Thursday, 10 December 1987 The PRESIDENT (Senator the Hon. Kerry Sibraa) took the chair at 10 a.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned shows that: There is widespread concern at the increasing breakdown of public order in the A.C.T. This breakdown is shown by the recent increase in reports of violent assault-one of which concerned the tragic death of a young man at a school fete. The involvement of groups of youths in some of these assaults causes particular concern. Such behaviour is affected by the ready availability, to young people, of alcohol and video and films which depict extreme violence. Your petitioners therefore ask the Parliament to: Make unlawful the creation of a public nuisance by loitering. Ensure the enforcement of laws which prohibit the public consumption of alcohol by under-age persons, and Legislate to restrict the production, distribution and sale of material which depicts extreme violence. And your petitioners as in duty bound will ever pray. by Senators Button (from 151 citizens) and Tate (from 120 citizens). To the Honourable the President and members of the Senate of the Commonwealth Parliament assembled. The petition of these residents of the Commonwealth of Australia respectfully showeth: that the Australian Broadcasting Corporation provides the citizens of the Commonwealth of Australia with the only nation-wide, independent radio and television service. that the independence of the Australian Broadcasting Corporation must be preserved in the interests of the citizens of the Commonwealth of Australia. that the introduction of commercial sponsorship or any form of advertising material from commercial sources, would destroy the independence of the Corporation. Your petitioners therefore humbly pray that the Honourable Senators will oppose the introduction of any form of sponsorship or advertising material from commercial sources into the programmes of the Australian Broadcasting Corporation. And your petitioners as in duty bound will ever pray. by Senator Gareth Evans (from 382 citizens). To the Honourable the President and members of the Senate in Parliament assembled: We the undersigned, (i) are greatly disturbed by the dangers to health posed by passive smoking, and evidence of which is being documented daily by medical authorities around the world; (ii) note that environmental tobacco smoke has been identified as the major pollutant in aeroplane cabins, and that its direct threat to health is recognised in the special leave provisions for flight attendants specifically on grounds of upper respiratory infections; (iii) appreciate the government's undertaking to legislate for smoke-free travel on aeroplanes, but are dismayed at the apparent reluctance to follow up the Minister for Aviation's December announcement with action; and (iv) call upon the government to make smoke-free aeroplane travel a reality without further delay, and to ensure that smoke-free areas which cannot be contaminated by recycled pollutants, are available at all aerodromes. And your petitioners as in duty bound will ever pray. by Senator Ryan (from 301 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: That the proposed national ID Card and numbering system threatens the privacy of law-abiding Australians opening the door to computer matching of personal information, will cause inconvenience to rural people in particular, and will result in massive compliance costs for private business. That the Joint Parliamentary Select Committee Report of 1986 showed that the Australia Card will not be effective in combating taxation and social security fraud and illegal immigration, as its cost savings are based on faulty estimates. That accordingly the Senate and Parliament should reject the Australia Card Bill. And your petitioners as in duty bound will ever pray. by Senator Chaney (from 198 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 243 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The Petition of the undersigned respectfully showeth that the Government has no clear mandate to introduce the Australia Card. Your Petitioners most humbly pray that the Senate in Parliament assembled insist that the Government not proceed with the Australia Card without the consent of a majority of the Australian people in a majority of the States as determined in a national referendum. And your petitioners as in duty bound will ever pray. by Senator Chaney (from 447 citizens). To the Honourable the President and members of the Senate in Parliament assembled: We the undersigned are totally opposed to the impending duty increase from 2% to 25% on Diesel Fuel Injection Pump and Turbocharger Spare Parts . . . And we call on the Senate to reject the legislation. And your petitioners as in duty bound will ever pray. by Senator Sheil (from 225 citizens). Petitions received. Senator VALLENTINE(Western Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes that 10 December is the thirty-ninth anniversary of the Universal Declaration of Human Rights; (b) commends the Government's stand on a number of human rights cases around the world and for the continued funding of the Human Rights and Equal Opportunity Commission; (c) condemns notable exceptions to these concerns where situations like East Timor, West Papua, Malaysia, Singapore and the Philippines are concerned because they are close to home; and (d) urges a strengthening of the mechanism by which citizens of Australia and the Parliament can get the Government to raise human rights issues with the governments concerned. Senator COLLINS(Northern Territory) —I give notice that, nine sitting days after today, I shall move: That the Meat Inspection [Fees] Orders (Amendment) as contained in Meat Inspection Orders No. 5 of 1987, made under the Meat Inspection (Orders) Regulations, made under the Meat Inspection Act 1983, be disallowed. I seek leave to make a short statement. Leave granted. Senator COLLINS —This is the last day for giving protective notice of motion to safeguard the position of the Standing Committee on Regulations and Ordinances while it considers the question of a wide, unreviewable, subjective, discretion arising under the orders. I seek leave to incorporate in Hansard a brief summary of the specific concerns we have put to the Minister for Primary Industries and Energy (Mr Kerin). Leave granted. The summary read as follows- New Order 18 confers on the Departmental Secretary a power to remit the whole or part of certain fees ``in a particular case, for a reason that the Secretary thinks sufficient''. This unusual discretionary authority struck the Committee as wide, subjective, unstructured, unreviewable and unexplained in the accompanying Explanatory Statement. The Committee has asked the Minister for Resources, the Hon. Peter Morris, M.P., for further information on the purpose of the provision to allow the Committee to determine whether it requires amendment. 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. Reports on the Forward Estimates of Budget outlays-1988-89 to 1990-91-December 1987. 2. Lemonthyme and Southern Forests Commission of Inquiry-interim report-pursuant to section 20 of the Lemonthyme and Southern Forests (Commission of Inquiry) Act 1987. Motion (by Senator Gareth Evans) agreed to: That the following Bill be introduced: a Bill for an Act to amend the Broadcasting Act 1942, and for related purposes. Motion (by Senator Gareth Evans) agreed to: That the Bill may proceed without formalities and be now read a first time. Bill read a first time. Senator GARETH EVANS(Victoria-Minister for Transport and Communications) —(10.04)-I move: That the Bill be now read a second time. I table the explanatory memorandum and seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- This Bill provides for a major new package of commercial radio ownership rules and will provide an efficient and equitable framework for the future development of radio services in Australia. The opportunity has also been taken in the Bill to accomplish some substantial rearrangement and consolidation of existing ownership and control provisions in broadcasting legislation, in a way that should be welcomed by all those who have to deal with the labyrinthine complexities of that legislation. The new radio rules, which implement the policy announced on 28 October 1987, will substantially complete the Government's unprecedented reform of the ownership structure of the Australian media. The Bill presents the results of the review of ownership limits for commercial radio. It also completes the review of cross-media ownership by addressing this issue in the context of revised radio rules. The new cross-media limits will effectively mean that media proprietors will have to choose between a major role in television or radio or newspapers. The existing radio limits in the Broadcasting Act 1942 are: one metropolitan radio licence in any State; a total of four metropolitan radio licences; a total of four radio licences in any State; a total of 8 licences. The factor that triggers the application of these limits is the holding of a prescribed interest in a commercial radio licence or the holding of a directorship in a company in a position to control a commercial radio licence. Broadly speaking, the threshold for attribution of a radio prescribed interest is the holding of more than a 15 per cent direct or indirect shareholding in a licensee company. This Bill does not propose changes either to this threshold level for radio prescribed interests or to the methods of tracing indirect interests. A change in the current 5 per cent prescribed interest level for commercial television licences is proposed, for the purpose of the revised television/radio cross-media limit. I will explain this change in addressing the provisions of the Bill in more detail. Since the inception of the radio limits in 1935, the number of commercial radio licences has more than doubled, and more new services are in the pipeline. In February this year the Government announced plans for 27 additional commercial FM radio stations in regional areas over a 3-year period, and in October I added 8 stations to this list. By 1990, commercial FM radio services will have been planned and licences invited to service more than 4.2 million people living outside the mainland State capitals. This expansion of commercial radio services represents a radical change in the commercial radio environment in non-metropolitan areas which is not catered for by the existing radio ownership and control limits. The Government believes that the public interest will best be served if commercial radio services are competitive. A competitive industry will strive to present the best in commercial radio programming in order to attract audiences and, consequently, advertising revenue. Competition within radio markets will also promote diversity of programming in terms of news, information, opinion and entertainment. In summary, the new package of ownership rules introduced by this Bill will consist of: A national limit of 16 commercial radio licences; A State radio licence limit of no more than half of the service areas in that State; A limit of one radio licence to a service area; and New and revised cross-media ownership limits. National Limit The new national limit for commercial radio licences is to be 16. The total number of these licences presently available has more than doubled (from 65 to 139) since the eight-station limit was introduced in 1935. To maintain the ratio of permitted licences to the total available today would require a new limit of seventeen. If one takes into account the 37 new licences in the pipeline, the number would need to be 21 to maintain that ratio. When the new services are in place the new limit will represent just over 9 per cent of licences as compared with 6 per cent under the current eight station rule. In this context, the new 16 licence limit is both realistic and conservative. State Limit The present State limit of four licences impacts unevenly upon the States because it takes no account of the differing numbers of licences among them. The new limit in the Bill will prohibit a person from holding prescribed interests in more licences within a State than half the number of service areas in that State. For this purpose, service areas that are substantially coextensive with each other will be counted only once. If the revised State limit were to come into operation today, the maximum number of licences in the States would be: NSW (including ACT) 17 Victoria 7 Queensland 11 South Australia 3 Western Australia 7 Tasmania 3 Northern Territory 1 The principle underlying the State limit is that no-one should be able to exercise too great an influence within a State. The combined effect of this limit and others included in the Bill will achieve this result. Local Limit The Government believes that diversity and quality of programming is best ensured by the provision of competitive services at the local level. Under the current rules, there is a prohibition against holding two or more radio licences serving any State capital city. Only a few cities outside the State capitals have more than one commercial radio service and these are not commonly owned. However, with the planned expansion of commercial services in non-metropolitan areas, it is necessary to give the metropolitan area prohibition general force. The general application of the one-licence-to-a-market limit is consistent with the one-licence-to-a-market rule for commercial television. The intent of the new rule is that, where licences are in direct competition, they should not be commonly owned. There are many services that are not in direct competition but whose service areas, for historical or other reasons, overlap. The ``one-radio-licence-in-a-service-area'' rule therefore has a built-in margin of tolerance of 30 per cent. That is, if two service areas overlap to the extent that more than 30 per cent of the population of one is also within the service area of the other, then the licences serving those areas will not be able to have common ownership links. There will, of course, remain the case of supplementary licences. These will normally be granted only where the service area concerned is judged to be unable to support a competitive service. Cross-Media Limits Earlier this year, the Government introduced cross-media limits in connection with changes to the television ownership and control rules. Those limits restricted, for the first time, holdings across media-in that case, television/radio and television/newspapers. Since then there has been a considerable realignment of interests within the industry with a significant uncoupling of cross-media linkages. The present Bill extends the cross-ownership restrictions to radio/newspaper holdings and amends the application of the existing television/radio restrictions. In the case of radio/television, the current restriction is that prescribed interests may not be held in both a television licence and a radio licence if, anywhere within the television service area, there is a monopoly for the commercial radio service. The new rule will prohibit the holding of prescribed interests by one person in both a television licence and a radio licence if more than 30 per cent of the population within the service area of one of those licences is also within the other's service area. For this purpose a prescribed interest in a television licence will be attributed to interests of more that 15 per cent. This television/radio limit will mean that there is uniform application of the prescribed interest levels to radio and television for the cross-media rule. The rule will apply universally across Australia-not just in monopoly radio markets. For radio/newspapers, cross-media holdings will be limited in an equivalent manner to television/newspapers. That is, a person will not be permitted to hold prescribed interests in both a radio licence and a newspaper if that newspaper: has fifty per cent or more of its circulation within the radio service area; is published, in English, on four or more days per week; and is sold, as a newspaper, to the extent of fifty per cent or more of its circulation. The threshold for a prescribed interest will be fifteen per cent for both radio and newspapers, as already defined in the Act. The effect of these rules will be that media proprietors will essentially have to choose between a major role in television, or radio, or newspapers. Directorship The existing radio directorship limits in the Act have also been changed to make them consistent with the revised radio prescribed interest limits. The existing television/radio cross-media directorship limit has also been amended to reflect the changes made to the corresponding cross-media prescribed interest limit. The new radio/newspaper cross-media prescribed interest limit is also supported by a corresponding directorship limit. The changes made to the cross-media directorship limits include an exemption to cover the circumstances where a person holds more than one directorship within a corporate group which has grandfathered cross-media interests. Administration and Enforcement For the purpose of the new radio rules, the Minister will be required to determine the percentage service area population overlaps between radio licences (to give effect to the one-radio-licence-to-a-service-area limit) and to determine the number of discrete service areas in each State (to give effect to the revised State limit). The Minister will also be required to determine percentage population service area overlaps between commercial radio and television licences for the purpose of the new television/radio cross-media limit. The determination of service area population overlaps is to be based on Census Count results published by the Australian Statistician. For the purpose of the new radio/newspaper cross-media limit, the Australian Broadcasting Tribunal will be required to determine those newspapers having more than 50 per cent of their circulation within the service area of particular commercial radio licences. The Bill will ensure that these determinations made by the Minister and the Tribunal are available to the public in the form of Ministerial Gazette Notices and the Tribunal's Associated Newspaper Register. The Notices and the Tribunal Register must also be updated to take account of new circumstances such as new Census Count results, changes in service areas, and changes in newspaper circulations. The administration and enforcement system closely follows the scheme which applies at present to the 60 per cent population reach television limit. Investors in the media will thus be able to ascertain those investments that would contravene the new limits through reference to the Gazette Notices of the Minister and/or the Associated Newspaper Register of the Tribunal. Contraventions of the new limits will be treated in the same way as contraventions under the existing Act. Grandfathering In accordance with normal practice, provision is made in the Bill to grandfather (ie protect) those contravening prescribed interests or directorships which were held on or before 28 October 1987 (the date of the announcement of the Government's intention to introduce new radio and cross-media laws). These provisions are drafted along the same lines as the grandfathering provisions contained in the Broadcasting (Ownership and Control) Act 1987, as clarified and refined by the Broadcasting (Ownership and Control) Act (No. 2) 1987. The only exception to those grandfathering rules which apply to the new television limits introduced by the Broadcasting (Ownership and Control) Act is that grandfathered protection for a contravention of a revised radio or cross-media limit will not apply where a person continues to hold prescribed interests or directorships that also contravened the corresponding existing limit on or before 28 October 1986. For example, if a person contravened the existing State limits (four commercial radio licences) by holding prescribed interests in five commercialradio licences in South Australia before 28 October 1987, that person would, if the revised statement for South Australia is three licences, be grandfathered for the holding of a prescribed interest in only four of those licences. On the other hand, a person who was grandfathered under the existing television/radio cross-media limits would continue to be grandfathered for contraventions of the new television/radio limit. Consequential Drafting Changes The Bill provides for consequential amendments of the licence grant, renewal, and transfer provisions of the Act to take account of the new limits. A cursory glance at the Bill will also reveal that significant structural changes have been made to the arrangement of the ownership and control provisions to accommodate the new limits. The existing and new cross-media provisions will be contained in a separate division of the Act. The existing and new grandfathering rules have been consolidated in a new division to avoid the need to refer to the transitional grandfathering provisions in recent broadcasting amendment Acts. The parliamentary draftsman has also taken the opportunity to provide a more logical and coherent arrangement of the ownership and control provisions and to streamline the ownership and control rules by deleting duplicate radio and television provisions. I am sure that these changes will be welcomed by those lawyers and representatives of the broadcasting industry that have had to deal with the labyrinthine arrangement of the existing provisions. Consultation It is not intended to seek passage of this Bill in these sittings, only to introduce it. This will provide an opportunity for representatives of the broadcasting industry and other interested parties to examine the detailed provisions in the Bill prior to resumption of the second reading debate. Any comments received on the technical operation of the Bill will be taken into account and, if appropriate, Government amendments will be moved on resumption of the debate in the 1988 autumn sittings of Parliament. In particular, I will be further examining the issue as to whether grandfathered protection should be afforded for contraventions of the new radio and cross-media limits caused by changes in Census Count population figures. I have also asked my Department to consider whether any such grandfathered protection can or should also apply to contraventions in relation to other limits in the Act. Financial Impact The new measures will place some additional administrative burden on the Department of Transport and Communications and on the Tribunal. These will be absorbed within current resources, although some reordering of priorities may be required. Conclusion This Bill marks the culmination of a process of reform for radio that commenced when my predecessor, early in 1985, asked the then Department of Communications to enquire into future directions for commercial radio. That process has resulted in two major advances. Firstly, there is the program to provide additional radio services in regional areas, which was announced earlier this year. Secondly, there are the rules provided for in this Bill. These new radio and cross-media rules and the new radio services, together with the television rules and the television equalisation scheme, will usher in a new era of broadcasting that will increase the quality and quantity of broadcasting services available to the public at all levels and in all areas. This new era has not been brought about by new technology or outside or overseas influences. It is a direct consequence of the Government's policy initiatives. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. The PRESIDENT —Pursuant to order, the resumption of the debate will be made an Order of the Day for the first sitting day in 1988. Debate resumed from 9 December, on motion by Senator Reynolds: That the Bills be now read a second time. upon which Senator Vanstone had moved by way of amendment: In respect of the States Grants (Schools Assistance) Amendment Bill (No. 2) 1987, add ``, but the Senate deplores the excessive regulation by the Federal Government of non-government schools, which is designed both to impose an external value system on those schools and to hamper the growth of non-government schools and thereby limit parent choice''. In respect of the States Grants (Tertiary Education Assistance) Bill 1987, add ``, but the Senate: (a) condemns Government policies which have denied 20,000 qualified students entry into higher education this year and which promise no better performance in 1988; (b) notes with concern the failure of the Government to maintain the triennial funding system for higher education, thus introducing uncertainty and potential wastefulness into the planning and expenditure of universities, institutes and colleges; (c) draws attention to the dangers inherent in allowing centralised bureaucratic bodies to decide whether or not research conducted by universities and colleges of advanced education is in the national interest; and (d) questions the inclusion of funds for key centres for teaching and research as a part of research funding rather than as a separate allocation concerned mainly with the improvement of teaching''. In respect of the States Grants (Tertiary Education Assistance) Amendment Bill (No. 2) 1987, add ``, but the Senate expresses its concern that the transfer of responsibility from the Commonwealth Tertiary Education Commission to the Department of Employment, Education and Training proposed in the Bill is a precursor to the denial of an adequate consultative mechanism and public voice for those directly concerned with running and using Australia's various education systems''. And in respect of the Student Assistance Amendment Bill 1987 add ``, but the Senate condemns the Government for its failure to administer Austudy student assistance grants in a timely and efficient manner, thus causing grave inconvenience to students and their families''. Senator TEAGUE(South Australia)(10.05) —I am concerned by the impasse we have reached in Australia in higher education. This impasse is our desperate inability under current government policies to provide the number and quality of higher education places that Australia needs. The same challenge also faces us in technical and further education. Everyone in this chamber acknowledges the fact that, by all international standards, Australia has too few graduates and too few people gaining higher degrees. We all know that if Australia is to take her rightful place as a strong player in the world's economic market-place and avoid sliding down the Argentinean road, our universities and colleges must be given the opportunity for significant expansion and the pursuit of excellence. Yet we know that under the present Government's policies, rather than having significant expansion, higher education enrolments have reached a plateau over the last five years. I have been referring to this plateau for several years in Senate debates on education. We all have to face up to the fact that each year more and more Australians are demanding access to our institutes of higher education. The statement of the Minister for Employment, Education and Training (Mr Dawkins) on 22 September and the Green Paper put down yesterday squarely seek to address this problem of the plateau. But I still believe that the approach put forward is inadequate and will not meet the challenge that is now being so squarely addressed. Each year more and more Australians who are willing and qualified to undertake tertiary studies are being locked out. There are simply not enough places to meet the demand. The Australian Vice-Chancellors Committee and the Australian Committee of Directors and Principals in Advanced Education have for the past three years published an annual survey which shows the gravity of the situation. Their report for 1987 revealed that between 14,000 and 20,000 eligible applicants were excluded from higher education. This is the net figure after double applications and flow-on applications have been excluded. In any event this is a conservative figure. Tens of thousands more people would benefit from higher education if the doors of our universities and colleges were not so firmly closed against them. There should be some freedom for citizens to engage in a market-place of education offerings. But this market-place does not exist, because of overregulation and the monopoly of decision making here in Canberra by the Minister and the Department of Employment, Education and Training-and it is getting worse. Under the present Government's policies we are moving from a centrally overregulated system which shuts people out to an even more centrally determined and more regulated system which will shut out even more Australians. I acknowledge that both the Opposition and the Government have recognised that Australia desperately needs to have a highly skilled and educated work force. However, the approaches of the Opposition and the Government now are starkly different. It is pleasing to see that the new Minister for education has decided to give consideration to the problem-and that is an understatement; he has very squarely addressed it. It is refreshing to see the way the Government has set out objectives to address this plateau problem. There are a number of welcome changes from the status quo approach adopted by the previous Minister, Senator Ryan. I refer, of course, to the present Minister's Budget night paper on skills formation in Australia, his statement on 22 September entitled `The Challenge for Higher Education in Australia', and the Green Paper that was published yesterday. In contrast, Senator Ryan, with the support of this present Australian Labor Party Government, was content for more than four years to adopt a policy which maintained the status quo in higher education, plodding along with marginal increases in additional places when funds permitted. There was no imagination and no freedom from the monopoly of decisions regulated from Canberra. Because of the complete commitment by that Minister to there being no introduction of tertiary fees, apart from the backdown of the administration charge, and because of the shutting out of private moneys from industry and commerce from the public due to a 15-year hangup in many elements of the Australian Labor Party-because there was a policy constraint-that status quo approach persisted for too long. The objective of the new Minister appears to be a genuine expansion in higher education places, but there is no credibility yet in the means by which he has chosen to achieve his objective. Squeezing again the already squeezed orange will not yield much juice. Squeezing too much, even in the noble name of efficiency and management, has the consequence of rupturing the orange altogether-but, yes, the Minister's objective is expansion. Mr Dawkins realises that Australia will have to find an extra 75,000 places in higher education by the end of the century. He also realises that the financing of his proposed expansion of higher education will be crucial to the necessary reforms. He has stated that the money to fund the extra 75,000 places eventually will be about $750m each year. Mr Dawkins said in his speech on Friday that, when the technical and further education (TAFE) sector is included, some 125,000 places will have to be found by the year 2000, but he has already indicated that there is unlikely to be any real increase in Commonwealth spending on higher education in the coming years. Page 7 of the 22 September ministerial statement reads: In current budgetary and economic circumstances, however, it is simply not feasible to achieve quantum leaps in participation in higher education by providing quantum leaps in public expenditure. I agree with that statement, as does the Opposition. It is on that realistic basis that the Opposition's higher education policy was published and put forward openly and honestly to the electorate at the beginning of this year. Rather than spend any new money, Mr Dawkins has already indicated several ways in which savings will be made in the tertiary sector. It is these savings which he imagines will be used to finance the expansion in enrolments, but that is not credible. According to Mr Dawkins, the new funding bonanza will arise from greater efficiency in the tertiary education sector. These efficiency measures will include amalgamation of small institutions, reorienting research funds, rationalising external studies and improving what he calls staff efficiency and effectiveness. Even with all this so-called efficiency bonanza, he has also said that efficiency improvements alone would not be enough and that it would be important for industry and commerce to make a greater contribution, but these references are vague and the hard policy decisions are evaded. In addition, Mr Dawkins has begun to hint about the reintroduction of tertiary education fees. It is easy to see that, when the question is asked, `Where is the money coming from, Mr Dawkins?', the logical answer must be that a substantial amount will come from fees. In a speech Mr Dawkins made in Perth last Friday, he said: A central question therefore is where the resources to allow for expansion are to come from. In my September statement I pointed out that it will not be possible in current circumstances for the Government to provide for this magnitude in this increase in funding. Mr Dawkins went on to say: I would hope that Governments will be prepared to continue current funding in real terms. The Senate must note that the Minister is not guaranteeing even the maintaining of funds in real terms. The expression he uses is that he hopes that will occur. Mr Dawkins went on to say: It will be important however for industry and commerce to demonstrate a greater preparedness to contribute and I believe there is a crucial issue to be resolved in relation to fair and equitable contributions on the part of individuals and their families. Mr Dawkins's expression `fair and equitable contributions by individuals and families' logically can mean only one thing-fees. Mr Dawkins has already demonstrated that he is perfectly willing to push ahead with his plans to impose fees in an area additional to that in relation to which Senator Ryan introduced fees. The 22 September statement enabled universities to charge fees in respect of certain post-graduate courses. I am still waiting to learn just how many students will be affected by that measure. I asked a question about that matter during the Estimates committee hearings, but my question was not able to be answered. Incidentally, that measure breaches Labor's long-standing promise not to reintroduce tertiary tuition fees. At present Senator Ryan's administration charge raises about $100m each year. That amount represents about 4 per cent of the total cost of higher education. It cannot yet be estimated whether Mr Dawkins's second measure-the introduction of fees in respect of some post-graduate courses-will raise more or less than this 4 per cent amount. Of course, Mr Dawkins has been more than happy to stick with the controversial $250 higher education administration charge, which is now the $263 fee following a consumer price index related increase in this year's Budget. The Government has taken the first two steps down the path towards a general reintroduction of tertiary tuition fees: the first is Senator Ryan's administration charge, and the second is Mr Dawkins's opening the door to the introduction of fees in respect of some post-graduate courses. It is well known that the so-called higher education administration charge is simply an unconvincing attempt at rhetoric to avoid the use of the word `fee'. I point out that Mr Dawkins's departure from Labor's long-standing no fees policy represents something much greater than doing away with one of Labor's fast dwindling stock of sacred cows. It shows that Mr Dawkins and the Australian Labor Party are now looking to achieve economic goals in the field of education. The social goals that were the very essence of the Party a few years ago have now gone out the window. There can be little doubt that fees will become an essential ingredient in the Minister's plans for higher education. Only one question remains to be answered: Can the Labor Left stop him at the national conference in June? The answer is, of course, wait and see. Senator Macklin —The answer is no. Senator TEAGUE —That is the problem the Government faces with its higher education policy. Senator Macklin interjects that the answer is no. I think he is probably right. The pragmatists in the Hawke Government, including Mr Dawkins, Senator Walsh and other proponents of tertiary fees, very genuinely recognise the plateau problem that I and other senators have been addressing in debate for several years now, and they recognise the Opposition's policy as being an open, honest and logical approach. However, they still have about their necks the great millstone of the Labor Party's past commitment to no tertiary tuition fees. But I believe that the pragmatists are likely to win in June. It is a wait and see problem. That is the problem with the Government's higher education policy now-it is a wait and see policy. It is a `let us take 1988 out of the triennial progression' policy; a `let us have a pause' policy. It is a `let us have a year off to try to win that policy debate' type of policy. It is an `objectives without explicit means of achievement' policy. It is not a credible policy; it may become so but it is not credible yet. I return to Mr Dawkins's vision-his objectives for the future of the higher education sector. His view of objectives is not all that different from the views spelt out by the Liberal Party at the last election. He has tried to steal our clothes, as the Hawke Government has tried in many areas. Senator Macklin —It has done very well. Senator TEAGUE —Yes, I think it has done very well in a number of areas. It is good to see Liberal policies serving Australia well. Certainly, Mr Dawkins accepts our analysis that following the last few years of stagnation-the plateau dilemma I have often referred to-we need a dramatic infusion of newer and higher objectives. The then Liberal Party spokesman on education said in February that the Party: acknowledged entirely the urgent need to increase the number of graduates especially in scientific and technological fields and to boost the number of young people participating in higher education. Our plan for higher education was aimed at increasing the number of people participating and improving the quality of their studies, but not by imposing more control and depriving the sector of funds. The Opposition also said: Our policy recognises the diminishing capacity of the Federal Government alone to finance the necessary expansion. Mr Dawkins has certainly taken a chapter out of the coalition's book but it is only one chapter-the chapter on objectives. He evades the rest; he evades the logic of determining actual realistic means to achieve these objectives. Where we differ is on the question of means and how to expand the higher education sector. Mr Dawkins is set to do this, firstly, by Canberra imposed thumb screws to get efficiency and, secondly, by inadequate hints about reintroducing fees. I refer to thumb screws because I am convinced that the so-called efficiency measures will be achieved by the Minister directly interfering in the administration of the universities and colleges. Real efficiency is not gained by imposition, by thumb screws and whips in the hands of the Canberra Minister and a more powerful Commonwealth Department of Employment, Education and Training. Real efficiency is gained-and I ask honourable senators to look about them for concrete examples-by inspiring shared objectives, by giving sensible incentives and by ensuring there is freedom to act. Responsibility should be decentralised, not centralised as by Mr Dawkins's approach. Another point I wish to make is that efficiencies do not necessarily come without costs. This is particularly true when dealing with such unquantifiable matters as the quality of research. These are issues that are not simple and I suspect Mr Dawkins will have a lot of trouble in an overcentralised and intrusive approach in this area. Mr Dawkins's objectives for higher education also involve a new responsiveness to the needs of the economy and a greater ability for our eduction processes to produce the skills we need in practice to be more prosperous. That is fine, but he believes that his own plan for higher education is correct and that others who oppose him are wrong and should be ignored. It is unwise to make all the key decisions before consultation. It is unwise to put even those key decisions into so much of a strait-jacket. Yesterday's Green Paper does call in the preface for consultation, for views. But has anyone seriously got an example to show how any of the consultation after 22 September has altered the key decisions that were already made without consultation? There is a great deal of danger in the Minister's strait-jacket. In order to shape higher education after his own model he intends to do away with the independent statutory authority, the Commonwealth Tertiary Education Commission (CTEC), and replace it with a small Advisory Council on Higher Education. That Council will be a substructure of the National Board of Employment, Education and Training and will deal only with matters referred by the Board or the Minister himself. In turn, the Board will base its work program and reports on formal references provided by the Minister. Council and Board recommendations and reports are to be put-and I quote from the Government's proposal-in the context of the Government's economic, social and resource allocation policies. In other words, the Council and Board might as well be part of the Minister's own staff or part of the already enlarged powers of the Commonwealth Department. I know that many in the higher education sector came to value the work and relative independence developed by the Commonwealth Tertiary Education Commission. Any amendment to CTEC, from the Opposition's point of view, would have been to give more autonomy to individual institutions so that the advice and decision-making could be even more independent, but this Minister has gone entirely in the other direction. I am sure that academics, students and administrators of universities and colleges cannot and do not expect as much from the new so-called Advisory Council. Nor can they expect too much independence or security in the next two or three years in the area of Commonwealth funding. The Minister has already abandoned triennial funding, at least for the next year, in favour of mere annual funding. This will give him more power to force through the changes he wants in our higher education sector. The conclusion to be drawn from all these developments, expressed now all around Australia and by Opposition senators and members in this Parliament, is that the Dawkins era is the most centralised and least consultative government regime ever imposed on higher education in Australia. Just consider the 1950s, when institutions were autonomous and were responsive to State governments, or the 1960s, the 1970s or the early 1980s, the whole 15 years of the Karmel period. Nothing compared with the present approach was so centralised and so dependent upon Canberra and the Commonwealth straitjacket. In contrast to the approach taken by Mr Dawkins and the Labor Government, the Opposition spelt out its plans to reform and expand the higher education sector, not by imposing more control but by giving universities and colleges more autonomy and more control of their own affairs. Our higher education policy released earlier this year stated that the traditional approach-I call it the `traditional' approach; at least it has been traditional since the Whitlam Government-in higher education has been to seek ever-increasing public finance. There is still, of course, the unimaginative and less than responsible approach of the Australian Democrats. They still believe that the way out of the plateau is more and more public money from taxpayers, and I believe that that is less than responsible. But we in the real world, that is, most Government and Opposition senators, acknowledge that this solution of more public money-the traditional response that has led to the plateau of the last 15 years-is no longer feasible, given the nation's alarming debt, our excessive level of taxation and the other competing budgetary needs. It is true that the previous Minister, Senator Ryan, adopted the traditional public funding solution-not successfully; but at best, as we now mostly agree, this has produced only marginal results. The Liberal Party has said that this approach is altogether inadequate. Mr Dawkins has obviously agreed with this. However, the Opposition policy also warned that the higher education institutions are becoming `ever more dependent on the directives of government'. We warned that the combination of bureaucratic management and insufficient funding for competing institutions was eroding academic freedom and institutional freedom, and it is imposing greater Commonwealth control. Canberra has eroded the very freedom which universities, institutes and colleges need to allow them to initiate many aspects of the solution to the plateau problem that we face. Mr Dawkins is even using his fiscal strings to bring the tertiary sector under more control than we thought possible. Already academics are up in arms because they see Mr Dawkins's plans as totally unreasonable and intrusive. They know that there will be no additional funding in real terms. They know that he wants to create an additional 75,000 places by the end of the year 2000. They know that he is intent on forcing through onerous so-called efficiency and effectiveness measures, many of which will amount to real cuts in resources and serious downward pressures on teaching and research standards. Our vice-chancellors and principals and other academic leaders have argued that the higher education sector has always been able and willing to meet the economic needs of the nation. This is where the Liberal Party and many academics have serious differences with the current Labor Minister for Employment, Education and Training. Mr Dawkins, in a less than helpful contribution to the debate on university reform, in a speech made recently in Melbourne accused universities and, in particular, the older institutions, of being `ossified bodies incapable of change'. This is a silly remark. It is a prejudiced remark. It is entirely unworthy of any Commonwealth Minister. Mr Dawkins should not be allowed to forget this shallow remark. It reinforces the view that Mr Dawkins's approach does not have depth and is, so very unfortunately, subjective. The Minister clearly is set on confrontation to force the changes he wants. I hope that he will repent of that approach. For example, in late October the Age reported that members of the schools lobby had been told to toe the Government line or be left out of education reforms. Mr Dawkins was quoted as telling the Australian Council of State School Organisations: Those who decide that the new arrangements are unwelcome and not to be tolerated will, of course, run the inevitable risk of having their views ignored as we develop and implement our new arrangements. Mr Dawkins has also said that his objective is to bring together limited resources to make the greatest impact for change. He said: Those people who stand out against that simple, and I would have thought undeniable, objective will quickly isolate themselves. In early November, Mr Dawkins refused to meet a delegation of student representatives who were seeking to open consultations with him. More recently, it was reported that Mr Dawkins had decided to abolish the Government's advisory council on overseas students. So we can see that consensus is out and control is in. As I said earlier, the Opposition has no problem with Mr Dawkins's objective to expand higher education. What deeply disturbs us is that Mr Dawkins proposes to achieve his own imposed changes through a centralist, dictatorial and confrontationist approach. We are disturbed that the end result of this approach will be failure. That is not good enough for Australia. This Labor Government and this Minister have borrowed the Opposition's published policy for higher education insofar as the objectives of the policy are concerned, but they have not yet accepted the necessary preconditions and the means proposed to achieve these objectives. The Opposition continues to maintain that these means require consultation and partnership as to objectives and then increased freedom and clearer autonomy for education institutions themselves to take up a wide range of realistic options, to map out their own destinies and serve more responsibly their own communities of students. Had the Minister followed the approach of the coalition parties, Australia could now have been looking forward to a rapidly expanding higher education sector in which universities and colleges, enjoying far greater autonomy, could be initiating most of the solution we are looking to achieve. The Opposition believes that our higher education institutions are responsive to change and should be given the opportunity to contribute in a major way to the achievement of that change. The Labor Government and the Minister should wake up to the fact that our universities, institutions and colleges are dynamic institutions that will make major contributions to the economic well-being of our country if allowed to flourish. I support all of the remarks of Senator Vanstone, leading for the Opposition in this debate, and the amendments moved at the second reading stage of the nine Bills before us. My remarks have been confined to higher education because, in these last days of debate in this session of Parliament, higher education is so prominently before us. Senator KNOWLES(Western Australia)(10.35) —I rise this morning to talk on this package of nine Bills covering a range of Government policy towards schools and tertiary education. To a great extent it reveals the sad deficiencies of this Government's approach. The Student Assistance Amendment Bill, which deals with Austudy, is to a large degree mechanical but, in establishing the right of the Federal Government to determine those institutions in which Austudy should be provided, its provision has been limited to those students undertaking courses wholly or substantially funded from Government sources. A government that supposedly is taking a more innovative approach to tertiary education has therefore at a stroke created a further barrier against private tertiary institutions, limiting the rights of their potential students. That is the aspect that we must never forget in this entire debate-where the rights of the students and the rights of the parents lie. In effect this Government is supporting the self-interested criticisms of private universities by those union-minded academics who hate and fear the thought of free choice and competition and who are blind to the opportunities that private institutions will create for academics as well as students. I wish they would just get away from the myopic attitude they have and look at the broader side of this entire debate. It is no coincidence that a viable private university is well on the way to being established in Queensland, because that State happens to be the State in which the proportion of young people denied tertiary places is the greatest. The Liberal Party of Australia believes very simply that Australia has to catch up with the rest of the advanced Western societies where 40 to 50 per cent of tertiary funding comes from the private sector, compared with a mere 5 per cent here in Australia. At the same time, it is also a fact that 65 per cent of tertiary funding in Australia in 1939 was from non-government sources. Sadly, we have seen a retrograde turning back from the position we were in in 1939. Private institutions catering for both overseas and Australian students are a means of injecting private funds into the tertiary system, promoting diversity and independence and creating opportunities for those unable to enter publicly funded institutions. They demonstrate the value of a free market in education in which students will not pay money for degrees of dubious credibility. The whole argument about whether or not private tertiary institutions will succeed can be very easily based on that premise, and that premise alone if necessary, because they simply will not continue to exist if the quality of the degrees that come out of those institutions is not accepted by the students. Attempts by this Government in an otherwise uncontroversial Bill to restrict the free choice of students are to be deplored. I support the Opposition amendment to this Bill which criticises the Government for its administration of Austudy, inconveniencing students and their families. I am sure all honourable senators will know, from just the sheer number of people who have made contacts with their offices expressing grave concern about Austudy generally, the inconvenience that has been created for students and their families. The States Grants (Tertiary Education Assistance) Bill 1987 and the States Grants (Tertiary Education Assistance) Amendment Bill (No. 2) 1987 cover a restructuring of tertiary funding, notably, the deferment of the funding triennium that would have commenced in 1988, limited relaxation on the prohibition of fees and the transfer of administrative responsibility from the Commonwealth Tertiary Education Commission directly to the Department of Employment, Education and Training. These changes add up to a dangerous centralisation of control of the tertiary sector by the Government, providing inadequate public funds while denying it the autonomy to raise funds privately. The dangers of any government seeking to direct research and achieve excellence through ministerial direction must be recognised. We must look to a situation where institutions are in a position to raise funds privately and create a very viable organisation. This year has seen 20,000 young Australians denied tertiary places-a rise of 22 per cent on the previous year. That simply cannot be sneezed at. It is something that this Government should be looking at and it should be making its policies accordingly, in preference to just closing its eyes and pretending that the problem does not exist. The deeply held policies of this Government have denied all these students the opportunity that we rightly provide overseas students-that of paying a tertiary institution for the education that they need for their future working lives. Why should Australian students be denied what we are in fact offering overseas students? It is absolutely absurd. We have seen the Government go through the farce of imposing on students a supposed administration fee while actually lacking the honesty and imagination to ditch its ideological hangups and simply allow institutions to charge fees when quotas of publicly funded places are filled. By both words and deeds the Government recognises one truth-that public funds are limi-ted and that it cannot provide what our tertiary institutions need. All that will be provided for 1988 with the deferred triennium is a net increase of $16m, which equates to a very small 2.1 per cent rise. That will in no way finance the demand for tertiary places. It will not go near it. What makes this financial stringency absolutely unacceptable to the Liberal Party is the fact that it is not accompanied by any realistic move to increase the autonomy of institutions to allow them the common-sense flexibility to offer places to fee paying Australian students, as we in the Opposition have been advocating. This legislation allows fees to be imposed only for vocational post-graduate courses, and that, I believe, is just far too limited. The Australian Labor Party is, of course, supported in its bigotry and hypocrisy on the fees question by academic staff unions that increasingly are out of step with progressive academic opinion, motivated by a concern that fee paying students will demand greater accountability from less effective tertiary staff. The interests they seek to represent are opposed to those of the student as the education consumer. I think it is about time that the academic staff unions actually began to consider what the consumer needs at the end of the day. I strongly support the Opposition's proposed amendment to the second reading motion of this Bill, which draws attention both to the inadequacies of tertiary funding in the circumstances I have outlined and to the centralising measures which the Government has announced and which find expression in this legislation. Clause 14 of the States Grants (Tertiary Education Assistance) Bill refers to the approval for targeted research activities `subject to such conditions as the Minister determines'. It is clear that the Minister for Employment, Education and Training (Mr Dawkins) and the Government believe that they have sufficient wisdom to be able to determine what priorities shall hold sway in research-according to their perception of the national good. It is the same philosophy, sadly, that the Australian Council of Trade Unions (ACTU) has been peddling in its corporatist blueprint Australia Reconstructed. We in the Liberal Party wish to place on record our warning that academic excellence can never be produced by ministerial direction. Indeed, it can only suffer, just as private enterprise withers when Ministers and bureaucrats take it on themselves to pick winners and try to direct investment as they have done so often in the past. There is concern that, through an emphasis on technology-desirable as that may be; let us not deny that-the humanities may at the end of the day be starved of funds. What Australia requires is excellence across the academic spectrum. This will not be achieved by any bureaucratic centralism of research funding. Of course, talk about excellence always brings to mind Senator Ryan's now famous statement when she was Minister for Education that the pursuit of excellence is elitist. I think it is the greatest tragedy of all time that the Government underpins its legislative program by saying that the pursuit of excellence is elitist. We should in fact be encouraging excellence instead of trying to belittle it. Both the States Grants (Tertiary Education Assistance) Bill 1987 and the States Grants (Tertiary Education Assistance) Amendment Bill (No. 2) 1987 establish the basis of the new boards that will control education under close Government direction. This will be achieved through the transfer of responsibility for administering the Act from the Commonwealth Tertiary Education Commission to the Department of Employment, Education and Training. I do not believe that education has a particularly bright future when its controlling board will have two representatives of the ACTU and four public servants among its 12 members. I must say that this is a cause of great concern for me. We can be confident that the views of academic and teaching unions will carry far greater weight than those of education consumers, whether those consumers be students or parents. The Opposition believes strongly that excellence can flourish only where institutions have maximum auto- nomy and education consumers have maximum choice to go with that autonomy. The centra-lised, corporatist formula that this Hawke Go-vernment is embracing will negate any of the worthwhile objectives that it may seek to promote. Mention should also be made of the States Grants (Schools Assistance) Amendment Bill (No. 2) 1987, which provides funding for go-vernment and independent schools in 1988. The Opposition takes this opportunity to place on record its opposition to the absurd and sinister regulation of independent schools, designed only to subvert the free choice of parents, especially those parents on limited incomes. Why should those people in particular be penalised? This Government always has difficulty in coming to terms with the fact that increasing numbers are now going into the non-government schools area. According to the Government's own Budget Papers of this year, 27 per cent of Australian school children are now being educated in non-government schools. The 1986 census of non-government schools showed that 800,000 children were attending 2,446 independent schools and that, of these, 60,000 children in 230 schools were in my own State of Western Australia. Governments that attempt to arrest this trend by placing limitations on the formation or expansion of independent schools and by financial restrictions that impose penalties on self-help are betraying a generation of Australians who should be given that freedom of choice. If it is the parents' wish to go without other things to be able to send their children to private schools, they should not be hamstrung in doing so purely and simply by Government policy. The Government also indulges in a form of religious discrimination, as these restrictions bear hard upon Christian schools that so often cater for children from homes with modest incomes. Other denominations deserve the opportunity to replicate the Catholic system that has provided an alternative for so long to the state system. To a large degree, these restrictions are imposed at the behest of the teachers unions. The teachers union in Queensland was quoted on 20 September in the Times on Sunday as fearing `that there seems to be no lid on the trend to freedom of choice in education'. That any res-ponsible group of people involved in teaching can so proclaim their desire to limit an essential human freedom is absolutely alarming. This Government, however, seems anxious to conciliate these collectivists at the expense of freedom of choice and that probably is even more alarming. I am confident that a future Liberal government will do all it can to extend this freedom to more and more parents prepared to make some financial sacrifice for the sake of their ideals, always bearing in mind that 27 per cent of children attending independent schools receive only 15 per cent of the total public education dollar. So they are not receiving much, but they are getting a further kick in the pants at every turn under this Government's policies. A Liberal government will also increase accountability across the whole range of Australian schools through a national standards monitoring program, in co-operation with the States and independent schools, measuring levels of both basic literacy and numeracy and higher academic achievement. I believe that this will be welcomed by parents, and by conscientious teachers who do not fear any form of objective evaluation of their output. Many of those conscientious teachers advocate this choice and decision. This package of legislation, I think, has demonstrated the philosophic divide between the Government, which believes in ministerial direction of excellence, and the coalition parties, which believe that it can be achieved by individuals only in a less regulated tertiary environment. It has also shown the difference between the Government view that choice in schooling is a privilege granted by the state and our belief that it is a fundamental civil right that governments have a duty to uphold. I support very strongly the amendments that have been moved by Senator Vanstone and I look forward to a more balanced and realistic education policy in the very near future. Senator McGAURAN(Victoria)(10.52) —There has been one distinct feature of the education debate over the years, that is, the whole debate has moved closer to the coalition's policies. It has been no mean feat to get a mass of Federal and State public servants and academics out of their ivory towers. This Government, with its dinosaur-like beliefs in education, is led by the left wing. There has been a great movement towards the coalition's policies in terms of new ideas in education in this country. There has been a great amount of pressure from industry and commerce, which have been saying for years that the education system has not reacted quickly enough to changes in this area. Parents who are totally dissatisfied with the decaying education system over the years have also brought some pressure to bear. The coalition has led the debate and has put it in its proper perspective. I will read out some of our policies because they relate to a policy discussion paper entitled Higher Education which was put out by the Minister for Employment, Education and Training (Mr Dawkins). Five of the coalition's policies, in broad terms, are: firstly, broadening of access to fee paying students; secondly, requiring higher education institutions to seek funds from non-public sources; thirdly, closer relations between higher education and industry; fourthly, more respective attitudes to private higher education institutions; and, fifthly, increased flexibility in course offerings in technical and further education (TAFE) colleges and colleges of advanced education (CAEs). Those policies represent the cornerstone of the coalition's attitude to education. Turning now to Mr Dawkins's Green Paper, keeping in mind the coalition's policies, I will read three sections. Firstly, under the heading `Higher education in TAFE', the document states: There is no good reason, however, why two-year full-time (or equivalent) courses in TAFE, funded by the States and leading to nationally registered awards, should continue to be differentiated from equivalent courses undertaken in CAEs . . . That is the crux of one of our policies. Under the heading `11.2 Use of non-Commonwealth revenue for the funding of additional higher education places', at page 84, the paper states: It is desirable that institutions pursue these opportunities, not least because of the improved links with the private sector and the community as a whole that will result. Under the heading `Joint arrangements with employers', the paper states: Employers have a direct interest- that is a new admission from this Government- in the quality and quantity of graduates from Australia's higher education institutions. Increasing the number of graduates in certain disciplines will, for example, help overcome the problems faced by employers of shortages of certain skills. That has been said for years. The difference between the Green Paper and our policies is that, sadly, the Government will have great difficulty in introducing the proposals. As previous speakers have outlined, particularly Senator Teague, the Government will have to face its own left wing on such a new ideology. Of course, the Government lost out to the left wing on the privatisation issue. The Government must face up to changes in education policies. No amount of structural changes will count for much unless the educators are scrutinised in terms of quality. I see that as the most important part of the education debate. The foundations of our tertiary institutions-that is, our secondary schools-should also be examined. The Victorian State Chamber of Commerce, of which I am a Board member, has a very deep concern about the lack of basic skills of secondary school leavers, particularly those from government schools, and of those leaving universities. So deep is its concern that it has introduced a commerce certificate, the holding of which will, it believes, better equip school and university leavers with the skills needed in commerce, which sadly are not being taught properly at the moment. There is evidence of that. Professor Lauchlan Chipman of the University of Wollongong has pointed out that between 80 and 90 per cent of the young unemployed are from the government education system. That is a very sad admission. I would point the finger at our teacher unions as one of the reasons for that, especially in my State. I believe that there are many fine teachers in Victoria but, equally, many do nothing but push their own political ends. I refer, of course, to the Socialist Left Victorian Teachers Federation. Senator Robert Ray —Come on! They are as right wing as anything. Senator McGAURAN —So concerned were some teachers about such a left wing loony union that they formed a breakaway group made up of more moderate teachers. I give my full support to that group. As I outlined before, one of the major complaints, particularly in Victoria, concerns the foundations of our tertiary institutions-that is, our secondary institutions-and the fact that radical left wing teachers have attempted to hijack the bureaucracies and curriculums of those schools. I refer to an article in the Australian Financial Review which really spells out the great problem we have with many of our teacher unions. It states: The problems of the teachers' union to a considerable extent derive from the kind of leadership which the members have allowed to dominate their unions. To generalise, these are dominated by the hangover of the Vietnam war, inferior intellects who preferred activism to study and who are still fighting the battles of their youth. As they are entering middle age, they still mouth the slogans of a decade ago, and search for new causes, whether the anti-uranium movement or `peace studies'-anything except serious pedagogy and serious disciplines of study. That sums up my concern very well. As Senator Knowles pointed out, there could well be a lost generation due to the lack of excellence in our schools. Concern by parents is putting pressure on the Government to loosen up its strict controls on our education system and to allow greater choice for parents between the private and government sectors, not only in our primary and secondary schools but now, hopefully and properly, in our universities. I support the concept of private universities. They are coming not before time. This is a step towards excellence in education. I conclude by saying that young people today need to be taught a lot more hope, vision, responsibility and discipline. They need to be taught about leadership in society. They are not getting those things, at least not in my State, because, sadly, left wing teachers have neglected these basic values and prefer a society of very much freer values so they can push their own political ends. As I said before, so many parents are realising the bias in schools that teachers-and this very weak Government-have been getting the message sheeted home to them very clearly that there is a need to return to the fundamentals of education. Senator HAINES(South Australia-Leader of the Australian Democrats)(11.03) —The States Grants (Education Assistance-Participation and Equity) Amendment Bill (No. 2), the States Grants (Schools Assistance) Amendment Bill (No. 2), the States Grants (Tertiary Education Assistance) Bill, the States Grants (Tertiary Education Assistance) Amendment Bill (No. 2), the Student Assistance Amendment Bill, the Maritime College Amendment Bill, the Canberra College of Advanced Education Amendment Bill, the Australian National University Amendment Bill and the Overseas Students Charge Amendment Bill, despite what Senator McGauran seems to think about them, actually cover a range of areas in which, allegedly, the Federal Government gives assistance via various States grants Bills. I say these Bills allegedly provide Federal Government assistance via the States because while the Bills certainly purport to provide assistance to tertiary education, overseas students, the participation and equity program (PEP), schools, students generally and the two major tertiary institutions in Canberra, the fact is that they do nothing of the sort. In many ways these Bills simply entrench the anti-education attitudes of this Government. They are certainly at variance with the pious statements and noises made by the Minister for Employment, Education and Training, Mr Dawkins-and for that matter by previous Labor Ministers for Education-and the Government regarding their supposed commitment to education. This Bills package is the most recent in a long line of Budget and mini-Budget Bills which have eroded in very real terms the funding given by this Government to all sectors of education and to the students who are part of those sectors. Particularly hard hit have been students in receipt of Austudy and those isolated and disadvantaged students involved in the participation and equity program and other isolated children's assistance programs. I was a little amused to read one of the amendments proposed by the Opposition to the second reading motion of one of the Bills, which requires to have added at the end of the second reading motion: . . . but the Senate condemns the Government for its failure to administer Austudy student assistance grants in a timely and efficient manner, thus causing grave