Tuesday, 17 November 1987 The PRESIDENT (Senator the Hon. Kerry Sibraa) took the chair at 2 p.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that: Whereas the fringe benefits tax will place a costly and unfair burden on independent schools. The fringe benefits tax will have the most damaging impact upon schools which provide boarding accommodation for children as they are also required to provide accommodation for staff members to live in and supervise the boarders. Independent schools have limited resources and this additional impost will ultimately have to be passed on to parents, many of whom are already heavily committed to the financing of their children's education. Your petitioners therefore call upon the Parliament to recognize that the future of Australia depends upon the education given to its children and to exempt schools from the operation of the fringe benefits tax. Your petitioners as in duty bound will ever pray. by Senator Crichton-Browne (from 22 citizens). To the Honourable the President and members of the Senate in Parliament assembled, your humble petitioners showeth: 1. The proposed Australia Card will have a dramatic impact on the lives of all Australians. 2. Therefore your petitioners request a national referendum on the Australia Card Bill before the proposal is re-submitted to Parliament. As in duty bound your petitioners will ever pray. by Senator Crichton-Browne (from 162 citizens). To the Honourable the President and members of the Senate in Parliament assembled: The humble petition of the undersigned citizens of Australia respectfully showeth: That we the undersigned, having great concern because of the threat to personal freedom posed by the introduction of The Australia Card, call on the Government to withdraw the enabling legislation on the following grounds; 1. Expert opinion does not agree ``that a National Identificaton Card system for all Australians'' would necessarily ``combat tax evasion and fraud''. 2. Once established at enormous cost to the taxpayer, the system would be here to stay. 3. The potential for the invasion of individual privacy by persons unknown to the private citizen is so great as to be unacceptable to us. Your petitioners therefore humbly pray that your Honourable House will protect this society by rejecting the Bill outright; And your petitioners as in duty bound will ever pray. by Senator Bishop (from 18 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The Petition of the undersigned respectfully showeth that the proposed Australia Card is an intrusion into the rights of the individual in a free and democratic country. Your petitioners most humbly pray that the Government not proceed with this legislation. And your petitioners as in duty bound will ever pray by Senator Chaney (from 27 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of certain citizens respectfully showeth that: The Hawke Labor Government's I.D. card proposal is the most far reaching and intrusive piece of Australian legislation yet introduced, and that on all the evidence available it will not tackle in the most cost-effective and effective manner tax and social security fraud. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: Reject Labor's I.D. card proposal to prevent a gross waste of taxpayers' money and a significant infringement of civil liberties. by Senator Jones (from 15 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned Australian citizens shows that: An ID Card numbering system for all Australians would give future governments tremendous power to collect sensitive information and use it against us. Criminal elements could benefit by forging cards and documents needed to obtain them, or by illegally accessing the data in the system. The dangers are much greater than with current systems such as Medicare, as the Australia Card number could link so many different confidential records. The cost to government and private enterprise of implementing the ID Card would be enormous, outweighing any gains. Tax cheats can be stopped more effectively by better checks in the present system. Your petitioners therefore pray that you will reject the Australia Card Bill. by Senator Messner (from 572 citizens). To the Honourable the President and members of the Senate in the Parliament assembled: the humble petition of the undersigned citizens of Australia respectfully showeth: That we the undersigned whilst opposing tax evasion strongly reject the I.D. [Australia] Card as a means of increasing Government revenue. The I.D. Card, by its intrusive nature, will be an invasion of our historic rights to privacy and freedom for all Australians. No democratic nation has an I.D. Card with such detailed computer surveillance, which will be provided by this system known as PIN [Personal Identification Number] or SUI [Standard Universal Identification] where every Australian citizen will have a personal dossier on computer. Your petitioners therefore, humbly pray that your Honourable House will protect our privacy and freedom, and totally reject the ID [Australia] Card, which will not stop welfare fraud, nor deter organised crime, nor prevent illegal immigration, nor expose tax evasion. And your petitioners as in duty bound will ever pray. by Senator Bishop (from 1,024 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 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 call upon the Government to improve management systems within the Australian Tax Office and other Departments to crack down on tax evasion and fraudulent practices. As in duty bound your petitioners will ever pray. by Senator Crichton-Browne (from 69 citizens). 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 Harradine (from 115 citizens) and Parer (from 249 citizens). To the Honourable the President and Senators of the Senate in Parliament assembled: This petition of certain residents of the Australian Capital Territory shows: That we are totally opposed to the imminent construction of a highrise hotel on the parkland area between the Boulevard and the CAGA Centre and Akuna Street and Allara Street. Your petitioners therefore request that the development of this hotel not proceed and the further destruction of parkland and recreational areas within the city cease. by Senator Jones (from seven citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of the Australian Capital Territory respectfully showeth: That the present stallholders of the Belconnen and Fyshwick Retail Markets have made an offer of $2 million to the government for each of the markets, and although this matches the government's estimate of the markets worth, the offer has not been accepted. Failure of the stallholders to retain the markets could result in their sale to other commercial interests with the displacement of the present stallholders and increased costs being passed on to consumers. Your petitioners therefore pray that: The present stallholders of the Belconnen and Fyshwick Markets should be given the first option on the sale of the markets. And your petitioners as in duty bound will ever pray. by Senator Jones (from 15 citizens). Petitions received. Senator CHANEY(Western Australia-Leader of the Opposition) —I give notice that, on the next day of sitting, I shall move: That the following Bill be introduced: a Bill for an Act to amend the Conciliation and Arbitration Act 1904 to ensure compliance with directions of the Australian Conciliation and Arbitration Commission, and for related purposes. Senator MACKLIN(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate: (a) congratulates the drivers and backup crew of Sunraycer, which on Friday, 6th November 1987 won the 3,600 kilometre Solar Car Race from Darwin to Adelaide; (b) extends best wishes to all entrants in the race for their efforts and the promotion that they provided for the value and applicability of solar energy; (c) encourages the Federal Government to invest more resources for research into the viability and applicability of solar energy, and the development of technologies suitable to harness Australia's cheapest and most abundant source of energy; and (d) urges the Government to provide more incentives to industry to facilitate research into the most effective and efficient means of harnessing, storing and expending the sun's energy. Senator GARETH EVANS(Victoria-Manager of Government Business in the Senate) —Papers are tabled in accordance with the list circulated to honourable senators. With the concurrence of the Senate, I ask that the list be incorporated in Hansard. Leave granted. The list read as follows- 1. Treaties-Text of-(a) Five which have been signed by Australia and which require further treaty action by Australia before the treaty can enter into force; (b) two which have been signed for and ratified by Australia; (c) twelve to which Australia has become a party by signature; (d) six which Australia has accepted or to which Australia has acceded; and (e) one which has been ratified by Australia. 2. Commonwealth Grants Commission-Annual Report 1986-87-Pursuant to Section 25 of the Commonwealth Grants Commission Act 1979. 3. The Tobacco Growing and Manufacturing Industries-Industries Assistance Commission Report. 4. Razors and Razor Blades-Industries Assistance Commission Report. 5. Australian Water Resources Council-Minutes of the Twenty-Ninth Meeting-Perth-9 July 1987. 6. Australian Federal Police-Annual Report 1986-87-Pursuant to Section 67 of the Australian Federal Police Act 1979. 7. Higher Education: Recommendations for 1988-Commonwealth Tertiary Education Commission Report, October 1987. 8. Advance to the Minister for Finance-Statement on Expenditure for October 1987. 9. Qantas Airways Limited-Annual Report 1986-87. 10. Department of Industry, Technology and Commerce-Annual Report 1986/87-Pursuant to Sub-section 25 (8) of the Public Service Act 1922. Senator BUTTON(Victoria-Leader of the Government in the Senate) —by leave-I inform the Senate that the Special Minister of State, Senator Ryan, left Australia on 6 November for official duties in the United States of America. She will return on 24 November. During her absence I will be Acting Special Minister of State and Acting Minister Assisting the Prime Minister for the Status of Women and for the Bicentenary. Questions on these matters should be directed to me. Senator Tate will be the Acting Minister Assisting the Minister for Community Services and Health and will represent the Minister for Employment, Education and Training. Questions on these matters should be directed to him. Senator PUPLICK —My question is directed to the Minister for the Environment and the Arts. Is the Minister familiar with an article entitled `Eco-Defence' published in a recent issue of the Australian magazine Simply Living? Does the article describe in detail the practices of monkeywrenching and ecotage, both of these terms referring to the deliberate sabotage of plant and equipment by conservationists or for environmental causes? Is the deliberate spiking of trees, a practice which has already led to serious, indeed almost fatal, harm to American timber workers, one such practice described in the article? Does the article in fact describe in favourable terms many such techniques and advocate the greater use of drastic and direct techniques of ecological sabotage which could easily endanger lives? Is the author of the article one Simon Balderstone? Is Simon Balderstone a member of the Minister's personal staff? Senator RICHARDSON —I will answer the last part of the question first. Simon Balderstone is certainly a member of my staff, and a valued member at that. Over the years he has been the author of a great many articles on the environment. I am not familiar with the article in Simply Living although, judging by what Senator Puplick has just had to say, I should become familiar with it fairly quickly. I shall do so, and will then give a response to the detailed allegations that the honourable senator has made. However, I make the general comment that the deliberate spiking of trees is not a practice that I would at this stage endorse, and I have not endorsed any activity that causes danger to any people, whether working in a forest or anywhere else. I would have thought that no one on my staff would ever have exhorted anyone to indulge in an activity that could cause harm to a person. Senator PUPLICK —Mr President, I ask a supplementary question. Why did the Minister find it necessary to insert the qualification `at this stage' in his answer? Is the Minister not prepared to give an unequivocal assurance that neither he nor any member of his staff will now or at any stage in the future ever advocate the use of such practices, and will he make it abundantly clear that he finds it incompatible for someone to be both a member of his staff and an advocate of those sorts of practices? Senator RICHARDSON —I make it abundantly clear to the Senate that at no stage would I ever endorse, nor, I hope, would any member of my staff endorse, any activity that can cause harm to a person. I thought that I said that clearly enough. Senator BEAHAN —My question, which is to the Minister representing the Treasurer, relates to the effects of the Government's crackdown on taxpayer subsidised lunches on employment in the restaurant industry. Can the Minister provide any Australian Bureau of Statistics (ABS) figures on employment in the restaurant sector? Do these figures indicate a contraction in employment in the sector in the two years since the Government's crackdown? Senator WALSH —The figures do not indicate any decline in employment in the restaurant sector. Indeed, the figures indicate a very major increase in employment. I believe it is still the case, unless it has changed very recently, that the ABS does not publish categories of employment specifying or restricted to restaurants but it does have two related categories-restaurants and hotels, and restaurants, hotels and clubs. As at August 1985 employment in restaurants, hotels and clubs totalled just over 214,000. That figure had grown to 238,000 by August 1986 and to 255,000 by August 1987. So there has been an increase in employment in that category of more than 19 per cent. Separate data, which is available on request but not normally published, for the more restricted category of restaurants and hotels shows employment at 176,000 in August 1985, the figure increasing to 188,000 in August 1986 and 212,000 in August 1987-an increase in that category of just over 20 per cent, as distinct from 19 per cent. It is not conceivable that an overall growth in employment in the hotels and restaurants category of above 20 per cent could have been achieved without a very large increase in the restaurants category although, as I have said, that data is not specifically available. Indeed, if the abolition of the free boozy lunch-which the Opposition remains committed to restoring-did have any effect on the demand for hotel and restaurant services it may even have been a good thing because I understand that as a result of the very heavy increase in foreign tourists coming to Australia the capacity of hotels and even some restaurants is being pressed hard by the demand and tourists may have been crowded out, which is obviously not good for the country as a whole. The final point I want to make is that these figures show just how wrong the Opposition was yet again. Senator Messner, just over two years ago, used to come in here with assertions day after day, week after week that the restaurant industry was headed for disaster because of the imposition of the fringe benefits tax. He was as wrong about that as he was about the effect of a sales tax on wine and indeed as wrong as he and the Opposition in general are about almost every prognostication they make about economic outcomes. Senator PUPLICK —My question is to the Minister for the Environment and the Arts. In the final determination for World Heritage boundaries in north Queensland, will the final boundaries either include or make provision for the subsequent inclusion of buffer zones? Senator RICHARDSON —As Senator Puplick and all other honourable senators would be aware, a great many people in the Department and elsewhere have had a chance to look at the boundaries. There was provision for a number of forest areas which were not rainforest and cleared areas around rainforest areas which could have acted as buffer zones. Those boundaries are currently under review and I hope to be in a position to make a submission to Cabinet on them within the next couple of weeks. Obviously, I shall inform the Senate as soon as that is done. I would not, of course, be prepared to discuss those boundaries in any detail until after the Cabinet submission has been made. Senator PUPLICK —Mr President, I ask a supplementary question. The Minister having failed to assure the Senate that the boundaries would not include buffer zones, I ask him: Is he aware of a letter signed by Chris Eccles of the rainforest unit addressed to a bank manager which says in part, `I am also writing to advise that the proposed boundary does not include buffer zones nor will any be included'? Is that still the Government's position? Senator RICHARDSON —If there is any need to clarify my earlier remarks I will do so but I would not have thought that there was. There is no intention on the part of the Government now to locate buffer zones and put them within the boundaries. In respect of the original boundaries, a number of different areas have been preserved around the rainforest. If you like, they can act as buffer zones but no study is being made to include buffer zones, nor was one made. All we have done is seek to draw a boundary which will give maximum protection to those magnificent rainforests, and I think we have done so pretty well. Senator CROWLEY —Can the Minister for Finance and Minister representing the Treasurer say what would be the macroeconomic effect if Australia were to adopt the approaches to health insurance and delivery of hospital and medical services proposed by the New South Wales Australian Medical Association (AMA) branch President, Bruce Shepherd, and the shadow Australian health Minister, Wilson Tuckey, in particular to abandon the community rating system for health insurance, abolish Medicare and move to what Dr Shepherd describes as a `free enterprise' system of doctors charging `what the market will bear'? Senator Peter Baume —He is not President of the AMA. Senator WALSH —I understand Dr Shepherd is the President-elect of the New South Wales Branch of the AMA. I am not sure when he actually becomes the President. It is very difficult to answer that part of the question which refers to the shadow Minister for health because the report of his views in the Australian on 5 November-most of which I should mention was in direct quotations-shows Mr Tuckey's comments to be riddled with internal contradictions and nonsensical statements. As an example of the latter, he is quoted as having said: Community rating is a dream for these companies because they can be selective. Community rating, by definition, of course, is a law, a principle, or a concept-whatever one wants to call it-which is enshrined in the legislation which requires health insurance funds to charge the same premium to individuals and to families, regardless of their health record or the size of the family. The effect of that, it is true, and it is fairly obvious, is that the relatively healthy subsidise the relatively unhealthy. Single people and smaller families or childless couples -childless couples in particular-subsidise the health services of the health insurance premiums of people who have children. The more children they have, the higher the level of subsidy is. I thought that that was supposed to be the sort of policy of which the Opposition was in favour. Mr Tuckey explicitly said, `The first thing I want to walk away from is community rating'. As an example of the nonsensical statements-and this is not a direct quote-he is reported as having said: It would be compulsory for private insurers to accept the chronically ill young at the same premium rates as healthy young people, so long as they had previously been insured. That, of course, is not entirely consistent with walking away from the community rating principle. More importantly, it does not explain how young people first become insured. A child, presumably, is not expected to insure himself or herself-certainly not from the moment of birth. Senator Sheil —The parents-- Senator WALSH —Thank you, Senator Sheil. The parents may or may not be insured. If Senator Sheil has helped to clarify that point, I am grateful. Apparently, what it means is that those children who were insured as part of their parents' insurance will, when they reach adulthood, however that may be defined, be entitled to cover, under a community rating principle-from which Mr Tuckey has already walked away, which he said in a different place-regardless of whether or not they are healthy. If, however, as Senator Sheil has clarified the policy, children whose parents were not privately insured happen to be unhealthy they will pay a penalty premium, on the ground, I suppose, that the children should be punished for the sins or shortcomings of the parents. I add that Mr Tuckey was promptly dumped the next day by the Leader of the Opposition, who realised how politically catastrophic it would be to push the abandonment of the community rating principle. It is clear, notwithstanding all those shortcomings, that although Mr Tuckey is somewhat more incoherent than other Opposition health spokespeople and Dr Shepherd, his views are no less predicated on ideological prejudice. The thread which is common to Dr Shepherd, to Mr Tuckey and to the Opposition in general is that of allowing private insurance and abandoning any limit to private insurance-allowing up to 100 per cent cover-and allowing people to insure for medical expenses, no matter how high they might be or no matter how high the payment for any individual service may be. The consequence of that, as anybody who knows anything at all about the operation of markets or of adverse selection and moral hazard in insurance would know, of course, inevitably would be a huge blow-out in the total cost of health services in the country. Senator MACKLIN —I refer the Minister for Industry, Technology and Commerce to recent statements and proposals by the Federal Government to develop flexible and effective guidelines for offset participation by overseas owned companies. What steps have been taken to ensure that offset programs developed for Australia are truly national and cohesive in their approach and design, rather than fragmented, parochial efforts which reflect the interests of State governments and not the national economy and interest? What is the status of the discussions between the Commonwealth and the States and, in particular, the status of present discussions between the Commonwealth and the Victorian Government, to develop a national offsets policy which reflects genuine national interest criteria and a need for a uniform and rational approach to this issue? Senator BUTTON —In March 1986 the Commonwealth Government revised the previous offsets policy. At that time it indicated that it would be appropriate to review the new guidelines after a period of 12 months. That review, involving State and Federal government departments and other interested parties, has been undertaken. A number of changes to the guidelines are proposed-I do not think I need to go into those-and the Government is hopeful of obtaining a national civil offsets program which will be implemented as of 1 March 1988. I take the point which is contained in Senator Macklin's question about the undesirability of fragmentation in offsets policy and the primacy of the national economic interest in trying to provide a uniform offsets policy. It is with that in mind that the Commonwealth Government is working towards the provision of uniform guidelines by 1 March 1988. That matter will be discussed and, hopefully, a conclusion will be reached at the Commonwealth-State industry Ministers conference, which I think takes place on the first two days of December. I am unable to say what the precise status of the discussions with the Victorian Government is at this time. I know that State governments approach changes of this kind sometimes with a degree of apprehension. That was certainly so when the national industry extension service was put in place. Ultimately, agreement was reached on that undertaking which I think has proved to be not only a cost saving measure but also a success. I anticipate that there will be some apprehensions about the national guidelines and the agreement on the national civil offsets program to be implemented by 1 March 1988. Officials of my Department currently are having discussions with the various State governments in order to try to resolve any difficulties which they have. Let me say by way of preaching, if one likes, as distinct from providing information, that it is of fundamental importance that we get agreement on these issues with these States if we are not to have fragmentation. It is particularly important that we get agreement in respect of a number of Commonwealth Government initiatives relating to the information and high technology industries and that that agreement does not reflect parochial interests but rather national interests. Senator McKIERNAN —My question, which is also directed to the Minister for Industry, Technology and Commerce, concerns the recent announcement by Mr Lang Hancock that he has recently completed negotiations on a counter-trade or barter agreement with the Government of Romania under which he could supply iron ore to that country in exchange for a range of manufactured goods. I ask the Minister: Firstly, is he aware of the agreement? Secondly, is he aware of concerns voiced by a number of organisations, including the West Australian Trades and Labor Council and the Heavy Engineering Manufacturers Association, about the proposal? Thirdly, is he aware of statements by the Premier of Queensland promoting similar arrangements concerning coal? Fourthly, has the Department of Industry, Technology and Commerce examined these proposals or otherwise explored the impact that such proposals for counter-trade may have on the revitalisation of Australia's manufacturing industry? Finally, will the Minister convene a meeting of all parties impacted by the presently proposed barter deals, as requested by the Heavy Engineering Manufacturers Association? Senator BUTTON —I am certainly aware that Hancock Mining has a counter-trade arrangement which would allow Australian iron ore to be supplied to Romania. I am certainly aware of the representations that have been made by the various bodies to which Senator McKiernan referred, particularly the Heavy Engineering Manufacturers Association and the West Australian Trades and Labor Council. Under the agreement between Hancock Mining and the Romanians, 53 million tonnes of iron ore would be supplied over a 15-year period starting late next year. I do not have access to the full details of these proposed private commercial transactions. To the best of my knowledge, the details are yet to be worked out between the parties. However, I am informed that the Mount Newman Mining Co. Ltd, which is involved with Hancock Mining in the plan to supply iron ore to Romania, might take some Romanian equipment by way of barter exchange. As I said, I am also aware of the concerns which have been expressed and the announcement made by the Queensland Premier, prior to his announcement of his retirement next year, that he was an enthusiastic proponent of development markets for Queensland coal through counter-trade arrangements. My Department and the Australian Trade Commission, Austrade, which now falls within my portfolio, have been following these developments closely. Their examination of the issues naturally relates to my concern that the promotion of exports of Australian raw materials through counter-trade might affect the Government's effort to encourage the revitalisation of Australian manufacturing. The arrangements under consideration are private commercial transactions, the full details of which have not yet been settled between the parties and about which my Department could not at this stage expect to be fully informed. I assure the Senate that we are keeping an eye on the matter. Senator McKiernan finally asked me whether I would convene a meeting of all the parties that might be affected by the deals. I understand that the Premier of Western Australia will conduct a study to examine the costs and benefits of counter-trade and the arrangements being set up by Hancock Mining with eastern Europe. It seems to me that at this stage interested parties might do best to concentrate their efforts on contributing to this inquiry and analysis. Of course, at the same time, my Department and Austrade will continue their monitoring and analysis of information about the deals as well as monitoring the interests and concerns of unions and business groups that might be affected. Senator PUPLICK —My question is addressed to the Minister for the Environment and the Arts. Since the purport of the Minister's previous answer to my earlier question on World Heritage listing was that formal buffer zones will not be required, I ask whether he is aware that section 14 of the operational guidelines for the implementation of the World Heritage convention adopted by the United Nations Educational, Scientific and Cultural Organisation in January 1987 requires that buffer zones be provided and that Mr Bernd von Droste, the Director of the Division of Ecological Sciences at UNESCO, has written: The World Heritage Committee will require buffer zones to be provided to protect the intrinsic merit of the Queensland rainforest if formally nominated. Is it the Government's intention deliberately to submit a flawed nomination to Paris to get itself off the hook or does the Minister claim that Mr von Droste is in error in stating that the World Heritage Committee will require buffer zones-or is the Minister being less than frank with the Senate? Senator RICHARDSON —The only claim I would make is that Senator Puplick should listen to the answers more clearly and more carefully. Senator Boswell —I am listening to the answers and you are getting into deep trouble. Senator RICHARDSON —Finally we have heard from Senator Boswell in Question Time about north Queensland. He has not been game to ask a question about it but we long for that. I get back to Senator Puplick. I thought that I had explained that, in preparing the boundaries, the Government had not declared formal buffer zones but had included within the boundaries a great many areas of sclerophyll forests, wet and dry, and cleared areas which could serve as buffer zones. I am more than confident that the final boundaries will satisfy all the problems that Senator Puplick has just raised. More importantly, the bank's concern, as expressed in the original question, really is a matter of saying, `Will there be a boundary for the World Heritage area and outside that will there be a buffer zone?'. The answer to that, clearly, is no. Senator PUPLICK —I ask a supplementary question. The Minister concluded his answer by saying in relation to the question, `Will there be a buffer zone?', that the answer is no. I draw his attention again to the specific letter from the Director of the Division of Ecological Sciences of UNESCO which says: The World Heritage Committee will require buffer zones to be provided to protect the intrinsic merit of the Queensland rainforest if formally nominated. I ask the Minister: Does he now repeat that there will not be formal buffer zones? Senator RICHARDSON —I find this exchange increasingly tiresome, but nonetheless I will bat on. I have said that there is no need to have buffer zones declared outside the area that will be within the final boundaries and I have said that, within those final boundaries, there are areas which will serve as buffer zones. I have said this four or five times, and I am not sure how many times I should say it, but I do hope that, when asking the next question on this-given that we have had three today, or even four-Senator Puplick and the Liberal Party of Australia will say whether or not they support the nomination of the wet tropics rainforest instead of running and hiding at every opportunity. Perhaps Senator Puplick can tell us where he stands. Senator MAGUIRE —My question is to the Minister representing the Treasurer. Has the Government been influenced to change its fiscal policy settings by calls yesterday from a leading businessman for a mini-Budget to produce a $3,000m surplus? If so, what factors persuaded the Government to change its policy settings? Senator WALSH —I assume that the leading businessman referred to is Mr Elliott, the President of the Liberal Party of Australia. I do not think that Mr Elliott's comments would have much influence on the Government-they certainly do not have much influence on me, and for that matter they do not seem to have much influence on the Liberal Party, either. If the Liberal Party takes no notice of Mr Elliott, I do not see why the Government should take any notice of him. In making this comment Mr Elliott has again done what he has said that he would not do, which is enter into the policy debate in a political way. Today's editorial in the Age refers to Mr Elliott's statement that the Liberal Party has plenty of chronic underachievers in State seats. One would have to agree with that judgment because one can see so many of those chronic underachievers across the aisle in this chamber. They will need to have safe seats if they are to survive Mr Elliott's recurrent incursions into the policy debate. The call for a $3 billion surplus is quite incompatible with the policy which the Opposition put to the electorate just a few months ago, which had something in it called a `balanced Budget'. However, that was predicated on a whole lot of unspecified expenditure cuts and blue sky windfall revenues arising from incentivation and better enforcement of the Income Tax Assessment Act. It is also incompatible with such proposals as providing for a couple of billion dollars worth of personal tax cuts in this year; abolishing the assets test, at a cost of $70m this year; and abolishing the fringe benefits tax, the entertainment tax, the capital gains tax and so on. All of those measures were a part of the Opposition's election policy. The Opposition would not have been able to produce anything like a balanced Budget, even taking its own shonky figures as being accurate, let alone one with a surplus of $3 billion. If Mr Elliott has any specific suggestions as to how an additional $3 billion could be cut off government expenditure, I would welcome those suggestions. I certainly do not say that I would act upon them or advocate that the Government act upon them, but I would welcome them just as I would welcome that list of expenditure cutting proposals which Mr Howard promised the Australian Broadcasting Corporation three weeks ago, but on which he has welshed. Senator CHANEY —My question is addressed to the Leader of the Government in the Senate, in that capacity and in his role as Minister for Industry, Technology and Commerce. The Minister will recall that his colleague Senator Walsh, in a speech made in August, expressed grave concern that the Government had not been moving as quickly as it should have in terms of economic policy adjustment. I note that the Minister, referring more specifically to industry policy, said in a speech on 6 November: The question can legitimately be asked whether the pace of adjustment has been sufficiently rapid, and there is no doubt that sectoral plans developed in 1983, for example, in a totally different economic environment, require further adjustment. I ask: Has the pace been sufficiently rapid, in terms of both industry specific proposals and macroeconomic policy? What sectoral plans does the Government intend to adjust and in what respect? Senator BUTTON —The question whether the pace of adjustment has been rapid or not is a matter for some very subjective judgment. I suppose governments have to make subjective judgments about those things. The point I was simply making was that in the economic context of 1983 when the country was in deep recession, judgments were made which, with the wisdom of hindsight and the enormous improvements in the competitive strength of the Australian economy which have come about under this Government's stewardship, may not seem to be-- Senator Chaney —Do you mean through devaluation of the dollar? Senator BUTTON —I did not mean that. Senator Chaney interjected and asked whether I meant as a result of the devaluation of the dollar. Yes, in part; yes, as a result of the implementation of the Government's wage fixing policy and a wide range of measures which have enhanced the competitiveness of Australian firms, those things, in addition to the devaluation of the dollar, have been important in the changed circumstances which have come about. But insofar as the industry's specific plans are concerned, all I can say is that at the moment the steel industry plan, which was introduced in 1983 in the context to which I have referred, will terminate at the end of December 1988. There are no plans to change that. The motor vehicle plan, which was introduced in 1984, is currently subject to a mid-term review. The only other sectoral plans which might be of relevance are those relating to shipbuilding, where there is a progressive phase-down of bounty, which is the only assistance offered to the shipbuilding industry. That phase-down has been quite steady and firm. Let me just say in relation to the textile, clothing and footwear plan that the Government made that commitment in 1986. There would need to be a very considerable reflection about what alterations, if any, might be made to that plan in the current context. Senator CHANEY —Mr President, I ask a supplementary question. I thank the Minister for his answer but I ask him in light of that answer: What did he mean when he said, `There is no doubt that sectoral plans developed in 1983 require further adjustment'? To what plans was he referring, or is the statement meaningless? Senator BUTTON —The statement is not meaningless at all. I said in my answer to the question which the honourable senator originally asked that the motor vehicle plan was currently subject to mid-term review and that the steel plan would expire, in spite of some requests that it continue. I use those by way of illustration of what I was saying on that occasion. Senator BLACK —My question is addressed to the Minister for Justice and Minister representing the Attorney-General. Has the Minister seen weekend Press reports referring to requests from the Queensland Government for amendments to the Income Tax Assessment Act and the Telecommunications (Interception) Act designed to broaden the powers of the Fitzgerald Commission of Inquiry into Possible Illegal Activities and Associated Police Misconduct? What action does the Federal Government intend to take in response to these approaches from the Queensland Government? Senator TATE —I have seen some weekend Press reports referring to requests from the Queensland Government for amendments to the Income Tax Assessment Act and the Telecommunications (Interception) Act which were said to be designed to broaden the powers of the Fitzgerald inquiry. At present, no formal request has been received from the Queensland Government, but it is true that Mr Fitzgerald has approached the Federal Attorney-General with a view to obtaining amendments to the Income Tax Assessment Act and the Telecommunications (Interception) Act to aid him in his work. I understand that that approach by Mr Fitzgerald was concurred in by the Minister for Police, Mr Gunn. With the support, therefore, of the Queensland Government one might say that an approach has been made by Mr Fitzgerald to the Federal Government. That request is being considered with extreme urgency. In light of Mr Fitzgerald making that request, I can assure honourable senators that the Cabinet will be giving attention to his request probably later this afternoon. Last week Senator Black asked in general terms whether the Government was prepared to amend the Income Tax Assessment Act to provide for access by the Fitzgerald inquiry to tax records. I indicated then that this Parliament had seen fit to make an exception to the general rule to enable the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union and other Commonwealth royal commissions to have such access in particular circumstances. I believe that Mr Fitzgerald's approach to the Commonwealth Government will be favourably considered. Senator Messner —Mr President, I ask the Minister to table the document from which he has just read. The PRESIDENT —Will the Minister table the document? Senator TATE —I will. Senator MESSNER —I refer the Minister for Transport and Communications to a letter of 18 March this year from the former Minister for Communications, Mr Duffy, to the Chairman of the Australian Broadcasting Tribunal, Miss O'Connor, requesting certain confidential information on the financial performance of every commercial radio licence in Australia for the years 1980-81 to 1985-86. Is the Minister aware of Mr Duffy's undertaking to the Tribunal, in the course of writing to Miss O'Connor, that the relevant information `will not be published or divulged in any way that would enable identification of any individual station's advertising revenue'? Will the Minister explain why he breached this undertaking by divulging the relevant revenue amounts in the case of the Gold Coast, Geelong, Gosford and Shepparton AM radio stations in the course of announcing the decision to introduce an establishment fee system for new FM radio licences? Does the Minister consider that such information is commercially sensitive and would not have been provided by the Tribunal in the absence of an undertaking by Mr Duffy not to publish or divulge the information in any way, given the requirements of section 124, sub-section (5), of the Broadcasting Act? While the Government is proposing to amend section 124 of the Broadcasting Act to allow the Tribunal to provide the relevant information to the Minister, does the Minister agree that he breached Mr Duffy's undertaking in the first place? Senator GARETH EVANS —I was certainly not aware of any such undertaking by Mr Duffy when making clear publicly the terms of the new establishment fee proposal and describing the financial implications of it for the areas in question. I have only just had brought to my attention the particular matter that Senator Messner has raised. I have not yet had an opportunity to see for myself what the terms of that original communication might have been and to satisfy myself that what I did say publicly may arguably have been at odds with it. The particular matter that I put into the public domain was simply an estimation of what the establishment fee, in round figures, would be for each of the areas in question pursuant to the statutory formula which is proposed now to apply and which, of course, will be related, in a quite complex way, to an estimate of what the market revenue is for the service area in question. It is a necessary corollary of going down the route of an establishment fee of the kind we are proposing that there be a nexus to the existing revenue capacity of the market in question. As Senator Messner has pointed out, the legislation now before the Parliament will establish procedures for getting that information into the public domain and giving it a firm statutory base. Under the circumstances, I think it would be well understood by all those in the radio industry what the basis of my announcement was and it would be well understood what the circumstances were that led me to identify the dollar amounts in question. Senator MESSNER —I ask a supplementary question, Mr President. Are we therefore to believe that the answer to all questions was yes? Senator GARETH EVANS —No, Senator Messner is not entitled to make any such assumption. I made it clear that I have not yet seen the terms of Mr Duffy's original communication, such as it was. Accordingly, I am not in a position to verify that anything that I may have said was in any way at odds with it. I am simply explaining the context in which I made my statement. Most people in the broadcasting industry were most anxious for me to make the statement in order to quantify the implications. In fact, Senator Messner was most anxious that I make some statement, and he vigorously pressed the cause with me, of what the dollar implications of this would be. Out of the goodness of my heart, I told him. Being filled with an abundance of goodness of heart, I told the community at large and the industry as well. Now Senator Messner comes in here and churlishly castigates me for it. He will be seen for the churl that he manifestly is. Senator FOREMAN —My question is to the Minister representing the Minister for Social Security. I draw the Minister's attention to an article in the Adelaide News of yesterday entitled `Pensioners treated like animals: report'. According to that article, an internal report conducted in the Department of Social Security showed that the clients were treated in some instances with little or no respect at all. Can the Minister assure the Senate that, if the report is accurate, the Government will do all in its power to see that all Department of Social Security clients are treated with respect and dignity? Senator RICHARDSON —I am aware of the article that appeared in the Adelaide News and in a number of other papers; it got a pretty big run around the country. I have not seen a copy of the letter which the person concerned wrote; that is an internal matter for the Department. The allegations about the treatment of Department of Social Security clients were not based on any research, review or report. Rather, these gross distortions happen to be the opinion of one person, in this case a social worker for the Department. Therefore, they are one officer's perceptions about what went on in one office, presumably at one point in time, and they cannot be taken as indicative of general staff attitude. I am sure that all honourable senators will be aware that the Department of Social Security employs some 17,000 people in 220 offices throughout the country. That makes it one of the largest office networks in Australia. It services thousands of people every day. Since this Government came to office, we have attempted to ensure that each one of the 2.7 million pensioners and beneficiaries has adequate rights in terms of social security payments. I assure the Senate that it is Government policy that Social Security clients be treated with dignity and respect. Since this Government came to office we have taken a number of steps to make sure that this is so. During the last four years the Government has introduced a new approach to administration. For the first time it has instilled into staff the values of sensitivity and respect for clients. In 1985 a new departmental charter was introduced at the Minister's direction which reflects Labor's concern to improve service to clients. The Department's charter reads as follows: To deliver social security entitlements and services in accordance with the policies of the government in a fair, sensitive, helpful and friendly manner with efficient and effective use of resources. The Government has ensured that this new charter is displayed prominently in Social Security offices throughout the country and that it has been brought to the attention of staff. The Government expects the charter to be enforced; the staff understand that. New training programs have been introduced to teach staff the skills necessary. Although isolated incidents may occur-with a staff of 17,000, obviously there will be some-all Social Security clients and all honourable senators can be assured that the clients will receive the best possible treatment and service. Senator NEWMAN —My question is directed to the Minister for Justice. Recently in the Senate the Minister clearly acknowledged that corruption in State police forces could threaten the security and, therefore, the success of National Crime Authority (NCA) operations. The Minister would also acknowledge that, given the case of police commissioners Allan and Lewis in New South Wales and Queensland and the position of the New South Wales Minister for Corrective Services, the danger of corruption does and could exist at the highest police force and political levels. Will the Minister recognise that the suggestions he has made to Mr Justice Stewart are merely tinkering with the problem and are, therefore, inadequate? Will he take immediate steps to review the fundamental mechanisms for informing, approving and/or vetoing NCA targeting and operations? Will he acknowledge that, without this step, the NCA remains fatally flawed? Given the fact that there was no reference to the NCA of the corruption currently the subject of the Fitzgerald Commission of Inquiry into Possible Illegal Activities and Associated Police Misconduct, is it not naive and stupid to believe that, when corruption does occur at the highest level, there could be any hope of a reference to the NCA as such a reference would be compromised from the start? Senator TATE —There was so much in that question that I do not know that I have managed to make a note of all the elements of it. But I reject that statement in the early part of Senator Newman's question that my letters to Mr Justice Stewart and Commissioner Grey concerning the fresh approach to the question of how one might appoint liaison officers with State police forces to understand the operations of the NCA within their jurisdiction represented a mere tinkering with the problem. To say that that is merely tinkering with the problem rather than trying to deal with it in a fundamental way is, I think, unfair. Until I receive a response from Mr Justice Stewart-I have not yet had a response from him to my letter-I would not assume that he would share the view of Senator Newman, apparently, that my proposal that the National Crime Authority have a more clear process of coming to a mutual agreement with the State police force concerned as to the person to fulfil the role of liaison officer is a mere tinkering with the problem. I think that it is a very important aspect of the successful safeguarding of the NCA's operations. I expect that when we come to the meeting of the Inter-governmental Committee of the National Crime Authority next Thursday week in Hobart and the meeting of the Australian Police Ministers Council the following Friday in Hobart we will be in a position to come up with, if not a formal promulgated set of rules to govern that relationship between the NCA and State police forces, certainly a better understanding-perhaps a tacit but well understood means of dealing with this very sensitive and delicate question. Obviously, one would not want to have such a formal structure of coming to mutual agreement as to the person to fulfil the role of liaison officer that any suspicion that was held by the NCA would, by being formally communicated in a very structured way, alert that person to the fact that he was possibly under surveillance and under suspicion. It is a very sensitive and delicate matter. It is also very fundamental and is not a question of merely tinkering with the problem. As to the general question of the Inter-governmental Committee and its role regarding the granting of references to the National Crime Authority: as I recall it, the ultimate safeguard for the NCA in relation to State governments which might, as is implied in the question, because of their own corruption be disinclined to give a reference to the NCA which has been sought, is that the National Crime Authority can make that known to the Parliament. I do not have the National Crime Authority legislation in front of me, but, as I recall it, there are provisions in the legislation passed by this Parliament-provisions which were intentionally put into that legislation-that if the NCA is refused a reference it can make that known to this Parliament. In that way, it becomes a matter of public record and leads to the sort of questioning and pressure in the political domain which will bring such a corrupt government, refusing to acquiesce in a reference sought by the NCA, to account. In the seven references that have been sought so far, there has been no question at any stage of any of the State governments concerned, co-operatively with the Commonwealth Government, refusing to co-operate in the fullest way with the National Crime Authority in the granting of those references. I expect that that will continue. In fact, we will be looking at a new reference at the meeting on the afternoon of Thursday week in Hobart. I would expect that that will be approached with absolute integrity. As I said, the runs are on the board in that regard. Senator NEWMAN —Mr President, I have a supplementary question. I asked the Minister whether it was not naive to think that when corruption does occur at the highest level there could be any hope of a reference to the NCA as such a reference would be compromised from the start. I am not questioning whether there have been any references knocked back, but is it not naive to think that the NCA would even propose a reference if it believed it would have to go through compromised and corrupt hands? Senator TATE —I understand what Senator Newman is driving at, but I do not believe that, if Mr Justice Stewart and the two other members of the Authority came to the conclusion that ordinary law enforcement methods had failed in relation to a particularly serious form of criminal activity harming this nation and its citizens, they would not be able to find a way of putting a reference to the Inter-governmental Committee and that that reference, having been put, would not put such pressure on the State government concerned that it would comply. These are all matters of great delicacy and I would acknowledge the point that has been made by Senator Newman, but from my workings with the NCA over the last five or six months, I believe that its strength is such that it could deal with the particular misgiving that she has. Senator ZAKHAROV —I ask the Minister for Local Government whether she is aware of an article by Senator Stone in the Sydney Morning Herald on 19 August 1986 in which he claims: . . . the Commonwealth Government has no good reason to be involved in local authority finances . . . The article then proposes drastic cuts to Commonwealth payments to local government. What would be the effect on local government activities of Senator Stone's proposal that $300m be cut from their grants? Senator REYNOLDS —I thank Senator Zakharov for her question. This issue was first raised by my colleague Senator Walsh, who is, of course, a great supporter of local government and who is very concerned-- Honourable senators interjecting- Senator REYNOLDS —Senator Walsh, just 10 days ago, raised this issue in this place, and was very critical of Senator Stone for daring to suggest that local government could be cut by such a drastic figure. What would a cut of $300m mean to Australian local government? It would reduce Commonwealth funding to local government by more than one-half and that, of course, would have a dramatic effect on local government throughout the country. We could expect that rates would double, unemployment would grow dramatically and there would be a very serious situation. Let me take a lighthearted look at what Senator Stone's proposal would mean. Perhaps all the lights in the cities of Australia would go out. Street lighting would depend-- Opposition senators interjecting- Senator REYNOLDS —Perhaps street lighting would have to be paid for by the consumer on a quarterly basis. If one had not paid one's street lighting account-just like a Telecom