31st Parliament · 1st Session
Mr SPEAKER (Rt Hon. Sir Billy Snedden) took the chair at 10.30 a.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 in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth:
That the provision ofpayments for abortion through items of the Medical Benefits Schedule is an unacceptable endorsement of abortion which has now reached the levels of a national tragedy with at least 60,000 unborn babies being killed in 1977.
Your petitioners therefore humbly pray that the Government will so amend the Medical Benefits Schedule as to preclude the payment of any benefit for abortion.
And your petitioners as in duty bound will ever pray. by Mr Aldred, Mr Bourchier, Mr Burns, Mr Fisher, Mr Hunt, Mr Roger Johnston and Mr Lloyd.
To the honourable the Speaker and Members of the House of Representatives in Parliament assembled:
The humble petition of we the undersigned citizens of Australia respectively showeth:
That because this budget will further increase the number of persons unemployed, because it reduces the average worker’s spending power by $ 10 per week, because it will reduce the income of pensioners, because it is unfair in placing a greater burden on the poor rather than the rich, and because it is driving this country into a depression.
Your petitioners therefore humbly pray that
The Federal Government withdraws this budget and provides Australia, within this session of Parliament, with a revised budget that increases the level of economic activity in Australia, lowers unemployment, removes the burdens placed on the disadvantaged, and revives business and consumer confidence in the future of this potentially great country.
And your petitioners, as in duty bound, will ever pray. by Mr Humphreys, Mr Charles Jones, Mr Kerin and Mr Stewart.
Royal Commission on Human Relationships
To the Honourable Speaker and Members of the House of Representatives in Parliament assembled:
The humble petition of the undersigned citizens of Australia respectfully showeth:
That because the Report of the Royal Commission on Human Relationships and especially its Recommendations-
Therefore the Parliament has a responsibility to the families of Australia not to adopt this controversial Report and its Recommendations.
Your petitioners therefore humbly pray:
That the Australian Parliament will:
Your petitioners therefore humbly pray that your honourable House will take no measures concerning the Royal Commission on Human Relationships Report that will further undermine and weaken marriage, child-care or the family which is the basic unit of our society.
And your petitioners, as in duty bound, will ever pray. by Mr Keating and Mr Martin.
To the honourable the Speaker and honourable Members of the House of Representatives in Parliament assembled the petition of the undersigned citizens of North Queensland, support this protest at the unjust treatment by the Federal Government of people depending on the old age pension, which is considered to be below the poverty level.
That we protest at the Federal Government’s failure to provide all sections of the Australian community with conditions of retirement more comparable to that section who now retire in comfort under superannuation and long service leave schemes.
That immediate action be taken to provide that all sections of the Australian work force be allowed to retire under a more comparable level than that which exists at present.
That we protest at the re-introduction of the means test for people over seventy years of age, especially those people who have already been assessed by the Social Security Department before being placed on a full age pension.
That we protest at the Government’s failure to honour their promise to have pensions adjusted in line with the C.P.I. cost of living adjustments, which is applied to all other sections of the community.
That the amounts allowed for earnings by single and married pensioners should be increased to a more comparable level to the high cost of living, before it affects the pensions.
That the amount allowable before a pensioner pays income tax which covers all forms of income, including the annual pension, should be increased, as the high cost of living warrants this consideration.
And your petitioners as in duty bound will every pray. by Mr Humphreys.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of we the undersigned citizens of Australia respectfully showeth: That we oppose any expansion of the facilities of Kingsford-Smith Airport which entails the building of a new runway as it would have the following detrimental effects. ( 1 ) The loss of one mile of waterfront including Lady Robinson’s Beach and a huge part of Botany Bay (2) The loss of up to 1,230 houses and a drop in value of remaining neighbouring properties (3) The creation of more noise pollution in the area (4) The creation of more traffic congestion on streets leading to and from the airport (5) The forced diversion of Cook’s River and further damage to the ecology of the area.
Your petitioners therefore humbly pray that the Federal Government will not consider satisfying the airport needs of Sydney by extending Kingsford-Smith Airport and that any decisions related thereto are not taken before there is an opportunity for adequate consultation with any community particularly affected.
And your petitioners as in duty bound will ever pray. by Mr Les Johnson.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of we the undersigned citizens of Australia respectfully showeth that:
The proposed introduction of a Retail Turnover Tax will-
Your petitioners humbly pray that the Members in the House assembled will not introduce indirect tax measures such as a Retail Turnover Tax or the administratively more difficult Value Added Tax as to do so would exacerbate the inequalities in our taxing system.
And your petitioners as in duty bound will ever pray. by Mr Les Johnson.
To The Honourable, The Speaker, and Members of the House of Representatives in Parliament Assembled.
Your petitioners most humbly pray that the House of Representatives in Parliament assembled will-
And your petitioners, as in duty bound, will ever pray. by Mr Les Johnson.
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 we the undersigned, having great concern at the way in which children are now being used in the production of pornography CALL UPON THE GOVERNMENT to introduce immediate legislation:
Your petitioners therefore humbly pray that your honourable House will protect all children and immediately prohibit pornographic child-abuse materials, publications or films. And your petitioners as in duty bound, will ever pray. byMrMacKellar.
To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble Petition of undersigned citizens of Australia respectfully showeth:
That we believe the Federal Government changes to the health insurance system are unjustified, costly and artificially bureaucratic.
The planned abolition of bulk billing will place an unnecessary burden on the poor and the disadvantaged in our community. The decision to reduce the rebate paid from 85per cent to 75 per cent of the scheduled fee is an attack on real wages.
Your Petitioners therefore humbly pray that the Government should reverse its decisions on these matters and develop proper consultation with the trade unions and the community.
And your petitioners as in duty bound will ever pray. by Mr Les McMahon.
– I give notice that on the next day of sitting I shall move:
That this House supports the application of the City of Melbourne to the International Olympic Federation for the 1988 Olympic Games to be held in that city.
– Has the Minister for Aboriginal Affairs received complaints from Aboriginal housing associations in New South Wales that the construction firm, Stawell Timber Industries, knew which housing associations were receiving grants this year before the housing associations themselves knew? Can the Minister explain why the Ngemba Housing Co-operative at Brewarrina and the Wytaliba Housing Association at Weilmoringle were induced to sign Stawell contracts before they had been informed that their applications for housing funds for 1978-79 had been successful?
-I have not received any representations from any Aboriginal community in New South Wales concerning the matter the honourable gentleman has raised. I do not know whether any such matters have been raised with departmental officers at the area level, but I will check it. With regard to the particular instances to which the honourable gentleman has referred, I will make inquiries within my Department and provide him with an answer.
-Is the Minister for Foreign Affairs aware of the growing number of Australians currently in gaol overseas on drug charges? Is he satisfied that all possible steps are being taken to warn Australians going overseas about the dangers of involvement with drugs?
-The number of Australians arrested overseas on drug charges has been a matter of very great concern to the Government for some considerable time. Currently 79 Australians who are in gaol on drug charges in 2 1 countries are receiving consular assistance from the Department. An aspect of real concern is the mounting evidence of an increasing involvement in hard drugs, particularly heroin, and in trafficking. So far as the warning is concerned, all Australians receiving a passport are given a booklet prepared by the Department which has a prominent section dealing with drugs, with the severity of penalties, and with the changes that some countries have made in ensuring that those severe penalties are carried out. It seems that we can warn and warn and warn- the media have been particularly helpful in this regard- but others will disregard those warnings.
Two years ago most of those arrested were young Australians on cannabis charges, usually related to small amounts apparently for personal use. But now increasingly arrests involve heroin, and the transition to heroin has brought with it the inevitable tragedies of young Australians dying overseas from drug overdoses. I do not think there is anyone in the House who would disagree with my own feelings on this. One has nothing but contempt for people prepared to profit by drug trafficking. It is an evil, pernicious and destructive practice. Unfortunately, it has become only too clear that some Australians are actively involved in this traffic in a highly professional way, and there has been a trend towards more severe penalties -
– I raise a point of order, Mr Speaker. I appreciate the thrust of what the Minister is saying, but one of my constituents happens to be one of those charged. Whilst I do not interpret the Minister’s statement as meaning that he has no concern for them if they are guilty, it could well affect the attitude of the Thai authorities to this particular case. Of course, one of the penalties is death by firing squad. I think it is a bit unfair to the three Australians, in the context of the words now being used, who might think that their fair trial could be prejudiced by these remarks.
– The Deputy Leader of the Opposition, by way of a point of order, has made a point. I will not rule that the Minister is not free to speak on the matter, but I am sure that the sensitivity of the Minister will allow him to adjust his answer accordingly.
-I do not object to the point made, which was made in absolute fairness so far as I am concerned. Nothing I was going on to say would have in any way traversed what I hope will be a fair trial in Thailand. Nevertheless, my remarks must be directed time and again to the increasing concern of the Government and I am sure of the House and the honourable member who took the point of order. The harsh reality is that almost every day of the week there is someone somewhere being tried in this particular area. My remarks in the past and at the present moment of course are not directed towards prejudging any person who may be facing a trial. I put that to one side but, as it is within my responsibility, it must be for me to comment generally on the increasing incidence, which is causing a great number of members on both sides of the House as well as the media, who have been very responsible on this matter, a great deal of concern. I was going to indicate that I was not referring specifically to the people who have been charged in Thailand, who have had so much prominence in the media.
I want to close by saying that the vast majority of Australians who travel abroad are lawabiding citizens, but the point cannot be emphasised enough that Australians visiting or residing in another country are subject to the laws of that country. They cannot look to the Department of Foreign Affairs suddenly to extricate them from difficulties if they set about committing breaches of the law of the country in which they are residing or visiting. Australians do not have any special immunity overseas. They are not operating in a legal vacuum, in other words. So, in a nutshell, the whole question of drug involvement overseas is a matter which the Government does consider very seriously. In answer specifically to the latter part of the question, I believe we have been giving warning after warning, and I will continue to do so. It is a tragedy that people seem to dismiss those warnings as nothing but mere rhetoric.
Mr Stewart having addressed a question to the Ministerfor Primary Industry-
– Order! Before the right honourable gentleman answers that question, I draw the attention of the House to the fact that there is a fine balance between the responsibility of a Minister in this House for public affairs and the absence of responsibility in this House for private affairs. Where that balance is difficult to test and to define, I have permitted questions to be asked, on the basis largely that I have to hear the question before I can rule on it. Once the question has been stated it is in the public arena and therefore it would not be fair to rule a question out of order, thus depriving the Minister of the chance to answer. However, a substantive motion on the subject now raised was moved recently. The House dealt with the matter. I am not prepared to allow this type of action to go on, despite the resolution of a substantive motion by the House. Therefore, in pursuance of that ruling, I declare that the question is out of order on two grounds: Firstly, that it contains an innuendo in relation to the right honourable gentleman which can be tested only by substantive motion; and, secondly, that it is repetitive of a matter already determined by the House. The question is out of order.
– I raise a point of order, Mr Speaker. I feel that the Minister’s integrity and fitness to be a Minister of the Crown is under question. Therefore, this question is in order because his outside affairs must have some influence on his ability and his integrity to occupy the position of a Minister of the Crown.
- Mr Speaker, I wish to speak to the point of order raised by the honourable member for Grayndler. He has the opportunity to move a substantive motion if he wants to take up the sort of matter that he is proposing but he cannot do it by way of question. I think that you should uphold the ruling that you have already given, Mr Speaker.
- Mr Speaker, on the point of order, we find the Parliament in quite a ridiculous sitution in that the only way in which the Minister for Primary Industry can be subject to any discussion in this Parliament is by substantive motion. You have ruled, Mr Speaker, that no question can be asked on the subject. That is not in keeping with the conduct of the people who are now in government when they were in opposition. The conduct of the Minister for Primary Industry is of great consequence, specifically to this Parliament and in general to the Australian public. It does not seem to us that we can put ourselves in a corner and say that no questions can be asked of the Minister. The censure motion, the substantive motion, was on the Prime Minister, not on the Minister for Primary Industry. It reflected on the conduct of the Minister for Primary Industry. We drew attention to the different levels of action which the Prime Minister has taken with Ministers in the Liberal Party vis-a-vis a Minister from the National Country Party. The question asked this morning was asked directly of the Minister for Primary Industry, and was about whether in fact a statement which he made publicly some time ago is still now operative or whether, to use a Nixonian tone, it is no longer operative. It seems to us that the Opposition should have the opportunity to question these matters in the Parliament.
-The Opposition will have an opportunity to question matters in the Parliament if they come within the Standing Orders. The question which is being asked by the honourable member for Grayndler relates to personal matters of the Minister for Primary Industry. The question is out of order.
- Mr Speaker, I wish to take a point of order. I argue, however, that the matter that has already been dealt with and concluded in this Parliament is a totally different one from that which has been raised this morning. The matter which was dealt with and concluded related to the concern of the Opposition that, consistent with the practice followed by the Prime Minister in other circumstances somewhat similar, the Minister for Primary Industry should be required at least to stand down, or be suspended, because of an investigation of a very serious nature into affairs with which he is associated. It is not only a matter of the public administrative responsibilities of public office; it is also a matter of one’s standing and credibility, while holding that public office, in areas outside that public office. If a person’s private behaviour can sully his position in public office, it is totally unacceptable if the behaviour of that person in relation to those private matters is beyond any question or reproach. This Parliament is placed in the invidious position of being constantly distracted by this matter simply because the Minister for Primary Industry is being evasive. The Standing Orders of the House -
-Order! The Leader of the Opposition is arguing the issue beyond his point of order. If he has a point of order to raise, I ask him to state it succinctly.
- Mr Speaker, my point of order is as follows: As I understand it, you are arguing that this matter has been concluded; I am arguing that it has not yet been dealt with properly. We are being prevented from dealing with it properly and I submit that it is an obligation of the Parliament to discuss it.
-Order! The honourable gentleman is arguing the issue. He is not taking a point of order. The point of order is whether or not my ruling, that the question is out of order, is correct. I do not want to hear the honourable gentleman explain what he believes are the circumstances surrounding the Minister. This is one of the reasons I have ruled the question out of order- because it relates to matters which do not affect the administration of the Minister for which he is responsible to Parliament.
- Mr Speaker, are you ruling against my point of order?
- Mr Speaker, I move:
That the ruling be dissented from.
-The honourable member will need to put it in writing.
– You cannot take it.
– I am about to give it.
– Why do not you deal with substantive matters?
– If you behave properly we will.
-The Leader of the Opposition has moved a motion in these terms: ‘I move: That the ruling be dissented from.’ I call the Leader of the Opposition.
-Mr Speaker, I have moved dissent from -
Motion (by Mr Bourchier) proposed:
That the question be now put
-I will not accept that motion. I call the Leader of the Opposition.
-Mr Speaker, reluctantly, I have moved dissent from your ruling.
Motion (by Mr Bourchier) proposed:
That the Leader of the Opposition be not further heard.
-Order! The Leader of the Opposition will resume his seat. I find myself in a most awkward position. It is this: When a motion such as that moved by the honourable member for Bendigo is moved, I have no discretion under the Standing Orders other than to put the question. But as the motion moved by the Leader of the Opposition relates to me, I would not want the matter to be resolved without any discussion. I therefore ask the honourable member for Bendigo not to proceed with his motion.
– I withdraw the motion, Mr Speaker.
– I call the Leader of the Opposition.
- Mr Speaker, I want to develop the argument that I was seeking to establish earlier. You said that it was argument and not acceptable in terms of a point of order. This Parliament cannot function satisfactorily while this matter remains unresolved. I argue that as much as public administration is a responsibility for which a Minister is answerable in this House in respect of his ministerial responsibility, also he is answerable in respect of his private conduct to the extent that it could impinge in some way upon that responsibility, or upon his stature or credibility as a Minister in this House, or upon the standing and respect which should be accorded to this House in the public view. To the extent that his private conduct can impinge upon those things, it must be a matter which can be raised in this Parliament. There is only one way in which this matter can be resolved, that is, to follow the proper procedures which have been followed in three previous cases in which Liberal Ministers have been involved in investigations arising from serious allegations about propriety. They were suspended.
– I ask the honourable gentleman to be relevant to the issue. The issue is his disagreement with my ruling. If the honourable gentleman disagrees with my ruling, he will find the basis for the disagreement in the Standing Orders. I direct him to that purpose.
- Mr Speaker, the Standing Orders refer to a Minister’s responsibility to answer and be accountable for matters related to his public responsibility in this House. I am arguing that public responsibility in the circumstances which now present themselves to this House in this matter must be defined broadly and that his private conduct is as much the public responsibility of the Minister in terms of his answerability to his House as are the relatively narrow matters of public administration as a Minister of the Crown in charge of a department. There can be no confidence in the administration by a Minister of his department and the discharge of his public responsibility arising from the conduct of that Department if matters with which he is associated in a private capacity are such as to raise conceivably, not justifiably in the light of subsequent evidence -
- Mr Speaker, I take a point of order. This debate, as I understand it, is about a motion of dissent by the Leader of the Opposition concerning a ruling that was made by you as to the vehicle by which certain matters can be raised in this Parliament. This debate is not about the veracity of the allegations that have been made by the Leader of the Opposition and others. I put it to you very strongly, Mr Speaker, that any reference in the Leader of the Opposition’s speech to the unsubstantiated allegations which he and his colleagues have continued to make against the Minister for Primary Industry is not relevant to the motion and merely continues the very blameworthy behaviour of which we have accused the Opposition over recent days.
– The Treasurer’s point is correct. The Leader of the Opposition, in moving dissent from my ruling, must confine himself to the reasons for that dissent.
– Let me quote this statement which I think is relevant. It states:
They seem to have been run in precisely the same fashion before and after his death-
That is, the death of George Sinclair- and for the benefit of the same person really.
This is a most serious statement from Mr Finnane in the inquiry that is being conducted in New South Wales.
– I will not permit-
– It raises grave matters which must be considered by this Parliament.
– I take a point of order, Mr Speaker. I ask the honourable gentleman to withdraw the imputation that is contained in that unbacked, unjustified assertion that he just read into the Hansard. It is an assertion that has no substance in fact. It is an assertion that has been made in cross examination and is in no way justified by the facts.
– I ask the Leader of the Opposition to withdraw.
-Mr Speaker, I was quoting from an official document.
– I ask the honourable gentleman to withdraw.
– I withdraw.
– Where did you steal it from?
-It was given to me by Creighton Walsh. I do not have to steal. I am not in charge of any bookkeeping processes -
-Order! The Leader of the Opposition will resume his seat. I ask honourable members on my right to remain silent. I call on the Leader of the Opposition to remain relevant to the issue.
– I ask for an offensive comment from the other side to be withdrawn. Somebody interjected: ‘Where did you steal that document from?’ I pointed out that I have no reason to steal. I am not in charge of bookkeeping processes in a private company, as are some people.
-Order! The honourable member will resume his seat. I heard the sentence: ‘Where did you steal the document from?’. I do not know who used it. I ask the honourable gentleman who used the term to withdrawn.
– I withdraw it, Mr Speaker.
-The Leader of the Opposition will continue and remain relevant to the matter.
– That is a testimonial from Patrick Partners. Could we ask for anything more?
-Order! The Leader of the Opposition will resume his seat.
- Mr Speaker, I believe that that comment ought to be withdrawn.
– Enough of the mock indignation from the other side of the House. They should sit and take it for once.
-Order! I call the honourable member for Blaxland to order. I have before me a motion that my ruling be dissented from. The honourable member for Bendigo proposed to move that the Leader of the Opposition be not further heard. I asked the honourable member for Bendigo not to move the motion so that the Leader of the Opposition could speak to the motion. If the honourable gentleman does not speak to the motion but instead argues wider issues, I will be prepared to hear the motion from the honourable member for Bendigo.
-Mr Speaker, I can terminate this matter in two or three sentences. The proposition simply is that the private conduct of a Minister is a matter for this Parliament, especially when it brings into question the propriety generally of his standing as a public office bearer. That essentially is what we are arguing from the Opposition side. Finally, while this matter remains unresolved, the Parliament will continue to be distracted towards it. That is unfortunate. We would prefer to handle the matters of substance, but we also have an obligation to attend to these very important matters of propriety of conduct in public office on the part of Ministers. I think it sits uneasily on the shoulders of the Government in view of its record during the 1975 period.
-Is the motion seconded?
– I second the motion. I will be extremely brief. We on this side of the House dissent from your ruling because it seems to us that before any substantive motion can be moved in any way, in addition to the substantive motion that has already been moved against the Prime Minister (Mr Malcolm Fraser), questions must be asked. Those questions must delve into the statements which the Minister for Primary Industry (Mr Sinclair) himself has made publicly, both inside this Parliament and outside it. The personal integrity of the Minister does affect his public standing, the standing of the Government and the standing of this Parliament, and should be subject to question. I should have thought that the Minister would be more than happy to answer those questions. There is certain ministerial accountability in this Parliament and the Minister ought to face up to it.
-Order! The honourable member will remain relevant to the question.
-Mr Speaker, I think that you ought to allow that course to be followed. You pointed out here once before that we do not follow the Westminster system in every way in terms of the role of the Speaker and that your activities outside the Parliament were not necessarily the course that would be followed by the Speaker at Westminster. It seems to honourable members on this side of the House that, unless we are allowed to follow this course, perhaps your role will come under a cloud. I cast no further reflection on it, but we do have a course to follow in seeking the role -
– You are threatening the Speaker.
-I am not threatening you Mr Speaker. This matter does throw up the matter of the difference between the role of the Speaker at Westminster and the role of the Speaker, as interpreted by you, in the Parliament of Australia. If the air is to be cleared on this issue, the Minister for Primary Industry ought to make himself available to answer the questions we are putting to him.
– I wish to speak very briefly to the motion moved by the Leader of the Opposition (Mr Hayden). As I said in raising a point of order, this motion is not about the veracity of the allegations that have been made by the Opposition against the Minister for Primary Industry (Mr Sinclair). This motion is about the forms of this House. This motion is about the vehicle by which certain matters can be dealt with. In no way, Sir, does your ruling prevent the Opposition from raising personal matters on substantive motion. In no way does your ruling, which the Government completely upholds, constitute any kind of cover-up of this matter. In no way does it prevent members of the Opposition from raising under the forms of this House, which have been in existence for a very long period, matters that they may wish to raise. The motion of dissent moved by the Leader of the Opposition demonstrates that the man increasingly has little respect for this institution. He happens to be the man who last night said to Mr Deputy Speaker in this chamber ‘We will do you tomorrow. You can just chew on it overnight ‘.
- Mr Speaker, if you have a rule for one you must have a rule for both. There should be no latitude.
– The Treasurer will resume his seat. The honourable member for Blaxland will remain seated. I call on the Treasurer to remain relevant to the question.
– The purpose of this motion is to call in question a procedural ruling by you, Sir. I think it is proper, in responding to that motion, to query why the Opposition calls into question that procedural ruling. The fact of the matter is that the Leader of the Opposition has demonstrated by his attitude to this matter that he has little regard for the forms of this House and that he has little understanding that the forms of the House do not prevent his legitimately raising matters by way of a substantive motion. I think he also demonstrated by his conduct in this matter that he is becoming increasingly out of touch with some of the people in his own party. I think it is worth quoting the remarks of the New South Wales Attorney-General -
-The Treasurer will not proceed with that line. I ask him to remain relevant to the issue.
-I think it is relevant to the issue that the Leader of the Opposition demonstrates by this motion that the Opposition is prepared, irrespective of the fact that the forms of this House provide a vehicle for raising particular matters, to use every single opportunity to continue what the Government regards as a contemptible and unsubstantiated attack on the Minister for Primary Industry (Mr Sinclair). The issue in this motion is very clear and simple. Mr
Speaker, you have given a ruling; you have said that a certain procedure can be followed by the Opposition. It is open to the Opposition to do so. The Minister for Primary Industry is available to respond to that procedure. It is not a reluctance of the Minister for Primary Industry to respond to matters that we are debating now. We are debating -
– I raise a point of order. The Treasurer is now arguing the case. The Minister for Primary Industry failed to respond in debate and to answer the charges laid against him in a substantive motion the day before yesterday.
-There is no point of order.
– I simply conclude by saying that in no way does the Government ‘s opposition to this motion represent an unwillingness by the Minister for Primary Industry to respond to these matters. In no way does the Government’s opposition to this motion constitute other than the Government’s belief that your ruling, Mr Speaker, is thoroughly correct and proper and fully in accordance with the Standing Orders.
Motion (by Mr Howard) agreed to:
That the question be now put.
Original question resolved in the negative.
– My question, which is on a substantive matter, is addressed to the Prime Minister and is subsequent to a number of petitions I have presented to the House concerning human rights in the Soviet Union. Will the Prime Minister inform the House of the Government’s attitude towards the Soviet Union’s attempts to deny the rights and liberties of those of its citizens wishing to exercise the democratic rights of free expression and peaceful dissent?
-On behalf of the Government and, on behalf of the overwhelming majority of the people of Australia, I would have believed the Foreign Minister has on a number of occasions expressed the view that the campaign of suppression of Soviet dissidents ought certainly to be condemned. The Government has made this view perfectly plain on a number of occasions. We strongly condemn the trials of Soviet human rights defenders such as Scharansky, Orlov and Ginsburg. We have urged the Soviet Union to implement important principles of human rights embodied in the Helsinki Accords, and if that could occur I am quite certain that the thrust for peace throughout the world would be enormously strengthened.
I think it is a matter for very great regret that the Government’s attitude was not supported by the Victorian Branch of the Australian Labor Party at the recent Australian Labor Party conference, which rejected a motion condemning the Soviet trials of dissidents. The motion was rejected. The only implication from that can be that that conference of the Victorian Labor Party was supporting the actions of the Soviet Union. There were obviously some red faces around, and the Opposition can put whatever complexion it likes on that. But the leaders of this move were three devout defenders of liberty- Mr Bill Hartley, Mrs Joan Coxsedge and Mr Bert Nolan, the State Secretary of the Seamen’s Union of Australia.
- Mr Speaker, I raise a point of order.
– Here they come in; the friends of the Left come in to defend the Left.
-The Prime Minister will resume his seat. I cannot hear the point of order while there is so much noise. I ask the House to come to order.
– My point of order is that the question directed to the Prime Minister was quite specific. It asked him about the Government’s position in respect of trials of dissidents within the Soviet Union. It did not ask about the situation in the Labor Party. If the Prime Minister is to make statements about that he has a duty to the House, and to the Parliament to be accurate. What he is saying is not only outside the framework of the question but also happens to be untrue and grossly inaccurate.
-I overrule the point of order because the question asked called for an answer. The answer being given is relevant to the question. As I understand it, it is a comparison between the Government’s point of view and other persons’ points of view, and that is what the Standing Orders permit.
– It is important that the Government’s point of view be reaffirmed, especially since an important section of the Australian Labor Party has taken a contrary point of view, as widely reported in the Press and coming out of the Victorian conference. Those people are- Bill Hartley, Mrs Joan Coxsedge and Mr Bert Nolan, State Secretary of the Seamen’s Union. But the interesting thing is the reason for the rejection of this motion. Mr Nolan said that he preferred to believe the accounts that he heard from fellow unionists in Russia rather than those he had read in the Australian Press. Really, he chooses to believe what the communists of Russia tell him about these things in preference to what he finds out from other sources. Quite plainly that is a matter of some embarrassment to some members of the Australian Labor Party.
A great service would be done if the Leader of the Opposition could dissociate the Federal Labor Party totally from the attitudes of Mr Nolan and from the attitudes of the Victorian Branch of the Australian Labor Party because then we would have what we thought we had, that is, a bipartisan policy in relation to these matters. But for the Victorian Branch of the Australian Labor Party to reject that motion condemning Soviet actions against the dissidents in the Soviet Union on the grounds that these people would prefer to believe what the Soviet Union, what communist Russia itself, said about the dissidents is, I believe, a totally unreasonable situation and one that would be widely condemned throughout Australia. It is in fact a perfect example of socialist realism.
It is worth noting, I think, that one recently elected Labor senator has been moved to comment that it appeared that the Labor Party had closet totalitarians in its midst. I am surprised that even a newly elected Labor senator should be so naive, because if Mr Hartley can be described as a closet totalitarian it certainly is the first time he has emerged from the closet to expose himself.
-Order! The right honourable gentleman is now departing from the relevance of the question.
– I ask a question of the Minister for Post and Telecommunications. Did the Minister recommend to Cabinet the abolition of the position of staff elected commissioner in the Australian Broadcasting Commission, the central issue in what has now become a serious industrial dispute? Does he consider the ABC management ‘s decision to stand down staff was appropriate in the circumstances, given the inevitable results that would follow? Does he agree with the priorities of the ABC General Manager, Mr Talbot Duckmanton, who apparently considers his attendance at a conference of broadcasters on Mauritius to be more important than attempting to mediate in this dispute?
– The Government decided that the staff elected commissioner position would not be continued and that is clear and plain. A number of matters have been raised by the Australian Broadcasting Commission, the most important of which is the question of staff ceilings and their impact upon the ABC. These matters are being looked at sympathetically by the Government. As for the industrial action which is under way, the ABC management is taking those decisions which it must take when faced with the refusal of members of staff to fulfil their normal duties- duties which are undertaken under an Act of Parliament. The ABC management, of course, has the full support of government in taking those appropriate actions.
– Will the Prime Minister inform the House whether overseas governments are adopting the same policies as Australia towards excessive wage and salary increases?
– To a greater or lesser extent a number of countries adopt the same policies. I do not know of any government, of any political complexion, in the Western world that does not place a great deal of importance on moderation in wage demands in maintaining the fight against inflation. Not all governments have had the same degree of success in relation to these matters.
I think it is worth noting that at the present time the Labour Government of the United Kingdom is putting up a particularly valiant fight to maintain its anti-inflationary stance. It had sought to negotiate with the trade unions a wage increase through the coming period of not more than S per cent. That failed. Since then the Prime Minister, Mr Callaghan, and more recently the Chancellor of the Exchequer, Mr Healey, have had some pretty cogent and relevant things to say on this issue. Mr Healey warned on a television program that he would either cut public spending, raise taxes or do both if there were a pay explosion. The Chancellor outlined this tough line he would have to take when he was interviewed on ITV’s Weekend World program. He went on to say that if pay settlements were too high he would have to consider cutting expenditure and increasing taxes, otherwise increases in pay would not only throw people out of work but would generate a price increase which would be damaging to the whole country. He indicated that this was not a threat. He said he was not prepared to finance inflation by printing money. He noted that he did not want to make threats; he was just describing the laws of arithmetic.
I think it is a great tragedy that some trade union leaders in this country cannot take heed if not of us then at least of the Labour Party in the United Kingdom, which has recognised the realities in the fight against inflation.
– Has the Prime Minister authorised Government Ministers who travel abroad on Government business at taxpayers’ expense to arrange with international airlines for cumulative credits to be granted against unused intraAustralian sector travel and then have the accumulated credits converted for use on intraAustralian travel by persons other than the Minister or his staff? If not, will he investigate attempts to introduce this practice by his Ministers?
-If the honourable gentleman has any specific allegation to make I suggest he make it.
-The Minister for Trade and Resources will recall statements he made earlier this year to the effect that there were signs of a willingness by the European Economic Community to reconsider its attitude to agricultural imports and to the heavy subsidies it pays on agricultural exports. I ask the Minister whether there are any signs in the current multilateral trade negotiations in Geneva that the attitude of the EEC will be translated into something more tangible?
– The operation of the common agricultural policy of the EEC has been a matter of great concern to Australia ever since its introduction. It is progressively having a more and more severe impact. The high protection and the keeping out of products are leading to greater inefficiency of production. The policy means that greater subsidies are being paid. It means an accumulation of surplus stocks. It means the dumping of those surplus stocks on third markets round the world, interfering with traditional agricultural trade, and of course that is having its impact on Australia. At the MTN round of negotiations held in July I made those points as cogently as I possibly could to the EEC Ministers and I felt that we were making some impact there, with greater recognition of the detrimental effect those operations are having.
Whilst in Britain following those discussions I also spoke with British Ministers and I was very pleased with the response I got. For the first time they were saying quite openly that there was a need for change in the common agricultural policy. I think that the attitude of the British Government has been highlighted in the last few days by a speech by Prime Minister Callaghan, who openly came out and attacked the common agricultural policy, saying that there must be changes in three areas. He said that the EEC’s attitude to food imports should be more liberal, that the EEC should make better use of its export subsidies, and that the EEC should reconsider its policy of pushing up production and surpluses by annual increases in price supports. These comments by the British Prime Minister are most welcome and I hope that they are being listened to by the member countries of the EEC, because some of them are hell-bent on a course which must ultimately lead to disaster, not only for themselves but also for other countries. As far as Australia is concerned, it will be continuing its fight to get more liberal access to the EEC and we will be using our negotiating strength at the MTN to try to do so.
-I address a question to the Minister for Industry and Commerce. I refer to the decision of the High Court last Thursday in what is known as the Sankey case. In particular, I refer to the criticism of the Minister by Mr Justice Aickin at page 78 of that judgment, where he dealt with an affidavit of the Minister in which the Minister referred to meetings of the Australian Loan Council. His Honour said:
The deponent -
The Minister- does not state that he has himself perused the particular documents. He does not specifically state that the minutes record either in full or in summary form the discussions which took place at those meetings or whether they record merely the decisions arrived at.
His Honour went on to say that he found the affidavit completely unsatisfactory. I therefore ask: Why was the claim of Crown privilege made in such an unsatisfactory form?
– That is clearly a matter which should be dealt with on notice, and I will treat it accordingly.
Mr Aldred having addressed a question to the Prime Minister-
-The honourable member’s question is out of order. The Prime Minister is not responsible to this House for the actions of the Victorian Branch of the Australian Labor Party.
-I ask the Minister for Industry and Commerce whether his attention has been drawn to the conflicting statements by Mr Munk of Travelodge Australia Ltd that cheaper international air fares will expand Australia’s potential to attract tourists from overseas and that any loss by Qantas would be returned ten-fold in profits to the tourist industry, and by Mr Allan Dick, the Chairman of the Australian National Travel Association, that cheaper fares will result simply in more Australians going overseas, with little if any increase in international visitors to Australia. What is the position of the Minister and the Government in this conflict?
– I call the Minister for Transport.
– I directed my question to the Minister for Industry and Commerce.
– I apologise. I thought the question was asked of the Minister for Transport. In any event, if the Minister for Industry and Commerce chooses to ask the Minister for Transport to respond to it, he may do so. I call the Minister for Transport.
– One of the aspects of the cheap air fare proposals has been, of course, the introduction of a cheap air fare regime not only out of Australia but also into Australia. One of the strengths of the proposals that I have been putting forward to the various countries involved has been that the proposals have been put on just that basis. What we are seeking to do is to get a cheap air fare regime from approximately 20 countries- I do not want to list them again- into Australia with the hope that we can encourage a great number of tourists to this country. I am delighted with the way in which the discussions have gone with the Americans this week. When they return to Australia on 4 December I hope that we will be able to conclude negotiations on the cheap air fare package to America that I proposed to them so that- this takes up pretty much the matter about which Mr Monk was talking- this cheap air fare package will be available to Americans from about 1 February 1979. That is the date for which we are aiming in relation to the introduction of this cheap air fare package. I am hoping that when the American team returns on 4 December we can wrap that up and be conclusive about it.
Of course, included in the honourable member’s question is his concern that the Australian Government do more to encourage tourists to come to Australia. I remind him of the specific increase in the allocations made to the Australian Tourist Commission in the Budget which was brought down in August. One of the purposes of those increased allocations was that, in the knowledge that we were seeking a cheap air fare regime to Australia, the Australian Tourist Commission would be better based to explore the matter of the number of tourists who might be encouraged to come here.
-I raise a matter which is of serious consequence to the Parliament. Mr Speaker, in view of answers given at Question Time, I ask whether you will investigate why an undertaking was given by the Department of Foreign Affairs to the Soviet Union that no members of the Joint Foreign Affairs and Defence Sub-Committee on Human Rights in the Soviet Union would be included in any parliamentary delegation to the Soviet Union. I can vouch for this. Mr Speaker, I ask you, as the person who is charged with the protection of the members of this House, to investigate the matter and to ensure that no such undertakings are given to any foreign country on any matter. It is an extremely serious matter.
-I will make inquiries and let the honourable member know.
- Mr Speaker, I raise a point of order. Because my Department has been involved in this matter, I would like to state here and now that if any officer of my Department sought to give an undertaking regarding the composition of a parliamentary delegation, it would have been done without my authority and without the imprimatur of the Government. It would run contrary to the viewpoints that I hold. It has nothing to do with the Department of Foreign Affairs, which may be able to state a view but would not be able to give a decision.
– For the information of honourable members I present the election statistics for the Senate election and general election of members of the House of Representatives held on 10 December 1977, together with the text of a statement by the Minister for Administrative Services outlining the information and electoral education services which the Australian Electoral Office has been developing over the last two years. Each member will receive a copy of the appropriate State volume. Due to the limited number of full sets available, references copies of these volumes have been placed in the Table Office and the Parliamentary Library.
-Mr Speaker, I wish to make a personal explanation on the ground that I have been misrepresented.
-The honourable member may proceed.
-This morning I noticed that it is recorded on page 2869 of yesterday’s Hansard report that the honourable member for St George (Mr Neil) invited members of the Australian Labor Party to rise in their places if they were prepared to denounce the honourable member for Lalor (Mr Barry Jones). Right at that moment, without having listened to the nonsense being spoken by the honourable member and not knowing that he had made this challenge, I nonchalantly rose from my seat and walked across to the table to make some notes about a remark which I had heard behind me and which I thought ought to be kept for posterity. As I did this, the honourable member for Denison (Mr Hodgman), with his usual sharpness interjected: The honourable member for Hindmarsh.
The report continues:
– The honourable member for Hindmarsh, I am told.
That remark would seem to give confirmation to the interjection by the honourable member for Denison that I had accepted the invitation extended to me to rise and to denounce my colleague, the honourable member for Lalor. I did nothing of the kind and I would do nothing of the kind.
- Mr Speaker, I also claim to have been misrepresented.
-Does the honourable member wish to make a personal explanation?
– Yes, I do. The words which are reported on page 2722 of Hansard of 14 November 1978 and which I used in this House are not exactly the words I intended to use. The words shown are: the person who spoke to him was a Mr Brian Mahony, to whom I spoke about other matters.
The correct form of that sentence should be: ‘The person was a Mr Brian Mahony’. I then went on to say:
I tabled a telex received from Mr Brian Mahony . . .
Secondly, I have been misrepresented by the Sydney Morning Herald this morning in an article which attributed this statement to the New South Wales Attorney-General:
I take the view there is only one source for that.
The is the publication in a recent issue of the Bulletin magazine of a letter by the special investigator, Mr M. J. Finnane to me. Mr Walker continues:
It must be a source associated with Mr Sinclair.
As I have remarked in this House before, the reproduction in the Bulletin is quite obviously not from the original document. The original document is in my possession only. The copy could not have come from the document which is in my possession. Other people have been attributed with being the source of that information. It would seem to me, however, that it is far more likely to have come either from the New South Wales Attorney-General, or from Dr George Venturini, or perhaps from Mr Finnane. In any case, I gather that neither the New South Wales Attorney-General nor Mr Finnane claim in any way to have been associated with it. I take that point but at the same time I say that it certainly could not have come from me.
The third misrepresentation is that in this place and in the other place reference has been made to a number of assertions made in a transcript of evidence of proceedings before Mr Finnane and a cross-examination of a Mr Creighton Walsh. Mr Creighton Walsh is a minor shareholder of A. Walsh Investments Pty Ltd. He is not a director of any of the companies. The assertions made in that cross-examination are not, in my view, in accordance with the facts. I believe that the comment made by Mr Finnane on 18 October 1978 that in fact he has come to no conclusions on the matter more accurately reflects the present position on those comments. Therefore, any inference that might be drawn from the assertions in that evidence I believe must be seen in the light of Mr Finnane ‘s that he has reached no conclusions on the evidence before him. At that stage Mr Finnane continued to say:
The reports in the Bulletin magazine were untrue and unfair to myself.
- Mr Speaker, with your indulgence, could we have it made clear what alterations the Minister is proposing to page 2722 of the House of Representatives Hansard?
– He is not proposing any alterations.
– The Hansard people seem to have experienced some confusion about exactly what the Minister is seeking. I certainly experienced that confusion in the way that he has put the matter.
- Mr Speaker, I seek your indulgence. In my statement to the House I said that Mr Brian Mahony had not spoken with Mr Creighton Walsh. As the transcript of Hansard was written, it appeared that he had done so. In fact Mr Brian Mahony did not speak with Mr Creighton Walsh and I corrected that part of the reference. He had at no stage spoken with Mr Creighton Walsh.
-Mr Speaker, I wish to make a personal explanation.
-Does the honourable gentleman claim to have been misrepresented?
– Yes. It is recorded on page 2870 of Hansard that last evening in the adjournment debate the honourable member for Prospect (Dr Klugman) made certain allegations which, in respect of me, could only be a gross misrepresentation. He made reference to the Joint Committee on Foreign Affairs and Defence and to the sub-committee which is chaired by Senator Wheeldon and which is currently investigating human rights in the Soviet Union. The honourable member stated:
I challenge members of the Liberal Party, who of course have adequate representation on that sub-committee, to look at the record of attendance at meetings of the subcommittee.
He went on to say that the sub-committee usually consists of only the following four members:
That is, the honourable member for Prospect-
Senator Sibraa, and the honourable member for Hawker (Mr Jacobi) before he became ill. Those are the four who always make up the sub-committee.
He further said:
For practical purposes, the other members of that subcommittee are non-existent. They do not attend.
I have taken the trouble to obtain a list of the sitting dates of that sub-committee since I have been involved with it during the life of this Parliament. The first meeting was held on 5 April 1978 and the last one was held on 27 October. Fourteen meetings were held of which I attended eleven. I put in an apology on 11 May and 12 May. On those occasions I was representing the Government as one of its three representatives at the Advisory Council for Inter-Government Relations in Melbourne. On 1 1 October I recorded an apology. On that day I was with Senator Sibraa who is another member of that subcommittee at the South Pacific Conference in New Caledonia. I note- I do not want to make any point of this matter because I think the error is quite obvious- that the honourable member for Prospect attended 12 of those 14 meetings and I notice that Senator Sibraa- again I emphasise that I make no point of it- attended only nine meetings. I seek leave to incorporate that attendance list in Hansard.
The document read as follows-
Meeting 24 May 1978- Attendance: Wheeldon, Jacobi, Klugman, Sibraa, Simon. Apologies- Dobie, Scott. 7 June 1978- Wheeldon, Scott, Dobie, Jacobi, Klugman, Sibraa, Simon. 20 September 1978-Wheeldon, Martin, Simon. Apologies- Jacobi, Klugman. 29 September 1978-Wheeldon, Dobie, Klugman, Simon. Apologies- Jacobi, Martin, Sibraa. 11 October 1978-Wheeldon, Klugman, Martin. Apologies- Dobie, Jacobi, Sibraa, Simon. 18 October 1978-Wheeldon, Simon, Dobie, Klugman, Sibraa. Apologies- Jacobi, Martin. 27 October 1978-Wheeldon, Simon, Dobie. ApologiesJacobi, Klugman, Martin, Sibraa.
-In reply to the honourable member for Corio, I emphasise that I make no point of the non-attendance of Senator Sibraa. Undoubtedly he had a valid excuse for not attending as I have no doubt the honourable member for Prospect also had a reasonable excuse for not attending on the two occasions on which he was not present. I go back to the point which is the basis of my complaint that the honourable member for Prospect claimed that no member from the Government side attended those meetings. Out of the last 14 meetings I attended eleven. I respectfully suggest that the honourable member for Prospect be given the opportunity to apologise.
-I indicate to the honourable member for Melbourne Ports that it is the practice in this House to inform the Speaker of the intention to raise a personal explanation.
– I apologise for that, Mr Speaker, and I assure you that I show no lack of courtesy.
-I understand that. I am drawing it to the attention of other honourable gentlemen. I call the honourable member for Melbourne Ports.
-I wish to make a personal explanation.
-Does the honourable gentleman claim to have been misrepresented?
– I do. During Question Time the Prime Minister (Mr Malcolm Fraser) seriously misrepresented me and many members of the Victorian Branch of the Australian Labor Party when he purported -
– The majority?
-Overwhelmingly the majority. He purported to give the House an account of decisions that were made at the Victorian Branch conference at the weekend. I will not take up the time of the House by going into all the details. Suffice to say that at the weekend the following resolution which constitutes the policy of the Victorian platform was carried by a very substantial majority of members at the conference:
Delegates voted that ‘support for human rights and dignity is a fundamental principle of Labor foreign policy and that the ALF is opposed to all forms of authoritarian and totalitarian Government whether based on the ideologies of the Left or the Right’.
In moving that motion the speaker made a very specific reference to the position in the Soviet Union and referred to the Dinzburg trial in particular. With that reference before it, the conference adopted the principle just referred to in a very substantial way. That represents the policy of the Victorian Branch. The House can be assured that I and other spokesmen of the Victorian Branch -
– You are the President, aren’t you?
