Tuesday, 26 April 1988 The PRESIDENT (Senator the Hon. Kerry Sibraa) took the chair at 2 p.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and Senators assembled in Parliament: The petition of certain citizens of Australia points out that aged and disabled people who require accommodation and support in nursing homes are entitled to the highest possible standard and quality of nursing care. We, the petitioners, request the Government to ensure that provisions of funds for nursing homes in Victoria is sustained at least at a level sufficient to maintain the high standard of care now available in nursing homes in this State. by Senators Button (from 25 citizens) and Short (from 193 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 Senators Gareth Evans (from 187 citizens) and Vanstone (from 90 citizens). To the Honourable President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: That in spite of many petitions and other communications, we are dismayed and disgusted at the lack of will on the part of the Parliament to restore to retired Commonwealth Public Servants and Defence Force Personnel, pension benchmarks which were affected by a two percent discount as part of the budget brought down in 1986. Having regard to assurances given by the Government that the base will be restored, your petitioners most humbly pray that the Senate, in Parliament assembled, act to ensure that this is done without further delay so as to remove the permanent and compounding effects of this discriminatory action taken under the guise of the entire community sharing the economic burden. And your petitioners as in duty bound will ever pray. by Senator McMullan (from 122 citizens). Petitions received. Senator WOOD(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes with regret the escalation of violence in New Caledonia; (b) recognises that the violence was provoked in the main by an expanded military presence, necessitated by the enactment of the Pons Statute which seeks to deny cultural autonomy to the Kanak people; (c) regrets the statements made by the Minister for Overseas Territories, Bernard Pons, calculated to incite further violence; and (d) urges the Australian Government to do everything in its power to urge the French Government to defuse the situation by taking a course of action which will result in independence for the Kanak people. Senator COLLINS(Northern Territory) —I give notice that, seven sitting days after today, I shall move: 1. That the Australian Federal Police (Police Liaison Advisory Committee for the Australian Capital Territory) Regulations (Repeal), as contained in Statutory Rules 1988 No. 32, and made under the Australian Federal Police Act 1979, be disallowed. 2. That the Australian Meat and Live-stock Corporation Order, as contained in Order No. MS12/88, and made under the Australian Meat and Live-stock Corporation Act 1977, be disallowed. 3. That the Motor Traffic (Amendment) Ordinance (No. 3) 1988, as contained in Australian Capital Territory Ordinance No. 11 of 1988, and made under the Seat of Government (Administration) Act 1910, be disallowed. I seek leave to incorporate in Hansard a list of the legislation with a short explanation of the concerns of the Senate Standing Committee on Regulations and Ordinances. Leave granted. The document read as follows- Today is the last day on which I can give these protective notices of motion to safeguard the Committee's position while it continues its examination of the legislative instruments described below. 1. Australian Federal Police (Police Liaison Advisory Committee for the Australian Capital Territory) Regulations (Repeal), as contained in Statutory Rules 1988 No. 32, and made under the Australian Federal Police Act 1979. These Regulations appear to have abolished a potentially significant A.C.T. police-community liaison body, notwithstanding that the obligation to establish such a group remains in the Australian Federal Police Act. In the absence of the A.C.T. representative institutions, the abolition of such a body has added significance for police work and personal rights issues. The Committee is seeking further information on this matter from the Minister for Territories. 2. Australian Meat and Live-stock Corporation Order, as contained in Order No. MS12/88, and made under the Australian Meat and Live-stock Corporation Act 1977. The Committee is examining a point affecting the legality of a provision which enables the Corporation to specify in the Government Gazette rather than the Orders themselves the maximum allowable charges for the sea-carriage of export meat to North America. 3. Motor Traffic (Amendment) Ordinance (No. 3) 1988, as contained in A.C.T. Ordinance No. 11 of 1988, and made under the Seat of Government (Administration) Act 1910. The Committee is examining with the Minister for Territories the justifications for certain apparently strict liability offences. 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. Arbitration Inspectorate-Annual Report 1986-87-sub-section 125 (12) of the Conciliation and Arbitration Act 1904. 2. Industry Research and Development Board-Annual Report 1986-87-sub-section 46 (3) of the Industry Research and Development Act 1986. 3. Advance to the Minister for Finance-statement of expenditure-February 1988. 4. Advance to the Minister for Finance-statement of expenditure-March 1988. Senator CHANEY —My question is addressed to the Minister representing the Minister for Industrial Relations. I refer the Minister to his answer to me last week, in the context of the Quadrant building site dispute in Canberra, when he said: If a criminal action is involved and the allegations are ones of criminality, the fact that it is alleged to have the character of an industrial dispute by some people has nothing to do with it. It is a criminal action. I ask: If it is true that some Robe River Iron Associates employees commandeered the company's tugs to prevent the company from using them as part of industrial action two weeks ago, does he agree that Robe River is perfectly within its rights to initiate legal action against those involved? If it is, will the Government use whatever influence it may have to persuade the Australian Council of Trade Unions, the unions directly involved and the Dowding Government to refrain from retaliatory action against a company which is doing no more than exercising its rights within the law of the land? Senator BUTTON —The Government is using its good offices to try to bring about a sensible resolution of the Robe River dispute. I do not think it appropriate or profitable to detail what action the Government is taking, but it is directed towards that end. Senator CHANEY —I ask a supplementary question. I note the Minister's response that he does not think it is appropriate or profitable, but I draw his attention to the fact that the Dowding Government in Western Australia has apparently seen it as both appropriate and profitable to enter the dispute in a very strong way. In light of that, is the Minister prepared to affirm that the rule of law should apply in this circumstance as in other circumstances and that the commandeering of tugs is not legitimate just because it is part of an industrial dispute? Senator BUTTON —Whatever statements were made by members of the Dowding Government, including by Mr Dowding himself, I understand that a meeting will take place between the Government and the parties concerned this week and I would not want to say anything which could prejudice any discussions that might take place at that meeting. Senator McMULLAN —My question is to the Minister for Transport and Communications. What are the implications for television viewers of the shadow Cabinet's decision to oppose an increase in commercial television audience reach limits and, in particular, what implications will this have for the aggregation of regional television services, particularly in the southern New South Wales region? Senator GARETH EVANS —I think it has already been widely acknowledged that the decision of the Opposition shadow Cabinet-if it does in fact prove to be the final position of the Opposition parties on this matter-puts seriously at risk two things. The first is the capacity for the present network owners, or anyone who might replace them, to build the kinds of economies of scale and the capacity for cross-subsidy which make it possible for there to be not only more and higher quality Australian television production but also, in particular, more and better quality local content, particularly in those smaller State capitals where, in the absence of a strong economic network base, the economic realities are that those sorts of benefits tend not to flow. The second risk that is extremely evident and has been widely remarked upon is the implication for the achievement-as fast as television viewers would obviously like-of aggregation in the areas that are presently being identified to create a situation of three commercial channels where at present only one exists, which will in effect provide two additional commercial services to more than four million Australians in eastern mainland regions. I think that point is worth spelling out in a little more detail. The retention of a 60 per cent limit provides a very significant disincentive to the Northern Star and Bond networks to accelerate this process, quite apart from its implications, along with all the other difficulties for Mr Skase with his regional interests. For example, the Northern Star and Bond networks would in fact go over the 60 per cent limit if they were to step down the aggregation route and, as a result, place themselves in a position of requiring forced divestiture of a significant portion of their assets. The southern New South Wales region, approved market C, to which Senator McMullan's question immediately relates, is perhaps the clearest of all the examples. It is due, under the Government's indicative timetable, to aggregate by the end of 1989. The Government has been involved in discussions with the networks with a view to bringing this start-up date forward to the beginning of next year-in other words, 12 months earlier. The Opposition decision-if it is the one that ultimately prevails-will make it extremely unlikely that viewers in this region will be able to enjoy the benefits of that accelerated aggregation process. If this proves to be the case, viewers in Wollongong, Canberra, Orange and Bathurst and all the surrounding areas will know very well who to blame. I do not think it very gentlemanly of me to dwell on the comprehensive way in which the Leader of the Opposition, Mr Howard, and his shadow communications spokesman, Senator Messner, were comprehensively rolled on this particular matter. It happens to all of us on occasion in our respective parties. I appreciate that that is the exigency of the political process, but let not the sea of confusion which has emanated from these two and others in recent days conceal the fact that comprehensively rolled they were, as nobody who was on the receiving end-as almost anyone in the country who chose to ask was-could be in any doubt at all of various confident assurances, predictions and commitments to achieving the more rational result which I have just described. The more important point to make is not so much the nature of the assurances and the confident predictions that were made and the way in which they were countermanded by the reality of the shadow Cabinet decision, with all the loss of authority and credibility to the leadership that that implies, but, as Mr Keating described it, the total intellectual dishevelment of the Opposition when it comes to articulating why the position is as is currently being described. Intellectual dishevelment it undoubtedly is, if one cannot put any kind of understandable substance to-- Senator Chaney —Jump! Senator GARETH EVANS —I will come to Senator Chaney in a moment. One cannot put any kind of substance to the extraordinary series of statements that have been made by Senator Messner and his own leader in describing what their optimal or preferred outcome would be as a result of this extraordinary saga. We had Senator Messner clearly saying on numberless occasions that his preferred position would be in fact 100 per cent, or something close to it, provided that there was a greater degree of access, a greater degree of competition, within the commercial television market. We had Mr Howard saying exactly the same thing in his doorstop on 22 April when he said: I think the ideal that all of us see, and I certainly see, and I think this is widely known- indeed it is, as he made it widely known- would be 100 per cent and far greater freedom of entry. I think it needs to be appreciated just how comprehensively idiotic that kind of assertion is and how incomprehensible it is to make any substantive sense of it in the context of the present television environment. There are no barriers to entry, there are no barriers standing in the way of anyone's access to the three existing commercial channels and the various groupings of related channels that exist around the country. There are no inhibitions to access; there is no obstacle to commercial freedom in this area. The only obstacle that is posed is the 60 per cent constraint which is there presently in the legislation. That is the only relevant obstacle. It is the very obstacle-the arbitrary obstacle-that the Liberal national council decided two or three weeks ago should be removed because it had no credible content. It is just impossible to work out what on earth the Opposition is talking about. The only way that one could possibly get more competition or more access is if one opened up a fourth commercial channel. Is that what the Opposition is proposing-a fourth commercial channel, which everyone knows, but which honourable senators opposite would probably be the last to know, is commercially wholly unfeasible in the present environment? Is it the concept of access to pay television, which has been uttered by Senator Messner on a couple of occasions in the last few days, even though he knows, as everybody else who has had anything to do with this well knows, that the Government is looking at the policy implications of that, that it is a totally different technology involving a totally different entertainment mode and is in no way comparable to the delivery of broadcasting television which they are suggesting should be exposed to greater access and greater competition? I just make the point, Mr President-and I make it very shortly-that what we have here is a performance on the part of the Opposition which involves talking in tongues as it is incomprehensible babble, it makes no intellectual sense, it certainly makes no policy sense and it ought not to be regarded as successfully concealing the total shambles the Opposition policy-making process has got itself into. Whatever the babble in fact means, it certainly has not impressed other Liberal leaders across the nation. I think one cannot let the occasion pass without referring to the way in which the present leadership, the present shadow Minister and those who voted against them, have been made to look thoroughly foolish by the response of their own spokesmen. Mr Greiner said, as reported in the Age today, that the shadow Cabinet decision was neither philosophically correct nor in the interests of the viewers. The Western Australian Opposition Leader, Mr MacKinnon, is quoted again in today's papers as saying: It would be ridiculous if Western Australia were to be disadvantaged by having TVW7 excluded from the benefits of being part of the national network. Even the Victorian Liberal leader, Mr Kennett, who needs this kind of recognition because I think this is the first time he has been acknowledged by the other side of the chamber-in fact, he has not been; honourable senators opposite have been very quiet-since he has been in that job, said on Australian Broadcasting Corporation radio this morning that he opposed the shadow Cabinet's decision on the grounds that it was against the philosophy of the Liberal Party, would not increase competition, would not help regional viewers and would not help encourage greater locally produced programming. That is the environment in which the Opposition leadership has got itself on this occasion. It is one that ought to be fully appreciated for the monumental idiocy that it is. Its own Party right around the nation and television viewers have been giving it the message. One only hopes that that message is still capable of being heeded. Senator CHANEY —My question is to the Minister for Transport and Communications and follows his extensive demonstration of the devil quoting scripture of a few minutes ago. I ask: If reducing the number of owners in the industry has all the advantages that he has just outlined, why does the Government not propose to increase the audience reach to 100 per cent rather than 75 per cent? Does he agree that, with the restricted number of licences which are available because of the licensing arrangement, the Government's proposal would reduce even more the number of companies which are presently in the industry? Senator GARETH EVANS —It has been acknowledged from the outset of this debate in the middle of last year that there is no logical stopping place short of 100 per cent once one recognises the realities of the argument in terms of the economic base and the need for a substantial financial base with the capacity to cross-subsidise. Once one moves beyond the 43 per cent limitation that is implied in so far as the previous two-station rule with Sydney and Melbourne is concerned, there is no logical stopping place in the argument about building the economic base and there is no logical reason for choosing any particular point between 43 and 100, save the important qualification which led the Government to choose the 75 per cent one last year and to regard that as an acceptable compromise subsequently. The relevant discriminating point-- Senator Puplick —They were just your instructions at the time. Senator GARETH EVANS —No. I have made the point previously and it is very simply this: it is a percentage figure which accommodates the five mainland capital cities-the five most substantial individual viewing areas. It would accommodate Hobart as well, but Tasmania is a special case. It is a percentage figure which accommodates that and, I repeat, allows a firm network base to be built to allow economies of scale and cross-subsidies. It is high enough to allow for that. It satisfies the hurdle requirement that there is enough of an economic base, which no lesser figure does, and enables that economic base to be built. On the other hand, it is not so high that it rules out the likelihood, indeed the probability, that smaller players will continue to have an ownership role in a significant number of the regional television stations around the country. It allows a diversity of players, if you like, to take their place in the television provision environment in those lesser markets-the less capital intensive; the less capital expensive to build up-and, as a result, gives some acknowledgment to the argument, which is very widely shared, and which obviously has some force in Senator Chaney's Party, that there ought to be more than just three individual owners in the game. I acknowledge that. Seventy-five per cent is a compromise figure, acknowledged and articulated as such, which satisfies those two equal and opposite concerns. It satisfies the concern to enable a broad economic base to be built in a way that 60 per cent does not. It also satisfies the concerns of those who do want to see the opportunity retained for niche players, as it were, to have a continuing role, particularly in the regions. One could argue, of course, about 5 per cent or 10 per cent either way of that particular figure as probably being capable of satisfying equally well those two aspirations. But the 75 per cent figure was chosen for that reason. There is no pretence at scientific exactitude about it. There has not been by Mr Duffy, by Mr Keating, by the Prime Minister or by me. I make no such pretence now. It is an appropriate compromise figure which draws a satisfactory policy balance between the concerns that exist. That is why the Labor Party in government chose the figure originally and has remained consistently with it throughout. It satisfies all the concerns that I have articulated today, plus others as well. Senator CHANEY —Mr President, I ask a supplementary question. I thank the Minister for his admission that the 75 per cent has no logical basis. I simply ask him, by way of supplementary question: Why not move now to 100 per cent? Why wait until one of the present owners buys some more stations which take him over the 75 per cent to get his instructions to move the limit? Senator GARETH EVANS —I reject wholly the sort of undertone of contempt which runs through Senator Chaney's-- Senator Chaney —That was an overtone of contempt. Senator GARETH EVANS —Well, the overtone. I reject wholly the quite explicit offensiveness of that question. Senator Button —Those over there were the only government to amend the legislation to protect one proprietor. Senator GARETH EVANS —And who was that, Senator Button? Senator Button —The Fraser Government, to protect one man. Senator GARETH EVANS —That is right; of course it did, and that ought to be acknowledged for the record. If the 75 per cent limit were legislated into effect, there would be no question of that being subject to any further change in the future. There was always the prospect that the 60 per cent limit would be the subject of change in the future because there was a clearly articulated and rational economic foundation for going to a higher figure. That was said at the time. It was said that the 60 per cent figure was forced upon us much against our inclination and against the best policy interests of the nation, that if the opportunity arose we would certainly reconsider it. That was a point made by me and other spokesmen on a number of occasions during the last few months. I have also made the point, and I do so again now, that if the 75 per cent figure were to be seized upon, were to be enacted as the appropriate figure, consistent with the stance we took last year, there would be no question in the foreseeable future of that figure being further amended. All the concerns that we have articulated-the concerns about, to repeat, the necessity for a sound economic base to get levels of production up and local production in the smaller States, and the concerns we have expressed simultaneously about aggregation-manifestly could be thoroughly satisfied under the 75 per cent limit, and there would be no justification, accordingly, for changing it in the future, and I make that commitment on the part of the Government. Senator COLSTON —Is the Minister representing the Treasurer aware that some Australian companies with major operations overseas have been calling for the Government's foreign tax credit system to be discontinued? Is it the Government's intention to accede to those calls? Senator WALSH —To my knowledge, the most vociferous of the people who have been calling for the abolition of the foreign tax credit system is, of course, John Elliott, who is equally vociferous and adamant about a number of other policy matters, including a consumption tax and, I understand, telling his mates at the footie how John Howard got it all wrong about television reach and a number of other matters. The Government has no intention of acceding to the sort of self-serving, self-promoting whingeing that Mr Elliott, among others, has been indulging in. I am confident that we have the support of almost every objective observer of the tax scene. One of those observers-or newspaper columnists, as he was at the time-who some would regard as a tax expert, quite explicitly stated in the Sydney Morning Herald on 25 September 1985, in a review of the then recently announced tax package: The proposed foreign tax credit system will be opposed by those Australian companies with major operations in countries where profits are relatively lightly taxed. Nevertheless, it will make our own taxation system more coherent and should be welcomed as such. So should most of the proposals to reduce or remove existing tax shelters. That is from an article written by Mr Stone, as he was then, and published in the Sydney Morning Herald on 25 September 1985. I entirely agree with him. I hope he still holds those views and is willing to put them forcefully to Mr Elliott. I also hope that he, or at least his Party, is as successful in rolling over the Liberal Party of Australia as the National Party of Australia was in rolling over the Liberal Party last week on the question of television audience reach. Senator LEWIS —My question is directed to the Minister for Industry, Technology and Commerce. I refer the Minister to his answer to my question last week. When talking about the process of consultation on tariff cuts he said that views of the Business Council of Australia (BCA) had been heard and the unions would be heard. He also said: The views of the Australian Manufacturing Council will be expressed to the Government on those issues. I regard that as a worthwhile process. In view of the reported abusive reception afforded members of the Australian Manufacturing Council (AMC) by the Prime Minister, by Mr Dawkins and by Senator Evans, but apparently not by this Minister, who once again appears to have distanced himself from his less temperate colleagues-at least according to the leak to the Age, which reported that he was embarrassed by the outburst-would he describe last week's meeting with the AMC as a worthwhile process? Will the Government release the Council's submission presented at the meeting with Ministers? In view of the flood of leaks, winks and nudges emanating from the Government on this issue, can the Minister blame the AMC for having based its submission on a belief that the Government had already decided its direction? What role, if any, has been played by the officers of the Minister's Department who staff the AMC secretariat, and the head of his Department, who is a Council member, in contributing to this belief? Does the Government's instruction to the AMC to go away and rewrite its submission raise serious questions about the independence of the Council and the quality of its advice? Senator BUTTON —There were a number of parts to that question. I can probably answer them in a general way, perhaps not to the satisfaction of Senator Lewis. As I understand it, the Manufacturing Council had a general discussion about tariffs at its February meeting. Those views expressed at that meeting were conveyed to me. It is also true that last week the three representatives of the Manufacturing Council met a number of Cabinet Ministers, the Manufacturing Council having sought that meeting but having been given relatively short notice of it. I concede that at that meeting there was something of what I would regard as a communications gap. It may have been my fault in the sense that I did not fully identify to the members of the Manufacturing Council who were coming to that meeting what was expected of them in translating at least the preliminary views they had formed at their February meeting. I have not read the report in today's Age. Let me make it clear that I have heard about it but I have not read it. Senator Lewis's reference to my distancing myself from-- Senator Lewis —You did not tell Michelle that you were involved? Senator BUTTON —I have had no discussion with Michelle Grattan or any other journalist about what took place last Wednesday night. If the Age wants to report that I was embarrassed or otherwise, I would expect it to have the courtesy to ask me whether I was embarrassed, because embarrassment is a fairly subjective sort of thing. Senator Chaney —Were you embarrassed? Senator BUTTON —I was no more embarrassed last Wednesday night than I am at Question Time by Opposition questions-and I can tell honourable senators that that is not very much. There were a number of other points in the question which Senator Lewis asked. The BCA has expressed views to the Government about tariffs, there has been a meeting with the manufacturing unions about tariffs, there was a meeting last Wednesday with the Australian Manufacturing Council to which Senator Lewis particularly referred. The Manufacturing Council will come back to the Government with some further views as a result of last Wednesday's meeting. Senator Lewis's question was in a number of bits. I think that I have picked up most of them, and if there are any I have missed please let me know. Senator LEWIS —I will now, by way of a supplementary question. I ask the Minister the last part of the question which he has not yet addressed: Does the Government's instruction to the Council to go away and rewrite its submission raise serious questions about the independence of the Council and the quality of its advice. Arising out of the answer itself, does the Minister agree that today's reports, involving two of the three groups he mentioned in his answer to me last week, indicate that the so-called consultation process is nothing more than farcical window dressing? Senator BUTTON —That may be a description which suits Senator Lewis's purposes, but I do not think it is correct. It is a lot more than window dressing. I have spent quite a bit of time involved in consultations with various organisations about this issue. But ultimately the Government has to make a decision about it, and the Government will do so. If one tries to form a view based on the collective wisdom of everybody in this country who is interested in tariffs, one will not get a very informed or progressive view, I am afraid. I am sorry, but there was another part of Senator Lewis's question. Perhaps by way of interjection, which he is normally good at, he will tell me the other part of his supplementary question. Senator Lewis —About the independence of the Council's advice. Senator BUTTON —There is no question about the independence of the Australian Manufacturing Council, which has said a number of things which are critical-- Senator Lewis —The Prime Minister has told it to go away and rewrite its submission. Senator BUTTON —I am not a nuclear medicine expert or anything like that, and I do not have a deep insight into the mind of the person who wrote that article. I take it that there is only one article to which Senator Lewis refers. Senator Lewis —So you are not distancing yourself from the Prime Minister? Senator BUTTON —No, I am not doing any of those things, Senator. The fact was that the Australian Manufacturing Council did not come to meet with the Government last Wednesday with a submission on the issues. It was certainly asked to come back with its views. Senator Stone —With another draft, like the FitzGerald report. Senator BUTTON —No, Senator Stone, it was not that at all, there was no question of that. It was asked to come back with a paper which addressed the issues in some detail. That is the important thing to do. What it came with on Wednesday night was a view about the process of consultation itself, not the issues which were intended to be the subject of that consultation. The next time, hopefully, it will come back with views about the issues. If some journalist wants to interpret that as meaning that it has been told to go away and rethink its position or something like that, that is not true. That is a very misleading piece of information. Senator GILES —My question is to the Minister representing the Treasurer. It relates to the ongoing work of the Hawke Government in repairing the nation's public finances from the shambles inherited in 1983. Opposition senators-Oh! Senator GILES —Does the Minister agree that a major part of this task of repair has to lie in improving community attitudes regarding the requirement on the part of corporations and individual citizens of honesty in their pecuniary dealings with the Government? What progress has the Commonwealth Government made in this area? Senator WALSH —I gather from the hoots and jeers that came from the other side while Senator Giles was asking the question that the Opposition has either forgotten the shambles that the nation's finances were in in 1983, or it is denying that the nation's finances were in a shambles. So, I think I should remind the Opposition, and anybody else who may have forgotten about it, what shambles the finances were in in 1983. Firstly, we were facing a prospective Budget deficit of nearly $10 billion, which, as Senator Stone pointed out in the first week of March 1983, was the biggest Budget deficit ever recorded in peacetime, and outlays had been increased by more than at any previous time since the Second World War as well. Unfortunately, I do not have the precise quotations with me right now, but Senator Stone told Mr Howard in the first week of March 1983 essentially that he was presiding over financial chaos which he himself had engineered. That was the essential message of Senator Stone's note to Mr Howard. We were also experiencing unemployment at above 10 per cent, inflation at above 11 per cent, as well as the $10 billion deficit. We had the big double digit trifecta: $10 billion deficit, more than 10 per cent unemployment, and more than 10 per cent inflation. However, I was really asked about the Government's repair of that financial shambles. On the Commonwealth side it has been entirely repaired. It has taken us five years to fix up the mess that John Howard left behind him; but finally, it has been done. On the revenue side of the Budget, it is also true that the loopholes in the taxation laws which John Howard, as Treasurer, allowed to be exploited, right up until 1982, without serious fear of any effective government action being taken, have been repaired. At that time, of course, when tax evaders plumbed the depths of depravity with the benign approval of the then Federal Government, a state of mind developed among a number of otherwise honest Australians that the successful tax avoider was a person to be admired and the honest tax complier was regarded as a bit of a mug. I believe that those days are gone, but there are still some elements around who would like to return to the bad old days when tax avoidance and evasion were rampant, when there was apparently, right up until 1982, no sign that the Federal Government intended to take serious action to stamp them out. One of those people who want to return to the bad old days is the Federal President of the Liberal Party, who is forever threatening to take his business offshore unless the taxation system is perverted again in the way in which it was in the early 1980s and the late 1970s. Indeed, he gave a speech in London recently in which he boasted of how proud he was of his grandmother because she had never drawn a government pension. I wonder whether his grandmother would have been as proud of him, a man who revels in being referred to in the public Press as being an Olympic-class tax avoider. Senator COULTER —I direct my question to the Minister for Finance. If an economy is to remain healthy and viable over time, is it not the case that interest must grow no more rapidly than does total national income? If interest grows more rapidly than national income, will not the rentiers come to consume a larger and larger portion of the national cake? What instruments are available to the Federal Government to hold interest rates to the rate of growth of national income? Senator WALSH —I think that that would probably make the subject for a PhD thesis. I would not like to try to answer it off the top of my head in about 30 seconds. The first problem is that I cannot see what the point of the question is. Perhaps I had better read it carefully later to see whether in the oral presentation something quickly slipped past me. I do not know whether Senator Coulter is referring to interest payable abroad or interest payable within Australia. He has failed to realise that interest is a form of property income. There are other forms of property income such as rents received from real estate and dividends received on shares. Other things being equal, it is obvious that if there were a change in the distribution of corporate financing from equities to debt-that is, were the income on property paid in the form of interest rather than dividends-there would be an increase in interest as a proportion of property income as against non-interest forms of property income. I do not know what fundamental or important changes that implies. Indeed, it does not seem to me to imply very much at all. In other words, I think it is a fairly silly question, which is fairly predictable coming from the `fairies at the bottom of the garden' party. Senator VALLENTINE —I ask the Minister representing the Minister for Foreign Affairs and Trade whether he has seen the article in the Weekend Australian on 16 April by D. D. McNicoll relating to drug war lord Khun Sa or whether he saw the subsequent program on A Current Affair in which an Australian television reporter, Stephen Rice, interviewed Khun Sa at his headquarters in eastern Burma. What is the Government's reaction to Khun Sa's offer to destroy up to half the world's annual heroin supply in return for $50m in cash or agricultural aid for the next eight years, given that this year there was a record crop of opium which will soon be hitting the streets of Sydney and other centres in Australia with a devastating effect on the lives of many Australians? Given that the problem is essentially political, as Khun Sa uses the money from opium sales to finance the struggle for independence by the Shan people in eastern Burma, has the Government been approached about the possibility of acting as a mediator between the rebel hill people around the borders of Burma, including the Shans, and the central government of General Ne Win in Rangoon? If so, what is our position and, if not, would the Government seriously consider acting in such a role, given that these wars have been going on for 40 years and opium is the main source of finance for many of the rebel armies? Senator GARETH EVANS —It does seem to be the case that the Burmese opium war lord-I think he is properly so described-Khun Sa is said to have offered to eliminate all drug trafficking and production in his territory if the Australian Government will provide him with aid to the value of $50m a year for eight years. Needless to say, this is not an offer which the Government would seriously consider. In fact, I think it involves a degree of breathtaking naivety to take any of this at face value. Khun Sa has a record of 25 years of violence and narcotics trafficking. He is not a revolutionary leader but a major drug trafficker. The Australian Government is simply not in the business of paying criminals to refrain from criminal activity. Of course, the Government cooperates with regional governments in fighting drug production and trafficking. It is also closely involved in action within the United Nations system to counter drug problems. We have not been approached to act as a mediator between the Burmese Government and insurgent groups within Burma. In the circumstances there is no advantage in speculating on what our response to such an approach might be. Senator STONE —I ask the Minister for Finance whether, firstly, he has seen reports of the views put forward in an address to the Young Labor National Conference last weekend by his colleague the Minister for Employment and Education Services regarding policies of what I think Mr Duncan called `the rational Left'. Secondly, does the Minister regard the term `the rational Left' as being itself a non sequitur? Thirdly, specifically does the Minister share his colleague's view that policies of the so-called rational Left involving an increase in spending and therefore, of course, an increase in taxing, should be seen `as an investment in our future, not as a cost'? Senator WALSH —It is about seven months since Senator Stone first sat in the Senate, so he is not a very experienced politician; but I will give him credit for one thing. It is now about 20 minutes to three. I thought Senator Stone's question would be the first question in Question Time today. From any half competent Opposition this question, or a question along the lines of it, would have been the first question. It took the Opposition over 40 minutes before one of its newest members finally had enough political nous to stand up and ask what was obviously, I would have thought, out there in arc lights, the question of the day-at least according to the newspaper reports. I have been asked whether I think `rational Left' is a non sequitur. I have never known for certain what `Left' means, other than to make the fairly obvious point that it means different things to different people. I suppose that one can be a bit more confident about what is rational. Certainly, one can be more confident still about what is not rational. For example, it is not rational to believe that one can put a fusion reactor into the boot of a motor car and generate electricity to hydrolyse water to produce hydrogen on which to run an internal combustion engine-as a good friend of Senator Stone believes can be done. Even if one could overcome the technical problems of fitting a fusion reactor into the boot of a Volkswagen, if one had already generated electricity it would raise the question of why one would not have an electric car instead of going through another couple of processes of hydrolysing water and then having an internal combustion engine powered by hydrogen. That is certainly not rational. Nor, for the information of Senator Stone, is it rational to believe that one can make water run uphill and generate electricity while it is doing so. His National Party colleagues from north Queensland obviously believe it can be done and continue to demand that the Commonwealth Government should put good taxpayers' money into funding feasibility studies-whether studies on how to make water run uphill while generating electricity or engineering studies for the construction of dams, I do not know. However, I return to the substance of the question. As I said, I give Senator Stone faint praise for apparently being the only person in the whole Opposition with enough political nous to realise that it would not be a bad idea to fly with a question like this. But it is not going to be as good as Senator Stone might have thought. I do not blame him for that. The plain fact is that I have not read the transcript of what Mr Duncan said. I do not know whether there is a transcript or a text. Regardless of whether there is one or both, I have not read anything from Mr Duncan. I have read, rather hastily I may say, some newspaper reports of what Mr Duncan is alleged to have said. In fact, I think I have a copy of it here. He is alleged to have said-I can quite believe that he did say this: I believe we must face up to the hard issue of increasing tax revenue, particularly by further reducing avoidance through loopholes in business-tax collection. I think that this Government has certainly gone a very long way to achieving that objective. I agree with Mr Duncan that that is an objective that should be pursued. Tax avoidance, whether it be by corporations or by individuals, is something which governments should not tolerate if they can stamp it out. As we know, this Government has taken major measures which have raised by now probably billions of dollars of additional revenue produced by income that previously was escaping untaxed. I am certainly entirely with Mr Duncan on that. I agree with him. I only wish that the Opposition would take such an enlightened view instead of continuing to provide succour and assistance to tax avoiders and evaders, as it has in the past. Senator STONE —Mr President, I ask a supplementary question. I thank the Minister for his response. I leave aside the earlier parts, which I rather thought were addressed to what he amusingly always calls the `fairies at the bottom of the garden' party. I thank him for his remarks about the nature of any increases in taxes as recommended by his colleague Mr Duncan, but I want him to respond to the second part of my question, which is whether he agrees with Mr Duncan's reported views, which the Minister has not denied, that the policies involving an increase in spending, which of course those forms of increased taxes would be required to pay for, should be seen-I quote again: as an investment in our future, not as a cost. Senator WALSH —The alleged statement to which Senator Stone refers is also in this newspaper clipping that I have and it refers to more education. I do not think that Mr Duncan would be alone in believing that expenditure on education should, to a significant extent, be regarded as an investment. Indeed, I think Senator Stone would agree with that. He may not agree with some people on the proportion which should be ascribed as investment and the proportion which should be ascribed as consumption by the individual, but I do not think he would deny that certainly some component of education expenditure ought to be regarded as an investment. Indeed, some types of industry assistance ought to be regarded as an investment. Senator Stone —I am talking about increases in it, not the proportion of it. Senator WALSH —I was coming to that; do not be so impatient. Whether the proportion of whatever level of Government expenditure is devoted to those activities should be increased vis-a-vis all the other claims on Government expenditure is a matter for both economic and, in my view, value judgment, as indeed is the proportion within quite a wide band of gross domestic product (GDP) which should be public sector expenditure. I understand from the same Press reports that Mr Duncan made the point that Australia, by the standards of the Organisation for Economic Cooperation and Development, is not a highly taxed country, and that is true. Whether it ought to be taxed more or less and whether the public sector should be smaller or larger are matters, as I have said before, for both economic and value judgments. But there is not any decisive evidence from around the world that, within a fairly wide range of public expenditure as a proportion of GDP, this makes very much difference to final outcomes. Senator Stone —What is your judgment? Senator WALSH —My judgment, which is not just a judgment-I would claim that it is a rational belief, a tautology actually-is that in the long term the level of expenditure is determined by the level of taxation. In the short term it can be different. It was indeed very different when John Howard was Treasurer, as I said a few minutes ago. John Howard's policies endorsed a level of expenditure in excess of the level of revenue which left us inheriting a gaping $10 billion prospective deficit. In a note he wrote in the first week of March 1983, Senator Stone very properly chided Mr Howard for his fiscal irresponsibility in leaving that sort of mess behind him. While, in the short term, irresponsible Treasurers-of which Mr Howard was one-can maintain a level of expenditure well in excess of the level of government revenue, in the long term it cannot be done. Senator GIETZELT —My question is to the Minister representing the Treasurer and deals with taxation. Is the Minister aware that a number of Australian companies with major operations overseas have been calling for a scrapping of the Government's foreign tax credit system? Is it the Government's intention to accede to these calls? Opposition senators-You have already asked that question. Senator WALSH —Something seems to have gone wrong. That is exactly the same question as I was asked a while ago, which just shows how perspicacious and diligent members on the Government side are in thinking about these matters. They think that it is a good idea to ask questions about them, unlike the drongos on the other side. If it were not for Senator Stone, they would not have even asked what is self-evidently-or what appears to be-the question of the day. I have given an answer to that question and I will not attempt to repeat it because I would hate there to be any inconsistency between the answer I gave earlier in Question Time and the answer I could give now. I refer Senator Gietzelt to today's Hansard when it comes out. Senator PUPLICK —My question is to the Minister for the