House of Representatives
26 August 1975

29th Parliament · 1st Session

  1. House of Representatives
  2. 29th Parliament
  3. 1975

Mr SPEAKER (Hon. G. G. D. Scholes) took the chair at 2.1 5 p.m., and read prayers.

page 479

PETITIONS

The Clerk:

– Petitions have been lodged for presentation as follows and copies will be referred to the appropriate Ministers:

Increased Postal and Telephone Charges

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully sheweth:

That we wish to protest most vigorously at the proposed increases in postal and telephone charges.

Your petitioners most humbly pray that the House of Representatives in Parliament assembled will take immediate steps to:

Diminish the size of the increase or, if possible, leave charges as they are.

And your petitioners as in duty bound will ever pray. by Mr Lynch, Mr Anthony, Mr Hewson, Mr Hunt, Mr Hyde, Mr Kerin, Mr Lloyd, Mr Lusher, Mr McVeigh and Mr Oldmeadow.

Petitions received.

Increased Postal and Telephone Charges

To the Honourable the Speaker and Members of the House of Representatives in Parliament Assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

The recently announced postal and telephone increases will be a severe impost on Australian people, businesses and organisations.

Your petitioners therefore humbly pray that the proposed postal and telephone charges, which are inconsiderate and destructive to the rural community, shall not be implemented. by Mr Lusher.

Petition received.

Australian Government Insurance Corporation

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled: The humble Petition of the undersigned Citizens of Australia respectfully showeth:

  1. 1 ) That Parliament should reject the Bill currently before it to establish an Australian Government Insurance Office.
  2. That while there is a need to establish in Australia a Natural Disaster Fund to provide compensation for property damage and other losses resulting from disasters such as earthquakes, floods and cyclones, such a Fund can be established, as in other countries, using the medium of the existing private enterprise insurance offices.
  3. That a plan for a Fund was submitted to the Treasury in October 1974.
  4. That no sound reason for the establishment of an Australian Government Insurance Corporation (other than the desire to provide non-commercial disaster insurance and Australian Government competition with private enterprise) has been given by the Government
  5. That there is already intense competition between the existing 45 life assurance offices and between over 260 general insurance companies now operating in Australia, and that further competition from a Government Office would only be harmful at this time.

  6. That the insurance industry is already coping with

    1. the effects of inflation,
    2. increased taxation on life assurance offices,
    3. the effects of recent natural disasters,
    4. other legislative measures already in train or in prospect by the Government, e.g. the National Compensation Bill, a National Superannuation Plan and Improved Commonwealth Public Service Superannuation.
  7. That as taxpayers your petitioners are greatly concerned at the huge costs (far more than the $2 million initial capital and loan funds which it is proposed will be allocated) of establishing an Australian Government Insurance Office.

Your petitioners therefore humbly pray that the House will reject the Bill.

And your petitioners as in duty bound will ever pray. by Mr Anthony.

Petition received.

Australian Government Insurance Corporation

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of undersigned citizens of Australia respectfully showeth that the establishment of an Australian Government Insurance Office will:

  1. . Nationalise the Insurance Industry.
  2. Trade unfairly.
  3. Add to the taxpayers burden.

Your Petitioners therefore humbly pray that the House of Representatives rejects completely the Australian Government Insurance Office Bill 1975.

And your petitioners as in duty bound will ever pray. by Mr Anthony.

Petition received.

Australian Government Insurance Corporation

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled: The humble Petition of undersigned citizens of Australia respectfully showeth that the establishment of an Australian Government Insurance Office will:

  1. Further shrink the flow of funds available for finance for private enterprise in Australia.
  2. Will eventually lead to nationalisation of much of private enterprise in Australia.
  3. Cause serious unemployment in the private insurance industry throughout Australia.

Your Petitioners therefore humbly pray that the House of Representatives rejects completely the Australian Government Insurance Office Bill 1 975.

And your petitioners as in duty bound will ever pray. by Mr Corbett and Mr Katter.

Petitions received.

Australian Government Insurance Corporation

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble Petition of undersigned citizens of Australia respectfully showeth that the establishment of an Australian Government Insurance Office will:

  1. Lead to the nationalization of the Insurance Industry.
  2. Divert a substantial flow of funds from the private to the public sector.
  3. Depress the private sector still further and create unemployment both within the Insurance Industry and elsewhere.

Your petitioners therefore humbly pray that the House of Representatives rejects completely the Australian Government Insurance Office Bill 1975.

And your petitioners as in duty bound will ever pray. by Mr Drury and Mr Hodges.

Petition received.

Australian Government Insurance Corporation

To the Honourable the Speaker and members of the House of Representatives in Parliament assembled: The humble petition of undersigned citizens of Australia respectfully showeth that the establishment of an Australian Government Insurance Office will:

Eliminate private insurance for Australians.

Have a serious effect on the private sector of the economy by the passing over of further funds to be controlled by the Government through its instrumentalities.

Provide no better plan for the establishment of a national disaster fund than that provided by the insurance industry in its submission to the Treasury in October 1974.

Your petitioners therefore humbly pray that the House of Representatives rejects completely the Australian Government Insurance Office Bill 1 975.

And your petitioners as in duty bound will ever pray. by Mr Hyde.

Petition received.

Australian Government Insurance Corporation

To the Honourable the Speaker and members of the House of Representatives in Parliament assembled: The humble petition of the undersigned employees and agents of the Australian insurance industry respectfully showeth:

  1. 1 ) That Parliament should reject the Bill currently before it to establish an Australian Government Insurance Office.
  2. That while there is a need to establish in Australia a Natural Disaster Fund to provide compensation for property damage and other losses resulting from disasters such as earthquakes, floods and cyclones, such a fund can be established, as in other countries, using the medium of the existing private enterprise insurance offices.
  3. That a plan for such a fund was submitted to the Treasury in October 1974.
  4. That no sound reasons for the establishment of an Australian Government Insurance Office (other than the desire to provide non-commercial disaster insurance and Australian Government competition with private enterprise) has been given by the Goverment.
  5. That there is already intense competition between the existing 45 life insurance offices and between over 260 general insurance companies now operating in Australia, and that further competition from a Government Office would only be harmful at this time.

  6. 6 ) That the insurance industry is already coping with-

    1. the effects of inflation,
    2. increased taxation on life assurance offices,
    3. the effects of recent natural disasters,
    4. other legislative measures already in train or in prospect by the Government, e.g., the National Compensation Bill, a National Superannuation Plan and improved Commonwealth Public Service Superannuation.
  7. That as taxpayers your petitioners are greatly concerned at the huge costs (far more than the $2m initial capital and loan funds which it is proposed will be allocated) of establishing an Australian Government Insurance Office.
  8. That as employees and agents of existing insurance offices your petitioners fear for their jobs and their future prospects if the Parliament proceeds with the legislation.

Your petitioners therefore humbly pray that the House will reject the Bill.

And your petitioners as in duty bound will ever pray. by Mr Anthony, Mr Bonnett, Mr Connolly, Mr Jarman, Mr Macphee and Mr Morris.

Petitions received.

Tertiary Education Scheme

To the Honourable Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens and foreign students respectfully showeth:

That the undersigned most strongly agree with the changes proposed to the tertiary education scheme in the submission to the Committee to review the scheme presented by the Australian Union of Students, and see the following specific changes as being immediately necessary:-

  1. An immediate increase in the maximum awayfromhome and independence rates from the present $32 p.w. to $49 p.w., as indicated in the 1974 joint Department of Education and AUS survey of student cost and expenditure.
  2. Indexation of the allowance according to moves in the Consumer Price Index weighted for particular student costs.
  3. Abolition of the present complex academic requirements preventing financially needy students from obtaining benefits on grounds of their academic standing and replacing them with one year’s automatic grace for students who fail or transfer.
  4. Abolition of the pernicious regulations which prevents students who are less than 21 and living away from home from receiving the away-from-home rate (except under three limited conditions).
  5. Increase in the allowance for dependent spouse from $5 to $17 p. w.
  6. Efficient administration of the scheme.

And your petitioners as in duty bound will ever pray. by Mr Beazley, Mr Oldmeadow and Mr Ruddock.

Petitions received.

Metric System

To the Honourable the Speaker and the Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth-

That the plan to obliterate the traditional weights and measures of this country is causing and will cause widespread inconvenience , confusion, expense and distress.

That there is no certainty that any significant benefits or indeed any benefits at all will follow the use of the new weights and measures.

That the traditional weights and measures are eminently satisfactory.

Your petitioners therefore pray that the Metric Conversion Act be repealed, and that the Government take urgent steps to cause the traditional and familiar units to be restored to those areas where the greatest inconvenience and distress are occurring, that is to say, in meteorology, in road distances, in sport, in the building and allied trades, in the printing trade, and in retail trade.

And your petitioners as in duty bound will ever pray. by Mr Jarman and Mr Jenkins.

Petitions received.

School Cadet Corps

To the Honourable the Speaker and the Members of the House of Representatives in Parliament assembled. We the undersigned citizens of Australia do humbly petition the Parliament of the Commonwealth of Australia that they do take such steps as necessary to:

Continue the School Cadets Movement and to actively promote same.

Which we do humbly petition this Honourable Parliament to make sure.

And your petitioners as in duty bound will ever pray. by Mr Beazley.

Petition received.

Uranium

To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

  1. That the use of Uranium as an alternative source of energy is currently unacceptable as it presents problems including radioactive waste, military implications and thermal pollution.
  2. That there can, at present, be no assurances that radioactive materials exported for peaceful purposes will not be used in the production of nuclear weapons.
  3. That there is not, as yet, any known safe method of disposal of radioactive wastes, nor is there likely to be.
  4. That the export of Uranium from Australia is internationally irresponsible and is not, in the long term, of benefit to Australia.
  5. That the export of Uranium from Australia only discourages importing countries from investing into research on viable alternatives.
  6. That only the overdeveloped industrial nations will benefit from Australian Uranium and the gap between these countries and the energy-starved Third World will increase yet further.

Your petitioners therefore humbly pray that the Australian Government will immediately cease the mining and exporting of Uranium until perfectly safe disposal methods for the radioactive wastes have been guaranteed; will greatly increase expenditure on research into safe clean and inexhaustible sources of energy; and will aid underdeveloped countries in their plea for a fair share of the world ‘s energy resources,while at the same time honouring its obliganons to the future of humanity.

And your petitioners as in duty bound will ever pray. byMrEnderby.

Petition received.

Australian Schools Commission Program

To the Honourable the Speaker and Members of the House of Representatives assembled, the petition of the undersigned citizens of Australia respectfully showeth urgent and strong protest against any possible cuts in Federal Government spending in the area of Education.

Your Petitioners therefore pray that the Schools Commission Triennium Report be implemented in full.

And your petitioners as in duty bound will ever pray. by Mr Bryant.

Petition received.

Taxation Deductions: Land and Water Rates

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That the undersigned persons believe that-

The $300 limit on income tax deductibility in respect of personal residential land and water rates is unrealistic and is a discriminatory income tax penalty.

Your petitioners therefore humbly pray that the Government will take steps to see that the aforesaid limitation is removed entirely or substantially increased.

And your petitioners as in duty bound will ever pray. by Mr Connolly.

Petition received.

Jandakot Wild Life Sanctuary and Zoological Gardens, Western Australia

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of undersigned citizens of Australia respectfully showeth:

The Jandakot Wild Life Sanctuary and Zoological Gardens Western Australia, is in need of financial support for its continued existence.

Your petitioners therefore humbly pray that the Government support the Jandakot Wild Life Sanctuary and Zoological Gardens, Western Australia.

And your petitioners as in duty bound will ever pray. by Mr Dawkins.

Petition received.

Hansard Subscription Rates

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth:

That the increased price of the Hansard subscription will place it beyond the financial reach of most people;

That it is basic in a Parliamentary democracy that electors have easy access to records of the debates in their Parliament.

That making Hansard available only to an elite who can afford it is at odds with the concept of open government.

Your petitioners therefore humbly pray that the Government will reduce the cost of the Hansard subscription so that it is still available at a moderate price to any interested citizen.