– That is right. I and other spokesmen of the Victorian Branch continue to be concerned at the erosion -
-The honourable gentleman will cease arguing the issue. This is a personal explanation.
– I am sorry. The House may be assured that I and other spokesmen of that Branch- I am the President- continue to be concerned at any erosion of human rights or liberties. I am still concerned, as the conference showed by its resolution, at the position and the problems raised by the Dinzburg trial. I regret that when the Prime Minister answered the question, he did not put all the facts and all the evidence before the House. But that is the usual practice of the Prime Minister.
-The honourable gentleman has made his point clear.
- Mr Speaker, I wish to make a personal explanation.
-Does the honourable gentleman claim to have been misrepresented?
– Yes, Mr Speaker. In response to a question which was asked at Question Time and which related to the matter of human rights in Russia and a recent decision of the Victorian Branch of the Australian Labor Party, the Prime Minister (Mr Malcolm Fraser) challenged me to make a statement dissociating myself from that decision. The implication was that if I did not make a statement dissociating myself from that policy decision, it would be interpreted as evidence that I was not concerned or was not opposing the onslaught against human rights in Russia. The details of that policy decision which was carried at the Victorian Branch of the Labor Party have been outlined by the honourable member for Melbourne Ports (Mr Holding).
I will not repeat them. They condemn the onslaught against human rights by any authoritarian and totalitarian government, whether based on the ideology of the Left or the Right. I have gone on public record several times quite recently condemning the onslaught against dissidents in the Union of Soviet Socialist Republics but also pointing out that there are extensive erosions of basic human rights in just about every country within our own geopolitical region. To be consistent, we would have to raise concern about those matters in specific terms if we are to set upon a campaign of condemning other countries in relation to the abuse of human rights. I have no objection to doing that. I will consider that matter further and we will see what we can do to test the Government’s genuineness about its relations with countries near us on this matter in the course of the next week.
-The honourable gentleman has now made his explanation.
-I wish to make a personal explanation.
-I remind the honourable member for Cook, as I did the honourable member for Melbourne Ports, that it is the practice to inform the Speaker beforehand that he wishes to make a personal explanation so that the Speaker may call the honourable gentleman. Does the honourable gentleman claim to have been misrepresented?
– Yes, on the same grounds as my colleague the honourable member for McMillan (Mr Simon) which related to the attendance at the sub-committee of the Joint Committee on Foreign Affairs and Defence which is investigating human rights in Russia. As will be shown from the document which was incorporated in Hansard, the attendance of all members of that sub-committee is substantial and there is no evidence of any member of that sub-committee regularly being absent.
I would also point out in view of this point that the membership of that sub-committee to date has been most bipartisan in its approach to the witnesses who have appeared before it. I would hate to think that matters such as this one would damage the reputation of the sub-committee as it proceeds with its hearings. I also seek your indulgence, Mr Speaker, to point out that the membership of that sub-committee, with the exception of the honourable member for Prospect (Dr Klugman), is identical to that of the other subcommittee which has been appointed to investigate issues concerning South Africa. I seek leave to have the attendance list for that subcommittee incorporated in Hansard.
The document read as follows-
12 April 1978-Jacobi, Blewett, Dobie, Simon, Wheeldon. 4 May 1978-Jacobi, Blewett, Dobie, Simon, Wheeldon. 27 September 1978-Dobie, Blewett, Martyr, Simon, Wheeldon. Apologies- Jacobi, Martin. 16 October 1978- Dobie, Blewett, Martin, Simon. Apologies- Jacobi, Martyr, Wheeldon. 19 October 1978-Dobie, Martin, Martyr. ApologiesJacobi Blewett, Simon, Wheeldon. 31 October 1978-Dobie, Simon, Blewett.
-I will make one short comment in relation to the work of the committees of this House or joint committees. I think it is most unfortunate if issues that should be resolved within the committees come to the House, except by formal report.
-Mr Speaker, I wish to make a personal explanation. If, incorrectly, I have offended people opposite, I withdraw the imputation. I think it is relevant, in making my personal explanation, to point out what happened last night in the context in which it happened.
-The honourable gentleman may proceed.
– This question was raised by the honourable member for St. George (Mr Neil). He made generalised allegations that members on this side of the House were not concerned about the question of human rights in the Soviet Union. I will look at the attendance records of the sub-committees which have been incorporated in Hansard on a couple of occasions today, but I would be surprised if they did not show that on numerous occasions, if not on the great majority of occasions, Labor Party members had a great majority as regards attendance on that sub-committee, if indeed they were not the only ones who attended. This would not have happened had the Liberal Party and National Country Party members of that subcommittee attended with the same keenness as members of the Labor Party. Let us be clear about that.
-Order! The honourable gentleman will resume his seat. The matter should not be pursued.
-Mr Speaker, I seek your indulgence to make a comment on some remarks that were made before and that I wish to correct.
– Correct whose remarks; your own?
-I wish to correct comments made by the honourable member for Melbourne Ports (Mr Holding) when he claimed to have been misrepresented. He was wrong. He was referring to a different resolution from that referred to by the Prime Minister (Mr Malcolm Fraser). The Prime Minister referred to- I think this should be brought before the House -
- Mr Speaker, I take a point of order.
MrBOURCHIER- They do not want to hear it, Mr Speaker.
-Order! I inform the honourable member for Bendigo that whether or not the Opposition wishes to hear his remarks, the honourable gentleman is not making a personal explanation. The record speaks for itself. If the honourable member for Melbourne Ports were talking about a resolution different from that mentioned by the Prime Minister, the matter would be apparent on the face of the record.
– Thank you, Mr Speaker. I just wanted to point out that the honourable member for Melbourne Ports was talking about -
-Order! The honourable gentleman will resume his seat.
- Mr Speaker, I take a point of order. If the Government does not support the resolution read by the honourable member for Melbourne Ports (Mr Holding), let the Government Whip be honest enough to say so.
-Order! There is no point of order.
Motion (by Mr Street) agreed to:
That the House, at its rising, adjourn until tomorrow at 10.0 a.m.
– I move:
That a joint select committee be established to inquire into and report upon:
1 ) all aspects of existing electoral laws affecting the Australian Parliament;
changes that should be made to existing legislation;
the provision of proportionate subsidies by the Australian Government to political parties and candidates in federal election campaigns and the disclosure of the amount and nature of assistance by corporations and individuals to these parties and candidates, and
the possibility of establishing fixed election dates subject to a government retaining the confidence of the House of Representatives.
The Opposition presents to the Parliament today a most reasonable and rational proposition: That a joint select committee be established to inquire into and to report upon the matters listed in the motion I have just moved.
This is not the first occasion upon which I have spoken on many of these subjects, especially the funding of political parties and candidates and the disclosure of political donations, and it will not be the last. But in the period since I spoke on this subject there has been some movement by Government members. Private discussions reveal to me that there is a growing number of supporters of the view that these steps that have been taken in so many other countries, are going to have to be taken in Australia. The standards set in other countries are standards that are going to have to be set in Australia.
This motion is not put forward as a party political proposition: It is put forward in the manner in which it has been put forward and carried in so many of the democracies- as the motion of a private member. We have previously presented private member’s Bills. The Government was reluctant to agree with them. In 1973, 1974 and 1975, the Opposition, the present Government, opposed all the reform measures presented to the Parliament, using its numbers in the Senate to frustrate the legislation introduced by the then Labor Government. Subsequent upon the Liberal-National Country Party coalition taking over the government of this country at the end of 1975, the Labor Party sought on no less than three occasions, through a private member’s Bill and through separate motions in this House, to get some movement going to inquire into the funding of political parties and the electoral laws that govern this country.
There has never been a major overview of the electoral laws of Australia. As a result, one tends to believe that people do not take the electoral laws of Australia as seriously as they ought to. Some people do not even know the electoral laws of Australia until they become a candidate or a member of parliament. Some people in the Parliament are not aware of the strange way in which the law moves; are not aware of how the electoral laws of this country affect the electoral responsibilities of candidates and of members and the rights of voters. We ask nothing more than that a parliamentary committee should look at those laws, should see the way in which reform is required to bring about some sense to them, especially those laws which honourable members know are frustrating the proper rights of citizens of this country and are being ignored by those of us who stand as candidates for our respective political parties. I will say more on this as I come to each of the sections.
The Electoral Act is a most complex document and it has a very interesting history. It covers all the matters affecting the rights of citizens, lt is an enormously important document, following upon the Constitution, in seeing that civil liberties are available- for example, the right to elect or not elect a party in this country. Why people have not taken this matter more seriously in the past is beyond me. Already this year a very senior Minister of this Government has been dismissed because of an inquiry in Queensland. The royal commissioner said that the Minister had acted improperly and in contravention of the law set down in the Electoral Act. Leaving aside that specific case, it seems to me that we ought to look a little more closely at the way in which these laws perhaps could catch us all at some time. Every member of this Parliament knows that if the law were enforced, certainly in respect of the limitation of expenses incurred by candidates, which is covered by a section of this Electoral Act, we could perhaps all be subject to some sort of legal action.
I wish to raise just one or two matters that could provoke some thought on the other side of the House about whether or not there should be a committee of this Parliament to look at the Act before I deal in more substance with the question of subsidies paid to political parties. We must look in the first place at the question of electoral commissioners. There has always been in this Parliament, irrespective of who is in government, some question about the third commissioner appointed in each of the States. It seems to me that perhaps there is a mechanism for overcoming those criticisms which arise when the Government of the day takes it upon itself to appoint the third commissioner in each State. As honourable members will know, there was a raging controversy over the way in which the redistribution was carried out in Queensland. I raise that matter because two positions of commissioner are laid down in the Act, but the appointment of the third commissioner is still subject to the whims of the Government of the day.
The second matter, which again was subject to a great deal of debate prior to the 1977 general election- it resulted from the 1977 redistribution- is the final report of the commissioners. We would all want to continue to have the right to object to the first report of the commissioners. But the final report- the report that is tabled in this Parliament as being the final redistribution upon which we will go to the polls- is not subject to objection. Some very major changes were made to it. Boundaries in the inner city area of Sydney were changed radically because of minor objections that were raised with the Commissioners. It seems to honourable members on this side of the House that if the Commissioners were brought to task on the way in which they varied their first report they would find it very difficult to justify what they had done. If objections can be raised to the first report, why should objections not be raised to the second report before it goes to the Parliament?
Nothing is more important than the way in which these things are done. Nothing could bring the Electoral Act into jeopardy more than the way in which the Commissioners carry out their duties. A simple thing like the right to abolish polling booths also causes problems. We all know that if action is taken to abolish the smallest polling booth in our electorate all the constituents in that area think that it is the greatest sin ever carried out under the Electoral Act. Perhaps we can have some more permanency about where people go to vote as it seems to be extremely important to the electors. That is something else that could be looked at.
Not the least reason for which I raise this matter today is the question that is raised from time to time of compulsory enrolment and compulsory voting. Much argument has taken place about who was responsible for the introduction of compulsory voting. A search of the record shows that in 1924 all the major parties agreed with the introduction of compulsory voting but no party would introduce it. It became law as a result of a private member’s Bill. I suggest that that epitomises the point I am making today. Perhaps the only way in which we can bring about reform in this area is by establishing a parliamentary committee so that all the major parties which make up this Parliament can look at the matter. I will read from a speech that was made a short time ago about this subject by the Acting Chief Australian Electoral Officer, Mr White. He said:
Until 1911 enrolment on the Commonwealth Electoral Roll was voluntary, although the electoral authorities and political organisations made every effort to secure the enrolment of qualified persons. However, in that year the compulsory enrolment provisions were embodied in the Commonwealth electoral law for the first time. The enrolment of persons already enrolled on the Electoral Rolls was unaffected, but the introduction of these compulsory enrolment provisions necessitated a complete revision of the existing Electoral Rolls and, henceforth, the submission of a claim for enrolment by every qualified person.
With the introduction of compulsory enrolment, the responsibility for enrolment or change of enrolment devolved upon the elector and, from that time forward, every person becoming entitled to enrolment was required to complete an electoral claim and forward it to the Electoral Registrar for the Subdivision.
Compulsory voting for Commonwealth elections was introduced in 1924 and became applicable for the first time at the Senate and House of Representatives elections held on 14 November 1925.
While compulsory voting was apparently favoured by both the Government and the Opposition at the time, no party wished to take the responsibility for its introduction. By arrangement, the Bill was introduced as a Private Member’s Bill. No Minister in either House spoke on the Bill.
One of the most important measures in the Electoral Act of this country was agreed to by the major parties and introduced by a private member. So no Minister spoke upon it. This is indicative of the fact that if a parliamentary committee looked at all these measures and said that we did not need any changes at all no harm would have been done. I suggest that the honourable members who are participating in the new House of Representatives legislation committees will vouch for the value of giving closer scrutiny to legislation that has been brought before this Parliament. No doubt exists in my mind that a joint parliamentary committee looking at the Electoral Act would agree on amendments that should be made to it.
Obviously other matters ought to be looked at. An issue arose last year in relation to nominations under section 70 of Part XI of the Electoral Act. Two previous State members of Parliament were elected to this House. I refer to the honourable member for Lalor (Mr Barry Jones) and the honourable member for Melbourne Ports (Mr Holding). The Act says that a State member cannot be a candidate at a federal election. We have never thoroughly discussed why. The matter affects both sides of this Parliament. The Minister for Business and Consumer Affairs (Mr Fife) was also a State member of Parliament. These members resigned their positions to stand as federal candidates. It seems to me to be logical to look at whether that provision is absolutely necessary.
Who in this Parliament likes the procedures that are followed, particularly in the marginal electorates, for postal voting? Who likes to go round the hospitals trying to get the matrons on side with respect to assisting in getting the maximum number of votes out of the private nursing homes, the geriatric wards, the hospitals and so forth? No one likes the system in this respect. The system under the South Australian Electoral Act has been altered so that the Electoral Office sends its own officers into those places which have a certain number of beds. No one acting on behalf of a political party is allowed by law to visit those places. The South Austraiian Electoral Act used to be the same as the federal Electoral Act in this respect but it has been changed radically.
The names of candidates for the Senate are placed into groups and those groups of names are put into a barrel which is rolled over and then the group names are picked out one by one, and that is the way the candidates then appear on the ballot paper. The honourable member for Holt (Mr Yates) will sympathise with me when I ask: Why should the Yates and the Youngs of the world always appear last on a House of Representatives ballot paper? The names should be drawn out of a hat and the names should appear on the ballot paper in that order. No one should suffer because his name starts with a letter at the bottom of the alphabet. Obviously it would be common sense to amend the law to see that names are put on the ballot paper in the order in which they are drawn, as is done in the Senate. Now is the time for a committee to look very seriously at the introduction of an optional preferential voting system. It is a system that is looked upon more kindly now than it was years ago.
Everyone knows that the part of the Art concerning the limitation of electoral expenses, which I touched on briefly at the commencement of my speech, is a joke. I do not know how many members fill out the returns required by the Electoral Act. Section 151 of Part XVI requires a form to be returned within eight weeks showing how much has been spent and how it was spent. There are all sorts of laws covering things which cannot be done. Everybody knows, especially me after having been a campaign director for 11 campaigns, that it is an absolute joke. That part of the Act ought to be looked at seriously. We have introduced, both in government and in opposition, Bills that would have set a certain ceiling on expenditure, depending on whether a House of Representatives election, a separate Senate election or a joint election was being held. This would have enabled some common sense to prevail in regard to the expenditure on elections in this country. I notice that under the part of the Act dealing with electoral offences and punishments a person who wagers on an election result is liable to a fine of $100. Many members would be subject to those provisions if close scrutiny were made of their activities.
I refer now to the question of the funding of political parties, which forms an enormously important section of the motion that I moved this morning and which I have moved so many times before. I do not believe that members of the Government will take notice of what I say as an individual about this matter but I have very strong feelings about it. I turn again to the most recent, comprehensive and perhaps most relevant report on this subject to be brought down overseas. I refer to the report of the Houghton Committee to the British Parliament. I will read a summary of its recommendations.
We recommend the introduction of a system of state financial aid for political patties in the United Kingdom.
Such aid should take the form of:
annual grants to be paid from Exchequer funds to the central organisations of the parties for their general purposes, the amounts being determined according to the extent of each party’s electoral support;
In order to qualify for a grant a party must at the previous general election have either.
Under those recommendations the total cost of state aid to political parties was estimated at £Stg2.25m a year. It is also interesting to note the reactions of the various parties. The Conservative Party as a party said it did not believe in state aid. The Labour Party said that as the parties were indispensable to democracy they should be assisted, they were finding things difficult and it came down in support of state aid being given to political parties. The Co-operative Party said that it also would support state aid. The Liberal Party said that previously it had a view which opposed state aid but now it came down in support of it. The Confederation of British Industry came down reluctantly in favour of a limited form of state aid. The British United Industrialists came down in favour of the present system of private donations. A number of trade unions were opposed to the idea; a number of major trade unions were in support of the idea. Other groups throughout England had mixed views on whether state aid should be provided.
Let me give the results of a survey throughout England of people representing the various political parties. Of the 91 replies received from various sections of the Labour Party throughout the United Kingdom 69 were in favour of state aid, 10 were opposed to it and 12 were neutral. In spite of the fact that the Conservative Party in its formal submission to the inquiry said that no state aid should be given to political parties, of the 84 replies received 32 were in favour of state aid 39 were opposed to it and 13 were neutral. Of the 80 replies received from Liberal Party organisations, 63 were in favour of state aid and 10 were opposed to it.
A survey, commissioned by the Houghton Committee, of the British public without any canvassing at all showed that 45 per cent of those interviewed were opposed to state aid for political parties and that 44 per cent were in favour of it. State aid for political parties is becoming the system throughout the Western world. We cannot continually hide our heads in the sand and say that it does not exist or there is no reason for providing state aid. People a lot smarter than us have adopted the system in favour of consolidating the role of political parties, not just at the parliamentary level, not just for the purpose of issuing propaganda and making announcements at election times, but to establish proper research and work in the electorate from the local level right through to the national level that we serve in the Parliament.
All we on this side of the House are asking is that a parliamentary committee be established to look at the system. If that committee recommends that nothing should be done, then we can have a look at its report. I assure the House, as I have done so many times before that on these questions if we form such a committee it will recommend change.
Mr DEPUTY SPEAKER (MrMillar)Order! The honourable member’s time has expired. Is there a seconder to the motion?
– I second the motion and I reserve my right to reply in order that we can have a vote on this matter.
– I have been trying to work out why the honourable member for Port Adelaide (Mr Young) has moved this motion. I think he has done so to embarrass his own Leader because the economic and the financial consequences of such a proposal are totally preposterous. The consequences of such a proposal for the nature of the democratic system are even more alarming. It will become obvious as we read the heart of the motion to which the honourable member for Port Adelaide is wedded. Paragraph (3) of the motion reads:
The provision of proportionate subsidies by the Australian Government to political parties and candidates in federal election campaigns . . .
That is the heart of what the honourable member for Port Adelaide is talking about. Under this motion candidates, members of parliament and political parties are to get into the private purse. Under this proposal they are to plunder the pockets of Australian taxpayers. Our attitude on this side of the House quite overwhelmingly would be more in tune with the motion, notice of which I gave in this House on 21 February in which, among other things, I said:
That this House, believing-
1 ) that any proposal to divert taxation or loan revenue to fund a political party will eventually lead to a weakening of the vigour and responsibility which should reside in freely formed political parties;
that public funds should be used for the benefit of the Australian people and not to promote the contest for power by political parties, and
that such funding is contrary to the interests of emerging parties and will prolong the power of contrasting political organisations,
That proposed motion opposed the call that such funding should be provided to political parties. The honourable member for Port Adelaide should not pretend that he is merely proposing an objective, academic, dispassionate inquiry by a committee. What he is doing is in line with what was proposed by a former Prime Minister and Leader of the Opposition, Mr Whitlam, who called over and over again for this kind of subsidy. It is in line with what was proposed by the Secretary of the New South Wales branch of the Australian Labor Party, Mr Graham Richardson. He has called for it on a number of occasions. It is in line with what has been proposed, for example, by the Federal Secretary of the Labor Party. So it is not a random proposition that the honourable member for Port Adelaide has thought about and brought into this place. Mr Whitlam, Mr Richardson, Mr Combe and the honourable member for Port Adelaide are in agreement. It is not a random proposition. It is part of a campaign and it ought to be seen as part of a campaign. For example, I quote Mr Combe, the Federal Secretary of the ALP, who on 28 May last year said that the only rational solution is for a system of total state funding as now applies in the United States presidential elections or a system of television and radio time, and so on. All those people I mentioned have supported that proposition. The honourable member for Port Adelaide has been persuaded to run this campaign because he supports the idea. His own party leaders, organisationally and otherwise, have been persuaded to run it because they support it. I am fascinated that he should take this action because it runs contrary to the principle which was enunciated by his own leader in South Australia, Premier Dunstan, who was asked to comment on his own slush fund in South Australia. I do not argue the merits of that fund but Mr Dunstan stated:
It is totally and completely separate from any Government finances and, as such, it is not the business of this House.
In other words, the funding of parties, condidates and campaigns is not the business of this House.
– It should be.
-I am sorry to hear the honourable member for Robertson say that because it ought not to be the business of this House. Let me for a few moments deal with the consequences in the event that such a process were introduced in Australia. The consequences would be enormous. The honourable member for Port Adelaide or the honourable member for Robertson could be accosted in a street in a suburb of the electorate by a pensioner who received a payment from the Government, say, an aged pensioner, and he would say: ‘Look, I am sorry, you know, we could have paid you an extra dollar a week in pension payment but we have taken that money because I need it to pay for my campaign and my party’s political campaign’. That is a proposition with which honourable members would be faced.
– Why don ‘t they say it in England?
– We are dealing with Australian democracy; we are not dealing with English democracy. I am interested to see the imperialists trying to impose the worst of what they see in other countries. Another consequence if this motion were accepted would be a situation in which the honourable member for Robertson would say, when he comes across a mother of three or four children in a street: ‘We would like to have given you a little more money in family allowance payment for your children but- and I know that you will understand- we have taken that because I want that money to pay for my political campaign and my party’s campaign. You should support it because it will go to pay for some of those television operators, radio station broadcasters, and the printers so that they can put out the propaganda on my behalf for you. I do not know how you voted, but you will feel happier about this proposition’. I could imagine nothing that would be so designed to destroy any of the responsibility of the people for their own democratic system.
Irrespective of what happens elsewhere, honourable members on the Opposition side must face up to the situation which I have described and which would occur in the streets in their own suburbs or cities. The people will not accept such a proposition and they ought to say so. Therefore, I believe that the honourable member for Port Adelaide has moved this motion to embarrass his own Leader because his Leader, a friend of mine for many years and a man whom I respect, has been trying to steer a sensible and responsible path for his own party especially in terms of economic affairs. He has been trying to get away from the proposition put by the honourable member for Gellibrand (Mr Willis), who sees virtue in having increased taxation because of the virtue of public expenditure. His leader, the honourable member for Oxley (Mr Hayden), has been trying to avoid those propositions. Now the honourable member puts it on him. I ask the honourable member What is he about; why is he doing it; why should he do it? The honourable member may be given an opportunity to say more a little later. We all know that there has never been a time when there has not been a crisis over political party funds. This crisis ought to be recognised for what it is and for nothing else. It does not invite this absurd kind of proposition.
There is an old saying: The pop of the pop gun is the pop of a pop gun; it is not the crisis of doom. I believe that the honourable member for Port Adelaide has made a serious and very significant error of judgment. Look at the morality of the proposition. The Opposition would plunder the pockets of people and ask them to pay directly for political campaigns on issues to which they would have been totally and completely opposed for all their working lives. Consider the morality of that proposition. Honourable members opposite are not going to ask for money to be allocated through the Parliament; they are not going to ask for money from general funds. They have put forward a direct proposition that people be asked to make a subvention for this purpose. I believe it is almost a totally immoral proposition -
– What about the immorality of the present situation? It is a greater immorality.
– The present situation has a great deal wrong with it but the Opposition would be compounding error upon error and grievous fault upon faults that are nothing like it. I ask the Opposition to consider this matter.
The honourable member for Port Adelaide spoke about proportionate funds. The Opposition would ask people to pay out of their own pockets for the campaigns of revolutionary parties which are designed to bring down the very system in which they operate. I am not talking here about the legal right of such parties to exist. The Opposition would import its own Trojan horse into the Australian democratic system. I would ask the Opposition to reconsider what it is about. Quite frankly, it has made a mistake and it ought to consider that it has made a mistake. I have said that I think the honourable member for Port Adelaide has raised this matter to embarrass his own leader. But I do not suggest that he has done it in order to pose such a threat to democracy. But whether he is doing it knowingly or unknowingly, he is in fact doing it.
Consider the Public Service. Can anyone imagine anything which is designed more sensitively and quickly to politicise the Public Service? It is proposed that the Public Service inspect the tactics, the books and the campaigns of political parties and see what they are about. It is proposed that the Public Service examine whether political parties are running bona fide campaigns or whether they are running false campaigns; whether they are really running candidates or whether they are running dummy candidates in order to get funds. The Opposition proposes to put public servants in offices to administer the law. It proposes that public servants administer the proportionate subsidies that would go to political parties in campaigns. The Opposition would completely politicise the Public Service in a way that has not been contemplated previously in Australia. So I plead with the honourable member for Port Adelaide. I believe there is the faintest glimmer of understanding coming across his brow now as to what he has been about. I ask the honourable member to consider again what he has done and to consider again the kind of doomsday situation into which he is leading his own party.
The United States of America has a system something like the proposed system although not quite ofthe order envisaged by the honourable member. The system distorted the 1976 presidential campaign enormously. The evidence is that during the first eight months of operation of the Federal Electorate Commission over 17,000 man hours were spent merely on the public financing of the law. At the moment the Public Service has staff ceilings, people have a resistance to paying more taxation and loan funds are difficult to raise. Yet the Opposition is asking for revenue for this purpose. The Opposition should consider the pensioner and the mother in receipt of the family allowance and what it proposes to do to them.
There are other matters that need to be brought into mind. We are not frozen into our present political system forever. There is a government and there is an opposition. Other parties have the right to come on to the scene or to depart from the scene. This has happened ever since Federation. However, the Opposition would divert public funds into freezing the present political system.
– Ossify them.
– The honourable member for Holt has a beautiful turn of phrase, a medical term the Opposition’s proposal would ossify the present political system absolutely and irreparably. I say to the honourable member for Port Adelaide and those few- they must be very few- sensible people who would support him that this would toll a dreadful litany of disaster in the Australian political system.
– All we are asking for is for you to set up a committee to see who supports it.
-No. The honourable member has argued the proposition strongly. The former Leader of the Opposition has argued it, the New South Wales secretary of the Labor Party has argued it; and the Federal Secretary of the Labor Party has argued it. The honourable member for Port Adelaide should not come here and say that the Opposition merely wants an academic inquiry by a committee of this Parliament. The honourable member and most of the members of his party have a definite point of view. I say that that point of view is unacceptable, and ought to be unacceptable, to the Australian people. The faults are enormous. The proposal would distort elections; it would distort the taxation system; it would demoralise a great part of the electorate into giving funds for the purposes to which I have referred; it would politicise the Public Service in a way that would be totally unacceptable; and in those cases where support would be given to parties that are totally opposed to our system it would introduce an unwarranted and unwanted Trojan horse into the Australian system. I merely say that the honourable member for Port Adelaide is a sincere man, and I know he would be subject to some reflection. I merely say five words to him again: Go and have another think.
- Mr Deputy Speaker, may I reserve my right to speak on this matter? I do this in deference to the Minister.
Mr DEPUTY SPEAKER (Mr Armitage)That is in order.
– I do not propose to deal specifically with the matters raised by the honourable member for Port Adelaide (Mr Young). However I will pass on his views and the points he made to the Minister for Administrative Services (Senator Chaney) for his information. The honourable member, as the House knows, has moved for the establishment of a committee to inquire into a number of aspects of electoral-
– What about my views? Will you pass them on too?
– Of course. I shall ensure that the honourable member for Lilley ‘s very constructive contribution in this debate is also passed on to the Minister. The committee proposed by the honourable member for Port Adelaide would be designed to inquire into a number of aspects of the electoral legislation. On this point I need to point out that the Minister for Administrative Services, who is responsible for the administration of electoral legislation, said in answer to a question on notice that a review of the Commonwealth Electoral Act is being undertaken at the moment. The Minister said that he could give no indication as to when the results of that review are likely to come forward for his consideration. Clearly, given the scope and importance of the existing legislation, of necessity any review must be a long and painstaking one. In that context, although there have been a number of important amendments to the lawfor example, those relating to compulsory enrolment, preferential voting, proportional Senate representation, and redistribution machinerymany of the existing legislative provisions do not take account of developments and changes that have occurred since the Commonwealth Electoral Act was first drafted. The advent of television and the increased importance of radio as a significant medium of mass communication are cases in point. Members will be aware, for example, of the Government’s desire to overcome difficulties which have arisen in respect of talk-back radio programs. At the same time, it is important to appreciate the very real need to ensure a close link between electoral administrative procedures and the legislative provisions which relate to them. Accordingly, the Government’s view is that questions of this nature are more appropriately items for consideration within the Minister’s portfolio of responsibilities, and in those circumstances the Government opposes the honourable member’s motion.
– I wish to support the motion moved by my colleague the honourable member for Port Adelaide (Mr Young), which seeks the establishment of a joint select committee of the Parliament to examine electoral laws and procedures. I am disappointed that the Government does not want to establish such a committee. I think that everybody in Australia wants to see a more efficient method of conducting elections on the basis of every party wishing to contest the various seats having an equal opportunity to do so. The honourable member said that we ought to be able to improve the laws, and I think that everybody in Australia is convinced that the laws need a lot of improvement. From the point of view of contributions to political parties, everybody would want to know, in terms of open government, that they were voting for people who were not beholden to anybody else. There ought to be open disclosure of the funds given to political parties. From the point of view of democracy, it does us no good if a multinational company subscribes Sim to assist a particular party without that fact being disclosed. Obviously, if that sort of subscription were made there would be some suggestion of a pay-back or payola arrangement. That is not in the interests of democracy, it is not in the interests of political integrity, and it is not in the interests of any candidate carrying the banner for the party. I fail to see why there is any objection to such disclosure.
In regard to slush funds, I think it is very important that all political parties declare here and now the source of their subscriptions. The source of their funds should be made known to the people of Australia. Why are we so secretive about it? We ought to be able to indicate that information clearly to the people, and the parties themselves have a responsibility to introduce rules requiring them to disclose to their own members the source of their funds. The Bowen committee is inquiring into members of parliament declaring their pecuniary interests. I think that information ought to be made available to the public, as is the case in Canada. If we are going to have a strong democracy, the people who elect members to Parliament are entitled to know all about those members and the political parties for which they stand, and that includes, particularly, the way in which they are able to get monetary subscriptions, perhaps of substantial amounts. That is done in England; it is done in other countries around the world. Why are we so worried about it? The suggestion that there are some difficulties and that the Government is considering the matter is not good enough. There are many examples throughout the world of what should be done. We could pass laws within a week providing for a strong and effective method of having elections on the basis that political parties could get a subsidy, clear and open and above board, to assist them in the course of the election, and guaranteeing that any subscription would be disclosed and, I suggest, audited by the Auditor-General. That could be done easily.
I want to address my remarks to the fourth aspect of the motion, which I think is very relevant. It refers to the possibility of establishing a fixed election date for Federal elections, subject to the Government having the confidence of the House of Representatives. It is very significant that between 1969 and 1977 we had six elections and this has affected the democratic fabric. People in Australia feel that there is no real strength in a government if it can be brought down by the decision of somebody else. In my view, we cannot have a stable democracy if we are going to have elections as frequently as that.
There are three factors which cause instability. Firstly, it is ludicrous that we do not have a constitutional requirement for simultaneous elections. In 1977, 62 per cent of Australians favoured such a proposition. Secondly, there is the sad fact that the Prime Minister (Mr Malcolm Fraser) appears to carry a dissolution in his pocket. His view is that provided the Government retains a lower House majority it will normally be granted a dissolution on request. That is not in accordance with what I would call good constitutional practice. Unjustifiably early elections, that is, elections for the House of Representatives within the first two and a half years of a parliament, have occurred on only three occasions- in 1955, 1963 and 1977. Elections caused by the loss of a House of Representatives majority occurred in 1929 and 193 1, and there have been four double dissolutions.
The election held last December was held for reasons which were clear to everyone. The considerations were purely political. The Fraser Government was worried, there were jittery back benchers, and so there was an early election because the Prime Minister wanted it. I asked the Prime Minister on 3 November last year when he would table a letter of request for a dissolution and the Governor-General’s letter of acquiescence. That has not been done. For the first time, no reasons have been given in this Parliament, as to why we had an early dissolution last year. I make the point that it was purely to suit the Prime Minister, purely for political reasons. That correspondence was not tabled. The third factor relates to the Senate itself. The Senate can guarantee that a government will be insecure by refusing Supply. Upon the advent of a Hayden Labor Government in 1980, if a hostile Senate refused Supply it would invite consternation in this nation. If that situation arose again it would almost be a question of having to call out the Army.
-Because we cannot have the elected House of the people dissolved because another House, not elected in accordance with the mandate, decides that it will not grant Supply. That situation is not tolerated even in Great Britain, from whence the honourable member comes. I often think, from his approach, that he must have come from the House of Lords, not from the other side. The point I want to make is that if we are going to have a strong democracy we have to overcome the problem. A fixed election date would overcome all three problems. We need stability and we must have proper respect for democratic principles. The cardinal principle of our system of government ought to be that the government will govern for its full term unless it is rejected in the House of Representatives. There have been suggestions in recent years that the life of the House of Representatives could be extended to four years. That is a fine proposition, but unless it were a fixed term it would achieve absolutely nothing because of the three factors I mentioned previously, that is, a government seeking an early dissolution it could lose its majority in the House of Representatives, or having Supply rejected in the Senate.
We could overcome those problems by guaranteeing the synchronisation of elections. Certainly we could reduce the term of senators to four years and elect all senators at one election. Alternatively, we could have eight-year terms for senators, but in my view that would be far too long. A four-year parliament is one suggestion, but it would require an alteration of the Constitution.
The proposition I am now putting forward would provide a mandatory term unless the Government lost its House of Representatives majority. If that occurred, the Governor-General would have a discretion, subject to accepted principles, to determine whether there should be an election or whether an alternative government was possible without an election being held. That should be the only time when a Governor-General has that independent discretion. The proposition would involve some sacrifice on the part of both the Opposition and the Government, to the benefit of the Australian people. It would mean that governments would be unable to call elections when it most suited them and that oppositions would be unable to force elections in the Senate. The concept of a fixed term parliament is one which already has a degree of support right across the political spectrum. It has been supported by Senator Missen, Senator Hamer and Senator Chipp. I stress that fact because I do not want to put forward this proposition as being one that is to our advantage. The Australian people would be the beneficiaries. There is no reason why fixed election dates, such as apply in the United States for
Congressional as well as Presidential elections, cannot apply here.
Mr DEPUTY SPEAKER (Mr Armitage)Order! As it is now two hours after the time fixed for the meeting of the House, the debate on the motion is interrupted.
Motion ( by Mr Street) agreed to:
That the time for discussion of Nonces, General Business, be extended until 12.4S p.m.
-I thank the House. In fact, if one looks at the reasons advanced in this House by the Prime Minister on 27 October of last year as justification for holding of an early election, the inescapable conclusion is that the right honourable gentleman should be an ardent supporter of this proposition. He tried at that time to draw an analogy with the dissolution of 19SS. I had already dealt with that matter in a Press statement the previous evening. That Press statement stated:
Apart from double dissolutions, dissolutions have been granted within two years on only two previous occasions- in 1963, when the Government of the day had a majority of one, and in 19SS, ostensibly on the basis of bringing the Houses together, but in fact for purely political reasons. The 19SS election was held in December, which clearly negatives any suggestion that it was held to make the elections for both Houses simultaneous because to achieve that it should have been held in May 1936 . . . The fact that the Governor-General granted the 19SS election was a perfectly proper example of the paramount principle that the Governor-General acts on the advice of his responsible Ministers. In seeking an early election, the Prime Minister will be once more breaching convention.
That he did. The Prime Minister’s other argument was surprising. He said that an election was necessary to kill speculation about an election. He was the only person who had created that speculation. So, from that point of view, it was a case of suicide. His Government likes to maintain a high profile posture on questions of political processes and human rights. It does so particularly when it talks about foreign affairs. Yet the Government does nothing about the undemocratic political processes in Australia or about human rights. For example, last Thursday the Minister for Aboriginal Affairs (Mr Viner), in his capacity as Minister representing the Attorney-General, had the following to say about human rights:
The Commonwealth does not have constitutional power in the area of freedom of speech or freedom of assembly . . . So it is for each State to pass its own laws either to preserve freedom of speech or freedom of assembly . . . The Commonwealth does not have any direct power to overrule laws of that kind.
That is quite untrue, quite improper and not in accordance with the law. The Commonwealth does have such power under the external affairs power in the light of the International Covenant on Civil and Political Rights. The question of Australia exhibiting all the political instability of a banana republic is equally as vital as that of human rights. In view of the fact that some government members have indicated their support for the proposition of fixed election dates, it is desirable that this matter be considered by a joint committee of this Parliament. It is no answer to say that this matter should be considered by the Constitutional Convention. The Convention does not have an exclusive right to consider constitutional questions.
We believe that the Australian Constitution is in desperate need of overhaul. We do not see the Constitutional Convention as being an adequate vehicle by which to achieve the major constitutional tasks ahead. It is important that the national Parliament involve itself in these questions, hopefully in a bipartisan way. No one can contend that the holding of six elections since 1969 is a satisfactory situation. No one can pretend that the Australian Constitution is an adequate vehicle by which to take us to the end of this century and beyond. A proposition such as that contained in the fourth paragraph of this motion offers a solution to three serious and important constitutional questions. The Australian people have demonstrated very clearly that they are not as negative about constitutional reform as is sometimes thought. Important as the simultaneous elections proposal is, it is only one aspect, and not the most important aspect, of this motion. The most important aspect of the motion is combining stability with basic democratic principles.
I shall refer again to the three factors mentioned earlier. I do not try to hide the fact that by reason of its terms the proposal involves removing one power only, namely, the power of the Senate to reject or to block Appropriation Bills. This matter was debated at Perth and I do not want to canvass those arguments again. However, I make the point that this motion offers a fair quid pro quo for the removal of the powers which the Senate claims. It is our intention to reform the Senate into a genuine House of review and not to abolish it. The power to reject or block Supply is not consistent with the role of a genuine House of review, as well as with normal democratic principles.
The motion involves the recasting of sections S3 and 57 of the Constitution. No apology is necessary for doing that. The right of a Prime Minister to seek an early election for reasons of political advantage would be removed. The only circumstance by which an early election could be held would be if the Government lost a vote of confidence in the House of Representatives. I want to make it clear that I do not agree with or support the views of Sir John Kerr as expressed in what is known as the Indian Law Institute lecture on similar views expressed by Sir Paul Hasluck, namely, that a Governor-General should refuse requests for mid-term dissolution unless the Parliament has become unworkable. I believe that those views are wrong. The Governor-General should always act on the advice of his Ministers, provided they enjoy the confidence of the House of Representatives. What I want to do is to prevent Prime Ministers from being able to seek early dissolutions. The synchronisation of elections for the Senate and the House of Representatives is part of this proposal. Half of the Senate would face the electors whenever the House of Representatives was dissolved. That would normally occur every three years. As I have explained, this proposal provides solutions to three important constitutional questions.
Mr DEPUTY SPEAKER (Mr Armitage)Order! The honourable member’s time has expired.
-Mr Deputy Speaker-
Motion (by Mr Bourchier) agreed to:
That the question be now put.
Original question put:
That the motion (Mr Young’s) be agreed to.
The House divided. (Mr Deputy Speaker- Mr J. L. Armitage)
Question so resolved in the negative.
Mr DEPUTY SPEAKER (Mr Armitage)The time allotted for precedence to General Business has expired.
-Mr Speaker has received letters from the Deputy Leader of the Opposition (Mr Lionel Bowen), the honourable member for Indi (Mr Ewen Cameron) and the honourable member for Denison (Mr Hodgman) proposing that definite matters of public importance be submitted to the House for discussion today. As required by Standing Order 107, Mr Speaker has selected one matter, that is, that proposed by the Deputy Leader of the Opposition, namely:
The Government’s failure to debate the implications of the issues now before the Multilateral Trade Negotiations.
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-
– At the present time in Geneva the countries which are signatories to the General Agreement on Tariffs and Trade are meeting. They hope to reach an agreement, this time they say, by the middle of December. The current round of Multilateral Trade Negotiations began in 1973- as far back as that- in Tokyo and are now known as the Tokyo Round. We know that the Minister for Special Trade Representations (Mr Garland) left again to be in Geneva during those negotiations. Prior to his leaving to go to that Geneva conference he was here in Australia for some time, but during that time he made no effort to debate the issues which, we say, are of fundamental importance to the people of Australia. Indeed, the remarks that he made outside this Parliament about what will be the situation are rather depressing utterances. His remarks are also somewhat significant as to his competency in the matter. For example, on 24 October 1978 I asked him whether, in discussing matters outside Parliament, he had said:
We have to relinquish the production of some goods which can be more sensibly and more economically produced in the developing countries.
He told me that I should read the words in the context of the complete speech he had made. Two days later, he came into the House and said that he did not use those words at all. Of course, that could have been a mistake on my part but I thought that he would have known when I asked the question whether it was accurate. On 25 October, the Minister, as Minister in charge of the Export Expansion Grants Bill 1978 in the Legislation Committee, got into some difficulties. The right honourable member for Lowe (Sir William McMahon) said:
This is supposed to be a Committee of the Parliament and Ministers -
In that case he was referring to the Minister to whom I am referring- who are representing somebody else must come along with a fair degree of authority . . . The Minister should be in a position to say that so far as he can see there is substance in what is said.
That is what the right honourable member for Lowe had said. This is the Minister to whom the Government has entrusted what it claims to be most important negotiations. The appropriateness of the appointment can be looked at from the point of view of the problems that the Minister in question has had over a period of time. People in Australia are well aware of the Minister’s behaviour when travelling overseas because of some reports as to what has taken place, whether on trade matters, or related to Florence, or Rome, or his baggage or what he thought of the European Economic Community. The real problem is to indicate clearly what we are about in international trade. The Minister is only a small part of the Government’s perpetual motion machine. It is a machine that seems to be cluttering up all the time and making very little progress. The lack of connection between the various small cogs in the Government is clearly illustrated by the Australian Financial Review and the National Times over the past week concerning the attempt by the Minister for Business and Consumer Affairs (Mr Fife) to prevent the publication of all the Industries Assistance Commission draft reports until the Multilateral Trade Negotiations are finished. This was apparently done on the basis of a misreading of a request in respect of only one report from the Deputy Prime Minister (Mr Anthony) relating to primage duties. As the National Times observed, the Minister for Business and Consumer Affairs:
Incompetence is not confined to one or two Ministers. On 23 October, the Prime Minister (Mr Malcolm Fraser), when speaking about Multilateral Trade Negotiations, said:
But … the omens for a satisfactory conclusion of the MTN are not all good.
He went on to say:
It is essential that the MTN succeeds in liberalising trade in all products, not just those of interest to the major industrial countries.
Again those remarks were not made in this Parliament. The Prime Minister has not joined in any debate on this subject in the Parliament. In fact there has been no real debate on this matter in the Parliament unless it has been initiated by the Opposition, as it endeavoured to do last May. On 9 May last, as a member of the Opposition, I proposed a matter of public importance concerning the damage that has been caused to Australia’s short term and long term trading interests by the Government’s activities. In that debate we highlighted the problems of confrontation with the European Economic Community and how we would not progress simply by trying to bluster our way through what is the Government’s view of our position. One could look at statements that have been made since that time. In front of me I have an article from the Australian Financial Review which is dated 12 July 1978 headed ‘European Community Lashes
Australia on Tariffs’. That is a complete denial of what the Government is putting forward in our approach by confrontations. Australia wound up bearing the brunt of the criticism at that time. Can we confidently expect that in that climate we will make any progress? Why is it that the matter has never been debated in the Parliament concerning our offers that are being made in the Multilateral Trade Negotiations? Again, adverting to a statement which was made by the Minister for Special Trade Representations, he said:
The Minister then proceeded to indicate that Australia could accept no multilateral trade negotiation agreement without a concession on agriculture. He launched into a severe criticism of the European Economic Community and the non-tariff barriers in the United States of America and Japan. It is very significant when one looks at his speech that was made on that occasion when he was talking about what he called a 30 per cent tariff reduction. Previously we understood that it was to be a 40 per cent tariff reduction. The Parliament had been told nothing about it. He said:
A widespread reduction of industrial tariffs-
Bear in mind that this statement was made outside the House- in the order of the average of 30 per cent seems close.
