30th Parliament · 2nd Session
Mr SPEAKER (Rt Hon. B. M. Snedden, Q.C.) took the chair at 2.15 p.m., and read prayers.
– Petitions have been lodged for presentation as follows and copies will be referred to the appropriate Ministers:
To the Honourable the Speaker and Members of the House of Representatives assembled. The petition of the undersigned citizens of Australia respectfully showeth:
That the delays between announcements of each quarterly movement in the Consumer Price Index and their application as a percentage increase in age and invalid pensions is excessive, unnecessary, discriminatory and a cause of economic distress to pensioners.
That proposals to amend the Consumer Price Index by eliminating particular items from the Index could adversely affect the value of future increases in age and invalid pensions and thus be a cause of additional economic hardship to pensioners.
The foregoing facts impel your petitioners to ask the Australian Government as a matter of urgency to:
And your petitioners as in duty bound will ever pray. by Mr Cohen, Mr Keith Johnson and Mr Ian Robinson.
Royal Commission on Petroleum
The petition of certain members of the Service Station Association of New South Wales Ltd, and certain members of the motoring public of New South Wales respectfully sheweth:
That the Federal Government give every consideration to implementing the findings of the Royal Commission on Petroleum.
Your petitioners therefore humbly pray that your Honourable House will take action to ensure that the needs of the motoring public and the retail petroleum industry are given every consideration.
And your petitioners as in duty bound will ever pray, by Mr Bradfield and Mr Cohen. Petitions received.
To the Right Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:
That Australian Government employees strenuously oppose the provisions of the Commonwealth Employees (Redeployment and Retirement) Bill first introduced in the House of Representatives on 8 December 1976. The basis for opposition includes the following reasons:
Your petitioners most humbly pray that the House of Representatives, in Parliament assembled, should reject passage of any legislation to extend powers of compulsory retirement of Australian Government employees unless and until any variation has been agreed with staff representatives.
And your petitioners as in duty bound will ever pray, by Mr Chipp and Mr Keith Johnson.
To the Honourable the Speaker, and Members of the House of Representatives in Parliament assembled:
The petition of the undersigned citizens of the Commonwealth humbly showeth that the undersigned are deeply concerned:
That abortion is the destruction of innocent human life.
That on 10 May 1973, the House of Representatives overwhelmingly rejected the Medical Practices Clarification Bill, which sought to legalise abortion on demand in the Territories controlled by the Federal Government.
That the Legislative Assembly in Canberra should consult Parliament again before discussing and debating the opening and operations of Population Services International and Preterm Foundation in Canberra.
That the situation regarding abortions in the Australian Capital Territory is the same as that in New South Wales where the statute prohibits abortion but allows a defence.
That the situation in the Australian Capital Territory has a great impact on situations in the States.
Your petitioners therefore humbly pray:
That the Federal Government will act immediately to prevent the establishment and/or operation of Population Services International and Preterm Foundation, and other private clinics, in the Australian Capital Territory.
That taxpayers money may not be used, through Medibank, to finance abortions.
And your petitioners as in duty bound will ever pray. by Mr Braithwaite.
To the Speaker and the House of Representatives in Parliament assembled:
The petition of the undersigned citizens of Australia respectfully showeth:
That many Australians are concerned at the announced decision by the Australian Government to phase out Federal financial and administrative support for the Australian Assistance Plan; the consequence of which will negate the Government’s stated commitment and even financial support for valuable community projects.
We your petitioners do therefore humbly pray that the Australian Government:
The Honourable the Speaker and members of the House of Representatives in Parliament assembled. We, the undersigned citizens of the Commonwealth, do respectfully showeth:
Are concerned about the consequences of mining of uranium and, in view of the important findings and warnings in the Fox Report, and the recommendations by the Commission that a public debate be held, request your Government to hold a referendum so that the Australian people can have the widest possible opportunity to participate in a debate on this vital environmental hazard; and in the conduct of such a referendum, take measures to ensure that arguments for and against mining and export of uranium receive equal media time and publicity.
And your petitioners as in duty bound will ever pray. by Mr Garrick.
To the Honourable the Speaker and members of the House of Representatives in Parliament assembled.
The humble petition of the undersigned members of Parents Without Partners Australia Incorporated and citizens of Australia respectfully say that we are concerned about the discrimination and hardship being experienced by lone fathers and their children. They are faced with the same problems and financial needs as supporting mothers, without equal opportunity for comparable benefits. We feel that the Government do not recognise the needs of this section of our community.
Your petitioners therefore humbly pray that Parliament take immediate steps to ensure that this years Budget allows for lone fathers to be given the right to receive a pension on the same basis as supporting mothers. We also request that the Government take immediate action to instigate one ( 1 ) category of lone parent pensions to eliminate the discrimination currently experienced in the present structure.
And your petitioners as in duty bound will ever pray. by Mr Goodluck.
To the Honourable Speaker and members of the House of Representatives assembled.
The humble petition of the undersigned citizens of Australia respectfully show us; that due to the new information on whale communication, behaviour and intelligence, and to the depleted state of most of the great whale stocks and the uncertainty associated with whale population estimates, that commercial whaling is no longer acceptable to the vast majority of Australians. It is urged that immediate steps be taken to end this activity.
And your petitioners as in duty bound will ever pray. by Mr Hodgman.
To the Speaker and the House of Representatives in Parliament assembled. The petition of the undersigned citizens and residents from overseas respectfully showeth that many Australians and residents from overseas are concerned for the safety of Malaysian student leader Mr Hishamuddin Rais.
Mr Hishamuddin Rais, the past Secretary General of the University of Malaya Student Union is currently in Australia seeking political asylum.
We your petitioners pray that the Commonwealth Government-
Recognises that Mr Hishamuddin Rais was persecuted by the Malaysian Government for his activities as a student leader, because he supported the struggle of the peasants and workers for just working and living conditions.
Considers Mr Hishamuddin Rais’ case favourably and grant him political asylum in the spirit of the UN Declaration of Human Rights which states that everyone has the right to seek and to enjoy in other countries asylum from persecution for reasons of race, religion, nationality, membership of a particular social group or political opinion.
Understands that the belated pressing of these charges as a deliberate attempt to incriminate Hishamuddin Rais before the law so as to jeopardise his case for political asylum. Hence, we demand that these fabricated charges be withdrawn in order that Hishamuddin ‘s case for political asylum not be prejudiced.
Acknowledges that the case of Mr Hishamuddin Rais is a particular instance of political pressure brought to bear upon overseas students in Australia as a result of the collusion between the Australian Government and foreign regimes. And recognises that political surveillance and political intervention by foreign and Australian agents is a direct threat on the life and liberty of overseas students.
And your petitioners as in duty bound will ever pray. by Mr Innes.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:
That although we accept the verdict of the Australian people in the 1975 election, we do not accept the right of a Governor-General to dismiss a Prime Minister who maintains the confidence of the House of Representatives.
We believe that the continued presence of Sir John Kerr as Governor-General is a cause of division among the Australian people.
Your petitioners therefore humbly pray that your honourable house will call on Sir John Kerr to resign as Australian Governor-General.
And your petitioners as in duty bound will ever pray. by Mr Morris.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned elector of the Division of Kooyong respectfully showeth:
Your petitioner therefore humbly prays that:
The Commissioner of Taxation be directed to forthwith furnish the House with:
And your petitioner as in duty bound will ever pray. by Mr Peacock.
To the Honourable the Speaker and Members of the House of Representatives assembled.
Your petitioners believe that all people have the right to education, irrespective of class, age, sex, sexuality and ethnic background, and that it is the responsibility of Government to ensure that sufficient funds are allocated to protect that right.
Your petitioners therefore humbly pray:
And your petitioners as in duty bound will ever pray. by Mr Short.
To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Eyre Peninsula in South Australia respectfully showeth:
And your petitioners as in duty bound will ever pray. byMrWallis. Petition received.
– I give notice that on the next day of sitting I shall move:
- Mr Speaker, I rise to order. Do we have to suffer the incessant prattling of these mediocrities every single solitary day?
-Order! I will hear the notice of motion. I call the honourable member for Evans.
– The notice of motion continues:
This House therefore resolves:
-I had no notice that the honourable member for Evans (Mr Abel) proposed to give a notice in the terms that he did. Honourable members willremember that I raised this matter following anotice of motion 5;given by the honourable member for Scullin (Dr J enkins). I have given considerable attention to the matter and I had prepared information which I had intended to state to the House. I do so now. Just as I said to the honourable member for Scullin that the remarks had no direct relation to him, I also say to the honourable member for Evans that they have no direct relation to him. On 30 March 1977 after the honourable member for Scullin and the honourable member for Denison (Mr Hodgman) had given openly very long notices of motion I drew the attention of the House to the need to have the recitals of notices examined in order to ensure they were necessary to make the motion meaningful and that they did not amount to a speech or argument in support of the motion. Since that time I have noticed that honourable members are continuing to give notices which are inordinately and unnecessarily long. Honourable members are tending to use this form of the House to narrate a long argument- in effect, a speech anticipating a debate- when they should be putting a concise proposition for determination by the House. I have a discretionary power under the Standing Orders and practices of the House to direct that a notice be not received in an inappropriate form or that its terms be corrected before it is placed on the notice paper. If honourable members continue to misuse that form of the House, I shall have to intervene to have the honourable member concerned reform his notice or alternatively to have the Clerks eliminate the argument and unnecessary statements of fact.
– Has the attention of the Prime Minister been drawn to a report in today’s Sydney Sun newspaper quoting a Mr Victor Marchetti, a former assistant to the executive director of the United States Central Intelligence Agency, as saying that the CIA has provided funds to the Liberal and National Country Parties in Australia for at least the past 10 years? Is the Prime Minister aware that the source of this information is reported as being Mr Richard Stallings, a former CIA official in Australia and a personal friend of the present Deputy Prime Minister? Finally, in view of the grave nature of these allegations, will the Prime Minister ascertain whether any money originating from the CIA has been received by his Party in the past 10 years and make that information available to the Parliament as a matter of urgency?
-Order! Before I call on the Prime Minister to choose whether he will answer the question, I point out to the honourable member for Banks that, in fact, the question is out of order. The Prime Minister is not responsible for the affairs of a political party. Each member sits in this House as a member of the Government parties or the Opposition party. The question is in fact out of order because of the nature of it. If the honourable gentleman wishes to argue the point I will hear him.
- Mr Speaker, I would prefer to answer the question.
– I maintain -
-Order! The honourable gentleman will resume his seat. I was giving the Prime Minister the opportunity to answer the question if he chose to do so. I call the Prime Minister.
– I think it was probably obvious that some honourable gentleman from the Opposition would ask this particular question, but I think he would have been well advised to wait and think before asking such a question. Let me, first of all, get one or two facts down for the information of honourable members. Fund raising for the Liberal Party is a matter for the Party organisation and not for the parliamentary members of the Party, whether it be the Prime Minister or somebody else. Under no circumstances would funds be accepted from any foreign country. The Liberal Party does not solicit or accept funds under those circumstances and never would do so. This is the approach that the organisation adopts, and it adheres to it very closely indeed.
I think this stands in stark and open contrast to the avowed and known approach of the Australian Labor Party. In the period of an election we had the circumstance of 2 strange characters coming here from Iraq, going to meetings with the present Leader of the Opposition at Blues Point Towers on- what was it- one occasion or 2 occasions; Mr David Coombe also being involved; these people staying in strange places in Sydney; and undercover arrangements being made to collect funds amounting to- what was it meant to be- half a million dollars. The relationships between the Australian Labor Party and the proposed fund-raising activities overseas have never been properly explained. There was that wonderful transcript from some midnight background Press conference given by Mr Hawke- the transcript of a Press conference which indicated that he thought that the Leader of the Opposition on that occasion had behaved disgracefully and with great impropriety. What was it that the President of the Labor Party said on that occasion? He said: ‘ Gough ‘s gone; Gough ‘s gone a million’. Of course, any leader of any respectable party would be gone a million if he sought funds overseas in the way in which this particular gentleman sought funds from overseason the basis of approaches made by Mr Hartley.
-Mr SpeakerMr SPEAKER- The right honourable gentleman will resume his seat. Is the Leader of the Opposition raising a point of order?
-No. I find objectionable these comments coming from a member who received assistance from a man who has just taken over $900,000 from his shareholders.
-Order! The honourable gentleman has no point of order.
– The man is the stooge of a corrupt unionMr SPEAKER-Order! The honourable gentleman will resume his seat. I call the Prime
-The Leader of the Opposition sought funds from a foreign country.
-Order! Both honourable gentlemen will resume their seats. The House will come to order. I remind both honourable gentlemen that they sit at the table as leaders in the national Parliament. I ask them each to conduct himself with dignity. I call the Prime Minister.
-What I have stated is known and public fact in this country. The Leader of the Opposition sought funds from a foreign country.
– How much did you get of the $900,000 stolen by Gale?
– The honourable gentleman is slightly disturbed.
-The right honourable gentleman will resume his seat.
– Why don’t you answer the question? The sum of $900,000 was made away by the man who helped-
-Order! I call upon the Leader of the Opposition to withdraw that accusation.
-Mr Speaker, I have a question on notice from which the Prime Minister can readily refute what has been published in a State parliament in a public document.
-Order! The honourable gentleman will respond to my request to him to withdraw the allegation.
-What is the allegation?
-It is not my practice to repeat an allegation which I find to be offensive. If the honourable gentleman was in some heat when he said it, I will remind him of it because it will be in Hansard. He asked by way of interjection: ‘How much did you receive of the $900,000?’ I ask that that be withdrawn.
– In obedience to you, Sir, I withdraw.
-I appreciate the action taken by the Leader of the Opposition. I call the Prime Minister.
-The honourable gentleman has a certain sensitivity on this subject and I can well understand it.
- Mr Speaker, I rise on a point of order. My point of order is this: The answer which is being given by the Prime Minister is not relevant to the question. My question specifically asked whether the Liberal Party had received money from the CIA. All I ask is that he answer that question.
– The right honourable gentleman is entitled to answer the question as he sees fit, provided what he says is relevant. I rule that his answer is relevant
– I also ask that you restrain the right honourable gentleman from being excessively provocative on this. I do as much as anybody else in this Parliament to help you to keep order in it.
– Order! The honourable gentleman will resume his seat. I ask honourable members on my right not to respond in loud terms as they have. The Leader of the Opposition is making his point of order.
- Sir, I withdrew something which you, I think quite properly, asked me to withdraw. Thereupon the Prime Minister gratuitously says that I am sensitive on the matter. Sir, I have approached this matter quite properly in the Parliament by putting questions on notice or without notice. I have not received a reply. I am happy to have the answer but it is, I believe, quite inappropriate to say that I am sensitive on a matter where I have sought the information or response by all the means available properly to members of Parliament.
-The point is taken. I asked the Leader of the Opposition for a withdrawal and his comments were withdrawn. I ask the Prime Minister not to comment on the withdrawal.
-The honourable gentleman who asked the question should have listened to the first part of the answer when I made it perfectly plain that under the Liberal Party’s fund raising code it is not possible to accept funds of a kind which the honourable gentleman suggested. Funds of that kind have not been accepted. I pointed out, Mr Speaker, because I believe there is very real relevance in it, that there is an odd circumstance when a member of a political party tries to make in his question allegations of that kind when his own Leader actively sought funds of the kind which have been mentioned on previous occasions and which led to the President of the Australian Labor Party uttering that famous phrase: ‘Gough’s gone a million- he has had it this time’. It led to Mr David Combe having to come back hurriedly from a cruise on a ship of a certain kind in the Pacific to attend a meeting.
– Come out- it was a Russian ship.
-The honourable gentleman admits that it was a Russian ship. Mr Combe was on a nice holiday cruise. Blues Point Towers and money from Iraq will be the honourable gentleman’s epitaph.
- Mr Speaker, I seek leave to supplement the answer given by the Prime Minister.
– There is no opportunity for the right honourable gentleman to do that.
Mr Graham having addressed a question to the Treasurer -
-Order! The question is out of order. The Treasurer has no responsibility for the people from academia and their pundits.
– I refer the Minister for Foreign Affairs to an answer he gave to a question asked by me yesterday and to a cable from Singapore which he tabled at the conclusion of his answer. Did the Minister ask the Australian High Commissioner at Singapore to speak to the Indonesian Ambassador at Singapore about the arrangements the latter had made for his visit to Bali in September 1975? Also, was the Minister correctly quoted by the National Times on Sunday when it was stated that he said that:
He kept his own record of conversation and his wife was present and would support him on this and that there were other cabled communications that refute the allegations.
Will the Minister table his record of conversation and the other cabled communications he referred to, and will he tell the House precisely what his wife is prepared to say about the discussions at Bali?
-I believe that I answered all these matters in detail yesterday. I see no reason to add anything further to what I said. The whole matter has been put before the House. The records and views of others were ignored totally by the Opposition in the debate yesterday. The carefully prepared statements of the Opposition were erroneous and ignored the answer I gave yesterday. If Opposition members cannot even pay attention to an answer before making a speech which turns out to be redundant, I see no reason to add anything further to that answer.
– My question is directed to the Prime Minister. In view of the closeness of the polling day for the 4 referendums, will the Prime Minister inform the House when he proposes to open the campaign? Is it his intention to campaign in all States? Will he inform the House of the extent of support being given the 4 proposals by all major political parties?
-The campaign will be opened on television tonight. I hope very much that all honourable gentlemen in this House and the greater majority of honourable senators in the other place will spend most of the next 2 weeks compaigning actively for the 4 referendum proposals. As honourable members know, the House is not sitting for one of the 2 weeks when it would otherwise have been sitting. This is for the specific purpose of enabling all honourable gentlemen whose minds and hearts are devoted to constitutional reform to pursue these matters with a great deal of vigour. I think there are effective organisations in all States. I cannot say that there is unanimous support in all States but I can certainly say that there is a high level of support for these 4 questions amongst the people of Australia. There have been, as the honourable gentleman would know, various polls taken of the state of view in relation to the 4 questions and in each of the States there is a much higher level of support for each question than one would have found on any previous occasion in relation to any previous referendum.
I think there are substantial reasons why there is greater support for these proposals at this time than there has been for previous proposals. These proposals simply are seeking sensible reform of the Constitution. They have been considered by the Constitutional Convention where people from this Parliament, State parliaments and local government bodies gave overwhelming support to the principles of the proposals. That is one marked difference. But there is another significant difference. Very often other referenda have been seeking more power for this Parliament, often at the expense of State parliaments. These proposals do not do that. They represent sensible, commonsense reforms. They will make the Constitution work better. They do not detract in any sense from other parliamentary institutions. They do not detract one whit from the power, authority and sovereignty of the States. Indeed, I believe that they would in fact enhance the position of the States.
Over the next 2 weeks I will certainly be visiting all States and spending more time in those States where there is some opposition than in those States where there is a greater degree of unanimity in relation to the questions. I hope that a great majority of the Australian people will accept the plain commonsense of these proposals. There is a very real element of fairness in the proposals. There is the question of votes for people in the Territories. These people are denied a democratic right accorded to other Australians and they should no longer be denied that right. There is the plain, commonsense proposal to have a retiring age for Federal judges, which is especially necessary now with the development of a system of Federal Family Courts. There is a question also of the replacement of senators. I believe that all honourable members feel that it is only fair that a senator who dies or retires from the Senate should be replaced by a senator from the same party. There is a very real element of fairness in these proposals and that is one of the reasons why I believe they will gain support.
Again, there is the question of simultaneous elections. Who really wants 4 elections for the Federal Parliament between now and 1980 or 1981? On practical grounds it does not make a great deal of sense and I think that this proposal will gain a great deal of support because it is simple, clear and, far from detracting from the powers and authorities of the States or, for that matter, of the Senate, it will enhance the position of the States by reinforcing the power and authority of a House of Parliament which, in fact, is designed to protect the States. So there are cogent reasons why these 4 measures should be given the strongest possible degree of support. I hope all honourable gentlemen will be on the campaign trail over the next 2Vi weeks to make sure that a maximum vote is mustered for the Yes case.
-While applauding and supporting the answer that the Prime Minister has just given may I ask him a question supplementary to that asked him by the honourable member for Banks? I ask: Is it also in accordance with the Liberal Party’s code that in no circumstances-
-Order! I have already indicated that the question asked by the honourable member for Banks was out of order because the Prime Minister has no ministerial responsibility for a political party. Because of the nature of the question which I allowed to proceed I also allowed the Prime Minister, at his wish, to answer it. But I must draw to the attention of the Leader of the Opposition that his question is out of order.
-Sir, on that-
- Mr Speaker, may I speak on a point of order? Since another gentleman from the Opposition was allowed to ask his question, with your indulgence and good wishes, Mr Speaker, I think that the Leader of the Opposition ought also to be allowed to ask his question.
– I will give the indulgence.
-This is a marvellous consenus
– Yes. I hope the consensus remains.
-We might have a national conference out of it yet. Mr Speaker, I ask the Prime Minister a question supplementary to that asked by the honourable member for Banks which you permitted him to answer and which he enjoyed answering. I ask: Is it also in accordance with the Liberal Party’s code that in no circumstances will a member of Parliament accept services such as free research assistance for his own staff or political needs? Will the Prime Minister assure the House that he will not again transgress this code?
– It is a common practice of the honourable gentleman and other members of his Party to draw conclusions from what they allege to be facts within their questions. Of course invariably their conclusions are wrong. A certain person many years ago did provide some assistance in helping to develop industrial relations policy when I was industrial relations spokesman for the then Opposition. That policy of course is the official policy of the Liberal Party. The service was provided in support of the Party and not for one second of any individual. That being so, it was completely in accord with the practices of the Party, which accepts support from a significant number of people- individuals and organisations throughout Australia- who strongly and vehemently believe in the philosophy and approach of private enterprise against the dead and killing hand of the then Government whose policies were destroying Australia.
– Is the Treasurer aware of calls for a reduction in sales tax on new motor vehicles to encourage sales in that area? Has the Government given consideration to these suggestions for sales tax cuts in the automotive industry?
– People who call for tax cuts fail to realise the implications of what in fact is being sought. Tax cuts are not costless. The proponents of cuts in indirect taxes often argue that there would be no loss of revenue as cuts would stimulate an increase in sales which, even though taxed at a lower rate, would generate more, rather than less, total revenue. This argument is fallacious. Experience has shown that a reduction in sales taxes on motor vehicles simply has the effect of pushing forward orders rather than creating a sustained increase in demand. I remind the House, as honourable gentlemen opposite are aware, that in 1975 the then Labor Government introduced a temporary reduction in the level of taxes on vehicles. According to information provided to me, that did not produce additional revenue. In fact I am informed that those sales tax cuts are estimated to have cost some $84m. Even though the reduction in sales tax provided an immediate increase in demand, that was not sustained and it fell away quickly. In addition, that experience showed that a reduction in sales tax on motor vehicles merely redirected a proportion of consumption away from other goods, such as white goods. The Government is not prepared to base policy decisions on one or two months’ figures; nor is it prepared to make an industry assessment on the basis of one company’s particular difficulties. I might say in passing that I am somewhat annoyed that the reference to sales tax cuts should, arise from industry sources, then to find that the Government is in the situation where it is called on by those same sources to dispel the confusion and uncertainty which the sources themselves have in fact created. I hope that this uncertainty is now dispelled. Sales tax cuts are simply not on.
- Mr Speaker, I rise on a point of order. The Treasurer has stated a figure concerning lost revenue. At some stage could the Minister provide the House with the means by which that figure was arrived at?
-There is no point of order. The Treasurer may consider whether he will do so.
- Mr Speaker, I rise on a point of order. This is the second day on which the Minister representing the Minister for Social Security has not been available in the chamber to answer questions.
– There is no substance in the point of order. The honourable gentleman will resume his seat.
– I should like to know whether there is any explanation from the Prime Minister.
– I think it ought to be known that the honourable gentleman is attending a funeral.
-I direct my question to the Prime Minister. I refer him to the answer he gave to the Leader of the Opposition yesterday to a question on the arrangements made for a meeting between the Foreign Minister and 2 Indonesian officials at Bali in September 1 975. In his answer he said that there had been a conversation between the Australian Ambassador in Jakarta and Australia in recent times. It is relevant that the Foreign Minister also stated in the House yesterday that the Ambassador had misled his departmental head about the arrangements for the Bali meeting. I ask the Prime Minister: When did the conversation between the Ambassador in Jakarta and Australia take place? Who initiated the conversation? With whom was it held? Will the Prime Minister table any note or record of the conversation that was made?
– I am advised that the Ambassador in Indonesia rang the Permanent Head of the Department of Foreign Affairs. I am surprised at this matter being raised again because my colleague the Foreign Minister so utterly banished the charges and turned the point back at the Leader of the Opposition that I would have thought that the honourable gentleman would have wanted to forget the question completely, unless of course he is seeking to embarrass the present Leader of the Opposition, having regard to some current contest that is being pursued within the Australian Labor Party.
– My question, which is directed to the Minister for Primary Industry, who is Acting Leader of the National Country Party, is supplementary to the question asked by the honourable member for Banks with reference to the National Country Party. Can the Minister advise whether there is any truth in the allegation that the National Country Party has received funds from overseas sources, with particular reference to the source mentioned by the honourable member for Banks?
-I know that the honourable member for Banks, like his Leader, sees a conspiracy under every chair. I do not know whether it is just a continuation of that indigestion from the Blues Point breakfast or whether it is a product of the machinations within their own Party that they have this attitude. Obviously Mr Hartley and his advocacy for the Palestine Liberation Organisation and the intrusions that he has made on the financing of the Australian Labor Party would seem to have prejudiced attitudes that members of the Opposition have in this place in this sort of cause.
The practice of the National Country Party has been that money is raised not by its parliamentarians but by the organisation. But obviously within the organisation there is an intention to raise funds from as many sources as possible. I am delighted to know that so many people do contribute to the funds of the National Country Party. However, I assure the House that, like the Liberal Party, the National Country Party does not solicit, nor does it accept knowingly, funds from overseas. Any allegations that might be made by Mr Marchetti or any member of the Opposition are totally false in that respect. With respect to allegations regarding the Deputy Prime Minister, I draw to the attention of members of this House a personal explanation which was given here on 4 November 1975 and which is recorded at pages 2723, 2724 and 2725 of Hansard. I regard any suggestion that Mr Anthony or members of his family have acted improperly in any way because of their association with a former tenant- a Mr Stallings- as gross impropriety, particularly in view of the fact that not only was a full explanation of the tenancy agreement given but also copies of arrangements entered into by a real estate firm in Canberra, then known as Mary Thynne Real Estate and now known as Thynne Real Estate, were in fact laid before the House on that occasion. Consequently, I would suggest that the whole of the assertions made are not only false but also grossly improper.
– I direct a question to the Treasurer. I refer the Treasurer to the last quarterly issue of the Australian Economic Review, the official journal of the Melbourne Institute of Applied Economic and Social Research. Is the Treasurer aware that the Institute predicts that unemployment is likely to increase until well into 1978 because of the Government’s economic policies? In the light of this comment, can the Treasurer explain how and by how much unemployment will be reduced by the end of this calendar year?
-The Institute has not had a very reliable record in the past for its particular forecasts- I am going back as far as 1972- and I do not regard any of the forecasts put by the Institute in its recent publication as being any more reliable. The Government has consistently said that the level of unemployment in this country is far too high. Secondly, it has said that the level of unemployment cannot be measured by the Commonwealth Employment Service series because that measures simply the number of people who apply for positions through the Commonwealth Employment Service and is not to be seen as an objective indicator of the level of those unemployed at a particular time. I draw to the attention of the honourable gentleman the more objective judgments expressed in the surveys brought down by the Commonwealth Bureau of Statistics. The Government is seeking to reduce the level of unemployment in this country. Its success will be very heavily determined by the extent to which wage-push takes place during the year. I therefore pinpoint in that sense the fundamental responsibility of the Conciliation and Arbitration Commission and highlight the importanceMr Young- Is the freeze over?
-The honourable member for Port Adelaide and his colleagues have always been determined to sabotage that freeze and they have been exposed again.
– Has the Treasurer examined the trend in the rates of inflation following the announcement of the consumer price index figures for the March quarter? If so, what conclusions has he reached?
-It is comforting to know that at least this side of the House is aware of what is happening in the Australian economy and is prepared to pose questions that relate to economic developments at the present time. The Government is very encouraged by the consumer price index figures for the March quarter, which show that the marked downward trend in inflation during 1976 has been consolidated. This is particularly so if allowance is made for the fact that some of the direct price effects of devaluation would have occurred during the March quarter.
The headway that has been made against inflation can be demonstrated on any reasonable basis of assessment. Firstly, the consumer price index increased by 2.3 per cent during the quarter, following increases of 2.8 per cent excluding Medibank effects, 2.2 per cent and 2.5 per cent in the proceeding 3 quarters, and 3 per cent in the March quarter of last year. Secondly, after adjustment for the effects of changes made to Medibank, this index increased at the rate of 10.2 per cent during the 12 months to the March quarter of 1977 compared with an increase of 16.8 per cent over the 12 months to March 1976. Thirdly, adjusting for government taxes and charges and the effects of Medibank, the index rose at an annual rate of 10.6 per cent in the 6 months to March 1977 compared with a rise of 15.7 per cent in the corresponding period a year earlier.
In short, in response to what the honourable gentleman has sought, on any accepted basis of comparison, whether one takes the March quarter alone, the 12 months to the March quarter or the 6 months to the March quarter expressed at an annual rate, the underlying rate of inflation is significantly less now than it was 1 2 months ago.
– I am not aware of the report the honourable member refers to. Our policy on uranium has been made clear many times. No decision will be taken until we receive the second Fox report.
-Has the Minister for Business and Consumer Affairs seen the article in today’s Australian Financial Review stating that the Trade Practices Amendment Bill presently before this House removes prohibitions on resale price maintenance? Can he inform the House whether this report is accurate and whether the Government has any intention of removing restrictions on resale price maintenance?
– My attention has been drawn to that article. I inform the honourable gentleman that the suggestion in the article that the Government has partially or otherwise reversed a decision taken, I think, by the McMahon Government to prohibit resale price maintenance is absolutely false. The author of the article totally misunderstood the difference between resale price maintenance and recommended price lists. He failed to understand that the practice of resale price maintenance involves the imposition of restrictions by a supplier of goods as to the minimum price at which a purchaser might resupply those goods, whereas the practice of recommending price lists involves the issuing of non-binding price lists by trade associations. The first practice imposes price rigidity; the latter practice can enable small business to compete more effectively. The author of the article would have produced a better exercise if he had carefully examined the provisions of the Bill. If he had done that he would have realised that the provision in the 1974 Act, which is the present law, prohibiting resale price maintenance has been left totally undisturbed in the amendment Bill.
– My question is directed to the Minister for Transport. He will recall his decision of about 26 April to order an inquiry into an incident involving 2 airline pilots at a Melbourne hotel and that the inquiry that was to be conducted should be completed in 2 days. I ask: Firstly is he able to give the House any information on the results of that inquiry; and secondly, in the interests of maximising the safety of the air travelling public will he now give further consideration to increasing the alcohol abstention period for airline pilots to 12 hours before departure time?