And your petitioners as in duty bound will ever pray. byMrDrury.

Petition received.

Television Service, Division of Kennedy

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned electors of the Division of Kennedy respectfully showeth:

That ( 1 ) we have been without a television service since the introduction of television into Australia in 1 956,

  1. We have been seeking such a service for many years without success and
  2. We are one of the few remaining areas of Australia not enjoying what is now considered a normal facet of Australian life.

Your petitioners therefore humbly pray that the House will take action which will require the Australian Broadcasting Control Board to take immediate steps to provide the electorate of Kennedy with a television service, where it is not now provided.

And your petitioners as in duty bound will ever pray. byMrKatter.

Petition received.

Whales

To the Speaker of the House of Representatives assembled. The humble petition of residents of Australia respectfully shows:

That we believe the plight of the World’s great whales to be desperate; that we are convinced that they need conservation now, and that exploitation should cease; that we agree with Dr Sidney Holt of F.A.O., who says that a complete re-assessment of all scientific data on whales is needed; and we further submit that substitutes to all whale products are available, and could, with Government encouragement, be made in Australia. We are convinced that the great whales, as a significant part of the World’s Wildlife Heritage, and being on the verge of extinction, now need our complete and wholehearted protection.

We, your petitioners, therefore humbly pray that you will:-

  1. Support a 10 year moratorium on whaling at the 1975 meeting of the I. W.C.
  2. Support research and development of alternatives to whale products, and encourage production of these products in Australia.
  3. Provide increased funds for research into marine biology.
  4. Force the cessation of whaling operations at Cheynes Beach, W.A.; at the same time providing funds to assist the personnel and facilities of the factory to be otherwise gainfully used, (perhaps in whale research, to further our own and the World ‘s knowledge.)
  5. Ban the import into this country of all whale products, and all goods containing whale products.
  6. Urge that Australia, as a member of the I. W.C, use all possible influence to encourage the end of whaling throughout the World, and refuse to service ships of all whaling nations at Australian ports.

And your petitioners as in duty bound will ever pray. by Mr Morris.

Petition received.

Australian Government Insurance Corporation

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled: The humble petition of undersigned electors of the Division of Shortland respectfully showeth-

  1. An Australian Government Insurance Corporation would improve job prospects of employees in the industry.
  2. would provide essential insurance cover for livestock and crops.
  3. would provide national disaster insurance.
  4. would provide improved cover and service for policy holders.

YourPetitioners therefore humbly pray that the House pass into law without delay legislation to establish the Australian Government Insurance Corporation.

And your petitioners as in duty bound will ever pray. by Mr Morris.

Petition received.

Radio 2 JJ

To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled: The petition of the undersigned students of Macquarie University, North Ryde, N.S.W. and citizens of Australia respectfully showeth:

That many areas of the Sydney region are inadequately serviced with access to broadcasts of ABC radio station 2JJ by virtue of the transmitting equipment used by that station being not powerful enough for good quality reception in some areas, or of any reception in others.

Your petitioners therefore humbly pray that the House will take all possible action to bring this matter to the attention of the Government, that by legislation, regulation or administrative fiat the station may be provided with the necessary facilities to adequately service the whole Sydney region.

And your petitioners as in duty bound will ever pray. by Mr Ruddock.

Petition received.

page 482

MINISTERIAL ARRANGEMENTS

Mr WHITLAM:
Prime Minister · Werriwa · ALP

Mr Speaker, I inform the House that the Foreign Minister, Senator Don Willesee, left Australia on 22 August to attend, with observer status, the first meeting of the non-aligned nations being held in Lima. He will also attend the United Nations special session and General Assembly in New York. He is expected to return on 29 September. During his absence I shall act as Foreign Minister.

I also inform the House that the Minister for Tourism and Recreation, the Honourable Frank Stewart, also left Australia on 22 August to lead, in his capacity as Minister assisting the Treasurer, the Australian delegation to the 1975 meeting of the Commonwealth Finance Ministers being held in Georgetown, Guyana. He is expected to return on 31 August. During his absence the Minister for Services and Property, the Honourable Fred Daly, will act as Minister for Tourism and Recreation -

Honourable members- Hear, hear!

Mr WHITLAM:

– I should have added, ‘the father of the Parliament’. He will act as Minister for Tourism and Recreation and will represent the Minister for Repatriation and Compensation and Minister for Social Security in this House.

page 483

QUESTION

QUESTIONS WITHOUT NOTICE

page 483

QUESTION

PORTUGUESE TIMOR

Mr MALCOLM FRASER:
WANNON, VICTORIA · LP

– I ask the Prime Minister a question. All Australians must be concerned at the disturbing developments in Timor. Would the Prime Minister inform us of any specific requests for assistance received from either the Portuguese authorities or international agencies, the attitude of his Government to those requests, the views it is expressing to Portugal and Indonesia, and the directions that have been given to the 2 Royal Australian Navy ships that have been sent to Darwin?

Mr WHITLAM:
ALP

– I shall be seeking leave to make a statement on this subject immediately after question time.

page 483

QUESTION

NUCLEAR WEAPONS

Dr GUN:
KINGSTON, SOUTH AUSTRALIA

– Can the Prime Minister give an unequivocal assurance that the Government is opposed to acquisition by Australia of nuclear weapons? Will the Prime Minister also affirm Australian support for the Nuclear NonProliferation Treaty?

Mr WHITLAM:
ALP

– I am very happy to give the unequivocal assurances that the honourable gentleman seeks. It will be remembered that the Government ratified the Nuclear NonProliferation Treaty on 23 January 1973. That Treaty prohibits the developing of technology to manufacture nuclear weapons. It permits the export of uranium to non-parties, but requires that specific International Atomic Energy Agency safeguards apply to such exports and that such uranium be not used in nuclear explosive devices, including those for peaceful purposes. Australia played an active part in the proceedings of the review conference of the Nuclear Non-Proliferation Treaty in Geneva in May.

Honourable members will remember that I tabled the final declaration of the conference a week ago. We are convinced that the early conclusion of meaningful arms control agreements by the nuclear powers, including a Comprehensive Test Ban Agreement, remains crucial to the containment of nuclear proliferation. At the last United Nations General Assembly I made clear that the concept of nuclear free zones was one that deserved the most serious exploration but emphasised that such zones were no substitute for an effective nuclear Non-Proliferation Treaty.

I think the honourable member for Kingston and everybody else on this side of the House would deplore the fact that the Liberal Party at 2 State conferences recently has resolved that Australia should develop nuclear weapons. It did so at the Western Australian State conference on the 26th of last month and at the New South Wales State conference on the 15th of this month. I believe that the Australian public- not only members of Parliament- would expect that the Liberal Party, including its Leader in this House, would be as unequivocal on this matter as the Australian Labor Party and I, its Leader have been for very many years. There should be no excuse for anybody in this country to be in any doubt on this issue. The Government adheres to its international obligations under the International Atomic Energy Agency and the Nuclear Non-Proliferation Treaty. I believe that the public is entitled to be reassured that the alternative government equally would honour Australia’s international obligations. The Leader of the Liberal Party should repudiate the State resolutions of his Party carried within the last few weeks.

page 483

QUESTION

CADET CORPS

Mr McVEIGH:
DARLING DOWNS, QUEENSLAND

-I direct my question to the Minister for Defence. Is it a fact that the Navy, Army and Air Force Cadet Corps are to be abolished? If so, why? If they are not to be abolished, is it intended that in future these cadet corps will be funded by other departments, such as the Department of Tourism and Recreation or the Department of Education?

Mr MORRISON:
Minister Assisting the Minister for Foreign Affairs in matters relating to the Islands of the Pacific · ST GEORGE, NEW SOUTH WALES · ALP

-It is true that the Army Cadet Corps is to be disbanded. (Opposition members interjecting)

Mr SPEAKER:

-Order! The Minister will resume his seat. When honourable members are ready to listen to the Minister’s answer we will proceed with question time.

Mr MORRISON:

-I repeat that the decision has been made to disband the Army cadets at the end of the year. In making that decision I was guided by the advice of the military advisers to the Government. The Chief of the General Staff and the Military Board advised me that the cost and effectiveness of cadet training cannot be justified from the viewpoint of its contribution to the defence of Australia. The Defence Force Development Committee which, as honourable gentlemen opposite will be aware, is the most authoritative source of advice to any Minister for Defence on these sorts of subjects, has advised -

Mr Katter:

– And legalise marihuana?

Mr MORRISON:

-I do wish that the honourable gentlemen would listen, because at one time they were arguing that we were not taking the advice of our military experts. In this case the advice of our military experts was taken. If the honourable gentleman will just be quiet for a little while I will explain what was the advice of our military experts. The advice of the Defence Force Development Committee was that abolition of school cadet corps would have no adverse effects on defence capabilities but would release Service manpower for other purposes. Honourable gentlemen opposite, over the course of the last week or so, have made in debates a number of comments on another expert, Dr Tom Millar. In its report on the Citizen Military Forces, the Army reserve, the Millar Committee observed:

The military value of cadets is small and does not of itself justify the present annual allocation of funds and regular Army manpower.

A little further on the report had this to say about the military value of cadets:

The level of achievement reached at the end of their cadet experience is about the standard reached in 2-3 weeks of full time training in a regular Army recruit training system.

As the Minister for Defence, it is necessary for me to ensure that every dollar which is spent in the defence vote is used to the utmost benefit of Australia’s defence preparedness. In taking the advice of the military advisers to the Government, the Government made the decision that the school cadet corps be abolished at the end of this year. The honourable gentleman has also raised the question of whether the activities of the school cadets could be undertaken by other sections of the Government. Consideration was given to that matter by the Minister for Tourism and Recreation, but I am not aware of what decision has been taken. I repeat that the advice of the military advisers to the Government in relation to those defence force functions for which the Minister for Defence is responsible was that the funds that were used for school cadets and the Regular Army men used in training school cadets- there are some 385 of them- could be better used for the defence preparedness of Australia. That was the basis on which the Government’s decision was made.

Mr Killen:

– I rise on a point of order, Mr Speaker. I ask the Minister to table the paper from which he quoted.

Mr MORRISON:

-I shall be delighted to do so.

page 484

QUESTION

BUDGET STRATEGY

Mr NICHOLLS:
BONYTHON, SOUTH AUSTRALIA

-Is the Treasurer aware of any recent economic statistics which bear out the soundness of the strategy which he set out last Tuesday in his Budget Speech and which provide a firm foundation for business confidence?

Mr HAYDEN:
Treasurer · OXLEY, QUEENSLAND · ALP

– The June quarter national income and expenditure estimates certainly show some signs of strengthening activity in the economy. As I have said before, and I say it again, these things must not be overstated. Nonetheless, they deserve to be brought before public attention. They show strong growth of both output and demand, growth in personal consumption, a moderate increase in wages, as against the rapid increase in the past, an improvement in company gross operating surpluses- that is profits- and a further rundown in stocks. Perhaps I could give some of the details of the evidence of this real improvement in the economic performance. In the first half of last year real gross domestic product was running down at an annual rate of 6.9 per cent. In the second half of the year to June it was increasing at a rate of 5.4 per cent. Wages, salaries and supplements were increasing at a fairly subdued rate. In fact, they increased at an annual rate of 13 per cent in the last 6 months compared with the very high rate of 38 per cent in the first 6 months of the year. Gross operating surpluses of companies- that is their profits- certainly indicate that a recovery is under way with an annual rate of increase of 25.8 per cent. Private investment in plant and equipment is showing a strong increase in the latest quarter and non-farm stocks continue to run down. Of course the measures taken by the Government in the Budget are aimed at making room for that recovery to continue, to strengthen and to expand. A little bit of encouragement from the Opposition side would be very helpful medicine in the course of these events.

page 485

QUESTION

BUDGET DEFICIT

Mr GARLAND:
CURTIN, WESTERN AUSTRALIA

– In directing my question to the Treasurer, I refer to answers that he gave to questions in the House last week and to his Budget presented last Tuesday. My question is in 2 parts: First, will he state precisely, since the Budget deficit is to be so much greater than ever before, how it is to be financed? Secondly, as the deficit is estimated in a full year to be $2,800m and one-quarter of that amount has been incurred in July alone- we do not know how much that may have increased in the last 3 weeks- will he give the House and the country an assurance that by the end of the year the deficit will not greatly exceed $2,800m for the whole year?