One would have thought that we could be told about it. It is of paramount importance in dealing with this matter concerning manufacturing industry and its position in this country. This Parliament ought to be able to indicate its views clearly. But we are just drifting along. There does not seem to be any national economic planning. We do not understand what sorts of discussions are taking place in the Multilateral Trade Negotiations and it appears that they are heading for failure. On 9 November last year Sir Eric Wydnham- White, the former Director-General of the General Agreement on Tariffs and Trade and now adviser to the Canadian delegation to the Multilateral Trade Negotiations said in the Financial Times in London that the failure of the Tokyo Round could provoke a worldwide recession comparable with the Great Depression of 1929. Sir Eric said that this could lead to the breakdown of the whole system. He also expressed concern at the lack of public interest in the negotiations.
Our concern is with the lack of effort on the part of the Government adequately to inform the country and debate the issues in the Parliament. Sir Eric Wyndham- White also made comments of direct relevance to the Fraser Government’s obsession with European agricultural policies. He said that it was unrealistic to expect the EEC to make major concessions on the operation of its Common Agricultural Policy during the Tokyo Round and that such concessions would not be made under negotiating pressure. But he thought that the sheer cost of that policy could well lead to its liberalisation in due course. It is important that I make this point because these comments bear directly on the Government’s policies. They come from an eminent and experienced adviser to another major agricultural producer. Those of us who attended a luncheon which was given by this Parliament for the President of West Germany heard him clearly indicate that there would be no retraction from the agricultural policy in Europe. He attributed that point of view to the problems of food, war and famine that could obtain if there was no adequate incentive to encourage food production.
Here we are beating on the Community’s door and threatening to make it change that policy. I want to make this point: The Fraser Government has said that it will block the Multilateral Trade Negotiations on agricultural issues with Europe. In our view if that sort of action takes place the Tokyo Round will certainly fail. The world economy can get into a mess and there could be a depression. The Fraser Government has not thought through the issues and they have not been discussed in this Parliament. Let us look at what representatives of the private sector are saying. The Confederation of Australian Industry four weeks ago stated:
Manpower planning and policy making involves the application of a comprehensive mix of social and economic policies designed to achieve the maximum utilisation of a nation’s human resources.
The Prime Minister’s approach is one of vested interest, that is, a vested interest in himself. He is prepared to ride the country into the ground on that basis. His earlier reputation for strong control of his ministry is not well-founded. There have been a number of problems that I have already mentioned. We are getting nowhere from this lack of co-ordination. We read in the Press that it was in a Tokyo hotel in April that Mr John Stone changed the Prime Minister’s mind about tariffs. Surely we should have been told about that. When we questioned the Prime Minister about what a 40 per cent tariff reduction would mean, he said that it merely means an average of 0.5 per cent a year over eight years. We clearly indicated to him in subsequent questioning what particular tariffs we were talking about. Some of them are as high as 30 per cent or 35 per cent. Could we get an answer on that? No. That is the problem.
– What are your propositions on tariffs?
-A question was asked by one of the honourable member’s colleagues from Queensland as to how we should be looking at this matter from the point of view of exchange alterations. He asked whether there would be arrangements for Australian currency to be better protected instead of having it move offshore to Chicago. The Treasurer (Mr Howard) said ‘that is a matter that ought to be kept under continuing consideration, depending on any circumstances that might arise’. We are talking about our exchange rate. People in Chicago will fix it. A question was asked by a colleague of the honourable member for Lilley (Mr Kevin Cairns) and the Treasurer said that the Government is keeping it under review. Of course exchange rate alterations can well affect tariffs and can be equivalent to them.
These are matters in which we want to say: Where are you heading? Who is running the economy? Who is running our trade policies? What are our propositions to GATT?’ We are saying that there is no plan. The Government is not prepared to discuss the matter in this Parliament and no real discussions are taking place outside, as far as we are concerned. The latest news that we have heard is that the Prime Minister is going to Jamaica again. He wanted to go there this year but he is going next year to meet Mr Manley. We understand that he is still trying to meet the President of the United States of America. He wants to participate in the economic summit. I understand that the President of the United States again is not available but I have no doubt that the Jamaican conference will take place.
What are our propositions for the economic summit talks? What is the plan for the financing of the Common Fund? It was said here that Governments should finance the fund. We then heard the Minister for Finance (Mr Eric Robinson) say outside the Parliament that it will be financed on a private loan basis. The developing countries want to know whether it will be made on a loan basis on a non-loan basis, because of repayment at fixed interest rates. We cannot get any answers. We have to look at the Government’s policy and we want to know why it is not discussed in this Parliament. There should be government support for export and other foreign exchange earning activities. The support should include the following: An effective national assessment of the international economy and strategic planning for trade; a review of the operation of traditional forms of trade promotion and assistance in traditional markets, establishing country by country plans and priorities; incentives for export gains and export development to efficient industry by providing assistance in inverse proportion to the scale of other industry assistance; the establishment of governmental machinery to facilitate trade with new markets, small markets, other governments and their instrumentalities engaging in trade, in co-operation with, not competing with, and with a view to assisting, private industry.
Let us be realistic about what we can do. There are plenty of avenues for us to open trade negotiations. It cannot be done by confrontation. It cannot be done in an area where we have no chance of success when we are dealing with the European Economic Community. It must be done on the basis, surely, that the people of Australia are entitled to know what this Government is putting forward as its propositions. What are the tariff reductions that it is offering? What are the trade-offs that it is offering? If it is anxious to sell uranium, on what basis would it do so? I read with interest the other day that the Finnish nuclear reactor is provided by the Russians who are also providing the enriched fuel. We are entering into arrangements for supplying the natural ore. These are matters that we would like to discuss because the Government runs a very hybrid arrangement when it comes to foreign policy. The real issue is that there is no coordination in the Government and no clear understanding of where we are going. It is for that reason that we are critical of the lack of debate in this Parliament.
Sitting suspended from 1.1 to 2.15 p.m.
– I have listened intently to the Deputy Leader of the Opposition (Mr Lionel Bowen) addressing himself to the matter of public importance before the House, namely:
The Government’s failure to debate the implications of the issues now before the Multilateral Trade Negotiations.
His address seemed to be a mixture of confusion of allegations about insufficient debate in the House, requests for more information and allegations of Government ineptitude. Certainly there was nothing in his speech about his own Party’s policies or attitudes. In fact, one could say that the Deputy Leader of the Opposition took the opportunity just to sound off and to say something about international trade.
However, I would join with him in one of his remarks and that is that the Multilateral Trade Negotiations are of extreme importance. They are negotiations which commenced with the Tokyo Round Declaration in 1972. It has taken all the time since to get to the critical negotiating position we are in at the moment It was hoped that finality would be reached in July. In Geneva a deadline was set for IS July. Unfortunately, the volume of work and the complications of the massive negotiations were such that it was not possible to complete them. However, progress was made to that stage. At the moment discussions are taking place in Geneva as to whether another round of concentrated negotiations will take place in an attempt to reach finality by 15 December. It is not clear whether these negotiations will take place. Differences of opinion between the United States and the countries of the European Economic Community, mainly relating to the failure of the United States Congress to pass a waiver on the countervailing duty question have to be resolved. Unless they can be resolved, these negotiations will be postponed until some time next year. But these negotiations are quite crucial to international trade. We believe that strenuous efforts must be made by all countries to try to liberalise trade as a further boost to stimulating international trade activity, which is desperately needed throughout the world today.
This round of Multilateral Trade Negotiations is really the seventh in a huge series of negotiations since the Second World War. But these negotiations are by far the most significant because they cover not only the question of industrial tariffs but also a wide gambit of subjects relating to international codes, codes of trading behaviour and codes of commerce. They also cover questions of multilateral trade negotiations. In all these areas it takes a lot of discussion and negotiation for countries to be able to come to some resolution.
The Deputy Leader of the Opposition made the allegation that we have treated the House with contempt because we have not given it more information. Let me remind the honourable member that in 1973, when his Government decided to join in the Multilateral Trade Negotiations, the responsible Minister then, Dr J. F. Cairns, who was then the Minister for Overseas Trade and Minister for Secondary Industry, did nothing more than put out a Press statement, copy of which I have here. He did not even have the decency to make a statement in the Parliament. There was never any statement made in Parliament. There was never any debate on the matter during Labor’s time in office. Earlier this year, before I went to Geneva in June, I made a comprehensive statement in this House detailing Australia’s negotiating attitude, that we enter into the formula approach to the cutting of tariffs based on a 40 per cent across-the-board tariff cut to commence in 1 980 and be implemented over a period of eight years. This was in accordance with the approach that had been taken by most other countries, with the exception of New Zealand and South Africa. We took this approach because we wanted to show our bona fides, to show that we were genuine in these negotiations. We also wanted to make the maximum impact in trying to free international trade in agricultural commodities and to see that certain actions were taken against the behaviour particularly of the EEC, in relation to the subsidy on exports and the dumping of those exports on third markets around the world, which is completely disrupting international agricultural trade and having very serious consequences for some of Australia’s agricultural trade. So the Deputy Leader of the Opposition was quite wrong when he made the allegation that we have been deficient. If we have been deficient, I would not like to try to put a description of the honourable member’s Party when it was in government.
The Deputy Leader of the Opposition talked in terms of more debate in Parliament on the negotiations. That is really a rather quaint notion. One has no negotiating position if one starts telling the public at large of that negotiating position, if one reveals ali one’s cards. That applies to all countries. Massive negotiations are going on, on an item-by-item basis, in relation to the codes which I mentioned before, namely, the code on standards, the code on subsidies and countervailing, the code on government procurement, the code on safeguards, the code on customs valuation and the code on licensing measures. All countries have their own points of view and in the course of conferences they reveal what their negotiating stance is. We just cannot negotiate in public. No other country negotiates its position publicly. One states a point of view and perhaps one has to backtrack a little from it; but one does not come out and embarrass a government or those negotiating by stating what one ‘s attitudes are going to be.
There are also joint disciplines on commodities agreements. Three major commodity agreements are involved- the wheat agreement, the meat agreement and the dairy products agreement. All of these are of vital concern. I have never known of any commodity agreement being brought into this House prior to the negotiations taking place and all the facts being laid on the table. It just cannot be done. It is naive to think that it can be done. Why should Australia do so when no other country does so?
The Deputy Leader of the Opposition seems to derive some joy from the fact that as yet we have not succeeded in our negotiations with the EEC to try to liberalise agricultural trade. The honourable member writes it off as if it does not matter; as if it is of no concern to Australia. Let me assure the honourable gentleman that we will continue our efforts to try to get some liberalisation of agricultural trade within the EEC. This morning, in answer to a question in this House, I mentioned the attitude of the British Labour Government about the Common Agricultural Policy. Mr Callaghan, the British Prime Minister, strongly attacked the operations of the Common Agricultural Policy. Mr Callaghan said that there should be more imports of food; their regulations should be liberalised; that something ought to be done about their export subsidies; that the European Economic Community should reconsider its price support policies. Is the Labor Party taking the attitude that this problem is too hard? Is it just going to run away from it? Is it going to betray all the farmers of this country who are being affected by these policies overseas? Is this what it is saying: That we should just ignore it, not worry about it, and that it is a difficult problem? Let me assure the Opposition that we have been having negotiations and discussions with the EEC. What was the EEC ‘s counter to that proposition? It was that the proper place to press this question was at the Multilateral Trade Negotiations. The Government is doing just that in Geneva at the moment.
Some of the remarks by the Deputy Leader of the Opposition about the Minister for Special Trade Representations (Mr Garland) were quite unfair. It was nit picking criticism at its best and I dismiss it out of hand. This Parliament has been informed. Questions have been asked and out in the market place consultations have been taking place with industry. When the Labor Party was in office a special industry consultative group was set up and that group has been consistently meeting all sections of industry. A very large booklet has just been put out giving all the information about what is going on in the Multilateral Trade Negotiations. I am happy to send the honourable member a copy of it if he likes to be informed. It is available and my department is available to talk to him if he wishes. But to talk about the EEC not being significant! Mr Callaghan mentioned in his speech that export subsidies were costing the EEC £2,000m. Its total agricultural budget is now $A8,000m-that is, $60 per head for everybody living in the EEC. On top of that there are huge consumer prices, something in the order of two to three times that of the world price at the moment. It is just wrong and it cannot go on. Even Mr Callaghan said it cannot go on.
What are we saying? We are not asking for a complete reform of the Common Agricultural Policy. We recognise that it is an inherent part of the whole operation of the EEC. But we do want some modification at the edges, a little more access for certain Australian products. I see no reason why they should be completely banned. At least we ought to be given some access. The EEC ought to start recognising the deleterious effects of its export subsidy programs. We want an international code that will cope with the situation and we are pressing very strenuously for it at the MTN. These are the sorts of things we are doing as a national government with a sense of responsibility for the people we represent. Those people happen to be Australian farmers. If their situation is well looked after there are repercussions on the rest of the Australian community because they are the biggest purchasing sector of it.
Let us look at what is happening with some of the EEC export subsidy programs. This year it will be exporting 150,000 tonnes of beef and each of those tonnes of beef will be subject to an export subsidy of $1,000. There will be 500,000 tonnes of butter exported for which there will be an export subsidy of $2,000 per tonne. Two million tonnes of skim milk powder is being exported with a subsidy of $600 per tonne. Twelve million tonnes of wheat is being exported with an export subsidy of $1,000 a tonne. Three million tonnes of sugar is being exported and it will cost the EEC a total amount of $A800m. Yet the Deputy Leader of the Opposition says that we do nothing about it. Let me assure him that we will continue our stance in seeing that there are modifications- and there will be modifications provided there is resolution on the part cf the Australian people. The Government is going to display it even though the Labor Party may want to walk away from it. We will continue to face up to any debates or discussions in this House but it is unreal to imagine that confidential information can be brought forward and revealed in public and to say that that is going to help our negotiating stance. We want to get the best negotiating position for all industriessecondary industry and primary industry- in the course of these negotiations and, at the same time, we want to be a responsible member at these international discussions and see that they succeed. I believe that our performance and record at these negotiations until now confirms what I have been saying.
Mr DEPUTY SPEAKER (Mr MillarOrder! The discussion is concluded.
Bill presented by Mr Anthony, and read a first time.
– I move:
The main purpose of the Bill is to enable the Act to be amended so that a mining authority to be issued under section 41 of the Act for mining at Ranger affords the persons on whom the authority has been conferred security of tenure similar to that enjoyed by the holders of a mining lease under laws in force in the Northern Territory and most of the States while, at the same time, ensuring that it is subject to appropriate controls. On 25 August 1977 the Government announced its policy to develop the uranium ore deposits in the Ranger project area on the basis of the Memorandum of Understanding of October 1975, which provided for mining to be undertaken under the Atomic Energy Act by the Australian Atomic Energy Commission, Peko Mines Ltd and the Electrolytic Zinc Company of Australasia Ltd as joint venturers. In this regard honourable members will recall that in June this year the Atomic Energy Act was amended to authorise the participation of the Commission in the Ranger project for the purpose of ensuring the supply of uranium. The legally binding agreements to implement the Memorandum of Understanding are now being negotiated to establish the joint venture and thus enable an authority ‘ to mine to be issued under section 41 of the Atomic Energy Act. The need for further amendments to the Act has been identified in the course of working out those legally binding agreements.
Honourable members will appreciate that laws which normally govern mining operationsfor example, State and Northern Territory mining laws- contain provisions which provide the holder of a lease with security of tenure and make quite clear the circumstances under which leases may, for example, be cancelled or revoked, assigned or transferred, and the conditions under which leases may be renewed. The Ranger joint venturers have pointed out that section 4 1 of the Atomic Energy Act, as it presently stands, does not provide them with adequate security of tenure. While the Act was designed to allow mining, detailed provisions to cover mining on a commercial basis were never included. Consequently, the Act does not address these issues. Because of the decision to proceed with Ranger under the Act, amendments to deal with them have now become necessary. This does not indicate, however, that the Government has in mind using the Act for other mining projects.
The Prime Minister (Mr Malcolm Fraser) said on 25 August 1977 that it should not be thought that the Commonwealth’s participation in the Memorandum of Understanding would give Ranger advantage over other mining companies. The Government, of course, also believes that the holders of an authority under the Atomic Energy Act should not be disadvantaged in respect of such an important matter as security of tenure in comparison with prospective competitors. In order to take appropriate account of requirements for security of tenure and, in addition, the Aboriginal Land Rights (Northern Territory) Act, the recent agreement with the Northern Land Council in respect of Ranger, and the Memorandum of Understanding, the resulting provisions in this Bill are somewhat involved.
Before turning to the detailed clauses of the Bill it is appropriate to recall some of the provision of the 1975 Memorandum of Understanding, presented to Parliament on 29 October 1975 and incorporated in Hansard on 27 October 1977, which are relevant to the matters covered in this Bill. One provision of the Memorandum requires that the initial authority for mining should be issued for 2 1 years; others provide that the Ranger project will be conducted as a commercial venture and continue in force during the economic life of the uranium ore deposits in the area. Another provision of the Memorandum requires that the Commonwealth contribute 72 Vi per cent of the capital cost and be entitled to receive 50 per cent of the proceeds of sale; still another provision dealt with the circumstances under which the joint venturers would be able to assign their interest to other parties.
The Government considers that it would be inappropriate for it to continue to contribute 72Vt per cent of the capital cost of the Ranger project on a permanent basis, that is, after the initial 2 1-year rnining period, as might be thought to have been contemplated by the Memorandum. Consequently all costs of mining beyond 21 years at Ranger will be shared on a straight 50/50 basis, and provisions to this effect will be incorporated in the legal agreements now being negotiated between the Commonwealth and Peko-EZ.
I tum now to the detailed provisions of the Bill. Honourable members will note that the Bill is to commence in two parts. All except the provisions dealing with renewal- clause 6- will commence on royal assent. It is the Government’s intention that clause 6, which deals only with Ranger, will be proclaimed to commence at the same time as the agreements now being negotiated with Peko-EZ are executed. Clause 4 of the Bill makes it clear that an authority issued under section 41 of the Act continues in force for the period for which it was granted unless terminated earlier in accordance with its own provisions, or unless it is revoked under new provisions dealt with in clauses 5 and 6 of the Bill. By way of example, I draw the attention of honourable members to a provision of the proposed authority for Ranger which would lead to its termination if the Government varied a determination as to payments to be made to the Aboriginal Benefit Trust Account. This provision is included in details of the proposed authority contained in documents tabled by the Minister for Aboriginal Affairs (Mr Viner) in Parliament on 7 November when he disclosed details of the agreement reached with the Northern Land Council.
Clause 5 will introduce two new sections into the Atomic Energy Act, namely, sections 4lA and 41b. The new section 41a will provide the basis on which an authority can be revoked or its conditions varied by the Minister. I draw the attention of honourable members to sub-section (3) of section 41a, which ensures that the Minister cannot revoke an authority upon application unless conditions and restrictions relating to rehabilitation of a mining area have been observed. This is consistent with the obligations the Government has undertaken in its agreement of 3 November with the Northern Land Council in respect of the Ranger project. Sub-section (8) is relevant in this regard. If a breach of a condition or restriction in the authority occurs, sub-section
The new section 41B expressly authorises assignment of an interest in an authority. It provides a proper framework within which assignments may be made and will enable those provisions of the Memorandum of Understanding that provide for assignment to be given effect. Sub-sections (1) and (2) of section 41 B will enable a person holding an interest in an authority to assign, with the consent of the Minister, the whole of an interest to a person not having an existing interest in the authority. Sub-sections (3) and (4) are designed to enable interests in an authority to be assigned as between parties engaged in a joint venture, each of which holds an existing interest in an authority.
Clause 6 of the Bill will introduce into the Act a new section 41C. That section provides for the renewal of an authority granted in relation to the Ranger project area. The initial authority for Ranger is to be issued for 26 years and under that authority mining will cease after a mining period of 21 years unless the authority is earlier renewed or extended. Under sub-section ( 1 ) of the proposed new section 41C an application for renewal- only one renewal is provided for- must be lodged between four and six years before the end of the mining period. Sub-section (2) provides that the existing Northern Land Council agreement must be extended, or a new agreement under section 44 of the Land Rights Act entered into, before the entitlement to a new authority becomes effective. Sub-section (3) requires the relevant Minister to endeavour to obtain an extension to the Northern Land Council agreement or a new agreement with the Northern Land Council, and honourable members will note that he will have a period of three to five years in which to do so. I emphasise that the Bill does not empower the Minister to have resort to arbitration proceedings to secure extension or renewal of the Northern Land Council agreement during the currency of that agreement. The conditions and restrictions of the renewed authority are to be determined under sub-section (4) at the time of the renewal.
I have explained the provisions of the Bill at some length in view of their complicated character and in view of the relevance of other legislation and agreements relating to the
Ranger project. Honourable members will recognise the care the Government has taken to ensure, by this Bill, that mining at Ranger is able to be undertaken on a commercial basis and consistent with the Government’s policy as is reflected in the agreement so recently entered into with the Northern Land Council. I commend the Bill to the House.
Debate (on motion by Mr Keating) adjourned.
Bill presented by Mr Nixon, and read a first time.
– I move:
That the Bill be now read a second time.
The purpose of this Bill is to amend the Qantas Airways Limited (Loan Guarantee) Act 1978. The Qantas Airways Limited (Loan Guarantee) Act 1978 was enacted to authorise the Treasurer, on behalf of the Commonwealth, to guarantee overseas borrowings by Qantas Airways Ltd to the extent of $US80m or its equivalent to finance the purchase of two Boeing 747 series aircraft. Qantas sought the Treasurer’s guarantee for a borrowing of $US80m under the provisions of the Act. Negotiations for a proposed borrowing were not sufficiently advanced, however, for Qantas to be enabled to finalise the terms of a borrowing before taking delivery of the aircraft. Qantas had funds earmarked for other purposes, but which were temporarily available, to make the payments owing on the aircraft in anticipation of these funds being recouped in due course from the proceeds of the $US80m loan for which a guarantee was being sought. Doubt has arisen as to whether section 4 ( 1 ) (a) of the Act as originally drafted provides for the giving of the guarantee in the circumstances outlined above. The amendment to the original Act provided for in this Bill is intended to put the question beyond doubt. Qantas has very heavy financial commitments to meet before the end of 1 978 and is relying on the loan proceeds. I commend the Bill to the House.
Debate (on motion by Mr Morris) adjourned.
Bill presented by Mr Fife, and read a first time.
– I move:
That the Bill be now read a second time.
The Customs Tariff Amendment Bill (No. 4) 1978 now before the House proposes amendments to the Customs Tariff Act 1966. The Bill, which contains 16 schedules, is necessary to enact tariff changes made since May 1978. All the changes were incorporated in Customs Tariff Proposals Nos 13-29 (1978) which have been introduced into the Parliament at different times since May 1978. In the main, the amendments give effect to decisions by the Government in respect of the following reports by the Industries Assistance Commission and the Temporary Assistance Authority:
Ball and Roller Bearings;
Bench or Pedestal Drilling Machines, Belt Driven, Pulley Operated (Non-Power Fed)- Interim Report;
Brassieres- Rate or Rates of Duty Outside Quota;
Brooms and Brushes;
Carbon Coated Film;
Carpets, Carpeting etcetera;
Domestic Refrigerating Appliances etcetera;
Gearboxes, Gears and Shaft Couplings;
Hoists, Pulley Tackle and Winches (Interim Report);
Hosiery, Undergarments and Knitted Sleep-Wear- Short Term Additional Assistance;
Light Commercial and Four- Wheel Drive Vehicles and Heavier Commercial Vehicles and Components;
Metal Working Machine Tools;
Products of the Printing Industry;
Starting, Regulating and Control Apparatus and Other Electrical Equipment, and
The Bill also contains increases in Customs duties on beer, spirits and manufactured tobacco products which formed part of the Government’s Budgetary program. Honourable members will recall that when the tariff proposals were introduced into the House a comprehensive summary in respect of each of the proposals was circulated which set out the nature of the changes. I have had a consolidation of those summaries prepared, and copies may be obtained from the Table Office. I commend the Bill to the House.
Debate (on motion by Mr Hurford) adjourned.
Debate resumed from 19 October, on motion by Mr Howard:
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, the Income Tax Assessment Amendment Bill (No. 2), the Income Tax (Non-Resident Companies) Bill, the Income Tax (Companies and Superannuation Funds) Amendment Bill and the Income Tax (Rates) 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, Mr Deputy Speaker, that you permit the subject matter of each of these Bills to be discussed in this debate.
-Is it the wish of the House to have a general debate covering each of these matters? There being no objection, I will allow that course to be followed.
-The Bills now before the House form a part of a continuing campaign to protect the revenue against the marauding activities of tax avoiders, a campaign which the Opposition supports but believes must be made much more effective than is currently the case. The Bills also seek to plug a blatant tax loophole regarding the repatriation of profits by foreign companies operating in Australia as branches of their parent company; to protect the revenue against a recent court decision which threatens to reduce tax revenue greatly unless counteraction is taken; and they implement the concession on capital investment in Australian film rights to encourage investment by Australians in the production of Australian films. We of the Opposition support all of these measures although we consider the rate of tax that has been set for the branch profits tax to be lower than appropriate, and I will say more about that later.
The major detail in these Bills relates to amendments to the current income tax law regarding current year losses and dividend stripping. It is pointless for me to discuss these in any detail as they are extraordinarily complex and in any case the Opposition does not oppose them. It is more important to note that the amendments are now to be subject to some 44 further technical amendments in the Committee stage as the Government tries to block off all the possible means by which the new provisions could be subject to further avoidance. The result is an almost bewildering array of technical jargon which is utterly incomprehensible to all but well versed tax lawyers, consultants and the officers of the Taxation Office, one presumes. This is a very important matter to which I will return later.
The imposition of a branch profits tax is welcomed by the Opposition. It is indeed scandalous that a company such as Utah Development Company could announce a dividend of $ 141m for 1 977 and not pay any withholding tax on it at all because it operated in Australia as a branch of its parent company. This was possible because the current tax system discriminates in favour of foreign companies which conduct their operations in the form of an Australian branch of the parent company as against a subsidiary company which is incorporated in Australia. Subsidiaries pay company tax at 46 per cent on their Australian taxable income plus dividend withholding tax on dividends remitted to their home country. The basic rate of dividend withholding tax is 30 per cent, but this is reduced to 15 per cent where the shareholder is resident in a country with which Australia has a double taxation agreement such as the United Kingdom, United States of America, Canada, New Zealand, Japan and Singapore. Branches are, for tax purposes, resident in another country. They are still liable for 46 per cent Australian company tax but remittances of branch profits to head offices do not attract additional Australian tax. This legislation is aimed at correcting the imbalance that thereby exists.
The reason for a branch profits tax rather than a dividend withholding tax is that it is impracticable to impose a tax on the remittances of branch profits. Subsidiaries must, by law, lodge audited statutory accounts in respect of their Australian operations. It is therefore easy to determine their profit distribution. On the other hand, branches are not obliged to lodge statutory accounts regarding their Australian operations. They have to lodge only the accounts which they lodge in their home country. These accounts may contain details of the operations in several countries and are not necessarily broken up to give details of operations in individual countries. In the case of branches it is also very difficult to disaggregate their cash flow. There may be substantial cash flows throughout the year which can involve, as well as profits, loan repayments, purchases, management charges or other cash transfers. Profit remittances therefore cannot be readily identified.
The basic reason then for the different taxing arrangement is the difficulty involved in determining the profit distribution of branches. Because of this difficulty other countries, such as New Zealand, Canada and France, have introduced a branch profits tax on branches operating in their country, and it is therefore not trendsetting for Australia to be taking this action. We are doing only what other countries have already seen fit to do. The only practical alternative would be not to tax the profit remittances of branches at all. To allow the continued tax-free repatriation of mammoth profits such as those of Utah would, in our view, be a scandalous dereliction of duty by the Government. It is bad enough that there is no resource tax applying to companies like Utah, let alone no tax on the profit repatriations. Some other overseas companies will be affected by this new tax. Companies such as Esso Exploration and Production, American Metals and the General Motors Acceptance Corporation are three which have been drawn to my attention. During the Committee stage we will argue that the rate of tax on branches should have been 8 per cent instead of 5 per cent. But I will leave that argument for that later stage in the debate.
The Income Tax Assessment Amendment Bill (No. 3) has become necessary through a decision of the Victorian Supreme Court which, according to the Treasurer (Mr Howard), has placed revenue for the current year at risk to the extent of up to $600m. Hence he has had to introduce legislation to prevent that potential considerable loss of revenue. The matter concerns section S 1 of the Income Tax Assessment Act regarding losses and outgoings incurred in gaining or producing assessable income being allowable as a tax deduction. The section makes no statement in regard to when employers may claim such liabilities as a tax deduction.
The particular case before the Supreme Court involved a company known as Nilsen Development Laboratories Pty Ltd and concerned long service leave and annual leave. The Commissioner of Taxation up until this time has only allowed such outgoings by employers when payment was made rather than while the liability for that leave was being incurred or accrued by the employer. The Nilsen case upset this by allowing employers to claim a deduction for the cost of the employee’s leave in the year in which he became entitled to the leave. In some ways this seems to us quite reasonable. It is accepted accounting practice for an employer to make provision for employee leave liability, and to allow the tax deduction at the time when provision is made would seem to be in conformity with that general accounting principle.
The Commissioner of Taxation’s interpretation of section 5 1 in this connection is not such an accepted and standard practice as the
Treasurer claimed in his second reading speech. I understand that many firms regularly claim accrued leave and then lodge objections with the Commissioner when he disallows the claim, all this being part of a continuing program by firms to change the nature of the assessment. That being the case, it does not seem right to say it is accepted practice. It might be accepted by the Commissioner but it is certainly not accepted by many firms in this country.
Previous committees of inquiry into taxationnot only the Aprey committee but also the Spooner and Ligertwood committees- have all recommended change in the tax law to allow leave provisions to become a tax deduction as the liability accrues rather than when it is paid. One could also argue that the refusal of a tax deduction until leave is paid also acts as a disincentive to the employment of labour. For instance, on the one hand an employer may be faced with an expense in the sense that he has to put aside year after year to cover the leave liability for labour funds for which he may not claim a tax deduction until some time hence. On the other hand he may claim in each year depreciation on machines. He may take these factors into consideration when he is deciding whether to invest in a laboursaving machine or continue with the current level of labour, that is, deciding between the employment of labour and the employment of capital. To the degree that they are taken into consideration, they would certainly make it less likely that the employer would opt for labour rather than capital. So in this area, which is now of increasing importance, given the growing impact of automation on this country, the tax law would seem to be showing a bias in this area towards capital rather than labour. I do not want to put this argument too highly but I think it does have some relevance, and to the extent that it does, it provides an argument for allowing leave to be made a tax deduction as it is provided for rather than when it is actually paid.
However, against all this one must set the fact that there could be up to a $600m loss of revenue in this financial year, according to the Government, if the Nilsen decision is allowed to stand. Although the decision is being appealed against by the Commissioner of Taxation and, indeed, by Nilsen, which wants to be able to claim for all the leave liability which has accrued in earlier years as well, the intention of this Bill is to make sure that such revenue loss does not occur.
There have been queries regarding the sum of $600m, and I must say that it does seem to be extraordinarily high for a loss just for leave provisions in one year. However, we do not have the basis on which to oppose or to declare that the Treasurer’s assessment of this sum is incorrect, although I note that the Australian Taxpayers Association has claimed that the amount is greatly overdrawn and would in fact be far less than the sum mentioned. However, not having a sound basis on which to reach any conclusion that the Treasurer is totally wrong in this respect, we have little alternative but to accept that the Taxation Office has made some calculation of this order and to accept therefore that that is the likely loss if the law is not changed.
For that reason we therefore support the Government’s legislation. In doing so we realise that there is clear retrospectivity involved because the Bill seeks to make clear that from 1 July 1977 leave liability is claimable as a tax deduction only at the time it is paid. But we are not deterred at all by the principle of retrospectivity. In fact, we believe that there may have to be greater recourse in the future to retrospective legislation in this regard if we are to defeat the machinations of tax avoiders and protect the revenue. No one likes retrospective legislation. But the Opposition has already made it clear that it does not shrink from supporting retrospective legislation when it feels this action is justified. In this particular area the Opposition feels that there is indeed every justification for retrospective legislation, although one would seek to keep it to the minimum extent necessary.
I turn now to consider the defects in the casebycase approach against tax avoidance which is being pursued by the present Government. There has been, of course, a rash of tax avoidance activity by the Government this year. Since acting against the Curran schemes in April the Treasurer has put out nine Press releases regarding tax avoidance measures, introduced three major Bills plus the minor machinery Bills that accompany them, foreshadowed action on 23 separate avoidance schemes plus the many varieties of each one, taken action on at least 10 schemes which have been designed to circumvent earlier announced legislation and is now about to introduce during the current debate 44 technical amendments to the Income Tax Assessment Amendment Bill (No. 2), most of which are said to be of the slip-of-the-pen variety. I simply note in passing that there must be some very slippery pens in the Taxation Office. However, I understand the complexities of what is involved and I do not intend to be really critical in making that off-the-cuff remark.
The effect of all this is that various tax avoidance loopholes will certainly be closed off. But it seems to us that others are just as likely to open up soon thereafter. As we have already seen, the Treasurer has had to bring in supplementary legislation to ensure that earlier tax avoidance legislation remains effective. We must realise that there is a whole industry working out how to avoid tax for those who can afford the fees. Of course these are the people with high incomes. With such complex legislation as this income tax law it is quite inevitable that highly skilled lawyers and accountants operating in this area will continue to find new loopholes as fast as the Parliament closes off existing ones, at least while we proceed in the present way. Thus this casebycase approach, in our view, is not likely to be effective in eliminating or severely restricting a blatant tax avoidance.
There are also great administrative and legislative burdens involved in this case-by-case approach. The process of drawing up legislation to cover all the possible means by which a scheme can be used must be creating a severe administrative burden, especially as there is no seeming end to the process. As things stand, it will just go on and on, with more and more avoidance Bills being brought before this House, creating an administrative burden for the Government and, indeed, creating a parliamentary burden. We will be faced continually with a vast array of complex legislation seeking to close off new tax avoidance schemes that have been opened up. One commentator has described this whole approach as ‘one of applying band-aids to a patient bleeding to death from multiple gunshot wounds ‘. It may not be an entirely pointless exercise to apply those band-aids, but we must recognise that it is an extremely frustrating process, knowing that it is not going to achieve any lasting effect. This surely should lead us to seek alternative means of overcoming the problem. Especially is this so when one considers the sort of tangled mess the income tax law is likely to become a few years hence if this process continues. The original Act of 1936 was 90 pages long. The Income Tax Assessment Act now is over 700 pages long and is likely to become longer in the near future. A well-known taxation lawyer, Mr Daryl Davies, Q.C., recently described the jumble of income tax legislation as follows:
The Income Tax Assessment Act 1936-1977 is practically incomprehensible . . . The uninitiated could not possibly read and understand the Act. Even the initiated will find difficulty in locating and bringing together all the matters that are relevant.
Mr Davies also pleaded for the Act to be entirely recast, and that seems to us to be an extremely sensible suggestion. We realise, of course, that recasting the Act would be no simple process. Indeed, it would raise enormous problems. But the fact is that this legislation is now so complex that inevitably it facilitates an unending stream of tax avoidance schemes.
The Government’s attack on tax avoidance schemes is not as comprehensive as it might have been. The various well-known devices to avoid tax or through which tax is reduced have been allowed by this Government to continue. Admittedly it has done quite a bit about tax avoidance, but it has allowed blatant tax avoidance areas to continue to operate. One of those areas is income splitting. As we all know, income splitting through family trusts is a blatant area of tax avoidance, and although this has been pointed out to the Government time and time again in debate, both the Prime Minister (Mr Malcolm Fraser) and the Treasurer have made it clear that they have no intention of moving to close off this substantial tax loophole. Income splitting through service trusts is also something which is quite open to those who wish to employ tax avoidance processes. The Australian Financial Review on 23 August 1978 carried an article headed ‘Income-splitting upheld’, and I quote briefly from that article:
An income-splitting case of interest to all professional persons was handed down by the Federal Court this month.
The court, in rejecting the Commissioner’s appeal in Phillip’s case, has ruled that the use of a service trust to carry on the non-professional activities of an accountancy practice was fully effective for tax purposes.
The importance of the scheme used is that it enabled income to be diverted by professional practitioners to the ultimate benefit of their wives and families.
What happens is that income is diverted to people who are in much lower tax bracketswives and children- and is therefore taxed at lower rates than if it remained in the hands of the professional person. In today’s Australian Financial Review there is a report of a similar decision by the Federal Court of Australia in relation to income splitting by partnerships. A decision has been made enabling those who participate in partnerships to minimise their tax through income-splitting devices. Clearly, in this area it would seem that there is a lot more to be done if the Government is really serious about cutting down on tax avoidance.
Again what about foreign-earned income? In June, when the Treasurer introduced the Bills now before the House, he spent a good third of his speech taking about the Government’s plan to tax foreign-earned income at Austraiian tax rates, or to ensure that total tax paid on that income was at Australian tax rates. As we have seen since, the Government has backed right off that measure and announced that it has no intention of going on with it. When the Treasurer announced that the Government was not going to go ahead with the scheme, I made the point in a speech in this House that it did involve allowing tax avoidance to go on. At that time the Treasurer seemed to think that I was being unfair and that he was concerned only with equity. It is not just a matter of equity, it is a matter of tax avoidance as well, and the two are closely related. I draw the attention of the Treasurer to a recent advertisement for the Small Business Letter in the newspapers which read:
Tax havens overseas.
Treasurer Howard has thrown the gate wide open for you to minimise tax through overseas tax shelters.
That relates to the fact that the Treasurer, on behalf of the Government, announced that they were backing right off the proposal to clamp down on these foreign tax havens by taxing foreign-earned income at Australian tax rates. So there we see two examples- income splitting and foreign-earned income- where the Government if it was really serious about this matter could be doing a lot more.
The result of all this- the ineffectiveness of the action taken against tax avoidance and the tolerance of some tax avoidance procedures- is that the tax system is becoming very inequitable, and that is of great concern to the Opposition. Payasyouearn taxpayers- the great wage and salary earners of this country- have little or no chance to avoid tax in the way that is open to those who do not come under the PA YE provisions.
I draw the attention of the House to what has happened over the last few years to the level of tax raised from PA YE taxpayers and others who do not come under the pay-as-you-earn provisions. In the period from 1976-77 to 1978-79-1 am using the Budget Estimates- net PAYE tax increased by 21.2 per cent but other personal income tax- I am talking about provisional taxpayers- increased by only 2.9 per cent There has been very little increase indeed, and the high income earners are in the second category, the personal income tax area. They are not increasing their tax payments to the Government because they are able to utilise tax avoidance techniques, despite all the efforts of this Government to this stage to close them off. As I mentioned, a lot more could have been done if the Government was really serious about it. It is also relevant to note that over the last few years there has been a move towards a larger proportion of the work force being self-employed and therefore not paying pay-as-you-earn tax. However, despite that, we still have this very low rate of increase for non-pay-as-you-earn taxpayers during the period from 1976-77 to 1978-79.
In considering what alternative approach can be taken, one has to bear in mind that the problem for the Government has been made much more difficult than it otherwise would have been by the actions of the High Court in this country. I do not have time to go into this area in any detail, but I think it is well known by all honourable members that section 260 of the Income Tax Assessment Act is one that has been written down by the High Court over the last decade or so to the point of near meaninglessness. Yet on the face of it, to the layman it seems to say quite clearly that tax avoidance procedures are void as against the Commissioner- absolutely void, to use the words of the section. Somehow this has been interpreted by the High Court as not applying and therefore the Government has no general annihilation provision, as it is known, in the Act, working to prevent tax avoidance schemes being utilised. Of course, this makes it extremely difficult. The alternative approach the Government is now employing, not having an effective annihilation provision, is to legislate against every tax avoidance scheme that it finds out about, but that has all the problems I have been talking about in regard to the complexity of the law and the administrative and parliamentary burden. It is a very unsatisfactory alternative, and it seems to us that the Government, if it is really serious about chopping off tax avoidance in this country, must do something about section 260. It should not just accept the fact that the High Court is able to ignore the wishes of parliament when it introduced such a provision and to interpret that section in a way which renders it virtually meaningless.
In considering what kind of action can be taken by the Government to overcome tax avoidance, let me make a few points. The first thing it must do is to create in the minds of the community a sense of immorality regarding enormous tax avoidance. Probably everyone tries to cheat the Commissioner of Taxation to some small degree, either by overstating the amount of his chemist bills or doing something similar. I am sure that most people in this community understate their income to a degree. But the amounts involved are very small and for most people the tax avoidance is very minor. What we are talking about are the actions of people who are able to undertake absolutely artificial schemes that are blatantly designed to avoid paying tax. In some cases those schemes wipe out totally their tax liability and in other cases that liability is wiped out for years in advance. Of course, we are talking about people on very high incomes. It is totally inequitable that we should allow that procedure to continue.
We say that the first thing the Government must do is to create in the minds of people the feeling that it is immoral to engage in such blatant tax avoidance. If we can create great community indignation about such tax avoidance and the realisation that those people who are able to escape from their tax liabilities are imposing a greater burden on the rest of us who are unable to engage in such practices, we may find eventually that the judiciary of this country will be forced to pay more regard to the wishes of Parliament than it seems to be doing at the present time.
Nevertheless, we feel that we ought to try to take other action, such as revamping section 260 of the Income Tax Assessment Act. A couple of alternative drafts of section 260 have been made available to me, one by Dr Uri Grbich, a senior lecturer in law at Monash University and the other by another tax lawyer who wishes to remain anonymous. One is an extremely detailed and lengthy rewrite of section 260 and the other is an attempt to explain that section in a very simple form. I seek leave of the House to incorporate in Hansard those two alternative drafts of section 260.
The documents read as follows-
This redraft should be enacted in the Income Tax Assessment Act 1 936-75, the Estate Duty Assessment Act 1 94 1 -67, and the Gift Duty Assessment Act 1 94 1 -72.
A ‘taxation avoidance transaction’ shall be any transaction:
(a) In interpreting the provisions of this Act proper weight shall be given to the objective of preventing taxation avoidance transactions.
In drawing the inference that there was a taxation avoidance transaction the Commissioner shall have regard to the following matters:
(a) Where there is a taxation avoidance transaction the Commissioner may but shall not be bound to treat all or any part of the taxation avoidance transaction as void for the purposes of this Act.
In any proceedings in which a taxpayer is appealing from a determination of the Commissioner under section 1 87 of this Act:
(a) The Commissioner shall supply to the taxpayer the basis on which he arrives at a new taxable income including the steps of the reconstructed transaction and the calculation of any approximations made in achieving the new taxable income.
– Another measure that can be taken is to ban all advertising of tax avoidance schemes. I cannot see why, for instance, the McCabe letter should be able to advertise ‘income tax wipe out’. No detail is given as to exactly how the people behind that can wipe out income tax entirely, but they are able to advertise schemes which claim that if they are followed one’s tax obligation will be totally obliterated. I do not think we should make it easier for people to evade tax by allowing the advertising of such schemes.
I turn now to retrospectivity. As I mentioned previously, the Opposition does not shrink from endorsing retrospectivity in this area. As I have said previously, we think there is absolutely nothing wrong with backdating legislation at least to the beginning of the financial year in which the Taxation Office discovers the operation of a tax avoidance scheme. That would seem to be very limited retrospectivity indeed. If that did not go far enough, we would not shrink from applying retrospectivity beyond that datefor example, to the period when a tax avoidance scheme first began to operate. I think that the application of retrospectivity is an element which absolutely ruins the tax avoidance industry. If retrospectivity were introduced in relation to every scheme the tax avoidance industry simply could not operate. The existence or otherwise of retrospectivity means the life or death of the tax avoidance industry. If members of the Government are really serious about preventing these practices from continuing they ought to think more seriously than they have in the past about supporting full scale retrospectivity.
There are other measures which can be taken. I refer to the imposition of fines and even perhaps taking such matters out of the hands of the courts altogether, as has been recommended by the Emeritus Professor of Law at the Australian National University, Professor Geoffrey Sawer. I do not have time to go into that matter now. At the approprate stage I will be moving an amendment to the motion for the second reading of the Income Tax Assessment Amendment BUI (No. 2) 1978. Although that Bill is currently being debated cognately with other Bills, we are formally debating the Income Tax Assessment Bill (No. 3) 1978. So I will move that amendment at a later time.
-I think that all honourable members on this side of the
House would congratulate the Government and its Treasurer (Mr Howard) for the enormous steps they have taken to confront the tax evasion industry. There is no doubt that, as the honourable member for Gellibrand (Mr Willis) said, there is an excessive use of evasion methods and that it is the duty and the role of government to ensure that the tax burden is spread as fairly as possible throughout the whole community. In that context, it is interesting to note that in the three years that this Government has been in office an enormous number of measures have been introduced to prevent from operating the more blatant schemes which have been practised without difficulty in previous years and which, of course, have cost the revenue- that means the taxpayer- large amounts of money. If a very large scale evasion industry exists, there is no doubt that it means that the tax burden is heavier on those who have the sense of responsibility to pay their taxes. It may be not only that they have the sense of responsibility to pay their taxes but also that they do not have the capacity to hire the experts who devise evasion schemes. I use the word ‘evasion’ rather than the word ‘avoidance’ in this context because some of the schemes that we have seen are of such a curious nature and fly so clearly in the face of normal commercial practice that the word ‘avoidance’ is, to my mind, irrelevant when dealing with them.