Arts, Sport, the Environment, Tourism and Territories. Is it a fact that production in the Australian film industry is now at its lowest level for a large number of years, primarily as a result of Government decisions? Is it a fact that in February 1987 there were some 64 film and television projects on the drawing board, whereas now there are only four? Is it also a fact that on 18 February Mr Punch promised that by the end of March there would be an announcement about future funding of the film industry, which promise has not been fulfilled? Is it the Government's intention to have a new film support scheme in place by 1 July? If the Government is committed to the development and maintenance of the Australian film industry, can the Minister explain why on 1 June 1988 the Government will introduce a new 20 per cent tax on film production and specifically on television commercial production? Having brought the film industry to its knees and having already reneged on the promise to have a new scheme announced by the end of March, can the Minister indicate why the film industry is now to be slugged with an additional 20 per cent tax on production? Senator RICHARDSON —I welcome the opportunity-that is the buzz phrase of the day-to put something on the record about the film industry, an opportunity I get far too rarely in this place. The level of film funding has dropped this year, given that changes in tax rates announced by the Government have had a profound effect on the usefulness of division 10ba of the Income Tax Assessment Act. That is obviously a matter of record. It was not until the end of February this year that the extent of decline in the industry was apparent and that was why the Government indicated that it would announce a new package for the film industry by the end of March. I will have to contact my colleague Mr Punch on this matter, but the last I heard was that the new package was going to Cabinet in a matter of days. We should not have too long to wait and Senator Puplick, along with all other senators, will have an opportunity to review it. Senator Stone —You are just about to turn the corner on that one too, are you? Senator RICHARDSON —I could not hear what Senator Stone just said and probably that is just as well. The package will be released very shortly and I will be pleased to discuss it with honourable senators in this place. Senator Puplick then asked about other taxes on the industry and suggested that these would deal some further blow. I have read in some newspapers in the last couple of days reports which suggest that some people in the industry are claiming that. I am not at all sure that that would be the case. Given that all of us in this country have to bear burdens for revenue raising, government tax measures must fall across the length and breadth of the economy. That is so in this case. However, I will try to get some more details for the honourable senator and, if there is anything further that I can usefully add, I will do so. Senator PUPLICK —Mr President, I ask a supplementary question. Will the Minister confirm the comment that he made in his answer that it was only in February 1988 that the full extent of the impact of tax changes on the film industry became apparent to members of the Government? Will he confirm, in fact, that the 20 per cent tax on film production to which I referred does, in fact, come into effect on 1 June 1988? Senator RICHARDSON —I think I should go back and explain for the benefit of Senator Puplick and anyone else who is interested that when I said that the full impact of the decline in 10ba funding was not evident until the end of February, I can recall that in November 1987 I went to the Screen Production Association of Australia conference in Surfers Paradise where I was given a whole range of different numbers that screen producers believed would come out for the end of the year. Those numbers varied dramatically because at that stage of the game it was simply too early to tell. Therefore, we waited a few months. I can confirm that the tax to which the honourable senator refers starts in a few months. I am not sure whether it is 1 June-I will have to check the exact date. However, I suggest that it is probably around then. Senator ZAKHAROV —Is the Minister for the Arts, Sport, the Environment, Tourism and Territories aware of the heightened interest in Australia's heritage, particularly its folk heritage, stimulated by activities related to the Bicentenary? Since the recommendations of the recent report on folk life in Australia are very relevant to this interest, can the Minister inform the Senate of when the Government is likely to respond to that report? Senator RICHARDSON —Obviously I am aware, as is the Government, of the heightened increase of interest in Australia's folk heritage. This interest has been growing for some time. The fact that we can release a report, to which I will now refer, in the bicentennial year is, I hope, an indication not only of the Government's commitment to the issue but also of a heightened increase in interest. In 1986 the Government commissioned a report into folk life in Australia that was sponsored by my Department and also by the National Museum of Australia, the former Institute of Multicultural Affairs and the Australia Council. A committee of inquiry into folk life held extensive consultations throughout Australia and reported in August 1987. That report was tabled in Parliament in February of this year. The Government would not seek to react immediately to this important study. Rather, if we are to focus on our nationhood, identity and sense of community, this ought best to be done after some extensive community consultations on the findings of that report. Copies of the report have been distributed widely and are available through government bookshops. Once public comment has been received, the Government will consider its response and, hopefully, within the next few months we will be able to make some announcements. Senator BUTTON —At Question Time on 21 April, Senator Lewis asked me a question about trading in offsets. I have a somewhat lengthy answer to that question for the honourable senator and ask that it be incorporated in Hansard. Leave granted. The answer read as follows- In answering a question by Senator Lewis regarding trading in offsets credits I undertook to provide a more detailed answer. The offsets program allows overseas suppliers to undertake activities to generate offsets credits to be applied to future obligations. Such credits may, with the approval of my Department, be transferred to another overseas supplier. Conversely offsets obligations may also be transferred where this approach will be beneficial to Australian industry but ultimately the offsets obligation remains the responsibility of the overseas supplier which made the original sale to the Government and incurred the obligation. Both of these forms of offsets transfer are described in the published guidelines for Australian civil offsets program and appropriate procedures described. An essential feature of these procedures is that the approval of the offsets authority must be obtained for any transfer. In regard to civil offsets few transfers of offsets credits have been approved, in detail these consist of: Company Transferring Credit Recipient Amount $A Rohr Industries, Boeing ... 21,301 Caterpillar, GE/CFM ... 11,000,000 Rolls Royce, Fokker ... 200,000 BAE, Rolls Royce ... 82,164 Caterpillar, Fritz Werner Austrustungen GmbH ... 873,879 Total ... 12,177,344 Taken in the context of the achievements of the civil offsets program as a whole which are well in excess of one billion dollars the transfer of credits of 12 million dollars in total is at this time about 1% of the program. All transfers of offsets credit in the civil area must be approved by my Department and are assessed on the basis of their contribution to the industry objectives of the program and the general criteria for approval of offsets. These include such matters as the resulting activity must be in addition to that which would have occurred in the absence of the program and the activity must contribute to the technological development of Australian industry. I am aware that the transfer of offsets credit is being promoted in Australia and I understand that such transfers occur between major USA corporations and other countries. While there is potential for disadvantages as well as advantages for our program in this environment I am confident that the procedures used by my Department will maximise the benefits to Australian industry. There have been some media reports recently regarding the concept of overseas insurance being undertaken in Australia as an offsets activity. Insurance related to the launch of Aussat B is a case in point. This has implications for the transfer of credits and I have not yet agreed to the general application of this form of offsets. The proposal is now under consideration by a working party of the Government Offsets and Procurement Advisory Committee. My reply does not address the matter of defence offsets and any questions in this area should be directed to my colleague the Minister for Defence. Senator COOK —On 20 April Senator MacGibbon asked me a question about government funding of the International Atomic Energy Agency (IAEA). I am now in a position to add to that answer. I am informed that the IAEA safeguards budget is met out of the IAEA regular budget. Australia has been a strong supporter of the IAEA since its inception and attaches particular importance to the effective operation of the safeguards system. We pay our full assessed share of the Agency's regular budget and, unlike some other contributors, we pay promptly. Under an existing safeguards financing formula we also pay more, proportionately, to the safeguards budget than do most of the Agency's members. At the same time, Australia's economic circumstances require that we pursue a policy of maximum expenditure restraint in all international organisations. Australia is currently in the process of reviewing the Agency's proposed budget for 1989. In regard to Senator MacGibbon's question where he refers to the funding of only 65 per cent of Australia's contribution, it would appear that Senator MacGibbon is confused with respect to what is the Technical Assistance and Co-operation Fund (TACF). Primarily, this funding aspect is administered through the Australian International Development Assistance Bureau and I understand such funding is in respect of technology transfer. Australia makes voluntary contributions to the TACF for which it receives an assessment based on its IAEA scale of contributions. Although Australia met its assessment in full in the years prior to 1987, in 1987 its contribution of $500,000 was only 56 per cent of the assessed contribution and in 1988 its contribution of $600,000 was 68 per cent of its assessed contribution. In order to provide some more information, I have a document from the Department of Foreign Affairs and Trade headed `Australia's Contributions to the IAEA Budget' which I table. Senator COOK —On 19 April I had a question without notice from Senator Harradine concerning brain transplants and the use of aborted foetuses. I am now in a position to answer that question. I am aware of the clinical treatment of Parkinson's disease sufferers in the United Kingdom by the utilisation of foetal brain cells. While this procedure is essentially clinical treatment rather than research, I am, however, aware that the Medical Research Ethics Committee of the National Health and Medical Research Council (NHMRC) has addressed the use of foetal tissue in its report entitled Ethics in Medical Research Involving the Human Foetus and Human Foetal Tissue. The report states inter alia that: dissection of the foetus should not be carried out while a heart beat is still apparent or there are other obvious signs of life. The consent of the mother and wherever practicable that of the father, should be obtained before research is undertaken. Under these research guidelines the obtaining of brain tissue from live foetuses would be unethical and not condoned in this country. In so far as Dr Kuhse's statements are concerned on this issue, neither the NHMRC nor, indeed, the Government is necessarily influenced by the personal views of particular researchers. Professor Singer's NHMRC supported project, on which Dr Kuhse is a co-investigator, is monitoring the development of techniques in the field of human foetal tissue, in-vitro fertilisation and embryos and is conducting research into the ethical, social and legal aspects of these techniques. I am advised that members of Professor Singer's research team are highly regarded in their fields and that the NHMRC considers their work of major importance in Australia at the present time. Dr Kuhse's viewpoint on this issue does not justify the withdrawal of NHMRC funds from this project. Finally, on the issue of foetal tissue transplantation, I believe that this throws up many questions of an ethical, legal and social nature. It would be a very foolish Minister who could pretend to answer all these issues without receiving considered and thoughtful advice on the matter. I would point out that the issue has already been considered in part by the Australian Health Ministers Conference in 1987, which has recommended that commercial exploitation of human foetal tissue should be prevented, and that jurisdictions introduce appropriate legislation. Further to this, the Commonwealth and State Health Ministers, Attorneys-General and Social Welfare Ministers have supported the establishment of the National Bioethics Consultative Committee. This Committee will provide advice to governments and this issue may be a suitable one for the Australian Health Ministers Conference to refer to the National Bioethics Consultative Committee. Senator REYNOLDS —On 21 April Senator Vanstone asked me a question about invitations to the rural women's survey launch. The rural women's survey was undertaken by the Office of the Status of Women in conjunction with the Country Women's Association. The findings of that survey were launched by the Prime Minister in Bathurst, New South Wales, on 8 February this year. The invitation list for the survey launch was drawn up in consultation with the Country Women's Association. The launch was intended to be a local event, and accessible to the local community. Invitations were limited to local community representatives nominated by the Country Women's Association and members of the Prime Minister's country task force, and the status of women Caucus committee, all of whom are taking an active role in distributing the survey and consulting with local communities on its findings. It is true that Opposition members were not invited to that particular occasion, as Senator Vanstone indicated. However, I believe that Senator Vanstone has been selective in her questioning. She has failed to point out to the Senate that the accompanying material, which I believe she also received, namely the invitation lists for the national agenda and women's suffrage banner launches, show quite clearly the difference between these national events and the local nature of the rural women's survey launch. Opposition politicians, including Senator Vanstone, were invited to attend both the national agenda and the women's suffrage banner launchings. Senator Knowles —This has nothing to do with the question. Senator REYNOLDS —It was a question about bipartisanship. It is unfortunate that Senator Vanstone declined to attend either of those two events to which she was invited. Perhaps Senator Vanstone should also recount to the Senate the arrangements that were made for her and/or her colleagues to be photographed with the women's suffrage banner before she lays charges of partisan politics. I have already indicated that Opposition members were not invited to the rural women's launch. To those members who would have liked to have been there, I am quite happy to apologise that they did not have the opportunity to be there. Now that I know they have an interest in these matters, I will ensure that on the next occasion we work on such local events, their names are on the mailing list. Senator WOOD(New South Wales) —by leave-In an article about violence in New Caledonia which appeared in the Daily Telegraph on Saturday, 23 April, I was quoted as having warned tourists to stay away from the area and as saying that more violence could erupt. In fact, when I was asked what advice I had for tourists, I urged tourists to boycott New Caledonia-to stay away from New Caledonia and to write to the French Government explaining why they were boycotting New Caledonia. It did not indicate in any way that I thought tourists were at risk in New Caledonia. As far as I am aware, there has been no violence directed towards foreign tourists in New Caledonia and I do not expect that there will be. I certainly did not warn Australian tourists that they may be subjected to violence there, although I did urge tourists to boycott New Caledonia. The PRESIDENT —I have received a letter from Senator Alston proposing that a matter of public importance be submitted to the Senate for discussion, namely: The precarious financial situation confronting Aussat and the need for the Government to take urgent action to ensure its viability. I call upon those senators who approve of the proposed discussion to rise in their places. More than the number of senators required by the Standing Orders having risen in their places- Senator ALSTON(Victoria)(3.13) —The precarious financial situation of Aussat Pty Ltd should be addressed urgently by the Australian public because it is quite clear that the present Government proposes to do nothing at all about it or a whole range of public trading enterprises until at least the Australian Labor Party (ALP) National Conference. The tragedy is that, in the meantime, Aussat will be bleeding to death. Australia's national satellite system was established by the previous Government in the early 1980s in the fond belief that, by making available 49 per cent of its share capital to the private sector, there would be sufficient funds available to establish a national satellite system. Aussat, with enormous start-up costs and, understandably, very little by way of operating profits, has reached the situation where it now faces some very serious financial decisions. Yet the Government, for its own political reasons, refuses to do anything about that crisis and has effectively washed its hands of the matter. The facts are these: Aussat was established finally by the present Government with a $75m injection of funds from the Government and $25m from Telecom Australia. Since then it has accumulated losses of $96.2m. It is expected that in the current financial year it will return a loss of $10.2m. Originally it was granted $455m worth of borrowings. It has drawn down and expended in excess of $430m. So its financial position is fairly clear: it is gravely short of funds. Because of the limited life of the first two of the three first generation satellites which have been in orbit, it will be necessary for some crunch decisions to be made. There is to be a board meeting of Aussat tomorrow which will have to address this vital question. The board will be confronted with a choice as to whether to embark on a $600m, at least, contract for second generation satellites or a scaled down option, allowing the third first generation satellite to stay in orbit for the rest of its natural life, which would perhaps take it through to 1995, and then launching one second generation satellite and leasing some space on Intelsat VII. If that is done, Aussat will be looking at only a mere $350m. Those sums of money are very large indeed. They are not sums that can be appropriated lightly by government. The present Government has shown a massive disinclination to make funds available to a whole range of public trading enterprises-for example, the Commonwealth Bank of Australia which, on one view, needs $1.6 billion; Qantas Airways Ltd, which needs probably $600m to $1 billion over the next three years; or Australian Airlines, which already has had to defer the purchase of A320s at a cost of $650m. A whole range of enterprises are pressing the Government for additional funding. The crisis that confronts Aussat will come to a head in a most unsatisfactory manner because the Government, with its blinkered ideology, will not take the only rational course available to it, and that is to put the risk of capital fund-raising into the private sector where it belongs. That decision will have to be made against the background and with the knowledge that Aussat's prospects of being able to fund borrowings of $280m-if one goes for the $600m contract-let alone finance the balance out of accumulated earnings over the next five years, are minimal. Therefore, it stands to reason that if Aussat were to operate in accordance with its charter under the Satellite Communications Act, it would not be able to operate on sound commercial principles. It simply does not have the capacity to raise those funds in the marketplace. Yet what will happen, one suspects, is that the Government will be forced to underwrite that first set of borrowings and guarantee implicitly the fulfilment of the contract. That very disturbing situation has come about because of the massive inertia and inaction on the part of the Government over the years it has been in office. One very disturbing matter which is not known in the public arena is that in 1982, when Aussat was being put onto a commercial basis, it was necessary to borrow a significant quantity of funds in addition to the $100m from the Government and Telecom. In order to obtain that bridging finance, which was of the order of $455m, the commercial bank consortia insisted on a letter of comfort from the Commonwealth to make it clear that the banks were concerned about the debt-equity ratio, which then stood at about 5 : 1. It insisted that a letter of comfort be provided in the following terms: that the Government give an explicit assurance that the debt-equity ratio would not fall below 350 : 75 during the term of the bridging finance. That is what the Government did. In June 1982 it provided that guarantee. That guarantee in relation to the bridging finance continued for the life of those loans-until April 1985. Yet it is quite clear, from all we know from the annual reports and elsewhere, that there has been a significant deterioration in the gearing of Aussat, to the point where the debt-equity ratio, on one view, could be regarded as 117 : 1, if one simply takes the accumulated losses and sets them off against the extent of the borrowings. Yet this Government has not honoured that letter of comfort. It has allowed it to be ignored. It has allowed Aussat's financial situation to deteriorate to a point where the commercial banks would not have a bar of providing any funds whatsoever for Aussat unless they were assured of an explicit guarantee. That is what will be put upon the Government in the near future. The proposal at the moment, from a board which is deeply divided about Aussat's future prospects and future investment strategies, is likely to involve asking the Government to sanction the entering into of the contract to purchase the second generation satellites next month. That will then confront the Government with a very serious capital funding decision. Where that decision is fundamentally wrong and unnecessary is that it does not need to be taken by the Government at all, and the Government does not need to become a guarantor. The taxpayers of this country should not be put into a position where there is a very real likelihood that they will have to cough up some hundreds of millions of dollars in due course. That is a risk that should be taken by the commercial sector. It is quite clear that there are many in the private sector who would be prepared to take that risk. To the extent that they are not, that is the consequence of not having a commercial enterprise. We would propose that Aussat should be wholly privatised, that it should be the responsibility of the private sector to make those crunch decisions, to put it into a profitable situation where it can generate earnings that will be sufficient to fund its debts, otherwise it will go to the wall. If it is not to go to the wall, it could be taken over by or merged with the Overseas Telecommunications Commission (Australia) (OTC), which I suggest is a very rational approach, but again one that is highly unlikely to be contemplated by this Government. Senator Schacht —Do you believe OTC should be privatised? Senator ALSTON —Certainly, OTC should be 100 per cent privatised. If there were a merger between the two, OTC, which does have significant profits, would be able to make decisions which would be compatible with the future of the national satellite system, which would be able to take account of OTC's long held expertise in negotiating with Intelsat. It would then be able to provide domestic tails for international calls and we would have end to end service, which would be much more efficient and effective than the present competitive arrangements. In many ways there is a very serious conflict of interest in the present situation, and not simply because, as a result of its injection of funds, Telecom has two directors on the board of Aussat who undoubtedly would have a different view of the world and who would prefer that Aussat not expand its operations and that it remain an indigent relative, that it work in close association with and probably under the aegis of Telecom, and that ultimately it be restricted in its range of activities. Certainly Telecom would take the view-and I am sure this Government will too, in its frantic endeavours to protect the monopoly situation of the basic network and all that hangs off it-that Aussat should not be allowed to compete on the switched network, that Aussat should not be able to make available resale capacity for those who lease or buy transponder space, that Aussat should not be able to provide a range of services by way of direct broadcast or otherwise that would obviously be available to it if the Government were prepared to face up to real marketplace decisions. I suspect that Alan Ramsay, who made a point of characterising the unfortunate and hapless Minister for Transport and Communications (Senator Gareth Evans) in terms which could have him described only as a badly bruised Biggles, blames him for almost all of the privatisation foul-ups that have taken place to date. But it is clear that whoever is at fault, the fact remains that there are going to be virtually no real privatisation initiatives from this Government. It has been kicked to death from all sides, by Caucus, by the State organisations and by the left wing of the Labor Party and, in due course, by the National Conference. That means that the Government and this Minister will be in no position to take those decisions which they know, in their heart of hearts, are not only rational and desirable but also put the risk where it ought to be-and that is not confronting the taxpayers of Australia but confronting those in the marketplace who are prepared to make those decisions and to put the money up front. If the money is not there and if the market is not there, they will not put it up. That, of course, is part of the major problem. This Government has a conflict of interest in its present ownership of Aussat, because it is not prepared to jeopardise Telecom's monopoly and it is not prepared to give Aussat those-- Senator Schacht —Do you support privatisation of Telecom? Senator ALSTON —I will deal with that on another occasion. There is a lot to be said for making Telecom a lot more competitive than it is at the moment, and I know that the honourable senator knows that too. Let me deal with what the Auditor-General had to say about Aussat's current financial position in his certificate issued in September last year, because I think on close examination it becomes rather dated and gives rise to a particular concern. As a result of the accumulated losses, one would have thought at first blush that Aussat had virtually nothing left by way of shareholders' funds, but by a cute accounting trick we have a situation where the Board, aided and abetted by the Auditor-General, has put forward in the annual report that Aussat has accumulated losses of only about $59m. That is achieved by the following device: by the application of accounting standard 3, future tax benefits are able to be carried forward if the ability of the company to realise that benefit is virtually certain. The standard goes on: This test of virtual certainty will only be met in rare and exceptional circumstances. Bear in mind that the Auditor-General is the only one who has had access to contracts with the Australian Broadcasting Corporation (ABC), which has currently in excess of one-third of the transponder space, and Bond, who has a strategic overholding at the moment, a position taken no doubt in anticipation of a deregulation of the market, and perhaps the sale of Aussat, but undoubtedly Bond will be sadly disappointed and will need to scale down the extent of the demand for Aussat's transponder usage. If that is the case-and no-one else has seen those contracts-one has very serious questions about how one can be virtually certain that future income streams are going to be able to fund that acute debt service problem that will undoubtedly arise if the second generation contracts are approved. I would like to quote from one rather odd source-odd for my purposes-and that is a document recently released by the H. V. Evatt Research Centre on the capital funding of public enterprises in Australia. It states that in 1985-86 and 1986-87, the stated future financial objectives, including improving gearing ratios through accumulation of reserves, were an Aussat objective. That has certainly not come about. It goes on to state that there has been an obvious lack of available information on pricing policy and there exists some grounds for concern on overall marketing performance. But most importantly, the report states that in the absence of a further injection of equity by government, the debt-equity ratio will be higher than management considers appropriate. Then it recites that Aussat currently forecasts post-tax profits of $20m by 1990, rising to $30m by 1995. That is very small beer indeed. It is quite clear that on those figures Aussat will not be in a position to meet its debt funding obligations, and it will need to call upon the guarantees that the Government will no doubt in due course provide. That will be an outrage. It will be totally unnecessary and a reflection of the Government's ideological commitment, its blinkered approach to the whole question of privatisation, its refusal to allow the marketplace to operate in this area and its refusal to give Aussat the market space that it so desperately needs. I have to say that Aussat is doing its best, but it is so encumbered by such restrictions that it is in very real danger of bleeding to death. It is now close to bankruptcy and, through the fault of the Government, those funds, if funds are to be made available, will be ones that the taxpayer will, in due course, be asked to provide. That is a very sad situation, because it is unnecessary. The Board will no doubt be confronted with that decision about whether to suggest a large or small second generation purchase, but ultimately, of course, the question is whether future borrowings can be justified at all. There is a lot to be said for the proposition that, given the way the market is structured-and Telecom very quickly is getting its optical fibre network into place-there may well not be a great deal of demand for Aussat services, unless it is able to provide a multipoint service, direct broadcasting to remote areas and elsewhere and extensions of its recently launched Starnet arrangement. Aussat's viability will depend largely on Telecom's pricing of broadband services and that will be very much a function of Telecom's optical fibre capacity. As that expands, Aussat undoubtedly will lose business. It will not be allowed to compete because of the Government's refusal to put Telecom at risk and its refusal to deregulate the telecommunications industry-and we will hear about that, no doubt, over the next month or so. Honourable senators can rest assured that this Government has utterly capitulated to the Australian Telecommunications Employees Association and others and that there will be perhaps a few cosmetic concessions, but essentially it will be the status quo. We will not see any competition in the telecommunications industry. That will be a function of a desire to protect Telecom at all costs and, as a consequence, to send Aussat down the drain. It is against that background that taxpayers are entitled to ask: Why should we be expected to underwrite borrowings and future streams of income, up to $600m, and why should we be expected to allow these conflicts of interest to continue? Why should OTC want to expand its use of Intelsat when Aussat would like to expand into the South Pacific through Fiji, the Solomon Islands and New Zealand? The answer is that that does not have to take place if there is a merger, but because of the Government's conflict of interest and its craven support for the Telecom position, it will ensure that Aussat does not have that capacity to compete. Aussat is desperately hoping it will be able to create new demand, especially amongst outback truck drivers and remote rural property holders. But the market is likely to be very competitive and there will be long lead times. If that is the case, one can well understand why no commercial bank would be remotely interested in taking the sorts of risks that would be necessary to provide those funds. Ultimately, the reality is that Aussat faces a grave financial situation. It is in a position of crisis because of the inability of this Government to act, because of its pusillanimous response to all of the pressures upon it on all sides, its craven capitulation to the forces of antirationalism and a Minister who is very much under threat, even from such staunch ALP journalists as Alan Ramsey. I can understand why it has all become too hard for him-but it is a bit unfair for the rest of the community who will be asked to pick up the tab and it is very unfair on Aussat when it is not being given room to expand and develop or given the ability to raise funds in the private sector which it so desperately needs. Senator GARETH EVANS(Victoria-Minister for Transport and Communications)(3.33) —The Government rejects absolutely the terms of this matter and the supporting argument that Senator Alston, that scourge of cross-subsidy and of rural Australia, that fierce deregulator and maniacally pro-private sector competition person, has put before us today. His credentials ought to be well understood because they misinform every aspect of his contribution to this debate. Let me say right at the outset, in dealing with the question of Aussat Pty Ltd, that it has always been recognised that a national satellite system was a high risk venture. I make no apologies for that; nor does the Government; nor do our predecessors. We knew that and we entered into it on that basis. The point I want to make very strongly today is that the major risks associated with the first generation of satellites are now behind us with, first, the successful launch and now the continued operation and increasing utilisation of the total system. An increasing utilisation is fully expected of the Aussat satellite, albeit perhaps in not quite the way that was originally predicted. With the development of technology that continues to occur, the character of Aussat services has evolved and developed. The Aussat system was always directed towards broadcasting and telecommunications. While that dual purpose remains, the truth is, as Senator Alston has indicated, the development of fibre optic technology will alter in a quite significant way the telecommunications side of the market, meaning that Aussat will need to rely increasingly, comparatively speaking, on broadcasting and specialised services which are emerging in response to the specific opportunities and unique capabilities of satellites, such as point to multipoint services and communications links to remote areas. Notwithstanding this development and evolution of the concept of what a satellite system might bring to this country, there is no doubt that utilisation patterns are increasing and that Aussat is perfectly capable of remaining viable. Before we get into the detailed questions of finance that have been raised, it ought to be appreciated just what an extraordinarily diverse range of services are already being provided through the satellite system. So far as people living in remote parts of Australia, who have been the primary beneficiaries, are concerned, the list really is substantial. There are the Australian homestead and community broadcasting satellite services (HACBSS); the remote commercial television service, which is operational in Western Australia and central Australia, and which came into operation in north-eastern Australia just yesterday; Telecom Australia's service providing communications to customers in remote areas, the Itevra service; the State specific government communications network, Q-Net, which has been operating in Queensland. There are also specialised networks in the provision of data and other communications links for remote mining and construction sites. Other services that Aussat provides include the distribution by the Special Broadcasting Service of its television programs to reach most capital cities and a large number of provincial and regional areas; the national satellite based commercial radio news gathering and distribution network, Macsat, run by the Macquarie Broadcasting outfit. Other satellite distribution systems are either in the process of implementation or planning in the commercial radio scene. There is the distribution of newsagency information and other data services run by Australian Associated Press; also the establishment of a range of private video, voice and data services for a wide range of governmental and corporate sector users. There is the distribution to hotels and clubs of video entertainment and information services on a subscription basis-Sky Channel-and there is the Starnet corporate data service. That is a pretty formidable list when those bodies are put together. It can be said with some confidence and accuracy that Aussat obviously is providing a range of communication services with a very great deal of value, covering the whole domestic, commercial and industrial range of needs of the Australian population. What then of Aussat's finances and financial prospects, against that background? Let me lay to rest right at the outset the suggestion that Aussat is in a precarious financial position and heading rapidly towards eventual bankruptcy-unless and until Senator Alston's preferred scenario eventuates and massive new opportunities can be created for Aussat in its service delivery and marketing arrangements and, in particular, the capacity to make major inroads into Telecom's present monopoly provision of basic network services. I simply say that none of that is necessary-quite apart from its desirability, and we do not share Senator Alston's view of the world in that respect. None of it is necessary to guarantee in any way Aussat's financial situation in the future. On the contrary, Aussat is steadily and deliberately heading into a profit situation. While present revenues of Aussat are slightly below original plans, as I have acknowledged in papers I have distributed, so, on the other side of the coin, are some of the costs. It is still fully expected that Aussat will move into a position where it will be able to pay dividends to its shareholders-that is, the Government directly-and to Telecom. Aussat has healthy cash flow, currently running at around $64m a year, which is more than sufficient to meet its commitments. The Aussat balance sheet, which has been fully approved by the Auditor-General without qualification, showed net shareholder funds of $59.2m at 30 June last year. The current figure is $54.4m. Senator Alston —Is it as at September last year? Senator GARETH EVANS —I am telling the honourable senator what the current figure is. It is $54.4m at the moment. To my mind, that does not represent a significant run-down in the total environment that we are presently living in and evaluating. It should be recognised when all this is put into context that Aussat is still properly described as a new company. It came into existence only in November 1981 for the purpose of establishing, owning and operating a national satellite system with ownership that now comprises 75 per cent Commonwealth, 25 per cent Commonwealth indirectly through Telecom. From 1981 to 1985 Aussat's principal activity was just that: the design, construction and installation of the satellite system-not its operation, because obviously it had to be put in place. During this time Aussat could have no revenue simply because it had no services to market, but it did incur heavy expenditure to commission the satellites and earth stations that were necessary for its operations. That heavy up-front expenditure, and the lack of revenue early in its operations, of course meant that Aussat had to bite deeply into shareholders' capital. The initial equity of $100m that was vested in it took that into account. The up-front cost was judged to be acceptable in the wider national interests such as remote broadcasting and so on of the kind I have described. Aussat's financial forecasts have always been that it would start to show a profit in 1989-90. In fact, my latest understanding is that Aussat could produce a small profit in 1988-89, a year earlier that has been expected. Revenue has increased rapidly over the period of its operations, while expenditure has tapered off with the launch and commissioning of the third satellite in September last year. The revenues for the last three financial years have been as follows: for 1985-86, $28.6m; for 1986-87, $73.7m; and for 1987-88 an estimated $93.4m. That increasing revenue has itself been directly translated into decreasing losses. The net operating losses for the same period have been-if one tabulates them side by side one will see the force of what I am saying-for 1985-86, $42.6m; for 1986-87, down to $35m; and for 1987-88 an estimated $12.1m only. Next year, 1988-89, will be the first year in which all three satellites will be operating and as a result Aussat will be able to benefit fully from the market provided by the substantial investments involved. I am told that at present Aussat has contracts covering 75 per cent of all its available transponders and is actively marketing its remaining capacity. I am also told that by international standards that involves very high utilisation of available capacity. In this context it should be mentioned that the delay of some 13 months in launching Aussat III which was caused by a failure of the Ariane rocket in early 1986, quite naturally delayed the start of a number of services. But in accounting terms Aussat remains in a relatively sound position for a new venture in a previously untested market. It has undertaken the bulk of its initial capital investment and is moving towards generating sufficient profits to repay its loans and produce a dividend for its shareholders. Management accounts, which will be considered by the Aussat board at its next meeting, show that in March 1988 the company recorded its first monthly accounting profit, of some $3m. In cost terms Aussat is already sustaining itself. It is generating sufficient revenue to more than cover its operating expenditure and its loan commitments. What that simply means is that, short of a disaster, no additional equity injections will be required by shareholders to support Aussat's activities. I turn to the suggestion that Aussat is somehow masking its true financial position by offsetting its operating losses with future tax benefits, the bit of scuttlebutt that had a run in a couple of newspaper reports and was seized upon assiduously, as one might expect, by Senator Alston. Whether he was inspired by it or whether in turn he inspired the newspaper comment in question must remain a matter of speculation. I would remind honourable senators that Aussat is a public company registered under the Companies Act and is legally required to pursue the accounting practices expected of all public companies. Its treatment of past losses is a perfectly proper accounting practice. It has been accepted by the Auditor-General in his approval on an unqualified basis, as I have already indicated, of Aussat's accounts. Having said that, and indeed having said everything that I have put on the record, it cannot be denied that there are risks involved with Aussat's business. It has to maintain a high usage of its available capacity to ensure that a higher level of revenue continues. There is also the possibility, although remote, of an unexpected failure in the system, once launched, but that would be most unusual. In short, Aussat is performing as would any new company which has made a very large capital investment, and is now moving to a position where its revenue will start to yield operating profits and dividends to its shareholders. I have not touched on Aussat's proposal for the next generation of satellites, and I do not propose to do so. The Aussat Board will be deliberating in the very near future on tenders before forwarding its recommendations to the Government. It would be quite inappropriate for me to address that in any detail at the moment. All I say is that the Government will give very careful consideration to Aussat's proposals. It will scrutinise in minute detail the future financial prospects and the returns to the community from the new generation satellites before giving any go-ahead. No-one can assume that those decisions have already been made. They remain to be made, and will be made on the basis, as I have said, of the most minute scrutiny of the costs and risks involved. In the meantime, there seems to be little reason objectively, whatever might be the case politically, to doubt Aussat's current financial position. It certainly does not require any intervention by shareholders to support its continued operations. It certainly does not require any of the fundamental upheaval of the telecommunications delivery system of the kind that is so dear to the Opposition, or more particularly to Senator Alston, in order to secure its financial viability. On that basis the defence rests. Senator POWELL(Victoria)(3.47) —Today we are discussing a matter of public importance relating to the precarious financial situation confronting Aussat Pty Ltd and the need for the Government to take urgent action to ensure its viability. A good argument can be made that Aussat should never have got, shall we say, off the ground and that it was started for the benefit of Bond Media Ltd primarily. Senator Schacht —Packer. Senator POWELL —I am sorry-Packer. But we should also remember in this context that it did get off the ground in the period of a former coalition government. That having been said, we had better address the future. It is an issue that is of concern to a great many Australians. I certainly welcome the opportunity to be involved in this debate today on behalf of the Australian Democrats. However, while Aussat has sustained some large losses-and it will be recalled that its after-tax loss last year was $18m-it has also dramatically increased its revenue. Although Aussat may or may not be profitable within the life of the first generation, it has begun to address the fact that the Government may not continue to devote large amounts of finance to it. Perhaps today's debate is, as much as anything, a result of speculation caused by the general trend of this Government towards privatisation, a trend away from the support of public institutions and authorities. Therefore, the Government cannot have any strong objection to the fact that these sorts of debates are raised and that they raise broader concerns in the community in as much as they arise out of that trend which we are seeing with this Government. This debate and some of its