Mr HAYDEN:
ALP

– The deficit will be financed in the usual way, that is, by resort to government securities, to Treasury notes and to cash balances. As to the mix of these, I state that it is impossible for any government to say at the beginning of a financial year what method will be used on any occasion. I saw a completely ludicrous Press statement released by the spokesman on economic affairs in the Opposition demanding to know with some precision what the mix would be. No Liberal-Country Party government was ever able to give a precise or even reasonably general detailed program of the under-the-line financing of the government’s transactions. For instance, the success of government loans will be very largely an influential factor as to the degree to which government securities are used to finance the deficit. I will be making a statement tonight about the latest loan, which has had a very encouraging result. But there are a full 12 months to go yet and the degree to which government loans, treasury notes or cash balances are resorted to is a matter which is very much dictated from time to time by the economic circumstances of the moment.

Another point to which the Deputy Leader of the Opposition, the economic specialist in search of an economic policy for the Opposition, referred was the degree to which the domestic deficit would be funded by overseas borrowings. Goodness knows why any government would want to do that. It has exactly the same effect as resorting to cash balances. Finally, every effort will be made to maintain the economic strategy which has been outlined in the Budget despite a certain amount of encouragement from some helpful economic spokesmen, not always from the Opposition side, to suggest that alternatives might be available.

page 485

QUESTION

SHIPBUILDING: QUEENSLAND

Mr KEOGH:
BOWMAN, QUEENSLAND

-I ask the Minister for Transport: Following the representations which have been made on several occasions recently by myself and my colleague the honourable member for Brisbane, is he in a position to indicate to honourable members any action which the Government may have initiated in regard to the present situation with shipbuilding in Queensland where Evans Deakin Industries Ltd has decided to terminate the operations of the Kangaroo Point shipyards? I remind the Minister of suggestions which I have made to him and which have been in line with the Government taking the initiative to develop a new shipbuilding complex at the mouth of the Brisbane River.

Mr SPEAKER:

-Order! I think the honourable gentleman should get to his question. His comments are not necessary.

Mr KEOGH:

– Is the Minister in a position to tell honourable members whether the Government has yet been able to get any agreement from the Queensland Government on this matter?

Mr CHARLES JONES:
Minister for Transport · NEWCASTLE, VICTORIA · ALP

-It is perfectly true that the honourable member for Bowman, the honourable member for Brisbane, Senator McAuliffe and one or two other honourable members have made representations to me on this matter, and that the president of the Queensland Trades and Labor Council, Mr Egerton, has done so also. All these people have written to me concerning the possible closure of Evans Deakin Ltd.

Mr Hunt:

– In friendly terms?

Mr CHARLES JONES:

-In quite friendly terms. The position is that they have written also to the Prime Minister who sent me a copy of a letter which he addressed to the Premier of Queensland last week and in which he has asked the Premier whether he would be prepared to make available a copy of a study which has been done in Queensland on the basis of the development of a shipping and shipbuilding complex at the mouth of the Brisbane River. I do not know the outcome of the Prime Minister’s letter. Obviously the Premier has not replied; if he had done so the Prime Minister, as is his usual procedure, would have sent me a copy of the reply. The Prime Minister also drew to the attention of the Premier the fact that since 1972 Evans Deakin could have tendered for 32 ships involving 26 different projects, but it did not do so. It tendered in 12 cases and this involved 16 ships. On each occasion it was not the lowest tender.

Honourable members will recall that when Walkers Ltd shipyards closed last year the Prime Minister made an offer to Walkers and to the Queensland Government for a 3-way or a 2-way arrangement between the Australian Government and either the company and/or the Queensland Government to take over Walkers shipyard and operate it. This offer was rejected by both the Queensland Government and Walkers. The Prime Minister has now sought the opinion and the views of the Queensland Government in relation to a similar project in respect of which discussions are taking place at the present time between the New South Wales Government and the Australian Government concerning the Newcastle State Dockyard. The Prime Minister also drew to the attention of the Queensland Premier the fact that only recently the Australian National Line called tenders for three or four 15 000 ton bulk ships. This would involve about $70m worth of work. They have not bothered to tender for that contract either. So taken all round I believe that this Government has done all in its power to assist, to ensure that this shipyard is kept in operation and to make sure that work is available for the men there.

page 486

QUESTION

TIMOR: PROPOSED STATEMENT BY PRIME MINISTER

Mr SINCLAIR:
NEW ENGLAND, NEW SOUTH WALES

– The Prime Minister will be aware of the very real concern felt by honourable members on this side of the House about the position in Portuguese Timor and of the plight of refugees from there. He has indicated that he will make a statement to Parliament today on this matter. Will the Prime Minister comply with the customary obligation of Ministers making statements, which is that 2 hours notice of a statement will be given to the Opposition? Will he also ensure that an adequate opportunity for debating the statement on its completion will be provided to the Parliament?

Mr WHITLAM:
ALP

– I have not been able to comply with the custom of giving 2 hours notice in this case because until about 35 minutes ago I was still working on the statement in consultation with officers of the Department of Foreign Affairs. The statement is being typed at this moment. I explain to honourable gentlemen that I have scrupulously avoided making statements on this subject as the Parliament was sitting and I thought that I should make the statement in the Parliament. The end of question time will be the earliest opportunity for me to make that statement. Accordingly, I propose to seek leave at the end of question time, as I mentioned in answer to the Leader of the Opposition, to make the statement. It is the latest statement and it will be made at the earliest time which is available.

page 486

QUESTION

SEWERAGE PROGRAM

Mr OLDMEADOW:
HOLT, VICTORIA

-Is the Minister for Urban and Regional Development aware of statements made by the Victorian State Minister of Water Supply and Forests that Melbourne’s sewerage program will be drastically restricted as a result of a cut-back in the Australian Government allocation? Will the Minister inform the House of the size of allocations for sewerage works in Victoria in this year’s Budget? Is the Victorian Minister’s statement compatible with the call of his Federal Leader for further Budget restraint?

Mr UREN:
Minister for Urban and Regional Development · REID, NEW SOUTH WALES · ALP

– Last year the allocation in the Budget for the national sewerage program was $95m for the whole of Australia. Subsequently a further $15m was made available to assist the unemployment situation. Therefore the States received $110m last year. The total of $1 15m allocated in this year’s Budget does meet the inflationary situation, as the rate was about 17 per cent last year. The Cabinet looked at the allocation of funds for the sewerage program and it was determined that within the budgetary context that was the maximum amount of money that could be made available. It is all right for conservative forces on the other side to criticise this Government for holding back public works programs; we will listen tonight to the Leader of the Opposition putting forward his alternative proposals. The Australian Government has been responsible. It sought to retain an overall deficit of about $2,500m or an internal deficit of about $2,000m. It was on that basis that the Australian Government framed its policies.

The conservative forces ought to examine the situation in connection with the sewerage program. It was during the 23 years of rule by those forces on the other side that the sewerage backlog occurred, with more than half of the people of Perth and more than one in seven families in Sydney and Melbourne living in unswered residences in the 1 970s. It was those forces that allowed that situation to accrue. It was those forces that allowed a situation to occur in which for every dollar received by sewerage authorities the interest burden represented 50c in Perth, 52c in Sydney and 58c in Melbourne. It was the Hamer Government and governments that were representative of people of the Opposition that allowed us to get into that situation. The Leader of the Labor Party, when in Opposition, said that he would try to meet the commitment within 6 years. Within the Government we have tried to taper the situation to make sure that we carry out the servicing of our sewerage program by 1982. We may have to curtail the program even further. That is one of the options at which the Australian Government is looking. The terms on which money has been made available to all the State governments for their sewerage programs are more favourable than any terms that have been given to any semi-government or local government authority ever before. Not only has this $1 15m been made available from this year’s Budget, whereas $95m was made available last financial year, but 30 per cent is made available by way of grant and 70 per cent is made available by way of loans at the long term bond rate.

page 487

QUESTION

PINE GAP JOINT DEFENCE SPACE RESEARCH FACILITY

Mr MALCOLM FRASER:
WANNON, VICTORIA

– I ask the Prime Minister: Has the Australian Government reversed its policy about joint bases with the United States and taken the decision to extend the agreement providing for the continued operation of the joint defence base research facility at Pine Gap? Does this change in policy apply also to the joint defence base communications station at Nurrungar, near Woomera?

Mr WHITLAM:
ALP

– I answered a question on notice concerning the first facility last Thursday. The same principles would apply to the other facility.

page 487

QUESTION

CUTS IN GOVERNMENT EXPENDITURE

Mr WILLIS:
GELLIBRAND, VICTORIA

– Can the Treasurer inform the House whether pre-Budget calls for reduced public spending have now been replaced by complaints about expenditure cuts? Can he say whether the source of the statements is the same in each case?

Mr HAYDEN:
ALP

– Yes. Up to the presentation of the Budget the non-Labor State Premiers were rather strident in their demands that there should be disciplines of restraint in expenditure exercised by the Australian Government. Since the Budget has been announced there has been a crows’ chorus demanding that more money should have been spent in the Budget for the State governments. Presumably money spent by the Australian Government for State governments has a different effect from moneys spent by the Australian Government in other areas. The difference escapes me entirely. As I pointed out last week, however, the States have been exceedingly generously treated by the Australian Government. The increase in general financial grants was more than 34 per cent and total allocations to the States increased by well over $2,000m to well over $8,000m. The State governments, especially the non-Labor State governments, have done better under an Australian Labor Government than they ever did under a Liberal-Country Party Federal Government.

page 487

QUESTION

TRADE PRACTICES ACT

Mr HOWARD:
BENNELONG, NEW SOUTH WALES

– My question is directed to the Attorney-General. By way of a short preface, I refer him to the first annual report of the Trade Practices Commission tabled by the honourable gentleman in this House last week. In that report the Commission states that it is the policy of the Trade Practices Act that administration be kept as much as possible in the open. Is it a fact that the honourable gentleman has on 3 occasions during the past 9 months used his power under section 90 of the Act to compel the Trade Practices Commission to grant authorisations in respect of proposed mergers? Can he explain to the House why on none of those 3 occasions did he give any reasons as to why the directions were being given? Will he be prepared to supply such reasons in future cases so that the actions of the Government might accord with what the Trade Practices Commission regards as the spirit of the Act?

Mr ENDERBY:
ALP

-I am familiar with the report and the section of the Act referred to by the honourable gentleman. It is true that there were some 3 occasions when I exercised the powers in section 90 of the Act in the way he described. It was deemed proper at the time, given the circumstances, to exercise the discretion given to the Attorney-General in that way. The course of making an announcement at the time can be taken in different ways. If the Parliament is sitting the announcement can be made to the Parliament. I see that the honourable gentleman shakes his head and indicates that it should not be announced in that way. On some occasions the action has been accompanied by a statement. I think it proper that it should be. It has always been accompanied by discussions with the relevant parties.

page 487

QUESTION

MEDICAL RECEIPTS

Mr CLAYTON:
ISAACS, VICTORIA

– My question is addressed to the Minister representing the Minister for Social Security and Minister for Repatriation and Compensation. Can the Minister explain the effect to the patient of not returning his accounts with his

Medibank refund? Will those with supplementary insurance still be able to obtain their additional rebates?

Mr DALY:
Minister for Services and Property · GRAYNDLER, NEW SOUTH WALES · ALP

– The honourable member was good enough to advise me that he intended to ask a question on this important matter. For the benefit of the House I shall read out a Press statement by the Minister for Social Security and Minister for Repatriation and Compensation, Senator John Wheeldon, about the return of accounts and receipts by Medibank. He said:

Medibank will continue to return accounts and receipts to people who still want them . . . Although they will not be returned automatically as in the past, anyone who sends a large stamped self-addressed envelope within four weeks of receiving their Medibank cheque and statement will have their documents sent back to them.