account-maybe one's street lights would go off. In terms of funding for sewerage, no doubt the old-fashioned term `spending a penny' would take on a totally new meaning. I am prepared to accept that Senator Stone did write this article over 12 months ago, before he became a senator and before he had the opportunity to hear from local councils throughout Queensland. I am sure that Queensland local councils will be very keen to discuss Senator Stone's proposal with him and I suggest that they all write to Senator Stone to ask him to justify this quite draconian measure of cutting local government expenditure by half. Furthermore, I think Senator Stone had better talk to his colleague Mr Ian Cameron, who is the shadow spokesperson on local government. I am sure he would be very concerned because he would effectively be out of a job in Queensland if he had to try to sell Senator Stone's proposal. Mr President, I am a very reasonable person and I am prepared to accept that Senator Stone, as a new senator, does have a lot to learn, and perhaps he does have a lot to learn about local government. Sir Joh Bjelke-Petersen said recently that he was surprised about some statements that Senator Stone had made which criticised the good Queensland Premier. He said that, after all, Senator Stone did get into the Senate holding on to Flo's skirt. Senator Robert Ray —Dress. Senator REYNOLDS —Dress. Thank you, Senator Ray. I am prepared to be yet another Queensland female senator who will assist Senator Stone. Senator Puplick —Whose skirt did you get in on? Senator REYNOLDS —I am not offering Senator Stone my skirts in any sense, but I am offering to take him under my wing to teach him about local government. I am sure that officers of my Department would welcome the opportunity to give him some very serious instruction about the importance of local government and the importance of Commonwealth support for local government programs. Furthermore, as I have just returned from the 1987 National Awards for Innovation in Local Government, I would like to extend an invitation to Senator Stone to come to those awards with me next year so that he can meet with a number of local councillors. There were 400 entries, which shows that local councils are very interested in innovation and in cost-effective management. I am sure they would welcome the opportunity to discuss some of Senator Stone's reactionary views on local government. Firstly, I invite Senator Stone to take advantage of my offer to find out more about local government funding in Australia and, secondly, I extend an open invitation to him to come to the National Awards for Innovation in Local Government next year. I would welcome that opportunity, and I am sure local government would welcome the opportunity to tell Senator Stone what it is doing and why it cannot afford to lose $300m. Senator HILL —My question is directed to the Minister representing the Minister for Foreign Affairs and Trade. I refer to comments of the Foreign Minister on the Walsh Report on 12 November 1987. When speaking of the payment former Foreign Minister Diro of Papua New Guinea (PNG) acknowledged he received from General Murdani, head of the Indonesian military, to help with electoral matters, Mr Hayden said: What takes place, however, between Indonesia and PNG is a matter for bilateral concerns and exchanges and not for Australia. I ask the Minister: Is not the stability of the PNG Government a matter of concern to Australia? Is not the statement of the then Acting Foreign Minister Matiabe, who remains a member of the Government of PNG, that it was normal for PNG political leaders to receive funds from foreign interests of concern to Australia? Is not the subsequent statement of Mr Diro, who, I remind the Minister, is a former head of the PNG military, that PNG was ripe for a military coup of concern to Australia? Now that the Foreign Minister and, finally, the Defence Minister have visited PNG, will the Minister advise the Senate what actions the Australian Government will take towards supporting stable government in PNG or are we now, under this Government, as impotent in influencing events in PNG as we were in Fiji? Senator GARETH EVANS —Australia's relations with Papua New Guinea are of acute importance and significance to both countries. That is fully acknowledged and is coming to be articulated in a new way with the treaty of mutual understanding arrangements presently being put in place. I do not think that anything that has happened in recent times in any way puts at risk that relationship. What would put it at risk, were we to go thundering around like a herd of bulls in china shops in the way that Senator Hill seems to propose, would be our commenting on everything and anything that happens in regard to our neighbour and, in particular, making strong views known on matters that are obviously of sensitivity and that are being dealt with manifestly very effectively within that country's own political system. The reference to Mr Matiabe still being a member of the Government fails to make the point, which I would have thought was far and away the most obvious one in the circumstances, that he is no longer the Acting Foreign Minister, apparently as a result of what he had to say on this particular subject matter. It is perfectly evident that Mr Wingti, the Prime Minister, has responded decisively and, as one in this country might think, appropriately to the particular circumstances with which he is confronted. Beyond that I simply repeat what Mr Hayden has said-that this is a matter for the Papua New Guinea and Indonesian governments to deal with as they see fit and that it would be inappropriate for the Australian Government to comment. Senator RICHARDSON —During Question Time, Senator Puplick referred to an article called `Eco-Defence!' written by Simon Balderstone. I said that I was not familiar with the article, but I have now read it. In answering some of the questions that Senator Puplick raised, I think it should be noted that the article does not at any point advocate tree spiking. It merely enters into a discussion as to the pros and cons of legal and illegal direct action by conservationists. Of course, Senator Puplick, as a participant in direct action by conservationists in blockades and demonstrations, would no doubt applaud it. The article was written by Mr Balderstone when he was a freelance journalist. It was published in September 1986 although it was written some time before that. At no time does he advocate any activity that would cause harm to a person. Simon Balderstone is owed an apology by Senator Puplick. Senator PUPLICK(New South Wales) —I seek leave, Mr President, to move a motion to take note of the answer by the Minister for the Environment and the Arts (Senator Richardson). Leave granted. Senator PUPLICK —I move: That the Senate take note of the answer. The article to which Senator Richardson has referred entitled `Eco-Defence' says in part: Time, however, is of the essence if the environment is to be protected and saved. Everywhere, people are resorting to direct action in an attempt to achieve their aims. Lobbying often fails, and more drastic measures have to be taken. I accept that the Minister has rightly said that this article was written at a time when Mr Balderstone was not a member of his staff. However, the article is quite clear. It analyses in a particular fashion a series of techniques, including what is called monkeywrenching, `ecotage' and the process of tree spiking-which is not only described in detail in this article but also in fact described by way of the presentation of a very explicit-- Senator Robert Ray —Did he write that section? Senator PUPLICK —I will come to that in a moment. It includes a very explicit guide to how one goes about the process of tree spiking-the sort of technique to be used. This includes mention of the fact that a silent and cordless drill should be used so as not to draw attention to the people spiking trees, that metal detectors are of such a nature that it would be better to use ceramic rods and not steel rods in the spiking of trees and that it is very important that the process be concluded by using a dab of clear silicone in order to conceal the whole thing and that a small chip of bark be pressed on to conceal the hole. A number of other techniques are described in such considerable detail that this article can only be seen to be a manual, a how-to-do-it guide, as far as this activity is concerned. The text, which is not in quotations and which does not discuss any of the articles published in overseas journals which Mr Balderstone seeks to analyse, makes it perfectly clear that the article gives support and encouragement to the adoption of these techniques. The article says: And to change those things- that is, in relation to certain practices- positive action obviously has to be taken. The differences of opinion within the conservation movement stem not from differences in principles, but in modus operandi. Generally, however, direct action, properly organised and timed, seems to have overwhelming support within the ecological movement. The article certainly makes qualifications as to the practice known as monkeywrenching. Nevertheless, the article is quite clear in the way it analyses and presents in a positive and formal fashion a do-it-yourself technique for sabotage in an ecological sense, in a fashion which is bound in the long run to be dangerous to the lives of ordinary people going about their normal business, in forestry or other operations. I in no way resile from the comments which I made either in the question I asked or subsequent to Senator Richardson's statement. I seek leave to table the article which is the subject of the debate which has just taken place. Leave granted. Senator PUPLICK —I table the artcile. Senator RICHARDSON(New South Wales-Minister for the Environment and the Arts)(3.12) —This is an extraordinary attack by Senator Puplick. I find it more than disturbing that a member of my staff, or any journalist, should be attacked in such a way. The great preponderance of this article contains quotes from senior people in the conservation movement around the country. Those quotes attack members of the conservation movement who take direct action beyond blockades and demonstrations-into monkeywrenching and tree spiking. The great preponderance of this article is against that and this is made clear time and again. The reality is that Simon Balderstone fulfilled his function as a journalist. He did not editorialise; he reported. At no stage did he indicate, in any part, an attack on the person. He never has and never would. That is what Senator Puplick failed to acknowledge. Debate (on motion by Senator Chaney) adjourned. Senator CHANEY(Western Australia-Leader of the Opposition) —by leave-I give notice that, on the next day of sitting, I shall move: That the Senate- (a) having regard: (i) to the desire of all people to live in peace and freedom and to enjoy basic human rights, including the right to self-determination, (ii) to Australia's membership of the United Nations and regard for the principles of its Charter, the Universal Declaration of Human Rights, the United Nations Declaration on the Granting of Independence to Colonial Countries and Peoples adopted by its General Assembly on 14 December 1960 by Resolution 1514 (XV), and the Final Act of the Helsinki Agreement, and (iii) to the fact that, whilst the Australian people have acquired these rights and freedoms other peoples are deprived of them; and (b) taking note: (i) of the Resolution of the European Parliament on the Situation in the Baltic States (Estonia, Latvia and Lithuania) adopted on 13 January 1983, (ii) of the fact that the 3 Baltic States were independent sovereign republics and members of the League of Nations during the years 1918 to 1940, when they were occupied by the Soviet Union in consequence of an agreement between the then German Government under Hitler and the Soviet Government under Stalin (the so-called Molotov-Ribbentrop Pact), (iii) of the fact that the occupation of these states by the Soviet Union still continues, but that in accordance with other democratic governments the Australian Government has not recognised de jure their incorporation into the Soviet Union, (iv) that the peoples of Estonia, Latvia and Lithuania are being denied many basic human rights but that they have not given up their struggle for self-determination and freedom, and (v) that an intensive process of Russification is taking place in these occupied countries aimed at elimination of the indigenous languages and culture; resolves- (a) that Australia, as a member of the United Nations, should fulfil its obligations to promote and encourage respect for human rights and fundamental freedoms, and should support the European Parliament's Resolution in respect of the Baltic States, (b) that in order to do so the Australian Government should, on its own initiative, and by seeking the support of like-minded governments, bring the question of human rights and self-determination for the Baltic States before all appropriate forums of the United Nations, and especially before the United Nations Human Rights Commission, and (c) that the Department of Foreign Affairs and Trade should be directed to take all necessary steps in order to implement this Resolution. Senator GARETH EVANS(Victoria-Minister for Transport and Communications) —I seek leave to make a statement about the Government's response to the report of the Standing Committee on Finance and Government Operations on Australian Broadcasting Corporation employment contracts and their confidentiality, to incorporate the statement in Hansard, and to move a motion relating to the statement. Leave granted. The statement read as follows- For the information of honourable senators I present the Government's response to the report of the Senate Standing Committee on Finance and Government Operations on `ABC Employment Contracts and their Confidentiality'. BACKGROUND During hearings held by Estimates Committee C, on 15 April 1985, on the Additional Estimates of expenditure for the Australian Broadcasting Corporation (ABC), several questions were asked of ABC officers concerning payments to Ms Geraldine Doogue, under her employment contract with the ABC, in relation to The National television news program. The information sought was regarded by the ABC as commercially confidential and ABC officers declined to provide it. An offer was made, however, for the data requested to be provided to the Minister for Communications for his information. Arising out of the Senate's consideration of the report of Senate Estimates Committee C on 16 May 1985, the Senate decided that the Senate Standing Committee on Finance and Government operations should investigate and report on: Whether the claim by the Australian Broadcasting Corporation that certain information should not be made available to Estimates Committee C, on the ground of commercial confidentiality, is justified. In conducting its investigation, the Committee decided that it should examine and determine whether such contracts were justifiable, and whether claims regarding their confidential status could be justified. CONCLUSIONS OF THE COMMITTEE The Committee reached conclusions in four areas: The use of contract employment; The confidentiality of such contracts; The particular nature of Ms Doogue's contract; and The accountability of the ABC to the Parliament and its Committees. These conclusions were: In Respect of Contract Employment In general the Committee did not disapprove of the use of contracts of employment by a statutory authority when it would facilitate the activities of the authority. The Committee believed, however, that such contracts should be used only for limited employment or for the engagement of persons to perform particular tasks and only after all other options have been considered. They should not be used for normal full-time employment. The Committee believed that contracts for service were not a desirable form of arranging employment for a Commonwealth authority. Such contracts could distort the normal employment relationship and may allow a person whose services are obtained under the contract to gain tax or other financial advantages not available to other employees. The ABC should introduce clear guidelines on the use of contract employment which address these points. The Government believes that statutory authorities such as the ABC should have the flexibility in their staffing arrangements to employ personnel on a contract basis. In many cases statutory authorities are operating in a competitive environment and are subject to market trends and pressures, and constantly changing challenges. It is essential to their ability to compete successfully with other organisations in these situations that they have the facility to engage staff for specific projects or time periods, with specialist skills, particular qualities, or expertise which may not be available other than on a contractual basis. Having set out this framework, I consider that the Committee's conclusions are not incompatible with this approach and would provide a basis for guiding authorities such as the ABC in this area of their activities. In respect of the introduction of guidelines the ABC has advised that it is currently reviewing its policy and practices with a view to developing guidelines which address the areas of concern to the Committee. Confidentiality of Contracts The broad conclusions in this area were: The Committee considered that an authority could not presume that the Parliament or its committees would not insist on disclosure of details of such contracts. As a matter of accountability it is desirable that details of contracts not be confidential. If information concerning contracts is claimed to be commercially confidential, proper regard should be had for genuine personal and commercial interests, such as privacy or competitiveness, that may be affected by publication. Estimates Committees were established for the specific purpose of examining the expenditure programs of Commonwealth Departments and statutory authorities. Authorities must, therefore, be prepared to account to Estimates Committees for all aspects of their financial management and administration, even when the information sought may be regarded as private or commercially confidential. The Government accepts the broad thrust of the Committee's comments on the issue of confidentiality. However, it is noted that the Committee's report seems implicitly to accept that in some circumstances the ABC could be justified in seeking to presume the confidentiality of contract details. In this respect, the Government would expect that Parliament would be mindful of the need to respect the confidentiality of any information which may be personal, of value to the contractor's competitors, or detrimental to the activities of the particular authority. The Government is conscious of the fact that authorities such as the ABC, which are in close competition with the private sector for certain personnel, may need to keep certain information relating to contracts of employment confidential. Knowledge that such information concerning the personal privacy of the individuals concerned could be made public at a Parliamentary Committee hearing may discourage those persons with the necessary skills from accepting appointment. In these circumstances, the Government believes that Parliament should assess the difficulties associated with making the information public and ensure that any such adverse effect is balanced against the public interest in the Parliament obtaining the information. Ms Doogue's Contract The Committee considered that it was irresponsible of the ABC to enter into a contract with Ms Doogue which provided for the payment for services so far in advance of the services being provided. The Committee understood the ABC's desire to obtain Ms Doogue's services but considered that a stronger negotiating stand should have been taken by the ABC to resist the imposition of an ``up front'' payment claim. It also considered that there should be no doubt on the part of the ABC that Parliament or its Committees was entitled to have full disclosure of the provisions of the contracts. The Government notes the Committee's conclusion, and the ABC advises that it accepts the Committee's views on advance payment provisions and it will restrict such provisions to cases where there is demonstrable advantages and adequate protection for the ABC in the case of non-performance. Accountability of the ABC to the Parliament and its Committees The Committee considered that the ABC must expect and respond to the same degree of scrutiny as any Commonwealth statutory authority in reporting its operations to Parliament. Subject to my earlier comments about when Parliament seeks information which is commercially sensitive or involves personal privacy issues, the Government fully accepts and agrees with the Committee's conclusion. Senator GARETH EVANS —I move: That the Senate take note of the statement. Senator MESSNER(South Australia)(3.17) —This is really a pathetic little document in response to a report of the Senate Standing Committee on Finance and Government Operations, which, I remind the Senate, was first put into the Senate just about a year ago, in December 1986. It has taken the Government a mighty labour of some 12 months to produce what is a short report to some rather important questions of principle that were raised by the Senate as a result of the Senate Estimates Committee report at an earlier time. I shall just remind the Senate of the actual terms of reference of that inquiry, which was established in May 1985 by the Senate when it referred this matter to the Senate Committee on Finance and Government Operations. The Committee was to investigate and report on: Whether the claim by the Australian Broadcasting Corporation that certain information should not be made available to Estimates Committee C, on the ground of commercial confidentiality, is justified. Those are very succinct terms of reference which require a simple answer in terms of the Government's approach. In the qualifying statement incorporated in the Senate Committee's report, my colleagues Senator Short and Senator Vanstone were quoted as drawing attention to that very point-that this was a narrow area of investigation, rather than one of substantial investigation of the question of principle and policy involved. I would just like to quote what they had to say in that report. It is as follows: The report as it stands, is open to being interpreted as making a policy decision by advocating that the ABC use as little contract employment as possible. We do not believe that it was a function of the Committee with respect to this reference to make such a decision and would not necessarily support such a decision in any event. I think that it is important to recognise that the Government has strayed way off its brief in bringing down the response to that report because it has strayed into the area of making statements of policy in regard to the general question of contract employment and other matters. I would just like to draw attention to one or two of those things, which obviously go much further than the statement required as a reply to the Senate Committee report. On the general question of whether or not the Australian Broadcasting Corporation (ABC) should enter into contract employment, the Government tries to draw the conclusion that, somehow, the Committee was opposed to this general idea. Quite clearly, my colleagues, and we on this side of the chamber, would not seek to interfere with the operation of the ABC in circumstances where obviously it was to the advantage of all parties, given the competitive environment in which the ABC needs to operate for talent, that such operations should not be curtailed. However, we agree, as the Government has now acknowledged, that there should be guidelines by which those contracts should be drawn up. Quite obviously there should be genuine complaint from all senators that those guidelines have not previously existed. Consequently the fact that those things did not exist prior to this matter having come to light must be put down as a black mark against the management of the ABC. On the question of confidentiality of contracts, obviously if we agree that in a competitive industry, such as entertainment and those services generally provided by the ABC, there ought to be contract arrangements in certain circumstances, quite clearly, confidentiality is an issue of some concern. However, as the Government says in its statement, the Parliament should have a right to assess the contract documents to ensure that there is no abuse of any principles as laid down in the law. For instance, we should be able to ensure that no tax avoidance takes place. This draws attention to the need for the Parliament to balance its requirement for information against the general interests of the community. But the Government, in requiring that the Parliament should assess the difficulties associated with making available information in a contract between a personality such as Ms Doogue and the ABC, has drawn attention to the fact that putting such a matter into the public arena may have adverse effects. But if the Parliament is to examine that question-obviously the Government believes it is important-why does the Government not seek to establish an inquiry to examine it? Why does it not seek to promote within the Parliament a means by which those matters can be further examined? Certainly a shortcoming of this statement is that the Government leaves it at that and does not take any further the matter of how the Parliament might better deal with such confidential matters as would be comprised in a contract of personal services, as in the case of Ms Geraldine Doogue and the ABC. On the question of Ms Doogue's contract with the ABC, the Government makes the point in its statement that the ABC has apparently given some undertaking to the Government that it accepts the Committee's view that advance payments, well in advance of actual services being performed by any personality in these situations, do need to be regulated and controlled by the ABC management in a very close way. The statement reads: . . . the ABC . . . will restrict such provisions to cases where there is demonstrable advantages and adequate protection for the ABC in the case of non-performance. This really comes to the point of the inquiry and opens up the basic question to which an answer was sought by Estimates Committee C. It initially asked this question some two years ago. It is amazing that it has taken the Government two years to give us the answer and tell us in a Yes Minister fashion that, yes, that is a problem, but it does not do anything further about it and it does not seek to demonstrate further how the ABC might overcome these problems. The fact is that the ABC has apparently given an undertaking that these advantages need to be demonstrated. I would like to know to whom they are to be demonstrated, whether it is to the Senate or to some other body. The Government apparently does not seek any further intervention in that matter at all but leaves it entirely to the ABC. The statement says that the ABC should be protected in the event of non-performance. I presume the Government means non-performance of the personalities. Surely that ought to be basic to the guidelines by which these contracts are drawn up in the first place? That this matter has gone on for what appears to be some years without proper protection for the ABC when entering into such arrangements is lamentable, at the very least. One was extremely surprised to find out at this late stage that no adequate protection is being written into these contract documents, apparently for the ABC, in those events. I guess that this comes to the central point of the response and the initial inquiry set up by Estimates Committee C; that is, that there are severe and serious shortcomings in the contracting arrangements between employees who are outstanding personalities, such as Ms Geraldine Doogue, and the ABC itself. It certainly represents an issue that the Government and particularly the Senate ought to be examining. The Government, having recognised this, has failed to do something about it; it is merely drawing attention to the point. The Government ought to be establishing an inquiry or initiating a further examination of the matter by a committee of the Senate or of the Parliament generally. Finally, on the question of the accountability of the ABC to the Parliament and its committees, the Government has reiterated some motherhood statements which really add nothing further to the total sum of human knowledge in the area of accountability of any statutory authority. They simply boil down to lip service to whatever it is that the Government believes ought to be proper governmental control in these areas. The statement is inadequate. It is certainly very late. It has taken the Government 12 months to labour mightily to bring forward this mouse and, as I have said, it adds nothing to the overall debate in this area. Senator MICHAEL BAUME(New South Wales)(3.27) —Two principles are at stake here: one is the principle which clearly involves the rights of the Parliament and the other is the principle which clearly involves the rights of the individual. It is absolutely intolerable that parliamentary scrutiny should be limited in its proper inquiry of its authorities. It is also intolerable that the privacy of those entering into private agreements with government authorities should be invaded and made public. The conflict of those two principles is a matter which goes to the heart of the general question of the role of government in the private sector. Whenever governments, which by their nature must have particular rules, become involved in private sector activity where they are competing-in this case for labour-with the private sector and where private sector rules dominate the method of hiring and firing, clearly government agencies are in an uncomfortable, indeed difficult, position. This statement does not resolve that difficult position in any way. It is refreshing that, after all this time, the Australian Broadcasting Corporation (ABC) has advised that it is currently reviewing its policy and practices with a view to developing guidelines which address the areas of concern to the Senate Standing Committee on Finance and Government Operations. The next question which stems from that is whether it will tell us about them. There seems to be no obligation in this report for it to do so. I hope that it sets out to do so as quickly and as effectively as possible. It may well be that these matters can be resolved by having anonymous information available about the nature of individual contracts without outlining individual personal contracts. I, like Senator Messner, find it unreasonable that the Committee should have set out not to prohibit but to seek to limit severely the rights of the ABC to compete in the market-place for skilled labour by suggesting that the ABC should not, except in special circumstances, be able to use contract arrangements. I particularly refer to the section of the Committee's report in which it stated: The Committee believed that contracts for service were not a desirable form of arranging employment for a Commonwealth authority. Such contracts could distort the normal employment relationship and may allow a person whose services are obtained under the contract to gain tax or other financial advantages not available to other employees. That is certainly a bureaucratic approach which is totally irrelevant to the market-place for the sort of labour that the ABC seeks to employ in many areas. I agree with the reservations made by Senator Messner about that, which as I recall were made in the minority report of the Committee. I agree with the Government that statutory authorities such as the ABC should have the flexibility in their staffing arrangements to allow them to employ personnel on a contract basis. However, like Senator Messner, I believe that we should have the right and the opportunity to examine the recommendations, the guidelines, that the ABC is developing. This is a matter which extends beyond the ABC to other governmental authorities for which the market-place for skilled labour may require the use of these sorts of contractual arrangements. If the ABC and other authorities are not to miss out on getting the best talent, the most appropriate people, it is absolutely essential that clear and effective guidelines be laid down. It would be absolutely disastrous if people were to be reluctant to enter into contracts with governmental authorities for fear that their privacy would be invaded when they had understood that, as with normal contractual arrangements, the details were of a private nature. Senator Coates —Why should they be private? Senator MICHAEL BAUME —I am asked why they should be private. If it is part of the conditions of employment that they be private, they should be private. If a person being employed is prepared to say, `I do not care whether this is a private matter or not', of course there is no question of privacy. But it is the invasion of an agreed privacy that I am addressing. What will happen when there are out of court settlements? Will we in this Parliament demand to know about each matter affecting the Commonwealth when there may have been a settlement made only on the basis of confidentiality? Will we face difficulties of that order? We believe that, where an arrangement has been made on the basis of confidentiality, it is improper-- Senator Coates —But why should it be made private? Senator MICHAEL BAUME —It may have to be made private because that is the only way to get an employee. Government senators will have to decide what their objectives are. Do they or do they not want government authorities to be hamstrung in their capacity to attract employees? For example, perhaps the Government thinks it would be good for the ABC to be put at a major disadvantage as against some of the commercial channels. Obviously, members of the Government have special mates in the commercial television area. Maybe it would suit members of the Government if the ABC were put at this specific disadvantage as against Mr Hawke's mates in the media. The level of that interjection suggests that that may be so. There is a conflict of principles here. I do not believe that this statement goes far enough towards resolving that conflict. I support the comments of Senator Messner that a far greater examination of this matter is required. Senator COATES(Tasmania)(3.34) —I would like to give some considered comment in response to the Government's response to the report handed down by the Standing Committee on Finance and Government Operations, which I chaired. However, I have only just received a copy of the response and would like more time to consider it. I therefore seek leave to continue my remarks on a later occasion. Leave granted; debate adjourned. Senator PUPLICK(New South Wales)(3.35) —I move: That the Senate take note of the papers. We have before us some 26 treaties or conventions covering a very large range of matters. They include a number of extradition treaties, a number of fisheries treaties, an agreement on nuclear science and technology, and the Budapest Treaty on the International Recognition of the Deposit of Micro-organisms for the Purposes of Patent Procedure, which is very important, especially to the world's leading genetic engineers. They include the ratification by Australia of the Convention for the Conservation of Antarctic Seals, which has long been called for and vigorously supported by the Opposition. More specifically, they also include the notification of Australia's adherence to the Vienna Convention for the Protection of the Ozone Layer of 1985. This is a very important international convention and I am glad to express the Opposition's very clear support for the steps that the Government has taken in this regard. Senator Peter Baume —Is there a hole in it? Senator PUPLICK —I will come to that in a moment. The ozone layer has been a matter of debate in recent months since some of the sensational reports which appeared in the popular Press, as well as in journals such as Nature, about the emergence of a hole in the ozone layer over the Antarctic. One of the consequences of this is the exposure of the surface of the earth to a far greater penetration by ultraviolet light. It has been estimated that for every one per cent reduction in the concentration of ozone in the atmosphere, our protective shield, there will be a 2 per cent increase in the rate of non-melanoma skin cancers in countries such as Australia, which already has the highest rate of skin cancer of any country in the world. Ever since Rowland and Molina first discussed this phenomenon in 1974, the effect of chlorofluorocarbons (CFCs), especially those known as CFC11 and CFC12, has been highly suspect as a primary cause of the ozone depletion. Australia has been an active participant in the work of the United Nations environment program conferences on this issue. We support fully both the 1985 Vienna Convention for the Protection of the Ozone Layer, which is one of the treaties on this list, and the associated Montreal Protocol of 1987, which I hope the Government will speedily adopt. The Australian Environment Council, together with the National Health and Medical Research Council, produced an excellent report on this subject as far back as 1983 entitled Environmental, Health and Economic Implications of the Use of Chlorofluorocarbons as Aerosol Propellants and Possible Substitutes. The Opposition fully supports the efforts of the Government to gain rapid adoption of the recommendations of the Montreal Protocol to secure a 50 per cent reduction in the use of CFCs by 1998-99. Action to date on this subject has been most encouraging in Australia, where voluntary compliance with the code has already reduced the levels of CFC releases by 35 per cent since the peak year of 1974. But a great deal remains to be done. It is very disappointing to see that at the last meeting of Australian environment Ministers, a proposal advanced by my colleague the Minister for the Environment in the Tasmanian Liberal Government, Mr Peter Hodgman, for urgent action on this matter was not taken up by the other Ministers. The majority of Labor Federal and State Ministers were not prepared to agree to Liberal Minister Hodgman's call for more urgent action to be taken on this matter. This Convention is very important. I believe it is also important that it operate as far as is possible through voluntary compliance within the industry. A notable contribution to this has already been made by the McDonalds Corporation, which in the United States of America has abandoned the use of the foam packaging for its hamburgers and other items, the decay of that foam packaging being an important contributor towards the release of CFCs into the atmosphere. I believe that its Australian subsidiary will follow suit shortly. Nevertheless, it is important for the Government to give an indication of its support to the private sector for the way in which it has handled this matter. At the same time it should assume the proper responsibility it has for atmospheric protection in Australia. I am glad to see that this Convention is one of those on the list. As I say, the Opposition has pressed for our adherence to the Budapest Treaty on Micro-organisms for Patent Purposes and the convention for the Conservation of Antarctic Seals. It is important that these international instruments, where they are relevant and where they do not trespass upon the proper and legitimate rights of states, can be entered into. We certainly commend the action taken by Government departments and advisers who have had a great deal of involvement in these areas and we are glad to see that these treaties are part of the list which is now before the Senate. Question resolved in the affirmative. Senator REID(Australian Capital Territory)(3.42) —I move: That the Senate take note of the paper. Although this report deals with the whole of the activities of the Australian Federal Police, I will refer briefly to that part of the report, in chapter 7 under the heading `Community Policing', which deals with the Australian Capital Territory. I have raised in the Senate previously the question of policing levels in the Australian Capital Territory and the Minister for Justice, Senator Tate, has given answers and provided information. I suggest that the level of policing is not adequate for the present situation. The report refers specifically to this on page 28 under the heading `Major Crime Trends'. It points out that in 1986-87 there was an increase in not only the incidence but also the value of property stolen. The report refers to the increasing involvement of drug dependent people in the offence of receiving stolen property. The report refers to an increase in the number of seizures together with the number of arrests in the drug area. There is reference to the growing number of suspected drug offenders. It is reported that heroin is readily available on the streets of Canberra. The report states: There has been a significant increase in the reports of incest, which have resulted in a number of prosecutions. There has also been a marked increase in reports of sexual assaults on both males and females. The report refers to the theft of computer equipment, mostly from government departments and schools, because of the vulnerability of those areas. It is reported that credit and debit card fraud continued as a growing crime trend. This was the case throughout 1986-87, as reported to the Parliament. It is clear, from information available, that this is also the case for the current financial year, 1987-88. A report in the Canberra Times of a week or so ago, entitled `ACT burglars ahead on points', dealt with the 1986-87 figures and pointed out that the Australian Federal Police appears to be fighting a losing battle against burglaries in the Australian Capital Territory with the number of break and enters during 1986-87 rising by 42 per cent. The article went on to detail numbers and statistics relating to this particular area. It said: There has been no real increase in the number of police per 1,000 head of population in the ACT since 1975-76, despite correlating increases in crime. That is important. The Minister has been quite frank in giving us details of the number of police available in the various areas of Canberra and the various times of duty. I stress that the number is no longer adequate. The police themselves have called for a greater level of policing to do the job they are required to do. There is no doubt that they are working hard, effectively and efficiently. I have not had complaints about police, but I certainly have had complaints about the time it takes for police to get to places to which they are called and problems of that nature. It is clear from figures disclosed by the Australian Bureau of Statistics that the level of policing in Canberra has decreased. In 1975-76 there were 3.7 police for every 1,000 people; in 1980-81 there were 3.5; and in 1985-86 there were 3.4. In view of those figures and the trends as disclosed in the 1986-87 annual report of the Australian Federal Police, I would say that a higher level of officers needs to be available for community policing work in Canberra. Question resolved in the affirmative. Senator KNOWLES(Western Australia)(3.45) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator KNOWLES(Western Australia)(3.46) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator MICHAEL BAUME(New South Wales)(3.47) —I move: That the Senate take note of the paper. Qantas Airways Ltd, as this nation's carrier, has an enviable record in terms of safety and reliability. I believe that its international reputation is second to none. But that does not mean that everything it does is right. There is at the moment a problem that I believe has to be resolved as quickly as possible. It has been alleged-I am not aware of the merit of the case either way-that intransigence by Qantas has been a factor in the extraordinary shortage of seats into and out of Australia, particularly over the Christmas period. Apparently, other airlines-for example, Korean Airlines and an airline operating out of Taiwan-have sought approval to institute services to Australia but have been denied that right. At a time when it is impossible to get a seat on an aeroplane, it is galling to many people-quite properly, I should imagine-that an airline such as Korean Airlines, particularly when there is a large traffic flow to and from Korea, is unable to come to an arrangement with Australia to provide more seats. This is what is happening at a time of acute shortage. This is not a matter that can simply drag on and on. People in the tourism industry in Australia are very concerned and upset about this situation. They say that their business is being diminished and that Australia's potential for earning foreign exchange is being severely diminished by the shortage of seats. A leading Australian hotelier has denied Qantas's claims that a shortage of hotel accommodation is threatening the country's tourist boom. He said that it is a shortage of airline seats that is threatening the country's tourist boom. He denied strongly Qantas's claims that Australian tourism destination hotels were booked out. He said that the only city that has a problem is Sydney and that areas such as Perth and the Gold Coast had an oversupply of rooms. He pointed out that Melbourne had an occupancy rate of about 75 per cent and would like more tourists; that Adelaide had plenty of rooms available for most of the year, with another hotel opening there soon; and that north Queensland and Hobart had plenty of rooms. So the claim of Qantas that there was a shortage of rooms that was inhibiting the tourism boom has at least been challenged. Government Ministers have been disagreeing with each other. Senator Evans rebuked the Minister for the Arts, Sport, the Environment, Tourism and Territories, Mr John Brown, by sending him what was described as a cautionary cable. Mr Brown had said in Tokyo, `I think it is high time the Australian Government took a very, very serious look at what is more important, preserving Qantas's 50 per cent share of the market or getting more people into Australia'. Senator Evans described Mr Brown's remarks as unhelpful. Government Ministers are disagreeing over this matter as are different sections of the airline industry. For example, the head of Cathay Pacific Airways Ltd has claimed that Qantas was acting unfairly over plans to increase passenger capacity into and out of Australia. Customers are being inconvenienced. Not only is it impossible to get people into and out of Australia but also there is a limitation on freight out of Australia. At a time when Australia is in urgent need of increasing its export income, as the latest balance of payments figures show with a further $1.2 billion deficit, something urgently has to be done. This Government is not addressing this problem. Debate (on motion by Senator Knowles) adjourned. DEPARTMENT OF INDUSTRY, TECHNOLOGY AND COMMERCE Annual Report 1986-87 Senator LEWIS(Victoria)(3.52) —I move: That the Senate take note of the paper. Firstly, I draw the Senate's attention to the form of the annual report, which follows the form adopted last year. I understand that last year's report won an award as the best presented annual report of any Government department. The report presented this year may also win that award because the format is certainly very clear and easy to follow. As usual, we have had only a very short time in which to examine it. I draw attention to a couple of matters in the report in the short time available. In the letter from the Secretary to the Department, Dr Charles, to the Minister for Industry, Technology and Commerce (Senator Button), Dr Charles points out that the Department seeks to facilitate changes in attitude and has sought to play a catalytic role in industry revitalisation. Whilst I certainly approve of those activities, I hope that some of the suggestions which are now going around industry that the Department is starting to interfere in manufacturing industry in Australia are not arising as a result of the Department's endeavours in this regard. In particular, I am concerned about some of the suggestions-certainly only rumours at this stage-that the Department is using the offsets policy and the Government's adoption of a new so-called corporate citizenship role to start interfering in the direction which manufacturing industry is taking in this country. I point out that public servants are not good at picking winners and they ought to leave that role to private enterprise. I turn to the summary of the year in industry in relation to the manufacturing sector. The report points out that in 1986-87 production actually fell by 0.5 per cent and employment in the manufacturing sector fell by 0.4 per cent. I find those figures fascinating in the light of all that Senator Button has been saying in relation to manufacturing, especially as this report covers only up to 30 June 1987 and in no way relates to or covers the period since the stock exchange crash a few weeks ago. The report also shows that investment has increased by only 4.3 per cent. That is far too small a figure for Australia. On the other hand, I compliment the Government on the other figures set out in the report which show that imports have fallen by 7.6 per cent. I hope the figure relates to general imports and not imports of machinery needed by the manufacturing sector. Exports have risen by 19.9 per cent and research and development has increased by 25 per cent. On the face of it, those figures are worthy of congratulations. I draw attention to page 1 of the report where the Department makes a criticism in saying: . . . the J Curve in Australia is likely to be subject to very considerable time lags and to be rather elongated. This is somewhat different to the experience of more industrially developed countries possessing larger or more internationally competitive manufacturing sectors . . . I am desperately short of time but I wish to refer to the number of bodies that the Department is associated with. There are pages and pages in the appendix-- The ACTING DEPUTY PRESIDENT(Senator Colston) —Order! The honourable senator's time has expired. Senator Lewis —Mr Acting Deputy President, I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator ZAKHAROV(Victoria) —I present the report of the Senate Standing Committee on Community Affairs on discretionary surgery. Ordered that the report be printed. Report-by leave-adopted. Senator CHILDS(New South Wales) —I table additional information received by Estimates Committee A. Senator JONES(Queensland) —On behalf of Senator Gietzelt, I table additional information received by Estimates Committee B. Senator JONES(Queensland) —On behalf of Senator Crowley, I table additional information received by Estimates Committee C. Senator COLSTON(Queensland) —I table additional information received by Senate Estimates Committee D and I seek leave to move a motion. Leave granted. Senator COLSTON —On behalf of Estimates Committee D, I move: That the following matter be referred to the Standing Committee on Procedure- The practice of Senators of referring written questions to Departments prior to the hearings of Estimates Committees. I would like to outline the reasons that the Committee has for bringing this matter to the attention of the Standing Committee on Procedure. It has been a long-standing practice of committee or non-committee members to give notice to departments of possible lines of questioning and expect that the departments will have the officers who deal with the matters at the committee hearing to answer the questions put by senators. This practice in recent years has been expanded to the point that some senators have been placing questions on notice to all departments and expecting that the answers will be provided in committee hearings. While not opposing the concept of having questions on notice to the departments, the Committee is concerned that the practice will develop into a situation where departments will be faced with an enormous task of answering questions given to them by the Estimates committee, although the questions were never actually asked in the Estimates hearing. One purpose of the Estimates committees has been to ask departmental officers questions concerning their programs in a committee atmosphere where there is face to face contact between witnesses and senators. The Committee believes that this situation should not be diluted by the growing practice of senators placing questions on notice. The Committee further recognises that all senators cannot attend every committee meeting, but suggests that senators should take one of two lines of approach: either pass on their questions so that colleagues on the committee might ask the necessary questions, or use the other forms that the Standing Orders provide to obtain information from departments. The Committee also believes that the process of placing questions on notice can be confusing, especially where a department answers the question at the beginning of the hearing, and when an honourable senator asks a similar or related question the officials refer to the tabled document and state that it has already been answered. This process leads to a diminution of the functions of honourable senators on the committee to ask and seek answers from departmental officials. I also make some comments in relation to replies to questions on notice. The Committee also wishes to express concern at the delay in receiving replies to questions taken on notice during the hearings by the Department of Community Services and Health. These were received by the Committee one week after the time allowed by the Committee and despite numerous calls by the staff of the Committee. It was only after intervention by the Chairman that a satisfactory resolution to the problem was achieved. The Committee acknowledges that it may be difficult for departments to answer some questions in a short period, but believes that the two weeks that the Department of Community Services and Health originally had was more than adequate to answer the majority of the questions that were asked. The Committee anticipates that by the Supplementary Estimates in 1988 the Department will be able to comply with the deadlines imposed by the Estimates committees timetable. Question resolved in the affirmative. Senator JONES(Queensland) —On behalf of Senator Aulich, I table additional information received by Estimates Committee E. Senator BLACK(Queensland) —I table additional information received by Estimates Committee F. Assent to the following Bills reported: Australian National Railways Commission Amendment Bill 1987 Defence Housing Authority Bill 1987 Sea Installations Bill 1987 Sea Installations Levy Bill 1987 Sea Installations (Miscellaneous Amendments) Bill 1987 Primary Industry Bank Repeal Bill 1987 Petroleum (Submerged Lands) Legislation Amendment Bill 1987 Egg Industry Research (Hen Quota) Levy Amendment Bill 1987 Taxation Laws Amendment Bill (No. 3) 1987 Bills received from the House of Representatives. Motion (by Senator Reynolds) agreed to: That the Bills may proceed without formalities, may be considered together and be now read a first time. Bills read a first time. Senator REYNOLDS(Queensland-Minister for Local Government)(4.05) —I table revised explanatory memoranda relating to six of the Bills and move: That the Bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- AUSTRALIAN HORTICULTURAL CORPORATION BILL 1987 The purpose of the Bill is to provide for the establishment of the Australian Horticultural Corporation (AHC). The Bill forms one essential element of the package