forecast that there would be only a negligible improvement in productivity, and this is in spite of the promised genuine productivity offsets under the second tier of the wages system. Again I am reminded of Senator Stone's interjection. It is very odd that the process of the second tier wage negotiations is not producing, according to the Government's own figures, the productivity increases that one ought to find if that is a genuine exercise. The only way that we can improve this woeful productivity performance is by increasing investment and by ensuring a more flexible approach to wage determination and industrial relations in general. We must restrain nominal wage growth. If we have wage increases which continually outstrip productivity, that will increase our unit labour costs and exacerbate our rate of inflation. That means that workers' living standards and those of the unemployed will be eroded. This speech is not about how to reduce the living standards of Australians. What the Opposition is putting forward is that there is a genuine way of increasing the living standards of the working men and women of Australia, and this Government is ignoring the real means which are available to it to provide the higher living standards which are certainly the objective of the Opposition and, one would imagine, the objective of both the Government and the Australian Council of Trade Unions. In the limited time which remains, I wish to refer to those means which are available to us to do something about increasing wealth in this country and paying the workers of Australia more, instead of less, as has occurred under this Government. I do not want to talk in fancy, theoretical terms. The production of wealth is a fairly straight forward matter and is clearly comprehended by people who work for a living. Let me cite one of the really high profile examples of the changes that can be affected, namely, the Robe River mine in Western Australia, which was the subject of a quite bitter dispute with the trade union movement, and yet a classic example of how we can increase the production of wealth in this country. Senator Stone —And what was the attitude of the Government to that experience? Senator CHANEY —The attitude of the Government of course was to regard the whole thing as a disgrace, whereas I think the figures show that the attitude in opposing change is what is truly disgraceful. The simple fact is that when Peko-Wallsend Ltd took over the Robe River mine last year, production was running at 840 tonnes of iron ore per month, averaged out over the company's total work force. That is a fairly simple way of indicating what that company was producing. For every man and woman it employed, it produced 840 tonnes of ore for each month of production. What has been the effect of the changes in work practices which were wrung out of an unwilling trade union movement at that mine? The changes are quite remarkable, because the figures which I was able to obtain on recent production are that productivity has risen to 1,714 tonnes per month. There is an increase from 840 tonnes to 1,714 tonnes per month. That is an increase in productivity, not of 5 or 10 per cent, but of 103 per cent. That is the path to increased wealth-productivity increases. That is the path to increased real wages in this country. And that is not an isolated example. In this chamber we have a number of members of the Government Party who have been members of the trade union movement. I would say to them that I have yet to meet anyone in the construction industry who does not believe that we could double productivity if we had a sensible approach to working on commercial sites in this country. I have yet to meet anyone engaged in that industry who would deny that productivity could be doubled. That is what this Government should be talking about before the Arbitration Commission. It should be talking about the production of greater real wealth which will sustain real wage rises for the working men and women of Australia. All that would be required in that major industry would be the simple reform that people do a fair day's work for a fair day's pay. It would require no fancy economic theory; it would simply require an honest day's work for an honest day's pay. That is what we should be talking about in Australia today, because the removal of absurd work practices and the pursuit of higher productivity on the part of both management and labour is the essential change that we must pursue. Any discussion on wages policy in this country which ignores that fact is a discussion based on nothing-it is a nonsense. What we are seeking to promote, whether by the promotion of employee share ownership or by the promotion of the abolition of absurd work practices, is a higher level of productivity. I hope that it is not only retired trade unionists who will be prepared to acknowledge the importance of profitability and the importance of incentive in obtaining productivity gains and higher real wages. I do not have time to quote, as I had hoped to do, what was said by Mr Charlie Fitzgibbon in his paper to the Economic Planning Advisory Council in February 1986. Basically Mr Fitzgibbon argued that significant productivity gains can be achieved if employees are provided with real involvement in the viability of their enterprises by way of incentives and awards which encourage productivity. The Opposition has offered the Government a perfectly sound policy on employee share ownership which could be one of the contributing factors towards achieving higher productivity in this country. I want to see some sign that the Government is prepared to pick up some of these initiatives and to try to get a more productive economy and culture. Even before the crash of the stock market, Australia had major ongoing problems. According to the Government's own Budget figures, we had the promise of even greater foreign debt, with a $11 1/2 billion trade deficit predicted by Mr Keating. We have and had higher inflation than our trading partners. We have higher interest rates than our trading partners. We have low investment in new industry in Australia-and that has continued year after year under this Government. We have high nominal wage rises which deliver declining-- Senator Richardson —How was it under Malcolm Fraser's Government? Senator CHANEY —It was very much higher. The Minister at the table who interjects should look at the private investment figures and see the enormous decline since this Government came into power. We have a Government which is delivering declining real wages to the work force of Australia and which on its own figures delivered no productivity growth this year and expects to deliver low or no productivity growth next year. That is the reality on which the real wages received by the Australian work force will be based. The Liberal Party of Australia and the National Party of Australia want higher real wages for the Australian work force. They know that will come only through increased productivity of the work force and increased investment. Senator Burns —Be honest! Senator CHANEY —The sort of caterwauling of the ex-union apparatchiks who helped destroy this country will not remove the truth. The truth is that unless the Government pursues higher productivity the real wages in this country will continue to decline. I commend the motion to the Senate. Senator FOREMAN(South Australia)(5.03) —Senator Chaney's proposition now before us on the question of wages and the general balance of labour costs deserves close scrutiny. The average unit labour cost in Australia is much lower than it was when Mr Howard was Treasurer. I would like to point out also that many more people are employed now than when Mr Howard was dismissed by the voters. It is obvious that any significant increases in unit labour costs will affect those industries to which export markets are an essential component. Products that originate in Australia can find overseas markets provided only that they are priced competitively compared with other products on the market. Australia has abundant supplies of raw materials and consequently has the edge on many of its overseas competitors. The supply of raw materials being both abundant and close at hand can in many instances constitute a comparative advantage to Australian producers. The costs of manufacturing depend not only on the provision of raw materials, though, but also on the labour and other costs necessary for production. Consequently, the statement on this matter by Mr Willis, the Minister for Industrial Relations, sums up the position very well. He said: It is quite fundamental to our prospects of economic recovery that we keep increases in our labour costs broadly in tune with those of our international trading competitors. Not to do so would jettison the very great opportunities provided by the very large devaluation of the Australian dollar and place us in dire economic peril. I believe that our fundamental trading position demands that the costs of labour be contained. A breakout of average weekly earnings significantly above the levels of our trading partners must adversely affect the role of Australian goods on overseas markets. Naturally, these goods may be present on overseas markets only if the costs of production are contained and the finished price therefore competitive. Consequently, any cost blowout will cause a further depreciation in the Australian currency and a decline in product sales. The world will not keep paying the same rate in other currencies for the Australian dollar if our inflation rate is greater than those of our principal trading partners. On this point I believe the Government and the Opposition are on similar ground. The point of departure is that this Government understands, and has practised, effective means of cost containment and has not advocated the sorts of policies favoured by the Opposition which would lead to massive cost blowouts. Members of the Opposition have regularly talked in this place and in the community about the need to deregulate the labour market. The chief target of their policies has been centralised wage fixation, and they seem to believe that collective bargaining will result in wage levels that reflect a company's ability to pay. The best illustration of this philosophy is what happened in 1981. The then Fraser-Howard Government started talking of the resources boom and effectively lifted the lid on wages. Indeed, quite a few collective bargains were made and the general result was a wages explosion of 13.1 per cent. When this figure is compared with the consumer price index (CPI) figure for 1981 of 11.3 per cent we see that in one year there was an increase in the level of real wages of nearly 2 per cent. When that Government realised the folly of all this it clamped on a wages freeze. What that meant, of course, was that where labour unions were strong and alert pay rises were soon obtained and in other areas workers were left behind. Naturally, the wage freeze froze those levels of inequality. I would also like to point out that these wage increases bore no resemblance to a company's ability to pay. Such rises were obtained by the law of the industrial jungle. When this Government came to power in 1983 the inflation rate was around 11 per cent and so was the rate of unemployment. The growth of wages was nearly two percentage points higher still in the previous year-so honourable senators opposite should know all about cost blowouts and the effect they have on our overseas markets. After all, they presided over the last major blowout and they experienced the results of it at first hand. The Government has supported the concept of centralised wage fixation. Under that system the rate of wage movements since March 1983 has been 32.4 per cent and the CPI has recorded 34 per cent in the same period. This means, of course, that a fall in wages of 1.6 per cent has taken place. Since 1986 the Government and the Australian Council of Trade Unions have put in place a more complex version of centralised wage fixation. The two-tier system is a response to the need to have wage fixation determined in the large part by an industry's ability to pay. This is achieved by the granting of a first tier rise with a second tier to be granted on productivity offsets. The maturity of the trade union movement in accepting and advocating this system is to be commended. The union movement and the Government both understand that wages must broadly follow productivity in order for us to continue to be competitive both on the Australian domestic market against imported goods and also on the international market against other goods. In the current national wage case the Opposition is desperate to try to exploit the nervousness created by the stock market fall over the last 10 days. The current wage fixation method has the virtues of a national wage fixation system-which is the only way to contain costs-as well as those of a system which recognises the fundamentals of productivity in wage determination. The recent problems on the stock market as yet appear not to be over. However, the impact of the drop in share values has yet to be determined. A fall in productive investment may indeed follow but it needs to be remembered that the current value of stocks on the market is that of early 1986. The market has inflated greatly since that time, in fact since 1984. The value of stocks has risen to a level that