consequences are raised by considerations which appear to be taking place within the Government. Issues such as potential mergers of Aussat, Overseas Telecommunications Commission (OTC) and Telecom Australia and the prospects of privatisation or deregulation, or both, of any or all of those organisations are part of this broader debate. It has been pointed out by industry sources that, although the Hawke Government was prepared to make a commitment not to sell OTC-Aussat following any merger, it would, of course-and after today's contribution from the Opposition it becomes clearer and clearer-be first in line for privatisation if a Liberal-National Government were to come into power. However, I shall say more about that later. Aussat is addressing the whole question of its financial viability and its future. That is a current matter for Aussat. It has looked at scaling down the second stage of new satellites, as part of that process, reducing potentially the cost by $600m for the new satellites. This proposal would involve a downgrading of transponder power from 50 to 30 watts and by the possible launching of the Chinese `Long March' rocket. These sorts of considerations are quite appropriate, as indeed is perhaps the possibility of abandoning, at least for now, the second generation altogether, as part of the deliberations of Aussat in the current situation. Certainly, in commenting on that part of the debate which raises questions of merger, coordination and cooperation between the various telecommunications institutions, Telecom, Aussat and OTC, the Australian Democrats acknowledge that, greater coordination is needed. This need has been acknowledged by the Telecom Chief General Manager, Mr Bob McKinnon, I refer to an item published in the Australian of 18 November last year, where, through Mr McKinnon, Telecom called on the Federal Government to allow it to work more closely with Aussat and OTC to ensure that Australia maintains its position in the increasingly competitive world telecommunications market. Quoting from the report, Mr McKinnon pointed out, quite rightly, that: With the rapid changes in the global scene, as well as our own local scene, we now have to look with more imagination than in the past to achieving a result which is good for the country and good for all our consumers. One question that needs to be kept firmly in mind in debates such as this is the matter of obtaining a result that will be good for our country and for the consumers of products services by Telecom, Aussat and OTC. In a debate like this it is not helpful to take entrenched ideological positions which, in the end, are not really concerned about the fundamental good of the nation and its people who depend on these services, and who need these services to be up-to-date, well coordinated and able to provide the best possible service, in the context of new technologies, and so on. There is no doubt that there are potential benefits of administrative rationalisation. While the Government has ruled out a merger between Telecom, OTC and Aussat, as I have said, the possibility of an OTC-Aussat merger has been, and I believe ought to be, looked at quite seriously. In the context of this debate, it could also help in fulfilling the capital needs of Aussat. However, one very important point that I would make here is that the Democrats reject the proposition put by Senator Alston in his contribution to this debate that Aussat should be privatised. In that scenario, there would be a need to make Aussat attractive enough to a buyer, and that would involve giving Aussat access to the lucrative Sydney-Melbourne telecommunications network. That, of course, would destroy straight away Telecom's cross-subsidising price structure, and therefore it should be rejected outright. Of course, the most likely buyer of Aussat would be none other than Bond Media, and if the Bond organisation owned Aussat it could swing the satellites around in order to cover its interests in Chile and other parts of the Pacific. As with a number of other debates that are current at the moment, I find it interesting that the view from within the coalition Opposition does not seem to be a terribly unanimous one, because the very points that I have made about the likely purchaser of a privatised Aussat and about the likely result of the purchase of Aussat by Bond Media have been made constantly by Ian Macphee, a prominent member of the Liberal Party. At this stage I shall make a couple of additional points, which were also made by Ian Macphee as recently as 2 March this year in relation to this issue. I refer to some comments that he made on the ABC PM program of 2 March 1988, when he said: Well, if it was simply sold as it now is, nobody would buy it. It's so heavily in debt and another $600 million has to be allocated to it. He then went on to express the concerns that I have also expressed. I think that is really the crunch issue when it comes to questions of privatising, especially in the context of an instrumentality which is looking for further capitalisation. The worry, however, for the Democrats is that both sides of parliament seem at the moment to be obsessed with staying on Bondy's Christmas card list. We do not feel too secure hearing Senator Alston being very upfront on the issue of privatisation, with perhaps the Government so far being not quite so upfront, because the Government, having destroyed television ownership to accommodate Bond and others and having turned a blind eye to Bond's monopoly on the television in pubs and clubs, is now looking at inviting Bond into the telecommunications arena here in this country. The Democrats believe that that proposal should be knocked on the head. The Opposition's policy of complete deregulation of communications has got it in rather a mess, too. As well, the Government's devotion to its mates over and above the interests of ordinary Australians has landed it in hot water with its back bench and, of course, most notably, with its voters. On the question of privatisation of Aussat, or indeed more generally, it seems that there is this rather knee jerk reaction involved, a sort of what I call Animal Farm mentality, where the notion of the pigs in Animal Farm was `four legs good, two legs bad'-a knee jerk reaction to an issue. I think in the case of privatisation the point is put this way: Investment by private sector, good, but investment by public sector bad. This, of course, is something that the Australian Democrats consistently question. In relation to the argument concerning the investment that needs to go into Aussat from the private sector, that is, money that comes from Bond et al, where is the inherent good in that? Are we not suffering at the moment from a foreign debt substantially in place because of the foreign borrowings that are taken to make such investments, with many of them highly unproductive and negatively geared within the corporate structure, and to the detriment, to the extent of at least $2 billion, of the Australian taxpaying public? I cannot see where the good is in that. On the other hand, there is the matter of a commitment by the Government to support, and to underwrite wherever it is necessary, the injections of funds that are necessary. Possibly some thought could even be given to the question of who it is that creates credit in our economy. That is an issue that perhaps ought to be looked at. Of course, there is a body of thinking very much against the view that public sector investment is necessarily bad. Apart from negative gearing, there are other issues involved with the reflex action that investment from the private sector is necessarily good. What about the public interest, and what about issues such as diversity, particularly in relation to media and communication, which is what we are discussing at the moment? Surely there is a role for government to ensure that diversity and in particular access apply in such industries. What about conflict of interest within the corporate sector, because in the telecommunications industry in particular that issue should be addressed? What about issues of national interest, to which I referred earlier? What about the point that decisions which are made in telecommunications generally must be made in the national interest? When one thinks about the Bond connection with Chile, that is perhaps an area where questions should be asked. In relation to the developing international links in telecommunications, which of course are inevitable, I believe, as do the Democrats, that the Government has a responsibility to overview that general area in the community interest to see whether hotel channels should bring us, for example, mud wrestling from Indiana, or whether the Government still has a large role to play and can provide Australians with something just a little bit different and a little more significant. However, on all sides of politics it is important to become serious and ensure the long term viability of Australia's telecommunications and satellite industry. Senator BISHOP(New South Wales)(4.02) —In his opening remarks I think Senator Alston set the scene very well, that is, that the matter is serious and that Aussat Pty Ltd is truly at risk. He then outlined the type of action that needs to be taken. In response, the Minister for Transport and Communications, Senator Gareth Evans, said that he may not share Senator Alston's view of the world, but he then failed to share with us what his view is. In response he gave one of the better examples of his woolly words, to which we have become so accustomed, to evade and talk around the issue and pad out the time; in fact he gave us no indication as to what the Government is truly attempting to do. I was looking for an argument of substance during the entire time that he spoke to justify the apparent deliberate strategy being pursued by the Government to place Aussat's financial viability in trouble. The Minister's only positive statement in favour of Aussat was that it was viable in accounting terms. That was the only time that the Minister made a statement to the effect that Aussat had a definite future. The Minister stressed the riskiness of the very nature of Aussat's business. I refer to a Caucus discussion paper prepared by the Minister, which states: Aussat will have substantial requirements for financing the proposed replacement satellites which are scheduled to be launched in 1991-92. The estimated capital cost is approximately $600m. The program is planned to be funded from retained earnings and from additional borrowings of up to $280m for which Loan Council approval will be required. However, at no stage today did Senator Evans say that Aussat had any real prospect, without subsequent Government action, of keeping to its game plan and, indeed, becoming financially viable. Aussat faces many problems, and among them is its inability to compete fairly against Telecom Australia. Indeed, it could be said that the high hopes with which Aussat began in 1981 have been considerably reduced as a result of the operating restrictions which prevent it from competing fairly with Telecom and because it is under-capitalised. Both of those reasons can be regarded as flowing from the Government's lack of honest commitment to the future of Aussat. When Aussat was established by the Fraser Government in 1981 the intention was that 49 per cent of its shareholding would be offered to the general public and that 51 per cent would be retained by the Government. When this Government came to power, it changed the way that Aussat was to operate when it introduced the Satellite Communications Act of 1984. In so doing it took 100 per cent ownership of Aussat and allowed Telecom to own 25 per cent and have two members on the Board. In fact, the Satellite Communications Act provides: . . . primary object [of Aussat] is the carrying on of the business, in accordance with sound commercial principles, of providing- (a) a telecommunications system for Australia by the use of space satellites; and (b) space satellite facilities for use in telecommunications systems for neighbouring regions. By placing Telecom directors on the Aussat Board and giving Telecom a 25 per cent holding in Aussat, the Government has placed tremendous restrictions on Aussat's ability to operate. The potential conflict of interest that must be continually faced by those Telecom directors cannot be overstressed. It is no secret that Telecom strenuously opposed the establishment of Aussat, and one can seriously ask whether all the actions which have resulted in Telecom striving to maintain its monopoly have been devised by Telecom itself simply to protect that monopoly. The other day I asked a question about telecommunications and telephone link-ups to central Australia and the outback. In his reply Senator Evans used the sort of rhetoric with which we have all become very familiar when we get into an argument with Telecom. In fact, does any senator know anyone who has ever won an argument with Telecom? Telecom, very simply, has a monopoly, and it continually wins all arguments. If you say that your telephone bill is wrong, Telecom simply tells you to pay up or it will take away the service. So we come to the argument of Telecom versus Aussat and that of competing technologies. We also come to the up-to-date technology possessed by Aussat, the use of satellites and the ability to provide communications not only Australia-wide but right throughout the important Pacific region. We then see Telecom's response to that technology. Telecom was not content with owning 25 per cent of Aussat, and it was not even content to set up its own arm to sell earth stations to compete with Aussat. Instead, to compete with the new satellite technology, Telecom wanted to establish a digital radio concentrator system. One might well ask what that is. Basically, it is a system of lines which every 40 kilometres across Australia has a microwave tower to continue the signal. The cost of such a system is in the vicinity of $400m. Interestingly enough, Australia is the only country in the world to have such a system. Telecom would probably say that it is having discussions with China and that it is hopeful that China might think that this is a good system too. Where on earth is the rhyme or the reason that allows a monopoly such as Telecom to take a decision in an untested manner to set up an alternative system to Aussat's satellite system? Very simply, the answer is if it did not do so it would lose its monopoly. In the whole argument about telecommunications and the need for us to provide services to the outback of Australia, again and again the flaws in the argument which show up come right back to the point that it is always Telecom's protection of its own monopoly that is the guiding force. Let us take a good example. Let us take the example of the sale of private networks. Under the legislation Aussat is committed to provide private networks. However, Telecom is the regulator that says to whom and with whom they may be set up. All who are engaged in the industry want an independent regulator. They want that function taken away from Telecom. Let us look a little more at this. Suppose that Aussat goes out into a mining town in outback rural Australia-a town such as the ones about which we are always hearing from people who attempt to oppose privatisation of services on the basis that cost subsidisation can be maintained only with government owned services. Let us try the example of private services provided by Aussat. Such services could also be provided by Telecom. However, in the event that one buys such a service from Aussat one is required to pay an annual interconnect fee of $2,000 per line, which is by way of a social contribution because one will be avoiding subscriber trunk dialling charges. This is so outback communications can be subsidised. In other words, an outback company or system of subscribers will be told that they have to pay a subsidy to subsidise themselves. Where is the logic or the sense in the argument, unless it is very simply to enable Telecom to maintain the monopoly which it regards as so precious? Last year in an article in the Bulletin entitled `Aussat launches a space industry' Laurel Allen wrote: The threat that satellite technology posed to the established order in Australia was one reason why institutions and their loyal outriders put up a battle to block what became Aussat. They did not block its formation, but they are certainly blocking its efficient operation. What Aussat needs is the opportunity to compete fairly. I suggest that if one looks at the Telecommunications Act 1975 and reads the duties of the Commission one will realise that Telecom needs to read its Act a little more closely as well. Section 6 of that Act says: The Commission shall perform- not may perform but shall perform- its functions in such a manner as will best meet the social, industrial and commercial needs of the Australian people for telecommunications services and shall- not `may'- so far as it is, in its opinion, reasonably practicable to do so, make its telecommunication services available throughout Australia for all people who reasonably require those services. It goes on to say in subsection (2) of that section: . . . the intention of the Parliament expressed in section 7 of the Satellite Communications Act 1984- it is so important that it is set out in the Act itself- namely, the intention that the telecommunications systems provided by the Commission and the telecommunications system provided by the company AUSSAT Pty Ltd (being the company described in the definition of `Aussat' in section 3 of that Act) by the use of space satellites within the meaning of the Act will- not `may'- provide the national communications network for Australia. Therefore, even in the legislation itself we see that there is an intention that Aussat shall provide an important part of our telecommunications system. Yet the unfair restrictions placed on it do not enable it to do just that. As Senator Alston said earlier, recently Aussat has introduced its new Starnet system which provides a private communications network to organisations with a large number of geographically dispersed locations requiring links to a central point. It is a viable alternative to dedicated closed data and telephone networks currently used by Telecom. Indeed, again it threatens the Telecom monopoly. Let us see how that will fare. If we are also going to examine in a fair way the effects that overrestrictions and regulations have on the business of Aussat let us look at the following curious pattern of restriction. Aussat competes with Telecom in the provision of private network services, which I have already outlined. Private networks such as Q-Net have diverted some revenue from Telecom to Aussat. Telecom has lost revenue to Aussat because its carriage of broadcasting services which were previously used by Telecom's network has now been dispensed with. We are now familiar with the use by the Australian Broadcasting Corporation of Aussat including for School of the Air and the use by the Department of Aviation of VHF phones out of aeroplanes with the result that they no longer have to fly to set patterns, which saves costs on avgas. Aussat is used by all commercial television and some commercial radio networks. It is used for video conferencing and voice and data links. A myriad of other uses can fairly be said to be on the horizon. The question is whether the attitude of this Government to allow restrictions on Aussat's operations means that it will have to be, I think the term is, `gobbled up' by its major competitor. The interests of the Australian people are served by deregulation in this area. They are served by Aussat being able to trade fairly and not being inhibited by the monopolistic practices and the clear strategy which Telecom, backed by up by this Government, is presently embarked upon. Senator SCHACHT(South Australia)(4.17) —I, like Senator Gareth Evans, oppose this matter of public importance brought on by Senator Alston. I must say that I could not think of a more inconsequential matter of public importance to be proposed today in view of the fact that in the last four or five days the Liberal Party of Australia and the National Party of Australia in coalition have made such a mess of their own communications policy. I would have thought that any aspect of communications would be the last matter which the coalition would want to expose to any discussion. (Quorum formed) I thank Senator Puplick for drawing attention to the discomfiture of the Liberal Party about its present communications policy. It has been quite a remarkable effort in the last four or five days. Various spokespeople from the Liberal Party have said that they support 25 per cent, 60 per cent and 75 per cent for the audience reach in commercial television. We now have Senator Messner saying that he opposed going from 60 per cent to 75 per cent because he supported 100 per cent. It really is a remarkable effort. After all this confusion in the last few days, the leadership of the Liberal Party is in tatters, and four State leaders of the Liberal Party are disagreeing with the shadow Cabinet's position. I understand that today in the Party room the Liberal Party decided to adjourn the discussion and to try to work out some further policy that might be acceptable to all the conflicting views within the Party over the communications policy. Here we have it: A debate has been instigated condemning the Government for its attitude towards the funding and operation of Aussat. I suppose that this topic was chosen because it is the only thing that all members of the Liberal Party can agree on. It is the lowest common denominator-attack the Australian Labor Party and the Labor Government over its policy on Aussat. Having heard Senator Bishop's speech about Aussat's history one should remember how Aussat started. It started in the late 1970s when Kerry Packer, then a media baron in Australia owning a number of television stations, decided that one way to improve his company's profitability would be to get hold of satellite communications. He convinced the Liberal Party in government that it would be a good idea. The hares were set running about establishing a satellite communications system. Quite rightly, many people in the community were not too enamoured of the idea that a person such as Kerry Packer, or anybody in a substantial media ownership position, would then control a satellite communications system. Fortunately, in March 1983 the Australian people elected a Labor Government which, within a year of its election, ensured that Aussat-as it was being called-would be retained in public ownership rather than being allowed to be owned by private or vested interests. I think that before Senator Bishop and Senator Alston get too carried away with criticising the Government over Aussat policy, they should have a good look at the record of how this country came to have a satellite communications policy. It started off with the Liberals' ham-fisted attitude in responding to the pressure from Kerry Packer. Why has Senator Alston raised the need for Aussat and the Overseas Telecommunications Commission (OTC) to be privatised and sold off? In response to an interjection of mine, he refused to commit himself about the future of Telecom Australia but he made it clear that Aussat, OTC and Telecom should all be deregulated. Why would one want to deregulate Aussat? Why would one want it to be able to move into areas to compete against Telecom? Because the Liberal Party wants to get into the profitable areas. It would then ultimately leave Telecom and even OTC with the least profitable areas and the taxpayer would have to pick them up. It would then use the argument, `Well, they're not running at a profit. We may as well sell them off'. So we would end up with a totally privatised telecommunications system in Australia. It may suit the ideologues in the Liberal Party, such as Senator Alston, to promote that cause but when one looks at what has happened in the United Kingdom and the United States of America-in the United States the private company, ATT, which had a government-controlled overview of its monopoly, was broken up into several private companies and in the UK the telecommunications system was privatised-one finds that there have been endless complaints from the consuming public. Why? Because the prices have gone up and services have been cut back, particularly in those areas which are not profitable. I find it really remarkable that Senator Alston, from the Victorian Liberal Party, which claims and wants to represent a number of rural electorates, which has many political dog fights with the National Party in trying to win State and Federal seats in that area and which claims that it knows what is best for the rural areas, would openly proclaim a system whereby rural people-the people in regional Australia-would end up paying more. If they do not pay more, a direct subsidy will be required from the Australian taxpayer. Those are the very people in the Liberal Party who call themselves `dries' and who want to cut government expenditure anyway. I do not accept the fact that, as Senator Alston proposes, one can get away with privatising and selling off the profitable areas to the private sector and having the taxpayer pick up the cost for the private area. In December of last year Senator Alston put this issue on the record-and I suppose in a sense he should be congratulated-in a speech in the Senate which was reported in a number of newspapers around Australia on 7 December 1987. One of these newspapers stated: An Opposition backbencher called yesterday for an end to cross-subsidisation of uneconomic services such as remote-area mail delivery and country telephone services. It went on to say: Subsidies were only made possible by Telecom's indefensible monopoly in many areas and this was damaging Australia's international competitiveness. `If the Government needs to continue providing discount services, all beneficiaries should be means-tested and funded either by a direct government grant to Telecom or by an explicit levy on all other users of Telecom's services,' he said. Senator Alston made it pretty clear what he was after. I only hope that he does not worry or complain too much during the next Federal election campaign when we in the Labor Party go around Australia-including regional and rural Australia-belling the cat on the Liberal Party that it wants people in the non-metropolitan areas to pay more for telecommunications services and, if they do not pay more, it wants the general Australian taxpayer to pick up the difference. I believe that that will be an issue that the Liberal Party will wish it had not raised for the next election. The Labor Party policy on telecommunications has to be supported by the general community because it is in the best interests of the community. We want a telecommunications system which is well planned, well balanced and efficient. We will not get that by allowing the various segments of the telecommunications system to be privatised and to compete against each other, because they will compete only for the profitable areas, particularly for the services provided in Sydney, Melbourne, Canberra and Brisbane and in the other major capital cities. They will not compete in the non-profitable areas-and that includes Aussat. If Aussat is used to destroy a balanced telecommunications system when it is privatised, the Australian community will be the loser. In any discussion on telecommunications policy the basic assumption must be that there is a balanced system where the community is served first, no matter where it is. We will not have an efficient economy in Australia if we have an inefficient telecommunications system and it will be inefficient if rip-roaring competitiveness is allowed to take place only in those areas which are profitable. We will not have a profitable farming sector if we have an inefficient telecommunications system serving it, and we will have an inefficient telecommunications system if we allow privatisation to occur and Aussat to be used as a device to destroy the well balanced telecommunications system in Australia. This matter of public importance introduced by Senator Alston should be rejected by the Senate. It will be overwhelmingly rejected by the Australian people because they can see a fraud being foisted upon them. They can see that they will have to pay more for a system that will be inefficient and will not serve their needs. I look forward to future debate in the Senate when wider issues about telecommunications policy and the public good are discussed. The Australian Labor Party in government will put the case to the Australian people that we have an efficient and effective telecommunications system based on the needs of the Australian people and not on the needs of a few capitalists who wish to rip off the system for their own profitable gain. I again welcome the opportunity to speak against this inane matter of public importance. Senator BOLKUS(South Australia-Minister for Consumer Affairs) —On behalf of the Minister for Trade Negotiations (Mr Duffy), I seek leave to make a statement relating to international trade and to move a motion that the Senate take note of the statement. Leave granted. Senator BOLKUS —I seek leave to incorporate the statement in Hansard. Leave granted. The statement read as follows- The news has recently been filled with the emergence of conflicts in our international trade relationships, particularly over the future of our coal and beef exports to North Asia. Honourable senators have heard of the very significant efforts this Government is making to deal with those problems and to ensure that Australia's key primary commodity industries receive fair treatment in world markets. Every opportunity has been taken to drive home to our trading partners the message that Australia expects non-discriminatory treatment for its competitively priced exports, not just because it is in our interest to get a fair deal, but also because it is in their own interests to make one. International trade is a business where both sides, producers and consumers, have to come out ahead or, in the end, no one will. Making deals that narrowly favour one side will lead to smaller trade gains, reduced investment and lost export sales on both sides of a trading relationship. The pressures for these discriminatory trade deals arise in large measure from the persistent international trade imbalances which plague the relationships between the world's major trading countries. These imbalances while overshadowing the international economic environment have thrown into sharp relief the cracks and imperfections in the international trading system itself. Such cracks can be seen in the inadequate GATT rules for agriculture, the unsatisfactory GATT dispute settlement record, the tendency of the majors to operate outside the GATT provisions relating to the use of temporary trade protection, the lack of direction in the GATT institution itself and its inability to guarantee fair trade in the fast growing services trades. All of these have become areas of intense discussion in the Uruguay Round of GATT negotiations which is now some 20 months old. It is timely therefore, I believe, for me to step back a little from the issues occupying the headlines today and to review for Parliament the progress that has been made in the Uruguay Round. In particular I wish to give senators a sense of where I think the negotiations are headed and of the prospects for some agreements on some of these issues by the mid-point of the negotiations late this year. In doing so I will outline for members the results of the Cairns Group ministerial meeting in Bariloche in February and the informal meeting of world trade Ministers at Lake Constance in March this year. Progress in the Uruguay Round remains an essential ingredient for sustained world trade and economic growth. While the results for growth in 1987 were sound, if not spectacular, expectations for 1988 are more modest. Large current account imbalances remain in the major developed countries, contributing to uncertainty and to pressure for protectionist action. In this environment, trade reform as a means of increasing stability has top priority. The House should not need to be reminded how important overseas trade is to our own economic health. Around 14 per cent of our GDP in 1987 was exported: for some products in our agricultural sector three-quarters or more of our output is sold overseas; the same is true for minerals and energy products; and as a result of the Government's policies we have seen gratifying growth in the export performance of the manufacturing and services sectors. Australia's trading prospects are clearly constrained by the present uncertainties, not least because the pace of necessary reform by the major traders-the US, the EC and Japan-is so slow. Over the last year or so, we have had to contemplate the possibility of a major increase in United States protectionist legislation, as the Congress discussed options for a new trade Bill. Some of the proposed statutes directly threatened Australia's interests and they and others had the potential to create enormous disruption in the world trading system. Australia has mounted a major effort to ensure US legislators were made aware of our concerns. I pay tribute to the work done by ministerial colleagues and parliamentarians, and in particular to the efforts of the all-party delegation led by Mr Barry Cunningham. Included in that delegation from the major parties were the Hon. Wal Fife from the Liberal Party and the Hon. Ralph Hunt from the National Party. I pay tribute also to the work done by Australian industry associations, in particular the National Farmers Federation and the AMLC, and by the Australian Embassy in Washington. As I indicated in my Press conference on 11 April 1988 we have welcomed the emergence of a more responsible Bill than existed in earlier versions. Although there remain elements of the current draft Bill which are of concern to Australia, it is pleasing that proposals which would have been most harmful to our trade in sugar and lamb have been dropped, and that improvements have been made in other areas of interest to Australia. We can also take some comfort that protectionist options are not as prominent now as they were in the earlier stages of the US presidential campaigns. There remains the danger however that the massive trade imbalances to which I referred earlier could lead to bilateral accommodations between the US and Japan, which could severely damage the world trading system. A similar danger exists in the trade conflicts between the US and the EC, especially in agricultural products, where the fallout of their subsidy war continues to adversely affect efficient exporters like Australia. I know the good news is that world commodity prices have improved of late: but that must not reduce the pressure for agricultural trade reform. The structural deficiencies which led to the crises of 1985 and 1986 remain, thus ensuring that the periodic crises that have plagued agricultural markets will recur, even if commodity prices have, for now, risen above the despairing limits of recent years. The recovery should be regarded as a breathing space to take action rather than a turning point. The Uruguay Round provides perhaps the only opportunity open to the international community to strengthen and secure the framework for multilateral trade, and thereby to deal decisively with a number of current uncertainties. Past such rounds could point to specific achievements in trade liberalisation. for example, in the Tokyo Round tariffs negotiations led average tariffs on manufactured products in industrial countries to fall from 7 per cent to below 5 per cent. Codes were negotiated which were successful in regulating the use of non-tariff measures, at least in some circumstances. But the Tokyo Round did not deal adequately with the agriculture sector, and did not address the area of trade in services at all. Countries found ways of using non-tariff measures which were outside the ambit of the codes, and some of the codes themselves-especially the one on the use of subsidies-proved deficient. The Uruguay Round was launched in 1986 with the clear intention to deal with all these issues. The launching declaration speaks about the reduction or elimination of tariffs and non-tariff measures, and has as one objective the improvement of GATT disciplines relating to all subsidies and countervailing measures that affect international trade. You will be familiar with the successful efforts by Australia and its colleagues in the Cairns Group to ensure that the mandate given for negotiations on agriculture addressed the real problems underlying the crisis we faced at that time. And for the first time, the GATT is looking at the kind of rules which might be applied to bring trade in the fast-growing services sector under international disciplines. The declaration acknowledges also the special need to secure trade liberalisation and expansion which will benefit less-developed countries, with an eye also to the particular problems of the least developed countries. Australia attaches great importance to the Uruguay Round. We of course continue our efforts to secure improved bilateral trading opportunities and relationships, but even there our best prospects for success arise in an open and predictable multilateral trading environment. We have therefore taken a most active role across a broad spectrum of negotiating issues. This represents a major long term effort. The Uruguay Round is a four-year undertaking due to conclude in 1990, so 1988 is the second year of actual negotiations. Participating countries have agreed however that a mid-term review at ministerial level should be held in Montreal in December this year. This is a welcome development. It gives negotiations an early focus, so they will not drift towards 1990. It also provides the opportunity to achieve early agreements in a number of areas where good progress has been made. If this is done, it will not only make available benefits which would otherwise not appear until 1990, but give a boost to confidence in the capacity of the GATT to take the world trading system into the next century. The first year of negotiations in the Uruguay Round saw good progress. The technical and information base for negotiations was consolidated, specific negotiating proposals were tabled on a wide range of subjects, and a smooth procedural transition was made to the substantive negotiating phase which began in January this year. In terms of the breadth of our interests and the initiatives we have taken, Australia has been the most active player in the negotiations to date. In addition to our leadership of the Cairns Group, we have advanced proposals in negotiations on services, tariffs and non-tariff measures, natural resource based products (where we are making a particular attack on subsidies and other measures which distort trade in coal), dispute settlement procedures, emergency protection measures (commonly called safeguards), and arrangements to improve the functioning of the GATT system. It has been made abundantly clear that Australia is not a single issue country but has trading interests across the board. Despite the promising start to the Round, we must recognise the hard bargaining has yet to begin. The pace of negotiations this year will depend in large part on the attitude of the major trading powers, some of which have important domestic political preoccupations: for example, the elections in France and the United States. It is essential that the pressure be kept on the majors to ensure that what could be achieved by December 1988 will not be put off until 1990. I attended the recent meeting hosted by the FRG at Lake Constance which provided an opportunity for informal discussions amongst trade Ministers from a broadly representative group of developed and developing countries, including the trade majors. At the meeting, we reviewed progress in the Round and discussed prospects for agreements being reached in some areas at the mid-term review. Discussion suggested that there are prospects for early results in the so-called framework areas of the negotiations. These are dispute settlement, institutionalised monitoring and/or surveillance of trade policies, and provisions for greater ministerial involvement in oversighting the work of the GATT. This is encouraging, in that it at least signifies that countries want the GATT to stay, and to work better. They may not yet have applied this insight to their domestic policy-making as rigorously as we would wish, but it is an important step forward nevertheless. Tropical products were identified as a priority area for negotiations in the Punta Del Este declaration, with specific reference made to achieving early agreements. Developing country exporters of these products are anxious to see early results in this area, which will represent an important test of the major players' commitment to the Round. Australia also has significant trading interests in tropical products, and we are advancing our own ideas for trade liberalisation in this area which call for extensive improvements in access to all markets. I was most disappointed to note at Lake Constance the strong disinclination of the EC and the US to give any ground at this stage in their negotiating positions on agriculture. The EC has placed emphasis in its proposal on the need for short term actions to underpin improvements in commodity markets, but has been vague on the extent to which it would be prepared to see agricultural supports dismantled over the longer term. Moreover, the Community is currently basking in self-acclaim following the February European Council which set new limits and disciplines on agricultural expenditure. While a significant agreement for the Community, it represents no more than a small step along the path of agricultural trade reform which we wish to secure in the Uruguay Round. Even modest domestic reforms need to be locked in through international commitments to ensure that they are not lost. The U.S. has tabled a most ambitious negotiating proposal which envisages the phased elimination of all agricultural subsidies and trade barriers by the year 2000. Regrettably, it makes no provision at this stage for early relief measures and U.S. negotiators maintain that if agreement cannot be reached on satisfactory objectives for the longer term, we can expect `more of the same' in world agricultural trade. This would mean continued aggressive export subsidisation by the US, and formulation of a tough Farm Bill to replace that which expires in 1989. Japan has tabled an agricultural proposal which has only limited appeal. While it supports the phased elimination of export subsidies (which Japan does not apply) it offers a minimal prospect of trade liberalisation and advances `food security' arguments in defence of supporting highly inefficient domestic production. It is against this background that the Cairns Group, at the meeting which I chaired in Bariloche, Argentina in late February, established a work program and strategy relating to objectives which members wish to see achieved at the mid-term review in December. It was significant that the meeting was held in a developing country, because a number of Cairns Group members are developing countries. They recognise the importance of agricultural trade reform to the achievement of their national ambitions, and Australia has valued their participation. The Group believes that the time has come to narrow the gap between rhetoric and practice in the positions of the majors on international agricultural reform. Its members will be working to achieve commitments from the mid-term review covering both the long term framework, and immediate implementation of substantive interim results. In this regard, the Group has decided to press for results in the mid-term review encompassing a freeze followed by a reduction in global support for agriculture in 1989-90. As a down payment towards longer term agricultural reform, this would include reductions in production and export subsidies and increases in market access opportunities. Members of the Cairns Group will be pressing their views on the `early action' concept at every opportunity, including meetings of the agricultural negotiating group in Geneva, and at high level political gatherings such as the May OECD Ministerial Council and the Toronto Economic Summit in June. Given the widely divergent positions of the majors, it is clear that the Cairns Group has a vital role to play in the negotiations. It is clear also from our meeting in Bariloche and the further opportunity which a number of Cairns Group Ministers had to meet informally in the margins of the Lake Constance meeting, that there is a strong current of cohesion and unity of purpose within the Group. Cairns Group Ministers envisage holding a meeting in Hungary towards the end of the year to co-ordinate our approach to the mid-term review of the GATT negotiations. While I am not in a position at this stage to suggest grounds for optimism that a process of fundamental international agricultural reform will be agreed to as early as December 1988, I can indicate that the Cairns Group is determined to continue with its active role. If early agreements are not reached in this area, it will more likely be as a result of the failure of the majors to display the political resolve and political flexibility needed to establish the basis for meaningful compromise. There are some grounds for optimism in the new areas of the negotiations, particularly on services. Despite the complexity of this area, broad principles have been identified as appropriate for a framework agreement, and there is a reasonable prospect that the core principles of a future agreement could be settled by the end of 1988. In other areas, widely divergent views remain, and the difficult negotiations may continue to the end of the Round. We are hopeful that agreement on the methods by which countries are to go about reducing their tariffs and non-tariff measures will not be delayed that long, and these particular negotiations are showing hopeful signs. Greater difficulty is evident in achieving progress on natural resource-based products, where there is resistance to focusing on distortions in trade especially in energy products and ferrous metals. Australia has been actively exploring the interests we share with a number of developing countries, to which this sector is also important. Another very difficult area is the safeguards negotiations: the achievement of an effective set of disciplines for the use of emergency protective measures. Because of deficiencies in the present rules, countries have turned to the `grey area measures': voluntary export restraints and other practices which are contrary to the spirit of and threaten the future role of the GATT. It is not likely that early agreement will be achieved here, but Australia has co-sponsored with a number of Pacific countries a proposal for a comprehensive safeguards agreement. Those are the broad outlines of progress in the trade negotiations to this point. The Uruguay Round is an enormous enterprise which is seeking to throw light on some of the fundamental problems of the world economy. It requires intense preparation and negotiation, increasingly between Ministers themselves as the discussions begin to touch on the most sensitive areas of policy. Already, plans have been made for another informal meeting of Ministers in Pakistan next October to attempt to bring different points of view closer together before the December mid-term review meeting. Throughout the negotiations to date, Australia has sought to take an active and constructive role. We have worked to maximise our influence wherever possible through co-operation with like-minded countries. We have worked within our traditional alliances and outside them, and have sought and found shared interests among both developed and developing countries. The Government recognises that a sustained and carefully focused effort will be needed to achieve tangible benefits for Australia in the mid term review. Indeed, this effort must and will be maintained throughout the Round. We can nevertheless welcome the achievements so far made and capitalise wherever possible