Whilst we should congratulate the present Government for its enormous effort in this area and for the large number of Bills it has introduced, many of which have been held to be quite controversial, we should perhaps look back and compare that enormous effort with what happened in the preceding three years when evasion schemes were being proceeded with and when the rate of tax rose so rapidly that the desire, the need in some cases, to seek to avoid income tax in order to survive became so great that this industry really began to flourish. I submit that the avoidance industry received no serious impediment whatsoever in the three years that Labor was in government, apart from a statement from the then Treasurer, Mr Crean, in which he stated that one particular form of evasion would be dealt with. That that scheme was not dealt with in the subsequent two years probably represents a pattern in the methods adopted by the Labor Government. In fact, nothing of any significance was done at all by those now in opposition to limit tax evasion and to ensure that the tax burden was spread fairly throughout the whole of the community.
I was fascinated to hear the honourable member for Gellibrand claim that an unfair rise in pay-as-you-earn taxation is taking place under this Government. Good heavens! Would the honourable member like to go back to the Budget which was introduced by the honourable member for Oxley (Mr Hayden) and which set out to increase wages by approximately 22 per cent but in which pay-as-you-earn tax- that is workers’ tax- was to rise by approximately 44 per cent? That was to happen under the last Labor Budget. No wonder it was the last Labor Budget. Whilst one should not be detoured into this kind of discussion, despite what was said by the honourable member for Gellibrand, I think we have to recognise that a very significant effort has been made in this area by the present Government which, I will concede, received grudging support from the honourable member for Gellibrand. However, I think we have to recognise that many other problems are still facing the Government and that it is no secret that the Government is maintaining a continuing examination of tax avoidance and evasion schemes.
I am certain that the honourable member for Gellibrand must be aware that section 260 of the Income Tax Assessment Act, which he mentioned, is at present subject to close examination by the Government and its back benchers. There is no doubt that many further proposals to restrain tax evasion schemes as they arise are either under examination or soon will be. Throughout this session statements have been made by the Treasurer about measures that will be taken. I simply contrast this action with the words- they have only ever been words- from the Opposition. I also would like to commend the Government for what it has deliberately not done. I draw attention to the matter that the honourable member for Gellibrand raised in relation to the taxation of foreign earnings by Australian corporations and Australian personal taxpayers.
The honourable member for Gellibrand made the comment that he did not find it satisfactory that the Treasurer would withdraw these taxes because they were inequitable. That is an extraordinary statement. For an honourable member of this House to concede that what was originally proposed would have been inequitable but that that did not matter is, I think, a reflection on the sorts of attitudes that members of the Austraiian Labor Party appear to have to equity throughout the community. The honourable member for Gellibrand said that it is not a matter of equity, that it is a matter of tax evasion. Goodness me, if we are to rely on that kind of thinking from the Opposition and if ever the Australian nation has the misfortune to see honourable members opposite again in government, the sort of inequitable legislation that will be brought down will make even the three years of the previous Labor Government from 1973 to 1975 look like a kids’ picnic. This is an absolutely apalling concession by the honourable member for Gellibrand. If we do not have paramount in our minds considerations of equity in tax matters, we have no right to impose taxes.
The whole thrust of the taxation system must be directed towards sharing the tax burden as fairly as possible throughout the communityamongst those people who have the capacity to pay. The efforts that this present Government has made in its three years of office have been eminently successful in that direction. It has blocked some of these blatant tax avoidance schemes. But we must recognise that although it is quite true that there is some area of tax avoidance and evasion involved in foreign earnings of Australian corporations and Australian individual taxpayers overseas, the fact is that the very great majority of those earnings is not in that category. The initially proposed legislation would have acted unfairly on the great bulk of honest and honourable corporations and people earning income from overseas. It is inequitable that they should have been unreasonably and unfairly treated simply to catch the small proportion of people involved in taxation devices. The fact is- the honourable member for Gellibrand might recognise this-that the kind of legislation originally proposed would not have caught the people using the more disgraceful devices that are apparently available. The hidden incomes being secretly established overseas would not have come within the realms of the legislation because, in fact, it related to declared earnings. Therefore, the legislation was withdrawn not only because it was inequitable- a major point- but also because it did not strike effectively at the heart of the recognised evasion. For the honourable member for Gellibrand to suggest that a McCabe letter or any other letter which deals with foreign taxation havens can exist only because this Government withdrew some proposed legislation that would have been inequitable is arrant and utter nonsense and he knows it.
– It is just easier.
– It may be just easier, but it is not true. I congratulate the Treasurer for the way in which he has responded to pressure from the committees set up by this Government to deal with matters of this nature. The House will be aware that there is not only a government member’s Treasury committee but also a taxation sub-committee. The right honourable member for Lowe (Sir William McMahon), who is in the House at the moment, is a member of that taxation sub-committee. I am the secretary of that sub-committee and Senator Messner is its chairman. The honourable member for Dawson (Mr Braithwaite) is also a member of that subcommittee as is the honourable member for Barker (Mr Porter), lt is a very effective subcommittee. I am very glad that immediately the Treasurer announced these matters he asked the sub-committee- as is customary- for its views. I stress that the style of government represented here is very effective. Statements are made by the Treasurer. He then requests public discussion of the matter concerned so that inequities will be avoided, so that the Government will be fully aware of possible effects when it eventually legislates and so that it will not be relying entirely on in-house advice from a department which regrettably is involved in the main at looking at the dark side of Austraiian business and the Australian taxpayer.
Naturally, the Taxation Office has the view that it is continually being cheated. The fact is that people in the Taxation Office understandably may not have the same happy, cheerful view of human nature that most Australians have. After all, if one is involved in tax evasion matters all the time, one no doubt becomes a little sour. The point is that this is a sensible form of government in which public and expert advice is sought and gained. The taxation subcommittee was overjoyed at the response that it received on this matter, as on every other matter that it has discussed with the Treasurer. A high degree of expertise exists within the committee gathered from outside sources. I repeat, that the Treasurer, should be commended for his response to the very alert and, I believe, capable submissions made to him by members of the taxation sub-committee on this and various other matters.
I shall deal with a point made by the honourable member for Gellibrand relating to retrospective legislation. I am concerned at his general point of view. He states that there may have to be greater retrospectivity in the future. That is the honourable member for Gellibrand ‘s view. He suggests that the tax evasion industry would be dealt with properly only if this threat of greater retrospectivity existed. I know that a view has been expressed by, I think, a Privy Councillor in Britain or by the High Court. Certainly it was expressed by a judge in Britain. He said that as this is open war and as it is regarded as war by both sides, it is pretty hard to have peaceful rules applying to tax evasion. Nonetheless, I submit that retrospectivity is not a principle that should be embraced by any government as a matter of course. It would be most regrettable if in any instance actions which were legal at the time they were done were then retrospectively made illegal. That is a basic principle of law. What we have to look at here is to what extent the retrospectivity involved in fixing up the mess created by the Nilsen case, as dealt with in the Income Tax Assessment Amendment Bill (No. 3), offends any of the principles of retrospectivity. I am certain that honourable members on this side of the House in particular would strongly support such principles. I submit that in this case retrospectivity is not the principle at risk because, as one will see from reading the judgment, this case changes a situation that had been assumed by everyone to exist. All that the amendment is doing is restoring the situation that everyone had assumed to exist anyway.
In fact the retrospectivity does not offend the proposition that people should not act on the expectation that the law states one thing only to find out that the law has been changed after the event. In essence, everyone expected the law to be as it has now been established to be in this legislation. To deny the point about retrospectivity that was raised by the honourable member for Gellibrand, I say that those people who in fact had a different view of the law and who believed the law to state what the learned judge in the Victorian Supreme Court said in the Nilsen case will not be subjected to the retrospective nature of this legislation. In the Treasurer’s second reading speech it is stated:
The amendment will not apply in respect of assessments yet to be raised in respect of earlier years and it will not apply to assessments already raised in respect of the 1977-78 and prior years where the taxpayer’s rights are protected by way of objection or appeal to a court.
We are not chopping out anything that had existed in the past. In effect we are only changing the legislation back to the situation which existed and was believed to exist in the minds of the taxpayers at the time they earned their incomes. I concede that there is a significant point about whether deductions for long service leave, annual leave and so on should be deductible for tax purposes. No doubt there is a very strong case that they all should be deductible at the time the provision is made rather than having to wait until the amount is actually paid. After all it is a cost against profits and it is rather illogical that a company should present one set of accounts to the Deputy Commissioner of Taxation on which it is taxed and yet another set of accounts to the public, in the case of a public company, in which these items axe deducted. The accounts which are presented to the Deputy Commissioner of Taxation do not have the provisions deducted but the accounts that are presented to the public have them deducted. Certainly it is illogical.
The argument against allowing the deductions is that because the money has not passed out of a corporation’s control, it should not get the benefit of the tax deduction. The Nilsen case would have an immense impact if it were allowed to go on this year. I believe that the Government should look at this point as a future policy matter in the hope that one would move towards a situation in which provisions are deductible for tax purposes at the time they are made. I believe it would be of great assistance, particularly to small businesses, in allowing them to retain in their businesses money that is useful and in fact essential to allow them to expand, develop and in fact employ people.
It can well be argued also that with the prevention of transfer of losses- current year losses are being prevented from being transferred in this legislation- there is a fair case for allowing all transfers of losses anyway and to allow trading losses, recognising it as one of the few ways in which creditors of a failed company can ever get any money back; the loss becomes an asset if it is able to be traded. I submit that this matter could be raised in the large review of taxation which is presently being carried out within the Government ranks.
I conclude by stating that a continuing inquiry about tax is going on. The honourable member for Gellibrand has referred to evasion and section 260. As I said, section 260 is being examined. This point about evasion probably dramatises the need to look at other forms of taxation which do not allow for evasion. That is one of the reasons that the Government is conducting an inquiry into such matters as indirect taxes and retail turnover tax. It is extraordinary that the Retail Traders Association apparently takes the view that this Government does not have the right to examine the best way to tax the Australian public.
Mr DEPUTY SPEAKER (Mr Drummond)Order! The honourable member’s time has expired.
-Five taxation Bills which are now before the House are being discussed, two of them being income tax assessment Bills. I will direct my remarks primarily to the Income Tax Assessment Amendment Bill (No. 2) 1978. When the Treasurer (Mr Howard) introduced this Bill on 8 June 1978 he said:
The Bill . . . contains further measures to counter tax avoidance and to improve the equity and balance of the income tax system.
I am pleased to note that this Bill contains provisions to encourage investment in Australian films. It deals with current year losses and rebates on dividends that are received as part of a dividend stripping operation so as to counter tax avoidance situations. It also contains provisions to impose a branch profits tax. To the extent that this Bill sets out to counter tax avoidance schemes, the Opposition does not quarrel with it and it certainly does not oppose the legislation. It also does not oppose the provisions of the Bill which set out to encourage investment in Australian films. This is a very worthwhile effort that is being taken by the Government and I only hope that it succeeds in its objectives.
In recent years there has been a great upsurge in the Australian film making industry. I might claim credit for the Whitlam Government which, after it came to office in December 1972, set out to introduce measures to encourage the Australian film making industry. Some States have followed the example of the Whitlam Government. The Labor Government in South Australia is particularly noteworthy for the efforts that it has made to encourage the industry. Films of the calibre of Picnic at Hanging Rock are evidence of the types of films which can be made quite successfully in Australia by the Australian film making industry, provided of course that sufficient encouragement is given to produce worthwhile films and not muck. I am pleased to see that the bulk of the films which have been produced in Australia have been worthwhile. Picnic at Hanging Rock is a particular example. It is a very worthwhile film and many other films that have been produced subsequently have received almost rave notices from the international film industry.
– As the honourable member for Macarthur points out, Caddie is an extremely good film. It goes to show that provided sufficient incentives are given to people in the industry and provided they can get a reasonable financial return from money invested, capital can and wil be made available. History has shown that there are sufficient good actors and actresses in Australia to provide worthwhile Austraiian films. We also have sufficient producers, directors, cameramen and supporting staff in the industry. I well remember discussing in early 1972 with an old friend who was in the film industry the possibility of encouraging a worthwhile film industry in Australia. This old friend of mine was somewhat of a cynic. He was Chips Rafferty, who was rather a Jack Blunt as well as being cynical. He was very blunt and very cynical of politicians. He made the statement that politicians, for many years, had held out hopes for incentives to be provided and assistance to be given to the Australian film industry but nothing worth while had been done. This was before the Whitlam Government was elected in December 1972.
I discussed this matter with Chips Rafferty one day when he was wearing a sarong and hosing the front garden. He was my daughter’s landlord. On a rather warm summer day in December at Vaucluse Chips had a long sarong around his paunchy stomach which had been built up with the best Australian brew- I think Tooths KB Lager had built him up into the fine figure that he was. Chips was out there hosing the garden and ranting and raving about what a bunch of bludgers Australian politicians were. That was before he found out that I was a politician. But that did not change his ranting and raving. He still ranted that the Australian film industry had been led up the garden path by politicians for many many years and that neither I nor a Whitlam Government, if it ever got into office, would be able to do anything about it. But Chips was made to eat his words in later years and he helped to assist in building up the Australian film industry.
He had been in the Australian industry for many many years before the Australian Film Commission was created by the Whitlam Government. Even when that was created, he still had his doubts about anything happening. But he lived to see the day when the Australian film industry did become a worthwhile project. Fortunately he did live long enough to see that industry make worthwhile developments. He also played a useful part in those developments. As I said before, the early upsurge in the industry came after the Australian Film Commission was set up by the Whitlam Labor Government. If the measures introduced by this Bill have a similar effect, then I say quite advisedly that they will be most worth while.
This Government claims to be lending significant support to the Austraiian film industry and to all those people who are engaged in it by the measures it is introducing in this Bill. Briefly, these measures will allow capital investment in Australian film rights to be written off over a two-year period, instead of, as at present, over a much longer period of up to 25 years. This should, and hopefully will, encourage a greater investment and participation by Australians in the production of Austraiian films. An Australian film, by definition, is one which has been made or is to be made wholly or substantially in Australia, and has a significant Australian content. I congratulate the Government for inserting such a provision in this Bill because I do not believe that we should be assisting overseas film industries to develop films in Australia if they are to be the ones to gain the advantages from those films. We have to encourage the Australian film industry to do its own development work, its own spade work, in developing the Australian film industry. The Australian film industry has come a long way in the last five years. With the assistance that is provided in this Bill, hopefully it will go a lot further in the next five years.
However, it is noteworthy that any time steps are taken to grant a tax benefit to any section of any industry it becomes necessary to guard against misuse of that benefit for tax avoidance purposes. I am pleased to see that this Bill has taken steps to prevent misuse, for tax avoidance purposes, of the measures which are being introduced to grant assistance to the Australian film industry. One would think that it should not be necessary to take steps to prevent tax avoidance, even with a concession of this nature, but unfortunately it is necessary. I say that it is symptomatic of the tax avoidance minds of skilled advisers who would do anything for a fee. That applies to some accountants, some lawyers and some other tax avoidance experts. They will do anything for a fee. It is necessary for the great bulk of people to be protected from having to share additional tax which has been thrust upon them by the machinations of such tax advisers.
Even in recent times, despite the measures which this Government has taken, advertisements on how to avoid tax have still appeared constantly in the Press. It is not called ‘evasion’; it is called ‘avoidance’. I have often wondered what is the difference between ‘evasion’ and avoidance’.
– ‘Evasion’ is illegal.
– ‘Evasion’ is not in accordance with the law and ‘avoidance’ is the nice way of saying that it is not evasion. But to my mind avoidance’ still carries the same stigma. It still carries the same benefit to those people who shirk their responsibilities for the amount of tax they avoid paying. In the Australian Financial Review of 12 September this year, a half-page advertisement appeared advising of a one-day conference on special incentives and tax shelters.
It referred to ‘New Horizons on Tax and Investment Planning’. One of the statements in that half-page advertisement was as follows:
A realistic future orientated assessment of tax and investment planning in Australia cannot be complete without a working knowledge of the scope for legitimate tax minimization and the potential of tax sheltered investments.
Among the subjects for discussion by skilled barristers at law were:
Tax Shelters and Special Incentives in Australian Income Tax Law: Opening Pandora’s Box.
Presumably Pandora is a female because she has a box. Obviously Pandora’s Box has been opened many times, if one takes into account the number of Bills that have been introduced in this House to close that box, in other words, to close off tax avoidance schemes. Another topic for discussion, as mentioned in the advertisement, was:
Variations on a Tax Shelter Theme:
Forestry Operations, Macadamia Nut Plantations, Wheat Pooling, Bulbs, Wineries, Indoor Plants, et cetera.
So apparently nothing is sacred. Not even Macadamia nuts or indoor plants are sacred. They all come within the realm of the tax planner, the taxminimiser. I notice that on page 39 of today’s Australian Financial Review, the following advertisement appears:
Investor is interested in purchasing for cash any trading, investment or family trust with accumulated or current income tax losses from $ 10,000 to $3 million.
Replies in strictest confidence to:
Trust Losses Box2157,GPO, Sydney
Because that advertisement mentions family trusts, I have no doubt that when the honourable member for Chifley (Mr Armitage) speaks in this debate he will open up Pandora’s Box on family trusts as they have application in some sections, even within this Parliament.
Measures are being introduced in the Income Tax Assessment Amendment Bill (No. 2) to deal also with current-year losses, that is, artificially created tax losses which are being injected into companies. What will happen is that the same tests will be applied under this Bill as presently apply to losses in prior years. There are two tests. There has to be a same shareholding tests and a same business test. The High Court has ruled that the same business test means that the business must operate in the same premises, with the same employees, et cetera. The High Court held that in the case of the Federal Commissioner of Taxation v. Avondale Motors Pry Ltd. So at least the Taxation Office has persuaded the Government that steps should be taken to close off that tax loophole, and indeed such steps are being taken in this Bill. The relevant provisions will operate from 7 April 1978, which was the date on which the Treasurer made his statement in this House.
Additional provisions are being made in regard to dividend stripping. Those provisions will date from 7 May 1978, which was the date of the Treasurer’s Press release. No matter how hard the Taxation Office or any government tries to clamp down on tax avoidance schemes, skilled promoters seem to find a way around the new provisions, as they did with the dividend stripping provisions of other income tax legislation. The promoters found a way round legislation brought down as late as April 1978 to interpose a company or a unit trust between the company to be stripped and the stripper. Section 46r is to be amended to apply the provisions of previous legislation to the schemes I have just mentioned. Section 46b is to be further amended to cover the interposition of a trust as well as a company.
I commend the Government for taking this action and for taking the advice of the Taxation Office in introducing this legislation. But no matter how hard the Taxation Office tries and no matter how hard a Government responds to pressure from the Taxation Office, it never seems to be able to close down the tax avoidance schemes. I often wonder whether the only solution to the discontinuance of tax avoidance and tax evasion is the introduction of a compulsory gaol sentence similar to that introduced in the United States of America. It seems to have had the effect, in the United States of curtailing tax avoidance and tax evasion. I think it is time the Government had a look at whether tax evasion and/or tax avoidance should be made the subject of a mandatory gaol sentence.
I think that that is one of the few ways in which the Government will be able to cut down on these nefarious schemes which force other sections of the community to carry an unfair burden of the tax. If it is introduced it should not apply only to the people who do the tax avoidance and do the tax evasion but also the people who advise them to do it. Surely they are just as much culprits in the conspiracy to evade or avoid as those who do the avoidance or evasion work. If there were a compulsory or mandatory gaol sentence for the tax avoider or evader as well as the tax adviser who gave the advice on these schemes, I am sure we would whittle down tax avoidance to a very minimal amount.
The honourable member for Gellibrand (Mr Willis) rightly mentioned steps which should be taken to amend section 260 of the Income Tax Assessment Act. I commend his remarks and would suggest to the Taxation Office that it have a very close look at the suggested amendments of that section. He brought forward two suggested amendments of section 260 which were incorporated in Hansard. As honourable members should be aware, section 260 was inserted in the Income Tax Assessment Act many years ago to give blanket coverage for taxation officers in their administration of the Income Tax Act to prevent tax avoidance schemes. It should not be necessary- as has been happening in recent years- to shut the stable door after the horse has bolted. There should be a blanket, worthwhile and watertight provision to prevent these tax avoidance schemes. Only in that way will every person bear a fair share of the income tax which has to be levied for the good government of any country.
I commend this Bill to the House and trust that the Government will take note of the remarks of the honourable member for Gellibrand and me in regard to the application of section 260 and the necessity to amend that provision and make it truly watertight.
– I wish to deal only with Order of the Day No. 1, the Income Tax Assessment Amendment Bill (No. 3). I think this question has to be answered for the benefit of the House: What are we considering? We are considering section 5 1 ( 1 ) of the Income Tax Act. That section says:
All losses and outgoings to the extent to which they are incurred in gaining or producing the assessible income or are necessarily incurred in carrying on a business . . . shall be allowable deductions . . .
The application of that section has already been answered in the Nilsen case and in several other cases. In this case there is no question of avoidance or evasion of tax, none whatsoever. That has to be stated. I put it to the House- this was mentioned by the honourable member for Gellibrand (Mr Willis)- that it is in many respects retrospective, but to a minor extent there is a guarding clause to prevent retrospectivity, and I am thankful for that Further, I want to put pretty clearly to this House that there is a long line of High Court decisions which show clearly that the decision in Nilsen ‘s case was legitimate and proper. They follow the text of other decisions given there. The honourable member for Gellibrand also mentioned that the Asprey Committee recommended the very process which we are now trying to overrule.
Let me come back to what has happened. In the case before the Victorian courts called the Nilsen case it was argued by Counsel, on behalf of the Australian Taxation Office, that losses or outgoings incurred could be claimed as a tax deduction only in the year of the tax return and only when payment in fact occurred. The finding of the Victorian court was clear and obvious. It said this:
The provisions for long service leave was a loss or outgoing necessarily incurred within section 5 1 ( 1 ) of the Taxation Act The taxpayers obligation to pay was an indefeasible one.
The court dealt with long service leave mainly but said exactly the same principles applied to annual leave.
That is a critical decision. Once it becomes accrued and indefeasible- that is, you cannot negotiate to get rid of or change the obligation, the law has to be applied- the taxpayer can claim the tax deduction. The Victorian court also said this:
Losses or outgoings are incurred when either they accrue due or when they are realised.
I think it is regrettable that we have heard in this House and in other places that this is something new. It is not new. I have said, and I emphasise it again, that it is consistent with a long set of rulings of the High Court of Australia. Within the Nilsen case the background to it all was traced by the judge or justice who heard the appeal. He referred to the James Flood case in 1953, reported in 103 Commonwealth Law Reports at page 655. In that case the High Court held that the word ‘outgoing’ in section 51(1) has been- I want to emphasise these words- interpreted as covering outgoings to which the taxpayer is definitively committed in the year of income although there has been no actual disbursement. How can it be said that this is something novel and something new? In 1953 the Taxation Office, in its magnificence and greatness, should have let the Government know what was involved in the Flood case, and the Government, if it wanted to, should have taken remedial action then in order to change the law if it thought it desirable to do so.
I also ask people who like the law and above all have a tremendous admiration for the legal practitioners in Australia, particularly those who go on to the High Court bench, to read the decision of Dixon C.J. in the Caltex case which says exactly the same thing: Therefore, I do not accept this nonsense about it being something novel and something new. I believe there are several other things we should mention. Firstly, it is critical to remember that if the deduction is not claimed in the tax year in which the allowance is claimed, it cannot subsequently be claimed. That is another protection. Then it has to be remembered when we are looking at this that it is a ‘one off’ proposition- that what the Taxation Office gains today it has to allow for by way of a deduction in the following year. I would point to two other matters that have not been emphasised anywhere but are of tremendous importance to us. First we must ensure that the profits of corporations are built up to somewhere about 19 per cent of our gross domestic production. That has to be done. It is fundamental if the economy of this country is to recover. Why then do we turn around and deprive companies of the opportunity, first of all to be able to appropriate and then claim a tax deduction which, under the laws they are perfectly entitled to do so? Second I refer to the fact that in Gorton ‘s case the Government said that we will obey the law. We will let the processes of the law and the appeal provisions take place and we will be guided by that. In the present instance it is to be done both ways. We will let it go on to appeal but at the same time we will amend the law although the law has been there for a very long period.
Let me mention two facts which also deserve to be stated in the light of what I want to say later. This has nothing to do with the Statute law of New South Wales and Victoria- in the case of New South Wales the Long Service Leave Act, and the Annual Holidays Act, and in Victoria the Victorian Labour and Industries Act. The law of those two States provides that leave must be granted within six months of accrual unless the registrars of the various departments of labour- or whatever they are called- agree.
The Nilsen case was based upon Metal Trades Awards. I deal now with the two arguments that were put in the second reading speech. The first is that uncertainty has been created by the disturbance of a practice followed by a great majority of taxpayers over past years. Taxpayers have been waiting since 1953-25 years ago- to see justice done and seen to be done. I cannot accept what has been said in this respect. Too many people have been hoping that the law as expounded in the Flood case would prevail, and that the disturbance created by the tax office would be overruled. The second argument relates to the loss of revenue which will occur if an amendment is not made. When the matter was first explained to me I was alarmed to hear the loss put at an amount as high as $600m. I could not believe it I cannot find anyone else who is prepared to justify such an assertion. I will tell honourable members why later.
One of the decisions in the Flood case was that there was no prospect of a pro rata claim being accepted and that the provisions of either the award or the law had to be carried out. In the case of long service leave a person had to have 1 5 years continuous service and in the case of annual leave the period was one year. No pro rata allocation was applicable. Let me analyse some of the points in that respect. Firstly, let us look at the long service leave situation to see whether there is any justification for such an amount being mentioned. A person has to serve for 15 years before such an entitlement arises. After that 15 years has been served a further period of several years has to be served before there is any pro rata entitlement for that subsequent period. In considering this matter one has to remember that there is a labour turnover of 20 per cent to 30 per cent in a year. Against those figures, the tax loss amounting to $250m or a little more than that, seems highly improbable! That is the main point I want to make on that aspect.
I turn now to the annual leave. I have referred to the fact that there is various State legislation, most of which was referred to in the Nilsen case. The trend today, and it is in accordance with the law, is for leave to be taken within the relevant period or the following six months. In view of that situation, surely one is entitled to ask how the amount could rise to the extent stated. Usually this leave is taken at Christmas when the kids are on holidays. By June they are not entitled to anymore. We have been given no evidence as to the way in which the amount of $600m could possibly be lost to the Treasury this financial year. In an endeavour to get information about this matter, I had to do my own homework. What did I do? I am glad that the honourable member for Gellibrand has returned to the chamber. He referred to this matter in his analytical and well-delivered speech.
I went to the Bureau of Statistics and found that it had no facts and no basis on which such an opinion could be arrived at. I went to the Reserve Bank, which is usually a pretty well informed organisation. It could not give me any information either. I went through the annual report of the Commissioner of Taxation and found nothing about this matter. I went then to Statex, which is the information centre for most of the companies listed on the stock exchanges. It could not find any readily available figures that would help me.
– Where did the figure come from?
– I believe it came from one of those intuitive judgments we heard about a few weeks ago from a former member of the Taxation Office. If not, maybe it was the result of crystal ball gazing. The honourable member’s imagination is a little better than mine. He will have to answer the question himself. One argument was put to me- not very persuasively- to which I took rather strong exception when I heard it. It was that as the wages and salaries supplement amounts in total to $50 billion one can draw the conclusion- by intuitive judgment and by other means- that $600m could be involved. I do not think that remotely touches reality.
Let us analyse the situation. From that amount of $50 billion one has firstly to deduct for the three tiers of government and the hospitals and edicaton. One has to look at a dozen and one things before one can ascertain what percentage of the amount of $50 billion should be deducted. The honourable member for Gellibrand also referred to the fact that certain people, particularly in Victoria, had made guesses about this matter. I have made inquiries about it. I have the approval of Mr Risstrom, the Secretary of the Australian Taxpayers Association, to say that he does not think the amount could be as high as $30m. From barristers and accountants whom I regard as being among some of the best professionals dealing with taxation matters I have obtained one common expression of opinion, that is, that it is a storm in a teacup. I believe that that statement is true.
I refer now to the attitude of the Australian Council of Trade Unions, the business sector and the community generally to annual and long service leave. The trade union movement believes that annual leave and long service leave are benefits that have been acquired over the years for the purpose of ensuring that the workers have time off from work and that they are part and parcel of their conditions of employment. It is not the money consideration that is important. It is the fact that under modern conditions, with the complexities of life and the unpredictability of the world in which we live, the workers must have time to rest and recuperate. For example, automobile workers, whose awards should be read, are given time off because of the dullness and the routine nature of their work due to mechanisation. It would be nothing but hypocritical if the ACTU and its members did not stick to that principle. I favour it, too. The large corporations, particularly those in the United States of America, are more and more realising that if the law provides for long service and annual leave to be taken at a particular time it should be taken then. I concede that on a large number of occasions technical officers, administrative officers or specialists cannot be given time off immediately. In those cases some dispensation must be made. But from a sociological, physiological and psychological point of view in the interest of the workers themselves, and given the fact that the mind and the body need refreshing frequently, I believe that it is in the best interests of this country to ensure that annual and long service leave are taken when it is available.
To sum up, I look at this matter from two points of view. I have asked myself whether, in the interests of the country and in the interests of ensuring that we achieve economic revival quickly, it is a proper measure. I have mentioned why I do not believe that this legislation is in the best interests of the country. Secondly, I have very grave doubts about whether, given the guesswork or intuitive judgment of those concerned, the amount could even get as high as $600m. I believe that $ 100m would be the maximum. We will find out in the wash up. When we add together all the amounts that we think will be recovered by the various pieces of legislation- and see the Neimeyer statement for 1978-79-1 think we will find that the amount that will be saved by the Treasury will be very small.
I make one final comment, and it has already been made by the honourable member for Gellibrand. I believe that the incidence of tax avoidance and evasion has become so bad that it amounts to a taxation conspiracy. Therefore I would like to see a brief relating to section 260 of the Act given to lawyers outside the AttorneyGeneral ‘s Department with a view to devising some change to the legislation to enable it to stand up against tax avoidance schemes as interpreted by the High Court. When I was handling the waterfront I had to brief professional counsel to prepare special legislation. It was successful. I believe that it can be done on this occasion. I also believe that an appeal ought to be made to the two great national taxation societies to use their prestige and authority to try to stop these shockingly bad tax evasion practices. They are bad in terms of morality. They are bad in terms of a perversion of what is in the best interests of the community. Therefore, I believe that drastic action ought to be taken in order to prevent them. Above all, at a time when the Government is seeking ways to reduce the deficit, let us hit tax avoidance and tax evasion, not legitimate commercial and business practices on which we will have to rely if this economy is to recover from stagnation.
I could not vote for this Bill.
-The honourable member for Gellibrand (Mr Willis) foreshadowed in his speech earlier this afternoon that he would be moving an amendment to the motion that the Income Tax Assessment Amendment Bill (No. 2) be read a second time. I point out that this is a cognate debate and the proposed amendment relates to the Bill listed on the blue sheet as order of the day No. 2.I wish to outline the precise nature of that amendment, which reads:
That all words after ‘That’ be omitted with a view to substituting the following words: whilst not opposing the Bill, the House:
is of the opinion that:
despite the passage of considerable legislation designed to close off tax avoidance loopholes, the Government has failed to legislate against various well-known tax avoidance schemes;
the continued operation of a large scale tax avoidance industry is creating grave inequities in the incidence of taxation, substantially reducing Government revenue, providing a substantial administrative burden for the Government, and imposing an increased legislative burden on the Parliament;
the process of countering tax avoidance schemes by the continual passage of complex legislation is cumbersome and inefficient;
d ) the income tax law has already reached a state of exceptional complexity, and
continued resort to the present means of countering tax avoidance will add greatly to the complexity of the tax law, and
therefore calls on the Government to redraft the income tax legislation with a view to increasing its simplicity and efficiency, to institute an effective annihilation provision based on Section 260 of the Income Tax Assessment Act, and to implement other general provisions designed to deter and restrict tax avoidance’.
Because this is a cognate debate and that amendment has been foreshadowed, these are the areas of concern to which I wish to address my remarks. Undoubtedly the dramatic growth of the various types of tax avoidance schemes has created a very difficult situation particularly for the taxation office which has to counter such schemes. Unfortunately the Office has not been helped by the High Court which in a number of cases has found against the Office and in favour of those organisations or companies which themselves have been conducting what could only be called the most outrageous tax avoidance schemes. I would like to cite a few of these cases which have come before the High Court and in which the Court has ruled against the Office and in favour of the tax avoider. One case involved the Curran scheme, another concerned South Australian Battery Makers Pty Ltd, with which I will deal in a moment. There was also the Cridlands case in 1977. Another was the Slutzkin case in 1977. In those last two cases the Court held that the provisions of section 260 of the Income Tax Assessment Act did not apply.
I wish to deal particularly with the minority judgment of Mr Justice Murphy in the High Court in the case of the Commissioner of Taxation, the appellant, and South Australian Battery Makers Pty Ltd, the respondent. The Acting Chief Judge was Justice Gibbs. The other judges were Justice Stephen, Justice Jacobs, Justice Murphy and Justice Aickin. I will quote from Justice Murphy’s judgment one or two paragraphs which I think are of vital importance. All members of this Parliament, and particularly the Executive arm of the Government, should take note of them. The judgment says:
Literal interpretations of the Act have allowed tax avoidance devices to succeed and have encouraged their growth. While the Act is read literally, no amount of legislative amendment will be able to stem the proliferation of such devices which are inconsistent with the general legislative intent. The strictly literal approach departs from the traditional respect of the courts for the legislative will.
In his minority judgment Justice Murphy also said:
Literal compliance with the terms of an Act is not enough if the real result is contrary to the general intention of the legislature. This approach should be taken to tax Acts.
The appeal should be allowed.
That was the appeal by the Commissioner of Taxation. As I said, the High Court itself for some reason or other has departed from the practices of the past when it did take account of the legislative intent. But now, time and again when the Court has to decide a case between the Taxation Office and some organisation which has been involved in some very blatant tax advoidance schemes- the Curran scheme is one very good example- it finds in favour of the tax avoider. I think that the Court should take into account that there is a legislative intent and that legislative intent should prevail. It is obvious that the Executive wishes to get rid of these tax avoidance schemes. Accordingly, the will of the legislature should apply.
I particularly wish to deal with paragraph (2) of the proposed amendment to the Income Tax Assessment Amendment Bill (No. 2) As I said, the amendment will be moved later by the honourable member for Gellibrand. Paragraph (2 ) of the amendment reads:
When the Act was first printed it comprised 90 pages. Today it is over 700 pages. I invite honourable members to have a look at the large number of amendments now lying on the table simply for the purpose of closing some of the tax avoidance loopholes. If the changes keep going at this rate it will be no time at all before the Act will comprise about 1,000 pages. The Act is getting more complicated every day and it is a lawyer’s feast. It is well and truly time that the Government woke up to the fact that there can be only one final answer to this issue and that is to re-draft the Act and to re-draft it in such a way that no court can obviate or get around the will of the legislature.
I also want to deal with that part of the proposed amendment which says that the Government has failed to legislate against various well known tax avoidance schemes. I will cite very good examples of this by referring to the Hansard records of 26, 27 and 28 September. I asked the Prime Minister questions regarding family trusts. I have pointed out in this House on a number of occasions that family trusts are one of the main tax avoidance schemes operating in this country today. Unfortunately they have been given some element of respectability because they are indulged in by some senior members of the Government such as the Prime Minister (Mr Malcolm Fraser), the Deputy Prime Minister (Mr Anthony) and the Deputy Leader of the Liberal Party, the Minister for Industry and Commerce (Mr Lynch). On 26 September I asked the Prime Minister a question. The Prime Minister’s answer is recorded at page 1352 of Hansard. He said:
There are many people throughout this community , . who believe that a family trust is necessary for the best discharge of their own family responsibilities, and the Government will not move away from that position. We are not going to be in a position of denigrating any person with any family trust, no matter what the circumstances may be.
I repeat the words ‘no matter what the circumstances may be’. In other words, no matter whether it is a family trust for tax avoidance purposes, whether it is a family trust which in the past has been used by people, including the Prime Minister himself, to avoid death duties the Prime Minister will not have the loophole plugged. He went on to say:
Quite plainly, a family trust serves many purposes and it ought to be stated quite plainly that this Government has been very concerned about the breaking up of family farms. It has been very concerned about the breaking up of family businesses and, in a high tax situation, especially when there was low profitability in many small businesses and on many farms- under those circumstances -
I emphasise this- many people introduced family trusts to enable their assets to be held together, their farms preserved . . .
I will refer to this again later. The Prime Minister used those same words in a statement he made to his electorate on 8 October this year. Incidentally, I have quoted that part of the Prime Minister’s answer as a good example of his straightout, flat refusal to correct the large scale avoidance of tax and death duties in the past by the use of family trusts and these involved interlocking companies that he himself has such as Fraser Properties Pty Ltd, the Nareen Pastoral Co. and L.J.W. Nominees Pty Ltd. These are the types of propositions that are involved in this instance. The Prime Minister went on to say:
I admitted at the time of the last election that I have a family trust, and there is no reason why that should not stand.
That is what the Prime Minister said on 26 September.
– At what page?
– At page 1354 of Hansard. On 27 September he is reported at page 1430 of Hansard as saying:
Before the last election I never hid the fact that I had a family trust. I made it perfectly plain also that the purposes of family trusts have generally been to hold a family’s assets together . . .
Those remarks will be seen also in the speech made by the Prime Minister on 8 October. He went on to say:
Does a trust mean that less tax would be paid than otherwise would be the case? That is the general result of trusts.
I emphasise that the Prime Minister said: ‘That is the general result of trusts’. In other words, he admitted it. He went on to say:
I do not know of any trust which has been established to look after the family interests which does not also have that result.
At page 1484 of Hansard of 28 September the Prime Minister is reported as saying:
There is no doubt, if we are prepared to face what had been occurring plainly in Australia, that the tax laws of this country- the weight of taxation, the punitive nature of death, estate and gift duties- had caused people in small businesses of many kinds, whether in country towns, in the cities, or on farms, in an effort to hold those businesses together and to leave something to their children -
I emphasise that- to enter into a degree of complication -
One can say ‘complication’ again. One ought to see how involved are these intricate series of companies and trusts that he himself has. The Prime Minister continued: in their affairs especially in a low income situation which has been typical of many small businesses, whether on farms or otherwise.
I would now like to quote what the Prime Minister said in his electorate talk on 8 October. He said:
Repressive and unfair taxation is the breeding ground for tax evasion.
He went on to say:
Punitive taxes forced many small businessmen and farmers into a situation -
I emphasise this- where they were obliged to make arrangements to ensure the continuity of their enterprises.
I ask honourable members to note the similarity of what the Prime Minister said on this occasion and what he said in the House. The Prime Minister in his electorate talk went on to say:
Many of the complex arrangments which people entered over the years were simply designed to keep family farms and businesses together.
Is that not what I read from the Hansard record? In other words, not only was the Prime Minister avoiding income taxation by this extraordinary complex series of companies and trusts that he has but also he was avoiding death duties. Is it any wonder that this government moves so quickly to abolish death duties, gift duties and the like? Is it any wonder that we on this side of the House speak of the need for members, and particularly members of the Cabinet from the top right down, to declare their pecuniary interests? It would be very interesting to have those pecuniary interests made public because then we would know whether members of the government, not matter what party were in office, were acting in the interests of the mass of the people as a whole and not in their own individual interests.
It is very obvious, I think, from what I have shown this afternoon that the Government’s actions in legislation on death duties and gift duties and its refusal to close up the loophole in respect of family trusts have been taken in the interests of individual and senior members of the Government itself. Have a look at some of the names involved in the Nareen Pastoral Co. They are John Malcolm Fraser, Tamara Margaret Sandford Fraser, Sandford Robert Beggs, Rupert James Hamer, Una Arnold Fraser and Harry Vincent Sampson. These names are listed in a statement of change of persons in relation to whom a business name is registered. This information was obtained as a result of a search carried out at the office of the Commissioner for Corporate Affairs in Melbourne. The names associated with the L.J.W. Nominees Pty Ltd are as follows:
Fraser, John Malcolm; Fraser, Tamara Margaret; Sinclair, Andrew Ian- that is not the Sinclair to do with the scandals of the moment.
Mr DEPUTY SPEAKER (Dr Jenkins)Order! I think the honourable member has strayed a little from the Bill.
– I withdraw that. Let me say that it does not relate to the controversial matters that are before this Parliament at the moment. We have also got a fellow named Frank Lewis Birch, and then Hugh Sandford Beggs. Once again, they are part of the establishment around the Fraser family. We also have in this organisation Rupert James Hamer, the Premer of Victoria. He is also tied up with the establishment, with the Fraser family. After that we have Fraser Properties Pty Ltd. First of all, we have the Nareen Pastoral Company, which is the profitmaking organisation. Then we have L.J.W. Nominees Pty Ltd, which is a party to that organisation. That has a trust behind it. Then there is Fraser Properties Pty Ltd, which one might say is a holding company for the property and I understand would be worth about $ 1.5m.
– That much?
– Yes, my word. We are dealing with big money with this mob, do not worry about that. Once again, in Fraser Properties Pty Ltd we have John Malcolm Fraser, Tamara Fraser, Una Fraser, the Sinclairs -
-Order! The honourable member’s time has expired.
-In rising to support these taxation Bills, I think that often we learn nothing as we go from one amendment to the other. We seem to hear the same diatribe every time from the speaker who preceded me. It is a great pity that he resorts to the type of character assassination and vindictive crusade that he has carried through this Parliament. I had hoped that the Federal Parliament would have been more constructive. It is a great pity that many of the constructive suggestions that have come forward in this debate have been ruined by the sort of remarks that have been made. There is a sense of uniformity between the Opposition and the Government on this matter; the Income Tax Assessment Act we have today does demand instant and immediate review. Before I get on to that broader subject, I want to speak on the amendments before us, the main one being an amendment relating to accrued long service leave and annual leave.
I should like to make it plain, as did the right honourable member for Lowe (Sir William McMahon), that in no sense can this be classed as a tax avoidance measure. It merely seeks to clarify what is still a very muddied stream of understanding. The Flood case, which was once regarded as being the authority in this regard, has been overtaken by the events of Nilsen ‘s case, and even that, if read by itself, is actually a determination made in connection with one award. No longer can we say with any clarity what is the situation one way or the other with annual leave and long service leave. While the case is on appeal to the High Court, I believe in respect of both parties, the matter will remain in this situation of uncertainty and the final decision will determine the ability of taxpayers to take advantage of a situation some 12 to 18 months in arrears. The amount involved has been estimated by the authorities at some $600m. I am not in a position to say whether that is correct or not, but I recall that on a previous occasion, when it was suggested that we might allow a deduction for taxation purposes of all long service leave accrued to that point, the cost was some $2.5 billion. So in respect of an annual accrual, $600m may be the figure. However, nobody is in a position to say one way or the other.
It has been said that in some respects this legislation is retrospective. Of course, retrospectivity is a matter that has been tossed around a lot in this Parliament over the last 12 months. I think retrospectivity must be considered in terms of taking from an individual his expectation of what he might normally have regarded as the normal practice. Up to the time of Nilsen ‘s case there was no expectation in regard to this matter in the minds of taxpayers throughout Australia, in spite of the fact that accountants had been asked to make sure of these provisions and accruals for accounting records. There was no expectation that a taxation deduction was involved, although many would have hoped that that was the case. So the legislation is not retrospective in that sense because it has been dated 1 July 1977. Very few people in the community would have had an expectation of getting such a taxation deduction for the year ended 30 June 1977 and certainly not for 30 June 1 978. As I have said, by the amendment to section 5 1 the legislation puts the situation in its proper perspective, without any reservation. In that regard, it is unfortunate that the Government could not take this opportunity, along with the Asprey Committee’s recommendation, to allow these amounts as taxation deductions in the time they are accrued. I believe such a course would assist to some extent the liquidity of small business and big business throughout Australia. Unfortunately, the budgetary situation did not allow the Government to make a commencement in this year, although it would have been a great opportunity. However, as all other speakers in this debate have said, I hope that in subsequent years the deduction will be forthcoming.
Other aspects of the Bill to which reference has been made by previous speakers include current year losses, and I want to pay a little attention to that because it is the subject of criticism. As we have heard, the size of the Act has grown from 90 pages to 600 pages. This is a simple piece of legislation in relation to what it will achieve in terms of cost, but some 42 pages will be added to the existing Act. The provision is very complex because, from my understanding of it, it endeavours to place an accounting interpretation on a division of profits during the year. In a normal commercial sense, this practice has not been available in the past, and this has led to complications. It is just not the fact that the Taxation Commission has not been allowed a discretion. The amendment should have been considered from the point of view of the actual cost to revenue. Having determined that, one should then have looked at the amendment and asked whether it was worth while to do it in this way or whether some concession should be allowed through a taxpayer being able to carry back losses. The current year’s loss situation rather staggers me when one compares the length of the legislation and what it is endeavouring to do.