is hard to sustain given the price to earning potential or the PEP. However, one thing is certain. The very foundations of the financial market would shake if they thought that there was any serious chance that the Opposition would succeed in getting the Commonwealth to adopt the policy of collective bargaining or a rerun of 1981. Opposition members have been described as doom and gloom merchants. The recent spate of books which talk about the end of the financial world as we know it are probably widely read in Opposition ranks. The Opposition seems to perk up every time some crisis emerges. It is, though, largely consistent. It generally opposes pay rises when times are good and when they are bad. The story of the little boy who cried wolf once too often is particularly apt. The financial market sees Opposition policies as generally unworkable and proposed with a degree of financial and industrial incompetency. Of course, the Opposition does not oppose every single pay rise. It is quite happy to see the Australian Capital Territory doctors get massive pay increases and it seems unable to understand why this Government has refused to grant such a rise. The real curse during the Fraser years was not only the blowout of wage rates. On that basis the Fraser-Howard Government was not successful either, but it was keeping a massively overvalued dollar that really spelled disaster. Since 1983 Australia has experienced a massive decline in commodity pricing. The resultant decline in Australian currency has been a boon to Australian manufacturing industry. The Australian dollar has dropped since March 1983 from 222 to 98 yen and from US95c to US68c. Australia can now build up overseas markets that once were not open because of uncompetitive pricing. This Government cannot and will not abrogate its responsibilities and end centralised wage fixation. To do so would almost certainly lead to enormous cost blowouts which would destroy the competitive advantage Australia now currently enjoys. Consequently, the Government will continue to support the present wage fixing system as the only viable alternative. The creation of around 800,000 jobs since March 1983 and the successful fight against inflation which has seen the CPI drop dramatically have come about because of some semblance of order in wage fixing. The Government will naturally continue with the system that so dramatically brought an end to the double digit inflation and double digit unemployment of the last year of the Fraser-Howard Government. Senator McLEAN(New South Wales)(5.14) —In attempting to bring even-handedness and open-mindedness to our consideration of this motion the Australian Democrats are striving for realism and in the next few minutes I hope to do something towards getting to the realities of this motion. We favour less politicking; we believe that that is in everybody's interests. We see this motion as an attempt to focus on the relationship between competitiveness and wage restraint. We see it being essentially a political motion and therefore we will be opposing it. The major thrust of the motion suggests that to increase wages is to threaten our international competitiveness. The Australian Democrats see this as being a simplistic observation and we reject it as being simplistic. Of course we acknowledge the fact that, in essence, employers tend to see things this way. Clearly, however, our international competitiveness is dependent upon much more than our labour costs. I would like to take a moment or two to put things in perspective. If we were to see our competitiveness purely and simply in terms of wage levels in this country we would see the Filipinos as being in a much more competitive situation than we are because their wages are dramatically lower than ours. We would all hesitate to identify with the proposition that Australian workers should, in terms of our wage levels, be in the same position as Filipino workers. Quite obviously much more than that is inherent in our international competitiveness. Clearly there is an element relating to the quality of the products which come from our labour effort. I cite the classic of the Mercedes car which for decades has been an expensive item but which is internationally renowned as being a most successful product. There are many historical reasons why Australia now finds itself in a relatively less competitive situation than we might desire. This situation in the 1980s reflects years of protectionism. The Prime Minister, Mr Hawke, in his recent visit to the United States, must have been embarrassed by our history in this regard. He urged the world's leading trading nation to abandon its position of protectionism when our history essentially shows that we have been rigorously protective. Historically we have relied heavily on primary produce and in that regard we are relatively disadvantaged. We envisaged that the 1980s would be the period of the mineral resource boom but that did not come to fruition. So, once again, we are finding ourselves relatively disadvantaged. Because of this history we lack the sorts of manufacturing skills which would allow us to be as competitive as we would like. In other words we are disadvantaged by our history. These factors must be taken into account if we are to analyse realistically our present circumstances. It would be more meaningful for us to see our competitive position as being a composite of wages and exchange rates. I cite the Treasury's analysis and the Treasury index, the tool that has been created by the Treasury for us to analyse more realistically our competitive situation. The Treasury has compiled, and frequently publishes, statistics that hopefully allow us to analyse a more realistic composite of labour costs acknowledging exchange rate variations and changes. I cite statistics from the Treasury publication Round-up, which uses an index of unit labour costs and prices adjusted for exchange rate changes. It makes a comparison, in its recent issue, of our relative competitiveness from 1969 through to mid-1987. It is interesting to make the observation that we have become more competitive, rather than less competitive, in recent years. Senator Messner —That is because the exchange rate goes down. Senator McLEAN —That is precisely the point I am making. When we take into account the second component-namely exchange rates-and we put that in composite with the labour cost unit, Australia is not as uncompetitive as we are occasionally led to believe and as the thrust of this motion would have us believe. Senator Messner —Why don't you let the dollar go down to zero? Senator McLEAN —No, that would be quite unrealistic. The honourable senator is asking me to adopt an unrealistic and stupid attitude. In fact, I am trying to encourage the honourable senator to adopt a much more realistic and insightful attitude than this motion asks. Even if we did as Senator Messner asks and rejected this rather meaningful index and looked at another index laid before us by the Treasury-in other words, the indices of average real labour costs-we would see that Australia is more competitive now than it was in, say, 1981-82 under the Fraser Government. If we look in simple terms at the index that I have cited, in 1981-82 the base would have been 118.7. In March 1985 it had dropped, and therefore we had become more competitive, to 109.8. In September 1986 it had dropped to 78.1, which suggests that at that time we were vastly more competitive than we had been in 1981-82. This indicates a dramatic improvement in our competitiveness, yet this motion asks us to accept the fact that somehow or other we are an endangered species and we should identify with the motion. I was fascinated this morning to see on the Today program George Negus interview former Prime Minister Fraser. The significance of the interview was that today an endorsed analysis of the Fraser era of government was released. In that interview Mr Fraser admitted that probably the greatest or major failure of his government-although he was reluctant to admit any failure by his Government-was the wages explosion and blowout in 1981-82. Therefore, I am puzzled by Senator Chaney's motion. It seems to me that in essence this motion admits and suggests that, having learnt a lesson from that wages blowout and explosion, the Opposition has done a 100 per cent turnaround. The only other interpretation one could make is that in essence it is a hypocritical motion that does little more than play politics. One can choose between only those two alternatives, if one accepts the admission by former Prime Minister Fraser this morning that a major failing of his Government was the wages blowout of 1981-82. I turn now to the evidence of the past five years. Presumably, if we are to make any realistic judgment in 1987, we must do it in terms of recent evidence. If we are really attempting to look at reality, I do not believe that it is unreasonable for the Government to support a pay rise of $6.50 per week right now in 1987. Budget table No. 4 acknowledges that the Australian worker has incurred a considerable reduction in real wages over the past five years. In fact, there was the wages blowout that I referred to in 1981 through to the end of 1983 when there were increases in real wages of 3.6 per cent and 2.6 per cent. Since then there has been a steady reduction in real wages, if we take average weekly earnings converted to real terms. Almost year by year and quarter by quarter there have been reductions in real wages. It does not seem reasonable that the Australian worker should accept an indefinite continuation of that reduction. In fact, we suggest that there is evidence that the present Government has been much better able to reduce wages than its Liberal Government predecessor and, in fact, former Prime Minister Fraser admitted that this morning. It is also true that in relation to the incidence of industrial disputation this Government has been more successful than its predecessor, and I refer here to the incidence of industrial disputation from 1976 through to 1987. Looking at it in terms of working days lost or working days lost per 1,000 employees, from 1976 through to 1982 there was a dramatic increase in the level of industrial disputation. In fact, from 1983 onwards there has been a considerable decrease. I am simply citing the fact that there has been a good deal more discipline, control and responsibility in the labour force in terms of its demands and expectations under this Government than was the case under the previous government. Senator Maguire —You should compare South Australia with Queensland; that is a very interesting comparison. Senator McLEAN —I am sure that a comparison State by State would bring out this simple fact and, in fairness, we must acknowledge this. All we are asking for in this debate is acknowledgment of reality. Restraint is also evident when we consider the more recent attitude towards wage fixation which suggests that under our two tiered system we should acknowledge movements in productivity. The system says that, if there has been a 4 per cent improvement in productivity, it is not unreasonable for those who have given rise to that improvement in productivity to make claims upon it. That is the mechanism that now applies. In terms of this mechanism great restraint has been shown by the work force and it is true that the majority of potential claimants has not recently made claims upon the percentage increase in productivity. So all we are doing is citing the fact that there has been obvious restraint by the work force, which reflects a relatively positive and co-operative industrial relations climate. The efforts of the present Government in this regard must be acknowledged if we are being fair, open-minded and even-handed. I would like to cite some inherent contradictions in the posture of the Opposition in the past two weeks. I am teased by the fact that Senator Chaney in addressing this motion in the chamber this afternoon has urged seriousness-and I think that is a responsible thing to do-and has urged that we adopt an extremely serious posture and attitude towards the stock market crash. Senator Chaney drew parallels with the Great Depression; he cited the possibility of an extremely serious recession and over and over again he used the word crisis. I must admit to being a modern day Keynesian in this respect and I would not be surprised to see a sudden return to Keynesianism in our economic thinking as we move into this crisis predicted by Senator Chaney. In hindsight, the lessons of the 1930s are that mild stimulation would have been the more appropriate action. In fact, for the first five or six years of the crisis of the late 1920s and the 1930s governments moved in the opposite direction. My colleague Senator Powell cited a recent article by Professor Kenneth Galbraith who has been acknowledged by both sides of the chamber in the past few days as an appropriate commentator-- Senator Messner —That is not true. Senator McLEAN —I am afraid it is, and the honourable senator will see that if he looks at Hansard. Professor Galbraith cited the fact that the policy of excessive restraint was inappropriate, and he drew our attention to the fact that, if we are moving into crisis and mild recession, a policy of mild and moderate stimulation might be quite appropriate. The mild and moderate stimulation sought in the case placed before the Australian Conciliation and