of measures being introduced primarily to enhance the capacity of the horticultural industries to expand exports. The other measures in the package are the Horticultural Research and Development Corporation Bill, the Horticultural Policy Council Bill, the Horticultural Levy Bill, the Horticultural Levy Collection Bill, the Horticultural Export Charge Bill, the Horticultural Export Charge Collection Bill and the Australian Horticultural Corporation (Transitional Provisions and Consequential Amendments) Bill. The package of Bills implements the institutional initiatives for the horticultural sector which form part of the Government's Economic and Rural Policy Statement of April 1986 and for which the Government has committed a total of $9 million over five years to assist in their establishment and early operation. The sector's output in 1985-86 was valued at some $2 billion, with exports amounting to around $400 million in that year. While the horticultural sector has achieved significant increases in exports in recent years, opportunities exist for further substantial increases. For the sector's full export potential to be realised, however, there needs to be a more co-ordinated and sustained activity both in horticultural products marketing and in research. The Bills relating to the two Corporations provide for the establishment of complementary institutions which will be required, as their main task, to assist the horticultural industries to develop their export marketing and research efforts. The four Bills dealing with product levies and export charges provide for funds to be raised for participating industries to help finance the ongoing activities of the two Corporations. The Horticultural Policy Council Bill fits into the package by providing the means for developing more consistent and comprehensive policies at the national level for the horticultural industries. The Council will be funded wholly by the Commonwealth for 5 years. Funding and the Council's continuance will be reviewed in its fifth year of operation. The Australian Horticultural Corporation (Transitional Provisions and Consequential Amendments) Bill provides for such things as the transfer to the AHC of staff, assets and liabilities from the Australian Apple and Pear Corporation on its abolition. Many views were conveyed to the Government by industry organisations and other groups throughout Australia during the extensive consultation process that was undertaken on the initiatives. These views were carefully considered and many of the suggestions which were put forward are now reflected in the Bills before the House. The Government believes that, in their present form, the Bills address constructively the needs of the industries and that the horticultural sector will benefit significantly from these new institutions. Participation in the AHC by horticultural industries is voluntary. In the case of industries currently covered by statutory marketing arrangements, namely the canned fruits, dried fruits and apple and pear industries, the situation is as follows. For canned fruits, the Government has decided that the statutory marketing powers of the Australian Canned Fruits Corporation are to be extended by one year only, to December 1988, and that the Corporation be wound up in 1989. Whether or not any of its other functions would be passed over to the AHC is a matter for consideration by the industry. The question of merging the Australian Dried Fruits Corporation with the AHC is being deferred until 1988. In the meantime, the Minister for Primary Industries and Energy is currently exploring with the industry the question of a separate Corporation in line with the Government's policy on Primary Industry Statutory Marketing Authorities. The Minister for Primary Industries and Energy advised the Australian Apple and Pear Growers' Association in May 1987 that he considered it would be in the best interests of the industry if it were encompassed in the AHC from the outset. He has had further consultations with that organisation's executive since then and, as a result, modifications to the details of the proposals were made to accommodate the Industry's concerns. At its Annual Conference in July 1987 the Association agreed to participation in the AHC. The inclusion of apple and pear activities under the AHC makes the Australian Apple and Pear Corporation redundant. The Bill thus provides for the repeal of the principal and amending Apple and Pear Corporation Acts and, as I mentioned earlier, there is an associated Bill which deals with transitional and other provisions arising from the abolition of this Corporation. I turn now to the specific provisions of the Bill. Objects, Functions and Powers The objects, functions and powers of the AHC are set out in Part II, Division 1 of the Bill and additional powers are described in Part V. The principal object of the AHC is to assist Australian horticultural industries to achieve their full potential in overseas markets. To achieve this it will encourage, facilitate and co-ordinate export activities, and provide a link from exporting and marketing back to growers to encourage production in line with market needs. It will complement, not replace, the marketing efforts of private exporters. An important subsidiary object of the AHC is to contribute to the development of horticultural production and marketing within Australia. In particular, it will be able to undertake domestic promotional activities on behalf of Horticultural Industries and, in this respect, will continue to handle the extensive domestic promotion relating to apples and pears. Not all horticultural industries will require the same services from the AHC and, for that reason, the Bill provides flexibility for the AHC in meeting varying industry needs; it also empowers the Corporation to carry out work for individuals and groups on a fee-for-service basis on the one hand, and on the other, it will have the power to appoint agents to perform any tasks on its behalf. In addition to the range of powers that will enable the Corporation to undertake general activities for and on behalf of the industries, the Bill provides it with export trading powers. These powers are, however, subject to the written approval of the Minister and the Government is firmly of the view that they would be applied only in circumstances where there is general support for the relevant industry. To facilitate such export trading, the Corporation may buy and sell horticultural products and it may enter into contracts concerning transport and insurance. In Part V of the Bill the AHC will also be empowered, if appropriate, to control exports and provide for licensing arrangements. The exercise of such powers is to be fully consistent with the Corporation's primary object of assisting the horticultural industries to achieve their full potential in export markets. The Government will only agree to the making of regulations and ministerial orders for this purpose if it is satisfied that this is the case and that the controls are in the best interests of the industry. Organisational Structure The Government's policy for Primary Industry Statutory Marketing Authorities provides that it is not appropriate for Boards of such authorities to have as members persons representing various sectors of industry but rather that the members should have the skills appropriate to their corporate responsibilities. In conformity with that policy, the Bill provides that membership of the AHC is based on qualifications and experience in various specified fields of endeavour. Part II, Division 2 of the Bill provides that the membership will comprise an independent Chairperson, one government member, the Managing Director and six other members. The six other members are to be selected on the basis of their expertise in one or more of a number of fields such as horticultural growing, horticultural exporting, business management, finance and marketing. Members, other than the Managing Director, will be appointed by the Minister on a part-time basis; except for the government member, the appointments will be for periods of up to three years but members will be eligible for re-appointment. Under this provision, membership terms can be staggered to ensure that the Corporation always has some members with experience of its activities and knowledge of current issues. The Managing Director will be appointed by the Board but with the terms and conditions of employment being approved by the Minister. The diversity of products and industries in the horticultural sector means the Board will need product-specific advice. Part II, Division 8 of the Bill therefore empowers the Corporation to establish such specialist committees as it considers necessary. The number of product group committees and the range of products a particular committee might cover will be decided by the Corporation after consultation with the industries participating in the AHC. Given its size and importance, the apple and pear industry can confidently anticipate that there would be a separate committee for its products; and so, too, can the citrus industry, which has given its firm commitment to participate in the AHC. The members of a product group committee will be appointed by the Corporation and comprise a Chairperson, who is to be a member of the Corporation Board, and from three to five other members with product-specific expertise in areas which are, in general terms, the same as those laid down for Corporation members. As it is the Board of the Corporation that is accountable for actions performed on its behalf, product group committees will not be autonomous. However, the Corporation will be empowered to delegate its powers to the committees and I would expect, for example, that the bulk of any activity undertaken on domestic promotion would be so delegated. This will free the Board to focus on the broader, general, export policy issues. Selection Procedures Part III of the Bill provides for the establishment of the Australian Horticultural Corporation Selection Committee. The function of the Committee will be to identify and nominate persons with expertise in one or more specified fields for appointment by the Minister of Corporation members. The Selection Committee will comprise a Chairperson selected by the Minister, six members appointed from nominations put forward by relevant horticultural producer organisations and one member nominated by horticultural exporting interests. In the longer term, when levy arrangements have been put in place, national organisations representing those industries which provide the levy proceeds for funding the Corporation will be the ones to be prescribed as eligible to provide producer nominations. However, as the apple and pear industry is the only industry for which levies will be collected for the AHC from its outset, and as the citrus industry is, so far, the only other industry which has given a firm commitment to participate and contribute by way of levies, the Government has decided that their respective national organisations will be invited to furnish the bulk of nominees for the first round of appointments to the AHC Selection Committee. Thus, the Australian Apple and Pear Growers' Association will be invited to furnish nominees for three positions and the Australian Citrus Growers' Federation for one position. The Australian Horticultural Growers' Council will also be invited to provide two nominees and, in recognition of the Corporation's export focus, one nominee is to be put forward by a horticultural exporter organisation. All these organisations will be prescribed for this purpose. It is intended that the Australian Horticultural Growers' Council, before furnishing its nominations, will be required to consult with industry organisations and to have particular regard to the views of those industries wishing to participate in the Corporation at an early stage. Part IV of the Bill provides for the establishment and operation of product Group Selection Committees. These are to consist of the Chairperson of the Corporation Selection Committee, two Corporation members and from three to six nominated members. The number of nominated members in each case will be determined by the Corporation in consultation with the relevant industry organisations. The Bill provides for the Corporation to appoint the members (other than the Chairperson) of a product group selection committee. The nominated members are to be appointed from nominees furnished by the relevant industry organisations. The arrangements mean that those industries which provide levy or export charge proceeds for funding the Corporation will play a major part in determining who will be on the AHC Selection Committee and on product group committees. Cost and Accounting Matters The Bill also puts in place provisions which deal with the manner in which financial transactions and costs are to be treated. To facilitate financial accountability and protect the interests of participating industries, funds provided by each industry will be held by the Corporation in separate accounts. In this regard, the assets and liabilities of the Australian Apple and Pear Corporation will be transferred immediately to a separate account on commencement of the AHC's operation. In consultation with different participating industries, the AHC will need to put in place mechanisms to ensure that the funds derived from one industry will not be used to support activities for other industries but this will not preclude agreed joint-industry funding for particular projects, should this be required. All participating industries will need to contribute to meeting the basic overheads of the AHC. The sharing of these costs will be determined by the Board of the Corporation on an equitable basis, with the composition of the costs being identified. An important consideration that has been of particular interest to the horticultural industries is that of cost. As I have already mentioned, the corporation will be a commercially oriented organisation. Its structure will reflect industry requirements. For example, separate product group committees will only be established, where justified, in consultation with the relevant industry or industries. Similarly, the Corporation will be able to respond in terms of staffing and other resources as needs dictate. Over the longer term, the Corporation will be funded fully by industry and the consultation and accountability requirements of the Bill will ensure that proper pressures are extended for its cost efficient and effective performance. The Commonwealth has allocated to the Corporation $5.85m over 5 years to assist it to get programs of activities under way quickly. Pending the implementation of levy arrangements for those industries wishing to participate, some $300,000 a year of this may be used to defray basic overheads, thus presenting significant savings for participating industries in the early years whilst leaving a considerable pool of funds for commercial activities. Planning and Accountability Provisions in Part II, Division 3 of the Bill ensure that the Corporation will carry out its functions in a business-like manner and spell out the basis for its relationship with the Minister. These require the Corporation to prepare a corporate plan with a five year horizon, to be reviewed and extended annually. The corporate plan is to define the principal objectives of the Corporation, assess the industry outlook and outline the strategies it will pursue. Before preparing or revising the corporate plan the Corporation will be required to consult with eligible bodies. The Corporation will also be required to develop for each successive period an annual operational plan which sets out, among other things, the details of the strategies to be pursued by the Corporation in the coming year. Both the corporate and annual operating plans are to be submitted to the Minister for approval. In this way, the accountability arrangements with the Minister will focus on the strategies and longer term performance of the Corporation and free it from the need for constant reference to the Minister for approval of individual activities proposed. Apart from its corporate and operational planning provisions, the Bill contains a number of accountability requirements which are designed to further ensure that the AHC will carry out its operations in a businesslike manner. These requirements are covered in Part III, Division 4 of the Bill. Not only will the Corporation be required to present an annual report covering its operations including its audited financial statements for each financial year to the Minister for tabling in the Parliament, but also to each eligible industry body. As well, the Corporation will be required to arrange with some individual, eligible industry bodies for the Chairperson to attend either their next annual conference or a meeting of their executives. For other eligible industry bodies, the Corporation will be required to convene a meeting to which their representatives would be invited to attend. At such meetings the Chairperson will be required to provide an address and to be questioned on the activities of the Corporation as covered by the Annual Report and the Corporation's intended activities for the coming year. The horticultural sector has considerable potential to develop further, particularly in terms of exporting. This potential will be more readily realised if the sector is assisted by an appropriate organisational infrastructure. This Corporation is an important part of that infrastructure. I commend the Bill to honourable senators. HORTICULTURAL RESEARCH AND DEVELOPMENT CORPORATION BILL 1987 The purpose of the Bill is to provide for the establishment of a Horticultural Research and Development Corporation as part of the package of measures outlined in my second reading speech for the Australian Horticultural Corporation Bill 1987. It has been recognised that the horticultural sector has under-invested in research and development (R&D) with continuing national programs having been few and far between. The Horticultural Research and Development Corporation (HRDC), provided for in this Bill, is designed to overcome these problems by funding more, and by better co-ordinating, horticultural R&D. I turn now to the specific provisions of the Bill. Objects, Functions and Powers The objects, functions and powers of the HRDC are set out in Part II, Division 1 of the Bill. The Corporation's primary object is to improve production by, and market performance of, horticultural industries. This is to be achieved in three main ways. Firstly, by identifying areas of horticultural R&D which are relevant to the needs of these industries. Secondly, by improving the efficiency and effectiveness of horticultural R&D. And, thirdly, by encouraging the more effective use of the resources and skills available in the community, especially in the scientific community, for horticultural R&D. The Corporation is also charged with developing awareness in the Australian horticultural industries as to the positive contribution that R&D can make to improving their efficiency and competitiveness. Industry diversity has meant that, due to the limited scope of their operations, smaller individual industries have had difficulties in identifying their potential for research. The Corporation will, in time, become a source of information for these industries with respect to the advantages that might exist for them. The functions of the Corporation detailed by the Bill include evaluation of R&D needs, formulation of annual and longer term R&D plans and, of course, funding the carrying out by others, or, if appropriate, by itself carrying out, relevant R&D activities. Subject to certain restrictions, the Corporation is to be empowered to do all things that are necessary to perform its functions. This includes fee-for-service charging, employing staff and accepting contributions. Importantly, as a body corporate, it will be able to make applications for, and deal with patents, participate in joint ventures and enter into agreements for the carrying out of R&D projects by other persons. Membership and Selection Part II, Division 2 of the Bill provides the composition of the Board of the Corporation. The nine member Board will consist of an independent Chairperson, one government member, the Executive Director and six other members. The six other members are to be selected on the basis of expertise in one or more fields such as growing or processing horticultural products, horticultural R&D or other R&D, administration or marketing. These members are to be nominated by a Selection Committee as provided for in Part III of the Bill. Members, other than the Corporation-appointed Executive Director, will be appointed by the Minister on a part-time basis; except for the government member, appointments will be for periods of up to three years, but members will be eligible for re-appointment. Under this provision, membership terms can be staggered to ensure that the Corporation always has some members with experience of its activities and knowledge of current issues. Part III of the Bill provides for the establishment of the Corporation Selection Committee. The function of that Committee will be to identify and nominate persons for appointment by the Minister of Corporation members based on one or more fields of expertise defined by the Bill. The Committee will consist of seven members. Four members, including the Chairperson will be drawn from the existing Rural Industries Research Councils Selection Committee. The other three members will be nominated by eligible industry bodies for appointment by the Minister. For the first round of appointments, the Government has decided that as the apple and pear industry is the only industry for which levies will be collected for the HRDC from its outset, and as the citrus industry is, so far, the only industry which has given a firm commitment to participate and contribute by way of levies, their respective national organisations will be invited to furnish one nominee each. The Australian Horticultural Growers' Council will be invited to provide the other nominee. It is intended that the Council will be required to consult with industry organisations before furnishing its nominee and to have particular regard to the views of those industries wishing to participate at an early stage. As other industries decide to participate in the arrangements they will become eligible industries and will have a say in the nomination process. Finance Part II, Division 7 of the Bill deals with financial accounting and auditing aspects of the Corporation's activities. A number of these matters warrant brief mention. The Corporation is to receive funds from industries through levy and export charge collections. As occurs with other Rural Industries Research Councils, the levies and charges collected for the Corporation will attract a matching dollar for dollar contribution from the Commonwealth of up to 0.5 per cent of the particular industry's gross value of production. However, as the dispersed nature or other factors in some industries within the horticultural sector can result in their not being able to develop adequate levy arrangements, the Government is prepared to vary these matching arrangements. This variation provides for the matching, by Government, of eligible voluntary contributions made in respect of products not subject to levy but, as before, within the ceiling of the 0.5 per cent of the gross value of production of the particular industry. Such matching will be subject to appropriate guidelines to be issued by way of ministerial orders in due course. It is also important to note that, in order to assist the Corporation to get programs under way quickly, the Government has allocated $1.25 million for use by the Corporation over the first five years of its operation. This funding is not dependent on corresponding industry contributions being made during that period but, as such contributions are made, normal Commonwealth matching will be drawn from this allocation. Provision has also been made for contribution by different industries to be held in separate accounts. This will result in the identification of each industry's expenditure on R&D activities. However, such an accounting practice will not preclude cross-industry funding of projects, where this is considered appropriate by the Corporation and the industries involved. Planning and Accountability Provisions in Part III, Division 3 ensure that the Corporation maintains a high level of control and direction in the discharge of its functions. It will be required to develop a corporate R&D plan with a 5 year horizon and an annual R&D program. Both the plan and the program are to be reviewed and revised annually, following consultation with relevant Australian horticultural industries. While the corporate plan will set out the longer term strategies and policies that the Corporation intends to adopt in order to achieve its objectives, the annual programs will provide yearly operational schedules for the Corporation by specifying and describing the projects to be carried out, or that may be considered for funding, in the coming year. The annual programs will also provide cost estimates of each project as well as the total anticipated expenditure of the Corporation for the year. Apart from its corporate and operational planning provisions, the Bill contains a number of accountability requirements which are designed to further ensure that the Corporation will carry out its operations in a business-like manner. These requirements are covered in Part III, Division 4 of the Bill. The Bill's annual report and accountability to industry provisions are the same as those outlined in my second reading speech for the Australian Horticultural Corporation Bill. The horticultural industries, which have considerable scope to develop their full potential, will be assisted in realising this by a well organised infrastructure for horticultural R&D. The activities of this Corporation will make significant complementary contributions to those of the other two bodies being established. I commend the Bill to honourable senators. HORTICULTURAL POLICY COUNCIL BILL 1987 The purpose of this Bill is to provide for the establishment of a Horticultural Policy Council as part of the package of measures outlined in my Second Reading Speech for the Australian Horticultural Corporation Bill 1987. The Government perceives that there is a need to bring together representatives of the widely dispersed, fragmented and diverse horticultural sector into a single body with capacity to present to Government a total sectoral perspective on policy issues. That body, the Council, will be able to thoroughly research and examine issues and areas of concern to the sector. I turn now to the specific provisions of the Bill. Objects, Functions and Powers The objects, functions and powers are set out in Part II of the Bill. The object of the Council is to facilitate development of policy through co-ordinated participation of the horticultural sector in the policy formulation process. The Bill provides the Council with powers necessary to perform its functions, which in the main are: to examine, on its own initiative, issues affecting the horticultural sector and report to the Minister; to examine matters relevant to horticulture referred to it by the Minister; and to develop recommendations, guidelines and plans for measures designed to safeguard or further the interests of horticulture Organisational Structure Part III of the Bill provides the composition of the Council. Its membership of 15 will consist of an independent Chairperson, five members representing horticultural growers and producers, two members representing processors, one member representing persons engaged in horticultural marketing, two members representing employees, two members representing the Australian Agricultural Council and the Chairpersons of the Australian Horticultural Corporation and the Horticultural Research and Development Corporation respectively. All members will be appointed by the Minister, but members, other than the Council's Chairperson and the Chairpersons of the two Corporations, will be nominated for appointment by relevant bodies, which will be prescribed by regulation. Also, by regulation, the Bill enables the number and composition of the Council's membership to be varied. This provision has been included so that changing circumstances in the organisational structure of the horticultural sector may be reflected in the representation on the Council as and when the need arises. I should also mention that it will be the Government's policy for variation to be made only after consultation with the Council. I believe it to be essential to keep the Council to a manageable size and this will be borne in mind in any consideration to vary the Council's membership. Part IV of the Bill provides the Council with the power and scope to establish and abolish executive or other committees and working groups. With regard to committees, it is intended that they be established to consider specific issues or areas of concern. The composition of such committees may be made up entirely of Council members or partly of members and other persons. A working group established by the Council may consist entirely of persons other than Council members, or may be composed of Council members and other persons. Membership of a working group would, in general, be based on expertise rather than representation and it would be expected that the issues being examined by a working group would have a high degree of technical content. The consultancy provisions of Part V of the Bill complement the provisions for committees and working groups of the Council. They enable the Council to engage experts who may work on their own or be part of a committee or working group. It will be up to the Council to determine the terms and conditions under which consultants may be engaged. Administrative Arrangements Part V of the Bill also makes provision for the Council to be staffed by a permanent secretariat. Staff of the Department of Primary Industries and Energy will fulfil this function. The Government is providing $1.9 million to cover the Council's costs over 5 years. Continuation and subsequent funding of the Council will be reviewed in the fifth year of its operation. The Bill makes annual report provisions consistent with those applied to other such Commonwealth statutory bodies. To this end, the Bill specifies that the Council is to prepare and submit an annual report each year to the Minister for tabling in the Parliament. The Government considers that the Horticultural Policy Council will provide an important link between industry and the Government in the development of national policies relevant to the horticultural sector. I commend the Bill to honourable senators. HORTICULTURAL LEVY BILL 1987 The purposes of this Bill and three related Bills-namely, the Horticultural Levy Collection Bill 1987, the Horticultural Export Charge Bill 1987 and the Horticultural Export Charge Collection Bill 1987-are to provide for the imposition and collection of levies on horticultural products produced and sold in Australia and for charges on exports of horticultural products. They provide the means of financing, in the longer term, the activities of the Australian Horticultural Corporation and, apart from Commonwealth matching moneys, the Horticultural Research and Development Corporation. As the Australian Horticultural Corporation's role will include the servicing of the apple and pear growing industry, the current levies on its products will be imposed and collected under the new Levy Bills; and the existing apple and pear levy legislation will be repealed. The operative rates of levy for apples and pears will be set by regulation, while the rates for other horticultural products will be included in regulations as respective horticultural industries decide to participate in the activities of either or both Corporations and agree on levy arrangements to help finance marketing and research activities. Levy will be payable by the producer of a horticultural product which is covered by the appropriate regulations while the export charge is to be payable by the owner of the product at the time of export. Provision has been made in the Levy and Export Charge Bills for determination of maximum rates of levy and charge. The maximum rates do, of course, vary from product to product. In order to limit administrative costs or for policy reasons, certain exemptions from levy will be permitted under regulations; for example, these may be in situations where sales by individual growers are relatively small or where small volumes of horticultural products are retailed direct by growers at the orchard gate or, in relation to products used directly by the grower for juicing or processing purposes, if the relevant annual quantities do not exceed a maximum level as set down in regulations. There are already levies on apples and pears and the continuing application of these levies is expected to provide annual funds to the Australian Horticultural Corporation and the Horticultural Research and Development Corporation combined of around $1.3 m. Total receipts of horticultural levies to fund the two Corporations will rise as the number of industry sectors participating in the marketing and research activities increases. The Commonwealth will match expenditure of the industry moneys-based on levies, export charges and eligible voluntary contributions, identified for the Research and Development Corporation-dollar for dollar, up to a limit of 0.5 per cent of the average annual gross value of production of groups of products, the groupings to be specified by regulation. The extent of the Commonwealth contribution to research will thus depend on the number of industries which agree to participate and the rates at which the individual industries are prepared to fund Corporation research activities. I commend the Bill to honourable senators. HORTICULTURAL LEVY COLLECTION BILL 1987 The Bill is complementary to the Horticultural Levy Bill, which I have just introduced. Its purpose is to make provision for the efficient and effective collection of the levies imposed by that Bill. Essentially, liability for the levies will rest with the growers or other producers of the relevant horticultural products. However, in order to reduce greatly the number of collection points and thus the costs of administering the collection of the levies, the responsibility for their payment to the Commonwealth will, for the most part, be placed with wholesalers, selling agents and processors. The Collection Bill provides for these persons to be given the authority in law to recover the levy payment from their supplying growers. The Bill also provides for dates on which levies become due for payment to be set by regulation. Collection of existing levies on apples and pears will continue, with the rates set by regulation under the Horticultural Levy Act. Total amounts of levies to be collected will rise over the next few years as the number of participating industries increases. I commend the Bill to honourable senators. HORTICULTURAL EXPORT CHARGE BILL 1987 This Bill is a companion to the Horticultural Levy Bill, 1987 dealt with earlier. Whereas the purpose of that Bill is to impose levies on the production of prescribed horticultural products, this one authorises charges to be imposed on the exports of prescribed horticultural products. The funds raised by both Bills are to provide the means of financing, in the longer term, the activities of the Australian Horticultural Corporation and, apart from Commonwealth matching money, the Horticultural Research and Development Corporation. The general principles of the Charge Bill mirror those of the Horticultural Levy Bill. The main difference is that the export charge is imposed on the owner at the time of export rather than on the producer. There are already export charges on apples and pears and these will be continued under the new legislation with the rates set by regulation; the existing apple and pear charge legislation will be repealed. The rates of charge for other horticultural products will be included in regulations as respective horticultural industries decide to participate in the activities of either or both Corporations and agree on the charge arrangements to help finance marketing and research activities. Provision has been made for determination of maximum rates of charge. The maximum rates do, of course, vary from product to product. Continuation of the current charges on apples and pears is expected to yield an annual income of around $300,000. Total receipts from charges to fund the Australian Horticultural Corporation and the Horticultural Research and Development Corporation will rise as the number of industries participating in this way in the marketing and research activities increases. The Commonwealth will match expenditure of the industry moneys-based on levies, export charges and eligible voluntary contributions, identified for the Research and Development Corporation-dollar for dollar, up to a limit of 0.5% of the average annual gross value of production of groups of products, the groupings to be specified by regulation. The extend of the Commonwealth contribution to research will thus depend on the number of industries which agree to participate and the rates at which the individual industries are prepared to fund Corporation research activities. I commend the Bill to honourable senators. HORTICULTURAL EXPORT CHARGE COLLECTION BILL 1987 The Bill is complementary to the Horticultural Export Charge Bill, which I have just introduced. Its purpose is to make provision for the efficient and effective collection of the charges imposed by that Bill. Essentially, liability for the charges will rest with the owner of the relevant horticultural products when exported. However, in order to facilitate collection when an exporting agent exports on behalf of another person who may reside overseas, the responsibility for payment of the charge to the Commonwealth will be placed with the agent. This Collection Bill provides for the agent to be given the authority in law to recover the charge payment from moneys received on behalf of the owner. The Bill also provides for dates on which charges become due for payment to be set by regulation. Collection of existing charges on apples and pears will continue, with the rates set by regulation under the Horticultural Export Charge Act. Total amounts of charges to be collected will rise over the next few years as the number of participating industries increases. I commend the Bill to honourable senators. AUSTRALIAN HORTICULTURAL CORPORATION (TRANSITIONAL PROVISIONS AND CONSEQUENTIAL AMENDMENTS) BILL 1987 The purpose of this Bill is to make provisions for arrangements to bring the apple and pear industry within the ambit of the new Australian Horticultural Corporation as outlined in my Second Reading Speech in relation to that body. While the Australian Horticultural Corporation Bill provides for the repeal of the principal and amending Australian Apple and Pear Corporation Acts, this Bill deals with provisions for such things as transfer of assets and liabilities from the Australian Apple and Pear Corporation, when abolished, to the new Corporation. The Bill also deals with consequential amendments to those Apple and Pear Acts which will continue in existence under the new arrangements. I turn now to the specific provisions of the Bill. The provisions for the administrative and organisational arrangements, which are necessary on abolition of the Australian Apple and Pear Corporation, are set out in Part II of the Bill. These cover the transfer of staff, assets and liabilities from the abolished to the new Corporation. In particular, it provides for the staff of the abolished Corporation to be transferred to the new Corporation on terms and conditions which applied immediately prior to the change over. Another provision of this Part requires the new Corporation to prepare the report and financial statements covering the period of operation of the abolished Corporation, from the time of its last report to the time of its abolition. Part III of the Bill provides amendments to the Apple and Pear Export Underwriting Act 1981 by substituting the name of the abolished Corporation with that of the new Corporation in the relevant provisions. Parts IV and V of the Bill provide amendments to the current Apple and Pear Export Charge and Levy Acts so as to limit their application up to the day immediately prior to the new Horticultural Levy and Export Charge Acts coming into effect. This prevents product from being subject to double levies or charges. Finally, Part VI of the Bill provides for the repeal of the Apple and Pear Stabilisation Acts and associated amendment Acts, the operation of which has been completed. I commend the Bill to honourable senators. Debate (on motion by Senator Tambling) adjourned. Bills received from the House of Representatives. Motion (by Senator Reynolds) agreed to: That the Bills may proceed without formalities, may be considered together and be now read a first time. Bills read a first time. Senator REYNOLDS(Queensland-Minister for Local Government)(4.06) —I move: That the Bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- FAMILY LAW AMENDMENT BILL 1987 For 11 years the Commonwealth and the States have been negotiating for a reference of powers from the States in respect of family law matters. Last year four States, New South Wales, Victoria, South Australia and Tasmania, enacted legislation referring to the Commonwealth powers over the maintenance, custody and guardianship of, and access to, all children and for the payment of expenses in relation to children and child bearing. The references of power do not extend to children who are the subject of orders under State welfare laws. The amendments being introduced in this Bill give effect to those references of powers. This means that in those States, and the Australian Capital Territory, Northern Territory and Norfolk Island, where the Family Law Act 1975 also has application, all children will be subject to the same law and the procedures under the Family Law Act, including the provisions for counselling and conciliation, will be available in disputes concerning ex-nuptial children. Queensland and Western Australia will be outside this uniform scheme. The provisions in this Bill applying the Act to ex-nuptial children will not extend to Queensland or Western Australia. In Western Australia, the State family court has jurisdiction to deal with all of the children in a family unit. It applies, as appropriate, the Family Law Act and the State law. In Queensland, however, it will still be necessary to bring proceedings in the State courts in respect of children who are not children of a marriage and in the Family Court in respect of children who are children of a marriage. The Bill seeks to avoid jurisdictional problems in some of these cases by giving the Family Court of Australia jurisdiction in matters concerning ex-nuptial children where the parties to the proceedings are residents of different States. In doing so, the Bill relies on the constitutional power in section 75 (iv) of the Constitution. In exercising jurisdiction in such a case, the court would apply the relevant law of the non-referring State to those cases not covered by the Family Law Act as amended. The Commonwealth is still hopeful that Queensland and Western Australia will refer similar powers to the Commonwealth. Alternatively, and the Bill provides for this, those States may adopt the provisions of this Bill in respect of their ex-nuptial children to ensure that such children are not disadvantaged compared with children in the referring States and the Territories. In the present Act the provisions relating to children are scattered throughout a number of parts of the Act. The opportunity has been taken to restructure the Act to bring most of the provisions relating to children together in the one part, new part VII. That new part will operate in general terms in the referring States, the Australian Capital Territory, the Northern Territory and Norfolk Island, but with no alteration to the substantive law in the non-referring states. Amendments to the Law The amendments in the Bill will change the present law on guardianship, custody and access in two ways. First, in the referring States and the Territories the provisions of the Family Law Act will apply to ex-nuptial children in the same way as those provisions now apply to children of a marriage. In the four referring States and the Territories there will be a uniform law for the guardianship and custody of all children. At present the parents of an ex-nuptial child have, under State and Territory law, varying status as guardians and custodians and these may differ from the guardianship and custody rights of parties to a marriage in respect of children of the marriage. This can create complex legal problems and parents of ex-nuptial children may be uncertain of their rights and responsibilities, particularly if one or both parents move interstate. The Bill provides that both parents of a child should, until a court orders to the contrary or the parents file a child welfare agreement in the court, be a guardian and share custody. Secondly, the Bill provides for the registration of enforceable agreements between the parents in respect of the custody, guardianship or welfare of, or access to, a child. The new procedure will simply involve the parents in filing the agreement at the court registry thus removing the need for expensive court hearings. The Bill introduces Federal laws in the area of child bearing expenses. The States and Territories have long provided, not uniformly, for such expenses. It also provides for presumptions of parentage and paternity for the purpose of determination of these issues under the Family Law Act, thereby replacing for those purposes the operation of the common law presumptions and the non-uniform statutory presumptions that apply under State and Territory status of children laws. The Bill makes substantial changes to the Family Law Act with respect to the maintenance of children. The Government's proposals in respect of maintenance were spelt out in a ministerial statement to the Parliament by the Minister for Social Security on 24 March 1987. The Government will be introducing separate legislation to establish the Child Support Agency in accordance with that statement. This Bill effects a number of changes to the Family Law Act that were foreshadowed in that statement. In particular, the Bill seeks to ensure that children will receive a proper level of financial support from the income, earning capacity, property and financial resources of both their parents and that both parents share equitably in the support of their children. The Bill provides that the duty of parents to maintain a child takes priority over all commitments of the parent other than commitments enabling the parent to support himself or herself or any other person or child that the parent has a duty to maintain. In developing its proposals for child maintenance, the Government has been concerned at the very high level of social security payments being made to divorced parties who have not made adequate provision for spousal maintenance in the course of conclusion of their financial arrangements. Section 75 (2) (f) has facilitated the drain on the revenue by allowing courts to take into account in both spousal and child maintenance proceedings the eligibility of either party to a marriage to a pension, benefit or allowance. This Bill provides that in any future proceedings for spousal or child maintenance the court must disregard the eligibility for an income tested pension of an applicant for maintenance. The Bill will still leave room for parties to reach their own agreements on child maintenance and spousal maintenance. Those agreements may be enforced so long as the effect of the agreements is not to cast a burden on the revenue by maintenance being so designed as to qualify the party concerned for an income tested pension or benefit. The Bill also inserts new provisions to enable the income testing, for social security purposes, of maintenance received other than by way of periodic sum. These provisions require the court, in ordering the payment of a lump sum or the transfer of property in satisfaction of maintenance, to specify the proportion of the payment or the value of the portion of the property which is attributable to the provision for maintenance of the party to the marriage. A similar requirement exists in relation to maintenance agreements. In his statement, the Minister for Social Security said that the Government would consider changes to access laws and the enforcement of access orders after it received the reports to be made by the Family Law Council on access and the Law Reform Commission on contempt of court. Those reports have now been tabled in the Parliament and the Government will be assessing the public reaction to the reports. Further amendments may be made to the Family Law Act in the light of that consideration and of the Government's consideration of the separate report on matrimonial property by the Law Reform Commission. Financial Impact Statement Implementation of the references of powers will result in the transfer of work from Senate welfare departments and State courts to the counselling, conciliation and judicial services of the Family Court of Australia. The effect will be to transfer most jurisdiction in custody and guardianship cases affecting ex-nuptial children in the referring States from the State courts to the Family Court. There is expected to be some transfer of maintenance cases affecting ex-nuptial children from State magistrates courts to the Family Court. It is difficult to predict the extent of the transferred work, but potentially this could increase the cost of the operation of the Family Court in a full year by some $3.5m. To the extent to which matters now coming before State courts would come before the Family Court there would be a corresponding decrease in the work load of the State courts. The amendments to be made by the Bill that relate to the child support scheme may result in increased litigation in the Family Court in maintenance matters. The extent to which this may occur is, however, impossible to predict, given the number of factors that are likely to influence decisions to litigate maintenance applications. I commend the Bill to the Senate. I present the explanatory memorandum to this Bill. FAMILY COURT OF AUSTRALIA (ADDITIONAL JURISDICTION AND EXERCISE OF POWERS) BILL 1987 The Family Court of Australia (Additional Jurisdiction and Exercise of Powers) Bill 1987 marks a major development in the administration of family law in Australia. The Government recognises that the specialist jurisdiction of the Family Court has created problems for judges and that the volume of routine and minor contested matters has produced delays. In this Bill the Government addresses these problems by extending the jurisdiction of the Family Court of Australia and introducing proposals to provide for speedier resolution of proceedings in routine and minor contested matters. The proposals embodied in the Bill have been developed having regard to- the views expressed by the Constitutional Commission Advisory Committee on the Australian Judicial System that the jurisdiction of the Family Court be extended so as to broaden the work of the Family Court judges and help enhance the standing of the Court; that Committee's further view that a large number of applications which, being essentially of a routine kind and uncontested, do not warrant the attention of a superior court; the need to reduce delays in defended proceedings in the Family Court by devolving some of the less complex contested and other matters now handled by judges to court officers and by providing additional jurisdiction for State courts of summary jurisdiction. For some time now the Government has been concerned about the difficulty of recruiting judges to the Family Court. The narrowness of the jurisdiction exercised by judges of the Family Court has reduced its attractiveness to a wide range of practitioners. By broadening the jurisdiction of Family Court judges, appointments to the Family Court will be more attractive. It will also give existing judges some relief from the burdens of the highly emotive family law jurisdiction. The Bill will extend the Family Court jurisdiction to proceedings in bankruptcy, income tax appeals, consumer protection provisions of the Trade Practices Act and proceedings under the Administrative Decisions (Judicial Review) Act. It does not permit proceedings in these matters to be filed directly in the Family Court. Instead, it provides for proceedings which have been filed in the Federal Court of Australia to be transferred to the Family Court. This may be done at the request of the parties or by the Federal Court on its own initiative. There is to be consultation between the chief judges of the two courts in respect of the transfer of proceedings. These consultations will ensure that appropriate Family Court judges are available to deal with transferred matters and that these matters will not be delayed as a consequence of transfer. The transfer of matters will not affect the basis upon which proceedings are conducted. An identical provision in the Administrative Decisions (Judicial Review) Act 1977, the Bankruptcy Act 1966, the Income Tax Assessment Act 1936 and the Trade Practices Act 1974 ensures that the practices and procedures applicable in proceedings in the Federal Court will apply in transferred proceedings in the Family Court. Registrars of the Family Court currently exercise jurisdiction under delegation from the judges in respect of many procedural matters and consent orders. They may not be delegated powers to deal with undefended divorces and to approve maintenance agreements under section 87 of the Act. The Bill provides for the creation of offices of judicial registrars to exercise jurisdiction under delegation from the judges. These offices will be similar to the office of master attached to State Supreme Courts. The Bill also removes the present limitations on the powers of the judges to delegate functions to registrars. The office of master is a concept well established in State superior courts. Masters undertake much minor and undefended work, relieving the judges of these more routine matters. The State experience is that the appointment of masters enables the numbers of the judges of such courts to be minimised. It is expected that the appointment of judicial registrars in the Family Court, together with the possibility of more matters being delegated to registrars, will leave the judges free to concentrate on the major matters and to accept additional jurisdiction. State courts of summary jurisdiction at present exercise limited family law jurisdiction. Apart from maintenance and minor property matters, however, that jurisdiction can only be exercised with the consent of the parties. Courts of summary jurisdiction are not presently able to deal with divorce applications. After discussing this matter with State Attorneys-General the Attorney-General proposes that the jurisdiction of courts of summary jurisdiction in family law matters be extended. The Bill gives courts of summary jurisdiction jurisdiction in respect of undefended applications for dissolution where the parties, for their own convenience, request that the application be transferred from the Family Court to a specified court of summary jurisdiction. Further, the monetary limit on the jurisdiction of these courts in property matters (unless the parties consent) has been substantially increased so that it will equal the monetary limit in the jurisdiction of those courts under State law in actions for the recovery of debts. It is expected that in country areas the extended jurisdiction for courts of summary jurisdiction will provide a less expensive and more timely resolution of family proceedings for the parties and their legal representatives. Financial Impact Statement The proposals for the transfer of proceedings from the Federal Court to the Family Court are substantially revenue neutral. Some additional expenditure will be involved in payments to the States in respect of additional jurisdiction conferred on courts of summary jurisdiction, which will be partly set off by the reduced work load of the registries of the Family Court. The additional cost will depend upon the number of matters brought in courts of summary jurisdiction and this cannot be predicted. Additional expenditure may be in the order of $250,000 in a full year. I commend the Bill to the Senate. I present the explanatory memorandum to this Bill. Debate (on motion by Senator Tambling) adjourned. 