inconvenience to students and their families. I am not going to argue that what the Government has done to Austudy in recent months has not caused grave inconvenience to students and their families; I just find it rather astonishing that the Opposition parties, having assisted the Government in causing that inconvenience by passing legislation that cut back Austudy payments to 15-year-olds in the last two years of school, should then take the Government to task for doing precisely that. A tremendous amount of inconvenience has been caused to a large number of low income families, in South Australia and Western Australia in particular, because the Government chose to remove Austudy payments to 15-year-olds in their last two years of school. Essentially that has made it a lot more difficult for 15-year-olds who come from low income families in the two States I have just mentioned, South Australia and Western Australia, to continue their secondary education. When we challenged the former Minister for Education on the fact that low income families would be losing up to $40 a week-that is, a little over $2,000 a year-as a result of this inequitable move by the Government, and asked what would happen to these 15-year-olds if they could not afford to stay in a secondary school system which is far from free, even in the public sector, Senator Ryan gave a version of the Marie Antoinette comment. She said, `Let them get a part time job'. She wants to let the 15-year-olds who are going to be deprived of this income, as a result of the cuts to Austudy payments to their families, work presumably in fast-food chains or on a paper round. Maybe somebody has not pointed out to her that kids from low income families have enough difficulty now in getting through their educational program, without having the burden of funding it placed on them. I do not know what cloud Senator Ryan has been existing on but she is off in cloud cuckoo-land if she thinks that those children should be responsible for funding their own education. This change is particularly inequitable for students in South Australia and Western Australia because the majority of year 11 students in those States are aged 15 for all or some of their fourth year in secondary school and very many of them are still 15 years old when they enter their matriculation year of high school. Those students do not need this clip in the ear, the removal of this assistance, from a government which is supposed to be concerned about the quality of life and the prospects of low income families and of their children in particular. The participation and equity program was another Government initiative that was supposed to encourage qualitative changes in education in schools and technical and further education colleges. It was argued by the Government that traditional practices and institutions were not always the best form of education for many young people, again especially those from disadvantaged backgrounds. In the past, the education system did not have to worry too much about those from disadvantaged backgrounds because, when they left school before completing their secondary education, they were able to find employment. Until a decade or so ago, it was not abnormal for young people from disadvantaged backgrounds who could not continue in the edu-cation system to leave school, because employers were prepared at that stage to employ students at 15 years of age. This is now no longer the case, for a variety of reasons, including, I suggest, the fact that, in many States, public exams have been done away with at that level and employers are generally suspicious of internal school assessments. In any event, whatever the reason may be, it is now no longer possible for many youngsters who leave school before the normal final year to get employment. As I said, that changed and the education system had to respond. The Commonwealth, through the participation and equity program, was to be a catalyst for reforms. The Commonwealth Schools Commission wished the Government to continue in that role. In its paper The National Interest it is stated: Systems, schools and, increasingly, the wider community, are acknowledging that PEP is a program with positive and lasting effects. PEP is bringing about marked changes in the climate, organisation and teaching in secondary schools. The Commission states that it seeks a new secondary education program, that is, a new specific purpose program, `as a necessary logical development and focusing of PEP', yet the Government has refused to accept this recommendation. It will not provide a successor program to PEP and, worse, it has decided also not to continue the specific purpose program complementary to PEP, the basic learning in primary schools program. So, by and large, the Government has turned its back on those programs that were set up to assist disadvantaged children to provide some sort of equity in the education system. That is basically at the secondary school level, but the problem has not stopped there. Funding has been cut from technical and further education (TAFE) colleges. We saw $30m removed from TAFE funding at a time when the Government also said that training and retraining programs were important; that flexibility in education was essential; and that our young people, the mature age unemployed, people made redundant and women wanting to get back into the work force had to be catered for through appropriate and adequate training and retraining programs. What did the Government do about it? It cut $30m from those programs. Fees-by any name the Government likes to call them, they are still fees-have been imposed on university students, and the rug is being slowly but surely pulled out from under the public education system across the board. The introduction of university fees-the so-called administrative fee of $250 which was geared to be increased according to consumer price index increases- has made it more difficult for low income families, women and certain people from ethnic groupings to get into the tertiary education system. That trend became obvious within months of the Government's tertiary fees program being instituted. People who were doing part time university and higher education courses were unable to continue with those, because there was no pro rata application of that tertiary fee. I must say that I shared Senator Macklin's frustration and irritation during the debate on that legislation when we had no support at all from Liberal and National Party senators at least to have that fee imposed on a pro rata basis for students at universities. They hid behind their standard argument that it was a Budget Bill, that Budget Bills are sacrosanct, and chose to wave their arms and say how terrible it was and what damage it was likely to do to certain groups. But, when it came to the crunch, they were not prepared to put their vote where they alleged their sentiments were. It does not surprise me at all that the Government has announced that it will have another May mini-Budget. It might just as well have a Budget in August or September and then another one in May when it knows that, by labelling these Bills as Budget Bills, it has induced the Opposition parties to roll over and have their collective tummies tickled. Why should it introduce legislation by another name when, by labelling it `Budget', it knows that it will have it passed, no matter what the social and economic consequences are? In relation to this sort of package, in many instances the Opposition parties are only too happy to support the moves by this Government, because they see them as reflecting the increasingly New Rightist attitudes that the Opposition parties have. It did not surprise me at all that Senator Teague claimed that his Party and the Australian Labor Party were the only political parties in this country that were living in the land of reality, because they have joined forces in this area to make education a prime target for further privatisation, for limited government funding and for increased government interference. If that was not the Government's intention, why else would honourable senators see in the notorious Green Paper to which Senator Macklin referred last night a statement such as that on page 29 under the heading `Educational Profiles'? Here we have the following extraordinary statement: Under the unified national system, the principal mechanism for defining institutional roles will be institutionally developed educational profiles. Senator Peter Baume —What does that mean? Senator HAINES —That is a good question. What does it mean? The statement contains a lot of words with more than one syllable, but it does not make a great deal of sense. It goes on: These- presumably the educational profiles- will take the form of statements that identify the role and mission of institutions in broad terms including, for example, fields of study- which, I would have thought, one could have worked out if one looked at the prospectus of any tertiary education institution- areas of research- I know that our universities provide annual reports on the research that they have been doing, so yet again there is documentary evidence of that- and the enrolment mix to which they wish to give priority, as well as statements of intent on issues such as equity and credit transfer. These educational profiles should both describe an institution's existing course mix and indicate the areas that the institution wishes to develop as strengths for the future. They will be subject to a process of discussion with the Government to enable both parties- that is, the institution and the Government; we are not talking about political parties here- to agree on a contract that specifies: the level of funding available to the institution from the Commonwealth to implement its chosen academic goals; the ability of the institution to meet the higher education needs of its community; and the institution's contribution to national priorities identified by the Commonwealth. What a weapon to hold over the heads of institutions! It suggests, `Come to us with your plans. If we like them, we will fund you; if we do not like them, we will not'. It is as simple as that. There is no other way to read those statements under the heading `Educational Profiles' in the Green Paper. Indeed, on the front page of this morning's Australian, under the headline `Universities told: Reform or funds will be cut'-`reform' means that the universities must change what they do in line with that the Government wants, or the Government will take away their money-an article by Paul Austin, states: Universities and colleges will have their funding cut unless they give a written commitment to comply with the Hawke Government's economic and social goals . . . The article makes the following point: But to be allowed into the new system, institutions will have to achieve a size nominated by the Government, submit a written ``educational profile'' detailing their plans for research and study and give a commitment to implement a new salary structure under which quality staff could be given more pay but redundant staff could be sacked. One wonders exactly what `redundant' means. Does it mean troublemakers or people who do not stick to the Government's goals? What happened to the freedom of academic thought that tenure was supposed to provide? The article continues: In return, the Government will promise to give institutions more autonomy in internal spending and course-creation decisions and allow them to bid for a pool of funds. The point there is that they get the pool of funds only after they have indicated, and received government approval for, their internal spending and their course creation proposals. So, the Government is creating a nice little chicken and egg situation. It is doing so in a country that is supposed to be democratic and in which institutions of this sort should be autonomous. Senator Peter Baume —Will the funds be 2 1/2 per cent of the previous year's recurrent money? Senator HAINES —I think it is a case of pick a number; it could be anything. It could be 2 1/2 per cent as set out in the Green Paper or the figure could be subject to some other change by the Government. There is absolutely no guarantee that any funding will go to any tertiary institution unless those institutions succumb to government demands with regard to course content and educational profiles. It means essentially that if tertiary institutions do not toe the government line, if they do not meet the Government's perceived needs for the community, if they do not contribute to government determined priorities, they can wave goodbye to their funding. That is occurring at a time when government and private funding is being increased in other civilised countries. But we in Australia are cutting public funding to tertiary institutions and secondary schools and encouraging the establishment of utilitarian fee paying universities to pander to the needs of the New Right-something that is enthusiastically supported by such people as Senator McGauran and Senator Teague. It is noted that there is no further commitment to knowledge for its own sake, as that sort of thing produces the so-called lunatic fringe about which Senator McGauran spoke. We must not have thinking in society, just utilitarianism. There is no more pretence that tertiary institutions are free of government interference, and there is no longer even the thin veneer of equity or claims that education is free and accessible to all. Despite the rhetoric, women and students from low income families will have even less access to tertiary education than they do now, and they will have less choice within those institutions if the Government, in return for funding, imposes the sorts of restrictions that are predicted in the Green Paper under the heading `Educational Profiles'. As other senators have pointed out, this is happening at a time when this country is crying out for a skills based work force. Ironically, many of those cries are coming from the private sector, which not only does not contribute in the way of research and development funding or higher education assistance but actively resents government funding of these institutions. Those same people believe in the user pays system but do not allow themselves to be pushed into funding the very institutions that now and in the future will provide them with the benefits they need. On the one hand, the private sector is claiming that it needs a skills based work force and that a user pays system should operate but, on the other hand, it, the user of the end product of the education system, is not willing to pay for that end product. Indeed, I think it is worth examining the comments that were made in a fairly long article written by Kenneth Davidson in this morning's Age newspaper. He wrote: The real issue, and probably the biggest question facing Australia at the present time, is how to build the skills base necessary to staff the high value-added industries we will have to create to generate the wealth necessary to replace the decline in income from traditional commodity exports. These industries, if they are to be internationally competitive, must be at the cutting edge of the new technologies and skills. Given our dominant corporate culture that stresses the short-term and sees employees as costs of production rather than a firm's major asset and the belief that skills can be pinched from down the road or overseas, business can only be quickly engaged in the education process on the scale necessary if it is subject to some sort of education and training levy. That is, impose a levy so that the user pays, so that the employers pay for the end product of the education system. If that were tried, the private sector would squeal and claim that it was being excessively taxed. Far from ensuring that university education is no longer the preserve of the rich, as Mr Dawkins claims, the package of Bills before us today and the system proposed in the Green Paper, as well as the Government's actions over the past few years and promises by the Opposition, which would like to be in government, will ensure that access to advanced education is the prerogative of the privileged. Education is therefore yet another area in relation to which this Government and the Liberal and National parties are in agreement, if not in cahoots. Their mutual aims are to undermine the public education sector by cutting funds, lowering morale, imposing government demands and removing autonomy, while at the same time encouraging a deregulated, freewheeling, fee paying private education system which, by its very nature, will be utilitarian, shortsighted, and ultimately disastrous for the long term development of this country. Senator TEAGUE(South Australia) —by leave-I claim to have been misrepresented. I point out to Senator Haines that everything I tried to bring to this debate was designed to enhance thinking and to increase the creativity of Australians so that originality is encouraged, new fields are developed and there is a readiness for change. My remarks should not in any way be interpreted as seeking to limit the bounds of thinking in Australians, not least among those in our higher education institutions. Senator NEWMAN(Tasmania)(11.27) —I am glad that Senator Teague set the record straight. If ever there was a misrepresentation of the Opposition's views on education, it was the last drab picture painted by Senator Haines. Obviously she was keen to present a picture of what life would be like under the Australian Democrats. Thank God that there is no chance that they will ever be in a position to put their views into effect in this country. The Liberal Party of Australia believes in choice in education; it believes in diversity; it believes in excellence; it believes in individuals providing their children with the best opportunities they can; and it believes in all of the resources in the country being brought into play to ensure that our children get the best education that we can possibly offer them. That does not mean that the education system has to be run entirely by the state. It does not mean that the education system must be one based on equality of outcome, which is what the Government seems to believe in. We are committed to equality of input and opportunity; we have no commitment to equality of outcome. I hoped that my reading of the papers produced and the statements made on this subject by the Minister for Employment, Education and Training (Mr Dawkins) since he was given responsibility for the education portfolio meant that the Government had changed its emphasis in the education field. I hoped, too, that the Government was looking for better outcomes than it has been willing to pursue in the past. Under the administration of the previous Minister, I feel that the Government was trying to turn out of our education system children at the one level of achievement. The Government has failed to recognise that people possess a variety of skills and talents and that those skills and talents must be developed to the utmost. If it is our purpose to meet the needs of employers in the fields of technology and commerce in this country, which is the matter upon which Mr Dawkins places heavy emphasis, no longer should we be seeking to achieve just equality of outcome. We have to concentrate on getting everybody producing to the best of their talents. I am very proud of the fact that on this side of the Parliament we have always had a view that excellence should be encouraged and that there is nothing elitist in supporting our most talented to the fullest extent of their abilities. It is right and important to encourage the slower learners, and it is also very important to ensure that the average child gets the best education possible. But why have we had this cult of not giving the best education possible to our most gifted children? This anti-elitism view, which is so prevalent in many of our education systems, despite lip service to the contrary, and the behaviour of the education system over the years have tended to discourage and quench the thirst for learning in our brightest children. Research which has been carried out since 1981 at the University of Tasmania Education Centre has followed the 1981 cohort of grade 10s through since that year. One of the most depressing outcomes of that research has been the high proportion of children who have not pursued education after grade 10 and who are in the very brightest percentile of their year. By not pursuing further education I mean not going on to apprenticeships, on the job training or to grades 11 and 12 and, obviously, not going on to tertiary education or any form of higher education. We are losing some of our brightest children because they have been wrongly diagnosed by their teachers at a very early stage in the education system as being troublemakers. I think that we are still putting through the training system teachers who are not trained to recognise the brightest children. They are frightened by their lack of training to educate these children to their fullest potential. This is a matter of terrible concern to Australia. If Mr Dawkins's policy of concentrating on making education fit the needs of employers is to be effective, then surely one of the end results of that will have to be doing better by our most gifted and talented children. Nevertheless, I do sound a word of warning because if this country simply continues to concentrate only on the needs of employers and the needs of the nation we will have only half- educated people. The tradition that we have had through the universities in Australia, and in Bri-tain and the European countries since the Middle Ages, has been education for education's sake and not just for employment's sake. Many people who have led our nation were leaders because they were well educated and well rounded people, not because they were experts in some technical field or other. This country does not need just skilled technocrats. It needs people of vision who can lead the country through difficult times. An excellent education-even if not necessarily directed to some professional area-is vital in providing such people of vision. I am glad to see that the Government admits that Australia languishes at the bottom of the league of the Organisation for Economic Co-operation and Development countries in relation to higher education participation by young people. I say this not because I am glad we languish but because I am glad to see that the admission is there. I am glad to see that there is an emphasis on improving that because one first has to recognise and admit the problem before one can take meaningful action. A recognition of that is obviously the first step. Nevertheless, there are somewhere between 13,000 and 20,000-goodness knows what the exact figure is-qualified applicants unable to secure tertiary places in this country and there is no promise of improvement in 1988. That is a matter of real concern. Even though we have this shortage of places there are other ways of getting people into tertiary institutions. The Government is just not opening up the alternatives; it is not remo-ving the regulations which would go some way towards solving the problem. It is not giving the students the freedom of choice which could be given and which could make a real and meaningful difference to the number of people who can get access to tertiary education. I particularly point out that the Government is perfectly happy to accept fees from overseas students to get into Australian tertiary institutions. That seems to me to be a particularly blind spot-the Government is prepared to accept fees from overseas students but it is not prepared to accept fees from Australian students who could not otherwise get in. I am a product of the system whereby, many years ago, many thousands of Australians were in receipt of Commonwealth Government scholarships for university entry. These scholarships were gene-rously supplied. Those who could not get a Commonwealth scholarship could still get in provided they paid their way. I was on a Commonwealth scholarship but many of my contemporaries worked their way through university on waitressing and labouring jobs, as students continue to do today. I do not believe that they suffered in their education. In fact, I think it made them much more determined to achieve and to win through. I think it is character building, if not necessarily the most desirable way; it is certainly much better than and preferable to missing out on tertiary education altogether. I cannot understand the blind spot that the Government has in this area. I see that the Government is prepared to allow tertiary institutions to charge for some post-graduate courses and yet it will not allow them to charge for undergraduate courses. It does seem to be a bit of a nonsense. The Government is reluctant to have private individuals or companies as providers of higher education and it has given no support to the private universities. This in itself would be a marvellous way of increasing the number of places available for tertiary students. It would also be a source of revenue for the nation in that it would open up more places for overseas students. Obviously, with the pressure that we have on our tertiary institutions now, we cannot take all the overseas students who would be prepared to come if there were more places. The other thing which I think is really very unsatisfactory is the fact that those who are attending private sector tertiary education institutions have the Austudy availability closed to them. I think that is quite disgraceful. I want to canvass a few areas relating to schools. It is a matter of real shame that the Government discriminates against families who choose alternative forms of education. Firstly, there is the constant emphasis on the elitism of non-government schools and people who struggle to get their children into non-government schools constantly feel that they are maintaining their children at these schools and are contributing to the maintenance of the schools almost in spite of some members of the Government who have an ideological block against seeing those schools survive. The Government is continuing to fund them but I think it does need fearless and independent advice through the independent schools on the proposed National Board of Employment, Education and Training. It is very important that the voice of independent schools and the parents who choose that education for their children is heard clearly and effectively by the Government and is not kept at too low a level through bureaucratic processes. There are other parents who choose not to send their children to school at all. I have several groups in my State who are banding together to give their children their time and devotion over a number of years in approved systems of education in their homes in co-operation with other parents. I draw the Senate's attention to the fact that these children are ineligible to receive Austudy. Children who go to government schools are eligible for Austudy and children who go to non-government schools are eligible for Austudy, but children who are educated in schemes such as ACE-accelerated Christian education-by their parents, with devotion and with no claim on the Commonwealth for capital or recurrent funds, are ineligible for any Austudy payments. This is quite incomprehensible. Why should we have two classes of young Australians? Surely Austudy is designed to see that children stay in the education system for the longest possible time. Just because they are being educated by their parents under the approved supervision of the State Minister but without any capital or recurrent funding input from the Commonwealth, they are ineligible for Austudy. I urge the Government to do something about that as a matter of urgency. With the failure of so many of the Government systems around the country, more and more parents are looking around to try to find other ways of having their children educated to the standards that they wish for them. Some of them opt for non-government schools, but many are prepared to devote many years of their lives to seeing that their children receive the sort of education that they desire for them. I feel that the excessive regulations on non-government schools do not seem to be being looked at by the Government. I know that independent schools and those in the Catholic system are continually looking over their shoulders because they are being bedevilled by the Government breathing down their necks on, first, one set of regulations and then another. I know that an awful lot of time, which costs money in the administration of non-government schools, is spent on satisfying the regulations that come from Canberra. The tertiary fee has been the subject of debate in this place over the last year, and we are now up to a figure of $263. A number of women at home and on maintenance-I am talking about maintenance from their husbands and not maintenance handed out by this Government by way of the supporting parent's benefit-are looking after children, are dependent upon their former husbands for maintenance and are trying to get qualifications, subject by subject, so that by the time their children are off their hands they are able to be independent of their husbands. Yet they are trying to do a subject a year at a cost, this year, of $263. They are going to acquire very expensive qualifications, if they can afford them at all. But they are usually in a position where their income is so marginal that they have to opt out of tertiary education altogether when they do only one or two subjects a year. I cannot understand how Senator Susan Ryan, who tells us how much she believes in women doing their own thing and being independent-and I for one, of course, support those things-can in all conscience remain a member of a government in which she was the Minister responsible for introducing this fee and see women in this position having to drop out of tertiary studies because of this iniquitous fee on people who are doing part time courses. Even students who withdraw from a course after teaching has commenced will be liable for this charge. I want to draw attention also to the fact that I believe we badly need a national centre for research into gifted and talented children. It is something we do not currently have. If we are to have a skills-based work force, I think we have to do better, as I said earlier, in the education of our gifted and talented. A number of centres around Australia would be very interested in establishing a centre of research into gifted and talented children. Yet the Government has not seen fit to fund such a centre. This is something which I want to draw to Minister Dawkins's attention as perhaps something which will fit into his ideological perception of education of Australians, even if it did not fit into the perception of the previous Minister. I welcome the increased grants for the new arrivals element of the English as a second language program. I want to conclude simply by saying that we cannot continue to wring more and more out of the taxpayers for education. People are not staying on at school long enough and people are not getting into the tertiary institutions that they desire to get into, yet we are not maximising all the resources that this country has at its disposal in the education system, both in non-government schools and in private tertiary institutions. By the use of the taxation system, I believe, we could do very much more to widen the choice for Australians in secondary and tertiary education, to give the diversity and to encourage the excellence which I believe the country desperately needs. The private sector can take some of the responsibility. Despite Senator Haines's drab and dismal picture, private enterprise is showing a willingness and an interest to be involved in education. It is a responsibility which it is willing to take, but it is being prevented from making that commitment and from taking that involvement because of the heavy regulatory hand of this socialist Government. Senator RYAN(Australian Capital Territory-Special Minister of State)(11.46) —The Senate is debating cognately nine education funding Bills whereby the Government has appropriated funds for schools, government and non-government, special purpose programs, technical and further education (TAFE) colleges, universities and colleges of advanced education (CAEs), research, and in relation to overseas students. Because the range of the nine Bills is so wide we have had, from the Opposition particularly, a very wide-ranging debate on various principles and philosophies of education. I do not propose to address most of the points that were made, because they are really expressions of a different policy or a different approach to what the Commonwealth's role in assisting education throughout Australia should be. However, I should point out that the issuing yesterday by my colleague Mr Dawkins of the Green Paper on education will provide the opportunity for the Senate, and for everybody else in the community who is interested in future directions in higher education, to make their views known. The Government has indicated that it has an open mind on certain aspects of the funding and administration of higher education and will be very interested indeed to receive the views of those who feel they have something constructive to offer. However, it is the case that the Green Paper builds on the dramatic and constructive changes and improvements in education that the Government made during its first four years in office. I would simply draw attention, for example, to the dramatically increased participation by Australian students in the final years of schooling. When we came to office in March 1983 we did have, indeed, the worst secondary school participation rate in the Organisation for Economic Co-operation and Development countries. That is no longer the case. Now more than half of our young people are finishing secondary school-an achievement of which this Government is proud but, of course, progress about which we are not complacent. We have announced a further target of achieving, by the 1990s, 65 per cent of our young people completing their secondary education and, in addition to that, many more young people at the ages of 16, 17 and 18 engaging in vocational training through our large and ever improving network of TAFE colleges. With that very clear indicator alone, we can see that there have been enormous increases in opportunities for young people in education. I should point out, too, that the young people who are now participating but who did not prior to our Government's policies being implemented are generally young people from disadvantaged backgrounds. We have known that for some time there were very high rates of participation of students from advantaged backgrounds through to the end of year 12, over 90 per cent in some cases. So the real growth in participation of young people, to the end of year 12, has been largely from disadvantaged students, students from disadvantaged areas and so on, a fact which Senator Macklin, at least, I believe, will be aware of and will welcome. We have also seen greatly increased participation in higher education in TAFE, but we have never been concerned with numbers alone. We have also been concerned with quality of education, quality of outcomes and relevance. During the first two periods of Labor's administration we have seen, for example, a 50 per cent increase in enrolments by higher education students in areas such as computing, business studies, engineering and so forth, areas where there had been very serious gaps in the labour market and very inadequate provision for the economy. So we have achieved not only a quantitative surge in enrolments in education over the last 4 1/2 years, but also very dramatic quality improvements and improvements in terms of the relevance of the training of young people for the needs of the economy and society. We have seen other great advances in equity. For example, in 1983 there were only a couple of hundred Aboriginal students enrolled in full time college or university degrees. Now there are almost 2,000. That is a huge increase, again one about which we are not complacent at all because the Aboriginal community is still very seriously disadvantaged in education, but it is progress of which we can be proud. Senator Newman suggested that the non-government sector had not fared well under the Labor Government. That is wildly wrong, as everybody who is seriously interested in education would know. Under our non-government schools funding policies-needs-based funding policies-the non-government sector has achieved more security and stability of funding than it has ever had, and it has acknowledged this on numerous occasions. Funding to non-government schools is now, as a result of our policies, distributed on a much more equitable basis than it has ever been before. So all sectors of education have benefited enormously from the policies of the first two periods of Labor administration. There have been other initiatives, such as the export of Australian education services, an initiative which was slow and complex to negotiate in the first phases but which is now flourishing and will return, I believe, this year and in subsequent years a very healthy result for our balance of trade figures. We also have unprecedented close and harmonious relationships with industry. We have a number of mechanisms now which allow direct input of industry into the education process. Similarly, with the Australian Council of Trade Unions there is a much closer relationship and a much more considered sharing of policy ideas. So education now, insofar as the Commonwealth can affect what is happening, is much improved in terms of curriculum content, relevance, direction and so forth. We have also achieved other initiatives for which sections of the community have been waiting for a very long time, such as those contained in our national language policies-long awaited by the ethnic communities, but also long awaited by those people in the business sector who recognise that we are never going to improve our trading performance in our region substantially unless the study of Asian languages and Asian economies and political systems is much more available within our school and higher education systems. As a result of the early implementation of our national language policies, that objective is starting to be realised. We have also put in place a national strategy for the education of girls which, for the first time, will ensure that the broadening of and improvements in girls' curriculum choices will be a commitment of every State system, with the exception of Queensland-and I hope that that is only a temporary exception-and including the major non-government systems, the Catholic systems and the bodies representing the independent schools. So in many areas massive changes and improvements have been made. We are now at the stage where we wish to take another very serious look at where we are going in higher education in order to ensure that the improvements that have been made can be the basis for developing a dynamic, flourishing and equitable high standard, higher education system. I hope that the publication of the Green Paper yesterday will bring about constructive discussion rather than tired and stale point-scoring and a rehashing of debates that were well and truly concluded by the end of the 1970s. There is no place, I believe, for harking back to old debates. There is every opportunity now to look at the needs of Australia through to the year 2000 and beyond, from the point of view of both economic growth and social equity. I hope that the debate about education will address itself in those ways. As I said, there has been a wide-ranging, somewhat philosophical debate on these nine Bills. I am sure that the matters which honourable senators want to take up specifically will be taken up in the committee stage. Before I conclude the second reading debate, I point out that there have been a number of amendments to the second readings, none of which are acceptable to the Government. I commend the Bills to the Senate. The DEPUTY PRESIDENT —The original question was that these eight Bills be now read a second time, and Senator Vanstone has moved second reading amendments with respect to four of the Bills. The first question is that the amendment moved in respect of the States Grants (Schools Assistance) Amendment Bill (No. 2) 1987 be agreed to. Question resolved in the negative. Original question resolved in the affirmative. Bill read a second time. The DEPUTY PRESIDENT —The question now is that the amendment moved by Senator Vanstone in respect of the States Grants (Tertiary Education Assistance) Bill 1987 be agreed to. Question resolved in the affirmative. Original question, as amended, resolved in the affirmative. Bill read a second time. The DEPUTY PRESIDENT —The question now is that the amendment moved by Senator Vanstone in respect of the States Grants (Tertiary Education Assistance) Amendment Bill (No. 2) 1987 be agreed to. Question resolved in the affirmative. Original question, as amended, resolved in the affirmative. Bill read a second time. The DEPUTY PRESIDENT —The question now is that the amendment moved by Senator Vanstone in respect of the Student Assistance Amendment Bill 1987 be agreed to. Question resolved in the affirmative. Original question, as amended, resolved in the affirmative. Bill read a second time. The DEPUTY PRESIDENT —The question now is that the remaining four Bills be now read a second time. Question resolved in the affirmative. Bills read a second time. STATES GRANTS (TERTIARY EDUCATION ASSISTANCE) BILL 1987 Clauses 1 to 8-by leave-taken together. Senator MACKLIN(Queensland)(11.59) —I wish to raise a question with regard to clause 8, which deals with liability with regard to charges. We have a concern as to what precisely the Government is attempting to do and how it is attempting to do it. I presume that the exercise is to make an imposition upon students by in some way assisting the institutions to collect the funds which are likely to come from the higher education charge. My concern with that is that what seems to be being introduced here is an enrolment date. An enrolment date is likely to provide much greater restrictions on institutions. I can well imagine that the institutions may find this useful. If one looks at the contents of the Green Paper, it seems that the thrust of clause 8 of this Bill is moving in completely the opposite direction. It does not seem to give any discretion to the institution with regard to the charging of that fee. What I want to know is: Is it possible for an institution to enrol a student who fails to pay the fee by the set date for enrolment? One can well imagine many circumstances in which that may not be possible. An institution may wish to provide some additional time for the student to pay. One can also imagine that if, say, there were a break-down of the computer on the relevant day, students would not be able to pay their fees and hence would not be able to be enrolled. I wonder whether the institutions will have any discretion with regard to that fee. Senator RYAN(Australian Capital Territory-Special Minister of State)(12.01) —I think I can reassure Senator Macklin that his concern is adequately covered. What we are doing in clause 8 is defining a relevant day on which the students become liable for the charge. Institutions have been informed that in each State that date will be the first day of teaching in the institution which is the latest to start teaching, to allow for second round offers and so forth. On that date all students in that State will be liable to pay the charge. If an institution wishes to defer collection of payment in certain circumstances, it may do so. Clauses agreed to. Clause 9 (Student fees). Senator MACKLIN(Queensland)(12.02) —I move: (1) Page 14, clause 9 to be opposed. The CHAIRMAN —Senator Macklin, your amendment opposes clause 9. It is not strictly an amendment; you are merely opposing the clause. Senator MACKLIN —Yes. I will explain our position on this and ask some questions of the Minister with regard to the item. If the Opposition parties support the Government and leave the clause in, I will seek to move to my second amendment, which requires the Government to specify courses by regulation, instead of simply by notice published in the Commonwealth of Australia Gazette. The CHAIRMAN —Are you aware that, if you oppose the clause and it is then passed, you will need leave to move an amendment to a clause that has been passed? Senator MACKLIN —Yes, Mr Chairman. I want to ask the Minister about some items relating to clause 9 which I think will bring out the reason why we are opposing this clause. I foreshadowed in my speech at the second reading stage a number of concerns about the drafting of the clause. Of course, I am not the only one who has raised those concerns; they have also been raised by the Standing Committee for the Scrutiny of Bills. Sub-clause 9 (2) refers to `a person who possesses educational qualifications', yet the term `educational qualifications' is not defined in the Bill. One assumes from the structure of the clause that it refers to educational qualifications which are precursors in some way to a post-graduate course. However, as the Minister well knows, the variations on that are absolutely enormous. It is possible in Australia to go into a post-graduate course without any formal educational degree having been received beforehand. My concern is with how far and how wide that notion of educational qualifications is to extend. Where a person is permitted to go into a post-graduate course without an undergraduate degree, as is possible, would those educational qualifications be seen as some prior tertiary education qualification, for example, a diploma from a college of technical and further education or a diploma received from an institution in another country which is not formally recognised but for which credit is allowed by the institution? Since we do not have a definition in the Bill, I ask just how broadly that reference to educational qualifications will be interpreted. Senator RYAN(Australian Capital Territory-Special Minister of State)(12.05) —The answer to Senator Macklin's concern about the definition of educational qualifications to be accepted by institutions is that the institutions themselves will determine these matters. In my view it would be most inappropriate for it to be handled in any other way. An institution will decide what qualifications it will require before admitting a student to a course. Those qualifications may be educational; they may be other qualifications such as work experience or other attributes such as Aboriginality in the case of particular arrangements for Aboriginals. Such matters will be determined by the institutions themselves. In response to Senator Macklin's reference to the comments of the Standing Committee for the Scrutiny of Bills, I have here a reply from Mr Dawkins to Senator Cooney, the Chairman of the Scrutiny of Bills Committee, pointing out that sub-clauses 9 (2) and 9 (4) are designed to give effect to the Government's Budget decision to relax the legislative prohibition on charging of fees in a limited range of post-basic award courses designed to upgrade vocational skills and income. The courses in question would be specified by the Minister in accordance with the provisions of sub-clauses 9 (1) and 9 (3) and would typically be courses in which all or the great majority of students involved would need to have completed a period of relevant employment or professional experience as a normal condition of entry to the course. In these circumstances, the process of course admission would serve to establish a prima facie liability for payment of a fee and there would be neither a requirement nor a need for an institution to undertake a separate and detailed examination of a student's curriculum vitae and financial circumstances. I am confident that there is no cause for concern about any trespass on the personal rights and liberties of individuals. Senator MACKLIN(Queensland)(12.07) —I thank the Minister for that. I wanted to refer to the second issue to which the Minister referred after the item on educational qualifications. My concern here is not primarily with the policy item. I expressed in my speech on the second reading the opposition of the Australian Democrats to that item. What I am trying to get clear now is the legislative base and how it will operate. The Minister has said that the institutions will define educational qualifications. The difficulty of that in sub-clause 9 (2) is that the educational qualifications could very well have been acquired from another institution. We can take the cases of a typical student and an untypical student-two different individuals. A typical student who may undertake a post-graduate course in Australia, as I understand it, is somebody who has done an undergraduate course at the same institution. So the typical student is catered for because the institution is very well able to say, `These educational qualifications are acceptable for the post-graduate course because they are qualifications from our institution'. But what about a student who changes institutions or comes through an atypical line to undertake a post-graduate course? Is the Minister saying that the institution is able to make any judgment it chooses about the educational qualifications it requires for the purposes of sub-clause 9 (2)? Senator Ryan —Yes. Senator MACKLIN —I must say that that is an extraordinary derogation of the ability of this Parliament to impose a fee. What the Minister is saying is that every institution in Australia will be able arbitrarily to determine what fees it will charge by simply defining what the educational qualifications will be. It is a most extraordinary proposition. Senator RYAN(Australian Capital Territory-Special Minister of State)(12.09) —Senator Macklin has not understood. Certainly, as is the case now, it will be the institutions which will decide which educational qualifications or other qualifications they will accept for the purpose of enrolling a student in a post-graduate course. It is simply not the case that all post-graduate students do their post-graduate work in the institution in which they did their undergraduate work. That happens for some students; it is by no means universally the case. Students go from one institution to another, students come from overseas, and institutions make their judgments about the capacity of the student, given his or her background, to undertake a certain post-graduate course. That has always been determined, and will continue to be determined, by the institutions. The institutions will forward to the Minister for his approval the courses liable for charge, so there is some ministerial control over what is charged for what courses. But in terms of educational qualifications, of course it is a matter for the institution. Senator MACKLIN(Queensland)(12.10) —I understand that under clause 9 (1) the Minister will in fact be the person who engages in the exercise. But he will now be relying totally, as the Special Minister of State (Senator Ryan) has informed us, on a judgment made by the institution as to what in fact will count as an educational qualification under this Bill. Presumably, according to the Minister's comments, anybody who objects will have nothing to stand on because the institution merely has to assert that it is the educational qualification for the purposes of the legislation. I do not see how a person will have any rights, under this particular piece of legislation, to dispute the decision that a fee is to be paid. I go on to the next matter, which I find even more difficult to deal with. I refer to the words `has earned a living at any time'. This is the aspect to which the Minister has just responded using the terms of Mr Dawkins's response to the report of the Senate Standing Committee for the Scrutiny of Bills. I thank the Minister for that response. Unfortunately, I think it was beside the point, with regard to both the Scrutiny of Bills Committee report and my objections. The Scrutiny of Bills Committee report in fact focused on what might be a definition of those words. In seeking to come to grips with this piece of legislation and determine how people would know what their liabilities might be-that is, so that individual Australian citizens might know whether or not they would have to go through this exercise-I went through various Acts to find out whether there was any definition of `earned a living at any time'. The words `has earned a living' are one thing; the words `at any time' are even more extraordinary. There does not seem to be any such definition, at least not that I was able to discover. I would be interested to know whether the Minister could cite a pre- cedent for this particular exercise. In the taxation Acts, of course, we can discover some definitions with regard to what `earning' is. They in themselves are interesting in terms of what might constitute earnings for the purposes of an Act. For example, a judgment in one particular court case held: The natural meaning of earnings in this context is money gained as the result of labour, work or services. In many ways that has been a fairly standard definition throughout most of the court proceedings with regard to this particular matter. However, my concern is whether or not the notion of unearned income which is enshrined in the taxation legislation could be said to apply in this particular case. If it does, we may have an anomaly at the very outset, in that, if we apply the unearned income definition from the taxation legislation-that is, money which is earned by way of interest or dividends-a person who is living on interest from investments may be said not to have earned a living. I do not know whether that definition is the one which is proposed, because there is no definition in this Bill, which makes it very difficult to understand what this particular item is about. In respect of the second part of the words `earning a living', one is led to ask what `a living' might be. I sought some legal advice with regard to how extensive this term might be. The advice I was given is that the words `a living' are qualified by the words `at any time'. `A living at any time' was considered to cover any work which was undertaken for any length of time for which any remuneration was paid. If it is that extensive, what we are now faced with-let us be very clear-is not the type of proposition set out in either the Government's previous paper on higher education or indeed that set out in the explanatory memorandum. We are dealing with a totally different structure. In fact, the explanatory memorandum is grossly inaccurate and misleads the Senate if this provision applies to a person who has worked for any length of time and received remuneration for it. Let us be clear about it: in terms of post-graduate students, we would be talking about every student, because I doubt whether any student gets to post-graduate level without having undertaken at some stage in his or her life-the Bill says `at any time'-some independent work exercise for which he or she is paid. A person could have worked part time serving behind a bar or whatever, as Senator Newman said a little while ago. So the issue I am picking up here does not apply, as the explanatory memorandum suggests, to somebody engaged in work who has now gone on to a post-graduate course, in the manner of the doctor who practises as a general practitioner while studying to become a specialist-which is the example that is bandied about to get support for this particular proposition. In fact, we are dealing with the possibility of doing what the Fraser Government attempted to do. Once this Bill is passed, I do not see how there could be any legislative prohibition that would present this Government from doing what the Fraser Government attempted to do; that is, imposing a fee on every higher degree course. It would be permissible because there is no way of stopping it by regulation. The Government would simply have to gazette the fee. It could apply to any post-graduate course because, as I have suggested, the reality is that any student who reaches post-graduate level has undertaken some type of work in the past. The Government may say, `This is not our intention'. I noticed that the Government's response to the Scrutiny of Bills Committee report referred to `the typical case'. The Government talked about what its intention was. I am not interested in what the Government's intention is; what I am interested in is what the legislation will enable the Government to do. My suggestion is that by some extremely clever drafting exercise the Government has managed to insert in this Bill a measure which the Fraser Government was not able to get through the Senate. Senator RYAN(Australian Capital Territory-Special Minister of State)(12.17) —If Senator Macklin had availed himself of the offer made to him to have a briefing on this legislation he would have understood it and would not have gone barking up the wrong tree in such an extravagant fashion. Senator Macklin needs to read clause 9 in the context of the rest of the legislation. The purpose of the clause is to allow institutions to charge fees, with the agreement of the Minister, for retraining or upgrading skills of people who have been in employment. The Minister will be able to examine whether the employment experience of the person really does relate to the course being offered; in other words, whether it is seriously an upgrading or a retraining kind of course. If it is, the Minister will give his agreement to it. The question of whether a student has ever earned any money and so forth, on which Senator Macklin extrapolated with such vigour, is quite irrelevant. It is not a question of whether the student has ever earned any money at all; it is a question of whether the course being undertaken for which the institution is seeking to charge is genuinely an upgrading of the employment experience that the student has already had. So there will be an examination of the relevant employment experience-not of whether the student has ever served behind a bar, worked in a shop, done baby-sitting or anything of that nature, but of whether, for example, a student with a bachelor degree in computer studies who has worked in the computer field for a period will actually have his or her computing skills upgraded by the course proposed. If there is a clear link between the current state of the student's computing skills and the upgrading that would occur under the course proposed, the Minister will agree that the student has, for the purposes of this provision of the Bill, earned his or her living in that way and will therefore benefit from the course. Senator Macklin —Where is that in the Bill? Senator RYAN —I believe the explanatory memorandum makes it clear on page 20 that the purpose is-- Senator Haines —Explanatory memorandums are not gospel. They have been known to be wrong. Senator RYAN —In relation to Senator Macklin's concern, I think I have explained the meaning of the clause. I should point out, too, that we will oppose his attempt to have these decisions made by regulation rather than by ministerial agreement. If Senator Macklin's proposal were to succeed, it would be chaotic for the institutions. There is the Senate power of disallowance, and institutions would not know-- Senator Macklin —That is precisely the point. Senator RYAN —I do not believe that it is appropriate for the Senate power of disallowance to be used in this case. Why would universities go to the trouble of putting resources into designing these sorts of courses, employing staff to teach them and attracting students to them, if they were not to know, until the Senate had had its deliberations, whether or not they were allowed to charge for them? It simply does not make sense. Also, because of the academic timetable to which institutions need to adhere, in many cases they would need to get the fee from the student before the regulation was disallowed. It would be absolutely chaotic. Institutions would not be able to plan. They would not be able to avail themselves of the new provision. I believe at least the Liberal Party agrees that they ought to be able to develop fee for service courses that have to do with the upgrading of the skills of people who are already trained and who have already worked in employment using those skills in which they were trained. I have now explained to Senator Macklin the meaning of the clause and have indicated that his proposal to remove the Minister's power and replace it by a regulation procedure is not acceptable to the Government. Senator MACKLIN(Queensland)(12.21) —I well understand that the Liberal Party agrees with this. At least it was up front and tried to impose fees for higher degree courses when it was in government. The Minister's remarks were an interesting extrapolation of what the Government's intention may be. I am not in a position to be able to dispute that. The Minister might call my attention to any part of the Bill which is relevant to clause 9. I would be happy to look at any other part which may bear on the questions I have raised; that is, an explanation of what it might be to have `earned a living at any time'. Indeed, the Standing Committee for the Scrutiny of Bills damning exercise with regard to that piece of drafting is well known to any senator who has read the Committee's report. Clause 9 is obviously a device to avoid something. Otherwise, there would have been the more normal drafting of that clause regarding remuneration. There are plenty of examples of the way in which such a clause could have been drafted. For example, there are oodles of them in the tax legislation. One could have been lifted straight from that legislation. There is a whole bevy of court cases giving us an explanation of what they are. This is a new and novel approach which is so broad as to be extraordinary. It is breathtaking. My interest is in how this is legislated. The Minister was patronising enough to say that I had not read the Bill. I doubt whether she read clause 9 before she came in here. Clause 9 (1) states: On application by a university, college of advanced education or institute of tertiary education, the Minister may specify, by notice published in the Gazette, post-graduate courses for the purposes of subsection (2). All that says is that the Minister may specify, upon application. My first question to the Minister was what would the educational qualifications be and I was told that the institution would decide. So the institution will make the application and it will decide the prior qualifications. What I was then interested in was how we define the words `has earned a living at any time'. The Minister told me that it would be a relevant connection. But relevancy does not appear in that clause. It could have been drafted into the clause. Plenty of Acts-we dealt with one yesterday-contain a relevant connection provision. All the clause states is this: has earned a living at any time may be charged fees in respect of undertaking . . . I suggest that my interpretation is correct. What this does is give the Government the legislative power, untrammelled by the Senate-because I understand that the Opposition will not support my amendment to try to get this to be done by regulation rather than gazettal-to impose fees on all higher degree courses. That is what the provision will do. Whether that is the Government's intention or not is beside the point. Once the Government has the power, it has the ability to do that. I suggest that, come next year when the Government will be seeking to impose fees on undergraduate courses, it will not even have to bother to get the legislative power for post-graduate courses; it will already have it. Question put: That the clause stand as printed. The Committee divided. (The Chairman-Senator D. J. Hamer) Ayes . . . . . . . . . . . 59 Noes . . . . . . . . . . . 8 —— Majority . . . . . . . . . 