Arbitration Commission today is in the order of 1.5 per cent. I think we would have to judge that to be a mild and moderate stimulation. If we are to accept the advice of Professor Galbraith and the economic lessons of history, we would not judge that to be irresponsible. When we align that with the obvious moderation, responsibility and restraint of the Australian worker over the last four years, I do not think it is an unreasonable expectation. Although this motion may suggest that the Opposition has learnt a lesson from its blowouts in wages in 1981-82, it does not seem to have learnt from the lessons of the thirties. I am teased by this apparent contradiction in the arguments that it has advanced in this chamber over the last ten days or so. So much for the inadequacies and contradictions that the Opposition has brought to this debate. Of course, wages have to do with much more than competitiveness. They have very much to do with relative standards of living. A wages system is also about equity and about how we distribute or redistribute wealth. As well, it is about how we control or affect the accumulation of wealth. I appear to have been very much on the side of the present Government in my previous comments. I would now like to become a little more critical of the Government. I acknowledge the fact that a great deal of restraint, discipline and responsibility has been apparent. Senator Sanders —Yin and Yang. Senator McLEAN —Yin and Yang, as my colleague observes. We have moved towards greater flexibility in wage settlement at the workplace level, and this system comes up for review in May of next year. The work force is becoming increasingly restive about the situation in which it is finding itself. It is saying that it has been restrained and responsible for some time. When the position comes up for review in May next year, I think that there is some danger of a potential breakout. I believe that when we look at the fact that 90 per cent of workers have since mid-last year received wage increases of less than $10 a week, but realise that during the same period there has been a 10 per cent increase in prices, which in reality means that there has been a $45 per week increase in their cost of living, we need to be careful that we do not expect excessive restraint. If that happens, we may find ourselves with a work force which asks why it should live with the consequences of the last ten days on the stock markets, which is probably a reasonable question for workers to put. I now move to examine the Government's record in relation to wealth distribution or redistribution. In that regard the Government's record has been grossly inadequate. During the campaign the Australian Democrats constantly cited the degree to which the present Government has sold out Australia's disadvantaged and has favoured the rich and nouveau rich. We have seen a veritable explosion of millionaires, though many may have been cut down substantially in the last ten days. But the fact is that this Government has sold out disadvantaged Australians in favour of the new rich. Senator Richardson —That is nonsense. Senator McLEAN —It is not nonsense. I shall proceed to cite the clear evidence of that. In this chamber on 11 May my colleague Senator Powell cited the evidence of the extraordinary explosion of poverty in this country in the last four or five years and quoted evidence from the National Institute of Economics and Industry Research which spelt out chapter and verse the fact that poverty has run riot in this country since the present Government sold out disadvantaged Australians in favour of the rich in our society. The tables of evidence are recorded in Hansard as Senator Powell elaborated on that argument. In fact, by any measures of poverty-and there are a number-the number of poverty stricken Australians has increased dramatically. It has increased to the stage where the present Government in its last campaign chose to make it a major issue and to grandstand on a policy whereby it pledged to do away with poverty among Australian children by 1990. We saw precisely the same Prime Minister standing in precisely the same place-- Senator Richardson —What was wrong with that? Senator McLEAN —It was fine, but it was just a grandstanding exercise which said that the Government's priority one for the next two years was to be poverty-an attack on the very poverty over which it has presided in the last four or five years. In doing so, the Government has abandoned its previous priority one which was, as will be recalled, to rectify unemployment among the youth of Australia. That was the Government's first priority in the previous 18 months. It is interesting to notice the manipulations in the context of a political campaign. Not only has the Government sold out disadvantaged Australians in terms of the creeping poverty that we have observed in the last four or five years, but this Government's so-called tax cuts of marginal tax rates from 60c to 49c in the dollar clearly advantaged the rich Australians as opposed to the disadvantaged Australians, the ones whom they are supposed to be representing. During the campaign we cited the irony of the fact that the Government has sat back and presided over the negative gearing rort whereby the Bonds have been able to put together financial actions of $10m, have gobbled up our media systems and have written it off in a negative gearing formula which allows such people to right such sums off in their tax claims. We cited in the election campaign the fact that the present Government, once again favouring the rich, allows superannuation funds to be carried off-shore and invested overseas at a tax advantage, when the Australian economy would be well served by a policy which would force the investment of these vast sums of Australian's hard earned savings on this continent to generate wealth for Australians. Also in the campaign the Australian Democrats cited the simultaneous explosion of poverty and the ironical growth of the new rich under a Labor Government. The most neglected Australians under this Government are those who have shown the very wages constraint, discipline and responsibility which have enabled us to remain relatively competitive-and not uncompetitive, as Senator Chaney would have us believe. What I have tried to do in this debate is to cite the realities. We believe that in this motion the Opposition is doing little more than playing crude politics. We believe that the motion ignores the realities of its own years and of its failure in that regard compared with the present Government. We believe that the Opposition is unfairly failing to acknowledge the responsibility of the Australian work force in recent years. We believe that the lesson of economics in what is appropriate reaction to the movements in the stock market casinos of the past ten days is mild stimulation of the economy. In fact, the most appropriate reaction is to sustain confidence and to say to the work force, `We acknowledge your responsibility, we have confidence in our economy'. To offer a mild stimulation of 1.5 per cent increase in wages is not irresponsible, but may be judged by any standards to be economically appropriate. Although we are disenchanted-indeed, disgusted-by the degree to which the Labor Government has sold out the growing mass of Australia's disadvantaged in favour of Australia's grossly rich, on balance we support the Government on this occasion and reject the motion of the Opposition. Senator CHAPMAN(South Australia)(5.40) —In speaking for the Government earlier in this debate, Senator Foreman raised the hoary old chestnut that Australian Labor Party parliamentarians have been raising for far more than half a decade now-that is, that in 1980-81 the Fraser Government adopted a free-market, collective bargaining approach to wages determination and that that had disastrous consequences for the wages explosion at that time. Senator Schacht —You don't disagree with that, surely. Senator CHAPMAN —It is patent nonsense. In fact, it was not the small element of collective bargaining that was introduced at that time which caused the wages blowout; the blowout was caused by the flow-ons resulting from the mindless continuation of the concept of comparative wage justice, which was endorsed at that time by a weak Australian Conciliation and Arbitration Commission. That caused the wages explosion. Wage increases which may have been justified in some sectors of industry at that time automatically flowed through to other sectors where they could not be afforded and were not justified. Had we had a truly deregulated labour market at that time, those flow-ons simply would not have occurred. So let us lay to rest this nonsense we continually hear from the Labor Party that we had a free market for wages determination in 1980-81. I hope that that will also lay to rest similar comments that we heard from Senator McLean. For the Australian economy to perform to its optimum and maximise economic growth for the benefit of all Australians, wages must reflect economic reality. That is the import of the statement by the Minister for Industrial Relations (Mr Willis) to which Senator Chaney referred in moving this motion. Our present wage structure does not reflect economic reality. In Budget Paper No. 2 the Government forecasts that the two-tier system of wage determination will run its full course. Thus, the Government is expecting most wage earners to get a 1.5 per cent increase from the first tier, a 4 per cent increase from the second tier plus an increase in relation to superannuation. Thus, overall average weekly earnings will increase by some 6.5 per cent. In terms of overall labour costs, this represents an increase of between 7 1/2 per cent and 8 per cent in the current financial year. This is double the increase that our major trading partners will experience. It follows a 7 1/2 per cent increase in wage costs in 1986-87, which compares with a 3 per cent increase for our major trading partners. So for two successive years we have had increases in labour costs which are double those of our major trading partners. Meanwhile, in 1986-87 national productivity fell. Furthermore, the Budget Papers forecast that there will be negligible productivity improvement in this financial year. This is despite the supposed productivity offsets to accompany the 4 per cent second tier wage increases. Clearly, the wage restraint so far exercised has been insufficient when related to productivity. Comparative wage rates are already higher than those of our trading partners, but they will increase by twice the rate of those of our trading partners over the next 12 months. It should be noted that I am not making a wages comparison with low wage countries which our trade union leaders might be quick to condemn as using sweated labour. I am comparing our situation with countries with comparable standards of living-the United States of America, Japan, Britain and European countries. Our present wage levels and the rate of increase of those wages is way out of kilter with those countries. Even with our devalued currency it makes it difficult for Australian industry to compete on export markets or against imports. Clearly, the rhetoric of the Minister for Industrial Relations concerning wage restraint is at odds with reality. The success which he claims has simply not been achieved. Honourable senators might ask why this is the case. It is because the Government has allowed wages determination to remain in the hands of the Conciliation and Arbitration Commission, instead of adopting a more market oriented system. In practice, this means that wage determination is in the hands of the most powerful unions. The combined effect of the excessive power of some unions and the Conciliation and Arbitration Commission ensures a downwards rigidity in real wages. External adverse developments, such as declining commodity prices or collapsing share markets, and internal recession due to seasonal conditions or other factors, are not sufficiently reflected in an erosion of real wages. The Commission has a ratchet effect on both money and real wages. The gains which are made are protected, regardless of the state of the economy or of our competitiveness in world markets. The inability of the Commission to exercise any final authority and its pathetic and desperate attempt to maintain and extend its own role in the wage fixation and industrial relations system by cajoling the unions to co-operate in its pretence of authority has led to a widespread belief that industrial relations-far from being a new province of law and order-is a province for the exercise of arbitrary power and coercion. Mr Justice Higgins's dream has come to a sorry end. As a result, the union movement in Australia considers itself-with some justification-to be beyond the law. It is organised so as to exercise monopoly control over labour markets and to prevent the settlement of disputes on a freely negotiated basis between employers and employees in a specific firm or group of firms. The union movement is determined to exercise a wider degree of control over the future of profitable investment, while making no commitment to the profitability of that investment, as we have seen in its production of Australia Reconstructed. Reflected in information from the Department of Industrial Relations is the fact that the number of new industrial stoppages which commenced in the three months