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)(4.07) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- This Bill will amend both the Management and Investment Companies Act 1983 and the Income Tax Assessment Act 1936 by permitting a management and investment company (MIC) to raise non-tax concessional capital in conjunction with tax concessional capital as well as enabling a MIC to exit the program without triggering the tax clawback arrangements by surrendering its licence. The proposed amendments follow the Government's consideration of the Bureau of Industry Economics' (BIE) review of the MIC program. The MIC program commenced in early 1984 with the objectives of encouraging the development of a viable private sector venture capital market and to provide management support and equity capital to young export oriented businesses using innovative technology and having the potential for rapid growth. This followed the report Developing High Technology Enterprises for Australia, prepared by a committee of the Australian Academy of Technological Sciences, chaired by Sir Frank Espie. The Espie report found that the lack of risk capital and a widespread lack of management and commercial skills within new high technology enterprises were obstacles to the development of those enterprises. Since the inception of the MIC program there has been a rapid increase in the availability of venture capital and continued strong growth is expected. The BIE in its review estimated that at 30 June 1983 only some $2m of venture capital had been available; by 31 March 1987 this had increased to approximately $310m with a further projected increase to about $570m for 31 March 1988. This rapid expansion in the availability of venture capital is indeed significant, and represents not only the activities of the MICs but also reflects growth in the availability of venture capital outside the MIC program. To 30 September 1987 the MICs have invested and committed almost $140m in 129 businesses across a range of industries, including computer hardware and software, medical equipment and products, scientific and technical services and industrial products and machinery. This is a clear indication that the program has gone a good deal of the way towards demonstrating the viability of a venture capital market. However, despite the increased availability of venture capital, the government remains unconvinced as to the durability of the venture capital market if the MIC program were to be terminated at this time. The danger being that premature termination of the program would not only place the MICs and their investee businesses at risk but could also lead to a lack of confidence in the venture capital market as a whole. The Government has therefore, decided to continue the MIC program until at least 30 June 1989. In reaching this decision the government has taken a number of factors into consideration which include the following: Firstly, many of the new non-MICs are still a good deal smaller than the MICs and with only a limited amount of capital available. Secondly, the MICs, unlike the non-MICs, focus their investments primarily at the more risky start-up and early growth stages of business development, with emphasis upon technology-based and export oriented industries. Thirdly, MICs appear to devote more time towards providing management support than the non-MICs. It was also felt that while financial deregulation had resulted in greater flexibility and competition within the financial system, this had not yet, to any great extent, flowed over into the high risk venture capital market, but had mainly benefited the more traditional areas of financial activity. The Government believes that the key to the long term viability of the venture capital market lies with its ability to attract funds from the major financial institutions. The institutions have begun to show an increased interest in venture capital but it is still very tentative. Indications are that institutional investors are reluctant to provide ongoing investment in venture capital as they regard the market as still being immature. The financial institutions are looking for an established track record in portfolio management of venture capital investments. The MICs with their spread of investments across the venture capital spectrum are well placed to show that such a track record can be achieved. An integral part of the MIC program is the 100 per cent tax concession which is provided in order to encourage investment in the MICs. The government has therefore decided to refer the program to the review of business taxation announced by the Treasurer in his recent Budget Speech. The future of the program beyond 30 June 1989 will be determined in the context of the review's findings, with due regard being paid to the program's objective of encouraging the development of a viable private sector venture capital market and assurance as to the long term viability of that market. The Government has decided that the upper limit of $20m per annum as the cost to revenue of the program will be retained for the life of the program. On the basis of a marginal tax rate of around 50c in the dollar, the $20m of revenue forgone will result in about $40m of tax concessional capital being available to the MICs per annum. In addition to the continuation of the MIC program the Government has recognised the need for a suitable mechanism by which MICs could exit the program. This is required so that individual MICs are allowed to voluntarily exit the program in an orderly and non prejudicial fashion. The raising of non-tax concession capital provides such a mechanism. At the moment MICs can raise only tax concessional capital. By allowing MICs to raise non-tax concessional capital in conjunction with tax concessional capital they will become less reliant upon the tax concession in order to attract funds, assisting in an orderly exit from the program. Apart from providing a suitable exiting mechanism, the raising of non-tax concessional capital will also increase the amount of venture capital available to these young innovative businesses without any additional cost to revenue. In order for the exiting mechanism to function, MICs must be able to voluntarily surrender licences without triggering the tax clawback provisions. To do otherwise would be prejudicial to interests of both the individual investors in the MICs and the businesses in which MICs have invested. The clawback provisions of the Income Tax Assessment Act operate to withdraw the 100 per cent tax concession for shares in a MIC which are disposed of within four years of the MIC becoming licensed or the shares being paid up, whichever is the later event. The clawback provisions are designed to encourage patient investment in the MICs while at the same time preventing abuses of the tax concession by investors. This Bill proposes to amend both the MIC Act and the Income Tax Assessment Act to enable a MIC to voluntarily surrender its licence without triggering the clawback provisions provided investors do not dispose of their shares in that MIC within the statutory four-year period. The Bill also proposes a number of minor amendments to the MIC Act. These amendments are necessary to clarify certain provisions, to remove a number of unnecessary restrictions and to resolve other administrative difficulties. Debate (on motion by Senator Tambling) adjourned. Debate resumed from 21 October, on motion by Senator Gareth Evans: That the Bill be now read a second time. Senator STONE(Queensland-Leader of the National Party of Australia)(4.07) —I understand that the Senate is debating the Appropriation (Parliamentary Departments) Bill cognately with Appropriation Bill (No. 1) 1987-88 and Appropriation Bill (No. 2) 1987-88. The Budget for 1987-88 presented by the Treasurer (Mr Keating) bore the hallmarks of a skilled, albeit shortsighted, political craftsman. Its centrepiece, which was an allegedly balanced Budget outcome, captured so much media attention that the more important questions about its underlying economic strategy were virtually ignored by media commentators. Essentially, it was a Budget directed towards the financial markets. The intention was to talk up the exchange rate and to talk down interest rates. Mr Deputy President, I am advised that at this stage it would be appropriate for me to foreshadow that, in respect of Appropriation Bill (No. 1) 1987-88, I shall move the following amendment: At end of motion, add: ``, but the Senate is of the opinion that: (1) this Bill is part of a continuing pattern of failure by the Hawke Government to face up to the need for adequate and timely adjustment of the economy; (2) this failure by the Hawke Government has heightened Australia's vulnerability to changes in world economic conditions at this time of crisis on world financial markets; (3) because the Government has squandered time and resources while persistently running Australia into massive debt, our national economic options are now so narrowly limited as to largely deprive us of independent options; and (4) the Government no longer has the scope to protect jobs, to stop the prospective rise in unemployment, to stem the continuing rise in numbers of Australians living in poverty or to protect the position of families more generally; and therefore calls on the Government to revise its fiscal, labour market, taxation and other micro-economic policies with a view to providing a more appropriate economic framework to meet our current economic and social dangers''. Less than a week after the delivery of the Budget its reception was transformed by Senator Walsh's extraordinary attack on it and, by implication, on the Treasurer. The Minister for Finance (Senator Walsh) implied at that time, on the weekend following the delivery of the Budget, amongst other things, that the Government lacked the `political courage' to bite into around 200 social welfare and other programs that, again in his words, `are not justified on social, equity or economic efficiency grounds'. The Minister for Finance was thereby criticising both the rhetoric and the substance of the Hawke-Keating Budget. In doing so he was seeking to distance himself from it and from them. Just how far wide of the mark that budgetary strategy was has since been frighteningly illustrated. On 20 October, four weeks ago tomorrow, Australian stock markets, in company with stock markets all around the world, crashed. Since that time international foreign exchange markets and, of course, our own foreign exchange market along with them, have brought about a major downgrading of the central reserve and transactions currency of the world, the United States dollar, and, of course, an even sharper decline in the value of our own dollar. With that initial crash and with the events which have followed it we have seen the Budget economic strategy rendered irrelevant. Although, of course, as the Government does not cease to remind us, it is still too early to assess the full and detailed consequences of that share market collapse and that foreign exchange market collapse, it is already clear that the optimistic Treasury economic forecasts which supported the budgetary strategy have been simply blown away. In his public responses to these events, Senator Walsh-I must say among whose more acceptable traits is a streak of economic rationalism almost unique among his ministerial colleagues-has again carefully and deliberately moved to distance himself from the Treasurer's attempts to salvage the Government's discredited policies. The irrelevancy of that strategy as laid down in the Budget in the face of a collapsing share market and a collapsing foreign exchange market, with all the attendant economic uncertainty which those events imply for the future, is already self-evident. The important question now is how the budgetary strategy and, indeed, the Government's economic strategy more generally, should be recast in order to tackle Australia's economic problems which until now the Treasurer has sought to gloss over in what, I think, can only be called his softly, softly approach to the Lodge. Part of the answer as to how that recasting of policies is to be attained is given in the Budget Papers themselves. I refer to page 7 of Budget Paper No. 1, that is, Statement No. 2. The Treasury purports to be the author of this particular Statement of the Budget, although I think these days the Treasurer and his private office staff go over it with rather a finer tooth comb than they once did. The Treasury states: The current account deficit, although significantly reduced, remains unsustainably high. That was written towards the end of August or early September, approximately six weeks before the events to which I have just been referring. The Treasury continues: Our large overseas debt is continuing to grow, although at a slower rate. Appropriate macroeconomic policies remain central to the adjustment process, and there is a need to complement these with an enhanced effort on a range of microeconomic policies. This is desirable to speed the adjustment process and, more generally, to improve the flexibility and adaptability of the Australian economy . . . Of course, so it is. That concise summary of the problems and constraints facing Australia's economic policy-makers is, in itself, unchallengeable. It states the problem and it points unmistakeably to the necessary corrective fiscal policy in this case, but also it hints at microeconomic policy, adjustments that are required. That was a statement drawn from the commencement of Statement No. 2. Let us now turn to page 52 of that Statement where the Treasury again says, and here I think the blue pencil of the Treasurer's office is rather more in evidence: The continued implementation of policies which consistently put runs on the board-particularly in terms of downward trends in inflation and in the current account deficit-without driving the economy through the floor, can be expected to produce an acceptable rate of adjustment. We should perhaps bear in mind those words, `particularly in terms of downward trends in inflation and in the current account deficit' of the balance of payments. As one senior economic journalist has put it, those words of the Treasury or, I think more accurately, the Treasurer's office, are doubletalk for `She'll be right, mate'. We have here a totally internally inconsistent analysis but one which effectively muddied the waters at the time it was first brought down. An economically robust analysis of the current situation and its inherent dangers obscured the fact that politically difficult but economically necessary responses had been sidestepped in the Budget itself. That is why Senator Walsh on two occasions now has taken the opportunity to part company publicly with the Prime Minister (Mr Hawke) and the Treasurer. His own general policy prescriptions are in conflict with those of his Government and his colleagues in that Government. They are unacceptable to the Treasurer and the Prime Minister because they flow consistently from the economic problems that he identifies. I will quote from a statement by Senator Walsh on 7 August this year, just five weeks before the Budget was brought down but, of course, during the middle of Cabinet discussions as to the nature of that Budget. In a speech which began with much the same view as the Treasury about the nature and severity of Australia's economic problems Senator Walsh pointed out that Australia had only three economic policy choices. Firstly, there was what he called the `draconian' choice, which was to stabilise the foreign debt by imposing on ourselves a catastrophic depression of infinite duration and frightening social consequences. Secondly, there was what he called the `irresponsible' choice, which was to ignore the problem until, as he put it, the International Monetary Fund imposed a solution on us. Thirdly, there was what he called the `sensible' choice, which was to stabilise and, in time, reverse our foreign debt position as a proportion of gross domestic product by a combination of consumption restraint, economic restructuring and productivity growth. From his immediate post-Budget comments and subsequent responses in the Parliament to the stock market and foreign exchange market collapses, the Minister for Finance clearly thinks that the 1987-88 Budget strategy represents the irresponsible choice. I would have to say that in that assessment at least it is impossible not to agree with him. The economic strategy of this Government has had two main themes. The first has focused on the private tradeable goods and services sector, which, according to the strategy, is expected to respond to a recent improvement in our international competitiveness, mainly achieved by a massive fall in the value of our currency vis-a-vis those of other countries, by displacing; imports and increasing exports of manufactured items and, in some cases-for example, tourism-services. The second prong of the adjustment process has pointed to constraining the growth of domestic demand. To that end, private and public consumption expenditure was to be reduced-so ran the theory. Certainly there was some success in reducing the growth of private consumption, but there was very little success-in fact, almost no success-in reducing the growth of public sector consumption, government consumption. That reduction in public and private consumption objective was directed to increasing domestic savings, and therefore, in turn, reducing imports and the current account deficit in the balance of payments. But the contentious question in this strategy is: How much can or should the pace of adjustment be forced? The answer emerges simply from examining the extent of the problem. The current account deficit in the balance of payments rose strongly-as the Government never ceases to point out-during the early 1980s. What the Government always fails to point out in that context is that it rose at that time because of a very strong burst of investment in the resource industries. Following the 1981-82 wage explosion, the recession of 1982-83 which resulted from that reduced import demand and business investment to an extraordinarily low level. Against that background, the current account deficit eased somewhat in 1982-83 to around 4 per cent of gross domestic product. But by 1985-86 that deficit had again increased-it increased further-to around 6 per cent of our gross domestic product, under the influence of swollen fiscal deficits under this Government and, above all, a wages policy totally out of line with our national productivity performance. It is true that in the latter part of that period these problems were also exacerbated by a significant decline in our international terms of trade-the capacity of our exports to provide the foreign exchange with which to buy imports. In the current Budget we have a forecast that the balance of payments deficit is to fall in the current financial year to what would still be an historically high level of 4 per cent of gross domestic product, a forecast which, I should add, in the light of recent events is already out of date. What we have now got-although we have not yet seen it reflected in the balance of payments figures and we will not see that for a month or two-are the effects of a further fall in the exchange rate impacting upon our balance of payments. A new J-curve is now commencing or is in prospect. In that respect it will be 1985-86 all over again. Let us consider the situation against which all this is happening. At 30 June last, which is the latest date for which we have figures, the gross external debts of all Australians-that is, government, corporations and individuals-totalled $109,000m. Just four years earlier, which was just after this Government came to office, that figure was only $35 billion. If we take the net figures-that is, after deducting from those gross figures any debts which were owed to Australians, including the Reserve Bank of Australia, by foreigners-Australia's net debts at 30 June last totalled some $83 billion, whereas four years earlier they were only $21 billion. In that very short space of time our net debts have quadrupled. What that boils down to is that, even at the time of the Budget, Australia was confronted with an unsustainable external account situation. Today that situation has become even more unsustainable than it was, because we now have the realities of our international uncompetitiveness, the likelihood of a resumed fall in the prices of our major export commodities-or a good many of them-and this dramatic increase in our overseas debt, and hence the debt servicing burden, which will be increased by the sharp fall in the value of the Australian dollar which has recently occurred again. These events are now forcing an effect on the Australian economy and, although they are not yet publicly acknowledged to be doing so, on the attention of our Government. Adjustments in economic policies and, as part of that, in community expectations and attitudes-a point on which the Leader of the Government in the Senate (Senator Button) often harps, quite rightly, in my view-are urgently required if the slide which has already occurred in living standards is to be halted and, over the longer term, reversed; it certainly cannot be over the shorter term. The Budget Papers canvassed the risks which are associated with forcing the pace of this adjustment but they also recognised, although the Budget did not take any account of it, that the longer we prolong this process of adjustment and refuse to face up to it, the more our debt burden will increase and the greater will be the call on future income from exports to service that debt. As I have said, since the Budget was brought down we have seen a major deterioration not only in the state of our economy but in the prospective state of the international economy. It is now distinctly likely-not to use any stronger term-that, in the light of those momentous events commencing almost four weeks ago, Australia particularly will be vulnerable to have overseas lenders pull from under us the hot money rug on which our Government's economic policies have been reclining for so long now to maintain not merely the value of our currency but our standard of living. We should not underestimate the capacity of the financial markets to do that, because the extent to which our financial markets, economy, balance of payments and capital account have been propped up by hot money in the past couple of years in particular, by these standards at least, can be regarded as almost limitless. It is very great. As an illustration of the kind of dilemma which these events have produced for our Government, let us consider that it has been rightly pointed out that in the wake of the share market crash it is the responsibility of the monetary authorities, the central bank, to maintain liquidity in the financial markets to avoid any sharp bankruptcies or crashes of that kind which could have adverse consequences. I agree with that, as we all do. But the problem that the Australian authorities have is that that cannot be a never-ending road. We no longer have the options open to us to prolong that action for very long because if we do so that action will undermine confidence in our currency. We also cannot afford to have our currency once again go into the kind of free-fall situation that we saw in February and April of 1985, again in November 1985 and, unfortunately, too often during the course of the last couple of years under this Government's policies. The Reserve Bank of Australia is faced with the problem of conducting a delicate operation. It is walking a tightrope-on the one hand it is seeking to maintain adequate liquidity in the financial market while, on the other, it is being extraordinarily concerned about the consequences for the foreign exchange market of doing so. Furthermore, the events that have already occurred in the last 2 1/2 weeks, as a result of which our currency has already depreciated by something like 8 per cent against the trade weighted index of a basket of currencies and by a bit less than that against the US dollar-that fall has already occurred, let alone any further possible falls that may occur-will themselves regenerate inflationary pressures. Therefore, whereas the Budget Papers talk about an inflation forecast of 6 per cent by the end of this financial year most private forecasters are putting that figure at around 7 1/2 per cent at least, without considering the possibility of further developments between now and then. Events of that kind have already almost certainly overturned the inflationary assumptions in the Budget Papers which were based on, among other things, the so-called wages accord between the Government and the Australian Council of Trade Unions. The point that I want to try to drive home to the Senate, which is set out in the amendment that I wish to move to the Appropriation Bill (No. 1), is that because this Government has squandered time-the past 4 1/2 years, but particularly the past three years-and resources in the sense of living off borrowed money, while persistently running Australia into massive debt, and because of the Government's failure to face up to its responsibility, our national economic options today are so narrowly limited that we can no longer regard ourselves as possibly having an independent economic policy. For example, just consider what the situation would be like if today our international debt were not $109 billion but the $35 billion figure that the Government inherited. Just consider what the situation would be like if today, instead of having a balance of payments deficit which was forecast in the Budget at 4 per cent of gross domestic product and which undoubtedly will be higher than that now unless the recession cuts back imports, we had a balance of payments deficit running at only 1 1/2 or 2 per cent because of good economic management over the past 4 1/2 years. Under those circumstances, the Government would have some options and would, perhaps, be able to contemplate maintaining a softer monetary policy and keeping interest rates lower than they would otherwise have to be, with the knowledge that this would allow our balance of payments deficit to be rather higher than would otherwise be the case, in the hope that those policies would be able to sustain activity in the Australian economy, shore up employment, reduce the otherwise likely increase in unemployment and generally help to soften the blow from abroad that is in prospect. Because the Government has squandered its opportunities to put us into that position over this time, we do not have those options. We cannot cut taxes and allow the Budget deficit to expand-the kind of thing that might, under other circumstances, have been sensible to suggest. We do not have that option any longer because of the fact that, for 4 1/2 years, this Government has continued to allow us to run further and further into debt and has maintained a balance of payments deficit that is inordinately high. The real tragedy of Australia's economic situation today is not merely that we are in this position of heavy indebtedness; it is the fact that we do not have to be. This Government continues to proclaim that it has been a successful government that has maintained employment and even managed to reduce unemployment slightly and that the standard of living, until the last year or so at least, has risen slightly. But what the Government has never told us is that there has been a price for that, and the price has been to drive us into debt and to maintain a balance of payments deficit at a level which today ties the hands of the Government in facing up to the now enormous problems confronting us both domestically and abroad. Therefore, the Opposition calls on the Government to revise its policies-not merely its fiscal policy but its labour market policy, its taxation policy and its other microeconomic policies, such as the ones about which the Leader of the Government in the Senate was refusing to talk in response to Senator Chaney's question today-in order to provide, even at this late stage, a better and more appropriate economic framework in which to meet and deal with our current economic and social dangers. It is the tragedy of this Government and of Australia under this Government that it has frittered away 4 1/2 years of office, particularly the last three years of office, without putting to rights the fundamentals of our public finance and of our balance of payments, and without attempting to brake the growth of our international debt. Because of all those failures, the Government is now helpless in the face of economic events bearing down on us and Australia will be tossed around in the wake of those events. The ACTING DEPUTY PRESIDENT(Senator Peter Baume) —Order! The honourable senator's time has expired. Senator MAGUIRE(South Australia)(4.37) —This afternoon we are debating jointly three Bills-Appropriation (Parliamentary Departments) Bill 1987-88, Appropriation Bill (No. 1) 1987-88 and Appropriation Bill (No. 2) 1987-88. Effectively, they are the Government's Budget Bills which provide for the 1987 Commonwealth Budget and, as a Government member, I support the legislation. A major feature of the 1987 Budget, which was brought down in September, was expenditure restraint. This Government faced up to the task of restraining the growth in government spending and has cut expenditure on the Forward Estimates quite significantly. The outcome of that activity has been to reduce the Budget deficit for the current financial year to a balanced position, that is, a zero deficit. That compares with the actual outcome in the last financial year of $2,700m and compares even more favourably with the prospective deficit inherited from the Liberal Treasurer of $9,600m for 1983-84. That is a major reduction in the Budget deficit compared with four financial years ago, and that prospective $9,600m deficit inherited from the Liberal Government. Despite the reduction in the deficit to a zero position this year, the Government has been able to proceed further with its rounds of tax cuts and tax reforms which it started in 1985 and, from 1 July of this financial year, the marginal income tax rates have been cut significantly. The rate, which was formerly 46c in the dollar and later reduced to 43c in the dollar, is now a mere 40c in the dollar. The top rate of income tax which we inherited from Mr Howard when he was Treasurer of 60c in the dollar, which we subsequently cut to 55c, from 1 July this year was reduced to 49c in the dollar. The result is that no Australian taxpayer will pay more than half of his or her extra income in income tax, because the top marginal tax rate is now 49c in the dollar. Economic indicators point to improvements in the Australian economy in recent times and suggest that the Government's budgetary strategy is on target. I instance the indicators which are reported in the Treasury Round-up, the economic bulletin for the month of October published by the Federal Treasury. That summarises a number of the major economic indicators in Australia at present. It is very interesting to note that in the three months to August this year there was a 4.1 per cent growth in new motor vehicle registrations. It is a welcome growth situation in Australia's very important new motor vehicle production industry. There are also signs of an upturn in the home building industry. In the three months to August this year there was a 3.4 per cent increase in new dwelling approvals, suggesting that the recent downturn in housing activity in Australia has bottomed out and that growth is now starting to occur in the new home building industry. One program which must be linked to that, one of the Government's policy initiatives which has been successful in boosting home building activity in Australia, is the first home owners scheme which was introduced by the Hawke Government in 1983 and which provides grants for householders to purchase their first homes. In the three months to August there was growth in retail sales of some 3.4 per cent, a very welcome rate of growth indeed and a sign of continuing confidence by consumers in Australia. I would like to mention particularly growth in employment which has occurred in recent months. For example, in the September quarter this year, the total number of Australians at work was 2.6 per cent higher than in the September quarter of 1986. That increase in employment has been one of the contributors to the extra 800,000 jobs in Australia since this Government came to power. I am very pleased to say that in just over 4 1/2 years of the Hawke Government 800,000 more Australians are at work. I was rather interested in comments made in the preceding speech by Senator Stone who, of course, was a former head of the Treasury. He said that this Government over 4 1/2 years has frittered away its opportunities in Australia. I must say, and I am sure Senator Tate who is in the chamber at the moment would agree with me, that when we look at the fact that some 800,000 extra jobs have been created under this Government-the great majority are permanent jobs in the private sector; they are not band-aid jobs in make work schemes-it is very hard to sustain the argument which Senator Stone embarked upon that opportunities have been frittered away. Clearly, over 800,000 more Australians are at work and no doubt they regard that as a very tangible improvement in the Australian economic scene. In the June quarter the unemployment rate fell as employment rose. In the June quarter the average rate of unemployment was 8 per cent compared with 8.2 per cent previously. In regard to new jobs available in the community, one of the more important items is a document prepared by the ANZ Bank which shows that in the month of September this year the number of new job advertisements in metropolitan newspapers rose by 5.9 per cent, making the figure 11.9 per cent higher than just 12 months ago. So the number of new jobs advertised has increased by more than 11 per cent over a 12-month period and, more importantly, the number of new jobs being advertised is now at its highest level since April 1986. I suggest that Senator Stone would have great difficulty in making his claim that opportunities have been frittered away by this Government. He needs to look at not only the numbers of extra people at work but also those who are about to go into work as a result of very rapid increases in the number of new jobs being advertised in Australia. The Australian Bureau of Statistics publishes a series of job vacancies. That series also shows an uptrend. The number of job vacancies recorded in August 1987, which are the latest figures available, is 56,200 or some 7,600 higher than in August 1986. I think the Government can take some heart from those figures. It is yet another confirmation that the Hawke Government, members of the Australian Labor Party, are much better economic managers than the Liberal Party of Australia under Mr Howard in the period to 1982-83. We need only to look at Mr Howard's recent record to be able to substantiate that particular claim. I pointed out on a number of occasions in this place that Mr Howard's record as Treasurer was disastrous. In five Budgets he had a disastrous record; he presided over the destruction of hundreds of thousands of jobs, a double digit unemployment rate and double digit cost of living rises. That was his record as Treasurer. I would like to examine in some detail Mr Howard's recent record as Opposition Leader in the Australian Parliament. It is interesting to go back to Mr Howard's speech on the 1986 Budget. He said: Unemployment is likely to rise well above the current 8.3 per cent. That was what Mr Howard said just over 12 months ago, but the facts are quite different. The reality is totally at odds with the claim made by Mr Howard because unemployment did not rise in the financial year 1986-87. The actual figure for the year was 8.3 per cent, the same as the figure quoted by Mr Howard as being the current figure at that time, so there was absolutely no rise in unemployment in that particular year. Mr Howard went on to say: . . . recession is likely to continue for longer than anticipated by the Government . . . But when one looks at the gross domestic product figures that we have available to us now for 1986-87, we see that actual gross domestic product rose in both halves of the financial year; it did not rise at some isolated point of time in that year, it rose in both halves of the 1986-87 financial year. Again we can see that with economic growth occurring in the community there was no such thing as an economic recession as predicted by Mr Howard during 1986-87. He then went on to talk about the Budget deficit. Mr Howard, the Leader of the Opposition and a former Treasurer of Australia last year, said: . . . the Budget deficit will blow out above the estimated $3.5 billion. He attacked the estimated deficit, the estimate made by the Treasurer (Mr Keating) that the Commonwealth Budget of Australia would be $3,500m last financial year. All honourable senators have those figures available to them. They show that the actual deficit for 1986-87 was $2,700m. It did not blow out from the $3,500m as estimated by the Treasurer, it came in better than that-it came in at a figure of $2,700m. Yet that particular claim again was made by the man who wants to be Prime Minister of this nation, the man who was Treasurer of Australia for five years and the man who left this country with double digit unemployment and double digit inflation. Mr Howard, in his speech last year, went on to say that the Budget: will limit any substantive fall in interest rates during the year ahead. He claimed that there would be limited falls in interest rates. I ask honourable senators to look at some of the commercial rates in the market place; for example, the rate of interest paid by the banks on their 90-day bank bills which is one of the most common ways in which banks borrow money for lending to the rest of the community. The rate of interest on those bank bills was over 17 per cent last January; the rate yesterday was below 13 per cent. So there was a very significant reduction in that important interest rate in the community. I would like to turn also to Mr Howard's predictions last year, made in his speech on the Budget, concerning net exports. That particular piece of economic jargon refers to the excess of Australia's exports over its imports. The Budget forecast for the 1986-87 financial year was for a 1 3/4 percentage point contribution to gross domestic product from net exports. Mr Howard, in response to that prediction in the Budget, said that this would result more from driving the economy into recession and reducing imports than from the so-called J-curve working. But when one looks at the figures one sees that they totally contradict the claims made by Mr Howard. They totally disprove his statement. While there was a 4.8 per cent reduction in imports in 1986-87, there was far stronger growth in exports. Exports did not stagnate, as he suggested would happen; they grew by 7.5 percentage points. So, wrong again on net exports, Mr Howard. Senator Short, a member of this place who, by the way, is a former Treasury officer-I think that is correct-made some predictions about the Budget in this place on 28 August last year. I found them fascinating reading when I went through them recently. I love checking up on the statements made by members of the Liberal Party because I know that I can always catch them out. They are always interested in the short term gain. They do not take a long term view of politics and they trip themselves up fairly quickly. For example, on 28 August last year Senator Short said that it was highly unlikely that Australia would lift its net export performance by anything like 1 3/4 percentage points. So a member of this place, I think at the time a shadow Minister in the Opposition and a former Treasury officer, said that Mr Keating's prediction about the contribution of net exports to economic growth would not reach the 1 3/4 percentage point level. But the record shows that the actual figure was 2.3 per cent, which far exceeded the prediction made by the Government. There is yet another case of an Opposition senator looking for the chance of short term gain, and getting caught out again. It is just a matter of checking the records and watching what Opposition senators say. I was interested in the prediction that Senator Stone made today. Mr Acting Deputy President, I can assure you that I will be checking the record very assiduously in the months to come to ensure that people such as Senator Stone are brought to account for the predictions they make about economic matters. Using about six instances this afternoon I have been able to show that Mr Howard made very rash predictions which did not come true and I have shown up a rather foolish prediction by Senator Short, made just 15 months ago, which has been clearly disproved by the record, by the Budget outcome. Those predictions made by honourable senators in the debate today and which will be made during this week will be examined very carefully by Government members. I would like now to refer also to the fact that in this Budget the Government is bringing down its $500m family package, as announced during the election campaign. That family package will introduce real increases in the standard of living of more than one million children. The package will be introduced from this Christmas and will include a new family allowance supplement of $22 a week for families with one child, earning $300 a week or less. That income limit increases by $12 for each subsequent child, so the income limit for a two-child family is $312 a week. Families earning below that figure qualify for the full $22 a week for each dependent child. The most important thing to bear in mind about the package is that it applies to working families. It applies not just to families whose head depends on social welfare payments but also to families whose head is in the work force but who is earning a low income. Of course that family package was a major election policy statement of this Hawke Government. It is noteworthy that the Government fought the election campaign on the themes of leadership and stability, its record in economic management-the fact that it had taken the tough decisions to get Australia back on the right economic track-and the lack of credibility of the Opposition in the Federal Parliament. It is very interesting that, as a result of the July elections, Labor not only is in government in four Australian States but also has been elected, for the first time in history, in three successive Federal elections. One of the results of the last election was that the Hawke Government increased its majority in the House of Representatives from 16 to 24 seats-a net gain of four seats, giving us our largest ever majority in the House of Representatives. We achieved election victories in the seat of Denison in Tasmania-which I know Senator Tate is very interested in-in the Northern Territory and, most particularly, in four more seats in Queensland. We won the seats of Forde, Petrie, Hinkler and Fisher. A very big swing to Labor in Queensland resulted in those substantial gains for the Government. I regret that we lost two very hard-working members in Mr Maher, the former member for Lowe in New South Wales, and Mrs Mayer, the former member for Chisholm. Those were the only two losses by this Government in the election. It is very important to note that the Labor Party now holds-- Senator Peter Baume —You lost Senator West. Maybe she wasn't a valued colleague. Senator MAGUIRE —I will talk about the Senate in a moment. It is important to note-I know that Liberal members do not like to hear about this-that, as a result of the realignment in Australian politics, Labor now holds the majority of House of Representatives seats in every mainland State of Australia. Only a matter of 10 years ago my State of South Australia was the only State that had a majority of Labor seats in the House of Representatives. I know that Liberal members do not like to hear these unpalatable facts but I repeat that Labor now holds the majority of House of Representatives seats in every mainland State of Australia. That is as a result of swings to Labor, particularly in Queensland, achieved despite the very difficult economic climate and economic circumstances in Australia. The Government had a swing against it at a national level, on a two-party preferred vote, of only one per cent-quite a small swing in view of the circumstances. The results give absolutely no comfort at all to the Opposition because, on the figures, it will be harder for the coalition parties to win the next election than it would have been for them to win the 1987 Federal election. It will require a swing of 3.3 per cent to win Labor's thirteenth most marginal seat-which, on my calculations, is the seat of Calare in New South Wales-and remove the Government's majority. Our campaign was very effective in the marginal seats. There is no doubt that, despite a recent assessment of the Liberal Party about the election results, we targeted the marginal seats very effectively indeed and we focused our campaign on the key seats. By contrast, the Opposition will be very vulnerable at the next election. Again on my calculations, a uniform swing of 2 per cent to the Government would net seven Opposition seats and that would give us a majority of 38 seats in the House of Representatives. A swing of 2 per cent to Labor would give us the seats of Chisholm, Casey, Flinders and Deakin in Victoria, Moreton and Dawson-two more seats-in Queensland and Lowe in New South Wales. The Hawke Government's strongest performance at the election was in Queensland. As I have pointed out, we won four seats. We now have a majority of the Federal divisions in Queensland, holding 13 of the 24 Federal seats in that State. What a change that is from the period 10 years ago when Labor held only one Federal seat in Queensland. I well recall the time not so long ago when the only Federal seat held by Labor in Queensland was that of Oxley held by Mr Hayden. We now hold 13 seats, a majority of the seats in Queensland. All I say to the coalition parties is, `Eat your hearts out. Labor is now the majority party in that State'. The reason for that is that there was a swing to Labor, to the Government, of 1.4 per cent in Queensland on a two-party preferred vote basis. Queensland is the State that is supposed to be the jewel in the crown of the National Party of Australia. I see there are some National Party senators in the chamber today. Queensland was supposedly the jewel in the crown of that Party. But the result of the election shows that four seats went to Labor. On the calculations of others in the Labor Party, another 1,000 votes to Labor would have given us three more seats. The seats of Kennedy, Dawson and Moreton would have fallen to Labor with another 1,000 votes spread over those seats. It is particularly interesting to note that in the Federal division of Wide Bay-you, Mr Deputy President, will be aware that this incorporates the State seat of Sir Joh Bjelke-Petersen-the swing to Labor was 2.6 per cent. In fact, one of the biggest swings to Labor in Australia occurred in the Federal division in which the town of Kingaroy is sited. There is no doubt in my mind that the result in Queensland in the Federal election was a stinging rebuff to the ill-conceived `Joh for PM' campaign because the biggest swings to Labor in the Federal election occurred consistently in the State of Queensland. One can say that the wheels fell off the `Joh for PM' band-wagon before it had even left the Queensland border. The reality was a stinging rebuff to the National Party in Queensland, a landslide to Labor and a major electoral realignment in that State. I turn to the rural results in the election campaign because it is quite clear from the figures available that the swing against Labor in rural and provincial Australia was less than in the capital cities. That is a very significant result because, prior to the 1987 election, of our nine most marginal seats five were based on provincial cities or included substantial rural areas. But the reality is that in the election we held every one of those seats. Not one of those five seats, based on provincial cities or having substantial rural areas, was lost by Labor. That followed a period of years in which honourable senators from the Liberal and National parties talked in this place about how the Labor Party had no support in country areas and that its taxation reforms and other policies would alienate voters in rural areas. The fact is that we did extraordinarily well outside of the capital cities in the 1987 election. Not only did we hold the seats that were at risk, the marginal seats, but also we picked up two provincial seats. We gained the seat of Hinkler in Queensland, based on the cities of Bundaberg and Gladstone, and we gained the Northern Territory. So there were further gains to Labor in rural areas of Australia at the 1987 election. The so-called rural revolt, about which we in the Government were subjected to tirades day after day and week after week in this place, completely fizzled out. The Opposition did not convince the townspeople. The so-called rural revolt did not carry the townspeople along with it. One of the reasons for that is that those Australians who live in country areas are becoming more and more aware as every month goes by that Labor governments are not as bad for them as the picture that has been painted by conservative politicians in the past. Those who live in country areas are becoming more and more familiar with life under a Labor government. They have found that the picture is not as bad as that painted by conservative politicians. It is interesting to note, from my calculations, that 10 years ago the Labor Party held just three Federal divisions outside of the capital cities of Australia. Following the 1987 election one can estimate that we now hold some 21 out of 45 non-metropolitan electorates. So there has been a quantum growth in Labor's representation in rural areas of Australia. That has been one of the major factors in the increase in Labor's majority in the House of Representatives. Of course, one of the big flops of the campaign was the role of the New Right, which has totally dropped out of the news, as honourable senators will be aware, in recent times. Who has heard anything of Katharine West and the other maddies out there? They have dropped out of the news completely. Another aspect of the campaign involved the total flop of the National Farmers Federation (NFF) campaign. The NFF targeted 22 seats in the election campaign; 11 of those were held by the Government and 11 were held by the coalition parties. Labor held every one of its 11. Labor held every one of its seats targeted by the National Farmers Federation and also won three from the Liberals and Nationals. That was the effect of the National Farmers Federation's campaign. We received a positive swing to us in all but one of the Labor seats targeted by the National Farmers Federation. So in 10 of the 11 seats held by Labor and targeted by Mr McLachlan and his cronies, we got a swing to us, not against us, at the election campaign. It is interesting that the biggest swing to Labor in South Australia occurred in the seat of Barker where Mr Ian McLachlan has his largest property. In fact it was in the southern part of the Barker electorate, where Mr McLachlan's property is situated, that the biggest swing to Labor in South Australia in the election occurred. At the 1987 election Labor rewrote the history books by winning three elections in a row. I believe we will win the next election. I believe we will win four terms and, as a result of that, we will totally rewrite the history books of Australia. Senator PETER BAUME(New South Wales)(5.07) —The Senate is debating the Appropriation (Parliamentary Departments) Bill 1987-88 by agreement cognately with the Appropriation Bill (No. 1) 1987-88 and the Appropriation Bill (No. 2) 1987-88. My colleague Senator Stone has foreshadowed that at an appropriate stage he will move an amendment to the motion for the second reading of Appropriation Bill (No. 1). I rise to speak to the Bills and to support the amendment foreshadowed by Senator Stone. First, it is desirable to say something about the speech which we have just heard from Senator Maguire. It was a strange mixture of hubris and nervousness. After all, why would someone come in here and find it necessary to set out the details of the election and yet ignore the fact that among the victories and losses one of his own colleagues in this chamber was defeated. He did not mention that even when we from this side attempted to draw it to his attention. Former Senator West, an Australian Labor Party senator from New South Wales, was defeated in the election. But Senator Maguire, probably out of nervousness, did not even refer to that. The election outcomes are indeed a matter of history and fact. They were what Senator Maguire says they were. Senator Stone —Another one resigned from the Party and would not come back and sit with them again-Senator Georges. Senator PETER BAUME —I pick up Senator Stone's interjection. But, if the election result is a matter of history, so too are the economic verities to which Senator Stone has referred in his speech. It is not without interest that Senator Maguire, in his address, did not respond to one of the major points raised by Senator Stone. We reckon that Senator Maguire chose to ignore these; had he possessed any of the answers to the points raised by Senator Stone, he would surely have presented them here today. The opportunity given by this debate allows senators to range widely-in fact to range over much government activity and not least to have a look at matters of context, the context within which we operate in Australia. Senator Stone has referred particularly to the economic context. We can look at the economic context, the political context and questions of context which are so vital today in Australia. They are as vital as the options we choose or the priorities we make. Unless we get the context right, many of our efforts will be in vain. The context in which we operate nationally should give Australia great cause for concern. I go back to what my colleague Senator Stone said. He described a national debt in excess of $100,000m and pointed out that if one nets that down the debt is $83,000m. He pointed out that when the Labor Party took office-the glorious Government of which Senator Maguire spoke-the netted down foreign debt was $21,000m. That is as much a verity as any of the election figures which were presented to us. We heard nothing of that. We know that the foreign debt is rising by more than $1,000m every month. Indeed, today we had the figures showing that for the last month it rose by $1,100m. We know that the balance of payments deficit has been running as high as 6 per cent of gross domestic product (GDP). We know that the Government thinks that it will come down to 4 per cent of GDP. But the Government inherited a level far lower than that-a level, I believe, of less than 2 per cent of GDP. The Government now thinks that it is doing well by aiming for a much higher figure than that. Our currency is diminishing rapidly in its value against the harder currencies. Against the Japanese yen it was in the low 90s and it probably remains there. Senator Stone —It has fallen by about 10 per cent. Senator PETER BAUME —Senator Stone says that it has fallen by about 10 per cent. Business confidence is low. More than that, we know that measured poverty in Australia is increasing. We know that home prices have put buying homes out of the reach of many Australians. The parents of young adults ask, `How can they hope to do as we did and purchase and own homes?'