51 —— Alston, R. K. R. Knowles, S. C.Archer, B. R. Lewis, A. W. R.Aulich, T. McGauran, J. J.Baume, Michael MacGibbon, D. J.Baume, Peter McKeirnan, J. P.Beahan, M. E. Maguire, G. R.Bishop, B. K. Messner, A. J.Bjelke-Petersen, F. I. Morris, J. J.Black, J. R. Newman, J. M.Bolkus, N. Panizza, J. H.Boswell, R. L. D. Parer, W. R.Burns, B. R. Patterson, K. C. L.Calvert, P. H. Puplick, C. J. G.Chapman, H. G. P. Ray, RobertChilds, B. K. Reid, M. E.Coates, J. Reynolds, M. E.Collins, R. L. Richardson, G. F.Colston, M. A. Ryan, S. M.Cooney, B. Schacht, C. C.Crichton-Browne, N. A. Sheil, G.Crowley, R. A. Short, J. R.Devereux, J. R. Sibraa, K. W.Devlin, R. Stone, J. O.Durack, P. D. Tate, M. C.Evans, Gareth Teague, B. C.Foreman, D. J. Vanstone, A. E.Gietzelt, A. T. Walters, M. S.Hamer, D. J. Watson, J. O. W.Hill, R. Zakharov, A. O.Jones, G. N. (Teller) Coulter, J. R. Macklin, M. J. (Teller)Haines, J. Powell, J. F.Harradine, B. Sanders, N. K.McLean, P. A. Wood, W. R. Question so resolved in the affirmative. Clause 9-by leave-reconsidered. Senator MACKLIN(Queensland)(12.34) —by leave-I move: (2) Page 14, subclause 9 (1), leave out ``the Minister may specify, by notice published in the Gazette, '', insert ``the regulations may specify''. (3) Page 14, subclause 9 (3), leave out ``the Minister may specify, by notice published in the Gazette, '', insert ``the regulations may specify''. I move these amendments for the reasons I proposed in the debate which has just ensued. Senator HARRADINE(Tasmania)(12.35) —I support Senator Macklin's proposition. What has just happened is somewhat disturbing. As a parliamentarian, I am concerned at the approach that has been taken by a number of Government departments and, unfortunately, acceded to by a number of Ministers; that is, government by gazettal. The matter of student fees is a major question of public policy. It has been cause for substantial debate in the community and quite large numbers of petitions about it have been presented to this Parliament. If it is the Government's intention that fees should be charged, I have no objection to that matter coming before the Parliament in a precise and defined manner. But the Government is dealing with the matter here by including a clause, clause 9, entitled `Student fees', which passes over to a university, college of advanced education or institute of tertiary education the right to determine which post-graduate courses are to be regarded as such for the purpose of proposed sub-section (2) concerning the application of fees. At this stage we do not know what those courses will be. In effect we are being asked by the Government to buy a pig in a poke. I will not go along with that. Admittedly, the institutions concerned may not have had the opportunity thus far to determine their policies on what courses will be recommended for gazettal by the Minister and will attract student fees. I understand that. However, the fall-back position explained by Senator Macklin does, in fairness, deserve the support of the Parliament. As Senator Macklin has said, for the Government simply to gazette those courses and thus enable student fees to be charged for them it is really taking a decision about a major question of public policy out of the hands of the elected representatives of the people and passing it over to the institutions. The Government is virtually rubber-stamping this. The elected representatives will not then be answerable to the students or their parents or whoever pays the fees. If we are going to take unpalatable decisions, let us take them and vote upon them. The reason I voted against clause 9 was not necessarily that student fees should not be charged in certain circumstances but that, as I understood it, the Government was not going along with a proposition which would enable parliamentary audit and control of what occurs in this area. Therefore, I support what Senator Macklin is proposing. It is a very legitimate proposal. I thought it would be attractive to the Opposition if the Opposition is concerned-as I am sure it is and as a number of members of the Government are-that decisions on major questions of public policy not be taken out of the hands of the elected representatives of the people. Amendments negatived. Clauses 10 to 38-by leave-taken together, and agreed to. Clause 39 (Additional conditions etc.). Senator VANSTONE(South Australia)(12.39) —I move: Page 46, clause 39, leave out subclauses (2), (3), (4) and (5). I raised in my speech on the second reading the need to give to higher educational institutions flexibility and autonomy with respect to wages. I understand that the Australian Democrats agree with this amendment. Many speakers have referred to the need for universities to be able to compete to attract the staff that they want. With the new private universities, which can pay whatever salaries they like, the pressure on universities to attract high quality staff will be even higher than it is now and it will become more difficult for them to do so. Therefore, they need the flexibility to do that. The passage of this amendment will ensure that they can do it without fear of the Commonwealth reducing their funds by the amount by which the universities exceed the salary payments that are accepted by the Government. Accordingly, the coalition supports this amendment. Senator MACKLIN(Queensland)(12.41) —The Australian Democrats support the amendment moved by the Opposition. We had circulated an amendment in identical terms. Basically, our concern is to enable the institutions to have the ability to undertake exercises of hiring staff where there is a major disparity between the salaries they are able to pay the staff they seek to hire and those which are paid in comparable jobs in the private sector. In the second reading debate I raised a number of issues, one of which I wish to refer to. It relates to the National Remuneration Centre and the salary for an engineer grade 5, that is, somebody of approximately 40 years of age who has a university degree and 15 years experience. The total cash payment to such a person is in the range of $56,000 to $82,000. It is interesting that the maximum salary of a professor, somebody who certainly has higher qualifications than those applying to the engineer grade 5, is in the $56,000 bracket, unless he happens to be in the medical profession. Interestingly, the Government in its Green Paper accepts the arguments put by the Opposition and the Democrats. At page 61 of the Green Paper the Government talks about the need for increasing salary flexibility. The following sentence sums up the position: The obvious demand for more flexible salary packages would be better met by more appropriate and openly recognised methods. I think the Government in this measure is again seeking to close the door. That is inconsistent with its position. I believe that, if we are attempting to raise the ability of all institutions-and certainly State institutions-to compete, we need to go down that track. This is the first time this particular provision has been inserted. Similar provisions have been inserted in previous Bills with regard to the Academic Salaries Tribunal, but we have never had one with regard to the Australian Conciliation and Arbitration Commission. The reasons for that are obvious. For the first time we have an industrial award at the national level which requires that certain standards be set. I think it is odd that, in acknowledgment of these new industrial conditions, the Government should continue with the proposition and, indeed, expand it to include for the first time the Australian Conciliation and Arbitration Commission. I think the Government would be better set to press ahead with the recommendations contained in paragraph 8.3 of the Green Paper, and that is what the Opposition's amendment proposes. Senator RYAN(Australian Capital Territory-Special Minister of State)(12.44) —I make it quite clear that the Government will not accept this amendment. If the Opposition parties and the Australian Democrats wish to persist with it, the Bill will be sent back to the House of Representatives. The Opposition parties and the Democrats will then be responsible for preventing institutions receiving the $170m which they will receive next week if the legislation is passed. It seems that both Senator Vanstone and Senator Macklin have been under some serious misapprehensions about the meaning of the provision and the effects of what they are trying to do. Neither was willing to accept a briefing from departmental officers, so they have remained in a state of semi-ignorance. Senator Macklin has claimed that this is the first time the provision has appeared. In fact it was inserted in the legislation in 1980. In relation to the Australian Conciliation and Arbitration Commission, the Act was amended last year to make a reference to that. So Senator Macklin is wildly wrong on those points. Senator Vanstone seems to think that there is some application of this provision to salaries that may be paid in private universities. That is also wrong. She mentioned that private universities would not be able to pay what they want. They can pay what they want. The provision has been in the legislation since 1980 and it has been applied. It was used by me to penalise institutions who were overpaying vice-chancellors and also in the case of a South Australian institution which consistently paid above the Federal award and still does. The reference to the Conciliation and Arbitration Commission came in last year. The desire of the Opposition and the Australian Democrats to allow institutions to have more flexibility in what they pay academics is something to which the Government is sympathetic. I should point out that the Government has had that under consideration for a number of years. Those honourable senators who have read the efficiency and effectiveness review, for example, will know that there is a lengthy discussion of the benefits of moving to a more flexible situation. That was one of the first issues which I, as Education Minister, discussed in 1983 with the academic unions. We have certainly had it on the agenda for some time and we believe we will move in that direction. We are not prepared to take a decision which pre-empts decisions arising from discussion of the Green Paper. The proposal for more flexibility for institutions in regard to payment is put forward in the Green Paper. We will have discussions on that with unions, managers of institutions and the Opposition, if they wish to discuss it with us. Senator Stone —In other words, you will let the unions keep on running your policies for you. Senator RYAN —Senator Stone has come into this debate very late and, really, he should stick to his jousts with my colleague, Senator Walsh. What I have said is that we have had under discussion for some years the possibility of a more flexible approach for the payment and we will now proceed to bring to some conclusion those discussions after everybody has had an opportunity to comment on the proposal in the Green Paper. But this provision remains only for 1988. I predict that it is very likely that next year we will have different and more flexible provisions. Again, I do not want to anticipate the discussion. But for next year the payment should be made under the conditions which have prevailed to date. We cannot suddenly change. There would need to be a policy change. We cannot say, `Okay, the institution in your State, Senator Vanstone, which has persisted in above award payments, can get away with that', whereas other institutions have already been pulled into line. All institutions have been required to abide by Tribunal decisions in order to bring to a conclusion this stage of the policy in 1988. I should point out that that was not only a policy of our Government but also it was a policy of the Fraser Government. We are still in that mode. The academics are still working under those awards. The changes which we anticipate, and which some people are keen to see, have not yet taken place so it would be inappropriate to make the change this year. What I suggest to the Opposition is that it give serious thought to withdrawing its amendment at this stage in the full knowledge that there is every likelihood that different provisions with regard to flexibility of payment will come into place next year after there has been a response to the Green Paper. Amendment agreed to. Clause, as amended, agreed to. Remainder of Bill-by leave-taken as a whole, and agreed to. Bill, as amended, agreed to. Ordered that the States Grants (Tertiary Education Assistance) Bill 1987 be reported with an amendment and that the Committee report progress in respect of the remaining Bills and seek leave to sit again. The Chairman having reported accordingly- Adoption of Report Motion (by Senator Ryan) agreed to: That the report of the Committee in relation to the States Grants (Tertiary Education Assistance) Bill 1987 be adopted and that the Committee have leave to sit again in relation to the other Bills at a later hour. States Grants (Tertiary Education Assistance) Bill 1987 (on motion by Senator Ryan) read a third time. The ACTING DEPUTY PRESIDENT(Senator Colston) —Order! It being after 12.45 p.m., pursuant to sessional order the Senate will now proceed with the debate on matters of public interest. Senator TEAGUE(South Australia)(12.52) —During November 1 was fortunate to have a four-week visit to the People's Republic of China. This is the first opportunity that I have had to speak in the Senate about that visit. On the first 12 days I was a member of the first official delegation from the Liberal Party of Australia to China. That seven-member delegation, of which I had the privilege of being deputy leader, was led by the then Federal President of the Liberal Party, Mr John Valder. This most successful visit demonstrates the close relationship between Australia and China and the bipartisan approach between the two major parties in this country-the potential governments of this country for years to come-in the important relationship that Australia has with China. Our magnificent host, the Chinese Association for International Understanding, introduced us to leaders at every point-in Beijing and other cities and in the provinces. We were able to visit Beijing, Tianjin, Shanghai, Hagnzhou and Guangzhou. I then had the opportunity as an individual and as an Australian Liberal senator to make an extended visit to Kunming and Dali in Yunnan, Chengtu and Chongqing in Sichuan, and Nanjing. It is certainly exceptional to have the opportunity to visit an important country like China for one month and I am grateful to my Senate colleagues for the leave granted to me. This was my third visit to China in the last three years and on each occasion I have had the benefit of parliamentary overseas travel allowance. In 1985 with my wife, I travelled to a dozen centres in China for a month. In 1986, as deputy leader of the Joint Parliamentary Foreign Affairs and Defence Committee delegation to China, hosted by the National People's Congress, I visited China for one week. In this recent visit I was able to build on the earlier visits. In the 15 minutes that are available to me, I can refer only to part of the longer speech I would have liked to have made. The Australia-Chinese relationship from 1973 to 1987 has been 15 years of constructive development. The Fraser Government built on the foundations of the Whitlam Government, and the present Hawke Government is building on the constructive developments that took place under Fraser. We have a bipartisan relationship with China and I wish that to continue for a long time. We need to be aware, critical and frank in ensuring that we have only the best and most refined foundations for the many aspects of our relationship. I continue to be struck by the special quality of China's regard for Australia. We are a small country of 16 million people; China has more than a billion. Australia has a short history of 200 years; China has a vast history of several millenniums. Yet, because of the open door, modernisation, approach of China and our ability in the field of advanced technology, our educational experience and a number of other qualities, it seems that a special relationship has grown between China and Australia. Australia does not offend by having been a major imperial country in the last century. It is not disadvantaged by having been entangled politically in recent times. I believe that this special quality in the Australia-China relationship is unique and we have a great opportunity to work together, to the mutual advantage of our two countries. In terms of Australia-China trade, in 1986 Australian exports to China totalled $1,587m and imports from China totalled $500m. This 3 : 1 trade balance runs in Australia's favour and I know that the Chinese are keen that we take up more imports from China. But there is no limit to the exports that we can send to China. So China has displaced New Zealand as Australia's third largest market. After Japan and the United States of America, China is the most important trading country for Australia. In 1986 Australia's principal exports to China were wheat, 29 per cent; wool, 21 per cent; iron ore, 13 per cent; and aluminium products, 7 per cent. Wheat exports in 1986 increased by 88 per cent on the previous year, wool increased by 16 per cent and iron ore by 18 per cent. China's principal exports to Australia were clothing, textiles and cotton fabric. The last decade has abundantly demonstrated China's rejection of the Cultural Revolution period which is universally known as the `Ten lost years'. My first visit to China was in January and February 1968 as the leader of a National Union of Australian University Students delegation to China. We were the last Western group to visit China during the Cultural Revolution and before the doors were completely closed for some years to foreign visits. Therefore, I had a responsibility, especially in the years immediately after that, to continue to think about developments in China. Certainly, my own assessment of my first visit to China accords rather closely with the title `Ten lost years' and my own articles run somewhat parallel with the current views of the Deng Xiaoping-Zhao Ziyang Government's assessment of the leftists' dominance in China at that time. It was an economic disaster for China; it was a social disaster for China; it was the result of a giant political mistake. As is well known, the schools and universities were closed for a considerable period and there was no contact with the outside world for several years. Most high officials were dismissed from party positions and went to work in the countryside. Most of those leaders have now been reinstated, as has been demonstrated in the case of China's senior leader, Deng Xiaoping. We need to be alert to the potential for some minor leftist reassertion in the coming years. Not everything is smooth in political developments in any country, but I am convinced that there will be no repetition of the disastrous Cultural Revolution period. China is overwhelmingly not an arrogant country. It is a country that does not have a world power aura about it. It does not seek to assert itself, as the United Kingdom had in the earlier part of this century or as the United States and the Soviet Union do now. China has an enormous potential to become a world power. But it has suffered in six ways: foreign exploitation flowing from the opium wars of the 1840s; feudalism; the incursions of the war lords following the early failure of the new republic after 1911; Japan's invasion in north China and China generally from 1937 and then through the World War II years; the civil war that continued to consume China in the 1945-1949 period; and, finally, the self-inflicted 10 lost years of the Cultural Revolution. The end result of those 150 years is that the world is not alert to the present potential for the emergence of China. I do not believe it is sufficiently aware of the humanity, the sensibleness and the consolation of suffering which is evident in China's domestic and international policies. I believe that China represents a huge human resource, and I place the emphasis on `human'. Its international policy again and again has the touchstone of non-arrogance, of a country emerging from a century and a half of suffering. In Australia we should think about not only the current year or the next five years, but the next 50 years, and see what historical precedents there are over recent centuries for the emergence of a country with so vast a human resource to escape the 150 years of suffering that I have outlined. The emergence of China, in partnership with Australia and the other Pacific rim countries such as Japan, Korea, Malaysia, Singapore, Canada and the United States, will ensure that the pacific will become the economic centre of gravity for this world in the twenty-first century. I believe that the future lies more and more with an increased Chinese influence in our region, and that region is this important area of the Pacific. The turning point in China came after Mao Tse-tung's death in September 1976. In October 1976 the Gang of Four were arrested and Deng Xiaoping was restored to his former posts. The Senate will be aware that he was, as early as the 1930s, General Secretary of the Party. He has made as large a contribution towards China's development over the last 50 years as did Mao Tse-tung, Chou En-lai and a number of other leaders. His resumption of his post in 1977 led on to, if you like, getting the numbers. The turning point was at the third plenary session of the eleventh party congress in December 1978. From December 1978-I note that this was a few months after my own election to this Senate-China concentrated all of its efforts on modernisation. There has been no turning back for these past nine years. The thirteenth party congress, which was held in Beijing the week before the Liberal Party delegation went to China, further consolidated that line of an open-door policy, an orientation to market economics and a complete resolve towards modernisation. The Central Committee elected by the congress met for the first time on Monday, 2 November, the day before our delegation arrived in Beijing. The highlights are well known. Zhao Ziyang was given a pre-eminent leadership position as General Secretary of the Party and as First Vice-Chairman of the Military Commission of the Party's Central Committee. He is aged 68 and has worked in the core leadership group for the last seven years. His experience in the transformation of Sichuan early in the last nine years and his leadership nationally have been the platform from which he has emerged as the successor to Deng Xiaoping, China's senior leader. The standing committee of the Political Bureau, also elected on that occasion, has five important leaders, all of whom are committed to the policy line that I have outlined. The fourth position happens to be filled by Hu Qili, a person whom, with my Foreign Affairs and Defence colleagues, I was able to meet a year ago. We engaged in our conversations in Beijing most happily, refreshingly and intelligently. I certainly wish the leadership of China every success in achieving the goals of modernisation of China. One other important aspect of the thirteenth party congress was the addressing of some theoretical issues and the reference to China being in the primary stage of socialism. I observe that addressing the theoretical basis of the party is an important and essential aspect that will give coherence to the achievement of consolidation and stability in the policy line that China has set for itself. I observe that Hu Qili has been given the pre-eminent responsibility for taking these theoretical issues in an education campaign to every area of China. I am an Australian Liberal; I am not a Marxist. I believe that the Marxist analysis is flawed; it was last century and it is this century. However, the gaining of national sovereignty and the modernisation of China has been undertaken by a Marxist party. I can only recognise that that party is now enormously flexible, pragmatic and objective in determining the best way forward for China. There are two fundamentals in China to which I will refer when I speak on the adjournment later on this evening. The ACTING DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Motion (by Senator Richardson) agreed to: (1) That discussion of matters of public interest be not further proceeded with this day. (2) That intervening Government Business be postponed till after consideration of Government Business, Orders of the Day Nos 9 (Australian National Airlines Amendment Bill 1987), 18 (Advance to the Minister for Finance 1986-87) and 16 (Statute Law (Miscellaneous Provisions) Bill 1987). (3) That this Order have effect till 2 p.m. this day. Debate resumed from 19 November, on motion by Senator Gareth Evans: That the Bill be now read a second time. Senator PARER(Queensland)(1.07) —I rise to speak on behalf of the Opposition to the Australian National Airlines Amendment Bill 1987. The Opposition does not oppose this legislation. However, I move the following amendment: At the end of the motion, add: ``, but the Senate condemns the Government for: (a) placing Australian Airlines at a $4.9 million per year competitive disadvantage with its major competitor, Ansett Airlines; and (b) failing to defer this measure until the Advisory Group on Australian Airlines has reported to the Government in March, 1988, on Australian Airlines' future capital requirements, especially considering that the Advisory Group's Terms of Reference include a specific reference to superannuation. The main effect of this Bill will be to burden Australian Airlines with an additional yearly bill of at least $4.9m. The legislation will force Australian Airlines to pay back $4.9m to the Commonwealth for the 900 employees who opted to remain in the Commonwealth superannuation scheme. There will be increases in later years, depending on actuarial assessments. I think one could confidently expect that, with the fallout in the stock exchange this year, that figure of $4.9m has already increased substantially. This in itself will be a tremendous handicap for Australian Airlines and it will also provide its competitor with more competitive edge. The airline has one major problem-the lack of money. This has been alluded to by, I think, Senator Evans on a few occasions. Any money taken off Australian Airlines is money it cannot use in competing for its share of the airline market in Australia. The airline desperately needs substantial injections of capital if it is to be able to compete on the national market. It needs at least $400m over the next three years if it is going to be able to offer similar services to its competitor, Ansett Airlines of Australia. The airline has many problems and many of them, of course, stem from management problems. The only way the airline's problems are going to be solved is by some form of privatisation, and this should have been done years ago. The previous coalition Government was fully aware of this and in 1981 had legislation in place to convert Australian Airlines into a company-to incorporate it. But the legislation was repealed by the Hawke Government in 1984. Now the Hawke Government is introducing legislation geared to privatise Australian Airlines. This is another example of the multitudinous policy about-turns and back flips for which this Government has become famous. The Government is only now admitting the huge mistake it made in repealing that legislation. That mistake has cost us untold millions of dollars and it has also has the effect of keeping Australian Airlines dramatically behind its competitor in equipment and technology. The Government is playing internal politics in not deferring this measure until the Advisory Group on Australian Airlines has reported to the Government next March and is jumping the gun on its advice. The advisory group is made up of the Chairman and Commissioner of Australian Airlines, a member of the Australian Council of Trade Unions, a leading left-wing member of the Australian Labor Party and the Secretary of the Department of Transport and Communications. The choice of members of the advisory group is designed to ensure that the various interest groups who would normally object to privatisation will be locked into the Government's intention to eventually privatise the airline. The airline, as is the case now, is unable to operate efficiently under the constraints of being a statutory authority. Examples of this are well known, but to name a few: it does not have the same lending ability of an incorporated company; it does not have the same borrowing ability; and it is hampered in acting quickly and competitively in a commercial sense. For example, it needs to be flying the A320 Airbuses, but it just cannot afford to buy them. Australian Airlines is confronted with an acute financial crisis as it prepares for the new challenge of competition which will arise with the termination of the two-airline agreement in 1990. While the Government has correctly signalled the deregulation of domestic air transport, it has not followed the logic through to privatisation. This must also be done. Senator RICHARDSON(New South Wales-Minister for the Environment and the Arts)(1.12) —The $4.9m to which Senator Parer referred was, I think, taken into account in the setting of the dividend for 1986-87 that was payable in that year. So I am obviously stating that the Government opposes Senator Parer's amendment. Obviously it is the Government's intention to ensure that Australian Airlines has sufficient capital. As far as privatisation is concerned, I am sure that Senator Parer reads the papers, so he will know what the position is. The Australian Labor Party will be considering that thorny question in the coming months and, with each new and exciting episode, I am sure he will take a new and invigorated interest. I will report to him personally on its progress. Amendment negatived. Original question resolved in the affirmative. Bill read a second time, and passed through its remaining stages without amendment or debate. Consideration resumed from 24 September. Motion (by Senator Richardson) proposed: That the Committee approves the Statement, for the year 1986-87, of the Heads of Expenditure and the amounts charged thereto, pursuant to section 36a of the Audit Act 1901. Senator STONE(Queensland-Leader of the National Party of Australia)(1.15) —I wish to speak briefly to the motion which the Minister for the Environment and the Arts (Senator Richardson) has moved, not because I wish to direct particular criticism to the Government in relation to the amounts being proposed, but rather to draw attention to the importance of this particular head of expenditure. In doing so, I wish to draw attention to some interesting and, I think, significant developments in relation to this area of the Budget and to appropriations over the years. As all honourable senators are well aware, what used to be called the Advance to Treasurer, and is now called the Advance to the Minister of Finance, is a key element in the total budgetary process because, in effect, it provides the government of the day, the Executive, with a contingency provision which will allow the Executive, subject to the prospective and, certainly, post-dated nature of scrutiny of the Parliament, the authority to deal with unforeseen circumstances that may arise in the course of the financial year and which cannot be provided for in the appropriations that are brought before the Parliament in the Budget itself or, for that matter, in the Supply appropriations. Because of the very special nature of this appropriation, there was for many years a very strong view within the financial arena that these provisions should be extremely limited, and that very little leeway should be given to the Executive to undertake spending which had not been specifically provided for by the Parliament-in other words, which had not been specifically provided for within the Appropriation Bills or otherwise under special appropriations. Over the years, I have to say, that view has been somewhat eroded and, I think, in some ways that is to be regretted. I do not wish to exaggerate the importance of that development, but I think, nevertheless, it has been a development which has occurred in a very gradual way and which needs to be kept under close review. Perhaps I could mention for the information of the Committee-and I have not gone back perhaps as far as I might have done-that in 1979-80 the appropriation the Advance to the Minister for Finance under Appropriation Bill (No. 1) was $125m and under Appropriation Bill (No. 2) it was $100m. Without wearying the Committee with a recitation of the totality of the figures over the years, we now have a situation where in the Budget of this year we have an appropriation of $170m for Appropriation Bill (No. 1) and $140m for Appropriation Bill (No. 2). I seek leave to have the table of figures incorporated in Hansard. Leave granted. The table read as follow- Year Bill 1 Bill 2 Total % or Previous year's Approp $m $m $m % 1979-80 ... 125 100 225 2.1 1980-81 ... 125 100 225 2.0 1981-82 ... 125 100 225 1.8 1982-83 ... 125 +50...100 275 2.2 1983-84 ... 150 120 270 1.8 1984-85 ... 160 130 290 1.7 1985-86 ... 160 130 290 1.4 1986-87 ... 160 130 290 1.3 1987-88 ... 170 140 310 1.3 1979 Report: on Advance to the Minister for Finance and Government Regulations Committee 2.3% of previous year's appropriations was seen as appropriate benchmark Senator STONE —I thank the Committee. Equally of some significance perhaps is, of course, the experience which successive governments have had with their spending under these heads of appropriation. Generally speaking, I think with some qualifications, it is fair to say that as the size of the appropriation for the Advance to the Minister for Finance has increased, so has the use of that appropriation increased. There is no necessary connection between those two things but, in fact, as a matter of experience, that is broadly what has occurred. Again, I seek leave to incorporate a small tabulation which shows the run of figures for that. Leave granted. The table read as follows- Year Bill 1 Bill 2 $m $m 1983-84 ... 150/149.5 120/119.9 1984-85 ... 160/128.6 130/103.9 1985-86 ... 160/132.7 130/113.2 1986-87 ... 160/143.6 130/126.0 1987-88 ... 170/2 1/4 140/2 1/4 Key: approval/spend Senator STONE —I thank the Committee. I make that point and incorporate those figures because it is, I think as a matter of experience, the case that when the Executive and the departments which serve it have at their disposal an appropriation such as that to the Advance to the Minister for Finance, they are not as closely limited in the bringing forward during the course of a financial year of new spending proposals as they would otherwise be. That is so obvious as hardly to need stating. We do find, therefore, that the Advance to the Minister for Finance tends to be fairly fully utilised, whatever the size of that advance may be. The figures that I have now had incorporated will, I think, bear out that comment. Indeed, I think-I will not foreshadow remarks; I will not repeat remarks now which I will perhaps make later this afternoon when we discuss the paper that the Minister for Finance (Senator Walsh) will table on the Forward Estimates-we have a situation where, for the purpose of those Forward Estimates, the Minister is now in fact beginning to incorporate in them contingency provisions which take account of this expenditure creep, or decision-making creep, so to speak, throughout the course of the financial year and which I think needs to be kept closely under review by the Parliament. So much for that particular aspect of my remarks, Mr Chairman. I want to say one other thing. I am aware that increasingly-and this is understandable, because of the great burdens which Ministers do carry-it has been necessary to delegate to officials the authority to make decisions in relation to the use of the Advance to the Minister for Finance. For example, there are two major categories in the advance under Appropriation Bill (No. 1)-there is in fact a third, but for the purpose of these remarks I will concentrate simply on the first two under division 310. The first is to enable the Minister for Finance to make advances-I am referring to page 88 of Public Account Budget Paper No. 2-that will be recovered during the financial year in respect of expenditure that is expenditure for the ordinary annual services of the Government-that is to say, in relation to decisions that are taken, say, by the Government during the course of the year and which will later in the year be the subject of additional appropriations. For that purpose, or at least for the use of the Advance to the Minister for Finance for advances of that category, I am informed that today a first assistant secretary-no doubt the relevant first assistant secretary of the Department of Finance-has unlimited authority to approve expenditure under that category. I am also advised that, indeed, even an officer at the class 11 level of the Public Service which, while a very responsible level, of course, is nevertheless not even a position within the Senior Executive Service of the Public Service, is delegated authority to approve expenditure under this category-that is, the first category I am referring to of division 310-under this advance of up to $5m, which is not an insignificant sum. It is true that under the second category, which I will come to now, the delegations are smaller. The second category is to enable the Minister for Finance to make money available for expenditure, firstly, that the Minister is satisfied is expenditure that is urgently required and, secondly, was unforeseen until after the last day on which it was practicable to include appropriation for the expenditure in the Bill before the introduction of the Bill into the House of Representatives and, of course, particulars of which will afterwards be submitted to parliament. In relation to that more significant, in many ways I suppose, category of expenditure, the delegation to a first assistant secretary in the Department of Finance is in fact limited in the first place to $500,000 or half a million dollars. Limitations also apply further down the line of delegation. That, of course, is entirely appropriate. I want to say that in the short space perhaps of a decade or so-and it is a short space in the life of a nation-we have seen the usage of the appropriation in what, as I said, was originally the Advance to the Treasurer and is now the Advance to the Minister for Finance, move from a point at which previously, I believe I am correct in saying, no expenditure would have been approved under this head other than by the Minister, to a point where today we have delegated authority to officials-reasonably senior officials, but nevertheless, not even, as I said, Senior Executive Service Officials-of up to $5m and, of course, unlimited delegation authority for more senior officials than that. I will not delay the Committee further. I wish simply to place on record that I think this particular Advance to the Minister of Finance is of very considerable constitutional significance because it is one of the areas of the Appropriation Bills where the Parliament, with full knowledge, in effect surrenders temporarily its authority to the Executive to commit expenditure even though details of such expenditure have not been put down in detail in the Appropriation Bills. It does so of course, subject to safeguards, reporting and so on. Nevertheless, it is a delegation by the Parliament to the Executive-in this case the Minister for Finance-which needs to be kept under very close surveillance because it has a capacity to grow and to provide the Executive with a further capability for acting in a manner which could give rise to concern. It needs to be kept under constant review. Question resolved in the affirmative. Resolution reported; report adopted. Consideration resumed from 26 November. Schedule of the amendments made by the House of Representatives- No. 1-Schedule 1, clause 3, page 11, in the items relating to the Acts Interpretation Act 1901, after the item relating to proposed section 46a insert: ``Paragraph 48 (1) (b): Omit the paragraph, substitute the following paragraph: `(b) shall, subject to this section, take effect from: (i) a specified date; (ii) a specified time on a specified date; (iii) the date, or date and time, of commencement of a specified Act or a specified provision of an Act; or (iv) in any other case-the date of notification; and'.''. No. 2-Schedule 1, clause 3, page 13, in the items relating to the Audit Act 1901, after the item relating to proposed section 11a insert: ``Sections 32 and 33: Repeal the sections, substitute the following sections: Minister may make payments from Commonwealth Public Account `32.1 (1) The Minister may, subject to this section, make payments from the Commonwealth Public Account in accordance with an appropriation of the Consolidated Revenue Fund or Loan Fund. `(2) The aggregate of the amounts paid under subsection (1) in relation to an appropriation shall not exceed the amount available for expenditure in accordance with the appropriation. `(3) Where it appears to the Minister that an amount, not exceeding the amount available for expenditure in respect of any services or purposes in accordance with an appropriation of the Consolidated Revenue Fund or Loan Fund, is required, or likely to be required, to be drawn from the Commonwealth Public Account for expenditure in respect of the services or purposes, the Minister may, in writing, authorise the Secretary to the Department to draw the amount from the Commonwealth Public Account in respect of the services or purposes. `(4) A reference in this section to an appropriation includes a reference to a contingent or conditional appropriation and, in relation to such an appropriation, a reference in this section to the amount available for expenditure in accordance with the appropriation is a reference to the amount that is, subject to the occurrence of the contingency or the fulfilment of the condition, available for expenditure in accordance with the appropriation. `(5) This section does not authorise the payment of money out of a bank account comprised in the Commonwealth Public Account otherwise than in accordance with section 34. Secretary may make allocations in accordance with authorisation of Minister `33. (1) Where the Minister has, under subsection 32 (3), authorised the Secretary to the Department to draw an amount from the Commonwealth Public Account in respect of any services or purposes, the Secretary to the Department may draw the amount from the Commonwealth Public Account and make allocations from the amount in respect of the services or purposes. `(2) Money or a payment that is, under section 36c or 58a, taken in reduction of expenditure from an appropriation to which an authorisation under subsection 32 (3) relates shall, for the purposes of subsection (1) of this section, also be taken to be an amount allocated to the authority of the authorisation. `(3) Where a payment is made out of a bank account comprised in the Commonwealth Public Account, the bank is not required to ascertain whether the payment was made on the authority of an authorisation under subsection 32 (3)'.''. No. 3-Schedule 1, clause 3, page 14, in the items relating to the Audit Act 1901, after the item relating to section 48h insert: ``Subsection 49 (1): Omit `Form 4 in the Schedule 2', substitute `the form in the Schedule'.''. No. 4-Schedule 1, clause 3, page 14, in the items relating to the Audit Act 1901, after the item relating to paragraph 49 (1) (a) insert: ``Subsection 49 (2): Omit `Form 4 in the Schedule 2', substitute `the form in the Schedule'.''. No. 5-Schedule 1, clause 3, page 14, in the items relating to the Audit Act 1901, after the item relating to section 54 insert: ``Subsection 57 (2): Omit the subsection.''. No. 6-Schedule 1, clause 3, page 16, in the items relating to the Audit Act 1901, after the item relating to proposed subsection 72 (5a) insert: ``Heading to Schedules: Omit the heading. Heading to Schedule 2: Omit the heading, substitute `SCHEDULE'. Forms 1, 2 and 3 in Schedule 2: Omit the forms. Heading to form 4 in Schedule 2: Omit `FORM 4'.''. No. 7-Schedule 1, clause 3, page 64, proposed subsection 12a (1) to be inserted in the National Measurement Act 1960, omit ``, and, if it does not, is void''. No. 8-Schedule 1, clause 3, page 65, proposed subsections 12a (3) to (6) (inclusive) to be inserted in the National Measurement Act 1960, omit the proposed subsections, substitute the following subsections: ``(3) Where a contract, dealing or other transaction in relation to which an additional unit of measurement is applicable under regulations made for the purposes of subsection 7 (3) refers to that additional unit of measurement, then, notwithstanding subsection 7 (2) and subsection (1) of this section, the contract, dealing or other transaction does not contravene subsection (1) merely because it refers exclusively to that additional unit of measurement. ``(4) Notwithstanding subsection 7 (2) and subsection (1) of this section, a contract, dealing or other transaction made or entered into with respect to an interest in land does not contravene subsection (1) merely because it refers to units of measurement other than Australian legal units of measurement if: (a) in the case of land that is registered under a law of a State or Territory relating to the registration of interests in land-the folium of the register in which interests in the land are registered, or the duplicate certificate of title for the land, is expressed in, or contains or refers to a plan expressed in, units of measurement other than Australian legal units of measurement (whether or not also expressed in Australian legal units of measurement); or (b) in any other case-all the muniments of title for the land are expressed in, or contain or refer to a plan expressed in, units of measurement other than Australian legal units of measurement (whether or not some of the muniments of titles are also expressed in, or contain or refer to a plan that is also expressed in, Australian legal units of measurement). ``(5) Nothing in this section shall be taken to affect the validity of a contract, dealing or other transaction, or any interest derived under a contract, dealing or other transaction, merely because the contract, dealing or other transaction contravenes subsection (1). ``(6) A person who makes or enters into a contract, dealing or other transaction that contravenes subsection (1) is guilty of an offence punishable on conviction by a fine not exceeding $500.''. Senator RICHARDSON(New South Wales-Minister for the Environment and the Arts (1.28) —I table supplementary explanatory memorandum No. 3. I move: That the amendments made by the House of Representatives be agreed to. Senator PUPLICK(New South Wales)(1.29) —The Statute Law (Miscellaneous Provisions) Bill 1987 has previously been dealt with by the chamber. As is usual with these miscellaneous provisions Bills, the opportunity has been taken to tidy up a number of pieces of legislation. In fact, 87 Acts have been amended and 24 repealed. In the course of that debate, the Opposition was successful in securing the deletion from the principal Act of the amendments which related to the Acts Interpretation Act and the Audit Act. These were subsequently referred to committees for investigation and report. The Government having had the benefit of that investigation and report, amendments were subsequently moved in the House of Representatives and these amendments are the amendments which are now before the chamber and which the Opposition does not oppose. As I say, amendments have been made in respect of the Acts Interpretation Act and the Audit Act. An opportunity has been taken to make certain minor amendments under the National Measurement Act to require the use of metric units of measurement in real estate transaction-a weighty matter which, from recollection, must have taken 21 or 22 years to get around to. Nevertheless, the principal House of Representatives amendments relate to the Acts Interpretation Act and to the Audit Act. The amendments to the Acts Interpretation Act seek to allow for more flexibility in the commencement of regulations. This matter was considered by the Senate Standing Committee on Regulations and Ordinances. The Committee recommended certain changes which the Government has accepted. The Committee supports the changes that the Government has made. I turn to the Audit Act. I know that my colleague Senator Watson wishes to address some remarks to an underlying principle in relation to the way in which the Government is generally dealing with the oversight and scrutiny of the expenditure and examination of the Government's financial transactions in terms of both the scrutiny being imposed by the Auditor-General and the scrutiny being imposed by the Joint Committee of Public Accounts. The indication was given in the second reading speech of the Minister for Justice (Senator Tate) that amendments to the Audit Act were deleted when this Bill was first before the Senate. The Senate Standing Committee on Finance and Public Administration has examined these amendments and reported favourably upon them. The Minister claims that the base gain of the amendments is to improve the efficiency of the Commonwealth's financial administration. As I say, Senator Watson will be addressing some remarks to this matter. The Committee has before it the House of Representatives amendments and, as I have said, the Opposition does not oppose them. Senator WATSON(Tasmania)(1.32) —The Committee has before it for consideration a number of amendments which have been agreed to by the House of Representatives. I want to take this opportunity to issue something of a warning. I think it was most unfortunate that the Government used the Statute Law (Miscellaneous Provisions) Bill 1987 as a vehicle to introduce some pretty substantial changes in relation to audit. Because these changes are very significant, a much cleaner and more open approach should have been adopted and a separate Bill introduced. I also take some umbrage in relation to an explanatory memorandum which was issued by the Attorney-General, Mr Lionel Bowen. I wish to remind the Committee of the importance and particularly the independence of the office of Auditor-General which is fundamental to the Westminster system. In this explanatory memorandum the Attorney-General, Mr Lionel Bowen, said: The involvement of the Auditor-General in the issuing of appropriate amounts, which is, essentially an administrative process by the Executive Government, is also inappropriate and contrary to modern concepts of the independence of the Auditor-General. I take exception to that because quite the opposite is the case. In fact, I take a very dim view of any changes in the role and functions of the Auditor-General and the Australian Audit Office, especially when they are dressed up in such terminology as `inappropriate' in the modern bureaucratic language. I even become more suspicious when the Government infers that it is a hindrance to the executive government to have the independent statutory office of the Auditor-General involved in this way. In my involvement as Deputy Chairman of the Joint Committee of Public Accounts, I am becoming extremely concerned at the number of government agencies and authorities that are writing letters to us and saying, `Our investigations are causing a hindrance to our operations'. Really, this smacks at the very heart of the parliamentary control over expenditure. Here we are allowing another situation, albeit a very small one, dressed up in language such as `inappropriate'. As I said, the inference is that this is a hindrance to executive government. This is another manifestation of the fact that the Government is getting a little bit sick and tired of any sort of scrutiny of its financial dealings and is using all sorts of pressures. I believe that this really is another small example of the Auditor-General's independence being undermined, especially in regard to his relationship with the Executive. The functional independence of the Auditor-General, in fact, has been a matter of debate for some years now. That debate seems to have accelerated in the last six months. I acknowledge that the Auditor-General has canvassed this issue in successive reports. On 4 October 1984, the then Auditor-General, Mr Brigden, suggested that it was: timely to question whether the independence of the Auditor-General and the Australian Audit Office from the executive arm of government is not more apparent than real. That is a very strident criticism. Yet this Government, I believe, has given scant recognition to the subtlety of the problem, choosing instead to answer rigidly, as Senator Walsh did recently in an answer to my colleague Senator Stone, who is in the chamber at the moment. He responded to Senator Stone in the following terms: Every publicly funded agency or department or unit, including the Parliament, will have its appropriations set by the executive government. I wish to emphasise that the point this Auditor-General was actually at pains to make in his annual report seems to have eluded the Minister for Finance (Senator Walsh) and the Government. I believe it is possible to recognise the need to endow the Auditor-General with functional independence while simultaneously exerting indirect influence on the independence of the Australian Audit Office through pressure on resources. Nevertheless, this pressure on resources of the Australian Audit Office by the Executive has the potential to be damaging to the traditional relationship that has existed between the Department of Finance and the Auditor-General. The current Auditor-General, Mr Monaghan, said: The practicality seems to be that . . . the pressure on the Department of Finance to achieve expenditure savings have ended the modus vivendi that I formerly perceived. Perhaps I could translate the Latin into modern terminology. The Government's insistence on trying to achieve all forms of savings using the Department of Finance has changed the relationship that the Auditor-General previously enjoyed. That is a very serious indictment. I acknowledge that a number of other countries have already moved to try to overcome this problem. I urge this Government to act in a similar way to which other enlightened governments are moving rather than taking this stringent position. For example, in the United Kingdom, the parliamentary body, the Public Accounts Committee, recommends the level of funding for the National Audit Office. This is one avenue open to us. Those who have read the Auditor-General's report would realise, however, that Australian conditions may be better suited to an alternative arrangement where a parliamentary committee would review funding for the Australian Audit Office. Whatever happens, I think we have to acknowledge this Government is making attacks on the resources of the Australian Audit Office. It is attacking the Auditor-General's independence. By allowing this amendment to go through, we are giving greater power to the Executive and hindering the wide operations of the Australian Audit Office. I believe that this Parliament should take up claims that the office is a hindrance to the executive government. The independent statutory office of Auditor-General should not be involved in this way. This is a serious issue. I reiterate my earlier comment that, in future, I think this Opposition will have to reject certain statute law miscellaneous provisions Bills where they contain substantive amendments such as the ones that are now before us in respect of the Australian Audit Office. I think in future we should not be part of that because it is an abrogation of the generally accepted principle that only minor changes of largely a technical nature should be included in this sort of legislation. In future I think the Opposition will be insisting that there be a separate Bill dealing with such important issues. Question resolved in the affirmative. Resolution reported; report adopted. Sitting suspended from 1.41 to 2 p.m. Senator BJELKE-PETERSEN —My question is directed to the Leader of the Government in the Senate and concerns this Government's discrimination over the direction of the allocation of financial assistance to industry in Australia. Is the Minister aware that the livestock industry contributes $95m each week and $4.9 billion each year to the Australian economy? Is the Minister aware also that this industry has recently committed more than $30m of industry funds towards residue testing of cattle? Given this Government's contribution of $500m to the steel industry, $300m to the motor vehicle industry, and $40m to the coal industry to prop up the New South Wales Government at the forthcoming election, will the Minister inform the House why the Government has chosen to discriminate against the livestock industry by imposing a retrospective levy of 15c per head for additional testing under the national residue survey, the direction of which has not been fully discussed with industry? Senator Boswell —Why do you hate farmers? Senator BUTTON —If I might deal with Senator Boswell's interjection first, I certainly do not hate farmers; I like them. It is just a pity that they do not have better representatives in this place than they have. That is the tragedy for farmers in this country. Senator Chaney —Don't you people over there represent farmers? Is that what you are saying? Senator BUTTON —No, I am not saying that at all. I am just saying that it is a pity that they do not have better representatives than they have. Senator Boswell claims to represent them. Senator Chaney —An interesting slip: the Labor Party does not represent farmers. Senator BUTTON —We are doing all right; do not worry about that. I am not able to agree or disagree with the various figures that Senator Bjelke-Petersen put to me in her question, except those that relate to my portfolio. I shall certainly make some inquiries to ascertain whether those figures are correct and obtain a more detailed answer to her question. If the figures mentioned by the honourable senator for rural industries are as inaccurate as the ones she mentioned for manufacturing industry, I think we will need to do a little work and it might take a while to get an answer to her question. This Government has not allocated $500m to the steel industry. It has not spent $300m on the motor vehicle industry. According to my recollection, this Government has not spent $40m on the coal industry. Insofar as those matters of detail can be checked, I will certainly do that. However, that is the position with regard to the figures the honourable senator mentioned. I shall make some further inquiries of the Minister for Primary Industries and Energy, to whose representative in this place the honourable senator's question might more appropriately have been directed. However, I shall certainly ensure that the honourable senator obtains an answer to her question. Senator McKIERNAN —My question is directed to the Minister representing the Treasurer. Is the Minister aware of publicity which the Press has accorded to Tuesday's Caucus decision on the proposed clampdown by the member for Canning, Mr George Gear, on taxpayers claiming rebates for their attendance at Australian conferences which are held overseas? Is the Minister aware that it has been alleged that many of these conferences are used by many to avail themselves of an overseas holiday which is subsidised by the Australian taxpayer? Will the Minister indicate whether the tax changes proposed by Mr Gear are receiving widespread community support? Senator Stone —Perhaps he can also tell us what he told Caucus about the superannuation provisions. Senator WALSH —I did indeed see on the front page of the Australian Financial Review an article dealing with George Gear's motion. Only the week before, I think it was, I saw an article about George Gear on the front page of the Sydney Morning Herald. It must be a long time since a backbencher from Western Australia had articles written about him on the front pages of those two newspapers in the one month. I think that report also mentioned that the move had the support of both the Treasurer and me and, I expect, every member of the Caucus. Indeed, I think the motion was carried unanimously. That is what one would expect from the Australian Labor Party-that it would show unanimous opposition to any form of tax evasion or tax avoidance. Indeed, that principle has been applied in government. It is too early to judge what effect this move will have on revenue, although some people believe it will be very substantial. I think it will have widespread community support outside the Labor Party, with a couple of exceptions: Dr Bruce Shepherd's faction of the doctors' union, for example, will probably oppose it, and I expect the Federal Opposition also will oppose it. I do not know whether that was the tenor of Senator Stone's earlier interjection as I was about to answer the question, but it certainly would not surprise me if the Federal Opposition opposed this move. The Federal Opposition is still in favour of taxpayer subsidised boozy lunches, tax deductible Mercedes motor vehicles, the payment of pensions to millionaires, and so on. At the same time the mountebanks who are in favour of all these rorts and lurks talk about fiscal responsibility and cutting government expenditure. Senator BISHOP —My question is directed to the Minister representing the Minister for Aboriginal Affairs. Is the Minister aware that the Elliot-Newcastle Waters Aborigines Progress and Housing Association Inc. of Elliot in the Northern Territory, which for some time has been extended credit by suppliers on the basis that recompense is made when the Association receives its periodical funding from the Department of Aboriginal Affairs, has had that government funding withdrawn, leaving outstanding debts of more than $200,000? Is the Minister further aware that creditors have been told that the assets of the Association cannot be sequestrated because they were purchased with government funds and as such are proscribed assets? Will the Minister take steps to ensure that the creditors who extended credit in good faith will be paid? Senator TATE —I have no information on that matter raised by Senator Bishop in her question. Senator Hill —That is very disappointing. Senator TATE —No notice was given of the question and, as the Senate will understand, the question relates to the apparent collapse of a particular association which has been funded with Commonwealth moneys and which has left substantial debts. Its creditors are obviously distressed because they cannot regain any moneys owed by the Association. I shall take the matter up with the Minister for Aboriginal Affairs and ensure that an answer is provided as speedily as possible. Senator BISHOP —I ask a supplementary question. If, when the Minister refers the matter to the Minister for Aboriginal Affairs, the answer is in the negative, that is, that the Association's debts will not be paid, will the Minister then take steps to inform members of the business community of the consequences they face if they issue credit facilities to organisations whose assets can be proscribed? Senator TATE —I undertake to ascertain whether any general principle can be gleaned from the particular instance that Senator Bishop has brought to the attention of the Senate and whether it warrants the sort of response that she suggests. Senator COLLINS —My question is directed to the Minister for the Environment and the Arts. Following the inscription of Ayers Rock (Uluru) National Park on to the World Heritage List yesterday, further cementing Senator Richardson's standing as the most outstandingly successful Minister for the Environment since Federation and in the history of the world as we know it, has the Minister received information from Paris as to whether stage 2 of Kakadu National Park has now also been placed on the List and whether the World Heritage Committee had been pressured not to inscribe stage 2? Senator RICHARDSON —I thank Senator Collins for his careful and accurate observations. Following the inscription of Uluru National Park on to the Register of the World Heritage List, it has now been announced that as of last night stage 2 of Kakadu National Park has also been inscribed. I think that is great news, not just for the environmental movement around the country but also for almost all Australians, and certainly for the traditional owners in Kakadu who have been so supportive of the listing for such a long time. Stage 2 comprises the catchment of the Wildman and West Alligator Rivers and also the downstream section of the South Alligator Rivers. It is, of course, outstanding in its own right and it is an area of magnificent Australian national heritage. It covers an area of approximately 13,000 square kilometres, so it is a huge tract of land. I think it is, undoubtedly, the most famous part of the country. It is extraordinary, therefore, that the decision made last night to inscribe it on the World Heritage List should have been opposed by the Northern Territory Government. It is extraordinary that the World Heritage Committee should be faced with the spectacle of a cowboy politician from the Northern Territory spreading misinformation on what can be described as little more than a crude junket or just another trip. The eminent members of that Committee must have found his antics and misinformation a little more than they could handle. I think the most important thing to note for the future is that the Committee once again commended the Australian Government for its initiative and for the work that it had done. It also commended us for taking measures to stop mining in the park. It has, I might say, encouraged the Government to include more of Stage 3 on the World Heritage List at some future time. That matter will be considered by the Government over the coming months and years. Senator SHORT —My question is directed to the Minister for Home Affairs. The Minister will recall that last year the honourable member for Moreton, Mr Donald Cameron, requested details from all Government Ministers of all overseas trips made during 1984-85 by the employees of their respective departments and all statutory authorities. Can the Minister advise the Senate whether the information provided by the then responsible Minister in relation to overseas trips made by officers of the Australian Electoral Commission was complete and accurate? Senator ROBERT RAY —I am a bit miffed that Senator Short did not give the obligatory praise to a Minister before he asked the question. Senator Short —Next time. Senator ROBERT RAY —Yes, next time. The conclusion that Senator Short draws in his question is accurate. The information given in answer to a question on notice has, on further examination, been proved to be inaccurate. We are talking about the very early life of the Australian Electoral Commission when two of its officers visited New Zealand to coincide with the holding of the 1984 New Zealand election. This study visit was intended to check features of the New Zealand electoral organisation for the benefit of the new Electoral Commission being established here. The understanding of the Commission officers was that, under Public Service conventions, the visits by Australian Public Service personnel to Papua New Guinea and New Zealand were not regarded as overseas travel-certainly not in the same terms as visits to the United States of America, Europe, et cetera. Of course, for a person based on the east coast of Australia this may be understandable in terms of distance. The bill for the study visit for the two officers, incidentally, came to $3,222. However, I agree that those two trips, under any sort of criteria, should have been listed in that particular response. The conclusion that I draw from their omission is that I believe the officers are being truthful when they say that they misunderstood the terms of overseas travel. I suggest that if I were an official of the Public Service I would hardly try to cheat on this matter and then end up in Dunedin or Christchurch. That is not really the sort of junket that I would look forward to. Senator GIETZELT —I refer the Minister for Finance to comments made by Mr Howard on an Australian Broadcasting Corporation (ABC) program this morning that the Government is imitating Mr Howard's proposals in the economic area. Can the Minister tell the Senate in what areas the Government is imitating Mr Howard's proposals? Senator WALSH —I did hear Mr Howard on the ABC this morning claiming that the Government was imitating him. No matter how hard I try, I cannot think of any example that confirms that but I can think of a huge number that show that we are certainly not imitating Mr Howard. For example, the Government is not running a wages policy, as Mr Howard did in 1981-82, that produced a wages explosion of 13 per cent in the first year and 14 per cent in the second year. We are not running a loose fiscal policy which has 8 per cent real growth built into the first year of the Forward Estimates or 6 per cent real growth built into the Forward Estimates, as Mr Howard ran for the last two years when he was Treasurer. We are not grovelling before the former Premier of Queensland. We do not make $1,500m worth of arithmetic mistakes when presenting a Budget. We are not presiding over 11 1/2 per cent inflation, as Mr Howard did, and 10 1/2 per cent unemployment. We do not intend to bring back the free boozy lunch or the tax deductible Mercedes or to pay pensions to millionaires, as Mr Howard would have us do. There are no mountebanks on the Government side who would seduce the people into believing-if they could-that living standards can be immediately improved with a mixture of voodoo supply-side economics and tax cuts which would deliver instant increases in living standards for all. In other words, far from imitating Mr Howard, this Government is doing all the things that Mr Howard said he would not do and we are not doing all the things that Mr Howard said he would do. In short, we are running a responsible fiscal policy. It has taken us five years to clean up the mess that John Howard left behind on the expenditure side of the Budget. We have done that. It took us a bit less than five years to clean up the taxation side of the Budget. We did that last year. Senator McLEAN —My question is directed to the Minister Assisting the Minister for Community Services and Health. Given the public concern regarding the use of 2,4,5-T and 2,4-D, what efforts has the Federal Government made to encourage State governments to adopt uniform measures designed to control the use of these chemicals? Further, has the Federal Government considered or will it consider banning the importation of 2,4,5-T and 2,4-D into Australia? Senator RYAN —Senator McLean did pay my office the courtesy of giving notice of his question. We are seeking information from the office of the Minister for Community Services and Health. It is not yet available, but I will make it available to Senator McLean as soon as I receive it. Senator COONEY —My question is addressed to the Minister for Justice. I refer him to the answer he gave me on Tuesday, 24 November 1987, in which he explained that people convicted of Commonwealth crimes and given custodial sentences were imprisoned in institutions controlled by the States or the Northern Territory. Given the Commonwealth's use of those gaols, does the Commonwealth take note of what deaths take place in them? If so, can he provide statistics of the number of deaths that have occurred in the gaols of each of the States and the Northern Territory? Can he state in respect of each jurisdiction the numbers of deaths resulting from suicides, murders, accidents and natural causes? Senator Hill —This will be pretty good without notice. Senator TATE —Senator Cooney did do me the courtesy of letting me know that I might be answering a question along these lines. Unfortunately, I am not able to give the comprehensive answers for which he is looking, but I can go some of the way. His first question was: Given the Commonwealth's use of gaols in State and Northern Territory jurisdictions for Commonwealth prisoners, does the Commonwealth take note of the deaths that take place in those gaols? The answer is that the Commonwealth does not keep a comprehensive running record of deaths taking place in gaols in those various jurisdictions. However, in 1984, at the request of the Conference of Correctional Ministers, the Australian Institute of Criminology carried out a survey of deaths in prisons. The period surveyed, once it was undertaken, was 1980 to 1985 inclusive. The results, published by the Australian Institute of Criminology in 1986, were entitled A National Study of Deaths in Australian Prisons, over the name of Messrs Hatty and Walker. That is available under that title. The second question was: Can the Minister provide now or at a later date statistics of the number of deaths that have occurred in the gaols of each of the States and the Northern Territory? When Senator Cooney reads the documentation he will note that table 1, page 13 of that survey gives details of the number of all deaths in prisons for the period 1980 to 1985 by State and Territory and the rate per 1,000 prisoners per year, and the number of suicides during the same period and the rate per 1,000 prisoners per year. I can table a copy of that. Table 2, page 14 of that survey provides details of all deaths and suicides and the sex of each prisoner concerned, and I can table that also. Senator Cooney also asked whether I could state, in respect of each jurisdiction, the number of deaths resulting from suicides, the number from murders, the number from accidents and the number from natural causes. Senator Cooney will find that on table 3, page 15 of the survey there is provided details of all deaths-the numbers and percentages by mode of death, jurisdiction and sex. I table the various documents. Senator HAMER —Is the Minister representing the Minister for Industrial Relations aware of the closure tomorrow of a shipping terminal in Rozelle, Sydney, as a result of inefficient work practices, mainly by members of the Waterside Workers Federation of Australia? Does the Minister agree that the productivity rate of between four and five containers a day is not only appalling in comparison with 10 to 12 in Melbourne, but even more appalling in comparison with terminals in other countries which have a productivity rate at least double that of the best terminal in Australia? Does the Minister consider that members of the Waterside Workers Federation from the Rozelle terminal who are to be returned to the waterside labour pool are entitled to any part of the productivity-related wage rise which is being negotiated at present for the members of this union, considering that their productivity rate has caused the closure of the terminal and the loss of jobs for other workers? Senator BUTTON —I am not aware of the closure to which Senator Hamer refers, but let me say that these things are likely to happen if the productivity performance of a company is as bad as he describes. However, I am not in the position of apportioning moral blame on the basis of ignorance. Productivity is an issue which in part relates to the labour force and in part relates to management. It is impossible to make assessments on the broad brush basis that the honourable senator does, which apportions moral blame in the way in which he would like to. I know companies in this country which had an appalling productivity record in 1981, for example, and which have a very high level of productivity now. That change has been accomplished largely by management direction and initiative, in terms of both investment and industrial relations policy and a wide range of issues which I believe are the responsibility of good managers. It is said that Australian companies often look to Japan as a model of productivity. That productivity has not been attained simply by a particular Japanese version of the work ethic; it has been attained by a variety of factors, and prominent and foremost amongst those factors would be good and innovative management. I will certainly try to find out about the Rozelle terminal and see what the Minister's views are about it. Perhaps it was doomed anyway; I do not know. Senator BEAHAN —My question is addressed to the Minister for Finance. I refer to chart 1 on page 6 of the Forward Estimates. Can the Minister provide any additional information to assist in interpretation of the chart, in particular information relevant to the Government's efforts to control the growth in outlays and to changes in the patterns of those outlays? Senator WALSH —I can supply some more information. I understand that for technical reasons Hansard cannot print graphs. It is a pity because, if that were not the case, I would seek leave to have this graph incorporated in Hansard, because it tells us more about the fiscal responsibility of this Government as compared to its predecessor than many pages of text or narrative could do. It shows at various periods over the last six years the immediate outlook, that is, the outlook in the next financial year, for government expenditure, on the basis of no changes to policy. It commences with the 1981 Budget and depicts graphically the expenditure on a no policy change basis for the next three years. It shows that, had there been no change to policy in 1981, outlays in real terms would have gone up by 6 per cent-that is, a 6 per cent real increase in government spending. When the 1982 Budget came down, government expenditure got even more out of control. Had there been no policy changes following the 1982 Budget, government expenditure in real terms would have gone up by 8 per cent. Not only was John Howard presiding over runaway growth in government expenditure in his last couple of years as Treasurer, but it was actually getting worse. The 6 per cent real growth rate in his 1981 Budget was superseded by an 8 per cent real growth rate, on a no policy change basis, in his 1982 Budget. The succeeding lines or curves then show a not so gradual-in fact a fairly rapid-pegging back of that sort of growth pattern, until the line was almost flat at the time the 1985 Budget was prepared. Following the May statement and the 1987 Budget the outlook for government expenditure is actually for a small decline in real terms. On a no policy change basis there will be a small decline in real terms. In five years we have turned the situation right around from a runaway, completely undisciplined government spending policy, with real growth of 8 per cent built into the first year with no policy changes, down to a negative growth rate, depending on what we like to measure it against, of either 0.2 or 0.5 per cent. It has taken five years to clean up the mess that John Howard left behind him, but it has been done and the days of fiscal irresponsibility are gone from this country, until such time as that rabble that sits over there, and sits on the same side in the House of Representatives, gets back into government. John Howard has shown us, in the alternative, hypothetical Budget which he presented in the middle of this year, that he has not learnt anything, that he has not mended his ways and that, if he had half a chance, he would go right back to presiding over the sorts of policies that he presided over when he was Treasurer in the early 1980s. Senator MacGIBBON —My question is addressed to the Minister for Transport and Communications. Is it a fact that the Government has received advice, or is considering proposals, from the Department of Transport and Communications or from other sources that departmental pilots should take over coastwatch duties? If this is so, what aircraft would the Department fly? Has any consideration been given to purchasing or leasing aircraft belonging to Amann Aviation Pty Ltd? Senator GARETH EVANS —If there is any such proposal it is complete news to me. I know nothing about it. I am sure that it is a furphy. Senator SCHACHT —My question is directed to the Minister representing the Treasurer. If the Opposition provides a list of expenditure cuts for inclusion in the forthcoming economic statement, will the Government undertake to examine them? Senator WALSH —Certainly the Government will examine a list of proposed expenditure cuts if Mr Howard cares to supply one. But I am much less confident that he will, because of what he said in an interview with the Australian Broadcasting Corporation (ABC) on 26 October in reply to a question regarding a mini-Budget before Christmas. One of the reasons the Government did not produce an instant mini-Bud- get, as the ABC called it, is that we do not believe that things should be done on the run. If one tries to produce on the run complicated economic documents, arithmetic tables and all that sort of thing, one is likely to make mistakes. I would have thought that even Mr Howard might have learnt that from his experience last June when, in great haste, the Opposition put together a hypothetical alternative Budget with a $1,500m