Senate
18 May 1971

27th Parliament · 2nd Session



The DEPUTY PRESIDENT (Senator Bull) took the chair at 11 a.m., and read prayers.

page 1951

QUESTION

LEBANESE MIGRANTS

Senator MULVIHILL:
NEW SOUTH WALES

– I direct a question to the Minister-in-Charge of Tourist Activities. In the light of the recent racket in which certain Lebanese citizens were apparently misled by overseas travel agents, can the Minister state what he is doing externally with the world governing body of travel agents to combat these occurrences, and internally to introduce legislation to register all travel agents operating within the Commonwealth?

Senator WRIGHT:
Minister for Works · TASMANIA · LP

– I infer that the honourable senator refers to reports that were given considerable publicity in Sydney newspapers recently that a party of Lebanese had been duped by travel agents. The travel agents concerned were overseas travel agents. No Australian travel agents were involved in this incident. The world body, the Universal Federation of Travel Agents Associations, is a private international organisation which has no links with national governments. Secondly, governments cannot take action through the Federation to prevent occurrences of this sort at all. I understand that the Australian member of the Federation, the Australian Federation of Travel Agents, will refer these cases to the international body which is at present drawing up a code of ethics which national associations will be invited to adopt.

I have referred in response to questions in this chamber from time to time to the preparation of legislation for the regulation of Australian travel agents engaged in interstate and overseas trade. That legislation is still in the stages of preparation. But having regard to the impending transfer of responsibility for tourism from myself to a new Minister who is to be appointed I am unable to say what decision the Government will make regarding the legislation or when it will be introduced.

page 1951

QUESTION

CIVIL AVIATION

Senator SIM:
WESTERN AUSTRALIA

– My question, which is directed to the Minister for Civil Aviation, follows questions asked of him concerning the serving of meals on flights of short duration and his undertaking to investigate the matter. I now ask the Minister: Was there an observer from the Department of Civil Aviation on Ansett Airlines of Australia flight 394 on Friday 14th May? Has it been reported that the senior hostess apologised to some economy class passengers for not serving refreshments? Did the senior hostess also announce that the staff would be able to serve first class passengers only because 12 passengers did not require dinner? If this is so, will the Minister take action, in the interests of safety and convenience, to stop the serving of meals on flights of less than 75 minutes duration?

Senator COTTON:
Minister for Civil Aviation · NEW SOUTH WALES · LP

– It would be well known to the Senate that questions on this subject have been asked by various honourable senators. Equally it would be known that I have said that I would have examiners put on some of these flights, particularly those of short duration. The problem seems to be quite a clear cut one. People can have drinks or meals but not both. Particularly, hostesses would need to make quite certain that they were adequately strapped in on both take-off and landing. I have not received a report yet as to what the examiners have found. I cannot say what the senior hostess on flight 394 said, although I would like to have been there to have heard some of it. The honourable senator has my assurance that this matter is under check and under surveillance. Once I have a report from the Department, these matters will be dealt with.

page 1951

QUESTION

HEALTH

Senator WRIEDT:
TASMANIA

– Is the Minister for Health aware of evidence given to the House of Representatives Select Committee on Pharmaceutical Benefits by Professor Burnstock of the University of Melbourne in which he claimed that during testing 2 blood pressure drugs have had adverse effects on animals and that one of these drugs has been withdrawn but that the other is in wide use? Is the Minister aware to which drug the professor was referring? If so, can he indicate to the Senate what action he intends to take?

Senator GREENWOOD:
Minister for Health · VICTORIA · LP

– I have read Press reports of what was said to the House of Representatives Select Committee on Pharmaceutical Benefits yesterday. I also read Press reports that the professor who gave evidence declined to name the drugs. Accordingly, I have no knowledge of what those drugs are. I feel that, in the circumstances in which the evidence was given, unless there is some formal representation to me identifying the drug and giving me the details - I presume that that representation would come from the Select Committee - I am unable to take any action.

page 1952

QUESTION

ENVIRONMENTAL CONTROL

Senator LAUCKE:
SOUTH AUSTRALIA

– I ask a question of the Minister representing the Minister for Shipping and Transport. I refer to the splendid evidence of Commonwealth and State co-operation in the decision to send a team of experts from the Commonwealth Department of Shipping and Transport to South Australia to investigate and to help combat extensive pollution from oil and algae on our southern coastline. Can this co-operative effort between the Commonwealth and the State in the preservation of the environment be interpreted as the initiation of a continuing constructive and desirable approach to enviromental control?

Senator COTTON:
LP

– Like the honourable senator, I was very pleased to hear of this decision. It can be interpreted as the honourable senator interpreted it. In fact, I think this is an opportunity to say that there has been a continuing policy of cooperation for quite some time. It is only on occasions such as this that we see the evidence of Commonwealth and State cooperation really at work. So many cases like this occur that one would like to see them publicised more, instead of the occasional case when the Commonwealth and the States appear to be at odds. There are many cases such as this where they work closely together in the interests of the Australian people.

page 1952

QUESTION

EUROPEAN COMMON MARKET

Senator POYSER:
VICTORIA

– My question is directed to the Minister representing the Minister for Trade and Industry. Is it a fact that New Zealand’s Deputy Prime Minister and Minister for Overseas Trade, Mr J. Marshall, has been invited to Britain to hold urgent talks on the European Common Market? Has the Australian Government received a similar invitation or has it been left out, as stated in an article in the Melbourne ‘Herald’ of Saturday last? If no invitation has been received, will the Government press strongly for similar talks to take place between the Minister for Trade and Industry, Mr Anthony, and the United Kingdom Government?

Senator COTTON:
LP

– I am not able to say whether New Zealand’s Deputy Prime Minister and Minister for Overseas Trade invited himself or was invited. This seems to be a piece of comment that one cannot adequately justify. Mr Marshall >s going to London to talk about the Common Market problem. So is Australia’s Deputy Prime Minister and Minister for Trade and Industry, Mr Anthony. He is on his way there too. Whether they were invited or invited themselves, both Ministers will be there as both countries have a great interest in this matter.

page 1952

QUESTION

TAXATION

Senator WEBSTER:
VICTORIA

– My question is directed to the Leader of the Government in the Senate. Has the Minister’s attention been drawn to comments by both the Treasurer and the former Treasurer that consideration is being given to introducing a new tax, the revenue from which may be available to the States and may approximate the growth tax which State governments have sought? Will the Minister bear in mind that the Australian public does not want the impost or consideration of new types of taxation but prefers that governments work within the existing taxation levels which give growth in volume from increase in population and by way of inflation? Would the Federal Government rather consider vacating some fields of taxation in favour of the States and give prime consideration to the wisdom of vacating the fields of probate or estate duty?

Senator Sir KENNETH ANDERSON:

– The honourable senator’s question intrigues me. On the one hand he talks in terms of not having a new tax because old ones do the job. On the other hand he rounds off a good performance by saying: ‘Let us take off some of the taxes we have already’. I suppose he cannot lose with that proposition. The fact of the matter is that governments, whatever their persuasion, have the responsibility to raise revenue for the purpose of governmental activity. It is a judgment they have to make and for which they have to accept responsibility. As I said last week, these things are traditionally looked at in the pre-Budget considerations, and therefore I cannot make any comment as to what the ultimate will be in relation to taxation. My instincts tell me that if you take a tax off at one end and you require finance you have to put a tax on the other end. But I do not think we should anticipate what the Budget will contain.

page 1953

QUESTION

TRADE

Senator FITZGERALD:
NEW SOUTH WALES

– My question is directed to the Minister representing the Minister for Trade and Industry. Has the Minister any intention of replying to the loud-mouthed Yanks, both United States Government spokemen and the Press, who have been very vocal against Australia in so many fields over the past week? Will he inform them that in addition to our troops in Vietnam, without foreign or Marshall aid the balance of trade between our two countries has favoured the United States by over $2,400m during the past 5i years - this excluding the Fill transaction and the huge profits made by American companies investing in Australia?

The DEPUTY PRESIDENT- The honourable senator will come to his question.

Senator FITZGERALD:

– Can the Minister advise what is being done to defend Australia’s name against such attacks?

Senator COTTON:
LP

– The honourable senator may take it that in matters of trade with the United States or with any other country Australia prosecutes its natural self interest to the best of its ability. It does so with discretion and dignity, lt does not engage in name calling against any other country to which it is selling goods. It is perfectly true that the trade situation with the United States has, through the years, improved progressively in favour of the United States, and therefore Australia ought to have increased trading opportunity in the United States for many things that we produce and that we think people in the United States should have a chance to buy. But in trading matters we conduct ourselves as no doubt the honourable senator thinks we should conduct ourselves, with both dignity and ability.

page 1953

QUESTION

CIVIL AVIATION

Senator BISHOP:
SOUTH AUSTRALIA

– My question to the Minister for Civil Aviation refers to previous answers by the Minister and further publicity about an application by the United States charter operator, World Airways, for 15 charter nights to Australia. Is it a fact, as the Minister said in reply, that the application was for control by World Airways of the charter services to and from Australia, or was there an agreement or a proposal that consideration would be given to 15 reciprocal charter flights from Australia to the United States? If not, has the Minister considered putting this up as an arrangement to resolve the issues between the Government and World Airways?

Senator COTTON:
LP

– What is at stake here is Australia’s self interest in civil aviation and international airline traffic both in the scheduled flights and in the charter business. The World Airways application came to us on the basis that certain people could be flown to Australia only by World Airways and that if World Airways did not fly them into Australia nobody else could or would. This was said to be the case. We as a department have been investigating whether or not this is the case. The latest information we have is that Qantas Airways Ltd was asked to make an application in the United States to provide facilities to fly the people referred to. We were told, I think last night that its application was turned down. It therefore begins to appear that there is some possibility - I underline ‘some possibility’ - that the people World Airways seek to bring here are people who would not otherwise come. The application is being considered for its effect on Australia’s tourist potential because it could improve that potential quite substantially, both now and in the future. The application is being looked at serious!/ and is being examined thoroughly, on the basis of what is Australia’s best position to take in its own self-interest.

page 1953

QUESTION

AUSTRALIAN LABOR PARTY DELEGATION TO CHINA

Senator HANNAN:
VICTORIA

– I direct my question to the Minister representing the Minister for Foreign Affairs. Has the Minister seen recent reports that a Chinese authority has invited an Australian Labor Party delegation to China, stating that this invitation has been extended by the Chinese ‘for discussions on questions concerning the relations between the 2 countries’? However, in a dignified and modest television interview last Sunday night Mr Whitlam did say that the Labor Party had by-passed the Government. Having regard to the proposed personnel of the ALP delegation, does the Minister think it necessary to remind these modern Marco Polos that Australia’s foreign relations are decided by the Government, not by Oppositions or Labor secretaries or even by university professors?

Senator Kennelly:

– I take a point of order. Is the honourable senator in order in referring to members of another place in the way he did, as ‘modern Marco Polos’? I thought it had always been the practice in this place, when we were referring to members in another place, to do so with respect.

Senator Rae:

– Marco Polo was held in the highest regard.

Senator Kennelly:

– Is it in order for such an inane interjection to be made by one who has not up to date graced this Senate with any great care? If you want it back you will get it. What are you squealing for? You are squealing like a lot of pups. On my point of order I ask: Is it in order for an honourable senator to refer to the members of another place in the derogatory manner in which Senator Hannan has done? He is, as you, Mr Deputy President, will admit, entitled to ask his question, but let us keep the dignity of the Senate as it ought to be and let us not have it as it would seem Senator Hannan would like it to be.

The DEPUTY PRESIDENT (Senator Bull) - Order! I am not prepared to uphold the point of order. Generally honourable senators should be careful with the language they use in this place. I think that should be kept in mind. I draw the attention of honourable senators, as Mr President has done so often, to the fact that too many statements are being made before a question is asked. Honourable senators should keep this in mind and come to their questions as quickly as they can.

Senator WRIGHT:
LP

– Insofar as the reference to Marco Polo is concerned, all I wish to say is that I think it is a matter of eager endeavour-

Senator Kennelly:

– I rise to point of order. Mr Deputy President, in view of the fact that you have ruled against my point of order relating to the disrespectful remark in which Senator Hannan likened some members of another place to Marco Polo, is the Minister in order in commencing his reply to the question by using the words ‘Marco Polo’?

Senator Willesee:

– I rise to order. Might I suggest, Mr Deputy President, that you instruct or request the Minister to answer that part of the question by Senator Hannan which asked for information and exclude reference to the propaganda content of the question. I suggest that this course be followed in all cases. From time to time we get questions which are very clearly outside the purview of a Minister’s responsibility. The present question does have a bearing on the fact that the main Opposition party in Australia is sending a delegation to Communist China to discuss the whole general question of relations between Australia and that country. I suggest that it would be for the good of all of us, especially if the Senate is to be able to rise some time this week, if the Minister were to proceed to answer the question itself.

Senator Hannan:

– I wish to make a personal explanation.

The DEPUTY PRESIDENT- Not at this moment, Senator.

Senator Hannan:

– I must have my say.

The DEPUTY PRESIDENT- I will allow you to make a personal explanation after the question has been answered.

Senator WRIGHT:

– Abstaining from all references that might disrupt proceedings, Senator Hannan asks me a question that relates to an invitation by a Chinese authority to a Labor delegation to discuss relations between Australia and China, and also refers to Mr Whitlam, the Leader of the Opposition in another place, making some statement about by-passing the Government. So far as I understand the situation it is perfectly legitimate, be he a private citizen or a public official, to travel to mainland China and engage in such activities there as he chooses. If the Opposition wishes to boast that that is by-passing the Government, that is a perfectly legitimate if indiscreet endeavour on its part, and the fruits of it will be revealed by experience. So far as earnest travel, almost endless travel, is concerned, that too is permissible by Australian parliamentarians provided that the arrangements are made in the ordinary way.

page 1955

PERSONAL EXPLANATION

Senator HANNAN:
Victoria

– I wish to make a personal explanation.

The DEPUTY PRESIDENT- Does the honourable senator claim to have been misrepresented?

Senator HANNAN:

– Yes, I have been misrepresented by Senator Kennelly, partly because he has never heard of Marco Polo before. Marco Polo was a most distinguished scientist and explorer who lived many centuries ago. He was a man held in very high repute in his own country. He travelled to China and helped to establish economic, social and cultural relations -

The DEPUTY PRESIDENT - Order! The remarks being made by the honourable senator do not constitute a personal explanation.

Senator Keeffe:

– I rise to order. I suggest that the honourable senator is not making a personal explanation.

The DEPUTY PRESIDENT - Order! I have already ruled in that manner.

page 1955

QUESTION

HEALTH

Senator O’BYRNE:
TASMANIA

– I wish to direct a question to the Minister for Health and I ask the indulgence of the Senate to make a brief prefatory statement to bring out the importance of this question. No doubt the Minister is aware of a recent announcement made by Dr Linus Pauling, the eminent United States scientist, twice winner of the Nobel prize for his work, to the effect that a copious intake of vitamin C will act as a preventive shield against the common cold. As so much discomfort, to say nothing of the loss of time in employment and other distress is caused by the common cold and influenza, will the Minister make a statement on behalf of the Department of Health, after consultation with the authorities of the Australian Medical Association, in order to encourage people to heed the advice of Dr Pauling on the subject of vitamin C?

Senator GREENWOOD:
LP

– I have read the recent publicity given to the opinions expressed by Dr Pauling and to which the honourable senator has referred. I am not in a position at present to give any assurance that a statement will be made but I am sure that medical opinion throughout Australia will know what has been said and I am equally sure that within my Department I will receive, in due course, opinions as to the views expressed by Dr Pauling. When I have this information and when there has been some general discussion on what has been proposed I will give consideration to the matters which the honourable senator has raised.

page 1955

QUESTION

SUGAR

Senator WOOD:
QUEENSLAND

– I address a question to the Minister representing the Minister for Trade and Industry. Has the Minister seen reports of the debate which is now raging in the United States of America between certain senators in relation to Australia’s selling mechanical sugar cane harvesters to Cuba? If so, is it not a fact that the company concerned, although manufacturing in Australia, is really a company based in Canada and not basically an Australian company? Has the Minister taken steps to inform the American senators and the American Government of this fact, particularly as there could be great damage to the sugar industry of Queensland if the quota of sugar supplied to America is cut or eliminated because of the stand by the United States of America?

Senator COTTON:
LP

– I have read the newspaper comment on the matter referred to by the honourable senator and what I say now refers to that comment. One of the comments was that this debate had all been generated by other sugar producing countries which are anxious to do something about getting part of the Australian sugar quota. That is the first point. Secondly, the company manufacturing these sugar harvesters is a company which manufactures farm machinery in Australia. It has had a pretty hard time and, as honourable senators will know, it has had some losses in its business operations in recent years. Therefore one is most anxious to see that that company generates as big jan export market for its machinery as is possible, at the same time generating employment and growth in Australia. In no sense of the word can one look upon sugar harvesters as strategic material and I should imagine that the Australian Government’s export policy in this respect would have no defence significance for any of our allies. This is a straight commercial transaction. It is equally true that the company concerned has a large North American capital content. I should imagine that all the things which the honourable senator has mentioned would be well known to the American Government but whether they are equally well known to American senators is another matter.

page 1956

QUESTION

HOSPITAL EQUIPMENT

Senator MILLINER:
QUEENSLAND

– Has the Minister of Health any knowledge of the installation in the New South Wales Liverpool District Hospital of sophistocated electronic and telecommunication equipment which allows instant communication between patients and nursing staffs? If the equipment installed is successful, will the Minister investigate the possibility of its installation in all public hospitals throughout the Commonwealth?

Senator GREENWOOD:
LP

– 1 am unaware of the equipment to which the honourable senator has referred. In those circumstances, because it arouses my interest, I would ask him to put his question on notice and I will endeavour to expedite a reply for him.

page 1956

QUESTION

POLLUTION

Senator RAE:

– I preface a question to the Minister representing the Minister for Shipping and Transport by stating that on 20th April I asked a question relating to the daily dumping of acid production effluent off-shore from the north coast of Tasmania and asked whether that material was harmful to marine life or to persons. I now inquire whether the Minister is in a position to give a reply to the question that I then asked.

Senator COTTON:
LP

– I have some information that bears on the question which was asked on 20th April 1971. It is not an answer to the question but is background information. I will be as quick as I can in presenting it to the honourable senator and will try to summarise it. The company involved is North West Acid Pty Ltd which approached both Commonwealth and State officials concerned prior to the commencement on the dumping of this material. Discussion took place between the Commonwealth and the State officials. It was considered that neither the Commonwealth not the State had any effective means of control over the dumping. The State Government asked whether legislative action was contemplated. The view adopted by the Commonwealth Department of Shipping and Transport and supported by legal advice from the Commonwealth Attorney-General’s Department was that this was substantially a matter which fell within the legal province and authority of the State Government, and it was informed accordingly.

As far as we can judge the material is being dumped approximately miles north east of Burnie. It is a waste product in the form of fine brown to purple powder. It is reported to contain iron, lead, zinc and copper oxide. We have been informed that a survey of the area was carried out by the Tasmanian Fisheries Division prior to dumping and that a further survey was carried out recently. We have not yet received any information as to the effect of the dumping on marine life. The Department is looking at this situation in conjunction with the State departments concerned and other interested parties to see whether this matter can be brought more tightly under control, whether it has any deleterious effect and, in general, at the problems which are caused by such dumping in oceans adjacent to the Australian coastline.

page 1956

QUESTION

NEW ZEALAND-AUSTRALIA FREE TRADE AGREEMENT

Senator KENNELLY:

– I ask the Minister representing the Minister for Trade and Industry whether he is aware that an American biscuit making firm now in Australia is importing biscuits from New Zealand. No doubt this done under the ambit of the New Zealand-Australia Free Trade Agreement. I inform the Minister that the importation of biscuits means that employees in the Australian industry are being displaced. The situation is similar to that which faces pea growers m Tasmania about whom we hear Senator Lillico speak.

Senator Devitt:

– Not only Senator Lillico.

Senator KENNELLY:

– I could include my colleague here, but I have listened to Senator Lillico on many occasions.

The DEPUTY PRESIDENT - Order! Senator Kennelly, ask your question.

Senator KENNELLY:

– I am. Will the Minister ask his colleague at least to request that goods which can be easily manufactured in this country be exempted from that Trade Agreement?

Senator COTTON:
LP

– The honourable senator asks whether he may ask me a question. The answer is that he most certainly may. He asks whether I will ask the Minister for Trade and Industry a question. Yes, I certainly will.

page 1957

QUESTION

POLLUTION

Senator WILLESEE:

– I ask of the Minister representing the Minister for Shipping and Transport a question which follows on a question asked by Senator Rae and also Senator Laucke’s question on oil pollution. Could the Minister take up with the State authorities the possibility of demanding that ships be cleaned at the wharf before they put to sea? I have already asked that this matter be referred to the Senate Standing Committee on Social Environment but it seems that it is becoming too urgent for that to be done. It is possible for the matter of ships being completely cleaned of bilge, oil, acid and all other rubbish before they put to sea to be dealt with as one of urgency?

Senator COTTON:
LP

– Yes, I think this matter ought to be put to the Minister for Shipping and Transport in the sense in which the honourable senator has asked. I shall do that.

page 1957

QUESTION

VIETNAM

Senator DEVITT:

– I ask the Leader of the Government in the Senate whether the security of Australian troops in Vietnam will be in any way diminished or lowered by the withdrawal of sections of our forces which the former Prime Minister, Mr Gorton, said would be the consequence of any partial withdrawal of traps from Vietnam. If this is so, what means will be taken to restore any such diminished security and ensure the safety of the remaining troops? If there has not been a reduction in the security and protection of our troops in Vietnam, on what judgment did the former Prime Minister operate when he emphatically claimed that to reduce troop numbers would expose our remaining troops to a risk which could not be tolerated, which proposition the community at large accepted in good faith?

Senator Sir KENNETH ANDERSONIt is axiomatic that in a consideration of movement of troops the very first question that has to be examined, and examined very carefully - our advisers are the people who have to advise the Government on it - is the effect of the movement, whether it is to Australia or from one area to another. That is a normal military procedure which many of us completely understand and I am sure Senator Devitt understands it. So I can only answer by saying that the circumstances at one time may not necessarily be the circumstances later on. In any movement of troops away from Vietnam probably the first consideration is given to the situation and security of those who remain.

page 1957

QUESTION

PENSIONER MEDICAL SERVICE

Senator KEEFFE:

– I ask the Minister for Health whether he can inform the Parliament how many doctors in Australia are refusing to treat pensioner patients? What steps are being taken by the Minister or the Government to compel those doctors refusing to treat pensioners to accept those persons as patients? Is the Minister also aware that some doctors are refusing treatment to pensioners but accepting those same pensioners as full-fee paying patients? Does this practice have the approval of the Minister?

Senator GREENWOOD:
LP

– I am not aware of the number of doctors who, as Senator Keeffe alleges, are refusing to treat pensioners. If the honourable senator has any information about doctors who are refusing to treat pensioners I would be appreciative of being supplied with it so that I may institute inquiries to see whether something can be done. But I should stress that doctors are not compelled to treat pensioners. Doctors have a freedom as to whom they will treat just as patients have a freedom as to the doctors to whom they will go. I would hope that if some pensioners were refused treatment by doctors they would use that opportunity and that reason to go to some other doctor who will treat them. The Commonwealth has instituted over the last 20 years the pensioner medical service under which for concessional fees doctors will provide general practitioner service for pensioners. Experience has indicated that this service is valuable, greatly utilised and greatly appreciated by the pensioners. As far as I am able to do so I will take all steps open to me to maintain efficiency of that service.

PETROL PRICES Senator DOUGLAS MCCLELLAND- I ask the Minister representing the Minister for National Development whether he is aware that in the southern portion of New South Wales, certainly at least between Albury and Wagga Wagga, there is a petrol price war between the established oil companies and that some of those companies are advertising discounts of about 7c a gallon for cash sales. Will the Minister agree that in a situation at this stage when costs are rising and freight charges are on the increase, and when petrol companies can offer this sort of discount, this action merely serves to indicate that Australian motorists have been fleeced for too long by these international oil companies? Will the Government inquire into this matter and order a public inquiry into the wholesale and retail prices of petrol throughout Australia?

Senator COTTON:
LP

– I am not the Minister for National Development. I represent him in this place and the other House in which he sits is not meeting at the moment. I can refer the question to him and to his Department and seek information. The only comment I make is that it is often inferred that international petroleum companies are making great fortunes at the expense of the Australian people. About a year ago there was an article in the ‘Economist’ which is worth looking at. lt records the total operating costs of the major international oil companies in everything they do - selling petrol, producing petrol, drilling for oil, shipping petrol and oil, the whole of the ramifications of their business. It shows that some of them are losing money. Possibly the best they receive is 7 per cent return on their capital.

page 1958

QUESTION

TAIWAN

Senator FITZGERALD:

– My question is directed to the Leader of the Government in the Senate. Does the statement of the

Minister for Foreign Affairs that Taiwan’s place in the United Nations in the name of China for the past 25 years has been somewhat fictional mean that the Australian Government will now officially support China’s admission to the United Nations?

Senator Sir KENNETH ANDERSON:

– The honourable senator asks me to express a view on a matter of Government policy. I think that is strictly forbidden at question time.

page 1958

QUESTION

CIVIL AVIATION

Senator KENNELLY:

– I ask a question of the Minister for Civil Aviation and I request no smart answer to it. I preface my question with a few remarks. Some time ago the Minister was kind enough to send me a letter in answer to a question concerning the collection of baggage at the Melbourne air terminal of Trans-Australia Airlines. I took that letter to the Minister and showed him that he had signed something that was absolutely stupid and, I regret to say, false. He promised me that he would get me another reply. Can he inform me when I will receive the reply?

Senator COTTON:
LP

– At the moment, no; within a day, yes.

page 1958

QUESTION

COMMUNIST CHINA

Senator GAIR:
QUEENSLAND

– I direct a question to the Minister representing the Minister for Foreign Affairs. Will the Minister request the Minister for Foreign Affairs to facilitate arrangements for Mr Whitlam, the Leader of the Australian Labor Party delegation to Communist China, to meet his counterpart when he is in that country with a view to ascertaining whether his counterpart enjoys the same measure of freedom, liberty, privileges and concessions as Mr Whitlam enjoys as Leader of the Opposition in this Parliament?

Senator WRIGHT:
LP

– The point is well taken that Mr Whitlam will search in vain for an Opposition or a Leader of it in mainland China. The answer to the honourable senator’s question is quite willingly, yes.

page 1958

QUESTION

REFUGEE SEAMEN’S CONVENTION

Senator MULVIHILL:

– I direct a question to the Minister representing the Minister for Foreign Affairs. By way of preface I refer to an earlier answer I received from the Minister representing the Minister for Immigration in relation to the ratification of the Refugee Seamen’s Convention. In that answer the Minister said that the Government had some reservations about this Convention. I now ask the Minister: What was the nature of the Government’s objection to this convention? What stage has been reached in relation to Australia becoming a signatory to the Convention?

Senator WRIGHT:
LP

– I would like to defer giving an answer to the honourable senator’s question. I shall endeavour to obtain the answer this week but otherwise I shall have to ask that the question be put on notice.

page 1959

QUESTION

BUREAU OF MINERAL RESOURCES

Senator KEEFFE:

– My question is directed to the Minister representing the Minister for National Development. Can the Minister inform Parliament of the current manpower strength of the Commonwealth Bureau of Mineral Resources? What are the current staff shortages and to which categories do the shortages apply? What steps are being taken to overcome such staff shortages?

Senator COTTON:
LP

– I think it will be appreciated that I would need to seek an answer because specific information is called for. I shall do that for the honourable senator.

page 1959

QUESTION

TELEVISION STATIONS

Senator Douglas McClelland:
NEW SOUTH WALES · ALP

– I ask the Minister representing the PostmasterGeneral: Has he seen a report that Riverina Television Ltd, RVN, and Albury Upper Murray Television Ltd propose a share exchange which will merge their interests? ls the Minister also aware that on 17th February last I raised in the Senate the question of the merger of RTN8 Lismore and NRN11 Coffs Harbour? Will the Minister request the Australian Broadcasting Control Board to furnish the Parliament with full details of all mergers that have taken place in the television sphere of mass media since television was first introduced in Australia? Because it appears that this medium is more and more being controlled by fewer people, will the Minister ask the Board to look at this whole question of mergers with a view to ensuring a diverse and widespread ownership of television throughout Australia?

Senator GREENWOOD:
LP

– I am unable myself to verify the assumptions which underlie the honourable senator’s question. I do not know whether what he alleges is occurring. But I have noted the points which he has raised and I will refer the matter to the Postmaster-General for decision by him.

page 1959

QUESTION

FINANCE COMPANIES

Senator BYRNE:
QUEENSLAND

– I direct my question to the Leader of the Government in the Senate in his capacity of Minister representing the Treasurer. Has the Minister seen recent rather alarming references to the growing element of control of Australian finance companies which has been passing into the hands of foreign banks and foreign corporations? As the control of finance through these companies in Australia is completely outside the banking system and not subject to the disciplines of the Banking Act, does the Minister think that a guide line should be laid down for finance corporations as to the amount of equity capital that may be controlled outside Australia different from the guidelines operating in relation to public companies generally? If so, will he commend to the Government that this matter should be investigated because, of course, it is the finance companies outside the banking system that have a tremendous impact on the ebb and flow of credit thereby determining the economic climate of Australia?

Senator Sir KENNETH ANDERSON:

Yes, I have seen a recent statement in relation to the intrusion of foreign investment into a particular finance company in Australia. I am aware, as is Senator Byrne, that certain guidelines are provided in relation to the banking system. As to the balance of the question, I believe that this aspect of the matter would be under constant examination by the Treasurer and the Department of the Treasury. Whilst I will refer to the Treasurer the series of question put to me by the honourable senator, I am sure that these are matters that are being closely examined at the present time.

Whilst I am on my feet, may I ask for the co-operation of the Senate to bring question time to an early conclusion if that is possible. The Senate has a lot of business on the notice paper today that we would want to get through soon.

page 1960

QUESTION

PATHOLOGY TESTS

Senator MULVIHILL:

– I direct my question to the Minister for Health. I hark back to an earlier answer he gave me in reply to a question on pathology tests. 1 ask the Minister: In view of weekend Press comment, is he in a position to elaborate further on any negotiations that he may or may not have had with the medical fraternity?

Senator GREENWOOD:
LP

– I do not think I can elaborate beyond saying this: I have received a submission for my consideration from the Medical Benefit Schedule Advisory Committee as to what should be an appropriate fee for automated pathology. The submission is currently receiving my consideration.

page 1960

QUESTION

RURAL FINANCE

(Question No. 1127)

Senator DEVITT:

asked the Minister representing the Minister for Primary Industry, upon notice:

  1. Are some primary producers having considerable difficulty in raising finance for the purchase of stock essential to enable them to reach the full economic potential of their properties.
  2. Is financing in this area largely in the hands of Stock and Station Agents and similar quasibanking organisations whose high rates of interest and other requirements place additional strains on the primary producer.
  3. Can finance for primary producers be more readily made available through the normal banking system; if not, why not.
Senator DRAKE-BROCKMAN:
Minister for Air · WESTERN AUSTRALIA · CP

– The

Minister for Primary Industry has provided the following answer to the honourable senator’s question:

  1. It is understood that some primary producers are experiencing difficulties in obtaining finance to purchase livestock because of uncertainty regardin the current and prospective economic viability of their enterprises.
  2. The information available on indebtedness in the rural sector confirms the importance of Pastoral Finance Companies in the provision of credit to primary producers. A substantial proportion of this credit would be for the financing of livestock purchases. There are, however, other sources of credit available for these purposes. For example the Commonwealth Development Bank lends for sound developmental proposals including the purchase of livestock when credit from other sources is not available on suitable terms and conditions.
  3. Finance for primary producers is already being made available to a large extent through the major trading banks, although other sources of credit are available to the rural sector.

Having regard to the special difficulties facing primary producers, the Government has asked the Reserve Bank that loans by the Trading Banks to rural borrowers be at preferential interest rates compared with rates charged to other borrowers. Moreover banks have given assurances that, consistent with commercial viability, they are maintaining their long standing favourable treatment of rural borrowers and that they assess new rural lending propositions sympathetically. Loans made by banks depend on their assessment of individual propositions. Preferential rates for rural borrowers apply also to rural loans from the Commonwealth Development Bank.

The States Grants (Rural Reconstruction) Act 1971 provides for advances to purchase additional livestock as part of the debt reconstruction arrangements. However the provision of funds through the rural reconstruction scheme is not intended to displace finance normally available from other sources.

page 1960

LOCAL GOVERNMENT

(Question No. 1140) Senator MILLINER asked the Minister representing the Prime Minister, upon notice:

Will the Prime Minister invite local government representatives in the States to meet the Treasurer and himself so that they may be informed, at first hand, of the financial problems of local governments, in view of the Prime Minister’s acknowledgment of the fact that local authorities are experiencing serious financial difficulties and because recognised channels of making representations to the Federal Government through State Governments have not been eminently successful.

The answer to the honourable senator’s question is as follows:

It is the Government’s long-held view that, as local authorities are constituted and function under State laws, it is the responsibility of State Governments to assess and provide for their financial needs. For this reason the Government considers that direct consultations on financial matters between representatives of the Commonwealth Government and representatives of local authorities would be neither fruitful nor proper.

However, as has been indicated from time to time in the past, if State Governments were to call a conference to discuss local government finances, the Commonwealth Government would be prepared to participate.

page 1960

QUESTION

INDONESIA

Senator WRIGHT:
LP

– On 20th April Senator Sir Magnus Cormack asked me the following question:

I have seen a reference, which has been claimed as factual, to the effect that the Indonesian Government has restricted the movement of foreign diplomats in the Djakarta area. I should be grateful if the Minister would inform me whether this is true. This is an abnormal diplomatic practice. Therefore, I would like to know whether there is any reasonable explanation for the Indonesian Government adopting this practice at the present moment?

I now give the following answer on information furnished to me by the Minister for Foreign Affairs:

In a circular note dated 31 March 1971 the Indonesian Government requested the ‘cooperation and understanding’ of members of diplomatic and consular missions in Djakarta not to visit the Provinces during the period 1 April to IS July 1971; members of consular missions in the Provinces were similarly requested not to visit subdistricts during the same period. The note said that where a visit to a Province or region had to be made urgently, the Missions might obtain a special permit to do so.

In its circular note of 31 March the Indonesian Department of Foreign Affairs stated:

In the month of July 1971, a General Election will take place throughout Indonesia, the preparations of which are now in progress. To ensure the smooth performance of the General Election, the Government has to maintain an orderly situation of tranquillity and security during the preparations for election day and thereafter.

It is to be noted that the Indonesian authorities have placed no restrictions on the movement of foreign journalists within Indonesia during this period and that the entry of foreign tourists has actually been facilitated by new measures announced in April.

Shortly before the circular was issued, the Military Commander of Central Java, Major General Widodo complained in public of the activities of certain, unnamed, foreign diplomats. It appears likely therefore, that the circular was issued because of concern at the possibility of foreign diplomats from some countries seeking to take advantage of the period of heightened political activity prior to the elections, rather than from any desire on the part of the Indonesian authorities to restrict opportunities for the outside world to observe the election campaign.

page 1961

DOCTORS’ FEES

Senator GREENWOOD:
LP

– On 5th May

Senator Milliner:

asked me a question concerning observance by doctors of the most common fees for medical services.

In the course of my reply I stated that I intended to release figures obtained from a survey by my Department. I am now in a position to provide information on the level of observance of the most common fees for each of the States, excluding Victoria, during the December quarter of 1970. These figures are the results of a continuing computer survey of the observance by doctors of most common medical fees in respect of contributors’ claims processed by the principal medical benefits organisation or organisations in each State, with the exception of Victoria for which the supply of data started at the end of December 1970.

The survey for the December quarter of 1970 shows that the great majority of medical fees under the new health benefits plan were at, or below, the common fee levels. In New South Wales 77 per cent of all medical services were at or below common fee levels. In Queensland the figure was 76 per cent, in South Australia 88 per cent, in Western Australia 86 per cent and in Tasmania 71 per cent. The survey of common fee observances was carried out by my Department using information supplied by health funds relating to around 2.9 million medical services for which benefit claims were made during the December quarter 1970.