. The rental market has contracted and has disappeared. Rental accommodation is impossible to find. Homelessness in Australia has increased rapidly under this Government. Business failures have increased and are at a high level. Government support for the needy has diminished and government support for the wealthy has increased. Families in Australia, whose functions are so important and vital-whatever form they have-are finding it harder to fulfil those functions. So of course we are concerned and worried. We look at the context and we do not like what we see. I am reminded that the Budget which we are considering was in two parts. There was a preliminary Budget statement in May this year. People have forgotten some of the things that were in the preliminary statement, but they are part of the Budget presentation which we are considering now. We remember that the Government sought to balance its books by reducing or withdrawing benefits to the needy, by imposing harsher conditions for those in need to gain access to benefits, by creating longer waiting periods and so on. Has anyone forgotten that the Government sought to balance its books by making conditions for widows harder, by telling widows whose children had grown older and who had done nothing more than elect to be full time homemakers, that they had to go out and compete again in the work force, a work force in which today there are 600,000 people registered as unemployed? What kind of priority was that? The only sin those people had committed was trying to be homemakers and to look after the children who had been left in their care. The Government saw fit to impose harsher conditions on the unemployed, families, school leavers, single sickness beneficiaries and all the young unemployed. It managed to take $77m in a full year from them. The Government sought to make those with complicated illnesses less able to pay their way. It sought to make those choosing to take beds in private hospitals pay more. It sought to make it more difficult for students, and it sought to make it more difficult for those seeking to get child care. The Government sought to make it difficult for all of those people to make their way. The Government at no stage gave us a full accounting of who the losers would be from this mini-Budget exercise, what the extent of their loss would be and what the social costs of the measures which it introduced would be. The social costs are many, not least in the area in which I am expert. During the Estimates hearings we had occasion to test the Government on its proposals to take away some of the rebates for payments to consulting physicians. I am a consulting physician. As I am no longer in practice, I have no pecuniary interest in what the Government has chosen to do. But the Chief Medical Officer of the Commonwealth told us in the Estimates that in relation to 20 medical conditions which I put to him, the Government's proposals simply would not work, that the conditions for which it was proposed to limit access to consulting physicians were the very conditions for which prolonged contact with those physicians was absolutely necessary. In the initial Budget statement the Government sought to achieve its major cost savings by hitting the weakest and the most vulnerable in our society. We should make clear a priority which the Liberal Party of Australia and, I am sure, the National Party of Australia have always emphasised, and that is that we will respond to need when we provide our welfare. It is impossible to understand the social priorities of some of the measures which were introduced by the Government in May, especially when they were to be offset by tax cuts for all, including the wealthiest in the community. I wish to use this opportunity to say something else in the area of context, to talk a little about the trade context in which Australia is trying to operate. Our capacity to trade will determine our capacity to prosper. Senator Maguire said that there had been a 7 1/2 per cent increase in trade. He did not bother to tell us whether he was talking about dollars or volume, but whatever he was talking about, I accept his figure in good faith. But other countries have had to trade under adverse circumstances. For example, Sweden and Switzerland have had to make their way in a hostile world. If Australia is to prosper, we must examine the context in which we are operating. We have to set the context and we have to get it right. It is appropriate now to examine the trade context, especially as it relates to Australia's relations with the three major trading groups in the world in which we operate. Those three major groups are critically important to Australia. I ask: How does what they are doing affect us now, how much have they done to damage us, and what are they threatening to do in the imminent future? The three main blocs are the European Community-a community of well over 300 million people-Japan, which is the great giant to our north, and the United States. Those three groups together account for 60 per cent of all the world trade in manufactured products, so they dominate most of the markets that interest us. The three groups are quite dissimilar and they present quite different problems for Australia today. The United States is the country most open to imports. It is the country that has been most serious about ending protection. Because it has been most open to imports, it has sucked in imports. That is one of the reasons that large United States deficits have become inevitable. The United States is heading into a presidential election year, and we have to ask what mood that will create for the United States approach to trade, especially as the Uruguay Round is upon us. In its dealings with the European Community, the United States has been operating at a great trade disadvantage. The European Community has a trade surplus with the United States of something like 25,000 million European currency units (ECUs), which is about $A30 billion, annually. At the same time, the US capacity to penetrate the European market has dropped and its exports to the European Community have dropped, over about four or five years, by about 75 per cent. So the United States is becoming more aggressive. It is looking at the situation and it does not like what it sees. It sees unequal treatment being given to it in its relations with Europe. It is approaching an election year in which protectionist pressures are rising and it is approaching the Uruguay Round where it wants to get some progress on moving further towards free trade. I put to the Senate that part of the context in which we operate is that there is the possibility of a trade war between Europe and the United States if things do not go well. Such a trade war, should it occur, would be to no one's benefit and especially not to the benefit of a country such as Australia, trading as it does with both Europe and the United States. The European Community is chronically in deficit in its relations with Japan. It had a deficit of $US8,000m in 1982 which has now risen to over $US22 billion a year. The European Community now understands that this cannot go on. So in terms of that bilateral relationship, things are not good. The European Community is the largest exporter of dairy products in the world. It is the largest exporter of beef and the second largest exporter of wheat. It is the third largest exporter of sugar after Cuba and the Soviet Union. Of course, it is also the largest agricultural importer in the world but mainly in coffee and tropical products. The European Community is in a mess and that is important for Australia in its trading capacity, prospects and future. Europe is suffering from what has been called `Euro-sclerosis', an incapacity to modify what it does in the face of some realities which I will set out. Japan, by contrast, after probably being worst affected of all the players by the oil shock, came out of the oil crisis toughened and more competitive and we are seeing the result today. Because of what the European Community has done, because of its production policies, its subsidisation policies and its export subsidies, the world prices of products that affect Australia have dropped by about 16 per cent. The European Community has in stock over one million tonnes of butter. It costs the European Community a dollar a day per tonne to store this butter. That store is three or four times the entire world market per year. How are we supposed to operate as a nation interested in dairy products in that kind of context? The European Community has a stock of beef of over 650,000 tonnes and in the killing season it is adding to that stock by 10,000 tonnes to 20,000 tonnes each week. The European Community finds itself in this position because of its production and export subsidies for agriculture. In 1986 export subsidies for agriculture were about 10 billion European currency units, about $A13,000m. We in Australia, looking at this Budget and asking what kind of context we are working in as we try to trade our way out of trouble, find we have very great difficulties. It is true that in 1986 the European Community was our second biggest trading partner but this was because we sell more than $1 billion of coal a year to the European Community. We sell $900m of wool and $750m worth of metals and ores a year to the European Community. But our problems with the Community relate particularly to agriculture. It is Australian agriculture that has suffered and it is all Australian trade that might suffer if the European Community cannot get its house in order. In the European Community agriculture is big business-it has become big agri-business now-but it is socially important because of the many small communities which are agricultural. It is because of these that Europe-in particular, Germany within the European Community-seems to lack a capacity and will to move. It seems that the common agricultural policy (CAP) is the problem that is making so much difficulty for us in Australia. After all, because of the common agricultural policy, European domestic subsidies stimulate overproduction so that Europe produces uneconomically more than it needs and the price related supports then distort community markets so that it is more difficult for Australia with its very efficient farming, its very efficient production, even to penetrate those markets. The export subsidies then allow the European Community to dump on world markets and to take away from us or interfere with the non-European markets to which we have traditionally sold. Interestingly, in talking about context, the common agricultural policy is now costing the European Community enormous amounts of money. In fact, in this current year, or the year just past, the CAP cost the European Community more money than the total income which the Community received from all the member states. Mr Deputy President, you will know that the Community gets its income from a part of the value added tax collections of each of the member states. The common agricultural policy subsidy payments this year came to 29 billion ECUs when the total income of the Community was 24 billion ECUs. I say to honourable senators that the European Community this year is technically bankrupt because it is paying out on an agricultural policy, the effect of which is to beggar the rest of the world, more money than it receives in total. Honourable senators may not have realised that the Europeans have got where they are partly because they have developed a decision making process which we do not use in this country. They have proceeded at a painfully slow speed by a method of consensual decision making. Unless we can master the consequences of their consensual decision making method, we will not be able to correct the situation in which we find ourselves. What does it all mean for Australia? Australia has already been forced to make more dramatic changes than has the European Community. Since the mid-1970s we have reduced our butter production by more than 60 per cent. We have reduced our skim milk production by 35 per cent. Our beef herd has been reduced by 27 per cent and in the last three years alone we have reduced our wheat acreage by 15 per cent and our barley acreage by more than one-quarter. Employment in this country has suffered. Farming communities have disappeared. Small farming towns have discovered that they are no longer viable and our fragile rural communities have been destroyed. It is all very well for the Europeans to tell us that they cannot change because they have fragile communities; we from this Senate should tell them that we do as well and that Australia is suffering. Mr Deputy President, in the year ahead Japan will have to try to start opening up its markets to many more imports. It will have to take a lot more imports as part of its share of solving some of the world problems. The European Community has to be helped to modify and move the common agricultural policy to something more sensible. It has to move from production subsidies to income support, which seems to be the favoured mechanism being put to us by Europeans. That would be very helpful. The United States must be assisted in the election year to resist the more outrageous protectionist pressures. The United States has to be assisted-as far as Australia can do so-towards a successful prosecution of its role in the Uruguay Round. We see an interesting situation where the United States legislative branch is becoming heavily protectionist as elections approach while the United States Executive tends to be much more interested in what the Uruguay Round might produce. Australia during this time must be able to take advantages, such as they are, of our more competitive export position, brought about by our weakened currency. I think that new protectionism is the danger we face, and we must do all we can to overcome it. At the moment there seem to be three giant trade elephants in the world fighting each other. Australia is like the grass beneath their feet. If I can paraphrase an old East African saying from the Kikuyu tribe, when the elephants fight, it is the grass that gets trampled. There are three elephants fighting and we, as the grass underneath, are feeling the pain of what they are doing. We need from this Government a set of clear trade priorities. I want to understand what it sees as Australia's place, as we find and secure niches in markets around the world, as other small to medium size countries have done in adverse times. For example, Sweden, early in this century, had exactly the same kind of problem. I want to know what the Government is doing, what policy approaches it is taking, to try to hold what we have now against the pressures in the United States, Europe and Japan, to send us even further backwards, to restrict our markets even more, to trump up cases against our exporters. I want to know what this Government will do to secure and to extend our penetration of more markets in the large region in which we live and operate. The last annual report that I saw of the then Department of Trade was concerned more about activities, structures and processes than it was about strategies or outcomes. Perhaps that was just as I read it, but it did not give me a lot of heart. I think the test in the end is what we can achieve by way of exports, markets and products. I conclude where I began: the question is one of context, the theme of our context. As Senator Stone said in his presentation, had the balance of payments deficit in Australia been held even to, say, 2 per cent, instead of the 4 per cent which the Government thinks it will achieve, think of the context that might then have applied. Had the overseas debt been held even close to the $35 billion mark, the $21 billion net that the Government inherited in 1983, think of the context in which we would have then been operating. Neither of those things are the reality today. The overseas debt has blown out to a net figure of over $80 billion. The balance of payments deficit has blown out, and we only have good intentions to say that it will come in at a lower figure. The context for this country is quite different. The Government is not now in a position to be able to direct policies which can best help Australia. The Government stands condemned for that, above all else. The Government has fired the bullets available to it so far and has done so with insufficient result. It has used up its options, and it leaves us with too few options today. Australia is now quite unnecessarily at the mercy of world events that are not of our making-events from which we are suffering. My presentation of the trade situation around the world sought merely to indicate another way in which Australia is suffering and another way in which we are more in jeopardy than we need have been. It is my belief that unless we can do something to control some of the outcomes of these negotiations between our great and powerful trading partners during the next year our position will become even more difficult and less certain. The tragedy for Australia is that so much of it was avoidable and it was not avoided. Senator McKIERNAN(Western Australia)(5.35) —This afternoon the Senate is debating cognately a number of Budget Bills-Appropriation (Parliamentary Departments) Bill 1987-88, Appropriation Bill (No. 1) 1987-88 and Appropriation Bill (No. 2) 1987-88. We have some difficulties in debating these Bills at this time because a considerable period-close on two months-has elapsed since the Budget was presented in this place and in the House of Representatives. A lot of water has gone under the bridge, to say the least, since then. We do need to reflect back to September, when the Treasurer (Mr Keating) handed down what was generally accepted in the broad community as a sensible, restrained approach in times of considerable international economic uncertainty. The Press of Australia, which is not generally noted for being in support of governments of the day, welcomed the Budget. Senator Lewis —Except your Party, the Labor Party. The Press generally supports you. Senator McKIERNAN —Senator Lewis cannot be arguing that the Press is not objective in its reportage of events in Australia. Senator Lewis —Of course they are not objective in their reporting. They are always in support of the Labor Party. You have it tied up. Senator McKIERNAN —We can pick isolated examples. Senator Maguire, a short time ago in his excellent contribution to this debate, mentioned such names as Katharine West, a prominent columnist with a particular newspaper. Another name that springs to mind is Des Keegan. Senator Lewis surely is not arguing that these people are in any way biased towards the Australian Labor Party or, in actual fact, against the Labor Party. Senator Lewis —They are not the daily journalists; they are the columnists. Senator Powell —John Stone. Senator McKIERNAN —I hear another name, that of John Stone-to give him his proper title, Senator John Stone. Another person in some cases uses the alias of Stephen Martin. Senator Lewis would not argue that these people are in any way biased towards the Australian Labor Party, but if that is what he wants to argue, he is free to do so. I do not accept his argument. Let me put the matter in some degree of perspective by referring to the comments made two months ago by a number of media outlets on the Federal Budget delivered in September. I am not an avid reader of the Brisbane Courier-Mail; I do not know whether Senator Lewis is. If it is not a magazine which reports objectively, perhaps you, Mr Acting Deputy President, at another time will be able to advise us of it. On 16 September this year the following statement appeared in the Brisbane Courier-Mail: For the Government to produce a balanced Budget . . . is a considerable achievement and one which will make the Opposition's task of criticism extremely difficult. Anyone listening to this debate will appreciate that the Opposition, as usual, has failed the test and, indeed, is failing the test that the Government has set it. Let me return again to the media. Peter Cole-Adams of the Age newspaper, which operates out of Melbourne-I do not know whether he joins that group that Senator Lewis mentioned a short while ago-had this to say in the Age of the same date, 16 September: The signal achievement of the Hawke Government over the past 12 months has been its success in educating Australians to the need for change and in not pushing those changes beyond the limits of public tolerance. This, even more than the Opposition's recent discord is why Mr Hawke and not Mr Howard is today Prime Minister. Peter Cole-Adams is recognising that the Budget is not just a one-day wonder; it is a result of detailed planning and detailed argument over a long period, with contributions by many people, in extremely difficult domestic and international economic times. Also in the Age newspaper Michelle Grattan stated: The Opposition could only be envious. Its spokesmen, who had to speak, knew they had little to say. The Opposition had said that the Government should balance the Budget, and it did. The Opposition says that spending and tax should be reduced as proportions of gross domestic product, and they are. A two per cent real cut in spending is impressive in anybody's terms, and there is in a budget that brings little new pain. It must go down in history as a textbook exercise in combining responsible economics and political skill. Those latter words are worth repeating: It must go down in history as a textbook exercise in combining responsible economics and political skill. That is what this Government, with the best front bench in the history of this nation, has been able to deliver. That front bench is packed with political skill and with that skill comes responsibility in both economic and political terms. I could continue with quotes from the extensive brief prepared by the Parliamentary Library on media comments on the Budget, and utilise the full time allocated to me in this debate doing so. However, I think that the three examples cited are a fair representation of what the media had to say about the Budget in September this year. Therefore, I will just raise some of the very positive matters that came out of the Budget. I have had some words to say previously in this place and elsewhere about the Budget. Certainly the Budget was balanced; certainly it was responsible. However, there was some little pain in some areas, but I will come to some of those cases at a later stage of my contribution this afternoon. There is one area that deserves special mention, and it is one that the Australian Labor Party and, indeed, the Prime Minister (Mr Hawke) and his Ministers, particularly the Minister for Social Security (Mr Howe), can take a tremendous amount of pleasure from. I refer to what the Government has been able to do in regard to the introduction of what is colloquially known as the family package. More than one million children will benefit from increases in the family allowance supplement, which will direct to families payments of some $22 per child per week and a higher rate of $28 per week for children aged between 13 and 15 years. For a two-child family earning around the average weekly earnings of $350 the package will deliver the equivalent of a 17.7 per cent increase in wages. For a five-child family on the same income it will deliver an equivalent increase of 39.4 per cent. In these days of tough and tight economic circumstances the Australian Labor Party, in government for an historic third term, has reminded the population of Australia and, indeed, the electorate that it has not forgotten the base from which it came; it is still looking after the disadvantaged in our society. This further resourcing of Australian families is an achievement of which this Government is rightly proud. It fulfils a commitment that we gave to the electorate during the course of the election campaign. As I said earlier, the Budget is outstanding, not only in my view but also in the view of those objective individuals within the media of this country who work so tirelessly to bring to the population of Australia the daily news. It is an outstanding Budget; nevertheless, the period since the Budget was handed down has been one of economic uncertainty. That economic uncertainty has been highlighted by the amazing fluctuations witnessed in the international money markets over the last two months or so. Unfortunately, I heard only part of Senator Stone's contribution to the debate but I know that in his opening remarks he mentioned the collapse in the stock market. I would like to make a few remarks in regard to that so-called collapse of the stock market and the gloom and doom emanating in our society as a result of it. I use the word `so-called' advisedly. If one is measuring fluctuations in stock markets over a period one can make the statistics prove what one wants. I want to put the stock market collapse in some perspective by quoting from a table in a background paper, which I hope to incorporate in Hansard, produced by the Legislative Research Service of the Parliamentary Library. On page 2 of the booklet is a graph which shows that the collapse in the stock market between September and October this year was indeed dramatic when one measures the fluctuation over a nine month period. However, very few of such statistics of the Australian Bureau of Statistics are taken over a nine month period. Invariably the measurements are taken over a 12-month period, on an annual basis. Alternatively they may be measured month to month. However, if one picks out a single block of three months, six months, nine months, or a year or even 15 months for that matter, one can make the figures say what one wants them to. Unfortunately, I think the particular graph to which I referred on the top of page 2 of the booklet does somewhat distort what has happened in the stock market. However, if one looks at the graph at the bottom of the page, which measures fluctuations on a monthly basis over a period of 5 1/2 years, one gets a better indication of where the stock market has been and where it is now. It shows a bit of a lumpy rise from January 1982, from a level of some 500 points on the index up to 2,250 points earlier this year. We then have a dramatic line downwards with the collapse that is supposed to have occurred in the market. To get that in perspective we have to refer to the figures themselves. At the end of October the all ordinaries index, which is the recognised measurement of what is happening on the Australian Stock Exchange, stood at 1,291.9 points. That represents a dramatic drop from the previous month's figures. However, when we go back 12 months and look at the figure for the end of October 1986 we find that the all ordinaries index for the Australian Stock Exchange was measured at 1,377.2-a drop over the 12-month period to October 1987 of only 85.3 points. That is all; a drop of 85.3. I argue, both in this chamber and in other places as well, that, if we have had a disaster in recent months with a drop of 40 per cent in the index, as represented by the figures in the Parliamentary Library booklet, the stock exchange boomed in the period before that drop. If people now argue that because the stock exchange index has dropped wages ought to be further cut back and national wage case increases should not be awarded, I would say that those people who are using the rationale of the stock market collapse should in turn have been arguing that the increases over the previous 12 months should have been passed on to the working people of Australia. I think that those honourable senators opposite who are fair would agree with me that in the interests of equality that should be so. I have shown a table showing the figures to which I have referred to Senator Puplick and Senator Stone and have sought permission for its incorporation in Hansard. Unfortunately, I have not had the opportunity to show it to Senator Lewis, who came into the chamber following the commencement of my speech. I seek leave to have the table incorporated in Hansard. Leave granted. The table read as follows- AUSTRALIA ALL ORDINARIES INDEX DAILY-1987 Mon Tue Wed Thu Fri 31 Aug 2150.0 1 Sep 2157.2 2 Sep 2179.6 3 Sep 2203.9 4 Sep 2195.3 7 Sep 2210.3 8 Sep 2208.1 9 Sep 2188.5 10 Sep 2184.8 11 Sep 2206.4 14 Sep 2206.1 15 Sep 2231.0 16 Sep 2276.0 17 Sep 2283.9 18 Sep 2305.5 21 Sep 2306.2 22 Sep 2291.4 23 Sep 2271.2 24 Sep 2277.4 25 Sep 2282.5 28 Sep 2274.2 29 Sep 2262.6 30 Sep 2249.2 1 Oct 2218.9 2 Oct 2240.5 5 Oct 2253.4 6 Oct 2247.0 7 Oct 2216.4 8 Oct 2223.4 9 Oct 2220.4 12 Oct 2184.6 13 Oct 2167.5 14 Oct 2185.1 15 Oct 2146.7 16 Oct 2144.6 19 Oct 2065.4 20 Oct 1549.2 21 Oct 1568.3 22 Oct 1628.9 23 Oct 1514.2 26 Oct 1414.9 27 Oct 1316.6 28 Oct 1388.5 29 Oct 1284.1 30 Oct 1291.9 At the end of the month Month 1982 1983 1984 1985 1986 1987 January ... 548.8 536.9 765.7 773.4 1075.3 1496.3 February ... 491.0 498.7 737.6 792.3 1050.1 1613.9 March ... 462.1 512.7 750.5 829.7 1136.5 1689.9 April ... 503.5 591.9 756.0 875.1 1210.5 1749.6 May ... 504.9 620.0 654.9 873.5 1241.0 1770.6 June ... 473.1 605.1 658.9 860.7 1180.0 1765.5 July ... 465.1 672.0 681.9 936.1 1123.5 2030.4 August ... 482.7 701.3 733.4 937.8 1192.3 2150.0 September 503.3 718.0 739.1 987.0 1246.6 2249.2 October ... 504.6 687.7 753.6 1027.0 1377.2 1291.9 November 484.4 744.0 749.5 990.7 1379.6 . . December 485.4 775.3 726.1 1003.7 1473.1 . . Per cent change 5.1.87 to 30.10.87:-14.0% Per cent change 1.10.87 to 30.10.87:-41.8% Index as at 29.10.87 (1284.1) is the lowest since 2.10.86 (1275.3) Senator McKIERNAN —I thank Senator Lewis very much. I will continue with my remarks in regard to the stock exchange. I have had something to say on this before. It is my view-I do not say that it is a view shared by the majority of Australians or, indeed, by the majority within my own Party, nevertheless I believe it is a view that is worth putting on the public record-that the speculation by and greed of a small part of the international and domestic business clique have put in peril the stability of the economic system of the entire financial world. That is evidenced by the massive increases in paper value we have seen in the previous 12-month period on the stock exchange, not only in this country but also in all the major capitalist trading nations of the world. Speculators have proved by their actions that they have no interest in the real productive activity of the economy. They are after a quick profit. If a quick profit can be extracted, the speculator believes that such a profit should be extracted irrespective of the cost to the individual, perhaps the worker on the shop floor, or the community in general. As long as the profit is there, the speculator believes that that profit should be his or hers. There has been a demand, which has been echoed in the past few days, that there should be no legal constraints put in the way of speculators' activities. We will see this demand by the pseudo-intellectual friends of the speculators, the New Right, rise again and again in the coming months. We have had something to say in the past about that movement. Perhaps it is not the force it was pre-election, but nonetheless it is still around. Members of the New Right suffered because of the crash in world stock markets. Perhaps it has shaken their gung ho confidence. They, above all others, had believed that the market-place was the only place from which society could be governed. Their confidence has been shaken as has their belief that the benefits of an unfettered market-place were obvious and self-evident. With the massive losses in prospect, the security of some form of regulation of financial institutions has suddenly become more attractive to some of the speculators. It makes one wonder what some of them are about. It would be like those of us who had a gamble, albeit small, recently on the Melbourne Cup-some lost and some won-seeking an indemnity from government to cover our losses. There are some interesting examples around Australia of requests to balance the Budget following the stock market crash. The Budget, in turn, put some new pressures on the New Right. The Budget, as I said, was responsible and informed. As Senator Maguire said earlier, it has proved to be a blow to the New Right. One does not hear a great deal from the New Right now. Its demands for Budget cuts, which would impose further burdens on disadvantaged groups, have been exposed for what they are: the demands of a greedy few for more of the national cake. Similarly, the July Federal election proved in many ways to be a disappointment to the New Right. Internal divisions and circumstances beyond the control of New Right groups led to the demise of the `Joh for Canberra' campaign. The much-vaunted targeting of marginal seats by the zealous leadership of the National Farmers Federation proved almost totally ineffective. It was exactly in those marginal seats that the Labor Government proved its durability and resilience. Many people can claim responsibility for the demise of the New Right-or at least putting it into the background where it properly belongs. Efforts by the Government, the trade union movement and the Australian Labor Party to expose the New Right activities in the run-up to the Federal election paid dividends in terms of public awareness and the subsequent rejection of New Right philosophies at the election. The likely New Right response at the moment will be to re-examine and perhaps apply sophisticated overseas models of propaganda, influence and control on the Australian population. The aftermath of the Federal election has also proved traumatic for the neo-conservatives. The standard-bearer in the north, the Premier of Queensland, Joh Bjelke-Petersen, is now a spent political force, ineffectual and even an embarrassment to those people who put him there. Behind that tottering throne where he sits for the moment we see that the jostling for power is beginning. It has probably been there for some time but it is now more in the open than it has been. The long tentacles of corruption reach even closer to the inner sanctums of the major political party in that area, making it increasingly difficult for that party to maintain its facade of fundamentalist moral purity. In this context I am not talking about condoms but moral purity as distinct from sexual purity. These things are demonstrable set-backs for the New Right. It is important to note that there are inherent contradictions in New Right thought. As Erica McWilliam points out in her article `The Challenge of the New Right': Its appeal is for both a stable social world, an established community with shared values and moral restraint and, paradoxically, a world which is wide open to possibilities, a world of individuals unfettered by government action. Consistency and coherence are abandoned philosophically in favour of seizing on matters of free floating anxiety thrown up by forces unleashed by the development of capitalism itself. It would be an error for us to regard the New Right as a clearly-defined political entity. Even more dangerous would be the idea that the recent electoral, internal and market force set-backs are an indication that the New Right has become a spent force. The realistic situation is that while the philosophies espoused by the New Right are deplorable, it must be recognised by all that some of the key individuals in the New Right have considerable organisational ability, even a misused intelligence. One likely short term strategy which the New Right might adopt is to concentrate on what has proven successful in the past-union bashing. On this scenario, attempts to rekindle anti-union fervour by running on pseudo-issues such as powerful unions, union bosses and union anarchy, are to be expected. Some of the puppet columnists have started this already. I notice that Senator Lewis reads newspapers. Perhaps he will point out the names of the columnists who are putting these ideas forward. I will not waste time in my contribution by doing this. If the Budget strategy is to succeed, the Government, the trade union movement and the community must be on guard against these renewed attacks. If the New Right succeeds in destabilising the industrial relations system, this will provide the neo-conservatives with the will and the impetus to exert their evil influences on an even larger audience-the total political system of this wonderful nation. One other area of concern-it is not necessarily a Budget matter, although it is certainly Budget-related-and which is on the agenda at the moment is privatisation. That is interpreted as the sale, in whole or in part, of publicly-owned assets. Assets which have been put on the list for discussion include the Commonwealth Bank of Australia, Qantas Airways Ltd, Australian Airlines, Telecom Australia and a host of others. The debate on whether these assets should be sold is ongoing and healthy. It will culminate in June next year in Hobart when the Labor Party National Conference is held in that fair city. Senator Tate —It is a fair city. Senator McKIERNAN —It is indeed. I have been there once. It was very cold but, nonetheless, it is a very fair city. I wish that Senator Tate could do something about the weather. I am glad that his efforts, among those of other senators, have enabled us to be given minimum temperatures for that fair city. Each of the assets which I mentioned before is a revenue raiser for government. The Commonwealth Bank, for example, contributed $100m last year. Qantas contributed $15m and Telecom contributed $661m. The Overseas Telecommunications Commission contributed $40m. I could go on but the figures are on the public record. As well as being major revenue earners for the Government, these enterprises also provide vital services to the public. When this debate is concluded next year, if it is concluded once and for all, I believe that the Labor Party will decide, for a wide number of reasons, not to sell these assets. Many of these reasons are being canvassed at the moment in the community. There is one government asset that I would like to see added to the list. Perhaps it sounds a little strange that a reputed left winger of the Labor Party would be advocating the sale of a government asset but I have had things to say in previous debates in this place about the Australian National Gallery. I note that page 195 of Budget Paper No. 1 states that the allocation this year to the Australian National Gallery is $15.7m. I advocate that that institution be put on the list and that its privatisation be debated throughout the community, particularly by people in outlying States who do not get the benefit of all these `valued treasures' held in that place. I have only a few minutes of my time left, but a few more things to say. My attention was drawn this morning to a leader in today's West Australian newspaper, headlined: `Jobs paradox is still with us'. This was a fairly responsible leader, or editorial comment, which said that an examination of the problems that Australia is experiencing at the moment shows a paradox of a shortage of skilled labour at a time of high unemployment. If we retrace our steps three or four years back, we find ourselves in a period when apprentices, particularly in the metal industry, were being put off by employers because there was not enough work for them, and because some employers had joined a campaign to cut youth wages. Now we find that, Australia-wide, we are having to recruit skilled persons from overseas to fill our needs because for some developments in some areas we do not have the necessary skilled people to do particular jobs and to continue the economic development of Australia. This matter has not been put in the cupboard by the Government and forgotten about. We are acutely aware that there are problems in this area. Not all of the problems are of our own making and we are certainly not going to get into a union bash. Mr Dawkins, the Minister for Employment, Education and Training, presented his Budget Paper No. 9, Skills Formation in Australia, during Budget day in the House of Representatives. I commend the paper to each and every person involved, in Parliament and out in society, in this very important matter, whether as a parent, an employer, a trade unionist or a worker. There is a whole restructuring of training, retraining, and education related training going on within the Department of Employment, Education and Training. However, I express some concerns about one area, although I blame myself for not informing myself about it earlier. I was aware of this, but it had not sunk in until last Friday afternoon when I attended a briefing session in the Department of Education, Employment and Training in Perth. It was mentioned that a new service is being provided to young job seekers and it is to be known as Job Club. I note from page 54 of the Budget Paper that an estimated 500 16- to 17-year-olds and 800 18- to 20-year-olds are expected to participate in Job Club in 1987-88. I asked the official what Job Club is and I was informed that it is a three-week course to train young people on how to apply for a job. I expressed some concern about why it should take three weeks to train a person to apply for a job, and I was given some verbal information with the promise of some written to come. I await that, but at this stage I need convincing that one has to spend three weeks to train people in the art of applying for a job. There has been some mention about the state of the Senate and people who are no longer with us and I had intended to pay tribute to some of my former colleagues, particularly those Western Australians Ruth Coleman and Gordon McIntosh. I had intended to welcome Senator Michael Beahan, who I believe will make an enormous contribution to the chamber on behalf of his State. Unfortunately, I have let time get away from me. I would have liked to say something about former Senator Georges and put on record just how he came to leave this Parliament, because some distortions have been made today and at other times about why George is no longer with us in body, although he is still with us in spirit on many of the issues for which he has fought so valiantly over the years. I commend the Budget to the chamber. Senator MICHAEL BAUME(New South Wales)(6.05) —If one is not worried, then one simply does not understand the problem. Senator McKiernan is not worried and he showed today that he simply has no understanding of the problem. But he is in good company-neither has the Treasurer (Mr Keating). The Minister for Foreign Affairs and Trade (Mr Hayden) has expressed some concerns. The Minister for Finance (Senator Walsh) has expressed enormous concerns. The Treasurer is still somewhere out there in cloud-cuckoo-land with Senator McKiernan. That his Budget is no longer appropriate is the simple reality. We warned of that when it was introduced. The Leader of the Opposition (Mr Howard) said that it was a risky Budget that left no scope for any protection and gave no benefit of any cover in the event of everything not turning out exactly right. Things are not turning out exactly right. They have turned out very wrong indeed. The risk to which the Government exposed the nation in that Budget is now being revealed. That risk or danger is understood by everyone except, apparently, the Treasurer. The reality is that if the present situation persists, this Budget will be about $1 billion wrong-unless, of course, the Government fiddles it by slamming in some more of the Reserve Bank profits that will emerge, in Australian dollar terms, from the continued collapse of the Australian dollar. But the Budget will not work either, and that is not just the Opposition saying so but the expert commentators such as Syntec Economic Services Pty Ltd, or even Senator Walsh, who have recognised that this Budget, which may have been marginally appropriate-as Senator McKiernan pointed out, some journalists welcomed it-given the continuation of the Indian summer in our economy that we had when it was introduced, is massively inappropriate now. Given the dramatic change in the outlook for the world, and for Australia, it is simply inappropriate and it will not work. We hope that there will not be a world recession and my concerns are expressed in that context. I do not expect there to be a world recession. Sensible comment overseas seems to be pointing to a significant slowdown in world economic growth-a slowdown that we cannot afford and that will have a massive impact on the Australian economy. The fact that there probably will not be a recession overseas does not mean that there will not be an enormous negative impact on Australia. One does not have to be a Jeremiah or a knocker, or all those other names that the Labor Party comes out with whenever anybody introduces a note of reality into the debate, to see that. One does not have to put up with that kind of nonsense from the Labor Party because, interestingly enough, some of the Labor Party people themselves recognise the truth of all the warnings that we have been giving. For Senator McKiernan's benefit, perhaps I should remind him of what Mr Bill Hayden said this morning on ABC radio, to expand on his comments, made the previous night, that Australia is living in the most difficult and threatening economic climate since World War II, and in which he warned of a new dark age of stagnation and protectionism in the world. When questioned about that this morning, he said: The longer the present undesirable international economic situation continues and continues to worsen with large trade imbalances, positively on the side of Japan and Germany and negatively on the side of the United States, the more worried one must become at the prospect becoming almost a certainty. He continued: The collapse in world stock exchanges, the collapse in the American dollar, the way that has affected us-striking us down with it and the general loss of confidence in economic activity as a result of that. Investors are disturbed at what has happened and will suspend in many cases important investment programs. That is here in Australia; that is the result of what is happening overseas. Let me now read the crucial bit to the non-worriers such as Senator McKiernan who say, `What, me worry?'. It sounds like the words from an American comic strip. Mr Hayden said: That means there could be a slowdown in economic activity. That is why it is urgent that action be taken . . . It is urgent that action be taken. It is urgent that action be taken by the Treasurer of this country to change what is now an extraordinarily inappropriate Budget. Mr Hayden went on: We are living in easily the most difficult and threatening international economic climate that we have lived in in any stage since WW II. The interviewer said: . . . an economic dark ages, is that not being over dramatic? Mr Hayden responded: It is an appropriate figure of speech. Although Mr Hayden warned us of the need for action, only 11 days ago Mr Keating told the Economic Planning Advisory Council (EPAC), `We see no role for any precipitate action'. `Precipitate' in that context means doing anything. Mr Keating went on to make one of the most extraordinary remarks that I believe any Treasurer of this nation has ever made. He said: This view is reinforced by the fact that the outlays and receipts estimates for this year remain firmly on track. He did not say the deficit outcome; he said both parts of it, that `the outlays and receipts estimates for this year remain firmly on track'. That is impossible. I believe that this is a deliberate attempt to mislead the Australian people because I do not believe that Mr Keating could possibly be so unaware of reality as to believe it himself. Let us have a look at the evidence of how much these revenue and expenditure figures can possibly be on track by looking at the Budget forecasts. Let us start off with the Budget forecast about the trade weighted index (TWI). The Budget forecasts, all of our revenue and expenditure estimates, are based on the fact that the Government expected the trade weighted index-that is, Australia's relationship with the world currencies-to be at the 56 level, not around the 51 level that now seems to be with us despite hiccups after today's balance of payments figure which is still a disastrous $1.2 billion but which was surprisingly and extraordinarily welcomed by some elements of the market which obviously will be reviewing their attitudes later, I would imagine downwards. But at this stage we have a situation where there has been almost a 10 per cent fall in the trade weighted index of our currency. Let us look at what the Government said last December would happen if there were even a 5 per cent depreciation of the currency against the trade weighted index. I refer honourable senators to the December 1986 report on the Forward Estimates of Budget outlays. That document forecast that a 5 per cent depreciation in the trade weighted index would bring a total response, as it was called; in other words, a rise in the Government deficit of about $400m. We have now had about a 10 per cent depreciation and the indications are that the Australian dollar could-it may not, but it could-deteriorate further. What would be the consequences of a 10 per cent depreciation of the Australian dollar against the TWI? The reality is that the deficit would be almost $800m, $0.8 billion. When I said that it looked like this Budget was going to be wrong by about $1 billion, 80 per cent of that being wrong emerges from one parameter change, one simple incident-the fact that our relationship with the currencies of our trading partners has deteriorated so significantly. It needs only another couple of hundred million dollars of being wrong to get over the billion dollar error that this Government now faces. I believe that that is inevitable unless, as I said, the Government fiddles it with some Reserve Bank of Australia profits. But that does not get Mr Keating off the hook because Mr Keating has said that both outlays and receipts estimates for this year remain firmly on track. That is absolute bunkum. Let us have a look at some of the other parameter changes that have taken place. Mr Keating was looking to the Organisation for Economic Co-operation and Development gross national product (GNP)-that is, the GNP of our major trading partners-going up by almost 4 per cent. The reality is that the latest estimates are all predicting a fall in world economic activity. According to his forecasts, world-wide inflation was supposed to go up a bit; clearly it will fall as a result of what has happened over the last two months on world markets. He said in the Budget that interest rates would be up a bit and that the Budget was based on that expectation. The fact is that they will be down a bit; in fact, in some areas down a lot. Then he said that the Budget is based on the assumption of monetary policy remaining appropriately firm throughout 1987-88. But, of course, the reality is that because of the fall in the markets there will be increasing pressure on the Government to make monetary policy a lot looser and to tighten fiscal policy. So these factors will have a clear and significant impact on what will happen in the Budget. It was estimated in the Budget that there would be something like a 5 per cent increase in business investment. There is just no chance of that. Who knows what it will be? Certainly all the evidence we have seen is that business investment is not being sustained at the sort of rate the Government would expect. The forecast for non-farm gross domestic product is 3 per cent. The comments that I have heard from most of the leading experts in this area have been that at best we could perhaps look to 2 per cent this year. All those things have an enormous impact on what the Budget deficit will be. They will certainly have an impact on both the outlays and receipts sides of the Budget. According to the forecasts, average weekly earnings will go up 6 1/2 per cent. But it now appears that the second tier is taking longer to come in than expected. As I understand it, only about a quarter of those seeking that second tier will have their claim resolved by the end of this year. If average earnings do not increase at the rate forecast in the Budget, neither will income tax collections. Clearly that will affect the revenue side of the Budget again. The consumer price index, along with the deflator, is forecast at 7 per cent. The forecast I have been seeing lately put it at around 8 per cent. That means there will be an increase in government costs. As with average earnings, this rise will take place without an appropriate or comparable rise in government revenues. We have a current account deficit which is forecast to be $11 1/2 billion. There is no chance whatsoever of that being achieved, particularly after the recent problems that will impinge on our capacity to export commodities. Certainly, the more cheerful comments around the place are that it might blow out to $12 1/2 billion-that is, about $1 billion or $1 1/4 billion more than the Budget forecasts. It seems to me that here we have the reality of a situation that Mr Paul Keating is not prepared to face. Let us see what is going on behind things such as today's balance of payments figure. No matter how temporary the good news might appear to be on exports, or even apparent good news on imports on a seasonally adjusted basis, the reality is that we face serious problems in a downturn in the world economy in trying to sell commodities on which we are still massively dependent. We certainly face import problems if-and it is a very big `if' at this stage-there is any renewal of investment in Australia. The items of equipment we would need to support that investment would have to come largely from overseas and that would knock our import levels. But the most sinister item is the total income debits-the flowing of money out of Australia in order to service our continually booming levels of international debt. This Government has not instituted effective policies to halt the worsening of our huge debt levels because of our continued massive balance of payments and current account deficits which today were shown to be $1.2 billion for the latest month-an unsustainable level. The Government cannot possibly pretend that its policies are having a serious and significant impact when underlying all this is the one major, serious and worsening problem of our debt bill. In the last three months our income debits have increased by 20 per cent over the same period for the previous year. As our dollar deteriorates-and it just has-that bill will keep going up because our borrowings in the currencies from overseas will increase in size relative to the Australian dollar and the cost of paying that interest bill will continue to increase. I believe that a 20 per cent rise in the cost of servicing our indebtedness is the hidden disaster that the Treasurer did not talk about in his Press release about today's less worse than expected balance of payments figures. Let us look at what independent commentators, not members of the Opposition, are saying about the