from May to July 1987 is 10 per cent higher than for the same period last year. It is a disastrous situation now when we consider that May to July last year was a period of unusually high disputes. This demonstrates that it is the industrial muscle of trade unions and not productivity improvement which is being used to obtain second tier 4 per cent wage increases. Senator Messner —What about all the unrecorded disputes? Senator CHAPMAN —That is right; we do not hear much about those at all. They add to the difficulties that we experience in the industrial relations environment. The Minister for Industrial Relations was living in fantasy land when he claimed on Monday, 26 October, that the Government was insisting on 100 per cent cost offsets in return for the 4 per cent rise under the second tier. Where was the 100 per cent cost offset when on the same day the railway workers in Victoria were awarded the 4 per cent second tier increase, despite only partial agreement by transport authorities and unions on the required trade-offs under the national wage guidelines? Negotiations between management and the two unions-the Australian Railways Union and the Amalgamated Metal Workers Union-resulted in little more than three-quarters of the $10.7m in offsets that were required to meet that 4 per cent increase. This was despite management having earlier lowered its request from $12m in trade-offs to that amount of $10.7m. Needless to say, the Conciliation and Arbitration Commission succumbed to the industrial blackmail of the unions, as indicated in a statement by Commissioner Neyland. He said: It is not appropriate that I attempt to apportion blame for a totally unsatisfactory state of affairs which resulted in the travelling public of Victoria and those users of freight services suffering massive inconvenience over the last few months and it is an endeavour to avoid any further disruption that the Commission is taking the action it is today. In other words, the Commission awarded the 4 per cent second tier increase purely to secure industrial peace, not in return for any productivity improvement. Where was the 100 per cent cost offset in the building industry? It is well known that in the wages settlement in that industry the second tier deal that was struck did not comply with the national wage guidelines. We can only conclude that the Conciliation and Arbitration Commission and employers went along with it because of widespread threats of industrial action. This jack-booted approach has gained wage increases of 16 per cent, as the Secretary of the Building Workers Industrial Union of Australia is ever ready to boast. Employees gained four per cent from the first tier, four per cent from the second tier, three per cent through superannuation and five per cent in severance pay. Yet there is no evidence of productivity improvement in the building industry anywhere near matching this wage increase. Where is the 100 per cent cost offset on the North West Shelf project? Unions there rejected an offer of a 16 per cent increase in remuneration and walked out on the most critically timed project in our history. They demanded increases which would have cost employers more than $1,000 per week for every employee-a total of $200m. The unions rejected the original offer of 16 per cent from employers because they had to work a full week to receive a $70 termination payment for each week employees had worked as part of the package. For every week they were on strike they needed to work almost nine weeks on the offered package before they caught up to their old package. Local industries shut their doors, laid off innocent and loyal workers and pleaded with banks not to close them down because of a dispute not of their making. Local workers were not receiving anything like the Burrup conditions but were being forced to pay the price for the irresponsible and greedy attitudes of imported workers who treated this project like they have treated other major sites around Australia-drastically extending construction, dramatically increasing costs and leaving behind on completion a local industry component to carry the burden. The only winners in the dispute were the airlines and petrol stations on the way to Perth which catered for the exodus of over two-thirds of the imported work force on their way for a `break', and the Government, which will reap an additional $19m in increased fringe benefits, payroll and pay as you earn tax on the offered package. The Federal Government, which was quick to disparage employers in the Robe River dispute, has been strangely silent in condemning the union thuggery with regard to the North West Shelf dispute. In light of these examples, the Government can only demonstrate that it is fair dinkum about restoring our international competitiveness by reversing its decision to proceed with the national wage case, or at least opposing an across the board 1.5 per cent increase. Unless this occurs, any export oriented or import competing business will have its competitive position further destroyed. The devaluation of our dollar has given us breathing space to get our wages structure in order. This benefit is being whittled away on two fronts: firstly, wage increases are not being matched by productivity improvement and, secondly, there have been further productivity increases in excess of our own in overseas countries. The simple fact is that even if we do achieve what the Government, despite its stated intent, has not been able to achieve, that is, productivity improvement to match wage increases, we are only treading water. We are maintaining our present position which, in itself, is unsatisfactory. All it means is that we are not going further backwards. To achieve the necessary improvement in our position, so that we can achieve real economic growth, we need productivity improvement significantly greater than any wage increases. But, as the Budget Papers acknowledge and the Australian Bulletin of Labour, June 1987 edition, indicates: Productivity performance has been extremely poor over the last year or two. Granting short term real wage increases at inappropriate times, such as now, or maintaining real wage increases when they ought to be falling, ensures a poorer performance of the Australian economy, a lower rate of growth and, therefore, lower real wage growth over time. So, inappropriate wage increases, by lowering the real rate of growth in the economy, ensure that wages are lower than they could be in the long run, and so is the capacity of the economy to deal with the social evil of poverty. It also causes the waste of immense human resources through a high level of unemployment. Employment growth in 1987 has diminished markedly compared with 1986 across all States and Territories. The drop in Australia's unemployment has bottomed out with the Budget predicting a slowing in employment growth and an unemployment rate little changed, on average, from the 8.3 per cent in 1986-87. But worse than that, the September 1987 issue of the Australian Bulletin of Labour differs from the predictions of the Treasurer (Mr Keating). It says that the seasonally adjusted figures on unemployment highlight the extent of the continuing unemployment problem in most of the country and that, with the exception of Victoria and the Northern Territory, a steady growth in unemployment is readily apparent. This is borne out in other figures, such as the ratio of job vacancies to unemployment. This ratio has come down slightly compared with corresponding levels last year. This means that there are more unemployed people per job vacancy, that is, the overall labour market has slackened. The teenage unemployment rate remains at a very high level. Teenagers, particularly early school leavers, are still being locked out of the labour market, in part because their relative wages are too high. Some freeing up of teenage wage rates was a necessary first step to ensure that teenagers had a range of job options before unemployment benefits for this group were abo-lished. As Senator Chaney has said in moving this motion, the Opposition is not urging a wages freeze, but we do oppose first tier, across the board wage increases. All increases should relate to second tier principles and be directly related to productivity improvement. A number of changes are necessary to achieve this: firstly, better direct communication between employers and employees at enterprise level. This has been achieved in a number of enterprises over the past decade. I cite Mitsubishi Motors in Adelaide as one example. But it must be extended. Better communication at the enterprise level will be helped by changing the union structure to an enterprise, rather than a craft, basis. Secondly, we must facilitate easier employee share acquisition. Encouraging employees to acquire a direct financial interest in the prosperity of the business for which they work will achieve the three objectives of greater reward for effort, improved productivity and greater industrial harmony. Central to this is the abolition of existing tax penalties which act as a disincentive to greater employee share acquisition. Thirdly, we must encourage profit sharing as another way of giving employees a more direct personal interest in their company's success. By establishing a direct link between the remuneration of a company's employees and its profitability, profit sharing helps employees and employers to recognise that they have a shared interest in the prosperity of their company. Like employee share ownership, this will improve industrial relations, break down the `them and us' attitude and encourage employers and employees to work together to improve the productivity and efficiency of their enterprise. Overseas experience strongly supports the introduction of these initiatives. A number of studies in the United States over the last decade have shown that companies with employee share ownership and profit sharing plans consistently outperform their competitors and generate higher profits and more new jobs. Fourthly, we must abandon the mindless support for the concept of comparative wage justice, which, as I mentioned at the outset, was mainly responsible for the 1980-81 wages blow-out. This concept is pervasive in the Australian union movement. It is clearly contrary to the second tier concept where wage increases should be based on productivity improvement at the enterprise level. The phenomenon of the flow-on under comparative wage justice ensures that wage increases in a particular industry or enterprise are rapidly generalised to others, irrespective of their profitability or capacity to pay. Comparative wage justice also means, in general, that uniform wage rates apply across Australia to the detriment of the decentralisation of industry and to the detriment of the cost advantage earlier enjoyed by States like my own State of South Australia which allowed it to compete with the eastern States while having accompanying lower costs of living and thereby enjoying a comparable standard of living. Comparative wage justice also squeezes relativities, minimising rewards for skill or labour scarcity. I support Senator Chaney's motion because it reinforces the need for wage increases to be granted only on the basis that I have outlined in the latter part of my remarks. Wage increases should only be granted directly on the basis of productivity improvement. That is the import of Senator Chaney's motion which I strongly support and bring to the Senate's attention. It reads: That the Senate- (a) records its agreement with the view expressed on behalf of the Government by the Minister for Industrial Relations, the Hon. Ralph Willis, MP, that `it is quite fundamental to our prospects of economic recovery that we keep increases in our labour costs broadly in line with those of our international trading competitors. Not to do so would jettison the great opportunities provided by the very large devaluation of the Australian dollar and place us in dire economic peril'; (b) notes that increases in our labour costs will, on the Government's own predictions, be substantially in excess of those of our trading competitors; and (c) expresses its disappointment at the Government's failure to understand that the decision to proceed with the national wage case on 28 October 1987 will contribute to the worsening of the problem the Minister has identified. It is essential that across the board wage increases, which will result from a continuation of the national wage case, be abandoned and that all wage increases in future be on the basis of productivity so that we can obtain real growth in this nation for the benefit of all of us and thereby improve our competitive position and our trading position with other countries. Senator McKIERNAN(Western Australia)(6.01) —Only a couple of minutes are left for me to debate this motion this afternoon. Essentially the debate is about holding back the cutting of living standards of the working people in this country because of a crash in the stock exchange. A few greedy speculators gambled on the stock exchange, got their fingers burnt and now they want the working people of Australia to pay for that. If this were to be an even-handed debate the argument should have been put in the past 12 months, when the stock exchange was going through the roof, that workers' wages commensurately should be going through the roof. Unfortunately, we did not get that argument