Mr Nixon:

– What, at 1 8c a stamp?

Mr DALY:

-Do not forget that if the Opposition had its way people would not have Medibank. Even Mr Lewis has found out that opposition to Medibank was a great political mistake. The Press release continues:

This means that people who want their receipts and accounts can receive them, but the responsibility is now with the person concerned rather than Medibank. By not returning accounts and receipts Medibank hopes to save more than $2.8m this financial year.

That should appeal to the money savers opposite.

Contrary to claims by the MBF in New South Wales, receipts and accounts are not necessary and health insurance funds have sufficient information on the Medibank statement to enable them to pay ‘gap’ insurance. ‘The attitude of MBF appears to be in line with the previous obstructive stance they have taken on nearly every issue on Medibank since its inception. Fortunately, to thencredit, the other health insurance funds in Australia have chosen to take a much more constructive and helpful attitude to Medibank’ Senator Wheeldon said. ‘I am encouraged by the news that the HCF in New South Wales will be assisting its customers by accepting the Medibank statement in lieu of accounts and receipts’, Senator Wheeldon said. ‘Claims by the Australian Medical Association, the MBF and others that this procedure will give rise to fraudulent claims are not true. If the health funds keep proper records of claims that they have paid it should be a simple matter to check that payment is not duplicated in future. If the MBF is worried about fraud, I can only assume that their accounting and other records are inadequate ‘, Senator Wheeldon said.

A check of other major funds throughout Australia, including HBF in Western Australia, HBA in Victoria and MHA in South Australia say that they are all prepared to accept the Medibank statement for gap insurance.

page 488

QUESTION

LIFE INSURANCE

Mr WILSON:
STURT, SOUTH AUSTRALIA

-I address a question to the Prime Minister. Did the Deputy Prime Minister express Government policy at the opening of the Labor Women’s Federal Conference when he said, firstly, that life insurance has little or no logic in an affluent society and, secondly, that tax concessions for life insurance premiums had no logic? Does this mean that the real value of this deduction will be maintained or that the real value will be allowed to decline as a consequence of the Government’s failure to see the logic of provision through life insurance and superannuation?

Mr Whitlam:

– The Treasurer will answer the question.

Mr HAYDEN:
ALP

– I have no doubt that the Deputy Prime Minister was expressing a personal considered judgment about the role of insurance organisations as financial institutions in the Australian economy. The force of some of what he said cannot be denied in the light of the experience of insurance institutions as against other financial institutions. Their role as a mobiliser of finance is diminishing. One of the matters which has concerned many economic commentators, including some in this Parliament but also many others even more informed outside the Parliament, is the distortion in the way in which finance is mobilised by certain preferential treatment provided for insurance organisations. For instance, personal taxation deductions under the $1,200 limit in respect of premiums for superannuation and insurance under section 82H of the Taxation Act cost the Australian community $200m last year. I am not sure of the average rate but I guess that for every $ 1 which is mobilised in the institutions as premium something like 40c is, in fact, actually contributed as a subsidy by taxpayers through this indirect tax. Concessions under section 1 15 of the Act cost the Australian community between $20m and $25m last year.

If honourable members look at the Insurance Commissioner’s annual report they will find that it is fairly costly business mobilising finance this way. The average cost to mobilise premiums was about 28.4 per cent. On more than one occasion the Insurance Commissioner has expressed some concern about the high and growing rate of this sort of cost. As against that, there are still many advantages in insurance and I, for one, would still recommend it to people who are interested in making savings and investments as a form of precautionary savings against obvious possible eventualities. I am talking now about the average member of the community who is not terribly sophisticated in handling investments for savings purposes and making small savings for the future. I certainly include myself in this category because I do not care to devote time and attention to trying to work out the most sophisticated and successful way of obtaining a return on investment. But if one cares to consider the return that one could get as an average saver in the community, one must weigh up the fact that the return on insurance is tax free as against the interest return on other forms of investment, which is taxed. Accordingly, since a 10 per cent return is reduced to somewhere between 5.5 per cent and 6.5 per cent, in those circumstances I think that insurance still has a lot going for it.

I conclude by suggesting that perhaps if less exaggerated and sensational attention were devoted to a few aspects of the insurance industry following the recent proposals for a new system of personal income tax, and the more positive side were stressed, insurance companies would feel more secure and would continue to play an important role in mobilising savings for investment in the community.

page 489

QUESTION

PUBLIC EXPENDITURE

Mr MULDER:
EVANS, NEW SOUTH WALES

-Has the attention of the Treasurer been drawn to recent statements promising new government subsidies and benefits? Can he say whether these statements come from the same sources as recent calls for a reduction in public spending?

Mr HAYDEN:
ALP

– Yes. This is a fine effort in paradoxes from the Opposition. Honourable members opposite have been lecturing us from time to time on the need to cut back public expenditure. On other platforms they have been making outlandish promises to people in the community about new expenditure commitments they would be prepared to make. In this they seem to be consistent with the inconsistency of their State brethren.

I shall give some illustrations: We have on record a promise from Opposition spokesmen on the front bench that there would be a reinstatement of the $400 tax concessional deduction in regard to expenditure on education, that there would be an abolition of the 10 per cent surcharge on unearned income, the introduction of a 40 per cent investment allowance, the restoration of the homes savings grant scheme, the restoration of export development allowances and the restoration of the superphosphate bountyall totalling nearly $400m. More recently the Leader of the National Country Party, plucking a nice round figure out of the air, proposed that $100m should be provided to the beef industry. So we are now talking about $500m. On top of that, there have been commitments from some spokesmen on the Opposition side in the field of defence to restore expenditure as a proportion of the gross domestic product to somewhere near the level that existed at the height of the Vietnam war. God knows why the country would be wanting to spend at a war footing level, but there you are. That in turn represents at least another $300m additional expenditure. So we are up to $800m without even trying too hard.

We have heard vague commitments such as the restoration of tax incentives, the restructuring of the tax scale and action to help to bridge the deposit gap- whatever that means- a better deal for private companies, lower interest rates and a whole range of such very expensive commitments. The fact is that the Opposition does not have a policy. The only consistent thing about the Opposition is that it is inconsistent and unreliable in its economic pronouncements.

page 489

QUESTION

WOMEN IN POLITICS: CONFERENCE

Mr KATTER:

-The Prime Minister will know that within 6 days there is to be a conference here in Canberra on women in politics. Is the Prime Minister aware of the discontent among women over the organising of this convention? Is he aware that the agenda has not yet been made available? Is he aware that many women have submitted papers and have no idea whether they will be presented or when they will be presented? Is he aware that delegates, especially those from Western Australia, have been given notice only in the last 24 hours as to who can come and who cannot? Further, is the lack of organisation for this important and worthwhile conference largely due to the fact that the people who were supposed to be organising it were jaunting around overseas after the world conference on women in Mexico? Finally, I ask: If there are to be other functions such as this, will he see that they are given much closer attention than seems to have been given in this case?

Mr WHITLAM:
ALP

-Next weekend in the Kings Hall I will have the pleasure of opening the Women and Politics conference which will be proceeding during the following week in Canberra. This will be the second of 3 very large conferences being conducted by Australia in the course of International Women’s Year. This week at the University of Queensland there is one on Women and Health. I opened that yesterday. In a couple of months there will be another conference- the third one- Women, the Media and the Arts. In addition there has been a very large number of smaller conferences. This conference in Canberra- Women and Politics- will be attended by over 600 women. They will be drawn from all over Australia and they will include women from political parties, women’s organisations and groups as well as many individual women who have indicated no particular party or group affiliation.

Information concerning the conference was sent to over 7000 individuals and groups, including women’s organisations, political parties, trade unions and members of Parliament. There are women in this Parliament belonging to the Australian Labor Party and to the Liberal Party but not, of course, to the National Country Party. Information concerning the conference was sent also to professional organisations, educational institutions and local government authorities. Advertisements have also been placed in the Press. The national organisations of the Australia Party, the National Country Party, the Liberal Party of Australia and the Australian Labor Party, and one State executive of the Democratic Labor Party, have worked closely with the conference organisers. Many individuals, including trade unionists, politicians, local government personnel, journalists, academics, ministerial staff and women workers have been approached or nominated by their organisations to read papers, to lead discussions or to participate in any other way in the program. A range of organisations has been approached, including the Women’s Electoral Lobby, the League of Women Voters, the Right to Life Association and the National Council of Women. Many other individuals and groups with a keen interest in this area have also offered to participate. In conclusion, the honourable member did not give me notice that he would be asking this question.

page 490

QUESTION

HOSPITAL BENEFITS

Mr FRY:

– I direct my question to the Minister for Health. It has been brought to my attention that a resident of the Australian Capital Territory was recently referred to the Queanbeyan Hospital for an operation by a well known Canberra surgeon who also happens to be the leading spokesman for the Australian Medical Association in Canberra. The resident involved received a bill of almost $100 for his hospital accommodation. He had previously cancelled his health insurance and was relying on Medibank and the Hospital Service Scheme for protection. In these circumstances can the Minister inform me whether the Capital Territory Health Commission can pay the account which the resident concerned received? Further, to the Minister’s knowledge have anti-Medibank doctors adopted a tactic to maximise their incomes, which involves admitting patients to the Queanbeyan Hospital, thereby denying them the free care and accommodation available in Australian Capital Territory public hospitals?

Dr EVERINGHAM:
Minister for Health · CAPRICORNIA, QUEENSLAND · ALP

– I am familiar with such a case. Unfortunately, under the Medibank agreement the Capital Territory Health Commission can cover only the cost of an Australian Capital Territory resident’s stay outside the Australian Capital Territory for non-emergency treatment if the referral received the prior approval of a medical administrator with the Commissionfor example, if someone had to go to Sydney for treatment not available in the Australian Capital Territory. But he cannot approve it unless there is an emergency or some reason of that kind. Prior approval had not been given in the case to which the honourable member refers. I suppose that no application was made for such permission and I do not see any good reason why it would have been granted if it had been applied for. In answer to the second part of the honourable member’s question, let me say that it may be that we are being unfair to the doctor involved. It may be that he admitted the patient to Queanbeyan in ignorance, thinking that the patient had retained -

Mr Hunt:

– People will need a visa to leave the A.C.T. soon.

Dr EVERINGHAM:

– None of the States do this either. It is not a Territory business. Queensland hospitals do not treat people from New South Wales free. They never have. It is nothing that Medibank invented. It is just common administrative prudence and sensible conditions.

Opposition members interjecting.

Mr SPEAKER:

-Order! I suggest that honourable members might direct one question to the Minister, and the Minister answer the question which was properly directed.

Dr EVERINGHAM:

– I suggest that if the Health Minister administering the Queanbeyan hospital had got cracking on Medibank in 1974 he would have had Medibank in New South Wales now and the question would not arise. The doctor may have been unfair, but we may be unfair to him if we judge that he did what he did in order to spike Medibank or to spite Medibank. He would not get any more money by sending the patient to Queanbeyan. He can admit a private patient to the Australian Capital Territory hospitals, get treatment here for his patient and charge the ordinary fee. The patient can pay for private accommodation in a Canberra hospital just as well as in a Queanbeyan hospital. It may be that the doctor is trying to confuse patients into thinking that in some way Medibank has failed and Medibank is not available in the A.C.T., or that the patient cannot have the doctor of his choice in the hospitals of the A.C.T., which of course is quite false. There is no financial disadvantage to either of them, if they want private hospital treatment, in having it in the A.C.T.

I suggest to patients in the A.C.T. that, if at any time a doctor says that there is no way that they can get free hospital treatment in the A.C.T. and then come back to him as private patients after hospital treatment, they should ask that doctor what his object is. Is he saying this for medical reasons and saying that it is in the medical interests of the patient that he is doing this, or is he saying it for a political reason? If there is a political reason he can only say: ‘The political reason is to save you, my patient, the freedom of choice’. The patient then only has to say: ‘I exercise my freedom of choice by choosing to be a hospital patient. I choose to be treated by doctors who co-operate with Medibank’. If the doctor objects to that, then he is not fair dinkum in his political objections.

page 491

PERSONAL EXPLANATION

Dr JENKINS:
Scullin

-Mr Speaker, I seek leave to make a personal explanation.