– The second part of the question is tied very much in a way to the first part. I have not yet received the report from Qantas Airways Ltd or my Department on the alleged incident. When that report is received, of course it will be given serious consideration. I do not intend to make any prejudgments on the issue; nor do I intend to make any prejudgments about the levels of alcohol that might have been consumed by the participants in the alleged incident. I think it far better to wait until I receive a report, and I will consider both matters raised by the honourable member.
– Is the Treasurer aware of the serious concern being expressed by the barley growing industry about excessive excise duty on beer sales and the resultant decrease in barley sales on the home market? Will the Treasurer consider abolishing excise on beer sales so as to place the barley growers of Australia in exactly the same position as grape growers?
– There is a quick answer which is no: I should say to the honourable gentleman that I have in my office a large black and yellow pamphlet, as I recall it, headed ‘The Beer Drinkers’ Lament’. That is a judgment by the industry on the extent to which excise puts a very considerable degree of revenue into the Commonwealth coffers. I understand very well the concern expressed by the honourable gentleman. A delegation has put detailed views to the Government, and those views will receive attention in the Budget context. I mentioned before the substantial revenue which the Commonwealth receives from beer sales, no doubt a tribute to many honourable members on both sides of this House. In the current financial year some $775m will be received by the Commonwealth from the excise on beer and, as the honourable gentleman mentioned in his question, there is no comparable impost in relation to sales of wine. I shall look into what the honourable gentleman has mentioned in relation to the equity between beer drinking and wine consumption. I say no more than that, and nothing that I say should be taken as any indication of a policy direction. As regards the question of the abolition of ‘The Beer Drinkers’ Lament’, I have to say regrettably, from both a personal as well as an economic point of view, that the answer to the question is certainly no.
– I ask the Prime Minister whether he will give an assurance to the Parliament that he does not intend in any way to question the complete constitutional independence of the Conciliation and Arbitration Commission nor does he intend to treat it as another government department?
– I should have thought that the constitutional position of the Conciliation and Arbitration Commission is very clear. It is established under the Constitution by laws of this Parliament. No government acting within the bounds of the laws of this Parliament and the Constitution can get away from that fact.
-I ask a question of the Minister for Primary Industry regarding the proposed Australian Meat and Livestock Corporation. Is the Minister in a position to indicate whether the new membership structure will assist the sale of meat abroad? Would it be stronger, with a producer majority on the Corporation? I further ask: Does the recently announced new quota of Japanese beef imports indicate that we now have reasonable access to that market?
-In respect of the first part of the honourable gentleman’s question, the range of views about just who should be on the proposed Australian Meat and Livestock Corporation is extraordinary. Having received a good many telegrams from constituents of the honourable gentleman and from other producers around Australia suggesting that the body should have a producer majority or should be entirely under the control of producers, even to the exclusion of all others, I noticed in this morning’s Press an advertisement from a group of exporters suggesting not only that they reject the request from producers but also that the present proposal to have one member representing the meat trade should be extended to three. In those circumstances, it is obvious that it is necessary for the Government to determine what would seem to be the most equitable structure, and I believe that in the outline of the membership which I gave to this House the other day that has been achieved. Obviously the objective is to ensure that the Corporation will be a more effective professional body than its predecessor, and the proposed reconstitution and new powers, I believe, will achieve that.
In respect of the second part of the honourable gentleman’s question, there is no doubt that the stop-go type of policy of admission into the Japanese market has been a major deterrent in the prices available to producers. I have been most concerned, as indeed have members of the Australian Meat Board and officers of my Department, at what is seen to be a policy followed by many countries, not peculiarly by Japan but by the European Economic Community and last year by the United States, of restricting the level of permissible imports of Australian beef into their markets. In those circumstances it becomes extraordinarily difficult to devise ways to ensure that what is a very competitive Australian industry internationally, an industry which can produce the animal protein needed by many people around the world, can operate at a reasonable level of profitability. Our interest at a government level has been a determination to try to overcome those barriers. I am pleased that the Japanese have announced for this 6-month period a quota that gives us some reasonable chance of selling into that market. However, I hope that a reasonable percentage of that quota will be for chilled beef. I hope also that that level will serve as a base from which future quota levels for 6-month periods might be increased rather than decreased. Certainly, I hope that the Australian Meat and Livestock Corporation, when it is incorporated, will be able to augment Government efforts to that end.
– I direct a question to the Prime Minister and remind him of his reply to my question 15 days ago when he said that there were no exceptions to the price freeze. Does this apply to the price of shares? If so, will he notify the Australian stock exchanges and the investing public that share prices between now and midJuly can stay only at their early April levels or go down? If not, how does this situation differ from that of perishables and other commodities sold, in effect, by auction and to a large extent reflecting supply and demand?
-The question is characteristic of the approach of the Opposition from the time that the Prime Minister and the Premiers made a call for a price-wage freeze. Let it be remembered that the response of the honourable member for Oxley to that initiative was beaten in speed only by the response of the senior vicepresident of the Australian Council of Trade Unions, Mr Ralston, both of whom competed to be the first to condemn a proposal which at that time had the unanimous support of 3 marginally more successful Labor politicians- more successful than any of the honourable members opposite in this House. The honourable gentleman’s question is, I think, typical of attempts by the Opposition to denigrate the attempt made by the Commonwealth Government and many people in Australia to make this proposal work. I think it worth noting that yesterday the Conciliation and Arbitration Commission considered in its deliberations the calling of a national conference as suggested by one of the parties to the hearing yesterday. The Commission said that it would not be appropriate in the circumstances. Naturally, the Commonwealth Government is disappointed that the submission it put was not fully acceded to. Nonetheless, we note with satisfaction the comments made by the Commission regarding its attitude towards increases in money wages during the period in which it will be considering the March consumer price index.
It will be my intention to make a statement to the House this week regarding the Government’s attitude to the current situation. Quite obviously the answer to the honourable gentleman’s question as to a specific situation that he raises is no. I would have thought it was apparent from the very nature of the proposal in the first instance that the situation he alleges came within the province of the freeze obviously could not do so. It was never intended to come within the province of the freeze. Suggestions that the rise in share prices since 13 April constitutes a breach of the freeze result from a total misapprehension by the honourable gentleman as to the nature of the proposal in the first place.
- Mr Speaker, I rise to order. Would you consider preparing a short paper to indicate to Ministers whether questions can be irrelevant and if so on what grounds?
-The practices of the House and the Standing Orders are quite clear. I suggest that the honourable gentleman consult them.
– I wish to inform the House that on 28 April last I was asked a question by the honourable member for Chifley (Mr Armitage) concerning prices in the staff cafeteria. As promised, I have now consulted with my colleague the President of the Senate on this matter, and I now report as follows: In relation to the refreshment rooms, prices for meals, morning and afternoon teas are all fixed by the Joint House Committee which last reviewed and increased prices with effect from 2 January 1977. No further increases are contemplated at present, and the subject would not be likely to come up for consideration again until after the annual accounts are available in AugustSeptember.
In the staff cafeteria the prices of meals, morning and afternoon teas, light refreshments, etc., are similarly covered by Joint House Committee approval. However, in this area a small number of items- principally tea, coffee, sugar and biscuits, as well as fresh fruit- were being varied in price according to the cost fluctuations that occurred, but these have now been pegged at rates ruling on 13 April. It is proposed that replacement stocks be purchased only if it is possible to do so at a purchase price which is less than the pegged price. If the replacement cost is higher than this item, it will not be purchased; some reduction in the existing margin of profit will occur.
The same principle is proposed to be followed in the book shop. The effect here is not likely to be of great consequence over a period of 3 months as a reasonable stock of the most popular lines is carried.
Discussion of Matter of Public Importance Mr SPEAKER- I have received a letter from the honourable the Leader of the Opposition (Mr E. G. Whitlam) proposing that a definite matter of public importance be submitted to the House for discussion, namely:
The need for parliamentary scrutiny of foreign intelligence services in Australia.
I call upon those members who approve of the proposed discussion to rise in their places.
More than the number of members required by the Standing Orders having risen in their places-
– There is increasing and profoundly disturbing evidence that foreign espionage and intelligence activities are being practised in Australia on a wide scale. In recent days a succession of allegations and disclosures has come to light through published documents, Press reports, statements by individuals and evidence given in public proceedings in the United States. The Fraser Government has treated this evidence with characteristic indifference, if not contempt. I believe the evidence is so grave in its detail and so alarming in its implications that it demands the fullest investigation. The public has grounds for disquiet. It must be reassured. To ignore the evidence would be to condone, and in the long run to encourage, a threat to civil liberties in this country which no democratic government could tolerate. Nothing less is at stake than Australia’s security and integrity as a sovereign nation.
I am not raising this matter of public importance in the usual style in which such matters are raised. I am not primarily attacking anything the Government has done. The issues are too serious for too partisan an approach. I stress too that the Labor Party, in raising these matters, is not endorsing all the reports and statements that have appeared in the Press; some of the claims that have been made are clearly dubious. The point must also be made that by the term ‘foreign intelligence services’ we do not mean only those of the United States. Other major powers have intelligence operations in this country. If there is less written about the activities of the other super-power, it is not necessarily because the Russians are less active. Nor am I asking that there be parliamentary scrutiny of our own intelligence services.
A week ago I asked the Prime Minister (Mr Malcolm Fraser) about the public allegations of Christopher Boyce, the defendant in the espionage trial in Los Angeles. One does not condone Boyce ‘s activities, but one cannot ignore his evidence. Government lawyers at his trial made strenuous, and successful, efforts to suppress his evidence. Clearly they acknowledged that Boyce was a man in the know, a man with inside knowledge and personal experience of espionage activities. He was employed by a company which contracts for joint Australian-United States defence installations. He had access to information about the activities of the Central Intelligence Agency. How far can we afford to ignore his evidence or to rubbish his credibility? He made the unqualified statement at his trial that the CIA had engaged in deception against Australia and that details of that deception had been passed to the Soviet Union. I asked the Prime Minister to draw this matter to the attention of Mr Justice Hope, who has been inquiring into the intelligence and security services for investigation and report. The Prime Minister undertook to look into the matter. Yesterday I asked him if he had done so. He finally confirmed that he proposed to do nothing.
The Prime Minister’s response was inadequate and contemptuous. It will not satisfy the public; it should not satisfy the Parliament. The Australian Broadcasting Commission reported from Washington this morning that the United States Justice Department had ordered a top level inquiry into Boyce ‘s statements. It is going to do what Mr Justice Hope had been doing in Australia. The Australian Government agreed to share joint defence space research facilities with the Government of the United States. It did not agree that the information obtained by these facilities would be shared with, or made available to, private corporations such as TRW Systems Incorporated. Knowledge of that company’s access to this information has emerged quite fortuitously because one of its employees has been convicted of espionage. What other contractors to the CIA, who may or may not employ Russian spies, are privileged to receive, analyse and transmit data from facilities on Australian soil?
We now know from the publication of a secret telex message from the Australian Security Intelligence Organisation representatives in Washington to the Director-General that Mr Richard Stallings who was in charge of the construction of a facility in Australia and was the first head of that facility, was not an employee of the Defence Department but of the Central Intelligence Agency. The published telex from ASIO in Washington is scandalous, not because the document was leaked, but because of its disclosures. It arrived on 10 November 1975. Its full text was published in the Australian Financial Review on 29 April and I can vouch for its authenticity. I seek leave to incorporate the text in Hansard. . Mr SPEAKER-Is leave granted? There being no objection, leave is granted.
The document read as follows-
The full text of the cable, published for the first time in Australia is:
Following message received from ASIO liaison officer Washington:
For Director General.
On 8 November Chackley chief East Asia Division CIA requested me to pass the following message to DG (Director General).
On 2 November the PM of Australia made a statement at Alice Springs to the effect that the CIA had been funding Anthony’s National Country Party in Australia.
On 4 November the U.S. Embassy in Australia approached the Australian Government at the highest level and categorically denied that CIA had given money to the National Country Party or its leader, nor any other U.S. Government agency had given or passed funds to an organisation or candidate for political office in Australia and to this effect was delivered to Roland at (DFA) Department of Foreign Affairs Canberra on 5 November.
On 6 November Asst Sec Edwards of U.S. State Department visiting DCM (Deputy Chief of Mission) at Australian Embassy in Washington and passed the same message that the CIA had not funded an Australian political party.
It was requested that this message be sent to Canberra. At this stage CIA was dealing only with the Stallings incident and was adopting a no comment attitude in the hope that the matter would be given little or no publicity.
Stallings is a retired CIA employee.
On November 6, the Prime Minister publicly repeated the allegation that he knew of two instances in which CIA money had been used to influence domestic Australian politics.
Simultaneously press coverage in Australia was such that a number of CIA members serving in Australia have been identified- Walker under State Department cover and Fitzwater and Bonin under Defence cover.
Now that there four persons have been publicised it is not possible for CIA to continue to deal with the matter on a no comment basis.
They have now had to confer with the cover agencies which have been saying that the persons concerned are in fact what they say they are, e.g. Defence Department saying that Stallings is a retired Defence Department employee.
On November 7, fifteen newspaper or wire service reps called the Pentagon seeking information on the allegations made in Australia.
CIA is perplexed at the point as to what all this means.
Does this signify some change in our bilateral intelligence security related fields.
CIA can not see how this dialogue with continued reference to CIA can do other than blow the lid off those installations in Australia where the persons concerned have been working and which are vital to both of our services and countries, particularly the installation at Alice Springs.
On November 7, at a press conference, Colby was asked whether the allegations made in Australia were true. He categorically denied them.
Congressman Otis Pike, chairman of the Congressional Committee inquiring into the CIA, has begun to make inquiries on this issue and has asked whether CIA has been funding Australian political parties.
This has been denied by the CIA rep in Canberra in putting the CIA position to relevant persons there.
However, CIA feels it necessary to speak also directly to ASIO because of the complexity of the problem.
Has ASIO HQ been contacted or involved?
CIA can understand a statement made in political debate but constant further unravelling worries them.
Is there a change in the Prime Minister’s attitude in Australian policy in this field?
This message should be regarded as an official demarche on a service to service link.
It is a frank explanation of a problem seeking counsel on that problem. CIA feel that everything possible has been done on a diplomatic basis and now on an intelligence liaison link they feel that if this problem can not be solved they do not see how our mutually beneficial relationships are going to continue.
The CIA feels grave concern as to where this type of public discussion may lead.
The DG should be assured that CIA does not lightly adopt this attitude.
Your urgent advice would be appreciated as to the reply which should be made to CIA.
Ambassador is fully informed of this message.
– In plain terms, that cable revealed that the CIA had deceived the Australian Government and was still seeking to continue its deception. It confirmed that Mr Stallings had been employed by the CIA. The cable made it clear that the CIA was making what was described, in the jargon of the trade, as an ‘official demarche on a service to service link’- in other words, without informing the elected Government of Australia. Implicit in the CIA’s approach to ASIO for information on events in Australia was an understanding that the Australian organisation had obligations of loyalty to the CIA itself before its obligations to the Australian Government. The tone and content of the CIA message were offensive; its implications were sinister. Here was a foreign intelligence service telling Australia’s domestic security service to keep information from the Australian Government. I want to acknowledge that the Acting Director-General of ASIO did his duty. He very promptly brought the cable to the notice of the head of the Australian Government.
– Who was that?
-Me. A newspaper first named Mr Stallings and the Leader of the National Country Party (Mr Anthony) then confirmed his name in the House. In that last question in the last Parliament the present Deputy Prime Minister repeated the fiction that Mr Stallings had never worked for the CIA and brazenly challenged me to prove that he had. The evidence that he had- the evidence that successive Australian governments had been duped- had already been cabled to Australia. I quote 2 sentences from that cable: ‘Stallings is a retired CIA employee’, ‘Defence Department has been saying that Stallings is a retired Defence Department employee ‘.
I stress that it is not just a Labor government that has cause for concern about CIA activities. Liberal governments had not been adequately informed. Mr Stallings’ name was not on the list of declared CIA employees given to the Department of Foreign Affairs by the United States State Department as part of the institutional arrangements between the 2 governments. There had been lack of candour. After some pressure the Department of Defence acknowledged the true nature of his employment. The following answer was prepared by me for the question placed on notice by the Leader of the National Country Party. It said:
I did not disclose that Mr Stallings was a CIA agent. The Right Honourable gentleman did that. I was informed that Mr Stallings worked for the CIA, not by the head of the Australian Foreign Affairs Department, or the United States
State Department, but by the head of another of our Departments which in turn was informed by a department in the United States other than the State Department.
The coup of 11 November prevented that answer being given. I am pleased to place it on record today.
There was further evidence of CIA activity in Australia in the Ermolenko affair. Georgi Ermolenko, the Russian violinist, sought asylum in Perth in 1974 and later changed his mind. It is clear that the CIA saw these events as an opportunity to embarrass the Russians. The Australian reported last Saturday:
The Secretary of the Transport Workers Union, Mr R. Cowles, said a CIA officer had tried to get the TWU to maintain a ban on the departure of Mr Ermolenko . . .
Mr Cowles said a man who gave his name as McLean and who claimed he was attached to the U.S. Navy had suggested the TWU ban on Mr Ermolenko ‘s travel should be maintained as an ‘embarrassment to the Russians’.
The man had admitted he was a CIA agent and had shown him an identity card, Mr Cowles said. He knew of at least three active CIA agents in Perth.
Thus the CIA was covertly working to frustrate the humanitarian efforts of the Australian Foreign Minister. Australia was a pawn in a squalid squabble between the United States and U.S.S.R. The American Embassy did not inform the Foreign Minister or the Department of Foreign Affairs or the Prime Minister or his Department.
Published statements now give strong grounds for believing that the CIA has given money to Australian political parties. There was a lot of self-righteous indignation when I suggested a year and half ago that this was happening. Mr Victor Marchetti the author of the only book on the CIA whose accuracy has never been challenged by any United States administration, today told a Sydney newspaper that his friend, Mr Stallings, informed him of his deep concern about CIA financial support for conservative political parties in Australia. Mr Stallings said the money was channelled directly through the CIA station chief in Canberra. It happened in the ’60s, it happened in the ’70s and there is no reason to believe it is not happening now. The Sydney Sun reports on its front page:
In an exclusive Sun telephone interview Marchetti said CIA money had been used to undermine the Australian Labor Party. Mr Marchetti said Stallings implied the CIA station chief in Canberra had been funding the Liberal and National Country Parties. The money had Been used to help keep the coalition partners in power; the funding had started about 1967; CIA money had been used to undermine the ALP.
According to Mr Marchetti there are six or eight ‘upfront’ CIA operatives in Canberra and another twenty to thirty ‘deep cover’ or clandestine operatives throughout Australia.
The Labor Party does not necessarily endorse all the details of such charges. The fact remains that the charges have been made, and such charges are multiplying. Do Ministers who answered questions today seriously believe there is a conspiracy of journalists and editors, union leaders and authors and American and Australian citizens to manufacture news simply to damage the Fraser Government? Is it not more rational, more realistic, indeed more patriotic, to examine these charges calmly to see whether there is any evidence of damage to our national security or institutions? The difficulty which any head of government faces in responding to these matters- or any former head of government or any aspiring head of government- is that he is bound by obligations of secrecy in the national interest. He cannot disclose what he knows. I readily acknowledge my own obligation. I was briefed in confidence on American facilities in Australia and the operations of our own security and intelligence services. I have not breached and I shall not breach those confidences. In this respect I differ from the Prime Minister who, in a provocative and maybe facetious answer a week ago, suggested that the honourable member for Grey (Mr Wallis) should obtain this confidential information from me. I have made it plain- the most recent occasion was yesterday- that even if it would be to my own advantage I shall not break the oaths of secrecy applying to Executive Council proceedings or diplomatic confidences or defence secrets, either my own country’s secrets and confidences or those of other countries with which it deals.
There is grave disquiet over recent allegations. It cannot be ignored by this Parliament. The manipulation of unions, the financing of political parties, the deception over the CIA and the activities of foreign installations on our soil all affect Australia’s independence and sovereignty. There is a need for parliamentary scrutiny of foreign intelligence activities in this country. The need is urgent. My Government had direct experience of these problems. It has been written- I cannot deny it- that when my Government took office Australian intelligence personnel were still working as proxies and nominees of the CIA in destabilising the Government of Chile. It is also a matter of record that the Labor Government replaced the heads of our internal and other intelligence services. It appointed Mr Justice A. E. Woodward as Director-General of ASIO, thus restoring a precedent established by the Chifley Government in 1949 when ASIO was formed. It commissioned Mr Justice Hope to inquire into and report upon all the services. My Government took the first steps in a quarter of a century to establish Australian sovereignty over Australia’s intelligence and security services and to assert the principle of their accountability to Parliament. This trend must not be abandoned. Our dignity and self-respect as a nation, no less than our national security, demand that the Parliament exercise its supremacy in scrutinising the activities of foreign intelligence services operating in this country.
– If I may I shall begin by reading the terms of the matter of public importance to remind the Leader of the Opposition (Mr E. G. Whitlam) precisely what he has put before the House for discussion this afternoon. They are:
The need for Parliamentary scrutiny of foreign intelligence services in Australia.
That is the proposition that has come from the honourable gentleman’s pen. During the course of his speech, indeed at the very beginning, he spoke about the gravity of the matter before the House. I may say, with respect, that I find myself in complete agreement with him as to the gravity of the matter the House is discussing. But the extraordinary thing about the argument put by the honourable gentleman is that it shows but a scant acknowledgement of the gravity of the issue. I invite the House to look quietly and purposefully at part of the argument which the honourable gentleman has delivered to this House. He said: ‘I am not asking for the security services of this country to be placed under parliamentary scrutiny’. That is the effect of what the honourable gentleman said. I know that he does not dispute that. Indeed, I am left with the impression that he agrees with me so I shall recapitulate it. He said: ‘I am not asking for the security services of this country to be placed under parliamentary scrutiny.’ If that be the case I ask the honourable gentleman: How on earth does he propose that the activities of any foreign body which may or may not operate in this country be placed under the control of this Parliament? Should the activities of such a body be placed under the control of the Parliamentary Public Accounts Committee or the Public Works Committee? The honourable gentleman has painted himself into a farcical position. He knows as perfectly well as I do that no government would tolerate, by one iota, any diminution of Australian sovereignty by any foreign body operating in this country. The honourable gentleman knows that as well as I know it and as well as any of my colleagues who have ministerial responsibility in this field know it.
Even if the honourable gentleman’s basic argument is accepted I ask the House to consider by what means is Parliament to exercise scrutiny over bodies which may or may not operate in this country? What are the bodies charged with an administrative responsibility with respect to foreign agents? The person who has responsibility in this field and who has to answer for that responsibility in this House is the AttorneyGeneral (Mr Ellicott). He commands ministerial responsibility for the activities of the Australian Security Intelligence Organisation. So, I say to the honourable gentleman: I think he is dead wrong with respect to his argument on this matter because the only body in existence which has an administrative responsibility for surveillance, superintending, scrutinising, considering and assessing the activities of bodies which may or may not operate in this country is the Australian Security Intelligence Organisation. Therefore, it behoves us to go back to the beginning of this body and to consider for a moment or two the attitude adopted by successive Prime Ministers. There is not one exception to be found. I refer to the late Mr Chifley, not to lacerate the feelings of the Leader of the Opposition but to remind him of what Mr Chifley had to say when this body was established in 1949. The late Mr Chifley said:
It is not the practice in this country or any other country to discuss in the Parliament the methods employed by an organisation of that kind. Therefore I do not propose to deal with such details here. The work of the security organisation is entrusted to highly qualified men who can be considered to be completely impartial. Should any matter arise which I believe should be reported to the Parliament, I shall take that course.
The honourable gentleman this afternoon said: ‘Oh yes, I agree with that.’ But when he is confronted with his own argument what does he say? Does he repudiate the stand taken by a distinguished predecessor of his in office. In the same year a late honourable member of this Parliament returned to this precise point of whether there should be disclosure. Point blank, in language which I trust all honourable members can understand, Mr Chifley said:
This is the summation of what he had to say: ‘There will not be any disclosure’. Again, a former late member of this Parliament asked the then Attorney-General, the right honourable member for Barton, Dr Evatt, whether he would make any comment about security activities. Dr Evatt said:
Under the charter issued to the Director-General of Security the matters referred to by the honourable member are within the responsibility of the Director-General and it is not in the interests of security to disclose the information available to him or his opinions and his actions.
This argument was so clear, so free from ambiguity and so convincing in its common sense that it was adopted by the Prime Minister of the day in 1950. One could go on from year to year to find parallel attitudes, comparable attitudes. I shall not do so because it would do a disservice to find attitudes which were in complete and utter coincidence. No Prime Minister and no Minister who has ever had to discharge a responsibility in this field has attempted to tamper with that principle.
Let me say to the honourable gentleman that it is a principle that cannot be watered down without being washed away. I hope that the honourable gentleman will bear that in mind. But if it is his attitude today that conversion has swept over him and that he now wants to adopt a different stand, let him tell the House the reasons that prompt him to change his mind. I call now as my witness on the divulging of security information, none other than the honourable member for Werriwa (Mr E. G. Whitlam). Speaking from this Dispatch Box in August 1973 the honourable gentleman had this to say to the honourable member for Corio (Mr Scholes), who I understand will also participate in this debate. The Leader of the Opposition said:
I do not concede that security services should be answerable to the Parliament.
Pray, how does the honourable gentleman suggest that they should be answerable? By calling a person before the bar of the House? By putting an advertisement in a newspaper? No proposal has come from the honourable gentleman this afternoon concerning this. So he can take his own stand. Is his stand now one of approbation of the attitude taken by his distinguished predecessors? Has he now abandoned the attitude taken by himself but three or four years ago?
I move on a little further. On the same day in 1973 the honourable gentleman was asked another question on security matters and he said:
The Director-General of Security and I realise that it is quite improper and it is unprecedented to reveal and to publicise security documents or conversations concerning security.
Yet here is the beckoning invitation from the honourable gentleman this afternoon that through some Heath Robinson apparition, through some undefined means, this Parliament is to exercise a scrutiny of activities of bodies that may or may not exist in Australia. I move on a little to the honourable gentleman’s argument as he has put it to us this afternoon. He has adverted to the fact that he has been briefed on certain matters in this country, as a few of us are. I am indebted to him to be relieved of the anxiety that in no circumstances would he seek to divulge briefings given to him. But that then prompts me to ask the honourable gentleman: What was the purpose of his initiating this debate here this afternoon? I heard no fierce denunciation from the honourable gentleman about the activities of the KGB or the GRU. The Leader of the Opposition claims that the CIA does this and the CIA does that. I remind the honourable gentleman of the language which he used in the past. It is language that I used. He used it before an American television audience. Speaking in the United States in October 1974 he declared:
My Government knows what the U.S. is doing. We have full knowledge and have given our concurrence.
A few months later speaking in Australia on Australian Broadcasting Commission national news he said:
We know what goes on there and we can stop it if we want to. There is no derogation of Australian sovereignty.
This afternoon the word ‘sovereignty’ fell from the lips of the Leader of the Opposition in an emotive and pejorative sense as though there is some sinister activity at work in this country which is bit by bit chiselling away at the sovereignty of the Australian nation. I adopt the honourable gentleman’s language which he used when he commanded a far more responsible position than he commands today. The last argument he sought to press upon us was the argument that came from Boyce in the U.S., Boyce, who I remind the House has been convicted by an American jury- a jury of his peers- for spying. The honourable gentleman said that we must take notice of the evidence given by Mr Boyce. Obviously the jury took notice of the evidence given against Mr Boyce. But the honourable gentleman would much prefer today to summon before the high court of Parliament the evidence of Mr Boyce rather than the verdict of the jury. I ask the honourable gentleman to peer back through the years to see what has been done against western civilisation by those intent upon destroying it, by people such as Fuchs, Pontecorvo, Alan Nunn-May and George Blake- the whole dreary recital of these people who have betrayed their countries and their countries’ secrets. It is there to caution all men of goodwill, and I hope that all men of goodwill would take some notice of it.
But here this afternoon the Leader of the Opposition said that we have had enough of this. We must ensure that this country is adequately protected. I agree with that sentiment. But in conclusion I invite the honourable gentleman to ponder a little about this: How would it be if any agent who may or may not be operating in this country knew of the counter activities being taken. He would operate with a contemptuous attitude towards the whole apparatus of Australian democracy. I am sorry- no, I go further and say that I am sad- that the Leader of the Opposition this afternoon has lent his name, his dignity and his office to this contemptuous discussion. It is unworthy of him; it is unworthy of the Parliament.
– On Saturday morning the Melbourne Sun published an article written by Laurie Oakes concerning a United States labour attache named Robert L. Walkinshaw. It is about Robert L. Walkinshaw that I wish to have something to say in this debate. Robert L. Walkinshaw parading as a United States labour attache, arrived in Australia in August of 1962. He stayed here until shortly after I lodged official complaints with the United States Embassy against his undiplomatic interference in the internal affairs of the Australian trade union movement in general and of the Australian Workers Union in particular. I subsequently met Mr Walkinshaw at the American Embassy and in the presence of a senior United States diplomat I repeated my charge that he was engaged in McCarthy-like operations against loyal and trusted members of the Australian Labor Party who were refusing to toe the Central Intelligence Agency line. He denied my charge. I did not expect him to do otherwise. Although he left Australia soon afterwards his work was continued by the agents he had enlisted during the 26 months he had operated here. During that time the CIA financed and supplied all the material for a news sheet published in Melbourne called Spotlight which was published by a CIA operative who covered by working as a taxi driver.
I turn now to this publication Spotlight. I quote excerpts from an item under the heading ‘Australian Workers Union’ of 15 August 1964. The report read:
There have been some people in South Australia who believe that Clyde is also the moving force behind the leftist perverts operating within the AWu as hate peddlers. Spotlight predicts that the Cameron forces will defeat O’Connor. This does not necessarily mean that Dougherty will sit idly by and allow them to take over. It does mean that Cameron will win the first round. Don’t be surprised, however, if Dougherty wins the rest of the rounds. It looks as though the incumbent President of the AWU, Horace Davis, is on his way out. His opponent in the triennial elections scheduled for September, Edgar Williams, has the support of Tom
Dougherty, which is tantamount to election in the AWU. Rumour has it that Dougherty views Davis as weak and ambivalent and rumour has it also that Davis was criticised for not playing a more decisive role in ALP affairs in Victoria over the years.