Although the common fee system came into operation on 1st July 1970, it is only now possible to announce results of the survey because of the long period necessary to finalise all benefit payments. I would mention that the common fee observance level varied between general practitioners and specialists services but in all categories the majority of fees were at or below the common fees during the early operation of the scheme. For general practitioner surgery visits, which comprise some 58 per cent of all medical services surveyed, the observance figures were 76 per cent in New South Wales, 75 per cent in Queensland, 90 per cent in South Australia, 87 per cent in Western Australia and 67 per cent in Tasmania. For home visits by general practitioners the figures were: New South Wales 73 per cent, Queensland 75 per cent, South Australia 83 per cent, Western Australia 79 per cent and Tasmania 50 per cent.

For operations, the common fee observance levels were: New South Wales 81 per cent, Queensland 77 per cent, South Australia 81 per cent, Western Australia 83 per cent and Tasmania 77 per cent. I have had prepared a table showing the proportion of fees at or below the most common fee for a selection of medical services in all States except Victoria and, 1 with the concurrence of honourable senators, I incorporate the table in Hansard.

The common fee system was designed to provide medical insurance contributors with guaranteed levels of rebates on the great majority of medical bills and it is therefore vitally important that doctors observe the common fees. I am pleased that the Australian Medical Association has given an assurance that it will continue to advise and encourage its members to adhere to the common fees. I also mention that it is Australian Medical Association policy that doctors should be prepared to discuss their fees with patients. However, individual medical insurance contributors also have a responsibility to inform themselves about medical fees if they wish to be assured of the amounts they will have to pay in the event of illness. They can do this simply by inquiring whether their doctor makes a practice of charging the common fees.

page 1962

QUESTION

WHEAT

Senator DRAKE-BROCKMAN:
CP

– On Friday, 7th May, Senator Sim asked me a question about a report that New South Wales had used money made available to cover special allocations of prime hard wheat for the general run of deliveries with the result that New South Wales growers had been paid for an additional 14 million bushels. He asked whether this report was correct, and would not this action be contrary to the intention of controlled wheat production in Australia. I now have additional information which I give the honourable senator.

The administration of quotas in any State is a matter for the appropriate State

Authorities. In New South Wales both the Grain Elevators Board and the Wheat Quota Review Committee have responsibilities which are denned by the State quotas legislation. The Australian Wheat Board makes payments to growers for wheat delivered within their quota entitlements. The basic quota for New South Wales for the 1969-70 season was 123 million bushels. A special quota of 7 million bushels for prime hard wheat brought the total for the State to 130 million bushels. The Wheat Board was asked to provide information on deliveries against the State quotas. The Board has now advised as follows: New South Wales growers delivered approximately 145.8 million bushels of which 16.1 million bushels represented overquote deliveries. Payments by the Board to New South Wales growers have been made in respect of 129.7 million bushels, including 6.3 million bushels of prime hard and 0.6 million bushels of readily saleable varieties.

From further information provided by the Board it appears that a shortfall in prime hard deliveries - 0.7 million bushels - was utilised to take in about 0.6 million bushels of overquote wheat which would have qualified as readily salable, being made up of the variety Falcon and soft biscuit types. The Board has expressed the view that treatment in this way of the relatively small quantity involved avoided difficult administrative problems associated with identifying transactions which qualified as readily salable and the subsequent pro rata distribution, among eligible growers, of the proceeds of sale. It is clear from this that the allegation that New South Wales growers have been paid for 7 million bushels of f.a.q. wheat in excess of their quotas is not correct. It seems, however, a small quantity, 0.6 million bushels, was treated in this way and the Minister for Primary Industry is pursuing this matter with the New South Wales Minister for Agriculture and the Wheat Board.

The only other point 1 have to make concerns the provision of funds for the Wheat Board’s operations. The practice has been that the Government makes arrangements with the Reserve Bank under which the Rural Credits Department of the Bank makes funds available to the Wheat Board to enable the Board to meet pool expenses, such as freight, storage and handling, and to pay growers a first advance on wheat delivered to it. Limits on the funds available are determined on the basis of aggregate quotas, but it is in no way the responsibility of the Bank to relate advances to the Board to the quotas set for individual categories of wheat or, for that matter, to State quotas and deliveries.

page 1963

QUESTION

DEFENCE FORCES: SUPPLY OF FOODSTUFFS

(Question No. 1041) Senator WEBSTER asked the Minister representing the Minister for Primary Industry, upon notice:

  1. Which authority or Commonwealth Government department is responsible for the control of standards of quality of foodstuffs supplied to the Australian armed forces and to government catering services?
  2. Does the Commonwealth inspect and approve the quality of raw materials used in the canning or manufacture of items of food provided to the Australian armed forces and to government catering services?
Senator DRAKE-BROCKMAN:
CP

– The

Minister for Primary Industry has provided the following answer to the honourable senator’s question:

  1. The Service departments determine the standards of foodstuffs required for the Australian armed Services. However, as a general rule the Commonwealth food specifications are used for this purpose. These specifications are drawn up by an inter-departmental Committee convened by the Department of Primary Industry. The procurement of Service foodstuffs is the responsibility of the Department of Supply in its capacity as the Commonwealth purchasing authority.

The standards of quality for foodstuffs for government catering services are the responsibility of the respective purchasing authority.

  1. The Commonwealth food specifications prescribe standards for raw materials used as a basis for processed foods in respect of those foodstuffs for which such specifications are considered to be necessary. For some products specific specifications for raw materials are not included because deficiencies in the raw materials would be evident in the finished processed product. By arrangement with the Department of Supply or the Service department concerned the Department of Primary Industry undertakes the inspection of raw materials used in Service contacts in respect of foodstuffs, such as meat and meat products, eggs and egg products and processed fruits, which are prepared in establishments under continuous supervision by the Department of Primary Industry.

Information available indicates that for products not inspected by the Department of Primary Industry the extent of inspection of raw materials varies depending upon the area of procurement and the type of commodities concerned.

Government catering services are provided by a very wide range of authorities which are respon sible for procurement arrangements and quality enforcement. Indications are that these organisations rely mainly on the inspection of the product at time of delivery.

page 1963

QUESTION

HOUSING

(Question No. 1122) Senator GEORGES asked the Minister representing the Minister for Housing, upon notice:

Are increasing numbers of young Australians experiencing extreme difficulty in obtaining housing finance?

Are these persons being forced to obtain housing finance at excessive and crippling rates of interest from finance corporations, some of which are closely linked with banks which are refusing such finance at normal housing loan interest rates? If so, will the Government take action to alleviate the position?

Senator WRIGHT:
LP

– The Minister for Housing has provided the following answer to the honourable senator’s question:

  1. The number and value of housing loans to individuals approved by the savings banks and permanent building societies during the first half of this financial year exceeded both the number and value of loans approved by those institutions in the preceding six months.
  2. As there are no statistics of the number of housing loans approved by finance corporations, there is no factual basis on which to answer this question.

By amending the Banking (Savings Bank) Regulations in October 1970, the Government did, however, take steps to increase the ability of savings banks to provide money for housing by enabling them to lend up to 40 per cent of depositors’ balances for this purpose.

page 1963

QUESTION

PRIMARY PRODUCTION

(Question No. 1165)

Senator WEBSTER:

asked the Minister representing the Minister for Primary Industry, upon notice:

  1. ls it the function of the Department of Primary Industry to make inspections of raw materials from which edible products are manufactured in Australia? If so, has the Department ever inspected the quality of tallow which finds its end use in Margarine which may be exported?
Senator DRAKE-BROCKMAN:
CP

– The

Minister for Primary Industry has provided the following answer to the honourable senator’s question:

  1. The inspection functions of the Department of Primary Industry are confined to the inspection of products intended for export. Such inspections encompass the examination of raw materials where it is considered necessary and it is practicable to do so. An export standard for margarine is prescribed in the Exports (Dairy Produce) Regulations. This standard prohibits the use in margarine intended for export of any fat obtained from diseased stock. However, export inspections of margarine are of the finished product only.

page 1964

QUESTION

EDUCATION OF HANDICAPPED CHILDREN

Senator WRIGHT:
LP

– On 6 April 1971 Senator Milliner asked me, as Minister representing the Minister for Education and Science, the following questions:

Has the Minister’s attention been drawn to Information Report No. 8 of the Sir Winston Churchill Memorial Trust which sets out the findings of Mr B. E. Reynolds, a Churchill Fellow, on his observations while travelling overseas of the latest trends in teaching deaf children and multiple handicapped children? Will the Minister examine the contents of the report to ascertain whether any of these overseas teaching methods can be incorporated in syllabuses in the respective areas in Australian schools?

The Minister for Education and Science has now provided the following answer:

I have examined the information Report by Mr B. E. Reynolds on his observations of overseas methods of teaching the deaf and multiple handicapped deaf child. The three methods observed by Mr Reynolds were the Rochester Method, the Combined Method and the Russian Neo-oral Method. Mr Reynolds stated that he considered the Combined Method of instruction used by teachers at the Victoria School for Deaf Children is ‘equal to, if not superior to, any combined method being used in any one of the countries visited’. He also states that a relatively new method, involving the use of ‘cued speech’, is being used experimentally at a number of schools for the deaf in Australia.

These examples show that at least some Australian schools for the deaf are well abreast of overseas teaching methods. Most schools for the deaf in Australia are run by State Education Departments who are responsible for drawing up the curriculum for use in the school. Independent schools for the deaf are responsible for determining their own curricula, although inspectors from State Education Departments visit these schools from time to time to ensure that satisfactory standards are maintained.

However, in line with the Commonwealth’s general policy of encouraging and assisting curriculum development, the Government would be prepared to consider a proposal from two or more States for support of a curriculum project in this area.

The Honourable Senator may be interested to know that the report to which he referred has been printed in full in Volume 11 No. 3 of the periodical ‘The Australian Teacher of the Deaf for October 1970. It is likely that Mr Reynolds’ article has been read by those responsible for developing syllabuses for use in schools for the deaf.

page 1964

QUESTION

COMMONWEALTH SCHOLARSHIPS

Senator WRIGHT:
LP

– On 14th May 1971 Senator Bishop asked me, as Minister representing the Minister for Education and Science, the following question:

My question relates to the report in this morning’s Press of a nearly blind student at Laverton High School who was very talented but who was unable to sit for the Commonwealth secondary schools scholarship examination because there are no facilities for people with this incapacity. In view of the fact that other handicapped persons who have sight can sit for such examinations will the Minister see to what extent special facilities can be made available to avoid any discrimination against people without sight.

The Minister for Education and Science has now provided the following answer:

The partially blind student of Laverton High School Victoria, will not be denied the opportunity of competing for the Commonwealth scholarship examination. In cases where a student is unable . to sit for the examination, arrangements are made where a student can be considered for a scholarship on the basis of school record.

The Royal Victorian Institute for the Blind has in the past made arrangements to enlarge papers so that students with partial sight can sit for the examinations. Arrangements have been made for 3 partially blind students to sit for the 1971 examination under these conditions at the Institute’s School, Burwood, Victoria. If the Laverton High School pupil’s sight is sufficient for her to make use of enlarged papers then the Victorian Education Department can arrange for her to sit for the examination at Burwood, or for a set of the papers to be sent to Laverton High. As the examination papers contain a number of pictures, symbols and diagrams, the Australian Council for Educational Research is negotiating with the Victorian Institute for the Blind to translate them into braille to assist totally blind students. The Minister said he was concerned that information available to him showed that teachers of Laverton High had not contacted the Victorian Education Department on this matter. If they had made enquiries they would have learned that facilities were provided for blind or partially blind students. Secondary scholarships to blind students have been awarded in the past, and no doubt will be awarded in the future, based on the student’s scholastic record.

page 1964

QUESTION

NOTICES OF MOTION

Senator WILLESEE:
Western Australia

– I move:

That notice of motion No. 4 be withdrawn from the notice paper and brought back in the appropriate position on 17th August.

Senator Sir Kenneth Anderson:

– There seems to be some doubt in the mind of Senator Greenwood. There will be 6 sitting days after today in which to deal with this ordinance.

Senator WILLESEE:

– We can put it on tomorrow if the Leader of the Government has any objection to my motion.

Senator Sir Kenneth Anderson:

– Leave it as it is at the moment.

Question resolved in the affirmative.

Senator WILLESEE:
Western Australia

– I move:

The reasons for notices of motion Nos 4 and 5 being treated like this is that the Leader of the Government has checked up and has found that there will be enough sitting days to enable the Senate to disallow the ordinance and the regulations when we return on 17th August. That is not so with the ordinances referred to in notices of motion Nos 1 and 2. As honourable senators know, if they had not been dealt with before the Senate adjourned the time in which they may be disallowed would have lapsed, and of course the Government did not want that.

Senator Sir Magnus Cormack:

– If the Senate so desired.

Senator WILLESEE:

– Of course. I always speak with that hanging over my head. In the case of notices of motion Nos 4 and 5 nothing will be lost because it is near the end of the sittings. I suggest that they be brought back on the notice paper on 17th August, at which time they may still be disallowed if the Senate so desires.

Question resolved in the affirmative.

page 1965

LOAN (FARMERS’ DEBT ADJUSTMENT) BILL 1971

Second Reading

Debate resumed from 6th May (vide page 1464), on motion by Senator Sir Kenneth Anderson:

That the Bill be now read a second time.

Senator WILKINSON:
Western Australia

– When we were dealing with the States Grants (Rural Reconstruction) Bill it was indicated that this Bill would be debated in conjunction with it and also in conjunction with the motion proposed by Senator Murphy to refer the primary industry problem to the Senate Standing Committee on Primary and Secondary Industry and Trade. I indicated at the time that the Opposition would not oppose this Bill. As a matter of fact we can see considerable value in using the funds which had been paid out previously in the execution of this Act to the various States in conjunction with the rural reconstruction scheme. It is noted that Tasmania will be excluded from the operation of this Bill because a grant was made to that State for particular purposes. It is also noted, although it has nothing to do with the Bill, that in his second reading speech the Minister for Supply (Senator Sir Kenneth Anderson) advised that the Commonwealth Banking Corporation proposed to widen the scope of activity of the Bank to make it more acceptable to farmers and easier for them to get certain types of assistance. I do not want to say any more. We are in support of this Bill and we wish to give it a speedy passage.

Senator KANE:
New South Wales

– As I indicated last week, it is my intention to move an amendment. I gave notice of it last week and I now formally move:

At end of motion add - but the Senate is of the opinion:

that the most rapid and the most effective emergency relief to the primary producers would be achieved by the Commonwealth establishing a national rural finance corporation outside the banking system; such corporation to be financed by the Commonwealth to fund and re-finance rural debts, making provision for interest free non-redemption periods of the debts so funded;

that such corporation should be especially structured to the cyclical nature of rural production and should provide outgoing finance by way of low interest loans over a repayment period up to 25 years; and

that the Commonwealth Government should retire from the field of estate duties thus granting relief from the dual incidence of succession duties imposed by both the Commonwealth and State governments.’

Senator Little:

– I second the amendment.

Senator KANE:

– I wish to speak briefly to the amendment. Mr Acting Deputy President, as we point out in the early part of the debate on the States Grants (Rural Reconstruction) Bill the present disastrous position in our rural industries will soon reach a stage of national crisis unless urgent remedial steps are taken.

Senator Douglas McClelland:
NEW SOUTH WALES · ALP

– We have reached that stage now.

Senator KANE:

– That is probably true. This is why we propose the immediate establishment of a national rural finance corporation which will be adequately financed and structured so to provide low interest bearing loans. This corporation should immediately begin to fund and refinance rural debts, making provision for interest free and non-redemption periods of the debts so funded. The position as we see it - I think it is generally accepted - is that agriculture is nation wide and most of the States can produce the majority of agricultural products which are common to all States. With improved and widespread fast transport facilities serving the exigencies of capital and main city needs flexibility is essential. Only a national agricultural bank - if I may use that term, because it is in fact what the proposed rural finance corporation would be - could cover the needs of such a varied and diversified range of products and circumstances. Agricultural products are not in any way comparable with trade and industry, due to the nature and the length of the operations involved, to the rate of yield, to the variable conditions such as weather, disease and so on, to demand, to investment in land, the equipment and to the available transport facilities.

It is not mere conversion or processing of the raw materials. There are many variables including weather patterns, disease, markets and so on. A man is largely powerless alone in the face of such conditions. There is also the factor that agricultural products are perishable. Compared with general industry agricultural systems are cumbersome and once commenced it is difficult to adapt production quickly or easily to new economic conditions. For example, work once started cannot be stopped, production cannot be diminished nor can it be redirected. No organisation has been successful in effectively regulating output or choice of crops. The sugar industry has been most successful in terms of actually agreed upon interna) organisation but even that industry must contend with hitherto unmanageable world supply and demand.

There is a very great variety and diversification of agricultural undertakings in a state of constant change and activity. Therefore credit which is available to the agricultural industry must be different in scope and approach from that which is available to manufacturers and traders. Agricultural operations cover greater periods of time than other processes. Even short term credits should extend over, say 9 to 12 months. Yield on capital invested is low. The farmer does not fix prices, so profits are limited by circumstances he cannot control. It is for these reasons that we feel that an entirely new approach to the financing of agricultural industries is needed. As regards the present crisis, it seems that farmers with good financial prospects are able to get the finance they require, but this rural finance corporation is designed primarily to help the many thousands of farmers whose farms will not produce a decent income at present prices. These farmers need special consideration. A decent income is needed for them to service interest charges and repayments on loans.

The attitude of the DLP is that the emphasis should be on people and not on properties; on the men and women of the rural industries and not on the industries themselves. Very many farmers do not want to leave their farms, and every effort should be made, we say, to ensure that their income is a decent one by providing them with financial arrangements that the rural finance corporation could provide. Sometimes it will be possible to ensure this on the existing farm by switching crops, by using new techniques and by using more efficient equipment. Sometimes it will require property enlargement so that the farm can operate on a larger scale. Some farmers will be willing to shift to more productive employment if given a chance to do so. The rural finance corporation proposed by the amendment we have moved could make grants and loans for the re-establishment of men wanting to leave their farms. They should be able to get generous compensation - at an average valuation over a run of past years - for their farms which would enable them to invest in some business or other undertaking should they desire to do so.

It is most essential, as we see it, that the farmers’ debts be funded as is proposed by the amendment and that farmers be granted a moratorium, so to speak. I hate to use that term since it is so offensive in another context, but we mean that there should be an interest free and non-repayment period in respect of the loan so funded. I do not propose to say more than that. The third proposition that we are submitting concerns the Commonwealth Government vacating the field of death duties, and I understand that Senator Byrne will deal with that aspect. I commend the amendment to honourable senators.

Senator BYRNE:
Queensland

– I rise for only a limited purpose. This Bill brings back memories of the days of the big depression in the 1930s, because the funds that already stand in the State accounts are funds that were provided by the Commonwealth Government way back in 193S, in the latter days of the depression, to enable farmers then stricken by the consequences of the depression to fund and refinance their debts. Those funds have stood in the State accounts in varying amounts in all the intervening years. Unfortunately I do not have the figures with me, but I think that in Queensland many millions of dollars accumulated interest over the intervening period. Other States - 1 instance New South Wales - have drawn more liberally on those funds, but there would in all be a tremendous amount standing to the credit of those accounts in the States; therefore it is rather salutary that the condition of primary industries has now reached a situation where - we are recapturing some of the funds provided by legislation in the days of the depression. That in itself is an indication of the seriousness, depth and extent of the rural crisis.

I rise more particularly because of a comment .made by Senator Wilkinson when speaking on the previous Bill. He pointed out that our proposal that the whole of the problems of the rural economy, be referred to an expert commission of inquiry involved a long range investigation and was not a short term solution to these problems. I merely want to point out that we realised that, and we stated very definitely that we thought the rural economy was in such a condition that it had to be investigated from the bottom to the top over the whole depth of its structure but that we realised also that that would necessarily be a long range investigation. And, as we said, the intention was to project the future of the rural economy up to the year 2000 and as that would necessarily be rather poor consolation to farmers in financial difficulties it is for that reason that on the other leg of our presentation we submitted the propositions which are contained in the amendment moved by my colleague Senator Kane and seconded by Senator Little.

These are the immediate short term solutions: The availability of finance through a specifically structured finance corporation adapted to the cyclical nature of the rural industries, the relief from estate duty of rural producers in particular - and perhaps everybody in general - and that estate duty should cease to be a field of operation of the Federal Government, and certainly the dual incidence of estate duty should be abandoned. In respect of the rural industries particularly, while more recently there was a lifting of the level of exemption from Federal estate duty in an amendment passed during the last sessional period, the hard fact of life is that the value has virtually completely fallen out of many rural properties; yet for the purpose of calculating duty on succession by death the value of the property is still assessed at a figure quite unrelated to the real market value of the property or the capacity to borrow money on it against the payment of duty. In addition to this there is the dual incidence caused by the Commonwealth and the States all attempting to collect duty from this greatly impoverished and depreciated asset.

Our first proposition relates to a finance corporation which would fund the debts of farmers and provide finance outside the banking system in a particular way with particular solicitude and with particular equipment to equate with the demands of the rural industries. Our second proposition relates to relieving the rural producer of the attempted realisation of the only capital asset he has in life - his property - which is going to be levied twice for duty. These are the short term solutions in addition to the long term solutions we projected in our amendment to the States Grants (Rural Reconstruction) Bill. For that reason we commend the whole of this amendment to honourable senators, including the finance corporation proposal, the method of providing finance within that corporation and the abandonment of Federal estate duty. We trust that honourable senators, conscious of the real, demanding and urgent needs of the rural economy, will find in these propositions some attempt to discover a solution to the problems of the farmers and will find it possible to support them. Therefore I commend the amendment of the Democratic Labor Party to honourable senators and ask for their support.

Senator MILLINER:
Queensland

– I rise merely to speak in terms of short term policies. I have asked the Government on at least 3 occasions since 1 have been in the Senate to give consideration to reviewing the zone allowances set out in the income tax legislation for people living in remote areas of the States. I have received a very polite answer to the effect that these matters will be considered by the Government at Budget time. Although the Government may have considered them, there has been nothing of a positive nature coming from discussions. People in western Queensland, in particular, are in severe difficulties. I do not think anyone would doubt that statement. Members of the Australian Country Party referred to this situation last Friday, and it is true indeed. Businesses are falling off and people are finding it difficult to maintain jobs in the area. If they are to be encouraged to stay in such areas I know of no greater incentive than for them to be treated more leniently with respect to taxation deductions.

Senator Little:

– It will not help the people who are making a loss, will it? They are not making an income.

Senator MILLINER:

– I am not speaking of the farmers. I thought I had discussed this at length on Friday when I criticised the Bill which Senator Little and his colleagues saw fit to favour. The Australian Labor Party senators voted against it because of the things Senator Little now says. I am pleading for the ordinary people who live in these areas because the scale of taxation has been eroded over the years and the zone allowances are completely disproportionate to what was the original intention. I commend to the Government that it give favourable consideration to reviewing zone allowances for taxation purposes when it next considers this matter. This morning I received from the Leader of the Government in the Senate (Senator Sir Kenneth Anderson), a reply to a question and I hope that local authorities will take up that reply because local authorities are finding it difficult to maintain the work schedule that is required urgently in some of these remote areas. Some people in the western areas of Queensland do not have the money to pay their rates and all the honourable senators know that local authorities rely heavily and principally on the rate money they collect. I hope that if members of any local authority are listening to the broadcast of proceedings today they will listen to a section of the answer that I received from the Leader of the Government in the Senate this morning. I asked whether the Prime Minister (Mr McMahon) and the Treasurer (Mr Snedden) would seek a conference of local authorities so that they could be made aware at first hand of the financial problems of local authorities. The Prime Minister declined that request but he held out hope in another direction because the final paragraph of the answer to question No. 1140 states:

If State governments were to call a conference to discuss local government finances the Commonwealth Government would be prepared to participate.

I hope that local authorities will heed that suggestion and will put pressure on the State governments so that a conference can be convened in which the Commonwealth Government will be prepared to participate.

Senator PROWSE:
Western Australia

– While I have a great measure of sympathy for the thought behind the amendment I cannot support it in the form in which it has been presented because it contains some words about which there could be debate and doubt. Whether it would enable rapid and effective action is surely debatable. I find myself in greatest disagreement with the suggestion that a national rural finance corporation should be set up outside the banking system. I think it is necessary that any such action should be within the banking system. It should be an integral part of the present structure if the skills, abilities, knowledge and practice of banking is to be utilised in a way whereby there could be rapid and effective work done in alleviating the present situation. I believe that the Minister for Air (Senator DrakeBrockman) will speak on this matter later and I do not want to traverse the whole argument that has been put regarding the necessity for such legislation. At this stage I indicate that I will, if the opportunity presents itself, move an amendment to the Bill as follows: but the Senate is of the opinion that the Government in its Budget considerations should give earnest attention to retiring from the field of estate duties.

I have spoken on other occasions on this topic and I do not want to delay the Senate by traversing the grounds of the case against estate duties. It will suffice at this stage to indicate that, if given the opportunity, I will move the amendment that I have foreshadowed.

Senator WILKINSON:
Western Australia

– The amendment that has been moved by Senate Kane on behalf of the Democratic Labor Party would, to the casual observer - that would be to the majority of farmers - appear to be holding out considerable hope for farmers in the immediate future. If the proposal could be put into operation a lot of farmers would think, from a first look at the amendment, that they could be helped in a considerable way, but when one examines the amendment more closely one wonders what will be done for the people who are in serious difficulty right now. When he moved the amendment Senator Kane said that we will shortly be entering a period when primary producers will be in an extremely bad situation. They are in an extremely bad situation now. This situation has arrived. As I said only the other day, in Western Australia there are 3,500 people who have to get off their farms right now and another 3,000 who will have to leave their farms very soon. This situation obtains all over Australia, although I have quoted only Western Australia. In Australia there are 92,000 farmers who have 200 sheep or more. This indicates the extent of sheep farming - from those with small flocks to those with large flocks. They are all in difficulty.

Senator Webster:

– Where did the honourable senator get that figure? That is not the correct figure.

Senator WILKINSON:

– In his second reading speech on the States Grant (Rural Reconstruction Bill) the Minister for Air (Senator Drake-Brockman) said that there are 92,000 farmers who have more than 200 sheep. If one looks further at the amendment one sees that what it proposes is exactly what is proposed in the rural reconstruction scheme. All the means that are proposed to be made available are means which will be available on loan, whether a short term or long term loan, with repayments. Most of these farmers are in difficulty and want some adjustment of their debts. Senator Byrne suggested that perhaps we could consider a moratorium, but a moratorium exists in Western

Australia already. The Loan (Farmers Debt Adjustment) Act has been in existence for goodness knows how long. It has been in existence since the depression days and it has been reintroduced every time its term has been due to expire. It now exists until 1973 and it is available for farmers to use in Western Australia. But they are not using it. Why are they not using it? The answer is that if they make use of the scheme the operation of their property will have to be subject to an administrator. Their debts will certainly be deferred for 12 months or 2 years, but they will still have to pay them. Under the Act the farmer thinks that somewhere he will get out of his indebtedness caused by overcapitalisation or by some other situation which has happened in the past. But when he examines the Act he finds that he obtains no relief at all; he merely gets a moratorium for the period which is allocated by an administrator who takes over the farm.

For some years in Western Australia practically no applications have been put forward by the farmers under the Loan (Farmers’ Debt Adjustment) Act. This is the reason for the objection on the part of the Opposition to the first part of the amendment put forward by the Australian Democratic Labor Party, which deals with the establishment of a national rural finance corporation. As Senator Prowse has indicated quite rightly, this would be something outside the banking system when we have other facilities which we could expand.

Another section of the amendment deals with estate duty. Honourable senators will remember that the purpose of the Estate Duty Assessment Bill which was introduced last year was to correct to a certain extent the operation of estate duty assessment. At the time, that is on 7th May 1970, I moved an amendment in these terms:

At end of motion add, ‘but, whilst realising that some estate planning may already have been effected following the promise of this legislation on 24th September 1969 and that this limited Bill offers some measure of relief from death duties in the rural sector, the Senate is of opinion:

That the Bill is inadequate as it fails to recognise -

the extension of liability for and the burden of Federal and State death duties resulting from the pressure of inflation.

the particularly critical situation of -

the relatively small farm in the rural sector, and

the small business unit in the industrial and commercial sector, where in both cases a large part of the estate is in a non-liquid form, the dismemberment of which to meet the tax liability destroys the basis of efficient operation, and

that difficulties are aggravated by the joint operations in this field of the Commonwealth and the States; and

that these matters should be fully examined with a view to early relief being afforded by further amendments of the Act.’

That is the stand which the Labor Party, in its opposition to the present proposed amendments, is taking. I am afraid that we cannot accept the amendment which seeks to express the opinion that the Commonwealth Government should retire as soon as practicable from the field of estate duty. The amendment foreshadowed by Senator Prowse - which we cannot accept either - is in similar terms. It requests that the Government in its Budget consideration should give earnest attention to retiring from the estate duty field. We do not consider that the Commonwealth Government should be retiring from that field but that we should examine the situation to see what amendments should be made or what should be done in view of the operation of the present Estate Duty Assessment Act. The Opposition finds itself unable to support any section of the amendment. We hope the Bill will be carried as it stands.

Senator WILLESEE:
Western Australia

– -I shall be brief. I support what Senator Wilkinson has said. I do not have a lot to add to what he has said. I point out that simultaneously with considering the Loan (Farmers’ Debt Adjustment) Bill, and the States Grants (Rural Reconstruction) Bill which we passed on Friday, we have before us notice of motion No. 3 in the name of Senator Murphy who, on behalf of the Australian Labor Party has moved:

That there be referred to the Standing Committee on Primary and Secondary Industry and Trade the following matter - Measures to alleviate the cost price squeeze on primary producers and to overcome the plight of the primary industries.

We have had before us a lot of Bills, amendments and all sorts of things, because everybody is concerned about the position of the rural industries in Australia today.

The Australian Labor Party has moved this motion because a standing committee has already been set up. We already have machinery in this Parliament to look at the position. If our motion were carried there would be nothing to prevent all the things which everybody has suggested today and which have been suggested on previous occasions from being referred to this committee. It has the advantage of speed, and if it finds a minute thing or something very big - what ever part of the spectrum it might be - it can make a recommendation to the Government immediately. But as Senator Wilkinson and, indeed, Senator Prowse have pointed out I am afraid the setting up of extra financial institutions will not necessarily provide the great speed that is needed today. I note that only last weekend the Minister for Trade and Industry, (Mr Anthony) issued a warning. He said that the Australian people did not realise how far the deterioration has gone in the wool industry. That bears out what Senator Wilkinson said in answering Senator Kane. He said it is not what is going to happen to farmers that will matter; but what is going to happen today.

I come to the question of estate duty. Senator Wilkinson has pointed out what the Australian Labor Party did when the Estate Duty Assessment Bill was before the Senate. I do not like the section of the amendment which deals with estate duty, as proposed by the Democratic Labor Party, being attached to the motion for the second reading of a Bill dealing with primary industries. If we are going to deal with the estate duty, we ought to consider the position of all people who die. To me it seems a bit strange that, when we are dealing with farming Bills and farmers talk about people walking off properties, we should be worried about them leaving big estates and the Commonwealth Government taking tax from them. If the stories we hear are true - I am afraid some of them are - then we will have a situation where farmers will not leave big estates at all.

When the Estate Duty Assessment Bill was being discussed we pointed out that people in the industrial field who may be building up small engineering factories may, in the event of a sudden death, find themselves in exactly the same situation as the farmers. It we look at a particular tax we should not confine our consideration to a section of the community. We should look at it as it applies to all sections of the community. We pointed out last year that if there was to be relief it should be relief to the small farmers and not the extremely wealthy farmers. When we look at the question of taxation - whether it be before a person dies or after - it should be locked at in the situation of those people who need taxation relief. Although cm 7th May last year in our amendment we pointed out that people were being bedevilled by the fact that there were 2 governments in the estate duty field nevertheless we suggested that the question should be looked at on a broad spectrum.

I think that when we say ‘but the Senate is of the opinion’ we are probably treating the situation a little lightly. If we want to be regarded as being serious I think we should be very careful in the way we handle the situation. I think that if the Government on the eve of fixing the Budget looks at the debate which took place in regard to, the estate duty tax - I trust it does - it will see clearly the broad thoughts of honourable senators on all sides. If the Government in the Budget were to decide to retire from the estate duty field and to leave it to the States, I would be perfectly happy. I mentioned that when speaking on the matter on 7th May last. But I believe the position should be looked at. The Government should consider that duty with all its other taxation proposals. It should decide whether relief should be aimed specifically at the primary industries or whether the rest of the community should be placed in the same position. I believe this relief should be aimed at those people who are not leaving a great estate as against those who are. In other words the relief should be provided for the people who need it most.

I repeat the words of Senator Prowse when he said that we all have sympathy with the thoughts that are expressed in the Democratic Labor Party amendment and in his foreshadowed amendment. Nobody is arguing about the parlous situation of the primary industries today. It is a question of what is the most expeditious way of dealing with the situation. Apart from its own bureaus the Government should call on the best advice to obtain a second opinion. We consider that the best way to do this is to utilise the standing committer which we have unanimously set up. It could also look into the latter field in which Senator Prowse is interested. I believe that if the Government - as I am sure it does - looks at the debates that take place, that will be sufficient for it to make up its mind when preparing the Budget which will be presented on 17th August.

Senator WOOD:
Queensland

– I have a few words to say in relation to an amendment proposed by the Australian Democratic Labor Party.

I refer to section (c) which states:

  1. that the Commonwealth Government should retire from the field of estate duties thus granting relief from the dual incidence of succession duties imposed by both the Commonwealth and State governments.

It is many years now since I stated in the Senate that I was opposed to estate duties. I believe that people throughout their lifetime should pay an income tax at a rate which is sufficient to allow the abolition of estate duty; but I see in this a difficulty. If the Commonwealth abolished estate duty the people of Canberra and the remainder of the Australian Capital Territory would be subject to no estate duty at all. This would put the people in the Territory at an advantage over the rest of the people of Australia, lt would also encourage people in the latter stages of their lives to come to this area and so avoid the estate duties that would have to be paid in the States.

It is very interesting to see this matter brought forward, under whichever guise it is brought forward, but it needs to be looked at in a deeper way than it is in this amendment. I believe that the abolition of estate duty should in the first place come from the States. In order to bring that about there would have to be some compensatory financial arrangements made between the Commonwealth and the States. Once that was achieved, with the abolition of estate duty by the Commonwealth we would arrive at the point where we had no estate duty. I have been keen to achieve this objective but abolition of estate duty by the Commonwealth would not give equitable treatment to all the people of Australia because the people in the A.C.T. would have a great advantage over everyone else in Australia.

Senator DRAKE-BROCKMAN:
Minister for Air · Western Australia · CP

– The Senate is dealing with a Bill to amend the Loan (Farmers’ Debt Adjustment) Act 1935-1950 to enable the funds at present being held by the States under this Act to be made available for the same purposes as the funds that are to be provided by the Commonwealth under the States Grants (Rural Reconstruction) Bill which the Senate debated last Friday. Senator Kane has moved an amendment to this Bill which is set out in 3 parts. The amendment suggests that it is Senator Kane’s view that the most rapid and the most effective emergency relief to the primary producers would be achieved by the Commonwealth establishing a national rural finance corporation outside the banking system. I wonder whether it would because this would require legislation which cannot be brought down before the end of the next sessional period shortly before Christmas. Then it would require the setting up of a corporation which is not done in a matter of a few moments.

If we analyse the amendment moved by Senator Kane we find that it implies that the debts of all or most rural producers should be taken over by the institution. Presumably it would also involve the institution in making additional loans to primary producers. At 30th June 1970 institutional loans to primary producers amounted to $2,095m, which is a considerable amount of money. The recent report of the Bureau of Agricultural Economics shows that the Bureau estimated that between 20 per cent and 25 per cent of the total debt in the wheat and sheep industries is represented by private family loans, loans from solicitors’ trust accounts, hire purchase debts and vendor credit. Assuming that the Bureau’s estimation is correct, if we apply that proportion of private debt in general to all rural industries then on this percentage there could be a further debt of about $630m over and above the total recorded rural debt to institutional lenders. In the Government’s view - we say this conservatively - such a corporation could cost about SI, 000m to set up and to take over some of the debts that are outstanding. Of course, this would apply on the conditions and terms of the loans that the corporation would make. The Government believes that the quickest way to do this job would be to use the normal channels - the rural reconstruction scheme - and to use the other means the Government has said that it hopes to set up, such as the Farmers’ Loan Insurance Corporation. This surely would be much better than setting up the body that Senator Kane wants set up which will cost a terrific amount of money.