on the potential for progress which has been created in a number of areas. Senator BOLKUS —I move: That the Senate take note of the statement. (Quorum formed) Senator MACKLIN(Queensland)(4.33) —The Australian Democrats welcome the statement by the Minister for Consumer Affairs (Senator Bolkus) on the status of the multilateral trade negotiations (MTN) talks. It is certainly the case that the welfare of all Australians is closely linked to our capacity to produce, provide and manufacture commodities, services and products which are competitive, attractive and capable of gaining access to overseas markets. My party is currently reviewing its trade policies. We are committed to promoting external trade and commercial policies which will foster the best possible conditions, both domestic and international, to enable Australian industries to expand and develop. It is true that any trade policy review serves a useful purpose to sensitise participants to the need to ensure that policies provide the resources, imagination and governmental structure to help ensure that this country is capable of earning its way in a global economy. Having noted this, it is with particular interest that I read the Minister's statement on the Government's vision for Australia and its strategy for ensuring that Australia stays afloat in an international trading environment characterised by beggar thy neighbour policies, particularly among the Western nations, the gradual breakdown of important international trade institutions such as the General Agreement on Tariffs and Trade and a decline, unfortunately, in the consensus among Western states on the need and the means of achieving trading reforms. A very good example of this breakdown is the domestic consensus on the desirability of a liberal trading regime in the United States of America. In the early 1970s that country began to run trade deficits in a number of politically sensitive industrial areas, starting with textiles in the early 1970s, steel and motor vehicles in the mid to late 1970s and machine tools and semi-conductor chips in the early 1980s. The large current account deficit and the political and electoral pressures that this is applying on a legislative branch increasingly unable to deal with or handle complex trading issues has undermined the capacity of that country to play a major leadership role in world trade. Certainly, it is no longer capable of playing the type of role it did until the early 1970s. Unfortunately, there still does not appear to be an appreciation within the United States Government of the macro-economic effects that the $160 billion budget deficit is going to have on the trade balance. Hence, there is a situation where Congress is resorting to micro-economic reforms through attempts at tariffs and quota barriers. The political significance of the trade deficit is that while America's healthy trade performance during the 1950s and 1960s served to reinforce the liberal trading regime, the present trading deficit serves as a symbol to the American public that liberal trading regimes are bad for America. A closely related and equally worrying development in international trade is the build-up in the Third World debt and the effect that this is having on the stability of global financial markets. There is, of course, the associated and very depressing effect which high debt levels are having on the living standards of developing countries and, in turn, the pressure that this is exerting on those countries' democratic institutions. In the context of these remarks, the MTN talks are absolutely vital. The Democrats wish the Government and the Minister well in their endeavours to obtain a fairer deal for Australia. It is without doubt that Australia as a trading nation has not had a fair deal. That is easily demonstrable, and in fact has been demonstrated by a number of very important documents-for example, the paper which deals with European Community trading operations and the soon to be released paper in respect of United States trading policies and the effect that those policies have had on our country. Only last week I spent some considerable time commenting on the latest problem we have had with regard to malt sales to Peru. A $8m market which has been developed and supplied by Australians is now to be the target of the American export enhancement program (EEP). The difficulty, of course, with the export enhancement program is that the Americans say that it is being aimed at the European Community. Their aim may well be the European Community, but the people who are getting shot are the Australian producers. Probably very few Australians know much about our trading relationships with countries such as Peru. But our trade in a number of items to these countries has been innovative, effective and, more than anything else, efficient. The way in which the international trading regime is currently being conducted really sticks in the craw of Australians, bearing in mind the efficiency of our trading operations. Half of the total income of United States farmers comes from consolidated revenue. The Russian Ambassador was quite staggered when I raised this point with him recently. He said, `We do not do anything like that in the Soviet Union'. The United States is probably the best example of a socialised agricultural economy anywhere in the world outside of Queensland. It is also a rather interesting fact that the Soviet Union is now the fourth largest recipient of United States aid on the basis of cheap wheat and other commodities that the United States sells to that country under various support programs. On any comparable figures, Australian agricultural producers are twice as efficient, if not three times as efficient-I think that they are three times more efficient, but on the available figures the Americans will accept that we are twice as efficient-as those in the United States. When one suffers under such circumstances and sees the United States, for internal political purposes, going into more of our markets, one cannot be other than extremely angry at the fact that efficient Australian producers are being forced out of the international market, not by efficient American producers but by the massive size of the US Treasury. International trade is of vital importance to Australia. With international protectionism on the increase, the Minister has chaired a number of meetings around the world. The previous Minister was responsible for the creation of the Cairns Group-a group that has been very effective in the international trading arena in putting the point of view of a number of countries such as Australia. Australia is not the only country involved. For example, Thailand has had a massive attack on its economy by the United States, again because the United States has targeted basic agricultural products that the Thais produce very efficiently. What has gone on to date is pretty tame stuff. When one looks at this paper, one considers that it is probably even tamer stuff. We are not told of the Government's strategy; that is completely missing. There is no vision of where the Government is going, let alone a detailed point by point plan. Nor, interestingly enough, does the document say anything about proposals in the United States to increase funding for the export enhancement program to $2.5 billion. According to the former Trade Minister, in 1986 EEP alone cost Australia $1 billion in lost income. It is very odd that in a paper canvassing these trading relations there is no mention of EEP nor of the tortuous route that the current omnibus Trade Bill is taking through the US Congress. As honourable senators realise, the Bill has passed through the United States House of Representatives and currently is on the floor of the Senate. There is some discussion as to whether the President will veto the omnibus Trade Bill. If he does that it is unlikely, given all its myriad attachments, that another Trade Bill will be brought before the current Congress. So the action of President Reagan in either vetoing the Bill or sustaining his veto to it is unlikely to go very far. I think that we are in for an even worse scenario in the short period ahead. Recently a comment was made by a representative of the US Embassy regarding malt-some newspaper reports also mentioned wheat-suggesting that Australia is selling more on the world market since the introduction of EEP. The difficulty with that whole silly exercise-unfortunately, it was swallowed by many people in our media who ought to have known better-is that, while we sold more grain over that period, we produced more grain. Of course, in the last couple of years total grain production has gone back. This is probably the only country in the world in which that has occurred. As a result, we have been getting much less for it. We started off by getting a world price of $140 a tonne. The price went down to $120, $100 and $93 or $94. The silly comment, `You can sell as much as you like provided you sell it at a rock bottom price', which, unfortunately, was not picked up by our journalists who ought to have known better, is the type of thing we get from embassies which, after all, are only doing their job. It was interesting to note that when the last all-party trade delegation, which I had the opportunity to be among, went to the United States and lobbied members of the House of Representatives and the Senate, it was fairly clear that, to start off with, they knew very little about Australia and about our trading relations. The fact that we have been in deficit to the US in our trading relations since 1954 seemed to come as a complete shock to them. The fact that we are the second largest cash purchaser in the world of military equipment from the US-most of the others trundle round with their hand held out and do not pay a brass razoo, while we pay money up-front, on the knocker-has not deterred this so-called ally of ours from engaging in some of the most predatory trading operations that this country has ever had to endure. It is not good enough to have this type of ministerial statement trotted out to us. It is a bland rehearsal of what is going on. We are in trouble. Our producers are in trouble. We need a firm and strong stance. While many people in the Government feel that we should back off from taking a strong stance with the United States, I am of a completely different view. It came across very strongly to me in that trade delegation that one of the things US Congressmen like is a bit of straight talking. When we closed the doors and excluded staff, we got down to some plain talking. Rather than the mealy-mouthed exercises which often go on under the name of diplomacy, they relished that. That is one of the useful things that came out of a visit by politicians. At least we were able to get down to some of the nitty-gritty operations affecting the relationships between our two countries. I see no reason to kowtow to the United States while it engages in a most extraordinary operation against our trade. What types of things should one look at? I wish to repeat nine points raised in a program that I put out last week because they go to the heart of the problem we face currently. The first, which I have already rehearsed, is the establishment of a broad Australian attack on US agricultural policies. This program should be aimed at developing a coalition of foreign and American domestic interest groups to fight the high cost and trade friction associated with EEP. Those groups would include, for example, the firm that we have just spent over $1 billion with, buying steering and other types of equipment for our submarine purchases. Such firms have a very real interest in whether Australia has the cash to purchase anything from the United States. I for one believe that our trading relationships with other countries would be enhanced enormously if we started sourcing a large number of our materials from countries which have purchased from us. We could get our trade balance with those countries back into some reasonable shape instead of continuing with a trade deficit exercise with the United States for which we are thanked not at all. I think that there needs to be a convening by the Minister for Foreign Affairs and Trade (Mr Hayden) of our Australian consular and embassy officials, based in Australia and the US, to review the situation regarding representations in the United States. We need to harness US defence contractors, such as McDonnell Douglas and Sikorsky, which have access to Congress, so that those massive cash purchases about which I spoke earlier can be brought to bear and used in our trading exercises. We should establish an Australian-United States business round table, patterned on the very successful Australia- Japan model, that would report directly to the American President and the Australian Prime Minister on ways to improve understanding between our two countries and to reduce the trade conflict. I think prominent Australians and Americans-a person whose name comes to mind is Rupert Murdoch, who presumably still has an affinity for this country, having once been an Australian citizen-are the kinds of people who could serve on such a body which would seek to widen Australia's approach to trade and commercial issues beyond the political and diplomatic levels. Fifthly, I think the data and arguments from the Bureau of Agricultural and Resource Economics, particularly from the item which I raised a little while ago, the soon to be published Blue Book on American agriculture, could then be used to demonstrate to urban based American Congressmen that their projects are being massively squeezed by cuts to Federal spending because of the inefficiencies of the US farm programs. Those inefficiencies are accepted by Americans and Australians alike. It is not something one has to argue; they know they are massively inefficient. I hope that the Blue Book will be able to have the same useful effect for both parliamentarians, when they visit that country, and for our embassies, as the 1985 Red Book on European agricultural policy had. The aim here is unashamedly to drive a wedge between the urban and rural interests within the Congress, so that there is greater scrutiny within the budgetary process of the massive and open-ended expenditures of some $30 billion, $40 billion or possibly $50 billion-nobody seems to know-on that agricultural support. Sixthly, Ministers should be more assertive in selling their message to the United States. I believe that Ministers whose responsibility covers trade should testify before the relevant congressional committees when our interests are threatened. It is no good their coming along afterwards. We should be in there, up front, at the beginning. After all, if it is good enough for George Shultz to sell his message on Capital Hill, surely it is good enough for our Prime Minister or our Trade Minister to do so on such a vital issue. I believe Bill Hayden ought to appear before the Congress, as should Minister Duffy. I think that would be a very up-front way for us to make the point that Australia is suffering, and suffering badly, from the predatory policies of the United States. Seventhly, I think the Australian commodities undermined by EEP should be used in counter trade deals between the Australian Government, where Canberra is the buyer, and American firms, so that we can protect our foreign exchange earnings and sensitise American businesses to the costs of EEP. I admit that counter trade has its problems, but I believe that in this circumstance counter trade is one of the exercises we ought to engage in. If we are going to purchase that massive one billion dollars worth of defence equipment, that seller simply has to find a billion dollars of Australian goods to purchase to offset it. What he does with those goods afterwards is his business. Let him try to sell them on a market that has been glutted by the extraordinary trading policies of the United States. It has certainly become very sensitive to the exercise of the disruption of international trade that the United States and the European Community are engaging in. I think it is that type of tough policy that we should be starting to follow when we talk to the United States. Eighthly, Despite two recent parliamentary delegations to the US, of which I was a member, which brought greater contact between the American and Australian politicians, little has been done. I think the Prime Minister (Mr Hawke) should use his forthcoming visit to Washington in June to establish a formal parliamentary congressional exchange program involving legislatures and staff on both sides of the Pacific. Over time I think this would create a pool of expertise on each other's political system, which could then be used to good effect to reduce misunderstandings between our countries and certainly to help Australians tap more efficiently into the American political process-knowledge coming before action. I believe there are many capable members of staff in the offices of Ministers, shadow Ministers, party leaders and backbenchers who could well benefit from a sensitisation operation with regard to the United States, and likewise there are many good staffers who would have the same effect if they came here and looked at our legislative process. Having them in the system, I think, is a vital and important item. It is one which I believe we have neglected in the past and which we ought now to take up with a vengeance if we are going to try to get inside the citadel. Lastly, I think we should be reviewing the staff, resources and strategy of the Congressional Liaison Unit within the Washington embassy. That unit at the moment consists of one Australian who has the task of liaising with over 70 congressional committees, departments and agencies. In fact the number of people there who could possibly have any effect on any of those types of trading policies could be over 1,000. We have one person engaged in that exercise. How important is our trade to this country? Everybody says that it is vitally important, but I think the proof of the pudding has to be in the eating. When one looks at that type of exercise, particularly in the United States, one cannot but be dismayed. The last point I wish to make is that we are in a trade surplus situation with a number of countries, and one of those is China. We have currently a massive trade surplus with China. The Chinese economy is expanding rapidly. It is the market of the future and it is a very important market for us. But the Chinese have everybody knocking on their door. At the moment Australia's standing with China could not be higher. The Chinese are very open to Australia, and Australia has been very helpful in terms of a number of items. For example, there was the inspired educational exercise of sending English teachers over there to teach their English teachers the latest techniques in English. Since about 98 per cent of foreign language learning in China at the moment is in English, we are in exactly the right spot. It is a brilliant idea and the Government is to be congratulated on following it through with such vigour. But having established ourselves in China and having created a very warm climate between our two countries over a reasonable time, now that China has come through the Cultural Revolution stage and is expanding its economy, we have to be seen to be trading on reasonably fair terms, and we are not. We have got to purchase more from China. How can we do that with our current trade imbalance? Will we have to cut back on purchases from other countries? I would like to nominate one: the United States. The reason for choosing the United States is that that country has done so little for us and has had such little regard for us, and in fact it cannot be seen as an area in which we would have much of a future, and it is now, within the next 12 months, about to kill off our entire sales of sugar into that country. In fact, we were the largest exporter of sugar to that market a little over five years ago. That is the type of turnaround we have had within a short time. I believe that if we are talking about allies, they cannot be the countries which are undermining our economy. We cannot call a country which is systematically undermining our economy an ally. I believe we should look to the future and look intensely at those countries which have shown that they are willing to buy from us and in great quantities and we should start sourcing our purchases within those countries to bring those bilateral trade relations back into some balance. I think then the United States might come to the talking table. I think we can still do a lot of trading together, but we cannot do it under these insufferable circumstances that we are subjected to at the moment. I think it is a pity that in a statement of this kind we should have more blancmange. We need a bit more tough talking in this exercise. I think the Americans appreciate us when we get down to brass tacks. I think it is about time we did that. Senator LEWIS(Victoria)(5.00) —The Senate is debating the motion: That the Senate take note of the statement. As Senator Macklin has indicated, the statement by the Minister for Trade Negotiations (Mr Duffy) was couched in very diplomatic language. I must admit that Senator Macklin's speech was of such a wide-ranging nature that I had to have another look at the statement to see whether we were both responding to the same statement. The Minister points out that the problems that Senator Macklin initially referred to have become areas of intense discussion in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations which are now some 20 months old. The Minister goes on to explain the reasons for his statement. He says: It is timely therefore, I believe, for me to step back a little from the issues occupying the headlines today and to review for Parliament the progress that has been made in the Uruguay Round. So the purpose of the statement is to step back and review what progress has been made, whereas towards the end of Senator Macklin's speech we ultimately found out what he was on about. Clearly he has had prepared for some time a speech which attacks the United States of America. This was the vehicle he used for it today. The coalition parties welcome the tabling of the report of progress, although some of the Government's claims that its policies are responsible for the gratifying growth are questionable. What is beyond question is that within the Cairns Group of nations there are principles and objectives which are endorsed by the coalition parties. We are concerned about-and I list them-trade imbalances, discriminatory treatment against competitively priced exports, the build-up of protection in the developed world and the financial consequences of major nations operating outside the General Agreement on Tariffs and Trade. There is no doubt that Australia is seriously disadvantaged by non-tariff barriers. We have adhered to the principles of GATT but in the jungle of international trade, many nations and significant trading partners of Australia find it necessary to resolve their problems outside GATT. For example, there are the bilateral arrangements between Japan and the United States. The coalition parties support the Cairns Group and the Government's attempts to break down the restrictions in trade-services, manufactured goods and minerals. The coalition parties have reservations as to whether GATT, in its present form, is achieving the purpose for which it was first constituted-and it seems that some changes may have to be made. Certainly, GATT lacks muscle. The sanctions under GATT are limited and Australia is too small a market for reduced levels of protection to make much of a bargaining point. In fact, we lack the muscle to have much impact on the major nations of the world. While we commend the concept of the Uruguay Round, which adds a little muscle, we have to accept that there are fundamental problems for Australian negotiators because of special relations which exist between other countries. Warren Lavorel, who is the US coordinator for multilateral negotiations, said: If you want to talk about trade problems, GATT can do nothing about the most serious problems of all-trade imbalances between nations. The trade imbalances are a question of macro-economics and have to be solved by the individual governments involved, not GATT. That is a very interesting observation. The coalition is also concerned about the relationships between GATT, world currencies and investment. The relative value of most of our major exports is sensitive to currency changes and the movement of money worldwide. Countertrade is also sought by Eastern bloc countries which are desperately short of foreign currency. In the communique of the ministerial meeting of the Cairns Group on 20 February 1988, the Minister said: While encouraged by the thrust of international debate which continues to recognise the need to address agricultural trade problems and to focus on the reform of domestic support policies, Ministers expressed disappointment at the significant and growing gap between rhetoric and practice. They noted that actions to reduce subsidies and increase access by the most trade distorting countries fell well short of what is required for sustained reform. Since their last meeting, Ministers noted that competitive subsidy practices have intensified and reductions in market access opportunities have occurred or are currently threatened for some commodities, including vegetable oils, apples, beef, sheepmeat, grains, flour, dairy products and poultry. So, in effect, the situation is getting worse, not better. We must look at Australia's overseas indebtedness. It is now in excess of $110 billion and servicing our foreign debt now requires 64c in every dollar of export income. The structural adjustment necessary to address this is a major cause for concern. Last week the Confederation of Australian Industry (CAI) said that real benefits from structural adjustment would be better achieved by reducing impediments to competitiveness such as the high cost of coastal shipping, land freight and labour and the costs of regulation and government charges. The benefits of reducing these would be three times that gained by tariff reductions. The CAI went on to warn that if the Government cut tariffs without addressing these issues it would reduce the competitiveness of Australian industry and could force some to close. They are the very things that the coalition parties have been saying to this Government for some considerable time-that it is just not a question of reducing tariffs, although clearly an opportunity exists at present for a cut in tariffs, and I will come to that in due course. We have a very substantial number of impediments to competitiveness and those are various things the Government has to look at. They include coastal shipping, land freight, the costs of regulation, and government charges. We are concerned that the Government is not adjusting those matters quickly enough. Moody's Investor Services has raised doubts about the pace of structural adjustment in the Australian economy. I quote from a report in the Australian Financial Review of 10 March this year: The pace of adjustment since 1983 has been steady but slow relative to several other OECD countries that have faced similar debt problems . . . A pertinent question is whether this gradualist approach to reform will succeed rapidly enough to prevent external borrowing requirements from reaching unacceptably high levels. I take the Government back to what I read earlier by Warren Lavorel: The trade imbalances are a question of macro-economics and have to be solved by the individual governments involved, not GATT. So it is up to us, and in particular this Government, to advance the restructuring of such matters as I have raised in such a way as to make this country more competitive. In fact, if it had not been for strong commodity prices, the current deficit would have been much worse than the $110m-plus that I mentioned earlier. But I say to the Government that it has perhaps a very short term opportunity, as a result of strong world commodity prices at the moment, to take many actions which will be of assistance to this nation in overcoming this major deficit problem. It is not just a question of trade barriers, currency and investment; it is a matter of improving competitiveness. It is in this area that the actions of the Government are perceived as being inadequate. The very substantial devaluation of the Australian dollar and the current perception in the community have given the Government the opportunity for substantially lower protection assistance. The comments by Mr Hawke, Mr Keating and Mr Dawkins about across the board cuts, ranging from some 25 per cent a few months ago, around Christmas, to 20 per cent early this year, to 15 per cent a couple of weeks ago and 10 per cent last week, have been very damaging. They have created speculation and deferral of investment plans. Treasurer Keating's comments about the dollar and its value over this weekend will no doubt involve further deferral of investment plans. Apparently, industry has to wait until the May statement before it learns what, if anything, the Government will do in regard to tariff cuts, and we shall have to wait and see what will be the consequences for the dollar. In summary, therefore, we say that Australia needs trade access, that GATT has a role, albeit a limited one, due to its lack of muscle, that the Government has an important role to play in ensuring that Australia is not shut out of markets, but that the major solution to Australia's trade problems lies not with others but with what Australia does itself to ensure competitive exports. Question resolved in the affirmative. Senator LEWIS(Victoria)(5.11) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. The ACTING DEPUTY PRESIDENT(Senator Peter Baume) —On behalf of the President, I present the tenth report of the Standing Committee on Appropriations and Staffing. Ordered that the report be printed and that consideration of the Report be made an Order of the Day for the next day of sitting. Senator DEVEREUX(Tasmania) —In accordance with the provisions of the Public Works Committee Act, I present the reports relating to the construction of new Commonwealth offices, Melbourne, and the construction of new Commonwealth offices, Haymarket, New South Wales. I seek leave to make a short statement in relation to the reports. Leave granted. Senator DEVEREUX —In accordance with the Government's policy of increasing its ownership of office accommodation and thereby reducing rental outlays from high priced central city locations, the Public Works Committee has recommended the construction and fitout of two new Commonwealth office buildings-one in Melbourne on the corner of Spring and Lonsdale Streets at an estimated cost of $118m for construction and $18m for fitout, and the other in Sydney at the Haymarket on the corner of Pitt and Hay Streets at an estimated cost of $143m for construction and $20m for fitout, all at April 1987 prices. The new Commonwealth offices in Melbourne will be a 42-storey building consisting of a nine-storey podium, and a 33-storey tower. The building will provide 60,000 square metres net of office space to accommodate some 4,000 staff and include shop-front accommodation for departments with a high level of public contact. The site for the building is portion of a larger Commonwealth owned block bound by Spring, La Trobe, Exhibition and Lonsdale Streets. Other developments proposed for this block are stage two of the Commonwealth offices building and new offices for Telecom Australia. The block is being developed as an integrated whole, even though development is planned in stages. As the block has not been redeveloped since it was acquired by the Commonwealth in 1948, an archaeological investigation was undertaken on the block. The Department of Administrative Services and Telecom each provided $50,000 for the archaeological salvage project on the block. A number of heritage buildings located on the perimeter of the new Commonwealth offices site will be retained and preserved by the Commonwealth. However, none of the heritage buildings form part of the development proposal. The Committee has recommended further consultation between the Department of Administrative Services and the Victorian Ministry for Planning and Environment concerning the future of the heritage buildings. The design solution for the new Commonwealth offices at the Haymarket, Sydney, has evolved from complex site conditions and planning criteria. The design solution incorporates a 31-storey office tower to the south of the site, a nine-storey wing to the west of the site with a two-storey podium to the north-east. The building will provide 50,000 square metres net of office space to accommodate some 3,000 staff and approximately 1,600 square metres net of retail-commercial space, including shop-front space for the Commonwealth. Three historic buildings and an underground gasholder base will be restored and have been integrated into the development. The building has been designed specifically in harmony with the heritage character of the Haymarket area and the scale of the surrounding streetscape, particularly along Hay and Pitt Streets. The Department of Administrative Services has consulted with the Australian Heritage Commission on heritage issues and will continue to do so as conservation work is documented in detail. The National Trust of Australia and the Heritage Council of New South Wales will also be involved in those consultations to take advantage of their particular expertise. During the Committee's investigation of the proposal, planning and heritage groups expressed concern about the overshadowing of Belmore Park and Eddy Avenue to the east of the site by the tower development. After examining all the issues, the Committee concluded that the Department of Administrative Services had examined a range of design options and that almost any viable building on the Haymarket site would produce some overshadowing of Belmore Park and Eddy Avenue, irrespective of the design solution. The Public Works Committee is satisfied that the Department of Administrative Services has developed a design that keeps overshadowing to a minimum while providing an economically viable building for the Commonwealth. The proposed office buildings will generate savings on Commonwealth office accommodation rental and lead to an improved overall standard of Commonwealth office accommodation with consequent improvements in operational efficiency and a reduction in operating costs. Bill returned from the House of Representatives without amendment. Bills received from the House of Representatives. Motion (by Senator Reynolds) agreed to: That the Bills may proceed without formalities, may be considered together and be now read a first time. Bills read a first time. Senator REYNOLDS(Queensland-Minister for Local Government)(5.16) —I move: That the Bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- HONEY MARKETING BILL 1988 The purpose of this Bill is to reconstitute the Australian Honey Board with revised functions and powers, a changed membership structure, and enhanced accountability to the honey industry which provides the Board's funds through levies and an export charge. The legislative changes required to this end involve also repeal of the Honey Industry Act 1962, which is the Board's present charter, and appropriate amendments to the Honey Levy Acts (Nos 1 and 2) 1962 as well as to the Honey Export Charge Act 1973. These amendments are being introduced by separate Bills, so that a legislative package of four Bills is involved. In seeking to reform the Australian Honey Board, the Government wishes to apply to this body the policy principles which are being progressively applied to all primary industry statutory marketing authorities. These principles were enunciated in January 1986 in a White Paper on the reform of the authorities in question. Their aim is to make these bodies more effective, improve their accountability and enlarge their autonomy while ensuring Ministerial oversight at the strategic level. In applying this policy to the Australian Honey Board, the Government has taken care to do so in a way appropriate to the circumstances of the honey industry. This industry is of modest size compared with our major rural industries, but it supplies virtually all domestic honey requirements and also exports a substantial part of its annual output. In 1986-87, honey exports contributed $16.6m to Australia's export income. The proposed changes to the structure and charter of the Honey Board were decided on after a detailed review of the Board's operations since its establishment some 25 years ago under the Honey Industry Act 1962. In the course of this review, extensive discussions took place with honey industry organisations in which the options discussed ranged from abolishing the Board to leaving it unchanged. The Government has concluded that there is still a role for a statutory marketing authority for the Australian honey industry, but believes that the present structure and charter of the Australian Honey Board are not conducive to fulfilment of that role with optimal results. The Board's current charter is too broad, as evidenced by the fact that some specific powers of the Board have seen little or no use in recent years. Its current membership of 10 is too large for an authority with a small budget, while the fact that Board members are elected or nominated to represent sectional interests limits the range of professional skills available to the Board. Moreover, the Board's operational autonomy is unduly restricted by requirements for ministerial approval in matters of relative detail. All of these shortcomings have been addressed in the changes proposed by the Bill. Under these changes, the new Board's role will be focused solely on two defined objectives. These are to maximise returns to the honey industry from exports, and to generate a greater demand for Australian honey both in Australia and overseas. In practical terms, this means that the restructured Board will be required to direct its attention and resources to promotional activity, and to support of the export marketing activities of the industry by assistance to honey exporters and a judicious regulation of their operations to prevent undesirable trading conduct. In the latter regard, it is the wish of the Government that the Board should keep its export regulatory or control activities to a minimum, allowing exporters as much freedom in their operations as is consistent with the interests of the industry as a whole. To ensure that this policy principle is observed, the Board will be required to review the operation of its export controls annually and to report the outcome of its review to the two principal organisations of the honey industry, namely, the Federal Council of Australian Apiarists' Associations (FCAAA) and the Honey Packers Association of Australia (HPAA). These organisations are referred to in the Bill as the `producers' organisation' and the `packers' organisation' respectively, and those terms are also used in this speech for the sake of brevity. To enable the Board to exercise an appropriate degree of control over exports, the Bill provides that exporters of honey must be licensed by the Board. At present, these exporters must also be licensed, but the Board only recommends the issue of licences, while the power to grant them resides with the Minister or his delegate. Criteria for the granting of licences are specified in the Bill, which also provides for recourse to the Administrative Appeals Tribunal where a person is dissatisfied with a decision of the Board in the matter of licensing. Export licences will be subject to terms and conditions determined by the Board. In this regard, the Board will retain its present power to set minimum prices below which honey may not be exported. Similarly, it will retain the power to appoint agents in overseas countries and to require all exporters to make their transactions through these agents. It will also be open to the new Board, if it deems necessary, to operate other modes of control such as export permits or time limits on forward contracts entered into by exporters. As already noted, however, the Board will be expected to provide reasons for such controls. In keeping with the Government's policy for statutory marketing authorities, the Board will be required to prepare a five-year corporate plan and to review it at least once a year. Similarly, it will have to prepare annual operational plans. In both cases, the Board will have to consult with the producers' and packers' organisations in the preparation of these plans. The plans will require the Minister's approval and form the basis of the Board's operations. As a further accountability requirement, the annual reports of the Board will, amongst other things, have to assess the extent to which the Board's corporate and operational plan objectives were met. The Board will also be formally accountable to the peak industry bodies, namely, the Federal Council of Australian Apiarists Associations and the Honey Packers Association of Australia. The Board's chairperson will be required to report to meetings of these bodies after presentation of the Board's annual report to the Minister. With regard to the structure of the new Board, it will be made up of eight members, namely, a chairperson and a government member who will both be chosen and appointed by the Minister, and six other members who will be selected and nominated for appointment by a selection committee to be established as specified in the Bill. These six members will be selected for their expertise in a range of fields relevant to the functions of the Board. Selection committee membership will consist of six persons appointed by the Minister, namely, a chairperson independent of any particular interest, two nominees each from the producer and packer sectors of the honey industry, and a person with professional staff selection experience who is to be nominated by the four industry members of the committee. Transitional provisions are included in the Bill which will ensure that existing Board membership and export controls will continue until the proposed new structure is fully in place and operational. It is expected that this stage will be reached not later than 1 January next. It is the intention of the Government that the operation of the reconstituted Honey Board be reviewed after five years in a fundamental way and accordingly, the Bill provides for termination of its constituting legislation after six years from its commencement. Mention was made earlier of proposed amendments to the honey levy and export charge Acts. These Acts generate the funds which finance the Board, and the projected amendments will give the peak organisations of the honey industry a formal right to influence the level of funding to be provided to the Board. In addition, they will create scope in the levy Acts to increase that funding beyond the present limit if the industry decides to seek an increase in the future. The new arrangements I have outlined are not expected to impose any additional costs on the Commonwealth. Little change is anticipated in the cost to the industry of maintaining the Board. I am confident that this Bill and associated legislation will establish a more effective institutional basis for the honey industry with which to respond to future marketing challenges. HONEY LEVY (No. 1) AMENDMENT BILL 1988 The purpose of this Bill is to amend the Honey Levy Act (No 1) 1962, under which a levy is imposed on honey sold in Australia. Income from the levy is used in part for the financing of the Australian Honey Board and in part for the financing of honey research programs. It complements the revenue obtained for these purposes under the Honey Levy Act (No. 2) 1962 and the Honey Export Charge Act 1973. The principal Act specifies maximum rates for the Honey Board and research components of the levy, and operative rates are prescribed by regulation. In the case of the Honey Board component, the Board recommends to the Minister the rates to be set. Under the proposed amendments, the Australian Honey Board will in future be required to consult with the national organisations of honey producers and honey packers before recommending to the Minister any change in the rate of levy imposed to finance the Board's operations. At present, the Board is not obliged to do so. A further provision will prevent the Board from recommending a levy rate higher than that agreed to by the producers' organisation. The object is to enhance the Board's accountability to industry. It is further proposed to increase the maximum rate of levy that can be imposed to finance the activities of the Board from 2.2c to 5c per kilogram of honey. The operative rate as prescribed by regulation is now at the maximum permissible level, and a higher levy maximum will provide scope for raising the present operative rate as and when recommended by the industry in the future. While the increased levy maximum will create scope for increasing the rate of the Honey Board component of the levy beyond its present level, no increase will take place until such time as the honey industry and the Board recommend that a higher rate be prescribed and the recommendation is implemented. The Bill has no financial implications for the Government. HONEY LEVY (No. 2) AMENDMENT BILL 1988 The purpose of this Bill is to amend the Honey Levy Act (No. 2) 1962, under which a levy is imposed on honey used in the production of other goods. Apart from covering honey disposed of by this particular method, the Act is identical in its provisions with the Honey Levy Act (No. 1) 1962. The amendments proposed by this Bill to the Honey Levy Act (No. 2) 1962 are the same as those which have been proposed to the Honey Levy Act (No. 1), and have been explained in the second reading speech on the Honey Levy (No. 1) Amendment Bill 1988. The comment made in that speech on financial implications of the amendments applies also to this Bill. HONEY EXPORT CHARGE AMENDMENT BILL 1988 The purpose of this Bill is to amend the Honey Export Charge Act 1973, under which a charge is imposed on honey exported from Australia. Income derived from the export charge is used in part for the financing of the Australian Honey Board and in part for the financing of honey research programs. It complements the revenue obtained for these purposes under the Honey Levy Acts (Nos 1 and 2) 1962, which apply to honey disposed of on the home market. The principal Act specifies maximum rates for the Honey Board and research components of the export charge, and operative rates are prescribed by regulation. In the case of the Honey Board component, the Board recommends to the Minister the rates to be set. Under the proposed amendments the Australian Honey Board will be required to consult with the honey producers' and honey packers' organisations prior to recommending to the Minister any change in the rate of the export charge component which funds Board activities. The Board will be precluded from recommending a rate higher than that agreed to by the producers' or packers' organisation. The amendments, which will enhance the accountability of the Australian Honey Board to the honey industry, have no financial implications for the Government or the industry. Debate (on motion by Senator Knowles) adjourned. The ACTING DEPUTY PRESIDENT(Senator Peter Baume) —Mr President has received a letter from the Leader of the Opposition in the Senate requesting a change in the membership of Estimates Committee E. Motion (by Senator Reynolds)-by leave-agreed to: That Senator Short be discharged from attending Estimates Committee E on 27 April 1988 and that Senator Parer, having been duly nominated in accordance with Standing Order 36ab, be appointed a member of the Committee for that day. Debate resumed from 25 March, on motion by Senator Tate: That the Bill be now read a second time. Senator LEWIS(Victoria)(5.19) —The Statute Law (Miscellaneous Provisions) Bill implements, apparently for the last time, the practice of introducing a general omnibus Bill into each sitting of the Parliament as allegedly an expeditious way of making minor amendments to `tidy up' legislation. Since this Government came into office the results have