inappropriate nature of this Budget. Many of those commentators are people who initially welcomed the Government's Budget. They believed it to be responsible economically and skilful politically, and this was referred to by Senator McKiernan. It was certainly skilful politically because it pulled the wool over their eyes and it was aimed at pulling the wool over the eyes of the Australian people. In fact, that wool is still being pulled with great enthusiasm by Mr Keating. As I have said, he addressed EPAC only 11 days ago and he said that the Budget parameters would not change. Let us have a look at the things he said in that speech because, quite frankly, some of the content of that speech suggests that his conclusion had nothing to do with the points he was making in his speech. In referring to the collapse in the share market and so on he said: This decline in private sector wealth, as well as the uncertainty about the economic outlook, can be expected to result in a slowing in the growth of private consumption expenditure. If that takes place it will mean that the Government will make less money out of sales tax collections, for example. The collapse in the share market has meant that non-pay as you earn (PAYE) tax collections will certainly be less than the Government had budgeted for. The forecast in the Budget Papers was for an 11 per cent increase in provisional tax. Of course, provisional tax is being paid only by non-PAYE taxpayers. I assume that the changed economic environment will make that forecast look very hairy indeed. Mr Keating went on: There is also likely to be an impact on investment from the share price slump. Okay; we have a few negatives here from Mr Keating. He said that apart from what happens to commodity prices-and there is universal acceptance that commodity prices will be badly affected by the world slump, not simply by a recession but also by any slowdown in world economic growth which is now regarded as inevitable by almost every commentator-some slowing in demand for Australia's exports can be expected in coming quarters, as world growth begins to moderate. Actually, he grasped at a straw then and said that that was not all too bad because the effect on imports into Australia will be a slowing in growth and that domestic demand will be working to offset a weaker outlook for exports. In other words, the Australian economy will get so bad that it does not matter that we will not be able to export much because we will not have any money to import anything anyway. The reality is that both those factors will affect the Federal budget and make the Budget that we are debating today increasingly irrelevant and increasingly inappropriate in terms of dealing with the real problems that we now have. The Treasurer admitted that there will be a period of slightly more adverse monthly balance of payments results. He said that that would not be too bad because it will increase our competitiveness. While that happens it means that our costs go up and our inflation rate goes up because the cost of our imports will go up if our dollar continues to devalue. Mr Keating said: . . . the . . . depreciation in trade weighted terms is appropriate . . . That is the depreciation that I have already pointed out. It would increase the Budget deficit by $800m-a Budget that Mr Keating still goes around pretending that he has balanced. Of course, this is absolute nonsense. He confirmed what I said earlier about the expectation that average wages will grow a little more slowly in 1987-88 than was expected at Budget time. As I have said, that means that the revenue from tax collections will not be as great as the Government had hoped for. Yet Mr Keating still says that the Budget revenue and expenditure sides remain firmly on track. I wonder which direction we are going in. I wonder where the track is leading us. Is it leading us, once again, to a statement, such as the one Mr Keating made last year, about a banana republic? Having assured us that everything was on track he then slipped on that track on his banana. I believe that the Government will be forced belatedly to take the sort of action that it should take. What is that action? A recent report by the National Australia Bank, in its monthly summary, entitled Australia's economic revival-is it real?, states not that we should do things, but that we must do things. It states: In these circumstances we must: - restrain domestic economic activity below the OECD average. Further cuts in government spending and an overall budget surplus may well be necessary to accommodate lower interest rates . . . The Government, instead of doing that, is still looking to growth a little ahead of the Organisation for Economic Co-operation and Development average. But we must restrain it, as the National Australia Bank quite rightly says. The second point the bank makes is: continue to curb growth in overall wages . . . That is self-evident if we are to try to compete. The bank states further that we must continue: . . . the process of deregulation, removing restrictive trade barriers and achieving further efficiencies in the public sector; I think that is a polite word for `privatise'. The bank then said that we need: . . . a higher level of domestic savings to wind back the nation's level of overseas debt. We can ask: What is the Government doing to bring these about? The answer is nothing. The Government has not changed its political economic stance. `Everything is on track', says Paul Keating. Senator McKiernan tells us not to worry. Sitting suspended from 6.30 to 8 p.m. Senator MICHAEL BAUME —What we need is appropriate action to stop the rot. As I mentioned before dinner, Mr Keating is still pretending that everything is right. As the Sydney Morning Herald columnist Ross Gittins described it, he is doing his Pollyanna act, pretending that nothing is wrong. But there are things that must be done urgently. As Syntec, one of the most respected analysts of the Australian economic scene, pointed out in its recent issue: If the Government wants to avoid an excessive fall in the $A and an excessive rise in interest rates, it will have to act on fiscal and wages policy. Provided it does so, the fall in the $A can probably be confined to 10 to 15 per cent in Trade Weighted terms. As I pointed out earlier, the sensitivity index in the Government's Forward Estimates publication indicates that that would have a worsening impact on the Budget deficit of between $0.8 billion and $1.2 billion. It will be limited to that only if the Government takes appropriate action now. What are the prospects of it doing so? Of course, Mr Keating still says that everything is on track and that there is no need to take any action. The only people in this Parliament who have been pointing the way, dramatising what should be done, are those in the Opposition. We have been consistently giving the lead to the Government on what it should be doing. This Government has consistently dragged the chain in responding appropriately to the sorts of problems we face. In every major instance of economic policy in the last four years the Opposition has recommended what should be done and the Government has reluctantly, at last, come to the same conclusion, though it has only half done it, and done it badly. From this Government's first Budgets, which involved massive overspending, to the latest Budget, which met what appeared to be the needs of the time but which we have demonstrated leaves no room for manoeuvre and no scope in case of disaster, we have consistently pointed out how the Government could and should be doing a better job. Syntec states: The Budget strategy of attempting to run moderately faster real growth than our major metropolitan economies and the associated gradual adjustment of our current account and external debt position is not viable. I stress that the Government's Budget strategy is not viable. It may have barely got by in September, in the Indian summer, but it certainly is not viable now. Syntec goes on: We are therefore faced with the formidable task of seeking to more rapidly close the gap between local and international wages and inflation . . . The pressure to do so is being increased by a falling Australian dollar, which will tend to push up prices. Without further policy action- that is, policy action the Opposition has been pressing for but which this Government has refused to supply- inflation here is likely to stall at around 7 per cent while world inflation-already significantly lower than this-is likely to fall back. In such a setting the Government cannot responsibly agree to carry on with existing wages policy as if nothing has happened. Growth in incomes and demand here has to be slowed as part of the process of faster adjustment of our external imbalances. It concludes on this note: The Government strategy of trying to have Australia grow as fast or faster than the major economies is a recipe for disaster now. That is an appropriate summation of this Budget that we are debating. It is a recipe for disaster now. it is based on a situation which no longer exists. We now have lower growth, higher inflation, a lower currency, a higher balance of payments deficit, a higher debt level and in fact a far worse outlook for our commodities. In the context of these major changes, the Government must change the steps it is taking. The ACTING DEPUTY PRESIDENT(Senator Peter Baume) —Order! The honourable senator's time has expired. Senator MacGIBBON(Queensland)(8.05) —This debate on the Appropriation (Parliamentary Departments) Bill 1987-88, Appropriation Bill (No. 1) 1987-88 and Appropriation Bill (No. 2) 1987-88 is an appropriate time to comment on and indeed to censure the Government for its incredible financial mismanagement of the Australian economy. I could not believe it last week when the arrogant Mr Keating abused Mr Whitlam for mismanaging the economy for the three tragic years that Labor was running this country. It showed the hide of the man and his inability to know what is going on. The Whitlam fools were children compared with the Keating fools. What Keating has done in four years is of a magnitude beyond what Whitlam did in the 1970s. Sadly, hundreds of thousands of ordinary defenceless Australians will pay for the mismanagement that this Government has inflicted upon the Australian community. They will pay for it through their livelihoods, their jobs and their family security. They will pay for it over years and years because even if we had a Liberal-National Party government tomorrow we would not get out of this mess in short of about 15 years of hard, constructive, disciplined work. That is the magnitude of the problem that we face. The sad part is that none of the mates of Hawke or Keating will suffer terribly much from the mess that we are in. The feudal financial barons that flock around the dinner tables of the Hawkes and the Keatings are insulated against the vicissitudes of the mess that has been brought about by these mismanagers. This country now is almost broke. Mr Keating and Mr Hawke have conferred that Third World status on our economy. We now have a debt of $109 billion. It is fast approaching four times the debt that the Government inherited when it came into power. We have enormous internal deficits. I would like to cite the figures in Budget Paper No. 1 from Mr Keating's Budget Statements for 1987-88. The section entitled `Commonwealth Budget Aggregates' lists the deficits as $3.2 billion in 1977-78, $3.4 billion in 1978-79, $1.9 billion the following year, then $1.08 billion, $0.5 billion and $4.4 billion in the last year of the Fraser regime. In the very first government over which Mr Keating and Mr Hawke had any control, the Budget deficit was $7.9 billion-almost twice the deficit of the year before. I seek leave to incorporate in Hansard a table headed `Table 1-Commonwealth Budget Aggregates'. Leave granted. The table read as follows- Table 1 COMMONWEALTH BUDGET AGGREGATES Outlays Proportion of GDP Revenue Proportion of GDP Deficit Proportion of GDP $m % $m % $m % Averages: 1957-58 to 1966-67 ... 22.4 20.8 1.6 Averages: 1967-68 to 1976-77 ... 24.7 22.8 1.9 Averages: 1977-78 to 1986-87 ... 27.9 25.6 2.3 1977-78 ... 26 665 28.2 23 382 24.7 3 283 3.5 1978-79 ... 28 912 27.0 25 486 23.8 3 426 3.2 1979-80 ... 31 445 26.0 29 457 24.3 1 989 1.6 1980-81 ... 35 996 26.2 34 916 25.4 1 080 0.8 1981-82 ... 41 189 26.6 40 637 26.2 553 0.4 1982-83 ... 48 793 28.7 44 345 26.1 4 448 2.6 1983-84 ... 56 432 29.3 48 500 25.2 7 932 4.1 1984-85 ... 63 714 29.7 56 994 26.5 6 720 3.1 1985-86 ... 69 918 29.1 64 193 26.7 5 726 2.4 1986-87 ... 74 899 28.3 72 184 27.3 2 716 1.0 1987-88 (a) ... 78 146 26.8 78 119 26.8 27 0.0 (a) Budget estimate NOTE 1: The figures in this Statement on Commonwealth Budget outlays, revenue and deficit have been prepared from, and are consistent with, current estimates and classifications. Where possible, other historical series have been adjusted to reflect the latest classification structures (see Statement No. 8 for a discussion of the major classification changes undertaken for 1987-88). Senator MacGIBBON —What has been the consequence of all this mismanagement? The first thing that has happened is that the bottom has fallen out of the value of the Australian dollar. When the Australian Labor Party came into power the Australian dollar was worth 206.99 yen. Today it is worth 92.40 yen. Senator Knowles —Disgraceful. Senator MacGIBBON —As is suggested, it is a drop that is quite disgraceful. The currency has depreciated by more than a half. The Government always cites the value of the dollar against the United States dollar. The erosion in the value of the US dollar has been an intentional part of the United States Treasury's policy and so the diminution in the value of our dollar is less vis-a-vis that of the US dollar. Even so, the Australian dollar was worth $US0.869 in March 1983 and today it is worth $US0.6818. But the test by which we have to measure our economy is the value of our dollar as against the hard currencies, the yen and the Deutsche mark. In March 1983 our dollar bought 2.0941 Deutsche marks; today it will buy 1.1485 Deutsche marks. If we take the Swiss franc, another hard currency, in March 1983 our dollar bought 1.7991 Swiss francs and today it will buy 0.9389 Swiss francs. We can see that the judgment passed by the world on the economic policies of the Labor Party is utterly catastrophic. Against the hard currencies which are the benchmark by which our efforts have to be measured, one can see that the Australian dollar is now worth less than half of what it was when the Labor Party came into power. That is a real measure of the confidence that the hard-headed business minds around the world have in what this Government is doing to our economy. The practicalities of that might be lost on the man in the street, but they are very real and very severe. It means that, since our currency is now worth under half of what it was when Labor came into office, we are paying twice as much in the interest payments on the huge borrowings that the Government has generated. It means that the debt repayment has to be paid with dollars which are worth half of what they were worth when Labor came into power. Senator Crichton-Browne —It is about $1 billion for every cent against the American dollar. Senator MacGIBBON —That is quite right. On the other side, it means that everything in Australia is for sale at less than half price. My home and Senator Maguire's home could be sold to a Japanese, German or Swiss buyer for under half price. That is why they are coming in and buying up our homes-- Senator Maguire —We stopped it. Senator MacGIBBON —Did the honourable senator say that the Government stopped it? I am astonished at that. There are so many loopholes that one could drive a double-decker bus through them. What Mr Keating did was done with his usual skill and success! The restrictions which he brought in-one could well argue that there was no real case to bring them in, which I would accept, because the real problem is the low value of the currency-were absolutely toothless tigers. They have not stopped anyone from overseas buying houses, particularly the Japanese at present. That has a real impact on the Australian community. I have been to some house auctions recently and I have seen the effect of that in Brisbane's suburban areas. The operations of Japanese buyers in those areas has probably put at least 10 per cent on to the price of houses. It does not just affect houses. We have the same problem with businesses. Any business that is profitable is for sale to an overseas buyer at half price. That is a consequence of the Government's economic policies. What has the Government done about this? I can tell you very simply, Mr Acting Deputy President, that it has done nothing. We have seen a great example of bovine inactivity from these great financial gurus. Mr Keating attacks Mr Whitlam and Senator Walsh attacks Mr Fraser. Mr Hawke comes home, after his last big junket, where he visited such crucial countries for the Australian economy as Ireland and Yugoslavia, and goes to bed sick with a headache for eight days straight. He could not stand the scene when he got back. That is some achievement, is it not, from a man of steel and principle! The Opposition will be moving an amendment which is in four parts and I have much pleasure in supporting it. The amendment reads in part: (1) this Bill is part of a continuing pattern of failure by the Hawke Government to face up to the need for adequate and timely adjustment of the economy; (2) this failure by the Hawke Government has heightened Australia's vulnerability to changes in world economic conditions at this time of crisis on world financial markets; (3) because the Government has squandered time and resources while persistently running Australia into massive debt, our national economic options are now so narrowly limited as to largely deprive us of independent options; and (4) the Government no longer has the scope to protect jobs, to stop the prospective rise in unemployment, to stem the continuing rise in numbers of Australians living in poverty or to protect the position of families more generally; We have only to go back a few months to the meretricious claims of the Prime Minister (Mr Hawke) when he was on the hustings for the election, beating his breast and saying, `I will abolish poverty. There will be no child poverty in Australia by the end of the next term of Parliament'. If ever there was a King Canute-type statement it was poor Hawke's statement about eliminating poverty. There will be more poverty in Australia when he is bundled out of office at the end of this term than when he came in. Again, it is the ordinary Australians who will pay the price of that, not Mr Hawke or his friends. Our problems come because we have a big spending, big taxing government. It spends too much on non-essentials. At a personal level one can see that in the way in which Mr Hawke and Mr Brown-Senator Puplick's friend!-go touring around the world at vast expense, as well as the blowout in expenditure on the new Parliament House. We are spending too much on non-essentials and not enough on essentials. The department about which I wish to talk now is the Department of Defence. It is suffering more than any other department. It has not been as badly off, in terms of its capabilities, since 1945. We are not spending enough on defence. What we do spend is not being spent wisely. We are very rapidly reaching a situation in which, despite the billions of dollars we have spent on equipment, we will have no one there who knows how to use it and use it effectively, so it all becomes pointless. We live in a region of changing circumstances. I have warned the Government on that for years, but it persists with its blinkered vision. It does not look at what is going on outside Australia. I do not think that it even reads newspapers. We now live in a region that is characterised by the highest degree of instability we have seen for many years. The latest example of that is Fiji. Before I look at some of the details of the region, I want to look at the major influences. The major power in the region has been the United States. We are looking at an historical change point with respect to the United States. Last week we saw the resignation of the Secretary of the Department of Defense, Caspar Weinberger. Caspar Weinberger fought in the Pacific in 1942 as a United States marine. He had a major interest in the Pacific as opposed to the European theatre which influenced United States policy. At the same time, the United States Navy, which has always been Pacific oriented rather than Atlantic oriented, had as its Secretary Mr Lehman, who was a very powerful advocate for the development of the Navy. So in the recent past we have seen a very strong United States defence position with respect to the Pacific. Mr Lehman has gone and Mr Weinberger has resigned. Mr Weinberger's successor is Mr Carlucci. I believe that we will see a shift in emphasis of the United States from the Pacific to the European theatre, particularly as the disarmament talks get closer to finality and the North Atlantic Treaty Organisation powers get more concerned about their own security vis-a-vis the Iron Curtain forces. Coupled with this shift in emphasis we will have a rundown, a decline, to some degree of United States military capability in the area as the deficit is reduced in the United States domestic Budget. Hand in hand with this we see an increasing Soviet presence. The Soviets have developed a very powerful base in Cam Ranh Bay, which is very close to the Philippines and the American resources at Subic and Clark Field. The Soviet presence has been expanding into our region in a slow, steady way for a matter of years. The fishing agreements are well known to honourable senators. I see in today's newspaper that the Soviets have declared an intention to join the Asian Development Bank. That will increase their presence and influence in the commercial activities of this region. So we have a potential rundown in the United States capability and a solid, steady growth of the Soviet presence. Dealing with particular countries, we had the events in Fiji. Fiji, in the direction in which it is moving, looks as if it will diminish its involvement with Australia. It seems to be setting up new alliances and new trading agreements. It will almost certainly introduce new countries-countries that have not been active in the South Pacific-to this region. While Fiji is a small country, it is the largest population group in that part of the South Pacific. It has an importance as a consequence of that. The government and future of New Caledonia are no further down the track than they were some years ago. There is a degree of unpredictability about Vanuatu. Coupled with New Guinea, there is a position developing in international affairs where there is a recognisable Melanesian view on events and that is a view which, at the moment, Australia seems to have very little influence on in any way at all. New Zealand still persists with the Lange Government and the economic debate in the last few weeks at the Labour Party conference there shows every indication that, if possible, the Lange Government has lurched even further to the left. In the Philippines, the Aquino regime seems to be set into an irreversible decline and we have to contemplate the prospect for the first time that there might be a secure Soviet presence in Cam Ranh Bay and no presence of the Americans in Subic and Clark Field. The social disorder in Malaysia keeps getting worse and, if there is a breakdown of social order in Malaysia, we can expect the Indonesian Government to take an interest in what is going on. In other words, we have all the signs of considerable trouble in the region in which we live. The point I make to the Government is that, just as we had a stock market collapse of great rapidity with no warning signs beforehand, we could have precisely the same situation in a military sense where we will have no warning time. Whilst it may not be a massive military event that we are involved in, it will come without any warning and we will have to use what we have at present, and what we have at present is not adequate in any way. Australia must protect its national interests and in this region those national interests cover a variety of topics. Our first consideration is the protection of our own people. Australians are great travellers: there are a lot of them in Fiji and in Papua New Guinea. There are a lot of them scattered around the South Pacific region. In any sort of emergency with a government in any of those places our first obligation is to go in to secure those Australian nationals if their lives are at risk. We simply do not have the capability to do that. The second general requirement on us is to have the ability to project some force into the region. There is a very great difference between being seen to have the ability to project force into the region and actually using the force. If we are seen to have the capacity, that does not leave a vacuum and the force does not have to be used. But we simply have no capacity now to project force into the region. Before I talk about some of our inadequacies in the few minutes remaining to me, I should say that the very first thing we have to know is what is going on in the region. The events of the last 12 months have demonstrated in the most dramatic way that we have very poor intelligence. I am sick and tired of going to meetings of the Joint Parliamentary Committee on Foreign Affairs, Defence and Trade and having people appearing before the Committee boasting about how well they know what is going on. The Australian Government was not advised before the first Fijian coup. What was even worse, the second coup caught the Government totally unprepared. The Cabinet did not know and no one in the Department of Foreign Affairs and Trade knew, and that is inexcusable. We should have known what was going to happen. Until we get a decent intelligence service in the region all else is in vain. The Australian defence forces are inadequately managed, inadequately structured, inadequately prepared, and inadequately nurtured-for want of a better word. The management is quite inadequate. Prior to 1974 we had a Minister for Defence, a Minister for the Army, a Minister for the Navy, a Minister for Air and a Minister for Supply. We had five Ministers coping with this area. We had an Army board, an Air board and a Navy board controlling the three Services. Clearly the segments had to be consolidated into an Australian Defence Force. The management needed to be improved. A Foreign Affairs officer by the name of Tange was appointed by the Whitlam Government to draft the blueprint for the new Department of Defence. What Mr Tange provided, albeit it in good faith, is really totally inadequate. We have now a single ministry of Defence. I have no quarrel with that or with the abolition of the boards. The Government set up a Chief of the Defence Force Staff, CDFS, who is now Chief of the Defence Force, CDF. It provided parity between the civilian Secretary to the Department and the Chief of the Defence Force. So far so good, but the system does not work. While the Defence Act provided for a rough parity between the civilian and the service components of the Department, in reality the practice is very, very different: all the plums go to the civilians. Whilst it is unquestionably a basic democratic principle in all democratic countries-which we support-that there is civilian control of the defence forces, that means control by the Parliament, by the Minister answerable to the Cabinet; it does not mean what we have in this country, which is control of the Defence Force by the bureaucracy. The Chief of the Defence Force is the principal adviser on military matters to the Minister. We ask him to defend the country but we deny him control over the resources that he needs to do so. He does not have control over the force structure. He does not have control over equipment. He does not have the means of supporting either the forces or the equipment. They are essentially under civilian control. If ever there was a way of ensuring without a shadow of a doubt that we are going to have a disaster on our hands, it is by asking someone to do something then denying that person the resources and control over the resources which are critical in carrying out that task. Of course, that was the position that the British forces were in at the time of the Crimean war. We all know what happened in the Crimean war. I can tell the Senate with absolute certainty that in the post-Tange era we are very lucky that we have not had a defence emergency. Had we had to use the Australian defence forces we would have suffered the same fate as the British forces did in the Crimea because the system simply will not work. We have over 90 committees in the Department of Defence. Nothing can get done until it is locked into the system for years and then nothing can be done if it is not approved by the civilian component because the Secretary alone is responsible for providing policy advice to the Minister. All the key committees in the Department of Defence-the Defence Committee, chaired by the Secretary; the Defence Force Development Committee, which is another very important committee, chaired by the Secretary; the consultative group, chaired by Deputy Secretary B; the Force Structure Committee, chaired by Deputy Secretary B; the Defence Source Definition Committee-are chaired by civilians. I do not need to go any further on that but we just cannot go on this way. Until that is changed and authority is vested in the uniformed services, with the Secretary and the civilian component providing advice and expertise where relevant, we will not get a decent Defence Force. The second point I raised on inadequacies related to the force structure. We are labouring under the doctrine at the moment of low level threats with some poorly armed, harassing force coming ashore. I find that absolutely impossible to believe. Public opinion internationally is such that no nation would send 50 or 120 poorly armed troops to invade someone else's sovereignty unless it would achieve something. One hundred and fifty people would not be able to capture a country. The present Defence Force structure is not realistic but it is what the Australian Labor Party wants. Australian Labor Party members do not want a strong Defence Force which will be able to deter. They have this belief-and it is a touching belief-that if they are nice and polite and demonstrably seen to have no capability to harm anyone else, no one will harm them. I wish that were true, but unfortunately life is not like that. The old pacifist doctrines still run very strong beneath the surface in the Labor Party. Because of that we have the present force structure designed to cope with this low threat scenario. As I said before, we do have essential interests in the region. We have to be able to project power into the geographical area around us. I would argue that the invasion scenario is the very lowest of our priorities. We need to project and to be able to get our nationals out of any country in the region if there are problems. Most importantly, we do not want any power vacuums in the region leaving an opportunity for someone else to come in. All we have at the moment is a very limited strike capability of the Air Force, a very limited submarine capability of the Navy, and almost nothing for the Army. Some of the basic things we need to correct relate to intelligence. We need to know what is going on in a military sense. We need an airborne warning and control system capability, an air and surface surveillance capability, and command and control function. We need a transport capability, an air and a sea lift capability. One of the great tragedies, as I said some time ago, is that in 1985 we abandoned the amphibious squadron. The Chief of Naval Staff at the time, Admiral Hudson, found this to be the softest option to take. He was told to cut his expenditure and his manpower, so he disbanded the amphibious squadron. If we are to operate in the region at all, we need to be able to bring in heavy equipment and troops by sea. This was demonstrated on a small scale at the Diamond Dollar exercise held last month on Cape York. The absence of any amphibious capability is absolutely crippling for us. The Government, instead of redressing this failure which it created years ago, has gone on with all of the nonsense regarding the new Anzac ship. Navy, during Estimates committee hearings, had no idea what it wants that ship to do, except that it wants it to cost $250m. I guess it does not want amphibious landing craft. They are not very good venues for cocktail parties and they certainly would not look very good on a calendar. But the fact is that they are what we need. We do not need a $250m surface ship for which the Navy does not have any idea what sorts of weapons fit it wants. The third point I raised was inadequate preparation. Again, this gets back to the doctrine that we will have 10 years warning time. That is absolute nonsense. We must have forces that are ready to go. The only force that can go tonight, within an hour or two's warning, is the Air Force, and that could not be sustained for more than a day or two because we are not keeping any war stocks of munitions in the country. Even the simple things that the Army requires, such as boots, webbing and camouflage clothing, are in desperately short supply and what it has is poor and inadequate. The camouflage smocks were ready to go into service-again, after years of delay-in 1983, but four years later, under this Government, they are still not on issue. I mentioned war stocks of ammunition. We simply have no war stocks of munitions or missiles of any size at all. Our capability is measured in days, certainly not in years. The final point is that we have an inadequately nurtured Defence Force. That can be seen by the resignation rates that are now running at record levels. I must comment on the sophistry of this Government. Just as a strike is an industrial dispute, we now find that a resignation from the armed services is a separation. For goodness sake, let us call a spade a spade. If we can recognise the problem, maybe we can be shamed into doing something about it. But to continue to refer to separations, as if this were some sort of hiving off that did not matter, is absolutely nonsensical and indefensible. People are leaving the defence forces because they know that this Government does not respect what they do. Sure, pay is bad. Sure, they are working long hours, they are living in rotten housing, their children are suffering from an educational point of view and their pay and allowances have not kept pace with the rest of the economy. All of those things must be fixed. But the key point is that they know at the end of the day that the Australian Labor Party is the old pacifist party that it always was, that wanted to see the Defence Force disbanded or reduced to token status. That is the psychology behind the massive resignation rates. That is why there must be a change in what the Government is doing. Just as the Government does not understand the economy and has driven the value of the dollar down to half the value that it was when it came to power, so it does not understand the defence needs of this country. It thinks that all it needs to do in both fields is to take a few surveys, get some golden tongued public relations people to tell a few mistruths about what is going on and everything will be all right. But at the end of the day the Government, just as it was caught out in regard to the economy, will also be caught out in the field of defence. It cannot keep running away from the truth. Senator DEVLIN(Tasmania)(8.34) —This evening the Senate is debating three Bills-the Appropriation (Parliamentary Departments) Bill 1987-88, Appropriation Bill (No. 1) 1987-88 and Appropriation Bill (No. 2) 1987-88. Debate on these Bills is, of necessity, wide-ranging and senators have the opportunity to explore and debate matters of particular importance to their States. The matter I raise tonight is indeed of importance to my State of Tasmania. I refer to job creation and job retention in forest-based industries in Tasmania. Job creation and retention is a task confronting governments around the world. Areas where employment potential is not being maximised must be explored and policies adjusted to make the most of any employment opportunities. One of the most controversial issues at the moment in Tasmania is the question of what direction Tasmania's forest-based industries should take. I believe that this industry offers one of the most neglected areas for improved employment in Tasmania. I will address this point in my speech. Australian Bureau of Statistics figures reveal that for every 10,000 cubic metres of logs consumed each year by woodchip export companies, 13 jobs will be created-directly, indirectly and induced-whereas the same volume of timber would produce 84 jobs in the sawmilling industry and 109 jobs in the paper industry. Obviously, therefore, to maximise employment in the forest-based industries, it is essential that any material suitable for sawmilling be used for that purpose and, wherever possible, woodchips be used to produce paper in Tasmania rather than being exported overseas to be made into paper by foreigners. While it is certainly true that integrated forest harvesting is certainly the best means of exploiting our forest resources, the integration should be such that sawmillers are seen to have the first rights to all millable material. Integration is preferable because it overcomes the practices that used to occur when sawmillers selectively logged forest areas. Now, with integrated logging, the areas are logged and regenerated. However, in this process it also appears that many millable logs are being lost. Clearly, there is a need to provide incentives for operators, contractors and companies to maximise sawlog yield. In a logging operation two operatives are closely introduced-the faller who identifies the standing tree as a potential sawlog and the landing man who dresses and cross cuts the log. To treat a sawlog to transportable stage requires skill, care and time not demanded in the preparation of the pulp or chip logs. An incentive payment must be made to operators as a reward for their efforts. Likewise, the contractor must be suitably rewarded. This may be activated by either additional payment or a change of handling methods, resulting in reduced handling costs. For example, if contractors were permitted to grade and mark sawlogs, this would obviate the delay of waiting for a Forestry Commission officer to do so and thus avoid multiple log handling at landings. An additional cost saving method would be the elimination of sawlog volume measurements. Sawlogs, like all other logs, should be measured by weight. As all log trucks today are fitted with integrated scales, this is a practical method of log measurement. Single handling at landings and log measurement by weight are cost saving devices which will lead to an increased contribution margin for contractors, thus providing incentive without adding to industry cost. Chip companies have a disincentive to encourage production of sawlogs due to bad debt write-off to supplied sawmills. This also applies to contractors who supply direct to sawmills. A solution exists in eliminating badly run sawmills either by upgrading management and operating skills or by causing the closure of the mill. Australia is increasingly competing on the domestic market against overseas producers, especially in regard to North American softwood. Today's environment does not protect the inefficient and it is not in anybody's interest to allow and even encourage the large companies to prop up uneconomical sawmill operators. Where chip companies are adequately compensated for sawlogs produced in the pursuit of chip logs the incentive to do so will exist and, consequently, saw log recovery will rise. Portions of chip logs frequently are of sawlog grade and are able to be recovered. It is of interest that the wood chip plant proposed to be established by Huon Forest Products contains a flitch mill for recovery of sawlog portions of chip grade logs. Clearly, this is an option open to all wood chip and pulp mills. Clearly this represents an added cost of production and cost offsets need to be sought, for example, in the form of royalty reduction. It is estimated that between 4 per cent and 10 per cent of all wood chipped at the Associated Pulp and Paper Mills (APPM) Long Reach plant would be suitable for sawmilling. Given that one million tonnes of wood is chipped each year at Long Reach this means that between 50,000 and 100,000 tonnes of millable wood is being chipped. These figures could be considered indicative, perhaps even conservative, in terms of the percentage of millable material that is chipped in Tasmania generally. It is interesting to note only recently the Kauri Timber Co. Ltd, which does not have a woodchip export licence, announced that it would spend around $1.6m to facilitate utilising category 2 sawlogs. The company estimated it would be able to obtain between 20 per cent and 25 per cent of sawn boards from these logs. Similar installations are needed for woodchipping plants to recover millable material for use by the more labour-intensive sawmills at Wiltshire and Triabunna. APPM does have secondary sorting processes. However, more modernisation, particularly at Long Reach, is needed. One of the main problems that needs remedying is that when trees are first cut down the logging contractors are not offered sufficient incentive to separate sawmilling material from chipping wood. Often to do so is a very time-consuming process which requires a sufficient excess profit to include such practices. In the absence of sufficient incentives many good millable logs are being cut in half for transporting thereby being ruined for any use other than chipping, even if the logs were later to go through a recovery mill. A number of points emerge from this. The first point is that while these practices continue resources that could be used in sawmills are being chipped. Thus jobs are being lost. The second point is that if appropriate incentives were offered contractors would spend longer recovering millable material with the result that new jobs would be created in the logging stage. Another issue relating to forest-based industries that has major ramifications for employment creation is that of the types of forest management practices being adopted. Different types of practices are available. However, the one which seems to have the greatest merit is intensive forest management. Intensive management necessitates greater tendering of regenerated areas during their growth, often entailing several stages of thinning. The benefit of intensive management is that regenerated areas reach maturity more quickly thus producing timber of large size and increasing the yield of a given area. While the cost of intensive management is about triple the cost of less intensive management practices, the benefit merits the additional expense. As well as minimising the amount of Tasmania's forest that has to be used to sustain the industry, the other great advantage of intensive management is in regard to the jobs it would create. As forecast earlier, there should perhaps be a fourth wood classification-the classification of fuel wood. Forests, particularly natural and regrowth forests, contain wood resource material which is both dead and alive, vertical and horizontal. Present wood use also requires a further classification which is wood rendered not usable due to carbon impurity. Present requirements for saw, chip and pulp logs demand carbon-free logs. It is a requirement of the Tasmanian forest practices code that the maximum harvestable resource left on the forest floor as residue does not exceed five tonnes per hectare. In my view this has led, firstly, to the harvesting of non-carbonised wood, for example, wood less than 20 centimetres in diameter which it is impracticable to bark before chipping at the chip mills. Small wood harvesting is expensive and the bark content adds to the impurity level of the export chip product. Secondly, there is a total forest residue far in excess of five tonnes per hectare, in some instances amounting to hundreds of tonnes per hectare where carbon impurity is high, because allowable residue is related to present marketable material. At present the level of harvesting in Tasmania's forest residue is estimated at two million tonnes per annum. This resource cannot be ignored. Much of the resource is not suitable for present mill usage so consideration should be given to alternative uses such as fuel wood as an energy source for industry. Simple observation of domestic heating methods shows an economically driven move to wood heating. This has occurred in spite of inefficient solid fuel home heating systems. However, this system is now being redressed. High standards of emission control, especially in the United States of America, have led to highly efficient wood burning systems. Eucalypt, with a low ash content, particularly when burnt at a high temperature, is a highly efficient fuel. Industry in Tasmania should be educated and encouraged to consider wood fuel as an energy substitute for electricity and, particularly, imported fossil fuel. Where necessary government should subsidise industry to change the system to solid fuel such as has occurred overseas, for example in Canada. There are many advantages to Tasmania in developing an industrial fuel market. Some such advantages are increased business opportunities, increased employment, reliable import replacement product, reduction in forest replanting costs, renewable resources and increased royalties. With proper co-ordination business opportunities could be created for harvesters and carters of solid wood fuel and for manufacturers of solid fuel burning systems. Obviously, employment opportunities would increase in tandem with such opportunities. Tasmania imports its liquid fuel requirements at a price which appears not only uncontrollable but also scandalous. This applies both to petrol- eum products and natural gas. Liquid fuel costs about $300 per tonne, whereas solid wood fuel can be produced for about $30 per tonne. Given a fuel energy factor of about five, it would appear that solid wood fuel gathered from local forests would cost about half that of imported fuels. By cleaning up the forest floor a fuel wood industry could have the dual effect of reducing the cost of preparing harvested areas for replanting and adding to revenue royalty by using the same road facilities. Additional harvested wood will contribute to recovering the fixed costs of present production. It is not suggested that the present residue of two million tonnes is indicative of the size of a solid fuel market. Domestic use stands at about half a million tonnes. An industrial market of about the same tonnage would make a significant contribution to the State's economy by increasing employment, recycling the energy dollar within the State and reducing the energy costs to industry and, ultimately, increasing competitiveness and possibly attracting new industry. Tasmania's forest-based industries are a classic example of the way in which job potential in Tasmania is not fully utilised. It is just the sort of area that we should be looking at improving. Senator WALTERS(Tasmania)(8.50) —Last August the Treasurer (Mr Keating) brought down a Budget which, according to the Government and indeed a lot of people in the media, was a masterpiece because the Government, supposedly, had been able to cut its deficit to $27m. Ross Gittins of the Sydney Morning Herald was one of the few commentators who labelled the Budget as a Budget of wasted opportunities-a nothing Budget. He has been proved correct. Senator Maguire —Still in balance. Senator WALTERS —Is Senator Maguire sure of that? Is it still in balance? I imagine that the honourable senator's interjection is very far from the truth. The Opposition was very critical in one specific area; that is, the Government's so-called cut which consisted of one-off asset sales. There were the $1 billion one-off asset sales and an additional $1,400m in taxes over and above the ceiling promised by Mr Hawke quite some time ago. In the Budget last August he overreached that promised ceiling by over $1,400m. There were tremendous windfall profits from the Reserve Bank of Australia. Last year the figure was $2.6 billion. It is estimated this year to be $2.7 billion. This underlines the fact that the true Budget deficit is more like $2.5 billion, because I sincerely hope we do not expect the Reserve Bank to make similar windfall gains next year. Over the past 10 years the average profit of the Reserve Bank has been only about $600m. Unless things go really wrong once again with the Australian dollar and the Reserve Bank is forced to prop it up and so get these tremendous windfall profits, such a sum will not be realised again next year. We all remember that volatile time when the Australian dollar dropped to an unprecedented low, other countries lost confidence in our economy and the situation was such that the Treasurer lost his cool and said that we were well on the way to being a banana republic. As I have said, the Opposition pointed out at Budget time that one-off sales such as asset sales, windfall Reserve Bank profits and rising taxes are not the way to go. Unless we have real cuts, the Government's expenditure next year will be the same and the Treasurer will be faced with the same problems he had this year. The true deficit will remain so long as it is paid for by one-off dollar profits. Year after year the Government will have to dream up bigger one-off dollar profits and bigger taxes. This was all said before the collapse in the market. How much more do the Opposition's warnings apply today? Following the market crash we know that growth will slow, the Government will not get its expected tax revenues and the Budget deficit will blow out purely because it was never anything but a false and phoney Budget deficit, one that relied entirely on one-off measures and additional taxes. Today we have been told that the current account deficit is nearly $1.2 billion. Mr Hawke has said, `Well, that is not bad. It is better than expected and should be looked upon in that light'. This figure, of course, does not reflect the impact of the collapse-no doubt that will happen next year-so the figure is more serious than it appears even at the moment because Australia is continuing to borrow just to pay the interest on our foreign debt. If the Government does not heed the Opposition's warning and the warning from its own Minister for Finance, Senator Walsh, it is being completely irresponsible. Let us look at what Senator Walsh has said, because he has been saying these things for some time. Last July, down in Hobart, he said: I know some people believe that budget deficits don't matter. They do matter in the degree to which they lock in future expenditure. If we had a public debt interest payment, the same level of outlays as it was in 1982- that, I might add, was the last Budget of the Fraser Government- we would in this financial year have about $4 billion extra to either cut taxes, increase welfare spending or whatever else you wanted to do with it. But because we have run a sequence of high budget deficits, we are lumbered with a crippling public debt interest payment which restricts the ability of this Government and Governments for the foreseeable future, to deliver the programs they would like to deliver elsewhere. That is how the Government's Finance Minister warned his own colleagues. The Government simply has to reduce its deficit. I am quite sure that Senator Walsh was not expecting one-off tax dollars to be used to reduce that deficit, nor was he expecting the one-off sales of Japanese property, the one-off sales totalling $1 billion that occurred in the May mini-Budget or a rise in taxes and he did not really anticipate the Reserve Bank's windfall profits, because he is reported to have said in his criticism of this year's Budget: I'm worried that the Budget has been oversold and it will make the public and the Government complacent and think that we can slip back into our old slothful ways and we don't have to worry any more. Why is not the Government listening to its Minister for Finance? Why is not the Government taking note of what Senator Walsh has been saying now for several years? He went on: . . . if people were encouraged to spend rather than save, Australia would be sent further down the Argentinean road. If it goes much further, it could well be irretrievable. Yet the Government ignores him. Senator Walsh is saying exactly the same things that the Opposition has been warning the Government about ever since it came to office. Senator Walsh said: Certainly if there was another commodity price slide, the International Monetary Fund will be knocking on the door again. And I think we would all know what would happen to the welfare sector if we are pushed to that point. A country which has a high level of foreign debt and a continuing large current account deficit is a country which has few options. Yet today, when the current account deficit comes out at nearly $1.2 billion, the Prime Minister says, `That is better than we expected. That is not bad. That is pretty good'. Why does he not listen? Why do not honourable senators opposite listen to their Minister for Finance? Let us have a look at what has been the result of some of the economic rationalities of this Government. Senator Maguire —Some 800,000 more jobs. Senator WALTERS —We have just been told that the Government has created 800,000 more jobs. Ever since the Government has been in power it has merely kept up with the rate of increase in the population reaching the job age group. That is all, and every job that is taken up by the increase in population the Government says it has created. What absolute rubbish. Have a look at the long term unemployment rate and do not boast about it-it is absolutely appalling. I would not boast about the additional length of the long term unemployment if I were Senator Maguire. Let us have a look at the bankruptcies that have occurred in the last few years. In 1984-85, there were 4,664. In 1985-86, the number went up to 5,539. In 1986-87 it went up to 7,495. Is that making lots more jobs? The Government is ruling over the highest number of bankruptcies in Australia's history and Government members are patting themselves on the back, and Mr Keating is telling us that the J-curve will soon take effect. We have the highest number of bankruptcies. What are the figures going to be next year, following on the market collapse, when there has been such an enormous jump between 1985-86 and 1986-87? I wonder what the figures for 1987-88 will be. So many small businesses have gone bankrupt. As a result, there are many pressures on the family. Families are now considered as only needing support from the Government if they are low income earners. The middle income earners have been completely deserted by the Government. Let us have a look at an article in the Age on 19 October. The Age is certainly not a supporter of the Opposition-it supports the Government-and yet it says that the middle class family loses in the long run. The article says: Average families on middle incomes are the big losers after a year of dramatic changes in taxes and benefits from all levels of government. An analysis by `The Age' of all main changes in taxes, benefits and charges announced in two federal budgets and one state budget shows that many families would be worse off despite the much publicised tax cuts. For example, a single-income family with two children, earning $22,000 a year at the start of this year would, after an increase in