Mr SPEAKER:

-Does the honourable member claim to have been misrepresented?

Dr JENKINS:

– I do. The misrepresentation occurred in a paragraph written by Cassandra in the Sunday Telegraph of Sunday, 24 August. The main points are covered by the following quotation from that paragraph:

Hawke will stand for the blue-ribbon Melbourne industrial suburbs seat of Scullin held by old-time Victorian Labor stalwart -

I do not object to that description-

Dr Harry Jenkins. Dr Jenkins is reported to be in bad health and to have agreed to stand down.

Normally I would disregard such reports, but these reports are being persistently floated about myself and other Victorian members. The report from which I have quoted requires denial and causes concern in the Scullin electorate and in the Australian Labor Party itself. To answer the misrepresentation I point out that when nominations were called for ALP preselection for Scullin for the next election mine was the only nomination received. No requests were received from the local electorate organisation for preselection proceedings; so I am endorsed.

At no time has Bob Hawke, any Party official, or indeed any individual either in or out of the Labor Party, suggested that I should forgo the seat in favour of any other person. I have not agreed to stand down. This must be made quite clear. On a previous occasion when this rumour circulated Bob Hawke took the trouble to contact me to assure me that he had had no discussions on this subject with any person.

Mention of bad health is made in the article. Many honourable members in this House have health problems. Here it would be a matter of definition whether there is misrepresentation. Industrially I would be classified as physically handicapped. I suffer a painful condition affecting the muscles which prevents me from walking long distances and causes difficulty in climbing stairs or carrying heavy objects. This has been so for some 4 years. I have not talked about it. Obviously with the honour which the House paid me last week my colleagues consider me capable of carrying out the arduous duties of a federal member of Parliament and are willing to entrust me with further duties. I hope this will give physically handicapped persons incentive to continue with their personal endeavours and cause employers to accept that being physically handicapped does not consign one to the scrap heap. Might I add, Mr Speaker, that this building has no facilities whatever to assist physically handicapped persons.

Mr SPEAKER:

– It has no facilities, full stop.

page 491

PORTUGUESE TIMOR

Ministerial Statement

Mr WHITLAM:
Prime Minister · Werriwa · ALP

by leave- The Government welcomed the outcome of the talks last May and June in Dili and Macao between the Portuguese Government and the principal parties in Portuguese Timor. In our view, the program mapped out at Macao, providing for steady forward movement towards decolonisation and free elections for a constituent assembly, went a long way towards the objectives we support for the territory. It also follows, however, that the Government is most concerned by the present situation in Portuguese Timor. What began as a show of force by the UDT party on 10 August has deteriorated into virtual civil war with widespread loss of life. The UDT and the rival Fretilin party are struggling for power in Dili and in many parts of the interior. The Timorese police appear to have sided with UDT, while the much more numerous military is predominantly for Fretilin.

The polarisation between the 2 groups now seems to be complete. Both groups are armed with Portuguese weapons captured at the time of the initial UDT show of force or having been taken over to Fretilin or UDT with the defecting troops and police. Apodeti, the party favouring integration with Indonesia, is not a major participant in the struggle, although there are some reports of attacks on its members.

As a result of the evacuation of most of the Portuguese administration and military, the Governor now remains in Dili with only a very small staff and with no chance of exerting control over more than a small section of Dili. The Governor thus retains no more than the formal trappings of office. The Portuguese authorities in a communication to the Secretary-General of the United Nations have acknowledged that it is impossible for them to control the situation.

Several days ago the Governor issued an appeal for international forces to be sent to Timor to control the situation and to bring an end to the bloodshed. The Portuguese Government has also issued appeals for international assistance, including suggestions that Indonesia and Australia might help, especially with the evacuation of Portuguese and foreign nationals from Timor. Australia has extended considerable support in various evacuation operations. We stand ready to take part in any humanitarian action that may be practicable.

We have been, however, and remain opposed to Australian military involvement. One of the first policy decisions of the Government, on assuming office in December 1972, was to determine that Australia would not intervene again in land wars in South East Asia. This applies as much to the civil war in Portuguese Timor as to the earlier civil war in Vietnam.

On political aspects of the situation, the Government has been in close touch with the other governments most concerned, namely, the Government of Portugal and the Government of Indonesia. The Australian Government, however, does not regard itself as a party principal in Portuguese Timor. We continue to hold that the future of the territory is a matter for resolution by Portugal and the Timorese people themselves with Indonesia also occupying an important place because of its predominant interest.

The Government recognises that there are some who believe that Australia should accept some political obligation in regard to Portuguese Timor, and even that Australia should step in and attempt to arbitrate between the competing political factions. The Government acknowledges that those who have put forward these views have been motivated by genuine feelings of concern for the welfare of the Timorese. But the Government does not itself think these views reflect the best approach for Australia. It believes that acceptance of these views could lead to a situation where Australia was exercising a quasicolonial role in Portuguese Timor, and might lead to the point where we were assuming some de facto responsibility for the territory.

But the Government does view with serious concern the recent turn of events in Portuguese Timor. The immediate need, of course, is to bring the fighting to an end. This is both a necessary pre-condition to any political settlement as well as an urgent need if the bloodshed is to stop and relief work is to begin. I take this opportunity to appeal on behalf of the Australian Government to all parties engaged in the fighting to lay down their arms and to end the bloodshed. I have said that it is not possible to carry forward relief or rehabilitation without restoration of order in the territory. The immediate responsibility for bringing an end to the fighting must continue to rest with Portugal. In the Government’s view, Portugual cannot simply wash its hands of Portuguese Timor.

The present situation, of course, may have passed the point of no return. In the absence of firm policies in Lisbon, defections of local officials and local military forces may now be complete. Nonetheless, the Government understands that Portugal is to make an attempt to retrieve some lost ground by sending a negotiating team with a view to persuading Fretilin and UDT to stop fighting and to agree to negotiate new arrangements among the Timorese parties for orderly decolonisation. The Portuguese Government, through Dr Santos, the former Minister for Interterritorial Co-ordination has approached the Secretary-General of the United Nations. The results of this approach are not yet clear. There have been suggestions that a good offices committee might be proposed to help mediate a settlement in Portuguese Timor. But none of this has gone very far and without some restoration of basic order in the territory it is not easy to see how a UN good offices committee, whose role would be essentially political in character, could function on the ground. The same consideration applies to various ideas for an international humanitarian relief effort.

I return, therefore, to the conclusion that the first priority is to put an end to the killing and fighting and to restore order. This objective requires the active intervention of Portugal itself. It is a responsibility that cannot be shrugged off on to others such as Australia. We have no national obligations or interest in getting rein.volved in colonial or post-colonial affairs in Portuguese Timor at the very time when Papua New Guinea’s imminent independence is leading to the ending of our colonial role there. We have no ethnic or cultural ties with the Timorese which would suggest a role for Australia in substitution for Portugal in Portuguese Timor.

The other interested country in all this is, of course, Indonesia, with which we have been in very close touch on developments in Portuguese Timor in recent days. Indonesia has shared the Australian concern about the evident drift in Portuguese policies and, like us, has urged on the Portuguese the need to reassert Portuguese control in Portuguese Timor. We, for our part, understand Indonesia’s concern that the territory should not be allowed to become a source of instability on Indonesia’s border. Portuguese Timor is in many ways part of the Indonesian world and its future is obviously a matter of great importance to Indonesia.

Indonesian policy is to respect the right of the people of Portuguese Timor to selfdetermination and Indonesian leaders have often denied that Indonesia has any territorial ambitions towards Portuguese Timor. Nevertheless, Indonesia’s concern about the situation in the territory has now led her to offer, if Portugal so requests, to assist in restoring order there. President Suharto has made it clear that Indonesia would only wish to act at Portugal’s bidding and that the objective would be the limited one of restoring conditions which would allow orderly self-determination to proceed. The Australian Government has frequently stated its concern that the people of the territory should be able to decide their own future.

Whatever external efforts might accomplish, the hostility and mistrust between Fretilin and UDT remain the main threat to future stability in the territory. This hostility and mistrust indeed forms one of the most disappointing aspects of the situation in Portuguese Timor. The events of the last few weeks have dashed the hopes for Portuguese Timor which followed the change of government and Portuguese colonial policy in Lisbon. In a little over a year, the situation in Portuguese Timor has become a very dangerous one, mainly- it must be said- because of the shortsightedness of some of the territory’s aspiring political leaders. It is a matter of record that none of the three major political groups in the territory has shown any genuine willingness to work with the others. Each demands that it alone be recognised as the sole legitimate nationalist group. None seems prepared to test its claims to lead the country through any conventional form of democratic process.

At the moment, it is not possible to predict how events will move or what constructive contribution Australia may be able to make. Our first task will be to be alert to opportunities for humanitarian assistance, but here there are real questions of practicability. We shall give what practical help we can to the Portuguese in their efforts to mediate and to bring an end to the fighting. I repeat my call to the parties for a cease-fire and the ending of the bloodshed. As events develop it may be necessary for me to keep the House further informed.

Motion (by Mr Daly) proposed:

That the House take note of the paper.

Debate (on motion by Mr Peacock) adjourned.

page 493

DEPARTMENT OF SOCIAL SECURITY

Mr DALY:
Minister for Services and Property · Grayndler · ALP

– For the information of honourable members I present the annual report of the Australian Department of Social Security for the financial year ended 30 June 1975.

page 493

DARWIN CYCLONE TRACY RELIEF TRUST FUND

Dr PATTERSON:
Minister for Northern Australia · Dawson · ALP

– For the information of honourable members I present the report on the Darwin Cyclone Tracy Relief Trust Fund for May 1975.

page 493

AUSTRALIAN NATIONAL UNIVERSITY

Mr BEAZLEY:
Minister for Education · Fremantle · ALP

– Pursuant to section 33 (2) of the Australian National University Act 1946-1973 I present the report of the Council of the Australian National University for the calendar year 1974.

page 493

AUSTRALIAN GOVERNMENT ASSISTANCE TO LOCAL PROJECTS

Mr UREN:
Minister for Urban and Regional Development · Reid · ALP

– For the information of honourable members I present a report titled: ‘Australian Government Assistance to Local Projects’.

page 493

HANDBOOK ON HEALTH MANPOWER

Dr EVERINGHAM:
Minister for Health · Capricornia · ALP

– For the information of honourable members I present the first edition of a ‘Handbook on Health Manpower’ prepared by the Australian Department of Health.

page 494

JOINT COMMITTEE ON THE AUSTRALIAN CAPITAL TERRITORY

Report

Mr FRY:
Fraser

-On behalf of the Joint Committee on the Australian Capital Territory I present the Committee’s report on proposals for the fifty-ninth series of variations of the plan of the layout of the city of Canberra in the Australian Capital Territory as gazetted in 1925.

Ordered that the report be printed.

Mr FRY:

– I ask for leave of the House to make a short statement in connection with the report.

Mr SPEAKER:

-Is leave granted? There being no objection, leave is granted.

Mr FRY:

– The fifty-ninth series of variations to the plan of layout of the city of Canberra involves 6 items. Four of the proposals involve minor routine changes, one was withdrawn and one involves changes of some significance. I will draw the House ‘s attention to two of these items.

The first is the deletion of two small roads in Belconnen, Sections 14 and 16. This variation is proposed to enable the establishment of a Belconnen bus depot in the service trades area of the Belconnen Town Centre. The Committee is gratified to see that this proposal accords with an evolving policy of increased emphasis upon the use of the public transport system. This policy and its ramifications were mentioned by the Committee in paragraph 7 of its report on the fifty-eighth series of variations.