from the Opposition this afternoon and we will never get that from the Opposition because it is clearly anti-worker. Senator Chaney's comments recognised some of the contributions of some of the unions in the areas of industrial relations, wage setting and the document of the Australian Council of Trade Unions entitled Australia Reconstructed. If there were more time I would draw the attention of the Senate to an address by Bert Evans, Chief Executive Officer of the Metal Trades Industry Association Inc., and some of the complimentary things he had to say about unions. The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Order! The time allotted for the debate has expired. Bill received from the House of Representatives. Motion (by Senator Reynolds) agreed to: That the Bill may proceed without formalities and be now read a first time. Bill read a first time. Senator REYNOLDS(Queensland-Minister for Local Government)(6.03) —I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- The Bill before the Senate makes a number of important changes to procedures associated with the pharmaceutical benefits scheme. These have been announced previously either as part of the 1987-88 Budget package or decisions taken as a result of the efficiency scrutiny into the payment of pharmaceutical benefits conducted earlier in 1987. Honourable senators are well aware of this Government's scrutiny of all areas of expenditure and in regard to the pharmaceutical benefits scheme in particular, the measures implemented last year to better target assistance on those in greatest need especially families who require large numbers of drugs. The changes incorporated in this Bill, although less significant than the changes made last year, maintain this momentum in achieving value for the taxpayers' dollar and improving efficiency. Amendments included in this Bill will make significant changes to the operation and activities of the Pharmaceutical Benefits Advisory Committee (PBAC). The role of this Committee is to advise the Minister on the listing of drugs and medicinal preparations as pharmaceutical benefits. The Government is concerned about the increasing cost of the pharmaceutical benefits scheme over the last two years, much of which has been caused by greater prescribing of expensive drugs. For example in 1986-87 the average price of drugs supplied to pensioners under the scheme was $8, some 24 per cent higher than the previous year. As mentioned in the Budget Papers, the major changes implemented in November 1986 are expected to save about $100m in 1987-88. If these changes had not been introduced expenditure on the pharmaceutical benefits scheme would have reached an estimated $970m in 1987-88, an increase of 58 per cent in the two years since 1985-86. This Bill includes amendments that will require the PBAC to take account of comparative effectiveness and cost in recommending drugs as pharmaceutical benefits and in considering any change to prescribing restrictions applying to pharmaceutical benefits. In the past the PBAC has not been required by its statutory charter to take costs into account when making its recommendations. In practice it has taken price into account when considering drugs of similar efficacy and toxicity, but only as a secondary consideration. The obligation to consider comparative effectiveness and cost will require the PBAC to give consideration to alternative forms of treatment, for example surgery, in making recommendations. The Committee will not be allowed to recommend the listing of a particular drug which is substantially more costly, unless it is satisfied that, at least for some patients, the drug provides significant therapeutic advantages over alternative therapy. The Government has no objection to paying high prices for new drugs that offer significant therapeutic advances over existing drugs or other forms of treatment. But it does not believe the taxpayer should foot the bill for very expensive drugs that offer only minimal advantages over much cheaper alternatives. To assist the Committee to take account of these wider considerations, the Government intends to significantly upgrade secretariat support for the PBAC, with greater utilisation of specialist consultants to advise on selected areas of drug therapy. Together with the upgrading of the PBAC secretariat, the Minister will be empowered to increase membership of the Committee by up to three; all of the additional members must be medical practitioners. This enlarged membership, additional secretariat support and greater resources to engage consultants complement the provisions in the Bill for the PBAC to appoint sub-committees to provide the best available advice in this technical area. In addition this Bill deals with the Minister's power to remove an item from the list of pharmaceutical benefits. The proposed amendment will enable the Minister to act quickly when circumstances change, for example where a cheaper alternative drug becomes available. When taking action under the proposed amendment the Minister will be required to have regard to previous views expressed by the PBAC. Clause 4 of the Bill requires that the declaration removing an item from the list of pharmaceutical benefits under these circumstances be tabled in the Parliament and be subject to disallowance. I turn now to two other provisions of the Bill, which arose out of the efficiency scrutiny of the payment of pharmaceutical benefits. Honourable senators will be aware of delays which have occurred in the past in paying pharmacists for pharmaceutical benefits they had supplied. A major initiative to prevent delays in paying pharmacists claims and reduce processing costs has been to encourage pharmacists with compatible computers to submit claims on floppy disks or via modem to the central claims processing facility. This method of submitting claims has a number of advantages which include more rapid and accurate processing. The Bill provides for a cash incentive of 2.5c per pharmaceutical benefit to be paid to pharmacists and other approved suppliers who utilise this claims transmission system. The incentive payment may be paid for a period of two years to each supplier using this system. The rules governing the payment of the incentive will be made by the Minister, published in the Gazette and laid before each House of Parliament for its scrutiny. The provisions in the Bill will formalise interim arrangements under which the incentive has been paid to eligible pharmacists since 1 July 1987. Earlier this year the Government announced that the incentive would be paid to all pharmacists, and other approved suppliers, who are ready to submit computer-readable claims by 1 November this year. Already the proportion of pharmacists participating in the claims transmission system has jumped from 11 per cent in February to more than 37 per cent at the end of September. A further initiative to prevent delay in reimbursing pharmacists is provided for in clauses 5, 6 and 7 of this Bill. This is the establishment of an alternative payment system whereby the reimbursement to pharmacists is calculated based on processing a random sample of prescriptions submitted in each claim. The proposed arrangement provides pharmacists with greater flexibi-lity in the ways they can receive reimbursement and will also assist the department in handling peak work loads which occur from time to time. Pharmacists will be able to participate in this arrangement by voluntary election. The Australian Bureau of Statistics and the Department of Finance have been involved in the development of the sampling arrangements. The Pharmacy Guild of Australia has been consulted and has given its approval in principle to the sampling arrangements. Further consultations will take place on the detailed rules which will govern this alternative payment method. The Bill provides that a copy of the rules be published in the Gazette, as well as being tabled in each House of the Parliament. It is expected that the rules will preclude from these arrangements very small pharmacies and those with computers capable of submitting data under the claims transmission system. The rules will specify how samples will be selected and how sample sizes will be determined for each pharmacy. To minimise the sampling variation in payments and take account of high priced items, the rules will allow pharmacists to submit up to 10 per cent of items in a claim for full processing, with the remainder to be reimbursed by the sampling method. In order to encourage pharmacists to choose this method of processing, the rules will provide that sample claims will receive both priority in processing and an incentive payment of 2.5c for each pharmaceutical bene-fit covered by the claim. Clause 7 of the Bill will extend the Commonwealth's recovery power to any overpayments made under the sampling method. Together with the other provisions in this Bill the sample processing arrangements are expected to contri-bute significantly to the efficiency of the pharmaceutical benefits scheme. While it is impossible to be precise about the expen-diture savings flowing from the changes in PBAC procedures, these have been estimated at $5m in this financial year. These will be offset by the additional expenditure of $0.5m for additional staffing and consultancies. The operational savings from the claims transmission incentive and sample processing will depend on the number of approved suppliers participating. If 50 per cent of approved suppliers participate in the claims transmission system and a further 25 per cent elect to have their claims processed by the alternative payment method, the gross operational savings are estimated at $7m and $3.5m respectively in a full year. Offsetting these savings would be the incentive payments themselves, amounting to $1.25m and $0.6m per annum respectively. I present the explanatory memorandum to this Bill. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Senator REYNOLDS(Queensland-Minister for Local Government) —by leave-On behalf of Senator Gareth Evans I give notice that, on the next day of sitting, he will move: That, notwithstanding anything contained in the Sessional Orders, the Order of Business on Tuesday, 3 November 1987, be as follows: (1) Petitions (2) Notices of Motion (3) Discovery of Formal Business (4) Government Business (5) At 3 p.m., Questions (6) Any proposal pursuant to Standing Order 64 (7) Consideration of Government Papers pursuant to Sessional Order (8) Further consideration of Government Business (9) Adjournment Debate resumed. Senator WALTERS(Tasmania)(6.05) —Prior to the suspension of the sitting for lunch I was explaining that, when the Minister for Community Services and Health (Dr Blewett) introduced the original Medicare legislation, he told everyone that we would have the best and the cheapest health and hospital care. I had been through health care and I had explained what second rate medicine we are now offering Australian citizens and what third and fourth rate hospital care we are now offering the people of Australia. I talked about the waiting lists and explained how they had all grown since the introduction of Medicare and how 64.4 per cent of Australian families with children had been forced to cover themselves with private insurance to enable them to get a bed. I said that, apart from that, there was a very poor group and that the Australian Bureau of Statistics had produced a survey which indicated that 46 per cent of married couples with children on $126 a week were now forced to cover themselves with private hospital insurance. As I have said, the Government did not like these figures so it took action to try to force those people who were privately insuring back on to the hospital queues. The Government did that by stating in its 1986 Budget that the private hospital bed subsidy was abolished. It took away the subsidy for the private hospitals and so forced hospital insurance contribution rates to rise. In the May mini-statement the rebate for private in-patients for hospital services was lowered from 85 per cent to 75 per cent and the maximum gap of $20 was removed. The Government, in doing both those things in 1986 and 1987, attempted to force these people who were struggling to maintain private insurance back on to the already bloated hospital queues resulting in increases in private insurance, as I have already said. It is really a disgrace. It is patent rubbish and nothing more. At the time of the introduction of Medicare we warned that the entrepreneurial exercises of the Edelstens of this world would pull the whole system down, make it impractical and unworkable and send everyone bankrupt. I repeat that I found it very interesting that Mr Hawke's letter, from which I quoted earlier, also stated that two out of three families would be paying less for Medicare. This statement very quickly followed the statement of the Minister, Dr Blewett, who said that nine out of 10 people in Australia would be paying less. The additional information that Mr Hawke gave was that the system would lower our inflation rate by reducing the cost of living. At that stage inflation was running at 8.6 per cent. Once the Government removed the health insurance cost from the pockets of the people and put it into tax, where it is not taken into account by inflation, the inflation rate dropped to 5.9 per cent. But then it promptly grew again and by December 1986 it was 9.8 per cent. So we have a 2.7 