The so-called ‘leftist perverts’ in the South Australian branch of the AWU were none other than Mr Reg Groth, MHA, the hon. James E. Dunford, MLC, Michael Jerome Young, MP, who is Labor’s shadow Minister for Business and Consumer Affairs, Senator Don Cameron and the hon. John D. Wright, South Australia’s present Minister for Labor and Industry. None of these gentlemen were members of Parliament in 1964. All of them were elected officers of the AWU and highly respected members of the ALP. Walkinshaw admitted to me that he had not met any of those officials and that his assessment of them had been based entirely upon information that had been fed to him by another official of the AWU. Notwithstanding this, he made arrangements for literature to be sent to thousands of AWU members in S.A. urging the defeat of the so-called Cameron forces. The postings of these letters continued after his departure.
As events turned out Spotlight’s prediction that ‘the Cameron forces will win the first round ‘ proved correct, but Walkinshaw had another string to his bow, or at least he thought he had. That is why Spotlight said: ‘Don’t be surprised however, if Dougherty wins the rest of the rounds’. Two things prompted this prognosis: First, Dougherty had told him that in the event of the rank and file electing the ‘wrong candidates’, he would use his control of the union’s executive council to cancel the ballot, expel or dismiss the successful candidates, put the branch under the control of the executive council and appoint his own men to fill the positions. Secondly, Walkinshaw was able to assure Dougherty that the CIA had infiltrated the personal staff of one of the judges who would probably determine the show-cause proceedings that could be anticipated and that one of the other judges who would be most likely to sit on the case was already committed to their cause. It was no idle boast on Mr Walkinshaw ‘s part.
I first got wind of the CIA ‘s infiltration into the chambers of the court after judgment had been reserved and before it was delivered on 29 October 1 975. 1 had been told by a university law lecturer that he had gained possession of all of the notes made by one of the judges who was then in the course of writing his judgment. He told me that he had received them from the judge’s associate. Then at a Melbourne Christmas party in 1965, a young man was overheard to lament- and I quote:
We would have got Cameron’s mates if Dougherty hadn’t buggered up the case.
That remark was too significant to ignore because it indicated that there had been a conspiracy to remove the democratically elected officials of the South Ausralian branch of the AWU. From further inquiries I discovered that the speaker was none other than the judge’s associate who had stolen the notes of his judge and had handed them to the Melbourne law lecturer. But in his description of Dougherty’s motives, this particular judge wrote the most scathing analysis of trade union politics that has ever been handed down from a bench of the Australian Industrial Court. It was one of the finest judgments I have ever read and in my view should be required reading in every law school in Australia. So I now knew that the term ‘we’ as used by this associate did not mean the ‘judge and me’; it meant ‘someone else and me’. That someone was not the man who had fumbled the ball in the court proceedings. From further inquiries I was informed that the judge’s associate was a CIA suspect and was closely linked with Walkinshaw and the news sheet Spotlight. When I told the then Leader of the Opposition what I had discovered, he insisted on my informing the judge and this I did. The judge made his own inquiries and was able to confirm all I had said. He dismissed his associate immediately.
I want to turn to the other prognosis made by Spotlight and that is that Mr Davis was going to be defeated. The genisis of that prognosis goes back to 1952 when a secret move was made by a man named Krygier- the first non-American CIA agent ever appointed to Australia. It is said that Krygier came to Australia on the same ship as Dr Bialoguski of Petrov fame. Late in the 1940s Krygier struck up an association with a young Sydney barrister who had just returned from World War II. Another associate was Francis James; another was Mr W. C. Wentworth and another was a prominent union official. The five of these people met in 1951 at a private dinner party and discussed ways and means of taking over certain unions. The young barrister advised on legal moves; Mr Wentworth dealt with publicity and Dr James outlined the strategy of the exercise. By now the young barrister had become very successful. He had been exposed for what he was. He was sacked by Mr Dougherty. That same barrister, after World War II, held a commission in a secret Army intelligence unit and was recommended for appointment into the British Intelligence. Later on he became Commander-in-Chief of the Australian Armed Forces. He is the man who dismissed the Whitlam Government one day after the CIA cabled its concern about the then Prime Minister’s exposing the CIA’s activities in Australia. The conclusions to be drawn from what I have said are all too clear: The CIA is not only seeking to subvert officials and members of the trade union movement, but is actually concerning itself in the affairs of the Government itself.
– I do not propose to follow the honourable member for Hindmarsh (Mr Clyde Cameron) down the fascinating byways of the labyrinth of the Australian Workers Union. I would like to deal with some of the points made, apparently seriously, by the Leader of the Opposition (Mr E. G. Whitlam) who seems to lurch from absurdity to absurdity in his desperate search for left wing votes for the forthcoming Labor Party leadership election. He seems as uncomfortable in matters of security as he notoriously is in matters of economics. In both of these fields, as I think I have told the House before, his learning curve seems to be a horizontal straight line. What he said to the House today was very interesting. He said- and I took down his words: ‘I have not breached and shall not breach such confidences’. He was referring to security matters, both foreign and those affecting our national interest. He may have forgotten, but I am sure that this House will not have forgotten, his blundering indiscretion over the communications stations in Singapore which caused great embarrassment to the Government of Singapore and did great damage to our intelligence organisations. It was a blunder of the first order.
Then we come to another matter that the Leader of the Opposition mentioned today- the cable from the Australian Security Intelligence Organisation. He said: ‘The method of leaking was not important’. I suppose he may think that but I would say that there is a strong prima facie case for thinking that the leak came either from his office or from his organisation. No wonder he thinks that the method of leaking is not important. He also said: ‘I vouch for its authenticity’. That makes a leaked document accepted as fact and that is a thing a responsible public figure should never do. I think it is another act of gross indiscretion on security matters on the part of the Leader of the Opposition. I turn now to the motion before us which we have a tendency to forget. The motion moved by the Leader of the Opposition is:
The need for parliamentary scrutiny of foreign intelligence services in Australia.
I do not think that the Leader of the Opposition made much of a case for this; in fact he talked about practically everything else. I think that one can sum up his method of addressing himself to these problems by saying that his chart is excellent but his grain is very poor stuff. What he said was all against the United States, our allies. He said nothing about the possible activities of other foreign intelligence services. For instance, he said nothing about the KGB. He said nothing about any Chinese activities; it was all about American activities. I believe that the underlying motive in all this debate is the strong, almost virulent anti-Americanism, and as such it is to be deplored because America is a strong and honourable ally of ours and one which deserves our respect.
All foreign intelligence activities in this country are illegal, whether they are carried out by friends or enemies. No country is legally entitled to conduct intelligence activities in this country except by the express approval of the Australian Government. What the Leader of the Opposition has proposed is that any such activity should be monitored, investigated, and controlled by a parliamentary committee. He refrained, perhaps understandably, from suggesting how this committee might go about its activities. In fact the operations of foreign agents in this country are the responsibility of ASIO which necessarily works in secret and reports to the Minister. It is ultimately responsible to the Parliament. The head of ASIO- Mr Justice Woodward- was appointed by the Whitlam Government. What this proposal in fact says, in essence, is that the Opposition has no confidence in the direction of ASIO. That is not my opinion. I think ASIO does an excellent job under very difficult circumstances.
There is no practical way in which ASIO’s activities could be taken over or controlled by a parliamentary committee. Imagine the grandstanding and the political arguments that would go on in such a committee. Imagine the fruitless discussions that would go on as to whether the Central Intelligence Agency was financing the Liberal Party of Australia and the National Country Party of Australia or the Arabs were financing the Australian Labor Party. It would be a sterile and completely pointless exercise. The essence of dealing with foreign agents is security. One cannot blazon all of one’s activities in public. If one did that one’s operations would become totally ineffective. It is a difficult area and one that can be conducted only by an organisation in which this House has confidence and which operates essentially in secrecy. I say again that the essence of the proposal is a vote of no confidence in the direction of ASIO and the head of ASIO who was appointed by the Whitlam Government. By the way, a very strong motive to destroy ASIO seems to exist in some parts of the Labor Party. I think those parts are worried because this organisation does watch foreign subversives. I find it very ominous that so many people should seek to destroy this important bulwark of our national security and safety.
If the Leader of the Opposition were serious about improving our security he could take a couple of very simple steps- and take them soon. The leaking of documents- government documents, official records- is extremely damaging to our reputation. Other countries can have no confidence in telling us things that are beneficial to us if they fear that the next thing they will see is their statements headlined in newspapers all over the world. If this practice persists we will find that we have become an outcast for the receipt of confidential exchanges from other countries. In my view one of the most alarming events of recent times has been the number of documents of a high security nature, which are supposedly in the hands of very few people, which nave been appearing in newspapers. I do not think we will ever be able to identify exactly where these documents have come from, but I would say that there is a very strong prima facie case for saying that they have come from either the Leader of the Opposition or his Party organisation. If the Leader of the Opposition is genuinely interested in improving the. security of this country and its international reputation that is the first leak he should plug.
-Crocodile tears flow very strangely from the honourable member for Isaacs (Mr Hamer). The leaking of documents was not of concern to him when his Party was in Opposition and when not only were documents being leaked but also the present Prime Minister (Mr Malcolm Fraser) said that he could see nothing wrong with the leaking of documents where such leaking exposed deficiencies in governments or Ministers.
– Do you agree with that?
-That was a statement by the honourable member’s leader and that is what is important in this instance.
– What do you think?
-At least we can say in this House that if honesty were part of the Government’’ policies, which it is not, the Prime Minister could deal with the Treasury officials known to him who leaked confidential documents to the Liberal Party of Australia at that time. He will not do that because they committed a political service for him. That is not what this debate is all about. The charges that the Government makes, including the most stupid one made yesterday by the Prime Minister that a certain document which appeared in the Canberra Times could be identified as having been leaked by certain marks which were on the document and which happened to have been put on it by the journalist who wrote the article, are the sort of thing we are coming to expect from this Government as proof of accusations that are totally baseless.
The Minister for Defence (Mr Killen), in defence of the Government’s position on this matter, made what unfortunately was a palpably inadequate defence of Australia’s rights or Australia’s capacity. He said that we can do nothing about the activities of foreign security organisations in Australia. He said that in 1945, 1946 and 1947 the then Prime Minister, Attorney-General and Minister for Foreign Affairs said that security was a matter of security. I would suggest that at that time the range of activities of security organisations and their capacity was considerably less than it is now. Since that time at least one international security organisation has participated in the overthrow of governments in Chile, Cambodia and Thailand. The security organisations of the Left, as honourable members opposite would call them- of the communist bloc-have participated in the overthrow of governments more numerous than will be elaborated upon in this debate. The facts are that security organisations now are not just collectors of information; they are political exponents that will seek wherever necessary to ensure the existence of a government that will pander to their needs and promote policies within their requirements.
The Minister for Defence made out a case that the Parliament was incapable and should not be allowed to participate in an examination of the activities of these organisations in Australia. I suggest that we ought to look at the situation in the United States. Parliamentary supervision of security organisations is possible. It is not a grandstanding exercise, as the honourable member for Isaacs would have us believe. It is in fact part of the responsibilities of the Congress of the United States to oversee that country’s security organisations and the excesses of one of them have been curbed because of an investigation carried out by the Congress of the United States. The basis of the argument that parliamentary supervision is not possible is a basis of an argument that Parliament itself cannot be trusted with the security of the country. There are at least indications that information important to the Government and the security of this country was withheld from Ministers because security organisations chose to act as censors of the information.
This Parliament, in the same way as the United States Congress, is capable of oversight without theatricals. It is capable of being informed on activities. I am sure that the honourable member for Mackellar (Mr Wentworth), for instance, would like to be able to be informed reliably- not by rumour or innuendo- on the activities of security agents from Yugoslavia and the Union of Soviet Socialist Republics and other security agents in Australia. Certainly the protection of the government elected by the people of Australia is something about which this Parliament has a right to know and in which it has a right to be involved. If a security organisation is going to seek to overthrow the government of Australia or place it in a position in which it has to pursue policies designated by another country the Parliament is entitled to know.
The people of Australia do not elect the security services, they do not control them and they know nothing whatsoever about their activities. The Parliament is entitled to some scrutiny, especially over those areas of security activities that impinge upon the civil liberties of individuals and the private activities of persons in their business and work affairs. We are not talking about disclosing information that would endanger the security of the nation. The facts are that the capacity exists in Australia, almost certainly in more than one embassy, for almost every telephone conversation going out of Canberra to be tapped without any difficulties whatsoever. The capacity exists in Australia for overseas agents to involve themselves in the affairs of this country in a manner that could alter political events. They can change the management of private business organisations, trade unions or other organisations by the use of funds or other methods. The control of the infrastructure in this country can be changed by a security service that has access, and security services do have access, to monitoring devices and other forms of media control that influence people. They can also involve themselves in blackmail if necessary.
Allegations are currently being made that foreign security funds were used to undermine one political party and fund another in Australia. That certainly happened in Chile and Australian security organisations were certainly involved in that exercise. It certainly happened in Cambodia, and there is at least a suspicion that Australian security operatives were involved in the overthrow of Sihanouk, which ultimately led to the overthrow of any elected government in that country. The blame must be placed where it properly rests.
It is now fairly evident that almost any international telephone call leaving Australia can be monitored by satellite, the information being fed to the United States of America or other countries. I think we could judge that the Soviet Union has this capacity. Information about trade dealings, overseas contracts and the seeking of orders is passed on to commercial concerns in other countries to the disadvantage of this country. We are told in this Parliament by those people who are responsible to this Parliament for the good government of this country- I think they are the words that are used- that it is not possible or not proper for the Parliament of Australia to seek to know what is going on outside this place possibly with the knowledge of some Government Ministers and certainly without the knowledge of all.
The United States Congress, through subcommittees of its various committees, is able to establish surveillance over United States security activities. As I have said, some of the excesses used in that country have been overcome by those committees. I seek leave to incorporate in Hansard a list of the committees of the United States Congress. The personnel listed are not accurate currently. There have been changes since the last election. The list is from the congressional records. It is only a factual document.
-Is leave granted? There being no objection, leave is granted.
The document read as follows-
Congressional responsibility for overseeing U.S. intelligence operations is vested primarily in the following four standing subcommittees:
Senate Appropriations Subcommittee on Defense’s Subcommittee on Intelligence Operations. Chairman John L. McClellan (D Ark.), John C. Stennis (D Miss.), John O. Pastore (D R.I.), Milton R. Young (R N.D.), Roman L. Hruska (RNeb.)
Senate Armed Services Subcommittee on Intelligence. Chairman John C. Stennis (D Miss.), Stuart Symington (D Mo.), Howard W. Cannon (D Nev.), Thomas J. Mclntyre (D N.H.), Barry Goldwater (R Ariz.) Strom Thurmond (R S.C.).
House Appropriations Subcommittee on Defense. Chairman George Mahon (D Texas), Robert L. F. Sikes (D Fla.)
Daniel J. Flood (D Pa.), Joseph P. Addabbo (D N.Y.), John J. McFall (D Calif.), John J. Flynt Jr. (D Ga.), Robert N. Giaimo (D Conn.), Bill Chappell Jr. (D Fla.). Bill D. Burlison (D Mo.), Jack Edwards (R Ala.), J. Kenneth Robinson (R Va.), Jack F. Kemp (R N.Y.).
House Armed Services Special Subcommittee on Intelligence. Chairman Lucien N. Nedzi (D Mich.), Melvin Price (D III.) F. Edward Hebert (D La.), Charles E. Bennett (D Fla.), Samuel S. Stratton (D N.Y.), Bob Wilson (R Calif. ), William L. Dickinson ( R Ala.).
In addition, the 94th Congress created three select (special) committees to investigate intelligence gathering activities of the federal government. Two were created in the House, one to succeed the other. The members of the Senate committee were:
The two select House committees had the same name and the same mandate. Only the membership differed. The first one, created by the House Feb. 19, was headed by Rep. Lucien N. Nedzi (D Mich.) and had 10 members. It was abolished by the House July 17 because internal disputes had blocked substantive work. The July 17 House action also created the second committee. It was headed by Rep. Otis G. Pike (D N.Y.) and had 13 members. (Details in accompanying story). The members of the committees were:
House Select Committee on Intelligence, Chairman Lucien N. Nedzi (D Mich.), Robert N. Giaimo (D Conn.), Don Edwards (D Calif.), James V. Stanton (D Ohio), Michael J. Harrington (D Mass.), Ronald V. Dellums (D Calif. ), Morgan F. Murphy (D 111. ), Robert McClory ( R 111. ), David C. Treen (R La.), Robert W. Kasten Jr. ( R Wis.).
House Select Committee on Intelligence. Chairman Otis
-The danger to democratic government in this country that is posed by not informing the Parliament is greater than any danger which could exist to security organisations in this country by parliamentary surveillance. Stories such as the one in today s Sydney Sun and one in the National Times at the weekend may or may not be true. Whether they are true or not, they are almost certainly sensationalised beyond recognition. The danger to the Australian Government and Australia in these areas is that no one in an elected capacity on either side of the Parliament can say whether they are accurate or inaccurate. It is a greater danger than information would be.
-Order! The honourable member’s time has expired.
-Any admiration I might have had for the logic of the mind of the Leader of the Opposition (Mr E. G. Whitlam) has been destroyed by the cynical, irresponsible and ridiculous terms of this matter of public importance. It has been used as a vehicle for malicious and absurd gossip and as an excuse for a lengthy diatribe against the Central Intelligence Agency. I quote the matter of public importance because I think the House should be reminded of it. It reads:
The need for Parliamentary scrutiny of foreign intelligence services in Australia.
The Leader of the Opposition stated very firmly that he would not agree to scrutiny of Australian security services by this Parliament. How he expects the Parliament to scrutinise foreign intelligence services I do not know. The honourable member for Corio (Mr Scholes) mentioned the matter, but he did not go into detail as to how he expected it to be done. It is the job of the Executive, not the legislature, to oversee the operations of the security services of our nation and the activities of any other security services which may or may not be operating in Australia. It was interesting that the Leader of the Opposition, the honourable member for Corio and the honourable member for Hindmarsh (Mr Clyde Cameron) spoke almost entirely about the operations of the CIA in Australia. There was very little mention of possible operations by other intelligence services from other nations. Lip service was paid to the proposition that these operations might be going on, but nothing was said about them. The debate has been used as a left wing device to denigrate Australian security services such as the Australian Security Intelligence Organisation and as pan of the battle for leadership in the Australian Labor Party. It has done nothing for the security of this nation.
– Nor for the security of Gough.
-As the honourable member for Dawson says, nor has it done anything for the security of the Leader of the Opposition himself. The Leader of the Opposition was quoted by the Minister for Defence (Mr Killen) as saying that he knew of everything that was going on in Australiaall the activities of the CIA. Now he cynically says that the Parliament should oversee any foreign intelligence services. It is quite impossible for this to be done, in my opinion. I would have been much more impressed by this debate if more had been made by the Opposition speakers of the activities of the nations which may or may not be operating in Australia. The Leader of the Opposition said yesterday that he took away from his office after 11 November 1975 a large number of documents, including documents about the Petrov case, which would certainly substantiate the operation of the KGB in this country at that time. We have no reason to believe that similar operations are not being conducted now. I would like to quote from the introduction of a book on the KGB by Mr John Barron. It states:
The KGB, or Committee for State Security, is the principal instrument through which the Soviet Union is ruled and Soviet foreign policy is executed. As such, it impinges on the lives of nearly 250 million individuals in the Soviet Union and countless others in nations affected by the Soviet Union’s presence.
It is interesting to note that in September 1971 the United Kingdom Government expelled a large number of Soviet diplomats from the United Kingdom. I believe 90 Soviet diplomats were expelled and 15 others who were out of the country at the time were prevented from returning. They were charged with engaging in operations against the security of that country. It is quite cynical for the Opposition to devote all its time in this debate to denigration of the security services of our major allies. Opposition speakers said nothing about the security services of other countries which are certainly working actively against Australia’s security. It was quite cynical that this Parliament should have been used as it was as a vehicle for left wing propaganda. Obviously the Opposition has great hang-ups not only about overseas security services in Australia but also perhaps about our own security services. In March 1973 the then Attorney-General, now Mr Justice Murphy, led a raid on the ASIO headquarters in St Kilda in Melbourne. That was an absolute farce. The Leader of the Opposition, the then Prime Minister, called it a disastrous mistake. Of course it was a disastrous mistake. It cut off the flow of any information from overseas to our own security services for some time. It was a disastrous and stupid mistake. If we have parliamentary committees inquiring into the operation of overseas security services, of course our flow of information from other countries, which is vitally important to the security of Australia, will be cut off.
– Does that happen in the United States? There are parliamentary committees in the United States.
-The United States does have a parliamentary committee. I would not like in this Parliament to criticise that parliamentary committee. I have some documents in front of me which in the interests of good relationships with the United States it would be unwise to read. Good relationships with the United States are most important. There is certainly a great deal of criticism of the congressional oversight of some of the operations of security services. I know of no congressional committee which is charged with overseeing the operations of foreign intelligence services in the United States. There is a committee charged with overseeing some of the operations of the CIA but not the operations of foreign intelligence agencies. I agree with the Minister for Defence, who said that this debate is quite unworthy of this Parliament and quite unworthy of the Opposition. I believe it is a disgraceful ploy to focus the Opposition’s paranoic views on security against the United States and against the Central Intelligence Agency, and I very much regret that I have had to take part in such a cynical and ridiculous debate.
Mr DEPUTY SPEAKER (Mr Lucock)Order! The discussion is now concluded.
Second Reading .Debate resumed from 2 1 April, on motion by Mr Lynch:
That the Bill be now read a second time.
- Mr Deputy Speaker, may I have the indulgence of the House to raise a point of procedure on this legislation. Before the debate is resumed on this Bill, I would like to suggest that it may suit the convenience of the House to have a general debate covering this Bill and the Income Tax (Companies and Superannuation Funds) Amendment Bill as they are associated measures. Separate questions will of course be put on each of the Bills at the conclusion of the debate. I suggest therefore that you permit the subject matter of both Bills to be discussed in this debate.
-Is it the wish of the House to have a general debate covering both measures? I will allow that course to be followed.
-The Opposition does not oppose these Bills. On the other hand, we have no great enthusiasm for the trading stock valuation adjustment in the main Bill. We think that important and necessary inflation accounting adjustments could have been improved upon in a number of ways. The major principle applying to the main provision in the first Bill being debated in this cognate debate is that inequitable tax burdens which arise as a result of the effects of inflation should be alleviated. The Opposition has sympathy for that principle. However, we find no particular merit in the way the Government has sought to put the principle on to the statute books through this measure. The Government has taken only one side of the picture into account. Firms are to be compensated for some of the adverse effects of inflation on the assets side of their balance sheets while their possible gains on the liabilities side are ignored. At a time when the Government refuses all other requests for increased expenditure, in this measure it is forgoing $360m in revenue. Surely it should justify this in a little more detail than the Treasurer (Mr Lynch) has done to date in the Bills before us. How is it to aid the economy as a whole? If this $360m means a significant reduction in the rate of price rises, then this is a good way for it to be spent, although not necessarily the best way. But is that going to be the outcome? We have yet to see.
This is how the Opposition judges the effectiveness of the legislation. The Mathews Committee saw its recommendations for tax alleviation as a substitute for price rises. This direct forgoing of tax should not be seen in any other light. I interpose that of course it is to alleviate price increases, in this case through wage increases, that the President of the Australian Council of Trade Unions joins with the Labor Opposition in calling for a national conference to get us all out of the present spiral of prices chasing costs chasing prices. Perhaps we have an example here of that being done, but as I will show in a moment I would like to be sure that that is what is happening. This direct forgoing of tax should not be seen in any other light. But what measures is the Government taking to see that tax alleviation is passed on through the system for the benefit of the community? I repeat that we have not yet been told.
While the Opposition at least has sympathy in principle with aspects of this Bill, and indeed it supports all the other provisions in the Bill, it has no sympathy at all with some misleading words of the Treasurer in his second reading speech. Traditionally, second reading speeches are vehicles for explanation. They are not normally a means of misleading the House about the attitude of previous governments. But I suppose the Treasurer has become a little used to making misleading statements about inflation, unemployment and growth, so much so that those misleading statements have become something of a habit with him. Regrettably, it appears to be becoming a permanent trait. The Labor Government did not refuse to make changes based on the Mathews recommendations, as the Treasurer asserted in his second reading speech. To put it mildly, the Treasurer was inaccurate when he said that. What the then Treasurer, the honourable member for Oxley (Mr Hayden), did say at the time on behalf of the Government was:
The Mathews Committee recommendations- are important recommendations with complex ramifications and there is a need for a further study of them before final decisions are made.
It is obvious from the Government’s proposals that a little more time should have been spent in study.
As I have already said, the trading stock valuation adjustment proposals are the most significant sections of this legislation, and I will devote most of my allotted time to those proposals. However, before doing so I will comment briefly upon the other changes to the Income Tax Assessment Act included in these Bills. Clauses 3 and 15 deal with rebates payable to employers under the Government’s scheme of rebates for apprentice full time training- the CRAFT scheme, as it is known. These payments to employers are to be exempted from income tax. The allowances paid to apprentices under the scheme, however, are to be subject to normal taxation provisions. The Opposition is not opposing these changes. As a slight indication of the Government’s acknowledgment of the drastic problem of youth unemployment, perhaps the CRAFT scheme is to be welcomed. In fact, it is welcomed by the Opposition. On the other hand, as these measures do little more than dint the surface of the problem, these changes to the tax Act should be seen as a reminder that the Government is in fact offering only piecemeal solutions to a major problem. CRAFT is not any sort of real solution to youth unemployment problems or shortages of skilled manpower. It is no substitute for a comprehensive manpower and retraining scheme. Investment in such a program now would be a practical means of working towards a solution of the long term problems confronting the economy as well as substantially alleviating the short term problems.
The amendments in clauses 13 and 14 of the Bill allow for the phasing in of the system of collection of company tax by instalments, and that is also the purpose of the second Bill we are deBating today. In the first instance, there will be two collections for the financial year 1977-78. Collections will then be quarterly, without further changes to the income tax Assessment Act. I think it goes without saying that in these amendments the Government is restoring a system it should never have abolished. Just 12 months ago, when introducing the legislation to suspend quarterly tax payments, the Treasurer said that it was being done to ‘assist business in the present difficult financial circumstances’. Events since that time have shown that the only assistance it gave to business was to give to some interests the capacity to speculate against the Australian dollar. I should say more accurately that that was one of the benefits it gave to business. This helped to precipitate devaluation. Even 12 months ago the Treasurer should have had advice from his Department that such a turn of events was possible. If such advice was proffered it was obviously ignored in favour of a sectional piece of advice, namely, to alleviate the business sector by suspending, indeed terminating, the quarterly company tax payments. I need go no further into the circumstances surrounding devaluation and the disastrous nature of that decision. The Wall Street Journal article of last week put the decision in its proper perspective, and I draw attention to that article. The Opposition is glad that the Government has seen the error of its ways and has recognised the far sightedness of the Labor Government’s initiatives, which will substantially aid liquidity management in this country.
Clauses 9, 10 and 1 1 of the Bill deal with the arrangements for income tax averaging for primary producers. At the moment, the letter of the law is, I am informed, acting contrary to the intent of the original law. These amendments will ensure that primary producers can make better use of the averaging provisions without being wrongly penalised. Frankly, it will not benefit those whose taxable incomes never rise above $16,000; nor will it benefit those whose taxable incomes are permanently above $16,000. But it will benefit those people whose taxable incomes hover around the $16,000 mark. In the years their taxable incomes are above $16,000, they pay normal marginal rates of taxation on the amount above $ 16,000. Therefore, it seems equitable that the part of the taxable income above $16,000 should be excluded from the calculations to arrive at an average taxable income. The Opposition does not oppose these amendments to the Bill. In fact, it goes further and supports them.
Clause 7 of the Bill provides for an amendment to the gift provisions of the Income Tax Assessment Act to allow gifts of $2 or more to the
Queen Elizabeth II Jubilee Trust for young Australians to be claimed as tax deductions. Clause 4 ensures that certain defence force retirement benefits and other Service pensions which a recent High Court decision may have rendered tax exempt in fact will be subject to taxation. This amendment simply means that the Act as applied in the past will continue. All other superannuation benefits are taxable. It would be inequitable if these superannuation benefits were not taxed. These provisions also are supported by members of the Opposition.
I now turn my attention to the proposals for trading stock valuation adjustments. Clauses 5, 6 and 8 cater for these changes. Essentially, the scheme as introduced by the Government provides for a deduction from taxable income at the end of the financial year of an amount related to the value of trading stock costs at the beginning of the financial year. The deduction is equal to half the percentage increase in the goods component of the consumer price index over the previous year as applied to that value. The object of these provisions is the lessening of what is seen to be an inflation induced tax burden on companies and businesses generally. As I mentioned earlier, the proposals arise from the report of the Labor Government initiated Mathews Committee which dealt with inflation and taxation. The Mathews Committee recommendations resulted from the Committee’s perception that inflation was causing a crisis in the business sector. Professor Mathews had summarised the Committee’s conclusions as follows- I quote from its report:
On the basis of existing accounting, pricing and taxing arrangements a firm can only survive by adopting one or more of the following policy options: Continuously increasing its profit mark-up relative to costs, without simultaneously increasing its profit distribution; continuously increasing its indebtedness; or continuously raising fresh capital. If it cannot do these things, it must continuously reduce the amounts of its profit distribution or continuously reduce the scale of its operations ultimately to the point of extinction.
The core of the problem is, of course, the method of accounting used. The conventional argument goes as follows: Historical cost accounting in times of high inflation will give rise to illusory profits. They will be large in money terms and attract taxation accordingly. However, in real terms as far as the continuing operations of the company are concerned, the profits often become non-existent when replacement price rises are taken into account. The danger is that in real terms taxation and dividends based on money profits will be paid out of capital. This process of erosion of the capital base is to be guarded against as it jeopardises the company’s future capacity for providing employment.
The Mathews proposals present a partial method for overcoming such capital erosion without changes in accounting practices. Proposals for current cost accounting are attempts to overcome the problem through changes in accounting practice. A draft procedure for current cost accounting is still subject to much debate and controversy amongst accountancy bodies in Australia and throughout the world. As yet, proposals put forward for practical application in Australia have dealt with only the asset side of the ledger or the balance sheet as, indeed, the Mathews proposals and the Government’s scheme do.
However, there are liabilities involved as well. Just as inflation acting on asset values will lead to an overstatement of the real profit situation, inflation induced reductions in the real value of debt could act to understate conventional profits. The ideal situation, of course, would be a form of accounting which could take both effects into consideration and arrive at a true profit position. This is proving a very difficult idea) to achieve. The assets adjustment is comparatively easy. The liabilities adjustment is very difficult. However, to ignore totally the liabilities gains and compensate fully for the assets losses is certainly not the answer. By doing this, stock holding firms will be given a substantial subsidy by other tax paying sectors or by those who deserve government services which are eliminated because of the erosion of revenue through a measure such as this one.