The second item worthy of comment involves major changes. It is the proposed development of Tuggeranong Creek South. This area is expected to accommodate ultimately 25 000 inhabitants; therefore its planning and development were of particular interest to the Committee. The area, to comprise approximately 1500 hectares of residential development, is a particularly attractive rural setting of mainly undulating country with several prominent hillsides and some lower lying ground to the north. Consequently the Committee was concerned to preserve as much of the natural environment as possible.

Two facets of the proposed development attracted particular attention of members of the Committee. These were, firstly, the possibility of drainage problems in the area and, secondly, the preservation of trees. The country to the southeast of the proposed development is higher than that to the north-west, thus providing a substantial catchment area. These catchment waters flow across a natural floodplain and eventually into the Murrumbidgee River. The Committee was concerned that proper measures should be taken to provide safe and effective drainage in the area and an assurance was given by the National Capital Development Commission that the construction of a major stormwater channel will alleviate the possibility of flooding in the future. The drainage systems being constructed has the capacity to cope with flooding of the order of frequency of once in 1000 years.

There are several major stands of trees in specific sectors of the development but on the whole the area is otherwise sparsely timbered. The Committee was concerned about the preservation of those trees and was assured that, whenever possible, provision is made to incorporate existing stands of trees into open spaces and that development is carried out in such a way as to preserve as many trees as possible. I commend the report to the House.

page 494

NATIONAL HEALTH (PHARMACEUTICAL BENEFITS CHARGES) BILL 1975

Second Reading

Debate resumed from 20 August, on motion by Dr Everingham:

That the Bill be now read a second time.

Mr LLOYD:
Murray

-The National Health (Pharmaceutical Benefits Charges) Bill 1975 increases the patient contribution for general pharmaceutical benefit from $1 to $1.50 and the subsidised health benefit prescription charge from 50c to 75c. Prescriptions for pensioner medical card holders and repatriation benefit recipients will still be free of any patient charge and friendly society arrangements will continue without change. These increased charges were not included in the Budget, or were not basically part of the Budget- they were announced earlier on 24 July- although they certainly are an integral part of the cost to a government. The increases were announced by the Minister for Health (Dr Everingham) on 24 July, but at the same time he announced the rejection of Sir Walter Scott’s recommendation on retrospective payments for pharmaceutical benefits to chemists for prescription fees or dispensing fees which date back to 1 July 1973. This announcement coupling the 2 decisions into one made the chemists of Australia very unhappy because in their belief the public felt that this $1.50 was being paid to the chemists for their profit rather than it being a charge by the Government on the pharmaceutical benefits scheme. I believe it was unfortunate, particularly if it was deliberate, that these 2 decisions were put together in the one announcement.

The increase in the pharmaceutical benefits charge from $1 to $1.50 was almost inevitable because of the Government’s creation of galloping inflation in this country and its desperate need for additional revenue. The Opposition will not oppose the legislation because, as the Minister has pointed out, the cost to the patient for a prescription fee will be approximately the same as it was in 1971 when it was last increased by the previous Government; that is to say the prescription fee or charge of $1.50 will approximate one per cent of average male weekly earnings now as it did at that time. However, at least for this year, the percentage of the total payment for a pharmaceutical benefit will be relatively higher for the patient, lower for the Government and possibly the lowest ever for the drug manufacturer. I am referring to the percentages of the components of the total prescription. One matter of interest and importance in the Government’s announcement of its increase is that it contradicts its own policy. The Australian Labor Party had stated and restated in its policy that it is opposed to any direct payment or contribution by patients for prescription for pharmaceutical benefits. But here we have the Australian Labor Party Government completely contradicting its own policy. In the ALP policy document prepared after the Launceston conference of 1973 it is stated in paragraph 22:

The dispensing of prescriptions without direct charge to the patient.

Now, in its greater wisdom after the national conference at Terrigal in 1975, it is stated in paragraph 18 (a) of the official platform document:

The dispensing of prescriptions without direct charge to the patient but with provision being made to deter against over prescribing.

One could ask if there is not even a contradiction within that one sentence. If there is any deterrent at the moment to over prescribing- in the sense of the patient asking for more than he may require- it would be in the increase of 50 per cent in the charge. But how does the Labor Government console itself with this complete contradiction of its policy which has been stated and restated on a number of occasions? How does it also match this increased patient contribution in the pharmaceutical section of our national health scheme with its own insistence on having no patient contribution for the medical section of a national health scheme? On the one hand, the Labor Government has fought and fought hard to ensure that there is no patient contribution by putting pressure on general practitioners for bulk billing. Yet, on the other hand, under this Bill it is blithely increasing the patient contribution required in respect of the pharmaceutical benefits charge by 50 per cent and is making it the highest for many years of the percentage of the total prescription that the patient will have to bear. In saying that, I am referring to the components going to the drug manufacturer, the wholesaler, the chemist’s mark-up, the chemist’s dispensing fee and the patient contribution. I would be interested to hear how Labor resolves these quite apparent and quite serious contradictions, all contained in its own health policy.

However, the contradictions also highlight another anomaly. I think this is something the Minister himself acknowledges. Australia has had a pharmaceutical benefits scheme since 1948 and an expanded scheme since 1960 which governments of all political persuasions have supported. It is a scheme which provides for government financial support for the purchase of drugs necessary for the restoration of health or the return to normal life of those people who need such treatment through drug therapy. However, those who require other forms of therapy or other forms of assistance- that is, the physically handicapped- are not so fortunate. Hearing aids are available for certain groups in the community, as are artificial limbs. The present Government has introduced stoma appliances and home dialysis. However, it appears to me that there is a need for a general scheme to offset costs of aids and appliances necessary for people with physical handicaps, as distinct from their medicinal needs, so that such people can lead normal lives.

I believe, consistent with our philosophy, that there should be a patient contribution for such government help, as there is in regard to the pharmaceutical benefits scheme, and that such help initially should be restricted to certain special groups. It should be provided only after there has been an open inquiry, not a secret interdepartmental inquiry or an inquiry within one department such as was the case with the hearing aids, the result of which as yet has not been released to the public in spite of all the cries of open government which we hear from this Government. I believe that groups outside those included in any working party or any inquiry should have an opportunity to put their points of view and to agree or disagree with the recommendations, and that a general debate should take place on such matters. The Minister made reference in his second reading speech to the retrospective payments to chemists backdated to 1 July 1973 in order to finalise, from the Government’s point of view, it would hope, the agreement originally entered into in 1972 by Sir Kenneth Anderson on behalf of the previous Government with the Pharmacy Guild of Australia. The Pharmacy Guild and the chemists of Australia believe that they have been betrayed by the present Government and that they have been let down by the present Minister in relation to this point. The President of the Pharmacy Guild of Australia issued a news release on 24 July 1975. It is headed: ‘Chemist Chief Hits at Government Decision’, and reads as follows:

The President of The Pharmacy Guild of Australia, Mr Alan Russell, said tonight he was extremely disappointed that the Government had chosen to ignore the expert advice given by Sir Walter Scott and in doing so repudiated an agreement entered into in good faith in 1972 by the Government and the Guild. ‘As soon as we have the Government decision in writing the Guild will decide what action it will take to rectify the injustice which has been perpetrated against the pharmaceutical profession throughout Australia ‘, Mr Russell said.

Mr Russell said that a Sub Committee of the Minister’s own Joint Committee on Pharmaceutical Benefit Pricing Arrangements had quantified the recommendations of Sir Walter Scott at 32 cents per prescription for 1 973-74 and 47c per prescription for 1974-75. The Government in raising the patient contribution far in excess of the amount they have decided to pay chemists has not only forced the additional cost onto patients, but has taken the opportunity of substantially reducing the Government’s contribution to the Pharmaceutical Benefits Scheme, Mr Russell added.

The chemists of Australia believed- I think rightly- that the present Minister for Health and the present Government would completely honour any recommendations made by Sir Walter Scott. The Australian Journal of Pharmacy of February 1973 contained a transcript of an interview between Mr Charles Hellier and the Minister for Health in his office in Parliament House, which stated:

Hellier: Will the Joint Committee on Pharmaceutical Benefits Pricing Arrangements continue its work? Do you intend to follow the schedule of adjustments in the NHS professional fee outlined by your predecessor, Senator Sir Kenneth Anderson?

Everingham: I am happy with the compromise arrangement worked out by the previous Government.

Further on the transcript stated:

Hellier: So all the arrangements made between the previous government and the Joint Committee still stand?

Everingham: Yes. Those undertakings would be adhered to.

The Pharmacy Guild adhered to the agreement which it had reached in 1972 and to which it believed the present Government adhered when it came to power. The Guild had a long wait for the Committee recommendations to be presented; 18 months longer than was originally anticipated. It appears that when it became obvious that the recommendations for retrospective payments for dispensing fees to chemists would be higher than had been originally anticipated the Department of Health unilaterally and arbitrally altered the criteria in the closing stages of the investigation. It decided for its own purposes, in relation to what should be paid to the chemists in retrospective payments, that the bottom three of the six strata of levels of chemists would be dropped. This was the unilateral and arbitrary decision made by the Department, contrary to the understandings entered into by Senator Sir Kenneth Anderson and agreed to by the present Minister. Of course, this substantially altered the view of the Department of Health on what the retrospective payments should be. That is why it was done.

Then the Minister was placed in a rather strange position because the only way in which the Department of Health was able to provide such a new set of criteria was with the agreement of the Minister. The Department had to obtain the agreement of the Minister before that could be done. So on the one hand the Minister was saying that he supported the original agreement that was entered into and on the other hand he was saying that he also supported his own Department in breaking that agreement. He was in the really strange position of going to Cabinet and arguing against himself, because we have been told that he said that he would put the case for the Department of Health, for the Sir Walter Scott compromise reached between the Department of Health and the Pharmacy Guild, and for the Pharmacy Guild. It was no surprise to anyone, seeing that the Minister was obviously supporting the Department of Health as he had agreed with it to make the change in the first place, that the Government accepted the Department’s ruling which had arbitrarily excluded three of the six levels of economic criteria for chemists in Australia.

Any other wage or price fixing body in Australia which excluded three of six strata would be laughed out of court, particularly if it involved a trade union arrangement- and quite rightly so. But that did not happen in this case. This arrangement means that, instead of receiving $73.5m in retrospective payment for underpayment in past years to which the chemists believed they were entitled and in respect of which they were supported by Sir Walter Scott as Chairman of the Committee, the chemists were to be offered $33m. The chemists of Australia rightly believe that they have been betrayed by the Government and the Minister to the extent of $40m. They faithfully waited and abided by the recommendations of the Chairman even though they did not agree with them. The chemists of Australia also materially assisted the Government in its introduction of Medibank when the Government, failing to find Medibank agents to allow the introduction of its scheme, obtained the co-operation of the chemists of Australia.

Dr Klugman:

– It was a big sacrifice on their part.

Mr LLOYD:

– I am sure the chemists realised that Medibank was only a short term proposition. They also realised that it was not a very good paying proposition. The honourable member for Prospect should give credit where credit is due, particularly when the chemists felt that they were doing their bit. Now the Government, like a dog, has turned and bitten the hand that fed it, to a certain extent. I note that the Minister has stated in reply to a question of mine that a further increase in the dispensing fee for chemists is being negotiated and that it will be backdated to 1 July 1975. It is rumoured that this increase could be up to 15c, which would take the dispensing fee to 99c a prescription. There appears to be no estimate or allowance for this increase in the Budget. There are other considerable underestimates for the pharmaceutical benefits scheme as presented in the Budget papers. I shall not discuss them now. I shall wait until the Budget debate. I just draw the attention of the House to one of what I consider to be many underestimates of Budget expenditure which must add materially to the overall Government deficit. I conclude by saying that the Opposition does not oppose the legislation.