seldom been expeditious and frequently they have stretched the guidelines beyond reasonable limits. The guidelines for statute law Bills included, firstly, correcting drafting errors; secondly, connection and updating, including modernisation of style-honourable senators will recall the number of Bills we saw with the phrase `and she' added to the word `he' and so on-thirdly, routine administrative changes; and, fourthly, with the approval of the Prime Minister (Mr Hawke), changes of so-called minor political significance. The guidelines excluded matters involving taxes or appropriations, lengthy matters, matters constituting change to the national companies and securities legislation, contentious issues, complex drafting, and substantial policy issues. The Bill, which amends 31 different Acts and repeals 10 Acts, is not opposed by the Opposition. The amendments are not contentious and do not involve any substantial policy issues, although some border on the lengthy. The Government has decided to discontinue Statute Law (Miscellaneous Provisions) Bills and proposes instead a system of statute law revision Bills and portfolio omnibus Bills. The Government has indicated that major new policy proposals will continue to be implemented, in the first instance, by separate Bills. Also, in future, wherever possible, consequential amendments will be included in the principal Bill rather than in a separate consequential provisions Bill. In his second reading speech the Minister for Justice (Senator Tate) indicated that the Government's objective is to enhance further opportunities for parliamentary scrutiny of proposed legislation. I can only hope that that objective is put into practice. To date, the record of the Government in allowing adequate scrutiny or consideration of complex legislation has been abysmal, with much legislation being rushed into the other place before any real opportunity for the consideration that much of that legislation deserves has been given. On occasions, the coalition parties have been able to join with the Australian Democrats to defer consideration of some of this legislation, just to give people, particularly those outside the chamber with a vital interest in the legislation, an opportunity to consider it and express their views. It is also noted that the Government has agreed to new guidelines for the inclusion of matters in portfolio Bills, which will enable it to include amendments of all legislation with a ministerial portfolio or of related legislation within the portfolio. I am grateful for the undertaking that the Minister has given my office that he will table the guidelines. While the guidelines may ensure that these amendments are limited to technical and administrative changes of a minor nature, the record of this Government in introducing lengthy and sometimes complex amendments in omnibus Bills of this nature has not been good. The Minister will no doubt recollect the occasion when 60 amendments were made to the Trade Union Training Authority Bill in May 1985 which substantially altered the rights and responsibilities of both the individuals and groups involved and which clearly was an abuse of the use of the Statute Law (Miscellaneous Provisions) Bill guidelines. The Opposition will be closely scrutinising this change of policy which transfers minor policy amendments from the statute law Bills to portfolio Bills to see whether the Government's performance matches its rhetoric. Senator MACKLIN(Queensland)(5.24) —This, thankfully, is the last of the Statute Law (Miscellaneous Provisions) Bills, as Senator Lewis has already said. There have been quite a number of problems on the way through with this approach, mainly because of the Government's willingness to stretch the guidelines that were originally provided for these types of Bills. In this Bill, for example, we find six pages of amendments to the Australian Capital Territory Supreme Court Act, particularly with regard to the Master of the Court. It is an uncontentious matter in anyone's language but, nevertheless, a matter comprising six pages of a Bill cannot be said to be a short one. In fact, it is probably longer than the average Bill that is introduced in this place. So I think it will be useful from now on for those types of amendments to be made in the omnibus Bills. I suppose we will have problems with those as well, but at least we have now separated out statute law revision, that is, amendments relating to technical drafting and repeal of spent or non-operative legislation. As to the matter of non-operative or spent legislation, I think it would be useful to include in subsequent statute law revision Bills some reason as to why the laws involved are in fact being repealed. There is absolutely no mention in the second reading speech of the Minister for Justice (Senator Tate) of why those laws are being repealed. One should be able to find out why they are inoperative, if that is the case. I think a note should be provided on each of the Acts that are to be repealed. For example, why are we now repealing two repeal Acts? I think that is interesting in itself. One of those is a rather interesting Act, namely, the Cities Commission (Repeal) Act of 1975. That certainly dates back to another time. Most of them are of an age that would lead one to believe that there is some reason why they are being repealed or why they have become inoperative, and if that is the case we ought to have the reasons provided to us. I imagine that the two Acts on wool marketing were not picked up last time we went through this exercise and, obviously, the Australian Capital Territory Electricity Supply Amendment Acts are included under another item. However, can the Minister indicate in his reply the reason for the repeal Acts being repealed? The only other matter that I wish to raise concerns the exercise with regard to the portfolio Bills. Obviously, these Bills, two of which I think are currently before Parliament, if not in this place at least in the other place, can become quite sensitive. They cannot be treated in the way that ordinary legislation is treated. The omnibus Bills will go through this chamber with a minimum of fuss. I believe that a reasonable amount of time needs to be provided and that at least some comment in the second reading speech or in the explanatory memorandum ought to be attached to each of the items in those omnibus Bills. Without that I think there will be some significant problems, given the size of some of those omnibus Bills that are likely to be introduced. Can the Minister give us some indication of the specific guidelines that the Government intends to follow with the omnibus Bills, so that at least we will have a gauge against which we will be able to check? It may be that the Government does not want to give us that, on the basis of thinking that we should keep to the ones given to us on the statute law. However, I wonder whether we can have those guidelines. Presumably, such guidelines have been drawn up and I think they would be very useful to the Senate in consideration of omnibus Bills introduced in future. Senator REID(Australian Capital Territory)(5.29) —I may be echoing what has already been said about the Statute Law (Miscellaneous Provisions) Bill 1988, but I want to refer specifically to the amendment to the Australian Capital Territory Supreme Court Act 1933. The Bill includes substantial amendments to that Act and there is no way that anybody could suggest that the amendments merely tidy something up, or that they do any of the other things that we have been told. It involves a substantial change to the legislation; it provides for the establishment of a Master of the Supreme Court in the Australian Capital Territory. I applaud the establishment of the position of Master of the Supreme Court, but I do not know why this amendment to the Australian Capital Territory Supreme Court Act was not brought in in a proper manner. I could take the full half hour to which I am entitled to explain how wrong I think it is to make these amendments in the manner proposed. I hope that the Minister for Justice (Senator Tate) can give a decent explanation for this matter. I would like the Minister to say that he will withdraw this provision from the Bill and that the Government will put it through the Parliament as it should be done. I can assume only that it has something to do with the Government's attitude to the Australian Capital Territory that something as significant as the appointment of a Master of the Supreme Court is shoved into a Bill like this and is not done in the proper manner. I would make a similar comment in relation to the amendments to the Maritime College Act, which go on for some pages and again, clearly, should have been introduced in their own amending Bill. We continually hear about the high cost of legal proceedings, the high cost of employing a lawyer and the drain on resources of legal aid, yet Bills like this continue to come before Parliament-Bills which make obtaining legal advice more expensive than otherwise would be the case if the law could be presented more simply. Any solicitor who must do research to advise his client and who has to thumb through all these Acts to find out exactly what has happened must spend more time and, therefore, it is more expensive for his client than can be justified. I think it is outrageous to treat legislation in this way, and I just hope that the Government appreciates what it is doing and mends its ways. Other legislation included in this Bill is treated in the same way. I note that the Government has corresponded with the Australian Capital Territory Law Society about the establishment of a Master of the Supreme Court and that it has substantially agreed to the requests that have been made. As I said, I am not commenting on or criticising the content, but I think that the way that it has been done deserves some explanation. Senator TATE(Tasmania-Minister for Justice)(5.31) —in reply-I thank those honourable senators who have contributed to the debate on what is the last of the Statute Law (Miscellaneous Provisions) Bills to be introduced into this chamber. I think it should be acknowledged that it was probably the activity of this chamber in particular in sending certain proposals contained in a former Statute Law (Miscellaneous Provisions) Bill to one of its committees which has, in part, led to the Government's decision to abandon this legislative procedure, which has been used for many years, to deal with amendments necessary to a wide range of legislation. I think it is true that the Statute Law (Miscellaneous Provisions) Bill has become so wide in its scope and has embraced so many areas that its sheer size has been daunting, and I think it has given an impression, perhaps beyond the actual substance, that indeed it was attempting to achieve something outside the scope suggested in the guidelines. I think on only one or two occasions was there any real transgression, and of course that was pointed out very firmly during this chamber's consideration of those parts of the Statute Law (Miscellaneous Provisions) Bills which did offend. As honourable senators will know, the Government has decided to bring in portfolio legislation Bills. It may be of interest to senators if I table the guidelines for including amendments in portfolio legislation Bills, and I will ensure that a copy goes to the Scrutiny of Bills Committee for its interest. I formally table those guidelines, which state: 1. A portfolio omnibus bill may include amendments of all legislation within a ministerial portfolio or of certain ``related'' legislation within the portfolio. 2. Major new policy proposals not previously included in any legislation should be implemented, in the first instance, by a separate Bill. 3. No provision that imposes a tax may be included (see section 55 of the Constitution). 4. Sensitive policy issues which are likely to raise major political considerations or potentially lengthy debates in one or both Houses of Parliament should be given effect to by a separate amending Bill. 5. Parliamentary Counsel has a discretion to ``close-off'' a bill which is becoming too lengthy when it is required for introduction before either outstanding instructions are available or drafting resources are available to draft the remainder of the Bill. During debate on the Statute Law (Miscellaneous Provisions) Bill 1988 now before us, Senator Macklin asked about the repeal of the Wool Marketing (Loan) Act 1974 and the Wool Marketing (Loan) Act (No. 2) 1974. I am advised that no transactions have been recorded under those Acts since 1978-79 and that the Australian Wool Corporation's reserve price activities are now industry financed and therefore the Act is exhausted. In relation to the Cities Commission (Repeal) Act 1975, I am advised that its provisions are no longer operative, that its obligations have been fulfilled and hence it is no longer necessary. That is all I have available on that Act at the moment. In relation to the Australian Capital Territory Supreme Court Act 1933 and the proposed amendment providing for the appointment of a Master of the Supreme Court, it is true that this is a rather lengthy provision, and indeed, it was only in that respect that the Scrutiny of Bills Committee found it necessary to pass comment. Indeed, it said that the proposed amendment may not be regarded as contentious and does not involve a substantial policy issue, but it did say that the amendment `borders on the lengthy'. Whether that is the case is a matter of judgment, but it brought that point to our attention. Be that as it may, I do not think it deserved the caning it received from Senator Reid. I hope that the new portfolio legislation Bill arrangement, when it comes into operation, provides a satisfactory mechanism which allows proper scrutiny of this type of amendment to major legislation within portfolios. Question resolved in the affirmative. Bill read a second time, and passed through its remaining stages without amendment or debate. Consideration resumed from 21 April. Clauses 1 to 6 agreed to. Clause 7 (Insertion of New Divisions). Senator VANSTONE(South Australia)(5.39) —The coalition amendments to this clause seek to ensure that the relevant staff organis- ation does not have the power of veto over people who serve on the joint selection committees. The point has been put by the Government, and as I understand it by the Democrats, that what happens in practice is that this is simply a matter of coming to an agreement and that it is inappropriate for the coalition to see that as providing a union power of veto. During the second reading debate, I said that if what would generally happen in practice is that the Minister would not make appointments without agreement, nothing is gained by leaving it as it is and, in fact, to make the appropriate changes as proposed in Opposition amendments Nos (1) to (3) would achieve that. What would happen is that the Minister would have the responsibility for coming to the agreement. It would be on the Minister's head if the Minister chose to make appointments with which the relevant staff organisation did not agree. I think the argument is as simple as that. The coalition has not been convinced by any arguments put forward either by the Australian Democrats or by the Government. The coalition still remains committed to the amendments (1) to (3) circulated in its name. The CHAIRMAN —There are a number of amendments to this Bill. I propose to take them in the order of the Opposition amendments (1) to (3), then the Government amendment and the Australian Democrats' amendment, if they wish to pursue it, and finally the Opposition amendment (4). Senator Vanstone, you have not moved your amendments (1) to (3). Do you wish to do so? Senator VANSTONE(South Australia)(5.41) —by leave-I move: (1) Page 6, clause 7, proposed subsection 32 (1), line 5, leave out ``Subject to subsection (2)''. (2) Page 6, clause 7, proposed subsection 32 (1) (b), at end of proposed paragraph, add: ``, after consultation with the relevant staff organisation''. (3) Page 6, clause 7, proposed subsection 32 (2), line 10 and 11, leave out the proposed subsection. Senator TATE(Tasmania-Minister for Justice)(5.41) —If Senator Jenkins does not mind, I will precede her in speaking because, as she knows, we will be supporting the Australian Democrat amendment. It might be best that I get my reasoning out of the way so that the Australian Democrats can move their amendment and we can have a vote. At the outset I should say that the Government amendment foreshadowed by Senator Richardson in the second reading debate on this Bill is withdrawn. The Government has agreed to support an Australian Democrat amendment, which is very similar to the one outlined by Senator Richardson. In essence, after the amendment, proposed new subsection 32 (2) would say that a person, other than the chairperson, cannot be appointed to a joint selection committee unless management and the union have first agreed that he or she is suitable for appointment. I turn now to the Opposition amendments, which the Government opposes. I shall deal with the first three amendments together as they amount to a single amendment in substance. The Opposition objects to giving the union a veto power over the appointment of persons to sit on a joint selection committee. The Government cannot see why. The very concept of joint selection committees is a cooperative arrangement. Job applicants interviewed by joint selection committee lose their normal appeal rights and one could not expect a union to cooperate in establishing a joint selection committee unless it was satisfied that the interests of its members were protected. In addition, a consultative process similar to the one in proposed section 32 has existed informally in the Commonwealth Teaching Service for some time. The Bill will give legislative force to what is already a successful and mutually beneficial arrangement. Senator JENKINS(Western Australia)(5.43) —I speak in support of the Australian Democrats' amendment-- The CHAIRMAN —Order! That amendment is not before the Chair at the moment. You will have a chance to move that after these particular amendments have been dealt with. Senator JENKINS —In which case, Mr Chairman, I rise to speak against the amendments moved by the Opposition. Mr Chairman, I am not speaking to our amendment, but we will move our amendment because we believe that it more realistically reflects the situation-- The CHAIRMAN —Senator Jenkins, you are perfectly entitled to foreshadow your amendment as an alternative to what is being proposed. Senator JENKINS —The Minister for Justice (Senator Tate) referred to both, with due respect, Mr Chairman. We believe that our amendment reflects the actual situation-a situation which has existed for some time. Under the Opposition's amendment section 32 (1) (b) would state: not fewer than 2 and not more than 3 other persons appointed by the relevant authority, after consultation with the relevant staff organisation. This does not go far enough. Our proposed amendment states: A person shall not be appointed under paragraph (1) (b) unless the relevant authority and the relevant staff organisation have first agreed that the person is suitable for appointment. I would like to point out to the Committee that what we are talking about is a series of joint selection committees. These committees change according to the appointments under discussion. Therefore, on each occasion the chairperson appointed by the Minister will be different. It has been indicated to me in consultations with the relevant authorities and with representatives of the staff organisations that the chairperson will be, for the most part, an officer who is at least one grade above the person to be appointed. One of the other persons will be a person who would be in a position of authority above the person applying for the appointment. The third person would be a person recommended by the relevant organisation on behalf of the interviewee. As far as the Australian Capital Territory Schools Authority is concerned, these selections are being made under peer assessment and selection criteria. For the interest of the Committee, I have with me the positions advertised in the Supplement to Schools Bulletin No. 324 of 10 March 1988. This supplement states that officers interested in having their names registered for vacancies that may occur in the Authority's Office during 1988 are invited to apply for such positions. One of these positions with vacancies is the Peer Assessment and Selection Section. The joint selection committee would be formed of different persons on each occasion. Of course some of these people will have applied already under these auspices. A third person may be appointed to join the selection committee. This person might be a member of or employer in a certain trade area if the appointment being examined by the joint selection committee is in such an area. It may indeed be a head of a department of an interstate technical and further education (TAFE) college. It may even be the principal of an interstate TAFE college if the position is a relatively high one. Therefore, what we are talking about are rolling committees-different committees on each occasion. Therefore, it is absolutely essential that the joint selection committees are formed by agreement of the relevant authority and the relevant staff organisation. In fact, they will not work if this is not the case. If agreement cannot be found the interviewee can then go through the normal appeals system. Therefore, the applicants for the positions are covered in that way. For this reason I will be supporting the Democrats' foreshadowed amendment. Amendments negatived. Senator JENKINS(Western Australia)(5.47) —The Australian Democrats cannot agree with clause 7 as printed. On this occasion we agree with the Liberal-National Party coalition that in fact clause 7 amounts to a veto clause rather than an industrial democracy clause, which is what we favour. Therefore, I move: Page 6, clause 7, proposed subsection 32 (2), lines 10 and 11, leave out the proposed subsection, insert the following subsection: `` `(2) A person shall not be appointed under paragraph (1) (b) unless the relevant authority and the relevant staff organisation have first agreed that the person is suitable for appointment.'.''. Amendment agreed to. Senator VANSTONE(South Australia)(5.48) —I move: (4) Page 7, clause 7, at end of proposed section 33, add the following new subsections: ``(6) A Joint Selection Committee shall not refuse to consider an application on the basis that the applicant is not a member of a relevant staff organisation. ``(7) A Joint Selection Committee, or a member of a Joint Selection Committee, shall not, in assessing the claims of applicants in accordance with subsection 33 (1), take into consideration whether an applicant is a member of a relevant staff organisation.''. This amendment seeks to add two subclauses to clause 7 to ensure that a joint selection committee will not refuse to consider an application on the basis that the applicant is not a member of a relevant staff organisation and, secondly, that a joint selection committee or a member of it will not, in assessing the claims of applicants in accordance with subsection 33 (1) take into consideration whether an applicant is a member of a relevant staff organisation. This proposed amendment adequately reflects the coalition's view with respect to the priority that ought to be given in any application for a job, promotion or transfer to someone on the basis of whether that person is a member of a union. In other words, we think that no priority should be given to that at all. We see the addition of the proposed new subclauses as simply spelling that out and making it abundantly clear. It seems that no more needs to be added. Senator TATE(Tasmania-Minister for Justice)(5.50) —The Government opposes this amendment, not because it in any way disagrees with the sentiments expressed but because it is illegal for such a committee to consider the question of whether a person is a unionist. As honourable senators would know from a cursory reading of the statute, proposed section 28 (1) makes it clear that, in promoting or transferring Commonwealth Teaching Service officers, the relevant authority must select the most efficient officer. Proposed section 28 (2) sets out the matters which must be taken into account in determining efficiency. Proposed section 31 authorises the relevant authority to promote or transfer an officer in accordance with the advice of a joint selection committee. I am advised that, as a matter of law in making its recommendations to the relevant authority, a joint selection committee would be bound by the requirements of section 28 to assess the claims of applicants in terms of relative efficiency. A joint selection committee which had regard to whether an applicant was a union member would not be assessing the relative efficiency of that officer and would be taking an irrelevant consideration into account. Certain legal remedies or consequences would follow. Either the relevant authority could decline, under proposed section 34 (b), to accept the advice of the joint selection committee or a legal challenge could be brought on the basis that, in taking account of irrelevant considerations, the committee was not complying with section 28. In other words, we are saying that under the normal rules of administrative law to take account of such an irrelevant consideration would be to act ultra vires. Therefore, it would be illegal. Senator JENKINS(Western Australia)(5.52) —The Australian Democrats are against compulsory unionism. So, on the surface, we certainly support the intent of the Opposition's amendments. I am encouraged by the Minister's words. However, I feel that, as we have, for example, sex discrimination legislation and anti-racial discrimination legislation, the Minister should spell out precisely where in that section it says that it would be absolutely out of the question for anyone to be denied promotion on those particular grounds. Senator TATE(Tasmania-Minister for Justice)(5.52) —One can do all sorts of things out of an abundance of caution, but I do not think it is necessary, otherwise we would have to list negatively all those matters which would be quite irrelevant and improper for the joint selection committee to take into account. The list could become endless. I understand entirely the sentiment which has been expressed; it is well understood. But I can assure honourable senators opposite that the best available advice is that it would be illegal for the committee to take that into account. Proposed section 28, which we have already passed as it is contained in clause 5, makes clear that, in the selection of officers, the committee must take into account the abilities, qualifications, experience, standard of work performance and personal qualities of each officer to the extent that they are relevant to the performance of the duties of the position and the potential of each officer for further career development and so on. They are the only matters which can properly be taken into account. We should not try to list by anticipation all the irrelevant matters which might be taken into account, such as whether one belongs to a staff association or union or is of a particular gender or race or some other matter. It would be improper and, more than that, illegal. Therefore, it could be quite adequately challenged. In the light of the explanation, I simply ask the Democrats and perhaps even Senator Vanstone to accept that that is the case and not to press this particular amendment. I can understand its symbolic value but I assure honourable senators opposite that it is unnecessary. Senator MACKLIN(Queensland)(5.54) —I accept the Minister's response. I just ask for one further point of clarification in relation to efficiency: Would it be permissible, within the definition of efficiency, to include an item about the fact that the person is a member of a trade union? In other words, in a fully unionised school would it not be the case that someone who was being promoted as a principal and who was not a unionist might find a great deal of difficulty in operating efficiently? Therefore, is this not a further point to raise now, rather than not at all? I take the Minister's point in relation to the other items. I simply say, by way of explanation, that our Party's policy has been against compulsory unionism, but it is very much in favour of a fee for service. We tried to interest the Australian Council of Trade Unions in this on one occasion, but it got rather upset about it. We do not wish to support the bludger syndrome of people who are quite willing for others to pay for an organisation to go before the relevant industrial tribunals, for lawyers and for research which is needed to support pay and conditions issues. We are quite happy for there to be a fee for service, but we think that people have a natural right to refuse to belong to any organisation to which they do not wish to belong. We just want to make sure that a person's promotion would not be jeopardised in any way by the fact that he or she chose, on the grounds of conscience or whatever, not to belong to a particular union. Senator VANSTONE(South Australia)(5.56) —The coalition welcomes the comments of the Minister for Justice (Senator Tate) that the Government is opposed to the question of union membership being taken into account in terms of transfers, promotions and appeals. It understands the points the Minister makes in relation to the guidance offered in section 28 to people involved in assessing others for promotion and transfer, but makes the point that compulsory unionism, whether spelt out in law or used in practice-and it is more often the case that it is used in practice than listed as some sort of legal requirement-has had a negative influence on the Australian economy. We take every opportunity we can to point out the change in direction that will be taken when we become the Government at the next election. Given that the Government agrees that there is no problem with the substantive content of these amendments, I think that it needs to make a better case as to why the two extra subsections should not be added to clause 7. These would give great heart to those who do not really want to belong to a union but do belong because they believe, rightly or wrongly, that their cause will be prejudiced if they do not. They can stare into section 28 and see nothing about unionism and take no heart from that at all. It may be the case-this is not denied-that if they could say that it was taken into account they would be able to appeal. But the fact is that, when it is not spelt out and explicitly listed as not being taken into account, one could regard this as a disincentive to pursue an appeal on that basis. Therefore, we consider it appropriate to spell out loud and clear that what the Minister says is the case so that people who wish to avail themselves of the opportunities of the administrative law can do so with some heart, resting on two clear subsections. The matter of compulsory unionism, as opposed to discrimination on gender, race or whatever, spreads throughout and pervades the whole community. On that basis, it deserves to be spelt out-more so than the wide range of other areas where there could be discrimination. I agree with the Minister that it would be inappropriate to list every basis on which a joint selection committee was not permitted to act, but this is such an important and all-pervasive matter that it should be listed. Senator JENKINS(Western Australia)(5.59) —I would like to ask Senator Vanstone whether she knows of instances in the Australian Capital Territory or in the Commonwealth Teaching Service where there has been discrimination on those grounds. I am not aware of any discrimination in my home State of Western Australia, although I certainly know that both members and non-members of the State schoolteachers union are involved in schools and technical and further education colleges. Of course, certain private developers had their own private arrangements with union members on a clearly advertised basis of `no ticket, no job'. I am sorry for using the time of the Committee, but I feel it is important that this should be talked out. We thought that we would have had more time to go into this matter thoroughly. So I put those questions to Senator Vanstone. Senator VANSTONE(South Australia)(6.00) —The Opposition does not see this as being-- Senator Knowles —Question Time. Senator VANSTONE —Question Time, as my colleague the Deputy Opposition Whip says. Nor does it see this as being something that needs to be talked up. We clearly agree on what the substance of the matter ought to be. We are simply arguing about whether in principle it ought to be spelt out in the legislation. That is all we are talking about now. We are not talking about whether something happens in one case or 50 cases. We are not talking about basing legislation on the odd example or 20 examples that come across one's desk. We are simply talking about whether a principle that the Democrats say that they agree with and the Government says that it agrees with ought to be spelt out. The argument need go no further than that. I think the issues are perfectly clear, and the sooner we vote on it the better. Senator TATE(Tasmania-Minister for Justice)(6.01) —Just to set Senator Jenkins's mind at ease-and I agree that to some extent it is irrelevant-as far as the officers are able to inform me, they are able to recall no instance in recent times of such discrimination occurring, or at least having been alleged as a reason for non-promotion, non-transfer or whatever. My real concern, though, remains that if one starts to make a list of those matters which are illegally taken into account by reason of their being irrelevant to the considerations properly outlined in proposed section 28 as proper criteria for judging the efficiency of an applicant for a position, under the well known Latin tag expressio unius est exclusio alterius it may well be that the listing of one particular instance of such discrimination could lead to the conclusion that other irrelevant considerations are not to be regarded as so weighty. It is only because at the moment this is a matter of particular concern that it has the dominance in the coalition's mind that it does. There could be times when other matters to do with racial origin, political bias or whatever could equally be put forward as matters which ought not to be taken into account by such a joint selection committee. As I say, I think it is somewhat dangerous to start listing or highlighting one particular instance of such an irrelevant and, therefore, illegally considered criterion being taken into account. As far as Senator Macklin's particular concern is to be assessed, it is clear that efficiency is to be judged by the criteria set out in the proposed section 28 (2) in clause 5 of the Bill. I find nowhere within those criteria the sorts of matters which would lead to the applicant he mentioned being judged adversely. I maintain that, having demonstrated that there are legal remedies available should such a matter be taken into account wrongly, the chamber can rest on that assurance and I think can pass the Bill in its present form. Amendment negatived. Clause, as amended, agreed to. Remainder of Bill-by leave-taken as a whole, and agreed to. Bill reported with an amendment; report adopted. Bill (on motion by Senator Tate) read a third time. Debate resumed from 17 March, on motion by Senator Tate: That the Bill be now read a second time. Senator STONE(Queensland-Leader of the National Party of Australia)(6.05) —As the Government is aware, the Opposition does not oppose the International Bank for Reconstruction and Development (Share Increase) Bill 1988. I propose to take a moment or two to comment on what the Bill actually does. As the second reading speech indicates, the Bill really has a rather lengthy history. It began back in 1984 when the governors of the World Bank, or the International Bank for Reconstruction and Development (IBRD)-that was its original title but usually these days it is called the World Bank-agreed to undertake an increase of $US7 billion in the capital of that international financial institution. At the same time, for somewhat complex technical reasons, which I will not bother to go into, the governors agreed upon the first phase of a related share allocation in the capital of the bank between the members of the bank of which, of course, Australia is one. This was related to the substantive capital increase itself. The Australian Government has already completed action on both of those major elements of the decisions taken in 1984 with legislation that passed through the Parliament in 1986, and the payment arrangements relating to that are already in train. What the present Bill does is to tidy up the very small remaining element of the matter which was agreed upon by the governors of the World Bank in 1986 in what was called the second and, indeed, final phase of that supplementary share allocation. Under this proposal Australia is entitled, but not obliged, to take up, I think, an additional 178 shares in the capital of the bank, involving a total amount of something over $US21m of which 8.75 per cent or $US1.88m is so-called paid up capital-and I will come back to that momentarily-and the other 91.25 per cent is capital at call, and I will also return to that. The paid up portion, which is the portion to which in particular the immediate financial aspects of this Bill relate, is paid, first of all, by the Australian Government, as it is entitled to do by the resolution of the Board of Governors, in the form of a promissory note which will be drawn down by arrangement between the World Bank and the Australian authorities over what is expected to be a term of four years from the date of the passage of this legislation. The remaining element of the contingent financial obligation for the Australian Government-the other 91.25 per cent of the total capital raising involved-is, as I said, capital at call. It is worth while pausing at that point for a moment and taking note of what is actually involved there. The International Bank-the World Bank-borrows very large sums in the international capital markets. Up to June of last year-that is, the end of its last fully completed financial year-the World Bank had lent altogether, since its inception, about $US120 billion, to its various member countries, including Australia back in the 1950s. I think we have now fully paid off the few World Bank loans that were on our books back in the 1950s. Almost the whole of that $US120 billion worth of lending to member countries has been financed by the World Bank from borrowings in its own name in the international financial markets. The importance of the uncalled capital of the bank, which we will now be adding to slightly, is that it is uncalled capital which represents in effect the guarantee, or the joint guarantees, of all the member countries of the bank for those borrowers. The bank has never defaulted on the repayment of any borrowing it has made in international markets. I think I am correct in saying that, while there may have been one or two occasions on which, in anything but technical terms, member countries of the bank have defaulted on loans it has made to them, in the end the bank has never had a bad debt from any of its member countries. So the question of actually falling back upon the guarantees of the members has never arisen. Nevertheless, the financial markets regard it as extremely important to have standing behind the borrowing prospectuses that the bank issues when it makes large loan raisings in the international capital markets the names and guarantees of the member countries of the bank, particularly the highly developed and, if you like, richer countries, such as the United States of America, Britain, Germany, Canada, Japan and, in the last resort, even Australia, because in the end that is the guarantee that the lenders in those markets to the World Bank will get their money, if they have to do so. What the International Bank for Reconstruction and Development (Share Increase) Bill does, in effect, is complete the last little bit of unfinished business arising out of events in 1984 and 1986 and, as I have said, the Opposition does not oppose it. Under this Bill, Australia will pay up the last portion of its share in that enterprise. Because the Bill concerns the World Bank, it leads immediately into consideration of the general state of that part of the world to which the bank's activities these days principally-one might almost say wholly-relate. I refer, of course, to the so-called Third World. At the end of last year, total Third World debt-there are various estimates of this, but there is some degree of consensus-amounted to about $US1,080 billion. That was an increase of roughly two-thirds-66 per cent-in the seven years since 1980. These days we are depressingly familiar with the topic of Third World debt, not merely because of the quite proper concern that many people in more fortunate countries, such as Australia, have for the plight of people living in Third World countries, often in conditions of extreme poverty, but also because, as we have become uncomfortably aware in the past few years, of the potential risks of default on much of that debt. Those risks carry possible dangers to the stability of the whole of the international financial system, including the domestic financial systems of many of the highly developed countries, such as the United States, Britain and Germany. I remind the Senate that this question first surfaced most acutely in July or August 1982 at the time of the Mexican debt crisis. It suddenly appeared to a startled world that Mexico had acquired a great deal more debt than most people had understood and it looked as though Mexico would not be able to meet the interest on those debts. I can vividly recall attending-I think in September of that year-the annual meetings of the International Monetary Fund and the World Bank, which were held in Toronto. To say the least, there was no other topic of conversation but the Mexican debt crisis which had just occurred and with which the major financial powers were just beginning to grapple, under the leadership of a very great public servant, Mr Paul Volker, who retired recently after a long period of extremely distinguished service as the Chairman of the United States Federal Reserve system, or the Federal Reserve Bank as it is generally known. That seems a long time ago but, in fact, it was less than six years ago. I think that the implications of those events, even now, probably are not generally fully understood. One implication was that a few months later, immediately following that meeting in Toronto, there was a major change in United States monetary policy. That major change was from a policy of monetary restraint to a policy of monetary relaxation. Mr Volker saw not merely the dangers for borrowers such as Mexico, Brazil, Argentina, Peru, Bolivia and many others at that time-not merely Latin America-but also the dangers to the United States banking system if those countries were to default on their debts to United States banks, among others, which were heavily involved in the lending which had been going on to those countries in the aftermath of the first and second oil shocks in the 1970s. Today, roughly 5 1/2 years later, the economic upswing in the United States which was initiated in late 1982 principally by that major policy change-I do not say that it was the only thing; a lot of budgetary stimulus was going on too, because of what has come to be called Reaganomics-is still proceeding, although I think it is fair to add that in the view of many people a tendency to falter has been beginning to appear in the last six months or so. That was notably signalled at the time of the crash on Wall Street on 19 October last year. Nevertheless, that 5 1/2-year period has provided the world, and was meant to provide it, as a matter of conscious decision-making-one might almost call it international economic policy decision-making-by the United States authorities, aided by the authorities in some other countries but led by the United States, with a breathing space. That breathing space was intended to provide a number of parts of the world with an opportunity to get their respective houses in order. It might be worth while reflecting for a moment or two on how well or, I regret to say in some cases, how badly that breathing space has been used. First, I turn to the world banking system. I think it is true to say that not all major world banks have been as successful as others in putting their individual houses in order. For example, the Bank of America is a very different and much diminished bank from what it was. I think that at that time it was the No. 2, or perhaps the No. 1, bank in the world. Today it is only a shadow of that. On the other hand, other major American banks have come through those difficult years rather well. They have restored their balance sheets and have either written off, or at least largely provided against, debts on their books which they regarded as being either doubtful or potentially bad in relation to many of the debtor countries concerned. Even if some kind of catastrophic or chain default situation developed in those countries today, they would be able to stand the shock to their profit and loss accounts, and hence to their balance sheets that that would entail. They would not, of course, welcome that. Nevertheless they are now much more able to handle such a potential situation than they would have been 5 1/2 years ago. I think it is generally true to say that the European banks-the Swiss banks and the German banks-have much more quickly moved to that situation, the British banks perhaps being somewhere in between. If one may make a generalisation, I would say that the world banking system has made more or less effective use of that 5 1/2 year breathing space to put itself in a position where it is no longer at anything like the same degree of risk that it would have been at had other decisions been taken in the aftermath of the Mexican debt crisis breaking out in July or August 1982. The International Monetary Fund (IMF) and the World Bank itself, to take other players involved in the game, if we can call it a game, have been seen throughout this period as major participants in the restructuring process and in the handling of this potential crisis which has built up in the system. Both of them have made their contributions, although I think it is fair to say that neither has made nearly as large a contribution as some of the initial suggestions for their role in the scheme of things might have had them make. Each has gone about its task in, I think, a characteristically workmanlike manner, but neither has played a particularly large role in the scheme of things. In fact, the World Bank, the institution which is the subject of this Bill and which the now Secretary of the United States Treasury, Mr James Baker, proposed for a major role at the annual general meeting in Seoul, I think 2 1/2 years ago, has actually not been able to perform that role, partly because it has not been able to get the agreement of the other parties to cooperate with Mr Baker's plan in bringing about the changes for which he had hoped. I think we would have to say, as far as the IMF and the IBRD have been concerned, that their performance, while workmanlike, has been in some senses perhaps a little disappointing. I come to perhaps the most important participants or players on the stage-namely, the Third World countries themselves, the indebted developing countries. I think one has to say that whilst experience has been mixed, the overall result, looking back on the last 5 1/2 years, has been rather depressing. A few of the countries concerned have taken advantage of the period. South Korea is a notable example. At the time, in mid-1982, South Korea had debt ratios which were amongst the highest in the world. They were well and truly up with many of the Latin American basket-case economies, as we have rather slightingly come to describe them. But the South Korean authorities have moved with determination and, I must say, with great effectiveness during the