Dividend stripping and branch profits taxes are amongst the matters that have been mentioned. I want to take up the matter of the branch profits tax because the honourable member for Gellibrand (Mr Willis) when he opened the debate for the Opposition, mentioned the old annual, the situation of Utah Development Company. I think it is only right and proper that I should read into Hansard the situation in relation to Utah. If Utah had not come to Australia vast tracts of land, particularly in inland Queensland, still would not be developed. We would still be running one beast to a thousand acres. Today that area has two thriving townships paid for by Utah Development. In 1977, 56.5 per cent of its gross profit was paid to the Commonwealth Government and the Queensland Government in taxes, royalties, payroll tax and so on. I want to make the point that that is not a bad collection by a government that has no other interest, participation or responsibility in this development. It should also be recognised that that S6.S per cent does not include rail freight to the coast which is paid by the company and includes a fairly considerable margin of profit for the Queensland Government. So excluding that, 56.5 per cent of the gross profits as denned by the company goes to the Queensland and Australian governments. Of course, with this branch profits tax there will be an additional margin for the Commonwealth. We should also remember in relation to Utah that, while the Government is not responsible, it is probably the biggest participant as far as dividend sharing of the profits is concerned. At this moment the company is conducting trials at underground collieries which indicates to me that it is encouraging development. It is prepared to tackle the development of the secondary coal seams at a lesser profit just to maintain its faith with its employees, the State of Queensland and the nation of Australia. I just wanted to mention that briefly in the time available to me.
I return to the remarks made by the honourable member for Chifley. They were the remarks that he normally makes when he discusses tax Bills. I had occasion to make some comments on his remarks during the second reading debate on, I think, the Income Tax Assessment Bill (No. 1) 1978. Unfortunately, I have to make similar comments again. If the honourable member were to look at the amendments which were announced in the 1 977 Budget he would realise that there is very little advantage to be gained today from setting up a trust for a child under the age of 16 and that there is very little avenue for a zero rating. The penalty rates of 50 per cent to 60 per cent can be applied more to those smaller margins of income than can the normal rates at the other end of the scale. In this regard it is very difficult these days to persuade a lawyer to draw up a trust agreement for a child on the basis that the purpose is to save tax because that no longer is the situation. So I suggest that the honourable member for Chifley reads the fine print of the legislation that was introduced following the 1977 Budget announcement and examine what constructive measures the Government has taken in the trust area.
One would imagine from the comments that have been made that nothing has been done. That is far from the truth. I think it reflects the vague knowledge that the honourable member for Chifley has of the Act that he makes these allegations in the House all the time. Of course, it is easy to say that if one had the opportunity one would have done certain things. We acted on those opportunities by doing the things I have just recalled. The Labor Party also had the opportunity to do something in regard to trusts in the period that it was in office. That was the period when the greatest proliferation of trusts for tax avoidance purposes occurred in the history of taxation in Australia. I ask the honourable member to look at the situation which applies at the time before he makes allegations in this place against people who have trusts.
I disagree with his view that it is the responsibility of the Taxation Office to review the Act and update it. It is the responsibility of this Government and this Parliament to do that. I hope that that is something that will be achieved, particularly as I feel that the views of the Opposition and those of the members of the Government are one in this regard.
I noted on a date block not so many weeks ago the thought that a human being is born with two ears and one mouth and should use them in those proportions. I suggest that politicians, and officers of the Taxation Office, should go into the marketplace, which is where the taxes are collected to get the feelings of the people and to listen to what they have to say about it. The message that I get loud and clear from a normal taxpayer in this country and the ordinary accountant and lawyer is one of utter despair in relation to the Income Tax Assessment Act. For the accountants and the lawyers, the change and complexity of the Act is a continuing feature which makes it almost incomprehensible. For the taxpayer, there is not only this aspect to consider but also the continuing inequity between the situations of one class of taxpayer and another, even though they might enjoy the same level of income.
I can understand the situation occurring of a taxpayer in this country earning an income identical to that of his neighbour and yet having to pay a larger amount of tax because he is not able to take advantage of schemes which are legal under the Act and which minimise the amount of tax paid by the neighbour. While this situation exists, more and more tax avoidance will occur. More people will be prepared to take the gamble, if they are given the chance, not to record their full income and thereby try to lessen the impact of tax on their lives and their incomes. Anybody can come into this place and say that we can lower the tax rates and that we can stamp out the known tax avoidance areas but that will not change the tendency towards tax avoidance. I can recall the American taxpayers rebelling in exactly the same way about 10 years ago because they felt that they received no thanks for the payment of foreign aid to other nations. The American taxpayer just could not accept that situation any further. That resulted in major tax avoidance in that country. Today in Australia we see the same thing occurring for another reason, namely, that there is no equity between the tax paid by one taxpayer and another.
On Thursday of last week, I think it was, during a speech in the Adjournment Debate an honourable member made a very valid suggestion which I believe could form the basis of the creation of a little more equity in relation to taxation matters. His suggestion was that a family unit and not the individual should be taxed so that a family in which the husband earns a salary and the wife stays at home has the advantage of spreading that income with his wife and getting the benefit of that, as would apply with the nontaxable ceiling that the neighbours would have if the two of them were at work. I believe that this is a responsible way of achieving equity under the Act. A reduction in taxation rates might help in some way to achieve that equity, but I believe that we have to go back to the start and review the Act, defining ‘income’ even if it means including capital gains tax, and then minimise the number of exemptions and exceptions to the payment of tax on that amount.
It is significant that the size of the Income Tax Assessment Act has increased from 90 pages to 600 pages. Since 1901 the Constitution has not changed in size, yet that Constitution can still be understood quite thoroughly by anybody who reads it. I am sure that if we were to return to the situation of having the Income Tax Assessment Act written in plain and clear language we could avoid many of the traps into which we have fallen in relation to that Act. We need to cooperate with the specialists. I feel that, as the right honourable member for Lowe has suggested, an approach to those people who administer the Act in the marketplace would be a good start. At this stage I refer to a question I asked yesterday, which I believe reflects the concern and despair of people outside this place who have to pay tax. My question was in these terms:
Will the Government, as part of its tax reform program, review the whole principle of the taxation of income with a view to simplifying the Act, discouraging avoidance, granting equity and providing incentives for the earning of income?
If we do that, I believe that we will be going a long way towards satisfying the requirements of those Australians who are being called upon to finance the running of this nation. The whole tax Act will always be under pressure and probe, particularly while it is in its present form. While the Act grows in volume but lessens in comprehension through the closure of loopholes, the granting of concessions and exemptions and the widening of the gap between accounting principles and taxation procedures, these probes by the taxpayers will become increasingly successful. In this regard government, through the ever increasing incomprehensible Income Tax Assessment Act, will be held further in contempt. That will apply irrespective of whether it is a conservative government or a Labor government.
The amendments that are before the House quite clearly do not constitute anti-avoidance procedures or legislation but are just aspects that seek to clarify the Act. But in the more general sense I believe that we have to look at the whole aspect of taxation of income in Australia. We have to look at the whole aspect of how this Government collects its revenue in order to ensure that we can rely on the public and the people in the professions to make certain that that money is collected but that an equitable situation is still retained so that the taxpayers are encouraged to go out and earn more. In that way this nation can prosper through the increased collections of taxation. I have much pleasure in supporting these Bills.
-Much of what was stated by the previous speaker in the debate, the honourable member for Dawson (Mr Braithwaite) makes sense and I do not find myself at variance with him. The House has five Bills before it at the present time. It is extremely complex legislation. It is sufficient to say that despite this legislation and its ultimate passage through the Parliament, the Governnent will be found to be ineffective and innocuous in legislating against the various well known tax avoidance schemes. The honourable member for Gellibrand (Mr Willis) has indicated that he will move an amendment at a later stage. It implies that there will be a continued operation of a large scale tax avoidance industry. This is creating grave inequities in the incidence of taxation. Indeed, the schemes are also having the effect of substantially reducing government revenue.
I will just make brief mention of some of the Bills before us. The first one is the Income Tax Assessment Amendment Bill (No. 3). This Bill deals with and clarifies the position of entitlement of employers to deductions for the cost of their employees’ long service, annual and other leave entitlements. The Bill puts beyond doubt that an employer is entitled to claim as a deduction in the year payment was made any payments made to employees for long service leave, et cetera. The Government’s decision to amend the Act by this Bill is based on two factors. The first is, the Victorian Supreme Court decision in the case of Nilsen Development Laboratories Pty Ltd v. the Federal Commissioner of Taxation which held that an employer was able to claim a deduction in respect of a liability to pay long service leave to employees for any one year the liability accrued even though no actual payment was made to employees in that year. The revenue implications of not legislating to meet that position would mean a loss to the Treasury of approximately $600m next financial year. It is gratifying at least to note that the Bill does not affect the employees’ tax position. The Government has indicated that it intends to legislate further, depending on the results of the appeal in the Nilsen case. No doubt we will hear more of this matter in the future.
The next Bill with which we are dealing is the Income Tax Assessment Bill (No. 2) which deals with tax avoidance schemes. They are schemes relating to, for example, current year losses. That is a practice of buying loss companies and offsetting these losses against profits of companies owned. The schemes also deal with rebates on dividends received as part of dividend stripping operations and branch profit tax. Companies could avoid tax liability by firstly claiming a full rebate of tax on dividends received in the course of dividend stripping and also a deduction for the loss on sale of shares after value had been dropped because of the loss of the dividend. This Bill introduces tax measures designed to promote investment in Australian films. It also amends the period of distribution by the liquidators of private companies and alters the appeal provisions for deregistered agents. The provisions designed to prevent tax avoidance through dividend stripping are to operate from 7 April 1978 which was the date on which the Treasurer (Mr Howard) announced the Government’s decision to act. This issue, of course, invoked the controversial retrospectivity factor which has already been thrashed out in this Parliament
The Income Tax (Non-Resident Companies) Bill 1978 imposes a 5 per cent branch profits tax on the taxable income of non-resident companies to bring into line companies operating in Australia but which, for tax purposes, are resident overseas, with companies resident in Australia which are liable for dividend withholding tax on profit remittance. In his statement on this tax, the Minister for Aboriginal Affairs (Mr Viner) said that the purpose of the Bill was to ensure that the benefit Australia obtains from foreign investment by way of tax revenue is not reduced because of the form in which operations are conducted here. Branch profit taxes are imposed by other countries and such a tax was recommended for Australia by the Asprey Committee some time ago.
The Income Tax (Companies and Superannuation Funds) Act is not imposing the branch profit tax. Another machinery Bill, the Income Tax (Rates) Amendment Bill 1978, similarly makes it clear that the Income Tax (Rates) Act 1976 does not impose a branch profit tax. We now come to this tax avoidance issue which is a main theme of the legislation. It is certainly the main theme of the debate and it revolves around the Income Tax Assessment Amendment Bill (No. 2). This Bill continues the stated Government objective of closing off tax avoidance schemes. I commend the Treasurer for taking this action. He says that he intends to continue to act against avoidance schemes. I am not conceding by any means that sufficient has been done in this regard. Severe budgetary problems are probably the motive for the Government’s action. I think it is necessary to say that the government’s formed by the Liberal and Country parties during the long 23 years of unbroken government that they enjoyed did not make any significant moves to close the tax avoidance scheme. Even when in Opposition the coalition failed to press or call for legislation against tax avoidance schemes. This Opposition has called for a concerted approach to tax avoidance schemes and not just a piecemeal approach or a one-off approach. We think that there is a good example in evidence but we want to see more done.
Last month, the Treasurer was asked whether the Government would consider amending section 260 of the Income Tax Assessment Act 1 978. This section was designed to catch all the schemes to avoid taxation. Honourable members will know the main theme of the section. A little notation beside section 260 of the Act describes the provisions as, ‘Contracts to evade tax void’. That is the position in a nutshell. I shall summarise that section briefly. It states that every contract, agreement, or arrangement altering the incidence of any income tax, relieving any person from liability to pay, defeating, evading or avoiding any duty or liability, preventing the operations of this Act in any respect shall be absolutely void. That is the effect of section 260. This section, notwithstanding the clear expression of the words which would seem to the layman to be fairly watertight, has been emasculated over the years by judicial interpretation. More than 20 years ago Mr Justice Kitto said in the case of the
Federal Commissioner of Taxation v. Newton, (1956):
Section 260 is a difficult provision, inherited from earlier legislation, and long overdue for reform by someone who will take the trouble to analyse his ideas and define his intentions with precision before putting pen to paper.
This message, despite its clarity, seems not to have reached its intended destination up to this time. In the recent case of Cridland v. Commissioner of Taxation ( 1978) it was stated:
Although the very restricted operation conceded to s. 260 by the course of judicial decision and the generality of the language in which the section is expressed stand in high contrast, the construction of the section is now settled. It is therefore a source of some surprise that it continues to be relied upon when its defects and deficiencies have been apparent for so long.
When the issue of amending section 260 was put to the Treasurer he said that it was not an easy matter and it ought not to be assumed, given interpretations of revenue statutes, that it is simply a question of re-arranging some of the words. As indicated, Justice Kitto thought otherwise over 20 years ago. No amending legislation has been put forward by successive governments. The Whitlam Labor Government, facing a hostile Senate, did not have any hope of passing such legislation. Anything that it tried to do to redress injustices of this kind at that time was blocked in the Senate. If the Fraser Government is fair dinkum about tax avoidance schemes it must legislate to change this section. The Australian community should not have to wait much longer to see it happen. A suitable amendment to the following effect would not be opposed: If transactions, dealings or financial affairs of a taxpayer are artificial or contrived, the tax liability of the taxpayer concerned may be determined according to the commercial realities; provided of course that machinery for judicial appeal remained to protect the individual from the Commissioner’s excesses.
One would not want the bureaucracy to be able to run riot. There has to be some checkpoint, some redress. Therefore that appeal provision would be essential. The Opposition’s priority for tax reform is motivated by a sense of tax equity not, as is the case with the Government, by the sole need to increase tax receipts. The taxation system that is operating in this country at this time is not equitable. It has manifestly failed to distribute wealth. One per cent of the Australian population owns 22 per cent of all wealth in Australia, five per cent of the population owns 40 per cent of all wealth and ten per cent of the population owns 60 per cent of all wealth, according to a survey that was conducted recently by an Australian university. This means that the wealthiest 2,000 people in Australia own as much as the poorest 2,232,000 people.
Tax revenue for the year 1977-78 amounted to 91 per cent of total receipts. This is estimated to rise marginally to 91.2 per cent this financial year. Pay-as-you-earn taxation which was collected last year was 41.1 per cent, other individual taxes were 10.6 per cent, giving a total individual tax component of 5 1.7 per cent of total tax receipts. Company taxes collected were 13.7 per cent and other indirect taxes brought in 25.6 per cent of tax revenue. This year’s Budget is expected to bring in tax revenue in the following proportions- some changes are worth noting: 39.7 per cent from pay-as-you-earn taxation, that is, direct tax- a marginal drop; ten per cent from individual taxpayers- a slightly larger drop; 12.9 per cent from companies- once again a drop; and 28.6 per cent from other indirect taxes- a significant increase indeed, that is, from 25.6 per cent. The shift from direct taxation to indirect taxation is apparent.
The Government’s response is to legislate against the most blatant tax avoidance schemes on a one-off basis, such as the Curran scheme and the schemes that have been legislated against in Income Tax Assessment Amendment Bill (No. 2) 1978 and proceed to this new emphasis. We all know what it is about. We have seen early manifestations of it. First of all, we have seen as a result of the Budget the raising of individual tax by 8 per cent. I think that represented a tax grab of $570m, breaking all the promises that were made at election time. Then there was this trend towards increased indirect taxes with the raising of the excise on beer, cigarettes, spirits and petrol. Government expenditure was reduced by shifting the cost of services and facilities, which were previously paid for by governments from tax receipts, directly on to the individual. I refer of course to the health scheme and pre-school centres where the consumer is being required to contribute more in a direct way. The reduction in the social wage means that taxpayers have to spend more of their take home pay on services that were previously and traditionally provided by government.
The Government’s taxing policy is not based on equity or substantial reform; it is based on minor reform of blatant abuse in order to keep the inequitable system intact. It is for this reason that the Government, with its budgetary restraint, is seeking to introduce new indirect taxes, such as the retail turnover tax and the value added- the VAT- tax. We are mindful that it has failed its public relations exercise concerning a reduction of taxation with the Budget decision to increase direct taxes by 8 per cent. The Treasurer talks of introducing more indirect taxes in order to change the mix of tax in the community. The effects of last year’s indirect tax slugs on beer, spirits and cigarettes have meant that consumers will pay an extra $500m a year. The excise on beer has gone up by 31.8 per cent, from 29.2c a bottle to 38.5c a bottle. Of course that involves an extra tax on beer of $222m. The tax on whisky has increased by 83.5 per cent, from $2.91 to $5.34 a bottle. The tax on brandy has increased from $3.06 to $5.63 a bottle. The extra revenue collected from spirits is $139m. The tax on cigarettes was increased by 35 per cent, from 34.6c to 46.8c a packet. That means an extra take of $ 1 36m. The tax on petrol is up 6 per cent, from 4.9c to 5.2c a litre.
In the last three years the cost of beer has increased from 54c to 77c a bottle; the cost of cigarettes has increased from 74c to 89c a packet; and the cost of petrol has increased from 14.5c to over 19c a litre. Pay-as-you-earn taxpayers and individual taxpayers pay for these increases from their take home pay. An introduction of new indirect taxes will increase the price of these goods and other goods even more significantly in the future. If the Government decides to introduce a retail turnover tax the prices of all goods, including food and clothing, are likely to rise. The tax burden on all Australians, regardless of their ability to pay, will rise uniformly. This means that a disproportionate tax burden will fall on those Australians who are least able to pay. It actually means a drop in the standard of living of the majority of Australians.
It means that an intolerable burden would be placed on retailers and small shopkeepers who would become the tax gatherers of the nation. It would be a great time-consuming, administratively costly and unwieldy process. It would be a most ridiculous arrangement which anyone who travels overseas finds to be most repugnant. Depending precisely on how this tax would be collected, it could mean that shoppers would be very seriously inconvenienced. It is no wonder that members of parliament have pouring into our electorate offices these letters of protest. No wonder petitions are being circulated, quite justifiably, by the retail traders associations and other organisations. I sound this note of warning because the Fraser Government has failed to be effective in closing off tax avoidance schemes. It has gained such unpopularity because of its broken promises in regard to giving remissions on direct taxation and is now going to move towards the surreptitious, the sneaky, tax. It knows about the Australian hip pocket nerve and it will bring this new emphasis to bear where the unsuspecting Australian will have the Treasurer’s hands sneaking into his pocket when he does not know much about it. This involves the abandonment of the principle of capacity to pay which has been inherent as the main philosophical cornerstone of our taxation system through the years. I warn the Australian people that the Fraser Government is intent on this process. If it goes unchecked, the living standards of all Australians will be seriously impaired.
-Much has been said by the Opposition about the Government’s alleged failure in the field of taxation. It is rather surprising that members of the Opposition should talk about the so-called failure of this Government when, during the Labor Party’s term of office, from 1972 to 1975, it did nothing for the Australian taxpayer except to increase the tax burden on them. Since 1975, when this Government came to office, regardless of what has been said by the Opposition, the Austraiian taxpayer has benefited greatly from the tax reforms put forward- tax reforms that will continue. It would be wrong of me not to refer to tax indexation, which in the three years in which this Government has been in power has saved the Australian public about $3,000m. That is $3,000m a year that the Austraiian public would have had to pay had we continued with the taxation system left to us by our predecessors, now the Opposition.
Members of the Opposition talk about the growth in taxation. That is quite incorrect. If one were to study the total pay-as-you-earn tax collected as shown at page 213 of Budget Paper No. 1, and analyse those figures and make adjustments for the consumer price index and for the increased force, one would see an interesting pattern emerge. For example, in 1971-72 there was a general increase in PAYE tax of 1 1.4 per cent. In 1973-74, a general increase in PAYE tax of 20.1 per cent was thrust upon the Australian public. In 1974-75, a similar figure, 19.9 per cent, was involved. In December 1975 there was a change of government. Tax indexation came onto the scene and the increases started to fall sharply. The figure of 20.1 per cent fell to 3.5 per cent in 1975-76. In 1976-77 it rose to 7.6 per cent, but in the year 1977-78 it fell to a mere 0.5 per cent. The estimate for this year, after allowing for consumer price index adjustments, there will be a net fall in PAYE tax of 0.3 per cent.
Of course, apart from the benefits of tax indexation, it is important to remind the Australian people and the Opposition of what this Government has done with tax avoidance during the last 12 months. We have taken steps to outlaw the socalled Curran scheme. We have taken steps against current year losses. We have taken away the abuse of the averaging provisions. We have stopped dividend stripping and we have rectified and altered the trust laws to stop trust stripping. We have altered laws to cut out the tax avoidance schemes that people have been able to maintain through pre-paid rent and interest We have stopped the abuse of the gift provisions. We have stopped the avoidance through share trading in loss companies. Tonight we will introduce legislation to stop malpractices in sales tax. Tax indexation and all these measures against tax avoidance have been introduced because we care for people. We want the people of Australia to share fairly the tax burden they should bear. We want to continue tax reform.
I shall refer briefly to some of the things that the Labor Government did not do when in power between 1972 and 1975. Today members of the Opposition are talking about all the things which we should do and which we are not doing. All of a sudden they have become educated in tax laws; they have become experts. Let me remind members of the Opposition of what their Government did not do during the 1972 to 1975 period. First of all, it refused to bring in tax indexation. It needed the money; it could not afford indexation. While Labor was in power it increased the receipts from personal income tax by 89 per cent. The honourable member for Hughes (Mr Les Johnson), who has just left the chamber, talked about increases in indirect tax. The Labor Government increased indirect taxes by $602m. So I fail to understand how members of the Opposition can talk about what we have not done when their Government failed to do so much during its term of office. However, I do respect some parts of the speech made by the honourable member for Hughes. He was the only member of the Opposition who acknowledged the fact that this Government had made attacks upon those people engaged in tax avoidance schemes. But I was surprised to hear him say that the Opposition puts a priority on tax reform and tax equity. I had not heard of this before; I did not realise that the Labor Party had a policy of tax reform and tax equity. That is exactly what our policy is, and that is the policy that we will pursue.
I turn now to the Bills that are before this House. I want to mention one of them in particular, and that is the Income Tax Assessment Amendment Bill (No. 3). This Bill rectifies the situation that was brought about by the Nilsen Development Laboratories case in the Victorian
Supreme Court. A judgment was handed down in favour of that company to the effect that business enterprises are able to make a tax deduction for holiday pay and long service leave not yet paid to the recipients. This practice had not been accepted as normal business practice in industry. Had the situation not been rectified, some $600m- that is the figure mentioned by the Treasurer (Mr Howard), although I do not put it so high- would have been lost to revenue.
Other provisions in the legislation have been mentioned already. Some deal with the lump sum payments on retirement. Previously, only 5 per cent of such sums attracted tax. Still only 5 per cent of lump sum payments for superannuation attracts tax. Unfortunately an adjustment has been made which stops people accumulating holiday pay and long service leave pay and paying tax on only 5 per cent on the payment they take in lieu. I have some sympathy for the many people who have come into my office and made representations about this adjustment. I know that some people have been disadvantaged by this legislation. Nevertheless, the system as it stood only created a situation in which people tended to terminate their employment on a continuing basis. This is bad for industry and it is bad for people. Long service leave is provided to reward a person for long service in his job. Holiday leave is provided to enable people to take an annual holiday and to have a rest from their normal occupation. I have had representations about this matter from people in the Local Government Association, from people employed in the transport industry and from people employed in the building industry. Nevertheless, I support the Government on this legislation.
Other provisions in the Bill alter the tax averaging provisions for primary producers. As I represent a metropolitan seat, I am afraid that I know very little about such provisions although you, Mr Deputy Speaker, may know a little more. There are also penalties for anyone who wilfully underestimates provisional taxation. They are there to stop people doing silly things and getting themselves into a situation where they cannot meet their taxation commitment. There are also in this legislation alterations to rebates for concessional tax deductions exceeding $1,590, and a lot of other minor adjustments to the Act. There are alterations to rebates for dependants residing overseas. One necessary part of the legislation says that the 2Vi per cent levy for health insurance need be collected no longer. With regard to that matter, people are doing all sorts of funny calculations to work out increases in the tax scale as from 1 November as a result of an alteration in the surcharge. They are not taking into consideration the fact that no longer is the 2te per cent levy payable. Removal of the levy tends to help people reach a reduced tax situation.
The final part of this legislation to which I want to refer deals with the alteration to the tax scale, the unfortunate Vi cents in the dollar surcharge which this Government has had to impose- a temporary surcharge- is embodied in the legislation and automatically cuts out on 30 June 1979. That is proof that this Government intends that surcharge to be a temporary situation. However, along with that surcharge, the increase of 1 te cents in the dollar, there are other generous measures which help to reduce tax commitments. The amount of income exempt from taxation has now been increased from $3,750 to $3,893-that helps people considerably- and the rebate for a dependant wife has been increased from $555 to $597.
I move now to some of the percentage adjustments that these alterations make to people’s incomes. I have been concerned at recent reports in the Press where all sorts of speculation have occurred. Calculations have been made to show that the change which came into operation from 1 November increased people’s taxation to figures as high as 10 te per cent. That I say is a lot of rubbish. I have some calculations here and I wish to tell the people what the Ite cents in the dollar increase means. Firstly, it was never the intention of this Government to indicate to people that the increase was only Ite per cent. When the previous standard rate of 32 cents in the dollar was increased to 33.5 cents in the dollar, it amounted to an increase of 4.075 per cent. People are miscalculating in that they are not calculating on a per annum basis but rather calculating for a period of eight months. Even though this increase in the surcharge is effective over a 12-months period, the Taxation Office only commenced to collect it from 1 November. A 4.075 per cent increase in an eight months period works out at 7 per cent. Anyone who gets a figure beyond 7 per cent is not being honest with the system. I have done calculations for incomes of $10,000 per annum without dependants, $10,000 per annum with a wife, $15,000 per annum without dependants and $15,000 per annum with a wife, and the result is a similar percentage just mentioned.
The Government is continuing its policy of taxation reform. The honourable member for Hughes (Mr Les Johnson) mentioned that we are grappling with section 260 of the Act which, legally, has not been very successful over the years. It is important that we grapple with this section- as we are doing at the moment- that cuts out particular schemes devised for tax avoidance. It is this Government’s intention to continue with section 260 and to try to strengthen it so that legally it can achieve that purpose.
The honourable member for Hughes also mentioned retail turnover tax. I would like to refer to this matter because, like him, I have had 400 or 500 letters in my office from people complaining about this terrible retail turnover tax that the Government is supposedly going to institute. This is not so. This Government does not intend to bring in a retail turnover tax. It has made no statement to that effect. Contrary to speculative suggestions in the Press and those made by some retail organisations, the Government has made no decision on whether such a tax should be introduced. It has decided that there should be an inquiry into the practicalities of various forms of taxation because it wants to continue with taxation reform. It wants to make decisions about whether the method of tax collection at the moment is the correct one or whether there is a better and fairer method. Certainly there is no intention to collect more tax. Of course, retail turnover tax may well be within the scope of such an inquiry but any decision would not be taken before ample opportunity had been given to assess the community response.
The Government is looking continually at ways of trying to vary the form of taxation and is committed to tax reform. It cannot be committed to tax reform if it cannot look at all avenues of tax that are available. I say to those people who are getting letters when they go to the local supermarket- I daresay many people probably do not even consider what is in those lettersbefore you sign a roneoed letter and send it in, just give some thought to what it says. I feel that many of the people who have shown concern or have sent these letters in have not taken a great deal of notice of what they are doing. The Treasurer (Mr Howard) has made statement after statement in the House about this matter. In answers to questions he has clearly shown that there has been no decision to impose a retail turnover tax.
The concern for taxation, for people and for tax equity will be continued by this Government. I am sure that the people of Australia will receive, now and in the future, a far better tax deal than they received during the dreadful years 1972 to 1975, a period when taxation ran rampant simply because inflation ran rampant Now we have stability in the economy. Taxation is greatly reduced and is going to be reduced further. The Government is getting close to the situation where the people will be able to receive a much fairer deal regarding taxation commitments. I fully support the Bills that we have before us at present and I believe that the people of Australia will benefit greatly as a result of them.
-This package of bills implements a variety of taxation measures which include several attempts to close tax avoidance, such as action against shady companies which use the dividend stripping procedure to achieve double taxation benefits. The legislation also imposes a branch profits tax on branches of an overseas company resident in Australia. Apparently at present it is not legally possible to impose a dividend withholding tax on profits remitted overseas by such branches.
The Bills also include measures to make capital investment in the Australian film industry more attractive to investors. The Income Tax Assessment Amendment Bill (No. 3) closes off the anomaly regarding taxation deductions for the cost to employers of their employees’ long service leave and annual leave arising from the recent decision in the Supreme Court in Victoria concerning the Nilsen Development Laboratories Pty Ltd case. The Bill provides that employers will be entitled only to deductions for this purpose for leave payments in the year in which the actual payment is made to the employees. The Opposition is of the opinion that the branch profits tax ought to be not less than 8 per cent of the taxable income of companies. I will return to this issue later.
In the main we support the legislation to counter the Nilsen case decision if for no other reason than that the $600m which the Treasurer says is involved in this matter could be far better used to stimulate capital expenditure rather than left with those employers who can fiddle this particular tax lurk. Before criticising the details of these most complicated Bills I refer to one very important matter that the Treasurer promised in his second reading speech of 8 June of this year to rectify. I refer to his promise adequately to tax Australian individuals and companies on earnings and dividends accruing from overseas. In his second reading speech the Treasurer quite lucidly explained why this was necessary. He said:
The position is hotchpotch . . . because the rebate on inter-corporate dividends applies to dividends from overseas as well as to dividends from within Australia, foreign dividends received by Australian companies are tax-free in Australia, and this is so even if the dividends and the profits out of which they are paid are not taxed in the overseas country of source.
He went on to say:
The credit system of relief applies also to income, other than salaries and wages, from Papua-New Guinea. All other foreign source income of Australian residents is exempt from Australian tax if it is subject to tax, no matter how negligible, in the country from which it is derived.
I remind the Treasurer that he concluded by saying:
The Government considers that such outdated and inconsistent rules cannot be retained.
But events moved very quickly. The Treasurer immediately drew the crows from the large companies resident in Australia which have overseas operations. Firstly, there were leaks in the Australian Financial Review that the Treasurer was in trouble on the issue. The Government back benchers then began to get restive. Of course, the companies involved were ropable. Their precious overseas tax havens, aided and nurtured by members of the Association of South East Asian Nations, were under challenge, and from a Liberal Treasurer, too.
So, shamefully, on 25 October the Treasurer informed the House that the leaks were once again right on Une. He dropped his daring proposal. What is more, he gave no satisfactory explanation. He covered his retreat with the absurdly obvious statement that many Australian companies see, as a direct consequence of a foreign tax system, an erosion of the competitive position of Australian companies overseas. He said that he was worried and concerned that such taxes might have an adverse effect on the level of Austraiian involvement in countries in the ASEAN region. He was worried about investment in the ASEAN region. What about investment in Australia? What about the investment by Australian companies being retained in Australia to create the jobs that are needed for the army of unemployed created by the Prime Minister (Mr Malcolm Fraser)?
It is certain that unemployment in Australia will be officially over 500,000 early next year. As the shadow Minister for Employment and Industrial Relations pointed out yesterday this does not take into account the 305,000 people who have dropped out of the official labour force of civilian employees. Already in the manufacturing industry 67,000 jobs have been lost in the last two years. Employment in the clothing and footwear industries is down by 13,000 in the last year. In the timber processing industry it is down by 7,000. Some 13,000 jobs have been lost in the electrical appliances industry. Even 2,500 fewer people are engaged in mining. From where will the jobs come to provide employment for the 230,000 school leavers who will annually join the labour market in the foreseeable future? Will they come from the rural sector? Hardly. Will they come from the rnining sector? No, not on your life. That industry is the most capital intensive of all. Will the jobs be provided in the services sector?
It seems that computers and word-processing machines will hit the tertiary sector very hard. No wonder bank employees are worried. It is said that technological change will revolutionise banking and finance and result in a reduction of staff numbers by at least one third of those now currently employed. So it is of little use for the Prime Minister and the Treasurer glibly to argue that, as automation increases, living standards will rise and thus produce more growth and extra jobs in the tertiary sector. The plain fact is that we have relied increasingly on this sector to take up the slack in employment since the Second World War. The tertiary sector will no longer take up that slack. So we must go back to the manufacturing base. It is of vital importance to ensure that jobs remain in manufacturing and that the Federal Government is intimately involved in assessing just where the potential for future growth in manufacturing lies. I will not argue that we should simply rely on the buttons and levers approach, that is, by adjusting tariffs, offering extra incentives, domestic subsidies, implementing investment allowances and so on. Any or all of these things may be important in the future but they will not be any substitute for planned industry and manpower policies. So, given all these facts, how can this Government drop its proposals to tax the earnings of Australian companies which have transferred operations to South East Asia?
The Government ought to be fighting to retain jobs and not cravenly backing off from the struggle with those companies which really, in a national sense, disloyally wish to move overseas to take advantage of cheap labour conditions and benign tax consideration. Recently I was requested to make approaches to the Minister for Trade and Commerce (Mr Lynch) on behalf of a company which imported from Malaysia some 40 per cent of its total Australian sales of children’s apparel. The company argued that unless it could continue to do so the jobs of those who manufactured the 60 per cent Australian component would be at risk. I asked the company manager what he would do if he were able to make a choice in the event of a heavy reduction in tariffs. He said that in those circumstances his company would transfer all its operations to Malaysia. The Minister must rethink his position on this matter. We should not be encouraging Australian companies to relocate overseas.
Let me examine the proposals to implement a branch profits tax. The Government says that this is necessary because branches of overseas companies resident in Australia, whilst being liable for the 46 per cent Austraiian company tax paid on taxable income, are not liable to be taxed, as are subsidiaries from overseas companies which remit dividends overseas. Obviously we support the branch profits tax, but why is it set at only 5 per cent? Apparently the Government has assessed that 5 per cent will cover the amount that would have been raised by a dividend withholding tax at the current rate of 1 5 per cent that was imposed on an average of 60 per cent of after tax distributable income remitted abroad. A branch profits tax of 8 or 10 per cent not only would raise more revenue but also would certainly encourage companies to establish Australian subsidiaries rather than a branch operation which is far less subject to Australian governmental control. At any rate, a branch profits tax is a totally inefficient and ineffective method of raising revenue from the gross profits of companies such as ESSO-BHP in oil and Utah Development Company in coal. This Government will give to ESSO-BHP by 1980 a $700m handout from its new oil policies. Of course as everyone knows, when the 1977 import parity policy is phased in, government revenue from the oil industry will rapidly decline. Similarly, in coal the Government is phasing out the coal export levy and refusing to replace it with a resources tax. A branch profits tax on Utah at the proposed rate would probably raise only $8m or $9m but a resources rent tax at a proposed threshold rate of, say, 15 per cent on invested capital and imposed at a rate of 70 per cent thereafter would have produced $95m last year in federal revenue. I believe that there also ought to be a resources tax implemented on the profits made from the extraction of our nonrenewable energy resources, particularly on overseas exports and I of course include coal and natural gas as logical areas for a Labor Government’s resources rent tax. Yesterday in answer to a question on income tax avoidance the Treasurer said: if one is to keep to a tolerable rninimum the level of discretions which are available to the Commissioner of Taxation under the legislation it is very difficult to restrain the size or the rate of growth … of the Act when . . . legislating against individual practices . . . Quite clearly we do have a complicated taxation Act in this country.
The Treasurer went on to say that it was necessary to reconsider the Federal taxation options open to the Government before attempting to simplify the whole of the taxation system. He then spoke of the much publicised inquiry into a retail turnover tax or a value added tax. Most overseas countries which have imposed the broadly based consumer taxes have opted for the VAT rather than the retail turnover tax. I believe that both these taxes are undesirable in Australia. The value added tax is, of course, really a tax on final consumption of goods and services. It is strongly argued that it should be neutral which is really a euphemism for making it as broad as possible.
I am opposed to the expansion of indirect taxation for a variety of reasons. Firstly, it should be the last thing to be implemented in a country which is in the depths of a recession because it is really a tax on spending and it must be inflationary. It would probably induce people to increase their savings, which are already at an historically high level, rather than to spend. It is cumulative, and applies at all stages of production. All suppliers and producers pay the tax in the production process but each recoups the outlay. The final total value added tax, which in the end amounts to fixed percentage of the final cost, is of course paid for by the poor old consumer. He cannot pass it on; nor does he receive any tax credits.
Furthermore, I think we ought to reject the arguments of the Prime Minister that a value added tax leaves a choice to the consumer of whether or not to purchase- but no one, he says, can escape an income tax. What nonsense. How illogical. He is really inciting people not to purchase, which of course is impracticable. Obviously, broadly based consumer taxes would include taxes on food and clothing, housing, rent, perhaps even second hand goods; public transport and even services such as the tourist and entertainment industry would not escape. Many of the Government back benchers say they are most concerned about those industries. How can they support extra taxes on them!
The argument that we should tax by means of value added taxes the wealthy people who consume more reverses itself when one considers that the low income earners, the fixed income earners such as pensioners, will not escape the tax and would pay the same for a loaf of bread as would the Treasurer. One acknowledges that many exponents of these taxes advocate them as part of an overall tax restructure. For instance, it should be possible to give special compensation to all pensioners by raising pensions. This could be paid for from the revenue collected by the tax. It should be possible to give special compensation to taxpayers by raising the threshold at which they are required to pay income tax. Perhaps we could exclude from income tax those people who earn less than, say, $8,000 a year, but we could not trust this Government to do these things; that is the point. All of its taxation performances have resulted in effecting more regressive tax changes such as the so-called cuts of last February which gave the Prime Minister $60 a week and the average earner $3.50 a week which of course has now been removed totally by the 1 .5c in the dollar surcharge.
As the honourable member for Chifley (Mr Armitage) pointed out, the Government will not ban the use of family trusts to avoid income tax because many of the honourable members who sit opposite have trusts themselves. However, the Government has found no difficulty in fully taxing workers on lump sum payments for accrued leave. We could not trust this Government to introduce any ameliatory measures to offset the regressive effects of value added taxes. Anyway, if such measures were introduced what guarantees would there ever be that they would not be removed or that they would be maintained at their initial real level? It would be possible for a value added tax to be introduced as part of an overall tax restructure only to see pension increases dissolved in the wake of inflation, and the value added tax would be eternal.
We admit that there is a need for and we would embrace taxation reform. The Treasurer is right when he says that section 260 of the Act needs to be rewritten to make it simpler to nail the tax bludgers. Earlier this year the Opposition moved to the Treasurer’s earlier tax avoidance Bills an amendment suggesting that Bills to outlaw tax avoidance schemes as they are identified should be retrospective to the beginning of that current financial year. Section 260 should be rewritten to embrace this concept. I believe that any restructuring of taxation should start by an examination of the levels of company taxation, the possibility of introducing a capital gains tax and other taxes on accumulated capital and also the resources rent tax that I mentioned earlier. Income tax structures also need drastic revision.
I think the scales on which income tax is paid are really too wide. For instance, let us examine the effect of the present marginal rate of 33.5c in the dollar. A person pay $335 for each $1,000 in excess of $9,000, but a person who earns $ 15,000 will pay tax at exactly the same rate on an extra $1,000 income over $15,000. That is inequitable. I am referring to marginal taxation. I am well aware of the effect of the threshold that has been imposed. Nevertheless, the same rate is applied to marginal tax. I am not suggesting that the
Government should increase the rate on incomes in the higher range. I am suggesting that some thought should be given to a marginal tax rate to be applied to workers receiving lower incomes. My time in this debate has almost expired. I suggest that the Treasurer should redraft the Bills and in doing so he should provide for an increase in the proposed branch profits tax rate, the resources rent tax on -
-(Hon. Ian Robinson) - Order! The honourable member’s time has expired.
– in reply- In closing the debate I would first or all like to thank the Opposition for its general support for the measures now before the House and those honourable members who have contributed to the debate. In so doing I must condemn the humbug which is implicit in the foreshadowed amendment to be moved by the honourable member for Gellibrand (Mr Willis) in respect of the Income Tax Assessment Amendment Bill (No. 2). It has been said in this House before, but it does need to be said again, that for Opposition members to be talking at present about the Government not having taken sufficiently strong action so far as tax avoidance is concerned is an act of political humbug. The record of this Government in taking significant action against tax avoidance is a record without compare over the last 20 or 25 years. I have said it before and will say it again that the opportunity was available to our political opponents for a period of three years to do some decisive things about tax avoidance, and in comparative terms very little was done. So the truth simply is that when the then Labor Government had the opportunity it was fairly dilatory on the subject. As this Government has taken decisive action it is an act of humbug for members of the Opposition on the sidelines to say: ‘That is all very well and we support it, but really you should have gone very much further’.
Everyone knows that this Government is committed to act as decisively as possible against blatant acts of tax avoidance. We have adopted a practice this year that in my view has had a significant impact on tax avoidance practices in this country. I share the view that the honourable member for Gellibrand has expressed in other debates that it is idle to imagine that any government can completely eliminate tax avoidance. In this connection I will say something about the status of section 260 of the Income Tax Assessment Act. The honourable member for Gellibrand knows that I have already indicated that the Government is at present considering the feasibility of rewriting section 260. 1 think he also knows, or ought to know, that that is not an easy task. The courts have given a very restrictive interpretation to the existing provisions of section 260. That is a matter of fact. It is something that the Government has to take into account in considering its approach to dealing with tax avoidance. But I can assure the House that we will continue as expeditiously as possible in our consideration of the feasibility of producing a new section 260.
I think honourable members on both sides of the House ought to recognise that there are pluses and minuses in having a general annihilatory provision against tax avoidance. There are some in the community who believe- and I consider that they hold these views genuinely- that such a provision could introduce an unwarranted area of uncertainty in normal commercial operations. On the other hand, of course, an effective provision of the section 260-type, if that ideal could be achieved, would do a great deal, but it would not entirely eliminate the need to have very voluminous legislation.
Most speakers in this debate have referred to the size of the Income Tax Assessment Act. I recognise that. But, apart from saying in a sweeping fashion that we should rewrite the Income Tax Amendment Act, nobody has argued seriously that the Government, if it is to be responsible in the tax avoidance area, has any alternative other than to act on a case-by-case approach at the present time against specific schemes as they become identified.
Therefore I simply say that the Government will continue with the campaign against tax avoidance which has been a significant feature of the administration by the Government of the income tax legislation this year. I believe it is a campaign which has very broad community support. It is fair. It is quite unacceptable to this Government that people should be able to avoid their liability for paying their fair share of the cost of running this country. They should not be able to do this in a blatant and artificial fashion of a kind that has occurred in this country not only in recent years but also over a period of time. I believe that this is an activity of the Government that has very broad community support, and so it ought, because if governments allow the type of avoidance that has occurred in recent times to go unchecked they will incite contempt for the integrity of the tax system and undermine people’s belief in the essential fairness of our society.
Sitting suspended from 6 to 8 p.m.
-Before concluding my remarks, there are two other matters to which I wish to refer. The first of those is that part of the present legislation which deals with the amendment to the Income Tax Act flowing out of the decision of the Victorian Supreme Court in the Nilsen Development Laboratories Pty Ltd case. I think it is right to say, as has been pointed out by a number of speakers, that the action of the Government in this area was one of those unfortunate things that, because of potential revenue consequences, governments find it necessary to do. I wish to make it quite clear to the House that the decision of the Government to legislate to preserve what it had believed, up to that time, to be the status quo regarding the time at which deductions in respect of long service leave and annual leave payments could be claimed, did not represent in any way an expression by the Government of a view on the merits of the proposition that deductions of this character should be available on an accruals basis as opposed to the basis on which it had hitherto been believed they were available.
It is also true, as some speakers have pointed out, that in no sense are we dealing here with a tax avoidance practice. Indeed, the proposition that the accruals basis should be available is one that has been put for a very lengthy period of time. It is well understood by the Government, and there is nothing in the legislation before the House which forecloses the Government’s options so far as some change in the law in this area at some time in the future is concerned. I wish to make that perfectly clear. Very simply, the Government was faced with the real dilemma that in a freak fashion a quite major threat to the revenue was involved. The real alternative available to the Government, given the commitment it made in the last Budget to the sort of deficit we ought to have, was either to act as it has done or to find some alternative revenue raising measure, which, I put to the House, would have been a lot less equitable than the decision that was ultimately taken.
I know that the amount of money claimed by the Government to be at risk has been questioned by some speakers in this debate. Let me say two things about that. Firstly, I think that all speakers would understand the difficulty of giving a completely precise estimate of the potential loss to revenue that may have flowed from that decision. When speaking of $600m, I have said that a figure of up to that order was involved. I point out to the House that what we are dealing with in part in arriving at that figure is a situation where, at the end of a particular financial year, we make some allowance for the notionally accrued annual leave of all the employees of Australia who are entitled to annual leave. Then we can get some idea of the potentially large figure which might be involved. As honourable members know, we are not talking about an ultimate cost to the revenue; we are talking about the bunching effect, so far as the revenue is concerned, of the deduction being available for the first time on an accruals basis as opposed to a payments basis. Whilst the circumstances of the Government having to legislate as it did, with effect from 1 July, are regrettable- it is a course of action the Government would have wished not to have taken- after very careful consideration of the circumstances it was felt that there was absolutely no alternative.