Mr LAMB:
La Trobe

-The National Health (Pharmaceutical Benefits Charges) Bill seeks to increase the patient contribution for each prescription provided under the pharmaceutical benefits scheme. Currently that contribution is $1 for the general public and 50c for those holding a subsidised health benefits entitlement. Pensioners holding a medical entitlement card do not pay a contribution. These rates will be raised, when this Bill is passed, from $1 to $1.50 and from 50c to 75c respectively. They will operate from I September. The last increase was made by the previous Liberal-Country Party Government on 1 November 1971, when the patient contribution rose from 50c to $1. If one wished to be rather intrigued by percentage terms one could say that the Opposition doubled the patient contribution whereas this Government has merely made a 50 per cent increase.

I rise to point out to the public that one thing which has caused me, as a pharmacist, and many of my colleagues much concern is the idea that the public understands this patient contribution to be a bonus to the pharmacist who dispenses a prescription. This does not increase his profit or his professional fee. The increase merely alters the proportions paid by the public and the Government. It does not alter the total price of the prescription. Incidentally, the cost of a prescription is eligible to earn a tax rebate for the patient which, when the Budget is passed as undoubtedly it will be, will be equivalent to 40c in the $ 1 . So the effective cost to the patient is really 90c. The rebate gives the benefit equally to the low, medium and high income earners, whereas under the previous Government the patient contribution increase was felt most by the low income earners and least by the high income earners.

In contrast to this decision the reason for the increase in 1971 was given as a deterrent introduced because of the sharp increase in the costs of the scheme. The Government hoped to bring down the utilisation of drugs. The increase was to act as a deterrent to the patient relying heavily on drugs and was to offset the sharp increase in the cost of the scheme. Of course those costs have continued. This year we have set out to cut government expenditure or, to put it correctly, to cut the rate of growth of government expenditure, especially after the decision to pay pharmacists an increase in the dispensing fee for prescriptions dispensed over the last 2 financial years.

I am not greatly persuaded by the assertion of the honourable member for Murray (Mr Lloyd) that we have totally abandoned our party platform. He described our policy as contradictory. I say it is flexible. The result is that this Government is charged with keeping costs as low as possible and working towards reducing the patient contribution as much as possible in the light of current conditions and in particular the financial stresses and costs of the scheme. The percentage rise in the consumer price index since 1 97 1 is far in excess of the percentage increase in the patient contribution. Do members of the Opposition argue that they would not have cut government costs by increasing the patient contribution far more than 50c? If we were to apply the percentage sum or equation that I mentioned earlier the increase would have been more than $1. It would have been a $2 increase. The Opposition has constantly argued for a cut in government expenditure. In the light of the Government’s desire to cut down the rate of growth of government expenditure I believe that the decision by the Minister for Health (Dr Everingham) and the Cabinet is the minimum increase that could be granted and is thoroughly consistent with our Party ‘s policy and platform.

There are a few pluses and minuses in the latest increase. Naturally I will give the good news first- the pluses. Experience shows that doctors will prescribe more under a scheme whereby patients obtain drugs at free or nominal cost than if the full cost or a substantial part of the cost has to be met by the patient. Why is it that regardless of whether a Liberal or Labor government is in power, whether a Medibank scheme is in operation or whether a pharmaceutical benefit scheme is in operation, if the patient has to pay there is a drop in the call upon prescriptions? I think this is of concern to Parliament. Australia is known as the greatest drug taking, pill popping nation in the world. We are a drug oriented society. Patients have an attitude of being unhappy if they do not leave the doctor’s surgery with a prescription clasped in their hands. They feel unsatisfied unless they come out with a certificate of ill health in the form of some medication to eradicate their illness.

Perhaps there should be greater effort by doctors to educate patients not to take unnecessary medicines. This is a natural question one can ask if it is argued that the doctor is over-prescribing because of the cost factor. It is a simplistic argument. It needs examination. I believe that general practitioners do not have the time personally to counsel their patients. We would need a vast increase in the number of general practitioners before the spread would be sufficient for the general practitioner to be able to sit down and fully counsel his patient. This is not the fault of our over-worked general practitioner. I compliment at this point the Minister for his attempt to increase the rate of graduation of general practitioners and their entry into that vital section of family medicine and family health. If the doctor were to take more time to counsel his patient, under the new fee structure there would be a greater cost to the patient. The honourable member for Murray mentioned Medibank. Of course the patient would get a lot more back under Medibank if this were so, especially if the doctor were encouraged and saw the light of direct billing. Certainly it is not the doctor’s responsibility per se. It is a matter of education of the public. Once again I compliment the Minister for his overall attack at undermining this prevalent attitude of wishing to support the patients’ difficulties, concerns, neuroses and illnesses with reliance upon drugs. Certainly the report from the House of Representatives Select Committee on Pharmaceutical Benefits suggested that. It reads:

The pressure of work of a general practitioner is great and it is easier and quicker to prescribe than to explain that a drug is not necessary.

The increase in cost to the patient therefore has a side benefit. It has an attraction that the patient will reduce the demand for prescription drugs and will take the pressure off the doctor. At this point I seek leave to incorporate in Hansard paragraphs 120 and 121 of the report of the House of Representatives Select Committee on Pharmaceutical Benefits.

Mr DEPUTY SPEAKER (Dr Jenkins:
SCULLIN, VICTORIA

-Is leave granted? There being no objection, leave is granted. (The document read as follows)- 120. The Department of Health quoted the British experience which suggests a correlation between patient contribution and prescription volume.

  1. The relevance of the British experience to Australian conditions is suggested by the initial reaction to the increase in the local patient contribution from SO cents to $1.00 in November 1971. The number of prescriptions dispensed under the Scheme in December 1971 -January 1972 was 7 021 000, a decrease of 6.7 per cent compared with the 7 522 000 prescriptions dispensed in the comparable period of 1970-71. By contrast, pensioner prescriptions, which were free throughout, increased by 3.4 per cent, that is from 3 513 399 m December 1970-January 1971 to 3 631 974 in December 1971-January 1972.
Mr LAMB:

– I thank the House. The second plus is the reduction in cost to the Government. As I have said before and stress again, this is the prime reason for the increase in patient contribution to cut government expenditure. The deterrent effects are a side benefit.

There are 2 possible minuses but these need not take place. Both flow from the possible removal of prescriptions costing less than $1.50 from the pharmaceutical benefits list. If those drugs are removed as they were in 1971 they become private prescriptions and the price to the patient is pushed into the $2 to $3 bracket because the private dispensing fee, coupled with the different markup on private prescriptions- 50 per cent instead of 33 lA per cent- pushes the cost into this more expensive bracket. I ask the Minister whether he will look at this aspect. I suggest to him that he devise ways and means of seeing that the pharmaceutical benefits that come to a total of less than $1.50 remain on the pharmaceutical benefits list. Ultimately it is cheaper to the public. It might mean a little less money in the pockets of my colleagues and myself, but I am interested in why the pharmaceutical benefits list is provided. It is to enable those who would otherwise be deprived of receiving the benefit of certain important drugs because they could not afford them. That is the prime objective. I would like the Minister to study that suggestion carefully and see whether ways and means could be devised to have those drugs that total under $ 1.50 remain on the pharmaceutical list.

Another minus which could possibly flow is that if these drugs are not available there could be influence upon the doctors to prescribe a ‘free’ drug if possible rather than for the patient to pay for a more expensive one, even though that drug may be more expensive and not the most suitable drug to use. Before I conclude I think it is opportune and proper that I should make a few comments on the matter raised by the honourable member for Murray who criticised the Government for paying an increase to cover underpayment of previously dispensed prescriptions by the pharmaceutical profession. I point out incidentally that this Government has given far more palatable increases to the profession than the honourable member’s Party ever did. Instead of 8c, 9c and miserable amounts like that, we now find reasonable increases that are more consistent with current costs.

Mr Hodges:

– Because of the inflation rate.

Mr LAMB:

– The interjection does not discourage me from sticking to my piece, and that is a rebuttal of the honourable member’s assertion that we rejected totally Sir Walter Scott’s report or recommendations on remuneration for underpaymentunderpayment which partly occurred in the previous Government’s time. We heard no comment or admission that this was so. As far as I understand it, the Government accepted all of Sir Walter Scott’s recommendations except the criterion of goodwill and that uneconomic pharmacies should not be considered when the aggregate income of pharmacies and therefore the averaging income of pharmacies was being considered. I think this is very important because to accept the report in total would be to reject entirely the Pharmacy Guild of Australia’s own move to bring about a rationalisation in pharmacy, to reduce the costs and to increase the service to the public. One suggestion that comes readily to mind is an encouragement to enlarge pharmacies and to rationalise partnerships so that as well as the enjoyments that flow from such a structure to the individual pharmacistssuch as more agreeable hours- a continuous, fully staffed professional service would be provided to the public at a far more economic cost, thus keeping down the overall costs of the pharmaceutical benefit which would otherwise be reflected in the dispensing fees. So I rebut the honourable member’s assertion that this was not in keeping with what the Guild wanted. It is thoroughly in concert, in agreement, with the rationalisation procedures that are taking place in pharmacy. I thoroughly endorse those moves. However, I would have liked to see some recognition of the service of the country pharmacist who may need to operate an uneconomic pharmacy to provide a service for country people. Perhaps another suggestion to the Minister would be that a zoning allowance or loading of a suitable amount be given to offset the decreases and so make these pharmacies viable so that the public does not suffer.

Dr Gun:

– The doctor can always do this.

Mr LAMB:

– That is true. The honourable member for Kingston, a doctor himself, suggests that the doctor could do the dispensing. But what doctor has the opportunity to advise the taking of the drug once dispensed? In country areas the pharmacist provides an individual and unique service for the public. He can advise the public when to take the drugs, what to take them with and so on. Of course he does this in consultation with the physician. Particularly in the country areas the pharmacist and the doctor work very closely together for community health benefit. That is natural seeing that it is a matter of propinquity.

It is arguable whether the question of goodwill should be taken into account in establishing the costs of a pharmacy operation. We did not accept it. The evidence has been put to us rather forcibly and effectively by the people who do the book work for the pharmacists, the accountants. These are the people who demonstrated to the Government that it was totally incorrect to base a rationalisation of cost in the pharmaceutical industry on a disputable, arguable and figurative calculation. It is for these reasons that I utterly refute what the honourable member for Murray has said. I support this Bill for an increase in the patient’s contribution to costs of pharmaceutical benefits from $1 to $1.50.

Mr HODGES:
Petrie

-At the outset of my remarks I wish to refute and rebut some of the arguments that have been put forward by the honourable member for La Trobe (Mr Lamb). He made reference to the rises under this Government being far greater than the rises that were experienced by pharmacists under previous Liberal-Country Party governments. In some respects I would agree with him. But I would remind the honourable member- I think it does us all good to think back a little, it is not that long ago- that just before the 1972 election the then Opposition, the Australian Labor Party, told this nation that we could not live with the rate on inflation of 4.5 per cent or 4.7 per cent a year. We know the story or the Labor Party’s sad record since then. It was only a matter of months until that rate of inflation had jumped to 10 per cent or 1 2 per cent a year and it is currently running at about 20 per cent a year. So naturally there have had to be greater increases. I am not suggesting for a moment that pharmacy was happy under the -previous Government. In many respects it was unhappy because it was obviously not receiving sufficient remuneration for the skill and the effort that was going into the profession.

The honourable member for La Trobe talked also of the rationalisation of pharmacy. I assure the honourable gentleman that hundreds of pharmacies are closing down throughout Australia today and hundreds more are for sale. The basic reason for this is that many of these pharmacies that were able to be operated viably a matter of only two or three years ago, today find it difficult to operate and of course are having to close. The honourable member talked about uneconomic pharmacies. I suggest to the honourable member and to the Minister for Health (Dr Everingham) that due consideration has not been given in this whole exercise to the number of small pharmacies in outlying suburbs and in smaller towns. I do not know how one rationalises pharmacy in a small town where there is one pharmacy, just as it would be difficult to rationalise the only butcher in a small suburban area or a small township. Obviously some provision has to be made for the so-called uneconomic pharmacies referred to by the Minister and referred to in the report that has been produced.