arithmetical mistake in it. The question was: If there were to be a mini-Budget before Christmas, as you're suggesting, would we need a big round of spending cuts as well? Mr Howard said: Oh, you'd need expenditure reductions as well, I would have, I assume that was implicit in my comment about a mini-Budget. The interviewer said: Well, what areas in particular would you like to see cut? Mr Howard said: Oh, I can give you a list if you want to give me another interview . . . He got another interview this morning from the ABC. He was asked, `What would be on your hit list of spending cuts, Mr Howard? The reply was, `We are not in power. I have been through this nonsense before. The idea that at every morning doorstop an Opposition Leader is supposed to produce an alternative Budget is a ludicrous way of conducting a national policy debate.' So, in a bit over six weeks, we went from, `Oh, I can give you a list if you want to give me another interview', to `It is a ludicrous idea that we should provide such a list'. In other words, Mr Howard has welshed yet again on undertakings he has given to people. If he were to develop a spine and actually put forward for consideration by the public and the Government a list of proposed expenditure cuts, certainly the Government would have a look at them. Senator CHANEY —My question is directed to the Minister for Finance and follows his previous answer. In view of the fact that the Government has indicated that it is going to have an expenditure statement in May, will he give us the Government's hit list? In particular, will he tell us whether what he has described as the two biggest contributors to spending growth-long term income security programs and welfare services-will be cut? Senator WALSH —This Government has an unprecedented record of delivering ongoing cuts in government expenditure. I have just answered a question pointing out that when John Howard was the Treasurer not only was government expenditure out of control but also it was getting more out of control the longer he remained Treasurer. Senator Chaney —Mr President, I take a point of order. The Minister is clearly debating the question. It is a simple question on what his list of expenditure cuts for May is. He is now debating his last answer, and I ask you to bring him to order. The PRESIDENT —I ask the Minister not to debate the question. Senator WALSH —The Government will deliver in May, as it always has delivered. Senator Chaney need have no fear of that. Things have changed massively in the last five years. We now have a government that delivers, instead of a government that does not deliver. I will not go into specifics. Honourable senators opposite can wait until May. However, I would like an assurance from Senator Chaney, as Leader in this chamber of that ragtag and bobtail group that is a substitute for an Opposition in this Parliament, that Government attempts to reduce expenditure will not be sabotaged in the Senate as they were yesterday. Senator CROWLEY —My question is directed to the Minister Assisting the Prime Minister for the Status of Women. I acknowledge the contribution by the Minister in the process that led to the launching by the Government today of the Women's Sports Promotion Unit and the first ever national policy for women in sport, which is a great milestone for women in sport in Australia, as well as being of considerable satisfaction to me. Can the Minister elaborate on how the Women's Sports Promotion Unit will be staffed and what its priority program will be over the next year? Senator RYAN —I am very pleased that Senator Crowley's question has drawn attention to the launching this morning by Mr Brown, ably assisted by Senator Crowley, of the Women's Sports Promotion Unit and the first national policy and plan for women in sport by the Australian Sports Commission (ASC). It is a very sound document and I commend it to the Senate and to all those who are interested in seeing women get better access to sports facilities and getting the achievements of our many outstanding women athletes better recognised in the media and the community. The establishment of the Women's Sports Promotion Unit will be welcomed not only by most honourable senators but also by sportswomen throughout Australia, by competitive women athletes and by the hundreds and thousands of women who are not outstanding athletes but who are involved in sport for recreational purposes-the netball players, the bowlers and so forth. I do not know whether the Senate is aware of the extent to which Australian women participate in sport, but they certainly participate to a very large extent. As a part of our overall commitment to better health for all Australians by the year 2000 the women's Sports Promotion Unit has a very important role to play. Senator Puplick —Do they all get their surfboards free to go with it? Senator RYAN —All women who are involved in sport, including surfing, will be very pleased to see that the Government is advancing the possibility of women's participation in sport. The Women's Sports Promotion Unit will have a budget of $50,000 for the forthcoming financial year. It will be chaired by Ms Margaret Pewtress, an Australian Sports Commissioner and the previous Chairman of the Australian Sports Commission's Task Force on Women's Sport. Other members include Ms Libby Darlinson, an ASC Commissioner who is an acknowledged authority on women in sport issues. There will be another co-opted member with marketing and business skills, and a media consultant will be appointed to the Unit in the near future. The Unit will draw up a program for women's sport and recognition of women's sport in the media, but because the question of getting better and fairer recognition of women's sport in the media has been crucial for women involved in sports, one of its first tasks will be to draw up a handbook for the media so that those people in the media, and there are some, who are keen to give women's sports a better go will know how to go about it. So, all in all, it is a very constructive step forward in the interests of women's sport, in the interests of equity and in the interests of the Australian community understanding what contribution our women athletes make to the outstanding sporting achievements of our nation. Senator WATSON —Mr President, I direct my question to you in your distinguished high office as President of the Senate. I draw your attention to comments made in the House of Representatives on 8 October 1987 by Mr Leo McLeay regarding the future of the President's chair. Mr McLeay said that the chair is to be left in this building when the Parliament moves into the permanent Parliament House next year. I remind the Senate that this chair was a gift of the Government of Canada to the people of Australia and symbolises the shared parliamentary heritage of Ottawa and Canberra. Can you assure the Senate that, as was the original intention, this chair will take pride of place in our new chamber on Capital Hill? The PRESIDENT —In reply to Senator Watson's question, of which he gave me notice some time ago, the functional brief for the new Parliament House which deals with the Senate chamber stated: It is possible that some of the major items of furniture in the existing Senate chamber will be transferred to the new chamber because of their historical significance. A decision on this matter has yet to be made. Items which may be transferred are the vice-regal chair . . . and the President's chair and desk. During 1985 discussions took place between my predecessor and Canadian officials about a suitable gift for the Canadian Parliament to present to the Australian Parliament in recognition of the opening of the new building. These discussions resolved that a new President's chair, fabricated in Canada, would be an eminently suitable gift. I understand that the Canadian Parliament was anxious to continue its close association with the Australian Parliament, and the gift of a President's chair was considered to achieve this aim. The necessary correspondence was exchanged between the parliaments and the offer of the gift was formally accepted by the then Presiding Officers in October 1985. The Joint Standing Committee on the New Parliament House noted the acceptance of the gift at its first meeting in 1986. The President's chair in the new chamber, which will be in sympathy with the overall design of the chamber, will be a fitting symbol of the shared parliamentary heritage between our two parliaments. The President's chair in this chamber will remain here to remind visitors in the future of the strong and continuing bond between the Canadian and Australian parliaments. Senator COATES —I ask the Minister for Transport and Communications a question. I refer to reported statements in today's Canberra Times by Mr John Dart, Chief Executive of the Australian Federation of Travel Agents, that the practice of multiple booking by passengers is artificially restricting the availability of airline seats into and out of Australia. For instance, he is quoted as saying: Qantas records show that many of their flights which are listed as overbooked are in fact leaving with 50 or 100 empty seats because of the `no show' problem caused by multi-bookings. What is the Minister's reaction to these reports? Is he able to say how much multiple booking is initiated by passengers and how much by travel agents? Can he advise on the accurate picture of current airline capacity? Senator GARETH EVANS —Senator Coates added a few bits of his own to that question which I do not think I can answer at this stage, but I will be happy to answer them in due course. What I can say at this stage is that the reported statements by Mr Dart of the Australian Federation of Travel Agents about overbookings by passengers bear out what I have been saying for some time, that claims of a capacity crisis have been overstated. It is the case that Qantas Airways Ltd has confirmed that flights are arriving with as many as 50 to 100 empty seats and that this situation is not helped by passengers making double or triple bookings because they fear they will not get a seat. Whether it is the passengers who are doing that on their own behalf, or their travel agents doing it for them, is the bit that Senator Coates threw in and the bit that I am unable to answer. I am not sure whether there is any evidence on that point. But, clearly, all the publicity about a so-called crisis is making it more difficult for airlines to deal efficiently with the great demand for travel to Australia. As I indicated earlier, Australia is not alone in facing the problem of increased demand. The latest figures from the International Air Transport Association, which have just come to hand, show a jump of about 18 per cent in world-wide traffic in October. On 20 November I advised the Senate that Qantas would be operating more than 160 supplementary flights over the present summer peak period, which is a quite dramatic increase on the 50-odd such flights which operated over the corresponding period last year. I am now able to advise the Senate that Qantas will be increasing the number of supplementary flights to more than 230 this summer and that it has the capacity to operate up to 300 should market demand require this number. This increment in Qantas capacity has been achieved through leasing a B747 aircraft from Tower Air, a second 747 from Aer Lingus and a DC10 from the Dutch carrier Martinair. Over the coming holiday season Qantas will be carrying about 700,000 passengers, making it very much the busiest season in the airline's history. In spite of this record number of passengers to be carried during December and January, Qantas still has some 67,000 outbound seats available through to February and some 53,000 inbound seats. Those numbers will be added to as additional flights are put into the system. Compared with Qantas's 230 supplementary flights, with the capacity to go up to 300, the situation with all the foreign carriers put together is that 121 supplementary services by foreign carriers have now been approved and a further six are being processed. I hope this information will dispel a lot of the unnecessary concern that has been created, for one reason or another, some of it in good faith, about the current capacity situation. Senator SHEIL —My question is directed to the Minister representing the Minister for Aboriginal Affairs. Is the Minister satisfied with the way in which mining royalties are administered in the Northern Territory? In light of recent developments in the Northern Territory concerning the payment of royalties by mining companies to the Central Land Council, will the Minister please explain the method of payment by the mining companies to the Central Land Council and the passing on of these royalties to the traditional owners to ensure that they get their lawful payments? It appears from last Sunday's Sunday Territorian that $25m paid by a mining company to the Central Land Council has been paid to the wrong people. Senator TATE —The Minister for Aboriginal Affairs has provided a brief which I think covers many of the matters raised in Senator Sheil's question. The land on which the Mereenie oil and gas project is situated is former Aboriginal reserve land, the title to which was transferred to an Aboriginal land trust under schedule 1 of the Aboriginal Land Rights (Northern Territory) Act. The land rights Act provides that determination of traditional ownership on schedule 1 land is the responsibility of the relevant land council. About $1.5m has been distributed to the traditional owners as part of a settlement negotiated by the Central Land Council on behalf of the traditional owners of the area of the Mereenie project. There has been some criticism of a lack of long term benefits from these payments, which in many cases were used to purchase vehicles and other commodities. However, the Minister wishes to emphasise that these Aboriginal people live in a remote area and are among the poorest people in Australia. In such conditions, the process of community development is very gradual. The land rights Act also provides that 30 per cent of an amount equivalent to that paid in royalties by a company mining on Aboriginal land should be paid to incorporated Aboriginal communities and groups in the area affected by the mining operations. The Ngurratjuta/Pmara Ntjarra Aboriginal Corporation, an association of the communities affected by the Mereenie project, has been formed to receive these statutory royalties. To date Ngurratjuta has received about $1.3m and has a policy that these moneys must be invested or used for community purposes. Ngurratjuta's investments include real estate and a local airline company. The Northern Territory News article was based on assertions by an individual to the Land Commissioner which has not been commented on by the Land Commissioner or assessed in any way. It is therefore wrong to assume the accuracy of the comments. Senator BURNS —My question is directed to the Special Minister of State. I ask: Is there a Facom computer in the national computer centre, Kent Street, Deakin, containing information on all Australians? Secondly, was the information from the 1986 census forms processed into that computer? Thirdly, which departments share the computer facilities? Fourthly, how much taxpayers' money has been spent on the building, the hardware and the software? Fifthly, will this computer be interlinked with similar computers in other parts of the world via satellite? Sixthly, have identification cards already been printed? Senator RYAN —I welcome Senator Burns's question, for reasons of which I think some honourable senators will be aware. Quite an hysterical, irrational campaign has been promoted by certain persons, including one in the media, about all kinds of sinister and otherworldly dealings going on at the Deakin exchange. Of course, these allegations are quite wrong and I will give some specific replies to Senator Burns's question in a second. But I just place on record my concern that people, particularly those in the media who have influence over their leaders, would give some credence to crazy suggestions of this kind and upset some gullible members of the community with the nonsense that they like to put about. Senator Haines —But the man who is making these suggestions thinks Gareth Evans is still Attorney-General, so he is way out of touch. Senator RYAN —There are even stranger things than Gareth Evans still being Attorney-General that the mind can contemplate. I am aware of the assertions and can state unequivocally that the Health Insurance Commission, whether as the Australia Card authority or otherwise, has never used space at the Deakin telephone exchange for a computer room or for any other purpose, has never expended any funds for the purpose of installing equipment at that location and has never printed Australia Cards. Furthermore, I refer the Senate to a report in the Canberra Times of 8 December 1987 which publicises the recent visit of the Joint Parliamentary Committee of Public Accounts to the Deakin telephone exchange for the precise purpose of investigating the allegations by Mr Sawyer, the gentleman who originally made the allegations. The report discounts the allegations entirely. It is most interesting that the report advises that Mr Peter Sawyer was formerly a junior officer in the Department of Social Security who rose to prominence last year when he published a book called Dole Bludging: a Taxpayer's Guide. Mr Sawyer and his wife were subsequently charged with defrauding the Commonwealth over unemployment and other welfare benefits. If, as I understand it, people are so gullible as to pay Mr Sawyer money for his newsletter and cassette, which contain such unfounded allegations regarding the national surveillance systems, I can only say: caveat emptor-let the buyer beware. Senator MICHAEL BAUME —My question is addressed to the Minister for Finance. Has the Commonwealth Superannuation Fund Investment Trust (SFIT) suffered a loss of at least $400m from its 30 June balance sheet levels because of the stock market collapse? Does this represent a worsening from the $300m, revealed in the annual report released this week, in the value of equities from June to October, from which time the Australian stock market has fallen a further 12 per cent, and involve a loss of up to $100m on its very large holding of shares in Mr Robert Holmes a Court's Bell Group? How does this loss compare with similar superannuation funds in Australia? Does it indicate that, contrary to rhetoric from Government and Australian Democrat senators in this House, ordinary Australians are directly affected by the share crash? Has the bulk of this loss come from the local equity portfolio rather than the $331m holding of foreign equities-all acquired since June, indicating the benefits of foreign investment by local institutions? Finally, as this $400m loss will have wiped out more than half the $791m available for distribution to contributors to the fund from its 1986-87 surplus, what will be the impact on contributors of this reduction of $1,200 per head in contributors' funds? Does it mean that public servants' lump sum pensions or other entitlements will be cut this year-and if so, by how much-or will taxpayers be called in to make up the difference? Senator WALSH —There were more questions asked by Senator Michael Baume than I could take note of, but I remember the last one clearly enough. Taxpayers will not be called on to make up the difference in anything, because the Superannuation Fund Investment Trust is funded entirely by employee contributions and there is no taxpayer subsidy involved in it, other than, one could perhaps argue-and it would be a quite small item-some administrative assistance from the Australian Government Retirement Benefits Office insofar as it keeps records for the Superannuation Fund Investment Trust. When Senator Baume started to ask this question I thought I had slipped back in time by about six weeks, because a question was asked about this matter-I cannot remember by whom-early in November, I think it was. I then remembered that, like most of the revelations that came out of the Waste Watch Committee, this was really a bit of old news-although some of the figures I gave at that time probably could be revised. At that time I pointed out that only 23 per cent of the SFIT total portfolio, which had been valued at $4.3 billion, was invested in Australian shares, and about 8 per cent of it was invested overseas-which is a very low percentage investment in equities compared with a number of other funds. Insofar as what Senator Baume asks can be quantified, I will get the information as soon as I can. When talking of a loss, some qualification should be added. It is a paper loss from what in the case of many superannuation funds it is legitimate to regard as a paper gain. That is to say, funds that had shares-selected at random even, because the whole market was going through a boom-recorded very large apparent paper gains. But in most cases they were just that-paper gains. It is a bit like a Patrick Partners underwritten company-what had been promised really was not there at all. Not all people recognise this. Indeed even somebody as astute as Daryl Dixon in an article published in, I think, the Business Review Weekly two or three months ago said that many employers who funded defined benefits schemes would not have to make any contributions for five or six years because the earnings of the funds were so high that they would not require any topping up to meet the drawings on them. That sort of thing cannot go on forever, any more than the land boom in Melbourne in the late 1880s and early 1890s or the Poseidon boom in the 1970s could go on forever. Senator MICHAEL BAUME —Mr President, I ask a supplementary question. I thank the Minister for his undertaking to get the answers to the various elements of my question. But I ask him specifically about the $791m available for distribution. In view of the fact that the $791m available for distribution is made up of so-called paper profits-profits which have not in fact been taken but which relate to the valuation of the portfolio-will the Minister now amend his answer in respect of the loss so that we can have a clear view of the impact of that loss on the amount available for distribution to contributors? Senator WALSH —I will see what extra information I can get. But I think that the point Senator Baume is making is that those people who got out and took their money when the fund had declared earnings rates of about 28 per cent, I think it was, for the last financial year received the benefit of that. Had the boom gone on for another 12 months, however, the same people might have thought that they were being unfairly treated because they did not get the benefit of an even higher declared earnings rate in the next year. I really do not see what we can do about that, unless we have a defined benefits scheme. Since this is not a taxpayer funded component of the total Commonwealth Public Service superannuation arrangements, I personally would not consider making any changes to that fund unless clearly that was desired by a majority of the contributors to it. Senator ZAKHAROV —Has the attention of the Minister for the Environment and the Arts been drawn to an article which appeared in the Melbourne Age last Saturday which outlines claims made by the north Queensland timber industry that World Heritage listing will result in the loss of 2,000 jobs? Can the Minister inform the Senate whether the claims made in that article are accurate? Senator RICHARDSON —The claims made by the timber industry in north Queensland are matched in their inaccuracies only by the claims made by the Queensland Government. I know that inflation has been worse in Queensland than in any other State-as is the case with most economic indicators; Queensland usually seems to lag behind. However, the inflation rate that appears to have set in is really quite remarkable as it affects the timber industry in north Queensland. It has to be noted that just on two weeks ago the industry's main spokesperson, Mr Kenane, put out a statement saying that the ambit claim, as he called it, of the industry was $66m. A couple of days ago he said it was now $120m. I am not sure of what sort of mathematics are used in the north Queensland timber industry, but I do know that that is not its only error. Part of Senator Zakharov's question related to prospective job losses as a result of World Heritage listing. This figure of 2,000 for the number of jobs to be lost through World Heritage listing should be scotched. The industry itself has never claimed that more than 700 workers were working in the industry, and no one in north Queensland now suggests that all of the mills will close. It is quite obvious that a number will remain open using resources from private land. It has to be remembered also that some of the mills there are not using rainforest timbers anyway. There are other sclerophyll forests that have been available to the industry and will continue to be available. The real factor in unemployment in the timber industry in north Queensland has been the Queensland Government's action in reducing quota. In the last 10 years, quota has been reduced massively and between 1,000 and 2,000 jobs have been lost. It should always be remembered that for those workers who lost their jobs during that period there were no redundancy or compensation packages, as the national Government proposes. They were simply shown the door. They were told, `There's the gate; walk out of it with nothing in your hand and no future'. There is no way that this Government will be a party to that. Given that Senator Puplick has returned to the chamber, I remind him that we still wonder what his policy and the Liberal Party's policy will be on the listing. Given the announcements that I will make tomorrow, no doubt we will hear next week. Certainly, the people of Australia will not wait until next August to hear what the Liberal Party thinks about it. Senator GARETH EVANS —On 8 December I undertook to Senator Knowles to provide further information in response to her question concerning allegations against individuals associated with Amann Aviation Pty Ltd, or Continental Venture Capital, the company which financed it. Accordingly, I seek leave to incorporate a response in Hansard. Leave granted. The response read as follows- On 18 September 1987 I tabled documents in the Senate relating, among other things, to: (a) a Bureau of Criminal Intelligence report, and (b) allegations made purporting to link Amann Aviation planes with the importation of drugs and purporting to present Mr Amann as a drug user. On that occasion I indicated, in paragraph 4 of the tabling statement, that the Bureau of Criminal Intelligence had carried out investigations into Amann Aviation and its associates. I received a report on 1 September 1987 from Mr Roger Beale, Associate Secretary of my Department (based upon that Bureau of Criminal Intelligence report) which wrongly identified a Mr Spiridon Apokis as a Director of Continental Venture Capital. He was, in fact, Director of Josa Investments, a major shareholder of Continental Venture Capital. Among the documents tabled on 18 September 1987 were extracts from Mr Beale's Minute. The relevant extracts read: ``In June 1987, a Bureau of Criminal Intelligence report . . . The Department was shown that report today. The responsible AFP Officer (Chief Superintendent Dixon) concluded, however, that `(5) The matter in issue is the possible embarrassment to the Government if the CVC Directors or corporate associates are disclosed to be of ill repute or with organised crime connotations. This has not been established, nor do I believe the information available to me that an initial suspicion of such connections can be substantiated. (6) Accordingly, I am of the view that unless some significant matter can be identified by the BCI as a concern to them or with implications of the Government and/or the civil coastal surveillance system I see no reason to (a) pursue this probe further or (b) initiate actions to altert any other persons/Department of the initial BCI report.' The recommendations were accepted by the BCI and the Deputy Commissioner of the AFP.'' The investigation ceased. I further indicated in my tabling statement that on 31 August 1987 allegations connecting Mr Amann with the use and/or smuggling of drugs were made to the AFP. Investigations were put in train by the AFP and the Australian Customs Service. No adverse findings were reported arising from these investigations. My tabling statement pointed out that Mr Beale had further discussed these matters with Deputy Commissioner Farmer of the Australian Federal Police on 4 September 1987 who, ``confirmed that the AFP's conclusion was that there was insufficient information of an adverse nature relevant to the contract to justify either: Further detailed investigation of CVC, for example through interviews; Any action to terminate the contract on these grounds.'' Mr Beale briefed me on these matters in Melbourne on 7 September 1987 and it was agreed that they were not such as to justify any action to terminate the contract. These matters were accordingly not further investigated or considered by my Department. I would further note that in my tabling statement and indeed in any public discussion of these matters I have not named individuals because: the Bureau of Criminal Intelligence report contains details of the private affairs of a number of persons including their credit and other financial dealings; it contains speculation about persons being involved in illegal activities which have not been the subject of full investigation or charges and the disclosure of which would be very damaging to the persons concerned; it could prejudice criminal investigations in relation to matters unrelated to the subject contract and the principals involved in it. That continues to be the case. I did, however, arrange for Senator Durack to read the report and for him to be briefed by Chief Superintendent Dixon. The PRESIDENT —Are there any ministerial statements? If not, we will proceed to the consideration of Government Papers. Senator Chaney-I thought that the Government was to make a ministerial statement on Aboriginal affairs. Senator Gareth Evans-We are not bringing it down this afternoon. Senator Chaney-The statement was put down in the House of Representatives this morning and I have been given a copy. The PRESIDENT —Order! I asked whether there were any ministerial statements. Senator Gareth Evans-No. A statement will be made next week. Hopefully, time can be found to debate it then, if that is the desire of the Senate. Senator CHANEY(Western Australia-Leader of the Opposition) —by leave-I make it quite clear to the Government that the Opposition expects the Government to bring the statement into the Senate. A copy of the statement was supplied to my office in the usual manner today. It was indicated that it would be made in both places. It is a major statement on a matter on which Government senators have had a great deal to say over the years. It is not satisfactory for the statement not to be made in this place. I seek an assurance from the Minister that the statement will be brought in and that there will be an opportunity to comment on it. Senator TEAGUE(South Australia) —by leave-Yesterday a Green Paper on higher education-a major discussion paper-was put down by the Minister for Employment, Education and Training (Mr Dawkins), but it was not tabled here and has not been circulated to honourable senators. It is a grave omission in the procedures of this parliament that papers of such major importance are not placed in this chamber on the same day as they are placed in the other place. Senator GARETH EVANS(Victoria-Manager of Government Business in the Senate) —by leave-I have been asked to give an undertaking that a statement on Aboriginal affairs will be put down. I have already done that and I do so again. I was acting under the belief that the statement would be put down later today. I had no idea that it had been put down already. Certainly, I have no desire to stop debate on it although, as is the case with the education statement, the Senate has obviously been operating under time constraints-not that some honourable senators opposite seem to have been too acutely conscious of that. Hopefully, there will be a little more time next week to spread out the debate and enable responses to be made accordingly. I will not go into some of the private discussions I have had on this subject, which are in accordance with that proposition and were the basis on which I acted as I did, to the extent that I had knowledge about the statements at all. Senator GIETZELT(New South Wales) —by leave-I have received a letter from the Deputy Secretary to the Department of Foreign Affairs and Trade, Mr Flood. He advises me: During consideration by the Committee of the estimates of the Department of Foreign Affairs and Trade, I advised the Committee that 300 officers from a range of departments passed on assignment through the Embassy in Jakarta in the period 1983 to 1986. This figure is incorrect. I apologise for this and would be grateful if you would inform the Committee of the correct position. Over the period in question 133 officers at the Embassy had the right to purchase a locally assembled vehicle tax-free. Those officers with diplomatic status also had the right to import a vehicle duty-free. Of these 133 officers, 27 were found to have engaged in questionable transactions involving vehicles imported or purchased locally under diplomatic privilege and 11 were charged with misconduct under the Public Service Act. I realise that the Estimates have been dealt with, but I thought that the letter should be read into the Hansard so it can be on the public record. Senator CHANEY(Western Australia-Leader of the Opposition) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator STONE(Queensland-Leader of the National Party of Australia)(3.07) —I move: That the Senate take note of the paper. When the Report on the Forward Estimates of Budget Outlays was tabled in the Senate this morning, it was noted that the paper was not available prior to tabling. I draw attention to the fact that the Treasurer (Mr Keating) and the Minister for Finance (Senator Walsh) held a Press conference yesterday afternoon based on this paper. Two honourable senators have just raised in this chamber an act-I accept the response of the Manager of Government Business in the Senate (Senator Gareth Evans)-of inadvertent discourtesy to the Senate in not having put down in this place statements on Aboriginal affairs and education. Now we have what seems to be a somewhat similar act of discourtesy in that two Ministers of the Crown held a Press conference yesterday afternoon based on a paper which was not available to the Senate at that time and which we have been told was not available prior to tabling. To be fair to the Minister for Finance, the paper contains some worthwhile improvements in presentational arrangements, which I take note of and endorse. The Minister has included under `contingency reserve' an additional item which takes account of what I would call-and the paper uses a similar term-policy drift as a result of the accretion of a whole series of often, in themselves, quite small decisions which, nevertheless, over the course of the financial year add up to a significant range of expenditure commitments. The inclusion in the documentation of such a provision is entirely admirable. However, having entered that note of appreciation for the technical quality-I underline the words `technical quality'-of the document, I make it quite clear that that is as far as my appreciation extends. In these Forward Estimates we do not have the position to which the Minister for Finance referred on, I think, at least two separate occasions in Question Time this afternoon of an all virtuous government having brought expenditure under control. Page 6 of the paper states that in 1988-89 completion of projects such as the new Parliament House and expiry of programs such as the Bicentenary celebrations contribute particularly to the decline in outlays in real terms in 1988-89. Similar comments are scattered elsewhere throughout the text but, in the short time available to me, I am unable to elaborate on them. I devote the last couple of minutes of my speech to a rather more general aspect of the report and, more particularly, the use which has been made of the report by Ministers, especially the Minister for Finance and the Treasurer. The fact is that whatever may or may not have been-and I do not have time now to debate that-the fiscal policy record of this Government during its term in office, that record clearly has not been good enough. Had it been good enough we would not have today the international debt of all Australians being something like $108 billion compared with the figure of $35 billion when this Government came to office. Nor would we have a continuingly growing interest bill to foreign creditors which is already eating up something like $8 billion a year of our export earnings in interest payments alone. Nor would we have the rather desperate state of affairs in the labour market that the Government is attempting to address. Again, I do not have time to deal with that. Since the Budget was brought down the Opposition has been pressing this Government to introduce a mini-Budget. We have redoubled our efforts since the stock market crash and, following that, the crash in the foreign exchange markets. Finally the Government has admitted that the Opposition has been right all along. But because the Government has not been prepared to admit that at the time it was proper to admit it-because it did not wish to do anything of that kind before the New South Wales election-it has done a double-shuffle of five months' duration and promised us a mini-Budget in May next year. Senator SHORT(Victoria)(3.12) —I, too, wish to make a few remarks on the Report on the Forward Estimates of Budget Outlays which was tabled today. I compliment the first comment made by Senator Stone by saying that I find it quite extraordinary that a matter of such apparent importance to the Government was made yesterday by way of Press release when the House of Representatives was sitting. Why on earth did the Treasurer (Mr Keating) completely ignore the Parliament by releasing a Press statement and having a Press conference on it? As far I know, no statement has yet been made to this Parliament and, therefore, to the people of Australia. This is part of the continuing prostitution of the parliamentary processes by which this Government, over 4 1/2 years, has put itself above the law and above the Parliament. It is about time it realised it is accountable to the Parliament and the people. The Treasurer, in his statement yesterday, said, `The Government will not do anything at all between now and next May, in terms of economic policy; we will announce now that in five months time we will have a May statement'. We were going to have a May statement anyway, presumably. It has been the pattern in the last few years. Senator Stone —The Leader of the Government has just said so. Senator SHORT —As Senator Stone says, Senator Button attempted to make that point during Senator Stone's contributions. Why on earth should the Government make a statement such as the one made yesterday? Contrary to the way much of the media has been conned into thinking, as demonstrated by its coverage of this matter today, the paper will not restore confidence in the economy and in the Government's ability to manage. As soon as people look through the charade, the facade and the superficiality of yesterday's statement and the figures produced by Senator Walsh, they will say, `What are we going to do? What will the climate be next year? We have to wait five months before the Government will tell us'. Quite frankly, I find that to be totally unacceptable, as it must be acceptable to any sensible, reasonable businessman or investor. Even if one discounted a little of my concern-and I do not believe it should be discounted one iota-the Government is still making statements in relation to what it is going to do in six months time on the basis of statistics and assumptions which, at this time, can only be of the most dubious accuracy. That is not to say that the best effort has not been put into reaching the conclusions but, in December 1987, how can the Government say that over the next year there will be an exchange rate value on a trade weighted index basis equal to 54, when, I remind the Senate, today the trade weighted index is 52.2? Does the Government seriously believe that with the economic prospects facing this country the level of the Australian dollar will rise over the next six to 12 months? If it does believe that, it is making at least one of two assumptions; that is, either that interest rates will rise very substantially to attract capital into this country to prop up the dollar or that the trade balance will be far better than even the most optimistic of economic forecasters would portray. I find it absolutely extraordinary that the Treasurer said, for example, in his statement yesterday: . . . the Government is determined that the very substantial progress we have made to date in reducing our trade imbalance will continue. What improvement has been made in our trade imbalance? We still face a balance of payments deficit on our current account in excess of $11 billion. Our foreign debt is increasing by $1 billion every month, and the Treasurer says sanguinely that we are making substantial progress. That is absolute nonsense. This statement yesterday by the Treasurer and the Report on the Forward Estimates of Budget Outlays are a con of the Australian people and will do them and the economy a great deal of harm. Senator MICHAEL BAUME(New South Wales)(3.17) —I join my colleagues in expressing grave concern about the outlook for the Australian economy, particularly following the Report on the Forward Estimates of Budget Outlays, which is cast again in the well-worn mould of saying, `Everything is all right. We have everything in hand. There is no need to worry because the best of all possible Treasurers in the best of all possible worlds has the best of all possible solutions'. We have to recognise that the premises on which this document is based seem to be incapable of being achieved. This is a matter of major concern to us all. On prices, for example, achieving the objective of this paper and the parameters within which this system works would involve all the deflators used to calculate the outlays being subject to only a one per cent increase over the course of 1988-89. If the pressures on our external balance, which now seem inevitable, come to fruition there will be a strengthening of inflation, not a weakening of it. If interest rates are forced to rise to protect the Australian dollar, that will add to internal costs. If interest rates do not rise and the dollar is left to run, there will be an inflationary impact. Let us look at some of the other criteria on which this Budget surplus outcome is based. The Government is expecting a one per cent increase to be applied to all wage and salary rates during 1988-89. That seems to be a fairly optimistic outcome. Prices being one per cent higher than the inflation rate that already exists means that there is not just a one per cent price rise, but that it is one per cent higher than the inflation rate. For economic activity, a one per cent increase is applied to the rate of growth of gross domestic product. I do not know where that one per cent higher growth rate than whatever it will be this year came from but, in view of the world slow-down in economic activity which is widely expected to follow the share crash, one would have to be fairly optimistic to look to a higher rate of economic growth-even one per cent higher than is currently taking place. The expectation is for a one per cent increase only in interest rates over those currently obtaining. The exchange rate, the key item, is assumed to be a one index point increase over the Australian dollar on a trade weighted index basis. In other words, that is a 1.9 per cent increase on the current assumption of a trade weighted index of 54, lifting it to around 56. I believe that very few forecasters would be prepared to accept the view that our currency will be so strong in the following year of 1988-89 that we will have a trade weighted index of 56. All the indicators point the other way. With great difficulties emerging in the area of oil, there are enormous difficulties in the sense of our commitment to pay something like $1,200m a month in gross income debits. That is the basic amount that we have to pay to pay interest only on what we have borrowed. That amounts to about $1 billion a month, and that simply will not go away. Nothing that this Government has done or said in these Forward Estimates papers or in its statements-particularly its statement that it will not have a mini-Budget until next May-will improve the situation. I simply remind the Senate that, when one compares the outcome under these Forward Estimates in terms of real growth in Government expenditure over six years with the contained growth over the first six years of the Fraser Government, one sees that, because of the profligacy of this Government's first two or three years, it is still a far bigger spending government, even after this forecast reduction-which I do not believe can come about-than the Fraser Government ever was. Senator LEWIS(Victoria)(3.22) —I also rise to speak to the Report on the Forward Estimates of Budget Outlays. Once again, this Government is up to the trick in which it has been indulging through its term of office, that of misleading the media, and, crazily, the media accepts being misled by this sort of nonsense. It goes on all the time. What are these figures? They are Forward Estimates, what one might call the wishbag of Ministers and public servants. They are nothing more than a guess as to the sort of money we would like to spend if we had the opportunity to spend it. The Government produces this wishbag of money requests and says, `Aren't we marvellous? We are going to cut it back'. It conducted a media interview yesterday, produced this 148-page document, which contains a lot of nonsense, estimates, figures and all sorts of things, and said, `Look how marvellous we are'. The truth is, as honourable senators can see when they read the document, that after 1988-89 the Forward Estimates again show a rise in real outlays. As my colleague Senator Michael Baume has just said, at the end of the day this Government is still spending much more than the Fraser Government ever spent or ever got around to spending. The Opposition keeps saying that this Government has to cut back its expenditure, but it will not cut back any expenditure in real terms; it cuts back on the expenditure estimates of some departments for the future. For anyone who does not believe that these estimates are just guesses, I refer to a paper issued today by the Australian Bureau of Statistics in which it acknowledges that a clerical error has been detected in the compilation of estimates of private gross fixed capital expenditure on equipment which resulted in an overstatement of the growth in this aggregate in the September quarter 1987. The Bureau explains: In addition, a downward revision has been made to this aggregate as a result of more complete capital expenditure survey data becoming available since the initial estimates for 5206.0 were compiled. The Acting Australian Statistician then goes on to explain that the result of these changes in estimates is a revision of the growth figure previously published for constant price private gross fixed capital expenditure on equipment in the September quarter 1987 from 11.8 per cent to 0.5 per cent. Now that we have the real figures, the estimate drops back from 11.8 per cent to 0.5 per cent. The Australian Statistician has come forward with this admission and has given the real figures after he has had another good look at them, and this Government presents a nonsense estimate and says, `Aren't we great? We have cut it back'-and the media falls for it. I cannot understand the media falling for this absolute nonsense. Where are the decent journalists with some sort of expertise? Senator Crichton-Browne —They are all out to lunch. Senator LEWIS —They are all out to lunch. Only one journalist is sitting in the gallery. Where are the rest of the journalists who might have some guts to stand up and say to Walsh and Keating, `You are kidding us; this is nonsense.'? When will we have journalists with that sort of guts? We had one called Pru Goward, but she was kicked out. The Australian Broadcasting Corporation (ABC) would not have her there because she asked too many difficult questions. The ABC is doing the same thing with another woman. I say to the journalists of Australia: Where are you? Why do you not stand up to the relevant Ministers and ask them some sensible questions? This 148-page document is absolute nonsense. It is about time some of the journalists who went to the Press conference asked some decent questions of these Ministers instead of accepting their gibberish. Senator CHANEY(Western Australia-Leader of the Opposition)(3.27) —The Opposition senators who have already spoken have described why the Opposition is very sceptical about the material that has been put before the Parliament today. It is a matter of serious concern that the latest sort of hypnotic gesture used by the Treasurer, Mr Keating, to befuddle observers into thinking that the Australian economy is in good shape appears to be the set of figures before us. When the Budget before last was brought down, I can remember saying to the Leader of the Government in the Senate (Senator Button) that getting the fiscal settings right was a very important element of the strategy for restoring Australia's economy but that other essential things needed to be done, such as microeconomic reforms and reform of the labour market. The fundamental point I make is that, even if one accepted at face value what has been said by Government Ministers about the fiscal position as represented by the Forward Estimates, it is quite clear that the Australian economy is in the deepest trouble and that this Government is not making any realistic efforts to come to grips with the many difficulties. The Government is focusing on this one area-the question of the fiscal deficit. It is hanging everything-its comparison with the United States performance and its belief that the economy is in good shape-on a single statistic. On behalf of the Opposition, I remind the Senate that when one looks at the situation that was described by Senator Stone, who was the first speaker from the Opposition on these papers-the growth in our external debt-and asks what our prospects are of getting out of the dire predicament in which our country stands at the moment, one sees a series of statistics which would strike despair in the heart of any sensible observer. The foreign debt in this country is now at 40 per cent of our gross domestic product compared with 13 per cent of GDP for the United States of America. That gives the Senate a clear indication of the comparative burden of foreign debt between the two countries. What are the prospects of our cutting down our foreign debt as against the United States? We know that the Government has predicted another $11.5 billion deficit this financial year on the external account. That means by definition that we will have a continued growth in our foreign debt during the current year. On the other hand, are we moving into a stage of higher productivity and great growth which means that we will turn the corner and start reversing that trend in a serious way? Are we becoming more internationally competitive. The figures show that the answer to that question is no. Let us take the area of wages. Here again the Government engages in a sleight of hand. It talks about a reduction in real labour costs in this country. The reduction in real labour costs has occurred as a result of the collapse of the Australian dollar. The nominal wages in this country have continued to rise, while living standards and real wages have fallen as a result of economic mismanagement. Senator Maguire —That is not true. Senator CHANEY —That is true. The reality is that nominal wages in Australia-we could use the measure of unit labour costs-have gone up by between two and three times the amount of increase in our competitor countries. This year the Government is predicting that unit labour costs will rise to a much larger extent than will the unit labour costs in our competitor countries. So we are going backwards. The chief apologist for the Government, Senator Maguire from South Australia, would justify the massacre of the innocents if it was carried out by Mr Keating; he justifies in a most craven and pathetic way everything that is done by this Government. The reality is that the Government has presented us with Budget Papers that show that productivity in Australia did not increase at all. The figures of Senator Maguire's Government show that there was no increase in productivity in the last period. What increase in productivity is predicted in the current Budget Papers? Maybe one-half of one per cent. The reality is that our inflation rate, our employment rate, our proportion of debt compared with our gross domestic product, our interest rates and our unit labour cost increases are all negatives when compared with the situation of our trading partners. That guarantees a continuing declining position. This Government must accept that Budget policy is but one of the legs of a successful economic policy. It must come to grips with its fiscal policy in a far more effective way than it has to date; that is the considered view of the Opposition. It must also come to grips with the fact that it is continuing to promote a wage fixing system and a general labour market approach which are not working for Australia; it is continuing to cause Australia to slide down the drain. It is important that the Opposition record these views at this time. Though 1988 may be Australia's birthday year, I can only say that no parent, no government, should present to its child or its country a birthday present that reflects the economic situation that this Government is presenting to Australia. Question resolved in the affirmative. Senator PUPLICK(New South Wales)(3.32) —I move: That the Senate take note of the paper. This is the first part of the report of the Helsham Commission of Inquiry into the Lemonthyme and Southern Forests of Tasmania. It will be recalled that the legislation establishing this inquiry was passed through Parliament in the face of strong opposition from this side of the chamber. We did not believe that the establishment of the Helsham inquiry was necessary following on the steps that had already been taken to give protection to the World Heritage areas of South West Tasmania. We still wait for the final report of the Helsham inquiry. This interim report is brought to us in order to indicate those parts of the Lemonthyme and Southern Forests which should be excluded from additional protection under the World Heritage regime. In fact, this report nominates four areas, totalling 226 hectares out of the whole area of some 283,300 hectares which is under consideration by the inquiry, as being areas which ought to be removed from the jurisdiction of the Commission and from the imposition of any controls over their exploitation. The report draws attention to the difficulty which is presented to the Commission in identifying the sites under section 8 (5) of the Lemonthyme and Southern Forests (Commission of Inquiry) Act. The Commission must be satisfied not simply that the areas to be excluded do not qualify for World Heritage status but that, in the words of the Act, they are `definitely not qualified' areas. The Commission draws attention to the very strict standard which is therefore imposed upon it. It is required not simply to assess that an area is not qualified but, indeed, that an area is `definitely not' qualified. I make two points arising from this report. The first is that by accepting the determination of the Commission in this regard-a determination which was urged upon the Commission by the Chief Justice when dealing with an application for an injunction to prevent logging from taking place in the area-and by accepting the principles of the exclusion, the Government has made it clear that there is no reason for World Heritage areas or areas relevant to the World Heritage to be treated in a blanket fashion. It will be of some considerable importance to note tomorrow, when Senator Richardson announces his final boundaries for the World Heritage area which he proposes to seek in north Queensland, that the argument that the whole area, a contiguous and continuous area and an area which in the jargon does not constitute a `Swiss cheese' approach to national park management, should be included is not sustainable on the basis of the scientific facts or the proper evaluation or assessment of the values which it is important to preserve. Senator Richardson will not be able tomorrow to get away with claims about blanket inclusions, given the clear fact that in assessing the value of areas for World Heritage and other preservation the Helsham inquiry has made it clear that each area should be evaluated discretely on the basis of the precise scientific data available and that the assessment should be made on the discrete basis. If this interim report does anything, it exposes the fact that the blanket approach which the Government has taken to World Heritage listing and to environmental protection is inherently unsound in principle and unsound on a scientific basis. That is why this interim report is a very important one. We shall await the final report with some considerable degree of interest, but this report needs to be noted for the important document which it is. The DEPUTY PRESIDENT —Order! The time for consideration of Government Papers has expired. The DEPUTY PRESIDENT —I table the response of Madam Speaker and the President to the report of the Joint Committee on Publications entitled Review of the Cost and Distribution of the Parliamentary Paper Series. Copies have been distributed to honourable senators and the text of the response will be incorporated in Hansard. The document read as follows- RESPONSE OF PRESIDING OFFICERS TO REPORT OF JOINT COMMITTEE ON PUBLICATIONS Review of the Cost and Distribution of the Parliamentary Paper Series-1986 Although this response addresses all recommendations of the Committee's report it is recognised that the Committee, the Presiding Officers and the Government are each involved in the consideration and implementation or otherwise of sections of the Committee's findings. Thus the Presiding Officers see: the Committee as responsible for action in respect of recommendations 1 to 5 and 10, the Presiding Officers as responsible for initiating action in respect of recommendations 14 to 19 and 22 to 32, and the Government as primarily responsible for evaluating and responding to recommendations 6 to 9, 11 and 12, 20, and 21. Recommendation 13 is seen as involving all 3 elements-the Committee, the Presiding Officers and the Government-and in order to advance this matter the Presiding Officers will initiate discussions with appropriate Government agencies at officer level. [For ease of reference, the recommendations of the Committee have been numbered.] Recommendation of Committee Response of Presiding Officers Content of the Parliamentary Papers Series (Chapter 2, recommendations 1 to 5) 1. That the documents comprising the Australian Treaty Series should not be recommended for printing. 2. That reports of delegates to conferences and international visits should not be recommended for printing. 3. That all parliamentary committee reports other than final reports on an inquiry or final reports on aspects of the inquiry, should not be recommended for printing. 4. That ad hoc committees of inquiry reports should continue to be included in the Parliamentary Papers Series except when the historical or political interest is limited to the short term. 5. That the Committee's publishing guidelines be revised to read: Recommendations 1 to 5 The content of the Series is determined by decisions of the two Houses based, in large measure, on recommendations of the Publications Committee. As the Committee's publishing guidelines are a matter for the Committee to determine, recommendations 1 to 5 do not call for a response from the Presiding Officers. The Presiding Officers would, however, make a comment in respect of recommendation 3. Some authors have, in the past, titled reports which have a continuing significance as a `progress' or `interim' report. An example of this would be the 203rd report of the Public Accounts Committee presented on 9 December 1982. It was titled `Medical fraud and overservicing-Progress report'. It would be unfortunate if reports such as these were, because of the title accorded them, not adequately considered by the Publications Committee. (i) that all reports, returns and statements of departments, authorities, Parliamentary and ad hoc inquiries and royal commissions which are presented to Parliament be recommended for printing; (ii) the previous resolution is not intended to include interim annual reports of departments and authorities nor reports of unfinished Parliamentary inquiries and reports of ad hoc inquiries with short term interest; (iii) papers which are regularly presented and subsequently printed as Parliamentary Papers should continue to be recommended for printing on those occasions when they constitute a `nil' return; and (iv) wherever possible, the reports of the Auditor-General which are presented in conjunction with annual reports and financial statements of statutory bodies be included in the one printed document with those reports and statements. Production of Pamphlet copies of the Parliamentary Papers Series (Chapter 3, recommendations 6 to 13) General response to recommendations 6 to 13 The Committee's report properly draws attention to the difficulty experienced by AGPS in administering the production standards for documents that are to be presented to Parliament and the need for the standards to be adhered to more closely if waste is to be avoided and costs controlled. The past record of disregard for the production standards by some departments and authorities supports the Committee's conclusions that the standards need to be supported by appropriate legislative provision, i.e. by incorporation in the guidelines made pursuant to section 25 (7) of the Public Service Act or by the passage of an Annual Reports Act. Mechanisms need to be developed to ensure that these provisions are oversighted by a relevant Government authority. The Presiding Officers note that the Government has recently presented to the Parliament its ``Guidelines for the preparation of Departmental annual reports''. In particular the Presiding Officers welcome the statement that AGPS guidelines on standards of production must be observed. This is a timely strengthening of this aspect of the guidelines from those announced in 1982. The Presiding Officers are confident that Parliamentary Committees, in particular the Joint Committee on Publications, will continue to monitor and to comment on the way in which departments adhere to the guidelines concerning production standards. 6. That the standards relating to the production of the cover of Class I reports be upgraded so that two colour designs may be included and that Class II be dropped from the production standards. Response to specific recommendations in this chapter: Recommendation 6 The Presiding Officers support the recommendation that the production standards governing the covers of Class I reports be changed to allow two colour designs. The recommendation that the Class II category of documents be omitted from the production standards for documents presented to Parliament is not opposed. The Government, however, may wish to consider whether this change may unduly restrict the format of the reports of departments and non-commercial agencies. 7. That the current Class III standards be applied only to reports of those government agencies competing in the commercial sector. 8. That the guidelines which are to be presented to Parliament pursuant to section 25 (7) of the Public Service Act 1922 include these references [e.g. to program budgeting and access to freedom of information material] and that the guidelines relating to reporting standards of statutory authorities also incorporate them. Recommendations 7 and 8 Supported. 9. That a system of two edition annual reports be available to those organisations wishing to publish an annual promotional document. Recommendation 9 Not opposed. The Presiding Officers recognise that expensive promotional reports which are tabled as annual reports significantly increase the cost to the Parliament of the Parliamentary Papers Series. In instances where an organisation opts to publish a promotional review of activities in addition to its annual report to Parliament, the Presiding Officers see it as essential in order to avoid confusion, that the promotional document be given a title other than `Annual Report'. While promotional annual reviews could be presented to Parliament, departments and authorities should be placed under no pressure to do so. Care would need to be exercised in any development of a system of publishing two documents-a simply produced annual report and a promotional annual review-that the costs of writing, preparing and printing two publications did not outweigh the advantages and savings seen in such a system. 10. That the edition which includes the financial statements and Auditor-General's report, and meets the other guidelines under the Public Service Act 1922 or those for statutory authorities, only be included in the Parliamentary Papers Series. Recommendations 10 to 13 Supported. 11. That the Government consider the introduction of an Annual Reports Act as a means of ensuring that federally funded bodies report on their responsibilities to the Parliament and do so within the appropriate production standards. 12. That `camera-ready' production of reports which fall readily within the Parliamentary Papers publishing guidelines should be produced in accordance with the AGPS requirements. 13. That alternative technology [e.g. microfiche, computer readable material on disk and audio or video cassette recordings] may be used in the production of material that is not required to be read with the body of a report provided the Joint Committee is consulted prior to production. Distribution of Pamphlet copies of the Parliamentary Papers Series (Chapter 3, recommendations 14 to 19) 14. That secondary schools no longer be eligible for the distribution of pamphlet copies of Parliamentary Papers. 15. That the members of the Parliamentary Press Gallery and newspapers be excluded from the free distribution guidelines. 16. That overseas addressees that are the main national or parliamentary library of a country be admitted on request to the free distribution list, if an exchange arrangement exists with the National Library of Australia. 17. That the stock of pamphlet Parliamentary Papers made available to AGPS be reduced from 100 to 25 or sufficient to meet subscribers' standing orders. 18. That free distribution to Federal Political Parties should be on the basis that the party has been registered by the Australian Electoral Commission. Recommendations 14 to 19 Accepted. The Presiding Officers are aware that the Committee has expressed concern about the increasing cost to the Parliament of the Parliamentary Papers Series. We share this concern and believe that implementation of these recommendations will assist to contain and in some instances reduce costs associated with the Series. The Presiding Officers will arrange for these recommendations to be implemented with the publication of Parliamentary Paper No. 1 of 1988. The Presiding Officers note the Committee's consideration in its 1986 report of the use of blue covers for pamphlet copies and its subsequent request that the Presiding Officers determine a suitable workable cost-efficient alternative. This matter is being reviewed and any necessary changes will be implemented at the commencement of the Parliamentary Papers Series in 1988. 19. That the distribution guidelines be as follows: That libraries of State, State parliaments, municipalities, tertiary education institutions, and Commonwealth departments (or in absence, the Secretary); and foreign embassies, political parties which are registered under the Commonwealth Electoral Act 1918, the main national or parliamentary library of a country which has an exchange arrangement with the National Library of Australia, and appropriate addresses as determined by the Presiding Officers which are consistent with the terms of this recommendation, be entitled to be supplied with one free copy of each of the undermentioned publications, upon request: Parliamentary Papers, Standing Orders of both Houses and the Short Description of Business and Procedures of the House of Representatives. That trade, business, employer, employee, professional commercial and similar organisations including members of the Parliamentary Press Gallery and newspapers, be not entitled to receive free distribution of the above. Production of the Bound Volumes of the Series (Chapter 4, recommendations 20 to 22) 20. That AGPS, when supplying the pamphlet copies of Parliamentary Papers, provide a cumulative listing of all Papers issued in that year and a list of outstanding papers from the previous year. Recommendation 20 Supported on the basis that AGPS provide the lists at regular quarterly intervals. 21. That any production of the Parliamentary Papers Series in microfiche should be accompanied by the appropriate amendments to copyright legislation to enable 100% reproduction of a paper in the restricted circumstances described [i.e. when a copy of the original paper is not available from the local AGPS bookshop]. Recommendation 21 This recommendation is supported in principle. No action is required on the recommendation until such time as a decision is made to publish the Series in a microform or other non-hard copy format such as read only memory (ROM) disc. 22. That the number of sets of bound volumes prepared annually be reduced to 27. Recommendation 22 The response to this recommendation is related to the response to recommendations 31 and 32. Distribution of the Bound Volumes of the Series (Chapter 4, recommendations 23 to 32) 23. That the practice of maintaining reserved stocks of bound volumes cease. Recommendations 23 to 30 Accepted. The Presiding Officers will arrange for these recommendations to be implemented as soon as possible. 24. That AGPS dispose of the current reserve stocks by providing missing stock to current recipients and other interested parties. 25. That free distribution to the House departments (the Departments of the Senate and the House of Representatives) and the Parliamentary Library be maintained. 26. That the National Library of Australia should be maintained as a recipient of two sets of bound volumes as it houses Australia's national collection. 27. That the Australian Archives remain on the free distribution list. 28. That free distribution be maintained to each of the State Parliamentary Libraries and the Northern Territory Legislative Assembly. 29. That State Libraries be maintained on the free distribution list. 30. That the issue of bound volumes be restricted to those overseas libraries that are the national or parliamentary library of a country which has an exchange arrangement with the National Library of Australia. 