My final comment relates specifically to the size of the amendments dealing with the current year loss provisions that are now being inserted in the Income Tax Assessment Act. I know that these provisions are very voluminous, and during the Committee stage of this debate they will be the subject of a number of amendments. Frankly, in the present state of the law and against the background of the comments I made earlier regarding section 260 of the Act, if the Government is to deal seriously with the type of practices that have been involved in current year loss situations, and if it is to keep to a minimum a number of discretions available to the Commissioner of Taxation under the Income Tax Assessment Amendment Act, then I invite anybody in the House to suggest that in practical terms it was possible to have a simple provision achieving these objectives.
It has been put to me- I am inclined to accept this to be the fact- that if we had been prepared to grant a very wide discretionary power to the Commissioner of Taxation the provision in question could have been a lot shorter. There are very mixed views on this subject. I find it interesting that, irrespective of one’s views about taxation legislation, many people who urge simplicity in tax legislation at the same time urge that there be a rninimum of discretion to the Commissioner of Taxation. Speaking of the office and in no sense of people, I think it is desirable that there not be too many discretions available to Commissioners of Taxation. There is a valid argument that as far as possible the rights of taxpayers should be spelt out in income tax legislation. But there is a cost to that, and the cost is highly complicated legislation. It is really living in a dreamland to imagine that we can have legislation which, on the one hand, has minimal discretions available to the Commissioner of Taxation and, on the other hand, is simple, brief and non-voluminous.
I share the view of all members of the House, I am sure, that the present Income Tax Act is extremely complicated. It is very big, and it is getting increasingly difficult for many people other than those who have a special expertise in this area to understand all of its ramifications. It is not so much that we have a complicated Act but rather that we have a complicated taxation system. It is to put the cart before the horse to imagine that as a separate exercise we can simplify the taxation legislation while leaving an essentially complicated taxation system. To give one illustration of that, under our income tax system we provide for accessability of income against which one can claim certain deductions. Once the availability of deductions is introduced into tax law a very complicated piece of legislation is created. In saying that, I am not suggesting for a moment- and I emphasise this point- that deductions should not be available. Just to illustrate, if we have legislation which is based upon a general statement of liability to tax to which there are numerous exceptions, we immediately have a complicated system. Of course, whenever we have in legislation exceptions to general liability, not only do we have a complicated Act and a complicated system but we also create the incentive for imitation of those exceptions and various arrangements that are designed to be captured by those exceptions.
I conclude my remarks by saying that I understand very much the concern of people about the size of the Income Tax Assessment Act. I hope they will bear in mind that, if we are to have legislation which does not give the Commissioner of Taxation too many discretions, it is very difficult at the same time to have that legislation brief. In regard to tax avoidance, I simply repeat that we have under consideration the possibility of rewriting section 260 of the Act. It is not an easy task. Anybody who imagines that it is just a question of adjusting a few words in order to have a workable section 260 does not understand the history of that section and does not understand the attitude taken by the courts in this country and elsewhere- particularly in this country because that is the situation which is relevant to us- towards the construction of taxation legislation.
Whilst I do not rule out the possibility of a workable redrafting of section 260 being achieved, in the meantime, if the Government is to pursue seriously its campaign against tax avoidance, which it intends to do, we will have to have a situation where complicated amendments are brought into this Parliament. Nobody likes having unnecessarily complicated legislation. But if we net out the interests that are involved in this situation and understand something of the workings of the taxation system, I hope the House agrees that in the short term, at least, we have to cope with this situation if we are seriously to try to deal with the problem of tax avoidance, which I hope that all honourable members see as the responsibility of this Government and a course of action that ought to be pursued.
Question resolved in the affirmative.
Bill read a second time.
After clause 3 add the following clause:
On 23 May 1978 the Prime Minister (Mr Malcolm Fraser) announced that work had commenced on the creation of a special appeal and fund to be known as the Sir Robert Menzies Memorial Trust. It was considered that in this way we might best commemorate the great contribution to the nation of the late Sir Robert Menzies. The Government has now decided that income tax deductions should be available in respect of gifts made to the Trust. Accordingly, this amendment proposes that the Sir Robert Menzies Memorial Trust be included in the list of funds to which gifts are an allowable tax deduction. I commend the amendment to the Committee.
Amendment agreed to.
Bill, as amended, agreed to.
Bill reported with an amendment; report- by leave- adopted.
Bill (on motion by Mr Howard)- by leaveread a third time.
Debate resumed from 8 June, on motion by Mr Howard:
That the Bill be now read a second time.
-As I foreshadowed during the cognate debate on these taxation measures, I wish to move as an amendment to the motion that the Bill be now read a second time. I move:
That all words after ‘That’ be omitted with a view to substituting the following words: whilst not opposing the Bill, the House-
is of the opinion that-
despite the passage of considerable legislation designed to close off tax avoidance loopholes, the Government has failed to legislate against various well-known tax avoidance schemes;
the continued operation of a large scale tax avoidance industry is creating grave inequities in the incidence of taxation, substantially reducing government revenue, providing a substantial administrative burden for the Government, and imposing an increased legislative burden on the Parliament;
the process of countering tax avoidance schemes by the continual passage of complex legislation is cumbersome and inefficient;
the income tax law has already reached a state of exceptional complexity, and
continued resort to the present means of countering tax avoidance will add greatly to the complexity of the tax law, and
therefore calls on the Government to redraft the income tax legislation with a view to increasing its simplicity and efficiency, to institute an effective annihilation provision based on section 260 of the Income Tax Assessment Act, and to implement other general provisions designed to deter and restrict tax avoidance.
-(Mr MiIIar) - Is the amendment seconded?
– I second the amendment.
Original question resolved in the affirmative.
Bill read a second time.
– I have amendments to clauses 1, 5, 9 and 12, which read in part:
1 ) Section 46a of the Principal Act is amended-
The amendments made by sub-section ( 1 ) (other than paragraph (1) (b)) apply in relation to dividends paid after 7 May 1978 other than dividends declared on or before that date.
After section 50 of the Principal Act the following Subdivision and headings are inserted; “Subdivision B- Calculation of Taxable Income where Disqualifying Event Occurs “50a.(1) …. “50d.(1) …. “(5) Sub-section (4) does not apply in relation to the notional loss in respect of a loss period in relation to a company if-
“(3) For the purposes of the application of this Subdivision in relation to a company in relation to a year of income-
A is the amount ascertained by multiplying the excess amount by-
Bistheamountascertainedbymultiplyingtheexcess amount by 0.1; and
Cisthefractionascertainedbydividingby365the number of whole days (if any) in the period commencing at the beginning of the year of income and ending at the end of the relevant period. “50N. ( 1 ) Where, for the purposes of any provision of this Act (other than this section), it is necessary to ascertain the extent to which the taxable income of a company of a year of income, being a company in relation to which this Subdivision applies in relation to the year of income, consists of one or more of the following classes of income, that is to say, income from private company dividends, income from dividends other than private company dividends, income from property other than dividends and income from personal exertion, then, notwithstanding any other provision of this Act, this section applies for that purpose. “(12) Subject to sub-section (13), the amount of income from private company dividends included in the taxable income of the company of the year of income shall be deemed to be the amount (if any) ascertained by deducting from the sum (in this sub-section referred to as the ‘income amount’) of-
After section 105AA of the Principal Act the following section is inserted: “105ab.(1) “(6) Where, in pursuance of sub-section (2), the Commissioner has determined that a period is to be an additional distribution period, or that periods are to be additional distribution periods, in relation to a company in relation to a year of income (in this sub-section referred to as the ‘relevant year of income ‘), so much of the amount of any distribution or of the sum of the amounts of any distributions of money or other property made during thatadditionaldistribution period or those additional distribution periods by the liquidator of the company (being a distribution the amount of which was, or being distributions the amounts of which were, specified in a notice or notices given to the Commissioner by the liquidator in accordance withsub-section (5)) as exceeds the amount (if any) that would be the undistributed amount in relation to the company in relation to the year of income immediately preceding the relevant year of income if no regard were had to the distribution or distributions of money or other property made by the liquidator during that additional distribution period or those additional distribution periods shall, for the purposes of ascertaining, for the purposes of this Division, whether the company is deemed to have made a sufficient distribution in relation to the relevant year of income, be taken to have been made during the prescribed period in relation to the relevant year of income.
I seek leave to move 43 amendments together.
In clause 5 (1) (b) omit proposed sub-section (8a), substitute the following sub-sections: “ ( 8a) For the purposes of the application of this section in relation to a shareholder in relation to a year of income, being a shareholder that is a company to which Subdivision B of Division 2a applies in relation to the year of income-
the Commissioner is satisfied it is reasonable to attribute to dividends included in the assessable income of the shareholder of the year of income;
the Commissioner is satisfied it is reasonable to attribute to private company dividends included in the assessable income of the shareholder of the year of income; and
In clause 5, omit sub-section (2), substitute the following sub-sections: “(2) The amendments made by sub-section (1) (other than paragraphs ( 1 ) (b), (ca) and (ea)) apply in relation to dividends paid after 7 May 1978 other than dividends declared on or before that date. “(2a) For the purposes of the application of section 46a of the Income Tax Assessment Act 1936 in relation to dividends paid to a company on or before 7 May 1978 or dividends declared on or before that date that are paid to a company after that date, being a company to which Subdivision B of Division 2a applies in relation to the year of income of the company during which the dividends are paid-
In clause 9, omit sub-paragraph (iii) of paragraph (a) of sub-section (3) of proposed section 50f, substitute the following sub-paragraphs: “(iii) the period that constitutes that corresponding year of income of the partnership is the same period as the period that constitutes the year of income of the company; and
In clause 9, omit sub-paragraph (iii) of paragraph (b) of sub-section (3) of proposed section 50f, substitute the following sub-paragraphs: “(iii) the period that constitutes that corresponding year of income of the partnership is the same period as the period that constitutes the year of income of the company; and
1 8) In clause 9, omit sub-paragraph (iii) of paragraph (c) of sub-section (3) of proposed section 50F, substitute the following sub-paragraphs: “(iii) the period that constitutes that corresponding year of income of the partnership is the sameperiodas the period that constitutes the year of income of the company; and
19) In clause 9, at the end of sub-section (3) of proposed section 50f add the following word and paragraph: “; and (d) where-
In clause 9, omit sub-section (2) of proposed section 50h, substitute the following sub-section: “(2) For the purposes of sub-section (1)-
In clause 9, in proposedsection50M.(2),substitute the following: “A is the amount ascertained by multiplying the excess amount by-
In clause 9, omit sub-section (22) of proposed section 50N, substitute the following sub-sections: “(22) Subject to sub-section (23), dividends paid to a company (in this sub-section referred to as the ‘relevant company’) by another company during a year of income of the relevant company shall, for the purposes of this section, be deemed to be private company dividends if, and only if-
Honourable members will recall that, in introducing this Bill on 8 June 1978, 1 said in my second reading speech that because of the complexity of much of the Bill, I considered that ample time should be given to interested parties to examine and comment on it. I said also that officials would be reviewing its technical features. These amendments arise from that process. Although there are in number 43 amendments to the Bill, they are closely inter-related and all are of a technical nature. Almost all of the amendments relate to the ‘current year losses’ provisions. Honourable members will recall that the current year losses provisions were introduced as a measure to counter the avoidance of tax by trafficking in current year company losses. The point of the measure, as of the provisions governing deductibility of prior year losses, is to prevent income earned by a company under the proprietorship of one set of shareholders being diminished for tax purposes by losses sustained under the proprietorship of a different group of people. The provisions employ and adapt the well-settled principles of the prior year loss provisions.
I draw particular attention to amendment No. 2. This relates to a company to which the proposed current year losses provisions apply and which is involved in a dividend stripping operation. As indicated in the special note on page 58 of the explanatory memorandum on the Bill, the provisions of the Bill are deficient in dealing with these cases. The trouble is that the Bill was intended, in ‘current year loss’ situations, to apply the same rules for setting deductions against dividends subject to rebate as apply in situations where the current year losses provisions are not applicable. It failed to do this. The amendment is directed to correcting this deficiency. If it went uncorrected there could be the paradoxical situation that legislation introduced to prevent tax avoidance through acquiring current year losses could aid and encourage avoidance through dividend stripping.
I mention also that amendments Nos 20 to 22 propose to replace references to the ‘holding’ of shares with references to the ‘beneficial ownership’ of shares. This amendment was foreshadowed in a statement I made on 28 July 1978 and will ensure that the ‘continuity of ownership’ tests in the current year losses provisions follow those already contained in the prior year losses provisions. Because of the subsequent introduction and passage of the Bills giving effect to Budget income tax measures, and introduction of the Income Tax Assessment Amendment Bill (No. 3) 1978, it has been necessary to re-number this Bill as the Income Tax Assessment Amendment Bill (No. 4) 1978.
These and all the other amendments are explained in a supplementary explanatory memorandum that is being circulated, and because of their technical nature I think that it is not necessary for me to speak at further length at this time. I commend the amendments to the Committee.
-I wish to make a couple of remarks in respect of the 43 amendments which have been moved by the Treasurer (Mr Howard). In moving these amendments and describing them as being of a technical nature, he emphasises and gives force to the point that I was making in my second reading speech in the cognate debate, namely, that it is quite impossible for the Parliament properly to consider legislation of this enormous complexity, particularly when it is given to us with such little notice. Even though it was given to me prior to the start of this debate, the point I make is valid. It is impossible for us properly to consider the ramifications of such an enormous number of amendments to what is already complex legislation. I simply reiterate the point I made previously. We must find another way in which to deal with tax avoidance in this country. In the short run, admittedly, we are supporting what the Government is doing. In no way do I say that the Government should not be introducing this kind of legislation. But while we say that the Government in the short run has no alternative but to take the kind of measures that it has taken, in the longer term it should also be taking the kind of action which will ensure that this is not a continuing feature of this Parliament over the next umpteen years.
We have to find a way of beating tax avoidance which does not involve the ludicrous procedure of incredibly complex legislation being brought before this Parliament and that legislation then being subject to further amendments which, quite frankly, are beyond the ability of the Opposition members to understand in the time given to us to consider them. We cannot understand properly what is being put before the Parliament. We endorse entirely the Government’s measures. However, we take as an act of faith from the Government that what it is doing is to ensure that the original legislation introduced on 8 June 1978 will be reinforced by the 43 amendments now before the Parliament.
Surely, in the longer term, this is not the kind of procedure that we want to adopt. Therefore, I reemphasise the point that eventually we must find an alternative method. Surely that must take the form of a blanket provision in the legislation which will make it unnecessary for this kind of procedure to be adopted in the future.
-I want to deal briefly with the problem which the Opposition faces with the introduction of this type of legislation. If a separate amending Bill were introduced, the Opposition would have an adequate period to study the Bill, consider its clauses, make a decision on those clauses and come back to the Parliament to indicate its attitude. That is not possible with amendments which are not required to be circulated in the usual manner and which are not publicly available prior to their introduction into the House except by private arrangement. They are certainly not available generally to members of the Opposition for discussion. The Parliament has adopted a procedure which would enable this type of amendment to be considered adequately. The Government should be prepared to adopt that procedure.
It would be possible without greatly delaying the legislation for the amendments and the Committee stage of the Bill to be examined by a Legislation Committee. The 43 amendments could be taken into consideration. On this occasion I am fairly certain that that proposition is not practicable, but I believe that in future when the Government intends, in effect, to introduce a new piece of legislation using the vehicle of multiple amendments, that practice ought to be adopted. Members of the Opposition should be supplied with copies of the amendments sufficiently in advance so that they can take advice on them and also make a decision upon them.
– I want to direct the attention of the Committee to clauses 13 and 14 of the Bill that provide for writing off film investments over a period of two years. I want to commend the Government and the Treasurer (Mr Howard) for introducing this enlightened measure. The situation still needs to be treated with caution. The Whitlam Government marked the ‘great leap forward’, to coin a phrase, in the Australian film industry. However, if I can be bipartisan for a moment, it is important to recognise the contribution made by the Vincent Committee and later by John Gorton. He accepted the 1969 report of the Australian Council for the Arts, as it was then called, which recommended the setting up of the Australian
Film and Television School, the Australian Film Development Corporation and the experimental film fund.
This report was written by Peter Coleman, the former Liberal leader in the New South Wales Parliament, Phillip Adams, the writer, television executive and film producer and a third person who modesty prevents me naming. I think it is fair to say that the success of the revived Australian feature film industry has been greater than we ever imagined in 1969-70. If we had predicted that within 10 years Australia would be producing 15 feature films each year, we would have been ridiculed as wild visionaries. Nevertheless, it is possible that the Australian feature film industry will face some difficulties. We must be careful that the Government’s apparent generosity in permitting tax write-offs after two years does not exacerbate the situation. One difficulty is that we are probably making too many feature films each year. There is real apprehension that the boom period may be passing. It has certainly peaked already and producers and directors do not want to wait in a long, slow queue to get their films made, sold and exhibited. They want to make them now. That means that film makers are competing with each other for scarce resources- the best camera men, light and sound personnel, writers and performers are in short supply.
Competition has led to a rapid escalation in the costs of films. I estimate that film costs have risen by about 25 per cent per annum over the past five years. If there were fewer films, it is possible that film costs could be controlled and we could have what the National Country Party might call orderly marketing over the next five years. The problem is, how to do it. I know it is a problem that worries the Minister for Home Affairs (Mr Ellicott) as well. An increased investment flow, however desirable at first sight, may add to the industry’s long-term problems unless it is handled very carefully.
The additional film costs pose other problems as well. Within the film industry there is a rule of thumb that for films with budgets of less than $lm, it is necessary to collect $5 at the box office for every $1 invested in the film before it is into profit. As a result, a film which costs $ 100,000 to make and grosses $600,000 at Australian box offices is a financial success. A film which costs $500,000 to make but which grosses $2m at the Australian box office is a disaster. Because of escalating costs, the $500,000 film is becoming increasingly common in Australia. As film goers will not pay five times the ticket price for a film which costs $500,000 to produce compared with the price of a ticket for a $100,000 film, this means that producers have to gross at least $2. 5m either here or abroad in order to break even. Past experience suggests that it is a very rare box office success in Australia which grosses more than $2m. The industry grosses about $100m per annum in Australia but our films, good as they are, have to compete with the best foreign films and also with box office blockbusters such as Jaws and Jaws II.
This means that our producers increasingly are looking for overseas sales to provide for the box office shortfall or overseas equity participation. Both courses present challenges, which is good, and risks, which may be good if we handle them properly. I am concerned about the danger that in appealing to the international market primarily our products may become bland, that is to say, they will become compromise films. They may not really express an Australian point of view because it is suspected that that Australian point of view may not go down too well in the overseas market or they may not express a point of view at all. The history of co-production in film making in Australia has a record of disaster. I think there has never been a co-production here which can be remembered without a shudder. It is true that a fail safe precaution in the definition of’Australianfilm’iscontainedinproposedsec- tion 1 24k of the principal Act clause 1 3 of the Bill before the Committee. When I read the definition of ‘Australian film’ I recognised my fine Italian hand because I think I drafted that definition originally and it appeared in the first annual report of the Australian Film Development Corporation. Now it has become -
– You did not have a beard in those days.
-That is true. But in any case my definition is still here. I hope that the Minister will be able to enforce the terms of the definition of Australian film to make sure that we never lose effective creative control over what we are doing. If we look at the history of coproduction in other countries, for example Spain, we find that it has a record of absolute disaster where there is a period in which a very large amount of foreign capital is provided with a lot of films being made, but suddenly the tide recedes. The troops go home and there is just a shambles of an industry left because it has been used to operating on a grandiose international scale. Once the foreign capital is withdrawn and once they are not interested in making those films -
– They were pretty terrible films too, were they not?
-A lot of them were pretty bad films. One could look at one of the first reports that was made to this Parliament on the future of the Australian film industry- the Vincent report of the early 1960s. My recollection is that the Vincent report also recommended that there should be tax adjustments of this kind. The late Senator Vincent has been dead for many years now but I would like to think that one of his recommendations, although it appears in a somewhat different form, has been introduced in legislation. I am glad to see it but I ask the Government and the Minister to look very carefully at the way in which it will be administered.
Amendments agreed to.
Bill, as amended, agreed to.
Bill reported with amendments; report- by leave- adopted.
Bill (on motion by Mr Howard)- by leaveread a third time.
Debate resumed from 8 June, on motion by Mr Howard:
That the Bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time.
– I wish to address myself to clause 6 which relates to the rate of tax to be imposed by the Income Tax (Non-Resident Companies) Bill 1978. The rate that is to be imposed is 5 per cent. I wish to draw the attention of the Committee to what is involved in a 5 per cent branch profits tax. It would involve a tax of 5 per cent being levied on the taxable income of a branch that is operating in Australia. This is to be a simulation of what might have been paid by the company as dividend withholding tax had that branch been operating as a subsidiary. I will give an example. If taxable income was $100, both the subsidiary and the branch would pay $46 in company tax, leaving distributable income of $54. If there was a 60 per cent distribution in dividend repatriation this would give a dividend withholding tax for a subsidiary of $4.86. A 5 per cent branch profits tax, being a tax levied on the whole taxable income prior to company tax, would result in $5 being paid. There is a rough equivalence. In other words, the branch profits tax has been pitched at such a level as to equate it with a dividend withholding tax where there is about a 60 per cent distribution.
This seems to us to be a not unreasonable assumption of what the distribution may be although of course it would vary significantly from firm to firm. At present the most obvious company to be discussed in this context is Utah Mining Australia Ltd but it would be distributing a much higher proportion than 60 per cent; therefore the tax of 5 per cent would mean an equivalent of much less than the amount that would be raised by a dividend withholding tax if it were applied to that company had it been operating as a subsidiary rather than a branch. It seems to us that there is a reasonable case therefore to argue not just in the case of Utah but in general for the branch profits tax to be pitched at a higher level than what might be a reasonable equivalent of a dividend withholding tax had the branch been operating as a subsidiary. That is because we think the operations of branches ought to be discouraged and there ought to be perhaps some taxation discouragement to a company operating as a branch in this country rather than as a subsidiary.
As I understand, there are some advantages for companies to operate as branches rather than as subsidiaries in this country. For instance, subsidiaries must lodge audited statutory accounts for their Australian operations whilst branches have no such obligations unless they wish to borrow money in Australia. Therefore there can be this advantage in not being required to meet the obligations of subsidiaries in respect of having to lodge audited statutory accounts. Secondly there is the matter of repatriation of funds. Subsidiaries have much greater controls imposed on them. Should they wish to liquidate and take their funds out of the country they have to go through a protracted liquidation process. This is not so in the case of branches, as I understand it, and it is much easier for branches simply to pack up and take their money out of the country without having to go through the significant requirements for subsidiaries that wish to undertake that process. Thirdly, in respect of insurance companies of which I understand quite a few branches are operating in this country, as subsidiaries, they face much greater control under the Insurance Act than do branches. It is more difficult, therefore, to control the solvency and re-insurance requirements of branches in the insurance industry.
It seems to us, therefore, that there are some benefits for Australia as a whole in saying that we do not want foreign companies to operate here as branches. If they are to operate here, they should form an Austraiian subsidiary. If they do that we will know much more about what they are doing. We can exercise much more control over their operations. That seems to us to be a desirable aim for the Australian Government to have in respect of foreign companies operating in Australia.
Had it been open to me to do so- under the Standing Orders it is not- I would have proposed that the branch profits tax be pitched at 8 per cent rather than at 5 per cent. Pitching it at 8 per cent would mean that this would equate a 100 per cent distribution of dividend withholding tax at the rate of 15 per cent. We would have proposed that simply as a means of discouraging foreign companies from operating in this country as branches rather than as subsidiaries. The Treasurer might bear in mind for future reference that it is not in the best interest of Australia to have branches. If he wishes to discourage branch operations in this country, an effective way of going about that is to impose a penalty in the form of a branch profits tax higher than that which would apply in the form of a dividend withholding tax had the company been operating as a subsidiary.
- Mr Chairman, I wish to respond very briefly to the remarks of the honourable member for Gellibrand (Mr Willis). I am grateful that the honourable member acknowledges that the effect of an 8 per cent branch profits tax would be to put a branch at a disadvantage to a subsidiary, because that is precisely what would have happened. I think it is fair to say that the purpose of this proposal was to put companies that operated in Australia through branches as opposed to subsidiaries on the same tax basis. The concern that gave rise to the Government’s decision was that branches, in making remittances, were not subject to dividend withholding tax or an equivalent.
I simply say to the honourable member for Gellibrand that I am not persuaded that at this stage- naturally this is something that the Government would keep under review- that the Government ought to do other than accord an equality of treatment under the taxation system to companies which operate through subsidiaries and companies which operate through branches.
With all due respect, I would want to hear some more powerful arguments than those advanced by the honourable member for Gellibrand to persuade me that we ought to use what in effect would be a penal rate of tax for the company involved to force it to change its mode of operations. It is very easy to say that and to point to a few technical advantages that companies operating through branches may have. But when one bears in mind the world-wide ramifications for companies- I think one ought to pay some regard to that- there would have to be some fairly good reasons why a government, through the tax system, would want to force companies to operate through subsidiaries rather than branches. Nonetheless, it is a matter we will keep under review. But for the present, the Government is not disposed to do other than, in a practical manner, give equality of treatment under the tax system or to ensure that there is no advantage under the tax system for a company operating through a branch.
Bill agreed to.
Bill reported without amendment; report adopted.
Bill (on motion by Mr Howard)- by leaveread a third time.
Debate resumed from 8 June, on motion by Mr Howard:
That the Bill be now read a second time.
Question resolved in the affirmative.
Bill read a second time.
– I have two amendments to this Bill- one relating to the tide and the other to clause 3, which read:
A Bill for an Act to amend the Income Tax (Companies and Superannuation Funds) Act 1977
Section5 of the Income Tax (Companies and Superannuation Funds) Act 1977* is amended by inserting “, 128t” after”128B”insub-section(2)
I seek leave to move thetwo amendments together.
In the title,omit”1977”,substitute”1978”.
In clause 3, omit” 1977”, substitute” 1978”.
These technical amendments arise because of the enactment of further legislation since the Bill was introduced. That legislation includes the Income Tax (Companies and Superannuation Funds) Act 1978, which imposes income tax for 1978-79 on the 1 977-78 incomes of companies.
The sole purpose of this Bill is to amend the Act imposing income tax on the 1 977-78 incomes of companies to make it clear that that Act does not impose branch profits tax. When this Bill was introduced it proposed the amendment of the Income Tax (Companies and Superannuation Funds) Act 1977, which at that time was the Act imposing income tax on the 1977-78 incomes of companies. As I have already mentioned, the Income Tax (Companies and Superannuation Funds) Act 1978, which has now been enacted, imposes income tax on 1977-78 company incomes and it is therefore necessary to amend this Bill to provide for the amendment of that Act. I commend the amendments to the Committee.
Amendments agreed to.
Bill, as amended, agreed to.
Bill reported with amendments; report- by leave- adopted.
Bill (on motion by Mr Howard)- by leaveread a third time.
Debate resumed from 8 June, on motion by Mr Howard:
That the Bill be now read a secondtime.
Question resolved in the affirmative.
Bill read a second time.
– The amendment I will propose relates to clause 1, which reads:
This Act may be cited as the Income Tax(Rates)Amendment Act 1978.
– The amendment merely renumbers this Bill as the Income Tax (Rates) Amendment Bill (No. 2) 1978. Since this Bill was originally introduced in June 1978, legislation giving effect to income tax measures arising out of the Budget has been enacted, including the Income Tax (Rates) Amendment Act 1978. Hence this is now the second Bill amending the Rates Act, and is being so numbered. I commend the amendment to the Committee.
Amendment agreed to.
Bill, as amended, agreed to.
Bill reported with an amendment; report- by leave- adopted.
Bill (on motion by Mr Howard)- by leaveread a third time.
Motion (by Mr Howard)- by leave- agreed to:
That so much of the Standing Orders be suspended as would prevent nine Sales Tax Assessment Amendment Bills (a), being presented and read a first time together, and one motion being moved without delay and one question being put in regard to respectively the Second Readings, the Committee’s report stage, and the Third Readings of all the Bills together and; (b) the consideration of the Bills in one Committee of the Whole.
SALES TAX ASSESSMENT (Nos. 1 TO 9) AMENDMENT BILLS 1978
Bills presented by Mr Howard, and read a first time.
That the Bills be now read a second time.
These Bills to amend the sales tax law contain several measures directed against schemes and arrangements that have been entered into and have the purpose, or the effect, of avoiding sales tax. These measures, when placed alongside those that have been introduced or have been announced to counter income tax avoidance schemes, demonstrate the Government’s resolve to act resolutely to prevent avoidance of tax. They will also introduce greater equity into the sales tax system. Apart from the substantial losses of revenue they cause, sales tax avoidance schemes enable those who enter into them to gain an unfair advantage in the market place over those who do not, either because they are not aware of the schemes or because they choose not to participate in them.
The legislation is aimed at overcoming five different types of sales tax avoidance. The amendments needed to achieve this are somewhat voluminous but this is mainly due to the constitutional requirement that an Act imposing taxation shall deal with only one subject of taxation. For this reason, nine Sales Tax Assessment Acts exist and each has, on this occasion, to be amended. The legislation contained in the (No. 1 ) amending Bill is largely repeated in Bills Nos 2 to 4 and 6 to 8. Amending Bills Nos 5 and 9 deal generally with purely formal amendments. Three of the five main matters dealt with by the legislation were covered by my announcement of 20 September and, as I indicated at that time, the legislation in respect of them will be effective from that date.
The first involves schemes under which goods are sold for a price substantially below their true wholesale value, ostensibly under an option granted to purchase them at that price. The amount paid for the option is normally the difference between the deflated sale price and the full wholesale price. The purpose of the scheme is to avoid sales tax on the part of the real purchase price represented by the amount paid for the option. Honourable members will recall that in my statement of 20 September I mentioned that new motor vehicles were being sold for as little as $20 under options to acquire them at that price for which several thousand dollars were paid. The amendments proposed by these Bills will provide that the sale value for sales tax purposes is to be what might reasonably be expected to be the wholesale value of the same or identical goods if no option agreement had been entered into.
The second of the schemes mentioned in my statement of 20 September is one devised to circumvent an anti-avoidance provision contained in the existing law. The present law provides that, where goods are sold between associated companies, and it appears to the Commissioner of Taxation that the goods were sold for less than their fair and reasonable wholesale value, the Commissioner is empowered to alter the sale value for sales tax purposes to equate with a fair and reasonable wholesale value. The application of this provision is being avoided by interposing an unrelated company between associated companies. For example, an unrelated wholesale company may be interposed between associated manufacturing and retail companies. The interposed company sells the goods for much the same deflated price as it pays for them. The legislation to counter this type of scheme provides that, where goods are sold for less than an arm’s length price, the sale value is to be the arm’s length wholesale price of such goods or, where that cannot be determined, the arm’s length wholesale price of identical goods.
The third amendment foreshadowed in my statement of 20 September relates to the manufacture of goods from materials supplied by a customer to a manufacturer. Where goods are manufactured on this basis sales tax is payable only on the making-up charge and not on materials used in the manufacture. This led to arrangements in which, instead of buying a completed product from a manufacturer, a customer would enter into two contracts, one covering materials that the customer technically supplies’ to the manufacturer and the other covering the making-up charge. Without such an arrangement, sales tax would be payable on a sale value equal to the full wholesale value of the completed product. The legislation proposed in relation to this tax-avoiding arrangement will mean that, where goods are manufactured for a customer wholly or in part out of exempt materials supplied by the customer, tax will be payable on the manufactured goods on a sale value that includes not only the making-up charge but also the value of any exempt materials supplied by the customer, other than second hand materials. The sale value will, however, not exceed an amount on which tax would have been payable if the manufacturer had obtained the materials from his usual sources of supply and the manufacture had been carried out in the normal way.
These three situations were specifically covered by my statement of 20 September and, accordingly, the amendments in respect of sales between associated taxpayers and option schemes will apply to sales of goods after that date. The amendments in respect of the manufacture of goods from materials supplied by a customer will apply to goods manufactured under an agreement entered into after 20 September 1978.
There are two other schemes covered by the Bills that were not specifically identified in my statement of 20 September. Accordingly, the amendments proposed in respect of these will have effect only after today. The first of the two schemes is an extension of the one I have already mentioned for a customer to supply materials to a manufacturer under a ‘two-contract’ arrangement. This particular scheme is a highly artificial one under which a customer avoids sales tax not only on the exempt materials used in manufacture but also on the cost of manufacture. In other words, under this scheme goods are acquired almost completely free of sales tax. This result is achieved by a customer formally taking over manufacturing premises or a part of them and hiring the manufacturer’s staff to manufacture a particular item required for the customer’s own use- usually a most expensive item. As the customer becomes, in law, the manufacturer of the goods and, as usually a ‘one-off’ transaction only is involved, the customer cannot, for the purposes of the sales tax law, be regarded as manufacturing goods in the course of carrying on a business. As a result no sales tax is payable.
The amendments directed against this type of scheme make the customer, who legally becomes the manufacturer, subject to sales tax on the sale value on which tax would have been payable had the customer manufactured the goods in the course of carrying on a business- that is, the sale value will be the usual wholesale price of the goods. As .1 have said, these amendments will apply to goods the manufacture of which commences after today on premises made available under an agreement entered into after today.
The final scheme that the amending legislation is designed to render ineffective involves avoidance of tax by the sale of goods at a price below a true wholesale value. This is achieved by separately billing the purchaser, in commercially unrealistic terms, for an additional amount ostensibly for the provision of services in connection with the goods, but which would ordinarily form part of the wholesale price. As amounts paid for services are not subject to sales tax, the tax may be avoided by inflating the service charge and reducing the nominal price of the goods. Amendments contained in the Bills provide that, where such schemes are entered into for the tax avoidance purpose of reducing the sale value of goods, the sale value is to be the usual wholesale selling price of the goods. These amendments will apply to goods sold after today.
I wish to make it quite clear that this provision strikes only at arrangements which involve the reduction of sale value for the purpose of avoiding sales tax. I am aware that there are a number of industries in which it has been the practice for some time to enter into separate agreements, one covering the supply of goods and one covering services related to the goods. Sometimes, instead of separate agreements one company in a group acts as the sales company and another company as the service company, thus obtaining the same result. Where these arrangements are commercially justifiable- for example, where, as is common with some nationally marketed products, the separate billing is made at a commercially realistic level for services that are associated with the retail sale rather than the wholesale sale- the proposed amendments will not apply. Details of the amendments are contained in the explanatory memorandum that is being circulated. I commend the Bills to the House.
Debate (on motion by Mr Willis) adjourned.
Debate resumed from IS November, on motion by Mr Peacock:
That the Bill be now read a second time.
-When I was interrupted by the adjournment of the House some 22 hours ago I was arguing that the Asian Development Bank, despite its great virtues, has a number of defects or problems which we should note- not that we should note these simply for the sake of criticism but so that the Australian Government can make a creative and constructive input in trying to solve these problems. I suggested three major problems, two of them institutional, one relating to the disbursement of ADB funds: The second to some of the problems associated with the bureaucracy of the Bank. At the end I was discussing the most important problem of all, that is, the fact that the Bank, Australia and the industrialised nations have been involved in the last decade in what appears to be a development failure of quite awesome proportions in relation to rural poverty in Asia.
The evidence for this pessimistic conclusion is a publication of the Asian Development Bank itself- the Second Asian Agricultural Survey. I was quoting some points from that survey- I will repeat them- that give a very pessimistic picture of the situation over much of rural Asia, that is, the area covered by the Asian Development Bank. The first point, and I quote from the survey, reads:
There is a general consensus that the problem of rural poverty has considerably worsened in the past decade.
I stress again the words ‘the problem has considerably worsened in the past decade’. That is the consensus of most involved in the field. Indeed, it is estimated that in the area covered by the Bank’s concerns some 3SS million people are living in poverty. Secondly, and again I quote from the survey:
The new technology essentially did nothing to curtail the growing number of landless labourers.
That is, the development technology introduced did nothing to curtail the growing number of landless labourers in Asia. Thirdly, and again I quote from the survey:
The most optimistic view which can be taken of the food situation is that the region is not much worse now than at the time of the First Asian Agricultural Survey in 1 968.
That is, over ten years, the best that can be said of the situation is that it is not much worse now.
If the present situation creates enormous problems, the prospect for the future is even more bleak. There are some projections in the survey that I think need to be drawn to the attention of the policy-makers in this country. Owing to the inability of the green revolution to raise agricultural output at a faster rate than population output there will be a worsening food grain deficit in the whole region by 1985. The survey produced two estimates- an optimistic high agricultural growth situation and a pessimistic low agricultural growth situation. The survey admitted that the pessimistic projection is the most realistic. I refer to the import of that low agricultural growth situation. By 1985, as compared with 1972, Indonesia’s food grain deficit- that is, its import requirements over its production- will have increased four times. Bangladesh’s food grain deficit will have increased three times. The food grain deficit of Malaysia and the Philippines will have increased two times. Pakistan’s food grain deficit will have increased twenty-five times. Overall for the region a 1972 deficit of eight million tons will by 1985 be a deficit of 46 million tons of food grain- a five-fold increase in the food grain deficit. Even if one takes the optimistic calculation- that is, the high agricultural growth assumption- there will be nearly a fourfold increase.
Let me refer now to the projections on unemployment in the region. Apart from a handful of east Asian success stories, it is estimated that by 1985 unemployment will have increased throughout most of the Asian countries. The survey did certain calculations on some small Asian nations. It was calculated that 23 per cent to 27 per cent of the population of Sri Lanka will be unemployed in 1985. The calculation for Burma was between 9 per cent to 15 per cent. For Malaysia it was 4 per cent to 1 1 per cent, and for the Philippines it was 12 per cent to 17 per cent. Unemployment for India, Bangladesh and Indonesia is both too difficult to calculate and too awesome to contemplate. I seek leave to incorporate in Hansard a table showing the food grain deficit.
The table read as follows-
– Why is there this depressing picture of development in rural Asia? What are the reasons for this failure? It is certainly failure for which the Asian Development Bank alone cannot be blamed but it cannot escape some responsibility. Let it be said that it would be unfair to lump it with anything like total responsibility. Basically the failure is due both to the execution of development policies and to the conception of development pursued by the Bank and the associated developed nations over the past decade. This was pointed out in the Far Eastern Economic Review of 1 977 well before the Second Asian Agriculture Survey emerged. The Far Eastern Economic Review stated:
The Asian Development Bank has . . . spent relatively too much on urban- and particularly metropolitanprojects, and too much on export oriented projects, whether utilities, transport, agriculture, or industry, without sufficient regard for the need for employment and raising subsistence levels.
For instance, 33. 1 per cent of loans of the Development Fund have been allocated to utilities, mainly in urban areas, and only 23.S per centless than a quarter- on agriculture. This reflects a considerable misreading of the urgent needs of agricultural development in the region. Again, the tendency of the Bank to favour loans for high capital intensive projects has both militated against agriculture and exacerbated unemployment. Therefore, allocating greater reserves to agriculture and supporting development involving simpler and cheaper intermediate technology are responses the Bank needs to make. But such responses provide no easy remedies because of more fundamental underlying problems. First of all, because of the inequitable distribution of land over much of the region, aid to agriculture may simply perpetuate inequities between rich and poor, and there is much evidence that this is what agricultural aid has done. Secondly, the hope that the effects of the green revolution and economic growth in the towns would percolate down to the poor now seems mistaken. Rather, the reverse has happended. There has been a sucking-up process’, which seems to have occurred throughout the region with the benefits going disproportionately to the urban and rural elites. Without land reform the work of the ADB and the resources that Australia and other nations give to the Bank will simply fan the tensions of rural Asia. I think we have to admit this. If we go on pouring our resources into Asia without land reform it will simply encourage the tensions developing in the area. Even land reform in itself is now no panacea given the enormous size of the landless rural proletariat, the great bulk of whom could not hope to share in any land redistribution.
I think that we have to confess that today the objective conditions for revolution exist across much of Asia. It can be argued, of course, that the objective conditions have existed for decades or even centuries, but as the Agricultural Survey notes:
But the Survey is not sanguine about the future; nor can we be. As the Survey points out, the objective conditions for revolution are now being given subjective awareness:
The impetus for equality is rapidly becoming a part of the consciousness of the vast masses of the underdeveloped countries … it will soon be a revolutionary force challenging the entire ideological and institutional framework of social existence.
Time is running out for all who hope for evolutionary change in Asia. The ADB, Australia, the developed world and above all the elites of developing Asia need drastically to rethink and revamp developmental policies. We cannot afford the complacency reflected in the Foreign Minister’s speech.
-In all humility might I say that both last night and tonight honourable members listened to one of the finest and most bipartisan debates in this chamber that I have had the pleasure of hearing since I became a member of this House in 1976. 1 believe that honourable members from both sides of this House who have contributed to this debate are to be commended for their objective approach to the Asian Development Fund Bill and more importantly for their careful analysis and assessment of what Australia’s contribution in financial terms under this Bill will mean to the development of those countries in the Asian area directly to our north. In introducing this legislation the Minister for Foreign Affairs (Mr Peacock) indicated that there was a significant commitment by the Government of the Commonwealth of Australia to the Asian Development Bank and to the Asian Development Fund, both of which have been supported by Australia since their inception.
I want to take up some points that have been made by previous speakers in this debate because I quite unashamedly wish to include in my remarks a reference to their comments so that the people who have the opportunity of reading Hansard will at least note what has been said by speakers from both sides of the House. At the outset I want to refer to the most valued contribution to the debate by the Deputy Leader of the Opposition (Mr Lionel Bowen). At page 2858 of Hansard the honourable member for KingsfordSmith had this to say:
The Asian Development Bank made its first loan 10 years ago. The Asian Development Fund was established in 1974 to provide funds to countries with a lower per capita gross national product. Both ordinary capital, that is, that provided by the Asian Development Bank, and special funds, that is, those provided by the Asian Development Fund, have been greatly increased in recent times. Ordinary capital increased in 1977 by 135 per cent-from $3,707m to $8,7 1 lm. The increase to the Fund projected by the Minister is of the same order. As I have indicated, our contribution on this occasion will be approximately $96.8m.
The Deputy Leader of the Opposition then referred in some detail to the Second Asian Agricultural Survey and he was granted leave to incorporate in Hansard, again at page 28S8, a table which sets out the areas in which Asian Development Bank funds were distributed in 1977. My colleague the honourable member for Bonython (Dr Blewett) also referred to these percentages, and I want to refer to them again. That table reveals that of the ordinary loan funds approved a mere 17.16 per cent had been applied to agriculture and agro-industry; 21.96 per cent had been applied to industry, including development banks; 20.99 per cent had been applied to transport and communications; 10.71 per cent had been applied to water supply and urban development; 26.58 per cent had been applied to power- and there must be a message in that percentage- and 2.6 per cent had been applied to education. I note and accept the proposition put by the honourable member for Bonython. I think that both the honourable member for Kingsford-Smith and my colleague the honourable member for Berowra (Dr Edwards) did refer to the effectiveness of the Fund’s loan appropriation in respect of agriculture and agro-industry. I accept the qualification made tonight by the honourable member for Bonython in his concluding remarks, but it does seem to me as a mere layman that out of a very substantial appropriation- in 1977 we were talking about ordinary loans to the Bank amounting to $US6 14.65m and special loan funds amounting to SUS27 1.8m- 17.16 per cent is an inordinately low percentage when applied to agriculture in an area which, as has been pointed out in this debate, contains no fewer than 335 million people living below the poverty line. I think that the honourable member for Berowra summed it up very well when he said that we could not hope for peace in this world with one-third rich and two-thirds in poverty.
The fact of the matter is that while the eventual product in respect of agriculture and agroindustry may have been disappointing I do believe that we should persevere, and like the honourable member for Berowra I believe that there should be an added emphasis on this area. I am convinced that if we do not feed these people or do not give them the means to feed themselves, quite frankly we are going to fall down on the job and the aims and objectives of the Bank and of the Fund will not be achieved. The Deputy Leader of the Opposition, the honourable member for Berowra and the honourable member for Bonython referred to the Second Asian Agricultural Survey. I simply interpolate by asking why there should be a 10-year gap between surveys. The first one was in 1968; the last one in 1978- this year. It would seem to me that 10 years is too long a gap. These surveys should be carried out more frequently. If one looks at the survey, a most voluminous report, one is forced to the conclusion that in terms of achievement, notwithstanding all the goodwill in the world, the Asian Development Bank and the Asian Development Fund have not produced the dramatic and dynamic results which I have no doubt were predicted for them at the time of their inception.