past 5 1/2 years to put that to right. They have radically amended their budgetary and balance of payments positions, and hence, as a consequence, of course, their debt position. From a situation where, 5 1/2 years ago, South Korea was regarded as one of the countries over which a large question mark temporarily hung, I think it is fair to say that that country today no longer has such a question mark hanging over it at all, from a purely financial viewpoint, that is. That is a success story. I wish there were more of them. There are very few such success stories in Latin America. Countries such as Brazil, I think, have made some progress, but there has been a continual tendency to lapse back, to take two steps forwards and one step or 1 1/2 steps backwards. So the progress in those countries has been slow at best. It must be said that in most countries-this is particularly true when one comes to black Africa, which is the other centre of great indebtedness, at least in relative terms, in the world-there has been no progress, or virtually none at all. In fact, many of those countries are in a worse state of indebtedness today than they were at the time the breathing space period began. I have to say that it is rather depressing. It is particularly depressing because during this time the actions of the United States and of the developed countries more generally, whatever we may have thought of this in Australia, have nevertheless held up the world. I know we have had a government here which two years ago was bewailing the fact that our terms of trade had deteriorated dramatically and that therefore our balance of payments was adversely affected by that, with consequences which the Government was then not finding comfortable. I will not digress into saying that there were more reasons than that for the state of our economy at that time, but that was certainly one of the arguments being strongly advanced by the Government at that time. Today, a year or so later, we have a situation where, as is common knowledge, international commodity prices have been rising very strongly for the last 9 to 12 months, particularly many of those commodities of which Australia is an exporter, such as wool, nickel and others which have made outstanding price gains. The Government has not been quite so eager to tell us about the improvement in our terms of trade as it was some time ago to tell us about the deterioration. The relevance of that is that if and when-I think it might be fair to say `when'-the cycle again turns, as I think everyone expects it to do at some point, although there may be differences of opinion about the timing, there will be consequences not merely for Australia, which is not the subject of my remarks tonight, but particularly for these Third World developing countries which are the clients of the World Bank. We sometimes talk of Australia as being a commodity exporting country, and that is true; but if Australia is dependent upon exports of commodities, a fortiori most of those developing countries certainly are. If most of those countries today are showing very little improvement in their state of indebtedness after what has been, from a broad viewpoint, not a bad period of world economic growth, what can we look forward to when that world economic growth slows down or perhaps for a time goes into reverse? I think we can expect at that time that there will be a fall in commodity prices. The countries concerned will suddenly find that the value of their exports is much diminished, and their capacity to service their debts will have fallen commensurately. While, as I say, there have been no formal defaults to date, unfortunately I do not think we will be able to expect that to continue when that day arrives. As I have said, although I am not particularly directing my remarks to our own situation, it is nevertheless noteworthy that that situation will also be fraught with some similar difficulties for another commodity exporting country, namely Australia. We have said that we will not oppose this Bill, and I conclude my remarks on that note. Sitting suspended from 6.30 to 8 p.m. Senator MACKLIN(Queensland)(8.00) —We are debating the International Bank for Reconstruction and Development (Share Increase) Bill. As has already been said in this debate, this Bill seeks to obtain parliamentary approval for Australia to take up an increase in its capital subscription to the International Bank for Reconstruction and Development, commonly known as the World Bank. The Australian Democrats will be supporting this Bill. The Minister for Justice, Senator Tate, said in his second reading speech that the bank was `an effective and efficient institution in the provision of development assistance' to the Third World countries. Community groups in Australia concerned with aid, represented, for example, by the Australian Council for Overseas Aid, recognise that the bank is a major source of finance for development. They support the bank. Nevertheless, they are critical of certain aspects of its operation. I wish to focus on some of these criticisms. Generally, they revolve around whether the bank takes sufficient account of social and environmental aspects of development. I hope to look at the degree to which the World Bank is likely effectively to incorporate these types of concerns. The criticisms of the bank probably were neatly summarised in a letter sent on behalf of members of this Parliament to the President of the bank. That letter was circulated to honourable senators by Senator Hill, who will be speaking in this debate after me. A similar letter was sent by members of the United States Congress and the parliaments of Canada and the United Kingdom. I seek to have that letter incorporated in Hansard. Leave granted. The letter read as follows- Mr. Barber Conable President The World Bank 1818 H Street, N.W. Washington, DC 20433 Dear Mr. Conable, We join our colleagues from other countries to convey to you our concern for the growing numbers of people living in absolute poverty. As you know, the source of popular support for the World Bank is for its work in assisting the world's poor. Statements that you have made since becoming president of the Bank, and your establishment of the high level task force on poverty, make it clear that you share our concerns. We note particularly your comments in Nairobi earlier this year: In developing nations . . . too many women are at the bottom. Their arms hold the family together. Their hands build the foundation of stable growing communities. But development efforts have not lent enough strengths to those arms, have not entrusted enough resources to those hands. And, along with women, development itself has suffered. We are pleased that the Bank intends to provide more support for the efforts of poor women. We note the proposed increase in the number of professional staff members devoted to women in development. However, the Bank's lending-in agriculture and rural development for example-does not yet adequately involve poor women in planning and implementation. As the Bank proceeds with restructuring, and attempts to focus more on women, it is important that it work with and through organizations that represent poor women. We commend the Bank's plans to increase its lending for primary health care and for primary education. This type of lending certainly can benefit some of the poorest people in developing countries. However, even with the proposed doubling of funding for population, health and nutrition, it would still represent only 2%-3% of the Bank's loan portfolio. Further increases in primary health lending are needed if we are to reach the World Health Assembly's goal of `Health for All by the Year 2000'. A crucial area in which the Bank could take steps to protect the interests of the poorest people is in adjustment lending. We do not believe that it is sufficient to merely cushion the impact of structural adjustment on the poor. The policies need to be re-thought. Recent studies sponsored by the Bank and by Unicef suggest a variety of ways in which policies could be tailored to the needs of the poor. For example, when government spending on health care is to be reduced, shifting spending from expensive curative health care, such as hospitals, to primary health care, can benefit more people at less cost. We also hope that the Bank will persevere with introducing adjustment lending in social sectors to improve the services most needed by the poor. In developing adjustment lending policy, in working with poor women mentioned earlier and in many other areas, the input of the poor themselves is too often overlooked. While it would be impractical for Bank staff to interview large numbers of very poor people prior to project identification, there are a rapidly growing number of non-governmental organizations (NGO's) in developing countries that can and do represent the poor. We consider it imperative that the Bank should involve these NGO's in the preplanning, execution and monitoring of projects to a much greater extent, as well as to involve them in discussions of policy and policy dialogue. Another area where Bank-indigenous NGO involvement must expand includes the protection of the environment. Although there has been a considerable awakening in the Bank with regard to the importance of environmental issues, there is still a great deal that must be changed. The environmental quality and economic sustainability of specific Bank projects must be assured. Finally, it concerns us that so little of the Bank's lending focuses on the needs of the poorest people. The ``Focus on Poverty'' report (1986) states that currently only 29% of Bank lending is directly poverty oriented. We suggest that the Bank establish the goal of targeting 60% of its lending directly to projects whose primary purpose is to assist the poorest 40% of people. The Bank's own evaluations have shown that its poverty oriented projects have often shown the highest rates of return. We wish you well as you seek to utilize the considerable resources of the Bank in the battle against world poverty. You can anticipate the continued support of the undersigned for the policies outlined above. Sincerely, Member of Parliament Senator MACKLIN —I thank the Senate. The letter suggests that more attention be given to the question of what to do with women, for example, in development. The bank's lending in agriculture and rural development does not yet adequately involve poor women in planning and implementation. More attention should be given to population, health and nutrition projects. A doubling of the funding here would represent only 2 to 3 per cent of the bank's loan portfolio. There is a danger that adjustment lending to assist countries alter their structure of the economies can simply result in a cycling of World Bank money to First World banks to pay the debts of Third World countries without any real contribution to development and the alleviation of poverty in those countries. Adjustment layers are tied to conditions on matters such as tariffs and other forms of protection-exchange rate management, government fiscal and monetary policies and the scale of public sector involvement in an economy. In all these things there is a danger in adjustment lending that the bank can overstep its brief and impose what is, in fact, a political ideology, such as the degree of public sector activity in a country's economy. Greater efforts should certainly be made by the bank to involve the rapidly growing number of non-governmental organisations in developing countries which can and do represent the poor. It is interesting to note that this Government, in terms of its aid, has moved to give more of that aid to non-government organisations. The environmental quality of specific bank projects must be assured. This is a crucial issue. In our own region, the Asian Development Bank warns in its just released annual report that demand for natural resources will rise greatly in the next 15 years because of population and economic growth, amongst other things. The bank points to the loss of about 11 per cent or 80 million hectares of current forest cover in the region, endangering critical watersheds and increasing soil erosion and the frequency of flooding and drought. Allied to environmental concerns is the impact of development projects in Third World countries on indigenous peoples. One could consider the impact of the growth of tourism, for example, in northern Thailand and the difficulty that the indigenous hill tribes are having in what has almost become a flood of tourists turning the area into nothing less than a human zoo. An example of a specific World Bank project giving rise to serious concerns in these regions is its funding for Indonesia's transmigration program from Java to Borneo and Irian Jaya. According to community aid groups, the massive immigration into Irian Jaya, for instance, is leading to the clearance of great tracts of jungle and the alienation of the indigenous Melanesian peoples. The letter to which I referred previously concludes by urging that the bank focus much more of its lending on the needs of the poorest people. The letter suggests: the Bank establish the goal of targeting 60% of its lending directly to projects whose primary purpose is to assist the poorest 40% of people. I should point out that it is the notion that aid goes to alleviate the poor and the suffering in this world that sustains public support in Australia for the various aid groups that operate out of this country. I understand that to varying degrees the World Bank is responding to these concerns. Last year the bank set up a department to examine environmental issues. It is now headed by a New Zealander, Ken Piddington, who, I believe, used to head the New Zealand Department of Environment. He is well known not only in his own country but also outside it for fundamental and basic concerns to do with the environment and the progress of peoples. My question is: To what extent are these concerns incorporated into the development of Australia's policy towards the bank and to the administration of our contributions and representations? Given that a great many parliamentarians from all parties endorsed and signed the letter that I have alluded to, there should be some guarantee from the Government that these concerns will be incorporated in our policy towards the bank. Yet it is my understanding that there is very little of a wider development perspective in Australia's policy towards the bank. The development of policy and the carriage of Australia's interest in the bank are almost exclusively the province of Treasury and so it is with Australia's relations with other international financial agencies. Treasury has long guarded its interest in this area. This has been documented by, amongst others, Peter Wilenski, a former private secretary to Gough Whitlam, more recently the former head of the Public Service Board and now head of the Department of Transport and Communications, in an essay entitled `Infanticide in the Bureaucracy: The case of the Australian Development Assistance Agency' and in his book Public Power and Public Administration. Wilenski describes how the Treasury resisted transferring any of its aid responsibilities to the new body established by the Whitlam Government to aggregate the many strands of Australia's development program. Wilenski says: Treasury, despite the wording of the announced Cabinet decision that the agency `was to absorb the aid functions of the Treasury' refused to surrender its functions, and there was nothing that other departments could do. Australia's representative on the bank's Board of Governors is the Treasurer. Australia's representative on the bank's Executive Board is a Treasury official. Australia alternates every two years between having the Executive Director and a Deputy Executive Director on the Board. When a brief is prepared for the Treasurer on the bank-say, prior to his attendance at a meeting of the bank's Board of Governors-I understand that broader aid perspectives are included only as a secondary consideration. After the brief has been drafted by Treasury, it will be sent to the Australian International Development Assistance Bureau (AIDAB) of the Department of Foreign Affairs and Trade for any additional comment. The Government will suggest that broader development concerns are represented through Australia's Deputy Governor at the bank, who is the head of AIDAB, and the fact is that the second to the Treasury officer on the Executive Board is also an AIDAB officer. However, the development of advice on the bank is, as I understand it, still almost exclusively flowing from the Treasury building. What I am suggesting is that there be a better bureaucratic arrangement to ensure that wider views on the development process are incorporated in this advice and that instructions are then issued to Australia's representatives at the bank. I am not in any way condemning the expertise of Treasury officials. What I am saying is that it cannot be expected that they, expert as they may be in economic matters, will be expert in health, educational and environmental aspects of development. Australia can have significant input in day-to-day monitoring of the sorts of concerns I and many honourable senators have raised in the parliamentary letter. The bank's Board of Executive Directors must approve all the bank's loan proposals. Australia's representative should insist that all loan proposals are accompanied by environmental impact statements. If this is not the case at present, it is at least one area in which advancement may be made. For example, what are the guidelines followed by Australia's representatives at the bank in Washington? What are their goals? What does the Government see as Australia's objective from an aid perspective, as distinct from a financial or banking perspective? We are, after all, discussing further support that Australia desires to give the bank. I would have thought it appropriate in such a debate for the Government to have canvassed its philosophy towards the bank and the bank's work in the development of those parts of the world to which we are all dedicated. It is a pity that this opportunity has been missed and one hopes that at some early stage the Government will provide the Senate with a clear enunciation of its view with regard to the matters I have raised and the matters which have been raised so succinctly and so well in the letter circulated by Senator Hill to honourable senators for their signature towards the end of last year. I hope the Government will see this as an opportunity to spell out not only to Australians, who after all are footing the bill, but to others around the world that our concern is that development be undertaken in such a way that the people are developed in an independent and human way and that the imposition of inhumane or environmentally destructive or uncaring policies is not something Australia would support. There have been a number of instances in the past, for example, where Australian aid has gone to support policies which would not form part of the policies of any government that could conceivably be elected in this country. The majority of Australians would find such policies abhorrent. The World Bank is a very important organ for the development of those parts of the world that are in need, the poorest areas of the world where people are suffering. I had hoped that we would have seen a succinct statement of the Government's position. It is a pity that we have not, because the Government's philosophy in regard to this bank will tell us a lot about the developing policy of this Government towards aid not only in that area but through its other agencies. I hope that the Senate will not have to wait too long for a detailed philosophy of what the Government intends to do in supporting this important organisation. Senator HILL(South Australia)(8.16) —The Senate is debating the International Bank for Reconstruction and Development (Share Increase) Bill 1988. I wish to take part in this debate because I, too, am concerned with the superficial contribution of the Government in this debate, as indicated by the second reading speech of the Minister for Justice (Senator Tate). It seems that we shall not have the benefit of contributions by any other Government senators, except no doubt the Minister in reply to the debate. But it is an important debate, not solely because of the fact that Australia is making a further contribution to the World Bank but because it leads to all the ongoing issues which should concern us about the methods of operation at the bank and the effectiveness of its programs. To be specific, this Bill empowers the Treasurer to make necessary agreements to allow Australia to purchase an additional 178 shares in the capital stock of the bank, the cost of which subscription is to be $US1.88m. Australia is making a further direct contribution to the funds. Also we should bear in mind, as Senator Stone reminded us, that it is not only our contribution in shares that we take up, but in effect the guarantees that we give as a capital contributor, that give us a vested interest in our concern as to the appropriateness of the bank's investments. These major issues which have been around for some time concern the internal operations of the bank, its efficiency, its internal auditing and accountability, and its methods of operation, and at a wider level concern the effectiveness of the bank's work, particularly in its contributions to development in developing countries, and whether programs have been successful. As I shall indicate later, a large number of the programs have been unsuccessful. If programs have been successful, one must consider whether the poor in these communities benefit, and whether the trickle-down effect which the bank has adopted in the past takes effect or whether we, or the bank through our support, are benefiting the minority, the well-off, in Third World communities. I would have thought that these important issues would be canvassed in this debate, but one sees in the second reading speech statements that are all-encompassing and rather unhelpful. The Minister in his speech said: The IBRD is an effective and efficient institution in the provision of development assistance to developing countries . . . What is the authority for that? It is unhelpful for the Minister simply to assert it, when we know that for many years there have been critical analyses as to whether it is an effective and efficient institution. If this Government is running counter to a widely held view in the international community, the least it can do is to provide us with evidence to support its claim. The Government went on to indicate that the bank had lent about $US120 billion to its member countries. That gives some indication of the very major role that it plays in the world financial community. It has said that this money was largely borrowed from international financial markets and that the cost to taxpayers in terms of paid in capital subscriptions was only $US7.2 billion. The Government then told us that projects financed covered all the major sectors of economic development, with an emphasis on infrastructure facilities in the transport and communications, industry and energy sectors, as well as projects for agriculture, education and water supply. That is interesting but it does not help us a great deal when we try to analyse whether the funds of the bank are in fact being expended wisely. The Government has said that 85 per cent of evaluated projects achieved all or most of their objectives. What are these objectives? It is not helpful to us for the Government simply to say that 85 per cent of objectives have been achieved without giving us any indication of what they are. If the objective is simply to build a road, then it is clearly easily assessed whether the road has been built, but it is much more difficult to assess whether the road has contributed to the well-being of the community of that developing country. It tends to be even more difficult to assess whether it has been of benefit to the poor in that country. I suppose the Government does give us the warm feeling that, in any event, our investment is more than balanced by procurements by the IBRD, including the International Development Association; that our contributions are more than covered. So, from a purely materialistic point of view, in that regard I suppose we should be pleased; but, of course, we are looking at the primary role of this international development bank and at our contribution as amounting to something greater than that, namely, to make a constructive and worthwhile contribution to developing countries so that their communities as a whole can benefit and so that they can play a more active part in the international economic community. I would like to have seen in the Minister's second reading speech on this Bill an analysis of whether that goal is being achieved. The World Bank group includes a number of different arms, and the guidelines for each will obviously be slightly different. I recall that I have spoken previously about contributions to the soft lending arm of the organisation, the International Development Association. Of course, the IBRD is not the soft lending arm; its real function is to make contributions to countries that are perhaps now not in the category of being the least developed or the most poor and to help them build their economies. Thus, as I indicated previously, slightly different criteria might be expected. It is interesting to note that we seem to have fallen into this category and, as Senator Stone reminded us, loans have been made to Australia. In fact, there seems to be some dispute as to whether we still owe money on those loans. I note that the summary of the statement of loans in the 1987 annual report of the World Bank indicates that we still owe $26m-although some other authorities, and the Government also, I understand, indicate that all our debts have now been repaid. We should look at this bank as playing a leadership role in providing development aid in the world. It is the most influential aid development institution and therefore, obviously, its pattern of loans and the priorities that it sets tend to be followed by others. I would have thought that that was all the more reason for the Government to have taken this new contribution and its obligation to the Senate seriously, and to have done a proper evaluation of the work that is being done by this body. Mr Deputy President, as you would also be aware, changes have been made recently and the World Bank seems to have made an effort to recognise some of its failures of the past and to look at undertaking worthwhile reforms. Something of a purge and a restructuring has taken place. I respectfully suggest that there are now some promising signs under the leadership of the new President, Mr Conable. It is interesting therefore to look now at the type of goals that the bank is setting itself and the criteria that it is setting as its objectives. I am pleased to note that at a seminar sponsored by the Australian Development Studies Network, held only in the last few days in Canberra, Mr Donaldson of the World Bank outlined the five principal criteria for the objectives of World Bank policy as: growth, stability, sustainability, efficiency and equity. I would have thought that in general terms they are the type of objectives that we would be looking for, although one would very quickly acknowledge that to achieve all such objectives simultaneously is in fact a great challenge. Who is receiving the benefits of loans from this arm of the World Bank group? It is interesting to note that seven countries receive over 50 per cent of such loans. They are: Brazil, Colombia, Indonesia, the Republic of Korea, Mexico, the Philippines and Turkey. These countries contain less than 10 per cent of the world's population, yet, as I have said, over 50 per cent of loans are devoted to them. Also, none of those countries is in the category comprising the poorest countries in the world, those low income economies that are mentioned in the 1987 World Bank annual report. Upon some reflection perhaps that makes sense because there is little point in simply making further loans on commercial terms to the poorest countries, which will not be able to repay those loans and which will go further into debt, as has happened in the past. In relation to the poorest countries, perhaps the emphasis should be on grants and, where necessary, on soft arm loans, that is, subsidised loans. Perhaps we should be looking at other types of developing countries. Certainly, I accept totally what Senator Stone said in his contribution that Korea is an example of a country which has taken up the bit and which is really showing that it is able to turn from being an undeveloped nation into what it looks as though it will become, namely, an economic powerhouse of not only the region but the world. So the examples are there. Achievements can be made and financial support through organisations such as the World Bank can make a significant contribution towards those goals. Senator Macklin mentioned that some of us in this place think that the criteria for assessing loans should not be simply on economic terms and that, in fact, if economic considerations are solely taken into account without other considerations the effect can be counterproductive. It can be counterproductive in social and political terms and in respect of the impact on the cultural fabric of the societies which are to receive funding. I respectfully submit that in the past the World Bank has not sufficiently taken into account criteria other than that which is purely economic, and in the long term that failure has shown itself in economic terms. Therefore, as Senator Macklin indicated, I have recently joined with other parliamentarians of this Parliament and those of Canada, the United Kingdom and the United States of America in writing to Mr Conable and stating that in the loan making procedures we believe greater consideration should be given to environmental and poverty indicators. In other words, we wish to see loans made for economic developments that are consistent with the local environment and which properly take into account real levels of poverty and hopefully can benefit those who are suffering most in these developing countries. We are pleased that we have received a positive response from Mr Conable, and I indicate that we intend to continue that challenge in our own small way-although I suppose it is not so small when one considers that it is a group comprising of parliamentarians from throughout the world-to attempt to guide the World Bank in what we see as a better direction. I only regret that the Australian Government has not been able to take a leaf from that book in that it has not been prepared to act in similar fashion to that example and take up the challenge itself. There again, I guess the superficial nature of this contribution by the Minister is somewhat consistent with this Government's whole attitude to aid development or otherwise, and of course aid is significantly reduced under this Government. I refer to comments made by Mr Conable, and again I think this gives us reason for some confidence in the future, which is why I am on my feet tonight. I believe that the new trends should be spoken about positively because with encouragement they may continue. When wrestling with the task of setting down the five priorities of the World Bank, which is under his stewardship, the President said: They are to maintain and strengthen the Bank: - as a central force for development and in the struggle against poverty; - as a major influence of economic adjustment and growth, for debt rescheduling and trade liberalisation; - as a steady source of project lending-especially in advancing agriculture beyond subsistence levels; - as a sensitive advocate of the importance of population, environmental and women's concerns in the developing world and in the development process; and - as a responsive institution quick to adjust to new needs and to adapt its strength to new challenges. If in practice the bank is able to meet that rhetoric, I will certainly be pleased with its direction. I am pleased that Mr Conable has given some indication that it is more than just rhetoric, a point that was also mentioned by Senator Macklin. In the World Bank's 1987 report Mr Conable indicated that it had established a special poverty task force composed of senior staff to review the bank's poverty work and propose new activities. He said that it has recommended strengthening of the bank's poverty programs and also said that they will be discussed with executive directors of the bank in 1988. So it would appear, although I must concede on somewhat superficial analysis at the moment, that the bank will match its rhetoric with action-and that is pleasing. I would like to see the Government acknowledge that it has been somewhat remiss and now take up the challenge as the Australian Government to ensure that within its responsibility and influence the World Bank continues down this path. I understand that some of the recent internal evaluations by the bank have shown a very large number of failed projects and that there has been very little evaluation. For example, I understand that in relation to the rural development program, on which $12.6 billion was expended in 1980-86-and as you would be well aware, Mr Acting Deputy President, a considerable portion of that has been in Africa-it has now been assessed that two-thirds of sub-Saharan African projects have failed. Failure is one thing, but I find equally disturbing this apparent lack of evaluation over the years. In fact, I understand that this program has been in place for some 20 years, during which time there has been inadequate evaluation, so in fact the extent of the failure and of the loss of these huge sums of money is only now coming to light. I commend Mr Conable for at least bringing these matters to light and for looking for ways to improve future programs. I guess we would say that some of the evidence that is coming forward is pretty obvious when we look at the sort of things that need to be taken into account to make a rural development program work. However, it seems that in the past these matters have not been sufficiently considered, and they include such things as first obtaining a commitment from the local government. By that I mean a real commitment-not just a statement that it wants more soft loans or more development loans from the World Bank, but a real indication that the Government, through its internal policies, is prepared to cooperate and be part of these projects. It also requires evidence in that, if you are working down the path of, for example, land reform, which will be an integral part of this program, the local government is prepared to be part of it. Of course, that is one of the reasons for the partial failure of many programs under Marcos in the Philippines; and it is part of the reason for the partial failure of many programs in Ethiopia. Apart from obtaining a real commitment from the local government it is now evident that there is a need for advisers who help set up these programs to not simply disappear once they are completed but to stay around to make sure that the local people are in a position to continue them. I have had the experience, as no doubt have other senators, in Africa of where rural development programs have worked marvellously while advisers have been present, but as soon as they have left the programs have collapsed. Therefore, what is needed is more emphasis on education and training of the local people so that when the advisers leave the local people are in a position to continue the projects. It is these types of matters that are coming out of the evaluation which is now being done by the World Bank. As I indicated, I would have thought that they were obvious, but apparently the agencies are only now publicly recognising that they are necessary and that there has been a failure to meet such obvious needs in the past. So I commend the direction that the bank is now taking and the attitude of its President, Mr Conable. I express concern and disappointment that the Australian Government is not seriously participating in this debate and is not putting an attitude to the World Bank or, if it is, certainly it is not taking us into its confidence in relation to the attitude that it is putting to the World Bank. I would like to see the Government be more constructive and productive in this area than it has been in the past, and perhaps when we get to the next of these Bills-and they tend to turn up every session or two-we might see a more worthwhile contribution from the Government. Senator REYNOLDS(Queensland-Minister for Local Government)(8.39) —I thank Senators Macklin and Hill for their contributions this evening. I did not have the opportunity to hear Senator Stone speak earlier in the debate. I assure honourable senators that I found the debate very thought-provoking and I will certainly ensure that their comments are referred to the Treasurer (Mr Keating). Question resolved in the affirmative. Bill read a second time, and passed through its remaining stages without amendment or debate. Debate resumed from 17 March, on motion by Senator Gareth Evans: That the Bill be now read a second time. Senator STONE(Queensland-Leader of the National Party of Australia)(8.41) —The Commonwealth Borrowing Levy Amendment Bill 1988 is, as you would certainly be aware, Mr Acting Deputy President, a non-controversial Bill. It constitutes a technical alteration to the Commonwealth Borrowing Levy Act, the principal Act, which has been necessitated because of the change in the status of Australian Airlines from a statutory authority to a public company, effected in recent months by the Government with the support, I may say, of the Opposition. I remind the Senate that the principal Act which this Bill seeks to amend was debated here only last October or thereabouts. That Act imposes a charge on Commonwealth authorities-a charge for the use of either an explicit Commonwealth Government guarantee for borrowings by such authorities or, for that matter, an implicit Commonwealth Government guarantee on such borrowings, that implicit guarantee deriving, of course, from the fact that all Commonwealth authorities are by definition wholly owned by the Commonwealth and therefore, whether there be an explicit guarantee or not, the Commonwealth effectively stands behind any borrowings by such authorities in the event of financial calamity overtaking them. The Opposition will not oppose this Bill as such. However, we wish to move an amendment at the second reading stage of the Bill in the terms which I have caused to be circulated to the Senate and which I shall now refer to. I move: At end of motion, add ``, but the Senate endorses the sale of Australian Airlines, and therefore supports the Prime Minister's statement that `I believe that an Australian Airlines, whether totally in private hands or an Australian Airlines with a significant private holding, with therefore correspondingly diminished demands upon public resources, could perform the function of Australian Airlines at least as well as they are now and, I would say, arguably, better'. ''. The truth is that we cannot allow this Bill to pass before us without taking the opportunity to give the Prime Minister (Mr Hawke) some support on this matter of the privatisation of Australian Airlines. Goodness knows, he needs all the support he can get on that subject from honourable senators and honourable members on his own side of the respective chambers. Senator Tambling —Particularly with this conference coming up. Senator STONE —As I am reminded by Senator Tambling, particularly with the National Conference of the Australian Labor Party coming up on 6 June. Indeed, I am glad that my colleague Senator Tambling reminded me of that because we have been told in recent days that for once the Senate will be able to plan on a certain date of rising-or certain latest date of rising-namely, 2 June. Upon inquiry as to why this very welcome additional element of certainty should have been injected into our lives on this particular occasion, we have been told that the reason is that Government Ministers will all wish to spend all of Friday, 3 June, preparing themselves busily for the opening of their Party's biennial National Conference on Monday, 6 June. It is, of course, very comforting to understand that this Government has its priorities right: it puts the Party first and the Parliament second. As I say, in this case it has had the very welcome effect that we can at least pencil into our diaries a date of final Senate sitting of, at the latest, 2 June. I should not allow myself to be diverted in this way by interjections from behind me, welcome though they are. Before the interjection I was saying that the Prime Minister needs all the support he can get on this matter. But, quite apart from that, the fact is that we totally agree with the Prime Minister in his remarks which are contained in the amendment that I have circulated. We know that the Minister for Transport and Communications (Senator Gareth Evans) supports those remarks too. I have to say that Senator Evans at any rate has been remarkably consistent about this matter of the privatisation of Australian Airlines and, indeed, the privatisation of several other government business enterprises. I would like to take this opportunity of congratulating Senator Evans for his stance on those matters-a stance which has received and which will continue to receive the full support of the Opposition. I can only hope and trust that he and his colleague the Prime Minister will be able to carry the day with them when they come to debate these matters in the smoke-filled rooms and, of course, the public auditoriums of the Labor Party biennial National Conference in the week beginning 6 June. I do have to say, however, that this consistency to which I referred in Senator Evans's case has not always been true in the case of the Prime Minister. It pains me to have to draw the attention of the Senate to some earlier views expressed by the Prime Minister. In fact, as recently as 23 May 1985, which is not so very long ago-less than three years ago-he said, when specifically referring to what was then Trans Australia Airlines, now Australian Airlines: No matter where one looks, whether it be at TAA or the other authorities, there is no case for the Opposition's argument in economics, except simply to indulge ideologically in a Thatcherite, vandalistic splurge to try and destroy these authorities. Those were the views of the Prime Minister in May 1985. Fortunately and naturally we welcome this change of mind, of heart or of political perception on the part of the Prime Minister in that he should now apparently believe, and be working assiduously to persuade his Party to believe, that it is now entirely desirable that Australian Airlines should be subjected to this Thatcherite, vandalistic splurge to try to destroy that authority by privatising it. We welcome the Prime Minister's conversion. Of course, from time to time one wishes that the Prime Minister would be more consistent in these matters. Of course, we are assuming, having moved this amendment and having employed in it words spoken very recently by the Prime Minister himself, that when it comes to dividing the Senate on the amendment we shall receive the support on the affirmative side of the chamber of at least a substantial proportion of the Government senators who sit there. Naturally we are not so optimistic or unreal as to believe that we will receive the support of, say, Senator Childs and other members of the Left faction of the Australian Labor Party. However, we would expect to find an appreciable number of members of other factions of the Labor Party sitting with us on this amendment because, so we are assured, they too will be supporting their Prime Minister in his opinions as expressed in the amendment. Therefore, we very much trust that they will not confuse the public by voting against such an amendment on this occasion. The fact is that the Prime Minister's successive volte-faces on this subject-and, indeed, on a great many other subjects-have already confused the Australian public a great deal, so I suppose it would not be altogether surprising if Government senators opposite were to add just a touch more confusion to that which has already occurred in this respect. I wish to reinforce my case, and the case put in the amendment, for the full privatisation of Australian Airlines by again bringing forward some recent remarks of the Prime Minister in support of that view. In fact, on the very same occasion on which the Prime Minister used the words contained in the amendment before the Senate, he also went on to discuss the matter more extensively. I hesitate to say it but the particular quote I put to the Senate now would have to be described as somewhat less than eloquent in the manner in which it is framed. Some less kindly persons than I might describe it as `Hawkespeak'. However that may be, the Prime Minister said: I think there is a case, a very strong case, for arguing that given the demands that there are and will increasingly be on government, for instance in the provision of facilities and income for the aged, I find it difficult to justify as a matter of priority utilisation of scarce public resources to provide a funding base for running an airline as compared to the provision of those same resources for those things which I say only government can and ever will provide. Again, I feel sure that, given that form of appeal to the sentiments of all factions of the Labor Party, perhaps with that addition, we might even be able to induce Left faction senators, such as Senator Childs, to at least consider their position on this matter. I am not holding my breath, but I think that would be not an unreasonable expectation. The truth is that tonight we have, because of the nature of the Bill before us, a matter which rather pointedly serves to illustrate the total hypocrisy that the Labor Party has brought to this whole question of the treatment, standing, position and role of Australian Airlines in our community. Less than three years ago the Prime Minister was ranting-I think, in the context of the South Australian election; I am not absolutely certain about that but, if not, he certainly did so in that same connection-against any suggestion of the privatisation of Australian Government business enterprises. Here, for the past six months or so-ever since the last election-we have had the Prime Minister leading the charge to have these same bodies privatised. It is true that the charge has been a good deal blunted and rebuffed in more recent times by the forces gathering within the Labor Party against it and, of course, not least, in the aftermath of the recent defeat of the Labor Party in New South Wales and on a number of other more scattered electoral occasions. The truth is that we have had these extraordinary weathercock performances on the part of people such as the Prime Minister and others. It is not only the Prime Minister who has been undergoing this extraordinary conversion. The Treasurer (Mr Keating) also has. It is true that the Treasurer has not been exactly eloquent in coming to the defence of the Prime Minister on this matter in recent times; nevertheless, he is known to be in favour of privatisation. It is simply that he has not found it politically convenient to make his views very fully or publicly available because, as now seems to be common knowledge-and it is common knowledge only because the Treasurer himself has made it such in several interviews-the Treasurer has his eye on the prime ministerial succession. Because he has his eye on the prime ministerial succession, he naturally seeks not to offend, at least unnecessarily, any more people in the parliamentary Labor Party Caucus then he needs to. So he has been lying doggo on this whole question of privatisation and on several other somewhat contentious questions. Nevertheless, he is known to be in favour of the privatisation of Australian Airlines-and I am sure I will not be contradicted in this assertion-which is being strongly proposed by the leader of his Government. Yet the fact is that the Treasurer on previous