I turn now to the last portion of the amendment which deals with estate duty. I remind the Senate that estate duty is not an unimportant source of revenue to the Commonwealth. In the 1969-1970 financial year it amounted to $71m. If the Commonwealth were to yield up estate duty to the States, there would be a number of major implications for Commonwealth and State financial relations. The present general revenue grants arrangements are on the basis that the existing division of financial responsibilities between the Commonwealth and the States does not significantly alter during the currency of the arrangements. Today at question time we heard a senator saying that he did not want to see increased taxation come about if the Government relinquished estate duty. I think that would be the general view of many honourable senators. But the Commonwealth has to make up this revenue from somewhere.

Senator Byrne:

– It said that about the receipts tax too.

Senator DRAKE-BROCKMAN:

– 1 am not going to have an argument with Senator Byrne about this.

Senator Webster:

– I was the one who asked the question. It has been misinterpreted.

Senator DRAKE-BROCKMAN:

– The honourable senator realised that if this probate was relinquished by the Commonwealth - I might remind the Senate that he suggested that the States were looking for increased revenue - and if the States had the S71m to themselves they would be inclined to increase this duty because they are seeking much more than $71m by way of growth tax. We have to look at that situation. We have only recently amended the legislation in relation to probate. No doubt the Commonwealth will go on looking at this and, where it can, gradually reduce the rates or provide some other relief. But to vacate the whole field is not a practical proposition at this time. For those reasons the Government cannot support the amendment moved by Senator Kane.

Question put:

That the words proposed to be added (Senator Kane’s amendment) be added.

The Senate divided. (The Deputy President- Senator Bull)

AYES: 4

NOES: 44

Majority 40

AYES

NOES

Question so resolved in the negative. Sitting suspended from 1 to 2.15 p.m.

Senator PROWSE:
Western Australia

– I move:

At end of motion add - ‘But the Senate is of the opinion that the Government in its Budget considerations should give earnest attention to retiring from the field of estate duties.’

The DEPUTY PRESIDENT (Senator Bull) - Is the amendment seconded?

Senator Webster:

– I second the amendment.

Senator PROWSE:

– Any honourable senator who is opposed to the amendment moved in this form is in fact saying that he or she does not want the Government even to consider estate duties in its general consideration of the Budget. I think there has been ample evidence from all sides of the Senate that a desire exists that this matter of estate duty should be considered. No honourable senator has been prepared to rise in his State and argue that no consideration could be given to that matter. I am loath to delay the Senate at this stage. The fact is that I have spoken at some length on other occasions on the general question of the effect of estate or death duty on the people of Australia and that duty’s doubtful validity as an effective way of raising tax. A thorough study of all the relevant side issues and the losses that occur to revenue through the incidence of a probate tax has never been made. A study has never been made of the loss of incentive in people who want to make provision for their families knowing that as they do so they will have to increase their protection by way of insurance.

I believe that these things have markedly effected our ability to secure the necessary capital generated from within the country, not borrowed from outside, to develop this country. I think that had that examination been made we would have seen that probate taxation is one of the most undesirable forms of taxation. We have adopted in our taxation structure the principle of ‘pay as you earn’ or ‘pay as you go’. We meet our tax obligations while we have the money. But here we clearly depart from that principle. We impose what is in effect a capital gains tax on the value of an estate accumulated at the point of death, paying no regard at all to the sort of estate or its position in relation to the general economy.

Certainly this position has been highlighted by the case that I have already related to honourable senators where a farmer in Western Australia had his property valued at the time of his death. His beneficiaries are now being asked to meet $94,000 in probate duties, although the asset has considerably decreased in value since the valuation was made. This is an impossible situation. Whatever the result of the Budget deliberations, very earnest consideration must be given by the Government to the whole impact of estate duties, not only in relation to primary industry. We are using primary industry to highlight this position because it has become almost a primary industry tax. Thirty-eight per cent of the total probate collected comes from the estates of those engaged in primary industry, whereas in relation to the gross national product the percentage is less than 5 per cent today. The number of taxpayers in the field of primary industry is about 7 per cent and they are being asked to shoulder nearly half the burden of probate.

Senator Wilkinson:

– Can you tell me whether that $94,000 was paid in Commonwealth estate duty or Commonwealth duty plus State duty, of which the State share was the larger?

Senator PROWSE:

– The amount assessed is partly State and partly Federal. I do not want to confuse the issue as some people have by saying-

Senator Wilkinson:

– You are saying it is Commonwealth.

Senator PROWSE:

– It is $33,000 to the Commonwealth. But surely the position will be more manageable if that part is removed. Surely we cannot hope for the States ever to do anything about probate duty if the Federal Government does not set the example. Other details have been raised in debate. The point raised about Canberra is a valid one. But this amendment does not go into detail. It simply asks that the Government, in preparing its Budget, give earnest attention to retiring from the field of probate duty. I cannot imagine any honourable senator who has spoken in this debate having sufficient grounds on which to oppose this amendment in the terms in which it has been put forward. I trust that the Senate will carry the amendment to the Bill.

Senator BYRNE:
Queensland

– The Democratic Labor Party, having moved its own amendment on this matter, and it being defeated, is now faced with the amendment moved by Senator Prowse as a Government senator on behalf of the Country Party-

Senator Withers:

– On behalf of himself.

Senator BYRNE:

– Then on behalf of himself. I could not imagine a more worthy sponsor. Because this amendment is virtually in complete accord with the amendment moved by the Democratic Labor Party - it really brings the matter rather closer than our amendment because it wants this subject to be considered in the preparation in the Budget - we proposed to support it. There are one or two matters to which I should like to refer. This, of course, is not the first occasion in more recent times on which the question of Federal estate duty has been before the Senate. To my recollection, the matter came before the Senate in more recent times on the amendment to the Estate Duty Assessment Act which purported to raise the level of exemption. On the third reading of that Bill the Democratic Labor Party moved an amendment in these terms:

But the Senate expresses the view that the Government should consider as soon as possible the complete elimination of Federal estate duty.

That was an extremely reasonable amendment. It did not call for the duty to be eliminated immediately. It merely asked the Government to consider early Commonwealth retirement from that field. That amendment was supported in division by the following Government senators: Senator Bull, Senator Buttfield, Senator Sir Magnus Cormack, Senator Greenwood, Senator Lawrie, Senator Lillico, Senator Prowse, Senator Webster, Senator Dame Ivy Wedgwood, Senator Wood and Senator Young. It was opposed to the last man by the Australian Labor Party.

To my recollection, the reason advanced by the Labor Party for its rejection on that occasion was that the amendment had been brought in hurriedly and precipitately; apparently there had not been time to consider it. Quite a long time has elapsed. The matter has been discussed on another occasion. I forget what the outcome was then. It is being discussed again, and the reason advanced today by the Australian Labor Party for the rejection of the amendment is totally different. It could not be said that this amendment has now been brought in precipitately or hurriedly. The reason which has been advanced is that the elimination of estate duty should be considered as a separate matter in the whole conspectus of Federal duties and should not merely be tagged on to a Bill of this nature or to any Bill of any other nature applying to rural industries.

Senator Prowse says that it is not inappropriate that it should be added to a Bill dealing with the reconstruction of primary industries because the incidence of the duty today lies most heavily on the primary producers. But quite apart from that which is a very valid reason, surely any appropriate vehicle - and no-one can say that this is inappropriate - is adequate in order to enable the Senate to present a point of view. All the Senate is being asked to do is to indicate an attitude to the incidence of estate duty in Federal hands in general terms, not on rural producers, not on urban producers or urban industrialists, but on the whole spectrum of Australian commercial and private life. The Senate is being asked to indicate that the Government should retire from the exaction of Federal estate duty. Surely that is handling the matter as Senator Willesee would want it handled. We are merely asking the Government to consider this over the whole area on which Federal estate duly falls. Surely that is precisely what Senator Willesee wants when he said that it should not be discussed in the complete and exclusive context of rural industry but over the whole of society. That is precisely what this amendment does. However, in this case it is attached ro the rural Bills because it is not inappropriate that it should be so attached. It is timely that the amendment should be attached to the Bill now before the Parliament.

In those circumstances, rather than Senator Willesee advancing arguments why it is not appropriate to discuss this matter now and indicating that the Opposition will oppose the amendment, I would have thought that the Opposition would have supported this amendment because of its method of general application over the whole of industry, over the whole of life and in the realm of Federal duty.

Senator Cavanagh:

– It does delete a lot of the Labor Party’s amendment. It uses the expression: ‘Leave all words after that. . . .’.

Senator BYRNE:

– No, that is not the Labor Party’s amendment; that was our amendment. I do not think that Senator Cavanagh was here when this was moved. That does not go to the Labor Party amendment at all. lt goes to our amendment. It is to delete our amendment, which has now been deleted. If the basis of Senator Cavanagh’s objection was that this is striking at the Opposition amendment, J would hope that he might be able to support us in this matter, his objection having been removed by the explanation which I have now tended. This becomes a matter in which we could expect the support of the Opposition. I would hope that we would get the support of those honourable senators on the Government side who found it possible to support us on the last occasion. At least I think Senator Prowse is entitled to expect that.

There are one or two other matters to which I should like to refer. Firstly, the Australian Democratic Labor Party supports the Bill in general principles. That is, we support the motion for the second reading of the Bill. We do not present any of our propositions as alternatives to the Bill. We merely suggest that these things could be embarked upon. To suggest that we are laying the Bill aside and replacing it with our proposition is not correct. We support the Bill and we see the need for the immediate financial aid to help alleviate the problems of the rural sector. We enthusiastically support what is contained in the Bill but we hope that other things more effective, more far reaching and more far ranging could be embarked upon by the Government also.

I make this point: The incidence of estate duty is having a very damaging effect in rural industry. What is one of the real problems today on the land? Because of falling prices and the collapse of markets farmers are being required, or may be required, to leave their properties and that is the one thing we cannot afford. The Minister for Primary Industry (Mr Sinclair) speaking at a gathering the other day said:

The wool industry faces a condition of total insolvency.

He then went on to say:

We could visualise, if something does not happen, that there could be an abandonment of properties in the western parts of Australia and that the western towns could diminish and disappear. That is a very bad prospect and it will come if men cannot be kept on their properties.

One of the things which is requiring people to leave their properties is this tax. What happens is that if a landholder dies his estate is valued for duty purposes. This is an unreal value in terms of market saleability. The beneficiaries are required to accept that valuation and to pay duty on it. Unless the people concerned get relief they have to sell the property in order to pay the duty. Very often the property has to be sacrificed and those living on it have to leave it because it cannot be financed any longer. The abandonment of properties in the rural areas is the one thing that we dread in this country. For these reasons it is most important that every means be seized upon to try to relieve the position of the man on the land in his interests and in the national interest.

This is one conspicuous way in which this can be done. As everyone in this chamber has adverted to the condition of prices in the rural industries, I think I am entitled to expect, and Senator Prowse is entitled to expect, that the amendment we are now considering will receive the support of every honourable senator in this chamber. The excuses for not supporting it must disappear. Many reasons have been advanced by the Opposition for not supporting the amendment. However, one by one the ground has been changed but still we are faced with the fact that members of the Opposition are not prepared even to suggest that the Government should retire or should consider retiring from this field of taxation. That is the stark position that now exists as a result of the speeches made by the Opposition.

Senator Willesee:

– That is a stark untruth.

Senator BYRNE:

– With respect to Senator Willesee, I cannot see that it is a stark untruth. As I understood Senator Willesee’s submission to this place, he does not support the amendment and the Opposition does not support the amendment. He thinks that this matter should be considered more widely and at depth. I think it would be fair to say that, Senator Willesee. But the fact is that on every occasion when this matter has come before the Senate - on the other occasion I mentioned and on this occasion - the Opposition has set its face against the support of even the suggestion that retirement should be considered by the Government. There was an intermediate occasion to which I cannot advert because my memory rather abandons me in which the Opposition did have some proposition between the resolution I have mentioned and this resolution. What its terms were I am not able now to recall.

However, the DLP commends this amendment. It is not our amendment. Our amendment has been defeated. But the amendment propounded by Senator Prowse is in almost the same terms as ours. I hope, in view of the matter being formally raised in this House by the DLP when it received support from some Government supporters, and because the matter has again come before the Senate in the form of the present amendment I hope that it will again receive support at least in substantial numbers from all sides of this place. Then, 1 would hope that when the Government embarks upon its consideration of the Budget it will take this into account. We have had other occasions on which money could not be found. I know that the Budget moves within the circumscription of demand and the availability of revenue. However, the amendment involved in this, even if it were phased out, is not so considerable that it could not be accommodated within a new budget concept. I think it is sufficiently important for that to be done.

Senator Young:

– It is 0.86 per cent of the total.

Senator BYRNE:

– It is 0.86 per cent of the total Budget. No-one can say that under no conceivable circumstances could a government frame a budget and abandon 0.86 per cent of the total available national revenue. It is inconceivable to concede that this could be a valid proposition. For those reasons we commend Senator Prowse’s amendment. I might say that it was probably the action of the DLP in first propounding this matter in a formal way that has encouraged Senator Prowse to move an amendment.

Senator Willesee:

– What year was that?

Senator BYRNE:

– We put it up in a formal way about 2 years ago. We had support from honourable senators whose names I read out, just as we had total resistance from the Opposition benches. I. hope that that resistance will be dissipated now and that we may get a more encouraging response in the Senate and then in the Budget we may see some steps taken for the abandonment or at least for the alleviation of the incidence of this tax. I hope that the tax, if not immediately abandoned, will at least be abandoned gradually. This would be a tremendous encouragement to farmers, to agriculturists and to rural producers who are already embedded deeply in the current rural crisis.

Senator LAUCKE:
South Australia

– I want to indicate my wholehearted support for the amendment which was moved by Senator Prowse which is: that the Government in its Budget consideration should give earnest attention to retiring in the field of estate duties.

In my opinion, there is no more illiberal form of taxation than the impost of death duties. I believe that it is far better for one to have to meet a heavier incidence of taxation during one’s lifetime than to have, after one’s death, usurpation of that which has been accumulated through income on which income tax has been paid. I speak as one of many thousands of people in Australia who have family businesses, farms or interests in various spheres and whose biggest worry is: ‘How do we continue to carry on with succession and probate duties hanging over us?’ Here I am referring particularly to Commonwealth estate duty.

I believe that succession and probate duties are among the most invidious forms of taking from people that which has been attained during their lifetime and on which they have paid taxes. People who have worked all their lives in order to get their farms or businesses into a better condition leave their beneficiaries, perhaps already faced with a severe problem of liquidity, unable to carry on because of death duties. Some enterprises may be able io continue but obviously not with the same buoyancy as before. This, as I have said, is usurpation.

I have spoken at length on this matter previously. I have expressed my point of view with directness and with feeling because I believe that in a country where thrift and individual enterprise should be encouraged in order to accomplish those things which in the long term will be to the benefit of both the individual and succeeding generations, there should not be this sort of impost which leads to an inability to maintain society in the way in which we seek to maintain it. In my opinion there has to be a facility for the small roan to carry on, observing the principles of thrift, so that he can get somewhere in his own right. What he has built should not be taken away when he dies. We should not place ourselves in the situation where only monopolies will count; where volume production will be the only criterion for viable survival of private enterprises which are so important to our way of life.

Senator WILKINSON:
Western Australia

Senator Byrne spoke in favour of Senator Prowse’s amendment, and I feel sure he just about convinced himself, even if he did not convince everybody else. One would imagine, from what has been said by Senator Byrne, that this amendment is the solution to the problems facing farmers at the present time. What ridiculous nonsense.

Senator Young:

– Do you not think it will help?

Senator WILKINSON:

– No. I do not think that the burden of estate duties is the cause of the problems facing farmers at the present time. The present position is that a man has a property which appears to be a wealthy property on paper. Senator Byrne told us that when this man dies and estate duty is imposed on his estate, his family has to sell the property at the market value, not at the potential value, in order to pay the duty. The point of the whole argument is that the property will not bring its potential value at present prices, but death duty is assessed on the potential value of the property.

The Opposition’s objection to the amendment is that the amendment requests the Government to give urgent consideration to retiring completely from the field of estate duty. It does not ask the Government to make a complete examination of the whole question of estate duty. We believe that an examination should be made of the whole question of estate duty so that assistance can be given to those people who are placed in the position of having to pay estate duty on the potential value of a property, not on the market value of a property. We tried to get the Government to make such an examination on 7th May 1970, but honourable senators opposite voted against our amendment.

Senator Young:

– Oh!

Senator WILKINSON:

– Yes, they voted against our amendment on 7th May last year. We asked the Government to make an examination of the whole question of estate duty with a view to rectifying the position. This is what we want done. It looks as though there might be a split in the Australian Country Party on this issue. If the majority of the members of the Country Party and one or two members of the Liberal Party want the Commonwealth to retire from the area of estate duty they will vote for the amendment, but the Opposition believes that an examination should be made of the whole question of estate duty. I am certain that the Commonwealth will look at this matter before the presentation of the next Budget. There is no doubt about that. But I am perfectly confident that the Commonwealth will not retire from the area of estate duty. The Labor Party Opposition believes that there should not be large estates. We believe that wherever possible large estates should be reduced.

Senator Laucke:

– Yes, financial usurpation.

Senator WILKINSON:

– 1 am stating what the Labor Party believes. I accept that Senator Laucke is within his rights in expressing a different opinion. I believe that estate duty should be paid on large estates, but I do not believe that hardship should be imposed on a wife who has to try to find the money with which to pay death duties. Her position was made much easier by the legislation which we considered 12 months ago. On that occasion certain amendments were made to the estate duty law. But I believe that we should go further and make an examination of the whole question to see what else can be done.

Actually, when one looks at this question of estate duty in its entirety one finds that the States are taking much more than the Commonwealth. That is why I say that the whole question should be considered. We have nothing to do with what the States do in this field, but we in the Commonwealth should have a look at the situation in the Commonwealth sphere and see what can be done to make the position more realistic.

Senator Prowse:

– Vote for the amendment.

Senator WILKINSON:

– We will not vote for the amendment which asks the Commonwealth to retire from the area of estate duty without making an examination of the whole question. That is the position.

Senator Gair:

– That is just a quibble.

Senator WILKINSON:

– Quibbling nothing. The Australian Democratic Labor Party will vote for the amendment and probably 4 or 5 Government senators will cross the floor and vote for it. But the Opposition will not support the amendment because we do not believe that the Commonwealth should retire from the area of estate duty without making an examination of the whole question, particularly as far as the big and wealthy properties are concerned. That is the Opposition’s position.

Senator WEBSTER:
Victoria

– I wish to make my position clear. I supported Senator Prowse’s amendment, which seeks, at the end of the motion That the Bill be now read a second time’, to add the following words: but the Senate is of the opinion that the Government in its Budget considerations should give earnest attention to retiring from the field of estate duties.

We have just heard Senator Wilkinson, who led for the Australian Labor Party, indicate that it is his and his Party’s desire that the Government should give consideration to this whole area of estate duty. Indeed, as honourable senators will appreciate, this amendment is not saying to the Government: ‘By all means vacate the field’; it is saying to the Government: ‘Give earnest consideration to retiring from the field.’ There is some agreement between the amendment and what the Opposition desires to do. For 3 or 4 days last week we debated the States Grants (Rural Reconstruction) Bill and today we have been debating the Loan (Farmers’ Debt Adjustment) Bill. Both of these measures dealt with the financing of rural properties. Indeed, by part of these measures we are to devote Commonwealth funds in an attempt to restore the viability of properties which has decreased over the years. Mr Acting Deputy President, you would know that one of the greatest causes of disaster to a rural property is when State probate and Federal estate probate divide a property so that it ends up as an unprofitable and unviable operation. That proposition has been put here for some days now.

Senator Wilkinson:

– That would happen only once every 40 years.

Senator WEBSTER:

– It would not happen only once every 40 years. In fact, the problem would be a continuing one. Those who are in succession should attempt to and be encouraged to stay on the property. They should not have to sell a part of it to meet what in many instances can be 30 per cent for State probate and another 28 per cent or 30 per cent for Federal probate. It is absolutely crucial to primary industry that consideration be given to alleviating the plight of those who find themselves in this predicament. The Opposition may say that similar circumstances apply in other areas.

The reason why Senator Prowse has moved this amendment relating to a rural Bill is obvious.

At question time today I asked whether the Commonwealth would consider vacating the field of succession duty or estate duty so that this growth tax may be collected by the States. Some people may argue against that proposition. In Victoria, the State with which you, Mr Acting Deputy President, are familiar, estate duty levied by the Commonwealth Government on farm estates is in instances higher than the State duty. I am not willing to allow the situation to continue to be left with the hope that in Federal hands progressively the Commonwealth will attempt to reduce the duty. At the moment the income derived from this duty is a very minor part of Commonwealth income. In this field there appears to be a complete duplication of operations in administration. In the State sphere there is a department set up under the State Treasury to deal with probate taxation. There is also departmental administration in the Federal area of probate duty. It is surely stupid. We should be looking to efficiency and economy in government administration. The present situation should not continue. There is a sound argument for the vacating by one area of government from the field of probate duty. For a few days the Commonwealth has allocated at least $50m in an attempt to build up farm properties, but at this very minute the Commonwealth will be taking action which will be creating the divisions of estates by requiring quite heavy probate duties. I believe that this field of taxation should be left to the State governments.

I recall the situation in the Senate when, in line with the policy of the Party which I represent, senators in this corner indicated their support for the attitude of the Australian Country Party. The policy of the Australian Country Party, and I believe the policy of the Liberal Party, is that progressively Federal authorities should leave the field of probate duty. The time to do so is now. Some move was made by the Federal Government about 12 months ago to relieve the incidence of that tax on rural estates. In the State which I represent the incidence of Commonwealth probate duty is still in instances higher than that which is levied by Victoria.

Senator Dame Ivy Wedgwood:

– Is that tax imposed on all estates?

Senator WEBSTER:

– lt is not imposed on all estates. In December last year the Victorian Parliament passed a Bill which will have the effect of lowering the probate tax payable on rural estates. That Bill will not get the Governor’s approval until theFederal Government does something to lower the probate it levies on primary industry estates. I find it hard to live with that situation.

Senator Devitt:

– What proportions are levied by the Commonwealth and the States?

Senator WEBSTER:

– I do not know the exact figures, but between 28 per cent and 33 per cent is levied by both State and Federal governments. In many instances that figure is far too great. It causes the break-up of properties. This is the reason why Senator Prowse moved this amendment. This is the policy of the Party which I represent, and I believe it is the policy of the Liberal Party. I feel that the amendment should be supported.

Senator WOOD:
Queensland

– I spoke earlier on this subject when I spoke on the Australian Democratic Labor Party’s amendment. Senator Prowse’s amendment is on almost similar lines, although he did point out that his amendment will mean that the matter will be considered during the preparation of the Budget. I again feel that the subject has to be tackled on a wider basis. I know that we have no control over what the States do, but I think that there are means by which we can influence the States to do certain things. If this tax is to be wiped out by the Federal Government, an approach should be made to the States to have it wiped out on a State basis also. The only way in which this can be done is to ensure that the States receive compensating revenue so that they will not be at a disadvantage if they abolish these duties. Generally speaking the Commonwealth tax is much lighter than the State tax. I understand that the State tax could be 2 or 3 times as heavy as the Commonwealth probate tax.

Senator Webster said that in Victoria certain rural people do not pay as much estate duty as do rural people in other States. That is because that State and possibly another State have given concessions to rural producers. Those States have given the rural sector a special reduction in State taxes.

Senator Devitt:

– They are not paying the State tax because those States are not subject to the Commonwealth Grants Commission examination.

Senator WOOD:

– No, but generally speaking the Commonwealth tax would be much lower. Therefore, I wanted to make it quite clear that I am very strongly opposed to the imposition of probate tax because I think it is an extremely difficult tax for people to meet. Senator Prowse quoted an estate of a deceased primary producer which had to find $95,000 for probate. That is a fairly large sum. It is a very difficult tax to pay.

Senator Little:

– He would almost wish he had not died.

Senator WOOD:

– 1 suppose there could be that aspect to it.

Senator Gair:

– You will have the consolation of knowing that your wife will not have to pay a second tax.

Senator WOOD:

– Not having a wife, that will not worry me.

Senator Dame Ivy Wedgwood:

– There is plenty of time yet.

Senator WOOD:

– There may still be a chance; one never knows. Apart from being a very difficult tax to pay, I also think that in many respects it is an unfair tax. I think it must be realised that quite often, when a person has a property which has to be sold within a certain time because it is part of an estate, the selling price would not be as high as it would if the person were selling, in a leisurely way, under normal conditions. Forced sales very often give other people the opportunity to get properties at what might be termed bargain prices because those properties have to be sold. 1 deal now with the arguments advanced by Senator Wilkinson. I have no objection to the size of the estate that a person leaves. I believe always in the spirit of free enterprise. The more successful a person is in life, through his efforts, the more I say to him ‘Good luck’. Therefore, I do not think that we, as parliamentarians, should have in our minds to try to tell people that they must not leave estates of beyond a certain amount. I think we should encourage people to be thrifty and to have some initiative and resource in order to develop themselves, to make themselves wealthier if at all possible, and at the same time to help develop this country. I support this amendment because I am very strongly opposed to the imposition of probate tax. If only the Commonwealth retired from this field, what would be the position with he States? Would they increase their tax further? I feel that this might be a possibility. My sympathy is with this type of amendment-

Senator Prowse:

– Therefore you do nothing about it because you are frightened about what the States will do.

Senator WOOD:

– That is all right. Let me say these few words: 1 feel that whilst this amendment relates to the Federal side, if we are earnest about this matter and want to do a job - I have talked to Senator Prowse about this - the amendment should be enlarged so that we also ask the Federal Government to have discussions with the States on the matter and see whether the Commonwealth Government can by some means or other arrange some compensating finance for any loss by the States. If the mover of the amendment were to make his amendment all embracing like that, from a State and Federal point of view, I would support that with the greatest of pleasure. But I cannot see how, by carrying the motion as it is at the moment, we will get where we want to get because I am quite sure that if the situation remains as it is, with the States remaining in the field of estate duty and the Commonwealth vacating that field, there will be an opportunity for the States to say: ‘We will increase our tax further’. I am not prepared to support the amendment because I think it should be on a wider basis.

Senator YOUNG:
South Australia

– I rise to support the amendment moved by Senator Prowse because I consider that estate duty is one of the most iniquitous taxes that have ever been introduced in this country. It was introduced originally not to operate as it is operating today. We know from history that it was introduced purely to break up the big estates so that more people could own land. Today we are looking at rural reconstruction. The Government has already stated that on the recommendation of the Bureau of Agricultural Economics SI 00m will be made available initially for a plan to assist rural industries. We are looking at the problems of rural industries, and one of these problems is this very iniquitous tax. Every 25 or 30 years in the family cycle a family just finishes paying its estate duty when the whole vicious circle starts once again and the family is unable to carry on with the efficiency with which it would be able to carry on but for this heavy taxation in the form of death duty. This is one area in which we can assist primary industry.

Senator Wilkinson has said today that the Opposition believes that the problem is that a farm may have a paper value which is not its real value. This is not the real cause of the problem. The cause is the estate duties. It is up to us in this Senate chamber, irrespective of party, 10 do what we can to assist the economy. The burden of estate duty goes further than rural industries; it flows right through the whole economy of this country and it is necessary for us to do all we can in this area. Senator Wilkinson also drew comparisons between the amounts of Federal and State duties.

He said that the Federal duty in most cases is less than the State duty, be it succession or estate duty. This might be so, but it is only the lesser of 2 evils.

Senator Wood has said that if the Commonwealth pulls out of the field of estate duty the States will increase their death duty. That is the responsibility of the States. Our responsibility is to play the part that we can play in the Federal sphere and hope that the States will accept their responsibilities, look at the overall situation that exists at the present time, adopt procedures similar to those that have been adopted in the Federal sphere and reduce the amount of their death duties. In my own State of South Australia, whilst we have a problem in primary industries at the present time, we have seen not a decrease but an increase in the incidence of State succession duty. As far as I am concerned, this is one field from which the Commonwealth should retire completely because estate duty is one of the most iniquitous and regressive taxes ever introduced. I support Senator Prowse’s amendment.

Senator WILLESEE:
Western Australia

– I will be brief. I do not want to repeat what I said this morning. So many airy-fairy things which are not the truth have been said that I want to quote from the record. The fact is that on 14th May last year the Australian Labor Party moved an amendment to the Estate Duty Assessment Bill. I suggest that it is during a debate on that type of Bill that we should be discussing the matters we are discussing now. On that occasion the Estate Duty Assessment Bill was aimed at assisting rural industries. It was one of a series of Bills that had been brought down to assist rural industries. Whilst agreeing that the Bill should be passed the Labor Party moved that the Senate express the opinion:

  1. That the Bill is inadequate as it fails to recognise:

    1. the extension of liability for and the burden of Federal and State death duties resulting from the pressure of inflation,

That is the point that Senator Wilkinson made. If we have inflated prices and not real prices an injustice is done to farmers or to anybody else who has business interests.

Senator Dame Ivy Wedgwood:

– And to the widow.

Senator WILLESEE:

– That is a very good interjection. It need not necessarily be the widow of a farmer; it could be the widow of anybody. Our amendment further stated - this is the part I want honourable senators to note particularly and the way some people voted on it:

  1. the particularly critical situation of:

    1. the relatively small farm in the rural sector, and
    2. the small business unit in the industrial and commercial sector,

We said - I would like Senator Byrne to listen to this because he said we were opposed to all sorts of things:

  1. that difficulties are aggravated by the joint operations in this field of the Commonwealth and the State; and

Finally we moved that the Senate express the opinion:

  1. That these matters should be fully examined with a view to early relief being afforded by further amendments of the Act.

That amendment, I would remind you, Mr Acting Deputy President, was carried by this Senate, so we already have an expression of opinion in this regard. It is interesting to note the people who voted against that amendment. One of them was Senator Wood, one of them was Senator Young and one of them was Senator Prowse.

Senator Young:

– You only wanted the matter examined. In other words, you were playing for time again. You were not definite about anything.

Senator WILLESEE:

– The honourable senator has been talking for a long time. I am trying to quote from the record because I have found lately that this is a pretty wise thing to do.

Senator Young:

– You only wanted the matter examined. That is what the record shows.

Senator WILLESEE:

– If the honourable senator will wait I shall tell him how he voted a little later. The thing I would like to be noted from that amendment is that the Labor Party drew attention to the fact that estate duties were being bedevilled because both the Commonwealth and State Governments were in the field of death duties. We said that it might well be that this situation should be examined. I suggest that ‘examination’ is the right word when we are talking about taxation. If Senator Prowse had really wanted to jump onto a big bandwagon, I do not know why he did not move to do away with income tax for the farmers. That would be even more popular than the abolition of death duties. Of course, talk about doing away with taxation is always popular. Senator Sir Kenneth Anderson pointed out at question time today that no matter whether the amount of tax be big or small, if we remove It from one section of the community, we must put it back on another section.

Senator Prowse:

– It depends how it is applied in the first place.

Senator WILLESEE:

– Thanks for the assistance. Senator Laucke today dealt with the very crux of this matter when he said: I do not like this tax at all. I think it ought to be put onto the living’. That is a matter of opinion; I am not sure whether it is right. Further on in the debate on the Estate Duty Assessment Bill last year the Democratic Labor Party moved an amendment to the effect that the Commonwealth should retire from the field cif estate duty altogether. Senator Prowse, Senator Wood and Senator Young immediately supported this move. The moment it became obvious that such a move would benefit not only the small businessman and the small farmer but also the wealthy man they were all for it. This is what they did. It is of no use for them to argue about it because this is what the record shows. While they were dealing with people who could not afford to pay the duty they wanted to grind them down, but when the proposal was extended to benefit the wealthy they voted for it. This can be seen from the record of the Senate, lt is no good trying to wriggle around what I have said.

Senator Wood went a little further than saying that the Commonwealth should retire from the field of estate duty. I give him credit for taking his thinking a little further than did other members on his side. He said that the Commonwealth should move out of the field of estate duties but then he said that this would be no good - which quite obviously is true - because the States would say ‘All right, here is another X million dollars we can pick up’. That would not help the wealthy, the poor farmer or anybody else in the community. The honourable senator took it a step further and said that as a corollary what ought to be done is that the States should retire from this field and that the Commonwealth should make up the amount of money they lose. But the moment that this happens it will involve a fairly large amount of money which will have to be raised by a levy being placed somewhere else. The reason why we say it ought to be examined is that a motion to this effect has already been carried by the Senate and it is already before the Government, if the Government takes any notice of the will of the Senate, which is half of this Parliament, and I believe that it does. It is nearing Budget time when all sorts of propositions for taxation relief will be put forward. For those reasons we believe that is where the matter should rest.

The alleviation of taxation was an argument put forward on a previous occasion. The Australian Labor Party has said that the Government should alleviate taxes imposed on those people who can least afford to pay them and not the wealthy people in the community, whether they bo farmers or big business people in the cities. If there is to be an alleviation we on this side would insist that it be given to those people who are suffering, such as the widows to whom Senator Dame Ivy Wedgwood referred, the person with a large family, the woman who is widowed by the untimely death of a young man who has not paid off his house and that type of person. When honourable senators on the other side come to comparisons 1 suggest that they should get off the bandwaggon of estate duties and do as we have suggested and as has been agreed to by this Senate. I ask the Government to take these matters into consideration with all the other requests which will be made from all sections of the community for the alleviation of taxation.

Senator DRAKE-BROCKMAN:
Minister for Air · Western Australia · CP

– The Senate is dealing with a Bill to amend the Loan (Farmers’ Debt Adjustment) Act. The purpose of this Bill is to make available to the States funds for the reconstruction of farmers debts in conjunction with the States Grants (Rural Reconstruction) Bill which was passed in this chamber last Friday. If one looks at the second reading speech on this Bill one will see that there is no mention of probate in it at all. It is a general rule in this Senate that debates are confined to the subject mentioned in the title of the Bill. How did this matter of probate arise? Before lunch the Senate dealt with an amendment to the Bill moved by Senator Kane. One of the clauses to that amendment contains a reference to probate. The Senate in its wisdom or otherwise defeated that amendment. After lunch Senator Prowse moved a further amendment which mentions probate. Senator Prowse and other honourable senators have expressed their views in relation to probate and its effect on the rural producers. I do not think that any of us will quarrel with some of the points which were made during the course of this debate but those remarks are not appropriate to this Bill. The Government sees no reason why the amendment should be moved by Senator Prowse during the debate on this Bill. Surely it does not mean that because an honourable senator opposes the amendment he is opposed to probate duty.

Senator Prowse:

– Is that your only objection to this amendment?

Senator DRAKE-BROCKMAN:

– Give me a chance; you have had your say.

Senator Prowse:

– I am asking you a question.

Senator DRAKE-BROCKMAN:

– No, it is not. The Government sees- no reason why a clause referring to probate, plucked out of the blue, should be attached to this Bill. If honourable senators believe that this should be done, there is no reason why in a future debate an honourable senator cannot introduce by way of an amendment a clause which has nothing to do with the Bill before the Senate and then expect the Senate to support it. Representations on probate duty have been made by organisations representing all sections of the community, both political and rural. These requests have over the past 12 months been directed to the Treasurer (Mr Snedden) by way of .notices of motion, by letter and so on. In each case the Treasurer has indicated that the Government will closely scrutinise all submissions made during the course of Budget considerations. The Government believes that there is no need for this proposed clause to be attached to the Bill and therefore the Government cannot support the amendment.

Question put:

That the words proposed to be. added (Senator Prowse’s amendment) be added.

The Senate divided. (The Deputy President - Senator Bull)

AYES: 13

NOES: 33

Majority 20

AYES

NOES

Question so resolved in the negative.