Adjustments as a result of the gain from the declining real value of financial liabilities in inflationary times and the decline in the market value of a firm’s outstanding liabilities as a result of rising interest rates have been shown to be quite substantial. In 1976 a study by John B. Shoven and Jeremy I. Bulow was published in ‘Brookings Papers on Economic Activity’. This study attempted to arrive at a real level for aggregate non-financial corporate profits in the United States of America in 1974. Those gentlemen deduced that reduced real liabilities added something of the order of $66 billion to aggregate profits and that stock plus depreciation adjustments brought about only a $27 billion reduction from the asset side. The sum total of the 2 adjustments resulted in a level of adjusted after-tax profits almost $40 billion above the conventional figure arrived at in the national accounts. When the authors carried out their adjustment on the 30 Dow Jones industrial companies in the U.S., they found that after-tax profits for 1974 were $23.5 billion, some $7.5 billion above the unadjusted figure.
A detailed study would be needed to see what the real position was like in Australia. But these figures from the United States present a stark reminder that in looking at the effects of inflation, gains as well as losses must be acknowledged. However, it would appear that by only adjusting on the stock side for 50 per cent of the rise in the price level and not introducing the depreciation recommendations of the Mathews Committee the Government has approached closer to the true position of compensation than if full indexation were granted, tn this respect I give notice that while the Opposition is not opposing adjustments for half the rise in the consumer price index, it will not necessarily accept a move to the full index. In the absence of information that the liabilities position of Australian firms is vastly different from the U.S. experience, adjustment for the whole index must be regarded definitely as over-compensation. In this context, we must bear in mind also the vastly improved profit performance of so many companies in recent months when compared with the situation existing when Professor Mathews and his Committee were examining the Australian business sector.
With governments the world over seemingly unable to reduce inflation quickly to the lower levels of the early 1960s, it is important that a process of accounting which caters for all the effects of inflation be instituted as soon as possible. Obviously severe distortions will arise when only part of the picture is acted on. This is not an argument for any diminution in efforts to control inflation but rather a plea for a realistic appraisal of the strains inflation places on the functions of all traditional institutions.
At this point I want to make a brief comment on an argument which is purported to have been put forward by the bureaucracy- by the Administration I prefer to call it- in opposing the Mathews recommendations. This argument is along the lines that the Mathews Committee looked at the taxation problems of businesses at a time of very tight credit and a growing recession which caused a rise in stock to above normal levels. This meant that the problems perceived by the Committee were arising as a result of recession and government anti-inflationary policy rather than inflation upsetting the traditional order. I am not overly impressed by this approach. It ignores the crux of the problem. The very magnitude of the adjustments on both sides that the United States study made to conventional profits- historical accounting profits- indicates that the effects of inflation itself are a problem and must be coped with.
Equally, attempting to isolate one sector of an economy from the effects of anti-inflationary policy under the guise of correcting an accounting problem is to be treated with caution. I am reminded of the song All or Nothing at all. I want the accounting profession to establish fair and equitable adjustments across the board. Then let us have a look at the taxation implications of that. I and my colleagues in the Australian Labor Party Opposition do not want dividends and taxation paid out of capital. So true profits must be calculated. But we do not want inequity either. That could be the result if total indexation is applied to just the stocks, the assets side.
Whatever is the net result of the effect of inflation on liabilities and assets, on a firm’s real trading position, one thing is well established, that is, the cost of the stock adjustment proposals to revenue. I repeat what I said earlier; it will be $360min 1977-78. The benefit will be spread very unevenly across the corporate sector, depending on a firm’s stock holdings. In total the Government has forgone revenue of the order of $1 billion in taxation changes which have diverted resources primarily to the business sector. That has occurred in a budgetary position in which the Government claims that enlarging the Budget deficit is impossible, in which it refuses even to discuss the possibility of a tax cut and wage rise trade off, in which recession has stretched welfare services to the limit with threats being made to cut them even further, in which unemployment has been deliberately created through cuts in capital works expenditure and inflationary pressures have been exacerbated through increases in government charges. Those things have been done at a time when that outline applies. It is in those circumstances that the Government has decided to allocate a substantial quantity of scarce resources on these measures. I repeat, we are not opposing them. The Government has a mandate for them. We would be doing something similar if in government, but hopefully without the bugs contained in the measure. But we must note, as I have just done, the hypocrisy which I have just outlined in relation to the situation that applies in this country at the present time.
Given this situation, any attempt to appraise the efficacy of the Government proposals must be made with full knowledge of the alternative uses to which the revenue forgone could have been put. In the jargon of economists, the opportunity costs have to be considered. The Government has tended to portray the stock valuation adjustment scheme, as it did the investment allowance, as a means of restoring what it saw as a severe imbalance in the profit and wages shares of the gross national product and, through that process, of evoking economic recovery. Experience has shown, however, that investment decisions are made primarily in the expectation of increased demand and not as a result of increased investment incentives. In that respect the revenue forgone on the investment allowance could certainly have been better spent in adding to the aggregate demand. The stock valuation scheme does deserve somewhat different evaluation as, in theory at least, it is designed to overcome distortions induced by inflation. However, because of the fashion in which it has been given by the Fraser Government, one could be foregiven for identifying it as simply another attempt to bring about economic recovery indirectly through enlarging private sector profits.
As this legislation is intimately connected with corporate profitability, the debate on it is an appropriate time to set the record straight on the wages and profits share issues. At the moment the profit share, or gross operating surpluses of companies, is about 1 4 per cent of GDP at factor cost. Historically it has been around the 15 per cent to 16 per cent mark in times of strong economic growth. In times of recession it has fallen to as low as 12 per cent. The deeper the recession, the larger the fall. In the 1961 recession it dropped to 12.6 per cent. It rose to 16.7 per cent in the normal recovery phase; that is, it rose by 4.1 per cent without government action being taken forcibly to reduce the wages share or inflate the profits share. The lesson from this is that the corporate sector now needs less in the way of special concessions; it will achieve its long term share of product simply through economic recovery. What is now needed is action to bring about across the board economic recovery. Any government revenue forgone would receive its maximum return if directed towards that end.
As I implied earlier, this legislation presents something of a quandary. In theory it is aimed at correcting a definite distortion, but it does not go about it in anything like a complete fashion. It has been introduced at a time when an investment allowance is already operating and, given the premium on government funds, there is no justification for both operating together. In brief, there is a case for an adjustment to be made to company taxation in the light of inflation.
Indeed, there is a case for an adjustment to be made to taxation of other businesses, but there is no case for an investment allowance to be given in addition.
One thing that should result once this legislation is on the statute book and once companies benefit from it is, as I indicated earlier, a slow down in the rate of increase in private sector prices. The Mathews Committee was adamant that it saw its proposals as a means of reducing the need for companies to raise prices to retain real profit levels. Now that the Government has seen fit to use its scarce resources in this manner, it is up to the Government to make sure that the taxpayers receive maximum benefit from their outlays. Efficiency in government spending does not stop at supervising public sector expenditure; it also means that concessions given to specific groups in the economy must be seen to be given in a fashion which leads to maximum return in social or economic terms for society as a whole. The benefit society as a whole should receive from this scheme is a much slower rate of price increases than would otherwise have taken place. Taxation these days is identified by most firms as being simply another cost. When the tax burden, and thus costs, are reduced and if all other things are equal, it should be logical for prices to follow suit. It is clearly the Government’s responsibility to make sure that that happens. The Government will not achieve that end by following its previous policy of watering down the Prices Justification Tribunal.
I have outlined views on the principles behind this legislation. I now turn briefly to the details of it. Perhaps the Minister will find some reason to reply to that detail when he responds to the second reading debate. A strange aspect of the provisions in the legislation is the decision to use the goods component of the consumer price index as a basis for calculating the tax deduction. There are obvious practical grounds for using a single index to calculate deductions rather than following the more complicated procedures suggested by the Mathews Committee. Why have the wholesale price indices developed by the Australian Bureau of Statistics and recommended by Mathews in later discussions not been seized upon for this purpose? These indices are directly related to the increase in the price of stocks. Perhaps the Minister will put his views on that aspect also on record in his reply.
Another obvious defect in the Bill, in our view, is that it is asymmetrical in the treatment of sales valuation adjustments. If stocks are falling in price, as we hope is likely to happen in the not too distant future, with commodities such as tea and coffee, an unfavourable adjustment will be eliminated. Surely some provision should have been included in the Bill to take account of the windfall gains that can occur through fluctuating raw commodity prices. Livestock has been included amongst the types of stock eligible for the adjustment. The Mathews Committee determined that the treatment of livestock in primary industry was already favourable and that it did not need the additional concession. Things may have changed since the time of the report and there may now be valid reasons for the inclusion of livestock. However, the Treasurer must explain the Government’s decision in this regard if others in the community are not to feel aggrieved by livestock being included when it was specifically excluded in the expert Committee’s report. Perhaps the Treasurer or the Minister Assisting the Treasurer at the table could also enlighten us as to why special arrangements could not be made for companies with accounting periods which close at times other than 30 June. The Associated Chambers of Manufactures of Australia has pointed out that these companies should be allowed to use an index covering a time period more relevant to their trading stock adjustment claims. We would like to know the Government’s attitude on this.
Perhaps the biggest problem in framing legislation of this type is providing for adequate safeguards against abuse of the system. Clauses 5 and 6 of the Bill contain special provisions designed to guard against tax avoidance. The Commissioner of Taxation has been given wide powers. However, it is doubtful that he has the resources effectively to use those powers. The short period of time that has elapsed since the Bill was introduced has meant that detailed study of the adequacy of the tax avoidance safeguard has been impossible. The best advice we have is that they appear to be as good as could be expected under the circumstances. Problems have arisen, though, in the implementation of clause 6. Its provisions are to be retrospective to 1 July 1976, unless the rumours we hear are correct. If they are correct, I would have thought -
– The amendment has been circulated.
– I thank the Minister for now telling me that the amendment has been circulated. I think he will understand my grievanceI was going to say ‘my resentment’ but perhaps that is a bit strong-at not being informed about that before opening this major debate on behalf of the Opposition on these income tax changes. I think that perhaps normal courtesy ought to prevail. I do not assert that it was his fault. However, I think that the Treasurer’s office might have given me advance advice of the amendment. I shall now tell the Minister what my attitude to the legislation was before learning about this amendment.
Whatever the merit of proposed new sections 31c and 36a, many people who have entered into agreements under the old rules will be affected. I do not want those people who use tax avoidance schemes to benefit from any changes. However, there may be some genuine people who should not be penalised in this way. It will be very sad if the changes that are proposed in the amendments being circulated mainly help only people who are nothing more or less than large tax avoiders. We must deplore the fact that there is such a large tax avoidance industry in Australia at the present time. In this case the firms affected by the legislation received no warning. Perhaps that situation is to be improved upon. Perhaps the Treasurer will explain further the meaning of the amendments.
Finally there is the problem of wine stocks as they relate to section 31b. It is my judgment that the past deferred tax which is being collected due to the changes in wine stock valuations on the changes from section 31a to section 31 should not prevent wine companies from being able to take full advantage of this trading stock adjustment taxation claim. I should like to hear the Minister explain his attitude on this matter to the House later. The Income Tax (Companies and Superannuation Funds) Amendment Bill relates only to company tax payments. All in all, although the Opposition is not opposing the second reading of these Bills it is deliberately praising the measures with faint damns or rather damning them with faint praise.
Mr DEPUTY SPEAKER (Mr Jarman) Order! The honourable member’s time has expired.
-The tax Bills we are discussing legislate for a number of important measures. In the short time at my disposal I want to concentrate on clause 8 of the Income Tax Assessment Amendment Bill which introduces the trading stock valuation adjustment. The honourable member for Adelaide (Mr Hurford), who has just resumed his seat, devoted much of his time to this clause. It is not surprising that the honourable member, who is the Opposition’s spokesman on Treasury matters, is not, as he put it, enthusiastic about the trading stock valuation adjustment proposal. The previous Labor Government was not enthusiastic about it during its term in office. I will touch on that later.
Although the honourable member otherwise took a reasonable line on this trading stock valuation adjustment proposal he called for a more detailed justification of the proposal. Let me attempt to do that. I would submit that it is a significant measure of company tax reform- a major measure, introduced in accordance with the Government’s election undertaking to offset the impact of inflation on the taxation of company profits. This proposal will make a major contribution to business liquidity, and- of key importance- it will make a major contribution to the capacity of business to retain profits and thus to finance new investment and new employment opportunities. It is a true statement that today’s profits are tomorrow’s investments and the day after tomorrow’s permanent and lasting jobs. The honourable member for Adelaide talked disapprovingly about diverting resources to the corporate sector. It is important that we do do this and to a significant extent that is what this measure is all about. By diverting resources to the corporate sector we increase the incentive and the very capacity of business to invest and to provide lasting jobs, employment for all Australians.
This Government continues to grapple with the inflation and the high unemployment which are the manifestations, readily seen and measured, of the major imbalances and distortions of the economic system which were brought about under the previous administration. We continue to grapple with these problems and we do so with some success. On the inflation front, one cannot over emphasise the importance of the 2.3 per cent increase in the March quarter consumer price index, which is the lowest increase since 1973. It is clearly indicative of an inflation rate of the order of, say 10 per cent. While it is true that an inflation rate of this size is too high, it is a vast improvement on the inflation rate of 17 per cent that prevailed when we took over from the previous administration. The inflation rate today is on the verge of a single digit percentage.
As to unemployment, it continues to be too high; it is unacceptably high. But unhappily the restoration of the massive imbalances in the economy that occurred, as I have said, under the previous administration cannot be done quickly. While much has been achieved, there is still some way to go. Perhaps the most significant of the imbalances is the imbalance associated with the massive increase in wages and salaries, especially during 1974-75 when in one year there was an increase in real wages of the order of 10 per cent- three of four years’ increase rolled into one. Associated with that were the significant revaluation of the Australian dollar that took place at that time, tariff cuts, the anti-profit stance of the Prices Justification Tribunal at least until the end of 1974, the abolition of the investment allowance and the halving of export incentives.
The massive increase in wages and salaries together with those other factors had a significant adverse impact on the profitability of business, and thence on unemployment. The effect was such as to reduce company profitability, expressed as a proportion of total income in the community- taking company profits as a proportion of the total incomes in the community or, strictly, of non-farm gross product- from a norm of the order of 15 per cent to 1 1 per cent in some quarters of 1975. The effect of this on unemployment was catastrophic. The number of people unemployed rose from 100 000 in early 1974 to more than 300 000 by the end of 1975.
Even the fall in reported profits was not the end of the story. This brings me to the specific subject matter of the Income Tax Assessment Amendment Bill. Although reported profits fell in the way that I have described, even the level of those profits represented an over statement of the true position. There are 2 main elements in this. Firstly, there is the cumulative effect of past inflation resulting in an allowance for the depreciation of capital equipment in company accounts which is less than it should be if we had regard to the current or replacement value of that equipment. One estimate of the size of this effect for the 1975-76 income year was as follows: Whereas depreciation based on historical costs for trading companies was $2, 150m, a truer figure based on current replacement values would be $3,822m, which is one and threequarter times the historical cost figure.
The second factor which brings us directly to the legislation before the House is the effect of inflation in increasing the value of trading stock, materials and finished products, over the income year. Even if a business had not increased its actual real level of operations so that it ended the income period with the same level of physical stocks at which it began, with the process of replacing trading stocks over the period the value at the end of the income period would be higher-in a period of high inflation significantly higher-than at the beginning. By the very process of drawing up business accounts the difference between the closing and the opening value of the stock, even if, as I said, it is physically at the same level, is included as operating profit. It is subject to profit tax although that profit is unreal, illusory and phantomas some people call it-in that it is not a realisable profit. At least, there is no way of realising it save winding up the business and selling the stock. But what happens to employment then? Inevitably, in a situation of continuing inflation, there is this element of fictitious profit, but the tax payable on it is by no means fictitious. I referred a moment ago to one estimate of depreciation at replacement cost. That was an estimate provided by the Melbourne Institute of Applied Economic and Social Research. According to that same source the element of which I am speaking, this element that comes into profit through the growth in the value of stocks, although there has been no change in the physical level of operation -
– The money value.
-Yes, just the money value. It is the sheer effect of inflation producing an unrealizable profit, a profit which nevertheless is subject to taxation. According to the Melbourne Institute this element, in a total gross operating profit of $8,267m in 1974-75, was $l,810m of
the profit, or about 22 per cent. This was subject to a tax of about $769m. This was a very real payment which business had to make although, as I have said, the profit is illusory. In 1 975-76 of a total gross operating profit of $9,439m, the stock element, including increases in the value of stock, was $l,927m-not far short of $2,000m. That is an approximation, not strictly accurate, of the order of magnitude of this effect. In 1975-76, out of a total gross operating profit of $9,439m, the stock component was an amount of $ 1,927m. Again, this represented about 20 per cent of the total and would be subject to taxation of the order of $800m. I seek leave to incorporate in Hansard the tables from the Melbourne Institute ‘s publication The Australian Economic Review setting out those figures. They also include an estimate by the Institute of the situation in the current year 1976-77.
-Is leave granted? There being no objection, leave is granted.
The tables read as follows-
-As the table shows, the effect of the 2 elements to which I have referred was to reduce real adjusted profits before tax in 1 975-76 to $2,304m, compared with a figure of $5,903m without the adjustment. This was in the face of a total tax liability of $2,690m. That meant that company tax paid in respect of that year was more than 100 per cent of the real company profits. This was also the case in 1974-75 when the total of adjusted profits before tax was $2,247m and the total tax payable was $2,34 lm. It is no wonder that the Financial Review in August 1 975 was led to publish an article entitled ‘Australia’s Devastated Corporate Landscape’. The impact of these effects was indeed devastating.
It is worth emphasising, as the honourable member for Adelaide mentioned in passing, that it was the Mathews Committee set up in early 1975 by the previous Government and which reported in about May 1975 which highlighted these facts. It went on to point out that if nothing was done, it would mean the end of the private enterprise system in Australia. That perhaps explains why the then Labor Government, in the Hayden Budget of 1975 which came after the report of the Mathews Committee, chose to ignore the Committee’s recommendations. Thus in the Budget of 1975 nothing was done to alleviate the effects to which I have been pointing. This Government is not ignoring those recommendations; hence this trading stock valuation adjustment in clause 8 of the Income Tax Assessment Amendment Bill which gives effect to the first stage of implementing the recommendations of the Mathews Committee and the election undertaking, in this respect, of this Government.
In essence the measure provides for a deduction from taxable profits of an amount which in most cases will approximate about 50 per cent of that fictitious profit element to which I have referred earlier. It is approximate because the Bill provides for the deduction to be calculated by increasing the opening stock in accordance with the goods component of the consumer price index. The deduction is then to be half of the difference between the value so arrived at and the opening value. That is a single procedure to be applied to all businesses rather than to take for each company half the difference between its opening stock valued at beginning and end of period prices of the particular stock. That would have created significant administrative difficulties and, therefore, this simpler procedure has been adopted. Broadly, it will mean that a deduction of the order of 50 per cent of the fictitious element to which I referred earlier will be allowed. By that means companies will be relieved of the burden of paying tax at 42 Vi per cent on that 50 per cent component.
The estimate of the tax saving contained in the speech of the Treasurer is, as the honourable member for Adelaide pointed out, $360m in respect of this financial year 1976-77. It may be less if, as the December quarter National Accounts suggest, the stock value rise turns out to be less because of reduced inflation. The December quarter figures suggest that the figure will be significantly less than that included in the the estimate which I have incorporated and which was provided by the Melbourne Institute. So be it. The lesser tax saving would be appropriate since the distortion, the fictitious profit element, will be less. That is all to the good.
The legislation to provide for this trading stock valuation adjustment- clause 8 of the Bill- is inevitably long and complex. There are varying situations to provide for- the situation where there is a sale of a business, or a liquidation, and so on. And of course there must be safeguards against attempts to exploit the measure in ways other than the intention of the measure which I have sought to indicate in the broad to the House. Time prevents me from going into these complexities. I repeat again that this is a very significant measure of company tax reform, for the large business as for the small business. With the latter case the change to Division 7 of the principal Act as well, will result in a substantial increase in the liquidity of businesses and will thereby add to the capacity of business to retain and to invest profits in new equipment and ventures. As I said earlier, today’s investments are tomorrow’s new and permanent jobs. So what this legislation is all about is the long term health of our quasi free enterprise system and the full and meaningful employment of all Australians.
– I am afraid that I shall not be quite as eulogistic as the previous speaker, the honourable member for Berowra (Dr Edwards), about the stock valuation adjustment. He explained essentially what it is. The company’s profit is calculated as before on the basis of what is called historical cost and then an adjustment is made which is taken straight off the taxable income. It does not appear technically in the books of the company at all but appears only in the tax calculation at the end of the year. An index that is related to the course of prices throughout the whole year is applied to opening stock at hand 12 months before. That is a rather different pattern from the indexation that applies to wage earners where an index 12 months old is applied to current income. Whether there is much difference once the system starts rolling is arguable.
The effect of this adjustment is, as the Treasurer (Mr Lynch) said in his speech in introducing this measure, to reduce the tax that will be paid by companies by something like $360m- almost one-eighth of the total that is collected in company tax each year at the moment. The Budget estimated company tax to yield somewhere in the region of $2,900m this year. Profits seem to have risen rather than fallen this year so the benefit will be at least $360m. The Treasurer allowed us to have a discussion with officials from the Taxation Office. In his speech the Treasurer said that he would have liked to apply the whole of the index, not 50 per cent of it for the 12 months, which would have given a tax saving not of $360m but of $720m. I am critical of two or three aspects of this scheme. Firstly, I refer to the choice of the consumer price index or part only of the consumer price index to apply to a situation of what are essentially wholesale stocks. I am interested to see as reported in the Australian Accountant of September 1976 an article on the Sandilands report which dealt with accounting in an inflationary era. It was critical of an accounting body because it had recommended that what in England is called the RPI- that is the retail price index, which coincides more or less with the CPI, the consumer price index- be used in SSAP7. That is the seventh draft of the provisional statement of standard accounting practice of the Accountants’ Institute of England and Ireland. It is criticised on the ground that the RPI is a wide ranging index of prices of goods and services purchased by domestic consumers which in many cases will give a misleading indication of the effects of inflation on individual companies. I suggest that this certainly will be the situation with the adoption of the CPI index in Australia to company taxation.
If there is logic in the arguments that have been advanced on the other side, particularly just a few moments ago by the honourable member for Berowra, the application of this crude index will give benefit to some people who do not deserve it and not sufficient to those who do. After all, stock is turned over at different rates among companies. A pie shop or a fruit shop turns its stock over every few days. Motor car manufacturers hope to turn stock over monthly. That is not quite the case at the moment. Some other manufacturing endeavour might make few pieces of equipment which are not to be sold for some considerable time. Again I criticise the use of the particular index. I criticise the crude way in which it covers all trading stock- there is a definition of trading stock in the legislation- in the same manner irrespective of how long the stock is held, how frequently acquired and so on.
We were told that the benefit is to be $360m. There is a lot of difference as to how that $360m will be divided among the recipient companies. I ask honourable members who are interested in this matter to look up the last set of company tax statistics published by the Commissioner of Taxation, I think in November 1976. They are the latest figures available. They refer to income year 1973-74. Total holdings of what the legislation calls trading stock, which these amendments cover, by 42 698 companies at the beginning of the financial year 1973-74 aggregated $7,2 14m- over $7 billion of stock. By the end of the financial year the value of the stock had risen to $9,019m-$9 billion, if you like. But when one looks more closely at the figures, particularly in the arena of public companies, one sees that the 295 public companies that had profits of $2m and over at the end of June 1974 held $2,96 lm worth of trading stock. Another 268 companies which had profits between $lm and $2m had stocks aggregating $992m. So in essence, certainly over one-third, and if you went up another bracket, one-half of the total stocks would be held by about 1000 companies.
Honourable members opposite talk about private enterprise as though it were some sort of little animal when, of course, it is a miscellany of the very big and the very small. There is not much doubt as to where the main advantage of this $360m is going to go. Nearly one-half of it will go to those 1000 or so very big companies. I am not too sure that in the long run they have not been able largely to adjust their prices to suit themselves anyway. After all, one only has to look at the structure of their other assets and the depreciation and so on that is allowed to see that one is talking about very big entities. They are not the sorts of companies that have been going bankrupt in Australia. They weathered the storm fairly successfully. The worst examples in Australia in recent times have been crashes of financial enterprises which got into the nefarious area of land dealing and speculation. In my view they deserved what happened to them. But they are not in this arena of concessions, that is, trading stock valuation as defined quite substantially in the Income Tax Act. The honourable member for Berowra (Dr Edwards) referred to the figures used by the Melbourne Institute of Applied Economics and Social Research. His figures were a year later than mine. I have taken the same figures from the Mathews report on inflation and taxation. I seek leave to have the table incorporated in Hansard.
-Is leave granted? There being no objection, leave is granted.
The table read as follows-
-The table headed ‘Profits, Profit Distribution and Valuation Adjustments of Australian Companies 1969-70 to 1974-75 ‘gives the run of profits as seen by the Institute. I think that the figures for 1974-75 must have been estimated. The table shows that the profits forecast before tax for 1974-75 were $3,810m, the income tax that would have been payable was $1,7 15m and dividends anticipated to be paid would have been $870m. This left undistributed profits of $ 1,225m. But apparently when what was called the income valuation adjustment was made to those profits there would have been a loss of $1 billion. These were adjustments not only for stock but also for depreciation to be made on an indexed basis. Candidly, I did not believe that to be a realistic situation, that is that the net equity of those sorts of companies- they would be the main ones- would have been reduced by $1 billion that year if adjustments had been made for stock and depreciation on a different basis. I believe that the figures would over-benefit some companies and may underbenefit the sort of company that is not able to adjust its prices. We have this hocus pocus at the moment about reducing sales tax on motor cars to enable companies to get rid of their stock. After the 3-month freeze those companies would be the first to go to the Prices Justification Tribunal and ask that prices be increased on the new lot of cars that came out. These sorts of things go on in large scale business. Again, I suggest that one needs to be cautious. There is no doubt that inflation affects everybody, but I am not too sure that if one indexed everything, in the finish one would have indexed anything. But once we index something it can be of great benefit to the area indexed but to the detriment of the rest of the community. I think that here we have a prime example of that. As we are so often told by honourable members on both sides of the House, everybody suffers from the effects of inflation. But not everybody is able to have his circumstances adjusted. I believe that the skilled wage earner is in a better position to index himself against inflation, than is the lower wage earner. I still think that the trade union movement has to do a lot of thinking about the fact that if the cake is not getting any bigger or is not as big as one likes and somebody is getting more of it, obviously somebody is going to get less. I suggest that this is the sort of way in which this handout of $360m ought to be considered.
We on this side of the House have been pilloried about the size of the deficit. There is not any doubt as to what will be the impact on the next Budget of 2 great items, namely the investment allowances, that have gone mainly to a handful of companies. Figures from the same source as I have cited show who got the benefit of the investment allowance that is estimated to cost $500m or thereabouts in a full year. Now we have another allowance amounting to $360m and it is proposed eventually to take this figure up to the full adjustment of the consumer price index. It is a fairly substantial reduction in the total amount of company tax paid. Estimated concessions via the investment allowance amount to $2,900m. Nearly one-third of that sum has been granted by way of stock valuation adjustment. In my view, the investment allowance never went to those people who deserved to get it. It went equally to breweries as to other areas of manufacturing and the same applies to this concession. I believe that when concessions of this kind are being made, they ought to be more systematically evaluated and their impact ought to be better looked at than seems to have been the case here. I do not think that there ought not to be some adjustment in some circumstances but there is anything but unanimity on the part of accounting institutions as to how these sorts of matters should be encompassed. Of course for a long time the whole thing was being looked at only on one side- the side of the assets. After all, people are paying tax annually. I think part of the trouble is the taxation period rather than inflation. Maybe companies ought to balance their books every month and get taxed as they go like the wage earner does.
– Are you an accountant?
-Well, it is one of my qualifications. But when company tax is being talked about, nobody says when the company pays the tax out of the profits of the year on which it is levied that money has depreciated by 15 per cent or so. The real tax burden is not as great when the tax bill is due as when one looks at the historical accounting that computed it.
I think that these sorts of things also ought to be thought through occasionally. We should not do what is so easily done, that is, look at the assets side only and ignore the liability. After all, in the end all the accounts show is whether one’s net worth has improved or deteriorated in the 12 month period. That is done on the basis of annual accounts showing expenditure for the period against income with a plus or minus adjustment according to whether one’s stocks are greater or less than they were when one started, and then one brings that surplus or deficit over into the balance sheet. One thing about balance sheets is that they balance- and they balance because there is a liability side as well as an asset side. But sometimes that is forgotten in this sort of argumentation. Variation from historical accounting is not quite so simple as is suggested, but I repeat that one variation from historical accounting- purely a tax calculation variation- need not appear in a company’s books, except that the tax will be so much less.
I think there is a good case for not taxing com- panies at all. But if that were the case, does anybody really believe that the $3 billion or so that is now collected in tax would be handed back to the buyer of a product in the form of reduced prices? I doubt it. After all, this $360m is an interference with the wage-price freeze. It will alter the tax payable and therefore the profits retained by the companies concerned. I leave it for honourable members to cogitate upon whether that is equivalent to a price rise. Nevertheless, I have tried to show today how that total benefit is to be ill-distributed. A few big people will get most of it and those who perhaps need it most will get very little.
-Order! The honourable member’s time has expired.
– I am always pleased to follow in a debate the honourable member for Melbourne Ports (Mr Crean), whom I respect. I regret that in many of the matters he raised today I am unable to agree with him, particularly his comment that if someone is going to get more it follows that someone else is going to get less. I believe that that is the style of thinking that led to a reduction in the gross domestic product of this nation. We have to recognise that if we increase the size of the cake- if someone gets more because there is more- we are not taking anything away from anyone else. I would like to see a little more positive thinking on the other side of the chamber.
– Actually, that is what I said. I said ‘unless the cake gets bigger’.
-Under the Whitlam Government the cake was continually getting smaller and everyone got less. We can have this type of legislation because it is aimed at increasing the size of the cake. I feel that it is very important to comment upon one remark that the honourable member for Melbourne Ports made, that is, his remark that companies could still earn profits by increasing the prices of their products to take account of the stock valuation adjustment. The fact is that these are fictitious profits. What happens if action is taken to increase those fictitious profits? There is an impression in the community that corporations are sufficiently profitable to be able to finance extraordinary, irresponsible wage and condition claims. What has happened is that on the basis of a community expectation about profits, which is based on a lie, not only have there been excessive, unrealistic efforts by the unions to get such high levels of benefit that they have destroyed many corporations but also there was acceptance of that view by the government of the day when it set out to redistribute resources from the private sector to the public sector.
I submit that it is vitally important that the corporations that receive the benefit of this stock valuation adjustment be required to report their profits in those terms so that the nation will see what is really the level of profitability. We have far too many managing directors of corporations who are keen to show that they are doing well in order to get the support of their shareholders when in fact they are doing badly. If they are required by the introduction of this kind of legislation to report accurately what are their profits after the stock valuation adjustment, I believe that we will have achieved something in communicating to the nation the reality of life in the real bad, hard world. I regret that there is no requirement in the Bill that makes certain that corporations will receive this benefit only if they report their profit after stock valuation adjustment. I hope the Minister Assisting the Treasurer (Mr Viner) will take that into account.