31. That the following categories be removed from the free distribution list for bound volumes: Commonwealth Departments Municipal Libraries Universities Colleges of Advanced Education Commonwealth Parliament Offices Overseas Libraries [which are not national or parliamentary libraries that have an exchange arrangement with the National Library of Australia] Recommendations 31 and 32 The Presiding Officers accept the Committee's conclusion that the provision of full case-bound sets of Parliamentary Papers to the categories of recipients listed in recommendation 31 cannot be justified given the very high costs associated with the provision of this item. Whilst not providing case-bound sets of papers to Australian universities and colleges in future, the Presiding Officers consider the value of the Series for students undertaking courses in the major tertiary institutions sufficient to justify the continued supply of two copies of each paper to universities and colleges: the first copy, in pamphlet form, when the Parliamentary Paper is published, and the second copy, again in pamphlet form at a later stage when all papers in a calendar year series have been published, collated in groups with the appropriate contents pages ready for the institution to bind according to its own standards and at its own expense, if it so chooses. In accepting the Committee's recommendation, the Presiding Officers also note that municipal libraries will continue to be eligible to receive pamphlet copies, though not case-bound sets, of Parliamentary Papers. Implementing the Recommendations (Chapter 5, recommendations 33 to 35) 33. That the following recommendations can be implemented on Government approval: camera-ready production [recommendation 12] alternative technology [recommendation 13] cumulative list of papers [recommendation 20]. Recommendations 33 Noted. 34. That the consistency within each year be maintained by implementing the following recommendations at the commencement of a Series: Recommendations 34 to 35 Accepted. publishing guidelines relating to treaties, reports of delegations, Parliamentary inquiries and ad hoc committee reports [recommendations 1 to 5] guidelines for the distribution of pamphlet copies relating to secondary schools, Parliamentary Press Gallery and newspapers, overseas recipients and `for sale' copies [recommendations 14 to 19] production standards and the content of annual reports [recommendations 6 to 13.] 35. That the recommendation reducing the number of bound volumes and the associated changes to the free distribution be implemented in the binding of the 1983 sets of Papers. Further, the Joint Committee recommends that the existing run-ons be offered to those organisations that will cease to receive free sets of bound volumes. The DEPUTY PRESIDENT —Pursuant to section 9B (2) of the Public Service Act 1922, I present on behalf of the President the annual report of the Department of the Parliamentary Library for 1986-87. The DEPUTY PRESIDENT —For the information of honourable senators, I table a report from the Joint Standing Committee on the New Parliament House relating to proposed works in the parliamentary zone. Senator McKIERNAN —I present the third report of the Standing Committee on Publications. Report-by leave-adopted. Senator WATSON(Tasmania) —by leave-On behalf of the Joint Committee of Public Accounts, I present nine reports-as many reports as some committees of this Parliament would present in perhaps four years-and move: That the Senate take note of the reports. I seek leave of the Senate to have my tabling speech incorporated in Hansard, as it involves nine reports and is lengthy. Leave granted. The speech read as follows- Report 278-Response to report 241-Report of the Auditor-General 1983/84 and September 1984 Report 278 contains the Department of Finance Minute on the Public Accounts Committee's Report 241-Auditor-General's report of 1983/84 and September 1984. Report 241 was tabled in November 1985. The Department of Finance Minute is the formal mechanism used by departments to respond to the Committee's conclusions and recommendations. The Committee is generally satisfied with the responses on this occasion. The Committee's conclusions in report 241 concerned the results of audits into matters affecting various departments, most significantly deficiencies in the administration by the Department of Education of student assistance schemes, tardiness by the Department of Territories in the presentation of financial statements for agencies under its control and unsatisfactory procedures relating to internal audit in the former Department of Defence Support. In view of the changes to student assistance schemes, the introduction of the Austudy scheme and the installation of a new ADP system in the former Department of Education and Youth Affairs the Committee has sought information to clarify that problems previously identified in the delivery of benefits to students will not occur with the new assistance scheme and the associated processing system. The successor to the Department of Territories, the Office of ACT Administration, no longer has a backlog of unaudited financial statements. The Committee hopes the Office will monitor the situation to ensure the backlog commented upon by the Auditor-General does not recur. The Committee is pleased to note that the Defence Audit Branch has remedied its internal audit deficiencies. An audit charter and annual work schedule have been established, reviews are carried out on the audit function and the methodology used by field-work staff, and more regular meetings of the Department's audit steering and policy committees are now held. These measures, together with adequate staffing, should ensure internal audits are finalised. Report 281-Report of Activities July 1986-June 1987 The Committee's 281st Report continues the practice established in 1976 of informing the Parliament of the Committee's activities. This Report covers the financial year 1 July 1986-30 June 1987. The report provides a convenient medium for the Committee to review its own activities and to suggest areas of public and financial administration which may require further review and reform. In the period reviewed by this report the Committee presented 27 reports to Parliament, including such major inquiries as the implementation of the offsets program, the administration of the Commonwealth's property functions and the Department of Defence's computer acquisition. This latter inquiry continued the significant role played by the Committee through the Standing Reference on major ADP acquisitions. During this last year, the Committee lost the services of two of its longest serving members. On 18 February 1987 the then Chairman Senator George Georges resigned from the Committee having served on it for over seven years. Senator the Hon. Dame Margaret Guilfoyle, DBE, who served on the committee for a total of eight years, retired from the Senate on the dissolution of Parliament in June. I would like to pay tribute to Senator Georges and Senator Guilfoyle for their active and effective membership of the Committee. Report 282-Australian Wool Corporation-Property Operations This Report, the 282nd from the Committee, outlines the findings of the Committee's review of the Auditor-General's efficiency audit of the Australian Wool Corporation's property operations. The Auditor-General's report was tabled in the Parliament on 26 November 1985. The efficiency audit focused on the commercial management of the wool stores owned by the Wool Corporation. Audit's analysis was based on the assumption that the Corporation should maximise the income obtained from its property operations, arguing for greater risk taking in property investment decisions. The Wool Corporation disagreed fundamentally with the Audit analysis. The Corporation did not disagree with the factual accuracy of the report, but rather with Audit's assessment of the commercial risks associated with the redevelopment of its wool stores and Audit's criticisms of the Corporation's commercial judgment. The Committee regards this audit as highlighting and clarifying the difficulties of applying present efficiency audit guidelines to government business enterprises. The Committee considers the Corporation's serious disagreement with Audit's analysis and recommendations as reflecting a genuine concern about the legitimate scope and character of the audit. The Committee therefore recommends that a detailed review of efficiency auditing guidelines for government business enterprises be undertaken. Report No. 283-Response to Report 248-Report of the Auditor-General-April 1985 The Committee presented its 248th Report on the Reports of the Auditor-General for April 1985 on 19 August 1986. The 283rd report sets out the Response to its findings in Report 248. The matters raised in the Committee's earlier report generally have elicited a satisfactory response from departments and agencies. Of the outstanding matters, the most significant were the procedures for the handling of grants by the Department of Community Services under the Children's Services Program and the recovery of overpayments and the matching of eligibility and entitlements for family allowances by the Department of Social Security. In its earlier report the Committee was concerned that the Department of Community Services had breached the Child Care Act 1972 in the payment of certain grants to organisations and that financial control over the acquittance of such grants had been poor. Although some of these problems appear to have been remedied, the Committee will look for continued improvements in the procedures for the handling of grants under the Children's Services Program. The Committee was also concerned at repeated findings by Audit that revealed either inadequate procedures or the non-compliance with procedures related to the recovery of overpayments by the Department of Social Security. The Department has implemented a range of measures aimed at improving its performance in the recovery of overpayments. The Committee supports these initiatives but would wish to see evidence of their impact before making a final assessment of their effectiveness. The Committee also expressed its concern in the earlier report at the continuing error rate in the payment of family allowances to persons in receipt of unemployment benefits. The Committee notes that the introduction of STRATPLAN should go some way towards preventing such errors in future but also supports the development of further procedures at the earliest opportunity which will enable the checking of continuing eligibility and entitlement. The Committee intends to keep the matters it has raised under review. I take this opportunity to reiterate the Committee's view that annual reports to the Parliament should contain information regarding any reviews by the Auditor-General or parliamentary committees which directly affect a department or agency, showing recommendations arising from such reviews and the action taken to address them. Report 284-Stratplan-the Department of Social Security's Re-equipment Program This is the Committee's third and final report on the implementation of Stratplan, the Department of Social Security's major computer re-equipment program. In June 1983, the Minister for Social Security announced the Stratplan program and indicated that in view of its costly and complex nature the Government had decided to refer it to the Public Accounts Committee for monitoring and report. The Committee's first report on Stratplan, Report 255, was tabled in October 1984 and dealt with the issues of: the acquisition process; health and safety; industrial relations; the resignation of a senior officer; offsets arrangements; project management; financial management; and internal audit involvement. The Committee made a number of recommendations in respect of several of these issues. In its first report the committee set out arrangements whereby the Department of Social Security would report to the Committee on a regular basis on various aspects of the implementation of Stratplan. To this end the Department forwarded quarterly progress reports. In August 1985 the Committee tabled Report 237, which covered the Government's response to the recommendations of its first report. The Committee noted that there were several matters for which satisfactory responses were not provided and undertook to pursue them during the next phase of its monitoring. In addition, the Committee has examined: industrial relations; applications development; Computer Systems Officer Staffing and the use of contractors; and cost-effectiveness of Stratplan. The Committee has reached a number of conclusions concerning the area of industrial relations. The Committee concluded that the Department of Social Security had been unprepared for the level of industrial action which had occurred, it had developed no contingency plans before the onset of industrial action and it had therefore lost the initiative to the unions which resulted in concessions which generated totally unplanned and unpredicted increases in the Department's staffing levels. The relevant guidelines promulgated by the Public Service Board had been deficient in that they did not provide for the development of contingency plans for use in the event of industrial action, nor did they provide for the translation of some part of efficiency gains and associated benefits into improved opportunities for affected staff. On the issue of applications development the Committee focused its attention on the National Index and Online Benefits Processing. The National Index was an original objective of the Stratplan program: based on a centralised database allowing access to larger databases, it would have enabled prompt identification of the Department's clients on an Australia-wide basis. To date the National Index has not been implemented as planned because of the costs entailed. Instead, a national inquiry about a client must be processed against each State database; this results in delayed responses to such inquiries. The Committee does not believe that this provides an adequate alternative to the National Index as originally envisaged. Online Benefits Processing is currently the Department's major strategic development project. It has always been identified as providing a major justification for the Stratplan project. To date Online Benefits Processing and its resulting benefits have not been realised. The Committee believes that delays which have occurred in its development could have been prevented. The Committee has referred to the major problem of recruiting and retaining Computer Systems Officers in the Australian Public Service before. It has been a contributing factor to some of the delays in the implementation of Stratplan and the Committee has no doubt that it will seriously affect other major Commonwealth ADP acquisition projects. The Committee notes the initiatives being taken within the Australian Public Service to remedy the problem of recruitment and retention but feels that much more needs to be done. In attempting to assess the cost effectiveness of the original Stratplan proposal the Committee found that not only had there been no adequate provision for measurement tools and performance indicators at the onset of the project but also that the identity of Stratplan and its outcomes had now become too inextricably confused with other departmental ADP initiatives. The Committee concluded that cost effectiveness could no longer be meaningfully quantified and that couching cost effectiveness in terms of foregone staff increases was of doubtful relevance to the decision making and review process. It is anticipated that this will be the Committee's final report on its monitoring of the implementation of Stratplan, other than on any responses to issues raised in this report which result in the tabling of a further Finance Minute. Reports 285 and 286-Advance to the Minister for Finance 1985-86 and 1986-87. The Advance to the Minister for Finance is a provision authorised by the annual Appropriation Acts and made available to the Minister for issue in accordance with the terms of the appropriations and Section 36a of the Audit Act 1901. Senators will be aware that each year the Committee examines expenditure from the Advance to ascertain whether that expenditure has been confined to urgent and unforeseen requirements for which provision could not have been made in the original or Additional Estimates. The Committee also seeks to ascertain whether the departments concerned have maintained efficient administration in the expenditure of funds under the items examined. Under current arrangements, the Department of Finance provides the Committee with copies of all approved applications for funds from the Advance where they would remain a final charge to the Advance at the close of the financial year. All these applications for funds must be accompanied by adequate supporting detail. While the Committee is satisfied that in most cases expenditure from the Advance in 1985-86 and 1986-87 was confined to urgent and unforeseen requirements, it continues to be concerned by the many instances of insufficient documentary information being provided by departments in support of their applications for funds from the Advance. The Committee has raised this shortcoming in previous reports. While the Committee recognises that the Department of Finance has attempted to ensure that departments comply with existing procedures to satisfy the Committee's requirements, it believes that the Department should now adopt a more rigorous approach to administering the AMF process. Departments are no less accountable for funds expended through this process than through any other. At a more fundamental level, the Committee doubts whether the current procedure enables the most timely and effective means of ensuring accountability. Given the delays which now occur between the incidence of expenditure from the Advance and its examination by the Committee, the Committee feels that perhaps there is a case for introducing a procedure which enables more immediate Parliamentary scrutiny. Further, the Committee questions whether the results it has achieved in the past in its involvement with the Advance to the Minister for Finance warrant the continued investment of its diminishing resources. The Committee intends to consider this matter in further detail. Report 287-Australian Taxation Office-Computer System Re-equipment and Redevelopment This report presents the findings of the Committee's review of the proposed computer system re-equipment and redevelopment program of the Australian Taxation Office. The report is the fifth to be tabled by the Committee under the terms of its standing reference (passed in the House of Representatives on 8 May 1985 and the Senate on 10 May 1985) to investigate and report on proposed acquisitions of Automatic Data Processing (ADP) facilities by Commonwealth departments and authorities staffed under the Public Service Act 1922. On 19 February 1987, the Treasurer wrote to the Chairman of the Committee indicating that Cabinet had given in-principle approval for a major staged computer systems re-equipment and redevelopment project to be undertaken by the Australian Taxation Office. The Treasurer advised the Chairman that Cabinet recognised the importance and urgency of the proposal and had asked the Commissioner of Taxation to make an immediate formal submission to the Committee. The Taxation Office would, in parallel with Committee consideration of the proposal, be developing a draft Request for Tender. The Treasurer requested that the Committee consider the matter in sufficient time to enable the Request for Tender to be issued in June 1987. While the Committee intended to table a report of its review before the end of the Autumn sittings of the 34th Parliament, the announcement of the federal election for 11 July and the concomitant dissolution of the 34th Parliament on 5 June prevented this from happening. On 2 June the Committee advised the Parliament that a report should be presented to the Parliament by the Sixteenth Committee of Public Accounts. The Taxation Office subsequently released its Request for Tender on 17 August 1987 and tenders closed on 24 November. The Committee regrets the delay that has occurred in the tabling of its report as a result of the federal election. The Committee supports the Australian Taxation Office in its endeavours to make better use of information technology and is firmly of the view that the Taxation Office has no real alternative but to proceed with its computer system re-equipment and redevelopment proposal. Nevertheless the Committee has a number of concerns with matters that relate to the proposal and has made recommendations accordingly. The Committee is concerned about the continuing shortage of suitably qualified computer personnel and the effects this problem will have on the Taxation Office's proposal. The Committee has recommended that the Tax Office look within its own ranks and train suitable tax staff to be qualified computer staff. The Committee is concerned about the management expertise of those charged with `driving' the re-equipment and redevelopment program through to completion and has recommended that the Tax Office set up a task force to be dedicated to the re-equipment and redevelopment program and that the task force be managed by highly experienced external resources. The Committee notes the project before the Tax Office is one of the largest of its kind to be undertaken in this country; The Committee is concerned with the justification of the project used by the Tax Office and in particular, the use of cost effectiveness analysis. The Committee is somewhat sceptical about the staff savings that are predicted by the Tax Office and which are the justification for the project. The Committee has recommended that the Tax Office re-evaluate the justification for its proposal and identify the proposal's potential benefits in terms of the objectives and performance targets defined in the office's Corporate Plan. The Committee has also recommended that the Tax Office and the Department of Finance adopt a co-ordinated and timely approach to the specification of appropriate performance indicators for the re-equipment and redevelopment program. The Committee notes that in justifying its proposal the Tax Office has not used revenue gains that might result from the new systems. The Tax Office advised the Committee that revenue gains had already been put forward to the Select Committee in the proposal for an Australia Card. However, subsequent to the Government's decision not to proceed with the Australia Card, the Tax Office advised the Committee that it was preparing for Cabinet consideration a proposal for the development of a high integrity numbering system as part of its computer system re-equipment and redevelopment proposal. The Tax Office advised the Committee that it would prepare a cost-benefit analysis of the re-equipment and redevelopment proposal which did not include the use of a high integrity number system. This analysis would be presented to Cabinet together with the proposal for the high integrity numbering system. The Committee has made recommendations in a number of other areas. They include: industrial relations; systems design; emergency computer sites; project estimates; and potential of participation by the Australian computer industry. The Committee believes the conclusions and recommendations it has made demonstrate a continuing need for thorough scrutiny of ADP acquisition proposals. The Committee notes, however, that the Australian Taxation Office has shown in some aspects of its proposal that it has benefited from the experience of other Commonwealth organisations and the scrutiny given to their ADP acquisition proposals. The Committee notes that this could be the last ADP acquisition proposal that it will review and report on. The Block Efficiency Scrutiny Unit reviewed the Commonwealth ADP acquisition process in January/February this year and in March forwarded a report to Cabinet for consideration. The Committee understands that the Scrutiny Unit's report sees the Committee's role in the major ADP acquisition area being greatly diminished if not being entirely removed. As a Committee of the Parliament the Public Accounts Committee is concerned that a final decision on this matter is still to be reached. The delay means that at least two departments that are presently preparing submissions for the Committee to review could be well wasting their time. The Committee is also having its Secretariat reduced from 15 staff to 5 staff so as to facilitate the new House of Representatives Standing Committees. So, even if the Committee should retain its standing reference to investigate and report on major ADP acquisition proposals it will not have the necessary staff to carry out its ADP work. In concluding it must be stated that the present Public Accounts Committee is very grateful for the work done by the 15th Committee and in particular, the members of the 15th Committee who served on the Committee's Information Technology Sub-Committee. Particular thanks go to the Chairman of that Sub-Committee, Mr Roger Price, MP. Report 288-Review of the Efficiency Audit-Administration of Capital Grants to Non-government School The 288th Report outlines the findings of the Public Accounts Committee's review of an efficiency audit by the Auditor-General on the administration of capital grants to non-government schools. The Auditor-General's Report was tabled on 23 September 1986. The audit identified serious deficiencies on the administration of capital grants to non-government schools. The Auditor-General's Report was tabled on 23 September 1986. The audit identified serious deficiencies in a number of areas related to the administration of the program. The major problems identified were the adequacy of guidelines and of assessment procedures, the efficiency and effectiveness of the operations of some components of the program and the monitoring of the program. The Committee noted that some of the findings and recommendations of the audit were out of date because of the delay in tabling the report after the collection of data. In addition, new arrangements for the payment of capital grants to non-government schools are being introduced. The Government has announced that as from January 1988, subject to the passage of necessary legislation, capital grants will be allocated as a block grant for internal distribution by authorities set up for that purpose. The Committee was pleased to note that the Department of Employment, Education and Training had taken action on a number of matters highlighted in the Auditor-General's Report or in the Committee's public hearings. However here were a number of matters which remain of concern to the Committee. A primary concern of the Committee was the need to protect the Commonwealth's financial interest. Section 26 (2) (c) of the States Grants (Schools Assistance) Act 1984 creates a Commonwealth interest, usually for a period of 20 years, in any asset valued in excess of $30,000 which is purchased with grant monies. Under this section school authorities may be required to repay to the Commonwealth an asset's depreciation value if the school ceases to use that asset for an approved purpose or sells it. The Audit found that a substantial number of schools had failed to observe grant conditions. It also found that there were deficiencies with the procedures, legislation and other documentation which put in doubt the Commonwealth's ability to recover monies. Notwithstanding advice that under the new arrangements schools will be required to provide security to Block Grant Authorities for the protection of the Commonwealth's financial interest, the Committee remains to be convinced that the new arrangements will be sufficient. The Committee has recommended that the Department develop comprehensive guidelines which address the protection of the Commonwealth's interest, that it ensures schools receiving grants are aware of their obligations and that it seek legal advice as to its current capacity to enforce recovery action. The Committee is also concerned about a lack of clearly defined objectives for the capital grants program. The Committee acknowledges that the Department had indicated in its guidelines for the new program that the Government's primary objective is to `improve educational outcomes in schools catering for students from low socio-economic backgrounds'. However, the Committee believes the Department should have a more comprehensive agreed statement of objectives as well as valid performance indicators with which to measure achievement of these objectives. The Committee believes that the Department should also develop clear assessment procedures for determining eligibility for grants. Of particular concern was the need for standard methods for assessing schools' financial and socio-economic need, as well as for determining the relative importance of financial, socio-economic and educational need. In the course of its inquiry, the Committee examined the proposed formula for distributing funds under the block grant arrangements. The Committee believes that the formula as proposed may produce anomalies. It may also be at odds with the Government's objective for the program. The Committee has recommended that the Department examine funding outcomes for schools of equal socio-economic status affiliated with different block grant authorities to ensure that anomalies do not result from the current formula. I commend the reports to Senators. Senator Watson —I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator WATSON —I seek leave to make a number of personal comments on the report in my capacity as Deputy Chairman of the Committee. Leave granted. Senator WATSON —I wish to make some comments about report 281 on the activities of the Committee from July 1986 to June 1987. In doing so, I acknowledge the work of a former Chairman of the Committee, Senator George Georges, whose resignation took place earlier this year. I thank him for his leadership, guidance and contribution to the work and status of this Committee. At the same time I wish the new Chairman, Mr Robert Tickner, the best of success in what I think will be a difficult and traumatic period for the Joint Committee of Public Accounts. Indeed, today is a very sad day for our Public Accounts Committee because the wreckers have actually moved and taken away a lot of the physical resources and facilities that were enjoyed by this Committee. Earlier this year the Joint Committee of Public Accounts received notification that its secretariat was to be cut to one-third of its previous level. Today the staff are moving out. It is a sad day. This is a wrecking not by the Parliament but by the Executive arm of the Australian Labor Party. As a result, the capacity of the Committee to fulfil its statutory obligations to the Parliament and to the people of Australia will be seriously limited. We have now reached a point in our history where it is the obligation of the Parliament-which includes this Senate-to take the Executive to task for this state of affairs. I remind the Senate that it is a feature of our system of government that a check be kept on executive government to ensure that it is complying with the wishes of the people and the Parliament. The Public Accounts Committee is a vital cog in this mechanism. It is becoming increasingly apparent that the actions of the Government are working to restrict the scrutiny operations not only of the Public Accounts Committee but also of other scrutiny organisations within the parliamentary realm. Indeed, this is to be deplored. At a time when the Hawke Government is finally coming to terms with the need to reduce government expenditure significantly, it is surely a very false economy to restrict the operations of bodies that can keep a check on inefficiencies and the wastage of public money. I mention not only the Public Accounts Committee but also the Auditor-General. He now reports that, in rounds of talks with the Department of Finance prior to the Budget, the Australian Audit Office was persistently lobbied in an effort to extract a commitment for staff cuts to offset the recurrent costs of implementing information technology programs. I have made this linkage because to some people the Public Accounts Committee is the parliamentary arm of the Auditor-General. In his latest report the Auditor-General acknowledges the important work that has been done by the Public Accounts Committee. There is an inference in that report that the Auditor-General is somewhat concerned about the cut in our resources. I reiterate my earlier comments-that cost savings measures are not appropriate in an area where considerable savings are actually generated for the Government in the form of greater efficiencies, loss prevention and improved standards of accounting and accountability. I think that one of the features of the Public Accounts Committee since I have been a member has been the upgrading of the standard of its stewardship and reporting to this Parliament. To constrain the activities of both the Public Accounts Committee and the Auditor-General is short-sighted in the extreme. They both have an integral role in guaranteeing that the public accountability obligations of government departments and instrumentalities are fully met. The importance of this function of democracy should not and cannot be overlooked. Despite this the Department of Finance has made it clear to the Australian Audit Office, and the Government has made it clear by virtue of taking away our resources in such a draconian manner, that it is the Department's ambition to circumscribe the future exercise of the external audit function. Specifically, the Department has announced its intention to initiate a comprehensive review of the administration and work loads of the Australian Audit Office. What a cheek! That Office is supposed to be an independent arm responsible to the Parliament. Yet the Department of Finance has announced its intention to initiate a comprehensive review of the administration of work loads of the Australian Audit Office should additional resources be sought in the future. That is blackmail. The Department of Finance is trying to blackmail the Auditor-General's Office. That is a serious matter and I think it is one that must be taken up by all parties in this Parliament. I hope we can get some support from the Australian Democrats as well as from the more enlightened members of the Australian Labor Party. Such a move would be in breach of the Auditor-General's statutory responsibilities to determine the manner in which the audit will be conducted. I believe it is a measure of the arrogance of this Government that a Minister would allow his Department to act in such flagrant disregard of statutory provisions. I draw the attention of honourable senators to the words of Barry Jones, a former distinguished member of our Public Accounts Committee-a member when, perhaps, it was in its heyday. These words were said in 1979 when he supported the extension of scrutineering functions of the Public Accounts Committee. I believe these comments are pertinent to the current debate. Mr Jones, who is now a member of the Australian Labor Party Executive, said: If the Westminster system is to survive- these are pretty dramatic words; what we are really seeing is a demise of our Westminster system in this Parliament today- it must depend on two elements. Those two elements are `disclosure' and `accountability'. The importance of the functions of both the Public Accounts Committee and the Australian Audit Office in facilitating this disclosure and accountability should never be lost sight of in the rush to fulfil commitments in other areas. By means of the Auditor-General's reports and the Public Accounts Committees' examination of them, the Parliament-this Senate and the House of Representatives-has been able to identify numerous areas of waste that have been an unnecessary drain on taxpayers' resources. In several reports alone these savings have actually amounted to millions of dollars a year. I suggest that we cannot afford to restrict the effective operation of the Australian Audit Office and the Public Accounts Committee or any other parliamentary body concerned with the scrutiny of public money. A comment has been made in another forum concerning parliamentary scrutiny in another equally important area-defence and intelligence. The comment is still very relevant. If the price of liberty is eternal vigilance, then the price of parliamentary democracy is eternal scrutiny. I believe that we are losing some of the scrutiny as a result of what is happening. If we examine some of the other things that the Government is doing we find that it has failed to appoint the Ombudsman, has increased the fees applicable to the Administrative Appeals Tribunal, has cut resources to the Australian Audit Office and has reduced the effectiveness of the Public Accounts Committee. Yet it expects it to fulfil its major statutory roles for which it is accountable not to the Executive but to the Parliament itself. I acknowledge that the Executive branch of Government has decided to increase the number of committees in the House of Representatives. In doing so it is going to take resources from the other committees, which include the Standing Committee on Foreign Affairs, Defence and Trade, a very big and important committee. That Committee will lose resources, so I ask its members to speak up, too. The Public Accounts Committee, which had a staff of 15, is now expected to operate with the same number of staff as the House of Representatives committee that deals with Aboriginal affairs. That committee has a staff of five, whereas Senate committees in such limited areas can conduct their hearings very effectively with a staff of three. The House of Representatives committee on the environment, also has a staff of five and has the same classification as the Public Accounts Committee. Surely it is quite unfair to have disproportionate work loads for some committees compared with others. I submit that very little thought has been given to the establishment and staffing of these committees. I acknowledge that Madam Speaker believes that we need additional staff. I also acknowledge that she has written to the Minister for Finance (Senator Walsh). But I certainly hope that he is not going to follow the line that he took previously, because we believe that we need to operate with a staff of about 10. We are prepared to cut our cloth, we are prepared to trim our sails, in line with the need for reduced government expenditure, but we are not prepared to be annihilated and we are not prepared to lie down so that we cannot adequately discharge all our responsibilities to this Parliament and to the people of Australia. Senator BISHOP(New South Wales) —by leave-I would like to make some remarks concerning the tabling of the Joint Committee of Public Accounts reports. Senator Watson has pointed out that he has tabled nine reports and that the volume of work that is carried out by the Public Accounts Committee is in pursuance of the statutory obligation that it bears. A perusal of report No. 28, the report of activities from 1986 to 1987, which for the most part predates my coming on to the Committee, means that I rise on this occasion with a degree of sadness. I was proud to become a member of the Joint Committee of Public Accounts. It has been a strong, vigorous and important watchdog committee guarding the rights of the Parliament and therefore the rights of the people. But I am disappointed to have to report that this Committee is now under attack. In my view, an attempt is being made to stifle it and the attempt is being made on two counts. Senator Watson referred to the various standing committees which have been established in the House of Representatives and which by definition are committees peopled by only one-half of the Parliament, that is, the House of Representatives, with no senators. They are, therefore, more susceptible to Government pressure than is a committee which has members of this House as part of its membership. This means that these committees have been set up to compete for business with the Public Accounts Committee. Indeed, we have seen the decimation of the staff that has been hithertofore provided to the Public Accounts Committee. The creation of those House of Representatives committees is being used as the reason for that loss of staff-truly a catch-22 situation. The argument goes this way: there are nine new standing committees in the House of Representatives. Senator Tambling —All with Government majorities. Senator BISHOP —All with Government majorities, as has been pointed out. The Government then said that parity of staffing would be the order of the day-five staff each. That means that the Public Accounts Committee has to lose staff. Let us look at how reasonable that statement is. Let us look at those nine committees. The Legal and Constitutional Affairs Committee, with a staff of five, has no business, no reference, no work to do. The Environment, Recreation and the Arts Committee has a staff of five and no reference-no work to do. The Employment, Education and Training Committee has a staff of five with two references. The Community Affairs Committee has a staff of five with no references-no work to do. The Standing Committee on Aboriginal Affairs has a staff of four with one reference-little work to do. The Industry, Science and Technology Committee has a staff of five with no reference-no work to do. The Transport, Communications and Infrastructure Committee has a staff of five with one reference-little work to do. The Finance and Public Administration Committee has a staff of five and has taken over the efficiency audit concerning the Australian Taxation Office covering eight areas, an area which the Public Accounts Committee, under its statute, is obliged to deal with. The Committee on Procedure has a staff of two, with no reference and no business. The result is that, of the nine competing committees, five have no reference and no work to do, yet between them have a staff of 25; two have one reference; and one has one reference plus. It is very disappointing to compare the work that those committees are supposed to be competing for with the responsibility that the Public Accounts Committee has under the Public Accounts Committee Act 1951. Under that Act it is charged with the examination of the accounts of the receipts and expenditure of the Commonwealth; with the examination of the financial affairs of authorities of the Commonwealth to which the Act applies and of intergovernmental bodies; and with the examination of all reports of the Auditor-General, including reports of the results of efficiency audits. Those reports have now been taken over, in a cursory manner, by one of the House of Representatives committees, but that in no way excuses or abrogates the responsibility that the Public Accounts Committee has. It is charged with reporting to both Houses of the Parliament-not one House-in any terms it sees fit, on any items or matters that it is deemed correct for that Committee to examine, in its judgment. It is to report to both Houses of the Parliament on any alteration which the Committee thinks desirable in the form of public accounts. It is to inquire into any connection with the public accounts which is referred to it by either House of the Parliament, and to report back to the Parliament. One such piece of business that we are currently pursuing is the purchase, or the proposed purchase, by the Taxation Office of automatic data processing equipment valued at some $700m. That is not something of a cursory nature; it is something that demands the closest scrutiny. Yet we in the Public Accounts Committee are left in a situation of not knowing whether the Executive arm of Government will choose to let that reference remain with the Committee. Let us examine the effective work which the Committee has already carried out. The Medifraud reports could have been deemed embarrassing to the Government but, nonetheless, served the Parliament and the people well and resulted in fundamental changes, both in 1985 and 1986, in the health legislation amendment Acts. Another report carried out by the Public Accounts Committee concerned a Department of Finance report on the selection and development of senior management in the Commonwealth Public Service. The Government, in 1983, brought down a paper concerning the reforming of the Public Service and subsequent legislation reflected the reports that were brought down by the Public Accounts Committee. Therefore, the question that we are really addressing today in having these reports tabled is this: Will the Parliament allow the important work of the Public Accounts Committee to be jeopardised? Will the Senate condone the accountability of the Government being forgone? I would point out that the Public Accounts Committee is but one of five prongs of attack against lack of accountability in government. We have seen stringent fees introduced under the Freedom of Information Act to make accountability more difficult. We have seen filing fees for the Administrative Appeals Tribunal increased to $240. No more the time when appealing against government decisions was within the reach of the ordinary man, such as the $2 fee that used to apply in the tax area. People now have to find the sum of some $240. The Ombudsman has not been re-appointed. Then we come to the crucial question of the Auditor-General himself-the Auditor-General who is taking advantage of early retirement, the Auditor-General who pointed out the important interaction between his Department and the work of the Public Accounts Committee. I think it is important to quote the conclusions from his report: Continuation of some recent trends could well see the AAO in for a turbulent time. I hope that this will not prove to be the case. Ultimately, of course, it is for the community to determine whether the Commonwealth is to continue to have a robust, effective and independent external audit institution; or, perhaps, to make do with some sort of docile client of the Department of Finance. If it is to be the former, the pre-requisites are a strong and clear audit mandate, and resourcing arrangements that do not prejudice the institution's independence. The Australian Financial Review, in its editorial on 1 December, picked up this theme and said that if we are to have a vigorous, robust, independent Auditor-General, he needs to be properly financed, but that if there needs to be a watch-dog for that watch-dog-that is, who is to police the Auditor-General?-it ought properly to be the Public Accounts Committee. The Auditor-General's report is very valuable in that it brings home the interaction between the accountability procedures of the independent Auditor and the watch-dog status that the Public Accounts Committee exercises. We cannot afford, in a democracy, as Senator Watson ably said, to allow scrutiny to become a second-class function of the Parliament. It is my hope that the Senate, in paying attention to these reports and in hearing, perhaps, the pleas of those who speak on their tabling will result in the Senate, of its own initiative, taking some action which will result in the watch-dog remaining able to carry out its function. Senator STONE(Queensland-Leader of the National Party of Australia) —by leave-Some little time ago in this place, following the tabling of the report of the Auditor-General, I addressed a question on a matter arising out of that report to the Minister for Finance (Senator Walsh) in the course of which I expressed some concern about the comments the Auditor-General had made relating to what he clearly believes-although his words were more modulated than perhaps mine will now be-to be an attempt by the Department of Finance, wholly supported by its Minister, to suppress the activities of the Office of the Auditor-General and to restrict the inquiry and accountability enforcement functions of that office. In his response to me on that occasion, the Minister for Finance said that the Government, including himself, was wholly supportive of the functional independence of the Office of the Auditor-General, and of the statutory officer bearing the title, the Auditor-General himself, but that he, as Minister for Finance, and the Government were determined to ensure that when it came to financial provision for the Office of the Auditor-General to carry out its duties, then that office, like any other agency of the Commonwealth, would be subject to the control of the Executive. With the procedures of this place I did not make an opportunity to point out to the Minister for Finance the obvious disjunction between the two points that he had raised, namely, the functional independence of the Office of the Auditor-General and the financial provision for that office, and the potential incompatibility of what he had said. It is impossible to go on asserting that one supports and will maintain the functional independence of the Office of the Auditor-General and the functional independence of the Joint Committee of Public Accounts of this Parliament but at the same time, by executive action, to deprive both those bodies of the resources, in particular the staffing resources, which are required to make good that functional independence. The claim of functional independence is, in short, hollow unless financial provision to an adequate degree is made to ensure that that functional independence can be maintained. Earlier today, in speaking to the Statute Law (Miscellaneous Provisions) Bill, which had been returned to this chamber from the other place after certain amendments had been required of the House of Representatives by the Senate, Senator Watson also remarked upon the position today of the Public Accounts Committee. This afternoon, when presenting these reports in his capacity as Deputy Chairman of the Joint Committee of Public Accounts, he reiterated, very ably, a number of concerns which he then foreshadowed. Madam Acting Deputy President, in view of your occupancy of the chair at this time I take particular interest in the fact that it is ironic that Government senators, who have almost made a profession, even in the short time I have been here, out of criticising the Government of Queensland for the fact that, at present, it has no public accounts committee, now want to emasculate the Joint Committee of Public Accounts of this Parliament. It is a nice irony and as I said, Madam Acting Deputy President, I make the point in your presence as it is particularly apt. Although I am not aware whether any specific statement has been made on this subject by the present Premier of Queensland, I should be very surprised if we do not find, before very long, that Government senators are deprived of that refrain. Senator Hamer —There has been a statement. Senator STONE —I thank Senator Hamer for reminding me that there has already been a statement of intention by the new Premier, Mr Ahern, in that regard. The Joint Committee of Public Accounts is a very particular committee of the Parliament. It is, first of all, a statutory committee in line with, I think, the Joint Committee of Public Works, and in that sense it is in a different category from the committees which are established under sessional orders of the Parliament. I venture to say, in the light of the evidence that the Government has so far given us of its attitude towards the Joint Committee of Public Accounts, that had it not been a statutory committee it would already have been a great deal more emasculated than it has been. It was not possible for the Government, when it sought to bring about a major restructuring of the committee system, particularly of the House of Representatives, and, in an associated manner, of the Senate, to move in like manner on the Joint Committee of Public Accounts or, for that matter, the Joint Committee of Public Works because to do so would have required legislation. Although one can never be quite certain about the Australian Democrats on these matters, I venture to say that even that Party would not have given its assent to legislation to disembowel the Joint Committee of Public Accounts by legislative act, as a consequence of which the Government has fallen back upon executive act. I said that this Committee was an historic committee of the Parliament. Professor F. A. Bland, who I think was its first Chairman or at least an early Chairman, brought to the operations of that Committee a standing and a prestige, and above all an intellectual attainment, which gradually forced the operations of that Committee, after its establishment, into the forefront of the watchdog activities of the Parliament. Over the years it has grown further in that watchdog role. There are indeed two vital instruments of parliamentary control, of which the Auditor-General's office is one and the Public Accounts Committee is the other. The situation today, as Senator Watson has pointed out, is that the staffing of the Public Accounts Committee has been arbitrarily reduced by the Minister for Finance, by the Government, from its previous complement of 15 people to five people, on the totally false rationalisation that the other committees of the House of Representatives are granted only five staff and that therefore it is inappropriate for the Joint Committee of Public Accounts to be more numerously staffed-an argument which Senator Watson and Senator Bishop have between them so capably and comprehensively blown out of the water that I do not need to spend further time doing so. I could speak at much greater length on this subject but, particularly in light of the general constraints on the time of the Senate at this time, I do not propose to do so. However, I want to stress to the Government side of the House that I and, I believe, all senators on this side of the House regard these developments in the working of the Joint Committee of Public Accounts as a very serious matter. It is not a matter of normal political controversy nor a matter on which there could be tenable views on the other side of the chamber different from those on this side. This is a matter concerning the functioning of the Parliament, and I put it to the Government side of the House that it concerns honourable senators on that side as much as it concerns honourable senators on this side. The fact that I emphasised the word `senators' in that context has to do with my distinction between senators on the one hand and Ministers of the Executive Government on the other. Senator CHANEY(Western Australia-Leader of the Opposition) —by leave-I start by picking up the point which has just been made by Senator Stone, namely, that this is essentially a parliamentary rather than an Executive or indeed an Opposition matter. I am pleased, therefore, that it was raised originally by Senator Watson as a member of the Joint Standing Committee of Public Accounts and supported by Senator Bishop, who has the same role. The intervention by a number of others is simply meant to indicate to the Senate, and to the Government in particular, that we regard this matter very seriously and are concerned at the range of actions being taken by the Government at the moment to reduce the scrutiny of government which is undertaken by various bodies, of which the Public Accounts Committee is one. I do not wish to go over the ground which was very adequately covered by other senators. I simply adopt the description given by Senator Bishop of the five areas in which there are apparent reductions in the capacity of the Auditor-General, along with the Public Accounts Committee and other bodies, to subject the acts of government to critical scrutiny. There are a couple of additional points worth making which were touched upon, perhaps lightly, in earlier comments. Senator Walsh has sought to excuse his actions in this matter by referring to the inescapable obligations of the Executive Government with respect to the raising of revenue and the appropriation of moneys. It is true that the executive government has a fundamental role in that, along with the Parliament. It is absolutely true that the government bears the odium of imposing taxes which are used to fund whatever activities government undertakes, including the activities of the Parliament itself. But whilst the Opposition will always give due consideration to the broader responsibilities of government, and would not seek to make claims on the public purse lightly or recklessly or without regard to the burden of taxation involved, it is a fact that wasteful government expenditure is a far more significant burden to taxpayers than is the cost of scrutiny. Indeed, it is the proper scrutiny of government that will avoid waste. Let us take the example of the waste that we have been discussing with respect to the Amann Aviation Pty Ltd contract-the gross inefficiency, admitted by the Government, with respect to the letting of a contract. That is but one very recent example of a very costly error. There have been many which involve far larger sums, but I do not think I need to labour the point that governments can be extremely wasteful with respect to expenditure. The work of the Public Accounts Committee is not partisan work. The Committee is not a partisan committee in a political sense. It is a committee in which all parties are engaged. Until recently it was under the chairmanship of former Senator George Georges who, however controversial in some of his political attitudes, performed his Public Accounts duties as a senator and as a parliamentarian and had the full support of senators and members from all sides. I stress the fact that this is not a partisan political issue. I am glad that Senator Button is now back in the chamber because the main reason I wished to speak was to say to the Government that at this stage precipitate action by the Opposition is not necessary, as the Committee and the Leader of the Opposition (Mr Howard) have taken up with the Government the need for greater resources for the Public Accounts Committee. We hope the Government will give rational and principled consideration to that request. However, if the Government fails to do that, I do not think that the Opposition can accept that and say that that is the end of the matter. Having earlier this week passed a resolution through the Senate about a matter which we thought was important, namely, the treatment of ex-servicemen who have had the statute of limitations pleaded against them after the Government said that it would not plead the statute-and having heard the Minister for Justice (Senator Tate) say in this chamber that the Government did not intend even to consider the resolution of the Senate-I have to say that I do not think it would be adequate for the Opposition simply to tackle this matter by saying, `We will pass a motion'. I am sure that the Australian Democrats would join with us on this because I think they would share the common parliamentary view that there should be adequate scrutiny of the Government's actions. I am sorry that there is no one here from the Australian Democrats to respond to this point, but I have little doubt, given their past attitude to staffing of Senate committees, that they would support us in that. I put the Government on notice that, if it is not prepared to give reasonable and principled consideration to the needs of the Public Accounts Committee, it is certainly my current view that the Opposition should take action in one of the few ways available to us and should simply say to the Government that there are elements of its legislative program that we will not be prepared to consider and pass until adequate arrangements have been made for the staffing of that parliamentary committee. I have given the matter very careful consideration. I cannot see that we have any other sanction to offer. I therefore simply put the Government on notice that that is a sanction which we will give very serious consideration to using if we do not get a rational response from the Government. I ask the Minister at the table, the Minister for Industry, Technology and Commerce (Senator Button), to advise his colleagues that that is our view. I ask him also to encourage the Prime Minister (Mr Hawke) and the Minister for Finance to give early and sensible consideration to the request which has been made of them. I would ask the Minister to remember that this is not a matter of party politics and the Labor members and senators, just as much as Liberal or National senators and members, are fully engaged in performing a duty which is quite outside the partisan political duties which take up the bulk of our time in this Parliament. I for one would wish to see us doing that job efficiently and well. I hope that the Government will give very careful consideration to that matter and provide adequate resources to this and other organs of scrutiny of government. Senator BUTTON(Victoria-Leader of the Government in the Senate) —by leave-I respond by saying, to use Senator Chaney's terminology, that I will convey the message, and the Government will give principled and adequate consideration to the matters he raised. Senator SHORT(Victoria)(4.21) —The time constraints on us all at the moment are very acute. Therefore I will be very brief and say just a few of the things I would like to have said. I wish to say a few words for two reasons. Firstly, I was a member of the Joint Committee of Public Accounts during my first two years in the Parliament, 1976 and 1977. I have had first-hand experience of that Committee, as one of its members, and that alone was sufficient for me to be very impressed with its significance and importance. Secondly, as has been said very well today by Senator Watson, Senator Stone, Senator Bishop and Senator Chaney, the matter at hand is of the very greatest importance because it goes to the whole root of the role of the Executive compared with that of the Parliament. The Public Accounts Committee had its genesis in the Westminster system. Its traditions go back into the last century. It is one of the great traditions of the Westminster system that we picked up here in Australia a long time ago. Indeed, before Federation there was a Public Accounts Committee in the colony of Victoria. Also, in the early years of the Federal Parliament there was a Public Accounts Committee. I think it first met in 1913. It was disbanded in the early 1930s as a so-called economy measure and was resurrected, as Senator Stone mentioned before, under the leadership of that very notable parliamentarian, Professor Bland. So we are not talking about just another committee. We are talking about one of the basic institutions of our parliamentary system. It is a basic institution for two particular reasons and, as I said, they relate to the role of the Parliament as opposed to the role of the Executive. Of all the things that Parliament ought to be concerned about, surely the prime one is the scrutiny of the operations of government on behalf of the people that the parliament represents. The Committee is all about scrutiny and therefore it is all about the accountability of the Parliament to the electors of Australia who have placed their trust in us politicians to conduct the affairs of government properly. Senator Button —Are you attacking me? Senator SHORT —Not on this occasion, but the point is well taken. Senator Michael Baume —A Short point. Senator SHORT —I will take the point shortly, yes. To emasculate this basic committee of the Parliament for the reasons given seems really to be neither logical nor comprehensible. The Committee has developed its work very assiduously and very efficiently over the past decade or more. It is now an even more important forum than it was in the past. To argue that it ought to have its resources reduced from 15 to five for the sorts of reasons that have been advanced by the Government-that that is the level that ought to be applied to all committees-really seems downright nonsense. It makes no sense unless, quite frankly, other more sinister motives are involved in the whole thing. I rather have a feeling that that is perhaps not too far from the truth. There are several reasons why the situation is very serious and why the secretariat of this Committee should not be reduced. They have been outlined very well up to date. I will not repeat them all. All I wish to reiterate in support of the comments made by other speakers on this side of the House is that we are not talking about just an economy measure or streamlining and equalising resources available to the Parliament; we are talking about the future of possibly the greatest watchdog committee that this Parliament has on behalf of the Australian people. Senator MICHAEL BAUME(New South Wales) —by leave-This attempt by the Government to undermine the effectiveness of the Joint Committee of Public Accounts (PAC) is indeed sinister. I go further than my good friend and colleague Senator Short, who said that it may be sinister. I believe it certainly is. I believe it is part of a pattern of attack by an arrogant government on the capacity of the Parliament properly to supervise its activities. I must say that when this attack on the Public Accounts Committee's effectiveness is added to the other assaults and attempts to diminish the capacity of any element of this Parliament to withstand the Executive and to limit its power-when we see this attack in that context-the word `sinister' certainly is appropriate. We are only too well aware of the close link between the Public Accounts Committee and the Auditor-General. Of course, the Auditor-General is also under attack. The agenda of the Public Accounts Committee is not set by the Government but by the Committee itself and the ambit of the Auditor-General's reports. Senator Watson —By statute. Senator MICHAEL BAUME —And as my friend Senator Watson says, by statute. So any attempt by the Government to limit the capacity of the Public Accounts Committee to follow its statutory obligations and to respond to the statements by the Auditor-General-particularly on efficiency audits in various areas-is, I believe, a matter of major significance and concern. This relationship between the Auditor-General and the Public Accounts Committee was raised in an editorial in the Australian Financial Review at the beginning of this month. It is interesting to note what the Australian Financial Review said. Mr Monaghan, the Auditor-General, had expressed grave concern about Budget moves to cut his staff to pay for a computer re-equipment program which he said would have `crippled' the Audit Office and were `in no uncertain terms . . . a usurpation of the Auditor-General's statutory responsibility to determine the manner in which the audit function is exercised'. The editorial went on to say: . . . Mr Monaghan feels: ``it is for the community to determine whether the Commonwealth is to continue to have a robust, effective and independent external audit institution-or perhaps to make do with some sort of docile client of the Department of Finance''. With the current Minister for Finance (Senator Walsh), that would certainly be a disastrous situation. The Financial Review then concluded: As the Audit Office is our watchdog against the power of the executive, we should watch very closely any attempt by governments to interfere with its actions. There is no doubt that the Auditor-General and the Public Accounts Committee have been very effective in pointing out areas of disastrous mismanagement by this Government. For example, the Auditor-General exposed inefficiencies in the Australian Taxation Office, scandals in the administration of the $1.1 billion community employment program (CEP)-I might say that the Auditor-General followed the Waste Watch Committee in exposing scandalous waste under the CEP, as the Auditor-General followed the Waste Watch Committee in revealing scandalous waste on the new Parliament House program-and he also outlined the failure of the Australian Broadcasting Corporation (ABC) to meet basic financial control requirements. Clearly, the attack on the Auditor-General seems to be part of this attack on organisations which have a duty to limit, supervise and publicise inappropriate exercise of government power and incompetent administration. One can well ask why Mr Monaghan, the Auditor-General, is retiring early. I do not know the reason, but I feel confident that, if he had had greater confidence in the willingness of this Government to listen to, act on and respond effectively to the Auditor-General's concerns, he might have taken a different view. There is no doubt in my mind that in many other areas the Government has set out deliberately to reduce the power of those who seek to limit the Government's exercise of its power. Because of the attack on the freedom of information area, one has to pay a lodgment fee whenever one wants to get information under the freedom of information legislation. This Government demanded that I pay a $400 fee to get information, which should have been public information, on grants made under the CEP to various political groups, trade unions and front organisation groups. Those grants should never have been made; they were a disgrace. This Government sought to cover that up. By imposing charges on gaining information under the freedom of information legislation, it is seeking to limit access to such information. In some instances the filing fee for a matter to go before the Administrative Appeals Tribunal exceeds the amount in dispute, particularly in taxation cases. There has been a failure to replace the now retired Ombudsman, or to advertise for the position. This is part of a pattern of attack on any organisation, any proper structure, which is there to limit the exercise of power. Any government which has been in office and has adopted the arrogant approach of this Government would naturally seek to limit the capacity of senators, members of parliament and the public who seek to limit the exercise of its power. This effort is the latest example of that arrogance and determination not to be held accountable. Message received from the House of Representatives intimating that it had agreed to the amendments made by the Senate to this Bill. Consideration resumed. The CHAIRMAN —Amendments to the Australian National University Amendment Bill, the Maritime College Amendment Bill and the Canberra College of Advanced Education Amendment Bill have been circulated. With the concurrence of the Committee, I propose to deal with those three Bills separately, after which I suggest that the remaining four Bills be considered together. Senator Macklin-Due to the failure of the amendments to the major Bill, I do not propose to proceed with them. Bills-by leave-taken as a whole, and agreed to. Bills reported without amendment; report adopted. Bills (on motion by Senator Gareth Evans) read a third time. Debate resumed from 5 November, on motion by Senator Reynolds: That the Bill be now read a second time. Amendment (by Senator Vanstone) negatived: At end of motion, add ``, but the Senate condemns the Government for: (a) its arbitrary and unnecessary restrictions on the rights of tertiary institutions to attract fee paying students from overseas; and (b) refusing admission into tertiary education to Australian students who are not awarded a free place but who are prepared to pay a fee for admission on the same basis as overseas students''. Senator MACKLIN(Queensland)(4.37) —I move: Leave out all words after ``That'', insert: ``this bill be withdrawn, redrafted and presented with a Bill to amend the Overseas Students Charge Collection Act, to provide for: (a) the payment of the charge during the year in 4 equal instalments; and (b) exemption from the charge for holders of post-graduate scholarships awarded by Australian institutions or by the Australian-American Educational Foundation, and of awards provided by Commonwealth departments or authorities''. I do not wish to speak to this amendment at great length. I have rehearsed many of the points previously. I believe that the instalment plan would go a long way towards solving many of the personally difficult areas which we have encountered regarding the overseas students charge, particularly the bad name that Australia is getting in many countries-not because we are not assisting them but because we are assisting them in such a way as to give rise to bad publicity in those countries. I visited Malaysia and Thailand recently and in both of those countries this problem was raised directly with me. Obviously it is of great concern to many people in government. I turn now to the exemption of overseas students holding post-graduate scholarships from Australian universities and the Australian-American Educational Foundation and awards provided by Commonwealth departments or authorities. As I argued last year, when the measure was introduced for the first time, it is an extraordinarily short-sighted measure. What is the point of trying to attract overseas students through scholarships if we intend to discount severely their value by demanding that they pay a charge of the order of $6,000 or $7,000 out of a stipend of little more than $8,000? I believe that a relatively cheap exercise has taken place. The total amount of money is negligible. What we ought to do is exempt those scholarships from the payment so that we do not seek to attract people from a whole range of overseas countries when they find, on accepting the scholarship, that they are