Original question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 1984

PRIMARY PRODUCTION

Reference to Standing Committee on Primary and Secondary Industry and Trade

Consideration resumed from 13 May on motion by Senator Murphy:

That there be referred to the Standing Committee on Primary and Secondary Industry and Trade the following matter - Measures to alleviate the cost price squeeze on primary producers and to overcome the plight of the primary industries.

Question put:

The Senate divided. (The Deputy President- Senator Bull)

AYES: 21

NOES: 25

Majority . . 4

AYES

NOES

Question so resolved in the negative

page 1984

STEVEDORING INDUSTRY CHARGE ASSESSMENT BILL 1971

Second Reading Debate resumed from 6 May (vide page 1489), on motion by Senator Wright: That the Bill be now read a second time. Senator MILLINER (Queensland) (3.24) - I rise on this occasion because I believe the second reading speech of the Minister for Works (Senator Wright) justifies some comment being made in relation to this matter. I am sorry to delay the Senate, but nevertheless I feel that my action is justified because of what I may describe as the abrasive nature of the second reading speech. The Minister may disagree with me. I do not know whether .it was the abrasive Mr Snedden who delivered the second reading speech in the other House or the innocent Mr Lynch - innocent in relation to industrial affairs - or whether the speech was prepared, as I suspect that it may have been, by the private secretary or Press, secretary of either of those 2 gentlemen. If that is so, perhaps the Minister for Works did not fully comprehend what he was .saying when he delivered the speech in this chamber. It is unfortunate that these matters raise some industrial issues when none are necessary. I refer to that section of the second reading speech in which the Minister takes to task some branches and members of the Waterside Workers Federation, The Minister said:

It is common knowledge that since then some members and branches of the Federation have embarked on stoppages ranging from 1 hour to a full day on issues covered by these undertakings. Whilst the ACTU and the federal officers of the Federation have done their utmost to ensure that the undertakings which they gave’ in the proceedings before Mr Justice Moore were honoured, I want to make 2 points perfectly clear.

The Minister went on to say what the Government expected in relation to undertakings. He said that the Government would be giving close attention to the performance of the Federation, its branches and its membership. I have said that this is an abrasive statement. If one realises what goes on in the industrial movement one can recognise that this was an unnecessary statement which could cause further industrial problems. The Minister may say: Statements of this nature do not provoke workers on the job,’ but, with due respect, I would suggest that they do.

If one looks at the propositions that were put before the workers one would expect the Government to take into consideration the fact that, a federation of unions is made up of branches of unions and what may please one branch may not please another. There are different working conditions in each area. For instance, in

Queensland parities are paid to workers in northern and western Queensland. There is no provision under federal awards for these parities to be paid. If an agreement were negotiated by Federation officers throughout Australia and no parities were provided for in the agreement one can realise what would happen to people in Queensland. Their earnings would be reduced and their prospective earnings would be decreased also. Although it might suit the branches in South Australia, Western Australia, Victoria and New South Wales it most certainly would not suit the workers in Queensland who would be deprived of what they regard as their legal and enforceable entitlements.

I do not know what happened or to which branch- the Minister Was referring when he said , thai there was’ a- disagreement among the members of a branch or branches. We must look- at the facts as they have been’ presented. An agreement was negotiated by the Federation officers and presented to each branch for endorsement. Obviously it would, be difficult , to achieve unanimity of thought throughout Australia because of the circumstances to which I. have referred. Because a branch or its members may endeavour by some means - either by stoppage or vocally - to raise objections . to a proposition, the Government is not fair in criticising the branch for that activity. After all is said and done; the Waterside Workers Federation has had a long history of militancy and that militancy will not be broken down over night. Possibly it may be broken down by proper conciliation or by persuasion. It will not be broken down by proposing something which is unpalatable to a section of the Federation and asking it to accept it. Consequently I take umbrage at the fact that the Minister should criticise a branch and its members for exercising what they believed to be their legitimate and lawful right.

We have often heard the Government say: ‘Unions must put propositions to their members’. The Government has written so many provisions into the Arbitration Act that it obviously wants members to have a say in the election of officers of their union and so forth but now, because a section of a union denies the Federation’s officers the right to accept something, the

Government criticises that section of the Federation. This is totally unfair. I make it perfectly clear that I believe that all agreements should be honoured, and honoured to the full, but I do not dispute that if a section of a federation, whether it be of employees or employers, feels that it is being wrongly treated, it should have the fundamental right to object in any way it chooses.

Another Section of the Minister’s second reading speech to which I take exception is that section which offers faint praise to the Australian Council of Trade Unions and the officers of the Federation for their attempts to preserve harmony in the industry. I refer again- to the Minister’s words:

Whilst the ACTU and the federal officers of the Federation have done, their . utmost to ensure that the undertakings which, they gave in the proceedings before’ Mr Justice Moore were honoured, 1 want to make 2 points perfectly clear.’

I draw attention to the ‘ use of the expression ‘ACTU’.’ lt’ is faint praise indeed tei say that the ACTU officers did their utmost to. ensure that the agreement was honoured. 1 wonder how that sentence would have read had the ACTU officers objected to some part of the agreement. I ask honourable senators to visualise for a moment how the Government would have vented its spleen on what it believed to be an .election winner by criticising Mr Hawke. When there is any praise associated with the activities of- Mr Hawke the Government brushes this aside by referring to the ACTU. We have seen this on innumerable occasions. But when the ACTU makes a decision which is unpalatable to the Government the blame is associated directly with Mr Hawke. Now, when some praise is due to Mr Hawke who is guiding the ACTU, his name is not mentioned. I believe that this is unfair.

Mr Deputy President, I have addressed myself to the matters that I wanted to raise. I have said previously that the Opposition has no intention of opposing the Bill because it is a measure that improves the relationships of all those within the stevedoring industry. We stick by that decision, but I felt that I should object on behalf of all those members who have exercised their right to protest at something which they believe to be unfair and who are now being criticised. I object also to the fact that the ACTU generally was praised whereas had there been condemnatory remarks the name of Mr Hawke would have appeared on every second line of the Minister’s second reading speech.

Senator WRIGHT:
Minister for Works · Tasmania · LP

– in reply- I rise to respond to what Senator Milliner has said, only to put the record straight. The second reading speech was delivered some days ago and the best way to put the record straight is to quote 2 short passages from that speech. .1 think that the simple quotation of those 2 passages will relieve me of any imputation such as the honourable senator makes. I submit that these passages put the matter simply and clearly, giving credit where it is due and emphasising, requirements where they are proper. The second reading speech states:

The most recent major concessions-

That is to members of the Waterside Workers Federation - were made in May 1970 when the parties were before Mr Justice Moore. As part of that consent 2-year award both the Australian Council of Trade Unions and the Waterside Workers Federation gave a written undertaking there would be no stoppages of work in respect of those matters which were the subject of that agreement. In relation to other conditions of employment-

That is, conditions other than those which were in dispute and settled by that agreement - the Waterside Workers Federation gave an undertaking that it would progress all claims with the employers through established procedures and take all reasonable steps to ensure that work continued normally while these negotiations were in progress.

The undertaking given was a continuity of work despite any disputes on matters settled by the agreement, and arbitration and conference on all matters otherwise. The second reading speech - this is the passage to which criticism was directed - continues:

It is common knowledge that since then some members in branches of the Federation have embarked on stoppages ranging from 1 hour to a full day on issues covered by these undertakings. Whilst the ACTU and the Federal officers of the Federation have done their utmost to ensure that the undertakings which they gave in the proceedings before Mr Justice Moore were honoured, I want to make 2 points perfectly clear. Firstly, the Government expects the undertakings to be honoured.

I gather from what Senator Milliner said that he too would urge that the undertakings be honoured. The speech continues:

Secondly, the Government will be giving close attention to the performance of the Federation, its branches and its membership, recognising they are one of the principal parties to the agreement

It is timely that that passage should be repeated in its completeness and its fairness, because the Bill - a very generous Bill from the point of view of financing labour on the waterfront - is to continue until the permanent employment arrangement is brought to finality in review in 2 years time. I hope the - honourable senator will join with me in urging that there should be continuity of employment on the waterfront during that time. I hope that when any dispute occurs work will go on and it will be settled by the established procedures. Goodness knows, we have gone to all possible lengths to create procedures which are designed to , bring independent minds to the setltment of any dispute. I ask the Senate to accept the Bill.

Senator MILLINER:

– (Queensland) - I seek leave to make a statement. -

Senator Wright:

– I ask’ the honourable senator to make it in Committee.

Senator MILLINER:

– I prefer to have it on the record at this stage. .

The ACTING DEPUTY PRESIDENT (Senator Laucke) - Is leave granted? There being no objection, leave, is granted.

Senator MILLINER:

– I hope the Minister for Works (Senator Wright) was not suggesting that I was being unfair in my interpretation of the second reading speech. With due respect, the Minister did use the word ‘unfairness*. I suggest that he indicated that I was being unfair in not reading the passages which he himself read. If the Minister looks at the record he will find that I read almost the identical passages to which he referred. It is useless for him to say otherwise. I hope we can have an assurance from the Minister that he did not indicate, nor imply that I was being unfair in my approach to this subject.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 1986

PAPUA AND NEW GUINEA BELL 1971

Second Reading

Debate resumed from 7 May (vide page 1593), on motion by Senator Wright:

That the Bill be now read a second time.

Senator KEEFFE:
Queensland (3.42

– The purpose of the Papua and

New Guinea Bill is to increase the number of elected members of the House of Assembly for the Territory of Papua New Guinea and to enact certain consequential provisions. Whilst the Opposition does not oppose the Bill as a whole, at a later stage I propose to divide the Senate on clause 3 of the Bill which seeks to amend section 36 of the principal Act. Clause 3 reads:

Section 36 of the Principal Act is amended -

by omitting from sub-section (1.) the word ninety-four’ and inserting in its stead the words ‘one hundred and ten’;

by omitting from paragraph (b) of subsection (1.) the word ‘sixty-nine’ and inserting in its stead the word ‘eighty-two’; and

by omitting from paragraph (c) of subsection (1.) ‘the word* ‘fifteen’ and inserting in ils stead the word ‘eighteen’.

We object very strongly to that clause. One of the reasons why we want a debate at this stage is that, as honourable senators will recall, some 2 weeks ago 19 hours were allocated in another place for the discussion of 17 Bills. Included in this time was a debate on a motion of no confidence in, I think, the current Prime Minister (Mr McMahon). When the Papua and New Guinea Bill was discussed on Tuesday, 4th May 1971, a total of 41 minutes was allocated for the debate, including divisions on clause 3. That was 41 minutes out of a total of 1,440 minutes in the 24-hour day. That was all the time that could be found in the other place to debate a Bill which affects the social life and the day to day living of 21 million people.

The House of Assembly of the Territory has a total of 94 members. Of these 84 are elected members and 10 are official members. The 84 elected members are returned from 69 open electorates and IS regional electorates. As the regional electorates are currently constituted they can be contested only by persons who have an intermediate certificate standard or a higher standard of education. Consequently many indigenous people are precluded from nominating for the seats. It is proposed in the new Bill to increase the number of regional electorates from 15 to 18 so that when the House of Assembly elections are held in the first half of 1972 there will be 18 areas for which people cannot nominate unless they have this standard of education.

I respectfully suggest that it is not always the formally educated person who makes the best politician. Some of the chiefs of tribes and other experienced people in the Territory would probably make better political representatives than those who might have formal education of the standard required. I respectfully suggest that if this standard were applied in the Senate, the august upper House of this country, 10 to 15 senators would have to leave this chamber. This is not to say they are not good parliamentary representatives but they do not have formal certificates to show that they have reached this standard of education. When it comes to experience, political know-how and a conception of the problems of this country, their standard of education is probably equivalent to the graduate level. If formal certificates have to be produced we may be precluding from the lists of candidates in the Territory some of the more experienced people in favour of some who have this education certificate. It naturally follows in the wake of this that the people who will be most qualified will not be black; they will be white. So much for the Government’s statements on providing independence to the Territory.

The new House after redistribution has been carried out will comprise 10 appointed members, 82 open members and 18 regional members to fill a total of 110 seats. The Labor Party has long advocated that there should be 100 seats and all 100 seats should be open; there should not be amy nominated parliamentarians. The regional electorates are not the be-all and end-all of the selection of candidates. This has led to quite a number of problems because the Mataungan Association in New Britain has refused to co-operate with the people who are now endeavouring to carry out redistribution. It is annoyed by the method by which this is done and by the process adopted by the Administration. My appeal to the Mataungans is to cooperate because the present Administration will not be in power much longer in the Territory, certainly not later than about November 1972, at which stage electoral and social justice will come the way of these people. It is significant, too, that most - almost all - of the white members of the House of Assembly have other incomes. Some are plantation owners and others have perks on the side which they are able to obtain from Government sources. Very few of the indigeneous members of the House of Assembly have a second source of income. I think it is significant that the Administration has kept parliamentary salaries of representatives at a. very low level. The Territory, regardless of whether one represents a coastal or a highland area, is a very difficult place to move around. Transport is at a premium and those who come from the highlands frequently can use only air transport or walk for many weeks through the mountains. In the coastal areas the hiring of boats is expensive. To reach one end of an electorate from the others becomes a very lengthy and expensive process. In another place a few days ago the disparity of wages was highlighted in an answer given to the Leader of the Opposition (Mr Whitlam). Mr Whitlam asked in question No. 1736:

  1. How many (a) indigenes and (b) expatriates had deposits with each trading bank in the Territory of Papua and New Guinea at (i)30th June 1969 and (ii) 30th June 1970 and what were the total and average deposits of indigenes and expatriates’ in each bank.

The answer from the Treasurer (Mr Sneddon) was that $ 18.296m was deposited with the Commonwealth Trading Bank as at June 1969. As at June 1970 the amount was $20.674m. The figures for the combined trading banks - Australia and New Zealand Banking Group Ltd, Bank of New South Wales, National Bank of Australasia Ltd - were consistent with those for the Commonwealth Bank.

Senator Webster:

– What are those totals for?

Senator KEEFFE:

– - These are the savings of indigenes and expatriates with each trading bank in Papua New Guinea. This question is relevant to the argument I am projecting and with the concurrence of honourable senators I incorporate question No. 1736 and its answer in Hansard.

Mr Whitlam asked the Treasurer, upon notice:

  1. How many (a) indigenes and (b) expatriates had deposits with each trading bank in the Territory of Papua and New Guinea at (i) 30th June 1969 and (ii) 30th June 1970 and what were the total and average deposits of indigenes and expatriates in each bank.
  2. How many (a) indigenes and (b) expatriates had advances from each bank at those dates, and what were the total and average advances to indigenes and expatriates by each bank.
  3. How many (a) indigenes and (b) expatriates are (i) employed and (ii) housed by each bank in the Territory of Papua and New Guinea.
  4. What the the (a) highest, (b) lowest and (c) average salaries and allowances paid by each bank to its (i) indigenous and (ii) expatriate employees.

Mr Snedden; The answer to the honourable member’s question is as follows:

  1. Total advances of each trading bank in the Territory were as follows:
  1. Banks are not required to furnish informa tion of this nature, nor that requested in sub-item (4) of the question. However, in view of the special circumstances applicable to the Territory, they have provided and have agreed to public disclosure of the following, which relates to com bined trading and savings bank functions as at 31st December 1970:

    1. Number of banking staff employed byeach bank in the Territory of Papua and New Guinea.
  1. Number of staff housed by each bank in the Territory of Papua and New Guinea.
  2. Indigenes-

In terms of the Native Employment Ordinance all banks provide housing to staff who are not bona fide residents of a village which is reasonably accessible to their place of employment.

  1. Non-indigenes -

The majority of non-indigene staff are on transfer from Australia and all banks make provision for their accommodation.

  1. (a) (i) and(ii) Highest salaries and allowances:

Banks have not provided this information since it would reveal the salaries paid to individual officers.

Senator Webster might be able to read this at his leasure tomorrow and see the point I am endeavouring to make Question No. 1737 asked by the Leader of the Opposition and to which he received a reply is of tremendous interest too. The point I am trying to make is that because the difference in wage rates and the possible difference in savings between expatriates and indigenes is so great that, these are the areas in which we should be looking. We should take into account every single local employee in the Territory. One of the questions asked by Mr Whitlam was:

  1. What are the (a) highest, (b) lowest and (c) average salaries and allowances paid by each bank to its (i) indigenous and (ii) expatriate employees.

The difference between the salaries of the 2 groups, that is, those who are white and those who are black, could be described as roughly 50 per cent. So my plea at this point of time is to try to close thisgap in some way or other. Certainly we can do it by better representation at parliamentary level so that the indigenous parliamentarian does not have to make sacrifices which his white brother occupying a similar office does not have to make. The Territory is one of those areas where the Government is fond of telling us that the problems are over. I suggest with all respect that they have not even started. The

Leader of the Opposition has made 2 visits in recent times. A former Prime Minister has made one visit, his first and naturally his last as Prime Minister. The Leader of the Opposition everywhere he went was received with open armsand with pleas for political and social justice. The former Prime Minister, when he visited the highlands, was given a very great welcome and nobody has yet been able to deny that the thousands who turned up to welcome him were brought there under coercion. The kiaps and others told them that if they did not turn up in their thousands there would be problems for them in other areas. So they turned up. One could hardly-

Senator Webster:

– That is a lot of rubbish.

Senator KEEFFE:

– There are plenty of people in the Territory who will tell the honourable senator that that is the truth if he goes there and talks to them.

Senator Webster:

– I was there recently, and I did not hear many people supporting Mr Whitlam.

Senator KEEFFE:

– When the honourable senator goes there he goes on the cocktail circuit. He has no possible chance of finding out the thinking of the people. Mr Deputy President, I would suggest that Senator Webster, with his . Country Party ideals might go and work with the Country Party organiser and perhaps meet people other than those he would meet on the cocktail circuit. There is an official of the Country Party operating in Papua New Guinea at the moment trying to build up a party called the Compass Party as a conservative organisation. I think it has changed its name in recent times but nevertheless this was its original name. The plain fact of the matter is that this country and this Government are still exploiting the indigenous people of the Territory. We had a debate in this chamber a few days ago which was concerned with legislation to enable the Government to secure a loan from the World Bank for certain developmental work. The Minister on that occasion did some research and found that I ha,d said some time previously that we would welcome loans from the World Bank. I did make that remark and I make no apology for it. At the same time I said also that loans should be at a reasonable rate of interest, not the 7i per cent exploitation rate of interest that applied to the last loan that was put through this chamber only recently.

We are way behind in our endeavours to improve the general health of the community. This is caused by sheer neglect by the Australian Government and its ineptitude and unwilligness to provide a satisfactory standard of living which it is fond of talking about but which seldom does anything about. A recent whooping cough epidemic claimed the lives of many youngsters. Influenza epidemics that claimed the lives of thousands were experienced in 2 successive years. That is the number of recorded deaths, but we do not know the loss of life that occurred in the more remote villages of the country because no real record is kept. Whooping cough epidemics and things of that nature ought not to occur and would not occur if there was a proper immunisation campaign carried out, but it has not been carried out in many parts of the Territory. I defy anyone to prove that it has. Malaria and other diseases of a tropical nature have been controlled in the areas of heavy population but in other areas they still have not been controlled. I suggest that within the next few months there will be a scandal in that country regarding its pollution with certain types of insecticides which are damaging the health of the people in another way. I will tell honourable senators more about that in the Budget session. There is no child endowment payable in Papua New Guinea. The income of a family is probably lower than that of people in a comparable Aboriginal group in Australia-

Senator Wright:

– What does that have to do with the Bill?

Senator KEEFFE:

– lt has a lot to do with the Bill. The Government is about to carry out a great social innovation by increasing the number of people in the House of Assembly in Papua New Guinea Is not one of the responsibilities of ‘ the House of Assembly to see that all these standards are maintained. Is it not the responsibility of this Government to see that the Australian Government does the right thing by one of its Territories, and one of its mandated territories. After all, Papua itself is part of Australia, as Government supporters are so fond of saying.

The Government will not let any black people from Papua into Australia, but they are Australian as much as we are. There is no pension payable in Papua New Guinea. Only a few days ago-

Senator Wright:

– I rise to a point of order. This is a Bill merely to provide for an increase in the number of elected members of the House of Assembly in the Territory and certain consequential provisions. The questions of health and pensions are completely irrelevant to the Bill. I rise because of time and sense. If relevancy is insisted upon we will have a much more informed and effective debate. I ask that it be insisted upon.

Senator Cavanagh:

– Speaking to the point of order, I disagree with the Minister. I think the points raised by Senator Keeffe could well be relevant. The Bill relates to the question of elected members of the House of Assembly. It seeks to make some alteration to the system at present operating in the Territory. Senator Keeffe raised the point that the attitude of neglect of the Territory which has persisted over the period of the present Constitution of the House of Assembly needs to be altered. He also states that there has been some neglect on the part of this Government on this question. This Bill could rectify some of the positions that he finds lacking in the Territory at the present time. I think the conditions which exist in the Territory are very pertinent to the number of representatives that the indigenous people in the Territory have in their Parliament. Therefore I would respectfully suggest that Senator Keeffe is entirely in order in raising these matters.

The ACTING DEPUTY PRESIDENT (Senator Laucke) - Senator Keeffe, will you keep more closely to the immediate provisions of the Bill before the chamber?

Senator KEEFFE:

– Yes, certainly, Mr Acting Deputy President. I understand the Minister’s problem in trying to push things like this under the carpet. I want to refer briefly to the 9-year old lad who was gaoled the other day. We now find that he has been confined to a mission station. The social conditions under which these people have to live are relevant to the Bill. I understand that the Minister for External

Territories (Mr Barnes) does not like these things to be debated in public. I understand that the Minister for Works (Senator Wright) who represents him in this chamber does not like these things being exposed to public view either. As a member of the Opposition I believe that we are the only real voice that the people of Papua New Guinea have.

I propose to talk about this matter completely in keeping with the terms of the Bill. A financial writer in one of the Sunday newspapers suggested that people should not buy shares in the mining venture at Bougainville. If we cannot apply the laws of the House of Assembly to the Territory and if we cannot apply our own administration in the best interests of the Territory, we ought to be looking at these matters. I respectfully suggest that an increase in the regional electorates from 15 to 18 and an increase in the total number Of electorates beyond the current figure will not satisfy either the people of the Territory or the thinking people of Australia.

The final point I want to make relates tq clause 3 of the Bill, on which we propose to divide the Senate. I should perhaps reemphasise that if we have 100 members representing open electorates on a fair boundary distribution it will do more towards assisting the people to political independence in the terms of being able to administer their own legislation and to look after their own affairs than this Bill even suggests. I again appeal to the Minister who has now left the chamber that when he is discussing these matters with the Minister for External Territories they look at some of the social questions, that this be part of the overall campaign of the Territory, and that the Government does not continue, as it has done for years, to sweep these problems under the carpet because the people of Papua New Guinea are black and therefore can safely be classified as second class citizens. They are not, and they are going to tell us so in a very short time.

Senator COTTON:
Minister for Civil Aviation · New South Wales · LP

– In the absence of the Minister for Works (Senator Wright) who was called from the chamber briefly, I will give to the Senate and in particular to Senator Keeffe information provided by the advisers from the Depart ment. The question of regional electorates is dealt with in paragraphs 27 to 30 of the final report of the Select Committee on Constitutional Development. The majority of people favoured an increase in regional electorates and suggested that educational qualifications for candidates be retained. There is a widespread request that educational qualifications be combined with experience. The qualification so listed is the intermediate certificate or its equivalent. The Committee felt that such a qualification was necessary to ensure a guaranteed standard of education in the House of Assembly.

The Committee also felt that in the event of abolishing regional electorates the question of a minimum qualification for candidates in open electorates would need to be considered. The Government has accepted the Committee’s report, as endorsed by the House of Assembly, as reflecting the views of the people of Papua New Guinea. The increase will permit regional members to be returned from each district. The Committee found in its investigations that this had some comparability with the experience of other countries and it was felt that in all those circumstances this was a wise and sensible way to proceed. I cannot add a great deal more to the discussion, and I think accordingly the question should be put.

Question resolved in the affirmative.

Bill read a second time.

In Committee

Clauses 1 and 2 - by leave - taken together, and agreed to.

Clause 3 (Composition of House of Assembly)

Senator BYRNE:
Queensland

– Clause 3 deals with the existence of regional electorates. I do not wish to speak, nor am I entitled to, on the general principles of the Bill. However, due to the absence of Senator Wright, who is the Minister handling this Bill-Senator Cotton acted temporarily in his position - I was taken a little by surprise at the passage of the second reading of the Bill and

I did not realise that the Minister was closing the debate. I was looking at something else. I rise merely to say that the Australian Democratic Labor Party supports the Bill and supports the principle of the regional electorate contained in clause 3.

This is a very difficult situation. After all, one of the greatest problems in the transposition from a less sophisticated society to a more sophisticated, developed society is the absence very often of an educated elite. I do not mean that in any socially snobbish sense, but in the sense of a cadre of those who areadequately educated in order to be able to take over the self administration of a country or a territory. This is an attempt, originally by the existence of regional electorates and now by the increase in their numbers; to perpetuate that system.

It appears to us that it is a not unreasonable concept: It is one that seems in some sense to meet adequately the requirements of a developing society, certainly of this developing society. To what extent and for how long the system will be perpetuated, we do not know. The alternative to the existence of regional electorates as spelt out by the Minister is that in the open electorates a minimum educational standard would have to be insisted upon to provide at least a distribution of the intellectual and educated ability as against the component which is given by representation of this kind from the regional electorates.

At this stage, I would not think that would be easy to achieve, nor possibly would it be effective for a long time. If one were to set one’s face against the existence of the principle of the regional electorate and to abandon it or in some way qualify it unduly, this could only have the effect ultimately of impeding the movement towards complete independence. I do not think that any protecting power would be justified in handing over independence to a country which did not have a certain component of educated people to take over the administration.

As it is the aim and aspiration of the people of the Territory to achieve independence and as it is the aim and ambition of Australia to grant independence on the proper terms as quickly as possible and in the best interests of the people of the Ter ritory, and this measure tends in that direction to achieve that purpose, I think it is a principle worth preserving. If it is worth preserving, the number of representatives of the regional electorate should be increased in accordance with the general numerical increase contemplated by the Bill in the other areas of political representation. For those reasons, the Australian Democratic Labor Party, supports this clause and the Bill.

Question put:

That the clause stand as printed.

The Committee divided. (The Temporary Chairman - Senator Sir Magnus Cormack)

AYES: 26

NOES: 22

Majority . . 4

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Clauses 4 and 5 - by leave - taken together and agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Third Reading

Standing orders suspended.

Bill (on motion by Senator Wright) read a third time.

page 1993

QUESTION

ARRANGEMENT OF BUSINESS

Senator WILLESEE:
Western Australia

– The next business before the Senate concerns 3 tax Bills, 2 of which the Minister for Supply (Senator Sir Kenneth Anderson) has taken to the second reading stage. Order of the day No. 6, which is the Income Tax (Bearer Debentures) Bill 1971 and which is the third of the trio, is at the first reading stage. Might I suggest, with the concurrence of the Leader of the Government, that I move that Orders of the Day Nos 4 and 5 be stood over until the completion of the first reading of Order of the Day No. 6? We have one speaker who wishes to speak on the first reading of the Income Tax (Bearer Debentures) Bill 1971. I suggest that we might take the 3 Bills together when we come back to Orders of the Day Nos 4 and 5.

Senator COTTON:
New South WalesMinister for Civil Aviation · LP

– I defer to Senator Willesee. I was proceeding to move that this, arrangement be followed. Accordingly, with your . approval Mr Deputy President, I move:

That Government business Orders of the Day Nos 4 and S be postponed until after consideration of Order of the Day No. 6.

Question resolved in the affirmative.

page 1993

INCOME TAX (BEARER DEBENTURES) BILL 1971

First Reading

Debate resumed from 7 May (vide page 1586), on motion by Senator Sir Kenneth Anderson:

That the Bill be now read a first time.

Senator CAVANAGH:
South Australia

– When I spoke on the Pig Slaughter Levy Bill I dealt with matters that were not relevant to the Bill for the purpose of analysing replies that I had received from the Government relating to Mrs Dalton’s book ‘Without Hardware’ which referred to the death of Dr Bogle and Mrs Chandler. On that occasion I stated that due to time limitations I would seek to move the adjournment on the next money Bill to be debated and that when that Bill came up for discussion I would continue the agitation that I think is necessary for the purpose of obtaining a Government investigation into the activities of political agents in Australia. Whilst I thought that there was sufficient informa tion available at least to create some suspicion to justify some investigation unfortunately there has been no move from the Government as yet to establish such a committee. I seek to take this matter further during my remarks on the first reading of this Bill. I regret that it will be necessary for me to hammer this question until at least we get an investigation into the activities of foreign agents in Australia.

When I spoke previously on this matter I pointed out my dissatisfaction with the replies that I had received from the Government. One of my questions concerned an international agreement. While we knew that there was an international agreement, a reply to one of my questions stated definitely that there was no secret clause in the agreement that permitted foreign agents to breach the laws of Australia without paying the consequences of some prosecution in Australia! This was a claim that was made by Mrs Dalton. Immediate^ly it was discovered that there was not a secret clause that gave Immunity to breaches of the law by foreign agents we had introduced into this country the International Organisations (Privileges and Immunities) Act which applies to the International Atomic Energy Agency and other international agencies. I think I should have mentioned this on the last occasion I raised the- matter. The International Organisations (Privileges and Immunities) Act relates to an international agreement. We adopted it for the purpose of extending its provisions to embassies. The Minister responsible for the Act may, by regulation, extend the provisions of the Act to other sections of people in Australia. By a decision of members of this Parliament we have extended the Act to cover international conferences that are held in Australia. I think this is understandable.

We have reached the position where regulations have extended the Act to cover employees of the Atomic Energy Agency in Australia. Whilst those employed by the Atomic Energy Agency have been in Australia for many years it has been only as a result of the publication of questions and answers that we found that no immunity had been given to those working for foreign powers within Australia if they breach our laws. Today there is this immunity. I have signified my intention on the notice paper to disallow the relevant regulations and this will come up for consideration possibly some time in the Budget session. But until such a time as the regulation applies in Australia if there is a breach of Australian law by any foreign agent working for the Atomic Energy Agency-

Senator Byrne:

– Do you think you should be canvassing a matter that is on the notice paper?

Senator CAVANAGH:

– I do not want to take it any further than to point’ out that such people could murder a person today and they could not be charged - they would have immunity. I do not know why immunity should be extended to them. It is important that I raise this matter because 1 have failed sufficiently to persuade the Government of the need for an investigation.

I want to raise another case in which it is alleged that the cause of death is unknown and that the identity of the victim is unknown. My reference is to the Sydney Daily Mirror’ of 13th and 14th luly of last year which reviewed the case of an unknown man who was found at Somerton sands in South Australia on 1st December 1948. This man was buried unknown. The thing he had in common with Dr Bogle was that he died an unnatural death from an unknown poison. Every year flowers are placed on his grave in the West Terrace cemetery. Someone obviously knew and had some affection for this person. All identification marks were removed from his clothing. He had a scrap of paper in his pocket together with some incidentals which are not important to my case. The scrap of paper in his pocket was from the Rubaiyat’ of Omar Khayyam. From the end of the poem had ‘been torn the words Tamum Shud which means the finish or the end. The book from which the extraction had been torn was found in the back seat of a car in a public park. The Sydney Daily Mirror* asked: “Was it suicide or was it murder?’ On the back of the booklet was an 8-line 44-letter code which was marked out in code formation. Rather than take up the time of the Senate, with the concurrence of the Senate I incorporate the letters in Hansard.

  1. R. G. O.
  2. D. A. B. D.
  3. T. B. L M. P.
  4. W. E. T. P. M. L. 1. A. B. O. A. I. A. Q. C. I. T. T. M. T. S. A. M. S. T. G. A. B.

The Sydney ‘Daily Mirror’ reported that the code baffled the Army decoding section at the time. They did not know how to decode it. As I proceed, this will be seriously queried. If the cause of death was suicide apparently the code was left as a message to someone; if it was murder it was left either by the murderer to notify someone that he had done his duty or to notify Australian officials to pull their dogs off because this was a justifiable murder and a question of international security.

An individual in Adelaide has done something to decipher the code. He thinks that his results will stand the test of time and the tests of deciphering experts. The deciphering of the code so much follows the accepted Army pattern that it is hard to realise that the Army did not decode it. Decoding is a system of replacing letters or numbers with different letters until words can be spelt. It is very simple to decipher a code if one has the master key. When one has the master key one finds that a letter replaces something else. The individual for whom the code was left apparently did not have the master key because it was written into the code. When we look at the code we see that there is a rhythm right through it which is possibly the reason why it was based on a verse of Omar Khayyam. As I say, the code comprises 8 lines of letters. It has a rhythm, other than for the first and last lines, of 5-6, 5-6, 5-6. The rhythm is broken in the first line, which has 4 letters, and in the last line, which has 7 letters. One letter has been taken from the first line and one letter has been added to the seventh line in order to throw the first and last lines out of rythm. This indicates that these lines have to be carefully considered. The last letter in the fifth line is the letter O with an X above it, which immediately indicates that it is a key word which has to be given some consideration.

The first line of letters has the rhythm MA, MA, MA, 1A. The M which is used in the last line could easily have been used again, but the rhythm is broken. We find that the M appears in the last line. Therefore our attention is attracted to the last line for 2 reasons. There are only 4 letters in the first line, therefore, it has to be a 4- letter code. Again, defence requirements stipulate a 4 or 5-letter code. The 4-letter code indicates to us that we are deciphering the code correctly when all deciphering is based on multiples of 4; it must be divisable by 4. I am referring to this matter because I think it is very important. Although possibly honourable senators will not be able to understand what I am saying now, I think that they will be able to understand it when they read it in Hansard. As we know, there must be a danger to a person who knows the key of a code belonging to some foreign power. If the key is made public, there is no need to annihilate a person who knows it because it is there for everyone to see.

We see the rhythm in this 4-letter code. The O in the fifth line has to be transferred to the fourth position. We must use the O, which is the key letter, for some other letter in the code. In 2 instances our attention has been attracted to the last line of the code. We find that by replacing the letter G with the letter O in the last line we can obtain the rhythm OAB, OAB in the fifth and last lines. Of course, we have the additional key to the code in the words ‘Tamam Shud’ which were found on a piece of paper in the pocket of this dead man in Adelaide. So we have to form a word at the end of the code for the purpose of obtaining the key of the code. Having placed the O in the third last position of the last line, we then have to use the G to replace another letter, and we put it at the end of the line where the letter O originally was. We therefore seek to find, for the purpose of decoding, a 4-letter word having an O as the second letter and a G as the last letter.

Many letters were tried and finally it was decided that the word ‘song’ fitted into the code. That permitted us to replace every T with an S, every G with an O, every A with an N, and every D with a G. This changed 20 letters of the 44-letter code. Only 16 letters of the alphabet were used. It was found the code was such that there were insufficient vowels for the purpose of finding any words, and the next step was to select a vowel which would take the place of the most used letter in the code. A replaces N. I do not go any further into the question except to say that we found 26 letters of a 44-letter code. Other methods were used. The whole operation necessitated the alteration of a letter which was obviously the missing letter of a word. The result was that the letters MRODIWTELQSG became AMRILESWYUTO respectively.

It is important to see what steps have been taken by this individual who claims te have decoded the message. He says that the words which are formed by the use of this method of decoding are ‘News as sad as a daylong mourning song- GL kills Nat TNN’. These words mean very little at this stage. We must ask ourselves why these words were used to describe the death of a person. We get the word “kills’ - someone kills someone else, and therefore we can discount suicide. We look for the basis of a message which says that someone has killed someone else. Why not say ‘sad news - someone kills someone else’. But we get this expression ‘News as sad as a daylong mourning song’.