I want to mention now very quickly the position of wine companies, which will not get the full benefit of this legislation. I have expressed my view on this matter to the Minister. They are to get roughly 75 per cent of the benefit because of an existing benefit. In other words, the principle appears to be that even though for other policy reasons a benefit in terms of back tax has been given to wine companies, that benefit should result in a diminution in relative terms of the new benefit being introduced. I believe that when a policy decision results in the granting of a benefit to a group in society the introduction of another universal benefit should in no way diminish it. I point as an example to the manner in which the estates of farmers now pass probate free as to $48,000 between a husband and wife on the death of the husband or wife. That $48,000 benefit has been in no way diminished by the introduction of a $50,000 general exemption. So farmers can now benefit to the extent of $98,000- in other words, there has been a lumping of the 2 benefits together. This principle has not been followed in this Bill. I believe that the failure to follow this principle is a mistake. I regret to see the Government making that mistake.
However, I am much more concerned about another mistake. I refer to that section of the Bill which seeks to change the rights now established before the High Court of Australia of disabled ex-servicemen to have their pensions tax free. The Treasurer (Mr Lynch) said in his second reading speech:
In a setting where tax is levied on pensions paid under other occupational superannuation schemes, the Government thinks it only equitable that all DFRB and DFRDB pensions be taxed and the Bill contains provisions to this effect.
That seeks to reverse the decision that the High Court held when Lieutenant-Commander Goodfellow a constituent of mine, succeeded in the case that he put to it. He objected to the tax he was charged on a pension he received as a result of an accident he had. That accident happened several years ago. It happened before the Repatriation Act was changed. I put it to the House that if Lieutenant-Commander Goodfellow had crashed the aircraft in which he was on active service after 7 December 1972 he would have been entitled to tax free repatriation benefits because that is the date on which the amendments to the Repatriation Act became effective, amendments which made servicemen who had at least 3 years effective full time service entitled to repatriation benefits, which had always been free of tax. Lieutenant-Commander Fred Goodfellow is being penalised because he crashed his aircraft at the wrong time. A matter of principle is not involved; it is a matter of timing. I believe it to be totally wrong for this House to be presented with a Bill that perpetuates a system that I believe is totally wrong and a system that relates only to servicemen of under 3 years service or servicemen who had not completed 3 years service by 7 December 1972. The basic rule has been changed. For heaven’s sake, why are we going back to catch Fred Goodfellow and the 1050 other people who receive Class A disability pensions? I believe that this is a totally wrong principle. I believe that it would cost the Federal Government $lm or so to remedy this morally wrong situation. In the context of the $360m a year that we are looking at in relation to another section of this Bill that amount does not seem a very large amount.
– Will it be $ lm each year?
– I am asked by my honourable friend from Wakefield whether it will be $lm a year. It will naturally be a diminishing amount because the number of people becoming eligible for this will be diminished by the action of the Act that amended the repatriation legislation, which changes the situation of people in Fred Goodfellow ‘s place. Lieutenant Commander
Goodfellow is in fact being penalised for ‘choosing’ to crash his aircraft at the wrong time. I ask whether the Minister for Aboriginal Affairs (Mr Viner) and the House would do me the courtesy of allowing me to incorporate in Hansard a letter to me from the man who was the initiator of the action which has brought about this section of the legislation- Lieutenant Commander Fred Goodfellow.
-Is leave granted?
-Mr Deputy Speaker, I rise on a point of order. Once again I would remind honourable members of the courtesy of showing beforehand to the person sitting opposite at the table anything to go into Hansard. On this occasion I grant leave.
– Leave is granted.
The document read as follows-
F.W. Goodfellow 34 Plunkett St. Nowra.N.S.W.,2540 Tel: 23117 27 April 1977
Mr Michael Baume, M.P., MHR for MacArthur Parliament Bldgs Canberra, A.C.T.2600
Dear Mr Baume
Thank you for your telephone call last evening. As a result, I now more fully appreciate the opposition I must meet.
May I say at the outset that I emphatically disagree with the distinction, armed services injury sustained in war and injury sustained in peace. This distinction, if it exists, is very wrong and is a product of the long established but dying ‘returned servicemen’ mentality. If you can tell me what difference it makes to a man with broken back, or blinded eyes, or severed hand etc. because one injury may have happened in Korea and a similar injury happened in N.S.W., then I might listen but otherwise, I am embarrased by such illogical argument. The full bench of the High Court of Australia does not accept such a distinction; are our Judges less perceptive or intelligent than our politicians?
Lieut. Ralph MacMillian was killed in a Skyhawk aircraft off Jervis Bay; Lieut/Commander Pat Vickers was killed in an Iroquois aircraft in Vietnam; dead is dead; ask the relatives of these fine men if it matters where life ceases.
I have eighteen years ‘peacetime’ service in Naval Aviation and for each of those years, I have one dead friend killed in ‘ peacetime ‘ flying operations.
Exposure to danger in the services ranges from very slight e.g. the pay writer doing accounts, to very great e.g. the point of release of a 500 lb. bomb in a steep ‘training dive in a naval fighter aircraft. These are perhaps extremes. The pay writer however, can also be and often is a gun layer exposed to all the hazards of machinery and high explosives during peacetime training while at sea. A ship’s cook can find himself up to his waist in sea water and handling heavy shoring timbers while acting as a member of a damage control party. The day-to-day activities of an engineering mechanic in the boiler room of a warship means continuous exposure to the danger of super-heat steam that can peel the flesh off a man in 1 / 10th of a second. The day-to-day activities of an aircraft handler during flying operations on the flight deck of an aircraft carrier are so fraught with danger that accident is almost inevitable if even a small error of judgment is committed or there is a small mechanical failure.
In my few years of service, I know of men blinded or otherwise maimed by accidents in peacetime handling of explosives and pyrotechnics; men with a leg nipped off by a steel hawser; men with kidneys shot out By a 20 mm malfunction; men sucked into the intakes of jet aircraft; men decapitated by propellers; men with arms and hands crushed in machinery that by nature cannot be protected by such legislative foresight as the Factories, Shops and Industries Act, 1962 (N.S. W.). There is an endless tedium of examples of the hazards of peacetime day-to-day life in the armed services.
The examples given are derived from naval service experience but of course, similar examples could be given in respect to the Army and the Air Force.
I have the greatest respect and deepest reverence for the Anzac tradition but what makes anyone think that this tradition stops with returned servicemen. Surely the peacetime professional shares in that tradition and often enhances it. The magnificent response of the services in Darwin after Cyclone Tracy is a recent example. Although we hear little about it, at this very moment there are servicemen in small warships in our northern seas quietly carrying out their duties in the best of the Anzac tradition: their country has ordered them in the National interest to carry out hazardous operations with the full confidence that their duties will be carried out faithfully whatever demands are made.
From the foregoing, I may be accused of being emotional. My answer is, you are damned right I am emotional. This is an emotional issue. Regardless of the motives for a man or woman putting on the uniform of their country, be that motive adventure, money or patriotism, by putting on that uniform they set themselves above ordinary citizens. In the aftermath of Vietnam this may not be the most popular of views but God help our country, our defence and our democracy if truly responsible people such as our politicians ever hold a contrary view.
There is another element, ‘liability to danger’ that the professional serviceman faces beyond his day-to-day activities. The duties of the Police may be useful for comparison. Police officers sometimes get shot at whilst apprehending bank robbers; they are expected to expose themselves to the possibility of danger when called. It goes further with a peacetime armed forces serviceman. When he is called, he is expected to expose himself to the probability of danger. In general terms he is expected to kill or maim and himself be killed or maimed and when he is called, it is not a question of ‘might be’, he ‘is’ shot at. This liability is the rationale for all his hazardous peacetime training and indeed, it is the rationale for the very existence of armed forces in peacetime.
In our quite proper system of military subservience to Parliament and limited numbers of men under arms in peace, it is of course the citizen soldier, not the peacetime professional, who does the bulk of fighting in war. But it is the prepared professional who takes the initial shock of war and who trains the citizen soldier. We are able to respond to our National duty in war because the peacetime professional has quietly done his job.
But there is more than merely danger that sets the serviceman apart. He gives up much to wear a uniform and serve. Two examples are suggested.
If you confine a citizen behind wire with a guard at the gate without following the processes of law it is called wrongful imprisonment and he has redress against his imprisoner. It is a part of service life to accept this underestimated restraint on freedom of movement.
If a civilian factory worker is injured through the negligence of his employer, he may sue his employer for that negligence. If the Crown is negligent in causing a serviceman to be maimed however, the serviceman has no redress for that negligence. Whether this should be so may some-day be open to serious challenge at law but for the moment, this is the commonly understood position.
There was a time when the giving up of these ordinary rights of the citizen was offset by benefits not widely available to the ordinary citizen. The serviceman was housed, clothed and fed; his medical and dental needs were cared for; his employment was reasonably secure. But now, to-day, what trade unionist does not get these same benefits? What extra does the serviceman get, other than the honour of serving, as a matter of setoff for giving up rights of ordinary citizenship? Surely a comparatively minor tax concession is not too much extra to ask for on behalf of a man whose body is broken in the service of his country.
The Treasurer and the Taxation Department speak of ‘anomolies’ if the invalided ex-serviceman is not taxed. The so called ‘anomoly’ presented is that a Major on an invalid pension may have more money to spend than he had while he was actively serving. Is this really anomolous? An ablebodied man retiring from the services on a normal retirement pension at say age 45 does not retire from the work force. As an able-bodied man, he has the full range of civilian employment open to him and he can take up any career consistent with his background and abilities. He has a choice. On the other hand, a man discharged as an invalid is restricted in his choice of employment to the degree of his invalidity. A paraplegic pilot can no longer fly. A paraplegic marine-engineer can no longer climb ships ladders. A paraplegic air-engineer can no longer climb onto an aircraft wing to service that aircraft. He must, as I had to in studying law, look elsewhere to make his life useful and to maintain the respect of his family and friends.
If the invalided ex-serviceman does, because of the machinations of our often confused and tangled retirement benefits schemes, end up receiving more money than he did whilst serving, this can very easily be rationalised as just and fair compensation.
The real anomolies that Treasury should concern itself with are the fact that no other Common Law or Commonwealth country taxes an invalided ex-serviceman. If the Australian invalided ex-serviceman could take his pension to other countries, as he should be able to do, such as New Zealand, Canada or the United States, his Australian invalidity pension will not be taxed. But if he stays in the country in whose service he has broken his body, he will be taxed if Treasury has its way. At present and since at least 1919, the English ex-serviceman coming to live in Australia does not have his invalidity pension taxed. If Treasury does succeed in getting this Bill through, the Digger will pay but Tommy will not.
The New Zealand tax legislation may interest the Commonwealth Parliament and is fairly representative of most other countries. The New Zealand Land and Income Tax Act 1 954 reads: S.86.-Incomes wholly exempt from taxation - ( 1 ) The following incomes shall be exempt from taxation: . . . (h) Income derived by any person from any pension or allowance . . . granted in New Zealand or elsewhere by any Government in respect of any war or in respect of any disability or disablement attributable to or aggravated by service in any naval, military, air, or police forces:
There remains I think one question to answer. Why has this wrongful and indeed unlawful interpretation of the Tax
Assessment Act gone unchallenged for 30 years? It had never been challenged to even the level of the Taxation Board of Review much less to a Court. I began questioning first in 1 97 1 . 1 formally objected to the Taxation Department in 1972 and I have formally objected each year since. The first ‘determination’ given to my objection by the Commissioner did not in fact deal with the grounds of my objection at all and was easy enough to repel. The Commissioner first called the pension ‘superannuation’ and taxable. He then changed his mind and called it ‘compensation’ and taxable. He then again changed his mind and called it an ‘annuity’ and taxable. It became apparent that once challenged the poor Commissioner did not know how to describe the pension for tax purposes without accepting defeat. He was groping. So much for his argumement of ‘consistent departmental practice’ the Tax Department claims it has adopted since 1 948. This may well have been practice but, it was not a practice that would stand up to the scrutiny of law as events finally showed.
Too easily do people accept without question the word of a government administrator; too easily are words written under official letter-head believed as gospel. It must be apparent that at no time since 1948 did the Commissioner give serious consideration to the fact that he could have been wrong and he was steadfast in his inflexibility to any contrary view. In fact, in 1973 his department advised one Minister of State that the issue had already been decided by a Taxation Board of Review in 1969. As it turned out, this advice was not true.
I am confident, Mr Baume, that you will give most serious consideration to the agruments that I have presented and I appeal to you not to let Australia slip back to the status of a developing country in its municipal law instead of the internationally recognised and respected country it now is by allowing this petty and morally wrong Bill to pass.
I am yours sincerely F. W. GOODFELLOW,
Lieut. Commander, R.A.N. R’td An Elector in Macarthur.
– I beg the pardon of the honourable member for Adelaide. I showed the matter desired to be incorporated to the Minister for Aboriginal Affairs. The points strongly raised by Lieutenant-Commander Goodfellow include this one:
If a civilian factory worker is injured through the negligence of his employer, he may sue his employer for that negligence. If the crown is negligent in causing a serviceman to be maimed however, the serviceman has no redress for that negligence. Whether this should be so may some-day be open to serious challenge at law but for the moment, this is the commonly understood position.
It is true that the Commonwealth- my general criticism relates to successive administrations, not just the present one- has allowed servicemen to bring legal action. I believe LieutenantCommander Goodfellow has such an action before the court in New South Wales. The Commonwealth has done so by simply avoiding to object to the court actions. But there is no basic right to the serviceman to carry on such an action, and that is intolerable. We are denying ex-servicemen- this relates only to people who are not covered by the Repatriation Act, those ex-servicemen who were not injured in act of warfare- the right to sue, while at the same time saying that we should regard them simply as civilians. It should be remembered that civilians in all instances have the right to sue. Either we grant the Fred Goodfellows of this world the right to sue, a right which cannot be taken away from them, or we give them some offsetting benefit, for example, tax free compensation in the form of a regular weekly payment, not simply a simple superannuation payment similar to civilian superannuation payments.
– Would you agree that granting the right is more equitable?
– It may well be. This matter should be examined by the Government. I would be content if the Government gave me and my constituent an assurance that it would examine this and provide either the inalienable right to sue or the tax free benefit. I also seek an assurance from the Government that it will examine the position of the pre- 1972 people like Commander Goodfellow, who appear to me to be discriminated against because of the date of operation of the Act. Another section of the letter to me which should be emphasised states:
The real anomalies that the Treasury should concern itself with are the fact that no other common law or Commonwealth country taxes on invalided ex-servicemen.
By the way, this relates to past administrations as well as the present one. The letter goes on:
If the Australian invalided ex-serviceman could take his pension to other countries, as he should be able to do, such as New Zealand, Canada or the United States, his Australian invalidity pension will not be taxed. But if he stays in the country in whose service he has broken his body, he will be taxed if Treasury has its way. At present and since at least 1919, the English ex-serviceman coming to live in Australia does not have his invalidity pension taxed. If Treasury does succeed in getting this Bill through, the Digger will pay but the Tommy will not. The New Zealand tax legislation may interest the Commonwealth Parliament and is fairly representative of most other countries. The New Zealand Land and Income Tax Act 1 954 reads . . . ( 1 ) The following incomes shall be exempt from taxation: . . . (h) Income derived by any person from any pension or allowance . . . granted in New Zealand or elsewhere by any Government -
That could include former enemy governments- in respect of any war or in respect of any disability or disablement attributable to or aggravated by service in any naval, military, air, or police forces:
The essence is that this is the general situation which exists. There may well be an effective answer on the Government’s behalf. It may well be that the level of pension available to disabled ex-servicemen in Australia is higher than pensions in those countries in which they are not taxed. If the Government wants to make that point it should advise us of the sizes of comparable pensions in those countries related, say, to the normal social security pension. We have to be very careful when we dismiss the Goodfellow objection by saying that the situation has existed since 1948. 1 do not want to be overcritical of the Returned Services League or the returned active servicemen group in Australia, but I believe that as a nation we have tended to concentrate too hard on the return from war style of thinking when we think about servicemen. We currently depend for our security on servicemen. We have no right to distinguish in such a serious way as we have in the amending legislation coming forward now between the war veteran and the current serviceman, particularly when we have recently passed, recently being four or so years ago, an act which clearly states that a person who has completed 3 years of effective full time service should be treated as a serviceman who has returned from war. We cannot have it both ways; yet this is what this Bill is effectively trying to do.
It is disappointing that such a large section of the returned services movement should be taking so little interest and taking what appears to me is a relatively ineffective role in supporting the proper claims, I believe the just claims, of current serving members of the forces. I have in my electorate a large naval area and many serving officers and men. I know the morale in that area will certainly be diminished by the passage of this legislation. It appears, and it may well be an unfortunate appearance, to be a slightly vindictive effort of ‘correcting’ a situation in which the administration of the law has proved to be wrong. The High Court found in Goodfellow ‘s favour. That is something we should not forget. We have to recognise that servicemen take greater risks than civilians. They are obliged to take greater risks. They give up many of their rights, not simply the right of action against the Commonwealth for negligence. I might say that serious related problems were stated by Mr Justice Windeyer, I think it was, in obiter dicta when he said that where there were 2 employees of the Crown and the accident to one was caused by the negligence of another there could be serious doubt about the right to take action.
Overall, then, I suggest that because the number of people involved is diminishing, because there is clearly a matter of principle involved in the sense that Goodfellow is being discriminated against because he crashed his aircraft too soon, because the Parliament now clearly takes the view that if a person has had 3 years service he is entitled to repatriation benefits which are tax free, the Government should reconsider the position. I understand that the honourable member for Herbert (Mr Bonnett) will be submitting a report to the Government on the whole question of Service pensions, and I believe that the Government has given an undertaking to consider those recommendations. I ask that the Government not only consider them seriously but also accept the points which I hope the honourable member will raise in his submission which support the position of people like Lieutenant-Commander Goodfellow who I believe have been badly treated in this legislation.
-Order! The honourable member’s time has expired.
-In speaking to the Income Tax Assessment Amendment Bill 1977 I should say that it has some rather complex issues, some rather controversial issues, and there are also some rather simple ones. I think it is preferable in all things to deal first with the simple issues. I am pleased to see that the Government has decided to allow as a tax deduction gifts to the Queen Elizabeth II Silver Jubilee Trust For Young Australians. When the Prime Minister (Mr Malcolm Fraser) announced in the House that he was setting up the Trust as a memorial to Her Majesty the Queen in her Silver Jubilee year, it brought commendation from both sides of the Parliament. I know just how difficult it is to get a government, whichever government is in power, to insert in the Income Tax Assessment Act a specific provision to exempt any gifts. I have tried in the past, even in the days when my own Government was in power and my colleague the honourable member for Melbourne Ports (Mr Crean) was Treasurer, and I did not succeed then. But in view of the fact that this is such a worthy cause, apparently the Government has seen fit to allow these gifts as a tax deduction. It is a start in the right direction. I can call to mind many representations which have been made in the past by other honourable members, and perhaps now that the Government has decided to ease the way in respect of this fund it will give consideration to allowing a tax deduction for some other worthwhile funds. In the past gifts to those funds have not been allowed as a tax deduction merely on the grounds that the recipients of the benefits of moneys raised through such funds happened to live overseas, and that is something to which the Government might give consideration in the future.
Another quite simple matter, and one with which the Opposition certainly does not quarrel, is the provision in this Bill for the exemption to employers of rebates which are paid to them under the Commonwealth Rebate for Apprenticeships Full-time Training Scheme, known as CRAFT. A practice which seems to have grown within the Public Service in recent years is that everything goes by a trade name or by initials. We hear about CRAFT and TEAS and UNESCO, a whole series of things. Together with the honourable member for Melbourne Ports, I sit on the Public Accounts Committee of the Parliament and when members of the Commonwealth Public Service give evidence before us they speak in this terminology which is common to them. It is often necessary to ask them to define what they mean, and finally we get the answer and know what they are talking about. The same situation applies in regard to the training scheme known as CRAFT. The Bill also provides that the special allowances which are payable to apprentices under the scheme will be subject to pay-as-you-earn income tax deductions in the same way as allowances paid under similar schemes. The Opposition certainly does not quarrel with that. There is no reason why payments made under the CRAFT scheme should not be subject to tax if similar payments are taxable under other schemes.
I am pleased also to note that at last the Government has seen the light in regard to the reintroduction of the system for the collection of company tax by instalments. As members of the House would know, the system was temporarily suspended by the present Government m 1976 when the corporate sector supposedly was having serious liquidity and cash flow problems. This Bill reintroduces the system of collection of company taxes by instalments, although there are slight variations from the original scheme introduced by the Labor Government in 1973. The present Bill provides that the first company tax instalments in respect of income for the income year 1976-77 will become payable on 15 November 1 977 and the second instalment on 1 5 February 1978. The balance, that is the final instalment, will not become payable before 30 April 1978 at the earliest. I think that the payment of company tax by instalments is a good thing, not only because the companies can plan out their cash flow a lot better if they know they are not going to be hit towards the end of the financial year with a large sum to pay out for company tax, but also because they can even out the payment over the year. That assists not only the company but also the revenue in view of the amount of money which is available to the Government and which finally finds it way back into the community.
I am afraid that I do not agree with the comments of the honourable member for Macarthur (Mr Baume) in regard to the amendments in the Bill relating to the taxing of pensions paid under superannuation arrangements for members of the defence forces. Quite frankly, I cannot see the difference between the case of LieutenantCommander Goodfellow, who apparently pranged his plane and was invalided out of the Services, and that of an officer of the Commonwealth Public Service or a person who is contributing to any other superannuation scheme. After all, Lieutenant-Commander Goodfellow was contributing to a superannuation scheme within the defence services. I cannot see the difference between the circumstances applying to him and those applying to a person in the Commonwealth Public Service, say, who is invalided out of the Public Service due to an accident on the way to work or in the course of his duties, in exactly the same fashion as was the case with Lieutenant-Commander Goodfellow. The officer in the Commonwealth Public Service or the person employed in private enterprise who is invalided out of his job is subject to tax on the pension he receives. For the life of me, I cannot see the difference between that and what happened in this case. All that the Government is doing, and I commend it, is making it clear that pensions paid to persons in the defence forces are to be treated in exactly the same way as those paid to people outside the defence forces. After all, that is the purpose of equity in income tax, that all people are subjected to the same rules and conditions and there is no particular advantage to others. I can see a difference. The situation to which I refer is specifically exempted in the Income Tax Assessment Act. A person who is injured in action in the defence of his country at a time of war receives a pension to compensate him for those injuries. He does not receive for life a pension which is of the quantum that a person who is paying superannuation receives. Quite frankly, in many of these cases, such people receive a very small pension for life to compensate for very serious injuries. I can understand that that pension is specifically exempted from income tax, and rightly so. But in my view there is a big difference between superannuation and the pension paid to a person as compensation for injuries sustained by him in the service of his country. I can see a very big difference between that situation and the situation cited by the honourable member for Macarthur (Mr Baume). The reason it is necessary to amend the Act at the present stage is because the High Court of Australia for reasons best known to itself- for technical reasons- stated that such pensions were not subject to tax under the present income tax law. The amendments to the Act at the present time are to alter that situation to put pensions paid to contributors to the Defence Forces Retirement Benefits Fund in exactly the same situation as pensions paid to contributors of all other superannuation funds. I commend the Government for doing so.
I should like to turn now in the short time available to me to the other amendments to the Act to be instituted by way of the Income Tax Assessment Amendment Bill now under discussion. They deal with the averaging system. I am afraid I do not agree that the amendments which are being made to the Act in regard to the averaging system as it affects primary producers have gone far enough. That may sound strange to some people seeing I am a member of the Australian Labor Party. The situation is this: At the present time, the averaging provisions of the Income Tax Assessment Act do not apply to a primary producer when his taxable income is in excess of $16,000 a year. The income is taxed at the normal general rate which is paid by every other person in the community. All that this amending Bill is seeking to do is to exclude from the averaging calculations for any future year the amount by which the income of a year exceeds $ 1 6,000. Frankly, I do not feel that this provision goes far enough.
Let me outline what was stated in the Industries Assistance Commission report brought down on 4 July 1975. 1 ask honourable members to remember that this reference to the Commission to look at rural income fluctuations and certain taxation measures was made by the previous Whitlam Government. The Commission came down with a recommendation different from what the Government is now implementing. It is strange to me that a Government which supposedly looks after the interests of the primary producers- its Cabinet is heavily weighted with 5 or 6 primary producers- has not come down with something better than it has presented in this Bill. The Industries Assistance Commission has recommended to the Government for a variety of reasons that the averaging provisions should not cease just because an income has reached $ 16,000 a year. I shall quote some of the reasons which the Commission gave. It set out that the averaging scheme- the existing scheme- allows primary producers to use the average of the income of the current year and the preceding 4 years to determine the rate of tax which is to apply to their current year’s income. Mr Deputy Speaker, I would prefer to cover this aspect of the matter when the sitting is resumed at 8 p.m. because it is rather complex.
Sitting suspended from 5.59 to 8 p.m.
– Prior to the suspension of the sitting for the dinner break I was speaking on the Income Tax Assessment Amendment BUI 1977 and in particular I referred to the averaging system applying to primary producers. When the sitting was suspended I was in the process of saying that in my view the Bill does not go far enough in giving advantages, if one calls them that, to primary producers. I would be the first to admit that they form a long-suffering section of the community. They are subject to the ravages of the weather; they are subject to the ravages caused by changes of government as well.
My concern is the reference that the Labor Government, of which I was proud to be a member, gave to the Industries Assistance Commission in regard to rural income fluctuations and certain taxation measures. The Industries Assistance Commission came down with a recommendation- a pretty firm recommendation at that- that the present limitation of $16,000 income, which applies as the figure beyond which a farmer cannot get the benefit of the averaging provisions, should be completely abolished. The present Government, which supposedly looks after the interest of farmers and other business sections of the community, has not taken any note of that recommendation of the Industries Assistance Commission. I think that to that extent it has been remiss. I think it would have been a far better idea for the Government, instead of tinkering around as it has done with the averaging provisions of the Income Tax Assessment Act- before the suspension of the sitting I mentioned what it has actually done- to have removed completely the limitation of $16,000 income as the figure beyond which the averaging provisions cannot apply. I am sorry to see that the Government did not take up the recommendation of the Industries Assistance Commission, whose recommendation was the result of a reference made to it, as I said earlier, by the previous Whitlam Government.
Another matter with which I am concerned, and this is probably one of the most important parts of the Bill, is what is known as the trading stock valuation adjustment. Much has been said on this matter by previous speakers from both sides of the House. In a statement made to this House on 9 December 1976 the Treasurer (Mr Lynch) said that the deduction being provided as a trading stock valuation adjustment ‘was the most appropriate way to reduce the burden of income tax on firms and companies which because of inflation have had to find increasing amounts of working capital to maintain business activity’. Quite frankly I, as well as other members of the Opposition have grave misgivings as to whether or not that is the most appropriate way in which to reduce the burden of income tax which is caused by the ravages of inflation. Notwithstanding the fine and pious words which supporters of the present Government uttered when they went to the people between November and December 1975, the Government has not done anything to reduce the level of inflation. In many ways it has fired the flames of inflation. I think we have reached the stage where the present Government can cease blaming the previous Labor Government for these things. The Government has been in power for just on 18 months and it is about time, to use a very common and very true old saying, that it put up or shut up. The stage has been reached when it has to accept the responsibility for the present state of the economy. It just cannot blame other people. It cannot blame someone else all the time. If it tries to do so people just will not believe it.
The Government is seeking by means of this legislation to provide a way of indexing company tax. According to the information given to the Parliament, that part of the legislation which deals with the trading stock valuation adjustment will lead to a reduction by 5Vi points in company taxation. I do not know to what extent, as a result of indexation, taxation will be reduced for those firms which are either trading on their own account and not as companies or are trading as partnerships. However, I understand that of those individuals or people who will be affected by this trading stock valuation adjustment measure, 80 per cent will be companies and 20 per cent will be individuals and partnerships.
I am gravely concerned also about the fact that the Government has succumbed to pressure. It has succumbed to pressure in regard to proposed alterations to section 3 1C and section 36A of the Income Tax Assessment Act. When I arrived in Canberra this week I found sitting on my desk a letter dated 28 April from the Australian Taxpayers Association. It gave a blurb about what the Government’s alterations to the Income Tax Assessment Act would do in regard to retrospectivity. If ever there was a blackmail job it was this letter. It is about time the Australian Taxpayers Association looked at itself and worked out whether it is really looking after the interests of all taxpayers or the interests of only a certain section of the taxpaying community.
The section of the taxpaying community to which I refer is, in my view, the one least deserving of any assistance at all. I refer to the tax dodgers, the tax evaders, the tax avoidance people. The letter which was sent to me and to every other member of the Parliament was signed by Mr Eric Risstrom. In the fourth last paragraph- this is the part to which I object- the letter states:
Therefore (and as we live in a democracy, and because doubtless you would agree that taxpayers deserve to know who votes for what) we propose to print in our journal soon the names and the electorates of those who do not rigorously oppose this unfair retrospectivity.
If ever there was a standover job, it is that letter. What I am disgusted about- I use the word ‘disgusted’ advisedly- is that the present Government and the people who form that government have allowed themselves to be subjected to that type of penny ante pressure. According to page 28 of today’s Melbourne Herald, apparently that newspaper was not aware that the Government intended to back down; the Government did back down. The headline in tonight’s Herald is: ‘Government will close tax loopholes’. Just before this legislation was called on for debate this evening the Treasurer announced that he intended to introduce amendments to the legislation which will have the effect of watering down the closing of those tax loopholes. I say to the Government seriously that its job is to govern. Its job is to collect taxes fairly and equitably from all people. If it intends to be subjected to pressures from a penny ante mob such as this, it does not deserve to be in government.
Mr DEPUTY SPEAKER (Mr Lucock)Order! The honourable member’s time has expired.
-Mr Deputy Speaker -
– Let us have a bit of sense.
– Thank you very much. In entering the debate on this income tax legislation I would just like to pick up a few of the comments that have been made by Opposition speakers who have taken part in the debate earlier. I can understand that in relation to some of the legislation that we have already implemented, especially in connection with stock indexation, those honourable members might have a view different from that which we propound. Our legislation dealing with the investment allowance and the present trading stock allowance will result in a total cost of just short of $ 1 billion, which is made up of approximately $500m in connection with the investment allowance for the current year and for the 12 months 1977-78 the stock indexation proposal will cost $360m. Possibly that difference can be found in our basic philosophies. The Liberal and National
Country parties have a social conscience, and the Labor Party might believe that the money would be better spent in some other social areas. In the free enterprise system we must at all times encourage production to ensure that we are able to retain or to increase the amount of revenue that is available. One might even subscribe to the theory that government is no more than big business. We hear this proposition so much today. Many a big business today has to increase its profit in order to provide future income and, for that time, an enhanced income. So whilst I take that view on board, I would hope that the cost to revenue will be returned more than adequately in increased productivity and increased income.