required to pay a visa fee which is sometimes only $1,000 less than the total award. It makes a mockery of our exercise of trying to assist many of those students in worthwhile graduate and post-graduate studies and it makes a mockery of our attempts in the international education arena to provide educational opportunities particularly to developing countries. Amendment negatived. Original question resolved in the affirmative. Bill read a second time. The Bill. Senator MACKLIN(Queensland)(4.41) —I wish to ask the Minister for Transport and Communications (Senator Gareth Evans) only one question. It is in regard to the marketing overseas of Australia's education services. There has obviously been intense competition in a number of countries between individual institutions, State governments, Austrade, the Overseas Student Office and private agents. I imagine that the Government has had reported to it-as I and I am sure the Opposition have had reported to us-many of the problems this competition has given rise to. Has the Government looked at attempting to co-ordinate this activity by way of some single agency, an agency which would be able to maintain standards and prevent practices that could be damaging to Australia's image and to Australia's educational institutions? Has it looked at the possibility of making this a worthwhile educational and trading exercise? Senator GARETH EVANS(Victoria-Minister for Transport and Communications)(4.42) —I am advised that there is no specific proposal for establishing a co-ordinating agency for this purpose but the Government is conscious of this problem to which Senator Macklin refers. The Government is very anxious to encourage discussion on an on going basis between the different institutions and people to whom he refers, in the hope that the problems of the kind to which Senator Macklin adverts-which are real-can be avoided. It is a matter of keeping a close, monitoring eye on the situation. If there becomes an apparent need for some sort of institutional arrangement to deal with this matter, as distinct from more informal discussions, we will have another look at what Senator Macklin is saying. Bill agreed to. Bill reported without amendment; report adopted. Bill (on motion by Senator Gareth Evans) read a third time. Debate resumed from 23 November, on motion by Senator Richardson: That the Bills be now read a second time. Senator STONE(Queensland-Leader of the National Party of Australia)(4.44) —The Senate is debating the Taxation Laws Amendment Bill (No. 4), the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill and the Sales Tax (Off-shore Installations) Amendment Bill. I make it clear that the Opposition will not oppose the Taxation Laws Amendment Bill (No. 4); we will move an amendment, the terms of which have been circulated in my name, to the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill; and we will not oppose the Sales Tax (Off-shore Installations) Amendment Bill. The first thing I want to do in relation to this collection of Bills is once again remark on their magnitude, on their sheer volume. I think I am correct in saying that the Taxation Laws Amendment Bill (No. 4) is some 75 pages in length, running to 92 clauses. The Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill 1987 is an even more massive piece of work of the draftsman, running to 146 pages and containing some 75 clauses. We see here a process whereby, because of the innate complexity of the existing taxation system, the need to add to that complexity by further amendments for the purpose of blocking loopholes or making changes at the margin continues apace. We have already reached the point-if we have not reached it we cannot be far way from it-where even the most knowledgable tax practitioner, leaving aside the ordinary citizen, must doubt at times whether he or she any longer has any real command over the totality of the tax law. The Taxation Laws Amendment Bill (No. 4) is particularly notable for the fact that it is the Bill which reintroduces to the tax law negative gearing in respect of investment in dwellings. Of course the Government never did restrict negative gearing in investment in shares or other forms of property. It simply had a view that somehow it was wrong to undertake investment in providing dwellings for rental to other Australians, and it moved to deny the appropriate taxation deductions for doing so. At the time, the Opposition sought to point out to the Government the folly of its action in that regard-folly on two quite different counts. First as a matter of taxation principle, of fundamental approach to the tax law, when a taxpayer acquires assessable income from a return on property, whether it be interest, dividends, or rent, as in this case, it is appropriate that expenditure necessarily incurred in the production of that income be a deduction from the income to be assessed by the Commissioner of Taxation. That, of course, is the principle followed throughout the tax law, including in the case of companies which earn profits. But to the extent that the earning of those profits requires them to borrow, the costs of that borrowing become, quite properly, a deduction in the accounts of a company when arriving at its assessable income as distinct from its gross profit. The Government's action of introducing its so-called anti-negative gearing provisions was therefore a breach of that fundamental principle of taxation law. The Government justified that breach on the ground, as it argued, that some investors were building or purchasing dwellings for rental. These investors applied the interest costs of the borrowings involved against the income from those dwellings, thereby in many cases showing a negative net income. Nevertheless, those taxpayers-and this was the Government's argument at the time-were able, perhaps some years later, to dispose of their dwelling investments at an increased capital value and to retain the capital difference without its being subjected to taxation, since at that time no capital gains tax existed in Australia. The fact that in this measure the Government was singling out one area of investment-namely, an investment in dwellings-for this particular form of treatment, not so much as a means of imposing capital gains tax by the back door but as a means of preventing or dissuading people from seeking capital gains in that area of the economy, appeared not to occur to the Government at the time. However, it was pointed out very strongly by the Opposition at the time the Government made that error. The second reason, of quite a different kind, why the Government's decision to introduce its so-called anti-negative gearing provisions in relation to rental dwellings was flawed was that, by discriminating against that particular form of investment, without the slightest doubt it laid the basis for a decline in investment in that area of the economy. Clearly, it stands to reason that, if investors have alternatives in areas in which to invest and one particular form of investment is subject to a harsher taxation administration than the rest, investment capital will tend not to flow to the first avenue. That is precisely what occurred in this instance, as was predicted by the Opposition at the time. One does not need to be a Rhodes scholar to work that out, but I leave that to the Senate to decide. It was obvious to all concerned at the time that that would be the outcome, and indeed it was. I suppose that one must give some credit to the Government for at least finally seeing the error of its ways and moving to correct its original error. Of course, that error was not costless to the Australian community, in the sense that, while the provision was in force-and I do not necessarily attribute these results entirely to that provision, although it obviously had a very considerable influence-there was a major decline in the dwelling construction industry in Australia, particularly in the area of rental dwellings. By definition it was not the owner-occupier who was disadvantaged by the anti-negative gearing provisions: rather, it was those who sought rental dwellings for occupancy and who suddenly found the new supply of such dwellings drying up and the existing stock being affected by gradual sale in the normal course of events. Naturally, the Opposition welcomes the return to sanity in this area of the taxation law but, in so doing, one must note that this episode was very costly to the Australian dwelling industry and, more particularly, to the people seeking rental dwellings who suddenly found the supply drying up. With a New South Wales election looming in the not too distant future, the problems of the rental dwelling market in Sydney became so acute that this Government's friends and associates in the Unsworth Government brought their views very forcibly to bear on the Treasurer, Mr Keating, in order to bring home to him the severe political consequences for the Labor Government of New South Wales if that very serious error of judgment, for which he had been responsible and which the Government had endorsed, was not rectified. Rectified it has been and, as I said, the Opposition welcomes that fact. I now turn to the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill 1987. I move: At the end of the motion, add: ``, but the Senate expresses its objection to the Labor Government's iniquitous fringe benefits tax while noting that a more efficient and equitable revenue collection system requires that obvious tax avoidance procedures, where benefits are not related to legitimate business activities, must be adequately dealt with''. I make my position and that of the Opposition on this subject crystal clear. I suppose that no one would have deplored more strongly than I, particularly in my earlier career not far from here, any suggestion that taxpayers in this country were avoiding the payment of tax in any illegitimate manner. In that connection, no one would have deplored more strongly the presence of elements of the tax law which had given rise to what I can only call dubious procedures in what has come to be called the fringe benefits area. It is true that for many years the Income Tax Assessment Act has contained a provision-I think section 26 (e)-which confers on the Commissioner of Taxation the widest possible authority to tax everything in the fringe benefits area. The problem was not a very large one, but over the years it mushroomed, originally making it very difficult for the Commissioner of Taxation to police that provision in an effective manner. However, it is worth noting in passing why that problem mushroomed in the way that it did. If one understands the reasons for that outcome, without condoning it, one will understand a great deal more about what is wrong with the taxation system in this country and why it has become increasingly necessary to begin to reform that system in a serious manner and not merely to talk about it, as this Government has become so proficient at doing. The major reason that the fringe benefits industry grew to the magnitude that it undoubtedly did was the extraordinarily high marginal tax rates applying in this country and the extraordinarily low levels of income at which very high marginal tax rates had begun to cut in. Senator Watson —And the failure of the Taxation Office to police the Act. Senator STONE —Senator Watson reminds me that it also had to do with the failure of the Commissioner of Taxation or the Australian Taxation Office to police the Act. To a degree I go along with that comment from Senator Watson, although, perhaps in line with the implication of my earlier remarks, I have to say that the magnitude of the problem had become so great that it would have required an army of taxation assessors or auditors, or whatever they are called these days, to do that to the degree which eventually became necessary. The fundamental reason for the growth of the fringe benefit industry was, as I said, the fact that income tax rates had become very high and had begun to become very high at relatively low levels of income. Naturally, and I think totally predict- ably, that put strains upon the tax system and upon the system of remuneration, which led to employers entering into compacts with their employees to remunerate them more and more in non-monetary forms of income but in ways that were acceptable to the employees. While many of these arrangements initially were perfectly proper exercises in formulating agreements between employers and employees, it is undoubtedly the case that over time there grew up a certain sleaziness about this particular industry which members of the Opposition deplore no less than, as we are continually told, members of the Government. The Government's response to this situation was not to deal with the root cause, not to address the situation of very high marginal tax rates and not to address the fact that, after all, these benefits were being received by employees. They were not being received by employers, although no doubt employers were benefiting from them as well, otherwise they would not have entered into them. The employers were benefiting in the sense that they were able to pay in net effective terms lower total rates of remuneration to their employees. The Government ignored both of those fundamental considerations. It moved to do very little about the basic problem of our income tax structure. It is true that over a period of, I think, 12 months the top marginal tax rate has been moved down from 60c to 49c-indeed, 50.25c if one includes the Medicare levy-and there have been similar movements in the other marginal rates. It is also true that these marginal rates, nevertheless, remain extraordinarily high. Therefore, they continue to provide, quite predictably, a set of incentives for people to enter into these arrangements. Although evidence on the matter is still fragmentary, nevertheless the volume of such evidence is still growing. I think I am correct in saying that in the annual report of the Commissioner of Taxation, which was tabled in this place not so long ago, one finds reference to evidence that the Commissioner has so far assembled suggesting that in many areas of the fringe benefits industry the actual number of fringe benefits being given by employers has not been reduced to a great degree. I think the number has been reduced in all cases, but the degree of reduction has varied significantly, except in one or two cases where there has been a major reduction. No doubt from the point of view of the Commissioner of Taxation that is welcome. That is my first point. The Government in seeking to rectify what was on all sides agreed to be a serious problem, did not, first of all, significantly address the basic reason for that problem, namely, the very high level of marginal tax rates. Secondly, the Acts which the Treasurer (Mr Keating) and his Government introduced in this area did not address the fact that these benefits were, after all, received by individuals, by employees, but sought instead to penalise the employers for the fact that these benefits were given. The fallacy in that approach is also evident from the facts that I cited a moment ago in relation to my first point. Under the circumstances, employers are between the devil and the deep blue sea. I do not wish to refer to one of my previous colleagues, the present Commissioner of Taxation, as the devil; nevertheless, that particular mephistophelian figure represents to employers to some degree the figure standing in the background who forces them to pay tax upon the benefits they offer their employees. One might say that the employer has a very ready remedy to avoid that particular satanic figure: he can simply cease to provide the fringe benefits. Although I could cite many such examples, I shall give the Senate one example at random: what happened when the banks in this country sought to remove from their employees the long-standing fringe benefit of so-called low interest loans. That benefit has been extensively available to employees throughout the banking industry for decades. Indeed, that benefit is available extensively not only to employees throughout the banking industry but also to employees throughout the finance industry generally. At that time the Australian Bank Employees Union brought the strongest pressure to bear upon the Australian Bankers Association, and more particularly the banking employers concerned, by threatening the gravest and most widespread industrial action if any such action were carried out. The result has been that nothing much of the kind has been done. The banks for the most part have simply maintained the benefits in being. I think from memory they have effected some minor reduction in the cost of those benefits to them by slightly increasing the low interest rates provided. But, for the most part, those benefits remain as they were. That, so to speak, is the deep sea on the other side of the employers concerned in this case. As I said, that example could be multiplied. The reason why that was the outcome was, as the Opposition said at the time, that the Government's measure in this area was directed not at the recipient of the benefit, not at the employee, but at the employer. Therefore, the employee is untouched by the law. The employee can in fact still obtain the benefit and is not affected by the law; he is not the person who is affected by the fringe benefits tax arrangements. It is the employer who is affected by those arrangements and who pays tax on the emoluments-on the non-monetary emoluments, if that is what they are-involved. Let me go on from there lest it be inferred that the Opposition in any way endorses or continues to support the status quo ante. We never did and we do not now. At the last Federal election the Opposition demonstrated that its policies were superior to those of the Government in one particular respect; and there has been some debate in recent days about that. The Opposition made it very clear that had it been elected to government-and, regrettably, it was not-it would certainly have abolished the fringe benefits tax and, equally certainly, it would have put in its place taxation provisions which were specifically directed to blocking the rorts-a favourite word of the Treasurer-which had grown up under the system which previously obtained. The Opposition had also made it clear that where benefits were related to legitimate business activities-subject perhaps to various forms of ceiling in order to provide additional safeguards and controls-it would remove the fringe benefits tax and deal with the matter through, in effect, making section 26 (e) of the Act, appropriately amended and enhanced, operative in a way in which it had ceased to be operative for many years previously. The last of the three Bills with which we are dealing today is the Sales Tax (Off-shore Installations) Amendment Bill 1987. That also is a Bill of some complexity. Questions have been raised about it in the debate in another place, but at this hour and given the pressures upon the time of the Senate, I simply repeat that the Opposition will not oppose it. Senator HAINES(South Australia-Leader of the Australian Democrats)(5.13) —The package of Bills that is before us today consists of the Taxation Laws Amendment Bill (No. 4) 1987, the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill 1987 and the Sales Tax (Off-shore Installations) Amendment Bill 1987. Unlike Senator Stone, it is my intention to concentrate mainly on the Taxation Laws Amendment Bill (No. 4), which is notable for its reintroduction of negative gearing for rental properties. In the two years since negative gearing was removed from property investment or speculation, the Government appears to have had a remarkable change of heart. In 1985 and 1986 the Hawke Government described the negative gearing of rental property as a tax rort-a tax shelter which gave the biggest tax break to investor landlords who had the highest incomes and faced the highest marginal tax rates. Of course, negative gearing enabled these sorts of people to borrow heavily to buy a property, to run the property at a loss essentially so that the interest on borrowings exceeded the return from rental, and to use that loss to reduce their tax liability from other income sources. It was a nice little system, particularly when there was no capital gains tax operating in this country, for those people on substantial incomes to reduce their taxation through this form of investment and later get a tax free capital gain. The Treasury's Draft White Paper on Reform of the Australian Taxation System in 1985 substantiated the justice and equity for disallowing negative gearing for rental property by showing that in 1982-83, 14 per cent of individuals would have had taxable incomes of over $100,000 if negative gearing had then been disallowed, while fewer than 2 per cent would have had taxable incomes below the then average wage. So that White Paper quite clearly indicated that negative gearing was of benefit only to those who had potential taxable incomes of over $100,000 and who were using the system to diminish their tax liability quite considerably. Of course, in this year's Budget the Treasurer (Mr Keating) announced the reintroduction of negative gearing for rental property, having apparently seen some kind of light that was not there for him in 1985-86. He gave two justifications for this massive somersault. Firstly, he argued that since negative gearing-that is, borrowing to acquire assets and using the cost of the borrowing to reduce a tax liability acquired from other income earned-is allowed on other activities, such as share purchases, the disallowance of negative gearing for rental property merely encouraged investors to negatively gear other transactions, such as share purchases, to achieve a similar tax benefit. Having watched the spectacular lack of success of a number of people in speculation on the stock market, I would have thought that, rather than removing negative gearing in the property market and allowing it to remain in the area of share purchases and so on, the Government would have removed it from the area of share speculation as well, having realised that all it was doing was encouraging speculation. So the strategy would have been far better put into effect if the Government had disallowed negative gearing on other transactions, instead of using the existence of it in that form as a reason to reintroduce it to property speculation. Instead of giving up an estimated $24m this year, rising to $80m next year, to enable those on the highest incomes to acquire a property and reduce their tax bills, this Government could have kept that revenue and added to it substantially by abolishing the general practice of negative gearing. In a recent issue of Australian Society an article outlined the cost of tax shelters created by our tax system. It stated: If the same negative gearing restrictions as were introduced for rental real estate had been applied to purchase of company shares, annual tax collections would have been at least $1 billion higher annually. The author then went on to argue that the figure might well range as high as $2 billion. Instead, we have a Labor government reducing the living standards of average and low income Australian households while restoring the rorts of the rich that it took away only two years ago. In this it is supported, as it is in most other things, by an Opposition which is reportedly planning to cut up to $7 billion from assistance programs to the unemployed, the sick, widows and sole supporting parents as part of its radical Budget agenda for the 1990s-at least that is if we believe the reports in the Australian of last November. The second reason that the Treasurer gave for reintroducing negative gearing-giving this rort back to the already well off-was that by restoring negative gearing the Government would ease the rental crisis, particularly in Sydney, which, quite coincidentally, happens to be the centre of an election next year for a State government. It would ease the rental crisis and somehow-in some unstipulated way-provide affordable accommodation for currently homeless or low income Australians. So from an equity point of view the Government is giving away $104m over the next two years with most of it going to the wealthiest Australians, without being able to guarantee that that money will be used to alleviate the housing problem faced by the poorest Australians. Why? Because negative gearing applies equally to people who invest their large amounts of income in luxury apartments as to those providing low cost rental accommodation. It does not take a giant IQ to work out that if somebody wants to make a capital gain and get a secure investment that will appreciate, either in the long term or the short term, the benefits for that person will not derive from investments in low income properties. In fact, the Government should have insisted that the money it was saving in removing the negative gearing rort was put into the public housing sector, which would have directly and accurately targeted the money towards solving the problem that has become something of a crisis for low income families. Instead, in the International Year of Shelter for the Homeless the Government has decided to squander money on subsidising the rents and incomes of the wealthy rather than using it to provide affordable accommodation for low income Australians through rental subsidies, through the provision of more public housing or through joint ventures with the private sector to provide affordable public housing. In an article in the Melbourne Age on 17 September of this year, Bishop Peter Hollingworth, the Executive Director of the Brotherhood of St Laurence, accurately described this decision to restore negative gearing for rental property as providing a tax shelter for rental investors but little or no gain for low income tenants. He believed, quite rightly, that the money could have been and should have been better used to expand the work of public housing authorities. Not surprisingly, the Tenants Union of Victoria said: The whole scheme will just bring more buyers into the market. Those with money to spend will be fine. But first home buyers will find themselves forced to rent again. Within days of the announcement of the reintroduction of negative gearing we saw property prices go up in the major capitals and advertisements in the real estate sections of Australia's major newspapers, particularly Saturday morning newspapers, gleefully indicating that negative gearing was being reintroduced and that the investors could come back into the market. I might add that the advertisements were not aimed at selling homes in the low price range but were aimed at getting investors to purchase units and homes for rental in the much higher brackets. So there occurred almost immediate rises in house prices. This, of course, means higher mortgages and higher rents. Many tenants are going to be forced out of their arrangements and into accommodation of a lesser standard if that occurs. The Government should be pouring money into housing and assisting low income earners instead of turning that assistance towards investors. It is another clear example of how this Government is turning its back on social welfare and encouraging corporate welfare at a time when there are increasing numbers of people in poverty and increasing numbers of families with large numbers of children living in poverty. Julian Disney, responding to the Budget on behalf of the Australian Council of Social Service, said: Tax changes directed to private rental market are not well targeted. Abolition of the prohibition on negative gearing for housing investment is likely to stimulate investment only at the top end of the market. In New South Wales a spokeswoman for the Housing Information and Referral Service said that the 67,000 applicants on the New South Wales public housing waiting list would not be helped by the return of negative gearing. She said: The fact the Hawke government is willing to allow landlords to virtually steal $150m of government revenue in order to secure the tax rort of negative gearing clearly showed their lack of concern for those in housing need. Public housing waiting lists in New South Wales are going to go through the roof. Whether that has happened in the ensuing couple of months I am not aware, but obviously the return of negative gearing in this area is not going to help the accommodation needs of those individuals and families on low incomes, particularly those in poverty. What has the Federal Government done to public housing in the International Year of Shelter for the Homeless? Precious little is the answer to that question. In 1986-87 the Commonwealth made $584.7m available to the States to spend on public housing. This year, allegedly a year of some significance as far as shelter for the homeless is concerned, it made available about $385.6m; that is, it cut funding and, on top of that, reintroduced negative gearing-a quite spectacular lack of sensitivity to the international year that we are currently in. This Bill also reduces from 4 per cent to 2.5 per cent the annual rate of deduction available for capital expenditure on the construction of new income producing buildings with effect from 16 September 1987. Investors are no better off than they were pre-1985 and government coffers are even further depleted. The introduction of the 4 per cent deduction for capital expenditure on the construction of new income producing assets was in part at least compensation for the abolition of negative gearing. It was designed to encourage the production of new commercial, industrial and residential property when negative gearing was removed. One is forced to wonder why, when negative gearing was reintroduced, the 4 per cent was not removed altogether. Instead, it has been reduced from 4 per cent to 2.5 per cent to provide a revenue saving to compensate for the revenue loss of reintroducing negative gearing, estimated to cost something like $24m in 1987-88 and $80m in 1988-89. The reduction in the write-off rate for the new income producing buildings is estimated to save $3m in 1988-89, over $500m after 25 years, money which, I point out, would be better spent over that period on providing affordable housing for low income Australians, a group of people who are quite clearly bottom of the list of priorities not only as far as the Opposition parties are concerned, which is only to be expected, given their commitment to New Rightist policies and the advancement of the wealthy, but also to this Labor Government, which for years chirped merrily that it was the only political party that was ideologically sound as far as social and economic policies were concerned. The legislation will also close a loophole which, as in another area, of course, allowed foreign investors to provide a low capital base for their investment in an Australian company and to provide more working capital in the form of interest bearing loans. This is aimed at preventing income generated in Australia from being taken out of the country as the deductible interest payment, subject only to a 10 per cent withholding tax. That is all the Australian Government imposes-a 10 per cent withholding tax. This move by the Government is something that the Democrats have been calling for for a long time, and indeed we commend the Government for finally closing off this loophole. It certainly is not speedy in acting to close off some of these loopholes, particularly those involving foreign investors. The legislation essentially will restrict the interest deduction for foreign investors who gear their Australian investments over a prescribed debt equity ratio of 6 : 1 for financial institutions or 3 : 1 for other investments, and it is expected to save at least $50m in revenue. As I said, that is something that we welcome. At the time that the Treasurer foreshadowed this legislation I put out a statement indicating that the Democrats had in fact been insisting for several years that the Government move to close off tax avoidance loopholes under which foreign companies operating in Australia have avoided tax through balance-sheet manipulation of prices, profits and intercompany borrowings. On behalf of the Australian Democrats I welcome this legislation as a belated admission by the Government that, first of all, tax revenue which is currently lost because corporations exploit tax avoidance loopholes should be recouped and, secondly, that this revenue can be recovered by a government prepared to legislate to close those loopholes. The legislation will apply where a foreign investor or associate who can trace 15 per cent or more equity in an Australian enterprise also makes an interest bearing loan or its equivalent to that enterprise and the debt amount exceeds either three or six times the amount of equity, depending on the system that is operating. If the Government is prepared to close this loophole, I am surprised that it is not prepared to take up the Democrats' suggestion of closing a few other loopholes, which would guarantee still more revenue and make a far more equitable economic system than the one we currently have. It is high time governments and others acknowledged that corporate welfare is, as I said, alive and well in this country, while all and sundry are trying to kick social welfare to death. It seems that this Labor Government, which is supposed to be assisting those who are in need, is spending more of its time ensuring that the wealthy get wealthier without doing anything to provide assistance to those who are on low incomes or who are struggling for one reason or another. I would have thought that closing off some more of those loopholes, such as the one that the Government has moved to end in this legislation, thereby raising additional revenue, would have been a better alternative than doing things like taxing milk products, postponing the indexation of pension increases, introducing tertiary fees, trying to throw an ID card down all our throats or cutting funding for public housing. So, in a spirit of economic generosity, I therefore suggest to the Government that it look at, for example, taxing superannuation and life funds that chose to invest the savings for Australians overseas. There is a very good argument that the cost of the present superannuation tax shelter is about $5 billion annually. The superannuation tax concessions, as with negative gearing, provide the biggest benefit to those on highest incomes. There is no reason at all why the big superannuation and life funds should retain their tax-free status when they invest off-shore, depleting this country of investment and internal revenue which it desperately needs. The Government could also look at abolishing negative gearing for companies that borrow overseas to take over existing Australian companies, transactions which increase our foreign debt, which is now over $107 billion and of which in excess of 60 per cent is owed by the private sector. We are all being told to tighten our belts because of the level of foreign indebtedness that is largely the responsibility of our home grown corporate raiders with the enthusiastic co-operation of a so-called Labor Government. They borrow overseas, add to our foreign debt and, through negative gearing, they reduce, if not actually wipe out, the profits of the company they take over. They are then in a position to diminish considerably their tax liability and, in doing so, diminish the amount of money in Consolidated Revenue that the Government has to put into the services that Australians deserve and need. So we have a modern Labor Party Government that seems to be specialising in helping the already well off, while expecting the average and low income Australian family to tighten its belt and to be punished, in effect, for the economic problems that have been caused largely by the corporate sector. The Government might also like to turn its attention to transfer pricing, particularly given the recently released report from the Auditor-General. During the election campaign, as well as prior to it, I raised something that was raised again recently by the Director of the Australian Taxpayers Association, namely the fact that the use of overseas tax havens is costing the nation at least $1 billion in annual revenue. Transfer pricing essentially involves the abuse of current tax law which exempts from local tax income derived by non-residents of Australia. Companies and trusts established abroad are used to shift profit-taking activities by Australian companies to subsidiaries and related companies in low tax countries. Paragraph 2.6 of the Auditor-General's efficiency audit report makes the following point: An indication of the significance of tax havens and the magnitude of the problem they pose for tax authorities can be gleaned from the amount of foreign deposits currently held by banks in six of the major tax havens namely, Cayman Islands, Luxembourg, Switzerland, Singapore, the Bahamas and Hong Kong. These six countries together currently hold approximately $1,000 billion of foreign deposits in nominated bank accounts for non-residents. So the use of tax havens as a way of diminishing tax payments, and hence reducing a government's consolidated revenue, is certainly alive and well and flourishing. Paragraph 2.10 of the Auditor-General's report states: Transfer pricing is a method of reducing a corporation's total tax liability through the manipulation of prices between countries with differing tax rates and legislation so as to realise the largest proportion of profit in the country with the most favourable tax regime. It can also be a method used by corporate management to facilitate other management objectives . . . The report stresses the fact that transfer pricing is primarily intended to ensure that taxes and duties are minimised. Paragraph 2.15 states: Transfer pricing is facilitated through the use of associated corporations overseas and tax havens. The potential impact of transfer pricing on Australian sourced profits and therefore on taxation revenue is indicated by the significant value of Australia's international trade conducted between associated corporations. Statistics issued by the Australian Bureau of Statistics for 1984-85 reveal that approximately 30 per cent of total Australian import and export trade, valued at $17,571 million in that year, was conducted between Australian branches and subsidiaries of foreign companies on the one hand and their foreign parent and related companies abroad on the other. Paragraph 2.16 states: These statistics do not reflect the volume of trade conducted between Australian owned enterprises and their subsidiaries and related companies abroad, nor do they include transactions of the banking sector. Inclusion of such data would undoubtedly establish that an even greater proportion of total Australian imports and exports of goods and services, now estimated by Audit to be in excess of $20,000 million annually, is conducted through intra-corporate trade. There is, in Audit's view, little doubt that transfer pricing associated with such trade results in very significant losses of taxation revenue. And still the Government makes no move to close off this loophole. The Commonwealth Auditor-General, in his report, also estimated that more than 40,000 companies may be avoiding tax by shifting profits off-shore. The 40,000 companies identified by the report account for more than 30 per cent of Australia's overseas trade. Through the use of overseas parents and subsidiaries these companies have the potential to minimise their total tax on world-wide earnings through profit shifting. Yet, with 45,000 corporations known to be in a position to shift profits, the Australian Taxation Office conducted only 251 international audits in 1985-86. Although the Taxation Office obviously is increasing its audits of large companies and this is netting some more revenue to the Government, it is a lengthy process, assisted by the low tax countries which have well developed structures and financial institutions to facilitate tax avoidance. The Government must lift the withholding tax from 10 per cent to something closer to the current company tax rate of 49 cents in the dollar if it is really serious about putting an end to tax rorts. Not only is it not doing this, but also it is not taking the sorts of steps necessary to collect all the revenue that is due and necessary to provide the services that Australians need. The Taxation Laws Amendment Bill (No. 4) facilitates yet another means by which corporations can reduce their tax liability. It does so through the amendments to the group loss provisions of the Income Tax Assessment Act in clauses 16, 42, 44 and 45 of this Bill. I do not have time to go into the workings of this system. Suffice it to say that it is predicated on the use of shelf companies, usually set up by a firm of solicitors, specifically to be sold. It is a rort that ought to be ended rather than facilitated. In other words this Government is continuing in the main to facilitate corporations to seek to reduce their tax liability. In doing so it is denying itself revenue. Given the enthusiastic way in which the Minister for Finance (Senator Walsh) and the Treasurer are cutting funds to the needy in order to balance the Budget, it is extraordinary that the Government is prepared at the same time to deny itself revenue by allowing to continue to exist a variety of tax rorts that it should have clamped down on in 1985 and must pay considerably more attention to in the next year or so if Australia is to have a truly equitable taxation system. Senator MICHAEL BAUME(New South Wales)(5.41) —There is something almost disgusting about the desperate search of the Australian Democrats for some kind of constituency, particularly when their rhetoric is aimed, I must say almost deliberately, at damaging the economic basis of the economy, driving more and more people, for example, into public housing rather than private housing and diminishing the ability of Australian corporations to compete with their rivals overseas. We have heard a litany of the same sort of nonsense that we have heard consistently and which would be massively damaging to the whole of the fabric of Australian society. But, of course, it is aimed at the cheap purchase of some votes in order to keep their party, which is always desperately searching for some constituency, capable of maintaining at least some representation in this chamber. That was a ludicrous speech by Senator Haines. To attempt to attack the return of negative gearing in the way she did was to miss one essential point, which at no stage did she address in her speech; that is, that with negative gearing one provides an incentive for the private sector to provide in the end the great bulk of the funds involved in building new homes. Senator Haines wants the public sector to undertake the total burden, which would mean that, under her ludicrous scheme,. we would get a tiny fraction of the number of houses built that we would get by providing a financial incentive for the private sector to build them. Senator Macklin —Absolute nonsense. Senator MICHAEL BAUME —That simple economic fact is never allowed to intrude itself into the narrow and self-seeking political position of the Australian Democrats, who come here and lower the nature and standard of debate in this chamber-- Senator Macklin —Why don't you look at the figures? The ACTING DEPUTY PRESIDENT(Senator Colston) —Order! Senator MICHAEL BAUME —They lower the standard and nature of the debate in this chamber by consistently seeking to appeal, if I may say so, to those Australians who cannot recognise reality and who are unaware of the fact that every prescription by the Australian Democrats would lead to disaster-in this case would lead to a reduction, and has led to a reduction, in the volume of housing available. Senator Macklin —Absolute nonsense. Why don't you look at the figures? The ACTING DEPUTY PRESIDENT(Senator Colston) —Order! There are far too many interjections. Senator MICHAEL BAUME —The incredible incompetence of the Australian Democrats in almost all matters economic is self-evident. The facts speak for themselves. But it is interesting to see that at last we have managed to convince the Australian Labor Party that it was equally incompetent. I remind the Senate of what the Treasurer (Mr Keating) said in 1985 about negative gearing, which he was then abolishing. He said: I cannot believe that any leader of a major party would come into this Parliament and seek to have restored one of the most blatantly abused tax shelters in the system . . . To try to defend this behaviour, this outrageous rort, on the basis that it helps some renters is extraordinary. The great majority of rental properties are not affected by negative gearing and negative gearing has not succeeded in providing an adequate number of rental properties. That was the Treasurer in 1985, sounding like an Australian Democrat. He has now found out what economic reality is all about and has been obliged to change his mind. He was totally wrong. The Democrats persist with their nonsensical view in an attempt to win some votes from people who respond with their hearts instead of their minds. That seems to me to be the only motive of the Democrats in this area. The sort of nonsense that the Treasurer was speaking before has now, clearly, been replaced by a recognition of what economic reality is all about. That is why we now have the Treasurer changing his stand. I believe that this was one of the issues on which he was pushed over the top by the Australian Taxation Office which, quite frankly, is now getting a bit out of control. I am glad to see the Treasurer now moving back and trying to restore some sanity. I must say that I am greatly concerned about that issue, which I will raise in a minute. But I would just like to say one other thing specifically about the Taxation Laws Amendment Bill (No. 4), which is to stress the Opposition's support for the averaging of income for artists, writers, sportsmen and other people who have highly variable incomes on a yearly basis. There are some people who continue to be unfairly treated in this matter. They are not high income earners; they are low income earners who, for example, as a result of a court action-I have one particular case in mind-receive back pay for say a year and a half or two years. They receive the back pay in one lump sum and end up paying tax on it at an extraordinarily high rate because the Taxation Office adopts the view that that salary has been received in that year and should be taxed at that year's rate. I know the situation of a former warder in the New South Wales prison system. He was not on a high salary. He had a two and half year fight, which he won in the end through the courts, for back pay. He was taxed at a rate that was absurdly high because he was taxed as though that income had been earned in one year. If it is good enough for the Tax Office and the Treasurer to allow averaging for sportsmen and so on, why can it not apply the same principle to people who, through no fault of their own, have been massively inconvenienced, find that their earnings are lumped in this way and taxed grossly unfairly? I notice in another part of the Bill that the Government, presumably on the advice of the Taxation Office, is taking the view that the Office should look at some income as it accrues. The explanatory memorandum to Taxation Laws Amendment Bill (No. 4) state: . . . to make clear that the investment return on certain financial instruments described as annuities is taxable as it accrues . . . rather than when it is received . . . If the Government is prepared to bend this principle when it suits it so that tax is paid only when income is received, why cannot it bend it when it is to the advantage of some income earner who is being massively disadvantaged by what I believe to be a quite improper exercise of the taxation power? I hope that the Minister at the table, the Minister for Industry, Technology and Commerce (Senator Button), will take this up and that we will not see the Treasurer and the Taxation Office continue to take positions which are to the disadvantage of taxpayers and to the advantage of the Office. I must say that that is one of the pleasant factors in the legislation. There are many items in this huge collection-I think it is 140 pages of legislation, or something enormous-which correct situations which have acted to the disadvantage of taxpayers. That is a welcome move. But I must say that it comes in a context of what seem to me to be continual problems with the Tax Office, which seems, as I said earlier, to be getting a little out of control. This bureau- cracy, which has the commendable motive of maximising the proper collection of tax, seems to me to have very little awareness or concern of the consequences of what it does. I quote, for example, this week's news: New Tax Office rules may increase sales tax by 10 per cent on a wide range of consumer goods and will drastically alter accounting practices for retail stores, increasing pressure for price rises to cover the additional costs. The Australian Financial Review had a large item on this matter this week. It said: The new rules, released a week ago, are further evidence of the gung-ho approach of the new tax regime in Canberra, which increasingly regards practices which minimise tax as arrangements to avoid tax. It went on: . . . the Tax Office believed that it was losing revenue in the sales tax area and it had to tighten the application of the law. Tax accountants are highly critical of the new rules which they argue are preventing arrangements that have been accepted or even recommended by the Tax Office for the past nine years. What is happening is that Mr Boucher is in effect introducing a rule of thumb for imputing the value of goods subject to sales tax in those instances where the wholesaler is in fact associated with the retailer. The reality, of course, is that this is yet another example of the Tax Office increasing costs and working to the disadvantage of efficiency. These non-arm's length companies were introduced only to prevent a grossly unfair situation from persisting. What normally happens is that the customer buys goods from the retailer. The retailer has bought them from the wholesaler. Tax is paid at that point of sale between the retailer and the wholesaler. Of course, when the wholesaler bought them from the manufacturer he did not pay that tax. The situation I have outlined is the normal situation. However, if a retailer seeks to make this operation more efficient-and many retailers these days buy directly from manufacturers, particularly when they are dealing in some bulk-it is quite reasonable to ask: Why should they be obliged to pay tax at a far earlier point than a retailer who buys from a wholesaler? The whole point of the wholesaler's operation is that he holds the stock until the retailer needs it, and the tax is not paid until that wholesaler disposes of that product. If a retailer deals directly with the manufacturer, why should he be massively disadvantaged by having to pay tax at the point of purchase when he may well be holding the stock himself? Exactly the same situation takes place in terms of the time gap between the manufacturer making the product and the consumer buying it. But, under the method that the Commissioner is now forcing on the Australian taxation system, he will make it more expensive-it is not a question of equalling out-for those retailers who deal directly with manufacturers. What many did was seek to diminish that disadvantage by creating their own wholesaling operation. The benefit that they had will now be diminished because the Commissioner will apply some notional mark-up which may well have absolutely no relation to reality. As I said, it seems to me that there are continual examples of the Commissioner getting a little out of control. These Bills constitute another of those great packages of tax laws which are aimed at fixing up things which have emerged-either mistakes or messes in this great volume of tax law that has hit us. Instead of a simplification of the tax laws as we were promised, there has been a massive increase in their complexity. There has been an increase in government by Press release. Some of these changes to the fringe benefits tax date back to announcements made in August 1986. Why on earth has it taken the Tax Office and this Government so long to fix these things up? Senator Messner —It is hopeless. Senator MICHAEL BAUME —As the honourable senator said, it is a hopeless situation. In the days when the Tax Office was inundated with paper schemes aimed at getting around clear tax law which existed at the time-back in the late 1970s-one could understand why it did take time for those statements of principle about cutting off particular forms of use to be converted into law. But, for heaven's sake, what would have happened had any of these clauses in these Bills been knocked out by the Senate? We are dealing with measures dating back to announcements on 26 August. It is simply an unacceptable situation. People who have been making commercial decisions based on a view they formed in August 1986 about what the tax law would be could now find that these measures do not come to fruition in exactly the way they expected. I restate that, despite the nonsense from the Australian Democrats, we certainly welcome the restoration of negative gearing. It follows the line we stressed at the time it was abolished. In conclusion, I point out that negative gearing removes the ludicrous situation of rents being forced to rise. Under negative gearing someone who builds or buys a property can get the interest cost deducted from his tax, so in fact the effective rate of return he gets is far higher than the 6 or 8 per cent which is the maximum he is likely to get from a rental property-particularly in Sydney; I do not know about other States. A 6 to 8 per cent rate is, of course, grossly inadequate, because one could buy a Commonwealth security and get double the return that one could get on buying or building a rental property. Senator Messner —How much would it cost you to borrow the money to put into it? Senator MICHAEL BAUME —As Senator Messner says, one would have to borrow the money at 14 1/2 per cent from a savings bank-that is the best rate one can get-in order simply to get a return of 6 or 8 per cent. Senator Messner —By definition, it is negative gearing. Senator MICHAEL BAUME —Exactly. Obviously this would be ludicrous. In other words, rents would have to rise, as they did, in the absence of negative gearing. When this factor is combined with the effect of the capital gains tax, one would have to get a substantial return from one's rent-in other words, rents would have to go up-to make it worth one's while to build anything. That was why there was a shortage of rental accommodation, why rents in Australia were going up and why the Government had to act. What happened was exactly as we forecast. Senator Messner —It would affect social security payments too, because renters would have to get more social security to cover the cost. Senator MICHAEL BAUME —Absolutely. As the honourable senator says, once there is a high average level of rents, pressure for increased welfare payments naturally follows-apart from the impact on the cost of living, because rent is a significant component of the cost of living. The Government, having flown in the face of economic reality, has at last recognised that reality. Naturally, the Opposition supports that. I also express my support for the amendment moved by Senator John Stone, which states: At the end of the motion, add: ``, but the Senate expresses its objection to the Labor Government's iniquitous fringe benefits tax while noting that a more efficient and equitable revenue collection system requires that obvious tax avoidance procedures, where benefits are not related to legitimate business activities, must be adequately dealt with''. Senator WATSON(Tasmania)(6.01) —The Senate, in discussing this tax legislation deserves a far bigger audience than the four people who are listening to the debate in the parliamentary galleries. I remind them that the amending Bills represent an apology by the Government for its past mistakes. The Bills rectify many things that have gone wrong in the tax area over the last 18 months. The amendments tidy up what we term many of the legislation's previously unintended consequences. I remind the Government and my colleagues that, since the Labor Government announced its program of so-called tax reform in 1985, the Liberal-National Party Opposition has had cause time after time to condemn the Government for creating a maze of tax legislation that is excessively complex. Is it not harder to fill out one's tax returns nowadays? The tax Act is gargantuan in its proportions. It is highly ambiguous. If one has a business, one requires constant reference to rulings by the Australian Commissioner of Taxation and to tax accountants. It is riddled with unintended consequences that continually require revision. This package of amendments-there are literally hundreds of amendments in this package of Bills-tidies up unintended consequences. We have arrived at this intolerable situation despite a commitment from the Prime Minister (Mr Hawke)-another commitment-to develop a simpler tax system that more Australians could understand. And what do we have? To anyone who has had anything to do with tax it is patently obvious that that admirable aim-there is nothing wrong with the aim-has not been achieved. Here we are three years down the track since the statement with such an intricate and ambiguous system that the average Australian could not even hope to be able to understand it. Today we have before us more amendments which make the tax Act even more complex. The Taxation Laws Amendment Bill (No. 4) 1987 is the fourth amendment to the Act this year alone. Senator Stone —There is another one coming. Senator WATSON —Senator Stone is right. There will be not only one, but more next year. The legislation amounts to another 221 pages to be added to the fine print of 1,356 pages that we already have. Depending on which printer prints it, it could be twice that number. I believe that the Bills are welcome in only one sense; that is, they attempt to cobble up the patchwork of existing legislation and take some steps towards correcting a few of the inequities that presently exist. At the same time, they reverse a lot of what we term ill-considered decisions that resulted from haphazard drafting in the first place. It is just not good enough. Indeed, I would go so far as to say that it is ironic that the Taxation Laws Amendment Bill (No. 4) and the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill come hot on the heels of an announcement by taxation officers of a major review of taxation legislation and administration that will aim to-and here is a repetition of the Prime Minister's 1984 promise-make a more equitable and simpler system. For those accountants and financial advisers who are responsible for the unenviable task of interpreting this country's tax laws, such a review will come as good news and will be welcomed, but this Government should be condemned. Well, let me pay the Government a compliment. It should be complimented, in the first place, for at least recognising its errors in this field and taking some steps to overcome them. I suggest that our tax system is in such a state of disarray that it will take some considerable time for decisions to be made and for action to be taken to simplify the situation. It will not be done overnight or in the next 12 months. The complexities of tax legislation are not the only area to be subject to review. It seems that the Government is beginning to be beset by doubts about the efficacy of the tax law it has introduced. Reviews of the tax system will also canvass the possibility of lowering the corporate rate in an attempt to boost business confidence and encourage investment that is vital to Australia's economic recovery. But what will it do to achieve this reduction in the corporate rate? While Keating was overseas he was told by bankers and financial experts that the money that could come into Australia was being limited by our high corporate tax rates. He has been told that, if he wants this money in, he has to lower the corporate tax rate. The avenue that the Government intends to use is to deny certain depreciation allowances for manufacturers. Senator Button is trying to encourage firms to buy new plant-to upgrade their investment in more efficient plant-which is difficult because of high interest rates and the fact that a lot of the plant has to come from overseas, and the devaluation, as a result of the poor economic management of this country, makes it much more costly; yet they will be deprived of certain depreciation allowances. What is the rationale for that? The other aspect involved is even worse. The Government seeks to attack the area of superannuation. Superannuation flows to individuals. It flows not to the corporate sector but to you and me. The Government intends to tax superannuation funds in order to lower the corporate rate, to the benefit of companies. The people who will have to pay the bills are the ordinary John Citizens of this land. How inequitable that is. That is the rationale of this sort of government. Having been told of the problem nearly two years ago, it hiked up the tax rates from 46 to 49 per cent, which caused major difficulties; it imposed a fringe benefits tax on companies, and imposed extra costs. Look what happened to the Commonwealth Banking Corporation. Because of these two measures alone, it will lose 5,000 employees-in the interests of Australia, the Government says. In three of the past four years business investment has fallen. That is not surprising. The outlook for 1987-88 is that, in real terms, there will be no, or little, increase in investment. If that is the case, investment in that period will be less than it was in 1981-82. Whether the good sense in initiating the inquiry into the level of the corporate tax rate will be carried through to the creation of a healthier climate for investment is yet to be seen. It is welcome, but we do not like the way the Government is going about it. In September 1985 Treasurer Keating, in his speech on the reform of the taxation system, told us: The Government's tax reform exercise is completed. The Government was getting pretty embarrassed by its results and blunderings. But three years on, it has changed its mind again. It says that the tax system will be reviewed again, despite Keating's earlier assurance in 1985. The real impact of this decision is finally becoming apparent to the Government. It has to change. The fact remains that if the Government had taken notice of the views of the Opposition and of the people in this chamber, these reviews would not have been necessary, legislation to withdraw and amend many ill-considered initiatives would not have been necessary and these Bills would not have been here today. Without these initiatives Australia would have been a lot more prosperous than it is at the moment. The Government now seems to be in something of a rush to put things right. The July 1987 decision to increase company tax to 49 per cent is now under review. That is welcome. But I hate the mechanisms the Government will use to get down that tax rate. With the Taxation Laws Amendment Bill (No. 4), the July 1987 decision to abolish negative gearing is to be reversed. By cripes, we took a hammering when we opposed the Government's decision. Today it seems to be an unintended consequence. It is to be reversed. The legislation provides a mass of exemptions from the fringe benefits tax which the Government introduced. We told it of the problems and the unintended consequences. The Government said, `Oh, no, you are wrong. You are protecting the tax avoiders'. Down the track, the Government has now admitted that it was wrong and it has had to open up the extensions and exemptions. This package of measures will also amend the Occupational Superannuation Standards Act 1987. Honourable senators will recall that the Occupational Superannuation Standards Amendment Bill was in the Senate only a few weeks ago to remedy certain technical and drafting defects. Why the Government did not amend the defects in the legislation before it passed both Houses is a mystery-unexplainable. It is yet another example of the haphazard approach this Government has taken towards taxation legislation, superannuation legislation and any sort of legislation. In the rush to have legislation passed, little thought has been given to the full implications of its implementation. Important details are continually being left out or are to be filled in at a later date by regulation or by rulings issued by the Commissioner of Taxation. Already, because of the complexity of legislation, tax rulings in the last few years have numbered 2,500 and they are growing at a frightening rate. The time has passed when we can expect to see Bills that are clear in their objective and meaning and are sufficiently detailed to allow taxpayers to act on them without having to search out sources other than the legislation to establish the Government's true intention. That is sad for Australia. The Taxation Laws Amendment Bill (No. 4) by and large contains a wide-ranging collection of unrelated amendments to taxation laws. Most of them are consequential changes the content of which at this stage of history are largely non-controversial. However, there are two further points I wish to make with reference to this Bill. The Occupational Superannuation Standards Bill has only recently passed through the Senate, as I mentioned earlier. During the debate on that legislation I had cause to comment on the excessive reliance on delegated legislation. In other words, a number of important matters, such as portability of benefits, investment of assets of superannuation funds and the disclosure of information, amongst others, are now subject to regulation. This legislation is just a hollow shell and will remain so until regulations that govern much of the substance are brought forward. Senator Parer —Where are they now? Senator WATSON —As my colleague Senator Parer asked, `Where are the regulations?'