Another remarkable discovery supporting the accuracy of the decoding is that by placing in alphabetical order the 16 letters as used, 4 in line under each other, and by using alternative words for those used in the code, we find that 4 words become clearly distinguishable. The first is ‘king’; the second I will refrain from mentioning for reasons which I will disclose later; the third is ‘ardum’; and the fourth is ‘est’. I am informed that ‘ardum’ is an ancient Latin word which means zealous or keen. A case was found in the Adelaide railway station office which was identified as belonging to the deceased. All of the identifications, with the exception of a name which was written in 3 places on a singlet, had been removed.’ The name was Keen’, but it was spelt in different ways. There was some desire to attach the name Keen’ to the particular individual who was found dead in Adelaide. If ‘ardum’ means keen’, that is one clue. The second word, interpreted into English, could be used to identify the name of another person whose name figured prominently in the investigation and if mentioned it may be suggested I implied he was the murderer.

If we begin by giving the letter K No. 1, and so on up to 16, and if we add the figures of the 4 rows, we get the totals 32, 36, 32, 36. No-one asked anyone to put down 1 to 16 in 4 in a line. No-one could do it without especially taking care that it added up for the purpose of division by 4. It was a deliberate coding for the purpose, which could be tested. Let me add that the police have identified the stitching on the gusset of the coat as stitching which would suggest that the coat was-made in America.

To see whether we can find a message in the code, I want to* look at the international situation at that time. At the conclusion of “the Second World War, in 1945, many European countries were in a state of bankruptcy. There was conflict between the Soviet Union and the Western Powers. In 1939 the Soviet Union bad made territorial gains at the expense of Finland, Poland, Romania, parts of north-east Germany and eastern Czechoslovakia. During or after the war- Russia annexed outright the Baltic nations of Latvia, Estonia and Lithuania. This represented 25 million people and 200,632 square miles. Pressures of international Commnnism began to move into the moral and material voids left by the war. - At the cessation* of hostilities the Western ‘ powers began to disarm. All armies, other- Unas those of the Soviet Union, began to move out of Europe. On the day of surrender American forces in Europe numbered 3,100.000. Within 12 months the number was reduced to 391,000. British armed strength had been reduced from 1,321,000 to 488,000. All Canada’s 299,000 troops had been withdrawn. The Soviet Union maintained its forces on a wartime footing and kept armament production at full speed. Poland, Bulgaria. Romania and Yugoslavia were controlled by Communist governments. In every country that the Soviet occupied at the time of surrender the Communists imposed their will upon the people.

On 12th March i947 the President of the United States of America announced what was to become known as the Truman Doctrine on military aid to Turkey and economic and military aid to Greece. On 5th June 1947 General George C. Marshall initiated the European Recovery Programme, which became known as the Marshall Plan. The Programme, which was extended to Russia and other communist countries, was for relief and rehabilitation. Its intention, as stated, was to save lives, to repair war damage and to save suffering nations from chaos and collapse. The Soviet Union refused to participate and denounced the Plan. On 20th March 1948 Russia walked out of a conference for co-operation and rehabilitation. Russia called the Warsaw Conference of satellite powers and formed a military bloc known as the Cominform. The powerful Communist parties of Italy and France were represented on this Cominform. In 1948 Czechoslovakia went Communist. Albania, Hungary and East Germany fell under Communist domination. During 1948 the Soviet blockaded West Berlin. This lasted for 323 days. These events occurred at about the time the unidentified body was found. A tight network of political, economic and military agreements bound satellite countries firmly to the Kremlin. By mid- 1949 23 such agreements were in existence.

In a resolute response to the challenge of Communism, particularly after Czechoslovakia went Communist, representatives of - Belgium and Luxembourg met in Brussels in March to discuss a treaty of mutual assitance. The Treaty of Brussels was signed on 19th March 1948. The United States Senate carried a resolution by Senator George Vandenberg that the United States enter into military agreements in conformity with the United Nations Charter. On 6th July 1948 representatives of the United States Department of State, the Ambassador of Canada and representatives of the Brussels Treaty countries met in Washington to plan such an alliance. This was at the time of the Berlin blockade. As a result of the Vandenberg resolution, President Truman was advocating a North Atlantic Treaty Alliance. The North Atlantic Treaty was signed in April 1949 on behalf of Belgium, Canada, Denmark, France, Iceland. Italy, Luxembourg, the Netherlands, Norway, Portugal, the United Kingdom and the United States of America. That shows the security desperation of America immediately after the last war. Following the Vandenberg resolution of 11th June 1949 and the meeting in April 1949, there was the signing of the North Atlantic Treaty Alliance which, in April 1949. formed the North Atlantic Treaty. Later the organisation was implemented and became what we now know as the North Atlantic Treaty Organisation.

If we look at the code that has been deciphered, if ‘News as sad as a day long mourning sob’ is divided into the 4-letter code and if we take the first 4 letters of

News as sad as’ we get NASA, which is the North Atlantic Security Alliance - advocated by America in that period to which I referred. If we look at the second section of the code we find ADMS. I have been searching, with assistance from the Parliamentary Library staff, for the meaning of the initials ADMS. During the war years an American intelligence organisation visited military establishments and those working in the decoding rooms of at least certain airports had to put ADMS on some messages which were decoded.. It is understood that ADMS stood for American Directorate of Military Security. It is easy to see that the message on the piece of paper found on the unidentified body was to someone. Here was a traitor against the plan to create the North Atlantic Security Alliance, which Alliance was to stop the thought about Russian expansion at that time. Someone was a traitor to it, and under orders from the American Directorate of Military Security his death was justified. If we look at ‘kill’ we look at what was death. Time will not permit me to go into that now. As with the deaths of Dr Bogie and Mrs Chandler, there are many questions about what causes quick death and leaves no sign. That rebuts the suggestion in Mrs Dalton’s book that the gas used in the Bogle-Chandler deaths was something manufactured in recent times in Queensland. The gas was known in 1948.

As my time has almost expired, I want to make 2 points. The Adelaide police force, which is recognised as one of the most efficient police forces in Australia, on 1st December 1948 discovered an unidentified body. Before there was any description of the body other than a notification that the police suspected that the deceased was about 45 years of age, 5 weeks elapsed. When a photograph was published it was found that many made an incorrect identification. The police generally seek the co-operation of the public in identification and obtaining clues when they do not know whether a death is due to foul play or when they do not know the individual. In this case they waited such a long time that the memories of many who may have casually met this person had dimmed so much that identification might have been nearly impossible.

What attracted me is that whether or not the code is correct the letters line up correctly. The individual who decoded the letter does not want his identity to remain secret. His name is available to anybody who wants it for the purposes of a government investigation. He sent a letter explaining the code to the journalist who wrote the article in the ‘Daily Mirror’, and he sent a letter to Detective Moore of the South Australian police force stating what he believed the code stood for. He received a reply acknowledging receipt of his letter, thanking him for his interest in the case and advising him that the matter would be investigated. His written English is not sufficiently good to give a proper indication of what he might be trying to write. The South Australian police force, which is seeking to clear this matter up, has had this correspondence for 2 months and has not made an investigation of this individual’s claims. Although there is some disagreement, I submit that the code is clearly a message of a traitor of the North Atlantic Security Alliance and the letters at the end could well mean that nerve gas had killed a national security treaty traitor. It is signed NL. This evidence supports my contention that at some stage we must have an investigation to see that there is not free rein for foreign agents in the commission of crime in Australia.

Senator CANT:
Western Australia

– I do not wish to delay the Senate for any great length of time, but I want to direct the attention of the Senate to ah article that appeared in last Saturday’s Australian’ under the big headlines ‘Big Bass Strait Crude Shipment goes to US’. The article states:

The largest shipment of local crude oil ever loaded in Australia shipped quietly out of Westernport, Victoria, last week - apparently bound for the west coast of the US.

The shipment, in the large 96,000 tons dwt tanker, ‘Oswego Glory’, was for Mobil Oil and carried 730,000 barrels of Bass Strait crude.

It seems likely that Mobil Oil, which is a refiner in Australia, would have made a profit out of the shipment

Other refineries, most of which are foreignowned, will be in a similar position if they can obtain an export licence from the Customs and Excise Department for shipments.

However, the producers who discovered the oil cannot take advantage of higher overseas prices as their crude must be offered to local refiners.

At ibc local price set for Bass Strait crude of $2.05 a barrel, Mobil’s shipment is valued at $1.5m

Prices for Australian crude however, are now below those ruling overseas, particularly following the recent hike in the Middle East crude prices. Yet the present price for local crude is set until 1975.

In California, where the Mobil shipment is thought to be bound, the post price for oil of similar quality to Bass Strait crude ranges between SUS3.75 and $US3.81 a barrel.

While shipping cost to the US would absorb a large portion of this differential it should still be profitable to ship erode bought in Australia.

The Government, through Customs, is believed to be adopting a general policy at present that refiners can export -

I direct particular attention to this - up to 20 per cent of their local crude allocation.

As Esso-BHP alone are currently producing 300,000 barrels a day from Bass Strait, this would mean the refiners could theoretically export 60,000 barrels a day.

It is extremely doubtful that refiners would obtain permission to export anywhere near that level, but any exports seem likely to be profitable al the expense of the producers, and, ultimately, the public.

Japan is currently showing great interest in taking regular supplies of Australian crude, and would probably be prepared to pay higher prices than currently ruling.

Pollution is a real concern in Japan and large quantities of Minas crude from Indonesia, which is low in sulphur content, is imported to Japan at $A2.21 a barrel.

Bass Strait is also low in’ sulphur content and of similar quality as Minas crude. A recent Japanese mission to Australia showed interest in obtaining Australian crude.

The Mobil shipment is not the first time local crude has been exported - although it is easily the largest.

In mid- 1967 Mobil shipped about 145,000 barrels of Barrow Island crude to Singapore.

This was at a time when the price for Australian crude was $US3.50 a barrel. The article continues:

About 3 months ago H. C. Sleigh shipped around 240,000 barrels of Bass Strait crude to Japan.

I asked the Minister representing the Minister for Customs and Excise (Mr Chipp) the following question with respect to the shipment of H. C. Sleigh crude:

Has H. C. Sleigh Ltd exported to C. Itoh and Co. of Japan 230,000 barrels of crude oil from Bass Strait: if so, who issued the export licence, special licence or export permit that allowed the export of this amount of crude oil.

The answer was:

No. However, the Department of Customs and Excise has issued the necessary permission to the company to export a quantity of crude oil to Japan. 1 understand the export is to take place shortly.

According to the article the shipment was made 3 months ago. I received the answer to my question on 25th February. It is not yet- 25th May. I also asked the Minister:

Did H. C. Sleigh have to pay $3.50 or $2.06 or a combination of these prices per barrel for the oil.

It must be remembered that under the agreement distributors in Australia had to take a quota of Australian production of oil in accordance with the amount that they distributed. A quantity of H. C. Sleigh’s crude oil would have been built up during the time when the price was $3.50 a barrel and some of -it would have been built up during the time when the price was $2.06. I understand that the price at present is $2.05 per barrel for crude. I wanted to know the price that H. C. Sleigh received for the crude oil which it sold to Japan. The answer I received was:

It is of course public knowledge that the current price of Gippsland crude oil is $2.05 per barrel. However, it is not ;the practice to disclose details of business transactions of companies dealing with the Department of Customs and Excise and accordingly I do not propose to disclose the price which H. C. -Sleigh paid or are to receive for this shipment of oil. .

I only needed to know what quantity was built up under the old price and what quantity was built up under the new price to ascertain what H. C. Sleigh paid per barrel of crude oil. The oil from Bass Strait is an Australian national resource, lt belongs to the people. It does not belong to this Liberal Government to dispose of how and where it will. It is a national asset of the people of Australia. Yet we are unable to find out at what price Australia’s assets are being , sold. I have asked other questions about oil and gas from Bass Strait. I have asked the Government at what price liquid ^petroleum gas from Bass Strait v/as being sold and it has refused to give me an answer as to the amount received per ton. The Government has refused to tell me whether an export licence had been issued, whether a special licence had been issued, or whether a licence was required. I finally obtained the information that it would have to be contained on a manifest of the companies which ship the oil. I obtained the price through the Bureau of Census and Statistics and I found that Australia was selling liquid petroleum gas to Japan for $14.50 per ton whilst the people of Australia had to pay $35 per ton.

This is what is happening to Australia’s crude oil. By a set of fortuitous circumstances the price paid for Australian crude oil is probably the lowest in the world. The fortuitous circumstances .ire that a Prime Minister entered into an agreement with Esso-BHP but he did not bother to call upon the Australian Oil and Gas Corporation Ltd or WAPET to take part in the negotiation of a price. It was a deal between the Prime Minister and Esso-BHP. That was the price fixed at that time supposedly in relation to the import parity price. The price fixed was $2.06 a barrel after 17th September 1970. Nevertheless at the time the Prime Minister entered into this agreement with Esso-BHP Dr Hunter of the Australian National University estimated that the import parity price was $1.70; and that included a differential for quality. At the time it was thought that Australia was making a very bad deal by agreeing to a price of $2.06 but, with increased freight and other charges such as harbour charges and a rise in the price of oil from the Middle East, it now turns out that Australia’s price was a very good price. It was no credit to this Government that the price turned out as good as it did.

But now the price is so good that the refinery companies - Mobil Oil Australia Ltd is the big offender - are able to buy Australian crude oil at $2.05 per barrel, ship it half way around the world and make a profit, f have proposed this question before: ls Australia so affluent in its natural resources that it can afford to export oil? At no time has it been expected that the flow of oil from Bass Strait and from WAPET and AOG in Queensland will exceed 60 per cent of Australia’s requirements. That means we still have to import 40 per cent of our requirements. Irrespective of the amount of oil that we are able to recover from these oil basins we are unable, because of the quality of the oil, ever to become self sufficient in our crude oil requirements because Australian oil does not produce some of the raw residues which are required in this country for other purposes. But the amount of crude oil we expect to have to continue to import to extract the heavy residues is 10 per cent to 15 per cent; so we are still down the drain by about 25 per cent to 30 per cent of our requirements for light fuel oil. Yet we are able to export it around the world. For every bar rel of Australian oil we export we will have to import 1.25 barrels of heavy residue oil to produce the same amount of the light residues such as petroleum, aviation fuel and kerosene.

There have been 7 increases in the price of petrol in Australia since the discovery of crude oil in Bass Strait. Only recently the Prices Commissioner in South Australia, who has the greatest say in this matter, gave a further increase in the price of crude oil on the basis that the increase in the price of crude oil from the Middle East required an increase in price of petrol in Australia. While we are selling cheaper oil around the world the people of Australia are not able to take full advantage of the amount of high grade crude oil that is. available to them. In my opinion this is a scandal. I have noticed in reading some of the questions asked in this place that there has been an attempt to ascertain what the finding of oil in Australia means to Australia. On 25th February Senator Young asked Senator Sir Kenneth Anderson this question:

Yesterday I asked the Leader of the Government in the Senate a ‘question regarding the difference between the price of imported oil and the price per barrel of oil from Bass Strait and other indigenous oil. I asked what the saving would be to the Australian nation, and, further the difference in the price of ‘petrol if indigenous oil were sold at the same price as imported oil. Does the Minister have an. answer to that question?

Of course the Minister had an answer. He said:

Yes. I promised to’ seek some information and I have been supplied with it. The question was:

What is the difference between the price per barrel of crude oil now imported and the price per barrel fixed for oil from Bass Strait and other indigenous areas? The answer is that the present price of indigenous crude oil. was based on the import parity price for imported crude oil in 1968.

This is a peculiar way of answering the question. He went on: Leaving aside the quality differential-

Which is the advantage in Australian Oil- determined for Australian oil, the import parity price in relation to which’ the Australian price is set for 5 years, is $1.89 per barrel.

When I look at the formula, which is set out in a document which I will later seek leave to have incorporated in Hansard, I see that the price under that formula is $1.80 and not $1.89. to this fixed base of $1.80 per barrel - it cannot be altered, it is a fixed base - is added a sum for quality differential estimated at 26c calculated in accordance with the modified Nelson formula upgraded as agreed. It has since been downgraded because it is now 25c and $2.05 a barrel. That is the first instance where the Minister was misleading in his information. He continued:

If overseas prices and freight increases which have taken place since that time are taken into account the import parity price today would be $2.31 per barrel . . .

He does not say whether this is the import parity price plus the quality differential or not: That is left blank but my reading of it would be that it does not include the quality differential. He continued further: - an increase of 42c per barrel.. The overseas price will increase year by year. Assuming that present freight rates remain the same, the price will be $2.65 by 1975- .

This is a build up for a good deal made by the former Prime Minister- an increase of 76c over the basic price of indigenous crude oilEven supposing that the Minister and his advisers are correct in making the assumption that this will be the price of oil in 1975 how much more important does it become that Australian crude oil be not exported and that the Australian people be allowed to take advantage of the fact that a fortuitous deal has been made between the Government and Esso-BHP? I think that there should be some questions asked and some explanations given as to how these export licences are issued. The Minister continued:

The second question was: What is the annual saving to Australia as a result of this difference. It is expected that the consumption of crude oil in Australia during 1971 will be approximately 190 million barrels. If supplies of indigenous crude were not available and Australia were fully dependent on overseas crude oil, the recent overseas price rise would increase Australia’s import bill for crude oil by $63m over a 12-monlh period. However, this amount will increase progressively with further overseas price rises, which have already been agreed upon, and the expected growth of refinery requirements.

If the oil distributors are to be allowed to continue to export Australia’s crude because of its quality and price end because of the profits that can be made out of shipping it out of Australia then Australia will have no alternative but to permit those who require the products of the oil industry to import oil at the prices that operate in the various countries, in the main the countries of the Middle East and Indonesia. Before very long it will be found that there will be further applications to the South Australian Prices Commissioner for increases in the price of petrol because of the increased price, the increases in freights and the increases in harbour charges that will apply to imported oil. The Australian people will not be able to take advantage of having a lower priced oil in this country. When the price of oil was fixed at $2.05 there was much said about an increase because the price was fixed so high. It was said that Australian motorists would have to pay between 3c and 5c a gallon extra for their petrol.

It was said that’ if Australia wanted to develop an indigenous oil industry then it would have to be prepared to pay more for its petrol and the balance would be worked out as a saving on bur balance of payments. But now we find that we have the cheap oil and we are not going to be allowed to make the fullest use of it. We will of course refine quite an amount of it, but we will not be allowed to make the fullest use of the fact that we have approximately 60 per cent, for a period of about 4 years, of our own requirements. We will be exporting it and the oil companies will, of course, . continue to try to export it and make profits on the export of it. In answer to a question earlier today directed to the Minister for National Development (Mr Swartz) the Minister for Civil Aviation (Senator Cotton) stated that a recent article in the ‘Economist’ revealed the financial operations of some of the major oil companies. The Minister said that it revealed that they were not making high profits and in many oases were losing money. I have not seen the article but I would direct the Minister’s attention to a book in the Parliamentary Library titled The Role of the Multi-National Company in Developing Countries - the Oil Industry’.

Senator Cotton:

– What is the author’s name?

Senator CANT:

– Edith Penrose. It is the most complete survey of the international oil industry and the methods used by the international oil companies to hide their profits that I know of. They do this not only to show that they are not making a lot of money but also to avoid taxation. Their methods include transferring money from one line of activity to another. The line of activity where the lowest income tax is payable is where the greatest profits are made. If the Minister makes a study of this book he will find out all the rackets that the oil companies get up to to try and convince people that they do not make money. For the 6 years prior to Australian indigenous oil coming on the market every refining and distributing company in Australia was running at a loss or at a profit of only I or 2 per cent. In the first year that Bass Strait oil started to come on to the market and Barrow Island was at top flow their profits increased by up to 1 5 per cent because they could , no longer hide them in the transport costs. That was the sort of racket that the oil companies got up to. I do not believe that they are operating for the good of the people. I do not believe that the oil companies of this world - this biggest cartels in the world - are great philanthropists and- that they have hundreds of thousands of millions of dollars of capital wrapped up in this industry for the good of the people. .

Do honourable senators think that the Standard New Jersey oil company is operating for the good of the people? Of course it is not. It is operating for the good of its shareholders. It was said by Mr Langston when he was here that the share holder must be the first consideration of the company manager. So when the Minister quotes an article in the ‘Economist’ which states that these people are running at a loss I would want this matter delved into a lot deeper before it would be acceptable to me and, I would think, before it would be acceptable to the Senate. In addition to the price that the former Prime Minister was able to negotiate the Government required that certain things be done. Esso-BHP were very pleased at the price they got. They were prepared to take it and said that they were pleased that they would make handsome profits. The Government requires that until September 1980 refineries continue to absorb the maximum possible quantities of indigenous crude oil and in order to achieve this objective it will be necessary for refiners to provide the plant facilities required to process the maximum quantity of indigenous crude. This is a clear statement of Government policy - a guaranteed market for Esso-BHP which, for 10 years, will have access to the Australian market. Yet, at the first opportunity we find that the Mobil company exported a shipload of oil from Barrow Island. No sooner has a quantity of crude oil been built up in Bass Strait than the opportunity is taken to make another large shipment to California.

This matter requires careful consideration in the light of the fact that we are not. and will not be for many years on present indications, self-sufficient in indigenous crude oil.- If. we do not find a different quality of crude oil Australia will never be self-sufficient. In the . aide memoire that the Prime Minister presented to the Parliament-he said:

If insufficient suitable feedstocks ‘ for the manufacture of lubricants and bitumen -can be obtained from Australian produced crude, the refiners should be allowed to import the minimum quantities of suitable quality feedstocks. The intent of such imports is that the volume be limited- so as to contain the least amount of ‘by-product’, materials to ensure that Australian crudes are. utilised to the maximum extent.

Even in the face of that statement someone is issuing licences for the export of Austraiian crude oil. This is a disgrace and the Government should be condemned for it. It should be condemned by the people who have to purchase the products at a higher price than they would otherwise have to pay.

Senator COTTON:
New South WalesMinister for Civil Aviation · LP

– I think it would be ‘ courteous for me to say to Senator Cavanagh and Senator Cant, to whom 1 have listened with considerable interest, that I shall refer their comments as they will appear in Hansard to the responsible Ministers.

Question resolved in the affirmative.

Bill read a first time.

Second Reading

Senator COTTON:
New South WalesMinister for Civil Aviation · LP

– I move:

That the Bill be now read a second time. This Bill is complementary to the Income Tax Assessment Bill (No. 2) 1971 which was introduced by Senator Sir Kenneth Anderson in broad terms on Friday, 7th

May. In broad terms, it imposes tax on interest paid by a company on bearer debentures where the names and addresses of the holders of the debentures are not provided to the Commissioner of Taxation by the company concerned.

Under the present law, such interest is liable to tax at a rate of approximately 42 per cent. This rate will be continued - if the bearer debenture interest does not qualify for complete exemption - except where the interest is paid on wholly foreign issues made by residents of Australia. In these cases the rate of tax will be the same as the withholding tax rate, that is, 10 per cent. I commend the Bill to the Senate.

Debate (on motion by Senator Wheeldon) adjourned.

page 2002

INCOME TAX ASSESSMENT BILL (No. 2) 1971

Second Reading

Debate resumed from 7 May (vide page 1585), on motion by Senator Sir Kenneth Anderson:

That the Bill be now read a second time.

Senator COTTON:
Minister for Civil Aviation · New South Wales · LP

Mr Acting Deputy President, might I indicate, for the convenience of the Senate, that I think it would be appropriate if honourable senators considered the Income Tax Assessment Bill (No. 2) 1971, the Income Tax (Withholding Tax Recoupment) Bill 1971 and the Income Tax (Bearer Debentures) Bill 1971 as concurrent Bills for the purposes of discussion and debate. Then, if appropriate, they can be voted on separately.

The ACTING DEPUTY PRESIDENT (Senator Lawrie) - There being no objection, I will allow that course to be followed.

Senator WHEELDON:
Western Australia

– The 3 Bills which the Senate is now discussing are interrelated. They all refer to changes which are being made to the laws relating to the assessment of income tax insofar as it affects overseas borrowings by Australian enterprises. These Bills, although perhaps not quite so mysterious as the matters which have been raised on the first reading by Senator Cavanagh would suggest, nonetheless would, to many people, be just as inexplic able. In fact there are 33 closely typewritten pages of notes which have been distributed by the Minister for Supply (Senator Sir Kenneth Anderson) in explanation of the matters contained in the Bills. Despite a suggestion by the Deputy Leader Of my Party, 1 shall not read them out with my appropriate comments at this moment.

The purpose of these… Bills is not primarily to provide revenue for the Commonwealth, as one normally expects in legislation relating to the assessment of income tax, but rather to attract foreign investment to Australia under certain terms and conditions. In the first paragraph of the introductory notes prepared by the Treasurer (Mr Snedden)and submitted to the Senate by the Minister, this purpose is made clear. The Treasurer stated:

The purpose of this memorandum is to explain the provisions of the 3 income tax Bills relating to interest paid to non-residents of Australia. The main purpose of the legislation is to provide 2 exemptions from withholding and other tax on interest oil certain borrowings from overseas.

The Opposition, in the time that was available to it in the House of Representatives, has made it clear, mainly in the speeches by my colleagues the honourable member for Melbourne Ports, Mr Crean, and the honourable member for Adelaide, Mr Hurford, that it does not intend to oppose these Bills. It is my belief that these Bills are of such a nature that there should be either a full scale analytical debate with considerable time given to the Committee stages of the Bills or, alternatively, little debate at all. The Bills are of such complexity that they require either detailed treatment or no treatment at all.

All that I intend to say in the second reading debate is that although the Opposition does not oppose the Bills they indicate the piecemeal, unplanned approach of the Government to overseas investment. We do not believe that there is anything like sufficient overall planning for the needs of future development of Australian industry. Furthermore, there is nothing like a statement of the Government’s policy as to what should be Australia’s approach to overseas investment. Certain hit and miss pieces of legislation such as these 3 Bills come before us from time to time. At no stage is it made clear what the Government believes our need to be at the present or in the foreseeable future and what steps it intends to take to create an overall plan, the purpose of which would be to attract the maximum of investment with, at *he same time, the minimum loss of Australian sovereignty. However, within the framework of the existing financial system the Opposition does not believe that it can oppose the 3 Bills as they are constituted. Consequently we shall not be voting against the second and third reading stages of any of these measures.

Senator BYRNE:
Queensland

– I rise to indicate that the Australian Democratic Labor Party supports these 3 Bills, namely, the Income Tax Assessment Bill (No. 2), the Income Tax (Withholding Tax Recoupment) Bill and the Income Tax (Bearer Debentures) Bill. These are a necessary adjustment in view of the development of overseas financial interest and commitment to Australian industry and Australian development. I agree with Senator Wheeldon that Australia is now attracting a tremendous amount of overseas interest with a consequent flow of overseas capital. Whether this is in the form which I raised this morning, where foreign capital ls moving into de facto if not legal control of public companies and corporations operating in this country, or whether it is moving in by way of capital investment on the basis of loans made available we can expect the tide flowing into Australia to be even stronger and more violent. In those circumstances the protection of Australian equity should be constantly under scrutiny. We should always make sure that the ultimate control of those areas of participation which affect the fundamentals of Australian economic life do not pass out of the control of Australians or out of the hands of the Australian Government. It is indeed serious, as I indicated in a question I directed to the Leader of the Government in the Senate (Senator Sir Kenneth Anderson) this morning, that large blocks of the equity holdings of finance companies which are attracting overseas, investment should be in the hands of banks in Hong Kong, United States of America, Great Britain and Canada.

Within the financial structure of our system a tremendous amount of credit control is outside the banking system and in the hands of finance and investment companies. It is of no good preventing the control of certain types of public companies from moving outside Australia if the control of this type of operation, which can be absolutely fundamental to the strength of the Australian economy, is not controlled by us. While the Democratic Labor Party supports these Bills we do join in that chorus of concern which at the moment perhaps is not altogether completely warranted in any serious way, but we always urge upon the Government that it should have constantly within its vision the necessity of keeping the strongest and clearest possible scrutiny over foreign investment in and control of Australian companies. New methods and new formulae are constantly being tried and new ingenuity is being developed to circumvent practices until some device is put into operation to preclude those practices. As far as possible the- Government must always try to be in advance of the ingenious internationalist who might try, until the law is changed or tightened, to circumvent this depredation upon our economy. With those words I indicate that the Democratic Labor Party supports the Bills.

Senator COTTON:
New South WalesMinister for Civil Aviation · LP

– in reply - I note from the comments made on behalf of the Australian Labor Party by Senator Wheeldon and on behalf of the Australian Democratic Labor Party by Senator Byrne that neither Party is in opposition to these measures. I expected that to be general attitude. Senator Wheeldon dealt slightly with some of the problems of trying to maintain a tight hand on the Australian monetary position. He made the point that in his view the Government did not have any long term, continuous, effective or demonstrable policy. This is not the case. As Senator Byrne so rightly reminded us, we are dealing with international finance which is a fairly flighty jade and the movement of money around the world is both material and volatile. It is not at all easy to have a rigid position in trying to handle affairs of this character. I think that perhaps the honourable senators might have commended the Government for introducing these measures when it discerned changes in the situation which, in its view, could be met by changes in Australian legislation.

The real burden of this situation is perhaps best covered in the second reading speech of the Minister for Supply (Senator

Sir Kenneth Anderson). I shall read from that in a moment. We are all aware - particularly those of us in this chamber - of the great importance of overseas capital flow to Australia. But we ought never to let ourselves be misled. This country has a most remarkable record of development on its own behalf. It has one of the highest savings rates in the free world and a remarkable reinvestment programme carried out by the Australian people. About 85 per cent of total investment is financed by the Australian people. The balance of this investment is coming from capital inflow. This demonstrates the faith that people have in this country and the fact that it is a safe place in which to invest.

Honourable senators will note from today’s Press that in total our present overseas reserves are very close to if not just over $2,000rn. This is a most remarkable change from, the figure of a few years ago. In a world where some countries are under pressure and where some currencies are having to be adjusted, we find the Australian currency situation becoming stronger. This is because of; the demonstrable faith of people in other parts of the world who are prepared to send their money here. That, in the broad, is the assessment of the highly informed and highly volatile international money market of the Australian Government, its Treasury and monetary policy, and the way in which this policy has been administered. In his second reading speech the Minister stated quite clearly the essential matter we are dealing with in these 3 Bills. He said:

The Government has made clear the importance it attaches to flows of capital from abroad for the development of our resources and of the economy generally. It has also made clear that it wishes to see as much Australian equity and managerial participation as possible . . .

Equally it was concerned that the burden of the interest withholding tax on overseas borrowings was passed on, in effect, to the borrower in Australia. It is thought that that net effect could be detrimental to its principal objectives. As a result of that it has brought in the changes in these 3 Bills. But having regard to the fact that that is the essential matter with which we are dealing, I accept the comments of both Senator Byrne and Senator Wheeldon in the spirit in which they have been made.

Speaking on my own behalf and not for the Treasurer, whom I represent on this occasion for Senator Sir Kenneth Anderson, I have only one further comment. I have some regard for what Senator Byrne said about the necessity to amend the Banking Act because of the change in the pattern of money in the community and because of the tendency for outside institutions to grow in strength in the money market. I shall pass the honourable senator’s comments on to the Treasurer.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

page 2004

INCOME TAX (WITHHOLDING TAX RECOUPMENT) BILL 1971

Second Reading

Consideration resumed from 7 May (vide page 1585), on motion by Senator Sir Kenneth Anderson:

That the Bill be now read a second time.

Question resolved in the affirmative.

Bill read a second . time, and passed through its remaining stages without amendment or debate.

page 2004

INCOME TAX. (BEARER DEBENTURES) BELL 1971

Second Reading

Consideration resumed (vide page 2002).

Question resolved in the affirmative.

BUI read a second time, and passed through its remaining stages without requests or debate.

page 2004

STATES GRANTS BILL 1971

Second Reading

Debate resumed from 7 May (vide page 1589), on motion by Senator Sir Kenneth Anderson:

That the Bill be now read a second time.

Senator KENNELLY:
Victoria

– The purpose of the Bill is to amend the States Grants Act 1970 to provide for payment of additional grants to the States as compensation for the loss of their receipts duties. The Federal Government under the former Prime Minister, Mr Gorton, informed the States that such collecting of receipts duties would have to stop and provided special assistance to help finance the 1970-71 Budgets largely because of the award in the recent wages case. Surely there is no need now for clause 5 of the Bill which deals with the effect of the nonpayment of payroll tax. I regret that this clause came into the Bill at any time because it seems to me that it was a case of trying to pressurise the High Court. The Premier of Victoria, allied with the Premier of South Australia, applied to the High Court to test the validity of payroll tax. Last week the Court gave its decision. It upheld the view that the Commonwealth had the right to collect the tax. Therefore, I see no need for clause 5 which provides for very dire effects if local government bodies in Victoria .and other State instrumentalities do not pay. I hope in the Com:mittee stage or on’ the second . reading it. will be moved that clause 5 .be deleted-, because it has. no. purpose. Its purpose, when it was. placed in the Bill really .was to. say to the States: Irrespective of what the Court may decide, if you do. not pay the payroll tax you do net get reimbursed that amount’.

To State governments- payroll tax wasmore like a cross entry. They paid payrolltax, say $8m, and when the reimbursement’ came along that $8m was added to the amount they were to get. Now there is no justification, I would suggest with great respect, for the clause to be in the Bill at all. The High Court has said that the Act as it stands is operative. Therefore, I see no reason why we should clutter a Bill with a clause that means nothing. It would have meant a great deal, no doubt, if the High Court had ruled in favour of the governments of Victoria and South Australia, the 2 governments that were contesting the validity of the Act. The Court has made its decision and I would be delighted to hear the Minister when replying explain the need for this clause.

Senator Sir Kenneth Anderson:

– There is a need and I will respond.

Senator KENNELLY:

– I hope you do. Some people had not paid under the Act when the High Court decided that the Commonwealth had the power. I know in one instance the cheque was sent along immediately. For that reason why should we have an Act like this? There will have to be a very valid reason why the Bill should be cluttered with clause 5. Can the Minister say why in his reply? There was never any argument until very recently that the Commonwealth had the power. Someone must have advised the Premier of Victoria. While he is a personal friend of mine except in the game of politics, the advice tendered was not too good and, therefore, he lost the case.

Senator Little:

– He must have had the wrong lawyers.

Senator KENNELLY:

– My friend knows as well, as I know that if he goes to one lawyer:- even his good friend, Condon - he will receive certain advice. If I go to another lawyer he will give some otheradvice. That must have “happened to the Premier of Victoria.

Senator Byrne:

– They say it is the Court which has the last guess. - Senator KENNELLY - All I can say about- that great profession is that it knows how to charge. I will leave it at that and get on with the Bill. I could understandthe reason for this clause if the Court had’ decided in favour of the Premier of Victoria. I would have been happy in one way. from a personal point of view if it had but it did not and therefore the cheque had to go in. Why is the clause there when there was no such provision before there was any thought of anyone attempting to take a case to the High Court to see whether that portion of the Commonwealth law was valid? -Apart from that I see nothing wrong with the Bill but I would be pleased to hear the explanation of the Minister as to why the clause should still remain to clutter up the statute book with a lot of words.

Senator HANNAN:
Victoria

– I support this . Bill. I think there is a good deal of validity in some of the points raised by my friend, Senator Kennelly. The honourable senator has drawn attention to some of the least praiseworthy aspects of this Bill. I propose to canvass them at slightly greater length. The difficulty I see in respect of clause 5 of the Bill is that if the Victorian senators gang up and reject this clause it means that the States will lose a staggering amount of $400m over a period of time. So to that extent I think our hands are tied in regard to rejecting the measure. But, in my view, that does not take away from the validity of what Senator Kennelly said.

Senator Willesee:

– That is a good lawyer’s argument.

Senator HANNAN:

– The honourable senator can have his go later, but if he wants to take away $400m from the States he can recommend that course. However I do not know how long it will be before the House of Representatives meets again and would be able to pass fresh legislation. I think as a matter of practical politics and as a matter of sheer horse trading that all honourable senators must support this Bill inasmuch as on balance it conveys overwhelming advantages and benefits to the States we represent. An increase of $400m is a staggering sum. If I may say so as a slight deviation, it is a firm indication-

Senator Wheeldon:

– Deviation?