per cent reduction in the inflation rate by just taking money out of people's pockets and putting it into the insurance funds and saying, `You do not pay the insurance company; you now pay Medicare through tax'. People are still paying for Medicare. If we add that 2.7 per cent reduced inflation rate to the 9.8 per cent, which is what it was in December 1986, we find that it is 12.5 per cent. The statement of the Prime Minister (Mr Hawke) that the new health care system would lower the inflation rate is nothing but a load of rubbish. I have said that I believe the Government's system is in tatters and that it is sending the country broke. This is not just my opinion; it is the opinion of many people around Australia. Let me just quote from Professor Penington as the Government considered it was worth while to ask him to advise it on such health matters. He said: The cost of the present system is out of control. That was Professor David Penington. He also said: I personally feel an enormous concern about the present state of the public sector health institutions. I feel they are facing a very critical period for their future as to whether they will survive. He also said: It has been a tribute to the ethical standards of the medical profession that growth in the utilisation and cost has not been far greater than it has been in the past ten years. The growing waiting lists at public hospitals and the increased numbers of services provided under Medicare with the rapid growth in areas such as private pathology, now well ahead of the Budget estimates, mean a rethink of medical policy was overdue. Warnings have been given to the Government on many occasions. The Government pushes ahead with its policy through ideology alone, nothing else. If we look at the December 1986 consumer price index figures, we find that, while the inflation rate was running at 9.8 per cent, the cost of health services was running at 26.2 per cent. Similarly this year, while inflation is running at 8.3 per cent on the most recent figures, the cost of health services is running at 20.9 per cent. The whole thing is sending us broke and it is time that the Minister abided by all the advice that he has been given by both the Opposition and Professor Penington who have advised the Government to abolish bulk billing. The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Order! The honourable senator's time has expired. Senator WALSH(Western Australia-Minister for Finance)(6.12) —Notice of intention to move a number of amendments at the committee stage has been given. I do not propose to deal with those matters now, but rather will leave that to the committee stage. I shall not, therefore, at this stage reply to any of the matters that were raised in the second reading debate. However, a couple of people mentioned Medicare, so I will give a few facts. I know that it is always awkward when facts collide with ideological prejudice, but this is a very important issue and a few facts should be put on the record. Total spending on health as a proportion of gross domestic product (GDP) in Australia has declined in recent years, albeit marginally. It currently stands at around 7 1/2 per cent of GDP, which is somewhat higher than in the United Kingdom where it is just under 7 per cent of GDP and somewhat lower than in Canada where it is just over 8 per cent of GDP. In the United States of America, which is the purest example of the sort of health system the Opposition would like to see Australia have, total health expenditure as a proportion of GDP is 11 per cent. If we were to spend 11 per cent of GDP on health care, that would entail expenditure of almost an additional $10 billion, for an outcome which would be certainly no better. Few people would argue that the health service delivery in the United States is any better than it is in Australia. There are pretty fundamental economic reasons why that sort of outcome has been produced. If one were to look to maximise costs on health expenditure, it would be difficult to devise a more effective formula for doing that than to abandon any attempt at controlling charges while simultaneously allowing unlimited private insurance-that is, private insurance for unlimited amounts and at an unlimited charge for specific services-and simultaneously on the Budget to pick up the cost of providing medical services to the aged, the infirm and a few other groups. That is the formula which the Opposition would foist upon the country. It is a formula which would maximise costs. It is true that to a significant extent it would transfer what is presently public expenditure, and therefore on the Budget, to private expenditure, which would lead to a major increase in total spending on health, with no better outcome. What the Opposition, because of its ideological bigotry, fails to recognise is that the market system does not work in the provision of health care unless one is willing to ban private insurance. Once private insurance is in place, it is a matter of no consequence to the individual how many services the individual either demands spontaneously or demands following prompting by a member of the profession. If that private insurance co-exists with a system which does not attempt to impose any control on service delivery, including a charge for services, one has a formula for maximising costs. If anybody wants the market system to operate effectively in the area of health service delivery, the formula for doing it is fairly clear, and this may well reduce total costs: One must outlaw private insurance and then go all the way down the social Darwinist road; that is, establish a policy and practice under which people who cannot afford to pay directly from their own pockets for medical services either remain sick or die. Nobody is suggesting that we do that. But the Opposition, following its practices of many years, refuses to acknowledge what anyone moderately well informed about market theories should know, which is that the market system will not work in conjunction with a system of insurance. The whole set of assumptions upon which the operation of a market is based fall to the ground. I do not propose to delay the second readings of the Bills any longer. Question resolved in the affirmative. Bills read a second time. Ordered that consideration of the Bills in Committee of the Whole be made an order of the day for the next day of sitting. Consideration resumed from 23 October, on motion by Senator Ryan: That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Ordered that consideration of the Bill in Committee of the Whole be made an order of the day for the next day of sitting. Motion (by Senator Walsh) proposed: That the Senate do now adjourn. Senator VANSTONE(South Australia)(6.18) —On the adjournment tonight I want to raise the two-faced attitude of this Government to sexism. It is an old adage that, if you protest too much, there must be something behind it. Senator Ryan, on behalf of the Government, certainly does protest high and low against sexism around the country-and so she should. But what I want to raise on the adjournment is whether she does so with the vehemence with which she does it because she is aware that senior Ministers in her Government do not believe and/or practice what she preaches. Apparently, we had yet another example today of a senior Minister in the Government behaving in a very sexist fashion. Senator Walsh —Who did? Senator VANSTONE —A senior Minister of a government that professes to be anti-sexist. Senator Walsh —Who did? Senator VANSTONE —If Senator Walsh will just wait for a minute, I will get to the point. When it comes to sexist Ministers, this Government got a very generous slice of the cake. Senator Robert Ray, the Minister for Home Affairs, answered a serious question from Senator Haines. He then sat down, and on the way down he added something to his answer. Perhaps it was not audible to everyone in the chamber, but I know it was audible to some, and certainly audible to some in the Press gallery. Irrespective of whether it was audible in the chamber, it was audible to the media and to those in offices who listened to tapes of the broadcast. What Senator Ray said as he sat down-and it is as clear as a bell on the tapes-is `bitch'. It is not a term that I would normally use in this chamber; henceforth I will say that he followed up his answer with a word that rhymes with witch, but begins with `b'. Having said it once, that is probably enough. We all know that that terminology is sexist. We all know it is a derogatory term to use when describing a woman. In case some honourable senators did not know that, I refer them, through you, Mr Acting Deputy President, to the following definition of `bitch' in one dictionary. It says it is a derogatory term of a woman, especially a lewd or malicious or treacherous one. That is, I would have thought, hardly an appropriate description for a Minister in this Government to apply not only to another member of this chamber, but to a female member of this chamber and, added to that, a female member of this chamber who happens to be the leader of a party. This is not the first time that this Government, through its Ministers, has shown that it is not prepared to practise what it preaches in this respect. I turn my mind back to, I think, February of this year when Senator Evans, in a discussion on the placing of Government Business, without much provocation made the following comment: Perhaps I should say that I so move on the principle that if rape is inevitable one might as well, if not enjoy it, at least succumb with such grace as one can muster in the circumstances. To be fair to Senator Evans, not much further on in the Hansard, one can see that he attempted to make a withdrawal of those remarks. He said: The reference, of course, is to a throw-away line which I employed in the course of the debate on the placing of business . . . I would have thought that Senator Ryan, the Minister Assisting the Prime Minister for the Status of Women, would not have approved of that sort of terminology, whether it was a throw-away line or used as a matter of substance. In fact, at the very moment that the comment was made, Senator Haines responded to Senator Evans's little sexist outburst and said, `A rather graceless analogy'. Senator Ryan commented, `I think some in the Senate could be offended by it'. She was, of course, right as there were a significant number of people in the Senate who were offended by it, and the people who read about it in the media, following the coverage of his comments, were equally offended. Senator Evans said to the chamber that it would be perfectly apparent from what he had said that he was not repeating the standard chauvinist cliche. I put it to you, Mr Acting Deputy President, that one cannot slip in sexist remarks and then put up one's hands and say, `I did not mean it; I was distancing myself from the use of that sort of terminology'. One either avoids that sort of terminology or one does not. Senator Evans was simply unable to help himself in this respect. In my view he compounded the problem and showed the views that he really holds because following an interjection of mine, when he was attempting to clarify his remarks, he responded that amongst the things that frightened him was Senator Vanstone, in addition to the other women on the back bench of the Opposition. This was clearly a sexist stereotyping of a group of women as a pack, and the negative connotations that go with that. I do not need to go on about that experience. It got a lot of unfortunate coverage. I raise another purported example of sexism demonstrated by Government Ministers and, might I say, senior Government Ministers. The Times on Sunday of 8 March this year carried a report entitled `All's not WEL with Walsh'. The Minister for Finance (Senator Walsh) was in the chamber some time ago, and perhaps he would like to come back and comment on this. The public perception as portrayed in the paper and, as I understand it, not denied is: In the course of the discussion the famous Budget-slasher- that is Senator Walsh- made some gruff asides about such worthy bodies as the Equal Opportunity Board, the Office of the Status of Women and the Affirmative Action program. Pondering the number of government agencies and programs devoted to women, Walsh muttered that all they did was `give jobs to hairy-legged Stalinists from the Women's Electoral Lobby.'