income in line with the consumer price index and despite federal tax cuts and the family package, lose at least $266 a year. That is $266 a year for a family with two children, on $22,000 a year. Under this Government's so-called tax cuts, it is down the drain $5 a week. The article continues: Similarly, a double-income family with two children, earning $42,500 a year, would be $409 a year poorer, while a couple earning $52,500 and which had two children would lose $750 a year, or $14.40 a week. That is not bad in these so-called tax cuts about which we have heard so much from the Government! The article continues: And state taxes and charges such as gas, electricity and council rates would bite further into family budgets, having risen on average by at least five per cent this year. Those are the figures. That is what is happening to the middle income families under this Government. As I say, the Government has said that the only assistance that it will give is to the very low income families. As for the rest, considered middle income families on $22,000 a year, the Government will rip off them $266 a year. The Government commissioned Bettina Cass to have a look at the situation of families, and she did a very detailed report for the Government on whether the family allowance should be given to everyone or whether it should be means tested. She came down very heavily on the side of saying that there would not be total equity, either horizontal or vertical, if it were means tested. Bettina Cass made it very clear that she believed that there was a need for families generally to pay less tax, rather than married couples or single people without the responsibility of children. What does this Government do? It decided that all the research that it had commissioned Bettina Cass to do was a lot of rot, and it decided to means test the family allowance. In his wisdom, at election time, to gain the popular vote, Mr Hawke made the statement that, `By 1990, no Australian child will be living in poverty'. What absolute rubbish that man talks. How can he possibly make a claim like that? I notice that, of late, he has changed those words quite considerably and now he is saying that no child will need to live in poverty by 1990. The Government has brought in a family assistance package. I certainly do not say that families should not get some assistance, but the way that the Government has introduced that package has created a poverty trap. Let me give an example of a single income family with two children on $330 a week. If that family man is offered $90 a week overtime and he earns that additional money, what will he get out of that following the loss of the family assistance and tax, et cetera? He will get only $10 a week. He earns $90 but he gets only $10. What is he going to do? He will say that it is just not worth it, that he will not work that overtime or spend those additional hours earning $90 when all he gets out of it is an additional $10. He would rather put his hand out and get the family assistance package, which is much more secure and stable. Why does the Government not cut taxes instead and say that it will not tax that group, instead of taxing the workers and then handing the money back in the family assistance package so that people get used to handouts and are convinced in the long term that it is far better not to earn $90 overtime but to put out their hands for the additional welfare package? Is the Government aware that there are 700,000 additional Australians below the poverty line since March 1983? Yet we are told by a senator tonight that the Government is doing pretty well and is creating jobs. Since those opposite have been in government 700,000 additional Australians have fallen below the poverty line. The Prime Minister (Mr Hawke) is telling us that by the year 1990 no child will be living in poverty. The Government has completely deserted the families. The Government has chosen to look after, give support to and encourage only those families which it has put below the poverty line. It is high time that this Government recognised that unless we look after the families, give them assistance and support and take the burden of taxes off their backs, there will be a continual need to support more and more families. Bettina Cass was 100 per cent correct when she said that all families have to shoulder additional costs if they have dependent children, and that governments must, just through sheer equity, allow those families to pay less tax, that there should be a redistribution in their favour, with family allowance to support them, and that there be some form of recognition by governments. But this Government has chosen to go the other way and not have any recognition of the needs of the families in the tax area. I believe that is the worst part of this Government's Budget and philosophy. The Government has completely deserted the middle income families, and in time those middle income families, through bankruptcies-I have just given the Senate the figures-will slowly but surely be reduced to the level of the low income families that the Government is now being forced to assist. (Quorum formed) Senator HAMER(Victoria)(9.15) —The Senate is considering together by leave the Appropriation (Parliamentary Departments) Bill, the Appropriation Bill (No. 1) and the Appropriation Bill (No. 2). Senator Stone, on behalf of the Opposition, has foreshadowed that he will move an amendment to the motion for the second reading of Appropriation Bill (No. 1) in these terms: At the end of motion, add: ``, but the Senate is of the opinion that: (1) this Bill is part of a continuing pattern of failure by the Hawke Government to face up to the need for adequate and timely adjustment of the economy; (2) this failure by the Hawke Government has heightened Australia's vulnerability to changes in world economic conditions at this time of crisis on world financial markets; (3) because the Government has squandered time and resources while persistently running Australia into massive debt, our national economic options are now so narrowly limited as to largely deprive us of independent options; and (4) the Government no longer has the scope to protect jobs, to stop the prospective rise in unemployment, to stem the continuing rise in numbers of Australians living in poverty or to protect the position of families more generally . . . Nothing any Government speaker has said has in any way contradicted those flat statements, which, in my view, are patently true. Because of the gross mismanagement of this country for the last 4 1/2 years we are in really serious economic trouble and we are depending on others and good luck to get us out of it. It is late and we must start now to address some of the problems that should have been tackled years ago when the decline in our terms of trade first became obvious. One area we just must concentrate on is improving our productivity, because it is productivity growth, and productivity growth alone, which over the long haul determines the extent to which the community's standard of living can be improved. It is therefore a matter of the most serious concern that over the last two years we have seen a decline in the average level of national productivity. In 1985-86 our national productivity declined by 1.7 per cent. Last year there was a further decline of 2.8 per cent. At a time when we desperately need an improvement we have seen a decline in our national productivity over the last two years of the order of 4 1/2 per cent. This must be of great concern to all of us. Of course, the Treasurer (Mr Keating), in his Budget Speech, anticipates an improvement in productivity of about one per cent this year. Well, we may get it. He promised the same thing last year and we did not get it, so I think we will believe the Treasurer's promises when we see the outcome. This decline in productivity must be of great concern to all concerned Australians. It is very alarming because despite the declining dollar and the increased opportunities our manufacturing sector in particular achieves from this, both for exports and for import replacements, we have not yet taken advantage of them. There has not been an improvement in investment in new plant and equipment in our manufacturing sector. In fact, the rate of investment in new plant and equipment, despite the enormously increased opportunities created by the declining dollar, is actually lower now than it was when the Hawke Government came to power. There has been a decline in real terms in investment in new plant and equipment, and our recovery cannot be said to have started until there is a sharp rise in investment in new plant and equipment and we take advantage of opportunities for exports and import replacements which are there for us to take if we have the will and the organisation. It is not that we have no investment in plant and equipment. We have about $20,000 for each worker invested in manufacturing plant and equipment. This is quite high by world standard. We are not updating and expanding our plant and equipment as we should be. But even though we have modern plant and equipment we must use it efficiently; we must use it full time. The examples are legion of highly expensive capital equipment operated not throughout the year-closing down for four weeks over Christmas-things most other countries would never contemplate. I will give honourable senators another example, which is notorious because there is a commission of inquiry into it. Grain terminals use highly expensive capital equipment which is fairly standard around the world. In grain terminal performance in four United States ports, the throughput per employee is 60,000, 80,000, 80,000 and 120,000; round about 100,000 average. With the same equipment in Sydney, the throughput per employee is 17,000 and in Newcastle 21,000. That really epitomises our productivity problem. Even where we have expensive equipment, we are not using it to its full capacity. If we do not do that, we will not be competitive. The world does not owe us a living; we must earn it. A great change of attitude is necessary if we are to do that. It is not that Australians cannot work. I have before me a table of productivity in Australia compared with that in Britain, Germany, the United States of America and Japan. In the area of agriculture, we are incomparably the most efficient of those countries. Our productivity per head in agriculture is 2 1/2 times that of Britain, over three times that of Germany, 1 1/2 times that of the United States and 6 1/2 times that of Japan. Australians can and do work in certain sectors; they certainly do in the agricultural sector. In the mining sector the figures are 1.67 compared with Britain, 2.44 compared with Germany, 1.29 compared with the United States and 1.5 compared with Japan. So again, in the mining sector, we are the most efficient of all those countries. That is undoubtedly partly helped by the fact that our mineral deposits are usually easily accessible and we can use advanced equipment. Nevertheless, in my view, it is to the credit of the unions concerned, probably because they have been exposed for a long time to international competitiveness, that they are the most productive compared with those four other countries. When we get into the manufacturing area we start to run into problems. We are actually more productive than Britain as the figures are 1.35 to one in our favour. We are less efficient than Germany with a figure of 0.9. The figure in respect of the United States is less than one-half and it is about the same for Japan. Other areas are broken down in the table which I seek leave to incorporate in Hansard. Leave granted. The table read as follows- Table 5: Comparative Productivity, 1983 Aust/ Britain Aust/ Germany Aust/ U.S.A. Aust/ Japan Agriculture... 2.55 3.20 1.51 6.7 Mining... 1.67 2.44 (a)...1.29 1.5 Manufacturing... 1.35 0.90 0.48 .6 Power, Water... 1.04 0.54 (a)...0.38 .9 Building... 1.19 0.60 0.90 2.5 Transport... 1.21 0.93 0.47 .8 Other Services... 0.93 (0.65) (0.86) (1.0) All... 1.22 (0.90) (0.86) (a) 1982. Source: Haig, B. (1986), Industry Productivity Levels: Are We in the World League?, paper delivered to the BIE conference on productivity growth at the Regent Hotel, Melbourne, 2nd December 1986. Senator HAMER —I thank the Senate. There are a couple of other points that I would like to mention which I find interesting. For instance, in the building industry-much vilified I think-we actually do better than Britain, substantially worse than Germany and the United States but, interestingly, we are very much more productive than the Japanese. In the transport area we also do better than Britain in productivity terms, worse than Germany, very much worse than the United States and somewhat worse than Japan. I think in the case of transport, it is not that our shipping or our rail transport are inefficient, but that our transport figures are undoubtedly raised by our road transport system which is highly efficient by international standards. Nevertheless, I think the lesson to be learnt from those figures is that Australians can and do work hard and efficiently in certain industries when they have the motivation and when they have the right attitudes. But in some areas-and the manufacturing industry is the most obvious one-they are not working nearly as productively as people in other comparable countries. Australians can respond to a challenge. When I was in the Royal Australian Navy we used to operate ships which were identical to those of Britain and the United States. We had no difficulty, when operating with a sister ship from another navy, in outshining them in every conceivable respect. Competition and drive enthused people to do it. People are competitive. Look at our attitude to things such as the America's Cup. It was our cup when we won it; I do not know whose cup it was when we lost it. In the same way, people are involved and motivated when we talk to them about their football teams. What we have not managed to do in areas which are heavily unionised, where people are working for wages, is to get them involved in the success of their company or their enterprise. They are doing it very much when they are working for themselves or for others on the land but they are not doing it in the manufacturing sector and that is the key problem we must address. We have to have a total change of attitude. Australians can and do do it. But they are not doing it in some key sectors. We have to go to the sources of our industrial relations problems and try to solve them. They will not be solved by confrontation and abuse. In my view, the whole problem is excessive confrontation. But somehow we have to get through the attitude that we are all in it together. The world does not owe us a living. If we are to get out of our current economic mess we must productively work together to cure the problems and we must all share fairly in success and all bear fairly the burdens of failure. The other area where we have problems in terms of productivity is not only how hard and efficiently we work but also how long we work. The average Australian employee gets paid for 57 days a year when he is not at work. The average United States employee gets paid for about only 19 non-working days a year. Australians work only about 75 per cent of the average hours worked by people in most other industrial countries. It is interesting that, in a recent referendum, the Swiss rejected a proposal that their working week be reduced from 42 hours to 38 hours. I do not know whether such a referendum on a reduction in working hours would have been rejected here. We also have great problems with featherbedding-people not doing jobs and just standing around. I will give just a couple of examples. One that struck me very forcibly was a study done in Sydney which showed that private bus companies had one maintenance man per nine buses and that the State transport system had one maintenance man per bus. There was no evidence that the State transport buses were cleaner or more reliable than the ones that had one maintenance man per nine buses. I will just run through a few other examples of the sorts of things we have to tackle and get rid of if we wish to become an economically efficient country. A large semi-governmental authority had all its new vehicles delivered without spare tyres. This was done to ensure that all punctures were repaired by a repairman who was sent with a driver from the base. On the New South Wales railways, hundreds of men were employed to check for bearing failures in hot boxes even though a switch to roller bearings had eliminated the possibility of the problem. On the waterfront, one worker is needed to stand at the edge and watch the loading of grain into container ships. Union rules insist on two workers watching the grain being poured. Only one is needed, but the union insists on two. Because there are two workers, the union insists that a supervisor must be present and, because there is a supervisor, there must be a foreman. Thus, four workers are employed to do one man's work. The world does not owe us a living. If we carry on like this we must expect a relative decline in our living standards. Let me give one final example. In 1985 the Australian National Line's River Torrens came into Brisbane carrying cement clinker from Adelaide for the Sunstate Cement Co. The ship had been restructured at considerable expense so that she could be unloaded in perfect safety and very rapidly without the need to employ any shore labour at all. When she reached Brisbane the unions insisted that, for each of the three ships, one foreman, one waterside worker and one clerk be present and paid for, even though there was nothing for them to do. They also wanted a first aid officer standing by. The dispute was eventually referred to a commissioner of the Australian Conciliation and Arbitration Commission who ruled that there was no need for any of the shore party, so the dispute in Brisbane was over. But it started again in each port, Sydney, Hobart and Devonport, when the ship got there. As a nation we cannot afford this sort of behaviour. I repeat that the world does not owe us a living; we have to earn it. Then there are the questions of restrictive work practices, some of which have been tackled in the recent second-tier wage negotiations. The sorts of things that we are up against are these: a recent survey of restrictive practices in the metal and engineering industries showed that 50 per cent of companies were affected by restrictions on the rostering of working hours; 46 per cent by inflexible manning practices; 46 per cent by limitations on the use of sub-contractors; 44 per cent by artificial controls on production levels-the old darg; 38 per cent by the prevention of incentive payments for individual performance; 37 per cent by one man, one job or machine; virtually all by demarcation restrictions; 35 per cent by restrictions on part time or casual employment; and 33.3 per cent by payment for work not done. I think we can all see that we just cannot go on this way. If we wish to be competitive on the world scene-if we want to get over our economic problems we must be competitive on the world scene-we cannot go on with behaviour like that. One of the good things that came out of last year's wage negotiations was the so-called second tier, the pay linked to productivity improvements. But it will not be very effective. We appear to be going to pay a 4 per cent productivity increase and will get only about a one per cent improvement in productivity. Nevertheless, at least it is focusing some attention on the need to eliminate these arbitrary restrictions on the efficient working of our manufacturing plants. The next point I wish to deal with is the question of quality control in manufacturing industry, although it does apply to other industries as well, such as the agricultural industry. There is little doubt that particularly in manufacturing industry our quality control is deplorable. A very large number of Australian consumers look at an Australian manufactured product and assume, with some justice, that it is likely to be inferior to a similar imported item. They will pay more for an imported item than for a comparable Australian item because they are sure or they think that the imported item is superior. Japan used to have this problem. When I was a boy Japan had the reputation of making cheap and nasty things. Japan had the reputation for using cheap, shoddy materials. We even used the slang expression `Japanese made', meaning that it was poor and inferior. Through their efforts over the last 20 or 30 years, the Japanese have totally reversed that. `Manufactured in Japan' is now normally taken as a sign of high quality manufacturing skill. Attitudes can be changed. Japan had to change attitudes. We must do so. We must stop `get rich' people destroying our exports. I am sure that would not happen in modern Japan. Let us look at some of the things that have happened. Honourable senators will remember that we built up a good trade with America for export beef. Someone thought that we would make some quick money by substituting kangaroo meat for the beef, without any regard for what that would do to Australia's exports standards and reputation. As another example, we built up, with considerable trouble, a reputation for Australian wines in Hong Kong. The people did not know the particular vineyards but they knew that Australian wines were quite good. When the reputation had been built up, someone thought what a wonderful opportunity there would be to dump some surplus cask wine. That soon destroyed the reputation, which it will take years to build up again, if we ever succeed. On the subject of quality control, and I come back to the manufacturing industry, I can give a personal instance from very close to home. My son has just acquired his first car-or to be more accurate the first car that he has paid for himself. He chose an Australian car, under some pressure from me, I am bound to admit. He chose a Ford Meteor Ghia, the top line of that company's small cars, with nice optional extras such as cruise control, a computer controlled burglar alarm and air-conditioning. This car consisted largely of imported Japanese components but, of course, it was assembled and tested in Australia. In the first 7,000 kilometres the following defects occurred. On the first day a door handle came off. The cruise control did not work, and still does not work properly. Two door seals were defective, which produced loud wind noise. There was corrosion around the wheels. The front left disk brake locked while the car was going at high speed on the freeway. The car suffers from fuel starvation if one does a sharp turn at less than 25 kilometres per hour. Despite repeated attention, the radio still rattles, and one channel does not work. One channel of the cassette player does not work. The roof light fitting vibrates badly. I think honourable senators can see that, if we are producing cars with that sort of quality control on the output, it is most unlikely that we will persuade anyone to buy a second one. Unfortunately, this affects the reputation right across the board of Australian manufactured products and Australian cars. If we are thinking of exporting cars, which we should be able to do-we used to have a substantial vehicle export industry in Australia-we can imagine what would happen if a car with those defects was sent to the United States. There would not be a second export order if we sent vehicles with those sorts of defects. We must tackle seriously our quality control. It is not a matter of just having an inspection at the end of the production line, with a car being inspected thoroughly-in my son's case, the car obviously was not inspected thoroughly-and then accepted or rejected. We must have quality control throughout the whole manufacturing cycle. To use an expression, we do not have quality control inspected in; it must be built in. Again, this requires a whole change of attitude in the people assembling those cars. The final point we must tackle in this area is the question of reliability of delivery. If we expect to be an exporting nation, we must be able to deliver when we promise. Last year 43 per cent of waterfront industrial disputes around the world occurred in Australia. We have only 10 per cent of the shipping movements and yet we have 43 per cent of the industrial disputes. I have a friend who has a small manufacturing business. He managed to get a contract to send some manufactured items to the Philippines. He sent off samples, which were satisfactory. He got the first production order, but it was stuck on the wharves in Melbourne for three months during a dispute. Of course, he had repeated calls from the Philippines asking where the order was. All he could say was that it had left the factory but was stuck on the wharves. Eventually, it was delivered. But he never got a repeat order. That sort of experience is all too common. If we are to be an efficient exporter, we must be able to guarantee reliability of delivery. This Government has done nothing to improve performance on the waterfront. It is still deplorable. All too frequently we see what happens with our coal exports, which are probably now our most important exports. We do not have all the coal in the world. If we have contracts to deliver to Japan, Korea or China and we cannot deliver because of a strike, there will not be further orders. They will order from somewhere else-from South Africa or from Brazil. We have no monopoly on supply and they will not give us special treatment. We must perform. This is the great challenge facing this country. We have enormous assets; we have an excellent climate; we have a stable political system; and we have enormous natural resources. But we are not making proper use of them. This is the challenge facing the country. This is the area in which we desperately need leadership from this Government and this is the area in which the Government is failing totally to give any sort of leadership to which this country is entitled. Senator KNOWLES(Western Australia)(9.38) —I rise to speak on Appropriation (Parliamentary Departments) Bill 1987-88, Appropriation Bill (No. 1) 1987-88 and Appropriation Bill (No. 2) 1987-88, and in particular on the Budget. When talking about the Budget, I suppose that any Budget that reduces the deficit has its welcome side. However, I think we should be very much aware that this is no decisive blueprint for Australia's economic future, as the Minister for Finance (Senator Walsh) admitted on the weekend of 19 September when he stated that we were heading down the Argentinean road. While the Minister for Finance is very prone to abuse in this place everyone who moves, on occasions he does have the capacity to hit the nail on the head. With regard to this Budget, he has probably done that and been the only member of the Government who has been prepared to do so. The cuts that he urged a few weeks before the Budget have clearly not occurred when overall outlays are down in real terms by only 1.3 per cent for the Government's own programs compared with a 4.2 per cent real cut imposed on the States. Of course, new spending initiatives in this Budget will amount to $1.3 billion over a full year. It is highly significant that overall no more than 40 positions in the Commonwealth Public Service will disappear. Since time immemorial, the Opposition has been begging and imploring the Government to cut spending and to cut the size of government. But that has not been done. All we have seen in this Budget is simply band-aids on the bucket that is rapidly leaking. This leakage has to be curtailed somehow. The Government is not prepared to bite that bullet. As I have said, Senator Walsh is probably the only person on the Government side who is prepared to be somewhat realistic. But, of course, he is beaten about the head by the Prime Minister (Mr Hawke) and the Treasurer (Mr Keating). Many of the initiatives that would have occurred in programs in the social security, health and education areas were described by Senator Walsh on 7 August as the `engine of growth in spending'. Once again, he described all this increased expenditure as inflationary. Yet, as Minister for Finance, he is not listened to. It is not surprising that this Government has sought to minimise the deficit by what in the outside world will be called creative accounting. The deficit has been artificially reduced by the sale of assets amounting to $1 billion, which is hardly an exercise that can be repeated in years to come. I find that quite amazing considering the Prime Minister's rather outrageous attack on the Opposition during both the State election campaigns in South Australia and Western Australia and in the Federal election campaign as a result of its privatisation policy. Yet Government members are brawling and are clawing their own eyes out over privatisation. They have not yet accepted the fact that there is a need for real privatisation. The important distinction that needs to be made on this occasion is that the Opposition's privatisation policy is one of fiscal responsibility and practicality, whereas the Government's idea of privatisation is selling off the family jewels to pay for groceries. It is sad that we cannot expect continued repetition of the Reserve Bank of Australia's $2.7 billion currency trading profits. It is unrealistic to expect that. Until recently Reserve Bank profits averaged $600m a year, so how in the world can we hope to see the $2.7 billion profit again? The fundamental point made by Senator Walsh in August was this: . . . the required fiscal policy statement must be made on the outlay side of the Budget. Yet this $27m deficit-which, in reality, is a deficit of around $1,000m-has been achieved by increased revenue and taxation. Instead of making the hard expenditure decisions, this Government, at best, plays the old game of deferment so that the hard choices are postponed yet another year. A slight, if timely, decrease in real spending has to be offset against the weight of an accumulated $22 billion in deficits caused by higher real spending after 1983. Even 4 1/2 years down the track, we still hear from this Government that it inherited all its problems from the Fraser Government. Mr Acting Deputy President, allow me to remind the Senate that since this Government took office we have seen five Budgets and three mini-Budgets, and we have had two talkfests called summits. The net result of all those things is that the economy is in an absolute mess. When Labor took office, it ran two massive Budget deficits. The Treasurer's first Budget deficit was almost double the deficit during the last year of the coalition Government. This Government has presided over a quadrupling of foreign debt. It has presided over the downgrading of our AAA credit rating for the first time in this country's history. History shows that no country has lost its AAA credit rating and got it back. That is what this Government has done for this country. If the Government can be proud of that achievement, good luck to it. Not too many people in the world are proud of it. The Government has put the economy in an extremely vulnerable position. It is not only the Opposition that has said that Australia is in a parlous state; so too has the Wall Street Journal. Of course a few weeks ago the Treasurer said that the Wall Street Journal was the most widely read newspaper in the United States of America, and in fact he was singing its praises. He may well be interested to know that the same Wall Street Journal said on 3 November, only a couple of days after he had praised it: If there's a booby prize for stock markets in the current tumult, Australia is a strong contender to win. It went on to say: Commodity prices are one reason investors fear Australia. The Government's economic strategy is clearly out of gear with the rest of the world-the real world. When will the Government sit up and take notice of the real world? It always begs the question: Who runs the country-the Government or the Australian Council of Trade Unions (ACTU)? I think that most of us fully recognise that predominantly it is the ACTU that runs the country. The Government cannot blink without first consulting the ACTU and having secret little rendezvous with it in hotel rooms and so forth. It goes on and on. The Government cannot talk about wage increases or whatever without first consulting the ACTU. So who does run the Government? This may not be a record spending Budget, except in nominal terms, but, let us face it, it is yet again a record taxing Budget. Nothing shows better the priorities of the Australian Labor Party (ALP) than when it tries to balance the books. Tax revenue has risen by 8.2 per cent compared with a 4.3 per cent rise in outlays. Taxation remains above 24 per cent of gross domestic product (GDP) compared with an average figure of 23 per cent under the former coalition Government. An extra $3 billion will be taken from Australians in tax this year and the average worker will be paying an extra $230 in taxation. Yet the Government talks about looking after the low income earners and says that they will be better off. That is a whole lot of rubbish. It should not be contemplated as any form of truth because it can be dispelled at the drop of a hat with accurate figures. Yet again, receipts from excise duty on crude oil, liquefied petroleum gas and petroleum products are to rise between 3 and 6 per cent. The Budget Papers, in a graph on page 331, show how drastically crude oil production is estimated to fall after this year-from over 500,000 barrels a day to something like 150,000 a day in less than 10 years. In view of this Government's track record and its preferring to rely on taxes in place of spending cuts, we may well ask what may be in store for the taxpayer when this source of revenue quite literally dries up. We may be entitled to fear that Senator Walsh was foreshadowing the shape of things to come when he spoke of levying capital gains tax on the family home and regressing to that most vicious and degrading of taxes-death duties. That is the price we might pay for this Government's inability to cut back spending. We have already had a debate about a wealth inquiry. I suppose the stock market crash has thrown a big bucket of iced water on that, however temporarily. This Government is committed to finding out who owns what and why and then distributing it back through the community. That is its whole motive-to destroy initiative. It has achieved its ultimate goal. A changed overall economic outlook since the Budget was presented gives greater force and urgency to the criticisms that the coalition is making of the inadequacy of this Government's spending cuts. The fact that the end of the five-year bull market on the stock exchange will severely cut the revenue from capital gains tax in 1988-89 is all the more reason why spending has to be addressed now rather than deferred to next year when at least that one aspect of taxation revenue will diminish. That is another great tragedy of this Government's capital gains tax. We have a capital gains tax on hand, but where is the capital losses tax? At the end of this year, many people will be confronted with provisional tax as a result of good capital gains. How are they to pay for it? They have now lost substantial income, but so what? There is no offsetting of the capital gains tax vis-a-vis a capital losses tax. There can be no question that this tax, expected to yield between $50m and $100m this financial year, is based very largely on the stock market. Page 299 of the Budget Papers states that revenue estimates for 1987-88 are `based principally on substantial past increases in share- market prices'. How will the Government raise the extra money it will lose because of the stock market crash? It will not have any difficulty finding a way because it is the greatest taxing government Australia has ever seen. Again we are entitled to focus more sharply on Australia's overseas debt as a cumulative end product of government spending. The United States deficit and indebtedness are described as the cause of the loss of international financial confidence. Last week we saw the Prime Minister, with all the hide in the world, writing to the President of the United States, telling him what to do and how to get his act together. What cheek! If this country were in good shape he might have some reason to be a little brash but Australia is poorly placed to handle any world downturn. And here we have the Prime Minister telling President Reagan how to do it! We are poorly placed because of our high debt, our high current account deficit, our high inflation and exposure to commodity price movements. It is just outrageous that the Prime Minister can stand on a pedestal and say `I have all the answers' when he cannot even solve his own problems at home. We have been calling on the Government to address the fundamentals which leave Australia exposed and in particular to rein back the growth of our external debt as rapidly as possible. The share and foreign exchange markets have registered their verdict on Australia's vulnerability in current economic circumstances. Our stock market has fallen by 44 per cent compared with much smaller falls in major overseas countries and our dollar has fallen by nearly 10 per cent against major world currencies. This perception of vulnerability is based on some very clear facts: our narrow commodity export base, our record foreign debt-our gross foreign debt is now at 42 per cent of gross domestic product (GDP), a doubling since June of 1983-and our record account deficits. The figure in 1986 was 5.6 per cent of GDP, which is the second largest figure in the Organisation for Economic Co-operation and Development (OECD) countries. Other factors are our high interest rates, our relatively high inflation rates and labour costs and low productivity growth. Inflation is forecast to rise by 7 per cent in Australia compared with a rise of about 3 per cent overseas and the labour productivity increase is expected to be about 0.5 per cent here compared with 2.7 per cent overseas. Yet with the benefit of all of that knowledge and all of that handy little needlework trick that the Prime Minister has done to this country, he has the audacity and the hide to write to the President of the United States telling him to get his act together. It is therefore worth remembering that while Australia's overseas debt of $112 billion represents 42 per cent of GDP, the United States debt has been estimated to be as little as 7 per cent of GDP. The facts and the statistics that go on and on and on make it more and more of a mockery that the Prime Minister should be as bold and as brash as he was last week. The United States requires only 28 per cent of export earnings to service interest and capital payments; in Australia the figure is 40 per cent. There are disturbingly few nations within our region of the Western world where as large a proportion of export earnings is so consumed. It all points to the need for harder and more immediate spending discipline than the ALP has imposed on itself in this year's Budget. Just as this Budget has dodged the tough decisions on spending, so we find it is based on optimistic forecasts that leave us virtually flying on a wing and a prayer. Predictions of a 3 per cent rise in investment may be based on wishful thinking, and so too perhaps a predicted 2.7 per cent rise in GDP. A growth rate of 1.75 per cent would automatically add another $500m to the deficit. We again need to ask whether indeed there will be a 7 per cent rise in the value of non-rural exports. An anticipated inflation rate of between 6 and 7 per cent is once again far above the rate of inflation of our major trading partners and is a major barrier to return to economic health, along with a rate of unemployment that is stalled at the 8 per cent mark. That is predicted by all sources in the Government. We should not forget that under this Government the average duration of unemployment has risen to 47 weeks, a 50 per cent rise since it took office. Despite all the fantastic super-duper training schemes that it has brought in, including Priority One, which was an absolute and utter national disaster-but a good publicity campaign by the Prime Minister-in terms of practicalities in helping young people find employment it has been a failure. The fact remains that no more than 4,000 extra places in tertiary institutions will be created this year. If we ask whether this Government is really laying the groundwork for a highly skilled, educated work force that is essential if we are going to pay our way in the world, I think the answer is unequivocally no. We will be faced with 20,000 school leavers in 1988 who simply will not be able to obtain places in universities or colleges of advanced education and who will not have the right to pay for tertiary education under this Government. Why can they not have that right? The answer is: simply because Senator Ryan and now, of course, Mr Dawkins say that they have not the right and that is that. Where this Government has made real spending cuts, it has done so in those areas where it feels it has no votes to lose, which are commonly defence and the rural sector. The 2.7 per cent increase in defence spending amounts to a reduction in real terms and casts further doubts as to whether the Government can fulfil the promises of last year's White Paper. A ceiling of 2 per cent real growth per annum at the most until 1993 will not be adequate. We are faced, therefore, with the prospect of our most effective hardware being mothballed. But of far greater concern is the attrition of 900 service personnel, which means our manpower is being pared to the bone. An extra $62m for defence force retirement benefits may not be sufficient to cover the entitlements of 8,000 service personnel who leave each year. This amounts to an increase of $1m per week. An extra $70m for personnel may be totally insufficient to meet basic pay increases and maintain standard of conditions to staunch this continued loss of highly trained personnel. As I said, the rural sector is always a good sector for this Government to clobber because it believes there are not too many votes in it. The point has been well made that with the reduction of $56m in support for agricultural industries, the sector of our economy that creates 40 per cent of export income draws less than half of one per cent in Budget outlays. That is an absolute disgrace on even straight equality terms. It may be true that the Bureau of Agricultural Economics has noted that farmer terms of trade have improved by 0.2 of a per cent, but that has to be set against an 8.6 per cent decline last year and indeed a continuous decline over the last seven years. It may be true that the wool industry is riding high but we search in vain for any provision for assistance and compensation for beef producers who have followed procedures that were approved at the time and who now find themselves the victims of a necessary campaign against chemical residues. In the past it has always been governments that have come to the aid of the producers who find themselves in positions such as this but no, not on this occasion; they will be levied and they will be levied very unfairly. In my State of Western Australia they are looking down the gun barrel of having most of their profits consumed in the proposed levies that this Government is putting forward for residue testing. Sadly, the whole situation is very grim for the rural sector. It will be debated on another Bill in a few weeks time. The rural sector does not look to direct government assistance to solve its problems, such as with this supposed assistance in the disbursement of levies collected from producers, but what farmers do expect is that the overall economic management expressed through the Budget will allow them to be competitive in the export field. So long as inflation and interest rates, if improved, remain well above those of our trading partners and taxation bears heavily on farms, these conditions will remain. This is a consequence of the failure to impose real spending cuts in other areas. Support for families has increased in this Budget by 10 per cent, following a 10 per cent decline last year, so I suppose we are back at a break-even level. It sounds good in one Budget to say, `We have increased it', but what the Government did not say is, `We knocked it off you last year so we will give it back to you this year'. We need to query very closely the treating of all such payments as social welfare; rather, the Opposition sees family allowances largely as a measure of horizontal equity, whereby the taxation system acknowledges that Australians who have chosen to raise families bear a cost that others on the same income level do not. We must not forget that the system of family allowances which began in 1976 represented a conversion of tax rebates into a direct payment. Certainly, there is a need to give greater support to families with lower incomes and ask those at the top of the scale to forgo a benefit in difficult economic times. What Australia does not need, and what this Government has given us, is a system of family allowance supplement that will create a gigantic poverty trap for many families with modest incomes. Families with incomes above $19,500 will find that the taxation rate rises from 29 per cent to 40 per cent. I do not think that anyone in this place could say that incomes of $19,500 deserve to attract a 40 per cent taxation rate. Also, families will find that the Medicare levy phases in at an income level of $17,000. Eligibility for the family allowance supplement can start to disappear if one is in receipt of an income of above $15,600 a year. Therefore, many families will find themselves in a very serious poverty trap. More than 40,000 Australian families will suffer an effective marginal tax rate of 110 per cent through the combined but unco-ordinated actions of the Australian Taxation Office and the Department of Social Security. Thus, 22,000 families with two children who earn between $374 and $394 a week will be severely penalised, as will 11,000 families with three children earning between $410 and $437 a week, nearly 7,000 families with four children earning between $450 and $480 a week, and 2,000 families with five children earning between $490 and $520 a week. So 8 per cent of the 500,000 families which the package was designed to help will be affected. It is a sad example of the inherently wasteful and futile result of seeking to alleviate hardship by relying on a welfarist approach. We must look at the total situation. We will do so by moving an amendment to the motion for the second reading of Appropriation Bill (No. 1) 1987-88. We say that this Bill is part of a continuing pattern of failure by the Government to face up to the need for adequate, timely adjustment of the economy to enable Australia to become more productive, so as to halt the incessant growth in our net foreign debt, which, as I said before, has quadrupled under the Hawke Government. Our amendment highlights the fact that this Government is continuing to run Australia into massive debt. We cannot afford it. We have to wake up sooner or later and I, as a very loyal Australian, sincerely hope that it is sooner rather than later. Of course, the stock market collapse has exacerbated Australia's economic situation. The Government has increased Australia's gross foreign debt, which stood at almost 42 per cent of GDP at the end of June 1987, compared with 15.7 per cent in June 1982. It has not done a bad job of increasing that debt, has it? This is very serious. The interest on this debt is equivalent to 21 per cent of Australia's export earnings, compared with 8 per cent in June 1982. One can see from figures such as those that this Government has been particularly busy in creating a very unstable Australia for future generations to be able to start a life. We are borrowing simply to pay interest on our foreign debt. That is a situation which is clearly unsustainable. We hear the Government saying dreadful things about how young people these days are opening more and more credit accounts. They open one account simply to pay off another one. That is exactly what this Government is doing to this country. It is borrowing to pay the interest. That does not seem to matter. It is all right for the Government to do it, but it is not all right for individuals to do it. How can it, once again, play God, stand on its pedestal and say, `Individuals cannot do it, but it is quite all right for us to hock the country from here to eternity'? The Opposition has called for substantial reductions in government spending by a reduction in the size of the public sector. But no, the Government simply will not do it. Spending cuts also mean that the public sector borrowing requirement would decline, which would tend to reduce interest rates. But no, that is all too hard for it as well. Big government suffocates initiative and incentive and deprives people of opportunity. While the media has sold this as a very good news Budget and has said that it is a wonderful Budget, once one starts to scratch below the surface, one will see quite clearly that this country needs a massive turnaround. Some very hard decisions need to be made now, and not in three or four months time. Maybe it is time that the Prime Minister and the Treasurer both shed their arrogance and their know-it-all attitude and listened to people who might be better informed on the subject, to know exactly what will happen to this country in the future. Senator CHAPMAN(South Australia)(10.08) —The Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) regularly claim, and have claimed during their 4 1/2 years in office, that they have turned the Australian economy around. This is certainly true, but it is not something for which credit is due. In fact, it is quite the reverse. Reference to a wide range of economic indicators demonstrates that when our economy is compared with the economies of our major trading partners, the record of economic management of the Fraser coalition Government was far superior to that of the present Hawke Labor Government. For most of the period during which the Fraser Government was in office, Australia's performance, with regard to a wide range of economic indicators, including rates of economic growth, rates of employment growth, declines in unemployment, rates of inflation and other key economic indicators, was far superior to that of other Organisation for Economic Co-operation and Development (OECD) countries. But during the 4 1/2 years of the Hawke Labor Government, its failed economic management has caused that situation to turn around disastrously. Australia is now doing much worse than many other OECD countries. Our rate of inflation is more than twice that of our major trading partners. Our current account deficit is the second largest in the OECD. Our gross foreign debt has virtually doubled in the four years of the Labor Government from 21 per cent of gross domestic product (GDP) to 41 per cent of gross domestic product. So let us lay to rest the unjustified claim about competent economic management which is continually made by this Labor Government. The fact is that Labor Government policies have left Australia more exposed to damage from the recent world stock market shakeout than should have been the case. The economic improvement which occurred in the early years of the Hawke Government was not due to some magical economic formula which it applied, nor to the accord with the trade union movement; rather, it was due to the dramatic increase in the value of rural production, resulting from an end, in 1983, to two years of one of the worst droughts in Australia's history. According to the June 1987 issue of the Quarterly Review of the Rural Economy, the gross value of crops during those two years of disastrous drought was $6,286,000,000 in 1980-81 and $5,009,000,000 in 1981-82. With the ending of the drought in 1983 the value of crop production jumped dramatically to $8,426,000,000 in 1983-84 and $8,092,000,000 in 1984-85. Thus, in the first two years of the Hawke Labor Government favourable seasonal conditions lifted the value of crop production in Australia to record levels-some $5,223,000,000 more or over 46 per cent greater than for the last two years of the Fraser Government. Clearly, the early economic success of the Hawke Government was not so much based on sound economic management but rather on the productivity and efficiency of farmers, once they were blessed with favourable seasonal conditions. With the more recent downturn in prices for rural products, the chickens are coming home to roost. The Government's reputation for economic management was built on the backs of hard working farmers. The Government's failure as an economic manager has been laid bare by the changed international economic environment. We are now debating a Budget, to which the Appropriation Bills relate, based on inadequate recognition of the crisis facing Australia. The Budget seeks to perpetuate the myth of competent economic management on the part of this Government. The Budget contains a number of myths. Perhaps the most significant of those myths is that it is a balanced Budget. But, of course, Keating's Budget is like one of those circus balancing acts-the crowd goes `ooh, aah' at the acrobat but no one sees the shoulders he is standing on; in this case, $1 billion in windfall taxes, the Reserve Bank of Australia like some rich uncle dying and leaving the lot to Paul and a billion dollar chook raffle of national assets. The reality is that a number of the revenue items which are claimed to provide a balanced Budget for 1987-88 are indeed one-off in nature. There is a claimed $1 billion in asset sales, $2.6m from Reserve Bank profits and $212m from the minting of new coins. It is largely on this basis that the Treasurer is credited with pulling off what is regarded as the miracle of a nearly balanced Budget. Of course, as a result he received wide applause when the Budget was handed down. However, given the one-off nature of those revenue items, in fact his claim to a balanced Budget is false. The Reserve Bank itself has made clear in its annual report that we cannot expect that the profits made on currency trading in the past can be continued in the future. Therefore, this will not be an ongoing revenue item. Those profits can be made only when the Australian dollar varies in value. Those variations in value may continue as a result of the poor economic management of this Government but, as I said a moment ago, the Reserve Bank has made it clear that it cannot sustain the profits on currency trading which it has achieved in the past. As I also mentioned, a major source of funding to achieve this apparently balanced Budget is the sale of assets which is expected to raise approximately $1 billion. However, the chance of further asset sales is now looking extremely dubious. The Government's privatisation ship has been torpedoed by Labor's Left. If the ship has not as yet sunk, it is certainly looking very shaky and is taking in an awful lot of water. The case for privatisation on a selective, case by case basis, with a range of checks and controls and a percentage of government ownership retained, where necessary, has been well established by debate and argument. But the Government is now stymied in its efforts to move constructively towards privatisation in any significant area of industry or activity by the activities of its left wing. Senator Gareth Evans detailed in a recent speech in Sydney that he is not backing away from the issue. He stated that the Government is facing `a quite major budgetary problem'. This major budgetary problem to which he referred is that the Government needs to find some $1 billion over the next few years to fund the capital requirements of government owned authorities such as Qantas Airways