Senator HANNAN:

– I am deviating from the question of taxation just for a moment. This increase is a firm indication that the new Prime Minister (Mr McMahon) is honouring his pledge to improve the financial relations between the Commonwealth and the States, and he is determined to go on improving them. I think he has brought the same drive and application to his new position that he gave to his numerous other portfolios. This increase in funds to go to the States is a very fair reflection on his intentions of ameliorating the rather exacerbated state of affairs’ between the States and the Commonwealth in relation to financial matters. If I can digress for one further moment, I suppose honourable senators opposite would agree with me when they look at the results of the gallup poll of a fortnight ago which shows that the Liberal vote has shot up from a miserable 38 per cent to 45 per cent in its own right. Allowing for a reasonable assessment of preferential allocations, it would now appear that 55 per cent of Australian voters support the present Government.

Senator Little:

– It has shot up a lot higher since the weekend.

Senator HANNAN:

– I am indebted to my friend, Senator Little, for his reminder that the State of Victoria continues on its merry Socialist left way. However, to turn to somewhat less desirable aspects of this Bill, I think it is common ground that the Government takes the view that these moneys are paid to the States, under section 96 of the Constitution, on certain conditions. I do not think anyone challenges the right of the Commonwealth to make grants upon the conditions laid down under clause 5. In fact, it is true- Senator Kennelly might remember this since I think he was a member of the administration - that the Cain Labor Government, subsequently the Country Party Government and after that the Liberal administrations in Victoria have all been dubious about the legality of payroll tax. Of course, after the High Court’s decision of last week this question has now been put beyond any reasonable doubt. But we all believe that justice should not only be done but must also appear to be done. I suppose it would be pretty generally agreed that Victoria is the social, cultural, economic, industrial heart of the Commonwealth. It is also true that the Premier of that State has never specifically agreed to pay this tax. Regardless of what the High Court may have said, he claims that on no occasion has he ever agreed to pay the tax. That claim would seem to be borne out by the statement made by Mr Gorton, the then Prime Minister, on 8th October last year. Whilst I am prepared to admit that this may sound as though Victoria wants to have it both ways - coming and going - I think that if there were some doubt about the legal validity of the tax it is not only the right but also the duty of any sane Administration to have the matter put beyond doubt by a High Court challenge, and this has now been done.

I turn to clause 5 of the Bill. I regret that I am precluded from taking a certain course of action in regard to this Bill. Sir Henry Bolte has made it clear that he has appropriated $9m for this purpose in his Appropriation Bill and, of course, will pay the tax now that the High Court has said that the tax has to be paid. If we look at clause 5 of the Bill - it is proposed new section 9a. (3.) - we find that the Treasurer has absolute discretion as to how much money to deduct. He is not limited to deducting the amount which a State may have failed to pay in payroll tax. I know that the Treasurer is an honourable man. So are they all, all honourable men. But where the language of the statute is clear, explicit and conclusive, the language of the statute is binding. In this sub-clause there is nothing theoretically - I do not regard it as a great practical problem - to stop the Treasurer from deducting the whole amount Under proposed new section 9a (1.) there is an obligation placed upon the State Government - I am speaking now of my own State of Victoria - to ensure that instrumentalities over which it has no direct control pay the money.

Senator Kennelly:

– Hear, hear!

Senator HANNAN:

– I am glad that my friend Senator Kennelly is with me on this point. If the municipal council fails to pay payroll tax, that amount may well be deducted from the amount which is given to the State even though under the Victorian Local Government Act the State Government has no direct financial control over the budgets of the local municipal councils or any other public body of a like nature. I come now to a somewhat more difficult point to consider, and that is the actual legal validity of clause 5. I am now dealing with proposed new section 9a. (1.). As I said earlier, there is no doubt that the Commonwealth can make grants to the States upon certain terms and conditions. Section 96 of the Constitution states: . . on such terms and conditions as the Par liament thinks fit.

I emphasise the word ‘Parliament’. Under this clause the Parliament is not determining the matter. The discretion is being exercised by a member of the Executive, the Treasurer. I am no constitutional lawyer, as are distinguished members of the Government, but it is my belief, for what it is worth as a small suburban lawyer, that that clause is invalid because it is in breach of section 96 of the Constitution.

Senator Byrne:

– Would not the term be the fact that th”. Treasurer may exercise a discretion? Perhaps that would be the term of the provision?

Senator HANNAN:

– Yes, but I do not think-

Senator Sir Kenneth Anderson:

– Did you say you were in support of the Bill?

Senator HANNAN:

– Yes, I did. I support the Bill. Simply because 1 support the Bill, it does not mean that I do not have to point out some of these minor technical deficiencies.

Senator Georges:

– They are not so minor.

Senator HANNAN:

- Mr Acting Deputy President, normally I am paid for an opinion. I am giving this free, and I do not attach great strength to it. All I say, as a simple man, is that, looking at it, my belief is that it is in breach of section 96 of the Constitution. Section 51 (ii.), I think it is, I am not sure, provides that the Parliament has power to make laws in respect of:

Taxation; but so as not to discriminate between States or parts of States.

Senator Dame Ivy Wedgwood:

– Is the honourable senator saying that the High Court was wrong?

Senator HANNAN:

– No, I am not saying that at all. The honourable senator was not with me when I spoke on section 96. With those minor reservations I am glad to say that I support this Bill wholeheartedly. I am delighted that the new Administration is being so generous in its treatment of the States.

Senator LITTLE:
Victoria

- Mr Acting Deputy President, the Australian Democratic Labor Party will support the Bill because it is necessary to do so to allow the States to survive at this time. However, I join with Senator Hannan in his criticism- but I take it the logical step further - that now there is in this bill, as Senator Kennelly also pointed out, a redundant clause. That clause was included to cover a set of circumstances which no longer exists. This arm of the Commonwealth Parliament is in no position to reject that clause without unduly upsetting the whole of the processes with respect to this piece of legislation, which nobody would want to upset. Senator Hannan took the point in his argument that no good purpose would be served by this House if it took such action. We would hold up the passage of the Bill. He left the argument there. But I think it is important that this House should dwell upon the reasons why we are unable to proceed to the logical conclusion and exclude from the Bill the clause which has now become redundant.

The reason is this: In another place a decision was taken to curtail the debates and to adjourn. Members of that House are not here. Whilst it may be said-

Senator Willesee:

– They could come back as they did before.

Senator LITTLE:

– Yes, but I do not know how that action would interfere with Mr Whitlam’s trip to China and with those members of the Labor Party who happen to be abroad.

Senator Willesee:

Mr Whitlam may not go away lor a month.

Senator LITTLE:

– The honourable senator says that he may not go for another month. We may still be sitting here for another month, the way we are going. There aw other members of that House who haw taken, the opportunity afforded by the adjournment to go abroad and so on. From what I read . in a newspaper today I understand that Dr J. F. Cairns is abroad. They have. every right to do so. We hear tins talk that we could bring them back. We could do. so, but I. think that honourable senators from, the Labor Party would be the first, to agree that it is wrong that the position should be that they would need to be brought back. This. House has not finished dealing with the important legislation that is of an urgent character in regard fo the States. Amendments to this legislation would involve bringing back honourable members in another place after that House had already been in recess for some weeks. This House is still operating and trying to give the normal parliamentary approach to the legislation that has been sent here for our consideration.

Senator Hannan:

– This clause may be one of the clauses which the Senate is unable to amend under the Constitution.

Senator LITTLE:

– It could very well be, but it may not be so. We may not be seeking to amend it. We may be seeking merely to reject the Bill and send it back without this clause, to see what will happen to it. But where will we send it? That is where I think Senator Hannan stopped short in his argument, that it was wrong for this House to be in this position. 1 point out that I thought that I would have received Ihe support of my friends in the Labor Party and not their interjections which indicate that they approve of the fact that we are unable to do anything about this clause. I suggest to Senator Kennelly that this is the reason why this clause which is unnecessary cannot at this point of time be removed from the Bill.

I advert to the second reading speech of the Leader of the Government in the Sedate (Senator Sir Kenneth Anderson) arid the manner in which this Bill was introduced. Once again, the Bill attempted to make respectable a most vicious and unfair form of taxation that was forced upon the States by the Commonwealth and which was never readily and easily accepted as the second reading speech would suggest it was. It almost sounds as. though the. States wanted it.

Sitting suspended from 6 to 8 p.m.

Senator- LITTLE - Before the suspension of the sitting I was adverting to what was said in the Minister’s second reading speech: I suggested that- I was distressed that an aura of respectability was contained in thesecond -reading speech in relation, to turnover tax. The States have had this item of taxation denied to them. From -the Minister’s second reading speech,- it would appearthat this was something which was taken away because of some feeling of pique by the Commonwealth or some act of misfortune. It appeared that the States considered that they should have the right to levy this particularly abhorrent type of tax and that the States themselves really desired the tax. Nothing is further from the truth.

Over a period of years the Premier of Victoria tried to negotiate with the Commonwealth the right to collect a very low rate of income tax. That right was denied to the Slate of Victoria. Indeed, the State was threatened with the loss of needed income by way of the CommonwealthState financial agreement if it exercised the right to levy an income tax properly based on a capacity of a person to earn an income with the proper type of remissions for responsibilities that are of essential character in our community such as rearing a family. The State only reverted to a form of turnover tax that previously had been deliberately restricted by governments to such industries as the gambling industry because of its particularly obnoxious character. I suggest that nothing can be done to make this form of taxation respectable. The States were forced by the Commonwealth to revert to this system of taxation because they were denied the proper types of taxation that are fair, just and equitable. If we are to be forced into a form of taxation such as this, a tax may as well be levied on our right to breathe the air or our right to drink the water of the earth.

What does a turnover tax mean? It is freely admitted by the Government that one has to pay this tax whether a business shows a profit or a loss. How can there be any justification for the Government to obtain its revenue through this method of income tax if, in the hazards of business life, one shows a loss and one has to pay a tax because one is participating in community activities for the purposes of trying to make a living for oneself and one’s family? Never in the history of mankind, even when taxes were levied on windows and bread, was there ever a tax which was as obnoxious in its basic principles as a turnover tax from which there is no allowance for anyone at all. Indeed this tax was only justified by the States in the. beginning because the other avenues of taxation were denied them. Also, the States excused the advent of this form of taxation because of the fact that it was so minute that it was considered it would do no real harm. Originally the tax was lc in every $10 of turnover. However, because this tax was levied in the aura of respectability, which was mentioned in the Minister’s second reading speech the tax is now becoming an accepted fact in the community. I hear stories - and I hope they are only stories - that the Federal Treasury is playing around with the idea, and the economic fatality that would result, of proposing that this tax again should be implemented on a Federal level and that it should be increased to lc in the $1. This, of course, would be fatal to the principals that operated in connection with this type of tax when the States were exercising the right to levy it. At that time the tax was of such a character that it could go almost unnoticed in business accounts only because of the fact that it could be offset against income tax.

As this tax came out of profits in most cases the people paying it related it to income tax and said: ‘Well, we pay half of the general profits of the company away in income tax anyway.’ But income tax is based on a different set of principles altogether and it provides proper allowances for those people in the community who are faced with family responsibilities. But if this tax - a tax that could well be imposed upon the air we breathe for all the logical reasons that there are for imposing it upon turnover - became the accepted principle of taxation it must eventually reflect itself in prices. The family man who is the most valuable asset that this community has and those young couples who are setting themselves to rear 3, 4 or 5 children will be the people paying the greatest amounts as a result of turnover tax because this tax will reflect in everything that is purchased by these people for the purposes of rearing their children. It will be reflected in the prices for socks, shoes and other clothing. It will also be reflected in food, entertainment and everything that goes .to make up a home and a family background. The Government will be levying taxation upon those who are least able to afford it.

Whereas I accept the principles of income tax, why is it that in a community such as ours the Government has camouflaged at all ‘ levels the right to tax? Surely sales tax in itself is iniquitous enough. There is the right to tax items that can be designated in some people’s minds as luxury goods. Iri most instances a family cannot afford to buy cigarettes, beer and those goods that are heavily taxed by excise duty.- But these families still get the whip of the sales tax on exercise books, pencils 1 and other materials needed to send their children to school. Who justifies this as a fair form of taxation? Nobody does. There has been some talk of a court case by the Victorian Government to determine whether or not it was right, just and legal to levy a payroll tax which was a war time measure introduced for the purposes of carrying a wartime economy. This tax has been continued. Where is the moral justification for a payroll tax, particularly a payroll tax paid by public utilities and State governments to a Commonwealth government? Is it not rather ridiculous that those who create the employment which provides the Commonwealth with revenue should be taxed in this way? If there were no employment there would be no wages and, as a result, no income tax.

The very basis of our society, the wage packet of the fellow who earns his daily bread, has a payroll tax on it. Payroll tax is levied on those who create employment - the public utilities and the State government. What a ridiculous set of circumstances we have when the Commonwealth collects payroll tax from the States and gives the money collected back to the States again. I cannot see that any of these forms of taxation are justified. Surely in our economy we are already loaded to the full with those types of taxes that are dishonest in their fundamental principle. This last addition happily, perhaps because of the activities of the Australian Democratic Labor Party and the firm belief of this Party in the Australian people and the Australian family, is at present removed from the statutes of both the States and the Commonwealth.

What 1 want to do tonight is to prevent the type of thinking that there is anything respectable in any government’s descending to a form of taxation that would not have been tolerated 150 years ago. Indeed, these forms of taxation invariably ended in bloodshed and revolution by people who sought to remove the injustices that developed from them. In the early days of the operation of the turnover tax we gave the warning that the minuteness of the tax should not hide the fundamental principles behind it. I well recall a statement by a Federal Treasurer to the States in which he suggested how much their income could be increased by increasing the rate of turnover tax ten-fold. We heard stories about the Commonwealth Government being so foolish, so ill advised or so heedless of advice, as to contemplate again loading the Australian economy with turnover taxes.

I believe that a good feature of this legislation is the fact that the Commonwealth is returning to the States from income tax - and that is where the Commonwealth gets its revenue - that portion of the income tax which rightly belongs to the people of the States and which is necessary to enable the States to run their machinery. If the amount of expenditure which is required to run the States as the people want them to be run and as the people are prepared to pay to have them run is in excess of the revenue derived from the present forms of taxation, then the Commonwealth should do the right and courageous thing and bring out into the open the question of the need to raise increased revenue. This should be done in a way that is fair and just to every member of the community..

Do not let us have any more of this talk about the States wanting this form of turnover taxation. Why, even after several years of its application in Victoria, the Premier of that State, Sir Henry Bolte, came to Canberra and asked for the right to levy a form of income taxation in preference to pay-roll taxation. It was only when his request to have the right to levy a small rate of income taxation in the State was rejected by the Commonwealth that he denounced the White Paper that he himself had laid upon the table of the Victorian Parliament and again reverted to the imposition of a form of taxation which became known as a turnover tax. Indeed, he became so confused politically that he was highly critical of this Government. Ultimately the turnover tax was withdrawn. But it was imposed of necessity in the first place because he had to obtain revenue in order to prevent the complete bankruptcy of his State.

The Premier of the State of Victoria would prefer to receive money in the way in which he now receives it than to revert to imposing a form of taxation that should be written off and forgotten in the history of Australia. It has no place in the philosophies of people who are fair minded and who at least believe than an opportunity should be given to a man to rear his family in a decent way without being taxed beyond his capacity to pay by insidious hidden forms of taxation. I refer for instance to taxes that are paid every time a man’s children drink milk or eat biscuits. In every other taxation law we concede to a man the right to buy goods at a price which it is necessary for him to pay in order to provide an income for the people who produce the goods. A government should not impose an unnecessary tax on a man who is doing the right thing with his life and the right thing in the interests of the nation. We will support the Bill with the reservations that I have mentioned. The Bill contains clauses which are unnecessary, but to delete them at this stage would create so much inconvenience and would be so impracticable that we are prepared to allow the measure to pass as it stands so that the States may receive immediately that portion of the money which they require in order to carry on their every-day businesses.

Senator Sir KENNETH ANDERSON:
Minister for Supply · New South Wales · LP

(8.15) - in reply - I thank the Senate for the assurance that it will give passage to the Bill. Adverting to Senator Little’s contribution to the debate, I feel bound to say to him that the purpose of this Bill is not to impose taxation; it is to give revenue to the States. I should say that that about 98 per cent of Senator Little’s contribution, worthy though it may have been, seemed to me to refer to the wrong Bill. Earlier today we dealt with the Income Tax Assessment Bill, and I should have thought that what he said tonight would have had far more application to that Bill.

Senator Little:

– Can I refer you to your remarks in your second reading speech?

Senator Sir KENNETH ANDERSONYes. I also will refer to them. I allowed Senator Little to have a fair go, but I must admit that I felt like interjecting and saying: ‘Look, you must be on the wrong Bill.’ The purposes of the States Grants Bill are to amend the States Grants Act 1970 to provide for the payment of additional grants to the States as compensation for loss of receipts duty revenue and as special revenue assistance to help finance Budget deficits.

Senator Little spoke with some force, 1 am bound to admit, on the question of receipts tax. But the purpose of this Bill - and at the moment I am concerned only with the passage of this Bill - is to give to the States revenue which they would have received but for the fact that this Senate defeated the receipts tax legislation. When we dealt with the receipts duties legislation I well recall Senator Little’s Leader saying: We oppose this receipts tax legislation. Although we recognise that the States have to have their finances made available to them, we are saying that you are doing it by the wrong method. We will vote against this receipts tax legislation because it has inequitable implications for the States, particularly, Victoria. I remember Senator Little’s Leader saying that, and I took it on board. He also said: ‘We realise that the States, under the CommonwealthState financial agreement, have to have certain revenue, but what we are saying to you is: “Get it some other way”.’ Worthy though some of Senator Little’s points may have been, we are concerned tonight with a Bill which is designed to give to the States some $59m to replace the revenue which they would have received from the receipts duty tax and an additional $43 m for the purpose of helping them to finance their Budget deficits.

I am delighted to -hear that the Opposition and the Australian Democratic Labor Party will support the Bill. One. matter of substance was raised, first of all, by Senator Kennelly and then by Senator Hannan and Senator Little. It relates to the provision in the Bill which states, in effect, that if Victoria does not pay its payroll tax, then the shortfall will be deducted from its share of the assistance which is being provided to the States under this Bill. I think that an amount of $9m is involved. Of course, the High Court of Australia subsequently has given a unanimous decision in favour of the Commonwealth. Senators Kennelly, Hannan and Little asked: ‘Why leave this provision in the Bill? It is superfluous.’ To a degree I cannot argue against that proposition. Subsequent events have caught up with the provision in clause 5 of the Bill which relates to the deduction of approximately $9m from Victoria for its refusal to pay payroll tax to the Commonwealth. But to delete the provision, as I think Senators Hannan and Little suggested, would mean that Our amendment would have to go to the other place. In due course the other place would deal with the amendment but, in fact, it might say: ‘We do not accept your amendment’, and then it would have to be returned to the Senate.

Senator Byrne:

– That is no reason not to do it.

Senator Sir KENNETH ANDERSONI am giving Senator Byrne the facts of life. I am being pragmatic. He is being idealistic. The fact is that the provision does not do any harm in the Bill. It is there, and it was a wise precaution to put it there. As subsequent events have indicated, the provision is no longer necessary. I do not think we should amend the Bill by deleting clause 5. That would involve sending a message to the other place. It could involve a message coming back to us. This clause has no real significance now. That is the reason why I say to Senator Kennelly that, while there may be some who might like to bring the other place back - and we might like to come back if necessary - I believe the logical thing to do is to leave the clause in the Bill. The Bill was drafted prior to a decision being given by the High Court. Looked at iu one way, the clause gives effect to the High Court’s Judgment, but I would not like to put that as an argument. I think that we should leave the clause in the Bill.

One other matter was raised by Senator Hannan. He referred to the discretion to determine deductions from grants payable to the States. I think the second reading speech dealt with that matter. I think an elementary discretion was provided because it would not have been possible to “give a precise amount. Because the’ precise amount that the States Would need as revenue could not be given, a discretion had to be written tate the Bill. “I do not want to open up a debate on that topic at this point of time; suffice it to say that the discretion is quite clearly expressed- in the second reading speech which- I commend to all honourable’ senators. They should refresh their memories from it because this Bill was introduced .some time ago.. The discretion is clearly denned in relation to assessing the amount of revenue involved under this measure. . .

I thank the Senate for the passage of the -Bill. We should be delighted to know that we are giving - not ‘giving’ in its true sense; I do not want to gild the lily - assistance to the States to help overcome their deficits. I speak to Senator Little with some particularity. By this Bill we are recognising the need for assistance to the States to help overcome their deficits and the need to replace what they lost when the Commonwealth Government was confronted with a loss of the receipts tax legislation. For that reason the Bill should carry the blessing of all of us.

Question resolved in the affirmative.

Bill read a second time.

In Committee

Clauses 1 to 4 - by leave - taken together, and agreed to.

Clause 5 (Effect on grants of non-payment of pay-roll tax).

Senator KENNELLY:
Victoria

– I move:

That clause 5 be deleted.

I listened to Senator Little’s speech. He said that no good purpose would be served and that the States would go without their money if this clause were deleted. Senator

Sir Kenneth Anderson, in his very nice reply, queries whether this clause does any harm. The fact of the matter is that this Bill was drafted before the High Court gave its judgment. The High Court decided that the Commonwealth had the power to obtain from the States payroll tax. Therefore, the clause has no bearing. All we are doing is cluttering up the statute book with a clause that is not needed. The High Court has laid down that the States must pay. I am not concerned about the Victorian Government paying the State payroll tax. I am worried about the State Government employees. As everyone knows, with the governments it is a cross entry. If the State pays $9m, when reimbursement time comes the State’ regains the $9m. .

This legislation has a long history. A -Bill was -introduced by- the Menzies Government in, I think, 1940 when Judge Beeby said that unless child’ endowment was given to all children but the first child there would have to be a very significant increase in the basic wage of the day.’ The Menzies Administration thought out this tax in order that child endowment could be paid for each child other than the first.

I have never wanted this tax to be imposed on municipalities because they do not get it back. Local government and other semi-State instrumentalities do not get it back. In one way I regret the judgment of the High Court. At the weekend I had to sign a fairly large cheque. I had adopted the attitude that some councils and other people who have something to do with semi-governmental activities had adopted; I said that I would look at what the Court said. Once the Court said it. we had to pay. This clause does not serve any useful purpose. Surely the last thing that we want legislation to do is to place in our Acts clauses that serve no purpose.

Senator Sir Kenneth Anderson:

– Can I clear the air a bit? You referred to clause 5. Are you sure yo do not mean clause 5 (5.)?

Senator KENNELLY:

– I want to delete all reference to payroll tax. Clause 5 states:

After section 9 of the principal Act the following section is inserted . . .

I ask: What need is there to insert that clause? The High Court - the principal court in the land, according to this Parliament - has said that the States, municipalities, all employers, semi-governmental instrumentalities, etc., have to pay this tax. That was the situation prior to the Premier pf Victoria, and the Premier of South Australia who went with him, wanting the legality of the tax proven one way or the Other. The Court decided it. Why does the Government want to clutter up the Bill? The clause has no purpose.

Senator Gair:

– The highest authority in the land, Parliament, is confirming the Court decision.

Senator KENNELLY:

– The High Court confirmed the legality of the payroll tax.

Senator Gair:

– It will be confirmed by a higher authority.

Senator KENNELLY:

– Some parliaments, I admit, are: minor to the national Parliament. The leaders of 2 States, whether by parliamentary action or by executive action, decided, that the Court should judge the matter. There had been rumblings. There are rumblings no longer. The position is that it was illegal for Victoria to stop paying the tax. It is now legal that Victoria pay the tax. Victoria shall pay what everyone else has paid up to this time. Therefore, what good purpose can be served by the clause? Let it not be said that the deletion of the clause will mean bringing back the other place. The Government knows what will happen in practical politics if clause 5 is deleted. The States will get their money. If necessary the Government will pass a Bill making the payment of this tax retrospective to the date on which the tax should have been paid. Can the Government tell me that at the moment no money is being paid to the States under this Bill? Does the Leader of the Government in the Senate (Senator Sir Kenneth Anderson) tell the Committee that at this moment no cheque, or however the money is paid, is being paid to the various States under this Bill?

Senator Sir Kenneth Anderson:

– There is not.

Senator KENNELLY:

– How many Bills have been made retrospective to a certain date? While all honourable senators deplore that legislation was rushed through another place, at least we have had ample opportunity to discuss Bills. I commend the Government for that. Therefore I regret that the Government has taken the stand that this clause should not be deleted from the Bill. I can see no good in having clause 5 in the Bill. I suppose the people who are most concerned with the cluttering up of the statute book are the people who live mainly by the Acts of Parliament, that is, the legal fraternity of this country. Anybody connected with administration should not want the statute book cluttered up.

I see no good purpose in leaving clause 5 in the Bill. AH it says is that if a State does not pay to the Commonwealth the payroll tax levied on it the Commonwealth can refuse to hand over to that State the amount that it considers the State ought to pay in payroll tax. Surely clauses 5 and 6 should have been deleted. Surely the matter could be dealt with without going to all the trouble of calling Dr Cairns back from Budapest or somewhere else, as Senator Little said. Goodness, only knows where he goes or what he does, but he has a perfect right to do what he does, as has been said. What I have suggested will not affect Mr Whitlam’s proposed visit to China. All that concerns me is that he will not take me. I do not want to go because. I have such a pressing appointment every weekend in my city that I never want to go out. 1 think we are making a little bit of a farce out of this matter. We are saying to the people of this nation that this provision is in the Bill because of happenings over which we had no control but over which another House did because it ran away after having passed a Bill’ while the matter of payroll tax was before the High Court of Australia. Government supporters in another place or the Parliamentary Draftsman must have thought that the High Court would not decide as it did, otherwise this clause would not have been included. Whoever drafted the Bill made a mistake by putting in it a clause alluding to the payroll tax. The Draftsman must have read the mind of the High Court the wrong way. He was unlucky. Therefore I ask that in common sense the clause be withdrawn. Its deletion will not affect the States and any money that the Commonwealth gives to the States. I am pleased that the Commonwealth is giving to the States the money provided for in the first 4 clauses which have already been agreed to. The money that the Commonwealth gives to the States can be given to them at any time and the Bill to legalise the payment of that money can be submitted in the next session. Those who will be here would certainly agree to a provision that payment of this money be made retrospective to the appropriate date.

I take the word of the Minister that no money has yet been paid. I did not think the Treasurer (Mr Snedden) or the Commonwealth would be as timid as that. The Bill having been passed in another place, I would have thought that the Premier of my State would commence yelling that he had not got what he was supposed to get under the Bill. I ask the Government to reconsider this clause. We never get anywhere by passing bad legislation. The inclusion of clause 5 is bad legislation. Senator Hannan says it is bad; Senator Little says it is bad. Therefore let us all get together and say it is bad, pay the money and let those who will be here during the next session; - I will not be here - .legislate to validate retrospective payment to the States.

Senator Sir KENNETH ANDERSON:
Minister for Supply · New South Wales · LP

(8.34)- Without closing the debate, I think I should respond to Senator Kennelly. The simple fact is that the provisions of clauses 5 and 6 apply to every State. They are not peculiar to Victoria. That is the first point to remember. The second point is that, despite the confidence of Senator Kennelly in what would be done with the finances of the Commonwealth in certain circumstances, this Bill involves in round figures an amount of Si 02m and if it is not passed the States will not receive this amount. The States will not receive it until the Bill is passed. They are expecting to get it before the end of this financial year. Senator Kennelly put the case as he saw it but the facts are not as he saw them. This Bill is to provide to the States under 2 heads about $102m and it is necessary for the Bill to be passed so that the States can get the money. It is all very well to say that if the Senate send a message to the other place it would not come back but would ratify the payment of this money in August and all would be well. That proposition presumes of course that the Treasury would find the Si 02m in the hope and on the assumption that the payment of this money to the States would be ratified ultimately. I regret that k does not quite work that way. After all $102m is not an inconsiderable amount.

Senator Byrne:

– It would be bad parliamentary procedure to follow that course.

Senator Sir KENNETH ANDERSON:

That is so. I think the Auditor-General would be casting pretty stern looks and writing some pretty stern messages if that procedure were adopted. We want the passage of this legislation and we want the provisions of clauses 5 and 6 to be in the Bill. Whilst there has been a High Court decision and certain statements have been made, the fact of the matter is that the provisions of clauses 5 and 6 apply to any State and every State. If a State does not collect its payroll tax, there will be means in the law for the reduction by that amount of the amount paid to that State by the Commonwealth. I would ask Senator Kennelly to consider withdrawing his motion on the basis that the procedure we are following is to most expeditious way of dealing with the matter. It is proper that those provisions remain in the Bill.

Senator LITTLE:
Victoria

– We find it impossible to support the motion. First, we accept the Minister’s assurance that the Bill, will operate along the lines that we thought. Secondly, I take Senator Kennelly’s own argument and use it against him if I may be permitted so to do. The main reason for his wanting to delete clause 5, if I remember his words rightly, is that we should not clutter up the statute book with unnecessary clauses. Then he told us the way out. The way out which he suggested, of course, is that in August we should clutter up the statute book with another Bill validating something that had already been done in accordance with a Bill we would have passed this session had we not deleted a vital clause which held up the application of the Bill until we could validate it next August by passing another statute which would have in it a clause to provide retrospectivity. I cannot see that that is a very sensible proposition to put as an alternative to calling back members of another place, for whom I think we must have consideration, although I agree that this should not be an overriding concern. Certain expenses from the public purse would be involved in calling back the other place at this time over one unnecessary clause in an absolutely essential Bill to enable the States to carry on with their legislation.

Senator Kennelly in criticising the circumstances has pointed to the difficulty that would arise if clause 6 were taken out of the Bill. If there is a weakness in parliamentary practices that we have criticised in dealing with this Bill, there would be a greater weakness in parliamentary procedure if we were to do what Senator Kennelly suggests. After all, we live in a democracy and even this Government may have some difficulty in surviving until August for all we know. Certain pressures and undercurrents have been evident in the Libera,! Party, and it would be a very serious situation if the Government had been paying out hundreds of millions of dollars to the States and it turned out when the Parliament re-assembled in August that this Government was no longer the Government. I am sure Senator Kennelly has always looked at this possibility in the world of politics.

My final point is that the legality of payroll tax has been referred to the highest court of the land. That court has said that it is legal and everybody now is saying that payroll tax is all right because it is legal. But the High Court was never asked to judge the moral background behind the levying of such a tax. I have no doubt that if the Commonwealth were to pass some law in the taxation field that was completely immoral it could be justified on the ground that it was legal for the Commonwealth so to do. This would have happened in the days when taxes were applied to windows, bread and all sorts of things that were considered to be luxuries. No court has adjudicated on the morals and the principles behind the payroll tax but because we have a court decision which says it is legal for the Commonwealth to collect payroll tax everybody will go around and say: ‘Payroll tax is all right; the High Court has said that it is all right’. But all that the High Court has said is that it is all right for the Commonwealth to collect from the States. That Court has not passed judgment on the type of tax. I will reserve my right to judge payroll tax for its morality in the general taxation structure of this community. I do not need to refer to a High Court of judges to understand what I think about payroll tax and some of the other taxes. The worst tax of all is the one to which I referred in my speech during the second reading stage. We cannot support the deletion of clause 5.

13931/71- -9-138

The TEMPORARY CHAIRMAN (Senator Davidson:
SOUTH AUSTRALIA

– I point out that no amendment is involved. The question before the Chair is that clause 5 stand as printed. Anyone who wishes to oppose it may take the appropriate steps, but no amendment is involved.

Senator HANNAN:
Victoria

– In that event I direct my remarks to the clause. For the reasons I gave when I spoke earlier this afternoon I still believe that there is some validity in what Senator Kennelly said and in my own remarks this afternoon. But, for the very same reasons, I think we would be cutting off our noses to spite our faces if we held up the passage of this Bill by removing clause 5. As the Leader of the Government in the Senate (Senator Sir Kenneth Anderson) has said, as a matter of practical politics we are aware of the delays which would follow if this clause were removed from the Bill. It must be appreciated that there is an increase of $400m by way of grants to the States for this year and whatever point of view Senator Kennelly, Senator Little or myself may have in respect of payroll tax as an imposition or as a bad form of taxation there is nothing contained in this clause which would enable us to take out our vengeance on it. Whilst I still have the doubts which I expressed this afternoon in regard to the constitutional aspects of clause 5, it is my intention to support this clause and the Bill.

Question put:

That the clause be agreed to.

The Committee divided. (The Temporary Chairman - Senator Davidson)

AYES: 27

NOES: 23

Majority . . . . 4

AYES

NOES

Question so resolved in the affirmative.

Clause agreed to.

Clause 6 (Statistical information).

Senator KENNELLY:
Victoria

- Mr Temporary Chairman, the same argument applies to this clause as applied to clause 5. Clause 6 deals with an employer who has not lodged a return. It is similar in one way to clause 5. Therefore I do not want to take up the time of the Senate unduly. Clause 6 catches up with an employer who had in previous years filled in a return but who because of the uncertainty as to the legality of the legislation failed to lodge a return. I do not want to say any more on this.

Clause agreed to.

Title agreed to.

Bill reported without amendment; report adopted.

Third Reading

Bill (on motion by Senator Sir Kenneth Anderson) read a third time.

page 2016

QUESTION

HOURS OF SITTING

Senator Sir KENNETH ANDERSON:
Minister for Supply · New South Wales · LP

– by leave - I move:

The Senate will note that I have only moved times for the balance of today’s sitting and for tomorrow. It is hoped that these hours of sitting will be sufficient to dispose of the remaining business. If not, before 11 p.m. tomorrow night I shall move the necessary motion to enable the Senate to sit after tomorrow night.

Senator Kennelly:

– Did I understand the Leader of the Government in the Senate to say that we will finish tomorrow at 11 p.m. but if need be we will have to come back the next day?

Senator Sir KENNETH ANDERSONYes.

Senator Little:

– This does not mean that we would contemplate coming back the next day if we looked like finishing in another half an hour, does it?

Senator Sir KENNETH ANDERSONI think we are all reasonable men and women when it comes to the question of time. If we got reasonably close to finishing by mutual agreement we would sit on but if there were no mutual agreement we would automatically come back the next day. The motion includes the words ‘unless otherwise ordered*.

page 2016

TRADE PRACTICES BILL 1971

Second Reading

Debate resumed from 11 May (vide page 1639), on motion by Senator Greenwood:

That the Bill be now read a second time.

Senator MURPHY:
New South WalesLeader of the Opposition

– This Bill to amend the Trade Practices Act in relation to resale price maintenance is a bill which is long overdue. It is very late, but nevertheless it is very welcome. We on the Opposition side will support the Bill because the principles which are included in it are necessary for any community acting as we are in the latter half of the 20th Century. The Bill amends the Trade Practices Act to cover resale price maintenance. In general terms resale price maintenance is a bad thing. I will speak in general terms unless I come to the question of exemptions, because there may be some parts of resale price maintenance which are justifiable and ought properly be exempted in the public interest.

Resale price maintenance tends to act against the public interest because it is a means whereby the prices of goods are held up to the highest the market can bear, which is against the interests of the consumer. This is done by way of agreements or action throughout a section of industry which results in the maintenance of prices at an artificially high level. Those prices would fall but for resale price maintenance. The Bill mentions some of the ways in which this might be done. The Bill states that a person engages in the practice of resale price maintenance if the supplier makes it known to a second person that he will not supply goods to that person unless he agrees to sell those goods at a price not less than a price specified by the supplier. In other words, a manufacturer or wholesaler says to the retailer: ‘You will not get the goods unless you agree to keep the price up to a certain level.’ Similarly, if a supplier or manufacturer, or perhaps another person or company in the particular section of trade or commerce, induces or attempts to induce another person not to sell at a price less than a price specified by him to a second person.

These kinds of practices have incidental means of enforcement such as withholding the supply of goods to persons who have not fitted in with the arrangements. There are various ways of freezing persons out of a trade if they do not succumb to the inducements or the pressure which is exercised upon them by some price fixing combine or cartel. It has been obvious in Australia for some years that there were pervasive practices of this kind right throughout industry. The Senate will recall that when the Trade Practices Bill 1965 was being debated in December 1965 I referred to this matter. I said:

Individual resale price maintenance is stripped completely from the Bill. This is maintenance of prices by a supplier, a device to exclude competition in proprietary lines. It tends to raise prices and is widely practised. It is one of the main ways in which the public is forced to pay higher prices than if there were a free market in those goods, it is a form of private price control, not subject to any public supervision. Resale price maintenance applies in Australia to a wide variety of goods, as was found by a Tasmanian royal commission this year. The list was found to include electric lights, beer, bread, tyres and tubes, automotive parts, books, sporting goods, hot water systems, paint, cement, steel pipes, hardboard, plywood, most hardware, cigarettes and tobacco, pharmaceutical goods, footwear, much clothing and drapery and many other goods comprising a significant segment of the wholesale and retail trades.