I believe that my colleague the honourable member for Berowra made a most valuable contribution to the debate and I quite unashamedly plagiarise it by reading into the Hansard two paragraphs of what he said last night. At page 2860 he said:
The purpose of the Fund, as is the case in respect of the International Development Association on a global basis, is specifically to assist the poorest and least developed countries with long term credits for sound projects but to assist them on a concessional basis. That is the so-called soft aspect of the operation. It is of the greatest importance because of the massive and crushing burden of debt servicing and repayment which the poorer developing nations currently face.
At page 286 1 he is recorded as delivering, I believe, one of the most telling statements in the entire debate. He said:
What I would like to stress again is that the world has a considerable stake in the greater economic health of the developing countries. That was evidenced, among other things, by the place of the non-oil developing countries in particular in the recent period of massive imbalance in the international payments system.
The honourable member for Berowra echoed the sentiments which brought me into this debate. We have a job to do. It is the right of this Parliament to ensure that that which we are appropriating tonight will be applied to the best advantage of those whom we are seeking to assist.
As I have already said, the honourable member for Bonython once again has made a most valuable contribution. To my knowledge the honourable member has always made valuable contributions in this Parliament. He presented a table which was incorporated in Hansard. That table, which is entitled ‘Rural Asia: Challenge and Opportunity’ contains some startling revelations with respect to our nearest neighbour, Indonesia. Under the heading Definition of poverty line per capita income’ we find that in 1969 all Indonesia was classified as below the poverty line. The table gives details of the rural population in poverty as a percentage of total rural population. For all Indonesia the figure was 47 per cent, for Java 62 per cent and for the other islands 22 per cent. The total population of the rural sector of Indonesia below the poverty line exceeded 1 10 million people. If that does not give some cause for thought, I do not know what will.
Supporting, as I do, the Bills and supporting, as I do, the objectives of the Asian Development Bank and the Asian Development Fund, I wish to pose, and hopefully answer, two fundamental questions which I believe must present themselves to all honourable members regardless of party political allegiance. The first question is this: Should we as an Australian nation, a major contributor to and supporter of the Asian Development Bank and the Asian Development Fund, place a human rights tag on our commitment, which this year is worth $96.8m? I believe the answer to that question must be an emphatic yes. To do otherwise would be to support financially national administrations whose policies are directed against the recognition of basic human rights. I do not believe there is anything immoral in the point of view which I now profess. I believe it is perfectly proper that the Australian nation and, indeed, the Parliament representing the people of Australia, should bring to bear all means at our disposal to bring about an appreciation of and a respect for basic human rights in our Asian neighbours. If this is Carterian philosophy, let me say that I unashamedly embrace it.
Secondly I pose this question: Should the Australian Parliament indicate areas which in its judgment are areas of special need for assistance by the Asian Development Bank and the Asian Development Fund. Australia is not merely a shareholder of the Asian Development Bank and the Asian Development Fund. We can claim to be a director nation and, as such, I believe we have the right to express a view for careful consideration by the Bank and the Fund.
It will come as no surprise to honourable members that I now wish to say that in my judgment, and I believe in the judgment of the overwhelming majority of Australians, an area of need in the Asian region for assistance by the Asian Development Bank and the Asian Development Fund is the troubled and tragedy-ridden area of East Timor. I believe that quietly and calmly I can speak on this occasion collectively for the overwhelming majority of this Parliament and the overwhelming majority of the Australian population. Since 1975 we have seen no fewer than 100,000 of our fellow human beings slaughtered in a war on an island which is less than 15 minutes flying time from Darwin by military aircraft. But more tragically, over the last six months the world has come to learn that 40,000 of our fellow human beings on that island have died from starvation. We know, because it has been authenticated, that many people have died from starvation because of the use of napalm and defoliants on crops upon which the people depended for their survival.
Barely three months ago diplomatic representatives of eight Western nations were invited into East Timor and saw with their own eyes and heard with their own ears of the deaths of 40,000 East Timorese from starvation and from disease. The Press of Australia, which has expressed mixed views about the Timor question, came out very strongly on this occasion. I would like to quote from an article which appeared in the Australian of 12 September 1978. Under the editorial headline ‘Helping neighbours in dire need’, it stated:
Australia has a clear and urgent task to perform in Timor: to give immediate aid in the form of food, clothing, medical supplies and whatever else is needed by those many unfortunate Timorese who, according to reports, are hungry and destitute. This assistance must be given quickly, with no strings attached and no debate. They are our neighbours and they are in need. That is all we need to know at this stage.
The eminent journalist Douglas Wilkie under the headline ‘Tens of thousands of Timorese have been starved into submission by the Indonesians’ had this to say:
Australia’s ignoble spectator role in the Timor tragedy on its doorstep is ending as it began.
In the beginning, a shabby evasion of the responsibilities which go into the making of a creditable foreign policy.
Now, as the corpses rot and the living cry for help, a timid shying away by Canberra from the sort of gesture by which Australia could make some amends for its military weakness and gutless diplomacy.
Such a gesture would require us to prove that our humanitarian principles are not propaganda cant- but something to be asserted determinedly, promptly and without cringe to protocol’. Tens of thousands of Timorese have been starved into submission by the Indonesians.
I go a little further and quote one sentence from an article which appeared in the Melbourne Age of 13 September. I need to quote only one sentence. It states:
Perhaps as many as 50,000 others have died, many of them from disease or starvation.
I am not talking about the war. I am talking about those who have died as a result of starvation following the defoliation of their crops. I am talking about the 50,000 human beings dying less than 1 5 minutes flying time from Darwin.
I turn to a report which appeared in the Sydney Daily Telegraph of 18 September 1978. The report was written by Alan Gill, who was the first foreign news man to enter Remexio, which had previously been one of the main headquarters of the East Timor independence movement. This is what he had to say about the camp at Remexio and the refugees he saw there:
A man wearing a new T-shirt walked away from the Red Cross truck holding an Indonesian flag and a pair of brilliant red shorts.
There were thousands of the red and white flags with nearly everyone holding one and hundreds more lining the track.
Children lining the track are singing ‘Indonesia raya’- the national anthem- as we walked back to the helicopter. Their sad-faced demonstration of loyalty obviously had been well rehearsed.
I do not want to live in the past. I want to look to the present and to the future. I want to see Australia stand up and do something about this important question. Seventy-six members of this Parliament- and there could have been morefrom both sides of this House and from both sides of the Senate, signed a petition calling for the immediate admission into East Timor of the International Red Cross, or the United Nations or the Australian Red Cross, to do something about the death, the genocide, the starvation, the cruelty and the basic human depravity which is occurring on the doorstep of this nation. It does us no credit when we go around on Anzac Day and we hear of Timorese who said that they stuck by us in World War II when we have not stuck by them in 1 978.
I appeal to the Asian Development Bank, I appeal to the Asian Development Fund, to ensure that some of the aid Australia is providing is made available for relief of the great human misery and distress in East Timor. If I had my way, I would say $ 100m should be appropriated tomorrow. The total budget for East Timor from the Indonesian Government at the moment is $20m. One hundred million dollars is chickenfeed. It is a minute portion of our Australian Budget. I am not talking about refugee reunion. I admire and respect the sincerity of the Minister for Immigration and Ethnic Affairs (Mr Mackellar) for his concern on this matter, and that will be discussed at a later time. But on the basis of ordinary humanity I do now appeal to the Asian Development Bank and the Asian Development Fund to recognise that on Australia’s doorstep there is a situation in East Timor crying out for help. We as a nation will be judged harshly by history if we do not respond firmly and effectively to their cri de coeur
-As well as speaking about the Asian Development Bank, I wish first of all to make some comments on Australia’s relations with Asia. Australia has certain problems in its relations with Asia. On the one hand, we see it as desirable to develop closer links with Asia for political and economic reasons. On the other hand, our political and social ties are with Europe and America and not with Asia. So Australians and Australian policy makers seem to regard Asia as a somewhat exotic and strange place. There is an important historical decision to be made here. Is Australia going to make a determined attempt to live with Asia or not? If Australia does decide to make a determined attempt to strengthen links with Asia, there are major economic benefits to be achieved in the next 20 to 30 years. It is now part of the latest conventional wisdom about the growth rates on the western Pacific rim and the Asian nations there.
A number of countries in Asia are entering a rapid growth phase where trade will expand rapidly and incomes will rise quickly. If our economic and political relations with these countries are good, Australia is likely to benefit substantially from this rapid growth phase in Asia. Looking further into the future, Indonesia is likely to grow steadily and there is a large potential market there for Australian goods. But our relations with Asia are not particularly good at present. One option available for Australia is to decide, either unconsciously or consciously, that it wants to remain a European nation with strong links with Britain, Europe and America. This will be easier in the short run and will not be disastrous in the long run, but there are certain disadvantages. One disadvantage is that our long term economic growth rate is likely to be lower, while another is that we are likely to be seen increasingly as a sort of rich white South Africa in Asia.
There are a number of reasons why Australian relations with Asia are not particularly good at present. Firstly, there is the matter of protectionist attitudes. Ten years ago when the Association of South East Asian Nations was formed there was a general expectation that nothing much would come from the new regional grouping. In fact, after a slow start, it is developing into a quite significant grouping. It is clear that the five member nations of ASEAN feel that there are substantial benefits to be gained from joining together in ASEAN and they are prepared to make a real effort to overcome the very big problems involved in holding the regional grouping together. In the wake of the 1974 economic recession in rich nations, protectionism in those rich nations has grown and the ASEAN nations have very quickly become aware of and very sensitive to protectionist attitudes in rich nations. Against this background Australia’s protectionist attitudes have attracted increasing attention in ASEAN. It is fair to say that the ASEAN nations are much more aware of Australia’s high levels of protection than was the case five years ago. It is also reasonable to expect that in the next four or five years criticism of Australia’s protectionist attitude will grow.
Australia has been able to buy time by promising to tackle the problem as soon as the Australian economy recovers, but we will not be able to rely on that excuse for much longer. The simple fact is that even that excuse is regarded as a somewhat hypocritical one by Asian leaders. The economic recession in Australia appears a fairly small problem to them when compared with the enormous problems of domestic poverty that most Asian nations have. Industries in Australia most likely to be affected include textiles, shoes and garments, and assembly industries such as automobiles, electronics and white goods. In the longer run, some of our primary industries- for example, the Australian sugarcane industry- might also run into trouble because of the very high levels of subsidy they receive. If is clear then that there is a close relationship between the need for industrial restructuring within Australia and our long term relationships with Asia.
Secondly, there is the matter of cultural, social and economic differences. Australia is still very cut-off from Asia. What most Australians do not seem to appreciate is that economic growth rates have been quite rapid in Asia, admittedly from a low base, and that living standards in some parts of Asia are beginning to catch up quite rapidly with living standards in Australia. However, many Asians, especially in rural areas, are still very poor, although many members of the Asian middle class now have living standards equal to and even higher than those of many Australians. But Australians know very little of this. Very few Australians speak Asian languages. Very few
Australians have any Asian friends and there is huie news about Asia in the Australian media. An enormous readjustment in the media and in our educational institutions will be required if Australia is going to make a serious attempt to live with Asia. As an example, universities are perhaps the most progressive and outward looking part of Australia’s educational institutions, but as a general principle there is very little interest in Asia within Australian universities.
Thirdly, there seems to me to be a sanctimonious attitude towards Asia. A holier-than-thou attitude towards many governments in Asia seems prevalent in Australia. This attitude is found in the Press, the Public Service, the Parliaments, and in educational institutions and trade unions. It is an enormous barrier to improved relationships with Asia. Many of Asia’s leaders, if not most of them, are extremely well educated intelligent men who have been brought up in a very tough school. They are jealous of thenrights as leaders of independent nations; they are nationalistic; and they do not take kindly to advice from outside from white, rich, dogooders.
An important characteristic of nearly all Western Asian leaders is that they are not Western liberals. They are ruling nations with enormous social problems, many of which are a legacy of Western colonialism, and they do not take kindly to being preached at. In this regard, their self confidence is growing. ASEAN has brought together five South East Asian nations, and their relations with each other are much more important than their relations with Australia.
With a population of 14 million, Australia simply cannot afford to declare a sort of moral war with ASEAN, which has a population of 240 million. Unless we are very careful in our relations with Asia, we will soon come to be seen as white, rich, isolationist and sanctimonious. Examples of incidents that have done us harm in Asia in the past few years include Indonesia, Timor and Irian Jaya- and I am talking about the perceptions in Indonesia, not my own perceptions of the Timor issue. I do not wish to canvass the rights and wrongs of that, but I tend to agree with the honourable member for Denison (Mr Hodgman).
The second example is the matter of drugs. Although we have put considerable pressure on Asian nations to deal harshly with drug sellers, the Australian news media has given great publicity over the past few weeks to the apparent lack of civil liberties in Thailand, which attracted attention when three Australians were arrested in Bangkok several weeks ago. We must make up our minds about this sort of thing. If we call on Asian nations to take tough measures, then we cannot be surprised and should not complain when they do so.
Thirdly, there is the question of Asian refugees. None of the ASEAN nations was directly involved in the Vietnam war; Australia was. Yet when the problem of Vietnamese refugees becomes a serious one it is the ASEAN nations who have to provide accommodation and food for the refugees and it is Australia which shows great reluctance to take any more than a small number.
What can be done about the three matters I have mentioned? There seem to me to be a number of obvious measures. Perhaps we could reduce protection of Australian industries and increase trade with Asia. With respect to education, in the longer term there needs to be much more of a turning towards Asia in Australian schools, universities and in the media. Yet if anything, interest in Asia in Australian educational institutions seems to be dropping away. The number of students in Australian high schools who are learning Asian languages seems to be falling. There are few courses about Asia in Australian universities, and it is still most unusual for an Australian university student to study a second language unless he is actually studying languages for his degree. This is a sharp contrast to the situation in Europe, where most university students are quite fluent in at least a second language and often a third. As far as the Australian news media is concerned, the coverage of events in Asia is very poor. For example, the AM radio program, which is one of the best radio programs in Australia, devotes much less time to reports of Asian events than it does to events in England or the United States of America.
I now to the performance of the Asian Development Bank. I think the first thing that needs to be said is that it has been relatively successful. The performance of the Asian Development Bank can be judged only when it is compared with the performance of other aid agencies. One can make some comparisons with the International Bank for Reconstruction and Development- the World Bank- and the Australian Development Assistance Bureau. Compared with both of those agencies, the Asian Development Bank is a relative success. I am not decrying the efforts of those other bodies, of course. However, as has been stressed by other speakers in this debate, the problem of poverty is an enormous one, and in my view it is the problem on which the aid agencies should be concentrating. Very often they do not do so. The quarterly review of July 1978 of the Asian Development Bank stated:
It is estimated that there are 1.2 billion extremely poor people in the world today, with annual incomes as low as $200. Nearly three-quarters of these poorest poor are Asians.
Given my view that poverty is the problem, I do not believe that emphasis on big projects is enough. The main method by which most aid agencies have been attempting to increase growth rates has been to set up large scale projects. I refer, for example, to the development of electrical power systems. In 1977 the Asian Development Bank approved almost $900m in loans, about one-quarter of which went to the power sector. In itself that may appear to be a good thing, but it is simply not good enough. If tackling poverty is the objective, it is just as important to look at the matter of who benefits from projects as it is to ensure that they are financially viable.
To take an example, the Asian Development Bank recently provided money for an expansion of the electricity sector in Medan, North Sumatra. Approximately 70 per cent of the houses in Medan do not have an electricity supply at present and there is no prospect whatsoever of the establishment of that project benefiting the poor of Medan. This program could have been designed in an entirely different way. It could have been designed to ensure that poor people in Medan were supplied with at least a small amount of electricity, but this sort of thing is very rarely done. The most important question to ask about any project is: Who benefits? In my opinion the Asian Development Bank, the World Bank and the Australian Development Assistance Bureau should all be paying much more attention to ensuring that the poor benefit directly.
In response to criticisms of this sort, bodies such as the Asian Development Bank, the World Bank and the United Nations agencies recently have been devoting a good deal of publicity to their programs, which are said to help the poor. Much of this publicity is nonsense. Detailed study after detailed study by outside experts indicate that many of these programs do not help the poor at all, even though the international agencies claim that they do. There is a fair debate in respect of aid about growth versus equity. During the 1950s and the 1960s it was generally thought that developing countries should aim to maximise their rates of economic growth and that other problems, such as poverty and unemployment, would tend to be solved simply through the process of growth.
It has become clear, however, that economic growth alone is not enough to solve the problems of poverty and unemployment. It is clear that economic growth is important for developing countries, but this involves a question of emphasis. In this matter, official international organisations, such as the Asian Development Bank and the World Bank, tend to take a rather old fashioned view. These organisations still tend to emphasise growth rather than solving the problem of poverty. It is now quite clear from the experience in many developing countries that there can be quite long periods of high growth but that absolute levels of poverty and unemployment do not improve very much.
One change that international organisations, such as the Asian Development Bank and the World Bank can introduce is a policy which ensures that each project that they undertake is examined from the point of view of its impact on poverty and unemployment. There are various ways in which any given project can be designed. What is needed is for international agencies to stop talking about unemployment and poverty and to start ensuring that these problems affect the way in which their detailed projects are drawn up. In this matter, the Asian Development Bank may be a little better than the World Bank and the Australian Development Assistance Bureau, but certainly the performance of all these organisations leaves much to be desired.
There are other criticisms that one can level at the Asian Development Bank. Like most other international organisations, the Asian Development Bank is subject to criticism on several grounds. First, the salaries that it pays its officials are very high, as my colleague the honourable member for Bonython (Dr Blewett) said last night. Detailed figures for the Asian Development Bank are not available, but it is not at all unusual for international organisations to pay salaries of $30,000 to $40,000 tax free and to provide other benefits, such as generous international travel allowances and generous housing conditions. It is generally true that officials working for these agencies command salaries which are far higher than those that they would receive in their home countries. Competition amongst these international agencies has created a world market for international civil servants, so that each agency can argue that it needs to pay high salaries because of the high salaries paid by the other organisations.
Since most of these officials are being paid salaries that are far higher than they would get in other jobs, the question arises of whether they are over-paid. In addition, it seems difficult to see how these people can do their jobs satisfactorily when they are paid such high salaries and live in such personally luxurious circumstances. The extraordinary situation has been reached where the world’s most highly paid international civil servants claim to spend much of their time working in the interests of the world ‘s poor.
Secondly, another unsatisfactory aspect of the way in which these international agencies operate is that their degree of public accountability is very low. Senior public servants within, say, Australia are at least subject to some control through the parliamentary process. The international civil servants in organisations such as the Asian Development Bank are a law unto themselves. In practice, the performance of these agencies very rarely comes under scrutiny from any elected representatives from outside. To summarise the situation, organisations such as the World Bank, the Asian Development Bank and other international organisations are outside parliamentary control, are staffed with officials who have very high salaries- largely they set their own salaries- who claim to be working in the interests of the world’s poor, and who are able to spend a great deal of money publicising their own activities in the way that they see fit and in building up their own prestige. This is the public servant’s dream.
In view of these criticisms of international organisations in general, and the Asian Development Bank in particular, what can be done? A number of proposals might be made. Firstly, the salaries paid within these international organisations need to be reviewed. On the face of it, there seem to be very good arguments for reducing the salaries that are paid across the board in most of these international agencies. The argument that this would reduce the quality of staff that could be recruited needs to be viewed with much scepticism. Given the sort of work in which the international agencies are involved, if the main reason that people work for them is the high salaries available, it is unlikely that suitable staff are being recruited. As was seen earlier, although the salaries being paid at present are very high, there are good reasons for doubting whether the agencies are doing their jobs very well.
Secondly, steps need to be taken to increase the public accountability of these international agencies. It is not desirable that the agencies should simply be encouraged to publicise their activities more because, naturally, they will publicise activities that they regard as desirable and present them in a way that puts the agencies in a good light. Perhaps more reviews are needed by outside people of the operations of these agencies. For example, teams of senior public servants, academics and parliamentarians might regularly review the operations of these organisations from the outside. These international reviews could be published. It seems to me that there needs to be more monitoring of aid projects by these international agencies.
Thirdly, steps need to be taken to ensure that people who are involved in anti-poverty programs are closer to the people with whom they are supposed to be working. It is quite unsatisfactory for a team of five or six people to fly from Washington or Manila to some part of Asia for a week or so in order to evaluate the progress of a rural development program. In the same way that officials of the Department of Aboriginal Affairs in Australia need to have close contact with the people in the field if they are to be effective, so do people from the Asian Development Bank and the World Bank. At present this is not done. We need to have recruited to these organisations people who can speak the languages spoken in the countries in which programs are being executed and who are prepared to live in the countries for quite long periods of time.
Fourthly, there are even arguments for considering whether the size of these agencies should be substantially reduced. The organisations are bureaucratic, inefficient and rather unsuccessful in achieving their goals, and it should not be taken for granted that the existence of these organisations is a good thing. Unless these organisations can do far better in the future, the poor of the world might be better served if the organisations were simply closed down and the resources that they use at present transferred to the poor countries in other ways. For example, if the staff of the Asian Development Bank did not work for the Bank, the governments of countries in South East Asia could hire the staff directly on medium term contracts. In this way, the staff would be more directly accountable to the governments of the countries in which they were working. Further, the funds that these agencies provide could be borrowed directly by developing countries on world capital markets. Even though the interest rates might be somewhat higher, this would not necessarily be a bad thing because it would be more likely that the borrowing countries would look more closely at the way the funds were being used.
The remarks I have made tonight by way of criticism of these agencies have been more critical than those made by other speakers in the debate, but I believe that if we are not to adopt paternalistic and patronising attitudes to our Asian neighbours and if we are to look seriously at the real problems, the problems of poverty, we have to advance views which are critical of some of these holy cows in the international aid scene.
-The Asian Development Fund Bill we are discussing tonight provides the mechanism for Australia’s contribution to the 1979-82 program for the Asian Development Bank. The second reading speech of the Minister for Foreign Affairs (Mr Peacock) has attached to it a table which shows Australia’s contribution as being the fourth largest of the nations that are contributing to the Asian Development Fund. Of course, the main contributor is Japan. I feel that that is a recognition by Japan of the part it can play in the Pacific and the Asian nations. During a trip to Japan earlier this year, it was indicated to us that Japan is quickly realising it has a major part to play in the development of the Asian area. No doubt its contribution to the Fund is recognition of that fact. Possibly Japan has felt for a long time that it has not been involved in the normal workings of Asian nations. Its contribution to this Fund, its friendship treaty with China and also the assistance it is rendering in Vietnam indicate that it wants to go further.
The initial contribution by Australia to this program was $18m. The first replenishment was $30.7m. In this Bill, Australia is now committing itself to a further $96.9m contribution or 5. 14 per cent of the total contribution. This in itself may not appear to be great, but as I mentioned earlier, the amount represents the fourth largest contribution of those nations which contribute to the Asian Development Fund. The contribution is recognition by the Government of Australia’s responsibility not only to look inward but also to look at the areas of influence where we can help. The projects of the Asian Development Bank undertaken from past contributions are mentioned in the Bank’s annual report for 1977. The types of projects undertaken are those of a selfhelp nature and to improve argiculture and community living. In fact, the variety of programs shows an active involvement in the welfare of the people in the developing nations.
I want to mention some of the projects that are listed. They include road projects, forestry, agriculture and fishing, the provisioning of sea ports, fertiliser plants, jute factories, flood mitigation and irrigation, drinking water for the communities, transport facilities and industrial research. I understand that the Bank, in making these contributions, monitors the projects very carefully to make sure that the funds are properly applied. There is a difficulty involved in any contribution that Australia makes overseas. When we contribute to South East Asian nations through funds such as the Asian Development Fund the amount contributed loses its identity. It is possible that Australia is not receiving any particular recognition for many of the projects being undertaken in these countries with the assistance of the Asian Development Bank. I think that Australia gets a lot more recognition from those programs which we administer ourselves and for which the funds are delivered by Australia. For example, funds are given directly to Papua New Guinea through the Colombo Plan and recognition is given of our contributions. In this manner, there is less chance of the donation being lost within the mire of a mass contribution. Amounts that have been allocated up to 31 December 1977 which are shown on page 55 indicate that special fund allocation up to that time was $1,166 billion. This money is provided at a rather concessional rate of interest, an on-charge of three-quarters of one per cent to 1 per cent, to cover the maintenance of the account. Also the loans are made over a 40-year period. Therefore, once the amounts are given, although they are recycled, Australia can never expect to see the money back in its revenue. However, that is not the intention.
The honourable member for Werriwa (Mr Kerin) made a point which I want to pick up. He said that the protectionist policies of Australia are detrimental in respect of trade and recognition throughout South East Asian countries. Of course, Australia is not the only protectionist nation. Japan, the greatest contributor to the Asian Development Bank, would be the greatest protectionist nation of its agricultural and secondary industries. I believe that I heard the honourable member for Werriwa correctly when he referred to the subsidies paid to the Australian sugar industry. I would like to correct his statement quite substantially. The subsidy provided at the moment is to the Australian consumer and not to the Australian sugar producer. Whatever else might be said about the embargo, it has acted to discipline and advantage the Australian producer. It has also provided counteracting benefits to the Australian consumer. I hope that I heard the honourable gentleman incorrectly. Perhaps he was referring to some subsidy to the sugar industry in some other nation. If he is referring to the Australian sugar industry, the protection that he claimed to exist is certainly not there.
There is a great deal of argument as to whether the $525m allocated this year to the Department of Foreign Affairs is giving us value for this money. Without a doubt, our involvement as an island in the South Pacific region is certainly directed to the Asian and Pacific nations. Our involvement is attributed to our geography, the distance of transportation, trade and also, I should mention, defence which I think is particularly important and mutual assistance. In fact, while we were in Japan earlier this year they regarded Japan and Australia as being natural partners. They spoke in terms quite consistently of Australia being natural partners not only with Japan, but also with the whole South East Asian region and South Pacific region. The contributions of foreign aid that we make are certainly directed to this geographic area. The major contribution by the Asian Development Bank is to Bangladesh, Pakistan and countries such as that whereas there were small recipients of amounts of, say, $2m to $3m.
Not only do these nations get the benefit of those smaller amounts but also their people are also engaged in the commercial market to make sure that their economic needs can be fulfilled from that end. For instance, I mentioned an amount of $3m to Malaysia. I know that at the moment Malaysia is not only borrowing money but also is improving its technology in so many different ways with overseas assistance. The Malaysian beef industry is under the control of Australians who developed a project there five years ago and are now bringing Malaysia into a situation, certainly not of self sufficiency in beef, but at least of being able able to produce better strains of beef. Hopefully this pattern of progress will continue into the future. That is the type of assistance that I feel our foreign aid program should be giving.
Without a doubt, the main feature that we are talking about in developing nations or in the under-developed nations is the aspect of sufficiency of food. All other aspects such as the standard of living, quality of life, all come back to this basic ingredient of sufficiency of food. I believe that our foreign aid policy allocates funds to the extent of $36m for food aid, but the major thrust of its work is in the contribution of funds which are diverted to these other major users in order to make sure that the nations that are receiving the funds do become self sufficient in the long run.
The Deputy Leader of the Opposition (Mr Lionel Bowen) in introducing this debate made quite a feature of the aspect of land usage or areas that are available to the South East Asian nations and compared them with our own situation. Any funds that are given must be seen to be giving a benefit to the people whom we ultimately want to assist- the peasants and the poorer people of those nations. We would not like to see the money wasted on the way. Small packages of land are a feature of the South East Asian nations. Certainly Japan, which is one of the richest countries in the area and one of the richest countries in the world today, survives on very small acreages. Hence the massive amount of subsidy and protection that is given by its government for land usage, in spite of the smallness of the areas, enables farmers to be probably some of the more well off citizens of Japan. I believe this is a feature of all the nations of that region.
Certainly in China there is collective use of land. When one considers the number of people in a commune who are able to make a living from the area, certainly the land usage per person would be very small. This is a situation that we have to accept. Let us look at China also from the point of view of our foreign aid. While it is not a recipient of funds from the Asian Development Bank, over the last 12 months it has possibly expanded its philosophies in so many different ways, especially to the extent that it would actively look outside its own nation for assistance and technology, it would welcome trade and it certainly is expanding its programs to obtain credit for the borrowing of money. Perhaps in the future of the Asian Development Bank China might be a recipient of funds also.
We are hoping to bring the South East Asian countries out of a fairly difficult past in which fairly old fashioned methods were used. Again I can only revert to the case of China but I think the situation would be the same in many of the other nations throughout South East Asia as far as their methods are concerned. First of all, discipline has been applied for the proper use of land, varieties of seeds and artificial fertilisers. It is important that the Asian Development Bank, in making loans, monitors the situation very closely to ensure that the funds that are given are used in such a way that modern technology is available for use by the countries. Our assistance to Indonesia also is most vital as far as this Government is concerned not only in the giving of foreign aid to lift its development but also for defence purposes. An amount of $1 13m has been allocated to Indonesia up to this time. Also as a government we give quite a deal extra through the Colombo Plan.
It is in projects such as this that I believe Australian technology should be made available if that is at all possible in order to identify Australians with the aid that is being given. In no other way can we identify these funds. If we put them into a pool and distribute them from it that cannot be done. In Indonesia road projects form some of the programs that we are offering. I believe it is important in these respects, if it is at all possible, that Australian technology should be used in that way. Also, the Philippines is a recipient of not only aid from the Bank but also aid in other respects. That brings me to the point that has been made in this debate of how we see that the funds that we allocate through our programs eventually go to the people who deserve and require them. I use the Philippines as one example. I believe that the amount of recognition that Australia gets through its efforts in the road programs there is minimal. Perhaps some other types of projects that are related directly to the people- perhaps a small health program- could be identified so that the people could see the benefits and we could see how the funds were being spent to make sure that they did not go through the bureaucracy and government agencies where the funds are adulterated to a great extent. Only by getting funds directly to the people so that they can see the benefits, will Australia be recognised as the nation that is giving the funds.
– We could have our own tuberculosis clinics there to help them overcome that problem.
– Health programs are most important. That is one type of project at which we should look. It has already been mentioned that the Asian Development Bank should be made accountable for the funds that we make available. As I have said, we require an identification of the funds that are given. After all, it is not the amount of $500m that is allocated to the Department of Foreign Affairs that is the major concern; it is how that amount is recognised by other countries and how it is spent to make sure that the countries derive the benefits that we would want them to derive. What are the benefits? Certainly they are in assisting developing nations but I think we have to look at the question from the point of view of our trade opportunities and certainly our present and future defence. These benefits will come about only if we are identified with the projects.
It is important also that we have an assessment of the various projects that we undertake to make sure that the aid which we are giving and which is expressed in monetary terms in the Budget is used for the purpose for which we want it to be used. As I mentioned before, other projects may identify us more directly with the people. I believe that a continuing assessment of these projects must be made and, if necessary, changes must be made to put us in a fluid position in order to give the funds as we should. It has been said that in the world of today in which travel between Australia and our near neighbours takes such a short time we are not an island and we cannot afford to isolate ourselves from the pressures of the outside world. Our trade depends on markets being available and the closer they are to us the better. Certainly the markets that have yet to be expanded and explored are those within the Asian region. The recent visit by the Deputy Prime Minister (Mr Anthony) to China would indicate that within that country there is a potential for a great expansion of our trade.
I believe that Japan and China look to Australia not only as a friend but also as a potential trading partner. They regard Australia as a country with which they can exchange technology mutually so that we can assist one another. Possibly this is what foreign aid is all about. The Bank not only can help in the distribution of these funds to the needy nations but also should be able to assist as a permanent monitor of the development that is necessary and the progress that is being made by underdeveloped nations. I mention here not only industrial progress but also social progress because these funds have to be used to make sure that we lift the nation in total, not just one part at a time to the advantage of the few and to the disadvantage of the many. That is where I believe the Bank can play a very important role. In fact, I believe its greatest responsibility could be not so much in the distribution and management of these funds but, for all intents and purposes, as an agency that monitors the progress of the nations that we are trying to help.
With these comments I commend the Bill to honourable members as part of our contribution to the more needy nations of the world. This is often a subject of vital contention. I say that because I come from Queensland where the argument is often used that these funds should be used internally and not externally. Those people conveniently forget or do not want to recognise the fact that Australia’s survival depends on the rest of the world. Our survival cannot result from inward looking policies. If we are to trade and have strong friendly relationships with other nations, I would suggest that of the nations that I visited earlier this year Japan and China could be of mutual assistance to Australia.
Question resolved in the affirmative.
Bill read a second time.
Message from Governor-General recommending appropriation announced.
Leave granted for third reading to be moved forthwith.
Bill (on motion by Mr MacKellar) read a third time.
Debate resumed from 9 November, on motion by Mr Sinclair:
That the Bill be now read a second time.
-At the outset I feel I should say that the Bill before the House relates to matters with which I have been most closely associated since August of last year when I commenced work in the crop marketing analysis section of the Bureau of Agricultural Economics. This is the second time that I have come into this House after having worked in and researched an area closely associated with matters of government policy. In a previous period my work was related to the wool industry. At that time I had to bite my tongue because much of the information in my head had been gained by virtue of my having been a public servant and thereby often gaining knowledge from private outside bodies which were co-operating with government. The same situation applies again tonight, but the ethical restrictions that I believe are on me not to say certain things are not now so great because the Industries Assistance Commission has taken public evidence and IAC has reported on wheat stabilisation. But tonight is not the time to go into the recommendations and the possibilities of the next stabilisation scheme. It would be better to leave them until the scheme is introduced. Much of that report directly covered matters that we are debating here. I do not think either that we need to debate tonight the recent High Court of Australia decision with respect to section 92 of the Constitution. But I would have thought that the introduction of this Bill gives some credence to the view that perhaps the present scheme may be extended for one more year.
The Industries Assistance Commission has allowed a lot of debate to take place in this country, particularly on the rural industries and the measures of assistance going to them. I believe that such assistance should be more fettered and not less fettered. We are not going to get better policies if secrecy prevails and if bodies and individuals are prevented from saying things that are not palatable to the Government. I believe that the Industries Assistance Commission regards itself as being under attack to some degree. I was particularly displeased to see that Hylda Rolfe was not reappointed to the Industries Assistance Commission. I would hope that that was not because she expressed some views on superphosphate that did not accord with those of this Government.
What I am coming round to saying is that although I have some specific knowledge on the areas under debate tonight, I will try not to relate any matter on which I gained knowledge directly by having been a public servant. However, fortunately there is a lot of public information now about wheat. This does not stop me from saying that I believe that many statutory authorities such as the Australian Wheat Board are still too secretive with respect to information given to those they are supposed to serve and to governments. Neither does it not stop me from saying that bodies such as the Australian Wheatgrowers Federation should engage in more open debate on their views rather than relying on political leverage to have their policies implemented by governments.
The Bill mainly relates, firstly, to the provisions to establish a varietal control scheme for wheat by providing for the imposition of dockages on the varieties of wheat possessing undesirable characteristics delivered to the Austraiian Wheat Board. Secondly, it provides for a change in the legal basis on which the Board makes payments to State bulk handling authorities and for a change in the basis of remuneration. The change in the legal basis was inserted as a result of a legal problem identified by the AuditorGeneral. Varietal recommendations and the question of varietal control have been around for quite a long time. Mr Deputy Speaker, I seek leave to incorporate in Hansard a table from a report on the wheat industry by Sir Alan Calaghan published quite some time ago.
The table read as follows-
– I should stress to honourable members that this table sets out an idea as to the way in which a classification of a varietal recommendation system would work, particularly with respect to protein and other characteristics or limiting factors. Some of the varieties recommended at that time are no longer recommended. I suppose the really big omissions are varieties such as Cook, Oxley and Kite. But as I said, it sets out the principles. In the past, and for the present year each State Department of Agriculture, not the Australian Wheat Board, has made and will make varietal recommendations by statistical division or by local government area or, in some cases, by silo. As an introduction to varietal control in the present year, for example, the New South Wales Government has recommended varieties by silo groupings which have been based on the performance of varieties in each location and on the history of the average percentage of protein in the wheat stored in the silo over the past 10 years. Such a time for calculation is necessary because a protein level can be fixed by climatic as well as soil factors. There are many variations through the years. This means that the main criterion of quality is wheat protein.
However, quality per se is not an objective factor unless it can be related to the market on which the wheat will be sold. Not only can one not produce all high protein wheat, but also one cannot sell it all necessarily. The quality of most market values to be associated with protein is the degree of hardness or softness of the wheat. In general, and I stress ‘in general’, it is best that there be a gradation of wheats from high protein hard through to low protein soft. But for some uses, inversions of this gradation are desirable. For example, for starch high protein, soft wheat is desired.
Wheat has many qualities and these are being tested by variety and by grade by various State authorities. New varieties of wheat are being tested constantly and their qualities are being tested. For the Australian Wheat Board to possess a full catalogue of wheats, falling into the four major classifications in which wheat is sold on the international market, it is essential to be able to specify to some degree those varieties that have the most potential to perform well in certain areas and to pay a premium for them. For example, in Queensland and northern New South Wales, where prime hard wheat is able to be grown, it would be silly to plant varieties that might yield a high protein, but which had a low yield or which had other characteristics such as poor baking quality. But even in this area there have been times when high yielding, but supposedly lower quality wheats would have given growers a greater return per hectare. It is this sort of equation that has caused most dissention.
Before the Australian Wheat Board can specify varieties to grow on the basis of protein, hardness and baking qualities, as well as all the usual parameters for acceptance of wheat, such as cleanness and shattering quality, it logically should be able to show two things. Firstly, it should be able to show that there is a need for as much high protein hard wheat on the international market as it is possible to grow. That is, it should be able to show what the international market for wheat is. Secondly, it should be able to show that there is a real premium to be gained on the international market by providing this wheat.
On the first point, it is problematical just what the international market for wheat is. Stocks affect it, climate here and abroad affect it and various institutional characteristics of exporting and importing countries affect it. We just do not know beforehand what the markets for particular qualities of wheat in any one year will be. On the second point, except in the boom period of wheat prices during the years of the Whitlam Labor Government’s, there is little evidence of the premiums paid for wheat locally being related to the actual premiums received. On many occasions, better prices were received for wheats of supposedly lower quality. But I emphasise that quality is in the eyes of the buyer or the ulitmate user. A buyer may not even be buying on objective grounds. For example, the buyer may be buying the wheat to blend it or for a freight advantage, that is, a price advantage, or he may be buying it on the grounds of price pure and simple or colour or tradition.
I believe that the Australian Wheat Board needs to give more information on the size of the various international markets in which it is competing. There is not just one international market. I sympathise with the Board for the problems it faces. It has to sell all the wheat that is handed to it. While it may be possible for everyone to grow more stockfeed wheat and maximise returns per hectare, the Board may not be able to sell it all. It is the same sort of argument against over-border trade. Those indulging in a practice of local optimum advantage may not be able to get away with it in the universal case.
I think there needs to be a lot more openness and research into the international wheat markets, the premiums and the qualities before the Australian Wheat Board can say with certainty what and why it wants certain varieties grown, and how much it needs to pay premiums on a more directly market related basis. I would make another point The emphasis on high protein hard varieties, where possible, I agree with mainly because of the Board’s marketing problem and also because of the vagaries of the weather which can always stick it with a lot of off-grade wheat. For example, this year there may be a problem with a massive amount of sprouted wheat. However, the converse can apply. I think that very often we may be selling high protein hard wheat as Australian Standard White because we have too much of it.
Some of these wheat quality committees in the industry tend to be intellectually dominated by the millers and cereal chemists rather than the marketers. I believe this is another criticism. Australian millers and bread manufacturers can pick the eyes out of the market because they want only about 20 per cent of what we produce. Our market in Europe where this sort of quality wheat was needed for blending has gone. Our future markets may well be for wheat for noodles entirely, or for stock feed, for Middle Eastern breads, for chapattis et cetera, where milling machinery is non-existent or primitive. While it may be true that sophistication in this regard is increasing in lesser developed countries, in times of shortage it is the rural poor that need grain, not the rising urban middle class.
Another problem is that there has been evidence of interstate rivalries as far as the production of wheat varieties is concerned. I do not wish for breeders, testers and cereal chemists to be taken from out of the State domains, but I believe there is a need for a bit more co-operation at times. One could give examples of where varieties have been down-played by a State on less than objective grounds.
Apart from these market aspects of varietal control I have been speaking on, there are some very practical advantages in the handling of wheat. At present all wheat is segregated on receival on the basis of pre-receival or point of receival subjective and objective testing. Although agronomic factors will determine to a large degree the protein of wheat, it is the variety which determines other quality characteristics. Some 60 per cent to 80 per cent of Australian wheat is Australian Standard White and thus fits into a fairly well defined slot on the international market. But without extensive and time consuming quality tests the wheat received at a single station or silo may be of 30 varieties, all of which form into an aggregated average grade but which will contain some part of the bulk at extremes of various quality parameters- that is, the silo may be full of wheat that is not homogenous.
Variety is very difficult to define on entry. There has been a problem with low protein hard wheats- for example, within SW. Although Australia has some 23 to 27 segregations of wheat there will be on average only up to four or five segregations at a certain silo collecting point. Each segregation will cost money as it costs storage space. If the number of varieties can be limited and if these varieties are optimum agronomically for that area, they in turn become more optimal as a marketing proposition. It is better to have silos filled with more homogenous samples and less segregations than vice versa. I accept that in any area there may be an economic case to grow a high yielding stock feed wheat but if it is to be sold it must bear all the real costs of its segregated storage and handling and, as I have said before, not everyone can do this necessarily.
I do not want to get down to cases but, as a result of the work I did in the Bureau of Agricultural Economics, I agree particularly with the Queensland and New South Wales recommendations on wheat varieties for this year and believe that only a limited economic case can be made to say that growers have been led up the garden path with respect to the recommendations in previous years. There simply needs to be a lot more economic research on the excellent agronomic research that is being done by the States.
I now move on to the other main proposal in the Bill with respect to wheat handling. The Australian Wheat Board receives through its licenced receivers all wheat tendered to it by growers subject to minimum specified standards. These licensed receivers are the bulk handling authorities in each State. There are four Government authorities and two wheat growers cooperatives. It is also recieved by certain Hour millers and stock feed suppliers who have been licensed to receive wheat. The bulk handling authority is the Grain Elevators Board in New
South Wales, Victoria and Tasmania; the Cooperative Bulk Handling Ltd in South Australia and Western Australia; and the State Wheat Board in Queensland. To quote the present Act, upon delivery the wheat ‘becomes the absolute property of the Board freed from all mortgages, charges, liens, pledges, interests and trusts’.
Capital expenditure by the bulk handling authorities in New South Wales, Victoria, Tasmania and Queensland is financed either through State Government loans or commercial loans, which in total form part of the State ‘s loan allocation from the Australian Loan Council. In South Australia and Western Australia, capital expenditure is financed by tolls on deliveries from growers, which provide a rotating loan fund, and loans from commercial institutions.
These receivers have costs on the following items reimbursed by the Australian Wheat Board: Depreciation on storages, buildings, and equipment; interest and associated expenses for the purchase of assets; interest on tolls in South Australia; interest on tolls and levies in Western Australia and interest on levies in Queensland. Also reimbursed are operating expenses and hiring charges paid to the bulk handling authorities on the basis of 1 per cent of the original cost of the asset. The costs incurred by the bulk handling authorities in the handling of wheat are set out in a table which I seek leave to have incorporated in Hansard.
The table reads as follows-
– Storage and handling costs are pooled and shared on a pro rata basis among all wheat growers throughout Australia. The Australian Wheat Board has proposed, and now the Government proposes, that this arrangement be altered so that wheat growers in any one State bear directly the costs of their bulk handling authority. On the basis that the current reimbursement system continued, then, between 1971-72 and 1976-77, handling and storage costs to wheat growers in Western Australia and New South Wales would have increased, while for growers in South Australia, Victoria and Queensland they would have generally declined. Again I seek leave to incorporate a table in Hansard which shows this.
– I understand that likely charges will now reflect wider disparities in charges than that shown in the table. For example, the table shows that the charge in the most expensive State would be approximately $9.64c a tonne in 1976-77. The cheapest was Victoria at $4.85. I have heard that the New South Wales bulk handling authority will be charging something like $ 12 per tonne. The total storage capacity for wheat- excluding stock feed and on-farm storage- in 1976-77 was 20.3 million tonnes. The bulk handling authorities control nearly all this storage, with 15.9 million tonnes of country capacity and 4.1 million tonnes at the seaboard. The storage capacity of flour mills was only 0.3 million tonnes. I have already indicated that varietal control will act to increase storage but the total capacity at present is inadequate in terms of both quantity and quality. Also, by better segregation we will get better transport, but more of that in a moment.
The Opposition supports the idea of State accounting as the basis of costing of handling and storage charges, mainly for reasons of economic efficiency and equity. The cost to individual producers in an industry should reflect the real cost of the services provided. But one accepts that there are institutional and administrative advantages in the pooling of some costs and returns, and of course costs will still be pooled within the State under the new system. The question of handling, storage, and transport and their related costs to growers is going to be the key area for concern to growers and governments and authorities in the future. The percentage of growers costs being taken by those items are increasing most rapidly. There is a sort of catch 22 situation here. Australia is one of the few countries where nearly all wheat is delivered immediately on harvest.