. We are now taking away legislative provisions under the income tax law, as they affect superannuation, and we have a void, because no provisions have been promulgated under this new legislation. The Minister promised we would have them before the end of this session and we have only a few days left. We still have not seen them. I reckon that they will be introduced on the last day when there is no opportunity for debate. It is rather poor that the Government is withdrawing substantial conditions in the form of legislative requirements and putting them in the form of regulations and yet those regulations have not yet been put in place. The regulations should have been put down first and then the withdrawal of provisions, by virtue of this amendment Bill, could have been agreed to. In other words, the Government has the matter back to front. The legislation was passed through the Senate despite vigorous opposition from the Liberal-National coalition. It was rushed through ostensibly because of the urgent need for industry to have some legislative basis on which its business could proceed with certainty. But how can one proceed with certainty if there is nothing on which to proceed? There are no regulations. A month later we find that there are no regulations and we are being asked to pass additional legislation amending occupational superannuation standards. What sort of certainty can industry draw from this series of events? It must be little comfort for it to see more amendments to what is supposed to be a firm legislative basis upon which to operate. In relation to negative gearing, if there is little else to be excited about in the legislation, it is certainly encouraging to note that income tax restrictions associated with negative gearing on rental property have been removed. The abolition of negative gearing in July 1985 has contributed significantly to the problems many Australians are facing in merely finding affordable accommodation. The capital gains tax and high interest rates have further compounded this problem. Rental accommodation has been very scarce in many areas, particularly in Sydney where rental vacancies have been approaching record lows. Private rental costs have been increasing at a rate in excess of the consumer price index. People wanting to buy their own home can expect to pay around 27 per cent of their income towards achieving this goal. The high cost of accommodation affects all sections of the community; those who rely on pensions, low income earners and, increasingly, people who receive middle incomes. All these people are feeling the pinch brought about by the high cost of accommodation. It is high time that the Government acted in this matter. The abolition of negative gearing acted as a barrier to investment in the housing sector for too long and with devastating results. The Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill will implement a multitude of exemptions to the fringe benefits tax which was introduced last year and, again, which had many unintended consequences. We drew those consequences to the attention of the Government. It largely ignored the representations until the force of public opinion was such that the Government had to issue a Press release-government by Press release. I acknowledge that these exemptions are welcome but they are overdue and far too late. I suggest that they should never have been the subject of taxation in the first place. For example, the exemptions will free from liability the benefits in respect of certain relocation costs. If a bank transfers a guy from one State to another the Government talks about a benefit because he got some relocation costs from his company. Fortunately, the Government has now recognised its error. Another example is compensation for work-related injury. A poor bloke gets injured on the go and the Government reckons it is a benefit because he was injured on the job. It took weeks before the Government could acknowledge its error. Unfortunately, it was only a few serious accidents that made the Government wake up. But it has taken it a long time to put the change on the statute books. The number of safety awards is under 2,000. Honourable senators would think that Senator Button and his friends would be interested in trying to make the industrial work place a lot safer. There was little benefit for people trying to introduce safety award schemes. The Government made the schemes taxable. They were benefits. Senator Parer —Weren't they abusive when we drew it to their attention? Senator WATSON —I acknowledge that comment from Senator Parer. Let us look at accommodation and food provided for live-in help to care for the elderly or disadvantaged persons. It took hundreds of cases-and I am sure Senator Parer would agree we all heard of hundreds of cases-of people who were bedridden and who had to have care for the Government to change its mind. This help was deemed to be a benefit. So the list goes on. These amendments were foreshadowed by the Treasurer (Mr Keating) on 26 August and 29 October 1986, which is over 12 months ago. Once again, it is a case of legislation by Press release, which has become an all too familiar trade mark of this Government. The complexities of the fringe benefits tax legislation are numerous enough without further complicating them with uncertainties arising from piecemeal announcements which may or may not be followed by legislation. On a number of occasions the Senate Standing Committee for the Scrutiny of Bills has reminded the Government of the impact of using Press releases as a form of ad hoc legislation and it has condemned the practice. More often than not, the ad hoc presentation of legislation by Press release simply increases the confusion surrounding the issues, especially when the legislation passed by the Parliament is different in substance from the original Press release. That is a real indictment of this Government. However, it appears that this is one practice that the Government will not give up-this ad hoc presentation of Press releases-despite constant and vehement protests from the Opposition, from taxpayers, from tax consultants and from Bar associations. In his second reading speech the Minister for the Environment and the Arts (Senator Richardson) informed us that we can expect even more amendments to the fringe benefits tax legislation, and some of these amendments will relate, for example, to liabilities arising from discounts, or purchase price under home ownership schemes in remote areas and arrangements under which employers may be reimbursed by employees or a third party for whole or part of the fringe benefits tax liability attributable to the employee's benefit. We have been told that there will be another amendment Bill next year and that is right. We will have not only one Bill but, I venture to say, many amendment Bills as these unintended consequences are finally acknowledged by government. Senator Knowles —The Prime Minister said that he wanted a simpler system. Senator WATSON —That was in 1984, but three years later the Commissioner of Taxation recognises the same thing, but we are not making much progress because, as I mentioned earlier today, we are adding another 221 pages to the legislation. What guarantees are there that the legislation ultimately will reflect these conditions of a simpler and fairer taxation system? Only recently during the debate on the Taxation Laws Amendment Bill (No. 3) it was shown that the final draft of legislation was different in some respects from that which industry had been led to expect and that resulted in parts of the legislation having a retrospective nature. Despite the changes that we have before us, fringe benefits tax legislation still will have many items that could not be described as tax avoidance as such. It will remain true that the Government's fringe benefits tax is placing an excessive burden on business and reducing funds that might otherwise be used to boost investment in this country. Surveys conducted by the New South Wales Chamber of Commerce reveal that 72 per cent of those businesses that were surveyed were forced to retrench staff as a result of levying this fringe benefits tax. I am sure that honourable senators would agree that 72 per cent is a high rate. Another big retrenchment will take place next year. The Commonwealth Banking Corporation-that favourite of the socialists opposite-reported in its annual report a 32 per cent reduction in after tax profit on the previous year. What did it say that result was largely due to? It was largely due to the imposition of fringe benefits tax and a higher corporate rate. That is the effect. Hot on the heels of this announcement concerning reduction in profits came the news that the bank would reduce its work force by 5,000 people. That is the effect of this fringe benefits tax and the increase in the corporate tax rate. That is the effect that those two impositions are having on the Government's friends in the Commonwealth Bank. Hot on the heels of that profit reduction announcement due to those two factors, the bank announced that it would shed 5,000 people. Where will those 5,000 people come from? Rather than coming from the head offices, they will come from the branch network out in the sticks and smaller parts of Australia where it is harder to get a job. The effect will be 5,000 lost jobs. The degree of responsibility that the Government should shoulder for these staff reductions is a matter for some debate. I have mentioned only one corporation. Its decision is being repeated everywhere around Australia at the present time, but, unfortunately, with less publicity. However, it appears that the impact of this fringe benefits tax was very significant in that decision. In an environment where investment is vital to Australia's economic recovery, the fringe benefits tax, the increase in the corporate tax rate to 49 per cent, the capital gains tax and a host of other imposts are creating barriers to development in this country, but this Government has the effrontery to congratulate itself on the fact that receipts from the fringe benefits tax in the past financial year were some $200m more than the originally estimated $535m. Senator Maguire —And hardly anything from the farming sector. Despite all the nonsense you people talked about, 97 per cent of the farmers did not even pay the tax. Senator WATSON —Senator Maguire's interjection is quite irrelevant, because not once to night have I mentioned the farming sector. I would like a comment about those 5,000 people who will be retrenched from the Commonwealth Bank. Further, I would like a comment from the 72 per cent of companies surveyed that said that they had shed labour because of this Government's fringe benefits tax. Senator Maguire should comment on that, because that is significant. I do not talk about the farmers, because the poor farmers do not have any money to pay tax. Senator Maguire —In 1985-86 you complained about the farmers all the time. Senator WATSON —As an economist, Senator Maguire would have to acknowledge that this Government is the biggest taxing government in peacetime. He should acknowledge that for the people of Australia, because that is a fact of life. Historically, this Government is expanding its tax regime, but at what cost to the Australian community? Let the Australian people judge, and I believe that they will do so. Sitting suspended from 6.28 to 8 p.m. Senator PARER(Queensland)(8.00) —This evening we are debating the Taxation Laws Amendment Bill (No. 4) 1987, the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill 1987 and the Sales Tax (Off-shore Installations) Amendment Bill 1987. Taxation is guaranteed to sharpen the minds of some seven million Australians from paper boys to heads of business corporations. The Taxation Laws Amendment Bill that is before us tonight-I think this was alluded to by my colleague Senator Stone-has 75 more pages of Australian law and 126 pages of explanatory memorandum. The Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill has 100 pages of law and another 146 pages of explanatory memorandum. The understanding of the tax laws today is beyond the average Australian taxpayer. All he seems to understand is that his gross income is also his taxable income. We are all aware of the fact that in the last decade the point at which the maximum rate of tax takes effect has decreased from something like 17 times average weekly earnings to 1 1/2 times average weekly earnings. The Taxation Laws Amendment Bill includes the following proposed changes to the income tax law: the removal of negative gearing, a limitation on rental property investment, a reduction in the rate of write-off for capital expenditure on new income producing buildings, introduction of income tax averaging arrangements for artists and sportspersons, and a range of provisions to deal with avoidance of income tax payments. The Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill seeks to implement changes to the fringe benefits tax announced by the Treasurer (Mr Keating) on 26 August and 29 October 1986 and income tax changes announced on 29 October 1986. As Senator Stone has pointed out, the Opposition does not oppose the Taxation Laws Amendment Bill (No. 4) because it presents a small step towards shifting the massive tax burden that the Hawke Labor Government has imposed on all Australians. But I think some comments should be made about this piece of legislation. The Government is fond of telling all and sundry how simple and equitable the taxation system is. This is clearly absolutely untrue. What was supposed to be a reformed tax system-a system that offered equity and simplicity-has in fact gone almost in the opposite direction. I take as an example the simple and equitable stance of negative gearing. The Hawke Labor Government has performed some amazing about-faces and back flips in its time, but the one that takes the cake is its decision to reintroduce negative gearing in this Bill. We should compare the Government's present position on negative gearing with its earlier position on exactly the same issue. For example, on 17 October 1985 the Treasurer, Mr Keating, said in the House of Representatives: I cannot believe that any leader of a major party- he was referring to Mr Howard- would come into this Parliament and seek to have restored one of the most blatantly abused tax shelters in the system. That is what the Treasurer said about the Opposition's suggestion to reintroduce negative gearing because of the adverse effects its removal was having on the house market, particularly the house rental market. He went on: To try and defend this behaviour, this outrageous rort, on the basis that it helps some renters is extraordinary. Earlier this year the Special Minister of State, Senator Ryan, when launching the Australian Labor Party's women's policy, condemned the Liberals' proposal to reintroduce negative gearing among other things. She described it as `a rort for the rich which would be paid for by cuts in essential services to women'. Only a short time ago that was the attitude of the Treasurer and senior ministers of the Labor Party. We will see whether that is what happens with Labor's change of mind. The reintroduction of negative gearing in this Bill highlights the major blunder the Government made when it abolished it in the first place. Honourable senators will recall the abuse that was hurled at the Opposition by the Government when the Opposition first drew attention to the problems with negative gearing. It was a classic example of assuming-which the Government did-that all people are tax evaders or potential tax evaders and thus introducing legislation which devastated the innocent bystanders. Ordinary Australians paid very dearly for this Government's decision to abolish negative gearing. This was yet another unintended consequence of the various tax measures of this Government. It has been compounded by the Hawke Labor Government's high taxing, high interest rate policies. I heard Senator Haines in here previously talking about the problems of capital fleeing Australia and of investments being made overseas. But at no time did Senator Haines ask the question why. It is a very sad reflection on Australia today that we have not had the recovery in manufacturing industry, for instance, that one would have expected with the collapse of the dollar-probably the quite deliberate collapse of the dollar as a quick fix for the problems we had. The sad thing about it is that if one talks to corporate people one finds that there is nothing these people would wish to do more than to invest in their own country and to have their investment at home. Senator McKiernan —That is not what John Elliott said. Senator PARER —They are forced to look elsewhere, to look in competitive countries. I am pleased that Senator McKiernan made that interjection. It is not that John Elliott would like to do that; he was forced to do it. If one talks to any sensible investor he will say that regrettably every investment decision we make in this country today is predicated on the tax effects. Once those decisions are made simply on tax effects something is seriously wrong. As I said earlier, we do have one of the highest taxing and highest spending governments this country has ever seen. In 1986-87 housing starts per 1,000 population slumped to their lowest level in 30 years. The chronic shortage of rental accommodation which resulted from the decision to get rid of negative gearing meant that people either were unable to rent properties or had to pay through the nose for houses. Other amendments which are part of this legislative package are related to the Occupational Superannuation Standards Bill passed earlier in these sittings. In this instance the Opposition had the same complaint as it raised in regard to the previous Bill. There is no substance to it. Once again we have to rely on Press releases as there are no regulations. For how much longer must the superannuation industry rely on Press releases for guidance and wait for vital regulations which in many cases can be quite different from the Press releases issued at that time? I will now move to the fringe benefits tax. The situation is the same for the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill. It has been tabled for only a short time, yet the Government says that everyone was acquainted with the changes. They were mentioned in two Press releases-one on 22 August and the other on 29 August 1986. Another example of the Government's simple and equitable tax system, this Bill brings about 147 pages of amendments. The fringe benefits Bill was introduced only last year, but the Government has now been forced into 147 pages of amendments. What an extraordinary example of muddle-headed legislation! This Government is being forced to make amendments to correct a situation which it should never have been forced into or have forced on to long-suffering Australians. I shall give a few examples of the changes, and there are pages and pages of them. Again, there are unintended consequences. Let us look at a few of them. The private use of unregistered motor vehicles used principally for business purposes will now be exempt. I think Senator Maguire interjected earlier on Senator Watson when he said, `What about the farmers?'. Obviously this will enable farmers to use their unregistered utes to go to the letter box and pick up the mail without paying fringe benefits tax. The use of an employer's business equipment on a non-working day or away from the employer's business premises is another change. Why that was ever brought in in the first place is beyond me. One could not take even an electric drill home without being charged fringe benefits tax. Also exempt will be benefits provided to employees of a government body who are employed in a public hospital, of all things-another unintended consequence. Benefits in respect of travel costs incurred in attending job interviews are another exemption. The fact that that was covered in the first place is absolutely extraordinary. Benefits in respect of specified relocation costs for a person transferred from one place to another will be exempt from fringe benefits tax. The changes go on and on. Compensation for work related injuries was one particular area that I drew attention to at the time because of a very tragic event in Queensland. I incurred the wrath of the Prime Minister (Mr Hawke) himself on the television. He said, `What nonsense. Who is this person? He is making it up'. We now have an amendment that allows compensation for work related injuries to be exempt from the fringe benefits tax. Another change covers medical services provided in work site medical facilities that are operated principally for the treatment of work related injuries. There are another two pages of them. A few of them apply, for instance, to the mining industry. There are more exemptions, such as the one to replace the statutory formula for valuing remote area housing by a statutory value of $60 a week per unit of accommodation or $15 per week for single person's quarters. Everyone is aware of the reason the Government decided that it was going to charge a fringe benefits tax. In areas where a company does not provide housing, it will not be able to get workers, so it is a compulsory expense for a company. In addition, the union representatives of the people who work in those mining areas will not allow them to go there unless there is housing. Of course, if the Government had felt inclined, it could have charged the fringe benefits tax to the user, to the person who receives the benefit, which would be the principle one would expect. But I think the Treasurer has admitted quite openly that he did not do that for political reasons. He knew that he would not get away with it. The mining industry is already in great difficulties, particularly the coal mining industry in Queensland, where the market has collapsed, yet the companies are still being charged the fringe benefits tax-in all cases in underground mines where the company is not making a profit. Senator Aulich —Higher rail duty is the other damaging thing, isn't it? Senator PARER —Yes, I agree with you, Senator. There are a whole lot of government charges. This happens to be just another one, just another nail in the coffin. While that is going on, the Government is handing out $40m to get a part of the coal industry out of trouble. It does not make any sense. There are pages and pages of changes. The list is endless. At least this Government is righting some of those petty mistakes-the unintended consequences. But how did it manage to impose the penalties on an unsuspecting public in the first place? Unfortunately, fringe benefit taxes which have hit some in the community who can least afford it will remain. For instance, we could hardly call shop assistants in the retail industry the wealthy in our community, but recent figures have shown that the numbers of workers who are able to buy goods and services from their employers at discount prices have now fallen by almost 30 per cent-and by almost 20 per cent over the last year. One method the Government has employed to boost its revenue, one which I would normally support, is the desk audit. But there is growing revolt in the community about the way in which desk audits are now being conducted. My constituents in Queensland tell me of the anger they feel over the way in which the audits are conducted. For instance, last financial year 20,000 taxpayers were subjected to desk audits and the number was expected to grow to some 31,000 this year. Ann Lampe has written two revealing articles on the subject in the Sydney Morning Herald. She quoted the Taxation Institute of Australia, which represents 9,000 professionals working in tax law and law practice, and wrote that the Institute had serious concerns about the way in which tax audits were being conducted. She stated that taxpayers were not made aware that it was not compulsory for them to attend an audit, and that they complied for fear of breaching the law. Her second article, on 2 December 1987, quotes a tax audit officer who has been assessing with the Australian Taxation Office for the last three years. She wrote: Auditors are not encouraged to outline the taxpayers rights when they were called in for an audit, particularly regarding taxpayers bringing accountants or tax agents with them. The auditor also said that their promotion prospects suffer if they were perceived to be soft on the auditee. He went on that the whole idea of the audit is rather like a guerrilla attack. We beat them (taxpayers) over the head when we get them in and leave them reeling. It is quite a different story from the information I received from the Australian Taxation Office as part of a reply to a question I asked during Estimates to which I waited over a month for a reply. I was told, amongst other things, `The taxpayer is always advised that he or she may be accompanied by a tax agent or adviser at any interview. From information I have received, more often than not that is just not the case. This Labor Government simply has an abominable record on taxation. As a proportion of gross domestic product, income taxes have increased alarmingly. They have risen by around 70 per cent. Tax revenue collected has risen from nearly $41 billion in 1982-83 to $65 billion in 1986-87. Income tax collected from individuals has increased from $23 billion, when this Government came into power, to $41 billion in 1987-88, after the tax cuts effective from July this year. Despite the rhetoric to the contrary, this is the highest taxing, highest spending government in the history of Australia. Australians are being bled to death, and the government runs around the country using the same language that the Whitlam Government used and saying, `You have never had it so good'. The Australian people know otherwise. Senator CRICHTON-BROWNE(Western Australia)(8.18) —The Senate is debating cognately the Taxation Laws Amendment Bill (No. 4), the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill 1987 and the Sales Tax (Off-shore Installations) Amendment Bill 1987. These Bills deal with a wide range of areas, such as sea installations, the taxation of annuities, tax deductions for donations to certain veterinary organisations, fringe benefits and shelf companies. The aspect of the cognate debate to which I wish to confine my remarks is the Taxation Laws Amendment Bill (No. 4) 1987, because it is in this Bill that the Government has finally reversed its decision to outlaw negative gearing. This is a proposal which the Opposition very much supports, and it was and still is part of the Opposition's taxation package. It is something which the Opposition has always supported, despite criticism from the Government and from the Treasurer (Mr Keating), who introduced this legislation. As we know, negative gearing occurs when a taxpayer who owns a rental property under a mortgage has greater outgoings than the level of rent receipts. He thus makes a loss. He is then able to claim that loss against any and all other income. That is the total amount on which he is taxed. The taxpayer is thus taxed only on his negative income. In the tax reform package the Government abolished negative gearing. Loss on rental properties had to be carried forward until subsequently it was able to be offset against profits from rental properties. Investment in housing simply dried up. Housing as an investment became a great deal less attractive than any other form of commercial fixed asset investments. A poor, but a very real, analogy is if a taxpayer owned a service station and two taxis and the service station made a loss but the taxis made a profit. He would be able to deduct the losses from his service station against the profit from his taxis and would be taxed only on the net result of the amalgamation of those two businesses. In the case of the abolition of negative gearing the Government chose to deny the same opportunity to those who were investing in housing. Clearly, the fabled blind Freddy could see that by placing a special taxation burden on housing, returns on investments in housing would inevitably fall relative to other investments. It necessarily followed that rental housing became scarce. As was predicted by the Opposition, rents rose automatically. This was pointed out to the Government by the Opposition at the time. On 18 July 1985, John Howard, the then Deputy Leader of the Opposition, issued a Press statement headed, `When Soaking the Rich Harms the Poor'. It stated: Mr Keating's crackdown on negative gearing is a classic example of the fact that when a government attempts to soak the rich it invariably harms the poor. Last night's announcement by the Treasurer will directly discourage the construction of low cost rental housing by increasing the cost to the investor. The end result will be an even greater shortage of low cost rental accommodation combined with a rise in rents. The Government was clearly and unambiguously warned of the consequences of abolishing negative gearing. The Government took no notice. The Treasurer, in particular, took absolutely no notice. In the second reading speech of the legislation which abolished negative gearing, Mr Hurford said: The Government takes the view that the taxpaying community should not have to subsidise the acquisition of investments by a particular group of taxpayers in this way. Competition for the purchase of residential property between these investors has been reflected in increased prices to the detriment of ordinary home buyers. The Government obviously regarded the deduction of losses as a subsidy by the balance of the community. If it were judged as being a subsidy, accordingly-if logic were to prevail-every other form of investment in the same category was also to be considered a subsidy. The facts are that there was no subsidy at all. Negative gearing was perfectly in accord with the normal taxation principle that taxpayers should be taxed only on their net income. The other claim that negative gearing had an adverse impact on home buying clearly overstates the case. Whilst it is true that investment demand for housing contributes to a proportion of the total demand in the housing market, it is only a proportion. A significant proportion comes from the people who are purchasing homes in which to live. In contrast, negative gearing affects almost every newly purchased house purchased for the purpose of rental. It is, therefore, plainly obvious that, whatever effect the abolition of negative gearing will have on housing prices, it will proportionally have more effect on the housing rental market by reducing the returns on housing investment and ultimately, as I said earlier, will increase rents. This was precisely the point put to the Government at the time by our shadow Minister, Jim Carlton. The Opposition kept up the pressure on the Government because it was so obvious that negative gearing was going to do exactly what subsequently it has done. The Treasurer, least of all, was convinced. He said in October 1985: I cannot believe that any leader of a major political party would come into this Parliament- he was referring to John Howard or Andrew Peacock- and seek to have restored one of the most blatantly abused tax shelters in the system where people can minimise their income by running interest cost deductions against property. To try and defend this behaviour, this outrageous rort, on the basis that it helps some renters is extraordinary. The great majority of rental properties are not affected by negative gearing and negative gearing has not succeeded in providing an adequate number of rental properties. By contrast, we have wiped out that outrageous rort and introduced accelerated depreciation for new buildings or major renovations in order to create more rental property and more opportunties for renters. As much as anything, that statement explains to me how divorced this Government is from reality and from commercial decisions. One might well ask how the Treasurer's statement compares with the facts. Let me remind honourable senators that, since the abolition of negative gearing until September of this year, rents have risen by an average of 43 per cent in Sydney, 23 per cent in Melbourne, 27 per cent in Brisbane and 36 per cent in Perth. That is the benefit of the Government's accelerated depreciation. That is the wonder the Government has cast upon the rental market. The truth is that that is the manifest result of the Government's decision selectively to abolish negative gearing in the rental market. In November 1985 in Perth the rent for a two-bedroom house ranged between $70 and $80 a week. By July this year the rent for the same house ranged from $100 a week to $160 a week. These figures were provided to me by the Real Estate Institute of Western Australia. At the same time, as if it were not enough to abolish negative gearing, the Government introduced a capital gains tax and this community, past and potential home buyers, was labouring under record interest rates. It was no great surprise to anybody who was able to get two and two to come to four that the number of housing building permits crashed. The number of new houses being constructed fell dramatically. In the financial year 1984-85, 160,459 approvals for new dwellings were given. Twelve months later, this figure had fallen by 20,000 to 140,655 and, at the end of the 1986-87 financial year, it had fallen by another 20,000 to 120,780. So much for the economic geniuses of the Australian Labor Party. Inevitably, the queues for public housing rose dramatically. The Government opposite claims to be a government of care, concern and compassion. It has said that by 1990 it will have abolished child poverty. This is the same Government which sent 40,000 people on to the queues for public housing because, thanks to its macroeconomic decisions, those people could no longer afford their own home. I seek leave to incorporate in Hansard a table from a document titled Commonwealth State Housing Agreement Background Information and Statistics, published by the Department of Community Services and Health, which shows the increase in the public housing queues. Leave granted. The table read as follows- APPLICANTS OUTSTANDING FOR RENTAL ACCOMMODATION (Excluding the ACT) 1983 ... 123,707 1984 ... 138,543 1985 ... 142,289 1986 ... 154,419 1987 prelim. ... 161,857 Figures based on 30th June each year. Australian Capital Territory 1984 ... 2,141 1985 ... 2,910 1986 ... 1,781 1987 ... 2,087 Source: Department of Community Services and Health: Commonwealth State Housing Agreement Background Information and Statistics November, 1987. Senator CRICHTON-BROWNE —I thank the Senate. While the entire real estate market was crashing around it and families were being relegated and children left homeless, what was the Government doing? Well, one and a half years later Senator Walsh, the Minister for Finance and Minister representing the Treasurer in this place, had this to say: I was asked what benefits would necessarily flow on to people seeking rental housing. The answer is that no benefits would necessarily flow on. He had been asked a question about negative gearing, of course. He went on: What Mr Howard proposes to do is to restore the old situation- that is, Mr Howard was going to restore negative gearing- under which it was not necessary to construct new accommodation to exploit the loophole. So negative gearing was described as a loophole. What Mr Howard had said was that negative gearing would apply to new homes and second-hand homes. Perhaps Senator Walsh is not conscious of the fact that the average family seeking to own a home for the first time-or own it in part at least, having paid a deposit-would be quite happy to live in a second-hand home. But, at that time, when Senator Walsh could see no virtue in negative gearing, Barrie Unsworth, Premier of New South Wales, was faced with an election. When writing to the Prime Minister, he stated: There can be no doubt that genuine investors have moved away from the rental property market. There is a dire need for more private investment in the rental market. With rents rising at the rate of 14.5% per annum and with the current vacancy rate at below 1% (its lowest point since the war) the situation is critical for many families. Soon after that we were told that the Government was going to reinstate negative gearing. Suddenly, the Government was struck by a great outpouring of common sense, compassion and logic and it suddenly understood the point. Senator Ryan —We have always had those things. Senator CRICHTON-BROWNE —Senator Ryan said that the Government has always had them. Well, if I can put just one caveat on that, it always shows that when there is a State election around the corner. That is what is happening in New South Wales right now. If Johnny Citizen had written to the Government, I do not believe that we would have had a reinstatement of negative gearing. But when big, ugly Barrie wrote and said-- The ACTING DEPUTY PRESIDENT(Senator Colston) —I think you should withdraw that remark, Senator Crichton-Browne. Senator CRICHTON-BROWNE —The `big' or the `ugly'? The ACTING DEPUTY PRESIDENT —Do not be smart with the Chair. Withdraw the remark. Senator CRICHTON-BROWNE —I withdraw the remark. When the temporary Premier of New South Wales wrote to the Government, he got an immediate response. The Government buckled and, properly, said that it would reverse its decision on negative gearing. Was it a revelation of logic? Was it that the Government had sat down and done its arithmetic? Was it that its economics had been wrong in the past, or was it simply that it wanted at any price to win an election in New South Wales? Senator McKiernan —Brian Burke also asked for it. There is no election in Western Australia. Senator CRICHTON-BROWNE —But Brian Burke asks for everything all the time. He wants to be all things to all men. Senator Ryan —And women. He has a very good program for women also. Senator CRICHTON-BROWNE —I will take Senator Ryan's word for it that he has a good program for women. Let us just look at the revelation that occurred. Perhaps it is best exemplified by an answer that the Treasurer provided, through Senator Walsh, to a question asked by Senator Powell. Senator Powell had asked about the effect of negative gearing on housing rentals. Senator Walsh said: The Treasurer has provided the following information in answer to the honourable senator's question: The ability to offset interest against other income accorded to 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 same Treasurer said that the abolition of negative gearing would have no effect on supply and demand and that, if it did, it would be overcome by depreciation provisions. Then, suddenly, he said that the reinstatement of negative gearing will increase the supply of rental housing. He went on to say: 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. So the Treasurer is now saying the exact reverse of what he said when he abolished negative gearing. He is now saying that the reintroduction of negative gearing will ensure an increase in the availability of homes and a decrease in the levels of rent. The homeless families and the rising rent queues could make no dent in this Government's resolve. Nobody could persuade the Treasurer that he was wrong. If I am correct, when speaking about tax in the House the Treasurer said that he would never back down on something in which he believed. With the passion and fury with which he attacked us when we opposed him, I assumed that he believed it. On 17 October 1985, reported at page 2350 of Hansard, he said that he would never back down on anything in which he believed. Well, why did he back down on this? Was it because he did not believe in it? Senator Knowles —A State election. Senator CRICHTON-BROWNE —There was a State election around the corner. Every time there is a State election the Australian Labor Party sells its soul. It compromises itself, compromises its principles, compromises the taxpayers, compromises the economy, compromises our balance of payments-all for the single-minded ambition of holding government at any price. One may well ask why the Government is now expanding this rationale which might have been lifted straight from the Press release of John Howard to which I referred earlier. I invite honourable senators to compare the two. It might even be that the Government and the Treasurer have changed their minds. It is not only the case that Mr Unsworth is about to be defeated at the polls; as best I am able to tell, he is also a member of the same faction as the Treasurer. Whatever the reason for the change of policy, Mr Unsworth certainly carries more weight as one man than do all the rest of the voters in Australia who opposed the Government's position on the fringe benefits tax. Of course, the Premier of New South Wales has an election around the corner and he has some explaining to do. He has to explain why the rental market in Sydney is so tight-perhaps the tightest of any capital city in Australia-and why interest rates in Sydney are going up higher than in almost any other capital city in Australia. He has to explain why, for instance, in the three months to April of last year, approvals for the construction of home units and flats fell by 43 per cent. Home units and flats are essentially the prime areas of investment for those investing in the rental market. That was the greatest fall over a similar period that this country has seen since Gough Whitlam. The New South Wales Government at the time had nothing to say about it; but, of course now with an election coming it has something to say. I really wonder whether this Government or the Government of New South Wales has compassion or whether this measure is simply due to the fact that an election is coming. If it is not that, why was the decision made in the first place, and why did the Government of New South Wales not complain bitterly at the time? The difference is-- Senator McKiernan —That is the fourth time you have said that. Senator CRICHTON-BROWNE —Do I hear from a failed candidate for the Federal seat of Moore in Western Australia? Was that the honourable senator who ran as No. 1 on the Senate ticket and got the worst vote in the history of his political party? The ACTING DEPUTY PRESIDENT(Senator Colston) —Could we perhaps get back to the Bill, Senator. Senator CRICHTON-BROWNE —Yes, indeed, Mr Acting Deputy President. The difference simply is that now political expediency prevails. Now we have an election and the hide of the New South Wales Government is on the line. No concern is shown for the hides of the poor souls queuing up to get public housing. If it is only the families getting the chop, of course, Mr Hawke and Mr Keating do not much care. They sit on their hands while the Federal Government rakes in this short term revenue. It is not long term revenue, because at the end of the day the cost of public housing to the Government goes up and the cost of outgoings in terms of social security and social welfare goes up. Suddenly there is a personal stake, a personal interest, in this matter for this Government. The reversal of the decision, of course, is welcomed. It removes an anomaly; it removes the unique discrimination against the housing industry as distinct from every other sector investing in fixed assets. The removal of negative gearing should never have taken place. If we had a government that was driven, as it falsely claims, by logic and common sense rather than an uncontrollable desire and thirst for revenue from taxpayers, these thousands of people who have already had to suffer over the intervening period would not have had to do so. It is just a pity that it is only when this Government finds its mates on the line that it has the heart and the commitment to reinstate negative gearing. It is regrettable that it was ever removed in the first place. Senator KNOWLES(Western Australia)(8.43) —Tonight I wish to address my comments to two of the Bills before us: the Taxation Laws Amendment Bill (No. 4) and the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill. The interesting thing about these particular pieces of legislation is that they add some 221 pages of new legislation. There are 92 clauses and 75 pages in the first Bill and 75 clauses and 146 pages in the second. This has come from a government whose Prime Minister (Mr Hawke) and Treasurer (Mr Keating) both said in 1985 that they were going to devise an easier and simpler taxation system. It was to be far less complicated. It has been a nightmare. It has been a nightmare for the Australian Taxation Office, for tax accountants and accountants generally, for the private sector and for the individual. Yet this Government said in 1985 that it would have a far easier and less complicated taxation system. What a joke! Since the National Taxation Summit, the gabfest that the Government held here in 1985, there has been a 57 per cent increase in the number of pages of tax legislation. That is making it easier! It is an absolute joke. It is typical of the style of this Government that such complex legislation as that which we are debating tonight should first be introduced on 29 October in the House of Representatives and a little more than two weeks later be rammed through that House in the space of one evening. It is almost like the Bill of Rights re-trotted and various other pieces of important legislation that have just been rammed through the House of Representatives without due consideration or debate. It is also a matter of general concern that the growing complexity of our tax laws gives more and more scope for discretionary decisions by the Commissioner of Taxation and the Australian Taxation Office in general. Since the 1985 Taxation Summit the number of pages of tax legislation, as I said before, has increased by 57 per cent. Not in one's wildest dreams could one imagine that that would make it easier to administer. Therefore many man hours have been wasted by the private sector in trying to come to grips with things such as the fringe benefits tax. Business people were getting conflicting advice from their accountants and the Taxation Office. What were they meant to do? They just had to wear it and they had to waste those man hours. This growing complexity of tax laws may reflect not only a bureaucratic approach but also a conscious desire to coerce more taxpayers through a legalistic jungle. It seems a long time since mid-1985 when the Prime Minister laid down those nine principles of taxation reform, the fourth of which, as I said, was simplicity. We are seeing the result of that simplicity yet again today. But the most significant feature of the Taxation Laws Amendment Bill (No. 4), which covers a number of separate issues, is of course the restoration of negative gearing for rental property investments. This subject has been very well covered by many of my colleagues today. Immediately prior to my speaking, Senator Crichton-Browne laid out a very compelling argument as to why we opposed the abolition of negative gearing originally and why we have advocated its reintroduction ever since. This measure that has now been taken by the Government is, of course, the reversal of the action that it took back in 1985. From the outset the Opposition warned that this action against a so-called tax shelter would make investment in rental housing unattractive and so hit the low income earners-the people whom this Government purports to look after and whose protectors and minders it purports to be. But they are the people who have been so adversely affected by this measure. The Government should be ashamed of itself. At the same time, the shadow Minister for taxation matters, Senator Messner, noted that the pressure on low income earners would in turn require a rise in the supplementary rent benefit. We as an Opposition advised the Government continually about this problem. Yet the Government took the view that it did not matter at that stage and would not matter further down the track. But obviously it now matters greatly when a New South Wales State election is around the corner. The $55m tax revenue gained by abolishing negative gearing was to be outweighed by increased welfare spending as more Australians became priced out of the private rental market and were forced to depend on public housing. That was something which we stated right from the word go and it is something that has been proven to be true. We must not forget that the abolition of negative gearing was not the only major disincentive for investment in rental accommodation introduced in 1985. The dreaded capital gains tax ensured that new buildings would incur a tax on profit from eventual sale. So the two things combined put the nail in the coffin for low income earners and the rental market generally. It was simply stating the obvious to predict that the supply of new accommodation would dry up and that rents would rise in response both to the shortage and the need to recoup losses incurred by the loss of the tax concessions. Of course, when the Liberal Party pointed that out, we were cast in the mould of friends of the tax avoiders, the tax cheats and such people. How many times have we heard Senator Walsh, in his most abusive style, call us friends of the tax avoiders and tax cheats purely and simply because we were aiming at highlighting what a dreadful mistake the Government was making in abolishing negative gearing and introducing a capital gains tax? The Government even tried to claim that the move would not affect the rental market. If that is so, why, other than for a New South Wales State election, is it now changing its tune? A city such as Perth, with a steady influx of new arrivals, has suffered particularly from the effects of the Government's action, with the rental vacancy rate falling from 2.4 per cent to one per cent in the two years to January 1987. We must remember that a rate of below 3 per cent represents a tight market. That is something that this Government should not be proud of. It should look at its policies and say, `We have caused that. We were advised that it would be wrong. We were told repeatedly by the Opposition that this would happen, but we did not care'. The effect of the introduction of the tax change can be seen in a fall of 3 per cent to 1.5 per cent between May and August 1985. The consequence has been an average rise of 25 per cent in flat rentals across the metropolitan area, rising to 40 per cent in inner suburbs where the demand is greatest. Housing rents have risen by 27 per cent both in 1985 and 1986, and rent for a two-bedroom house in Perth has risen by 39 per cent in the two years to 1987. The abolition of negative gearing has the effect of encouraging owners of rental homes to sell them, thus further reducing the supply. Sadly, many people come into my office who do not qualify for rental assistance, but they simply cannot afford the private rental market because of this Government's initiatives and actions. The Minister for Housing in the State Labor Government of New South Wales, Mr Walker, has stated that the shortage of rental accommodation is due to the end of negative gearing and the effects of the capital gains tax. On 20 July, the Master Builders Federation of Australia urged the Government to restore negative gearing to ease the rental crisis. Its own people in other States were begging this Government not to bring in negative gearing, but the matter has been deferred and deferred until such time as it now tries to make it an election carrot for a government in New South Wales that is in more strife than Ned Kelly. While we may be pleased that the impending State election in New South Wales may have finally forced the Government to rectify its error, we are entitled to record that such an obvious misjudgment in the continual quest to squeeze more revenue from the taxpayer ought not to have been made in the first instance. The Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill is an example of the procedures of this Government to legislate by Press release. Heaven only knows how much of that we have seen in the last couple of years. Measures announced originally on 29 October 1986 have taken 12 months to reach the Parliament in legislative form. While we would concede that there can be some delay in finalising legislation in the taxation field, such a time-lag brings the whole authority of the Parliament into disrepute. But, then again, the Minister responsible for these pieces of legislation does not care about that. He has no regard for the Senate or the institution of the Parliament generally. The delay may also reflect the difficulties in amending what we in the Opposition continue to regard as a bad tax. It is complex, intrusive and unjust both because it is levied on the providers rather than the recipients of benefits and because it continues to be levied on items that are genuinely work-related. At the time of the initial debate on the legislation, we fought tooth and nail for the Government to try to distinguish between those benefits that had been given to people in lieu of salary and those that were genuinely work-related. But the Government, in its blinkered attitude, had to continue to hit all. The Bill removes some of the more gross anomalies that were identified when the original fringe benefits tax was passed by this Government and the Australian Democrats in June 1986. The Democrats filibustered all day yesterday, calling unnecessary quorums and divisions. Yet, when it comes to debating things such as the fringe benefits tax, which they supported-- Senator Stone —It's all too hard. Senator KNOWLES —That is exactly right, Senator-they pack their bags and go home. It is an absolute disgrace that the Democrats supported the proposal originally and cannot, even now, see the evils of what they did back in those dim, dark days of June 1986. Of course, invalids will now no longer pay the tax for live-in assistance-and about time. There is an extra 10 per cent discount on remote area housing and travel-and about time, especially in a State such as my own, Western Australia, where rental accommodation and housing accommodation generally in the north-west and the Goldfields can be very difficult. In many instances, it is difficult to attract people to those areas. Car log-book procedures are to be simplified. As I said before, all of these things were done by Press release and we now see the legislation. These and other measures do not alter the basic substance of the original Act, as the Government has been happy to proclaim. The Senate should recognise that there is continuing opposition to this tax among the business community. In March this year, a survey of the fringe benefits tax by the New South Wales Chamber of Commerce showed that 98 per cent of businesses opposed it. More importantly, I suppose, is the fact that 81 per cent of those surveyed said that they would reduce their work forces as a consequence and 72 per cent said that they had already had to do so. Once again, this Government does not care about that. It talks about job creation-not about the explosion of the jobless. It talks about creating jobs in the Public Service-not about real job creation. Altogether, 51 per cent of businesses claimed that the tax had affected trading viability; 61 per cent claimed to have passed on some costs to consumers, and 71 per cent said that they would need to reconsider investment plans. On an individual level, a letter from Mr Les Howard to the Small Business Letter of 28 September stated that the fringe benefits tax had caused him to cut staff at his car radio service in Sydney and Gosford from 25 to 18. He raised a very interesting question in that letter as to how the books would be balanced. He asked how the reduced sales tax from the loss of his sales and the loss of his business generally should be offset against the revenue gained from the fringe benefits tax. Once again, the people and the economy are suffering from this high taxing and high spending Government that beats all past records. It was also noted in the same publication of 20 July that that month the Taxation Office was late in mailing out the fringe benefits tax forms to businesses. That is a very interesting piece of information. As we can all recall, July just happened to be the month of the Federal election. They were posted out in Perth between 13 and 15 July; in Sydney, on 16 July; and in Adelaide, on Sunday, 12 July and those dates were all after the Federal election. All forms were posted late. I wonder why. Would it be fair to suggest that the Government was anxious to ensure that the small business community was not reminded of such an unpopular tax immediately prior to the election of 11 July? The date of the election was 11 July, but Adelaide sent its forms out on Sunday, 12 July. It is highly likely that a 10 to 15 per cent increase in management salaries during 1986, as reported in March this year, represents a substantial cashing out of executive benefits, of those who dominated the rhetoric of this Government when attempting to justify the tax. It should be said in passing that, if this supposedly is what the tax set out to eliminate, how can the Government and the Australian Council of Trade Unions have it both ways by denouncing the salary increases that are sought? This also suggests that the increasing returns from fringe benefits tax must reflect more and more a tax not on executive packages but, rather, on those so-called benefits that are substantially work-related and simply cannot be cashed out. The Budget Papers make it clear that the fringe benefits tax represents a major tax grab and that it is being paid on the work conditions of a wide section of the Australian work force. Despite the cashing out to which I referred earlier, a tax estimated to raise $325m in 1986-87 has exceeded this forecast by $200m, making a total of $525m from the private sector. The estimate for 1987-88 is $750m, which is an increase of 40 per cent on the original estimate and that is boosted by a rise in the tax rate from 46 per cent to 49 per cent. It was reported on 20 November by the Department of Finance that, for the first quarter of the financial year, returns from fringe benefits tax had exceeded forecasts by $45m, so that over a full year the yield would reach $855m and, doubtless, all this revenue is gratifying for the Government as a tax on turnover rather than on profit, but it begs the question as to how well business can afford to pay it: it cannot afford to pay it. It has been telling the Government that it cannot afford to pay it, but this Government has done nothing about it. On page 362 the Budget Papers show just how widely the fringe benefits tax net has been cast. In total, there are 105,000 taxpayers who clearly represent a big slice of Australian private enterprise and, while there is no total for the number of employees for whom the tax must be paid, given that fringe benefits tax on motor vehicles affects 433,000 employees, that fringe benefits tax on low interest loans affects over 168,000 people and that its application to housing affects over 105,000 people, a large proportion of the work force has attracted the tax. We can hardly believe that all these people are the business executives whom Senator Walsh talked about and condemned all the time, saying that they were the only ones who would be hit. Another table shows that 47 per cent of those paying the tax have a liability of less than $1,000 and 67 per cent of all those paying fringe benefits tax pay less than $2,000. This shows the extent of fringe benefits tax as an administrative burden on the small business community, whose real cost often is in the paperwork and being an adjunct to the Australian Taxation Office, where the quarterly imposition of fringe benefits tax must be added to the quarterly company tax and provisional tax returns-all at different stages of the year-and monthly payments of group tax, prescribed payments, withholding tax and sales tax. So, this Government considers any more taxes that it can put on to the private sector are well and good. It just dishes them out like lollies to the private sector, but they are not lollies at all; they are a little slice of poison. At the other end of the scale, 41 taxpayers, presumably corporations, paid fringe benefits tax last year in excess of $1m, which amounted to 24 per cent of the total collection. Even for a large concern fringe benefits tax must now stand as yet another major expense and time consuming effort which it has to put in to comply with this ridiculous measure taken by this ridiculous Government. The business community in Western Australia knows that this tax is an unfair burden. It knows also that many anomalies still will remain after the supposed concessions in this Bill. An employee of private enterprise working away from home receives a living away from home allowance, yet over a week his employer would be liable for $21 fringe benefits tax payable on meals. These employers ask why they have to pay $21 on a person in the private sector for fringe benefits tax on meals when a public servant in the same situation receives a tax free travel allowance. Surely the two should be the same, but that is not so. The public sector is treated completely differently from the private sector. The private sector cops the bills, but the public sector cops a tax free travel allowance. Employers are conscious also of the fact that some supposed fringe benefits are enshrined in industrial awards and cannot be cashed out. The unions have played a large part in this and they were quite delighted to do so, because they know that the benefits cannot be cashed out. They know that their union members still will be beneficiaries of these types of benefits and that those benefits will not be rescinded. The mining industry is a particular case in point. A discount on the fringe benefits tax liability for remote area housing only acknowledges the fact that its provision is an accepted precondition for work in remote and harsh climates. Should a company elect to sell housing to employees, any concessional element to the scheme is also subject to the tax. Last year I warned the Senate that the fringe benefits tax might cost the Western Australian mining industry $30m annually. The latest estimate is that its total cost will fall between $50m and $75m, despite the concessions announced in October 1986. It is a major cost for our export industries, but once again this Government is not too keen on exporting. It prefers to import more than it exports, hence our balance of payments is right up the creek. A major Western Australian company engaged in manufacturing and timber production has a fringe benefits tax bill of $300,000 annually, even after exact and careful valuation of some housing that would have very little general value. This company returns 51 per cent of its profits in overall tax to the Government. The publisher David Syme and Co. Ltd, in order to meet its fringe benefits tax bill, must earn an extra $1.3m in profit, or in effect generate an extra $8m in revenue. The fringe benefits tax is responsible for the employment of two extra bookkeepers, although in so many enterprises its cost must also have a bearing on decisions to limit the size of the work force. Of course, various other people have been hit by this tax. Employers who simply want to hold a Christmas party for their staff and for the children of their staff are hit by this tax. Surely employers can do something for their staff and not be slugged by this Government. Smaller councils that do not possess their own dining facilities are hit by this tax and are still hit by it even if they simply go out, buy food and reheat it on the premises. Doctors who provide a free consultation to their staff have to pay for fringe benefits tax, or they charge it to Medicare so that the taxpayer can pay the Medicare bill. It is absolutely outrageous. It was actually after the announcement on 10 November last year of the concessions on the fringe benefits tax that Senator Richardson was quoted in the Sydney Morning Herald as expressing concern for bank employees. He stated that governments had to make sure the little man was not caught up in such a tax. But now Senator Richardson has his ministerial cloak on, he has changed his tune. Now, needless to say, he would deny that the little man is affected by the fringe benefits tax, despite all the evidence. It is outrageous that even independent schools with significant boarding facilities must budget for sums in excess of $40,000 to pay their fringe benefits tax on necessary staff accommodation. Even though those boarding schools simply want to have staff on the premises to look after the boarders, the provision of this accommodation is considered a fringe benefit. I doubt whether much of the accommodation they live in could be classed as a fringe benefit. The non-cash benefits provided to enable employees to do their duty should not be taxed, and neither should accommodation provided to employees moving to country areas. Loans of up to $50,000, where it is the practice of an industry to provide them to an employee, should not be taxed. Of course, this would solve the problem which Senator Richardson raised but which he is not now prepared to repeat. On the other hand, non-work related benefits such as the payment of school fees in circumstances where the employee is not transferred overseas or away from a major city should be taxable, but taxable in the hands of the recipient who enjoys the benefit, not in the hands of the provider. The Opposition will not support open slather on executive perks because there are so many that are work related, and the ones that are not work related should be the problem of the recipient and not the problem of the provider. The Opposition will definitely seek to remove the cost impositions from export industries, small business and voluntary bodies. It is simply a little too late for this Government to introduce these measures now purely and simply because of the impending New South Wales State election. Senator PANIZZA(Western Australia)(9.13) —This evening the Senate is debating various taxation law amendments. Normally I do not speak on taxation and the economy, but I was fired up tonight by the screwed-up view the Australian Democrats have on negative gearing. Nothing sets me going more than a kick in the stomach. I have received many of them in my life, and one such kick sent me on my way to this chamber in the beginning. This evening I will direct my remarks, short as they will be, towards negative gearing, the fringe benefits tax and, to a certain degree, substantiation. I had not intended to speak because the Opposition has plenty of good speakers and authorities, in Senator Stone, Senator Knowles, Senator Michael Baume and others. Unfortunately I cannot abide what the Democrats have said on negative gearing. Let assure the chamber that when I speak on negative gearing and its effects on private rental housing I talk from experience. I have been a housing developer for at least 20 years and have had vast experience of tenants all through that time. I was accused this afternoon by our friends the Democrats, including their Leader, Senator Haines, and Senator Macklin, of being a no dog, no cat and no children sort of landlord. Knowing the long term tenants I have had over 20 years, I can assure them that that is far from the truth. The Democrats also carried on this afternoon about people buying high-priced units to get a tax deduction through negatively gearing. I will give them a lesson on investing in home units for rental purposes. The best recipe for disaster is to buy a high-priced unit and rent it out. Anyone who does that will soon go down the drain. On a high class unit, starting at around $200,000 to $250,000, there would not be a return of more than 1 1/2 per cent gross, and then there are all the deductions, such as the body corporate fees and everything that goes with owning a unit. Anybody who did that would come out at a loss; in other words, there would be a minus return. It is time that the Democrats looked at the creators of wealth as well as the people who take. On this earth we need the ones who create as well as the ones who receive. Landlords will put money into buildings if they can see some return, but they will not invest if they cannot see any return at all. A medium sized block of flats, on the western side of the continent, anyhow, will return 6 per cent gross, less outgoings. An average single housing unit-that is, a house-will return 4 1/2 per cent gross. So how can anyone tell me that investing in rental property is a rort? Landlords and investors would usually have such property in the expectation of a gain value in the long run, even though there is now a capital gains tax. It is property bought to provide for or leave something behind for the investor's family. In 1985 the Government decided, probably on Senator Walsh's recommendation, to eliminate negative gearing. What was the result? There was an immediate drop in the commencement of new buildings for the private sector rental market. I have a graph which shows this, and it is a pity that we cannot incorporate it in Hansard. Senator Walsh —It is a great pity; otherwise we could have put into Hansard the graph on page 6 of the report on the Forward Estimates. Senator PANIZZA —I will take that on board. The graph shows building approvals in Australia up to October 1987. In September 1985 building was almost at a peak, and within 12 months it had dropped by 3,000 units per month, a 25 per cent drop. This drop was felt by the building trade, and of course the building trade buys materials from suppliers. As well, all the various building trades employ a lot of people. The effect was felt most of all by apprentices. Tradesmen already in the trade did not have too much to worry about because they could carry on somewhere else, but the intake of apprentices took a great dive. When the Democrats, who are the upholders of the downtrodden in Australia, supported the Government's abandonment of negative gearing they should have been worrying about these apprentices and other people who lost their jobs because of it. What else did the dropping of the negative gearing provisions result in? Money that would otherwise have been available for private sector housing went into commercial buildings and into the stock market. It probably helped overheat the stock market, as it has been overheated in the last few years. The money also went into gold bullion, and it went into bank accounts and sat there, doing nothing but creating interest. I have always believed that money is round to go around. Because of all this, private investors withdrew from the rental sector. Of course, the amount of rental accommodation available went down and as my colleague Senator Knowles has told us, the cost of renting went up. There was a steep rise in rental charges. Then the 4 per cent depreciation allowance was introduced to attract money into housing and other investments and to get the building industry going. However, that resulted in finance going more into commercial buildings rather than rental housing. It is quite reasonable to expect a return of 12 per cent in the commercial area, much higher than the return from private rental investments. It is also a lot easier to collect the rent as it is paid up front and all additional outgoings are paid by the tenant. At that stage the housing shortage was still worsening and rents were still rising. Then the Government somersaulted. Perhaps it saw the writing on the wall. I was not here at the time, but I know that the Opposition was heavily criticised for its opposition to the removal of negative gearing. The Government's illustrious Minister for Finance (Senator Walsh), who has probably learnt some common sense in the hard areas of the eastern wheatbelt of Western Australia in his time, decided that enough was enough. I congratulate the Government on its somersault, because it was common sense. What has happened since then? Life has already been instilled into the housing industry. The Australian Democrats were grizzling this afternoon about the forgone taxation which will result from the reintroduction of negative gearing. If I read the Budget Papers correctly, as a result of the reintroduction of negative gearing the Government will forgo $80m in tax revenue, the loss peaking in 1989, after which it will reduce gradually then drastically. This is where the Democrats really screwed their argument up. The Budget provided for a reduction in the depreciation allowance to 2 1/2 per cent to balance the revenue forgone and what was coming in. Again, if I have read the Budget Papers correctly, the Commonwealth will pick up $3m in extra tax in 1988-89, $10m in 1989-90 and $29m in 1990-91, with a total revenue of $500m after 25 years. Following this change in policy, the re-introduction of negative gearing and the cutting of the depreciation allowance on buildings, unless I have my figures mighty wrong, the Commonwealth will still come out in front. Nonetheless, the Government has done the right thing by acknowledging its folly of 1985 and reversing the trend. Hopefully, landlords and developers, with whom I am happy to have been associated over the years, will get back into the market to provide the private sector housing that is so badly needed. Senator Knowles earlier this evening referred to the rental rises in Perth since September 1985. If I remember her words correctly, she said that a steep rise of 25 per cent occurred in one year. With all the houses that have changed hands, all the money that has come in and the interest that has been shown in housing investment since the reintroduction of negative gearing, rents have not risen, as the Democrats tried to tell us was the case this afternoon. Rents have at least been held in the last couple of months. The rental housing situation during the America's Cup in Perth last year was a fiasco. Nowhere near the expected high rents were obtained, but rentals in the middle housing bracket were forced up. I can assure honourable senators that rental charges now are at least holding or coming back. The reintroduction of negative gearing is already starting to make a difference in rental housing, in Perth at least. I have spoken quite enough about negative gearing. I congratulate the Government, after its great folly of 1985, on the re-introduction of negative gearing. I wish briefly to touch on the fringe benefits tax as it affects the outback areas of at least Western Australia. Senator Walsh —You are becoming as verbose as some of the other people over there. Senator PANIZZA —That is all right. Senator Walsh —What about Marvel Loch? Senator PANIZZA —Marvel Loch is doing all right. It is a pity that the Minister does not look at Marvel Loch again and see some of the good crops that we are harvesting right at the moment. To get back to the point, Senator Knowles pointed to the results of the fringe benefits tax on the Goldfields of Western Australia. The user pay principle has been referred to time and time again inside and outside this chamber, and I agree with it. Recently, perhaps even today, an inquiry was announced into Telecom Australia and the connections in the outback areas for which the user pays. In some cases it costs about $280,000 to have a phone connection. Everything seems to be operating on the user pay principle. I mostly agree with that, but that did not apply in the case of the fringe benefits tax. It was again the poor old employer who was hit with it. Despite my limited knowledge of the taxation laws, I have been made well aware of certain sections of the tax law under which those fringe benefits that were a rort could have been hit. I refer not only to those who had expensive lunches while others ate their lunch out of a brown paper bag; but also to those who were getting their children's school fees paid even though they were living in Perth, Sydney or Melbourne. There were ways to catch those people without making a broad-based swipe across the country which brought in, according to the figures I hear tonight, umpteen times more than was expected. If there was anywhere that the Government should have considered exempting from the fringe benefits tax it was the outback generally, particularly in Western Australia. Not only mining companies but also local government had to pay it. When the tax first came in, my shire had just formulated a budget, as no doubt had many of the other shires. Somewhere down the track we were required to make provision for the fringe benefits tax. In order not to overrun our budget and upset ratepayers and the local government Minister alike, we had to cut back on other works to fit the tax in. I must refer to the question of farmers not paying fringe benefits tax. When I first came to this chamber a discussion arose from a dorothy dix question from a member of the back bench to the Minister for Finance in which the Minister was asked whether he was aware how much fringe benefits tax farmers did not pay. Senator Walsh —Bugger all. Senator PANIZZA —I know that. But why do they not pay it? It is because they have cashed out. For farmers who have only one or two employees, it it hardly worth while mucking around and doing a return once a month, so they cash out. They charged their employees for the accommodation, then gave them more money to pay for that accommodation and this put their tax rate up. The farmers are paying this money, but it is hidden in the cash out system. If honourable senators do not believe me they should make their own inquiries; the facts are there. I move on briefly to the question of substantiation. Previous speakers have mentioned how this Government amends taxation legislation by Press release. That has certainly been the case in relation to substantiation. Various Press releases have been issued since substantiation laws were tightened up and as a result more and more work has been created for accountants who file taxation returns. We have now reached a point where these accountants do not quite know from these Press releases how far they have to go with substantiation. Of course, they are now running out of time to lodge the returns. They risk incurring the wrath of the Commissioner of Taxation and they worry about whether they can obtain extensions. Senator Calvert —Some people forget to lodge their returns! Senator PANIZZA —That is right, Senator Calvert. Either they get an extension or they are fined. Certainly, it is time that the Government set down far more definite guidelines about substantiation. I am not sure whether my final point has anything to do with the Bills at hand, but I stress that the Government keeps telling us that it is time to save money. I agree with that. I read some figures the other day which astonished me. I believe that something like $5 billion is owed on plastic cards floating around Australia at the moment. Honourable senators should not take that figure as gospel, but nevertheless it is ridiculous. I had hoped that some other senator would have been able to help me out and confirm whether that figure is correct. The fact is that although this figure exists, we are being encouraged to save. When the Government next considers reforming the tax laws I hope it will look at the threshold for the payment of provisional tax. That threshold is still $999, or so the chartered accountant in my family informs me, and it has been at that level for as long as both he and I can remember. This chartered accountant has been in the game, both as a student and as a practising accountant, for about nine years. With the high interest rates of the past 12 months or two years, one does not need very much money stored up in the bank to obtain interest of more than $1,000. This accountant tells me that time and time again when people bring their tax returns to him they are told that they will have to pay provisional tax because their unearned income is more than $1,000. These clients then say, `Well, I had better go out and spend some money and bring my total savings under the $7,000 or whatever it is that generates that $1,000 interest.'