. That is not a comment that I would have thought appropriate for a senior Minister in a government that purports to be so keen to raise the status of women. I have given honourable senators three examples of where I believe Ministers of this Government have, by the remarks they have chosen to make, flippantly or otherwise, demonstrated that they do not believe all their Government preaches. I give a further example, one that pertains not to any particular Minister, but to the material put out by this Government. I ask honourable senators in the chamber to cast their minds back to the launch of the campaign against drug abuse and to the glossy leaflets that came out then. I recall asking Senator Ryan at the time whether she had noticed in those leaflets a section dealing with why girls ought not to take drugs. The way in which this Government attempted to convince young girls that they ought not to take drugs was by using quotes from young boys saying that boys do not like girls that get high on drugs. That is quite an unsatisfactory leaflet in terms of raising the status of women, because that leaflet portrayed women as being the sorts of people who would do things simply as a consequence of whether a male approved or otherwise. I do not want to go on at length; I simply summarise my comments by saying that I think it is appropriate for Senator Ryan to take an early opportunity to explain, not only to this chamber but perhaps also to the media, how she can make the comments she does when other Ministers behave as they do and when the Government's publications are of a sexist nature. Senator ROBERT RAY(Victoria-Minister for Home Affairs)(6.27) —I thank Senator Peter Baume for yielding the floor for the moment. Unfortunately, I have not heard all of the remarks that Senator Vanstone made tonight. I remind her that if she wishes to criticise my behaviour it would be nice to give me some notice so that I can be here to respond accurately. However, let me put the record straight. Senator Vanstone alleges that I used a particular word and directed it towards Senator Haines. She has no knowledge of that. I may have used a particular word. How does she know whether it was directed at Senator Haines? It may have been an expression used to describe a particular question that I was asked, and I will go into the details of that in a moment to put the public record right. I would have thought it would have been a more simple process for Senator Vanstone to give me some notice that she wanted to attack me tonight. Let me go to the basic reason for my anger after the question that Senator Haines asked today. I regret having to raise it because, given the sequence of events, I have not been able to give Senator Haines any notice of discussing that question, which is unfortunate. The normal practice in this chamber is for questions to be asked without notice. However, if senators require some very detailed accurate response, they quite often indicate to the Minister the subject nature of their question, usually two to four hours before questions. That is what occurred this morning. I was asked a very sensitive and touchy question on acquired immune deficiency syndrome in the defence forces. Notice was given to me and I put on extra pressure this morning and this afternoon to make sure that five detailed questions were answered properly, because I think there is nothing worse, when notice of a question is given, for the respondent to come into this chamber and not be able to give an accurate response. I think subsequent events prove that the question that was asked of me was to elicit certain information in the hope that there would be a mistake, with a specific case in mind, but let us leave that aside. I had some notice of the question and I had a detailed response prepared, but when the question was asked certain key words in that question had been changed. Had I not been alert to the fact that two or three crucial passages of that question were changed and merely read out the answer, I would have been guilty of a more serious charge than sexism-that of misleading the Senate with a false answer. As it happened, I picked up the changes to that question and was able to amend the answer, I think, as to in no way mislead the Senate, but to give it accurate information. Therefore, when I sat down I may have made a remark to myself. Senator Vanstone does not know-and I cannot remember myself-whether that remark was directed at Senator Haines, at someone else or, indeed, at the nature of the question or the change of the question. It is not on the Hansard record, as the honourable senator well knows. What we have seen here tonight is another example of Senator Vanstone's grandstanding-trying to prove to this chamber that, while she may lack the ability to be on the front bench, at least she is tough enough to be on it. I noted in the debate the other day that these matters come to a particular sensitivity. I refer not so much to her attitude when she is dealing with people such as me, but to her attitude, and that of many of her female colleagues, to the treatment of female Ministers, when the vitriol becomes particularly bitter. I will not impute motive to that. I merely observe that that is a fact that I have observed in this chamber. When I made that observation yesterday it was interesting to see how many male members on Senator Vanstone's side of the chamber nodded their heads. To get back to the point, I do not appreciate Senator Vanstone's raising this matter without giving me any notice of it. I have explained the circumstances, which I doubt she would dispute, of what I regard as an unfortunate change to the question that was asked of me-a change that could well have led me to mislead the Senate. On the final point, if Senator Vanstone has taken it upon herself to believe that a remark I made was directed to Senator Haines-it was not recorded in Hansard-I withdraw it happily. However, I am not sure even in my own mind now whether I directed that remark to Senator Haines or to the nature of the question. If the honourable senator regards the term I used as one that should be removed from the English language, I am sorry; I will not do it. It is part of the English language; it is not necessarily sexist. Certainly, when I dish it out in this chamber-and I do-I am willing and happy to cop it, because if one dishes it out one has to learn to cop it. But I will not cop it on the basis of the honourable senator misdirecting her criticism to motives that I do not have, as she did in this chamber tonight. I will take on Senator Haines in debate in this chamber any time Senator Vanstone likes. I will not treat her any differently because she happens to be of a diffe-rent gender. She is a very capable person. I repeat the two basic points that I want to make: I think Senator Vanstone should have given me notice of this matter, as it is not on the Hansard record. Secondly, although one could not say that one objects to this practice, all honourable senators from now on must be very careful-leaving aside the efficacy of the Standing Orders, because this place has to run on common sense-if they give notice of a question, particularly a long one, not to change one or two words of it when reading it out and expect the Minister to be able to respond. All such questions will be put on notice, because if I had read out the answer to Senator Haines's original question or had not been concentrating, I would have misled this chamber and would have had to come in and apologise for it. I think the key word in Senator Haines's original question was the word `without'. She altered the question to say `with or without permission' and changed the whole nature of the question. So I think Senator Vanstone-I see her acknowledging this-could at least understand that I was angry. There is no excuse, in a moment of anger, for reacting in a sexist way. I acknow-ledge that. If I have done that, I withdraw what I said. But I am not certain in my own mind whether my remark-which was inaudible not only to the chamber and the Hansard reporters but also to the tape recorder-was directed at Senator Haines or at the nature of the question. I will leave the matter there. Senator PETER BAUME(New South Wales)(6.34) —This week a biography of a former Prime Minister, Mr Malcolm Fraser, is being launched. I want to say a little bit about it. It is very difficult to assess the achievements of any Australian Prime Minister close to the events in which he was involved. This is no different in the case of Mr Fraser than in the case of any other Prime Minister. It is less than five years since Mr Fraser yielded the Prime Ministership and even today we are very close to the events in which he was involved. The biography attempts to cover some of those events. I have had the pleasure of reading the biography. Malcolm Fraser was the Prime Minister under whom I served as a Minister in his Government and his last Cabinet. I have even written a review of the biography. Whether or not it is published is another matter. The biography recounts many of the achievements of Malcolm Fraser, Prime Minister, but as honourable senators will have noticed in the newspapers, it has given rise to some controversy already. Some people have drawn upon a single half page in a book of well over 400 pages where Mr Fraser's relations with Mr Howard are mentioned, and on another part of the book which deals with some conversations he had with Sir John Kerr in 1975. As I said, the book outlines many of the achievements of Malcolm Fraser as Prime Minister. I do not think it does him justice in terms of some of the recent things he has done. The book relates to his activities in southern Africa and the role he played in Zimbabwe-matters of great international importance which reflect very well upon him and his abilities. I have come here tonight to tell the Senate that earlier this year, on 30 July, Malcolm Fraser delivered the Daniel Mannix memorial lecture in Melbourne. It was a splendid lecture. It is not covered in the biography. In that lecture Mr Fraser took the subject of Robert Menzies and developed the theme `Robert Menzies: In search of Balance'. It really adds to our understanding and appreciation of Malcolm Fraser. He discussed the context in which balance is desirable. He discussed the continuity of liberal tradition from the time of Robert Menzies through to today. He developed his theme of balance in relation to policy, the views one holds and projects and the judgments one makes. It has been a contribution to Australian public life this year. It certainly should be part of what is going on this week when the Fraser biography is released. It is not desirable that I incorporate in the Hansard or read into the Hansard even the brief version of this speech which I have, but I seek leave to table it to make it available to honourable senators who may have an interest in it. Leave granted. Senator PETER BAUME —I table the document. Senator CHILDS(New South Wales)(6.38) —In tonight's adjournment debate I would like to speak on the world economic crisis facing us. I want to refer particularly to the American President, because I believe that President Reagan, as a Republican President, has been guilty of the most irresponsible behaviour during his presidency. I will develop that theme. I noticed yesterday an article in the Australian Financial Review by Paddy McGuinness headed `Action must be directed at world system'. I think he summed up the position when he said, in part: There is a single major culprit. It is the United States. It is the US which has insisted on running a Budget deficit of immense and uncontrollable proportions, and which has failed to face up to the issue of either raising taxes or reducing expenditure to bring down the deficit. When one considers Mr Reagan's presidency one sees that he has allowed $1.8 trillion to be committed to an escalating arms budget between 1984 and 1988. This figure is based on the Department of Defense estimates and does not include expenditure on military related items in other departments. The escalating development of the military-industrial complex is a matter of great concern. Ultimately, there is a great deal of waste in those resources, whether they are used or not. Unfortunately, the Star Wars development is just the most recent escalation of that arms race in the threat to take war into outer space. I believe that these excessive defence expenditures-which are like a bottomless pit of waste, whether the weapons are used or not-account for 28 per cent of the current United States Budget, which is, of course, a 5 per cent increase during the period of Mr Reagan's presidency. The outcome of the Reagan Administration's strategy will be to put the cost on future generations by borrowing from tomorrow rather than facing up to taxing today. This strategy of increasing armament expenditure on the never-never payment principle must be acknowledged as a major cause of the crisis the world faces today. The raft of debt on which the American economy now floats is truly staggering. The result is a debilitating deficit which is a prime cause of the current crisis. I am not suggesting that that is the only activity that has occurred. The Vietnam War was financed in an inflationary way. There have been other factors, such as the two oil crises. The 1982 recession was, in part, alleviated by an increase in defence expenditure, but that was at the expense of higher interest rates which have had a devastating effect on Third World countries and left the Third World with a crippling debt. We might well ask: What is the result of the seven-year Reagan presidency? Today the United States is no longer an independent nation. For the first time in its history it now depends on foreign capital to finance the day to day activities of government. The United States national debt has doubled over the last five years. Interest on the debt alone will be in the vicinity of $125 billion. The United States trade deficit reached $220 billion last year; that is, 1985-86. It was $75 billion for the first six months of the 1986-87 financial year and is estimated to be $155 billion this year. The current United States Budget deficit is $148 billion. President Reagan has belatedly announced that he will discuss with Congress possible steps to reduce this deficit. However, until last week President Reagan had refused to consider an increased tax on wealthy people