Other countries have for many years had legislation against resale price maintenance. Unfortunately we in Australia have not. The Senate is only too well aware of the delays which took place before the introduction of the Trade Practices Bill and that the stronger proposals of Sir Garfield Barwick were shelved after he had left to take a seat on the High Court. The measure was introduced after it had stayed in the House of Representatives for, I think, the better part of a year, and in the last few days before it was passed amendments were moved in order to water it down; and it was watered down. We in the Senate were able to achieve some strengthening of the Bill in significant respects but we failed to deal with this aspect of resale price maintenance conditions.

On behalf of the Opposition at that time I moved that we add a clause to the Bill which would impose resale price maintenance conditions to the list of what were called examinable practices. That failed because we did not get the support of the majority of the Senate. The other parties voted against us. I am not sure now whether perhaps one Government supporter supported us, and perhaps the independant senator too, but by and .large the other Parties opposed us. The passage of time has shown the wisdom of what we were proposing and the dramatic events of a couple of months ago when the Australian Council of Trade Unions, under the leadership of Mr Hawke, forced Dunlop Australia Ltd to abandon resale price maintenance as it was operating in regard to Bourke’s Melbourne Pty Ltd with which the ACTU is associated and so highlighted the fact that this resale price maintenance was against the public interest and could not really be justified when it was brought under intense public examination, as it was by the incidents at that time. I do not think there can be any real dispute that restrictive practices and agreements of the nature of resale price maintenance are widespread throughout Australia and that they are injurious to the community.

Senator Webster:

– Can you instance any field where it appears to be injurious?

Senator MURPHY:

– I would think that in the general field of household commodities such as I outlined it is injurious. Senator Webster has asked me for some instances. The Tasmanian royal commission referred to agreements and practices to hold up to an artificially high level the price of electric lights, beer, hot water systems, paint, cement and steel pipes all of which affect every family in the community. They affect the cost of building. They affect the cost of carrying on life. This undoubtedly is one of the most potent factors in the cost-price squeeze which is affecting the rural communities of Australia and about which there is so much concern. I should have thought that Senator Webster would be one of the first to applaud any attempt which would be made to do away with all such resale price maintenance except that which could be demonstrated to be in the public interest.

Because of the stand of the Labor movement both inside and outside the Parliament 1 think it has become common ground in Australia that resale price maintenance should be made unlawful. This has been accepted by the Government because public feeling has been so great in relation to this practice. It may have taken the public some time to understand what was happening to them but they now understand that they were being subjected to agreements which were forcing up prices and rendering the value of their money less. They understand that it is within governmental competence to do something about it and that the Government should do something about it. However late it may be, the Government has come around to doing something about it and has introduced this Bill which, in general, says that the practice shall be unlawful.

The Bill provides a means of exemption if an application is made to the tribunal for a determination exempting from the application of the appropriate Part of the legislation goods which are being supplied or which it is intended to supply. It may be that there are some difficulties in this area of the Bill. Generally this is a good Bill, a strong Bill and a proper Bill but it may be that there are practices which are, in fact, in the public interest. The Opposition does not contend that there are not. The Bill assumes that there are. The Senate may recall that I introduced a Bill on this same subject matter a few days before the Government announced that it would introduce this Bill. My Bill is still listed on the Senate notice paper and perhaps I may refer to it briefly because it is on the same subject matter. In respect of resale price maintenance the Opposition proposal states:

It shall be unlawful, without the permission of the Commissioner of Trade Practices, to enter into any contract or arrangement (including any collateral contract or arrangement) which imposes resale price maintenance.

This provision relates to much the same point as the present Bill except that the Bill we are now discussing states the same point as the present Bill except that the practice shall be unlawful and that an application must be made for exemption. The Opposition measure provides that the Commissioner of Trade Practices shall not give such permission unless he is satisfied that to do so is in the public interest. Our proposal provides for an appeal from the grant or refusal of such permission, at the instance of any person affected, to the Trade Practices Tribunal. The Bill now before the Senate provides for exemption and it sets out some grounds for exemption. I suppose it comes down to much the same basis in that a person has to establish that the exemption will be in the public interest.

The Bill provides that an exemption is not to be granted unless the tribunal is satisfied that the quality of the goods available for sale, or the varieties of the goods so available, would be substantially reduced to the detriment of the public as consumers or users of those goods; or the number of establishments in which the goods are sold would be substantially reduced to the public detriment; or the prices at which the goods are sold by retail would ultimately be increased to the detriment of the public; or that the goods would be sold under conditions likely to cause danger to the health of human beings or animals; or any necessary services provided in connection with or after the sale of the goods by retail would cease to be provided. They seem reasonable enough grounds. They amount to much the same kind of criterion of public interest.

It is conceived that there are circumstances in which there should be an exemption. This raises a problem, and it may be that actually the Bill is a little harsh in this respect, because if the Bill is predicated, as was the Opposition Bill, upon the fact that there may be some of these practices of resale price maintenance in some areas which on some occasions might be in the public interest, the moment the Bill becomes law those practices - the good along with the bad - become unlawful, and until such time as a practice is exempted it continues to be unlawful. The unlawfulness, although it does not involve any criminal proceedings, may, nevertheless, carry with it severe consequences. It may be that persons may not have to pay for goods if they obtain them pursuant to an unlawful arrangement. There are consequences serious enough to prevent persons continuing with such arrangements. As far as the Opposition can see, the Government has not, in presenting the Bill, coped with this problem. It may be that there could be some period ot breathing space during which some authority could temporarily exercise a discretion to render not unlawful the practice of resale price maintenance in some areas where there is a strong case or a probable case for exemption.

Senator Gair:

– A prima facie case in favour of exemption?

Senator MURPHY:

– Yes. Perhaps there could be some provision like that for a temporary period. All honourable senators are opposed to such a discretion being exercised by any administrative authority, but this is not a case of making determinations in situations which are to come. Actual practices are operating through the community and determinations would be made in respect of an existing situation.

Senator Little:

– Some practices are very good and have taken years to build up.

Senator MURPHY:

– It might be said also that some are extremely bad, but we are dealing with the good and the bad and there is the danger that provision has not been made for preserving from unlawfulness practices which ultimately might be held to be in the public interest. I suggest that this situation might be met in this way: If those who claim the exemption are able to make an immediate application to the tribunal, and this procedure is facilitated, the tribunal might be able to make interim orders pending the final hearing of the applications. It may be possible, if it is not possible now, even by subsequent legislation to allow such orders to be retrospective.

Senator Byrne:

– A strong prima facie case would have to be made out otherwise this procedure could be used as an escape.

Senator MURPHY:

– Of course. What Senator Byrne says is correct. No doubt that is why the Government quite correctly has taken the view that, in general, there should not be an exemption pending the actual grant of the exemption. That would be proper if we were dealing with a situation which was to arise in which persons were deciding what to do. They could get an exemption before they entered upon such a course. However, we are concerned with an area in which the practices, both good and bad, are established. In any event I do not want to dwell further on this except to suggest that there are, amongst the myriad of practices, some which are in the public interest. That is why the Bill, and the Opposition approach, is predicated upon the basis that some practices will be justifiable. The proper way of dealing with this aspect may be to enable the rapid grant of an interim order in an extremely substantial case where there is a high probability that some kind of exemption may be granted. It is proper to have the law as it is because if we were to allow exemptions pending appeal everyone would be exempt and for a long time the tribunal would be cluttered up. The legislation would be in effect for a long period. What I have said suggests that perhaps there is a need for preserving rights that deserve preservation in the public interest.

Senator Greenwood:

– Overseas experience has suggested that there are very few cases where it is in the public interest. The information the Government has suggests this.

Senator MURPHY:

– The Minister interpolates and I am pleased to hear him say that, because it bears out the view which our Party has been maintaining inside and outside this chamber, that is, that the vast majority of practices of resale price maintenance have been against the public interest. That is why we have wanted something done about the position. I do not want to criticise the Minister unduly because we are pleased at the change of attitude on the part of the Government. We do not want to be captious about it. It has taken the Government a long time to realise what has been staring it in the face. That has been the experience here and in other countries where the operation of this practice has been examined in some detail.

Senator Greenwood:

– I thought the honourable senator was saying that we had gone too far.

Senator MURPHY:

– Far from it. I encourage the Minister and his colleagues to pay attention to some parts of. the Act in which the Government has clearly not gone far enough. The Act could do with a great deal of improvement especially in the abandonment of the secrecy provisions and a like approach to that which has been shown in this measure which is now before the chamber. Resale price maintenance is based upon the principle that the manufacturer has the right to dictate the price at which the wholesaler or retailer, or both, sells the goods. Not infrequently it is found that retailers also are engaged in this form of price setting. They demand that the manufacturers enforce resale price maintenance by refusing to supply cut price firms, thereby removing competition and preserving profit margins.

There are 4 principal detrimental effects which stem from resale price maintenance. Firstly, where there are only a few manufacturers - as is true in Australia - it is likely that prices for all brands are uniform; there is no competition. Secondly, resale price maintenance makes price competition among wholesalers and retailers impossible. Thirdly, the price may be geared to providing a profit for the least efficient retailer. Fourthly, lack of competition removes any incentive the manufacturer and retailer might have to pass on by lower prices any economies achieved in production or selling.

There is no need to dwell upon the damage which is done to the community by this practice. It affects all sections of the community. The object of those indulging in these arrangements, that is apart from those which are in the public interest, is simple. It is to gain control of a market or part of a market and to fix prices at the highest level which the market will bear. The ordinary consumer has no hope at all of beating the cartels which fix the prices of many ordinary consumer items.

Senator Webster:

– What is the honourable senator quoting from?

Senator MURPHY:

– This is quoted from my notes. If the honourable senator would like to study them in greater detail I will be pleased to supply him with a copy.

Senator Webster:

– No. I apologise. I thought the honourable senator may have been quoting somebody.

Senator MURPHY:

– I thank Senator Webster for that compliment. If my notes are becoming quotable that is indeed a rare compliment in this House. No matter where the ordinary consumer buys many of the ordinary consumer items he pays the price fixed by these private price fixing authorities. The ineffectiveness of the trade practices legislation has been clearly recognised in many quarters. In the annual report for the period ended June 1970 Mr Bannerman, the Commissioner of Trade Practices, referred to the existence of 3,000 horizontal and about 6,000 vertical resale price maintenance agreements, that is, those between manufacturers and wholesalers or retailers and those between the same level of persons. The inference from this report is clear. Under the present legislation it is not possible to deal effectively with those who are parties to the extensive network of resale price maintenance agreements.

We know that the former AttorneyGeneral came out strongly against the lack of an adequate Trade Practices Act. Thereafter he ceased to be Attorney-General. Whether the 2 matters are connected is a matter of speculation. Speaking specifically about price fixing by groups of business men, he said that such a practice was pernicious and destructive of the element of competition that is supposed to be the hallmark of a free enterprise society. He went on to say that there was much to support the view that the present Trade Practices Act was inadequate to achieve its stated objectives of promoting competition in Australian industry to the extent required by the public interest. He added:

The public interest requires an assessment of the best way of performing the task of promoting internal competition by trade practices legislation. This task must be undertaken if we are to grapple with the problems of inflation in their current manifestations.

We know that the words of the then Attorney-General are correct. There ought to be action on the lines taken in most parts of Europe and many States of America.

Insofar as this Bill is designed to eliminate a practice which ought to have been effectively dealt with a long time ago we enthusiastically support it. It will not deal with all the problems in the resale price maintenance area. It will bring about the abandonment of resale price maintenance clauses in certain vertical arrangements such as manufacturer and distributor agreements and the like. But its object will be completely thwarted in certain instances because of the existence of other restrictive arrangements.

The glass industry provides a clear illustration of how the present Bill, while achieving its immediate objective, will make no impact whatever on the actual level of prices to end users nor on the fact of common pricing to end users. To take an example, the marketing arrangements in that industry have 3 distinct forms. Firstly, there is a series of vertical arrangements as between the sole manufacturer and each of his distributors. These contain a resale price maintenance clause which will become unlawful when this Bill comes into operation. Secondly, there are horizontal agreements between glass merchants which include provisions for price fixing together with penalties for non-compliance, that is, fines, expulsions and stop lists. Thirdly, there is an arrangement between the sole manufacturer and certain specified overseas suppliers. While this is not a matter of formal record it emerges from th: fact that there is a requirement in the vertical agreements referred to that each distributor purchase not less than 85 per cent of his requirements of certain products from the manufacturer and the balance only from certain specified overseas suppliers, the names of whom are listed. It is a very small list.

The other facts are these: At least one of the approved overseas suppliers publishes a list of Australian customers - that is distributors - for each State which is identical with the approved distributors of the Australian manufacturer. Thirdly, the discount structure of the same overseas supplier is virtually identical with that allowed by the Australian manufacturer. Price movements of Australian glass are followed not simultaneously but closely by the overseas suppliers. Then there are other arrangements in this field designed to achieve the purpose of maintaining the price. In 1970 the New South Wales Glass Merchants Association sought to amend its rules by creating the additional offence of acting as agent, distributor or representative in New South Wales of any overseas glass manufacturers in respect of any type of fiat glass without the prior consent of the management committee. Although this was ultimately deferred it shows how comprehensive and interlocking the arrangements are.

The combined effect of all these arrangements is that the present Bill will outlaw the vertical prices restriction. It may affect resale price maintenance arrangements imposed by the approved overseas suppliers provided that their Australian agents are deemed to be suppliers within the terms of the Bill. It does not, however, affect the common price provisions of the horizontal agreement of the Glass Merchants Association. Thus, while both the Australian and overseas suppliers will presumably delete the resale price maintenance requirements from their distributor agreements presumably they will continue to supply the same group of Australian distributors at supply prices which move in concert, and the distributors for their part will presumably continue to set common prices to end users under the rules of the Association. So the present Bill will be quite ineffective in practice so far as that industry is concerned. There are other problems in that industry but it seems that the real problem is that there are interlocking arrangements not only in Australia but also overseas which bear down on the Australian firms which might want to seek from overseas, for example, glass at a lower price than they are compelled to pay to those who have arrangements in Australia with the manufacturer.

By one device or another the industry is so internationally cartelised that in relation to its effect on Australia there will not be very much change. Perhaps this may be associated with the fact of applications for temporary protection on certain glass products. Such protection is operating now. While we all want to see the Australian glass industry operating efficiently we also want to see Australian consumers able to purchase glass at reasonable prices and it does seem difficult to see why there should be interlocking international arrangements to protect firms outside Australia by the exercise of pressure against persons inside Australia which ultimately bears on the consumer.

Senator Little:

– The book industry is one which has great international difficulty.

Senator MURPHY:

– Yes. I selected one industry as an example. There are all sorts of operations in the book industry and in other industries. Some of these international arrangements are not really capable of being dealt with by the provisions which we have before us or by the Trade Practices Act itself. Some attention will no doubt need to be paid to this.

Senator Prowse:

– To what extent do these arrangements override tariff provisions and negate them?

Senator MURPHY:

– What they do is operate to prevent people from buying at the lowest price. Take for example a person selling glass in Australia. Some of it he buys from the local manufacturer who has a monopoly and some he might want to bring from overseas. He is restricted in his overseas purchases to those sellers who are nominees of the local manufacturer who has this cartel. Unless he buys from the ones he is told to buy from his supplies of other types of glass will be chopped off in Australia. So this means that it is not a question of some injury to the Australian product: It is a question of the availability of the Australian product.

Senator Gair:

– They withhold stock.

Senator MURPHY:

– Yes. The availability of the Australian product is being used to force a person to purchase from those overseas suppliers from whom he is told to purchase, for example, the types of glass that are not available in Australia. This type of practice, one would think, should be dealt with but it will not be coped with by this Bill. I turn now to other factors which are operating to the public detriment and which are concerned with this field. There is arising rapidly in Australia a trend towards a practice known as pyramid marketing or pyramid selling which has caused a good deal of trouble in other parts of the world. It has recently been the subject of investigation by the South Australian AttorneyGeneral’s Department. It has also been the subject of newspaper reports and television and “radio coverage. The pyramid idea came to Australia from the United States where it has been under increasingly heavy fire and the subject of several investigations. In Australia pyramid marketing - it is not called this by those who practise it - has been used primarily in the selling of cosmetics, cleaning compounds and some detergents, including well known ones. Overseas pyramid marketing has been used to sell such products as food supplements, houseware and appliances as well as cosmetics and cleaning compounds.

In pyramid marketing, goods are sold through a plan based on stages or graduated levels of distributorships to reach the consumer by direct sales. As a rule 4 or 5 levels of distributorships are available. Generally such plans involve the recruitment and engagement of independent distributors whose earnings depend on (a) profits based on the difference between wholesale or quantity prices and retail prices, plus (b) commissions or over-rides based on sales of lower level distributors or sales personnel, and (c) bonuses or incentive payments by the company for recruiting other distributors. The total income to any one distributor thus may result from one or a combination of these sources or may depend solely on the sales activities of others. Potential distributors are recruited mainly by personal contact. Once a person is enrolled in the scheme he is far more concerned with bringing others into it than he is with selling the product. This is where the name of the process comes from. The selling procedure spreads out like a pyramid or a chain letter. There is a product to be sold and if one pays to get into the chain, if we might call it that, one is promised rewards which are far beyond one’s present earnings and dreams of great wealth.

Senator Byrne:

– A geometric progression.

Senator MURPHY:

– Thank you. ft is a geometric progression and it depends on enrolling other persons in the scheme who will sell for someone already recruited. One can go in to sell but the better way to do it is to enrol 5 other people and out of their sales to get a commission. They in turn are told that if they enrol anyone they will get commissions on their sales. One can see that it is exactly like a chain letter. But those involved cannot progress very far before they find that their income rapidly tapers off and their dreams of wealth are not realised.

Senator Rae:

– It is not a promotion of the sort of things you can buy within sight of the pyramids?

Senator MURPHY:

– Not really. There are very solid ways of getting people into the schemes. One can imagine how persons are told about the golden opportunities and so on and the promises of high monthly and annual incomes and how people are involved in signing up and investing their money as a sign of good faith. A standard work on this very subject states:

Pyramid marketing is not primarily designed as an offer to knowledgable businessmen, competent to weigh and evaluate commercial risks. It is designed, rather, to appeal to uninformed members of the general public, unaware and unadvised of the true nature of the risks run - persons with limited capital who are led to part with that capital by promise and hopes, which are seldom, if ever, fulfilled. A particular vice of the plan is that part which provides over-ride bonuses for recruited distributors, implicit in such an arrangement is the promise, rarely if ever kept, that the recruiting distributor can, without himself working, profit from the work of others.

In Australia there are a number of companies involved in this pyramid selling. One of the companies announced recently that its monthly sales volume reached Sim a year early in 1970. That company which sells detergent uses the hard sell techniques perfected in the United States. Every stage of persuading people to join the plan is a professional act perfected to the minutest detail. There are sound colour movies and very experienced gentlemen pushing the benefits of being in the arrangement. People are told that thev can earn $50,000, $100,000 or even more a year. They are told this in the most convincing manner and then pressured into signing on the dotted line. The investors enter the scheme at several levels. One observer has described the process in this way:

They purchase stock at a given discount. The more stock they buy, according to a formula established by the promoters, the bigger discount they get, and the higher sounding title they are given.

Titles are bestowed from that of general distributor down to others of less consequence. Each title carries with it certain prestige and the right to bring other investors into the programme. The marketing structure is highly complex and stratified. It often happens that those who commit themselves to the pyramid selling programme do so on the spur of the moment before they have had time to give the matter serious thought. Many of the people recruited into the scheme have little sales aptitude and less business acumen. They commit what little money they have, or what they can borrow, and then find that they have got into a scheme which is not as grandiose as was made out by its promoters. Once committed to the pyramid marketing structure it is difficult and expensive to get out.

The estimates of earnings in these schemes are not borne out. 1 do not have time to go into details with the Senate on this matter, except to give one example of how dangerous the trend is and how much care should be taken in Australia. There are some half a dozen firms operating in Australia on a big scale. I wish to make reference to one of them. Koscot Australia is a company which was launched 4 years ago in the United States. Its founder, Glenn Turner, is reported to have been once associated with one of the other companies now operating on a great scale here. Mr Turner is reported to be the head of a financial empire worth between $150m and $200m. Koscot Australia is now seeking 1,500 distributors throughout Australia and is determined, according to one report, to become the leading cosmetic retailer by 1972. Koscot Australia is an offshoot of Koscot Interplanetary Inc. which is its American counterpart.

This company was recently charged by the Attorney-General of the State of New York with using fraudulent practices to sell $3. 8m in distributorships in New York. It denied the charges but signed a consent agreement to contact distributors and make an offer of restitution in accordance with the court order. Koscot informed the owners of 531 distributorships of the consent decree at a meeting held in Brooklyn. A number of those attending the meeting signed a form stating that they had been deceived by Koscot. In this case the Attorney-General of New York said that Koscot had made outlandish claims that a person investing $2,000 or $5,000 for a distributorship could have a guaranteed income of $50,000 a year and possibly $240,000 annually. The Attorney-General pointed out that of the 1,604 persons in New York who paid a total of $3. 8m since late 1969 when Koscot began full time operations in New York only 79 - that is some 5 per cent - made more than $5,000 and only 10 made more than $10,000. This company has begun operations in Australia.

I think it is probably reasonable that some kind of action should be taken to deal with these practices, which are trade practices, and would intimately affect our trade and commerce if they began operating on as great a scale as they have elsewhere. As I say, the company is being investigated in one State, but these practices jump over State borders. It ought to be thoroughly investigated by the Commonwealth Government to ensure that these practices do not erupt as they have elsewhere to damage not only the individuals who are lured into it but also the public interest in general. We see how injurious practices in various parts of our trade and commerce can have a very damaging effect on others who are not immediately connected with them. As I said, we think the Bill is late but we commend the Government for having changed its mind and, having seen the error of its ways, for bringing in the Bill even at this late stage. We hope it will achieve the object of ensuring that injurious price fixing is eliminated and that where there is just cause the public interest may be satisfactorily protected from any form of resale price maintenance. The Opposition will support the Bill.

Senator WEBSTER:
Victoria

– - The Government will be pleased to hear from the Leader of the Opposition (Senator Murphy) that his Party is supporting this measure. Indeed, the comments made by Senator Murphy were most interesting as he outlined the various areas of trade practice where it appeared to him there was some reason to question whether the public interest was being protected. I have some doubts about the measure that has been brought before the chamber and I question a number of the propositions that Senator Murphy has put forward. As we are dealing with the Trade Practices Bill, one could readily ask why a man of Senator Murphy’s stature or perhaps even a man of the Minister’s stature is not advocating that there should be some restriction on some practices associated with the legal profession. I know that this Bill does not apply to services, but if we in the Senate are to criticise various practices that we see in relation to manufacture and resale, I think it would be a very good thing if Senator Murphy - I prompted him once or twice - attempted to give some examples of where he sees the public interest being disadvantaged in the Australian community.

Senator Hannan:

– But legal fees are normally fixed by a statutory authority.

Senator Georges:

– Which is the statutory authority?

Senator Byrne:

– They are settled by the Taxing Master.

Senator WEBSTER:

– Those honourable senators who have commented have great experience in the field of collecting legal fees. My experience of it is somewhat contrary to the thought they are putting forward. In making my comments, I wish the Senate to bear in mind that I do not think that Senator Murphy instanced an example where the public interest is put at detriment by the general practices that we see in the community, which I would prefer to call not uniform selling but perhaps stable selling-

Senator Lillico:

– Or daylight robbery.

Senator WEBSTER:

– This is not daylight robbery. I take the point that Senator Murphy did not express where in the various areas of public interest this problem lies. I tried to encourage him to do so. I thought that perhaps he could suggest that the pharmaceutical industry was an example. The products of that industry are in daily use. Indeed, the honourable senator did mention some household products.

I take a view separate from that taken by the honourable senator. The honourable senator mentioned many countries, including those in most parts of Europe as well as the United States of America, in which legislation of this type has existed for many years. But Senator Murphy or this Government does not go on to say what it is that we are attempting to do by this legislation and what a glorious picture of Australia is promoted in other areas of the world because of the introduction of this legislation. I bear in mind, in making my comments in relation to this legislation, that this Bill as foreshadowed originally sought to control retail price agreements. Its purpose has been varied. The Senate has before it now a Bill which deals with the rights or wrongs of resale price maintenance. The scope of the legislation apparently is much wider than originally considered. I emphasise that point. In reply to Mr Fox, the honourable member for Henty in the other place, the Prime Minister (Mr McMahon) said on 31st March as reported at page 1202 of the House of Representatives Hansard of that date:

I thought until yesterday that it was well known to every member of this House and to most thinking members of the population that the Government had decided to introduce a Bill quite soon in order to control retail price maintenance.

He went on:

There are many arguments for and against retail price maintenance. A lot of people say they believe in orderly marketing and that orderly marketing is the best way there is of selling goods cheaply in shops. We have taken the view that we believe in competitive influences. We believe that in the period of very rapid inflation that we are going through at present it is better for us to introduce legislation now or, if we can, during this session of Parliament and have it passed as soon as we can.

The Prime Minister made other comments on this point, but I do emphasise to the Senate that the legislation that we have before us, when foreshadowed earlier in the year, was to relate to a different aspect.

This Bill is very complex. I doubt whether the public generally understands the influence that such a law will have for the good of the community. To its credit, this legislation attempts to declare resale price maintenance an unlawful practice. It provides that agreements to sustain a resale price are unenforceable and it allows for an application to be made to the Registrar of Trade Practices for an agreement regarding particular goods to be exempted from Part VI of the Trade Practices Act and that notice of application will be published in the ‘Gazette’ and may be published in newspapers.

It provides further that the Tribunal shall not make a determination exempting goods from the application of Part VI of the Act unless 5 separate points are satisfied. These points are to be found in proposed new section 66j (2.) (a) to (e). Mr Acting Deputy President, with the concurrence of honourable senators, I incorporate in Hansard that part of the Bill to which I have just referred. “(2.) The Tribunal shall not make a determination exempting goods from the application of this Part unless the Tribunal is satisfied that, unless the exemption is granted -

  1. the quality of the goods available for sale, or the varieties of the goods so available, would be substantially reduced to the detriment of the public as consumers or users of those goods;
  2. the number of establishments in which the goods are sold by retail would be substantially reduced to the detriment of the public as consumers or users of those goods;
  3. the prices at which the goods are sold by retail would ultimately be increased to the detriment of the public as consumers or users of those goods;
  4. the goods would be sold by retail under conditions likely to cause danger to the health of human beings or animals in consequence of their misuse; or
  5. any necessary services provided in connexion with or after the sale of the goods by retail would cease to be so provided or would be substantially reduced to the detriment of the public as consumers or users of those goods.

The sub-section which follows I take to be very well meaning. It will create some thinking amongst individuals. Sub-section (3.) of proposed new section 66j reads:

For the purposes of the last preceding sub-section detriment to the public as consumers or users of goods shall not be taken into account unless it would outweigh any detriment to them as consumers or users of the goods (whether by the restriction of competition or otherwise) that would result if the determination were made.

I doubt whether, when the point as to the application that that sub-section will have on the preceeding sub-section is argued, the Tribunal or people generally will follow what is to be brought about in the public interest.

I have questioned the reason for this legislation because, not being a legal person, but at least being involved very much in manufacturing, wholesaling and retailing over many years, I have some knowledge of the various practices that may go on in the community. In Australia, many monopolistic companies are developing. I am not assured that a monopoly may not be directed by its board to do certain things because its board feels that it has not a public obligation in Australia but wishes to take as much from the Australian people as possible. The situation in which a monopoly with that type of board will act in that way will continue. It will not be affected by this legislation.

I hold the view that in monopoly companies in Australia, where the boards of those companies are made up of sound thinking men who see their interests as being identical with the interests of Australia, a price structure will evolve which certainly can be described as orderly marketing. I think that this is more the proposition which is adhered to by many of the major industries in Australia. Tt may be that unwarranted margins of profit exist on the sale of some goods. Such comments may apply to the situation in certain instances, but 1 have a great regard for the various levels of business production and distribution in Australia. I believe that much can be said for a system of free enterprise in Australia which combines competition among manufacturers, stockists, wholesalers and retailers. An exemption applies where a company is a monopoly supplier. Senator Murphy mentioned the glass industry. The steel industry and a variety of other industries which manufacture one basic item come to mind.

Senator Georges:

– Far too many.

Senator WEBSTER:

– The honourable senator says: ‘Far too many*. But any person in Australia can bring in any item from overseas which is not produced in Australia, put it on the market and sell it at whatever price he wishes.

Senator- Prowse - That is not quite true.

Senator WEBSTER:

– A monopoly in that item can be created. The exemption which my friend wishes to point out is this: If that item that is imported is in competition with an Australian product and it can be proved that that item can be imported to undercut the price at which the same item is produced by an efficient Australian industry protection is afforded. The honourable, senator will make no comment when 1 use the word ‘efficient’ because this protection generally is based on whether or not the product is produced efficiently for sale to the public.

Senator PROWSE:
WESTERN AUSTRALIA · CP

– What about retailer agreements in other countries?

Senator WEBSTER:

– I will be most anxious to hear the remarks of any honourable senator including the Minister for Health (Senator Greenwood) on the subject of retailer agreement in other countries. I read of no-one in the House of Representatives who could say: This legislation has applied in America for X number of years. As a result, certain products can be purchased in America so much more cheaply than comparable products here not because of the volume of the market but because there is not this orderly marketing that we have in Australia’.

As the Government has introduced this Bill as one measure to attack inflation, nobody is able to say to me: ‘Why, where similar legislation applies in other countries, those countries have been so much more able to rid themselves of the horrible inflationary rate that Australia has’. Of course everyone in the end will come to the decision that no country has as good a record as this Government has been able to provide in Australia by following the type of marketing system that it has over the years. I hope that somebody will take me up on this point and demonstrate where in other countries in which no marketing arrangement is allowed a. better service and goods at a much cheaper rate can be provided to the customer.

Senator Byrne:

– I am not following the honourable senator. What does he mean?

Senator WEBSTER:

– I speak of a marketing arrangement where you have a manufacturer who decides that there will be orderly marketing by selecting capable people to sell his product from 5 sources in a capital city. They will distribute because they have a variety of services and because it is in the interests of the product that he produces that he should sell only from a selected number of individuals who will not only have expertise in the handling of goods that he manufactures but will also give care and attention to the customer, and make expert knowledge available to the customer as to what he will be buying. They will have delivery facilities, they will see that there is a follow-through and after service maintenance. Of course, the interest that has been shown in this matter perhaps has been prompted by the action Mr Hawke took in relation to the Australian Council of Trade Unions store in Melbourne. Here is a perfect example of where the public in actual fact gets no service. But at least Mr Hawke and his store are able to say: ‘We demand the goods from Dunlop or whatever the manufacturing company may be, even though we do not wish to put a price tag on the goods, even though we do not wish to give a specialised service to the customer, and even though we do not wish to deliver or give credit facilities.

Senator Georges:

– That is not so. Goods sold through Bourkes have the normal service and guarantee facilities as any other store.

Senator WEBSTER:

– I hope the honourable senator has been in Bourkes as regularly as I have. But seeing that the honourable senator comes from Queensland I doubt that he has.

Senator Georges:

– Is it fair for you to make that statement?

Senator WEBSTER:

– What statement is incorrect, Senator?

Senator Georges:

– The statement you made was that goods purchased from Bourkes did not have the normal protection of service and guarantee. That is what you inferred and this is not so.

Senator WEBSTER:

– Has the honourable senator attempted to return goods to Bourkes? 1 think if the honourable senator will just keep quiet for a little while he will learn. He will learn more if he comes to Victoria to see what marketing is. Victoria is a pretty good State and 1 think that Queensland may be a little slower in regard to what needs to be done.

Senator Rae:

– I would be interested to hear the honourable senator elaborate on his answer to Senator Byrne’s interjection by explaining what he means by marketing arrangements. Surely he is not suggesting that the sort of marketing arrangements he has enumerated are precluded by any of the provisions of this Bill?

Senator WEBSTER:

– I am quite scared, myself, that they will be excluded under this arrangement because I think it will be necessary to establish that there are benefits to be obtained for the public by having these particular sources of supply. Indeed, the ACTU Bourkes Store in Melbourne is an example of what has been accepted by the Government. We have the example of a small corner store without the facilities to hold a volume of stock and without the ability to give those services which I attempted to enumerate to the senator on the other side of the chamber. I refer to facilities of credit and of having expert salesmen.

Senator Rae:

– How does this Bill prevent this from applying? It does not force anyone to deal with someone else.

Senator WEBSTER:

– 1 believe that it will.

Senator Rae:

– I will be very interested to hear that explained.

Senator WEBSTER:

– I believe that a firm will not be able to maintain a price and sell to the customer to whom it might wish to sell. There will be the ability for a smaller store or some other competitive store to say - and the Minister may correct me - that they wish access; they they wish to buy a volume of line A that may be put out. For example, let us consider the shoe manufacturer. Shoes happen to be one of the companies in Victoria which to my knowledge have been taken on in this blackmail fashion. They are told: ‘You supply us with your goods or else we will see that we will pull labour out or we will see that deliveries do not go to your stores.’

Senator Rae:

– That is an entirely different thing to what is proposed in this Bill. That is industrial blackmail which many of us have some opinions about. But what is proposed under this Bill is not any such thing as the industrial blackmail that the honourable senator is talking about.

Senator WEBSTER:

– I hope that the Minister might be able to clean up that point. My reading of the Bill, and the general attitude of the Bill in the public mind at the moment, is that if a manufacturer is in a particular line of products he must make those goods available on fair terms and equal conditions to all storekeepers. This is as I understand the position. I mentioned at the outset of my speech the 5 criteria that have to be taken into account. However, if one reads those, as I have read them, there will still be a demand by a store such as Bourkes in Melbourne, which I mentioned. They will still have the right to demand goods. As they are said to be a major store in a capital city, able to dispose of a volume of goods and able to offer some services they will have a right to supply at the same figure as any other store which is offering similar or better services. If I may say so I believe the whole retail trade throughout Australia will be most anxious to hear the comment that that situation does not apply. But I believe that it does apply.

Senator Georges:

– We believe it should apply.

Senator WEBSTER:

– There we are. I think it is the attitude of the Opposition that anyone should be entitled to have goods. But I hope in the time available to me that I will be able to mention one or two industries that indicate the situation. I mentioned that this Bill appeared to me to be one that the Government had brought in in an attempt to halt some inflationary trend. Indeed, I think we can find comments in the Minister’s second reading speech and in speeches made by other leaders of the Government to indicate that that is one fact.

I believe that the Government should be attacking the wage inflation rate at present. I criticise the Government, as I have done on the last 2 Budgets, for taking the lead often in the governmental field, not only in bringing more bodies into its service but also in leading the practice of granting enormous rises in wages. I have expressed the opinion before that it is completely abhorrent to me that if a 6 per cent wage rise is granted to a person who happens to earn $4,000 a year, for example, that this percentage rise should also be applied to a person who earns $20,000 a year. One person receives a rise of $240 and another receives $1,200. This is one of the factors which is adding to wage inflation.

I would refer anyone interested in this point to the Minister’s second reading speech when he said:

This legislation is intended to assist in warding oft present inflationary pressures in the economy.

If I had time I would quote several pages of a current edition of the ‘Reader’s Digest’ which honourable senators may have read. An article entitled ‘The High Cost of Wage Inflation’ tells of the abuse of union monopoly power as being at the heart of the new inflation that threatens to sink us all. The article goes on to say:

The gravest economic problem facing the Western world in the early 1970s is cost-push inflation powered by excessive wage increases. In its scope and intensity, this inflation can be regarded as a new phenomenon, one that stubbornly resists classic monetary or fiscal remedies. What is happening, throughout the Western world, is that organised labour is overreaching.