Ltd, Australian Airlines and the Commonwealth Bank. On the other hand, Senator Peter Cook is reported to have put forward for Caucus consideration this week a motion that Government authorities `be retained in full public ownership'. It would appear that, even in the cases where there is clear justification for privatisation, the Government's economic managers will be powerless to act. This simply reinforces the inadequacy of the Government's present approach to economic management. Mr John Langmore is chairman of the Labor back bench committee on privatisation. That is an interesting appointment. One would expect that, because of its title, such a committee would develop a positive approach to privatisation. However, in fact, it is chaired by someone who is bitterly opposed to privatisation. John Langmore has told his colleagues: `Reduction of the public debt is not a high priority'. It would seem that he is out of step not only with many people within the Government and the Government party but also with most sound economic analysts in this country at present. He claimed that it made absolutely no difference whether the public sector or the private sector borrowed the necessary funds for public utilities, provided that they could show a return on this investment. This is a frightening prospect. The whole rationale for the privatisation of some of these utilities is that they will be able to raise the necessary capital through share issue and, thereby, through increased equity or through some other source, whether it be borrowing or whatever, be directly accountable to shareholders for their actions. It is competitive, privately owned firms which have incentives to achieve both productive and allocative efficiency. Privatisation tends to promote productive efficiency. The incentive to productive efficiency comes from the requirement on private firms to achieve profits and to stay in business in competitive product markets. This is not to say that all public utilities ought to be privatised, either fully or even partly. There can be no doubt that the economic rationale for privatisation has been well established. The proper levels of regulation and control need to be established. This can be done, has been done and should be done on a case by case basis for operations that have the potential for privatisation. Of course, the first principal requirement to establish the desirability for privatisation must be that competition and efficiency will be better achieved. This is in marked contrast to the Government's approach to the privatisation issue in the context of its attempts to achieve a phoney balance to the present Budget. Its approach is to make a quick grab for revenue to achieve this balanced Budget. Rather, the Government ought to look at improving competition and efficiency in the economy as the motivation for privatisation of public utilities. Unless competition, efficiency and productivity are improved, a phoney attempt to balance the Budget through privatisation will be of no benefit to Australians whatsoever. The underlying economic factors which will ensure long term economic growth must be put in order. The Government must pay much greater attention to productive efficiency in this economy. Among measures the Government should take to improve productive efficiency is to curb excessive wage claims. This is another area in which we have seen the Government fail with regard to its Budget strategy. Despite clear evidence that wage increases continue to be above productivity improvement and are thereby further depressing economic activity and our capacity to compete on the international economic stage, the Government has not abandoned the present wage case and, indeed, has indicated its support for the $7 wage increase. This flies in the face of our current economic circumstances and is another factor which introduces a mythical quality to this Budget. As a result of the Government's support for the wage case the economy will experience wage increases of the order of two times or greater than the wage increases which will be experienced among most OECD countries and, in particular, our major trading partners during the next 12 months. Not only do we find that our present wage structure in relation to productivity is way out of kilter with that of our major trading partners but it is also being driven further out of kilter at an increasing rate because of that greater rate of increase in our wages than in overseas countries. That, of course, will further destroy the competitiveness of the economy. The Government is attempting to perpetuate this myth of a balanced Budget by unreal analysis. Keating does his balancing act while the rest of the country walks on a tightrope between inflation and interest rates and between the national debt and international derision. Unless the Government begins to face reality we will find at the end of this financial year that the country will be much further down the chute than it already is. Another myth that the Government is attempting to perpetuate in this Budget is that it is a Budget of significant expenditure restraint. The Government claims that there has been a 2.4 per cent cut in real expenditure and that government spending has fallen relative to gross domestic product. But if we exclude those potential asset sales, which, as I said earlier, are looking less and less likely as the left wing of the Government rails against privatisation, the expenditure restraint can be considered only as something of the order of 1.4 per cent. If we compare that situation with that which transpired during the Fraser Government period, as measured against GDP, we find that the claimed expenditure restraint nowhere near matches the restraint exercised by the Fraser Government. We find that we are barely back to the level of 1982-83 when expenditure is measured relative to gross domestic product. The further myth that is created by this Budget is that it involves significant tax reform. Yet, if we again compare the record of this Government with that of the Fraser Government we find that, if the average tax rate that applied during the period of the Fraser Government still applied, this Government would be collecting some $16 billion less in taxation revenue in this Budget. So apart from those one off items, we find that to the extent the Government has come near to balancing its Budget, it has done so by increasing tax revenue, by increasing its take from the productive efforts of the Australian people. During the period that this Government has been in office, it has increased revenue from taxation by some $34 billion and expenditure by some $30 billion. Of course, the difference is the deficit inherited in 1982-83. The Government has raised about $18 billion in additional taxation since 1984-85 but it has returned to the people only some $6.5 billion in tax cuts; that is, for every $3 it has taken from everyone it has kept $2 and returned $1-hardly adequate tax reform. A further myth on which this Budget is based is that it is paying out some of the accumulated government debt. It claims that it will retire about $2 billion in government debt, $1 billion from overseas debt and $1 billion from domestic debt. The truth is that the Government will run down its cash balances over the next 12 months by about $1 billion. These cash balances were built up last year through excessive borrowing. So we find that the Government will replace overseas debt through that medium. It will also issue about $1 billion worth of new Treasury notes. So the Government's claim that it will retire debt is based purely on the fact that it borrowed too much last year and is now substituting short term debt for long term debt this year. A further myth created by this Budget is with regard to wage competitiveness. I have dealt with this matter in earlier debates this session. It seems that virtually all wage earners will receive both the first tier increase and the second tier increase, irrespective of productivity improvement. A significant segment of the work force is gaining those two tiers of wage increase largely through the application of industrial muscle rather than through the productivity improvement on which the second tier is supposed to be based. That simply will not do anything for Australia's competitiveness and our overseas trading position. This Budget really fails in any concerted way to address the economic difficulties currently being faced by Australia. As I have said, it seeks to create a series of myths about the Budget which, in turn, are directed towards perpetuating the myth which the Government has created concerning its economic management over the four years it has been in office. This simply is not good enough. The Australian people deserve much better from the Government. That is why the Opposition has moved its amendment in relation to these Appropriation Bills. I fully support it. It seems that the Government is ignoring the advice it is receiving from the Opposition and the business community regarding the inadequacy of its Budget in the light of the recent international stock market crash. While Australia recorded its highest ever trade deficit in October, the Treasurer was overseas telling other countries how to run their economies, throwing his weight around like some lounge lizard Luigi Locarno. Keating seems entirely unruffled by the present situation. He rec- kons that businessmen should look on the bright side of the stock exchange crash. At least now they will not be affected by the wealth inquiry. Australia deserves far better from its Treasurer and its Prime Minister and it deserves far better economic management from the Government as a whole. Only the approach which the Opposition has advocated consistently regarding economic management will ensure that Australia gets out of the dire economic circumstances in which it presently finds itself. The PRESIDENT —Order! It being 10.30 p.m. the debate is interrupted. Under sessional order I put the question: That the Senate do now adjourn. Senator MICHAEL BAUME(New South Wales)(10.30) —Tonight I want to draw the attention of the Senate to some extraordinary activities of Telecom Australia, emerging particularly from its new billing system. I have a letter from a major customer of Telecom. I will read this letter which conveys the burden of the problem. This is a copy of a letter written to Telecom at the end of last month: Telecom's new billing system refers. The enclosed photographs show the most recent bill for our . . . PABX number. This bill of 2,317 pages stands 45 cm high. One of the worst features is that 2,000 pages of this bill are for a $0.00 charge. Because of the obvious waste of paper alone. I have taken the liberty to send a copy of this letter and photographs of evidence to Senator Baume- a very sensible decision, I might say- We have made representation to Telecom on this matter before. Both through the recently disbanded Account Management team and the CPU, but obviously to no avail. Promises by Telecom to address this matter are clearly only made to pacify us on the day of confrontation. Beyond those occasions you appear to forge ahead without any regard for your customer's needs. Some of us see this as a typical approach shown by a monopoly. That is a monopoly that seems ripe for privatisation. The letter continues: We cannot live with this system any longer. Already we have found it necessary to increase staff- that is one way to solve the unemployment problem- to process these accounts and we often have difficulty meeting the payment date. The letter continues to say that the company concerned is a substantial user of Telecom services, and it goes on: . . . needs an itemised bill that clearly shows the base rental for a particular service, followed by charges for any additional equipment and/or services such as extra handsets, sockets, STD barring etc. Call charges should be broken down into local, STD, ISD, Operator assisted, etc. That is a fairly naive request. It is actually the customer asking for something that he wants. No wonder that Telecom found great difficulty handling that. The company further suggested: To make the bills more manageable we would like a larger format (preferably A4)- that is a reasonable request- This will mean fewer pages and will significantly enhance our ability to file these. I can suggest one place where they could and should be filed. Senator Puplick —In that case, it would be better if it was not A4. Senator MICHAEL BAUME —Perhaps the perforations would get in the way of the charge. I approached Telecom about this matter and was told that it was true that when the August tariff change took place, a new sheet was produced, under its new software system, and as a result these 2,317 pages went to one customer. It admitted that this was not an isolated incident and that many large PABX exchanges in major companies have thousands of telephone lines, meaning that these companies also get mountains of high quality material like this. It is extraordinary that this should take place in the first instance. The waste of paper and stamps involved is obviously very large. Senator Puplick —All those trees. Senator MICHAEL BAUME —Yes, and all Senator Puplick's trees. He bleeds every time a tree is chopped down. The incredible thing is that this is not the first time, according to my informant, that this has happened. This company has had to raise this question with Telecom before, and it keeps on being mucked around. I have been told by Telecom that it is `doing something about it'. That is one of those marvellous phrases that always worry me, like `I am just a boy from the bush'. I always reach for my cast iron knickers when I hear anyone say anything like that. I hope that Telecom is not only doing something about it, but doing something useful that benefits the consumer. I did not dare press that point because I thought it might be going a little too far. It is ridiculous to have what are clearly bureaucratic malfunctions apparently on such a large scale. I urge Telecom not simply to do something about it but actually to fix this up so that customers get the sort of service to which they are entitled-after all, they are paying a fortune for it. Despite wasting money like this, Telecom still appears to be able to make money, so obviously being a monopoly is quite helpful. I urge Telecom to take great notice of this matter, and I seek leave to table the photographs of the telephone accounts to which I have referred. Leave granted. Senator MICHAEL BAUME —I table the phoptograph. Senator PETER BAUME(New South Wales)(10.35) —As a philosophical liberal, a long time civil libertarian and member of the Council for Civil Liberties I came into this Parliament believing in the principles of philosophical liberalism. I remind the Senate that, over 150 years, these principles have been directed towards securing the liberties of the subject, liberties which have included protection against cruel or inhuman imprisonment or punishment and which have latterly included protection against racial slurs and discrimination. We in this Parliament passed an Act concerning racial discrimination in the last decade and I remind the Senate that the Human Rights and Equal Opportunity Commission has the duty to implement the decisions of that Racial Discrimination Act. Over the weekend, I became aware of television reports relating to events in Brisbane involving an Aboriginal with whom I worked when I was the Minister for Aboriginal Affairs, Mr Ray Robinson. He was speaking on behalf of people demonstrating outside Boggo Road Gaol, and objecting to a proposal that certain underground cells, known as the black hole, be reopened as punishment cells. Today, on the front page of the Brisbane Courier-Mail, in between an article detailing the problems of the National Party of Australia and another article detailing the problems of the Australian Labor Party, appeared an item headed `Blacks planned armed jail uprising: Neal'. I take it that Neal is the name of the Minister in the Government of Queensland who was being quoted. I just want to outline what I understand. I understand that there are some punishment cells in Boggo Road Gaol which were closed by a former Minister for Corrective Services, Mr Muntz, who promised that they would never be reopened or used again. He is no longer the Minister, and the Minister today is a Mr Neal. The cells admit no fresh air or light, and it is not possible for people who are incarcerated in those cells to know the time of day or whether it is day or night. It is well known that if one wishes to break people down psychologically, a good technique is to put them in punishment cells with no physical stimulus. Not letting them know whether it is day or night is one of the techniques used in other parts of the world. It may be fortuitous that these cells have that reputation and might have that effect. When I read the Courier-Mail article today, it alarmed me. It says: Black activists in Brisbane Jail planned to smuggle in 10 semi-automatic rifles and take over the jail during World Expo 88, the Corrective Services Minister, Mr Neal, said last night. The guns, to be bought with Federal Government money, were to be used to take hostages and embarrass the State Government over land rights and other Aboriginal issues, he said. I want to be fair to the State Minister, because I am only going by what the Courier-Mail reported. Apparently, this is the justification for opening these underground cells. Later in the article the following quote is attributed to Mr Neal: It can only be used as a deterrent to prisoners. In no way could it be used to house those legitimately demonstrating a particular cause during Expo and who are not even serving a sentence inside the prison. It is clear from that quote that if it is to serve as a deterrent, it must be envisaged that the cells could be used. If that newspaper story is true at all, it is very serious. If it is true, the allegations require confirmation urgently, and action is required. Is it true that a plot by Aboriginals to smuggle rifles inside the goal has been uncovered? If that is true, we want to know. It is not commercially sensitive information. If that is true, the information should be laid out. We want to know what the information is. We want to know in this Senate particularly what Federal money is being talked about and on what basis it is being alleged that money appropriated by this Parliament is to be used for the purchase of firearms to take over the Boggo Road Gaol during Expo 88. I assure the Senate that I come to this matter as a civil libertarian, because even if those facts are set out it remains to be shown what kind of logical jump there is which then says that it is necessary to open these cells, occupancy of which would seem to constitute barbaric and inhumane punishment under any principles of penology. The Human Rights and Equal Opportunity Commission, under the charter it has, could institute a commission of inquiry immediately if it wished to do so, but I think the Commission, being reasonable, would rather find out exactly what is going on: what are the facts behind this alleged plot involving unnamed people, except that they are Aboriginal; what are the facts behind the allegation that members of the Aboriginal community are going to misuse Federal funds which are made available them. If the allegations are true, then there is corrective action required by us in this Parliament and corrective action required in Queensland. We are entitled to know. If the allegations are untrue, that needs to be known as well, because if the allegations are untrue, then what we have had is a racial slur. I believe some statements are not consistent with the kinds of goals that we have been seeking to achieve over the last decade and are not consistent, when we have actions proposed by the Minister, with undertakings given by Mr Muntz, the previous Minister, who said that those cells were to be closed and never reopened. What is it that is so serious that requires their reopening today? I do not mind the Minister, Mr Neal, making these statements if he can back each of them up and if he will back them up and provide the evidence and put it out publicly, but if he cannot do that, then his allegations are in the tradition of racial slurs. If there is nothing to hide, if the Queensland Government is proceeding on proper information for proper reasons, then the allegations it has made should be laid out before us. In fact, the Queensland Government should allow the Chairman of the Human Rights and Equal Opportunity Commission to see the material it has now since he is responsible for the administration of the Radical Discrimination Act in this country. If there is a good case, reveal it. I cannot imagine that it is the kind of information that needs to be kept secret. If the Queensland Government has revealed this much to the Press, let it reveal it all. After today's statements it cannot be left where it is. I make no judgments on the matter as I do not know whether the allegations are true. I can see nothing in what has been advanced by the Minister, Mr Neal, to justify the opening of underground cells containing neither light nor fresh air. I cannot believe that those are the kinds of punishment cells which are necessary for a prison in Australia today. I accept that any prison, as part of its plan of management, must have segregation facilities and may need special cells. I draw no firm conclusions as to the truth or otherwise of the allegations that are being made. All I demand is that we be told and that we be allowed to take whatever action is necessary. Senator PUPLICK(New South Wales)(10.44) —Because in the course of the next couple of months the Senate and the Parliament will have to focus on a number of issues dealing with the question of ethics in medicine and in medical practice, particularly when we come to debate recommendations about the legislative control of in vitro fertilisation, I seek to draw the attention of honourable senators to a lecture given just last month by Professor Stephen Leeder, a Professor of Community and Geriatric Medicine at the University of Sydney, at Westmead Hospital, which was, in fact, the 1987 Maddison Lecture named after the late David Maddison, Professor of Psychiatry and Dean of the Faculty of Medicine at the University of Sydney and subsequently the founding Dean of the Faculty of Medicine at the University of Newcastle. Both Professor Leeder and the late Professor Maddison are most outstanding members of the medical fraternity in Australia. I believe that the lecture given by Professor Leeder will be a very valuable adjunct to honourable senators in considering this matter when it comes forward for debate. Therefore, I simply seek leave to table a copy of the 1987 Maddison Lecture and commend it to honourable senators who are interested in the questions of medicine and ethics as a very valuable guide to a debate which I think will preoccupy this Senate for some considerable time in the not too distant future. Leave granted. Senator PUPLICK —I table the document. Senator COLLINS(Northern Territory)(10.47) —I rise briefly in the adjournment debate tonight to respond, in some way, to the adjournment speech made by Senator Peter Baume. The reason I do so is that I was pursuing privately today the very matter that Senator Baume has had the fortitude to raise tonight. I welcome it in the Senate tonight because it encourages me to pursue an inquiry into the allegations made by Mr Neal in a way that I can now be absolutely comfortable with, for reasons I will explain in a moment, and which will not involve any point scoring at all. I share the same concern. I saw the Courier-Mail article this morning and Mr Neal's statements and they struck a chord with me because I have had a similar experience in the Northern Territory with such stories. I was concerned on two grounds. The first thing that struck me was that any Minister of any government would have the extraordinary insensitivity in the current climate of deaths of Aboriginal people in custody-one tragic death just in the last week of a 20-year-old in Western Australia-to even raise the reopening of those infamous cells that received so much publicity a few years ago in Queensland. The second thing that struck me was the proposition that people, Aboriginal or otherwise, would be able, with impunity, to smuggle automatic firearms into prisons. The reason I was curious about it is that that is not a particularly easy thing to accomplish. Indeed, if it were, then prisoners would not go to the extraordinary lengths they do to manufacture inside the prison the array of home-made weapons that prisoners occasionally do manufacture and which are discovered. The very thought of people being able to smuggle with impunity AK47s or whatever other automatic firearms from outside into the prison and then be able to conceal them successfully for any length of time within the prison was an extraordinary proposition. The reason the story struck a chord with me and the reason I agree with Senator Baume deserves to be pursued just a little. I have two stories. I will not bore the Senate with any more than that. I can assure the Senate that there are more than that in the Northern Territory of a similar nature. One story in the Northern Territory News some years ago ran a headline which read, `Red alert at Maningrida'. The story was published that an armed insurrection of Aboriginal people was to begin in Arnhem Land . It was published at a time when, because of a number of other issues, there was a degree of tension in the community. The story alleged that a military aircraft had landed at Maningrida, that arms had been unloaded and that Aboriginal people were being armed and were going to create, by armed revolt, a black state in Arnhem Land. The matter was investigated and it was discovered that the military aircraft that landed in Maningrida was the military aircraft used once every couple of years. Senator Tambling would be well aware of this custom. I travelled on the aircraft on one occasion. It is a very peculiar custom. The heads of the Services travel around all the isolated communities of the Northern Territory on a regular basis. I do not know whether it is done annually; I think it is done every couple of years. The heads of the Royal Australian Navy, the Royal Australian Air Force, the Army and various other prominent people, such as I, judges and so on, go on that aircraft. Senator Puplick —Just stick to the believable parts. Senator COLLINS —I think I am free to say that at 10.50 on a late night. Indeed that was the aircraft that had landed at Maningrida. I am sure that the naval commanding officer, the Army head and the Air Force wing commander were extremely surprised to find that they had been insurgents who were allegedly arming Aboriginal people. But of course, the story created a great deal of further tension in the community. More recently in the Northern Territory there was a far more serious story. Indeed, I would have pursued it with the Press Council had I thought that such a course of action-having embarked on such once before-was worth the amount of effort that goes into it. It is not. The story was far more serious and, again, I am sure that Senator Tambling will recall the story and the subsequent events in the Legislative Assembly that resulted from it. A story appeared on the front page of the Northern Territory newspaper stating, `AIDS Epidemic in Aboriginal Communities'. This came at the height of the first real scare about the acquired immune deficiency syndrome (AIDS) in Australia. The story alleged that a special screening program for AIDS had been instituted by the Northern Territory Department of Health in Aboriginal communities in the Northern Territory. By any measure, it was an outrageous story in that it was based on absolutely nothing. I can remember very well indeed that the front page story stated that the reason the special blood test screening program had been instituted-the article is burnt on my brain-was due to the `peculiar sexual practices of Aboriginal people'. I have known over many years that the sexual practices of Aboriginal people, by and large, are no more peculiar than our own. I also know that homosexuals are regarded-from personal experience I think it is reasonable to say this without people misinterpreting it-with a fair amount of derision in Aboriginal communities; I think `derision' is the right word. Indeed, in some Aboriginal communities they are regarded with a great deal more than that. If I can just be clinical about it for a minute, it is a fact that from the measures that can be used and are used routinely in the Northern Territory medical services for diagnosing problems of this sort-anal gonorrhoea and anal syphilis-the standards are well known. Of course, the reality was that this was not a problem that was peculiar to Aboriginal people. Unfortunately, the newspaper went one step further. Having alleged in the story, quite specifically, that there was a secret report of the Northern Territory Department of Health which released this dreadful information that there was an AIDS epidemic in Aboriginal communities and that all these dirty Aboriginals were about to infect the nice clean white people of the Northern Territory with this life-threatening disease, the newspaper went one step further and published an editorial which went along with the front page story predicting an imminent catastrophe for the people of the Northern Territory. So I made inquiries, not surprisingly, of the Northern Territory Department of Health and I contacted Dr Ella Stack, the Secretary of the Department, a friend of mine over many years, and a prominent member of the Country Liberal Party of the Northern Territory, as a number of my friends are. Not only did she tell me that that story was outrageous nonsense and based on nothing whatever even approaching the truth, but also she told me that, at that time, there were 23 known cases of AIDS in the Northern Territory. Indeed, it is a very serious subject that concerns me and I will be saying something in respect of some recent discussions I have had with the Menzies School of Health in the Northern Territory at a later stage in the Senate. But there were 23 known cases, most of them in categories B and C. There were two category A cases of AIDS in the Northern Territory, and one of the 23 cases involved an Aboriginal person who was from South Australia. The rest were Caucasians, for what that is worth-which in my view is nothing. Nevertheless, those were the facts. The Acting Secretary of the Department of Health then went on Australian Broadcasting Corporation (ABC) radio. In fact, it was the only time I have ever heard that gentleman, who was obviously provoked beyond endurance by this story, go on ABC radio. He categorically denied in an interview that there was any foundation of truth whatever in that story. At the time, the Minister for Health, Jim Robertson, got up in the Legislative Assembly in response to a question from me and asserted, in the Parliament, that there was not the slightest foundation in fact in the story. The story was totally and utterly untrue. The reason that I labour all this is that the Acting Secretary of the Department of Health, in that interview, talked about the measures that were being used by the Health Department at the time for keeping an eye on this matter. I want to commend Dr Ella Stack for taking the unilateral decision that she did, I think very wisely, of putting, as she said, a canary down the mine, in that she had been very discreetly testing. I appreciate all the civil liberties arguments that are involved as they are serious ones, but she had been testing quietly for some time and this has been made public now so it is certainly no state secret. Blood tests had been made on pregnant women because of her concern for the women themselves and, of course, for their unborn children. I believe that the Northern Territory was amongst the first of the States in Australia to bring in mandatory testing for AIDS in the prison population. Of course, as the Acting Secretary to the Department of Health explained very succinctly on ABC radio in response to this story, regrettably, 80 per cent of the Northern Territory's prison population are male Aboriginals, and a cross-section from the Northern Territory. So it is not a bad canary to have down the mine to be able to test the prison population of the Northern Territory for AIDS on a regular basis, to get a fairly good indication of just how prevalent this problem is in the male Aboriginal community. Indeed, not one positive case has been diagnosed, thank God, to this point in time, in the prison population of Aboriginal males. Despite all of this absolutely overwhelming evidence, the newspaper concerned flatly refused to retract the story or print a correction. In my view and in the view of many others the newspaper stands alone. There were many letters to the editor and many phone calls. I, among others, was certainly one who, not unreasonably I felt, rang the newspaper concerned-a newspaper with which I have otherwise had quite a good relationship. It stands on the record. Despite statements in the Parliament and despite statements by the Acting Secretary of the Department of Health, it flatly refused to print a retraction. Of course, the difficulty with all of that is that it has caused an enormous degree of racial tension in the community. It has degraded and humiliated one section of the community. In a lot of cases, such action is designed to do so. I will give one further example in closing. If anyone doubts the veracity of these stories, I will be happy to provide the material. A number of years ago the Darwin City Council purchased one of the most modern street sweepers available in the world, with some attendant publicity. This automatic machine went around the city early in the morning and swept the streets. The Alice Springs Council, amid some controversy, also purchased one of the machines. I am sure that Senator Tambling would remember the cartoon that appeared about the justification of the cost. A cartoon appeared in the Northern Territory News. Despite the reluctance of most politicians in regard to offending the media, especially when talking about the only daily newspaper one has in the Northern Territory, I have no hesitation. A cartoon appeared in the Northern Territory News, and I still have a framed copy of it. The caption underneath the cartoon was `Suggested use for the new street sweeper in Alice Springs'. The cartoon depicted a street sweeper, which had a bulk bin attached to the back of it, sweeping the streets of Alice Springs with a whole stack of black arms and legs and flagons and wine bottles projecting from the top of the bulk bin. In my view that stands as one of the most outrageously racist cartoons that I have ever seen printed in any newspaper in this country. But I found it extremely offensive that it was printed in the only daily newspaper of a place in Australia where one-quarter of the total population is Aboriginal. I welcome the concern that Senator Baume has expressed in the Senate this evening. I will come out of the cupboard a little more on this one. As I have said, I made my own discreet approaches today to members of the Government in order to pursue that story and to try to find out whether it had any foundation in fact. I welcome the contribution by Senator Baume. By keeping politics out of this, hopefully it may be possible one way or the other for someone to stand up in the Senate at some later stage and indicate whether the story has a foundation in truth or whether it has simply heightened the degree of racial tension in Queensland for absolutely no good purpose whatsoever. Senator REYNOLDS(Queensland-Minister for Local Government)(11.01) —This evening we heard from Senator Michael Baume. I wish him well in his attempts to highlight some of the problems that people are having with Telecom Australia's new accounting system. Senator Puplick tabled the 1987 Maddison lecture, which I am sure honourable senators will find very useful in debating issues associated with ethics in medicine. But, with due respect to those two honourable senators and the issues they raised here this evening, I think the most important subject to be raised in this place for some considerable time was that raised by Senator Peter Baume and Senator Bob Collins. Certainly, I also saw the quite outlandish headline-that is the only word I can use to describe it-relating to the alleged plan that the Queensland Minister for Corrective Services, Mr Neal, has spoken out about in justification for reopening the black hole. I find it very hard to accept that the plan that he alleges exists is any more than a figment of his imagination. I do not say that in an attempt to score political points. Like Senator Collins, I have lived for long enough in a State in which quite bizarre allegations are inclined to be made to be automatically suspicious when an allegation of this kind comes out. I say to the State Minister: if indeed there is anything at all to support this quite gross allegation, where are the facts? If a plan can be revealed, why has he not made those details public rather than just indulging in what I think was described by Senator Collins as yet another example of a racial slur. I have had quite a deal to do with prison conditions in Queensland. I take this opportunity to pay tribute to the former Minister, Mr Muntz, who, while he was Minister, I believe really made tremendous progress in trying to clean up and to humanise the Queensland prison system to a far greater extent. After Mr Muntz went to considerable efforts to improve conditions in Queensland prisons-and, to his credit, he closed the black hole-it is certainly of great concern that Mr Neal should talk now of re-opening the black hole in such bizarre circumstances. I have spoken to a prisoner who spent several weeks in the black hole a number of years ago. In an interview that I had with him about 18 months ago, he described in detail just how absolutely appalling those conditions were, as I am sure anybody with any imagination and sensitivity could well understand. There is absolutely no reason, no circumstance, that I can imagine in this country for that particular cell provision ever being reopened. I know that my colleague in the other place, Gerry Hand, has spoken out against the reopening of these cells. The Human Rights and Equal Opportunity Commission has spoken out against it, and it certainly seems to me that the Minister responsible, Mr Neal, is out of his depth. He is relatively new to the particular portfolio. He seems to have backed off to an extent from his earlier statements about reopening these cells, but then he seemed to want to come forward with the justification for his being forced into that position. Senator Collins —I would imagine it will do our international reputation at Expo a lot of good. Senator REYNOLDS —Yes. The lack of sensitivity in even contemplating ever reopening the cells concerned is one thing. But to announce it the day before the opening of the royal commission which is inquiring into Aboriginal deaths in police custody is something that I think many Australians would find totally incomprehensible. I think Senator Collins mentioned a regrettable Aboriginal death in custody recently in Western Australia. Another death in custody that has not been generally publicised but which I think it is appropriate to mention here this evening is the apparent suicide of a Maori prisoner in the Stuart Prison last week. The prisoner was in fact married to an Aboriginal woman from North Queensland and the circumstances of that death in custody are of great concern to a number of people in Queensland. I would certainly commend the comments that have been made here this evening by Senator Peter Baume and Senator Collins and I hope that Minister Neal will listen very carefully to what is being said not just in this place but indeed all over the country about the way in which he is considering reopening these quite draconian prison cells. If he has any details of this quite bizarre take-over plan, if it is genuine-and I must admit that I totally doubt that-I believe that he has an obligation actually to produce the facts, if indeed there are any, and I call on him to do so. Otherwise, he owes Aboriginal people in this country an apology, because it is just totally unacceptable for a Minister of the Crown to make such bizarre allegations simply perhaps to protect his own back because he was insensitive enough to announce the reopening of the black hole on the eve of the royal commission. Senator CHANEY(Western Australia-Leader of the Opposition)(11.03) —I will not keep the Senate very long because it is already very late. I heard only part of the comments in the adjournment debate by both Senator Peter Baume and Senator Collins. I certainly support the request for the facts which Senator Baume has made and I welcome the fact that both honourable senators have raised issues which I think are very important to Aboriginal Australians and indeed to all of us. I was taken by Senator Collins's reference to the cartoon showing Aboriginals as part of the material in bins. I recall, when I was first appointed Minister for Aboriginal Affairs, being cartooned shoving Aboriginals into bins, a cartoon which I found particularly painful. Therefore, I have some additional sympathy with Senator Collins's concern about cartoons because that was a very vivid lesson to me about how painful a cartoon can be when it portrays one in that light. I am sure that for Aboriginal people in the Northern Territory the cartoon which he described will be utterly offensive, as it is to Senator Collins and me. The additional point I want to make-I hope that it will not be taken in a negative spirit-is that the pleas for common sense and decency which we have heard in the chamber tonight do need to apply to all people who are involved in this area. I mention something which is of concern to me; that is, a further report I have seen of Mr Michael Mansell, again, involving himself with Libya. I raise that because I think nothing is more likely to give heart to those people who wish to portray Aboriginals in an unfortunate light than the efforts of Mr Mansell to behave in a way which is quite repugnant, I believe, to the great majority of Aboriginal people and utterly repugnant to most Australians. Sometimes those who purport to be the friends of Aboriginals and some people who are Aboriginal, as Mr Mansell is, do an enormous amount of damage to the cause that they claim to be trying to further. I come from the State of Western Australia where there are very strong feelings on Aboriginal affairs. I believe that the task of trying to achieve a better situation for Aboriginal Australians is made much more difficult by that very small group of Aboriginal people, of whom Mr Michael Mansell is one, who espouse approaches and actions which give rise to a great sense of fear and concern to the rest of the community. I put that on the record at this time after the contributions to the debate by Senator Peter Baume, the Minister for Local Government (Senator Reynolds) and Senator Collins because I think that something that is absent from the debate too often is that those who are the friends of Aboriginals, or claim to be or wish to be, are very reluctant sometimes to point out that it is a two-sided thing and there does require to be a contribution from Aboriginal people and a very few can make a negative contribution. I make an appeal-a number of appeals have been made in the Senate-to Mr Michael Mansell to stop the sorts of activities that I have mentioned, because he does enormous harm on the way through and certainly tends to exacerbate the problems which Senator Peter Baume and Senator Collins have raised. Question resolved in the affirmative. Senate adjourned at 11.13 p.m. The following papers were tabled: Australian Wine and Brandy Corporation Act-Regulations-Statutory Rules 1987 No. 264. Christmas Island Act- Ordinances 1987- No. 6-Interpretation (Amendment). No. 7-Administration (Amendment). Regulation 1987-No. 1-(Christmas Island Assembly Ordinance). Cocos (Keeling) Islands Act- Ordinances 1987- No. 3-Interpretation (Amendment). No. 4-Administration (Amendment). Conciliation and Arbitration Act-Regulation-Statutory Rules 1987 No. 256. Customs Act-Notice 1987-No. 8-Specified rate in respect to the diesel fuel rebate, dated 14 October 1987. Dairy Produce Act-Regulation-Statutory Rules 1987 No. 263. Defence Act- Determinations 1987- No. 73-Overseas Rental and Utilities Allowance and Education Assistance Overseas. No. 74-Education Assistance Overseas. No. 75-Temporary Rental Allowance. No. 76-Travelling Allowance and others. Excise Act-Notice 1987-No. 8-Specified rate in respect of the diesel fuel rebate, dated 14 October 1987. Fisheries Act-Regulations-Statutory Rules 1987 No. 259. Lands Acquisition Act-Statement by the Minister describing lands acquired by agreement under subsection 7 (1). Lighthouses Act-Regulation-Statutory Rules 1987 No. 257. National Health Act- Regulations-Statutory Rules 1987 No. 262. Standards made by the Minister under Section 45d, dated 10 November 1987. National Parks and Wildlife Conservation Act-Regulation-Statutory Rules 1987 No. 254. Nuclear Non-Proliferation (Safeguards) Act-Regulations-Statutory Rules 1987 Nos 258, 260. Public Service Act-Determinations 1987 Nos 75, 103, 104. Racial Discrimination Act-Regulations-Statutory Rules 1987 No. 265. Radiocommunications Act-Standard-Statutory Rules 1987 No. 266. Seat of Government (Administration) Act- Determination made under the Health Authority Ordinance, dated 6 November 1987. Ordinances 1987- No. 57-Medical Practitioners Registration (Amendment) No. 58-Business Franchise (Tobacco and Petroleum Products) (Amendment) (No. 2) No. 59-Games Wagers and Betting-houses (Amendment) No. 60-Gaming and Betting (Amendment) No. 61-Gaming and Betting Laws Amendment No. 62-Health Authority (Amendment) (No. 2) No. 63-Motor Traffic (Amendment) (No. 2) No. 64-Roads and Public Places (Amendment) Regulations 1987- No. 14-(Magistrates Court (Civil Jurisdiction) Ordinance) No. 15-(Business Franchise (Tobacco and Petroleum) Ordinance) No. 16-(Magistrates Court (Civil Jurisdiction) Ordinance) No. 17-(Motor Traffic Ordinance) Superannuation Act-Regulations-Statutory Rules 1987 No. 255. Therapeutic Goods Act-Regulations-Statutory Rules 1987 No. 261. The following answers to questions were circulated: (Question No. 76) Senator Parer asked the Minister representing the Minister for Social Security, upon notice, on 7 October 1987: (1) Has the Department of Social Security recently conducted a review into the procedures and staffing levels in Regional Social Security offices throughout the country. (2) What was the reason for the review. (3) Who carried out the review. (4) What was the cost of the review. (5) What were the findings of the review. (6) What action has been taken as a result of the review. (7) What is the Department's estimate of a reasonable period before the public can be attended to in regional offices. Senator Richardson —The Minister for Social Security has provided the following answer to the honourable senator's question: (1) In 1986/87, a Joint Work Measurement Study was undertaken in regional offices of the Department. (2) The main objective of the study was to develop principles and procedures for assessing the level and distribution of staffing among regional offices. This was to revise the first version of the staffing model which had become outdated. (3) Participants were the Departments of Social Security and Finance, the Administrative and Clerical Officers Association and PA Management Consultants. (4) The cost of the study was $650,000 including the salaries of Departmental officers who participated. (5) The study has provided detailed information on the workload associated with processing social security payments in regional offices. (6) Since work measurement was concluded in February 1987, the Department of Social Security has proceeded to build a comprehensive staffing model designed to: predict, on the basis of projected client populations and workload, the Department's staffing needs for regional offices; manage the distribution of resources according to changes in workload patterns; and provide a tool to access the staffing effects of possible procedural changes; Further meetings of the Steering Committee are scheduled with a view to the early finalisation of the model. (7) The Department endeavours to attend quickly to the public in regional offices. A wait of less than ten minutes is desirable, but this will inevitably be exceeded from time to time because of peak demands, lags in staffing adjustments and, physical constraints such as counter capacity. The staffing model will facilitate more accurate and timely adjustment of staffing in accordance with workload and hence reduce the incidence of long delays. (Question No. 78) Senator Macklin asked the Minister representing the Minister for Employment, Education and Training, upon notice, on 7 October 1987: (1) Is the Minister for Employment, Education and Training aware that as a result of changes to the regulations of the Student Assistance Act 1973 which were approved on 27 February 1986, but took effect from 1 January 1986, that serious anomalies have been created with respect to the eligibility of people receiving Austudy benefits. (2) In particular is the Minister aware that because of regulation 34 (1) (f) which took effect from 1 January 1986, a person who had previously completed a two-year part-time Graduate Diploma could receive tertiary assistance to complete an undergraduate course, but that the effect of this regulation was to retrospectively change the eligibility status of such people. (3) Is the Minister aware that, as a result of the retrospectivity of the operation of these regulations, some people who genuinely require financial assistance to complete their courses of study have been disadvantaged. (4) Will the Minister seek to rectify the anomalies caused by regulation 34 (1) (f), so that students who genuinely require financial assistance to complete their courses of study do receive such assistance. Senator Ryan —The Minister for Employment, Education and Training has provided the following answer to the honourable senator's question: (1) Statutory Rules 1985 No. 354 dated 19 December 1985 amended the wording of paragraph 34 (1) (f) with effect from 1 January 1986. No change was made to the meaning of the paragraph. The effect of the paragraph continued to be that students who have completed, by full-time or part-time study, a course that is of a higher level than the course being undertaken, are ineligible for assistance in respect of the latter course. Subject to the effect of the concession provided by sub-regulation 34 (5C), paragraph 34 (1) (f) has operated in this way since 1974. (2) The eligibility status of students in general and persons who had previously completed a two-year part-time Graduate Diploma in particular, was not changed by the amendment. (3) No retrospectivity was involved and no persons have been disadvantaged by the amendment. (4) Not applicable. Presentation of Address-in-Reply to (Question No. 122) Senator Puplick asked the Minister for Home Affairs, upon notice, on 5 November 1987: What was the function or functions, or the other commitments which the Minister had which prevented him from attending the official presentation of the Address-in-Reply to His Excellency the Governor-General on 5 November 1987. Senator Robert Ray —The answer to the honourable senator's question is as follows: Duties associated with my portfolio. Senator Walsh —On 24 September 1987 (Hansard, page 652) Senator Powell asked me, as Minister representing the Treasurer, a supplementary question without notice concerning negative gearing. The Treasurer has provided the following information in answer to the honourable senator's question: The ability to offset interest against other income accorded rental property investors by the Government's decision on negative gearing can be expected to increase the after-tax rate of return on rental housing investment and thereby lead to some increase in the supply of rental housing. The negative gearing arrangements apply equally to investors in all types of rental housing. As a result, the arrangements could be expected to provide a stimulus to the supply of rental accommodation in all sections of the market, including the lower end. This increase in supply should have a favourable impact, from the renter's point of view, on both the availability and price of rental accommodation. Senator Tate —On 9 October 1987 (Hansard, page 926) Senator Jones asked the following question without notice: Has the attention of the Minister for Justice been drawn to statistics from the Federal Attorney-General's Department which show the number of bankruptcies in Queensland has risen by nearly 100 per cent in the past three years? What has been the comparative rate of bankruptcies between the Australian States in the financial years 1983-84 to 1986-87? According to the latest information, what is the bankruptcy situation in Queensland in regard to the first half of 1987 compared with the same period last year? The answers to the honourable senator's question are as follows: (i) I am aware that bankruptcies in Queensland have increased by 69.8% in the financial years 1984-85 to 1986-87. (ii) Comparative bankruptcy statistics for the Australian States in the financial years 1983-84 to 1986-87 are set out in the following table: Financial Year 1983-84 1984-85 1985-86 1986-87 N.S.W. and A.C.T. ... 1 161 1 185 1 406 1 776 Victoria ... 1 107 897 932 1 289 Queensland ... 865 1 011 1 280 1 717 S.A. ... 775 662 923 1 353 N.T. ... 40 42 60 51 W.A. ... 705 597 652 916 Tasmania ... 256 270 328 393 TOTAL... 4 909 4 664 5 581 7 495 (iii) According to the latest information, the comparative Queensland statistics for the half years ended 30 June 1986 and 30 June 1987 respectively are: January-June 1986: 654; January-June 1987: 936. Senator Tate —On 9 October 1987 (Hansard, page 935) Senator Watson asked me as the Minister representing the Attorney-General the following question without notice: (1) Are there any parts of the off-shore constitutional settlement package that remain outstanding? (2) If so, what further proclamations are required? (3) Can the Minister explain the reasons for the elements that are still outstanding? The Attorney-General has provided the following answer to the honourable senator's question: (1) I draw attention to the answer to question 2929 in the House of Representatives (Hansard (H of Reps) p. 1781, 20 March 1986) which sets out the Government's attitude towards the offshore constitutional settlement. Of the Commonwealth legislation enacted to implement the Offshore Constitutional Settlement, only the Minerals (Submerged Lands) Act 1981 and associated Royalty, Exploration Permit Fees, Production Licence Fees, Works Authority fees and registration Fees Acts are currently unproclaimed. (2) and (3) Under the Offshore Constitutional Settlement arrangements, the Commonwealth has jurisdiction over offshore mining beyond the three-mile territorial sea. Inside the outer limit of the territorial sea offshore mining is subject to State/Northern Territory jurisdiction. At present, no legislation has been enacted by any State or the Northern Territory to regulate mining within the territorial sea. I understand that a Working Group of Australian Minerals and Energy Council Officials has proposed the amendment of the current Commonwealth legislation and the enactment of complementary legislation by each State and the Northern Territory. The Minister responsible for the Commonwealth legislation is the Honourable John Kerin, M.P., the Minister for Primary Industries and Energy. If any further information is required, it should be sought from him.