The Income Tax Assessment Amendment Bill deals mainly with stock indexation. This is the first serious attempt any Australian government has ever made to come to grips with modern techniques of accounting and to try to get the tax law to conform with modern accounting principles. We know that in Australia today, whether we are talking about individuals or businesses, much of the presentation of our financial statements depends on how we apply the tax laws and what deductions we might be able to get from them. There is a vast difference between what might be a normal profit or loss situation from a financial accounting point of view.
This legislation is only a start. I believe that the greatest barrier to the acceptance by the Australian community of modern accounting principles has been the reluctance of the Taxation Office to recognise certain accounting expenses as being a taxation deduction. With the introduction of this legislation we see the first step taken in this recognition, although certainly it is a small step. The legislation proposes a 50 per cent taxation deduction on trading stock based on an index which will be forthcoming from the Taxation Office, that index being based on the goods component of the consumer price index. So, as I have said, it is only a first step. We have to look at ways and means of achieving uniformity of accounting and taxation principles. We have to look at such things as provision for long service leave, depreciation on buildings, which as far as I am concerned is as much a loss as depreciation on plant, and possibly, later on, depreciation on the inflated price of plant, as was indicated by Mathews in his report.
The legislation will give a much needed stimulus which will be of assistance to business, small and large alike. We hear so much today about the small businessman who seeks aid and assistance from governments and from other parts of the private enterprise system. I believe that in this legislation we have taken a first step in this area. We recognise many of the difficulties that small business has faced in the economic climate of the last three or four years. Inflation and unemployment are still with us. At least by this legislation we are trying to remove some of the impact of inflation and recognise that inflation is the number one problem of this nation.
– It is the first step in a journey of a thousand miles.
– I am glad to be reminded of that. It starts with a very small step, and we have taken the first small step tonight.
The trading stock indexation is applicable to all businesses. I think that possibly in the minds of some people there was the belief that it applied only to private and public companies. It applies to any business that trades in stock. It would include the categories of sole proprietor, a partnership and a trust, as well as the companies I have mentioned. In addition to this it applies also to livestock. Therefore graziers have an interest in the legislation. In mentioning this point, I hope that the legislation that we are considering tonight will not disfranchise the grazing people and the livestock industry from taking proper advantage of section 36A(2). The honourable member for Banks (Mr Martin) also mentioned this point. The following statement is made at page 13 of the explanatory notes:
It is therefore proposed to replace the present sub-section 36a (2) with a new sub-section 36a (2) which will limit elections under the section to cases where the market value of the stock is greater than the value that would have been taken into account if there had been no disposal.
I hope that the Minister for Aboriginal Affairs and Minister Assisting the Treasurer (Mr Viner), who is at the table, can give an assurance that this part of the legislation will not be in any way to the detriment of graziers and people dealing in livestock.
I would mention also for the benefit of those who are interested that the legislation applies only to trading stock. Many businesses these days carry stores which they use internally for repairs and maintenance at the end of a financial year. It is my understanding that, because of the definition of trading stock, indexation will not apply to those stores and that people who might have had some hope that it would apply will be disappointed. The legislation seeks to give recognition to the difficulties of small business. I reiterate for the benefit of those honourable members who are interested what has been done within the 18 months that this Government has been in office. Not only wage and salary earners but also every business person and every shareholder in this nation have been able to take advantage of the saving opportunities which personal income tax indexation offers. The investment allowance, which has already been mentioned by some members of the Opposition, again on the theory that perhaps it was a misplaced type of allowance, is a real allowance if business will get behind the theory that they should use it as an opportunity to expand their business, replace plant and even extend into other ventures. If they do that they will be entitled to a deduction to the extent of 40 per cent of their new plant.
Division 7 now recognises and increases the amount of allowable retention from 50 per cent to 60 per cent and puts businesses in a category which I believe is quite similar to a public company in that the 40 per cent after-tax payment on dividends is roughly equivalent to what the majority of public companies are paying today. So benefit under this legislation provide something in which small businesses and large businesses can participate. I think we should remind ourselves constantly that we have done much in this area. We have added to this tonight by way of this legislation in respect of personal taxation.
– The Government can be proud of its achievements.
– Yes, I think it can. I think we should remind ourselves of that constantly. The cost to revenue, as I have mentioned before, is measured in terms of the manner in which we interpret our tax laws. I think we should ask ourselves time and again: What are our tax laws meant to achieve? On the one hand taxation is a means of spreading income among the people of Australia, taking it from those who can afford to pay and sharing it among those who are less fortunate. I think that is one responsibility that we should impose upon our tax laws. But we should not do it in such a way as to spoil the incentive of those people in the producing section to make greater profits and, as such, be greater contributors to our tax revenue through profit. We must remind ourselves of the fact that there is no chance of us getting revenue from a bankrupt business, just as we have less chance of getting tax from an unemployed person. I think this incentive must always be with us when we have regard to our taxation laws.
The 50 per cent gives recognition to a problem that has existed in an inflationary year. In fact, it is ironical that when our economic situation improves and our policies justify what is being done there will be no need for this legislation because inflation will not be with us. The 50 per cent, although it is not the total possible amount of deduction, puts the ball in the corner of 3 separate types of people. First it indicates that the Government has made a contribution because it lessens the effect of taxation on profits of a business for a year. Secondly, in the case of a private company it means that shareholders also contribute by taking a lesser dividend than they might otherwise have expected because of the retention allowance and the fact that the taxable income is not so great. Thirdly, it places back on business the challenge of and also gives it the right to participate in the correcting of the present situation. It can also contribute as far as the problem of inflation is concerned. We have certainly acknowledged the problem in respect of the 3 groups of people and we are prepared to sit down and tackle it.
I agree with what was said by the honourable member for Banks in connection with section 36a. I believe that taxation legislation which contains a provision such as section 36a for the benefit of a particular type of person should not deprive this class of person from an ability to use this legislation and to rearrange his affairs in a way that is permitted by the legislation. Yet some people could be deprived or denied the opportunity available to them under this legislation because some other people may abuse the system. Abuse has been prevalent with regard to this section of the Act for the last 12 months. In fact in many ways the people who have promoted this professionally have, I believe, acted unethically because they have based their charges on the premise that so much be paid, as with ordinary costs, but if the plan succeeded and tax was saved against the Taxation Office, the retainer or fee would be a certain percentage of that amount saved. I think it is unethical for any solicitor or accountant to promote this activity. I do not condone at all -
-It is theft.
– It is theft from the public purse from the point of view that this section was not introduced to provide this benefit. I do not condone this in any way. As much as I dislike this abuse I dislike just a little more that any government should make legislation retrospective when people have gone ahead with plans with the thought or the knowledge that they were acting at that time on legal grounds. Whether or not they are legal grounds is yet to be determined. I wish the Taxation Office every success in any case it might undertake under section 260 against these people who are abusing the system.
With regard to the averaging of incomes, again I must pay tribute to the fact that the honourable member for Banks (Mr Martin) has brought forward a very pertinent point concerning what the legislation fails to achieve. Certainly the limitation of all incomes in the 5-year period to an amount of $ 16,000 adjusts an anomaly that has been in the Act for years, probably since its creation. Unfortunately, again, we do not believe in retrospective legislation so we cannot give the benefit for the four or five years beforehand. While I recognise that anomaly, the big problem is that the ceiling of $16,000, to my knowledge, has not been increased since 1966. 1 believe that the people who produce in the rural industries should have the benefit that inflation has given to that $16,000 ceiling since that date or, better still, a complete removal of the ceiling. I hope that the Government is not turned aside from this aspect of inequity which has existed since inflation took control of the 1966 ceiling. Perhaps sometime in the not too distant future this will be corrected. Every now and again there is a rural industry which has a flash in the pan and which rises to a situation of years of high income. There are two or three such industries at the moment. There are not very many but they are there. I believe they should not be subject to that ceiling.
– The cane farmers.
– I did not want to mention cane farmers but as the honourable member for Banks has done so now, I will say that the cane farmers are living with high costs but with relative prosperity. The other matter dealt with in this Bill is, of course, the Commonwealth Rebate for Apprenticeship Full-time Training Scheme. The Bill proposes that the rebate should not be taxable. If we look at the situation where an employer receives a deduction for the wages paid to the employee, the apprentice, it will be seen that after the deduction his net contribution is less than the wage factor. If we counterset this with the rebate from the Commonwealth for apprenticeship training on a tax free basis, I believe we get closer to equality with regard to what is paid out on the one hand and what is received on the other. Again I would hope that the Government has used the taxation laws as an incentive at this time for employers to create more job opportunities for apprentices. I think there has already been an increase but perhaps the scheme was introduced a little bit too late in the year in that many apprenticeships had been granted and apprentices had been placed at the time this legislation was introduced. If this scheme is sold correctly to the employers I think it is an additional opportunity for employment. Here again, I think that public relations might be used. If it can be sold to employers that their outofpocket expenses would be minimised under this particular clause of the Bill, I think they will create those job opportunities. But let us not forget that at the present time, under the apprenticeship scheme, our trained technical and trade personnel are an aging generation. In 10 years or 20 years time we might well look back on this period of our nationhood and say that that was the time our apprenticeships did not operate. There was no encouragement for them. The economy was in such a position that employment was not offered. In 10 years or 20 years time we will pay the price for our shortsightedness because we will not have people with technical and trade experience in our midst.
I hope that this might in some way be an encouragement for employment and also for those young people in the community who are, I am led to understand, the majority of the unemployed at the moment so that we can give them job opportunities. Mr Acting Speaker -
-The honourable member should address himself to Mr Deputy Speaker.
– He was when I started. I support this Bill. I have commented with regard to the proposed amendment to section 36a and I hope that this trading stock legislation is the first step towards legislation which will give in due time the full credit that is due to business and accounting principles so that they may be promoted side by side.
– I think that I should continue my sermon of yesterday and say that any person sitting in this chair other than the Speaker occupies the position of Deputy Speaker. The position of Acting Speaker occurs only when the Speaker is overseas. In that case a member of this House is nominated by the Clerk, after consideration by the House, to act in that position. Any person occupying this position is referred to as ‘Mr Deputy Speaker’, with the exception of the Speaker himself.
-Thank you, Mr Deputy Speaker, for the credit due to me. It helps my ego a great deal as no doubt it helps yours as well. In addressing myself to this piece of legislation I think the important thing to remember, with regard to the implementation of the Mathews Committee recommendations, is that the proposals contained in the legislation favour a very small section of the community.
– Such as?
– Such as those who are not normal taxpayers. The taxpayer will pay for these measures. The average guy in the street will pay the $360m involved in this legislation.
– Not at all. It will be paid for through increased productivity.
– Perhaps the honourable member for Dawson does not know that sales in one of the biggest retail complexes in Sydney have dropped since the beginning of this year by 20 per cent.
– Which one was that?
– The West Point shopping centre in Blacktown, an area where people earn their living; where they work for their living, unlike some of the people represented by the honourable member for Swan (Mr Martyr), unlike some of the people from the Democratic Labour Party. The honourable member for Swan used to be the State Secretary of the DLP in Western Australia. Furthermore, this is the Party that received its funds from Caltex. It was paid by the Central Intelligence Agency through Caltex to the DLP. That is what is happening in Australia today. The only difference is that the DLP does not get it. Today the Liberal Party gets the money. Furthermore, the National Country Party receives funds from Utah. It is paid also by the CIA through Utah to the National Country Party.
-Order! The honourable member for Chifley will resume his seat. This debate is not concerned with the CIA, the DLP or the sources of party funds. I ask the honourable gentleman to return to the discussion of the clauses of the Bill, for the edification of all honourable members.
- Mr Deputy Speaker, I assure you that I am only too pleased to do so but these people will be so provocative. Do you blame me for answering a question like that? When a question like that is posed, surely out of honesty and for the integrity of this Parliament I should answer it. So I answered it accordinglyUtah for the National Country Party, Caltex for the Liberal Party, all money originally coming from the CIA.
– I rise on a point of order. Mr Deputy Speaker, you drew attention to the fact that the honourable member for Chifley had wandered away from the Bill. He immediately went back to what he was saying. I believe it is time that he was made to stick to the Bill. I hope that you, Sir, will follow up the ruling you gave earlier and see that he stays on the Bill being considered.
-The normal procedure of the House is that an honourable member may make passing reference, particularly early in his speech, to points made by another speaker. I ask the honourable member to remember this and return to the Bill shortly.
– I fully agree. I feel the same as you, Mr Deputy Speaker. As I was saying, this Bill favours the selected few, and the selected few are those who have a quick turnover. This legislation provides that stock shall be valued at the beginning of a financial year and the figures shall be subject to a reduction based on 50 per cent of the increase in the consumer price index.
– Are you sure of that?
– I am quite sure, my friend. We had Treasury officials over to advise us in precise terms the other day.
– It does not sound as though you know.
– Really, the DLP member should not get so excited. Those companies which have a fast turnover will have an advantage. This legislation covers not only limited companies, companies registered with the stock exchange which are proprietary companies, but also companies which are not proprietary companies and sole traders as well.
-Like the CIA.
- Mr Deputy Speaker, honourable members opposite keep referring to the CIA.
– Well I did not.
– Do you expect me to be provoked into referring to this matter again? After all, the honourable member who has kept referring to it and has provoked me used to be the West Australian secretary of the DLP a matter of only a little over 3 years ago. That Party is well known as an organisation in this country financed by the CIA. The money is channelled from Caltex oil company into the DLP.
-Order! I think 2 problems are involved. Perhaps the honourable member for Swan is being needlessly provocative. On the other hand, the honourable member for Chifley will address his remarks through the Chair and return to the Bill.
– Thank you, Mr Deputy Speaker. I sincerely hope that you will see that this provocation about the CIA and those sorts of things do not occur in the future. As I was saying, the Bill covers limited companies, proprietary companies, individual companies, sole traders and so on.
– As the honourable member for Banks mentioned, it covers partnerships as well. It means that those companies which have a quick turnover and which are able to dispose of their stock quickly, will receive a far greater benefit than those companies which cannot dispose of their stocks quickly. For example, a steel fabricating company has to retain its stock for a long period. Because of the nature of the manufacturing business a considerable time elapses between the manufacture of the material and the disposal of the material. That company will receive little benefit as compared- I make that point- with a company which deals with primary produce. Such a company would do its stocktaking at the end of the financial year. It would immediately value the stock. It would receive the same benefit; that is a valuation of stock less 50 per cent of the CPI increase for the year. Accordingly that company can then keep on turning over that stock as the year rolls by. I realise of course that the National Country Party would have had a great influence on this decision. I realise that it is of great advantage to primary producers. The influences in the Liberal Party would not receive quite the same advantage. Nevertheless, overall on the average this provision means that there will be a reduction of 5Vi per cent in company tax. In other words company tax will be reduced by this legislation from 42 i4 per cent to 37 per cent- an appreciable decrease in company tax.
– That is a fair bit of incentive.
– Oh, yes. The Government has given every possible incentive but so far there have been no results. It has increased the number of unemployed. It has not managed to control inflation. The increase in inflation in my electorate alone has been almost 30 per cent since the date of the last election- all caused by the policies of this Government. There have been the tariff policies of this Government and the maintenance of the increased interest rates when they are no longer applicable, because this is a time of recession and not the other extreme. The facts are that altogether this Government will have given to the business community well over $1,000m-reaching on to $l,300m-by the end of this financial year. This will mean of course -
- Mr Deputy Speaker, I fail to see that it is within the Standing Orders for you to tolerate this continuing and distracting stream of interjections to which the honourable member for Chifley is subjected. If he replies you rebuke him. This is a technical subject and I believe that the honourable member is entitled to a fair go.
– I partially uphold the point of order of the honourable member for Hughes. It is a bit difficult when there are so few honourable members in the House. If the chamber were full of course interjections would not be so noticeable. Perhaps the honourable members on my right might give the honourable member for Chifley a little more of a free go. He seems to be tempted to come in anyway.
-I am beginning to think, Mr Deputy Speaker, that you understand my personality.
-And perhaps your difficulty.
-I make the point that this concession to industry- to limited companies, proprietary companies, sole traders and individual traders- will cost in all $360m. The total concessions to the business community given by this Government are in excess of1,000mreaching up to $ 1,300m. It is the ordinary taxpayer who will pay for this.
– How do you explain that?
– If my friend cannot add two and two and get four and not five that is his problem. Alternatively the Government could increase the deficit instead of making the ordinary taxpayer pay; one or the other.
– Did you not do that?
– We agree that at this point in time there should be a small increase in the deficit to bring about the introduction of an unemployment relief scheme.
– What about interest rates?
– Hold on my friend; I shall come to interest rates in a moment. The conditions exist today for you to decrease interest rates and you will not do so.
-Order! The honourable member for Chifley will address his remarks through the Chair.
-Do you have to blame me, Mr Deputy Speaker? For heavens sake, the provocation is coming from the other side of the House.
-Order! If the honourable gentleman were to address his remarks through the Chair and perhaps ignore some interjections he might improve his debating technique.
– But Mr Deputy Speaker, you should keep your side of the House under control.
– I have just done so. I think the honourable member should ignore the interjections.
– As I was saying, in this case the estimated cost to revenue will be $360m; but total concessions to the business community will exceed $ 1,000m and may reach $ 1,300m, which will increase the deficit. If these funds could be saved and an unemployment relief scheme introduced instead, unemployment relief could be made available in areas of high unemployment, such as my own area out in the western suburbs of Sydney. In that area a large number of people are unemployed, particularly the youth under the age of 18 years who comprise nearly 50 per cent of the people throughout that area. If an unemployment relief scheme were to be implemented in that area these young people and the older people could be given employment which would be of lasting benefit to the community. The Government should institute such a scheme instead of sending down the drain each year something like $300m in unemployment benefits. It could give man the dignity to work for his living and enable him to provide something useful to the community rather than merely paying him the unemployment benefit. The Government will not use that extra little bit of finance, which would cost between about $100m and $200m, to provide an unemployment relief scheme. It prefers at this point to give away the money to industry. The sole trader in particular will benefit because he will have a quick turnover of stock. If the Government were to provide finance of $ 100m to $200m, thereby providing employment for those masses of people who are losing all the dignity of life- the ability to work and the right to work which are fundamental human principles in this country- instead of allowing industry to benefit to the extent of $360m, it would be doing something for the community at large. Instead, the Government keeps on giving out special concessions to the business community. It gave them an investment allowance amounting to about $500m in one financial year. It gave the business community a reduction in company tax in the last Budget.
– To create employment.
– For God ‘s sake, Mr Deputy Speaker, first of all get rid of the Democratic Labor Party out of your own Party. The DLP has caused trouble in lots of other organisations in the past and now it is hanging on to your Party. We got rid of the DLP and thank God we did.
– He is a oncer.
– The honourable member for Swan is a oncer. He will not be a twicer. He may be a twicer by nature but he will not be a twicer as far as electoral history is concerned. I was making the point that there had been a decrease in company tax in the last Budget, that special benefits were given to the mining industry and then there was the investment allowance which has already been approved and which is giving great benefit to one section of industry. The Government is introducing new techniques in benefits but also is increasing unemployment, particularly in the mining industry which employs very few people. Yet the Government continues with this particular proposal to lose a further $360m in revenue, which amounts to a 5lA per cent reduction in company tax. In other words, the Government has given away between $ 1 ,000m and $ 1 ,300m at the expense of the ordinary wage and salary earner who has to meet that taxation burden. That being the case, I believe it is time that we stopped giving these handouts, which obviously, as a matter of truth, have not been successful. They have not decreased unemployment and have had no effect upon inflation itself; in other words, they have not enabled the Government to succeed in implementing the policies with regard to 2 major promises which it made at the last general election. The first was to decrease unemployment and the second was to decrease inflation. The Government is not making an impact on those 2 factors by allocating up to $ 1,300m in concessions. Surely $100m to $200m would be far better spent on implementing an unemployment relief scheme which would give dignity to all unemployed.
-Order! The honourable member’s time has expired.
– I thank honourable gentlemen who have participated in this debate. This is a matter of some technical complexity as well as of considerable significance for the business community in Australia, particularly those businesses which are anxious to invest out of real profits and to see that paper profits upon which they are taxed do not take away from them capital reserves and thereby diminish their capacity to invest. The point has been well made on this side of the House that the profits of today are the investments of tomorrow. Those investments will lead to permanent employment which above all else is what is needed in Australia.
Let me answer briefly some particular points made by speakers so as to clarify aspects of this legislation and remove any doubt about it. The honourable member for Adelaide (Mr Hurford), leading for the Opposition, asked me a number of questions. I shall seek to clarify them now. He referred to the fact that there had been representations in respect of those companies which have substituted accounting periods. It is thought that they may be in some difficulty where the legislation provides for the indexing to be on a June to June basis, which may not always correspond with the accounting period of some companies. It may generally be observed that it is necessary to have a common measure of indexation for all companies, so the matter of judgment becomes whether one should vary the index period to accommodate the different accounting periods or whether there should be a common index period for all companies to which they must accommodate themselves, irrespective of their own accounting periods. As the House knows, the Government has decided that there should be a standard index period applying to all companies. Of course company tax rates are not known before the Budget of each year is brought down. In saying that it should not be thought that I am in any way anticipating what might happen in this year’s Budget. On the grounds of equity and for the sake of simplicity it is the Government’s view that the same index should be applied to the stocks held by all firms at the beginning of their accounting period.
Another point that the honourable gentleman made was with respect to the goods component of the consumer price index, which is to be the index that is to be applied for stock valuation adjustment. It was suggested that that component might not be the correct index to use. The Government was concerned to use an index that was generally accepted as an indicator of inflation. The CPI is used for personal tax indexation and is generally seen as a proper index for measuring inflation. Of course, there are even arguments against the appropriateness of all the elements of the consumer price index for that purpose. But as the stock valuation adjustment deduction is restricted to goods, it follows that the goods component of the CPI is more appropriate to use than the full CPI itself. It is accepted that the use of this one index will not meet the particular circumstances of different industries. However, in the interests of simplicity and equity, which must be a guiding light in tax matters, the one general index was adopted.
The honourable member for Adelaide queried the inclusion of livestock within the scheme, particularly as Professor Mathews had recommended their exclusion. The Mathews recommendation was based largely on the fact that natural increase livestock are favoured with a concessional valuation for tax purposes. Let me make 2 points with regard to that. Firstly, not all the livestock of a primary producer are the result of natural increase. Some livestock are purchased at market prices. The other point I would make is that, to the extent that natural increase is brought to account for tax purposes at a low notional cost, the trading stock valuation adjustment deduction will be based on that low value. Therefore the Government considers that livestock in the hands of primary producers should be brought into the trading stock valuation adjustment scheme.
The honourable gentleman also referred to a situation in which there are fluctuating commodity prices and suggested that falling prices for some commodities can give a windfall gain that is not taken into account in calculating the stock adjustment, which is based on opening stock values for the year. It is recognised that the prices of some goods and commodities can fluctuate. Obviously they will fluctuate either upwards or downwards. Where the price falls during a year it will result in lower closing stock values, which will in turn determine the opening value of stock for the succeeding year. That will be reflected in the deduction available for the next year being reduced. Where prices rise during a year the reverse will apply. Thus over the longer term these swings in prices will be taken into account in the trading stock valuation adjustment scheme. More sophisticated adjustments could have been devised but only at the expense of a far more complex piece of legislation. I am sure that the honourable gentleman would not suggest that we should embark upon that course.
I turn to the contribution to the debate by the honourable member for Berowra (Dr Edwards). I thought it was most valuable in pointing out to the House the necessity in today’s economic environment of increasing the profit share of business of the gross domestic product. Only if that share is increased can we get investment back into the economy and, through investment, greater economic activity, which in turn will lead in due course to a higher level of employment and a lowering of the present unemployment levels. The honourable member pointed out forcibly what had happened under the previous Labor Administration whereby the profit share was diminished. It is a clear policy objective of this Government to increase the profit share so as to lead to greater investment.
The honourable member for Macarthur (Mr Baume) raised a matter concerning the tax liability of the defence forces retirement benefit and defence forces retirement and death benefit pensions. The amendment that has been introduced is designed again to render taxable these types of pensions, which had been taxable from 1945 until a recent High Court decision. In again rendering these pensions taxable we have very deliberately removed any element of retrospectivity. The point that the honourable member for Macarthur has raised goes not so much to the fact that these pensions, which were previously liable to tax, are again to be taxable as to the fact that there are other aspects of the position of exservicemen receiving Service invalidity pensions that deserve investigation by the Government. The honourable member for Macarthur pointed to the fact that the honourable member for Herbert (Mr Bonnett) is conducting an inquiry into Service pensions generally. Amongst other things, he will be looking at the matters that have been raised by the honourable member for Macarthur. I can assure the honourable member for Macarthur that the government will give serious consideration to the report by the honourable member for Herbert when it is forthcoming. Of course, I cannot make any commitment one way or the other with regard to the particular matter raised concerning Lieutenant Commander Goodfellow who has been successful in the High Court pursuant to an objection against an assessment of a tax return that he lodged. His case was upheld. But as I have pointed out, consistent with the way in which these pensions have been taxed since 1945, the Government considers that they should be liable to tax and does not wish to create the anomalies that would otherwise occur if they were allowed to remain non-taxable.
The honourable member for Banks (Mr Martin) suggested that the amendment to the averaging provisions concerning primary producers does not go far enough. He was good enough to point out that that might sound strange, coming from a member of the Australian Labor Party. He mentioned that the Industries Assistance Commission had recommended the removal of the $16,000 limit. He failed to mention that the IAC also recommended in the same report the introduction of income equalisation deposits and, of course, he failed to mention that the Government has introduced an income equalisation deposits scheme. The introduction of that scheme was foreshadowed in the last Budget and, as I have indicated, legislation providing for its introduction has since been brought into this Parliament. The scheme has taken a lot of pressure from the $ 16,000 limit because a primary producer can, in effect, average out his own income by investing in income equalisation deposits in good years, receive a deduction for the investment and so reduce his taxable income. The question of the removal of the $16,000 limit is, of course, a matter that is properly considered in a budgetary context.
I mention briefly the contribution to the debate by the honourable member for Dawson (Mr Braithwaite). The particular point that he made was that tax measures need to comprehend the fact that they should provide incentives rather than disincentives for people whilst at the same time they raise for the Government the revenue that is needed to finance its expenditures. I thank honourable members for their contributions to this debate. As foreshadowed, I will be introducing amendments to clauses 5 and 6 of the Bill at the Committee stage to remove any elements of retrospectivity with regard to the safeguard provisions.
Question resolved in the affirmative.
Bill read a second time.
Clauses 1 to 4-by leave- taken together, and agreed to.
After section 3 IB of the Principal Act the following section is inserted: ‘31c.(1)Where-
– I move:
In proposed section 3 lc. ( 1 ) (a) omit ‘whether before or after the commencement of this section’, substitute ‘on or after21 April 1977’.
There are two further amendments which I shall formally move later. Since the amendments are interrelated I propose, with the concurrence of the Committee, to speak to them together at this time.
– Is that the wish of the Committee? There being no objection, I shall allow that course to be followed.
-The provisions of the Bill proposed to be amended are concerned with the time from which two special measures associated with the trading stock valuation adjustment scheme are to have effect. The first measure, contained in clause 5, is designed to counter avoidance of tax under arrangements between parties not acting at arm ‘s length from each other for the purchase of trading stock at inflated prices. The second measure, contained in clause 6, qualifies the circumstances in which trading stock may be transferred at cost price instead of market price where there is a partial change in the ownership of stock brought about by the formation, dissolution or variation of a partnership. It applies to cases in which stock that has declined significantly in value is transferred at its original cost.
As the Bill stands both of these measures would have operated in relation to transactions taking place after the commencement of the 1976-77 income year. In that respect it has been put to the Government from a number of sources that this course would involve an unfairly retrospective change in the law which would interfere with arrangements entered into before the Bill was introduced in reliance on a view of the then State of the law. The Government has decided that in order to remove any element of retrospectivity the 2 measures I have referred to should apply only to arrangements entered into on or after 21 April 1977, the date on which the Treasurer (Mr Lynch) introduced the Bill in the House. I would stress, however, that this decision will in no way inhibit the Commissioner of Taxation from contesting before the courts the validity under existing law of tax avoidance schemes entered into prior to 21 April. I would further stress that the amendment proposed by clause 6 will not affect the ordinary situation affecting primary producers for which section 36a (2) was introduced to cover, that is where market value at date of change of ownership of stock is greater than the cost of that stock which the vendors would have returned for tax purposes. I commend the amendments to the Committee.
-The Labor Opposition is not opposing the amendments at this stage. I have to put emphasis on the words ‘at this stage’ because, as the Minister Assisting the Treasurer (Mr Viner) knows, the Opposition received notice of the amendments only this afternoon- in fact, since I made my speech at the second reading stage- and we have not had time to confer on the subject. We are given time by the fact that the amendments will of course be discussed in the Senate and there will be an occassion then to give a more considered opinion. But let me state as spokesman for the Opposition that I share the views of my colleagues that we do not like retrospective legislation normally, but in this case there is evidence that much of the retrospectivity would have mainly affected those who are professional tax avoiders, or quasi tax evaders, as those of us who have had some experience in the business of taxation consultancy would term them.
It is true that the situation is changed from 2 1 April, the day on which this legislation was introduced to the House- changed by an amendment introduced 2 weeks after that date. We know that a lot of avoidance schemes, or quasi evasion schemes, as I shall call them, can themselves be retrospective. Those who have been involved in this part of tax consultancy will know that a lot of the partnership agreements that are drawn up in order to take advantage of the old section 36A are often signed well after the event. They can be predated. Despite all the wonderful talk about trying to prove that they are made at the proper date, the bona fide date, say prior to 2 1 April, by an exchange of cheques, it is enormously difficult to do that proving and to ensure that those who are in the professional business of avoiding taxation which one of my colleagues has pointed out already this evening is to the cost of the rest of the community, are brought within the legislation. They will still find ways around the legislation and predate their agreements to sometime before 2 1 April. An enormous loss will accrue to revenue.
There was a lot of merit in the legislation as the Government brought it before the House prior to this amendment. I do not ask the Committee to take my word for it. I draw attention to the speech of the honourable member for Banks (Mr Martin). He drew attention to an article in the business section of tonight’s Melbourne Herald by the finance editor. He is not somebody who writes normally for the average man in the street but, frankly, for a lot of the people who are taking advantage of the type of loophole to which I refer. The article is headed ‘Government will close tax loopholes’. The leading paragraph of the article states:
The Federal Government has moved to close loopholes in the Income Tax Act which were being exploited by highincome earners aiming to pay virtually no tax.