I would recommend further reading of that article because what we are dealing with in this Bill is very much what is dealt with in the article. I refer here to the force of union power that perhaps prompts the community to think that the type of thing that the Government is engaging in at present is a particularly good thing and it will do something to dampen inflation.

There is another article which I would suggest honourable senators should read. This article appeared in ‘Fortune’ magazine of February 1971 which discusses union power and the new inflation. The first line of this article states:

The gravest economic problems are indeed excessive wage increases.

If we hope to achieve something by the present measure it would not be nearly as much as could be brought about if the Government were able to take action at least to control some of the wage demand that we have at the present time. The previous article which I mentioned referred clearly to union power and to the fact that productivity of British industries rises at less than 2 per cent per annum while wages are rising at approximately 13 per cent per annum. Wages are outstripping productivity. Apparently this Bill seeks to introduce greater competition and supposedly will lower prices. In my view, it will be only a bump on the road of inflation. I question the eventual outcome of the legislation.

In his second reading speech the Minister listed those countries which have introduced legislation similar to this over the past15 years. I hope that he will be able to tell us what benefits have flowed from that legislation to the people of those countries. I have referred to the inflationary experience of countries comparable with Australia. I believe that their price rises would not be acceptable in Australia. In short, the abolition of resale price maintenance could not be said to have visibly achieved anything in those countries.

I think that on several occasions in this chamber I have referred to the fact that over many years Australia has experienced a lesser inflationary spiral than has occurred in any of the countries which the Minister mentioned in his second reading speech. What is actually meant when the Senate is told that15 countries have introduced this type of legislation? Does it mean that Australia’s experience has been worse or better than the experience in those countries? I believe that this question of resale price maintenance is quite an emotional issue. People have been encouraged to be against it. Indeed, I should imagine that the public would adopt the view that not to be against resale price maintenance would be like not speaking against sin, and nobody would contenance that.

Does this this measure appear to be unconstitutional? Will the State governments introduce mirror legislation to support this measure? It will be interesting to see whether they do. I wish to discuss two aspects of business into which this legislation will intrude. Indeed, I have mentioned the deal in Melbourne involving the ACTU, Mr Revelman, and Mr Hawke. I have grave doubts as to whether Mr Hawke did anything to benefit the community. I believe that if one looks at the benefits which will flow to the ACTU, to Mr Hawke, to Mr Revelman and to the community, one will be inclined to think that Mr Revelman will come out in front. The rest of the story surrounding this deal appears to be quite farcical, but it could have quite harmful effects upon the community. Here we saw a definite attempt at blackmail by Mr Hawke.

Senator Poyser:

– Oh!

Senator WEBSTER:

– I think Senator Poyser will agree with me when I say that it could be construed as being blackmail. Mr Hawke demanded that the ACTU store should be supplied with certain goods. Nobody can withstand a threat to ruin a business. Mr Hawke demanded a variety of goods which I do not think the ACTU store necessarily wanted to display. It wanted to have in its store line leaders which it would be able to sell at a figure less than that charged by nearby stores. Other respectable stores throughout Melbourne have to do a number of things in the public interest. For instance, the Myer Emporium Ltd in Melbourne and large retail stores in the other capital cities are willing to disclose to the public the amount of capital involved in their operations and the various facilities they provide. They always mark their goods with price tags and they offer credit facilities to their customers. They are willing to publish their turnover figures, to indicate their margins of profit and to declare dividends.

That is not done in this instance. Probably the greatest interest that has been taken in an attempt to abolish resale price maintenance, we would agree, has taken place in this instance in Melbourne. I think the public should be alerted, as undoubtedly it is, to the fact that there are benefits associated with large companies being able to make arrangements with manufacturers for the orderly marketing of the goods that they wish to supply and certainly that the goods should not be available to every store whether it provides some service or fails to provide service. I sincerely hope that the provisions of this Act will allow manufacturers and wholesalers of goods to channel their products through stores which offer the expertise and service which the original manufacturers wished to accompany the proper public presentation of their goods.

I certainly believe that there is a place for the discount store, but I mention one thing. This measure will encourage the growth of the discount store, but it will also discourage the growth of and will put out of business many small stores throughout Australia. I sincerely hope that either the Federal Government or the State governments will introduce provisions requiring all goods to have a price tag. A number of discount houses - undoubtedly honourable senators opposite will know where this applies - which are demanding access to goods place no price tags on their goods. The salesman is able to say: What price can you get these goods for? If you go down the road and find out the price and the colour of the one you want, come to us and we will sell it much cheaper”. In many instances the unknowing public is paying a higher price for goods in some of those discount stores. I hope the Minister will accept this point, as I see it is avoided in this legislation.

The heavy hardware and steel industry is one in which I have had some experience. This industry has been under the control of probably the largest monopoly in Australia - that is, the Broken Hill Pty Co. Ltd. This company has had an elevation to fame in Australia. I suppose if people wish to argue that the price lists and the orderly marketing that that company presents not only to its stockists but also to its resellers will now be abolished and that it will be able under one section of the Act only to advise what it feels is a minimum price-

Senator Poyser:

– That is not true. It has several prices. The small man is paying much more for steel from Broken Hill than the big man is. The company has been doing it for years. I can prove it. There is no orderly marketing, except to look after the big interests.

Senator WEBSTER:

– The honourable senator is not quite right, but undoubtedly he will learn as he goes on. 1 doubt that this type of legislation will markedly assist the public in the marketing of steel. The Broken Hill company and the steel industry, I believe, have always looked to stable marketing, and margins on the levels of stockists and resellers have forced the greatest endeavours towards efficiency on the part of these stockists and resellers. For instance, the margin for a wholesaler or a reseller is about 10 per cent or 12 per cent on wire netting - an item in which my Party might have great interest - but on steel sections the margin is about 19 per cent. These margins are much under the margins at which Mr Hawke believes his store can sell.

There are agreements that manufacturers and stockists will have to carry stock in depth; that those who sell the material will have to be able to advise their customers correctly, being educated in the field; that there will be sufficient handling facilities and volume to supply the user as he would wish. The staff handling the stock, must be technically equipped. In the last few years when there has been a shortage of some BHP lines we have found that BHP steel sold at a certain figure but once this stock was eliminated imported steel became available for sale at at least $100 more a ton. If a company such as that were not interested in the public or had no orderly marketing scheme, undoubtedly it could adjust its price until this reached a figure near the price of imported steel.

I wish to make some comment on the retailing industry in Australia. I believe the figures I am about to mention are of interest. Excluding automobiles and petrol, retailing in Australia consists of some 110,796 separate businesses employing 572,647 people, of whom half are women. That represented in 1969 about 11 per cent of Australia’s total work force. Sales have increased over the last 5 years at an annual average rate of 6.3 per cent and in the current year will exceed $9,000m, representing some 28 per cent of Australia’s gross national expenditure. Over the 5 years to 1969-70 the average weekly earnings of people in that industry grew by 6.6 per cent per annum, including an increase of 8 per cent per annum over the last 2 years. In the first half of 1970-71 they have been increasing at the rate of almost 9 per cent per annum, which gives weight to the previous point I made. The average annual rate of increase in consumer prices over the same 5-year period has been 1.4 per cent for household supplies and equipment, 2.1 per cent for clothing and drapery and 2.9 per cent for food, the overall average being 2.3 per cent. This compares with an overall increase in consumer prices of 3.1 per cent. In the first three quarters of 1970-71 the overall increase in consumer prices has been at the rate of 4.5 per cent per annum. So despite the recent quickening in the pace of inflation, it becomes obvious that the self discipline of competition characteristics of retailing in Australia has kept retail price increases well below the national average and quite remarkably below the increased cost of wages.

Let me take that international point that I mentioned and give as a demonstration of distributive efficiency the level of gross profits in Australian industries as a percentage of sales. It is most interesting to compare rates applying to department stores here with those in overseas countries. Indeed, I hope that the Minister, when we say that other countries have brought in this legislation, may be able to show the benefit that has flowed to the public in those countries. Reported figures show that gross profit of department stores in the United States is 36 per cent, in the United Kingdom 31 per cent and 29 per cent in Australia. Food chains operate in Australia at approximately 4 percentage points less gross profit than in America. Modern discount stores, such as the Target Stores and K Mart stores, operate in Australia at at least 8 percentage points lower than in America. It is interesting to note that the 3 top Australian retailers - Myers Emporium Ltd, Woolworths Ltd and G. J. Coles and Co. Ltd - being the only reporters of sales in this country, last year earned an average of 3c after tax on every $1 of sales. The average earnings of the American leaders - Sears, Safeway and Federated Department Stores - was 3.9c in the $1 after tax.

The ACTING DEPUTY PRESIDENT (Senator Sir Magnus Cormack) - Senator, I do not wish to interrupt you, nor do I have any real right to do so, but there is an understood practice that when the proceedings of the Senate are being broadcast there is a limit on the length of time that an honourable senator will take in a debate. Will you indicate to me when you will complete your speech?

Senator WEBSTER:

- Sir, I notice that you did not make the same interruption when the Leader of the Opposition was speaking and I take it that you will not interrupt me. I will not take very long.

Senator O’Byrne:

– You know the rules.

Senator WEBSTER:

– I happen to be the first speaker on this side of the House. My remarks may be hurting the Opposition. A measure of financial efficiency is the return on shareholders’ funds. The average for the top 10 retailers in Australia is 10 per cent but in the United States it is 11.9 per cent. In my view these figures show quite clearly that Australian retailing industries operate at a substantially lower rate of mark-up and profit than their American or United Kingdom counterparts. To sum up the points I have made, I believe that Australian production and retail marketing do not suggest that this legislation is warranted. Where competition exists no wholesaler or retailer believes that he can continue to sell at a higher price than his competitor. This legislation, I believe, will hasten the advent of discount bouses which in some instances offer little service to the public. My concern in this matter is for the storekeeper in rural areas. In looking at a maintained price that may apply particularly to important items in the community it can be seen that a manufacturer has his distribution costs built into the price.

Senator O’Byrne:

– I take a point of order. There is an agreement between honourable senators - a gentlemen’s agreement - that the time allowed during broadcasting is half an hour. I remind the honourable senator of this agreement. I think that he is overstepping the mark because he commenced his speech at 9.38 p.m. and it is now 10.17 p.m. He does not appear to be winding up. I draw the attention of the Senate to this agreement which has been honoured for a long time in this place.

The ACTING DEPUTY PRESIDENT - Order! There is no substance in the point of order. I have already directed Senator Webster’s attention to that understanding and I know that he will conform with the wishes of the Chair.

Senator WEBSTER:

– This will lead to big stores producing their own goods and brand house goods. These will be absolutely unaffected by this legislation. It is beyond the capacity of the suburban storekeeper and certainly the country storekeeper to be able to follow this practice. In Britain and America fair trade laws have been used and in instances abandoned. I believe that the figures I have quoted indicate quite clearly that what has been maintained in Australia for many years is acceptable and a good practice for Australia.

Senator BYRNE:
Queensland

– The legislation now before the Senate is receiving the support of all parties with some qualifications in one direction or another. One of the major criticisms has been that legislation of this character has been unduly delayed. We have witnessed over the past years in Australia, as so often happens, a developing complexity in national merchandising and in commercial operations. It is an unfortunate fact of commercial life or business life that, with the advent of more intense competition and with the necessity, because of high wages and increasing costs, to cut production costs and as far as possible to elevate profits, commercial enterprises are compelled to move in fields and in a manner which sometimes creates benefits for the trader but can have very grave disabilities for the consuming public. There is a constant battle between authorities which have the public interest at heart and the traders who legitimately have their interest at heart and in the case of companies the interest of the shareholders or the participants. There is a constant battle on one side and on the other to try to preserve equity within this range of mutual conflict.

Now, this Bill reflects all those principles which we have seen emerging in modern

Australian commercial life. It is not, perhaps, by accident that legislation of this character comes to this country many years after similar legislation has been in effect in other countries such as the United States, Great Britain and certain continental countries.

Senator Webster:

– What benefits did it bring there?

Senator BYRNE:

– The reason for that would obviously be that those societies have reached in their commercial transactions a level of sophistication that is perhaps only now being attained in Australia, and as the commercial societies lift to certain levels of sophistication legislation of this character is found necessary, and now has been found necessary in this country. Senator Webster asked just what benefit has accrued in the countries in which it has been operating for some years. I personally am unable to answer that question specifically but I would have imagined that it would be highly unlikely that legislation in those countries would have been allowed to continue if it had not proved effective or if the public of those countries was not satisfied that it was of some benefit.

Senator Webster:

– It is being abandoned in many countries.

Senator BYRNE:

– I am not aware of it being abandoned. The Minister and other people have explained that similar legislation is operating in some of the major trading nations of the world, and until the proof is conclusive that it is ineffective or is having an effect contrary to that for which it was designed and intended, I personally would be persuaded still to follow the examples of those countries.

Senator Wheeldon:

– It was only recently adopted in Great Britain - within the last decade.

Senator BYRNE:

– That is fairly recently, if it was in the last decade. But, as I say, these things are a reflection of the developing commercial pattern in Australia. I have a number of qualifications that I would advance in considering this legislation. Firstly, that commercial pattern has not reached the ultimate point of development. We find that every day there are company takeovers and that organisations are merging one into the other until we are getting great monolithic corporations, as has hap pened in Japan, where manufacture, distribution and sales are all merged in one gigantic enterprise. In those circumstances there may be developing there patterns which even legislation of this nature would do little to affect and in that case again the battle will go on, because new commercial methods will be designed and will emerge which in turn will have the effect of evading legislation of what we consider to be of a fairly embracive character today. Therefore at that point of time it will be necessary again for governmental ingenuity to be exercised as against private commercial ingenuity to enable these new practices in their turn to be controlled.

Reference was made to my next point by Senator Webster in another direction; but I am concerned that this legislation may have one adverse effect, and that is to make goods unavailable at a reasonable price in the remote rural areas. I hope that will not happen, but as I understand it - and I do not purport to be an expert in the elements of commercial trading - there is a system of the national advertised line where a uniform price is fixed throughout the Commonwealth and perhaps the urban dweller is required to pay a higher price than otherwise might be commercially possible at the insistence of the trader, so that the same goods can be sold at substantially the same price in the remote areas of Australia. That is a very good commercial practice in the rural and remote areas of this continent and if the effect of this legislation were to destroy the possibility of that it would be highly regrettable. I do not know that that necessarily will happen, but if it does I see no way in which the rural areas and the remote areas are not going to be very gravely disadvantaged by the operation of the statute which is now before us for consideration in the form of a Bill.

Senator Georges:

– They will get their goods cheaper.

Senator BYRNE:

– I would hope that they would get their goods cheaper.

Senator Georges:

– At least they will not be paying a 60 per cent margin on clothes as they do now.

Senator BYRNE:

Senator Georges has been engaged in trading in an honorary capacity and he would have a better knowledge than I. He says purchasers would be able to get their goods more cheaply. I would be reassured if that is a fact. I merely express concern that that may not be the case, and whatever the good intention of the Bill may be, and however much it can advantage urban dwellers who are able to resort to the major department stores in the closely settled areas, if these are not available in the rural areas the people there will be disadvantaged. I would be concerned also about whether the small trader might be adversely affected. Again I am advised by those who operate in this field of merchandising that these people stock specialised lines, not the lines that are generally available in the grand magazines and that this might adversely affect them.

I am one who, even in the days of the modern commercial trends, favours the continued existence and even the proliferation of the small shopkeeper. I am one who sees in that a healthiness in the commerical community. I am one who sees in it the distribution of wealth. I see in it the continued existence of the small and rural community. I should be concerned again if I thought that the livelihood of these people would be affected or that, in fact, they would be required to go out of existence. This is another matter which exercises my mind and I would hope again that this legislation in its present form would not have the effect that I fear it may. If it were going to have that effect, maybe by some emendation at a later stage the legislation may be given a form which might make it possible for that consequence to be avoided.

Whilst the principles of the Bill are generally accepted and I do not propose to examine them over a broad spectrum, I shall deal with specific aspects which may occupy a few minutes of the time of the Senate. On the question of exemptions, it is possible for applications to be made for the exemption of certain goods. Senator Murphy has canvassed the possibility that perhaps, particularly in the intermediate stage, it may be possible for some intermediate decision to be made which would not disturb the current trading practice of certain people until a final resolution can be made as to the permanence or otherwise of the exemption. I think this would be a salutory provision because again, whilst it is desired to protect the consumer, there must also be, in the concept of justice, a fair recognition of the right of the trader who has built up his practice, sometimes with years and years of laborious dedication to his small business which has grown and grown, and he is entitled to the protection of this legislature just as the consumer is entitled to the protection which he will get under this Bill.

I am concerned that the great principle of this Bill should be clouded by a reference to the economic climate in which it is introduced. In his second reading speech the Minister for Health (Senator Greenwood) referred to the reason why certain provisions are in the Bill and said:

The Bill does not provide for goods that are the subject of an application for exemption to be treated as exempt pending a determination of tha application by the Tribunal. This is a matter to which the Government has given close thought, but the conclusion that it has reached is that, as this legislation is intended to assist in warding off the present inflationary pressures in the economy, provision for interim exemptions pending tha determination of applications would be inappropriate in that it would have the effect of unduly deferring the really effective date of the legislation.

I was under the impression that in this Bill we were adopting and enunciating, in legislative form, certain social and economic principles and that these principles were not being enunciated merely in relation to an ephemeral economic situation. I was hoping that this was a recognition by the national Parliament that in the case of those principles of commercial operation which were bad there should be government intervention to truncate, in some way, the law to remove them. To learn that this is equated, and the whole approach of this Bill is somewhat related, to the current economic situation somewhat disappoints me. I hope that at all times these principles will be observed irrespective of what might be the economic milieu in which the principle is to operate in terms of the control of these undesirable practices. I know the Minister only advances that as a reason why these exemptions in a particular part of the Bill should not be given, that that has particular application to delay in implementing provisions which, if implemented, would have the effect of countering the inflationary pressures. I cannot see that that is a sufficient reason why what I regard as an important principle in this Bill should be laid aside. As I say, I do not think the Bill should be considered in the light of the current economic situation. I do not think the application of its principles should be in any way limited or circumscribed because at the present time the application of those principles may not have the desired effect in the inflationary situation.

I suppose that in another way this Bill does operate a system of price control. Where there is a horizontal fixing of prices then we have the normal method of price fixation to control the undue rise in prices. A more complicated attack on the vertical mode of raising prices is made through the outlawing of resale price maintenance. Again without dogmatising, I do not know to what extent a Bill of this nature should operate to control an economic situation. It will have that effect but the principle is too great to make it merely the timetotime plaything of a government of one complexion or another which might say: This is a method by which we can control the economy.’ There are certain recognised classical methods of controlling the economy, that is, through the control of credit, fiscal control and monetary and banking control. I think they are the accepted norms which may be applied. This Bill should flow on with its principles undiluted and unimpaired. Perhaps by proper operation of the Bill it will at all times have the consequence that it will stabilise the economy, because that is the very nature of the principle embodied in it. If that is so, it does not have to be particularly orientated to achieve that end. It does have that consequence by virtue of the mere operation of the principles involved in it.

In regard to the exemption of certain types of goods, I particularly refer to goods which are not the products of manual operation but goods in the artistic and intellectual field. I refer, for example, to works of fiction or technology but more particularly those of fiction. Books which are produced have a most inexact market demand. An attempt may be made to capture or to accommodate public taste. This is very uncertain and it is not accurately assessed. Therefore very often books come cut with a limited circulation. A fixed price may be a fair way of recouping the initial risk taken by the publisher and of giving some recompense to the author of the intellectual or artistic work. I think that particularly in the field of book production consideration should be given to the possibility of exemption because these products, as goods, do not in my concept appear to fall within the type of product which is in the general contemplation of the principles of the Bill. These goods cannot be produced en masse; they are by their nature the product of one man’s or one woman’s ability or genius. They have a limited circulation and a limited demand. Perhaps the only way in which people can be induced to embark upon this type of literary and intellectual effort is to assure them of at least a reasonable return for their product, their literary or artistic output. That may, be possible only by fixing a price below which the product may not be sold. Those are the matters which seem to me to require particular attention in the application of the general principles of the Bill.

I commend the Bill. It has arisen to some extent in a climate of political controversy. It could have been introduced some considerable time ago because it is designed to control a practice that is now of long and developing operation. I do not think we have come to the end of the road in legislation to control or try to influence commercial practices. Today there is tremendous pressure on men of commerce, manufacturers and traders because of intense competition in the market. Due to economic pressures they have to resort to methods of business which are quite legitimate but which undoubtedly have the effect of making it very difficult for people to buy in the circumstances of the time. Therefore, there is this constant struggle between the public authorities and the private enterpreneur. I would imagine that this conflict will continue and it will continue in other forms. We can expect that the Bill now before us will require from time to time adjustments and amendments as practices are discovered which quite properly should come within the disciplines of the Bill. It may be inadequate to accommodate or control practices which are now operating and which at this stage are considered to be controlled by the Bill but are found to be not controlled. On behalf of the Democratic Labor Party I support the Bill and commend it to honourable senators.

Senator LAUCKE:
South Australia

– I wish to make a few observations in respect of this Bill. There are always 2 sides to any question; that this is so is acknowledged in this Bill. The popular side of the question tonight is the acclaim for the core of the Bill which appears in section 66b. Sub-clause (1.) states:

It is unlawful to engage in the practice of resale price maintenance.

Sub-clause (2.) states:

Subject to this Part, a person (in this section calledthe supplier’) engages in the practice of resale price maintenance if -

the supplier makes it known to a second person that he win not supply goods to the second person unless the second person agrees to sell those goods at a price not less than a price specified by the supplier.

The other side of the question is found in clause 66k which, where the public interest would be served, provides exemptions from the rigid provision to which I initially referred. Obviously this legislation has wide appeal. Shooting at some of the practices and policies of trade and industry is currently a highly popular sport and it is being widely acclaimed. But I feel impelled to issue a word of warning in respect of these attitudes. I believe that great care, skill and responsibility have to be calmly exercised by government to ensure that fire aimed at the marauding fox does not carry on or ricochet to the destruction of the goose that lays the golden egg.

There seems to be a spirit abroad that all the ills of the community so far as trade and commerce are concerned can be cured by the unrestrained, unbridled and vicious competition. I do not subscribe to this attitude. Reasonable competition is a necessary element in the free enterprise system; indeed it is basic to it and I support it. But competition which is encouraged to run riot attacks the very roots of stable industry and commerce. The adverse chain effects of destruction of stability and confidence must be pondered. I am sure that if they are given the long term consideration to which they are entitled the current clamour and acclaim for the sweeping removal of some practices now pursued in trade and commerce could well be dampened down. Collective bargaining and association within trade and industry are equally as moral and honourable, in my opinion, as collective bargaining by labour in trade union activity.

I must point out that efficiency and viability are not necessarily the closed prov ince of big business. 1 have my reservations regarding legislation which could have a tendency or propensity to allow or to encourage big business to become bigger to the exclusion of small business. In many instances the vulnerability of small business lies in the comparative lack of financial reserves. Small business cannot withstand the unfair onslaughts of price cutting by the big operators. When the little chap is removed, monopoly moves in and ultimately there is far less competition, if any at all. When competition is abolished through the build-up of organisations, in the process the independent small man is lost and the activities of commerce are placed in the hands of a few. This is the ideal condition under which social istically inclined governments could nationalise industry and I am sure that we in Australia do not want the nationalisation of industry. But I believe that we are doing many things which provide the conditions and backgrounds most conducive to more and more take overs by big business, until finally we will reach the stage where business will be in the hands of only a few and so will become an interest of government. We could lose out on the good things which free enterprise has done for our economy because we have not retained a width of competition.

Because I feel pretty keenly about these aspects of intrusion into the carefully thought out policies of trade and industry, I view with some concern the claims for new rigid attitudes which are not capable of being varied from time to time in the light of experience. We must act very carefully to ensure that although the things we do may have a momentary appeal, in the long term they will not have a detrimental effect upon the public interest which we seek to serve.

Senator HANNAN:
Victoria

– I want to make one or two very brief references in supporting this Bill. I welcome its introduction. As Senator Laucke has said, reasonable competition is the basis of a free enterprise society, and this Bill, which takes a step in that direction, is to be welcomed. I think that perhaps my friend Senator Webster misread a part of the legislation when he said that any retailer could require any manufacturer to supply him with goods. There is nothing in the Bill which requires that to be done.

Senator Webster:

– How will Mr Hawke interpret it?

Senator HANNAN:

– I am not concerned about what some outside body might attempt to do by way of industrial action. Proposed new section 66b simply refers to a practice that is unlawful. Proposed new section 66r> is relevant only if goods are withheld because the proposed purchaser will not enter into an agreement to resell the goods at an agreed price. Section 66j(a) to (e) contains a multitude of gates, provisions or protections so that a genuine arrangement between manufacturer and retailer is not in truth and in fact disturbed. A great deal has been said about the President of the Australian Council of Trade Unions and his engagement with a certain firm in Melbourne in order to bring about the end of resale price maintenance. I think it is probable that Mr Hawke came to the right answer for the wrong reasons, but I do not propose to traverse that at the moment. It has been suggested that Mr Hawke has preempted the Government in regard to taking action in relation to this matter. In those circumstances I would like to quote a brief extract from a speech made by a Government senator in this chamber on 12th September 1956. He said:

May I now say something of the type of legislation that was introduced into the United States in 1890. This type of anti-monopoly legislation was first introduced in 1890 to deal with certain activities of the Rockefeller empire . . .

That is one matter in respect of which the people of the United States received a benefit as a result of similar legislation.

Senator Webster:

– That was a monopoly.

Senator HANNAN:

– Yes, it was. It is a different aspect of this legislation. The honourable senator continued: . . and was amended by Clayton in 1914 and Robinson in 1936 to improve its procedure. The Act is administered by a federal trade commission, and is aimed at horizontal and vertical monopolies, trade cartels and unfair or restrictive trade practices.

A number of other matters are referred to in this speech. The honourable senator continued:

The Act is admittedly clumsy in operation, but it has a wonderful deterrent effect on the wouldbe commercial buccaneer in the United States. For every one person convicted under the Act a thousand must be deterred. Du Pont Industries,

Standard Oil, Stetson Hats, Kodak and Judson Rivets are some of the well known names which have been effectively dealt with in the United States.

The suggestion was then put that the Government should proceed and put teeth into the legislation which then existed in Australia and which was in part a copy of the 1890 and 1914 American legislation. We introduced our legislation in 1911. I cannot remember the name of the Prime Minister, but the legislation was called the Australian Industries Preservation Act. I think perhaps Senator Byrne ignored this existing legislation in his thoughtful address to the chamber. One of the things about the Australian Industries Preservation Act until the year 1965 was the almost singular lack of success in obtaining convictions on prosecutions under it. My recollection is that there were only 3 major prosecutions under the legislation, all of which failed, until the present Treasurer (Mr Snedden) who was then Attorney-General launched successful proceedings against wine merchants, 1 point out to Senator Laucke, in Canberra on the ground of withholding goods.

Senator Cavanagh:

– Why Senator Laucke?

Senator HANNAN:

Senator Laucke is a wine expert. I do not suggest that he was in any way associated with the prosecution. I think it is reasonable to say that the Government was not entirely pre-empted by Mr Hawke in entering this field. After 1956, a distinguished jurist, Sir Garfield Barwick, prepared legislation, and we subsequently had the Trade Practices Act. We are now bringing it up to date and making it more effective. In the United States, which I suppose must be regarded as the home of free enterprise, the practice under the old Sherman Act - I call it that for lack of a better title at the moment - was that where a company had 35 per cent of the market it was not allowed to fix its resale price maintenance figures. As 35 per cent was considered to be a substantial share of the market, the American philosophy was that it would not be in the public interest for such companies to fix those figures. Speaking from memory, I think this was one of the matters that forced the great Eastman Kodak Corporation to yield to the Federal Trade Commission. I feel that since this Bill has the fairly general support of the whole Senate it is a matter in relation to which both sides of the chamber are interested in securing the best and most advantageous provisions for consumers without - I emphasise the word ‘without’ - ruining the trade and the stability of the commercial sector of our community. I support the Bill.

Senator GREENWOOD:
Minister for Health · Victoria · LP

– in reply- I welcome the support that the Senate has given to this measure and I propose, in replying to the debate, to refer to some of the matters that have been raised by various speakers. But I think it is important, in the light of what has been said, to go back to what this Bill is concerned with. It is concerned with the practice of resale price maintenance, and its provisions are designed to make that practice unlawful and to enact certain consequential provisions into the Trade Practices Act so that teeth can be given to the statement that resale price maintenance is to be made unlawful.

I think that a first point of examination is: What is resale price maintenance? Broadly stated, it is a practice by which a manufacturer, a wholesaler or a supplier stipulates a minimum price that must be charged on the resale of the goods which have been supplied by him. The Bill makes it unlawful for a supplier to engage in that practice of stipulating that there shall be a minimum price charged by the person to whom he supplies the goods. That states the practice briefly, and it requires some elaboration to cover the various circumstances in which this practice may be found. That is one of the reasons why there are many clauses to the Bill. They cover not only the situation of a person with goods to supply being met by a person who would like to have those goods supplied to him and telling that person the only condition on which he can have the goods is that he observes the minimum price which the supplier stipulates. There are other circumstances that the Bill is designed to cover. There is not only that classic example which I have already mentioned, but there is the case of a person who is induced, not by a condition, not by an expressed stipulation, but simply on a suggestion of threat of consequences, to sell the goods at a particular price which is fixed by the supplier.

There is the situation of a person who, having been asked by the supplier to sell goods at a particular price, refuses to obey that stipulation or that request and finds thereafter that he cannot get goods from that supplier. That is the example, which is referred to in much of the literature on this subject, of the withholding of supplies for the reason that a person will not agree to a condition or a stipulation fixing a minimum price at which the goods are to be sold or he will not agree to a condition or stipulation that he will not sell below a minimum price. These are various forms of giving effect to the practice that require the most elaborate and careful exposition, and this is what the clauses of the Bill are concerned with.

I think that much of what has been said by a number of senators tonight flows from a lack of appreciation that the clauses of the Bill are designed to embrace these situations. The purpose of the Bill is clear. It is to prohibit the practice of resale price maintenance, and the Bill is concerned with expressing in as comprehensive a form as is capable of being devised by the Parliamentary Draftsman the various situations in which this practice may be found. I believe that the Bill does achieve that purpose. I think from what has been said by various speakers that some accept that proposition with the same knowledge and certainty as I do and others are prepared to take it on trust, that it will achieve this particular objective.

I think it is important also to appreciate that there are benefits which are believed to flow from the abolition of resale price maintenance. We believe that efficient retailers will be able to pass on the results of their efficiency to the consumer by the reduction in price if they are not inhibited by some arrangement which is implicit in resale price maintenance. We believe that the existence of the practice of resale price maintenance tends to remove the incentive to sell goods cheaply. If we remove the practice the opportunity at least exists for benefits of competition and consequential price reduction to operate. I think this is a point which has been made by the Commissioner of Trade Practices in one or more of the reports which he has presented in the last 3 years - that the existence of a variety of restrictive trade practices in Australia over the years, many of them flowing from the orderly marketing situations which developed during wartime, has prevented the development of a competitive spirit and what I would describe as the ‘operation of the competitive dynamics’ so that throughout society there can be a continual presentation of the benefits of price reductions which come from competition.

The third reason which the Government regards as important in the justification of this measure is that we believe that internal competition should be protected, and we believe it should be protected particularly at this time because we are confronted with an inflationary situation in which various steps have been taken by government with a view to curbing the incipient tendencies which that situation presents. One of the steps that is being taken, along with action with regard to the Tariff Board which, of course, is long-range in its potential benefits, is to amend the Trade Practices Act to remove those practices which prevent the competitive processes from operating in the community. It has been said that it is difficult to determine the extent of the practice of resale price maintenance and it is a difficult matter to ascertain because there are no statistics resulting from people being required to present details of their resale price maintenance practices and there is no machinery under which one can assess the extent of the practice throughout Australia. But there is fairly authoritative opinion based upon some examination which suggests that this practice is extensive. In his first report which he presented in 1968 the Commissioner of Trade Practices said:

Resale price maintenance operates very widely both on producer goods and consumer goods. Indeed there are instances of resale price maintenance extending into areas where until recently there was price competition; on the other hand there are some notable areas where prices are competitive. Where resale price maintenance operates, it is sometimes a matter of horizontal agreement between competitors at the same level, but more often is shown on the Register as a feature of distribution agreements. It is often coupled with exclusive dealing.

I think it was Senator Murphy who referred to some figures which appeared in the third report of the Commissioner which suggested that on the material available to the Commissioner there were approximately 3,000 horizontal agreements and approximately 6,000 distribution agreements which comprehend the type of resale price maintenance with which we are concerned. The Commissioner of Trade Practices has in addresses he has delivered on occasions other than when presenting his report indicated the existence of resale price maintenance and, as far as he was able within the terms of his office, he suggested that this was an area which could be looked at. But, as I have said, we have no details because there has been no broad examination of the existence of the practice, and what details the Commissioner for Trade Practices has elicited which are referred to in the various reports which he has presented cannot be revealed because of the secrecy provisions which are contained in the Trade Practices Act. We all know that instances are given in the Press from time to time of persons who have suffered from the practice, and this is what is basic to the Government’s approach to banning the practice at the present time.

Debate interrupted.

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ADJOURNMENT

The Senate

The ACTING DEPUTY PRESIDENT (Senator Sir Magnus Cormack) - Order! In conformity with the sessional order relating to the adjournment of the Senate, I formally put the question:

That the Senate do now adjourn.

Senator HANNAN:
Victoria

- Mr Deputy President, I wish to take 2 minutes, if I may, to amplify a matter arising from a small misunderstanding which appears to have resulted from a question that I asked this morning in relation to the proposed visit of an Australian Labor Party delegation to China. My friend, Senator Kennelly, seems to have misunderstood the wording of my inquiry and to have found in it some slight or offensive personal reference to the Leader of the Australian Labor Party, Mr Whitlam, a man for whom I have high esteem.

Senator O’Byrne:

– Just apologise and sit down. We will accept it, and I am sure that Senator Kennelly will.

Senator HANNAN:

– I am not apologising. Let me assure the honourable senator that nothing is further from my mind. Mark you, I have no objection to needling my honourable friends opposite from time to time but, on the occasion in question, I was innocent. I said:

Mr Whitlam’s television interview was modest and dignified.

Is there anything offensive in that statement? Could any Labor man take exception to it - except, perhaps, George Crawford and/or Bill Hartley? But I think that, on the surface, there was nothing to which exception could be taken.

I then likened the members of the delegation to modem Marco Polos. Is that offensive? To remove any lingering doubts, I quote from the ‘Encyclopaedia Britannica’ in relation to Marco Polo. It states:

POLO, MARCO (1254-1324), Venetian traveller, whose descriptions of his journeys across the world from Venice to China and back, and of his experiences in the vast dominions of the Mongol emperor Kublai, make one of the greatest books of a time. This remarkable book, ‘The Book of Marco Polo, Citizen of Venice, Called Million, Wherein Is Recounted the Wonders of the World”, is a forerunner of scientific geography. ls there anything offensive in that? It continues:

Its author was the first to inform the West of the extent and power of China-

Is there anything offensive in that? It continues:

  1. . and the first to give an intelligible account of the ways thither. He made known a host of places hitherto hidden from European cartographers. Granted the prejudices of his age, in which, for instance, Christians and Muslims knew each other’s faith only by travesty, his judgments reveal an open mind.

Is there anything offensive in that? I hope that Mr Whitlam comes back with an open mind. The ‘Encyclopaedia Britannica* continues:

The value of his observations on the events of bis time is recognised by modern Orientalists.

Senator Cavanagh:

– The honourable senator can present his apology without going into such great detail.

Senator HANNAN:

– This is not an apology. Is there anything offensive in the last sentence that I read? I think that this was perhaps the most flattering reference made to Mr Whitlam for a long time. With reference to Kublai Khan, if honourable senators read Chairman Mao they will see that the parallel is complete. I hope that my friend, Senator Kennelly, will accept my assurance on this point.

Question resolved in the affirmative. Senate adjourned at 11.4 p.m.

Cite as: Australia, Senate, Debates, 18 May 1971, viewed 22 October 2017, <http://historichansard.net/senate/1971/19710518_senate_27_s48/>.