. I would have thought that by now the Government should have increased that threshold in order to encourage people to save. I hope it will look at that matter. I do not wish to say any more, but I hope that I have put the Government and the Australian Democrats right on negative gearing. Probably in 12 months or two years they will appreciate the folly of their statements. Senator WALSH(Western Australia-Minister for Finance)(9.34) —I do not propose to delay the passage of the Taxation Laws Amendment Bill (No. 4) 1987, the Taxation Laws Amendment (Fringe Benefits and Substantiation) Bill 1987 and the Sales Tax (Off-shore Installations) Amendment Bill 1987 any longer other than to say that the Government will oppose the second reading amendment. Amendment negatived. Original question resolved in the affirmative. Bills read a second time, and passed through their remaining stages without amendment or debate. Consideration resumed from 4 November. The Bill. Senator WALSH(Western Australia-Minister for Finance)(9.37) —On 4 November 1987 progress was reported on the Sales Tax (Exemptions and Classifications) Amendment Bill 1987 in order to allow the Government to review an amendment which had been moved by Senator Macklin on behalf of the Australian Democrats. The amendment proposed a sales tax exemption for general purpose goods when sold for use as `special aids' to persons who are disabled or physically or mentally handicapped. This is a proposition which has been considered by many governments over the years, but doubts over whether sales tax exemption is the best method of providing assistance to the handicapped and the many problems associated with an exemption for general purpose goods persuaded those governments not to change the law in that way. I guess that points to the general bluntness of the laudable objective of helping particular individuals with general concessions. Recently I have mentioned some concessions that mean the provision of electricity at way below the cost in Western Australia's remote areas. The rationale for this, by and large, is to help pensioners and people with low incomes, but the final income distributional effects are very different from those which the proposers or supporters of such policies probably expect. For example, on the proposal put up by Senator Macklin one problem would be to define who is to be regarded as handicapped or disabled-certainly not an easy decision to make at the margin-or what classes or degrees of handicaps are required to qualify for exemption. In other words, it is extremely difficult to administer such a proposal, even if one agrees with it in principle. The related problem would be the need to establish a system under which persons with the necessary professional expertise could apply consistent criteria to certify that particular individuals qualified for the concession. It would also be necessary to specify the classes of goods that handicapped or disabled persons could purchase free of tax, and to ensure that safeguards were set to prevent abuse of any such concession by eligible persons buying those goods for relatives or friends. In other words, it would be setting up, admittedly probably on a small scale, tax evasion arrangements. In that regard it would be impossible to ensure that special aids which would be of use to persons without disabilities were used by only disabled or physically or mentally handicapped people. Senator Macklin cited the example of a computer. Even if it were provided for in the law, the Commissioner of Taxation could not enforce any restriction on the use of the computer to the disabled or handicapped person where the computer was also available to other members of the family. The Government does recognise that some specific assistance needs to be given to those in the community who find it difficult to lead ordinary lives, but the granting of sales tax concessions is not considered the most appropriate method of granting assistance. For those reasons the Government will not be accepting the amendment. Senator MACKLIN(Queensland)(9.41) —Senator Walsh has outlined, the reason for the Governments opposition to the amendment which I moved some time ago. Indeed, the amendment has been the subject of both a private member's Bill at some stage and some discussion and letters with the previous Minister for Social Security. Tonight Senator Walsh explained essentially-if I have not got him wrong-the reason the Government is opposed to the proposition I am putting, which, for clarification for members of the chamber, is to seek a sales tax deduction for goods for handicapped people, although those goods are not specifically designated as goods for handicapped people. An example of a particular good which is already exempt under the sales tax Bills is a wheelchair. The type of item I am talking about is one which is for general purpose use, such as a computer. If I can use those two as paradigm examples I think it may make somewhat clearer the item I am arguing. I understood the Minister for Finance (Senator Walsh) to say that it will be impossible to ascertain first of all whether these items are being bought by handicapped people and, presumably, how many items, and secondly, whether it is possible to stop people who are not handicapped from using those items. Senator Walsh —I think it is a question of confirming first that he is handicapped and then ensuring that only those who are handicapped use them. Senator MACKLIN —Right. I am happy to address myself to those issues because, interestingly enough, the Bill as it stands permits all those things for other items, and I think this is the problem that the Government is arguing. What the Government has not done, and what is something I had hoped it would have done by now, and possibly the previous Government, is to provide a total review of the current list. Since the Government does not have that, I am quite happy to go through those items to show that each of those things currently occurs. The first schedule of the Sales Tax Act 1935 contains and specifies the items under which various classes of goods are exempt. Item 123a in the first schedule of the Sales Tax Act provides exemptions for interactive and broadcast videotex systems, broadcast teletext decoding devices and similar decoding devices of a kind used in or in connection with television receivers, where the system or device is for use and not for sale by profoundly deaf people or persons taken to be profoundly deaf. As all honourable senators would know, those videotex systems are in fact capable of being used for a whole variety of purposes by people other than those who are deaf. Exemption for that piece of equipment, interestingly enough-and here we come to the point of how we know whether a person is handicapped-is on a restricted basis and is available only to persons to whom a certificate as to the extent of the hearing disability has been furnished by the Director-General of Health or by an officer appointed by him for that purpose. Honourable senators may remember that the first time I moved this amendment I suggested the same procedure by regulation-that in fact a suitable medical practitioner would be the person who would certify this. I think there is a clear case to show that there are presently mechanisms available to facilitate the means by which my amendment could be administered. The onus would be on the person who is handicapped to seek that exemption. Item 135a of the Sales Tax Act contains provisions which require evidence of a handicap before sales tax exemptions are offered to the persons seeking them. Motor vehicles are mentioned under this item. This may be interesting to people who have a friend or relative who has a vehicle equipped so that their handicap is overcome, especially if they have ever driven in one. I have had a lift in one. Members of families one of whom is handicapped travel in them frequently. In other words those items, which were sales tax exempt, are used by other people. So what? Why are we concerned about that? I see no objection to a person who is handicapped and who has a specially equipped vehicle which enables him to drive, driving other people in it. There is no loss of revenue. It is an absurd proposition to say that if we provide this exemption to handicapped people, such as with a computer, which is the item I have used, other people may use it. So what? There is no problem there. I think it is niggardly and absurd to suggest that because other people might have to use it, there is some reason we should not allow it. Senator Panizza —As long as it is used primarily by them. Senator MACKLIN —As long as it is used primarily by the handicapped person, yes. I think we have a very good example of that particular operation here. Item 42 (17) refers to wigs and hair-pieces for people who are clinically bald. Sales tax exemption is provided conditionally-- Senator Sanders —Aulich would be interested in this. Senator MACKLIN —Yes. In fact a number of senators probably do not know about this item and we are shortly likely to have a large jump in sales tax exemption. Senator Aulich —What is the number? Senator MACKLIN —It is item 42 (17). We thought you might be interested. It is for wigs and hair-pieces for people who are clinically bald. Sales tax exemption is provided conditionally on the certification of a legally qualified medical practitioner, and in fact there are no regulations with regard to 42 (17)-- Senator Walsh —It is an offensive personal reflection. Have a look behind you. Senator MACKLIN —I have already recommended this to Senator Coulter. He is worried that somebody else might wear the hair-piece. The situation is that the certification is provided by a legally qualified medical practitioner. The interesting thing about that section is that there are no regulations governing it. The entire operation of that section is done out of the legislation. What it comes down to is not whether it can be administered. Items are already operating in that way. I believe the real point is a philosophical one, and the Minister did touch on this although only briefly; there were better ways to help disabled people. It is interesting that there are better ways to help them and that the bureaucrats know better ways to help them. At least the previous Minister for Social Security made a valiant attempt, obviously not good enough with regard to this Government, to turn that whole thing on its head. Disabled people, because they may be physically disabled, because they may be deaf or blind, do not lack intelligence or the capacity to run their own lives or make their own decisions. The bureaucrats know what is best for somebody else. At least with the establishment of an Australia-wide committee of disabled people, presumably disabled people will be accepted by this Government as having the ability to make those types of decisions. If we accepted this item I think we could do away with every other item relating to disabled people, because it puts the onus on disabled people to decide what will best help them overcome their particular disabilities, rather than having the bureaucrats saying, `We believe that this is good for you'. Let us take that step forward in our philosophical position with regard to disabled people. I make a specific plea with regard to computers. I shall explain why I became interested in this four years ago. I repeat the story even though some honourable senators have heard it before because I think it is useful. A father came to me about a child who was about to start school and who had been born with his hands attached to his shoulders. His hands were functional but he had no arms. His father was insistent that his child go into a normal classroom. Interestingly enough, he was in contact with a friend of mine. I was able to put him in contact with a couple of other friends of mine who customised the keyboard of a small computer. It was put up on a little stand so that the child was able to operate it. He went into grade 1 with his computer. He is still in primary school and he uses the computer every day in the classroom. What he was thus able to do with that computer is surely, from his father's and his own point of view, far better than all the bureaucrat designed propositions. It was something the family did. Interestingly enough, the computer was provided by private enterprise without profit. The father had to pay sales tax to the Government, whereas the company he bought the computer from was quite happy to forgo, in that circumstance, the profit it would have made on the equipment. I make a plea to the Government that if, as it has already indicated, it is unwilling to accept this amendment it, at least agree to review the situation. In 1987 we are not talking about wheelchairs or crutches. We are talking about technology which will enable these people to live a full and productive life in our society. At last technology has come far enough to assist these people in a remarkable way to assist themselves. The technology is available. We are still collecting money on it, saying, `We are going to deny it to you unless you can raise the full amount of tax to pay to the Government'. On the other hand, we give a whole variety of other hand-outs. I am not advocating hand-outs. I am talking about the ability of people to make their own decisions. After this debate had been adjourned and as I was flying home to Brisbane I read a book entitled So Far published by the Apple computer company on its first 10 years. I came across a part on page 45 that I would like to read to honourable senators because I think it sums up the proposition I am putting: Computers, rigged with a variety of special devices and accessories, allow even severely handicapped children to accomplish tasks most people take for granted. They make writing possible for kids who can't hold a pencil. They make words clear to kids who can't hear a sound. And they make playtime fun for kids who can't use their arms and legs. Senator MICHAEL BAUME(New South Wales)(9.55) —Senator Macklin has made some sound points about the need for review. It was the Opposition's recognition of the need for a review by the Government that encouraged us to support the proposal that progress be reported the last time this matter was discussed so that the Government could at least reconsider the matter. However, the support we had for Senator Macklin's request for a review of what is clearly a strange mixture of items that are available free of sales tax compared with those that are not does not lead us to support the Australian Democrats' amendment in this case for the very reasons outlined by Senator Walsh. In particular, we believe that there is a need to target those people in need with the scarce resources of taxpayers' money that are available. The targeting of those people in need is not done by a general removal of sales tax from what are, as Senator Macklin conceded, general goods rather than specific aids of a specific nature for people with disabilities. The Opposition's policy on this matter is clear. We have a very strong commitment to and support the wider provision of respite care for disabled people living with their families, noting in particular the problems of those in remote areas. Our policy is that, as budgetary circumstances permit, we will move progressively to remove any specific taxes and other imposts from specific aids for those with disabilities. Where the Government determines that there should be support for Australian manufacturers this should be through bounty or subsidy. Senator Macklin's recommendation is of a non-specific nature. The goods are of a non-specific nature and could be used by or resold to people who would not be using them specifically as an aid in respect of a disability. As a result, whilst supporting the view that there should be a review of the application of these exemptions, the Opposition is not prepared to support this amendment because it does not deal with specific taxes for specific aids. I stress that such a broad sweep is inappropriate at a time when budgetary circumstances do not permit further moves in the direction of general exemptions. However, hopefully, the Government will entertain the view that a specific, purpose-built computer such as the one Senator Macklin mentioned-he pointed out that it involved additional work and I presume that sales tax was paid on the components and work involved in making that computer a specific item of use only for the child who had the disability-should be exempt from tax. I hope that the Government considers the problem Senator Macklin has raised because it fits in very clearly with the Opposition's view that, for specific aids, specific taxes should be removed. Senator HARRADINE(Tasmania)(9.59) —I support the amendment moved by Senator Macklin. After my election in 1976, one of the first things I had occasion to raise with the then Government was the very question of the need for families with disabled children to choose the most suitable aids for those children and for their particular handicap, having regard to the fact that they and they alone were the ones able to determine the issue. Unfortunately, over a long period there has been correspondence on the issue of sales tax exemptions for such devices and aids. The worrying thing now is that the handicapped are being put into straitjackets by the bureaucrats. Unless the bureaucrats approve of a device, the handicapped do not get anywhere. I am really disappointed that members of the Opposition are not supporting this amendment. I appreciate what Senator Michael Baume has said. I have listened to him carefully. But I am disappointed in what he said because he talked about targeting those most in need. That ought to be the object of policy in this area. It is not as though the handicapped and their families are asking for a hand-out. That is not what is being asked for in this amendment put forward by Senator Macklin. All they are asking for is for the Government not to knock them off, not to ask a couple to pay tax just because they happen to have a handicapped child. They would not want to purchase the equipment unless they had a handicapped child. Senator Michael Baume —But it is non-specific. Senator HARRADINE —Yes, I understand the point that Senator Michael Baume makes. But it is the parents of a handicapped child who know precisely what is most beneficial, or at least what is most useful, for their handicapped child. This legislation is symptomatic of the attitude of government to taxation. It is as though it is the right of the Government to grab what it can from anybody, particularly from families with children, just because they have children-or, in this case to grab a bit of sales tax from a family just because that family has a handicapped child. It is an extraordinary situation and I really feel that it is something which the Opposition should oppose. I think Senator Macklin has attempted to overcome the other point made by Senator Baume relating, as I understand it, to any problem with a resale of the equipment. Unless I have misread Senator Macklin's amendment, I think he has covered that. But I appeal to honourable senators to support Senator Macklin's amendment. Amendment negatived. Bill agreed to. Bill reported without amendment; report adopted. Bill (on motion by Senator Walsh) read a third time. Message received from the House of Representatives intimating that it had agreed to the amendments made by the Senate to this Bill. The following Bills were returned from the House of Representatives without amendment: Australian Tourist Commission Bill 1987. Australian Tourist Commission (Transitional Provisions) Bill 1987. Debate resumed from 4 November, on motion by Senator Ryan: That the Bill be now read a second time. Senator SHORT(Victoria)(10.06) —The purpose of the Housing Assistance Amendment Bill is to amend the Housing Assistance Act 1984 to authorise an appropriation for the provision of financial assistance for public housing for the years 1988-89 and 1989-1990 and to authorise the Federal Minister for Community Services and Health (Dr Blewett) to re-allocate specific housing assistance grants between the States. The amount involved will be a cost to the Commonwealth of $700m in each of the two financial years 1988-89 and 1989-1990. The funding for the current year, 1987-88 ,is also $700m. It is to be made available through Appropriation Act (No. 2). Of the $700m to be provided in each of the next two years, $11m is for expenditure on local government and community housing and $14m for expenditure on crisis accommodation. The Opposition will not be opposing this Bill. However, we do have great concern about the deplorable state of the housing sector in Australia due directly to the policies and the mismanagement of the Hawke Government. Accordingly, on behalf of the Opposition, I move: At end of motion, add ``, but the Senate: (a) condemns the Government for its further intrusion into State housing programs involving more administrative duplication and waste; and (b) believes greater responsibility for the provision of housing should rest with the States who are in the best position to address their communities' needs''. I understand that that amendment has been circulated to honourable members. For the reasons I will turn to now, the Opposition will be taking that amendment to a division, if necessary. I believe the Government's role in Australian housing should be two-fold: there is an economic or financial role and there is a social role. So far as the economic and financial role is concerned, unless there are overriding reasons, no government should pursue policies that would hinder the growth and development of the nation's housing sector. So far as the social considerations are concerned, in implementing policies governments must respect individual rights and freedoms and assist the genuinely poor and defenceless in the community. How does the Hawke Government's record over the past five years stand against these two fundamental requirements for good government so far as they relate to the housing sector? The short answer is that the record is quite pathetic. Statistics from a range of independent government and non-government sources show starkly that something has gone dreadfully wrong in both the public and private housing sectors. The public housing waiting lists have increased from 110,000 to in the order of 160,000 during the period of this Government. The Government has crucified families seeking rental accommodation. Those families, as we all know, tend to be low income families. Rents have increased dramatically in all States. In the year to last July alone they soared by 23 per cent in my capital city, Melbourne; by 43 per cent in Sydney; by 36 per cent in Perth; and by 27 per cent in Brisbane. As a share of family income, rents have also increased savagely under this Government. In June 1987, the average rent in Sydney took not less than 38.2 per cent of average weekly earnings. In Melbourne, where rents are lower, it still took more than 26 per cent of average weekly earnings. Figures from the Government's own principal housing advisory body, the Indicative Planning Council, show that last year housing starts were 30,000 below the predicted demand in 1986. This year the shortfall is expected to be 42,000. Because of rising house prices and record high interest rates, home owners are now paying up to 17 per cent more of their incomes in mortgage repayments than they were a decade ago. In Sydney, home buyers are now paying up to 45 per cent of their gross incomes on an average loan repayment. Ten years ago that figure was 28 per cent. In Melbourne, home buyers are now paying 36 per cent of their gross incomes on an average loan and in Adelaide it is 34 per cent. The overall picture in the housing sector is one of turmoil and, for many Australians, despair. On both economic and social counts, Labor has failed dismally. Labor has also abrogated its economic responsibility on behalf of all Australians, but particularly those Australians seeking to buy homes or requiring rental accommodation. Last night we heard the announcement that a mini-Budget will be brought down in five months time, with no action to be taken in the intervening period. What was portrayed as a major decision by this Government came by Press release at a time when the Parliament was sitting-a complete abrogation of the fundamental role of Parliament in our society, our democracy. There has been bungling of an economic nature from this Government for the last 4 1/2 years, and the confusion and the hiatus that will be caused in planning prospects in the housing sector and in other areas of the economy over the next five months while we wait to see what the mini-Budget holds will further add to the confusion and to the major problems confronting this economy-problems which this Government seems incapable of understanding and which have led to an overseas debt facing this nation of the order of $110 billion, a three-fold increase over the last four years and, in net terms, a four-fold increase. We have seen interest rates soar, again having an enormous effect on the housing industry and on people's capacity to buy homes. Those soaring interest rates have been caused essentially by the big spending policies of this Government-a government which has seemingly been unable to keep its spending under control and which has been forced, therefore, to borrow a further $23 billion in the last four years, with high interest payments to match. It is the biggest single borrower in the market. The Government has crowded out, particularly in its initial period in government but the effect is still lingering, the borrowing market and has forced interest rates up to record levels. Some time ago the Government abolished negative gearing on housing for rental purposes. We told the Government at the time what the impact of that would be on rental accommodation costs and availability because people would no longer invest in housing for investment and rental purposes in the way they had done in the past. We were exactly right. The Government has now been forced in the Budget to reverse that decision, which it should never have taken in the first instance. I now turn briefly to the more social factors associated with the housing sector. I think it is very important to ask whether the Government has encouraged independence on the part of ordinary Australians. Is it really helping the genuinely poor and defenceless in our community to improve their situation so far as housing is concerned? The answer to both those fundamental threshold questions has to be a resounding no. As I have already pointed out, we have had a dramatic increase in public housing waiting lists to a record of some 160,000 applicants. In November 1987 we have a record number of over 64,000 applicants waiting for home purchase assistance under State programs. There has been a cut of $648m to the States for public housing and capital grants. The Government says that its policies aim to promote fairness and equity but where is the fairness and equity in rising public housing waiting lists, an ever-increasing taxation burden for ordinary Australian families and higher and higher mortgage repayments? Housing has always occupied a unique place in the Australian way of life. Home ownership has traditionally been the goal of most Australians. Some may argue, in fact, that we have overdone the importance of home ownership. Nevertheless, that goal has been a fundamentally important expression within Australia of individuality, independence, privacy and a feeling of security. In the early 1980s 72 per cent of Australians owned their own homes, one of the highest percentages in the world. Under Labor, home ownership has now dropped to about 69 per cent and is destined to fall lower. The Australian dream is rapidly becoming a nightmare for many Australians-an impossible nightmare at that. Labor's legislative program in the housing area provides no solution to the malaise in the housing sector. We have more and more of the same approach-tighter and tighter controls, increased interference and fewer funds available. We have more intervention in State housing policy matters and more duplication. For example, the revised Commonwealth-State Housing Agreement mentioned in the legislation specifies that rental accommodation by the States shall not comprise less than 50 per cent of total Commonwealth-State Housing Agreement funds and, as I have said, $700m will be spent over each of the next three years. The funds allocated to rental accommodation will not be less than 50 per cent of total Loan Council borrowing program moneys nominated for housing. The Commonwealth has encouraged the States to put more moneys from the proceeds of sales of public housing into rental accommodation. There is a lesser role for individual States to determine their own housing policies, yet the States are in a much better position to assess the housing needs of their own communities. The States-not the Federal Government-are in a more favourable position to determine how State housing dollars should be allocated. The Opposition believes that the Government's approach is a recipe for increased levels of dependence on the Government as landlord. It provides no incentive for self-provision or home ownership. This is the sharp end of the Government's philosophy-a philosophy which results in undermining home ownership and fostering greater and greater reliance on the state. This Government's policies are so flawed that they encourage subservience to and reliance on the state. The Opposition believes that there should be provision for public housing for the genuinely poor, the weak and those who cannot otherwise provide their own shelter and accommodation. Our policies, when we were last in government, were designed to this effect, and they will be again when we regain government at the next election. The Government claims that this legislation will assist the homeless by creating more public housing. Whilst that may be true in theory, although even that is doubtful, in the meantime the Government is creating an army of the new poor-those who would have been able to buy their own homes if interest rates were not so high, if taxation levels were lower, if they had greater job security and if they had been given encouragement and incentive. The Opposition believes that it is well past the time for the Government to face up to the malaise in the housing sector and to work towards rebuilding an environment conducive to growth, development and encouragement for increased home ownership-an environment which this Government has destroyed during its period in office. Senator COULTER(South Australia)(10.22) —I think that nothing exemplifies more the failure of economic policies which have been pursued by both this Government and the Opposition for a long period than the housing industry. I refer yet again to the policy of the pursuit of economic growth as the principal direction of government. It is a matter of fact that since 1948 there has been a 2 1/4-fold increase in the per capita gross national product. According to that measure, we are supposed to be 2 1/4 times richer-if either the Government or the Opposition are to be believed in terms of their economic objectives-than we were in 1948-49. Senator Short told us how much poorer we are as individuals in this community, how many more poor people we have who cannot afford even basic housing and how many more are becoming dependent on the state to provide housing for them. If one were to look at an example of the failure of the growth system, one could do no better than to look at the increase in gross national product which does not represent an increase in real wealth for ordinary people. What we are measuring-Senator Short gave a good example of this-is the throughput, the using up of things, rather than the stock. If we are interested in housing, we are interested in the stock of housing which is available-the stock of houses which people can use-and the way in which that stock is divided among people. We are not really interested in the number of houses being built in a given year. It was largely irrelevant for Senator Short to say that there were 30,000 housing starts or 17,000 more or fewer housing starts. The importance to ordinary people is how many houses there are, how many people there are and how the stock is divided up. As I have indicated before, we do not count our individual wealth by how quickly we use up our resources. If we own a house we do not measure how much it costs us in terms of much we have to take out of the bank or how many hours of leisure we have to give up to maintain it. But that is what the Government measures. When it takes economic measures, when it counts its gross national product, that is what it counts and that is what the Opposition would count also because it is pursuing essentially the same policies. We need an economic system which measures stock rather than throughput, an economic system which would be based on optimising that stock while minimising the throughput. In fact, we could have a fall in gross national product and people could well be better off. Having said that, I turn specifically to this piece of legislation. As already indicated, the Housing Assistance Amendment Bill 1987 alters the Minister's authority to reallocate housing grants between the States. The Australian Democrats recognise the desirability of the Commonwealth being able to enforce compliance by the States with its guidelines for grants. The case cited by the Special Minister of State (Senator Ryan) of ensuring appropriate consultation takes place in respect of Aboriginal housing developments is an important example. However, the Commonwealth must also recognise the differences which exist between the States and their needs. I hope the Minister can therefore assure me that in the committee stage the amendment of section 11 of the Act will not stifle flexibility in responding to local housing needs. Federal priorities should not be taken so literally that the desires of the bureaucrats, removed from the impact of their decisions, prevail. The Democrats are concerned that the amendment proposed by the Government to section 11 leaves open a loophole whereby the Government could avoid spending all of this allocation on housing assistance. The proposed sub-section 11 (1b) authorises the distribution of any money declared by the Minister to be available for reallocation but the proposal makes such redistribution by the Minister entirely optional. In other words, the Minister may seek not to provide funds to a particular State because that State is not conforming. Yet at the same time he might refuse to reallocate that money and simply resume it into Commonwealth revenue. In view of the statements being made about the decrease in the amount being spent on housing, we do not believe the Minister should have this option. There is no legislative requirement that such funds be reallocated and, whilst this is apparently the intention of the legislation, the explanatory memorandum presented by the Minister states quite clearly that this legal position will allow `that they be retained by the Commonwealth'. The Democrats would like to see it made more explicit in this legislation that all of the $700m annually allocated to housing assistance will in fact be spent on housing assistance. As it is proposed, the Government legislation leaves the way open for the Federal Government's contribution to housing to be diminished through one State or several States defaulting on the conditions laid down by the Commonwealth. So we will be moving an amendment not to hamper the Commonwealth's power to indicate funding priorities and to encourage State compliance but to ensure that in this area of enormous need the community receives all the help that it can. There is, as indicated, still a large need, an unmet need, for housing in Australia, particularly in the public sector. The well-publicised supplement to Australian Society, for example, claimed that amongst people renting privately 20 per cent live below the poverty line. Within this group are the 62 per cent of single parents in private rental who are pushed even further below the poverty line by their housing costs. So, with housing problems, poverty is also high amongst the elderly. An estimated 40,000 Australians are homeless and some 150,000 live permanently in caravan parks. The most poorly housed group in Australia is probably our Aboriginal population. Only two months ago, through the States Grants (General Revenue) Amendment Bill and the States (Works and Housing) Assistance Amendment Bill, this Government reduced general purpose capital grants to the States by $715m in this year. This will lead to an estimated fall in funds for States to spend on capital works such as housing of 56 per cent this year as compared with last year. In 1986-87 the Commonwealth made $584.7m available to the States to spend on public housing and this year it is expected to provide only $385.6m. The PRESIDENT —Order! It being 10.30 p.m., under sessional order, I put the question: That the Senate do now adjourn. Senator CHILDS(New South Wales)(10.30) —I am proud to announce the formation of the Australian Parliamentary Association for UNICEF-the United Nations Children's Fund. It is the first such group in the world and will hopefully be the start of many others. The Association has representatives from all parties in the Parliament and was launched last Tuesday, when UNICEF's Deputy Director, Dr Richard Jolly, gave members and senators a preview of the 1988 State of the World's Children report. The senior office bearers are myself as President; Mrs Kathy Sullivan, MP, is Deputy President; Senator David Brownhill, Secretary; and Senator Michael Macklin, Treasurer. The committee consists of Mrs Elaine Darling, MP; Mr John Langmore, MP; the Hon. Robert Katter, MP; and Senator Jo Vallentine. The patrons are Mr Hawke, Mr Howard, Mr Sinclair, and Senator Janine Haines. The Association's charter states that it will; firstly, support and promote the Declaration of the Rights of the Child as adopted by the United Nations in 1959 and support the Adoption of a convention on the rights of the child; secondly, promote in the Parliament and throughout the Australian Government and the Australian community the work of UNICEF for children and their mothers; and thirdly, encourage Australia Governments to give priority support to children and their mothers in Australia's overseas development assistance program. Not only is this association a world first, as I have said, but it is a first for children in developing countries. The quiet carnage of a quarter of a million children dying each week from preventable causes is not a result of a shortage of food or medicine; it is because of the lack of political and social will to empower parents in developing countries with today's basic health knowledge. The role for industrialised countries, the report indicates, is to prevent the greatest burden of world recession from passing on to those who can least afford it: children and mothers in poor countries. Despite a tough economic climate, I am pleased to say that the Australian Government pledged $3.1m in October to UNICEF, an increase of 24 per cent over last year's contribution. In doing so, Australia has demonstrated support for what UNICEF terms a gathering `grand alliance for children'. Thelma O'Consolozarno, UNICEF representative for Australia and New Zealand, says: This formal alliance of governments, health workers, religious leaders, teachers, community organisations and the media is arming parents with lifesaving knowledge about child health. The Australian Government is committed to the alleviation of poverty and poor health amongst Australian children, and introduced the family package in the last Budget. The family package puts children first and aims to ensure a decent standard of living for the poorest people in our community. About 60 per cent of Government spending on family assistance now goes to the poorest 30 per cent of families. The Government's pledge is that, by 1990, Australian families will have access to the basic income required to ensure that their children need not live in poverty. As the State Of The World's Children Report highlights, UNICEF has been promoting lifesaving programs like immunisation and breastfeeding. These programs are saving about two million children this year, yet a quarter of a million children are still dying each week from preventable causes. Let me conclude by drawing the Senate's attention to some dramatic facts from The State Of The World's Children Report. Immunisation coverage for children in the developing world has leapt from 5 to 50 per cent in the last 10 years, and is now saving the lives of 1.4 million children each year. For about the cost of 10 advanced fighter planes, UNICEF estimates a permanent immunisation system could be set up in the developing world. Because a number of senators wish to speak, I seek leave to incorporate in Hansard a Press summary of the state of the world's children in 1988, which I have shown to members of the Opposition. Leave granted. The statement read as follows- Saving two million children The promotion of immunization and ORT, in the 1980s, is now saving the lives of approximately 2 million children a year in the developing world. Similar low-cost methods could cut child deaths and child malnutrition by approximately half over the next few years, says UNICEF's State of the World's Children report for 1988. Immunization is the success story of this decade. Ten years ago, less than 5% of the developing world's infants were vaccinated against diseases which were killing 4.5 million children a year. This year, immunization has reached 50% for DPT vaccine and 40% for measles, and is now saving over 1.3 million lives annually. The UN target of immunizing all children by 1990-considered unrealistic in the early 1980s-is now within reach. On present trends, over 70% of the developing world's children will be immunized against the main vaccine-preventable diseases by 1990. Citing the example of several countries which have doubled immunization coverage in the last two years-including some of the world's poorest nations-the report argues that, despite the difficult economic climate, there is now no nation which cannot now meet the 1990 target-if the will is there. The cost of a permanent and universal immunization system for the developing world is estimated by UNICEF to be about $500 million a year-about the same as ten advanced fighter planes. Such a system will also be essential, argues the report, when vaccines are developed against malaria and AIDS. Oral rehydration The greatest killer of the world's children-with 3 million young victims a year-is still the dehydration, caused by diarrhoeal disease. Yet dehydration, says UNICEF, ``can now be prevented by a technique which is so simple that any parent can use it, so cheap that any parent can afford it, so effective that it is rapidly becoming the treatment of choice in the most advanced hospitals of the Western world.'' That technique is known as oral rehydration therapy or ORT-and it has been available since the early 1970s. But only in the mid-1980s has the attempt been made to promote the solution on a scale commensurate with the problem. Today, approximately 20% of the developing world's parents are using ORT and the therapy is estimated to be saving more than 600,000 young lives each year. ``It is not nearly enough,'' says UNICEF, ``progress is far too slow. Three million children should not still be dying each year from dehydration.'' Together with other low-cost child protection methods-such as breast-feeding, better weaning, and spacing births at least two year apart-ORT and immunization could save the lives of up to 7 million children a year and protect the normal physical and mental growth of many millions more. ``And if we cannot mobilize the will to put these most basic and low-cost elements of child protection into action,'' says UNICEF, ``then what chance do we realistically have of making significant progress against other, often more difficult, problems which face the world's children?'' A grand alliance The 1988 report proposes that the greatest opportunity for improving the `state of the worlds' children' lies in informing and supporting all today's parents in applying what is already known about these basic and inexpensive methods of child protection. To achieve this, the report calls for a `Grand Alliance' of all possible resources-teachers and religious leaders, mass media and government agencies, voluntary organizations and people's movements, business leaders and labour unions, women's groups and health services-to create an informed public demand for, and practical knowledge of, the methods which could now bring about ``a revolution in child survival and development.'' The report cites several examples of this alliance in action. In Turkey, 200,000 school-teachers and 54,000 imams have helped to treble the nation's immunization coverage. In Syria and Egypt, television has succeeded in getting the immunization message into every home. In Bangladesh, a voluntary organization has visited 9 million homes to carry the news of ORT. In Colombia, parish priests are using pre-marital and pre-baptism counselling sessions to advise parents on the importance of breast-feeding, immunization, and growth monitoring. Also in Colombia, 700,000 high school students are being trained to do community service in putting today's child health methods at the disposal of the nation's parents. Deaths and births In proposing this alliance of all possible organized resources, the 1988 UNICEF report argues that ``there is no greater cause in which to march.'' In the world as a whole, one death in three is the death of a child under the age of five. Each week that goes by, more than a quarter of a million young children are dying in the ``quiet carnage'' of malnutrition and infection. Many of the survivors, says UNICEF, ``live on with ill health and poor growth, unable today to develop to their full mental and physical potential, unable tomorrow to fully contribute to the families they will have or the communities in which they will live.'' Tackling the fundamental problems of child deaths and malnutrition will therefore remain the priority task for the rest of this century-``not just because of the sheer scale and severity of the problem, but because of the emergence of dramatic new possibilities for its solution.'' Will the saving of so many children's lives exacerbate the problem of population growth? Paradoxically, says UNICEF, the answer is no: ``When parents become more confident that their children will survive, they tend to have smaller families. That is one reason why there has never been a steep and sustained fall in child births which has not been preceded by a steep and sustained fall in child deaths. Senator CHILDS —In conclusion, can I say that the work of UNICEF is vital, and we as parliamentarians can add our support to this new and important association by joining, paying the $5 membership fee, and actively participating. Senator HILL(South Australia)(10.37) —I want to take the opportunity during this adjournment debate to make a few points on the agreement that was signed yesterday by the super-powers to abolish intermediate-range nuclear force weapons, and give some advice to the Australian Government as to how Australia might react to this changing security environment. I would have preferred to have made these remarks at the more appropriate time of lunch time today, but because of the re-arranging of the business that opportunity was not presented. For those who believe that the world would be a safer place with a mutual and verifiable reduction of the nuclear arsenal of the super-powers, yesterday was obviously an historic day because it was the time of the signing of the first treaty to actually reduce the number of nuclear weapons. It might be said that it is modest in terms of the total number of nuclear weapons that are to be abolished-only 4 per cent of an estimated total of some 50,000 warheads would be dismantled-but nevertheless it is very significant in other ways. It is significant in its symbolism and as a step towards greater reductions particularly in the more critical long-range strategic weapons, and in the decoupling of Europe, to some extent, from the nuclear umbrella. However, the agreement raises other challenges that must now be addressed such as how to maintain an adequate deterrent as the debate continues about the adequacy of conventional forces, particularly in Europe, and about the whole subject of the legitimacy of strategic defence in this process. I shall deal briefly with both of these matters in a moment. Nevertheless, it must be said that the agreement is a step towards a more civilised world. Any step taken away from a reliance on mutually assured destruction as the method of protecting civilisation from nuclear catastrophe must be regarded as a step in the right direction. Therefore, I would say that this is an event worthy of modest celebration by the many millions of people throughout the world who have, through demonstration, said to the super-power leaders, `You must work towards another way to protect us'. I guess that that was the overriding sentiment that someone such as myself felt when, a little over a year ago, I was in Hiroshima and stood in the museum and in the peace park and sensed the absolute destruction and devastation that occurred as a result of the weapon used then, a weapon which, by today's standards, was little more than a toy. There are obviously lots of reasons why this agreement has been signed, such as, naturally, the desire of presidents to leave an historic legacy and the difficulty of the Soviets economically keeping in the race at the same time as allowing Mr Gorbachev to implement the changes necessary to ensure his legacy. However, I argue that one should not underestimate the influence of mass opinion on the occurrence of yesterday, or the enormous amount of work done over the years in disarmament forums, in the various peace research institutes throughout the world and in other such bodies in moving super-power leaders to the state of confidence that they apparently reached to take this important step. It is significant also, I would argue, because although the verification procedures in the agreement are complex, they are not foolproof. Therefore, by accepting the agreement, the super-powers have indicated that they are, for perhaps the first time, prepared to accept some good faith on the part of each other. I would not want to rely on the goodwill, particularly of the Soviets, whilst they remain a closed society, having the experience of Afghanistan, the support of Vietnam's occupation of Kampuchea, et cetera. Nevertheless, we all know that so many disarmament conferences in the past have ended with statements to the effect that more could have been achieved but for the very poor relations and deep distrust that existed between the super-powers. So I argue that it is significant that on this occasion such a sentiment did not end a treaty process. One must, therefore, recognise signs of improved understanding which can reduce tension and allow progress towards a more secure and just world. I believe that this change of attitude is just as significant as the actual reduction of the weapons pursuant to the agreement. In referring to this agreement, I believe that credit should be given to a number of national leaders. President Reagan recognised that successful negotiations with the Soviets would come about only through being able to negotiate from a position of strength. If Pershing IIs and cruise missiles had not been deployed in Europe, the SS20s would not now be going to be removed. I also give credit to Mr Gorbachev, who has shown the enlightenment to realise that his people deserve more than just a strong defence and is therefore prepared to divert resources that his predecessors were not prepared to divert. I commend Mr Gorbachev also for his preparedness to accept exclusion from the agreement of the British and French nuclear forces. Of course, if he had not been prepared to accept that exclusion, it would not have been easy for him in his domestic situation and the treaty would never have been finalised. I give credit to Mr Gorbachev finally for the fact that he was prepared to agree to remove the Asian-based intermediate-range nuclear forces although the United States of America was only to dismantle weapons in Europe. That in a small way, I suggest, brings the sentiment of the reduced tensions evident in this agreement to our part of the world. Credit also should be given to European leaders, particularly Chancellor Kohl, for the courage they have shown. Arguably, it is the Europeans who have allowed themselves to become more vulnerable as a result of this agreement. One remembers that the Pershing IIs and cruise missiles went into Europe as a result of European fear that the US might stand aside from a Soviet-European nuclear conflict. Therefore, in this agreement, there is evidence on the part of the Europeans of greater confidence in the alliance at lower threshold levels and evidence of their recognition of an improved climate between the super-powers, both of which is pleasing. I said that this agreement should be looked at as a step towards the challenge of the removal of further weapons. Four per cent of 50,000 has been removed by this agreement. Some 48,000 will remain, including the largest, most lethal and, arguably, the most strategically destabilising weapons because of their accuracy and because of their potential first strike capacity. Unfortunately, in the area of the largest weapons, the arms race has continued unabated. The United States has deployed the MX missile and will be deploying the particularly accurate Trident II submarine-launched ballistic missiles. The Soviets also have new ICBMs either deployed or near deployment. Now, both super-powers seem to be of a mind to progress towards a treaty to reduce these weapons, and this we should encourage. This reduction process will be more difficult particularly because of the asymmetrical nature of each super-power's strategic force structure. But with concessions and good will, it is possible-but they will be necessary on both sides. However, with them, a formula can be worked out for that reduction which will nevertheless preserve the strategic relationship of essential equivalents. However, a key to this achievement will be verification. Verification of removal of these weapons will be more difficult. That brings in the responsibility of Australia, which I would argue has a continuing responsibility towards verification through the joint communication facilities, and I remind the Government of that fact. In a very modest way through those bases, and through the more positive signs of ship visits and the other ways in which we contribute to the alliance, the strength of the alliance will be maintained. We must be aware that, as gross numbers of weapons are reduced, strength and resolve in other ways becomes more important. I said that strategic defence initiatives are irrevocably intertwined in the debate. A sentiment impossible to resist by a nation that has the capacity to build a defence to nuclear weapons is that it should not move down that path of relying solely on a deterrent. Therefore, it is not surprising that both super-powers are moving in that direction. However, at the same time, I remind the Senate that each will be developing weapons to defeat the other's defence, and so the arms race escalates yet again into a new field. The fear of either party that defence can become a shield from which a first strike might one day be launched can in fact turn what is a morally commendable approach to super-power defence into what could become a catastrophe. The better alternative is the continued reduction of weapons because, with fewer weapons, the less the need for a shield. With restraint on development of such a shield, it appears that the super-powers-- Senator Gareth Evans —What about some restraint in speech-making? Senator HILL —That is a strange comment to come from Senator Evans. Perhaps we can calculate how much time he has taken this session. With restraint on deployment which, as I have indicated, looks as though it is possible by the super-powers, the better alternative is that numbers will be reduced to an extent that the super-powers will have confidence not to need to put the shield into effect. If that is not possible, the better alternative is that the shield would be implemented when the super-powers have greater confidence in each other and at a lower threshold level. The intermediate-range nuclear forces treaty adds a new dimension to the conventional force reduction talks which have been taking place in Vienna since 1973. There has been little progress in these talks because of disagreements over the existing balance of forces against which any reductions could be measured and over whether armaments and equipment in the mutual and balanced force reductions zone should be reduced as well as personnel. However, because the North Atlantic Treaty Organisation (NATO) doctrine of flexible response will be be available to the same extent now that INF weapons are to be abolished, that is, in their capacity to have a nuclear response to a massive conventional attack by Warsaw forces, there is an even more urgent need to address the overwhelming superiority which exists on the part of the bloc in conventional weaponry and its invasion capacity. As I have indicated, that now requires to be urgently addressed. The lesson of the INF treaty is that, to negotiate with the Soviets, one must negotiate from strength. Therefore, as the INF treaty is implemented, NATO must respond with increased and updated conventional forces. The deterrent must be built this time at a conventional level. Regrettably, that is more expensive. It would be more desirable if the Soviets were prepared to downgrade their conventional force. That is the most desirable direction in which the West should be pushing. We should be supporting that move in our own way. As time goes on, and the less we are protected under a nuclear umbrella, Australia must realise that it will be equally responsible for playing a part in the upgrading of our conventional forces and that costs will have to be borne. One remaining inducement for the Soviets to look seriously at a conventional downgrading is the independent nuclear forces of Britain and France, because there is little prospect of bringing these forces into an agreement for reduction and ultimate abolition whilst the Eastern bloc maintains such superior conventional forces. As to chemical and biological weapons, I hope that the success in reaching an INF agreement will act as an impetus for further progress in restraining the chemical weapons race. Extensive multilateral and bilateral talks have been taking place and much progress has been made; nevertheless, very difficult questions of verification remain to be settled. Australia should continue to use its good offices and its resources in assisting the super-powers particularly in finding a resolution to the problems of verification in this areas, as they have been able to do in relation to chemical weapons, the safer will be the world community. I say in conclusion-as Senator Evans will be pleased to hear-that the treaty is to be welcomed. The super-powers should be encouraged and supported in extending it into the area of long range strategic nuclear weapons. The nuclear powers should, as a further step, be encouraged towards a comprehensive test ban treaty as a further limiting influence. In a period of wind-down of nuclear weapons, deterrence must be retained and the Western alliance must remain strong both in its military capacity and in its resolve, and Australia must continue to play its fair part in that role. In the environment of vertical reduction, more pressure must be put on nuclear threshold states not to go down the nuclear weapon path. In other words, we must now use this influence to restrain further horizontal proliferation and we must also use influence as an impetus for progress in other negotiations for reduction of weapons such as chemical weapons. Senator TEAGUE(South Australia)(10.53) — Mr President, in the Senate at one o'clock this afternoon I was making some observations about my visit to China in November. Senator Wood —Mr President, I raise a point of order. Yesterday during the urgency debate I was on the speakers list and I stood to speak. Senator Hill rose to speak and was given the call. The situation was further clarified by the Deputy President in a memo today saying that the list is an agreement between Whips and is not an official document and that, if two speakers are listed from one side and someone rises from the other side between them, the person from the other side gets the call. This is the way it was put to me by Senator Chaney yesterday. The PRESIDENT —Senator Wood, there is no point of order. I have a list provided to me by the Whips for the adjournment debate. Senator Teague was on it. He stood, and you stood at the same time. You will certainly get your opportunity on the adjournment tonight. I called Senator Teague first because I saw him first. Senator Wood —I draw attention to the state of the House. A quorum not being present and the bells being rung- Senator Puplick —Mr President, I draw your attention once again to the fact that a Government senator has come in and left the chamber in the course of a quorum being formed. Senator Gareth Evans —Senator Vallentine came in and left. Senator Puplick —Both Senator Jones and Senator Vallentine came in and left. Senator Jones came in and left during the ringing of the quorum bells. Mr President, I really do object to people coming in during the forming of a quorum and then leaving. That is a breach of Standing Orders to which I drew your attention yesterday. It has been repeated by Senator Jones for the second occasion. The PRESIDENT —Order! A quorum is not present. I ask all senators to resume their seats while we have a count. I ask the attendants to close the doors. A quorum is not present. We will now record the names of those senators who are present. Senator Puplick —Mr President, I ask what you propose to do about the situation of senators who come in in the course of the forming of a quorum and then leave in defiance of the Standing Orders. I had occasion to draw attention yesterday to this matter. I refer to this again, particularly because on this occasion the Government Whip is the senator involved. If we are not to get proper compliance with the Standing Orders on a matter such as this, then I think the Chair has to take some steps to ensure that the Standing Orders are properly enforced and that honourable senators do not come in here in the course of the forming of a quorum and then, in defiance of the Standing Orders, leave the chamber. The PRESIDENT —Senator Puplick, what you are saying is technically quite correct. There was a great deal of confusion when the quorum was formed. I did not see Senator Jones come in, by the way. However, I am not saying that that did not occur. All I can do is bring the matter to the attention of the Party Leaders and the Party Whips to ensure that this situation does not occur in the future. Order! There being no quorum present, the Senate stands adjourned until Monday, 14 December, at 2 p.m. Senate adjourned at 10.59 p.m. until 2 p.m. on Monday, 14 December The following papers were tabled: Meat Inspection Act-Meat Inspection (Orders) Regulations-Orders 1987 No. 6-Meat Inspection (Northern Territory) (Amendment). National Health Act-Declaration made by the delegate of the Minister under section 85, dated 1 December 1987. The following answers to questions were circulated: (Question No. 63) Senator Coulter asked the Minister Assisting the Minister for Community Services and Health, upon notice, on 24 September 1987: (1) Did the Health Insurance (Variation of Fees and Medical Services) (No. 47) Regulations as contained in Statutory Rules 1987 No. 160 and made under the Health Insurance Act 1973, which came into operation on 1 August 1987, delete from the earlier fee schedule items 3330 and 3346 dealing with the treatment of keratoses, warts and similar lesions. (2) Will the Minister for Community Services and Health reinstate these items to the schedule, in view of the potential malignancy of a number of keratotic lesions if untreated and the small amount of fees involved. (3) Will the Minister give an undertaking that he will announce this modification before 8 October 1987. Senator Ryan —The Minister for Community Services and Health has provided the following answer to the honourable senator's question: (1) Yes. (2) and (3) In recognition of representations pointing out problems that could be encountered as a result of the deletion of Schedule items 3330 and 3346, officers of my Department have met with representatives of the medical profession including surgeons, dermatologists, obstetricians and gynaecologists. In the opinion of my Department, there is a special case for removal of anal and genital warts to be covered in the Schedule as they usually require hospital admission and removal under anaesthetic. Action is proceeding to have items specifically for removal of anal and genital warts introduced into the Medicare Benefits Schedule. It is recognised that some keratoses may be precursors to skin cancer; nevertheless, the techniques for removal of these skin blemishes are similar to those for warts and are considered to be reasonably covered under the appropriate consultation item. Items covering the removal of skin cancer and treatment of melanoma have not been deleted from the Schedule, and the Government recognises the need for separate procedures for those services. The Government does not intend to reinstate the general procedural items for removal of warts, keratoses and lesions. (Question No. 114) Senator McLean asked the Minister Assisting the Minister for Community Services and Health, upon notice, on 4 November 1987: Would the Minister for Community Services and Health explain how the Federal and State Governments intend to pressure the alcohol industry into adopting a more ``socially responsible'' position (refer Answer to Question on Notice No. 48, Senate Hansard, 27 October 1987, p. 1345). Senator Ryan —The Minister for Community Services and Health has provided the following answer to the honourable senator's question: In the answer to Question on Notice No. 48, Senator Ryan spoke of pressing-rather than pressuring-the liquor industry to adopt a more socially responsible stand on alcohol advertising. This approach is in accord with the Government's philosophy of achieving agreement, wherever possible, through negotiation and consensus. It is against a background of concern about alcohol-related problems expressed by Commonwealth, State and Territory Health Ministers on the Ministerial Council on Drug Strategy (MCDS) that initiatives such as the Australian Wine and Brandy Producers' Association's nationwide campaign ``Enjoy Wine in Moderation'', ``Enjoy Wine Coolers in Moderation'' and Carlton and United Breweries' ``Think Before You Drink'' campaigns have emerged. These socially responsible actions by sections of the liquor industry come at a time when the Government is emphasising the need for community education on alcohol consumption-a matter referred to in answer to part (2) of Question No. 48. Senator Ryan —On 22 October 1987 (Hansard, page 1116), Senator Bjelke-Petersen asked me, as Minister assisting the Minister for Community Services and Health, the following question without notice: My question refers to the serious effects which the Federal Government's Medicare arrangements are having on staffing levels in Queensland hospitals. Is it a fact that, under the Medicare agreement, Queensland receives $82.86 per capita whilst the average of the other States of Australia is $198.80? Is it a fact that the South Australian Government receives $257.46, which is more than three times the amount per capita than is received in Queensland? Is the Minister aware that, if the identified health grants are added to that, the total amount received by New South Wales from the Commonwealth is $1,039m whilst the Queensland figure is a mere $205m? Does the Minister not agree that these are serious discrepancies and is she in a position to explain why they have occurred? The Minister for Community Services and Health has provided the following answer to the honourable senator's question: On a number of occasions, Queensland opposition spokespeople have raised the perceived inequitable distribution of Medicare and identified health grants payments to Queensland compared with other States. In doing so they conveniently forget how those grants were derived and the overall Commonwealth/State financial arrangements which are negotiated at Premiers' Conferences. I refer the honourable senator to the 1985 Premiers' Conference where a number of issues relevant to her question were raised. Firstly, the senator may recall that when Medicare was introduced, the Commonwealth requested the Grants Commission, in its review of tax sharing relativities, to specifically identify whether the introduction of Medicare had disturbed the health relativities existing prior to Medicare. The Grants Commission reported that health relationships had been disturbed and an amount of $10m was identified as necessary to restore the relativities for the two years 1983-84 and 1984-85. The Commonwealth accepted the Grants Commission report in this regard and the $10m was paid to Queensland in 1985-86. At the Premiers' Conference, it was also agreed that the identified health grants would continue as separate payments for the 1985-86-1987-88 triennium. However, in the context of overall Commonwealth/State financial arrangements, adjustments and offsets were made to the general financial assistance grants in lieu of the identified health grants. In other words, the identified health grants would be health grants in name only. This means that when comparing identified health grant payments between States, general financial assistance grants must also be taken into account. It is therefore not realistic to compare one or two specific grant arrangements, without also including the other untied grants made to States. Listed below is a comparison of per capita distribution of Medicare, identified health grants and general financial assistance grants to States for 1986-87 which truly reflect those Commonwealth payments which States have available to them for allocation to health. The honourable senator will note that Queensland receives significantly more per capita funding than New South Wales, Victoria and the Australian average. ESTIMATED PAYMENTS FOR 1986-87 BY THE COMMONWEALTH FOR HEALTH RELATED AND TAX SHARING GRANTS NSW Vic Qld SA WA Tas NT Total Est. Population Dec 1986 ('000)... 5 573.1 4 185.7 2 613.7 1 379.7 1 450.8 448.9 151.6 15 803.5 General Financial Assistance Grants $m... 3 322.2 2 475.3 2 188.7 1 139.8 1 248.3 426.1 * 10 800.5 Health Grants $m... 621.3 408.8 126.0 215.5 196.1 70.0 - 1 637.8 Medicare $m... 418.6 269.1 79.2 118.0 93.6 35.4 12.5 1 026.4 Capital Grants for Teaching Hospitals $m... 16.8 12.6 7.7 4.2 4.3 1.4 0.5 47.5 Total $m... 4 378.9 3 165.8 2 401.6 1 477.5 1 542.3 532.9 642.5 14 141.7 Per Capita... 785.72 756.34 918.85 1 070.89 1 063.07 1 187.12 4 238.13 894.85 * NT gets a `General Revenue Grant' of $629.5 Source: Payments to or for the States, the Northern Territory and local government authorities. 1986-87 Budget Paper No. 7.