Of course I do not have time to read the whole of the article to the Committee. It is an excellent article and I commend the finance editor for having written it. I wish to quote a couple of other pertinent paragraphs. The article goes on:
One tax expert said today the schemes had been under some pressure in N.S.W. where there has been a recent court case involving the schemes. He said it should have been obvious to anyone in the field that the loopholes were receiving serious scrutiny by the Taxation Commissioner. ‘In my view, it was an artificial situation. And it was a tax rip-off,’ he said. Some reports say turnover in the schemes in N.S.W.-
This is New South Wales alone- has reached about $40m worth.
Where money like that is flowing through a loophole it means that governments have that much less to spend on worthwhile social security programs or other worthwhile government expenditure programs or it means that other taxpayers are obliged to pay that much more. If that is the figure for New South Wales alone heaven knows what the figure is for the whole of Australia. But having said that, one recognises that even after this amendment at least some attempt is being made from now onwards to close this loophole from 2 1 April. I only ask the Taxation Office and the Government generally to pursue vigorously those other sections of the tax legislation, even if it is only the all-embracing section 260, to catch up with those charlatans who have taken advantage of section 36A. I am glad of the following sentence in the speech by the Minister Assisting the Treasurer on this amendment.
I would stress, however, that this decision will in no way inhibit the Commissioner of Taxation from contesting before the courts the validity under existing law of tax avoidance schemes entered into prior to 2 1 April.
Having said that, I want to say also that a lot of genuine people were quite properly taking advantage of section 36a. Section 36a was put into the Act because of hardships caused by such a provision not being in the Act, and that applied particularly to the dissolution of partnerships on death. Unfortunately, even after these amendments are passed those people will not be able to take advantage of the old section 36a. I know the Taxation office feels that even after the changes there will be some few cases where, if I have it right, the market value would be less than the cost value. Of course, it is mainly where market value is greater than the cost value of stock that advantage could be taken by elections under 36a. Nevertheless, there are some cases of which one knows where the opposite applied, and indeed situations have arisen where market value has been less than cost value. If one then has to take the lower market value and losses are made: one cannot take advantage of the rebates in the individual tax returns of the partners in the partnership. Tax advantages, genuine tax benefits, are thus lost to taxpayers, and that is a pity.
In speaking to these amendments on behalf of the Opposition, we believe that the law should be drawn in terms whereby genuine people are still allowed to take advantage of the old section 36a while the charlatans are stopped from doing so. The Opposition has not had time to pursue this to see whether clauses could be written into the Bill in substitute for the ones which the Minister has brought to the Chamber tonight in order to achieve just that advantage. It is an equivocal answer that I give on behalf of the Opposition because we have not had time to study the matter in depth, but I hope that in what I have said I have at least given an attitude. I suggest that there is still time to explore further the possibility of moving amendments in the Senate and then in this Chamber which would give the advantages of the old section 36a to genuine people but at the same time not allow the terrible loopholes which have existed and of which advantage has been taken by the charlatans in the community.
– I listened very carefully to the remarks of the honourable member for Adelaide (Mr Hurford) and I can understand his difficulty. It was a difficulty that concerned very much our party meetings and the Treasury committee of our Party. What the honourable member for Adelaide seems not to comprehend is that once the spirit of retrospectivity is started in all legislation one can undo all sorts of perfectly legal and in many cases perfectly proper arrangements which have been made. I congratulate the Minister Assisting the Treasurer (Mr Viner) for the part he took -
– A good Minister.
– A very understanding Minister in this regard. At least he realised the problem that if one were to leave the legislation open ended until the end of the financial year massive malpractices of the type described succinctly by the honourable member for Adelaide could occur. On the other hand, if this Government were to accept the principle that an Act of today could apply back 5 years for some particular purpose, it could net all sorts of people quite honestly taking action within the community according to law. I think that the principle we have adopted tonight is very important, and I hope that in years to come the honourable member for Adelaide will remember this historic occasion and make quite certain that he uses his influence within his Party to make sure that this dreadful matter of retrospective legislation and its application is never allowed to raise its head within this place to the disadvantage of ordinary members of the community who make perfectly rational decisions according to the law of the time.
I can understand the difficulty of the honourable member for Adelaide. On the other hand, I hope he will forgive me for pointing out that I congratulate the Government for adopting 21 April as the date of application of this legislation. That was the date on which the Government made public the fact that it was going to close this loophole. If the speech of the honourable member for Adelaide has merit, it must be in his comments in regard to the back-dating of arrangements, and I hope that both the Treasury officials here tonight and, more importantly, the Minister will remember that point. I for one do not wish to be part of any action which will enable malpractice to occur to the disadvantage of other taxpayers. It may well be that the date of lodgment of such agreements should be tightened up considerably, and I ask the Minister to have a look at that in order to overcome the situation covered by what I regard as the pretty valid point made by the honourable member for Adelaide.
The other thing I wish to say is that the honourable member for Chifley (Mr Armitage) just made an incredible speech.
– He is not here now.
– He had a certain amount of help in that from the honourable member for Swan (Mr Martyr), but I shall leave that aside. The main thrust of his speech, and I refer primarily to clauses 5 and 6, on which I have just congratulated the Minister, was to point out that firms with a quick turnover get maximum benefit from the stock adjustment scheme. As happens so often in this place, the honourable member was unutterably and completely wrong. I do not think that I can remember a speech made by any honourable member which was more theatrical, and I had a vantage point, and the thrust of which was so totally wrong. To explain my point, might I quote from the evidence given by Mr Brigden, who is a prominent and respected officer of the Treasury, to the Senate Standing Committee on Trade and Commerce during its inquiry into wine making. Amongst other things, Mr Brigden said:
Although there is no set pattern, it is not uncommon to find that the cost value of stocks on hand at any one time is about 3 times the profit for the year.
He was talking about wineries with big stock holding capacity in terms of turnover or of profit. He continued:
If you assume that the valuation proposal announced in the Treasurer’s Budget Speech operates on a 10 per cent index, that means that 10 per cent of the value of stocks will be allowed as a deduction. So if your stocks are S rimes your net profit you effectively cut your net profit in half because you take one-tenth of the stock valuation equivalent or O.S of the profit. Another way of looking at it is that instead of paying tax at 42 per cent, winemakers in general can expect to pay tax at something in the order of 2 1 ‘A per cent.
That is a complete refutation of the thrust of the speech made by the honourable member for Chifley. Those firms with big stock holdings compared with profits, or quick turnovers in effect, are the major beneficiaries. If I might make a point before I am noticed by the Chairman for moving away from the clause, that is particularly applicable to the wine industry. Due to the withdrawal of section 3 lA by the Whitlam Government, the industry is now in the process of paying back $22m. The only value that those in the industry are allowed on stock, and so they are disadvantaged peculiarly under this legislation, is a valuation up to the proportion of the amount they have paid back of $22m. In a way that magnifies the error made by the honourable member for Chifley, and I would not be just to the industry if I did not point out that that is the case in this instance.
Returning specifically to clauses 5 and 6 of the Bill, we on this side of the chamber will not have a bar of deliberate manipulation of the law to the disadvantage of other taxpayers or, put in another sense, to the disadvantage of the community in general. We regard it as a principle which should be accepted by this chamber and by all people in the nation that, unless there is a reason which I cannot imagine at this stage, legislation is not made retrospective for 5 years, 10 years or 15 years. If that is done, members of the community who took proper action according to the law will be disadvantaged. I finish my few remarks in the Committee stage by once again congratulating the Minister assisting the Treasurer for the amount of time he has given our Party in consideration of this problem and for his reasonable attitude to it. I believe that I have the support of many honourable members on this side of the chamber, if not on the other side of the chamber, in saying that we have arrived at a compromise solution that is fair to everybody.
-I am afraid I do not share the lofty ideals, if I can call them that, of the honourable member for Angas (Mr Giles). I treat tax avoiders and tax evaders as thieves. I can use no word other than that word because they are thieving from the community. They are thieving from the community and forcing someone else, who is less able to pay his share of tax than they are, to pay that tax. I have no sympathy for the tax avoider or the tax evader.
– What is an avoider?
– A tax avoider is a person who seeks to use the law to his own advantage.
– Within the law?
– ‘Within the law’ is a nice common saying. What does it actually mean? Criminals seek to operate within the law. They employ mouth pieces. They get the best of lawyers. They get off with murder. They get off after committing rape and they get off after bashing. But they are operating within the law. I put the tax avoiders and evaders into the same category as these people. They are thieving from their fellow men. I have no sympathy for them, nor does the Australian Labor Party.
This action has been taken by the Government to water down- there is no other word for itwhat was a good provision in the original Act merely because of the complaints of a few people or a few tax avoiders. There were possibly more than a few in the accepted sense. But there was a lot of tax avoidance going on and the Taxation Office in its wisdom put forward a proposition to the Government, which was approved by the Government, to close off tax loopholes. A little pressure was applied. As I mentioned in my second reading speech, blackmail was applied. I use that word ‘blackmail’ advisedly. Blackmail was applied by the Taxpayers Association of Victoria under the signature of one Eric Risstrom who wrote to every member of Parliament and threatened that he would be named publicly and castigated if he supported this legislation. It was blackmail in its worst form. To its discredit, the Government has succumbed to the blackmail by putting forward this amendment which is now being made to the legislation. In other words, we are debating an amendment to restrict the operations of the provisions of the amendments to section 36a to 21 May 1977. What do we want the Taxation Office to do? What do we want our revenue collectors to do? Do we want them to fight these skilful tax avoiders with one hand tied behind their back.
A lot of nonsense has been talked in this place about these people who made their decision in accordance with the law as it then existed. We are told that we cannot alter the law to undo what they have done. I do not agree with this. I do not agree that there is any need to protect tax avoiders and tax evaders any more than there is now. We hear a lot of talk in the Parliament in regard to the provisions of section 260 of the Income Tax Assessment Act. That section was originally placed in the legislation to stop these schemes of avoidance. But the skilful lawyers and the skilful tax advisers to these people almost completely negatived the provisions of section 260. Recent cases such as the Slutzkin case and the Patrick Corporation case showed pretty well that section 260 of the Income Tax Assessment Act has no force. What was thought to be a good section in the Act a few years ago is now almost without force. These rorts, ramps and tax avoidance schemes are still going on. I think it is worthy of note that, to my knowledge, this is the first time since this Government has been in power-it has been in power for 18 months now- that it has allowed the Taxation Office to introduce legislation for its consideration to close off another tax loophole.
I had some 34 years service in the Taxation Office before coming into the Parliament. I can remember speaking consistently in the House between 1969 and 1972 to try to get the then governments- that was the Gorton Government and the McMahon Government- to introduce legislation to close off tax loopholes and tax avoidance schemes which are mainly for the benefit of the wealthy friends of honourable members opposite. Not a word was heard from the then governments of the day and no action was taken by them to close off those tax avoidance loopholes. It was under the Government which I was proud to support form 1972 to 1975 that we allowed the Income Tax Assessment Act to be amended to close off these tax avoidance schemes and these loopholes brought about by these mavericks who are roaming around the country thinking up ways and means of exploiting and profiteering at the expense of their fellowmen. That is all they are. They are a bunch of mavericks.
– You have lived off them.
-There are many skilled people in this place who have lived off the mavericks in the community. I refer to the legal advisers to the tax avoiders, the accountants and the tax avoidance scheme advisers to these mavericks and tax avoiders. They have lived off them the same as a solicitor or a criminal lawyer lives off the illgotten gains of somebody he defends for a murder. I put such people in the same category.
There are still tax avoidance schemes which need to be closed off. This amendment we are debating tonight unfortunately will be negatived to a large degree. Members of the ALP thought when we were in government that we had effectively closed off dividend stripping schemes. I am afraid this has not been the case because skilful tax advisers to these tax avoiders have whipped up further schemes. Unfortunately this Government will not accept the advice of its advisers and bring in changes to the legislation to chop out these schemes. I refer not only to dividend stripping schemes but also to schemes such as the acquisition of company structures which are then exploited. I say this to the Government quite seriously: Have a little less sympathy for the tax avoiders and the tax evaders and a little more sympathy for the average person in the community who pays his fair share of tax.
– He does not.
– Such people do pay their fair share of tax. The average wage earner cannot get out of paying it. He is forced to do so. But this is not the case in business. I do not put all people in business in this category. But the wage earner cannot get out of paying tax. The tax is taken out of his wage before he receives it. That applies to members of Parliament as well. The man in business, particularly those without a great deal of ethics or with very little ethics- that is the correct word to use -
– Oh, come on.
– The honourable member who interjects knows what I am saying is quite true. There are very few ethics where tax avoidance is concerned. It is a case of chiselling and cheating or whatever honourable members like to call it. There is no other name for it. Frankly, I believe that the members of that section of the community who are prepared to bludge- that is another word I do not normally use- on their fellow taxpayers are worthy of no consideration. I say to the Government, to the Treasurer (Mr Lynch) and to the skilled officers of the Taxation Office who are present: Keep putting up these schemes to the Government to wipe out all tax avoidance schemes. When that happens, everyone will pay his fair share of tax. That includes the ordinary person in the community. That will force these mavericks in the community, who are trying to get out of paying any tax if it is possible, to pay their fair share of tax.
Amendment agreed to.
Clause, as amended, agreed to.
Remainder of Bill-by leave-taken as a whole.
– I have 2 amendments which refer to clause 1 8, which reads in part:
In sub-clause ( 1 ), omit ‘6,’.
Omit sub-clause (4), substitute the following sub-clause: ‘(4) The amendment made by section 6 does not apply in relation to a change in ownership or interests that occurred’ before 2 1 April 1977.’.
Amendments agreed to.
Remainder of Bill, as amended, agreed to.
Bill reported with amendments; report- by leave-adopted.
Bill (on motion by Mr Viner)- by leave- read a third time.
Consideration resumed from 21 April, on motion by Mr Lynch:
That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr Viner) read a third time.
-I present the twelfth report from the Publications Committee, sitting in conference with the Publications Committee of the Senate.
Report- by leave- adopted.
Debate resumed from 28 April, on motion by Mr Nixon:
That the Bill be now read a second time.
-The purpose of the Australian National Railways Amendment Bill 1977 is to amend the Australian National Railways Act 1917 following the transfer of the South Australian non-metropolitan railways and the Tasmanian railway system to the Commonwealth. Honourable members will recall that the transfer was commenced by the Australian Labor Government. Complementary legislation has been enacted in the South Australian Parliament, and I understand that the Tasmanian Government will introduce its complementary legislation early in the Budget session of the Tasmanian Parliament.
The Opposition does not oppose the Bill. However, there are a number of points on which we will be seeking some clarification during the Committee stage at which time I understand that the Minister for Transport (Mr Nixon) will be moving an amendment relating to the disallowance of the by-laws. In the second paragraph of his second reading speech the Minister gave the impression that this Bill is the finalisation of the transfer arrangements of the State railway systems. That is not so, as there are several issues yet to be resolved, particularly with the South Australian Government. I emphasise that this Bill then is another stage in the transfer arrangements and that all issues in abeyance will have to be resolved before a declaration date can be set.
The Opposition recognises the complexity of the task facing the Australian National Railways Commission, the South Australian Government and the Tasmanian Government in working up a formula that is acceptable to all parties and which at the same time makes provisions for the [>roper interests of all parties involved, particularly the employees of the 3 railway organisations concerned. The task is a formidable one, given that there are 24 unions and associations involved in discussions which cover 26 different awards and about 600 wage classifications. Clearly it is essential that goodwill and cooperation be shown by all concerned.
Having that in mind, there seems to be a contradiction between the Minister’s earnest request in his second reading speech for ‘those involved in the discussions to co-operate to the fullest extent to enable the remaining unresolved matters to be finalised’ and his statement in the explanatory memorandum on clause 1 1 of the Bill. In referring to clause 1 1 he states:
The clause has been based on the agreement reached with South Australia in anticipation that a similar agreement will be reached with Tasmania. The Tasmanian legislation will, however, have to be consistent with these provisions.
It seems that the Minister seeks co-operation on the one hand and, on the other hand, dictates to the Tasmanian Government what it must do.
The major thrust of the legislation encompasses the conditions and rights of employees of the State railway systems transferring to the Australian National Railways Commission. The replacement of the Public Service Arbitrator by the Conciliation and Arbitration Commission- a condition requested by the unions- is covered by clauses 10, 14 and 19. Superannuation rights and entitlements of transferring employees are set out in clause 12. It should be noted that on the declared date transferring employees will have a once only option to remain in their respective State schemes or to transfer to the Federal superannuation scheme. Provision is made in clause 12 for the establishment and operation of promotion appeals boards and a disciplinary appeals board. The provision of by-laws to govern those boards will be a matter further mentioned at the Committee stage. Likewise clause 13 which repeals section 46(2) of the principal Act which is related to the retirement age of employees, will be mentioned during the Committee stage.
The Government has taken the opportunity also in clause 5 of the Bill to amend section 23 of the principal Act by removing the necessity for ministerial approval of contracts in which the Australian National Railways Commission receives in excess of $100,000. That is a condition which seems to have been included inadvertently in a previous amendment to the principal Act. The Opposition has no objection to that clause, nor to clause 4 which removes the necessity for ministerial approval for leases of land in excess of 10 years by the Commission.
The provision of an adequate and efficient national railways system is vital to our economic performance and has always been a matter of high priority with the Australian Labor Party. While recognising that the present Government, when in opposition, did not oppose the enabling legislation of the then Labor Government which brought about the transfer of the nonmetropolitan South Australian railway system and the Tasmanian railway system to the Commission because the legislation flowed from agreements reached between the States concerned and the Australian Government, the Opposition deplores the attacks that have been made by government spokesmen on the transfer agreements. I am surprised that no honourable members from Tasmania have seen fit to criticise their own Government in that regard. Ours is a vast continent whose population is located mainly on the seaboard fringes. Hence it is imperative that we have a national railway system that can transport our products and population quickly, efficiently and as cheaply as possible. It is a condemnation of our political system that those conditions do not yet exist 77 years after Federation.
When the present Government came to office it sought first in a snide way to escape from its obligations under the rail transfer agreements by briefing Mr Aicken Q.C., now Mr Justice Aicken, to study the agreements in order to see whether an escape could be found. When that ploy failed the Minister then appointed Dr Joy to investigate the Tasmanian railway system and the AdelaideCrystal Brook standardisation project in an attempt to evade Commonwealth liability. The reports which resulted from those investigations are now available to the public.
I mention also that on 21 July 1976 the Treasurer (Mr Lynch) told the Department of Transport that the Prime Minister (Mr Malcolm Fraser) wanted to hand the railways back to the States. The Minister for Transport during a radio interview on 10 August 1976 said that he had wanted to get out of the railway transfer agreements but that it had been found that the agreements were valid. So now we have a government responsible for part of a national railways system which it would prefer to disband or from which it would prefer to escape liability. Despite all its election promises the Government has succeeded in doing the following: Firstly, closing down the North Australian Railway; secondly, setting a course to reduce substantially the operations of the Tasmanian railway system; thirdly, frozen construction of the Adelaide-Crystal Brook standardisation project; fourthly, slowed the rate of construction of the Tarcoola-Alice Springs rail link by reducing the funds sought by the Commission for construction this year; fifthly, cancelled the second rolling stock program of 800 wagons which would have given a much needed lift to rolling stock manufacturers and the heavy engineering industry as a whole as well as providing much needed rail wagons.
It is 1 1 months since the financial year 1975-76 ended and we have yet to see the annual report of the Australian National Railways Commission. The Minister stated in his second reading speech that the Tasmanian and South Australian regions of the Commission incurred a loss of about $45m. This comprised a loss of $14. 9m on Tasmanian operations and $30m on South Australian operations. I understand that the Commission in its other activities incurred a loss of $ 10.5m, in all a total loss of $55.4m. It is high time that the Commission’s report for 1975-76 was tabled in the Parliament so that its operations could be examined by all members of the Parliament, not just the Minister and his cronies.
I appreciate that accounting difficulties could delay the amalgamation of the 3 sets of accounts but 1 1 months in my view is ample time to overcome those difficulties. Much public criticism by opponents of and competitors with the railway system has been made of railway losses and for this reason alone the Commission’s accounts should be tabled as soon as possible. Much of the criticism is made, I suspect, tongue in cheek. I recall that Sir Peter Abeles used to complain bitterly that trans-Australian rail freight rates were undercutting his company’s shipping operations to Western Australia despite the fact that the rates charged returned a sizeable surplus to the Commission. When the Commission increased its trans-Australia rail freight rates by 7 per cent last year following the withdrawal of Sir Peter Abele’s shipping service to Western Australia Sir Peter then complained that the rail freight rates were too high, no doubt because his company Thomas Nationwide Transport Ltd wished to use those rail freight services. As I said, I suspect much of the criticism of the rail systems and their rates was made tongue in cheek by the competitors and users.
Although the number of passengers carried on railways has gradually decreased in recent years the railways have become increasingly important for freight. In 1963-64 Australian National Railways carried 338 414 passengers, 2.517 million tons of freight and earned $ 15.2m. Ten years later in 1973-74 it carried 253 962 passengers, 4.020 million tons of freight and earned $37.2m. In 1974-75- the last year for which figures are available- ANR carried 230 695 passengers, which is a substantial decline from the figure of 1963-64. It carried 3.857 million tons of freight and earned $4 1.4m.
To facilitate a rational public discussion of railway systems and the results of their operations it is essential that we have available sufficient and comparable information. For that reason I would like to compliment the Commission on the detail provided in the statistical information it prepares despite the fact that the latest publication covers 1974-75. Because of the political aspects of rail charges and services it seems that the various State government railways are able to prepare their railways accounts with particular political objectives in mind. I suspect also that first they determine the results they want to show and then they set about creating a means in their accounts of showing that result. I am told it is nigh impossible to ascertain from the State rail authorities the actual cost of transporting one tonne of goods from point A to point B because of the varying methods followed by the State rail systems in apportioning capital, maintenance and operating expenditure.
The subject becomes more complex when one attempts to differentiate between costs associated with passenger services as distinct from costs associated with freight services. Likewise, rail systems are called on by governments to provide concessional rates particularly in times of natural disasters, whether drought, cyclone or famine. Losses incurred in the provision of these and similar services, which are in effect social services, should be able to be accurately identified so that proper comparisons can be made then of the costs and efficiencies of rail services as compared with other modes of transport. I mentioned the detailed and useful information made available by the Commission. This shows that for the year ended 30 June 1974 operational expenditures and earnings were as follows: On the trans-Australia railway service, a surplus of $2.882m; on the central Australia railway service, a loss of $3.967m; on the north Australia railway service, a loss of $2.538m; and on the Australian Capital Territory railway service, a loss of $0.260m. Taking those losses, less the surplus shown on the trans-Australia service which in fact is overshadowed by the loss on passenger services, and adding to those figures other expenditure as distinct from operational expenditure of $ 10.597m, gives a total loss for the year ended June 1 974 of $ 14.48m.
Further examination of the heads of expenditure and earnings provided by the Commission enables at least some comparison to be made of the passenger and freight operations. The importance of accurate information on costs of the various transport modes to our manufacturing industry has been highlighted by the call from the Heavy Engineering Manufacturers Association for an Industries Assistance Commission inquiry into the transport industry and its impact on cost disabilities of Australian manufacturing industry. This has been reinforced in a recently reported statement in Perth by Mr McKinnon, the Chairman of the IAC. I quote from the Manufacturers Monthly of 15 April in which Mr McKinnon is reported as saying:
The true economics of the relative modes of transport are not easy to determine. But until this area is scrutinised fully to estimate the total costs, both private and public, of each mode, it is impossible to say whether or not the community’s interest might best be served by subsidising interstate shipping.
The relevance of shipping there is that often we hear that the loss of general cargo from coastal shipping has gone to rail. I think that it has since gone both to road and to rail transport. But again because of the importance of shipping and because we are an island continent it is important that we look at accurate information, that we make a proper comparison of the 3 different modes of transport to see what advantages can be derived from better co-ordination and from a better and more efficient use of the modes themselves.
According to the same article the request for the IAC inquiry is now with the Department of Transport for report. Perhaps the Minister for Transport could tell us at a later stage what progress has been made with that request. It is reported in the same article that the Department of Business and Consumer Affairs is opposed to the inquiry proceeding on the basis that union bashing by Government Ministers and supporters negates any advantages that such an inquiry might bring out into the open. I will refer to that a little later. Fortunately at last it seems that public attention is being directed to the importance to our economy and particularly to the manufacturing and export sections of transport costs. I hope that public interest will grow and that we will see increasing attention by governments- possibly in a joint approach- to the costs of the various modes of transport. Certainly the Australian Transport Advisory Council is supposed to discuss things like that. Looking at the history of ATAC and considering the speed with which it moves and with which decisions are made and the acrimony that presently exists at its meetings, I am quite satisfied there ought to be some sort of alternative method of going about such an inquiry and going about a co-ordination of the modes of transport.
I reiterate now what I have said on a number of previous occasions- that selective union bashing by Government ministers exacerbates the transport industrial situation rather than remedies it. I am satisfied that the Government has a vested political interest in creating industrial disputes in the transport scene so as to present the trade union movement as a scapegoat for its own incompetence and failures. The cost of this in terms of social and economic disruption is borne by all the community, not just the employees involved in strikes. The Government quite clearly is prepared to use the unions, and the transport unions in particular, to hold the rest of the nation to ransom for its own selfish political interests. The economic costs of that action have to be borne by the taxpayers, consumers and industry at large. I think the strongest evidence of that at the moment is the vigorous campaign that is being waged by the aviation industry unions against the Minister for Transport, who is at the table. It is creating a very unpleasant atmosphere in the aviation industry. It also bodes ill for the other transport unions in our nation. I hope that there can be some kind of resolution and conciliation. As I have said also on many occasions I see the role of the Minister for Transport and the Government as being that of conciliator, not of agitator.
I turn now to the other matter that is especially relevant to railways as well as to all other forms of transport. That matter is the need for energy conservation. There is ample evidence to show that rail transport and shipping are both far more efficient users of energy than other forms of transport, particularly in urban environments. The Government still is considering the recommendations of the Industries Assistance Commission on crude oil pricing. At no stage, however, has the Minister spoken out on the implications of those recommendations for the transport industries, from either the cost aspect or the energy consumption aspect. I have asked questions of the Minister on the implications of the IAC report but I have been unable to get a worthwhile response. I think it is important that the Minister should make some statement on that. Any future examination of the transport industries must take into account not only the costs and the efficiencies of the various modes of transport but also the energy consumption characteristics of the various modes of transport. It is a big task because of the constitutional problems involved, particularly where some of the transport services are operated by the States, but it is a task that must be tackled.
Alternative sources of energy for transport must be examined. For example, it seems that no consideration has been given by this Government or any of the other conservative governments that have been in office in this nation for 25 years of the past 28 years to the electrification of the mainline rail system. I think that also was made evident by the Minister’s answer to a question asked by the honourable member for Newcastle (Mr Charles Jones) in the chamber last Thursday. It is an issue which I cannot over emphasise. If the Government has not done something about it or if the report has been completed, again I hope that the Minister will bring forward that report as soon as it is completed for the benefit of the Australian community. We must concentrate on this issue much more than has been done in the past. The alternative, particularly the alternative of electrification of mainline rail systems, must be investigated and is an urgent matter.
I mentioned earlier the increasing public attention being given to rail systems. For decades until 1972 we witnessed a gradual diminution of Government priorities for expenditure on railway systems. I am not saying that is a fault of this Government but it is a fact of history. The results of declining priorities for expenditure on railway construction and maintenance have been sheeted home by the tragic Granville disaster. Out of the horror of that terrible accident some good may come in that governments, particularly Federal and State governments, and the community will upgrade their priorities for expenditure on railway maintenance. Railways throughout Australia represent a huge public investment and must be maintained in first class operating condition to protect rail passengers and to operate efficiently and economically as part of our national transport system. This Bill marks another stage in the development of the nationally operated railway service that the Australian Labor Party is committed to develop for the benefit of all Australians. The Opposition does not oppose the Bill.
-Before I call the honourable member for Braddon (Mr Groom) I point out to the House that the Chair, rightly or wrongly, takes the view that this debate is not concerned with energy programs for Australia. On the other hand, passing references certainly are allowable according to custom. This debate is dealing with the Australian National Railways Amendment Bill.
-Mr Deputy Speaker, with your permission I will deviate slightly from the subject in view of the fact that the honourable member for Shortland (Mr Morris) mentioned the air traffic controllers’ strike. I would like to make a point concerning that matter. The honourable member suggested that the Government should approach this type of strike in a conciliatory manner. I suggest to him that the Government must not only be seen to govern but also it must actually govern the country in the interests of the nation. When a handful of individuals -
- Mr Deputy Speaker, I rise on a point of order. With all due respect to the honourable member for Braddon, I made no mention of the strike, nor of air traffic controllers, nor of any proposed strike or past strike. I submit that that matter is not relevant to the debate before the chamber.
-Mr Deputy Speaker, with all respect, I suggest that the honourable member did mention the dispute and the involvement of the Minister (Mr Nixon) in that dispute. I simply make the point that the Government must be seen to govern and must govern in the interests of the nation. If a handful of people attempt to bring the nation to its knees through this sort of action, then, unfortunately, drastic action might be necessary.
I turn to the subject at hand. The legislation finalises, as far as legislation is concerned, the transfer of the railway system of South Australia, that is, the country section of that railway system, and the railway system of Tasmania from the State governments to the Commonwealth Government. I think it is worthwhile to look briefly at the history of the transfer. The previous Labor Government, in its wisdom, wanted all power to be transferred to Canberra so it decided to endeavour to take control of the State railways systems. It approached the various State governments and only 2 governments, the Labor governments of South Australia and Tasmania, were prepared to co-operate and to transfer, in the case of South Australia, a section of the railway system and, in the case of Tasmania, the whole railway system to the Federal Government. Following the policy decision the then Government arranged for officers of the Australian National Railways and the various State personnel to examine the proposal in some depth. Working committees were then established to consider the many complex facets of the transfer. They had to consider in detail the financial arrangements which certainly were and still are complex; the redemption of accumulated loans; the staff conditions which have caused particular problems; the conditions of employment of those previously employed by the State railway systems; leave and superannuation entitlements; workers compensation and so on.
The agreements were signed by the then Prime Minister, Mr Whitlam, and the Premier of South Australia on 2 1 May 1 975 and by the then Prime Minister and the Premier of Tasmania on 23 May 1975. Complementary State and Federal legislation was then enacted to validate the respective agreements. Legislation was enacted in the South Australian Parliament on 2 1 August 1975 and in the Tasmanian Parliament on 18 June 1975. Legislation was passed in this Parliament on 7 October 1975. As the honourable member for Shortland (Mr Morris) has said, the transfer arrangements have indeed been complex. I think it would be only fair to congratulate all parties concerned for the effort and work they have put into reaching harmonious arrangements in concluding the transfers. I think it is fair to say that generally there is harmony within all the ranks concerned, including the representatives of the employees of the State railway systems.