Mr DEPUTY SPEAKER (Mr MillarOrder! It being 10.30 p.m., I propose the question:
That the House do now adjourn.
-I draw the attention of the House to an article about the mining industry in the United States of America that appeared in the Australian Financial Review of last Wednesday under the heading Mining industry controls; the tide ebbs’. I wish that that situation would come to Australia. I hope that the Australian Mining Industry Council will take note of this ebbing tide in the United States. I hope that the companies will see that the opportunity is here for them to make their pace with government and the people of this country through the apparatus that they have for public communication and to see that the ebb-tide of controls starts in this country, too. The situation has become so serious in the United States that Charles Barber, the Chairman of Asarco, a major minerals group is reported in the Financial Review as saying recently:
Unless something changes 10 years or 20 years from now our mineral industry will have disappeared.
The article states that Mr Barber said that when commenting on a Department of Commerce study which showed that by 1987 the cost to the copper industry of meeting environmental regulations would rise to a total of $4.5 billion. A multitude of government and other agencies have brought about this situation in the United States and the whole minerals industry, including the copper industry, is boxed in by a series of Acts about clean air, federal water pollution, marine protection, federal insecticide, safe drinking water, toxic substances control, resource conservation, surface mining control and reclamation and clean water. All these Acts were passed between 1970 and 1977. These sorts of things have happened in Australia, too.
It is often forgotten, particularly by the extreme conservationists in this country, just how much this country owes to the mining industry. The article in the Financial Review made it quite clear that, for example, 40 minerals are used in the manufacture of every telephone. I wonder whether the honourable members opposite who seem to go for the extremes of conservation and the people outside who use telephones so much in the cause of sabotaging Australian industry realise that 40 minerals are used in the construction of every telephone. In order to bring the country down they are quite prepared to use the tilings which the mining industry provides. I think that this is scandalous.
I move from the situation in the United States to the situation in Australia. I do not often commend any of the Ministers, but I would like the Minister for Aboriginal Affairs (Mr Viner), who is at the table, to convey to his friend and colleague the Minister for Environment, Housing and Community Development (Mr Groom) my congratulations for the cuts that have been made to the grants for the Australian Conservation Foundation in particular. If I can keep on speaking to the House about this matter the situation will arise in which the Australian Conservation Foundation will not get a cracker. That is the situation that I want to bring about. That is what I have been striving for ever since I have been here. The Foundation’s funds have been cut. So in some respects, I have been successful. I hope that everyone else who feels the same as I do will say much the same thing.
The Minister for Environment, Housing and Community Development made two important points in a recent news release. I will not ask for leave to incorporate it in Hansard but I will quote a couple of sentences from it which I think are significant. The news release stated:
The Government had, however, decided that from next year (1979-80) the matching grant would be made on a $1 for $1 basis.
In other words, the conservationists will have to do something for themselves and raise a few bob themselves to pay for the sabotage. The Minister went on to say:
The protection of the National Estate is not the responsibility of government alone or of one group of people. It is something in which the whole community should be involved.
I would like to know how much of the community has been involved in the extreme conservation movements. It is quite obvious that it would not be a large percentage. If we took a survey of the members of this House we would find that very few of them are so involved. I know that there are one or two on our side who still pay their money, very foolishly I think, to the Victorian branch of the Australian Conservation Foundation. This is a complete waste of money. I hope that they take what the Minister has said seriously. I hope that they do not give it another cracker. I hope that, from now on, the Government will make it harder for these groups. I have said in this House before that all we seem to do is feed our enemies. They take the money that we give them and use it to propagandise against us. If these cuts are not made, we can expect to see some of the money from the Australian Conservation Foundation used to destroy the Yeppoon project in Queensland. This is absolutely disgraceful. I think that this action is a most refreshing departure from what we have seen up to date. I hope that the Minister will continue with the good work that he has started and reduce the funding to nil.
– I rise in this debate to raise a matter that was so hypocritically put to the Parliament this morning by the Prime Minister (Mr Malcolm Fraser). He talked about civil liberties.
Mr DEPUTY SPEAKER (Mr MillarOrder! The level of conversation in the chamber is too high. I ask honourable members to remain silent. The honourable member for La Trobe will remain silent.
– He referred to the proposition passed at the weekend at the Victorian Australian Labor conference. He put this in a perspective that was completely erroneous. In fact, the Leader of the Opposition (Mr Hayden) straightened it out when he said that the resolution condemned the onslaught against human rights by any authoritarian or totalitarian government, whether based on the ideology of the Left or the Right. One of the individuals whom the Prime Minister named, Mr Hartley, in fact opposed the proposition but it was carried in the terms quoted.
The real issue here is the hypocrisy that is evident in the attitude of the Prime Minister. He talks about civil liberties. What were the civil liberties involved in the expulsion, by kangaroo court mentods, of Jennings and Francis in Victoria.
Honourable members do not need to rely on the view of the Labor Party only. I refer to the Canberra Times of 2 August. It says, amongst a number of things:
Mr Doug Jennings, member for Westernport of the Legislative Assembly in Victoria, made the mistake of putting loyalty to the people of Victoria before loyalty to an erring Liberal Party. What the world has been deploring in the Soviet Union is happening in Australia: The Soviet Communist Party is putting in gaol people who have the honesty and courage to publicly criticise the party line. It seems that the Liberal Party of Victoria is now joining that distinguished company by disowning its own-
So called: traditional beliefs . . .
– Tell us about last Sunday.
Mr DEPUTY SPEAKER (Mr Millar)Order!
– Let us have a look to the lead-up to this particular-
– Tell us about last Sunday.
– You are a gabber and an idiot. About all we get out of you is idiotic interjecting.
– Tell us about last Sunday.
-Order! I warn the honourable member for Hotham. The honourable member for Melbourne will withdraw that remark.
-I withdraw it. The point here is that during the course of the lead-up to this kangaroo court action the Victorian State member concerned was given five minutes in which to defend himself. The honourable member for McMillan (Mr Simon) declared in a Press report that he was condemned before he went off. Before the trial took place, the honourable member for McMillan had indicated that he was going to be expelled. The Age of 26 July prior to the event reports:
A Liberal MHR, Mr Simon, predicted yesterday that State rebel MP Mr Jennings, member for Westernport, would be expelled from the Liberal Party.
Some time after that this fellow was in effect expelled. Some of the material that was produced prior to the event states:
The expulsion motion has been launched by Liberal Federal MP Mr Simon and nine other delegates to the council.
The Federal Minister for Industry and Commerce, Mr Lynch, is expected to lead State and Federal MPs in the move to oust Mr Jennings.
That is great! That is the pot calling the kettle black! This material continues:
Mr Lynch is expected to be strongly supported by the Premier Mr Hamer and his Deputy Mr Thompson.
Supporters of Mr Lynch are confident that they can obtain the necessary three-fifths of the votes cast to expel Mr Jennings.
A number of prominent members of the Liberal Party resigned as a result and at least they showed some integrity, unlike the honourable member for Hotham (Mr Roger Johnston) and the other people who support the Prime Minister. They have not raised even one finger in protest about the way in which he is not prepared to do anything about the treatment of Jennings and Francis, despite his views on civil liberties. On the contrary the Prime Minister comes into this place as if butter would not melt in his mouth, criticising and misrepresenting what occurred at the Victorian Conference of the Labor Party when in actual fact the Liberal Party in Victoria was trying to bury what had happened. It is hypocrisy of the worst type, and the Prime Minister stands condemned. All he is concerned about is to red bait, attack unionists and attack the people in his own party. If they are not prepared to toe the line he will have them expelled.
Mr DEPUTY SPEAKER (Mr Millar)Order! The honourable member’s time has expired. Before I call another speaker I draw the attention of honourable members to the fact that under the Standing Orders interjections are out of order. Under certain circumstances the Chair can extend its indulgence if interjections of a mild nature might be helpful to the course of the debate but they cannot be tolerated if they bring the House into total disarray as we have recently witnessed. I caution all honourable members that the Chair cannot be tolerant of the abuse of the latitude extended to them.
-Last night I was interrupted when commenting about what has happened to the Australian Labor Party since the honourable member for Oxley (Mr Hayden) became the Leader. I wish now- in fact it is my painful task at this point of time to comment about the honourable member for Oxley -
– I raise a point of order. Although the honourable member for Denison has been speaking for a short time the clock has not yet been set.
– I thank the honourable member for Chifley for drawing attention to that fact.
– It is now my painful task to comment on the performance of the honourable member for Oxley since becoming the Leader of the Opposition, but before I say any more let me say that I do not intend to commit nor will I commit any breach of Standing Order 76. I do not wish to indulge myself in any persecution of the Leader of the Opposition but simply to give an objective assessment. It is now common knowledge within this Parliament that the Leader of the Opposition personally has been a bitter disappointment to his strongest supporters of only 12 months ago. In fact, invective, spleen, spite and personal vendetta have become the hallmark of his term as leader. Persecution of individuals rather than proclaiming and pronouncing principles is now his trade mark.
– I raise a point of order.
-Order! Before the honourable member proceeds, the level of conversation is far too high. A number of members seem to be in total disregard of the requirement that honourable members be permitted to address the House in silence, and I caution them.
– Today the Leader of the Opposition was prevented from asking questions on the basis that if there were even an imputation which involved an honourable member -
– What is the point of order?
-Order! I warn the honourable member for Hotham. It is not beyond the bounds of possibility that he did not hear the warning but to ensure that he is fully aware of the risk to which he is subjecting himself I again warn him. A further interjection will result in action from the Chair.
– This morning at Question Time the Leader of the Opposition was prevented from asking a question on the basis that the question could involve imputations against a Minister of the Crown and therefore required a substantive motion. I have listened very carefully to the honourable member for Denison. In the second sentence he clearly was casting reflections upon the Leader of the Opposition. It was not even a question of imputation. I ask you, Mr Deputy Speaker, to apply the same standards that Mr Speaker applied this morning and to suggest to the honourable member for Denison that if he wants to attack the Leader of the Opposition he should do so by way of a substantive motion.
-Order! The honourable member for Melbourne Ports has made his point of order. It is a matter of fine judgment but it is the Chair’s opinion that the reflection is not other than within the ambit of political debate.
– Whingeing, whining, carping, petifogging peccadillos have replaced constructive criticism and sound policy formation. Glaring errors of fact and misdescription of events, places, people and statistics are now par for the course in the twisted deluge of hate of the Leader of the Opposition. The repertoire of highpitched whining, predicting economic gloom, doom and devastation have earned him the nicknames right across Australia of ‘Bellyache Bill’ and ‘ Whingeing Willie ‘.
-I raise a point of order -
- Mr Deputy Speaker -
-Order! The honourable member for Denison will resume bis seat as will the honourable members for Melbourne Ports and Prospect resume theirs. I call upon the honourable member for Denison to withdraw the remarks. They are decidedly unparliamentary.
– I withdraw. Why does the Leader of the Opposition pursue abnormal -
– I raise a point of order. Mr Deputy Speaker, I ask you simply to apply the standards that the Chair applied at Question Time. There cannot be one standard in this House at Question Time when it suits Ministers of the Crown and another standard for the adjournment debate. I ask for some consistency from the Chair.
-Order! The Chair insists that there is a consistency in the application of the Standing Orders. The matters raised by the honourable member for Denison relate to statements and actions of the Leader of the Opposition in this chamber and, therefore, I consider them the subject of reasonable parliamentary debate.
-Why is the Leader of the Opposition prepared to use and abuse parliamentary privilege to personally scarify his opponents and in the process seriously damage the good name and standing of the parliamentary institution?
-Mr Deputy Speaker -
-Order! The honourable member for Corio will resume his seat. The honourable member for Denison again has used unparliamentary expressions which constitute a serious reflection upon a member of this House. The honourable member’s time has expired. I call the honourable member for Grayndler.
– His ticket number was 042.
-Order ! The honourable member for Chifley is not assisting the proceedings. I call upon honourable gentlemen to observe their responsibilities in this chamber.
-Mr Deputy Speaker, you will be pleased to learn that after 25 years in Parliament I have learned a few more things than has the honourable member for Denison (Mr Hodgman). When I was his age and first came to this House I thought that I could be aggressive, come into the House and take over on the adjournment debate, but after a few years I found out that it is much better to act normally than to act like a Sir Laurence Olivier. I raise a matter tonight which is not a direct responsibility of the Minister for Health (Mr Hunt) but which must be of vital concern to him. I refer to the double graduation this year of medical students from the universities of Sydney and New South Wales. In the early 1 970s the administrators of the medical schools of the universities of Sydney and New South Wales decided to reduce the academic time of their medical courses from six years to five years. The proposed courses were approved by the General Medical Council of Great Britain. At that time all the States and the Territories of Australia accepted the GMC medical standards.
The first five-year medical students commenced their courses in New South Wales in 1974 which means that this year the last of the six-year graduates and the first of the five-year graduates will be looking for places in hospitals in New South Wales to complete their one-year compulsory internship which is required for their full registration by the Medical Board of New South Wales. The New South Wales Government has made arrangements for the 800 to 900 graduates this year to be placed in hospitals in New South Wales for their one-year internship. But it is the next year, in 1980, that the troubles of these young doctors will commence. Then sufficient internships will be available in New South Wales hospitals for about only half of the 1979 graduates.
One might say: ‘So what. There are plenty of hospitals in Australia and those graduates who cannot be placed in New South Wales hospitals should be able to find a place in a hospital in another State or in one of the territories if they wish to have two years hospital experience’. However, my information is that there are very few places in hospitals throughout Australia which are not filled by local graduates. If these inexperienced doctors decide to go into general practice they will be eligible to practise only in
New South Wales and Western Australia, and perhaps Queensland, as the medical boards in those States are prepared to register the five-year graduates after one year’s internship. The Northern Territory and Tasmanian medical boards have decided that five-year academic training plus a two-year internship is required before registration is allowed there. The Victorian and South Australian medical boards have not yet made a decision on registration qualifications but they are expected to decide on a five-year academic plus two-year internship before they will allow registration.
Whilst these New South Wales doctors will be able to obtain registration in New South Wales, Western Australia, perhaps Queensland and also in Great Britain, they will not be able to register in the Northern Territory, Tasmania, Victoria or South Australia. Has anyone ever heard of a more ludicrous situation? I emphasise that this situation has not been brought about by the decision of any government but by the unilateral action of university administrators and medical boards in various states. Surely, after the difficulties Australia has had in trying to solve the problems created by not having universal educational qualifications, universal rail gauges, universal traffic signs and laws and in having an industrial movement which is confounded by State and Federal unions and State and Federal awards, we should have learnt that we are one nation with a common bond and -
Mr DEPUTY SPEAKER (Mr MillarOrder! The honourable member’s time has expired.
-Tonight I too want to refer to health insurance. I believe that in the main health insurance will be successful and that costs in relation to the percentage of population participating in the insurance scheme will be lowered. Whilst there is no compulsion to insure, if people desire to have the doctor of thenchoice and to go to a private hospital for treatment it is necessary for them to take out hospital insurance to cover the extra cost that will be incurred. Many people would desire to do this. But if they do not insure there is no way in which they could afford to pay the very heavy medical and hospital costs which they could incur. Therefore if they are to avail themselves of those privileges they will have to take out hospital insurance.
If people are encouraged not to insure and if such encouragement were successful it would be reasonable to assume that because of the lower numbers insuring the cost of insuring would become greater. The cost to those people who feel the need for the protection that insurance would give them would find the cost very heavy indeed. Another factor to be considered is the very high cost of conducting private hospitals. These costs are greatly influenced by the percentage of bed occupancy in these hospitals. It would almost certainly follow that if the number of people taking hospital insurance were reduced the number of people able to afford private hospital fees with the doctor of their choice would also be reduced, perhaps to the extent that hospitals would have difficulty in surviving. This prospect must be of very real concern to thinking people in the community. It is against this background that I deprecate the attitude of the Leader of the Opposition (Mr Hayden), as stated in the Courier-Mail, that he will not take out private health insurance for himself and his family. Of course, if the Leader of the Opposition or any member of his family required hospitalisation, he would, no doubt, be able to afford a doctor in a hospital of his choice if this is what he chose to do. This opportunity would not be available to many people on a lower income. The Leader of the Opposition is quoted as having said:
I realise, of course, there are people with chronic poor health, or families with a number of small children requiring constant medical attention, where some insurance is needed.
The Labor Party’s health spokesman, Dr Klugman, has also been reported to have decided against private health insurance. I believe that he will not deny that he is in accord with what his leader said in that regard. He too, probably even more so, would be able to afford any medical or hospital costs he might be confronted with if he wished to have the doctor of his choice in the hospital of his choice. On the other hand, the Prime Minister (Mr Malcolm Fraser) and the Minister for Health (Mr Hunt) have said that they are insuring to maintain the higher medical and hospital benefits. Some concern has been expressed to him about the attitude people might take following what the Leader of the Opposition and the Labor Party’s health spokesman have said with regard to their attitude towards hospital insurance. That concern was felt by a number of people, particularly those associated with private hospitals which have served the community for a long time and which are of high repute. They may not be able to continue operating. This would deprive people, who really believe that their money would be best spent in providing for a doctor of their choice in a private hospital, of a choice. I hope that the shadow Minister will agree that sometimes this is of value in medical treatment.
However, I have been assured by the Minister for Health that the numbers of people insuring are satisfactory to him. It is fairly obvious that the community at large has not taken any notice of the attitude of the Leader of the Opposition or the shadow Minister for Health in relation to hospital insurance. I am pleased that the community at large is looking at the matter in this way so enabling those people to whom the Leader of the Opposition referred and many other people who require hospital insurance to obtain that cover.
Mr DEPUTY SPEAKER (Mr MillarOrder! The honourable member’s time has expired.
– I support the honourable member for Melbourne (Mr Innes) who pointed out that the Prime Minister (Mr Malcolm Fraser) was guilty of grave hypocrisy at Question Time today when he was prepared to spend so much time canvassing the issues of the State Conference of the Victorian Branch of the Australian Labor Party. I ask the Prime Minister, when he raises issues of civil liberties and human freedom to come into this House with clean hands. If he had clean hands he would have spent some time looking at the internal affairs of the Liberal Party of Australia and its State Conference in Victoria. The events there were not matters of which any true Liberal could be proud. Two members of the Liberal Party, who had the confidence of that Party to the degree that they were endorsed candidates for office and had been elected to Parliament, because they were not prepared to subscribe to the degree of corruption, abuse of public office and use of office for personal gain- five members of the Liberal Government in Victoria- were subjected to a kangaroo court and were expelled from the party. As was pointed out by the honourable member for Melbourne, one of those members was given five minutes in which to defend himself. Prior to the actual expulsion, a member of this House, the honourable member for McMillan (Mr Simon) went on the public record as saying what the result would be. Not only did he say that but also he said that the Prime Minister was fully informed at every point. I refer honourable members to the Age newspaper of 26 July in which Mr Simon pointed out that not only would the expulsion move succeed but that the Prime Minister knew all about it and approved of it.
-Order! It being 1 1 p.m., the debate is interrupted. The House stands adjourned until 10 a.m. tomorrow.
The following notices were given:
Mr Burns to move that this House supports the application of the City of Melbourne to the International Olympic Federation for the 1988 Olympic Games to be held in that city.
Mr Sinclair to move That the legislation committee considering the Audit Amendment Bill have power to meet during the sitting of the House on Friday, 1 7 November 1 978.
Mr Hunt to present a Bill for an Act to amend the National Health Act 1953.
House adjourned at 11 p.m.
The following answers to questions upon notice were circulated:
asked the Minister for Immigration and Ethnic Affairs, upon notice, on 27 September 1978:
– The answer to the honourable member’s question is as follows:
The attached table (A) sets out the information sought for the periods 1.10.73 to 31.12.75, the years 1976and 1977 and the first quarter of 1 978.
These figures are based upon computer records of passenger cards presented by people entering Australia, ostensibly for temporary purposes, for whom no matching outgoing passenger cards have been found.
There may be overstatement of the number of people overstayed for the period up to mid- 1976 because of difficulties in the computer matching of names.
It is not possible to state the percentages of such people who were deported. However, the numbers of prohibited immigrants (including people who entered Australia illegally) deponed during the years 1975, 1976 and 1977 and from 1.1.78 to 3 1.3.78 are given in the attached table (B).
asked the Minister for Immigration and Ethnic Affairs, upon notice, on IS August 1978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Health, upon notice, on 23 August 1978:
– The answer to the honourable member’s question is as follows:
(a) The National Health and Medical Research Council established an ad hoc Working Party to study the use and safety of 2,4,5-T. This Working Party examined over 3,000 documents and reports including data and the results of investigations carried out both in Australia and overseas.
Royal Commission into Queensland Electoral Redistribution 1977 (Question No. 1920)
asked the Prime Minister, upon notice, on 12 September 1978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Immigration and Ethnic Affairs, upon notice, on 13 September 1978:
– The answer to the honourable member’s question is as follows:
Three hundred and seventeen courses were conducted during 1977-78 for employees of the organisations listed. A total of 3, 1 78 employees took advantage of these courses, including 1,138 women employees.
Commonwealth support for the scheme is made available through the Adult Migrant Education Program. Participating employer organisations also contribute significantly to the scheme by providing classroom accommodation at the workplace and by allowing employees to attend classes wholly or partly during paid working hours.
Commonwealth expenditure on the Courses-in-Industry scheme cannot be readily separated out in all cases because some staff and other resources are used in relation to the adult migrant education program generally as well as in support of this particular scheme. Subject to this comment it is estimated that $328,000 was spent on that scheme during the 1977- 78 program year from the funds provided for the adult migrant education program. $520,000 has been set aside for Courses-in-Industry for the 1978-79 financial year. Subject to demand and opportunities this amount could be increased during the year by the re-apportionment of funds from other lower priority activities within the overall program.
Another project in the Courses-in-Industry area that was current in 1977-78 and is expected to be completed in 1978- 79 is the development of new teaching and learning materials for these courses.
Courses-in-Industry (English for Migrants) Scheme Participating Employer Organisations ( 1977-78):
New South Wales-
Royal Prince Alfred Hospital
Lady Davidson Hospital
North Ryde Psychiatric Centre
Parramatta Psychiatric Centre
St George Hospital
Women’s Hospital (Crown Street)
Department of Public Works
Australian Iron and Steel Pry Ltd
Australian Record Co. Ltd ( Artarmon)
Bradford Insulation Industries Pty Ltd
Australian Wire Industries Pty Ltd
Garden Island Dockyard
Concord Repatriation General Hospital
General Motors-Holden’s Ltd
Clyde Wagon Maintenance Centre
Master Foods of Australia Pry Ltd
Rheem Australia Ltd
Water Sewerage and Employers Union
John Lysaght (Aust.) Ltd (Wollongong)
Public Transport Commission of NSW
Inghams Enterprises Pty Ltd
Colonial Sugar Refining Ltd
Broken Hill Pty Ltd
Cable Makers Australia Pty Ltd
W.C. Stevens (NSW)
Standard Telephones and Cables Pty Ltd
Imperial Peking Restaurant
Elevators Pty Ltd
Nestle Co. (Aust.) Ltd
Auditor-General- State Department
St Nicholas Hospital
General Motors-Holden’s Ltd
Latoof and Callil Pty Ltd
Australian Telecommunications Commission
Australian Government Clothing Factory
Leyland Motor Corporation of Australia Ltd
Kraft Foods Ltd
Nissan Motor Company (Australia) Pty Ltd
Quaker Products Australia Ltd
Colonial Sugar Refinery Ltd
Heidelberg Repatriation Hospital
Olympic Tyres and Rubber Co. Pty Ltd
Victorian Railways Department
Government Aircraft Factory
Victorian Farmers’ Union
HMA Naval Dockyards
Frozen Food Industries Pty Ltd
Larundel Psychiatric Hospital
Melbourne State College
Commonwealth Industrial Gases Pty Ltd
L. M. Ericsson Pty Ltd
Carlton and United Breweries Ltd
Mont Park Psychiatric Hospital
Thomas Borthwick and Sons (A/Asia) Ltd
General Motors-Holden’s Ltd
Queensland Institute of Technology
Caroma Sales Pty Ltd
General Motors-Holden’s Ltd ( Woodville)
Simpson Pope Ltd
Royal Adelaide Hospital
Daw Park Private Hospital
The Queen Elizabeth Hospital
Poon Bros. ( WA ) Pty Ltd
Australian Capital Territory-
Department of the Capital Territory- Botanic Gardens
Australian Government Publishing Service
Bureau of Statistics
Northern Research Pty Ltd
asked the Minister for Transport, upon notice, on 20 September 1978:
– The answer to the honourable member’s question is as follows:
The above list excludes companies operating railway lines of less than 2 kilometres in length or railway lines within industrial estates, harbour precincts, mines and quarries. Lines operated by railway preservation societies are also excluded.
In addition, there are approximately 3,000 kilometres of permanent privately-operated sugar cane railways in Queensland, with extra temporary lines being laid during the cane harvesting season.
asked the Treasurer, upon notice, on 26 September 1978:
– The answer to the honourable member’s question is as follows:
asked the Treasurer, upon notice, on 26 September 1978:
– The answer to the honourable member’s question is as follows:
asked the Treasurer, upon notice, on 26 September 1978:
– The answer to the honourable member’s question is as follows:
Department of the Capital Territory: Computers (Question No. 2230)
asked the Minister for the Capital Territory, upon notice, on 27 September 1 978:
– The answer to the honourable member’s question is as under
I am informed by my Department as follows:
Australian Capital Territory Police; (a) 1; (b) 1; (c) Nil; (d) Nil.
Commonwealth Brickworks (Canberra) Limited; (a) 1; (b) l;(c)Nil;(d)Nil.
National Capital Development Commission; (a) 1; (b) 2; (c) Nil;(d)1.
Australian Capital Territory Totalizator Agency Board; (a)7;(b)8;(c)Nil;(d)1.
ACT Electricity Authority; (a) 1; (b) 3; (c) Nil; (d) 2.
Australian Capital Territory Police; $54,701- cost of purchase.
Commonwealth Brickworks (Canberra) Limited; $30,600-cost of purchase.
National Capital Development Commission; (a) ICL system 10-$93,000-cost of purchase; (b) PDP 11/20- $748.35-rental per month.
Australian Capital Territory Totalizator Agency Board; (a) i. Average cost of purchase of each of 3 systems- $537,920; ii. Average cost of purchase of each of 4 systems-$207,963; (b) $ 1 , 100-rental per month.
ACT Electricity Authority; (a) $138,000-cost of purchase; ( b ) $2 1 , 750- per month to lease 2 computers.
Australian Capital Territory Police; Assist in management of Police prosecutions including summons production, court listings and statistics.
Commonwealth Brickworks (Canberra) Limited; General accounting work and debtors and creditors statements etc.
National Capital Development Commission; (a) ICL system 10- To maintain financial and other control systems such as personnel records and pay systems; (b) PDP 11/20- To provide a high speed terminal facility to the CSIRO NET system to allow tasks requiring large scale or specialised computing resources to be carried out.
Australian Capital Territory Totalizator Agency Board; For the processing of bets and associated activities, or the development of new systems for this purpose.
ACT Electricity Authority; For the monitoring of electrical zone sub-stations, the billing of electricity and stores accounting.
Australian Capital Territory Police; Proforma indictments and letters, data for production, and daily updating of Police court listings.
Commonwealth Brickworks (Canberra) Limited; Company operating information.
National Capital Development Commission; (a) ICL system 10- Data relating to financial transactions and personnel records; (b) PDP 1 1 /20- Nil- Date used by this computer is stored in the CSIRO system, and relates to basic planning information.
Australian Capital Territory Totalizator Agency Board; Data relating to betting transactions, with some personal details being held for customer’s telephone betting accounts (e.g. name and address).
ACT Electricity Authority; (a) Data required to control and monitor the switching of electrical networks; (b) The data base for controlling the billing of electricity consumed within the ACT and the total stores inventory.
Australian Capital Territory Police; Nil.
Commonwealth Brickworks (Canberra) Limited; Nil.
National Capital Development Commission; (a) ICL system 10-Nil; (b) PDP 1 1 /20-Telecom line.
Australian Capital Territory Totalizator Agency Board; All computers are interconnected either via direct links, or by shared access to common peripherals.
ACT Electricity Authority; Nil.
Australian Capital Territory Police; Australian Capital Territory Police Force.
Commonwealth Brickworks (Canberra) Limited; Company accounting staff.
National Capital Development Commission; (a) ICL system 10- All NCDC personnel to general data. Confidential data access restricted to authorised NCDC personnel; (b) PDP 1 1 /20-Authorised NCDC personnel.
Australian Capital Territory Totalizator Agency Board; Authorised staff of the ACT TAB.
ACT Electricity Authority; Authorised ACT Electricity Authority staff.
asked the Minister for Health, upon notice on 27 September 1978:
– The answer to the honourable member’s question is as follows:
Dr E. J. Fitzsimons is the Director of the Toxicology Section in the Commonwealth Department of Health. He is also the Chairman of the Poisons Schedule Committee and Chairman of the Pesticides and Agricultural Chemicals Subcommittee of the National Health and Medical Research Council.
asked the Minister representing the Minister for Education, upon notice, on 27 September 1978:
– The Minister for Education has provided the following answer to the honourable member’s question: (1), (2) and (3) The matters raised by the honourable member’s question are the concern of the Western Australian Post-Secondary Education Commission. The Commonwealth has no information of the type sought as the responsibility for the arrangements made and the decisions reached rest with the State.
The Western Australian Post-Secondary Education Commission submitted four course proposals for approval for introduction in 1979, as follows:
Western Australian Secondary Teachers College: Associate Diploma in Arts/ Applied Science
Western Australian Institute of Technology: Associate Diploma in Engineering; Masters Degree in Metallurgy; Masters Degree in Health Science.
The three proposals at the Western Australian Institute of Technology were approved. The Associate Diploma in Arts/Applied Science at the Western Australian Secondary Teachers College was not approved. The Tertiary Education Commission felt that as this proposal had significant implications for the future development of teacher education institutions no decision should be made which might pre-empt a comprehensive consideration of appropriate developments.
In addition, Murdoch University has submitted to the Tertiary Education Commission for approval a proposed new teaching activity in linguistics to begin in 1980. This submission is currently being considered. Also, the University of Western Australia proposes in 1 979 to extend its existing law course to include a diploma of legal practice as an alternative to articles of clerkship. As this diploma would be an extension of existing studies rather than a new development, the Commission’s agreement was not required.
asked the Treasurer, upon notice, on 27 September 1 978:
When will the Parliament receive an answer to question No. 2066 appearing on the Notice Paper in my name in relation to a question which was first put on the Notice Paper on 15 August 1978.
– The answer to the honourable member’s questions is as follows:
I refer the honourable member to the answer provided by me to his Question on Notice No. 2066 (See Hansard, 9 November 1978,page2710).
asked the Treasurer, upon notice, on 27 September 1978:
When will the Parliament receive an answer to question No. 2067 appearing on the Notice Paper in my name in relation to a question which was first put on the Notice Paper on 15 August 1978.
– The answer to the honourable member’s question is as follows:
I refer the honourable member to the answer provided by me to his Question on Notice No. 2067 (See Hansard, 9 November 1978, page 27 10).
asked the Minister for Productivity, upon notice, on 1 1 October 1978:
– The answer to the honourable member’s question is as follows:
asked the Treasurer, upon notice, on 1 1 October 1978:
– The answer to the honourable member’s question is as follows:
(a) Provision for a survey of household income and expenditure in respect of 1979-80 was omitted from the forward staff estimates of the Australian Bureau of Statistics because the substantial resources required to develop and conduct such a survey were not available.
The Statistician nominated a number of possible areas for program cuts. These were selected on the basis that they were not considered to be mainstream economic and social indicators, that they were as self-contained as possible so as not to have major repercussions on inter-related projects and that they were small to medium size so as not to concentrate the whole impact on one sector of the economy.
On the basis of these considerations it was found necessary to terminate the quarterly and annual job vacancy surveys and further foreign participation studies.
asked the Minister for Transport, upon notice, on 1 1 October 1 978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Productivity, upon notice, on 12 October 1978:
– The answer to the honourable member’s question is as follows:
The advice was subsequently rescinded pending further consultation with union representatives.
asked the Minister for Immigration and Ethnic Affairs, upon notice, on 25 October 1978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Immigration and Ethnic Affairs, upon notice, on 25 October 1978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Immigration and Ethnic Affairs, upon notice, on 25 October 1978:
– The answer to the honourable member’s question is as follows:
Some grants are given to broadly-based community or- . ganisations which achieve very wide coverage among ethnic groups.
The names and addresses of the organisations that received these grants are as follows:
Greek Orthodox Archdiocese of WA, 115 Francis Street, Perth, WA 6000.
WA Portuguese Club Inc., Strang Street, Beaconsfield, Fremantle,WA6160.
Italian Welfare Committee, 59 1 Bowen Terrace, New Farm, Queensland 4005.
Catholic Family Welfare Bureau of Tasmania ‘Centacare’, 1 1 Harrington Street, Hobart, Tasmania 7000 (to assist all migrant communities).
Greek Orthodox Archdiocese of SA, 533 Anzac Highway, North Glenelg, SA 5045.
Indo-China Refugee Association of NSW, 264 Pitt Street, Sydney, NSW 2000.
Australian Lebanese Association of Victoria, 62 Union Street, Brunswick, Victoria.
Spanish Latin American Welfare Committee of Victoria, 575 Elizabeth Street, Melbourne, Victoria 3000 (mainly covering Spanish, Chilean, Argentinean and Brazilian communities).
Ecumenical Migration Centre, 133 Church Street, Richmond, Victoria 3 12 1 (a special grant to assist the Timorese community).
To be eligible for a grant, an agency is expected to be:
Recipients of grants are required to ensure that the welfare of immigrants must constitute the whole or major part of the activities of the social worker or welfare worker appointed as a result of the grant. The types of activities that qualify in this context are specified in the documents associated with the grant-in-aid agreement.
Applicants are required to submit a program of activities to be undertaken under the grant.
Social workers appointed under the scheme must be qualified and eligible for membership of the Austraian Association of Social Workers.
Welfare workers employed on migrant welfare under the scheme are expected to have:
In the Press release to which the honourable member referred, I drew attention to the availability of further grants in 1978-79 and invited ethnic and other community organisations which could meet the foregoing criteria to contact the Regional Director, Department of Immigration and Ethnic Affairs.
asked the Minister representing the Minister for Education, upon notice, on 26 October 1978:
– The Minister for Education has provided the following answer to the honourable member’s question:
Year ended 30 June each year. The majority of students would have completed their degree at the end of the previous calendar year. For example, the students who are included in the 1978 statistics generally would have completed their degree in the 1 977 academic year.
asked the Prime Minister, upon notice, on 7 November 1 978:
Will he give an undertaking that any nuclear safeguards agreement covering the sale of Australian uranium to European countries will include a mandatory provision for Australia ‘s prior consent for reprocessing or retransfer of nuclear material derived from Australian ore.
– The answer to the honourable member’s question is as follows:
The Government’s policy on nuclear safeguards was announced by me on 24 May 1977, and remains unchanged. I referred further to the question of reprocessing in my statement on 25 August 1977.
Motor Vehicle Plan
asked the Prime Minister the following question, without notice, on 19 October 1978:
My question should be directed to the Acting Minister for Industry and Commerce, but in his absence I ask the Prime Minister: Is it a fact that the 30 per cent devaluation of the Australian dollar in relation to the Yen has meant a higher Australian content requirement under the motor vehicle plans than was the intention when the plans were formulated? Is it a fact that the adjustments announced by the Minister yesterday do not offset completely the effects of the 30 per cent devaluation and have left Chrysler Australia Limited and possibly other motor vehicle manufacturing companies paying large penalties for factors over which they had no control?
Is it also a fact that these large penalties may result in a further disastrous loss of employment? Is it true that General Motors-Holden’s Ltd and Ford Motor Co. of Australia Ltd can now reduce their local content from over 90 per cent to 85 per cent, thus creating more unemployment? Without wishing in any way to support or criticise the changes made yesterday but seeking information, I ask the Prime Minister why the Government has not allowed a full adjustment for the 30 per cent devaluation and why he has allowed the abolition of reversion control procedures?
– The Prime Minister has referred the question to me. The answer is as follows:
The effect of appreciation of the Yen against the Australian dollar has caused difficulties for some companies in meeting their local content obligations under the Motor Vehicle Plan, but it has not caused difficulties for others. Thus it is not a fact that the Yen appreciation has generally caused a higher Australian content requirement as calculated under the Plan rules than when the Plan was formulated. Whilst appreciation of the Yen has caused componentry sourced from Japan to be less economic than at the time the Plan was formulated, conversely it has improved the competitiveness of componentry sourced from Australia compared to imports from Japan. For some producers this will mean physically incorporating into their vehicles more local components than they had originally envisaged. However the Motor Vehicle Plan content requirements are not based on meeting specific requirements as to the actual componentry incorporated in vehicles. Content is calculated on a value basis with the decision as to which componentry to source locally being a matter for commercial decision making.
It should be noted that if there were to be a devaluation against the dollar in the currency of a country supplying components to an Australian car manufacturer, then that manufacturer would be able to reduce his local component sourcing and still meet the local content levels prescribed in the Plan.
The adjustments announced by the Government on 18 October 1978 recognise the difficulties brought about for certain companies by the rapid appreciation of the Yen and the fact that resourcing of components cannot be achieved quickly because of the necessary lead times involved.
The Government’s action was in conformity with the Plan’s provisions that circumstances beyond a company’s control which have caused or contributed to its failure to comply with the Plan may be taken into account in considering whether or not penalties should be applied.
Passenger motor vehicle manufacturers who were affected by major foreign currency appreciations will be allowed to adjust their local content calculation for the purpose of application of penalty duties under the Plan on the basis of a 12 month lag in the application of exchange rates.
The adjustment will have effect from 1 July 1978 and will expire on 31 December 1979 when all Plan manufacturers will be required to be at 85 per cent company average local content on the basis of exchange rates applicable at that time.
This action is not intended to eliminate the need for penalty payment by these companies for failing to meet their local content commitments. Any penalty liability which companies may incur for failing to meet their commitments for reasons other than the Yen appreciation will not be affected.
There is no basis in speculation in the media and elsewhere that employmentin the industry will be affected by any penalties for which motor vehicle manufacturers may be liable.
The Government decided to abolish the reversion control because it has now served its intended purpose. This was to provide a means of avoiding major disruption in the component sector during the phasing period of the present Plan while the local content levels in certain vehicles entered in former plans was being reduced.
The average local content levels of General MotorsHolden’s Ltd and the Ford Motor Company of Australia Ltd have already been significantly reduced towards 85 per cent and the opportunities for reversion to overseas sources of componentry have thus become very much limited.
At the same time the component industry has been receiving substantial additional business from the new manufacturers as they increase the local content of their vehicles in accordance with their commitments under the Plan.
Reversion control was never intended to be a permanent feature of the Motor Vehicle Plan. This was clearly indicated by the Government when the motor vehicle policy was announced in the Parliament on 30 March 1976 and again in a further statement by the then Minister for Industry and Commerce on 9 June 1976.
To introduce reversion control as an integral part of the Motor Vehicle Plan would constitute a major change to the Plan; and major investment decisions have been made in the confident expectation that the rules will not be changed.
The basic thrust of the Government’s motor vehicle policy is to facilitate the development of a more viable and competitive industry by reducing Government intervention in commercial decision making and giving the vehicle builders more flexibility in making their own component sourcing arrangements within the overall 85 per cent company average local content requirement.
asked the Minister for Employment and Industrial Relations, upon notice, on 2 June 1978:
– The answer to the honourable member’s question is as follows:
The ban does not apply to other export markets such as Malaysia, Hong Kong and the near East. AMIEU policy, however, is that the export of live cattle to these countries is subject to a limit on numbers of cattle exported.
In addition, live sheep and merino rams are currently the subject of specific trade union bans or limitations.
Earlier this year action taken by members of the AMIEU threatened exports of live sheep to Middle East countries and Iran. As from 19 April exports proceeded subject to an agreement between parties to the dispute and pending reports being received on the employment implications of live sheep exports and proposals for improving carcass meat exports to the Middle East. The AMIEU wrote to me in August advising that it would not regard itself as bound by the agreement as from 3 1 August 1 978.
The Federal Executive of the AMIEU is seeking the views of members of the Union as to the future policy on action to be taken by the Union with regard to live sheep exports.
On the subject of merino rams, my colleague the Minister for Primary Industry, announced that the longstanding embargo with regard to the export of merino rams would be partially lifted as from5 July 1978. He indicated the intention was that up to 300 rams would be able to be exported on a trial basis over a 12 month period.
The ACTU Executive position, resolved on 6 July 1978, was to ask Union members who might be involved ‘not to facilitate the export of merino rams against the decision of growers expressed by way of referendum’.
Both the Prime Minister and the Minister for Primary Industry have recently reaffirmed that the way is open for the export of merino rams on a trial basis.
asked the Minister for Trade and Resources, upon notice, on 15 August 1978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Aboriginal Affairs, upon notice, on 22 August 1978:
What sum has been granted or lent by the Commonwealth Government to (a) the Furneaux Fishing and Processing Co. in the last 5 years and (b) the Flinders Island Community Association in the last 20 years.
– The answer to the honourable member’s question is as follows:
To the best of my knowledge, no other Commonwealth Government funds have been provided to either body.
Postage Stamps: Portrait of Queen Elizabeth II (Question No.1960)
asked the Minister for Post and Telecommunications, upon notice, on 14 September 1978:
– The answer to the honourable member’s question is as follows:
Because Australia Post is keen to feature on its postage stamps, subjects which have a high appeal among the public, an Australia-wide survey of public opinion regarding stamp designs and subjects was carried out in 1975. The subjects which proved to be most popular were Australian flora, fauna, scenes and historical events. Only 4 per cent of people interviewed were interested in seeing royalty depicted on Australian postage stamps.
Australia Post plans to continue to issue stamps featuring subjects which the public has indicated that it would most like to see.
asked the Minister for Post and Telecommunications, upon notice, on 19 September 1978:
What are the respective sections of the Act and Regulations which (a) empower Telecom to authorise the approval of equipment for connection to its network and (b) determine the criteria by which this equipment is judged as suitable for connection to that network.
– The answer to the honourable member’s question is as follows:
asked the Minister for Post and Telecommunications, upon notice, on 21 September 1978:
– The answer to the honourable member’s question is as follows:
asked the Minister for Aboriginal Affairs, upon notice, on 27 September 1978:
– The answer to the honourable member’s question is as follows:
Grants to the Lands Trust for new capital items can be made available, in accordance with the normal practice, only after the Budget has been passed.
I am not aware of any ‘false accusations’ against the Trust by an officer of my Department nor of any promise to make a public apology.
asked the Minister representing the Minister for Education, upon notice, on 12 October 1978:
– The Minister for Education has provided the following answer to the honourable member’s question:
Funds for non-government schools in the electoral division of Lalor in the period in question have been made available under programs administered by the Department of Education and the Schools Commission.
States Grants (Science Laboratories) Act 1 97 1 .
States Grants (Independent Schools) Act 1969.
States Grants (Secondary Schools Libraries) Act 1 97 1 .
States Grants (Schools) Act 1972.
Payments made under these acts are set out in reports which were tabled in the Senate on the dates listed below:
States Grants (Science Laboratories) Act 1 97 1 : 27 October 1972. 12 December 1973. 28 October 1975. 4 May 1976.
States Grants (Independent Schools) Act 1 969: 13 December 1972. 12 March 1974. 5 December 1974.
States Grants (Secondary Schools Libraries) Act 1971: 17 May 1972. 3 April 1973. 23 July 1974. 29 May 1975.
States Grants (Schools) Act 1972: 12 November 1974.
Payments for the years 1974-76 are set out in the reports which were tabled in the Senate on the dateslisted below:
Report-States Grants (Schools) Act 1972- Financial Assistance granted to each State in 1974- 75-19 May 1976.
Report-States Grants (Schools) Act 1972- Financial Assistance granted to each State in 1975- 76-2 November 1977.
Report- States Grants (Schools) Act 1972- Financial Assistance granted to each State in 1976- 77-23 February 1978.
Report -States Grants (Schools) Act 1973- Financial Assistance granted to each State in 1974- 1 October 1975.
Report-States Grants (Schools) Act 1973- Financial Assistance granted to each State in 1975- 30 November 1976.
Report-States Grants (Schools) Act 1973- Financial Assistance granted to each State in 1976- 25 August 1977.
Report-States Grants (Schools) Act 1976- Financial Assistance granted to each State- 23 February 1978.
Information in respect of the years 1977 and 1978 is not covered in the above reports. In relation to non-government schools it is set out in the schedules below.
The following funds have been allocated to government schools in Victoria through Schools Commission programs.
asked the Minister for Aboriginal Affairs, upon notice, on 25 October 1978:
– The answer to the honourable member’s question is as follows:
asked the Minister representing the Minister for Science, upon notice, on 8 November 1978:
– The Minister for Science has provided the following answer to the honourable member’s question:
Cite as: Australia, House of Representatives, Debates, 16 November 1978, viewed 22 October 2017, <http://historichansard.net/hofreps/1978/19781116_reps_31_hor112/>.