occasions had made it very plain that he was totally opposed to such action. Take also the case of the Minister for Transport and Communications Support, Mr Peter Morris. When Mr Morris was last on the record on this matter in 1981-at that time the Labor Party was in Opposition-he said: It is the policy of the Labor Party to ensure that TAA remains a 100 per cent government-owned enterprise. In fact, Mr Morris went further at that time. He went on to say: Converting TAA into a public company will simplify its sale and it meets the prime demands of this Government's- that is, the then Fraser Government's- backers, the multimillionaire proprietors of Ansett. This statement was being made by a member of the House of Representatives who is now a Minister and who has since participated in, or has at least been a member of the Government which early this year actually participated in, a move to transform Australian Airlines into a public company-the very matter against which he was so strongly inveighing in 1981. The fact of the matter is, of course, that Australian Airlines is desperately in need of privatisation. It is in need of it for all the very good reasons which the present Minister for Transport and Communications adduced in his recent Caucus discussion paper on the subject, which he circulated not only to his parliamentary colleagues but, by doing so, of course, more publicly. In that paper Senator Evans noted that Australian Airlines had had a net impact on the Budget since 1981-82 of about $115m in payments to the Budget, although no dividends had been paid since 1981-82. I think I am right in saying that a small one is expected in the current fiscal year. Meanwhile, the debt to equity ratio of Australian Airlines has been deteriorating more or less consistently to the point where it is now in a rather grievous condition. It has certainly gone way beyond what the present management of the airline itself considers to be, and what I think disinterested and objective outside consultants would agree to be, an appropriate debt to equity ratio. What that means, as Senator Evans's paper tells us, is that to have the airline remain competitive, which will involve it in a significant-in fact, a major-re-equipment program involving very large capital sums, there will need to be an appropriate borrowing program. If there is to be an appropriate borrowing program and at the same time the current debt to equity ratio is to be repaired, there will have to be, from one source or another, very significant injections of equity capital into the balance sheet of Australian Airlines. The figures which Senator Evans himself suggests as being required are $250m in the next financial year, 1988-89, and $50m in the following financial year, 1989-90. Of course, there are only two conceivable sources from which this can come. One is the Budget if Australian Airlines is to remain a wholly government owned public company-in other words, the taxpayer. The other would be private capital from the market if Australian Airlines were to be privatised. The position of this side of the chamber as between those two choices is quite clear. We are totally of the view that there is now only one satisfactory course to be adopted in the case of Australian Airlines, and that is to do what its own executives want done and what I think, increasingly, the general body of staff wants done-to put this airline into the private sector and give it a chance to compete. We have a situation at present where not only the difficulties of the future capital requirements of Australian Airlines have become a significant hurdle in terms of the airline's performance but also its operations are continually being hamstrung by the restrictions which result from the fact that it is a government instrumentality, even though it is now a public company-a wholly owned government public company. There are restrictions on the remunerations of senior executives. After all, the airline has to compete in the private sector with Ansett Airlines of Australia, another very effective airline. It also has to participate in a non-commercial government superannuation scheme and, perhaps most importantly of all, when considering industrial relations questions it needs at all times to work under the umbrella and, I would say, under the dictate, of the increasingly depressing Department of Industrial Relations. Our position on this matter will now, I hope, have been made perfectly clear. While we certainly do not oppose this amending Bill, we believe that the instrumentality, the change of status of which has brought about the need for this Bill, has problems that go far beyond its capacity to borrow or not to borrow with a government guarantee and that those problems can be addressed only by privatising that once proud, and I hope still proud, company, Australian Airlines, to give it a chance to survive. Senator HAINES(South Australia-Leader of the Australian Democrats)(9.06) —The Commonwealth Borrowing Levy Amendment Bill 1988 imposes, as Senator Stone has already pointed out, a levy on borrowings by a public enterprise-in this case Australian Airlines. It does this, as do other Commonwealth borrowing levy amendment Bills, partly as an acknowledgment that government authorities and public enterprises are able to borrow more cheaply than other institutions and, in particular, private sector bodies, because statutory authorities and public enterprises are government guaranteed. So, without a levy imposed in this way, it could be argued that organisations and enterprises such as Australian Airlines or statutory authorities have an unfair advantage over private sector borrowers. The Government imposes a levy of a percentage point or two-it is rarely more than that-to ensure that this interest rate advantage is offset and that statutory authorities and private enterprises do not compete unfairly with private sector borrowers on the open market. All of that is fair enough. All sides of the Senate support such a mechanism because it makes for equity and fairness in the borrowing area. Given the Opposition's keenness to see the deficit transferred into surplus, however small, I find the amendment moved by Senator Stone rather extraordinary. His amendment, which proposes an attachment to the second reading motion, reads as follows: . . . but the Senate endorses the sale of Australian Airlines, and therefore supports the Prime Minister's statement that `I believe that an Australian Airlines, whether totally in private hands or an Australian Airlines with a significant private holding, with therefore correspondingly diminished demands upon public resources, could perform the function of Australian Airlines at least as well as they are now and, I would say, arguably, better'. This is a typical tortuous piece of Hawkespeak. Nevertheless, it is an endorsement for privatising Australian Airlines, an endorsement of an action enthusiastically supported by the Opposition parties. This conflicts, of course, with earlier statements made by the Prime Minister (Mr Hawke) that I will refer to in a minute. It also, I would suggest, conflicts somewhat with commonsense. At the moment, as both Senator Stone and I have pointed out, the reason that a levy is imposed on enterprises such as Australian Airlines is that they are able to borrow at a smaller interest rate. A levy is thereby imposed in order to offset any unfair advantage over the private sector, whose borrowings are at a higher interest rate level. The revenue from the levy goes into Consolidated Revenue and the government-guaranteed organisation borrows at a smaller interest rate than a private sector organisation in a similar position would be able to do. If Australian Airlines is privatised, future borrowings by that company as a private company will no longer be guaranteed by the government. Therefore, borrowings will not be able to be made at the lower interest rates that Australian Airlines and other government guaranteed organisations are able to borrow at. So there will be an increased cost to the consumer and, presumably, increased fares and so on charged by the company once it has gone private. Worse, however, as happens with all borrowings by the private sector, the interest repayments will be tax deductible; in other words, negative gearing will apply because the borrower is in the private sector. That means there will be a considerable cost to taxpayers who are essentially subsidising the borrowers in the private sector and, therefore, there will be a considerable cost to Consolidated Revenue. Clearly, the Opposition has to make up its mind what its priorities are. Either it wants a Budget surplus or it wants public enterprises such as Australian Airlines privatised, and at a cost to the taxpayer, even though organisations such as Australian Airlines are making a profit and, as a consequence, are revenue-raising concerns. Senator Stone justifies his amendment by quoting recent comments by the Prime Minister, namely, as I said a moment ago, his belief that an Australian airline, whether totally in private hands or with a significant private holding, could do as well as, if not better than, Australian Airlines does currently as a public company. Senator Stone picked up some recent comments by the Prime Minister. That was not particularly surprising because the Prime Minister is moving about as far to the right as it is possible to go without actually bumping into Senator Stone. So it is quite likely that there will be increasing areas of agreement between those two individuals. I do not know who feels the more uncomfortable about that-Senator Stone or the Prime Minister-but I suspect that it ought to be the Prime Minister since he is the one making the shift voluntarily. Senator Stone —There must be a conspiracy somewhere, I am sure. Senator HAINES —I do not know, Senator. Around this place, if it is a choice between a conspiracy and an absolute muck-up, one goes for the muck-up. That is certainly what would happen if we privatised willy-nilly in the way that some Opposition people would have us think is justified. Not surprisingly, therefore, the Australian Democrats will be opposing Senator Stone's amendment. Senator Stone —I thought you always agreed with the Prime Minister. Senator HAINES —I ask Senator Stone to cast his mind back to last year when he first became a member of this place and was absolutely astonished at the number of times we actually voted with him. I can recall sitting next to him on many occasions in divisions. In September last year both of us became embarrassed about it. If he is at a loss to remember, I suggest that he go back and look how we all behaved on the Loans Bill for a start. I have recollections of Senator Stone expressing absolute amazement, not to say admiration, at the fact that we supported his stance on the Loans Bill. But at the moment on more and more occasions the Opposition parties are supporting Australian Labor Party legislation and we are seeing, increasingly, the shifting position of the Prime Minister on things such as privatisation. We will not support the amendment because we are much more in tune with earlier comments by the Prime Minister and others regarding the pitfalls of privatisation, comments to which I refer honourable senators who are at all interested in finding out what the Prime Minister used to think, or said he used to think, as distinct from what he is saying at the moment. I do not know whether this falls into the same category as `there will be no child in poverty in 1990'-that is, he actually said it but did not mean it when he said it-whether we all misinterpreted him, or whether his use of the words is somewhat different from everybody else's. In any event, back in 1985, in an article in the Melbourne Herald of 29 August headed `A con that benefits corporate raiders', the Prime Minister said, among other things: The reality is that privatisation is a con job-it purports to sell to the people something that is already their own. . . . . Privatisation will see profitable areas of government activity transferred to wealthy private shareholders. Taxpayers will be left subsidising the loss-making activities of government. . . . . Privatisation will not lead to lower taxation. In the main, government corporations are financed by selling their services. Privatisation, by contrast, would probably see a lift in taxes as the Government would be forced into subsidising uneconomic services. It is especially shortsighted to give up future dividends and interest flows in return for a one-off realisation of capital sums now. . . . . The fact of the matter is that privatisation is an entirely inappropriate approach to the social, economic and community needs of a country such as Australia. It is an approach promoted by vested interests, sustained by blinkered ideological obsessions and entirely lacking in logic and commonsense. The Prime Minister has had a change of heart in the 2 1/2 years since then and now argues that privatising Australian Airlines will mean that the service provided will be at least as good and, he says, arguably better. I am afraid that we do not subscribe to the Opposition's variation on the comments in Orwell's Animal Farm. We do not accept that in every instance private enterprise is good and public enterprise is bad. I think that we have to weigh up the merits in each case. We have to look at the service that is provided, the costing of that service, the cost to the taxpayer of variations in the service, the cost if the service is provided by the government sector and the cost if it is provided by the private sector. There are costs to the taxpayer from services provided by the private sector. More importantly, in a country the size of Australia, with the population spread of Australia, when it comes to services such as airlines, communications-through Telecom Australia and Australia Post-and so on, we need to look at what likely diminution in service there is if only the private sector provides those services. We need to remember that the main aim of the private sector is to provide the maximum return to shareholders. If that means leaving certain groups in the community in isolation, charging them more than others, that is precisely what the private sector does. It does so by justifying itself with the argument that I have just put-that is, its priority commitment is to its shareholders. An Australian government of any persuasion must have as its priority commitment the appropriate, adequate and good servicing of all Australians. If that means cross subsidisation and forcing the private sector to provide services to rural Australia, to isolated Australians, and so on, that is something that we have to accept and be prepared to pay the costs of. A successful private enterprise of the sort that Australian Airlines is can ensure competition and the provision of adequate, appropriate and affordable services to everyone-not just those that private sector enterprises believe are the most profitable. I suggest that anybody who is a promoter of wholesale privatisation consider that we are not a country such as the United States whose population is large enough and densely enough packed to be able to have a plethora of private organisations providing the sort of competition that can keep prices down. In instances such as Australian Airlines it is necessary to have a government competitor, a public enterprise competitor, there keeping the private sector on its toes and on the straight and narrow and providing the services that Australians need and deserve at prices that everyone can afford. Senator ROBERT RAY(Victoria-Minister for Home Affairs)(9.20) —I thank all honourable senators for their contribution to the debate. I have not followed some of the earlier sections of the debate with great diligence. However, I have come in in time to look at the very irrelevant amendment moved by Senator Stone, and its very irrelevance is proved by the fact that it has drawn Senator Haines into the debate. I am not sure what to make of the amendment. Second reading amendments tend to be fairly dreary. This one is intended to be clever. In my view it is bordering on the undergraduate, nevertheless it is supposed to be clever. Of course it is very incomplete. The Australian Labor Party has made it quite clear that it will make its decision on privatisation at the National Conference in Hobart in June. We have put a wide range of options on the table over the last few months to be considered. I do not draw away from the fact that the Labor Party Conference will make the decision. That is the nature of the Labor Party. Senator Haines —Will you be bound by it? Senator ROBERT RAY —Yes, we will. Senator Haines —That is a novelty. Senator ROBERT RAY —Senator Haines says that that is a novelty. We have seen all sorts of techniques by the Australian Democrats on policy. We have even seen that rather dubious tactic where they split their troops deliberately and put four on one side and three on the other so that they can work both sides of the street. They have done that cynically and on several occasions, so there is no point in their coming in here and berating our methods and the way we do it. We have formed policy in this way since Federation. At every election we have gone to the people on the basis that that is the way we form our policy and that is the way we are bound by it, and it is a process that will continue. That is where the decision will be made. The Prime Minister (Mr Hawke) made that very clear at the outset by saying that these matters at least should be discussed by the Labor Party. He said that any decisions on any of these matters will not be pre-empted. He has kept his word on that. They will not be pre-empted and they will be decided at the National Conference in June. I know that sometimes annoys the conservatives of politics, who say that the decisions should be made only by the people's representatives as elected to the national Parliament. Of course that is what they say, but they do not do that. We had the great spectacle last year of the Queensland National Party machine and its thugs standing over National Party members in this chamber and in the other chamber directing them what to do. It was an orchestrated campaign coming out of the machine in Queensland, by which anyone who did not toe the line would be dumped, and of course we have had Nationals dumped of late. Two former senators, Senator Maunsell and Senator Collard, did not toe the line and both are out of Parliament. The only monument in Senator Maunsell's case is that a bridge has been named after him. I am not sure whether poor old Senator Collard even has a bridge named after him. We hear a lot of rubbish spoken from time to time. The only other thing I have to say, in terms of what Senator Haines said, is that there has always been a dichotomy between the Democrats' beliefs and their actions in this chamber in terms of the overall. We can listen to the Democrats on occasions when on 15 micro issues they sound very plausible. When we add them up to a macro approach, they are completely divergent, they just do not work. We would not even have troubles with some of our government enterprises if some of the revenue measures that were put to this Parliament had been passed; we would have had plenty of revenue available for capital injections, but no, from time to time the Democrats have had to play politics. I understand that. From time to time they have had to do things that appeal to the 10 per cent of constituents in this country from whom they draw support. I cannot be critical of that approach, other than when we are lectured by Senator Haines that we are not keeping the true faith. What a joke! I really regard that as a bigger joke than the amendment. The Government quite clearly has stated its attitude towards privatisation. We will determine it at our National Conference. Such an undergraduate amendment will be opposed by the Labor Party here in the chamber tonight and, hopefully, consigned to where it belongs. Question put: That the amendment (Senator Stone's) be agreed to. The Senate divided. (The President-Senator the Hon. Kerry Sibraa) Ayes . . . . . . . . . . . 28 Noes . . . . . . . . . . . 32 —— Majority . . . . . . . . . 4 —— Archer, B. R. Lewis, A. W. R.Baume, Michael McGauran, J. J.Baume, Peter Messner, A. J.Bishop, B. K. Newman, J. M.Bjelke-Petersen, F. I. Panizza, J. H.Boswell, R. L. D. Parer, W. R.Calvert, P. H. Patterson, K. C. L.Chaney, F. M. Puplick, C. J. G.Chapman, H. G. P. Reid, M. E.Crichton-Browne, N. A. Stone, J. O.Durack, P. D. Tambling, G. E. J.Hamer, D. J. Teague, B. C.Hill, R. M. Vanstone, A. E.Knowles, S. C. (Teller) Walters, M. S. Aulich, T. G. Giles, P. J.Black, J. R. Haines, J.Bolkus, N. Jenkins, J. A.Burns, B. R. McLean, P. A.Button, J. N. McMullan, R. F.Childs, B. K. Maguire, G. R. (Teller)Coates, J. Morris, J. J.Collins, R. L. Powell, J. F.Colston, M. A. Ray, RobertCook, P. F. S. Reynolds, M.Cooney, B. C. Sanders, N. K.Coulter, J. R. Schacht, C. C.Crowley, R. A. Sibraa, K. W.Devereux, J. R. Tate, M. C.Devlin, A. R. Walsh, P. A.Gietzelt, A. T. Zakharov, A. O. Alston, R. K. R. Foreman, D. J.Brownhill, D. G. C. McKiernan, J. P.MacGibbon, D. J. Richardson, G. F.Sheil, G. Beahan, M. E.Short, J. R. Evans, GarethWatson, J. O. W. Jones, G. N. Question so resolved in the negative. Original question resolved in the affirmative. Bill read a second time, and passed through its remaining stages without amendment, requests or debate. Debate resumed from 17 March, on motion by Senator Gareth Evans: That the Bill be now read a second time. Senator LEWIS(Victoria)(9.32) —The Customs Tariff (Uranium Concentrate Export Duty) Amendment proposes to amend the Customs Tariff (Uranium Concentrate Export Duty) Act 1980 to incorporate in the Act the tariff proposal tabled as part of the 1987-88 Budget. The coalition will not oppose the Bill as it results from a decision made in the Budget context. However the coalition will be moving an amendment at the second reading stage The Bill increases the export duty on uranium concentrate produced from the Alligator Rivers region in the Northern Territory from 80c to $1.02 per kilogram as from 15 September 1987. The proposed new rate will cover approximately 75 per cent of the annual cost of the uranium related monitoring and research activities of the Office of the Supervising Scientist (OSS) for the Alligator Rivers region. The mining industry is totally opposed to this levy which significantly adds to export costs and the industry in general fears that the principle in this Bill could be extended in future to other forms of mining. The 75 per cent funding of the OSS through this Bill is discriminatory and is funding an office which seems to be based on Parkinson's law. There is no quarrel with the establishment of the Office of Supervising Scientist. It was an initiative of the Fraser Government in 1978 to implement the recommendations of the Ranger uranium environmental inquiries to establish a major national park in the Alligator Rivers region; to appoint a supervising scientist to coordinate environmental protection in the region; to set up a research institute to provide a centre where research and monitoring staff can work together; to establish a coordinating committee to include representatives of all agencies involved in research and monitoring activities, the mining industry and other relevant bodies; to develop a uniform national code of practice to apply to uranium mining and milling in Australia; and to adopt strict environmental controls and standards in relation to uranium mining in the Alligator Rivers region. That was 10 years ago. I must say that I am disappointed that Senator Walsh is not the Minister on duty in the chamber at present because I am sure he would take a great interest in the matters that I am about to raise. But, as I was saying, this Office was established 10 years ago when the Ranger commissioners decided that a completely different outlook to mining company proposals was needed. They found that the following were largely unknown: first, the final type of concentration and chemical form of mine pollutants in the environment; secondly, changes in toxicity with time or place; thirdly, sensitivity of the environment to toxic substances; and, fourthly, effects of other non-toxic factors such as eutrophication. Now we are 10 years down the track and the office has grown and grown, despite being cut back by the Fraser Government's razor gang and on two occasions by this Government. It would seem that it is far easier for governments of both persuasions to provide funds for the OSS than it is to explain to the people the simple truths about uranium-in particular, the simple truth that we export uranium for the purpose of generating electricity. It would, of course, be much better if we enriched our uranium and exported the enriched product. That would discourage other nations which buy our fuel from building costly enrichment plants that might later be utilised for enrichment to nuclear weapon levels. Instead, a large proportion of our yellowcake is exported to Canada, where it is enriched and then exported to other destinations. Canada, of course, has no need for our uranium, being rich in this resource. Now back to the Office of the Supervising Scientist. At 30 June 1979 there was a permanent staff of 14 with six additional positions to be filled, making a total of 20. The Department of Science and the Environment provided management services and the scientific work was being carried out almost entirely by contract. According to the 1986-87 annual report of the Office of the Supervising Scientist, the actual staff numbers at 30 June 1987 were 58 permanent officers and 11 temporary employees, after having been exposed to a 15 per cent cut over two years. However, because of the implications of OSS involvement in the newly proclaimed conservation zone, Kakadu stage 3, the office was provided with one more staff member in the 1986-87 Additional Estimates and sought a further eight staff for 1987-88. At 30 June 1987, 41.5 staff were based at Jabiru, 26.2 in Sydney and one in Darwin, a total of 68.7 persons. I hope Senator Walsh is listening. The decision to base the Supervising Scientist, Policy and Administration Division, Supervisory and Assessment Branch, Policy Co-ordination Branch and Management Services Branch, in Sydney may have been argued on the grounds that the management services of the Department of Science and the Environment were utilised and the Northern Territory lacked tertiary institutions. In other words, what I am saying is that this could have been the argument in 1979, under the Fraser Government, for setting up the office in Sydney. But the simple truth is that the reason that the office was set up in Sydney was that the first Supervising Scientist, Mr Fry, wanted to remain in Sydney-so the office was established in Sydney and has remained there ever since. Whatever the merits of the case at that time, that argument that the office remain in Sydney can no longer be sustained. The Northern Territory now has a university college, self-government and a Minister for Mines and Energy. The 1986-87 annual report of the OSS indicates the need for staff regularly to liaise with the Northern Territory supervising authority on matters related to the formulation of authorisations, industrial health and safety and environmental protection measures and with the Northern Land Council. In addition, Sydney based staff visit Darwin and the region on an approximately monthly basis arranged to coincide with meetings of one or other of a number of standing or ad hoc committees and working groups that meet regularly in the Northern Territory. It is clear that the administration should now be Darwin based. This would result in substantial savings in travel and administrative costs alone. In addition, there is clearly an opportunity for the University College of the Northern Territory to be closely involved, probably on a contract basis, in providing many of the operational and administrative services currently provided by the Alligator Rivers Research Institute. On 28 October 1981 the Fraser Government's Minister for Home Affairs, the Hon. Ian Wilson, supported moves to the Northern Territory and made it clear that government moves to hand control of nuclear regulation to the States and Northern Territory `did not in any way reduce its level of commitment to ensuring the most comprehensive and effective regulations and controls with respect to all matters regarding the uranium and nuclear industries'. In other words, under self-government the Northern Territory can look after this matter, as can Queensland, Western Australia or any other State government, with the Commonwealth still having supervisory overall control. Northern Territory law regulates mining operations in the Alligator Rivers region and the Supervising Scientist exercises supervisory, coordinating, research, standards development and reporting roles under Commonwealth law. The role of the Supervising Scientist should, of course, have diminished over the 10 years as the unknowns have been resolved. There were many unknowns when this position was established, but most have been resolved. Some of his original functions, such as standards development, should have been firmly established and others become merely routine. If this is not so, the Supervising Scientist has not been doing his job-and I do not suggest that he has not been doing his job. Also, it should now be possible for the Office of the Supervising Scientist to determine whether all of the original recommendations of the Ranger commissioners remain valid. Furthermore, there is need for a review to ensure there is no duplication between departments of the Northern Territory Government and the OSS. If the Sydney Office was moved to Darwin, there should be a significant reduction in administrative costs. A review such as I have suggested should be carried out by an independent consultant charged with merging as many functions as possible with Northern Territory agencies and tertiary institutions while retaining the integrity and legitimate purpose of the OSS. I repeat that we are not talking about doing away with the Office of the Supervising Scientist, but of retaining the integrity and legitimate purposes of that Office. I now turn to the subject of research. The 1986-87 annual report details some 52 publications, papers and monographs, papers to conferences and symposia, reports and papers to conferences and symposia. That number raises the question of national priorities in scientific research. This issue has been consistently raised by Senator Puplick in Senate Estimates committees. The integrity and dedication of the scientists in the Office of the Supervising Scientist are not in question. In no way do I make any comments about their integrity and their dedication. That is not what I am about to talk about. What I do raise is the question of the priorities of their research, considering the limited funds that are available in Australia for scientific research. Some of the research seems to be peripheral to the Office. I point, for example, to research in the following fields: a simple model for rapidly computing terrestrial solar flux and global mean surface temperature-- Senator Crichton-Browne —What is that again? Senator LEWIS —Don't worry about that one. Let us take the next one: sexual differences in morphology and niche utilisation in an aquatic snake. Another piece of research relates to food habits, habitats and reproductive biology of four sympatric species of varanid lizards in tropical Australia. It is clear that what is happening is that people who are in the Office have these matters that they can see are related in some way or other to the Office, and no doubt from time to time they have spare time while they are doing their duties perhaps up at Jabiru to go on and do this sort of research. Senator Crichton-Browne —The trouble is they spend all their time in Sydney. Senator LEWIS —Well, Senator Crichton-Browne, they probably spend too much time in Sydney, too-I do not know. But in any event it is clear that they must have some time to devote to these matters. We question whether their research merits the national priority it is accorded through current funding arrangements. The question is whether that decision that is-the national priority of their research-should rest with the Office of the Supervising Scientist, as it does at present, or with the Australian Research Council, which is the national body responsible for overall national research priorities. In many respects these scientists are, or should be, firemen whose function should be to deal with any emergency that arises in this regard. When not on alert, clearly there is the opportunity for them to carry out other research, but that must be secondary to their primary role. These issues all indicate that the Office of the Supervising Scientist clearly needs to be reviewed by the Government. I turn to the levy. It is clear from Senator Gareth Evans's statement that uranium can already be purchased more cheaply from other sources. Thus, the introduction of an increased levy is an astonishing additional burden to impose on our uranium exporters at a time when they are attempting to compete in a buyers' market. The Liberal and National parties are very concerned about this substantial increase in the levy, an increase of about 25 per cent, and we probably would have opposed this Bill but the Government brought it in as part of the Budget measures. Therefore, in accordance with our principles, we will not oppose it. But I move the following amendment to the motion that the Bill be read a second time: At end of motion, add ``, but the Senate is of the opinion that the Hawke Government should be condemned: (a) for its failure to limit the role, the duties and the accountability of the Office of the Supervising Scientist in the light of 10 years' experience in its monitoring of the Alligator Rivers region, the grant of self-government to the Northern Territory and the establishment of the University College of the Northern Territory; and (b) for the imposition of this additional levy on uranium at a time when Australian uranium exporters are struggling to remain competitive on world markets''. Senator COULTER(South Australia)(9.48) —The Customs Tariff (Uranium Concentrate Export Duty) Amendment Bill proposes, as Senator Lewis has indicated, an increase from 80c to $1.02 in the duty payable by uranium miners operating in the Alligator Rivers region, the purpose of which duty is to support the Office of the Supervising Scientist. That Office monitors before, during and after the operation of uranium mines in that region to ensure that that absolutely superb World Heritage area is not damaged and is left in as good a state as possible. Senator Lewis has also correctly pointed out that the Office of the Supervising Scientist was established as a result of the Ranger Uranium Environmental Inquiry in the 1975-76 era, the commission headed by Mr Justice Fox, which recommended that such an office be established. We have abundant evidence in Australia that uranium mining carried on elsewhere and other operations associated with that mining have resulted in very serious environmental damage of a long term nature and that that may continue for many decades-and we already have experience of this-after the operation has been completed. The purpose of the Customs Tariff (Uranium Concentrate Export Duty) Amendment Bill, as explained by the Minister for Transport and Communications (Senator Gareth Evans), is to bring the levy up to 75 per cent of the costs of the operation of the Office of the Supervising Scientist. It is surprising to hear Senator Lewis-and presumably the Government, because it has put up this Bill-argue that in this respect the user should not pay and that 25 per cent of the cost should be borne by the general public. In a moment I shall move an amendment, which I believe has been circulated, proposing that the duty payable be increased to cover the full costs of the Office of the Supervising Scientist, and that would be up to a level of $1.36 per kilogram. That is justified, as Senator Stone has pointed out several times in recent days, on the grounds of producing a level playing field; and, as both the Opposition and the Government have pointed out repeatedly, the user should pay and the market should be allowed to operate. Let the market operate and let those who choose to mine in an extremely sensitive environmental area, namely, in the middle of a World Heritage park, pay the full cost and compete with those who choose to mine uranium somewhere else in Australia, in an area which does not involve that necessary protection. In defence of paying only the 75 per cent it may be argued, of course, that the Office of the Supervising Scientist has carried out other work, and I think that Senator Lewis alluded to some other projects. One can instance the proposal by the Broken Hill Proprietary Co. Ltd to mine gold at Coronation Hill. It is doubtful whether that operation will get off the ground. One hopes that it will not, because it is upstream of the important parts of the surrounding park and, therefore, is in a potentially very dangerous area in relation to contamination. If it does not get off the ground, clearly no fee can be charged against the production from that operation. Moreover, the Office of the Supervising Scientist came into existence as a direct consequence of the proposal to mine uranium, which was later brought into operation. Clearly, that is where the basic maintenance of the cost should fall. If other mines were to be established, they should be looked on as a bonus and perhaps further down the track some adjustment might be made. Senator Lewis has also alluded to work which may be carried out by the University of the Northern Territory. We are aware, of course, that much work in the Alligator Rivers Region has been carried out by the Northern Division of the Commonwealth Scientific and Industrial Research Organisation. However, to the extent that that work relieves the Office of the Supervising Scientist of work which would have to be done in relation to potential contamination from uranium mining, that cost is being borne by the public and should be picked up by the Office of the Supervising Scientist. This duty is charged only against the year on year returns from uranium mining. In our proposal it is $1.36 per kilogram of uranium that is mined and exported. At the point when uranium mining ceases that money will simply disappear. As I have already mentioned, a number of former uranium mines and treatment plants around Australia have involved the public in enormous expense. Last year the Government had to set aside $7m in relation to contamination of the Finniss River from the mining of uranium at Rum Jungle, which ceased some 30 years ago. That is a continuing drain on the public purse, so to ask for $1.36 per kilogram year on year, bearing in mind that no money will be flowing into the Office of the Supervising Scientist when uranium mining ceases, is surely little enough to ask, because quite clearly that Office will have to continue for many years into the future, not the least simply to look after the massive tailings dams which have been built in the area and which, one hopes, will not leak into Magela Creek and other waterways-but one can never be too certain of that. Senator Sanders —It has leaked. Senator COULTER —Senator Sanders has just pointed out to me that it has already leaked. That brings into disrepute another point that Senator Lewis made when he said that all the unknowns should be resolved. I take it from Senator Lewis's remarks that he has never worked in a research laboratory and has very little idea of the way in which this research needs to be conducted. In pointing to the measurement of solar flux, he presumably has no understanding of the way in which solar flux relates to water evaporation and, therefore, to the size of the tailings ponds; the maintenance of levels of water over the tailings so that radon gas does not escape; the problem of flood return times; and the suggested need from time to time to release water from tailings ponds and from other areas. Senator Lewis —I would be careful about what you presume about the knowledge of any senator in this place. Senator COULTER —In Senator Lewis's questioning of some of the research projects that have been carried out by the Office of the Supervising Scientist the implication seemed absolutely clear that he was saying that it was no business of the Supervising Scientist to get involved in that type of research. Senator Lewis —You ought to read what I said then; I suggest that you read the Hansard. Senator COULTER —That was the clear implication. In terms of the breeding habits of various animals-lizards and so on-that exist in that area, I again remind the Senate that we are talking about a World Heritage area, an area which is recognisably one of the few places in the world that are still in pretty much a pristine state but which has a very large uranium mine slap bang in the middle of it. That is a very good reason why we need to know a great deal about the breeding habits of animals in that region, especially when we know that radiation is a known mutagenic agent. It was discovered in 1928 that radiation caused mutation and could clearly interfere with the breeding habits of animals. Those animals that are having great difficulty in maintaining themselves in a changing environment might well be pushed over the edge if the mutation rate were to significantly change. There was also in what Senator Lewis said an implication that reports to international symposia were somehow beyond the pale and that these were things that the Office of the Supervising Scientist should not be involved with. We know that the uranium we send overseas goes into a nuclear fuel cycle which produces very long lived isotopes. Indeed, in mining we have the exhuming of deeply buried radioactive ores which are brought up to the surface and which then cause significant increases in radiation levels in the atmosphere. Thus, it is vitally important that we properly understand the role of these radiation sources in relation to a whole range of living things, and we have a distinct responsibility to share this knowledge with people around the world. It is entirely appropriate that the Office of the Supervising Scientist should go to other countries and share this knowledge with others. As I have indicated, the Democrats propose an amendment to increase the duty payable, not from 80c to $1.02 but to $1.36, to cover the full costs associated with maintaining the Office of the Supervising Scientist. Because of the way that this Bill is worded, namely that the increase from 80c to $1.02 is effective from 15 September 1987-and presumably as this was mentioned in the Budget the uranium miners have been forewarned that this extra duty will be levied when the Bill becomes law-and because we propose an increase in the levy to a higher amount it is necessary as a consequence of our amendment to move a further amendment so that the second increase, the increase that we are recommending, is not made retrospective to 15 September but, if our amendment is accepted, is made prospective to the date on which the Bill receives royal assent. Finally, we are really looking at quite a small amount if we take a floor price of $31 per pound which works out at $A91 a kilogram. So at $1.36 it is 1.5 per cent duty on the uranium mined in this very sensitive environmental area simply to look after and retain without damage the pristine nature of the Kakadu National Park. I note the second part of Senator Lewis's proposed amendment which states: . . . for the imposition of this additional levy on uranium at a time when Australian uranium exporters are struggling to remain competitive on world markets.'' We have debated in this place very often the fact that we cannot maintain safeguards and prices at the same time. If the state of the uranium market is so parlous that the imposition of a 1.5 per cent levy to look after the environment places the industry in jeopardy, the Democrats would suggest that it is not an industry that this nation should support. If, on the other hand, it is the buoyant, magnificently productive industry which is bringing in the foreign exchange that both the Opposition and the Government have been telling us about for so long, no one can complain that a 1.5 per cent levy is too much for the industry to pay. Senator TAMBLING(Northern Territory)(10.03) —This evening we are addressing the Customs Tariff (Uranium Concentrate Export Duty) Amendment Bill and several amendments proposed by honourable senators. I strongly support the amendment moved by Senator Lewis this evening and also draw the Senate's attention to the debate in the House of Representatives on 25 February and, in particular, the contribution by the shadow Minister for Science and Energy, the honourable member for Bass, Warwick Smith. He made a thoughtful and thought provoking contribution to the debate, very much in contrast with the rather boring diatribe that we have just had from Senator Coulter. I also draw attention to the debate in the House of Representatives on 15 March and the contribution by the member for Sturt, the Hon. Ian Wilson, who, as a Fraser Government Minister, was responsible for the early introduction of the Office of the Supervising Scientist and the very important role that it has played. I will address the specifics of Senator Lewis's amendment a little later in the debate, but at this stage I express my surprise at the blatantly political and uncaring move of the Australian Democrats this evening with respect to their proposed amendment. Anyone would think that the Australian Democrats were destined to take the front benches in executive government in Australia. Lord preserve us! What an ultra contradiction that is. They are in no way entitled to look at how the Budget should be framed through the eyes of the Executive. The effect of their amendment is a blatant move to increase the contribution from mining companies. Of course, this comes at a time when mining companies are experiencing financial constraints and financial difficulties like so many areas of the community. Basically, the Democrats are seeking to increase the burden on mining companies when this struggle is going on, and that means that it will cost jobs in the community. Of course, the Democrats can afford to be open and honest in their policies because they do not believe in jobs. Their amendment to this Bill backs up their recent record in this place. Who else should feel threatened by the Democrats move tonight? I would say that the research establishment in Australia will recoil completely from moves of this nature which would, wherever feasible, switch all of the costs into the research areas. Senator Coulter has just said that he wants to see 100 per cent funding by the mining companies of the research cost-just because it happens to be in the uranium province and because it is easy to dip into the tin if there is a bit more in it. Senator Coulter —It happens to be in a World Heritage area. Senator TAMBLING —I am not denying the significance of Kakadu or the World Heritage area or the importance of the research projects going on in that area. If we look at what this legislation will do, it is most important to recognise that the facts and figures bear out that there is extensive funding of the projects of the Office of the Supervising Scientist. In fact, 75 per cent of the annual cost is being raised through these Budget measures. The Kakadu area and its geography is very significant to the Northern Territory, to Australia and the world and it is an area that is well worth preserving. The important functions and roles being fulfilled are in no way detracted from by what is going on. However, the role of the Office of the Supervising Scientist must be put in its proper context. Let us look at the original five functions of the Office of the Supervising Scientist. The first is to carry out research into the effects of uranium and other mining operations on the environment of the Alligator Rivers region-research within a narrow frame into the effects of mining in that region. The second is to supervise the implementation of the Commonwealth's environmental requirements and others. The