and reduced defence spending. Felix Rohatyn, Chairman of the Municipal Assistance Corporation of New York, wrote in the New York Review of Books on 11 June this year an article entitled `On the Brink' in which he successfully predicted the crisis that has occurred in the stock market over the last couple of weeks. He pointed out: Even if the US was able to reduce its trade deficit by 20 billion dollars a year, by 1995 the external debt would be about 1.5 trillion. That is United States dollars. The interest alone on that debt would be in the vicinity of $US120 billion a year. Another aspect of this problem is that in order to service the debt the United States domestic market is absorbing an ever increasing amount of foreign goods. The political reaction to this problem has been to attempt to erect prohibitive trade barriers that, of course, will adversely affect Australian exports. The fact that the crisis has been deeper in the United States and the United Kingdom requires us to look at the reality of what has occurred under these New Right governments-the regimes where New Right leaders have presided. The time has come for us to examine the experience of the New Right. Untrammelled market forces have resulted in an unparalleled growth of corporate debt, in many cases fuelled by unbridled takeover activity. To the end of last year the total long term and short term debt of non-financial institutions in the United States was about $1.6 trillion. I again quote Felix Rohatyn: There is no precedent or analogy for the worldwide financial structure that has been created in recent years. One and a half trillion dollars per day flows through New York's clearing house interbank payment systems (CHIPS), which processes all the domestic and foreign payments passing through New York banks. This amounts to one third of (the United States) annual gross national product. Incidentally, it is worth noting that the London Eurodollar market now turns over $300 billion every working day or $75 trillion a year-that is, a volume at least 25 times greater than the level of world trade. As Felix Rohatyn has said: The relationships between exchange rates and trade, between interest rates and economic activities, between fiscal and monetary, have become less and less predictable. The famous Peter Drucker, an expert on corporate affairs, confirmed this point recently in the Los Angeles Times when he described Wall Street brokers in the following way: A totally non-productive crowd which just is out for a lot of easy money. When you reach the point where traders make more money than investors, you know it's not going to last. With short term profits the only aim, the daily business news, particularly in the United States, was of speculative real estate deals, assets stripping, hostile takeovers, strategic bankruptcy and risk arbitrage. Huge fortunes were made in days with not a single productive result. Last week the rug of New Right attitudes was pulled away to reveal a very bleak future for the world and a real danger of millions of ordinary people suffering because of the greed of the free marketeers. In the last few years we have seen the United States turn from being the world's biggest creditor nation to being the world's biggest debtor. The counterpart to this is the growing trade surpluses of Japan and Germany. Neither the United States deficit nor the surpluses of Japan and Germany are sustainable. But, in the absence of orderly sensible policies to deal with this problem, the world is likely to be engulfed in trade wars, slow or negative economic growth and, consequently, reduced living standards. There is a growing global imbalance between the industrialised countries and the less developed countries because of the international debt problem. The adoption of monetarist policies by many countries, accompanied by high interest rates and depressed commodity prices, has resulted in an absurd situation. It is a situation in which despite substantial debt rescheduling, there has actually been a net transfer of resources from poor countries to rich countries. The total outstanding debt of developing countries is estimated at nearly $1 trillion. Debt repayment obligations in some countries exceed total visible export earnings. No government or banker should regard the present situation as sustainable. However, it is not so much the size of the debt that counts; rather the increased amount of export earnings required to service it. Debt repayment for many Third World countries now amounts to half, two-thirds or, in some cases, more than all exports. As an ever increasing number of debts are tied to United States interest rates, export servicing costs rise every time United States interest rates rise. Already the world stock of debt is larger that the world domestic product. It has also been estimated that world annual interest payments are larger than the increase in world income. Under these conditions it is inevitable that a growing proportion of income will be absorbed by interest payments. This is not only unsustainable but also imposes deflation on the world economy by pre-empting resources which otherwise could finance increased imports for other countries' exports. This is how the problems of the Third World debt threaten all the world, particularly Australia because of our commodity exports. It is therefore obscene to concentrate media attention and analysis on millionaires and yuppies-the superficial analysis that has been characteristic of our Press-and not look at the hunger, degradation and even death facing millions of people throughout the world because of the failed New Right policies which are based simply on greed and which are unsustainable. Socialist International, the organisation of Labor, Socialist and Social Democratic Parties, in a book entitled Global Challenge, which is a prescription by an economic committee of Socialist International, has proposed alternatives which I am sure many thinking people will now look at to see how the industrialised north and the less developed south should co-operate. Because I have stretched the indulgence of the Senate, I seek leave to have incorporated in Hansard proposals numbered 3, 5 and 18 contained in the recommendations of Global Challenge. Leave granted. The proposals read as follows- 3 Institutional reform should not delay policy changes in the existing agencies. The shocks suffered by the world trading system in the early 1980s, clearly illustrated the need for major changes. An international trade system, serving both North and South should: Be non-discriminatory between northern countries. Be dynamic, allowing Third World countries to participate in the gains from trade. Allow southern countries to adopt interim measures for planned trade, to develop their own industrial base and to pursue policies for social accumulation and basic needs. Provide security of access to northern markets. Include safeguard arrangements for effective appeal against abuse of planned or managed trade. Foster structural adjustment through mutually reinforcing programmes for recovery of spending, trade and payments. Meet the needs of weaker trading partners, through long-term credits to support their development deficits. Meet the needs not only of trade in manufactures, but also of trade in agricultural products and services, through price stabilization agreements. Provide an adequate framework in both accounting for and accountability of transnational companies, including joint development agreements. Be multilateral, while admitting the role of regional trading areas or common markets in both northern and southern countries. 5 It must be acknowledged that the United States-and several other members of the Group of Ten-have deliberately blocked progress in the multilateral system, on development issues, on trading reform, and on new programmes, agencies and initiatives. The US has not only threatened to withdraw from other agencies following its abandonment of its commitments to UNESCO, but has refused to negotiate on a range of issues in the international community. We welcome a dialogue with those in the United States who are attempting to pose realistic international policy alternatives for a new administration. 18 We propose a commitment to an additional spending of $100 billion a year to make possible a new decade of recovery and development. This is ten per cent of current global arms spending. We are not suggesting a naive formula by which the world would decrease its arms spending each year by a tenth in favour of spending for development. But we do advocate that the target for a global budget to recover income and trade, and restructure and redistribute resources, should, over ten years, be at least equivalent to current global arms spending. We should be spending a trillion dollars a year more than now on additional resources to sustain global development and transform the current global crisis. Senator REYNOLDS(Queensland-Minister for Local Government)(6.52) —This evening in the adjournment debate we heard from Senator Vanstone, Senator Peter Baume and Senator Childs. I must say that I was very disappointed, to put it mildly, with the comments of Senator Vanstone. However, I can understand her frustration in working from her shadow portfolio, given the record of her Party in relation to the status of women issues. I understand that because of that frustration she is ever seeking to draw attention to some issue that she thinks may put herself or her Party in a more favourable light. I think the manner in which she chose to do it this evening was totally inappropriate, and I think Senator Ray more than ably covered the attack on him. If indeed as Senator Vanstone suggests the three Ministers she mentioned were guilty of sexism, I am not quite sure why two of them over four years have consistently supported the Government in its efforts to recognise the important role of women in Australia and why they have both participated in developing women's policy both within Cabinet and within their own portfolios. Senator Vanstone —Who's the odd one out? Senator REYNOLDS —Senator Ray, of course, has just become a Minister and I know that he has also taken on that commitment within his Department because, as Senator Vanstone well knows, this Government has a strong record in relation to women's policy. It is quite ludicrous to accuse Ministers of not supporting women's policy when in the Budget document that has been produced one can look closely at the initiatives in every single portfolio-one can look at Senator Ray's portfolio, Senator Walsh's portfolio and Senator Evans's portfolio. I sympathise with Senator Vanstone because I can understand her frustration. There are many people within the Liberal Party and many women members of the Liberal Party who share her frustration. Dame Beryl Beaurepaire, who was mentioned in Question Time today, I am sure shares many of Senator Vanstone's frustrations. I do not think that it is fit and proper for Senator Vanstone to misrepresent Ministers in this place just because she happens to be frustrated about her party's current stance in relation to women's policy. I turn now to Senator Peter Baume's contribution. Senator Peter Baume tabled the Daniel Mannix memorial lecture, `Robert Menzies: In search of Balance'. I am sure that honourable senators will welcome this addition in Hansard and will look forward to reading it. Senator Childs made an important contribution and I will not attempt to summarise the important issues that he raised. One point that I noted that I think would have a great deal of support within the community was his highlighting that it was the greed of many of the free marketeers that is now having such a devastating impact on the world economy. He also talked about the escalation of the arms budget of the United States of America under the Reagan Administration, he highlighted the excessive budgeting of the United States in regard to Star Wars and he said that ordinary Americans were suffering as a result. Of course, the cost of maintaining the arms race is at the expense of a more stable economy. Senator Childs also commented on the impact of the New Right and the tremendous growth in the corporate sector debt which I know in current economic circumstances is of great concern to all of us. Question resolved in the affirmative. The PRESIDENT —Order! Before the Senate adjourns, I advise honourable senators that Estimates Committee D will meet in Senate committee rooms 1 and 2 at 8 p.m. Senate adjourned at 6.55 p.m. until 2 p.m. on Monday, 2 November. The following papers were tabled: Aged and Disabled Persons Homes Act- Certificate pursuant to paragraph 9 (1) (b), dated 28 October 1987. Determination pursuant to subsection 9 (3), dated 28 October 1987. Christmas Island Act-Ordinance 1987- No. 3-Juries. No. 4-Criminal Procedure Code (Amendment). No. 5-Supreme Court (Amendment). Customs Act-Regulation-Statutory Rules 1987 No. 244. Dairy Produce Levy (No. 1) Act-Regulations-Statutory Rules 1987 No. 243. First Home Owners Act-Regulation-Statutory Rules 1987 No. 240. Great Barrier Reef Marine Park Act-Regulations-Statutory Rules 1987 No. 247. International Organisations (Privileges and Immunities) Act-Regulations-Statutory Rules 1987 No. 241. Meat Chicken Levy Act-Regulation-Statutory Rules 1987 No. 242. Patents Act-Regulations-Statutory Rules 1987 No. 248. Trade Practices Act-Regulations-Statutory Rules 1987 Nos 245, 246.