As I have said, there were particular problems in South Australia because of the fact that only part of the railway system in that State was being transferred to the Commonwealth Government. There were problems in denning which of the rolling stock were part of the country railway system and which were part of the metropolitan railway system; which locomotives were part of the respective systems; which real estate was to be transferred, and the assets generally to be transferred to the Commonwealth. There were some very real problems in South Australia. Generally, both in South Australia and in Tasmania, there have been tremendous and complex problems concerning the conditions of employment. As the honourable member for Shortland has said, 24 different unions were involved in the negotiations. Twenty-six different awards applied to those employed by the then State railway systems. Many of the provisions of the legislation now before the House result from negotiations with staff and employees of the State railway systems and from agreements which have been reached with all the unions concerned in the arrangements.
In making some general remarks about the transfers I think it should be said that the Commonwealth clearly paid an exorbitant figure for the railways systems, especially the South Australian system. I should like to quote briefly from the second reading speech by the Minister for Transport. He said:
But that does not mean we were happy with arrangements made. In fact I have made it very clear that in my opinion the Whitlam Government was taken to the cleaners, whilst the two State Premiers laughed all the way to the bank!
I think that is an appropriate statement. The then Federal Government clearly was taken to the cleaners on that occasion. In the case of South Australia the amount paid exceeded the true value, on my advice, of the total South Australian railway system. So the then Federal Government paid for the total system and all it received, and all we have now received, is only the country system, only part of the total railway system. That is something that could be criticised and something about which this Government no doubt must be concerned. There was a wastage of taxpayers’ money and a lack of concern at the way in which it was spent on this occasion. But the 2 State Premiers concerned certainly showed some cunning and guile in being prepared to go on with this deal. Their States have gained some advantages from the transfers.
The Minister in his second reading speech referred to the report into the Tasmanian railway system by Dr Joy and his committee. I should like to make one or two comments about that report. I trust that the Minister will take note of them. There is a fair amount of criticism around Tasmania about the report and a good deal of concern in many quarters at some of the recommendations flowing from the report. I do not believe there was sufficient public involvement in compiling the report. Those inquiring into the problems tended to look towards the people involved directly in the railway systems for advice and comment. I think the report was too narrow in its scope. It would have been far better if there had been a greater opportunity for the public generally to express some viewpoint about the many problems which obviously exist, and continue to exist, in the Tasmanian railway system. The report fails to take into account many of the human and social factors which I think in due course will prevent the full implementation of a number of recommendations in the report. It fails to display any real optimism for industrial growth in Tasmania. I think it appears to have placed generally too much emphasis on cost cutting and could have been much more realistic in that respect.
I believe that the Tasmanian railways must be totally rehabilitated. I suspect if that is to be achieved the outlay on the part of the Federal Government will exceed by a large amount the $23m which was recommended to be spent by the Joy report. Workers involved in the Tasmanian railway system in recent times have certainly felt threatened, firstly by the transfer itself and all the connotations and uncertainties involved and, secondly, by the recommendations and the contents of the Joy report. I am concerned about the suggestion in that report that the Tasmanian railway system is grossly overmanned. I suggest that possibly every railway system in Australia- perhaps in the world- is largely over-manned. On page 13 1 the Joy report states:
The major benefit which Tasmanian Railways bestows on Tasmania at the moment is that by employing about 800 more people than can be justified on social benefit gounds, and 1 500 more people than could be justified on crude financial grounds, it brings in between $8m and SI 5m more each year in payrolls than otherwise would be the case. This is financed by the Federal Government but then so too would be unemployment benefit which would need to be paid to that number of people.
I do not feel that that is a terribly accurate statement, with all due respect to those who inquired into the problems. I do not think it does justice to the Tasmanian railway system, which I think provides much greater benefits than merely employing a surplus of individuals, as is suggested in the report. In considering reducing staff numbers in the railways, if that is the intention of the Government, I should like to have an assurance that there would be a similar percentage reduction of Commonwealth jobs in other parts of Australia- for example in Gippsland and other country areas in Victoria, and indeed here in Canberra. I suggest that if there is a surplus of 1500 employees on the Tasmanian railways there would be a surplus of 50 000 people on the public payroll here in Canberra. Perhaps that is something that Dr Joy and his committee could well examine.
Generally I support this legislation. There have been problems associated with the transfer -obviously there have been very complicated problems- but this Government sees that there is a definite commitment entered into originally by the previous Federal Government and of course that commitment must now be honoured. I therefore support the legislation and trust that the transfer continues smoothly.
-Whilst the Opposition does not oppose the Australian National Railways Amendment Bill there are a few remarks I should like to make on this Bill. Firstly I refer to something that was said in the speech of the honourable member for Braddon (Mr Groom). He referred to the statement of the Minister for Transport (Mr Nixon) that South Australia got a good deal out of the rail transfer agreement. We all know the Minister’s attitude to this. But I can assure honourable members that South Australia will probably finish up behind because the Minister will get that money back by the back door by increasing freight rates for the carriage of coal from the Leigh Creek fields to Port Augusta power station by something in the vicinity of 180 per cent. So he will make sure he gets some of the money back.
This legislation gives effect to the agreements entered into by the Labor Government during the years 1972-1975. These were certainly long overdue. Possibly there has been a bi-partisan approach to rail standardisation and advancement of our railway services. Following the problems of World War II the question of standardisation received some consideration. The Chifley Government made a start on the matter and the
Government that followed it carried on with the project. During the following 23 years of government we did see some progress that got us away from the mess the Australian railway system had been in for so many years. Australia suffered for so long because of the insular and narrowminded attitudes of the States in the last century. Our railways system was broken up into 3 different and completely insulated systems with the result that our railways were hopelessly inefficient. We had the 3 feet 6 inch gauge, the 4 feet 8Vi inch gauge and the 5 feet 3 inch gauge. The foolishness of this attitude was exemplified by Port Pirie, a city of my own electorate, into which 3 feet 6 inch, 4 feet 8V4 inch and 5 feet 3 inch gauges all came. That indicates the stupidity of the attitude of some of our forefathers in their approach to standardisation.
Of course we have seen some progress since those days. The Melbourne-Sydney line has been standardised and the line from Brisbane to Sydney was standardised many years ago. The Sydney-Perth line was linked up a number of years ago and the Tarcoola-Alice Springs railway line is progressing. In a few years time we should see that standard gauge line reaching the Northern Territory. But there is one project in which there has been some controversy; that is, that the city of Adelaide is still not linked to the standard system. Because of this, the whole state of South Australia misses out There have certainly been some reports on this aspect. I imagine that if one were to get all the reports and tear them all apart, they would reach from Adelaide to Crystal Brook without any problems.
However, despite the fact that we were making some progress in the whole problem of standardisation, we still had another problem. We still have 6 different State railway systems as well as the system run by the Commonwealth Government. This in itself created problems in Australian transport and worked against the effective use of our transport facilities. But during the years of the Labor Government, as was mentioned by previous speakers, this problem was examined. An offer was made to the States that the Commonwealth Government take over the State systems. This was a logical move if the railway systems were to be used more effectively and were to become a major factor in our general transport system. We all realise that in Australia, with our long distances, transport has a very high cost factor. The more efficient we can make our railway transport system, the more we will be able to keep those transport costs down, which is essential. It would certainly allow us to make far greater use of the transport resources which we have.
When this matter was first raised, 3 States were prepared to come to the party in allowing the Commonwealth to take over their railway systems in an effort to bring about one railway system throughout Australia. But one of those States pulled out. There was a change of government in Western Australia. Because a Labor Government had been doing the negotiating over the take-over of the West Australian system, on the change to a Liberal-Country Party Governments, Western Australia pulled out. This left the South Australian and Tasmanian Governments. Negotiations proceeded with these 2 States and agreement was reached with the Federal Government on this project. It was arrived at because those 2 States saw that there was an advantage to be gained from this particular arrangement. We realise that the agreement upset the present Minister for Transport (Mr Nixon) and still upsets him because he seems to feel that the States had too good a go out of it. This Bill facilitates the finalisation of negotiations that have taken place over the last 2 years. It will allow the matter to be brought to finality. Previously a period to allow the agreement for the transfer of employees had applied. We hope that this Bill is the culmination of those negotiations because during the last 2 years many discussions and agreements have taken place between the various unions and people involved. The various by-laws that relate to the railway systems have also had to be discussed. We trust that we have now reached the stage where those agreements are valid and have been freely negotiated and agreed to by the people involved. I notice that the Minister referred to this point in his second reading speech. I trust that he is correct in what he said.
Let us look at a breakdown of the Bill. I have spoken to many former South Australian railway employees and also Australian National Railways employees- formerly Commonwealth Railways employees- on the question of superannuation. Of course, what was going to happen as regards superannuation was one of the stumbling blocks to agreement. It is very pleasing to see that some of the fears that were held by some South Australian employees who felt that their superannuation system was a better system than the Commonwealth one have been allayed and that the situation has now reached the stage where a person coming to the Comonwealth system from the State system- either Tasmanian or South Australian- can elect to retain his State system superannuation. He would thereby gain any benefit he felt would come from that particular system. I have had a look at both schemes. I can see that there are some advantages in the South Australian scheme when compared with the Commonwealth scheme and that there are also disadvantages; it works both ways. But at least an employee has the opportunity of making that decision himself.
There is a clause in the Bill dealing with promotion appeals. I have had problems in the past regarding promotion appeals with the ANR, or the Commonwealth Railways as it was then called in my former work as a union official with that railway. In some areas the question of promotion and appeals against promotion became a bit of a problem, particularly when a wage employee was elevated to a salaried position. At that time salaried employees had their own appeal system. The wage employee had a seniority system which did give him some rights of appeal. But if a wage employee moved to a salaried position, there were no appeal provisions. Some appeal provisions were made later on but they certainly were not as satisfactory as they should have been. The same applies to the disciplinary appeals. It is noted that the provision for disciplinary appeal boards will be added to the legislation. We trust that this has met with the approval of the unions who would no doubt have examined this matter closely because some of the older by-laws are old fashioned and out-of-date and certainly needed bringing up-to-date.
I can remember when on the job I used to carry around, practically as a bible, the by-law which covered the conditions of employment and so forth. I say ‘bible’ because I think it was nearly as old as the Bible. I think it carried the date 1925. It was hopelessly out-of-date. I remember one condition that stated that a railway employee could not give or lend anything to an Aboriginal. It then went on to define what an Aboriginal was and whether he was a half caste or of a particular race. It also covered the children of those particular people. It was the most stupid thing that one could ever see in a day’s march. Of course, that provision about Aboriginals was later taken out of the by-law.
One of the public changes that will take place under this legislation is the removal of ANR employees from jurisdiction of the Public Service Arbitrator to that of Conciliation and Arbitration Commission. This in itself could be a big step forward because there certainly have been problems in the operation of unions under the Public Service Arbitrator. One of the biggest problems was that when a decision was given by the Conciliation and Arbitration Commission, it had to flow on and it had to be handled by the Public Service Arbitrator. Delay would occur there and because of the operations of the Public Service Arbitrator, any decision he made would have to lie before the Parliament for a particular time. The result was that there were many delays in the payment of any increase to ANR employees. I could cite cases where ANR employees had to wait up to 8 months before they received their increase. We hope that by placing these employees under the jurisdiction of the Conciliation and Arbitration Commission a lot of these delays will not now occur.
I refer to what is happening at the present time. A few weeks ago ANR employees received their increase, not for the December quarter but for the last September quarter. Some weeks ago the Conciliation and Arbitration Commission granted a $5.70 increase across the board throughout the country. Let us not forget that this rise took place in the October to December quarter. These people will have to wait another three or four months at least before they can expect to receive this increase. It is to be hoped that the operation of the Conciliation and Arbitration Act will mean that a lot of these delays will be obviated, which will mean a much better arrangement and will certainly give greater satisfaction to the employees.
Mention was made earlier of the Crystal Brook railway project. I have said that there have been quite a few reports on this subject. Looking back into the history of the matter, I can recall the Fitch report being presented. It was prepared by a previous Commissioner of the South Australian Railways. On 27 May 1970 the then Minister for Shipping and Transport, Mr Sinclair, sent the then Premier of South Australia a telegram advising that the Commonwealth Government had that day decided to accept the recommendations of the consultants for the provision of a standard gauge connection between Adelaide and Crystal Brook. On 18 March 1971 the then Prime Minister- the right honourable member for Lowe (Mr William McMahon)wrote to the Premier advising him of the Federal Government’s acceptance of the proposals. On 17 May 1974 the then Prime Minister, Mr E. G. Whitlam, and the South Australian Premier, Mr Dunstan, signed the Adelaide to Crystal Brook standard gauge railway agreement, which put into effect the written undertakings which had previously been given by Mr Sinclair and Mr McMahon. This agreement was ratified by both the Federal Parliament and the South Australian Parliament.
Moving on from there, we have had the present Minister for Transport calling for a further report and we have since had the Joy report, which was released in February of this year. A copy of it was sent to the South Australian Minister, who then replied to the Federal Minister outlining the State’s attitude. But a decision as to what is to happen to this line is still in limbo. This line is extremely essential to South Australia. South Australia is probably the most vulnerable State in Australia in relation to its industrial products. In the last couple of days we have seen the attitude of General MotorsHolden’s Pty Ltd. It will have a big effect in South Australia if GM-H carries on with its proposal to put people off on a week’s holiday. Because of South Australia’s reliance on this type of industry it is essential that South Australia has a system that will at least provide decent transport facilities to the eastern States, which are the main market. So it is essential that the products from the main areas of Adelaide be transported on the standard gauge line.
There are a few matters that I feel I should mention in the short time that I have left. One concerns the people who are presently employed by the Australian National Railways. The Australian National Railways owns a large number of homes. That is particularly so in the case of Port Augusta. I realise that it was essential in the more remote areas in the earlier days for the railways to build its own homes and provide accommodation for its employees. In Port Augusta the railways owns approximately 450 houses. However, there are problems in this respect because those homes go with the job, which means that anyone who leaves the job has to get out of his house. It also means that any employee who wants to change his employment will find it extremely difficult to do so because he will have to find other accommodation if he gets another job. It also hits fairly hard the retiring employees. Many employees live for 30 years or 40 years in the one home and develop that home. When it comes to retirement they are required to leave that home and find accommodation elsewhere. I appreciate that there are no evictions; nevertheless pressure is on these people once they reach retirement age, whether it be 60 years or 65 years, to get out of their Australian National Railways home and find another home elsewhere.
I took up this matter with the previous Minister for Transport just prior to the dismissal of the Whitlam Government. I think that it is possible in areas of Port Augusta in which the homes are attached to the railways- I am not talking about those areas in which it is essential that the railways provide homes- to take the homes away from the railways and in a general sense get the railways out of the home ownership field. I feel that this can be done in 2 ways. Firstly, the homes could be offered to the present occupants for purchase. Alternatively the homes could be offered to the South Australian Housing Trust. In so doing it would take away the sort of company town position that applies whereby the house goes with the job. I think that that is a little out of date. I also think that it is about time something was done about the matter. I earnestly ask the Minister to have a look at this matter. I feel that there are areas in Port Augusta where houses can be taken from the railways and sold to the occupants or the South Australian Housing Trust.
There is one other matter that I wish to raise in the few minutes that I have left to me. I have no doubt that either the Minister or the Treasurer (Mr Lynch) have had correspondence on this matter. For a number of years Port Augusta has been the headquarters of the Commonwealth Railways, which is now known as the Australian National Railways. The railways occupies practically all the Port Augusta waterfront. I would say that the railways would extend, at a rough guess, for about 2 miles around the waterfront, with the exception of a small beach. For many years the town council has been concerned about this matter. The railways owns prime land. Any other normal industrial undertaking is required to pay rates. Being a Commonwealth Government authority, the railways is not required to pay rates, but it does make an ex gratia payment to the council. I understand that the ex gratia payment is worked out on the number of railway, properties that front council property. From memory the amount last year was $35,000. I think that that is a fleabite compared with what other major industries in other areas have to put into a local government authority.
I have mentioned the people living in the Australian National Railways homes. In most cases those homes are on land that is owned by the Commonwealth and, as such, rates are not paid on that land. That does not apply in other areas, but there is quite a few of those houses that do not front council property. It is a fact that the people in them use the facilities of Port Augusta. Normally the landlord is required to pay rates for a house that is rented, but in this case in Port Augusta, although these facilities are available to all, the landlord- the Australian National Railways Commission- does not pay full rates. As I have said, it does make an ex gratia payment of $35,000, but that certainly does not cover what I feel and I am sure the town council of Port Augusta feels is the actual amount that it should be required to be paid.
Mr DEPUTY SPEAKER (Mr Martin)Order! The honourable member’s time has expired.
– I should like to make some brief comments about this Bill. With the takeover of the South Australian and Tasmanian rail systems, the Australian National Railways is now responsible for about one-fifth of Australia’s rail network. It covers something like 8000 kilometres of track. The Australian National Railways Amendment Bill is designed to tighten a number of grey areas related to the transfer of the Tasmanian and South Australian systems to the Australian National Railways and to update other minor areas of the Australian National Railways Act 1917. It is now nearly 2 years since the transfer of the Tasmanian and South Australian systems. I would have to agree with the honourable member for Braddon (Mr Groom) that the transfer must have been one of the greatest rip-offs of the Commonwealth Government in history. But this Government is now pledged to meet its obligations. Consequently the final transfers related in this Bill are being executed through this piece of legislation. The rationalisation is necessary if we are to conduct the Australian National Railways on a commercial basis as a statutory authority. The Bill will also rationalise the situation of employees by settling areas, such as retirement superannuation, in line with the Commonwealth provisions.
Since the Commonwealth first became involved with railways, with the turning of the sod at Port Augusta in 1912 to the connection with the Western Australian system at Kalgoorlie, it has been the Commonwealth’s role to provide an efficient service for both goods and passengers at the least cost to the community. The Australian National Railways has provided services to remote areas of the country and has played a major part in the operation of the main east-west standard gauge link. Now, of course, there is the added responsibility of the Tasmanian and South Australian sections, which have a $45m deficit hanging around their necks at the moment. The problems of the railways, their services and the financial burdens that they impose are certainly going to be with us for a long time. It is reassuring to know that the Government has already received the report of the committee of inquiry headed by Dr Stewart Joy into the whole Tasmanian system and the establishment of the standard gauge link from Adelaide. It will be very interesting to see just what does evolve from the discussions.
Education-Medical Prescriptions-Unemployment -Brisbane Airport -Pre-apprenticeship Training Scheme
-Order! It being 10.30 p.m. in accordance with the order of the House of 10 March, I propose the question:
That the House do now adjourn.
-On 6 April throughout Australia’s principal cities rallies were held on educational matters of interest to parents, citizens and teachers. I attended one in Melbourne held at the Camberwell Civic Centre. There I had handed to me details of several schools in my electorate. I intend to relay to the House the information about one of them because what concerns me in the light of the Government’s devolution of responsibility to the States is that it illustrates the States’ inability, despite the injection of federal finance in recent years, to cope with the great problems that exist. I wish to refer to the Preston Girls High School. On a pro forma answers were given to various questions. Firstly the school was asked to describe its educational aims. The answer was:
As a female, migrant school in a low socio-economic area, we have the base aims of equipping students to cope adequately with varied situations in life, to contribute positively to their community- local, ethnic and Australian.
Referring to physical and human resources and referring to buildings, the next question was:
How many extra rooms do you need?
The answer was 10 general classrooms. The answer to a question concerning special purpose rooms stated that 3 were needed. They were specified as a library, a gymnasium and an assembly hall. The next question was:
How many existing rooms need total replacement?
The answer was fourteen. They were portables and Bristol temporary accommodation that had existed since 1949. With regard to special purpose rooms there was a need to replace three because they were noisy, crowded and cold. The next question asked whether any of the existing class rooms needed substantial upgrading. The school was unable to suggest any that could be substantially upgraded. The answer said that upgrading was needed in covered walkways and staircases. It was said that 3 special purpose rooms needed upgrading. They were typing rooms that had inadequate space and equipment, preventing any expansion of the programs.
The most alarming thing is the answer to the next question. The question reads:
Is your school on a State Department list of school building projects for any of the above?
In respect of extra rooms the answer is ‘don ‘t know’. In respect of the replacement of rooms the answer is ‘no’. In respect of substantial upgrading of rooms the answer is ‘no’. In regard to all the projects suggested in this area the answer is ‘no’. The school needs other facilities. It needs a gymnasium, an assembly hall, even a staff room, and a playing sports area. There is no playing sports area at the moment. The paving is always in need of repair. Toilet facilities are inadequate for students and male staff. There are no covered ways, and staff and students are exposed to the elements. Asked to comment on the need for extra equipment, the school stated that there were inadequate duplicating facilities, no audio-visual equipment except projectors, no audio-visual department, inadequate slide projection material, and a lack of tape recorders and record players.
The buildings are not properly maintained. The upper windows are never cleaned. There are broken Venetian blinds. The school generally is in such a rundown state that adequate maintenance is impossible. Concerning the staff-student ratio, 5 extra teachers would be needed to ensure that no class at the school exceeded 30, and 14 extra teachers would be needed to ensure that no class exceeded 25. In reply to another question it was stated that the physical conditions at the school made team teaching impossible. Seventyfive per cent of the school are migrants from a low socio-economic area. The school needs another 5 migrant English teachers and qualified remedial English and maths teachers. A number of other disabilities are detailed. The school was asked whether it was in any of the Schools Commission programs. The one ‘yes’ answer related to the disadvantaged program. It is stated that this has improved student morale in making more materials and more varied activities available and has improved teacher morale also. Another question asked:
What would be the effects on your school if any of these programs were stopped?
The answer is:
Crippling. There would be no way we could hope to cope with severe and numerous problems of our high migrant population.
This is a scathing condemnation of the inability of States to use the assistance given to them.
Mr DEPUTY SPEAKER (Mr Lucock)Order! The honourable member’s time has expired.
-The circumstances surrounding the recent death of an infant highlight the need for more stringent safeguards to ensure that the dosage typed on medicine bottles is accurate and strictly in accordance with the relevant prescription. The coroner was told that a typing error on a medicine label may have caused a child’s death recently. The baby was given 10 times the prescribed dosage for a serious heart condition. Instructions typed on the label of the medicine bottle read: “Three millilitres twice a day’. It should have read: ‘0.3 millilitres twice daily’. Death ensued 5 days after his mother took him home from hospital.
Because of the human element involved, mistakes must and do occur to the detriment of the public. I wonder how many other fatalities or near fatalities have been occasioned because of a typing error as to the correct dosage. Another contributory cause is the careless writing of many doctors on prescriptions, which is a blatant disregard for the safety of patients. I appeal to them all to write in a way that leaves no room for misinterpretation. I point to the case of an all night chemist in the western suburbs of Sydney who dispensed antibiotics and a sleep producer. Both were capsules. One antibiotic capsule was to be take every 6 hours and one sleep producer capsule at bedtime. The labels were mixed and the customer of course was asleep more than he was awake. The point that has to be made is that in large establishments where there are many dispensers it is almost an impossibility to identify who dispensed a prescription. It is that person who is ultimately responsible for the final product as to both label and contents. I have written to the Minister for Health (Mr Hunt) to see what can be done to make as foolproof as possible the labelling and checking of contents. I believe that a dispenser should be required by law to initial the label, thereby providing a further safety check and at the same time permitting of identification of the dispenser should the need arise.
– Tonight I would like to bring to the attention of honourable members the findings of a group of concerned people from my electorate who recently conducted a study of inner city unemployment. This group, known as the Inner City Regional Council for Social Development Unemployment Committee, has been meeting for about 3 months with the aim of examining the needs of the unemployed in the inner city area of Sydney and determining effective ways of providing assistance. The committee has submitted its first report. This report outlines some glaring examples of government oversight which demand urgent government attention.
Before I begin to spell out the significant contents of this report, I would first stress the point that the valuable work of the committee was done under the sponsorship of the Australian Assistance Plan and that the report represents just one of the many contributions being made to the Australian community by the AAP. For the information of honourable members, the Unemployment Committee’s report demonstrated some startling statistics on inner city unemployment. For instance, it was disclosed that within the areas covered by the Commonwealth Employment Service’s 5 inner city offices of Marrickville, Leichhardt, Sydney, Surry Hills and Mascot, as at the first week of April, 18 152 people were registered as unemployed, and this represented 10 per cent of the local work force. These figures should be cause for concern in themselves. However, the report revealed an even more disturbing trend. Of particular significance was the fact that the figure of 18 152 unemployed represented an increase of 43 per cent since April last year. By comparison, unemployment increased nationally over the same period by 17.5 per cent. Therefore, according to the CES figures, the rate of unemployment in inner Sydney is higher than for Sydney as a whole.
It was also revealed in the report that typical persons registered as unemployed in Sydney are male, over 21 years of age, unskilled or semiskilled, migrant and probably single. Some 65 per cent of the registered unemployed in the inner city area are adult men, compared with 46 per cent for New South Wales as a whole. This means that unemployed adult males are thicker on the ground in inner Sydney than anywhere else in that city or in any other capital city of Australia. I have discussed this matter with the Minister for Post and Telecommunications (Mr Eric Robinson), who is at the table, and he has agreed to the incorporation in Hansard of the main points of the report to the Unemployment Committee. I seek leave to have the document incorporated in Hansard.
-Is leave granted? There being no objection, leave is granted.
The document read as follows-
There were 18 152 people registered as unemployed at the 5 CES offices covering inner Sydney at the beginning of April.
Of the 18 152 registered, 14 816 were adults and 3 336 were young people under 2 1 .
The number of unemployed registered at the S CES offices were:
Marrickville……….. 5 001
Leichhardt……….. 4 893
Sydney…………. 3 872
Surry Hills……….. 2 840
Mascot…………. 1 546
This represents an overall increase of 43 per cent in the last 12 months.
The national increase for the same period was 17.5 per cent.
The increase at each office was:
Marrickville……… 43 per cent
Leichhardt……… 52 per cent
Sydney……….. 38 per cent
Surry Hills………. 37 per cent
Mascot……….. 42 per cent
According to CES figures the rate of unemployment in inner Sydney is higher than for Sydney as a whole.
CES estimates that unemployed in the Sydney metropolitan area account for 6.5 per cent of the workforce, as estimated in the 1971 census. For Leichhardt the unemployed make up 8 per cent of the workforce, for Marrickville 1 1 per cent, for Mascot 8.6 per cent, for Sydney 1 1 per cent, and for Surry Hills 1 5 per cent.
As the workforce has declined in those areas since the 1971 census, the rate of unemployment is higher than these figures indicate.
The Single Male
There is a heavy concentration of unemployed adult males in inner Sydney.
The unemployed registered at inner Sydney CES offices are overwhelmingly men. Adult men account for 65 per cent of the registered unemployed- compared with 46 per cent for N.S.W. as a whole.
The barriers to women registering at CES offices are wellknown. Even if they were to register in their proper numbers, evidence points to the fact that Sydney has a significant female unemployment problem, and it appears to be concentrated in inner Sydney.
Surveys carried out by the Australian Bureau of Statistics reveal that all over Australia the rate of female unemployment is significantly higher than the rate of male unemployment-except in Sydney.
In their last survey, in November 1976, the rate of male unemployment was higher than the female rate in Sydney alone.
There is some evidence to suggest that these unemployed men are usually single.
In a report to head office in November 1976, the manager of the Leichhardt CES observed: ‘The majority of adult males registered are in the semi-skilled factory or unskilled occupations with the emphasis on single men ‘.
Migrants make up a large proportion of the inner Sydney unemployed.
Mascot CES office estimates that 37 per cent of the men registered and 50 per cent of the women are migrants.
While the other CES offices have not produced estimates on the proportion of migrants registered, they confirm what they term ‘ the high migrant content ‘.
The manager of the Leichhardt office says that ‘migrants take being without a job harder than most’, and adds, ‘we’ve had some of the men crying on the counter’.
According to the Australian Bureau of Statistics the unemployment rates for recently arrived migrants- those arriving since 1 968- is almost 50 per cent higher than for people born in Australia.
Given the recent publicity focusing on discrepancies between CES and ABS figures, this ABS finding confirms the CES figures for inner Sydney where recently arrived migrants tend to congregate.
Unskilled and Semi-S killed
Most of the unemployed are unskilled or semi-skilled.
At all the inner Sydney CES offices over 75 per cent of the males registered and over 90 per cent of the women registered are unskilled or semi-skilled workers.
At Marrickville the breakdown for adult males is: 46 per cent semi-skilled, 29 per cent unskilled, 7 per cent cleaners, hotel workers, etc., 5 per cent clerical and administrative, 1 3 per cent skilled workers.
For women the proportions are: 6 1 per cent semi-skilled, 2 1 per cent cleaners, hotel workers, etc., 1 7 per cent clerical and administrative, I per cent skilled.
For young men: 47 percent semi-skilled, 20 percent unskilled manual, 16 per cent skilled, 1 7 per cent other.
And for young women: 57 per cent clerical and administrative, 33 per cent semi-skilled, 10 per cent other.
At Leichhardt the breakdown for adult males is: 40 per cent semi-skilled, 20 percent unskilled manual, 9 per cent cleaners, hotel workers, etc., 10 per cent clerical and administrative, 21 percent skilled.
The adult women: 33 per cent semi-skilled, 23 percent cleaners, hotel workers, etc., 37 per cent clerical and administrative, 7 per cent other.
For young men: 35 per cent semi-skilled, 20 percent unskilled manual, 21 per cent skilled, 1 8 per cent clerical and administrative, 6 per cent other.
For young women: 60 per cent clerical and administrative, 1 8 per cent semi-skilled, 1 8 per cent cleaners hotel workers, etc., 4 percent other.
The unemployed in inner Sydney are overwhelmingly adult.
In N.S.W. as a whole youth unemployed make up 40 per cent of the unemployed- rising as high as 60 per cent in areas like Liverpool and Wagga.
In inner Sydney they account for less than 20 per cent of the registered unemployed.
This does not reflect more job opportunities for youth in inner Sydney. Rather it reflects the aging composition of the population in inner Sydney.
There has been no change in the situation since my March report: unemployment is not coming down.
The conformist recipe for ‘recovery’ is there: resurgent profits and declining real wages. Real wages- according to P. P. McGuinness have declined by around 7 per cent since
June 1976. But there has been no change in unemployment and there is not likely to be.
As the SMH editorial of April 12, 1977, pointed out, any pick-up in demand will be met as far as possible from stockpiles and overtime. While there is idle capacity there will be little investment in increased productive capacity. Any investment is and will be predominantly in labour saving plant. All of which, as the SMH admitted, scarcely adds up to an expansion of job opportunities.
As well as publicising, and attempting to understand, the peculiarities of the inner Sydney unemployment scene the committee needs to clarify goals for itself. I will submit some ideas on this at the Thursday meeting.
Cite as: Australia, House of Representatives, Debates, 4 May 1977, viewed 22 October 2017, <http://historichansard.net/hofreps/1977/19770504_reps_30_hor105/>.