third is to develop and promote standards, procedures and measures for the protection and restoration of the environment from the effect of mining operations. The fourth is to coordinate environment protection, research and supervisory activities relating to the uranium mining industry in the region. The fifth is to advise the Minister on these matters. So research, supervision, monitoring and coordination are the keys to projects in this area. We are 10 years down the line and we have accumulated 10 years of experience in this area. In that time a number of other significant events have also happened. One of those, of course, is the progress of the Northern Territory towards statehood; the progress to self-government of a body politic in the Northern Territory. The success of that body politic, particularly in the area of mining, whether it is in research or operations, or in education, whether in research or in the community advancement, is something that we ought to be properly reviewing and putting into the context of federalism and the system in which we operate. It is therefore vitally important that the Northern Territory's role and involvement be picked up and looked at. The Office of the Supervising Scientist, as a Federal Government instrumentality, is the issue that ought to be under review. In fact, I would go much further than saying that we ought just to be reviewing the research functions of the Office of the Supervising Scientist. There are many other institutes that should be looked at in the same context. There are many others in the same department. For example, what functions currently carried out by the Commonwealth Scientific and Industrial Research Organisation, the North Australian Research Unit of the Australian National University, the Institute of Aboriginal Studies and many other academic institutions around Australia, should be reviewed and looked at in the context in which they ought very properly to be looked at-as Mr Smith and Senator Lewis said, under the umbrella of the new University College of the Northern Territory? That is the appropriate body, and given the Government's intention of moving in the area of higher education advancement policies in the very near future, it is timely that we call for this review now. It is timely that the institution that should have the control ought to be the new University College of the Northern Territory. It needs to be looked at under the education umbrella. It needs to be looked at under the proper governmental functions of the Northern Territory Department of Mines and Energy. There is no need to have arm's length and remote groups operating from headquarters in Bondi controlling the destiny of the Northern Territory, particularly in functional areas that apply more properly in this regard. I believe that if honourable senators took the time to go up and talk very closely to Aboriginals with specific interests in this area, they would find that there is a great deal of sympathy for the fact that it is the Northern Territory Government that they talk to most frequently, with which they enjoy the financial and close working relationships on a day to day basis. They would be very happy to see the sort of changes that have been proposed by Mr Smith, Senator Lewis and me. In the House of Representatives the Minister for Science, Customs and Small Business, Mr Barry Jones, said in responding to the debate there that he was looking at the Bondi functions of the Office of the Supervising Scientist. He pointed out that the staff there carried out the vital computer and mathematical modelling and other administrative functions which could not be done on site. They certainly could be done in the Northern Territory. They do not need to be done in Bondi, at remote arm's length. If one looks at the last annual report, for 1986-87, of the Supervising Scientist and progresses through the report, particularly in the area of research programs, one will see many of these projects listed. I will cover each of the areas. There is the aquatic biology research program, the environmental radioactivity research program, the environmental modelling research program, the environmental chemistry research program, the plant ecology research program, the geomorphology research program and a proposed hydrology research program. All of those programs are currently under way in the Northern Territory in other proper Territory government instrumentalities, either departments or institutes. They do not have to be duplicated. They certainly do not have to be duplicated by a central, controlled office, from Canberra. The coordination that must go on, the administrative inflexibility that must result, and the additional financing that has to come through the Federal Budget, make for a complex web of issues and laws. This evening I am certainly arguing very strongly from a parochial and Northern Territory standpoint, because the uranium industry, and in fact anything to do with nuclear policy in Australia, needs to be put in the proper context of how it should be administered. That is a co-operative arrangement between the State governments, in this case the Territory Government, and the Commonwealth Government. There is a time for review after 10 years. I would argue that that time is now. It is in fact picked up in Senator Lewis's amendment. If we are looking to the future, no matter whether it is this year, next year, or 10 years or 20 years from now, control will inevitably be by the Northern Territory Government. That is where appropriately it should be. The sooner we can get to that position the better. Senator SANDERS(Tasmania)(10.16) —We have heard some debate on this issue. We have heard the Opposition, through Senator Lewis, state that the Office of the Supervising Scientist (OSS) should actually be reduced because it has been in action for 10 years and therefore should presumably have learnt all there is to know about uranium mining at Ranger and in the Kakadu National Park. In fact, of course the Office of the Supervising Scientist is still needed. In essence uranium mining is a very new type of mining. We have had coal mining, copper mining and iron mining for a very long time. Uranium mining is entirely new. It is entirely confined to our century. We know very little about the overall result of uranium mining on any environmental system. We find more and more impacts-impacts that we never predicted or were never foreseen. Therefore, the Office of the Supervising Scientist is very justified not only in maintaining its efforts but in increasing its efforts and following leads, any leads, which would be indicated in dealing with the environmental problems of uranium mining. Ranger has had a number of difficulties in the past years-difficulties that were not predicted at all; difficulties in the release of water and the amount of water it had in the first place. It actually stored water in the early days because of miscalculation of the amount of rainfall and how much water problem it would actually have. Now, of course, that stored water has become an embarrassment. Ranger has to keep it in dams and transfer it from one pit to another in order to mine. It has made mistakes; it continues to make mistakes. Therefore, the Office of the Supervising Scientist, instead of having its operations curtailed, should actually have its operations expanded. Senator Lewis fails to see the value of basic research. Basic research is valuable in itself. We cannot predict the results of basic research. As Senator Coulter has pointed out, when one goes into an area as sensitive as Kakadu National Park one must know the environmental parameters. We do not know them. We have never identified them. We must identify them in terms of the breeding habits of snakes, the solar flux, and any number of factors. We must know these things. Senator Lewis said that the role of the Office of the Supervising Scientist should be that of a fireman. Those were his exact words. In other words the OSS should run, after a disaster has already started, to try to stop the disaster. It should put out the fire. This is not good enough with uranium. It is really not good enough with anything. Any fireman will tell us that the best type of fire fighting is to prevent the fire in the first place. Senator Lewis —I agree. Senator SANDERS —Senator Lewis agrees with that. Senator Lewis —That is what being a fireman is. Senator SANDERS —That is what being a fireman is. The Office of the Supervising Scientist must identify the dangers and stop the disasters before they occur. In order to do this the OSS must engage in basic research. Perhaps Senator Lewis agrees with this. Perhaps we have misinterpreted his statement. I hope he does agree. The OSS should actually prevent the fires. It should not be called in to put out the fires after they have already started. Senator Tambling has criticised our amendment for suggesting that the full costs of the Office of the Supervising Scientist should be paid by the uranium miners. He said that this was a blatant move to increase the burden on mining companies. Blatant? I do not think it is blatant; I think it is necessary and logical. After all, these mining companies are making a profit on their activities. Senator Cook —It is blatantly necessary and logical. It is a blatant, discrete, overt charge. Senator SANDERS —The Minister says it is a blatant, discrete, overt charge. I will have to investigate that with my thesaurus later. It is blatant, it is obvious and it is necessary. I believe in cost recovery. I think that both the Liberal Party of Australia and the National Party of Australia believe in cost recovery so I am somewhat puzzled at this approach of Senator Tambling that there should not be full cost recovery. The mining companies are benefiting from the activities of the Office of the Supervising Scientist, and in any other country they would be required to do this research themselves. Certainly that would be the case in the United States of America, as it would be in most other parts of the world. The companies are benefiting. The OSS activities are of benefit to their commercial operations so they should pay the full cost of operating the Office of the Supervising Scientist. In amongst all this came the gratuitous charge that the Australian Democrats were anti jobs. We are not anti jobs, we are pro future. We are pro future employment, we are pro future environmental opportunities for our kids; we want the world to be livable in the future. If some jobs prove to be hazardous to our future occupation of this earth then we are anti those jobs, but basically we want to see workers engaged in productive and healthy pursuits. We are not anti jobs; we are anti destruction. Senator Tambling said that research areas would suffer because of this levy. How can a research area suffer because of an increased amount of funding? One of the tragedies in Australia is the lack of funding for research, the lack of availability of funds. Of all the developed countries Australia is at the bottom in the amount of money spent on basic research. We still have a cultural cringe. We still expect other people to do our research for us. As long as we do that we will never be a first rate nation. We must have the confidence in ourselves to utilise our skills in research for our own wellbeing. When I was in the aerospace industry in the United States I was amazed at the number of Australian engineers who were my co-workers. I thought that Australia must be full of great engineers if it could afford to send so many overseas. But of course the answer is that Australian engineers must go overseas because that is where the grants are. In Australia we simply do not fund our basic research. So how can Senator Tambling say that an increased levy on a uranium company will cause research areas to suffer? That is a nonsense. Senator Tambling also made a plea for Northern Territory involvement. I would be happy to see the Northern Territory have more involvement if it were a positive involvement. Over the years that I have watched what is happening in the Northern Territory I have found that the Northern Territory approach is to support the mining industry at the expense of the environment. I do not think that kind of involvement would be at all productive. I turn to the amendment moved by Senator Lewis. The Australian Democrats will not support it because of its avowed intention to limit the role, the duties and accountability of the Office of the Supervising Scientist. As I said earlier, we feel that the OSS is performing a very necessary function and should continue to do so. Senator Lewis echoed Senator Tambling's concern about the imposition of this additional levy on uranium at a time when Australian uranium exporters are struggling to remain competitive on world markets. Well, so what? Why should not the uranium producers pay the costs of their operations? Why not? If they are struggling on world markets, as Senator Coulter says, perhaps they are not a viable commercial operation anyway. Is it not the policy of the Labor Party and the Opposition-- Senator Collins —Have you seen the annual report of ERA? Senator SANDERS —Senator Collins refers me to the annual report of Energy Resources of Australia. I have not had the opportunity to see it. Senator Collins —It is a viable industry. Senator SANDERS —Senator Collins assures me that it is a viable industry. If that is so, it can certainly afford the levy. Senator Collins —I agree. Senator SANDERS —Senator Collins agrees and he has a detailed knowledge of the area. Perhaps he and Senator Tambling are at odds in this matter. Senator Collins —That is right; we are. Senator SANDERS —Senator Collins says that they are. So, the mining companies can pay the costs and I think they should do so. I would like to expand this in the area of Kakadu. It is not really reasonable that uranium miners should bear the total cost of running the Office of the Supervising Scientist, given that Office's new responsibilities to supervise gold mining in stage 3 of Kakadu. It would be reasonable only if in fact they also paid a levy in response to the gold mining in stage 3 of Kakadu at Coronation Hill. Will this happen? Will the Government also charge a levy in relation to gold mining? The OSS has been asked to supervise that as well. Gold mining at Coronation Hill can be just as environmentally hazardous to the headwaters of the Alligator River as uranium mining at Ranger is to Magela Creek. I feel that both uranium and gold miners should be required to meet all the infrastructure costs of uranium and gold mining-not only the costs to the Office of the Supervising Scientist but also the infrastructure costs. Why should the taxpayers of Australia pay for infrastructure, roads and all the costs of managing these areas? Why should the mining companies not pay for this? Under the total cost recovery schemes of the Liberal and National parties this would certainly be logical. The proposed mines at Coronation Hill will involve the expenditure of huge sums of taxpayers' money for bridges, roads and other infrastructure. This is particularly important in the case of gold because no tax is paid on it. Therefore the recovery of the levy should be extended to the gold miners at Coronation Hill. No work has been done to protect the environment as a result of the new mine. There have been no cost benefit studies and no socio-economic studies. We are operating in the dark. Perhaps this is something the OSS could look at, at least in part. The Government and Coronation Hill are accepting the word of Broken Hill Proprietary Co. Ltd (BHP) about the value of gold without any independent assessment. BHP has refused to give the Bureau of Mineral Resources any access in order to verify the results at Coronation Hill. The situation is completely unacceptable because of the risks to the environment and the potential economic damage to the tourist industry. Mining should not be allowed to proceed. Another difficulty at Coronation Hill involves uranium. There is uranium there. From our information and from that of the OSS, there is a major uranium ore body there. The Government has denied this in this chamber, but in fact it does exist. This is an embarrassment for the Government because uranium has to be mined as an adjunct to gold and this will thus impinge on the Government's three-mine policy. So this is a problem for the Government. We have a number of factors involved in the Customs Tariff (Uranium Concentrate Export Duty) Amendment Bill. We have the Office of the Supervising Scientist; we have the environment itself; and we have the need to protect the environment. The environment of the area is very fragile; it is part of the Kakadu National Park. We have a responsibility not only to the people of Australia but to the people of the world to protect this sensitive environment. If we followed the route of the Opposition-of Senator Lewis and Senator Tambling-we would merely allow the uranium miners to do what they will as cheaply as they can and despoil the environment, and the future of our children and of our country will be the loser. The PRESIDENT —Order! It being 10.30 p.m., under sessional order I put the question: That the Senate do now adjourn. Senator PUPLICK(New South Wales)(10.30) —Mr President, I shall detain the Senate only briefly this evening. I wish to place on record some comments about the passing last weekend in England of an important figure in Christian history. Last weekend in England Lord Michael Ramsey, the one-hundredth Archbishop of Canterbury, passed away. Michael Ramsey was the one-hundredth successor to the Seat of St Augustine. He was one of the most important figures in Christian history in the post-war period. He was born in 1904. Without reciting his lengthy and distinguished career, let me simply say that he was Professor of Divinity at the University of Durham from 1940 to 1950. He was Regius Professor of Divinity at the University of Cambridge from 1950 to 1952. He was Lord Bishop of Durham from 1952 to 1956, the Archbishop of York from 1956 to 1961 and the Archbishop of Canterbury from 1961 to 1974. As such, he was the spiritual leader of my church. He was the world spiritual leader of those of us who regard ourselves as Anglicans or members of the Church of England. He was also President of the World Council of Churches from 1962 to 1968. The passing of so eminent a figure in Christian history should not be ignored by this Parliament. It should not be ignored in terms of at least being recorded for the millions of people in this country who profess the Anglican faith or who describe themselves in somewhat more old-fashioned terms as members of the Church of England. He was a remarkable man. I had the opportunity to meet him when I was still a student at school in London. At that stage Michael Ramsey was the Archbishop of York-the Primate of England, not yet the Primate of All England, as the church has it in that country. It was he who, not just on that occasion but on numerous occasions, in what was in fact a unique contribution to theology in the United Kingdom and, indeed, to an understanding of a Christian perspective on world affairs, actually persuaded me as a young adolescent in the United Kingdom of the validity of the Christian faith. During the period in which he was the Archbishop of Canterbury he played a most distinguished role in a number of areas. First, it was he who was primarily responsible for establishing the debate in Great Britain on the question of immigration on sound and decent lines. He made it a moral issue-not an economic issue, but an issue of one's Christian principles. He indicated in the time he served, under the prime ministership of Harold Wilson, as the Chairman of the National Committee for Commonwealth Immigrants a view about the way in which the immigration debate should be handled which I think would benefit many Australians, were they to go back to that debate and reread what the Archbishop of Canterbury said at that stage. In 1965 in Aberdeen he made a speech in which he said that, if Harold Wilson used force to stop Ian Smith's Unilateral Declaration of Independence in Rhodesia, Christian people ought to support him. He believed that the establishment of another racist regime in southern Africa was something which Christians in good conscience could not tolerate. He drew that extraordinarily difficult line for people who professed to be Christians on the question of when the use of force is justified and when it is not. He led the debate in the House of Lords on establishing a Christian position in favour of the abolition of capital punishment. I well remember that particular debate in the United Kingdom. He supported his predecessor, Geoffrey Fisher, the ninety-ninth Archbishop of Canterbury, in moving in the House of Lords for the repeal of laws which discriminated against homosexual behaviour in the United Kingdom. When this debate has arisen, I have frequently had the opportunity to quote the then Archbishop of Canterbury, Geoffrey Fisher, and the then Archbishop of York, Michael Ramsey, on why it was that a decent Christian position requires one not to make a judgment about homosexual behaviour and turn it into repressive laws. He also pioneered the support in the House of Lords for reform of the divorce laws, again going very much against a large part of community opinion. Nevertheless, he pioneered that and played a significant role in changing community opinion. In 1966 he visited Rome and established a particular friendship with the then Pontiff, Paul VI. He worked tirelessly for the attempt to reunify Christian churches throughout the world. In the United Kingdom he pressed for unity with the Methodist Church. He was disappointed that that did not come to pass. He was a man of true spirituality and at the same time a man of extraordinarily good humour. I well remember one of those famous Oxford Union debates in which he was a witty, erudite man who demonstrated that a love of life, a sense of humour and a sense of enjoyment were in no sense incompatible with the true meaning of Christian vocation. He was a very learned man. His books are well remembered. In particular his 1964 publication entitled Canterbury Essays and Addresses is one which I think again pays a great deal of rereading and a great deal of study. As an obituary in the Sunday Times described him, he was a thinker with a learned knowledge of past faiths; a lover of the Bible; and full of affection for the human race. The Sunday Times report concluded: He had a warm heart and was so near to God that, to be near him, was to be near Someone behind and above him. Michael Ramsey was, I think, a nonpareil of the church, a person of spirituality, a person who believed in ecumenism and the unity of the Christian church. In particular, may I say, and I suppose one should be both humble and contrite in these circumstances, that the Church of England, the Anglican Church in the Diocese of Sydney, which has driven so many Christians out of the church as active participants in the church-people like myself who cannot tolerate a church which is based fundamentally on the assertion of authority rather than the proclamation of love-would do well to pause and to consider Michael Ramsey's contribution to Christian faith and Michael Ramsey's contribution to that sort of spiritual development which I believe is extraordinarily important in public life. I would not want the opportunity to pass without putting on record that the Christian churches, the Anglican Church, the Church of England, in particular, have lost one of their finest examples. After 83 years of productive life, Michael Ramsey has been called to his reward. I have no doubt that his reward will be entirely commensurate with the Christian principles which he upheld and which he so eloquently advocated throughout his long and distinguished career both in the church and, indeed, in the political service of his nation in the period of time which he spent as a member of the House of Lords. Mr President, I know it passes I suppose from almost the sublime, not to the ridiculous but certainly to a level far less sublime, to raise one other matter on the adjournment this evening. I do so simply in order not to detain the Senate later in the week by raising another matter. I want to make passing mention of a matter concerning the portfolio of the arts for which I have a responsibility. A few days ago the Wang computer company announced that it was entering into an agreement with the Sydney Dance Company to provide sponsorship of up to $1m over the next three years. This is the largest single sponsorship, I think, which has ever been announced for the performing arts in Australia. I do not think that I should allow it to pass without making reference to it on this occasion. The Sydney Dance Company is, I believe, one of the most monumental adornments of the arts scene in Australia. Anybody who has seen its productions, particularly its bicentennial production Vast, would agree with that. The sponsorship between Wang Australia and the Sydney Dance Company dates back to 1983. In 1985 a $750,000 three-year agreement was announced which at that time was the largest sponsorship ever announced. The support which Wang has given to the Sydney Dance Company has assisted it in the production of such notable events as Some Rooms in 1983, After Venice in 1984, Boxes in 1985, which incorporated some of the most terrific modern music in Australia, produced by Icehouse, and Shining in 1987. I believe the example which Wang Australia has demonstrated to the rest of the corporate sector in this country is quite notable. I congratulate that company, its Managing Director, Michael Clarkin, and those associated with it on this sponsorship deal. If we could have a little more of return to Australian arts and return to the Australian community of the profits which are made by large corporations in Australia, because of the sort of climate which exists in this country, that would be not only a notable contribution but also a notable return to Australia, particularly by companies which are essentially non-Australian companies. It would be a real investment in something other than bricks and mortar and land speculation. It would be a real investment in the young people of Australia, many of whom will find their careers through the Sydney Dance Company. I take this opportunity to congratulate Wang on this outstanding achievement on its part and to say that I think it has set an enormously high example for other corporations and companies in Australia to follow. I believe that it has invested in one of the most exciting, interesting and dynamic performing arts companies in Australia, one which is also prepared to tour and take its work to the rest of the people of Australia, which so few of our companies are these days. I wish to put that very much on the record, as I did when I spoke briefly some time ago about the bicentennial dance event Vast. Mr President, I thank you and fellow senators for your patience in allowing me the opportunity this evening to put those two matters on the public record. Funnily enough, they are related at some remote distance. They are related in that both Michael Ramsey and the Sydney Dance Company want to express something about the essential qualities of human nature, about the celebration, about the joy and about the spirituality of life. Those things rarely get mentioned in politics. When one does mention them one tends to get bucketed for one's trouble. That is a pity, but that is the current situation. Nevertheless, I think both of those matters were worth putting on the public record this evening. Senator VALLENTINE(Western Australia)(10.44) —I appreciated Senator Puplick's final remarks. I know only too well about the public bucketing that follows whenever people talk in this place about spiritual matters. I think they are a very important part of our personal lives which should also enter into our public lives. I want to explain to the Senate an action I took last Friday, 23 April, which could also be related to a spiritual dimension of life, certainly to a feeling about the future. It is a subject which is very important to me. On that day I redirected 10 per cent of my additional tax bill to the Peace and Development Foundation in Melbourne, having paid the balance of the money already owed to the Australian Taxation Office in Perth with a letter to the Deputy Commissioner of Taxation explaining why I had taken that action. This figure of 10 per cent represents the percentage of tax money spent on supporting Australia's defence establishment. As an Australian citizen and a senator in the Australian Parliament, I intend to redirect 10 per cent of extra taxes due to the Tax Office as long as Australia is involved in a military alliance with the United States Government and as long as Australia is involved in the mining and export of uranium; therefore, I believe, involving us in preparations for nuclear war. This involvement is a morally unacceptable position and I am challenging it because, under international law, nuclear weapons clearly are illegal. I am taking this action in the hope that it will encourage people to think of security in non-military terms. We cannot buy security with weapons. We need to seek non-violent resolutions to international conflicts by encouraging negotiation and mediation skills and by putting research moneys into peace seeking, rather than promoting the continued escalation of the arms race. In Australia, the Peace and Development Foundation has been set up to receive funds from people who do not wish their tax moneys to be spent on preparations for war. Internationally, a peace tax campaign has existed for many years. The purpose of the campaign is to highlight the immorality of the world's annual expenditure on armaments-about $US930 billion a year-while the basic social needs of millions of the world's people remain unmet. I hope that my action will cause people to think about Australia's current defence position. My action is carefully considered and I hope that the Taxation Office will respect it. I wish to expand on several points. First of all, the point about highlighting the immorality of the world's arms expenditure while millions of people's social needs remain unmet. It is a sum that is almost too large for an individual to comprehend-$US930 billion spent annually on weapons systems of all kinds. As a world community we are condoning that and allowing it to happen. We are allowing it to happen in our names while, at the same time, we know that a fraction of that expenditure could relieve many of the problems which the world's peoples face in terms of a lack of basic commodities, such as fresh drinking water, housing and education for children. It is a great blight on the international community that we allow that situation to continue. We need to continue to look at how the tax cakes are carved up in each individual country and suggest to our governments that there are other ways that we would like to see our tax dollars spent-that is, in more socially productive ways. As I have said, this is part of an international peace tax campaign. It is an encouragement to the world's governments to allow conscientious objectors to redirect taxes usually spent on defence to these socially more useful projects. It is important for us to realise that this has come on to the agenda in Australia only recently-it has been happening in Australia for the last few years-and it has not reached the large proportions it has in other countries, such as Belgium, Canada, West Germany, France, Italy, Japan, the Netherlands, New Zealand, Switzerland, the United States and the United Kingdom. All have been part of this international peace tax campaign for a number of years. All those campaigns have a common philosophical basis of conscientious or religious objection to tax funds being used for war or military expenditure. Many of these campaigns have the establishment of a peace tax fund as a related and central aim. The purpose of a peace tax fund would be to allow individuals to nominate on their income tax return that they wish the proportion of their tax normally used for military expenditure to be allocated to the peace tax fund. The peace tax fund campaigns in the United States, Canada and the United Kingdom are particularly active and have some support at congressional and parliamentary level. For example, in the United States, the World Peace Tax Fund Bill has been submitted to Congress every year since 1972, when it got one vote, but by 1984 it had attracted 50 supporters in the House of Representatives and three in the Senate. The aim of the World Peace Tax Fund Bill is to establish a special trust fund in the United States Treasury for deposits from those taxpayers who conscientiously oppose war and military expenditure. I am indebted for that information to Robert Burrowes, who is Australia's best known war tax resister. One year he paid his taxation to the Taxation Office in the form of shovels for Eritrea, acknowledging that Eritrean people needed basic assistance, such as shovels, in order to provide food in that war torn country. This year he tried to pay his tax in the form of trees, and he presented 104 native trees to the Australian Taxation Office in Melbourne. They were actually rejected by the Taxation Office, which said that trees were not legal tender-in other words, that money does not grow on trees. No doubt the 104 native trees have gone to very good homes, but the point has been made by Robert Burrowes, in two very creative ways, that there are more socially useful projects that we could be spending our money on rather than weapons which can actually kill people. The objectives of the Peace and Development Foundation set up in Melbourne last year with the intention of holding and redistributing money for war tax resisters needs to be clarified. I will read its statement of purposes and objectives, which is not very long, so that it is clearly laid before the Senate. There is no intention whatsoever on the part of people who wish to resist paying a war tax to get out of paying any taxes. That is not the point at all. The point is that the percentage of tax which is presently allocated to the defence budget should be spent on more socially useful projects. These people are not in any way, and should not be misconstrued in any way as, trying to evade paying their full tax bill. The Peace and Development Foundation was set up in Melbourne in the latter part of 1987. Its purposes include the following: 1. To raise community awareness of the nonviolent means of achieving global security. 2. To raise community awareness of the fact that personal, company and other forms of taxation are used to finance Australia's military expenditure. 3. To support campaigns seeking legislative changes which will allow people to ensure by legal means that their taxes are applied to non-military purposes. 4. To generate funds for the promotion of peace, development, ecological harmony, social justice and political participation by nonviolent means. I think they are very laudable purposes indeed. The specific objectives of the organisation are as follows: 1. To hold in a secure account: (a) monies deposited with the Foundation by War Tax Resisters (called `war tax deposits') until such time as the return of these deposits is requested or they are donated to the Foundation. (b) monies donated to the Foundation (called `donations') by supporters who have a conscientious objection to war and the arms race. (c) interest earned on the deposits and donations. 2. To use donations and interest from the Foundation's account: (a) to financially support initiatives consistent with the promotion of peace, development, ecological harmony, social justice and political participation by nonviolent means, and in particular: (i) to develop nonviolent methods of resolving conflict within and between peoples (ii) to educate the community about those methods. (b) to financially support the preparation and presentation in court of arguments intended to establish the legal right of individuals to resist paying taxes for war and the arms race given their rights and duties under international law. (c) to provide financial relief for War Tax Resisters. I want to correct a statement in which I was misquoted in the West Australian on Saturday, 24 April, in which it said that I had said at a Press conference in Melbourne on Friday that some members of the Australian Democrats and the Australian Labor Party could soon join me. That was an exaggeration of a comment made by somebody else. In fact, the co-convenor of the Peace and Development Foundation said that she was aware that some members of the Australian Labor Party who were also members of the new Peace and Development Foundation had suggested that they would put the idea of a war tax resistance and a peace tax fund instituted by the Government on the agenda at the local branch level of the Labor Party. So that needs to be clarified. I am sure that the Australian Democrats are interested in the proposal, but I have not canvassed this and I have not suggested that other people should follow my lead in making this statement of civil disobedience. It is important to put into perspective the defence expenditure of this country. In 1985-86 we spent 9.9 per cent of our expenditure on defence, 9.8 per cent on health and 7 per cent on education. I think it is very important that people in the Australian community understand the relationship between these various areas of expenditure and that defence actually gets more than both health and education. At the same time, we spent 0.36 per cent on foreign aid. So, in dollar terms, $7.5 billion was spent on defence and $7m on peacekeeping efforts-for example, Australia's efforts at the United Nations (UN). At the same time $1 billion was spent on foreign aid, which is only half of the United Nations recommended figure for expenditure on foreign aid. So Australia is sliding down the scale and approaching the status of mean nations as far as its foreign aid expenditure is concerned. Although I know there are many problems within Australia that need to be addressed-I do not want to denigrate the problems that we have here or the minority groups within Australia that need more attention from the Government-I think it is important that we see foreign aid as a way of building security. It is much more positively and socially useful to spend money on foreign aid rather than on weapons systems which can be seen by our neighbours as a threat to them. I think it is very important to put that into perspective. My personal position is that I wish to withhold this 10 per cent of my tax, which is additional to the pay as you earn tax already taken from my salary, as long as the Australian Government supports the United States nuclear alliance and as long as we mine and export uranium. To be involved in preparations for the use of nuclear weapons is morally unacceptable, and under international law I feel an obligation to reject that complicity. This is another form of civil disobedience. It is most important that it is seen as such, because civil disobedience is a very powerful tool of civil change. When we consider the appropriateness of a war tax resistance campaign for Australia, it is important to consider the individual's moral rights and legal responsibilities in relation to war preparation under international law. For example, it is evident that nuclear weapons have the properties of weapons outlawed by international law. Briefly, their effects include the indiscriminate dispersal of toxic and carcinogenic chemicals; the exposure of combatants and civilians alike to irreversible biological and genetic damage; and the creation of unpredictable, uncontrollable and unprecedented environmental destruction of such temporal longevity as to threaten the biological identity of the human race and even the physical integrity of the planet. Several international treaties outlaw weapons which have such effects. Yet states manufacture and threaten to use these outlawed weapons. States like Australia provide uranium and support the intelligence and command structures-that is, the American bases on Australian soil-for their use. What, then, is the moral and legal position of the individual in such circumstances? Article 18 of the International Covenant on Civil and Political Rights states: Everyone shall have the right of freedom of . . . conscience . . . This right shall include freedom to . . . manifest (their) . . . belief in . . . practice. There is an equivalent article in the Universal Declaration on Human Rights. The Roman Catholic Archbishop of Seattle, Raymond Hunthausen, is a well-known war tax resister. Explaining his `witness of faith', Hunthausen proclaimed his commitment to a moral principle higher than the law of the state. He said-I quote from Peace Dossier No. 6, put out by the Victorian Association for Peace Studies: It is true that as a general rule the laws of the state must be obeyed. However, we may peacefully disobey certain laws under serious conditions . . . The point is that civil law is not absolute . . . where issues of great moral importance are at stake, disobedience to a law in a peaceful manner . . . may be . . . an obligation of conscience. I am saying by my action that in conscience I cannot support or acquiesce in a nuclear arms buildup which I consider a grave moral evil. But while international law confers certain rights, it also entails a series of responsibilities. International law is not confined to the relations among states. An individual who commits an act which is a crime under international law is responsible and consequently liable to punishment. The International Law Commission (ILC), which was set up by the United Nations General Assembly to promote the progressive development and codification of international law, was asked to formulate the principles of international law recognised in the Charter of the Nuremberg Tribunal and to prepare a draft code of offences against the peace and security of humankind. The ILC formulated seven principles which were adopted by the UN in 1950. The fourth principle, based on article 8 of the Nuremberg Charter, stipulated: The fact that a person acted pursuant to order of (their) government or of a superior does not relieve (them) from responsibility under international law, provided a moral choice was in fact possible to (them). I think that question of choice being made available to the people is very important. Certainly, in the democratic state in which we live, I believe choices are available. That is why I have chosen twice in Australia to commit civil disobedience on this important question of our involvement with preparations for the use of nuclear weapons. Individuals have the right to freedom of conscience but they also have the legal responsibility to make a moral choice which may conflict with the laws of the state. Laws have often been created to support the will of a government; the apartheid laws of South Africa are a good example. In national law, what is morally wrong is not necessarily illegal. What is right is not necessarily legal. The order of a government to pay military taxes does not, under international law, absolve the individual of responsibility for the use of those taxes. Military taxes finance preparation for, and participation in, war beyond the legitimate if still moral use of force-defined in international law as cases of self-defence or under the enforcement provisions of the United Nations Charter. They are used to produce not only defensive but offensive weapons and technologies, especially those related to the nuclear arms race and to finance overseas military aid. It may thus be argued that the refusal to pay military taxes is not only an act of conscience but an obligation under international law. I am indebted to that material and also to Robert Burrowes. I am very aware of the consequences of taking such action. I realise that the Australian Taxation Office, under section 207 and section 218, has the ability to retrieve unpaid taxes. First, it can levy a 20 per cent per annum fee on unpaid taxes cumulatively, as with compound interest, and, under section 218, notices can be served to the effect that money can be withdrawn from bank accounts and so on and fines are imposed. I am quite aware of all that and am willing to take the consequences of my actions. This is a very important aspect of civil disobedience, that people are not trying to get out of their civilian responsibilities by taking such actions. It is also important to note that with the build-up of the peace tax campaign in Australia-and people may remember, it was sometime last year, that a very large petition was presented to the Senate on the question of the Government setting up a peace tax campaign-I am currently investigating the possibilities of an amendment to the taxation Act to make legal provision for conscientious objectors available to Australian taxpayers. Senator REYNOLDS(Queensland-Minister for Local Government)(11.02) —This evening we have heard contributions from Senator Puplick and Senator Vallentine. I am sure that honourable senators in the chamber would want to endorse many of the comments that Senator Puplick made in regard to the passing of Lord Michael Ramsey, the most eminent Anglican leader. He was, as Senator Puplick said, a very distinguished churchman. Particularly in his stands in regard to immigration policy and moral issues he made a very significant contribution to social responsibility, being an opponent of racism and adopting reactionary views in regard to social moral issues. I can appreciate what Senator Puplick had to say in regard to just what is involved in true Christianity. On occasions, one queries just what the Christian view is when we hear some of the views espoused in high, and sometimes not so high, places. On another note, I am sure we would all also endorse Senator Puplick's comments about the sponsorship of the Sydney Dance Company. It is not often that I agree so totally with Senator Puplick but on these two issues tonight I do agree with him. I have enjoyed greatly the Sydney Dance Company's contribution to Australian culture. The very substantial contribution as sponsorship that the Wang computer company is prepared to make is indicative of how it values the Sydney Dance Company's contribution to Australian culture. I am afraid that neither I nor, I imagine, any honourable senator in the place at this hour of the night, can endorse Senator Vallentine's comments this evening in regard to her stand in supporting the peace tax campaign. I found her contribution very interesting. I imagine that she and other senators will hear a great deal more in the near future about the actions she has chosen to take. Question resolved in the affirmative. Senate adjourned at 11.05 p.m. The following papers were tabled: Acts Interpretation Act-Correspondence and Statement relating to an extension of a specified period of time for presentation of the Industry Research and Development Board Annual Report 1986-87. Horticultural Policy Council Act-Horticultural Policy Council Regulations-Orders 1988 No. 1-Horticultural Policy Council (Variation to Constitution of Council). No. 2-Horticultural Policy Council (Appointment of Members). Liquefied Petroleum Gas (Grants) Act-Price Determination, dated 23 March 1988. National Health Act- Declarations and Schedules (2) made by the delegate of the Minister under section 85, dated 30 March 1988. Pharmaceutical benefits information provision incentive payment Rules and Schedules made by the delegate of the Minister under subsection 99aaa, dated 23 March 1988. Seat of Government (Administration) Act-Determinations made under the following Ordinances- Building and Services (Amendment), dated 28 March 1988. Plumbers, Drainers and Gasfitters Board, dated 7 April 1988. GOVERNOR-GENERAL'S PROCLAMATIONS-COMMENCEMENT OF ACTS: Proclamations by His Excellency the Governor-General were tabled, notifying that His Excellency had proclaimed the following sections of Acts to come into operation on the dates specified: Fishing Industry Research and Development Act 1987-All provisions other than Parts I, III and IV and Section 64-15 April 1988 (Gazette No. S 107, 14 April 1988). Meat Inspection Act 1983-Subsections 4 (3) and (5)-3 April 1988 (Gazette No. S 88, 29 March 1988).