This Bill seeks to increase the pharmaceutical benefit item charge from $1 to $1.50 for drugs under the national health scheme. This new move, one might say, probably would have been made had a Liberal-National Country Party government been in power. The Bill also seeks to increase from 50c to 75c the charge for those patients who are catered for under the subsidised health benefits scheme. The Opposition does not oppose the Bill. As I said, in all probability, having looked at the history of the pharmaceutical benefits scheme from its inception back in 1948, a Liberal-National Country Party government would have increased charges also. The scheme was of course considerably expanded in 1960 when the first charge of 50c per item was instituted and of course again in 1971 when this was increased to $1.

I want to point out forcibly to the House the real position because I believe that many people in Australia, when they pay that $1 as it is today or the $1.50 as it will be from 1 September, believe that the pharmacist in actual fact puts that $1 or $1.50 into his own pocket. I think this point has been made by the honourable member for Murray (Mr Lloyd) and the honourable member for La Trobe. This is not the case. The $1, or $1.50 as it will be, in actual fact is deducted from the amount the pharmacist receives from the Government. I understand that a move is afoot by pharmacists today to display signs in their shops to point out this fact to the public. I applaud them for this. There is a misconception on this point and I believe that the public must be informed on this matter.

Since I have been a member of this House I have refrained, to a great extent, from participating directly in debates concerning pharmacy. I made some small reference in my maiden speech to the fact that I was a pharmacist. I have refrained from speaking on pharmacy because I believe that one has to be extremely careful in the pursuance of a profession- one which has supported me for some 20 years- in taking up the case for that particular profession. Nevertheless I believe I am in a position to voice an opinion because, as I have said, I have experience of some 20 years of the position in relation to pharmacy and the pharmaceutical benefits scheme.

In answering the Minister’s speech on the reason why the patient contribution towards the national health prescription should be increased from $1 to $1.50 one must of necessity also look into the composition of the elements which make up the costs of the national health prescription and what has happened to these costs in the past 3 years, that is, since the financial year 1972-73, for it is in the years since then that the major increases in costs have occurred. For the year 1972-73 we have extremely accurate figures to which to refer for it was in this year that the Liberal-Country Party came to an agreement with the Pharmacy Guild of Australia to conduct an inquiry into pharmacy earnings, costs and profits. This inquiry was to be under the control of the Joint Committee of Pharmaceutical Benefits Pricing Arrangements. I point out that the previous surveys had taken a great deal of time and there had been much wrangling between the Pharmacy Guild and the Government. I believe that in entering into this agreement of 1972 pharmacy thought basically that its pricing problems were over.

This joint committee which comprised 4 Government representatives and 4 representatives from the Pharmacy Guild was presided over by an independent chairman in the person of Sir Walter Scott The terms and conditions under which this inquiry was to be conducted were conveyed to the Pharmacy Guild in a letter dated 5 April 1972 by the then Minister, Senator Sir Kenneth Anderson. I understand that these terms and conditions were confirmed by the present Minister, Dr Everingham, when his Party came to office. I would appreciate it if the Minister would confirm that he agreed to the conditions laid down for this inquiry in the letter dated 5 April 1972. The aim of the inquiry was that the Government and the nation would have available in great detail complete information as to the average cost of dispensing a national health scheme prescription. It is important to note this fact for I shall revert to it later to show how this Government has manipulated the figures to give a result quite outside the aim and objective of the inquiry- a result which bears no relationship to the facts. I will refer in detail to certain aspects of the result because I believe the Government has used figures to gain a false result.

The terms of the inquiry gave both parties certain rights in the event of disagreement. Firstly, the Chairman would be able to make recommendations to the Minister and, secondly, if the recommendations were not accepted by either party they were to go to arbitration, the result of arbitration to be binding on both parties. I think everyone will agree that if an agreement is entered into both parties must abide by it. These were the major points of the inquiry which was conducted by a secretariat within the Department of Health directed by a sub-committee of the main joint committee. For various reasons the inquiry- as a pharmacist I do not want to dwell on those reasons- took far longer than the Government had anticipated. The recommendations of Sir Walter Scott on the points at issue were conveyed to members of the joint committee and the Minister on 23 May this year.

Subsequently in June of this year the report was tabled in the Senate.

The recommendations made by the independent chairman, Sir Walter Scott- a man of probity whose reputation in the business world in Australia and overseas is beyond reproach and who has served on many major committees as chairman or member during the past 35 to 40 years- have not been accepted by the Government and at this stage the Government has made no effort to carry out its obligations under the agreement to go to arbitration on the issues in dispute, notwithstanding the fact that requests have been made by the Pharmacy Guild, the other partner to the agreement, that the agreement made by the Government should be honoured. It seems completely alien to me and outside the nature of the Minister that he should be refusing to abide by the agreement. Indeed, last Thursday, when speaking to the Bill requiring manufacturers to disclose their costs of pharmaceuticals, he made a point of the fact that he would be willing to have arbitration available in the event of disputes. How hollow does this offer sound when equated with the realities of what this Government in the past 4 months has done with the agreement on arbitration for pharmacistsa written agreement by the Minister of the day? If one looks also at the statement made on 16 July by the Minister to a deputation from the Pharmacy Guild it would appear that the Minister- I feel that this is correct- does agree with the concept of arbitration but has been overruled by Cabinet. Where then is the supposed justice that the Labor Party claims it represents? Why then in the Press statement of 16 July does the Minister add to that statement a last line: ‘although the Government may not in law be bound to accept such arbitration’? Why, one might use the term, the two bob each way? In one case the Minister agrees with the agreement made by the Minister of the day providing for arbitration but now, when the chips are down, he implies that there can be arbitration but the Government is not bound by it. Surely this is duplicity, if ever there was.

If we study in more detail what the Government has done by accepting the Department’s approach to a nebulous concept of relative economic pharmacy- nowhere does the Government define it- we see some strange manipulation of figures. It must be remembered that the results we have are from an inquiry statistically designed for no other reason than to discover the average cost of dispensing a national health scheme prescription. I point out that the survey was based on categorising pharmacies into 6 strata determined by items dispensed per annum. I now refer in detail to only stratum 1 figures from table 1 in the Scott report on the economic approach. These show that by using this approach in part 77.6c per prescription is taken away from the income of this stratum. As this stratum dispensed some 4426 items in the year inquired into there was an income loss of $3,434. The total income received by this stratum under the national health scheme in this period was $4,589 when assessed at $5 per hour. This means that this stratum was paid $1,155 instead of $4,589 for the proprietor’s professional labour or, expressed in real terms, at a rate of $1.25 per hour. I wonder what other profession of similar standing in Australia would be prepared to accept a rate of $ 1 .25 per hour.

Dr Klugman:

– Only the surgeons.

Mr HODGES:

– Surgeons are extremely well paid in comparison. This, to answer the honourable member who is a medical practitioner, is the result of the manipulation of the figures by the Government. What was not appreciated by the departmental advisers was that in a cost accounting approach one cannot take out of the system without a corresponding input into the system. However, because these same departmental advisers manipulated only one set of figuresthat is the cost of national health scheme items- we have the most ludicrous and unbelievable situations where stratum 1 proprietors are paid at the rate of $1.25 per hour when dispensing national health scheme items but at the correct rate of $4.86 per hour when dispensing repatriation prescriptions. I think that is worthy of comment by the Minister. How immoral and ridiculous can a government get when it tries to fiddle figures? If it had accepted arbitration these facts would have been disclosed once again, as indeed Sir Walter Scott disclosed them when on page 6 in paragraph 5 of his review of the economic approach he said:

The obvious question is what importance is to be ascribed to this all-important word ‘relatively’, because it is the ‘relatively uneconomic’ that reduces everybody’s prices by 70 per cent.

As a pharmacist I must say that one wonders whether the departmental officers advising the Minister are out to destroy private enterprise pharmacy as it is or whether they are acting on Government orders. If it is the former one can only be alarmed; if the latter, the Government should declare its hand and state that it is its intention to destroy the community pharmacist, for this surely will become the result of the policy being carried out now, more particularly as this policy is, in effect, being dated back by 2 years to the year beginning 1 July 1973. So much for the Treasurer’s statement of giving the private sector confidence in the future as stated by him in his Budget Speech delivered last Tuesday evening.

If one now studies the total picture of the cost of national health scheme items as a whole- here I can use only the combined total figures of national health scheme and pensioner prescriptionsone sees that since 1972-73 the total volume has increased from more than 74 million to more than 97 million- an increase of 23 million items or 33 W per cent. The figures for 1974-75 would include oral contraceptives and so this increase is not a net increase in volume but a gross increase. That is, a large proportion of this increase is brought about by alterations to items available under the national health scheme and so the increase is not a total income increase to the industry. It would probably be of the order of approximately 30 per cent to 40 per cent of this total. This percentage increase would become a true increase of some 1 5 per cent.

Against this increase in volume the value per prescription has increased from 264c to 280c whilst the cost of the ingredients has fallen marginally. In other words, the manufacturers’ costs have not risen. It is a truly remarkable performance by private industry to keep its costs the same over a 3-year period. Where else has industry done this? I ask this question particularly bearing in mind the percentage increase of up to 16 per cent in average weekly wages in 1973-74 and 27 per cent in 1974-75 and increases in the consumer price index of 13 per cent and 17 per cent respectively in those years. So if we look at actual alterations in the gross income per national health scheme prescription- and here for convenience we look at the Government’s figures which include the 11c and 22c increases plus any other increase in the past 3 years- we find that at 1 January 1972, labour, expenses, and return on funds amounted to 113.57c. In 1974-75 these items amounted to 144.11c. The difference between these figures then becomes the increase in actual costs over the past Vh years and also in the actual gross income per prescription on average, or, expressed another way, a total of 3 lc and not the 50c that the Government is now claiming. Whilst I have not worked out the figures for the period used by the Minister I can assure honourable members that the figures I have cited are factual and would still be relevant no matter at what stage the Minister wished to compare them and no matter if a different set of figures were used as a basis. As I see it not only has the pharmacist in community practice not been paid his just rights in the past 3 years but now, because the entitlement is being paid- or more correctly 2 years of it is being paid in the tax year- the Government will reap back a substantial amount of the payments in extra taxation. I should like the Minister to comment on this point and to say whether he has discussed the matter with the Treasurer (Mr Hayden) with a view to evening out or spreading the income over 3 years.

I should like to conclude my remarks with some questions directed to the Minister; I trust that he will answer them. I understand that the Minister recently put to Cabinet the case of the Department, the case of Sir Walter Scott and the case of the Guild and that he argued for the Chairman’s recommendations as against those of the Department. I understand that he argued that if the Guild asked for arbitration after a Cabinet decision contrary to the Chairman’s recommendations this arbitration should be agreed to and the arbitration finding accepted, although he felt that the Government would not be bound in law to accept such arbitration. Am I and the pharmacist to assume that this Government will not honour the agreement of 1972? I suggest to the Minister that this is a disgraceful state of affairs. Does the Minister agree with me? Will the Minister explain his position and say whether it varies from that of the Government?

Dr KLUGMAN:
Prospect

-Before dealing with the main part of the proposition that I wish to raise here today I should like to comment on a sarcastic interjection that I made during the speech of the honourable member for Petrie (Mr Hodges), when I referred to the low income per hour of surgeons. In case people took this remark to be my serious view I should like to refer to the fact that apparently at the wind-up meeting of Patrick Partners last Friday it was announced that a combine of Melbourne doctors were raising $2.5m to rescue Patrick Partners. So the professional incomes of those doctors seem to be reasonably good if they are prepared to go into that sort of extremely high risk investment. But the point I should like to deal with today- I have not raised it with the Minister for Health (Dr Everingham) previously- deals with prescriptions. I shall ask the indulgence of the House to incorporate some tables in Hansard so as to enable me not to go into great detail in what I am saying. The tables are from the official journal of the Australian Department of Health, volume 25, for the third quarter of 1 975, under the heading of ‘Pharmaceutical Benefits’ and are at pages 42 and 43. 1 shall then refer to other tables. The table I should like to have incorporated in Hansard is table D on page 43.

Mr DEPUTY SPEAKER:

- (Mr Keith Johnson)- Is leave granted? There being no objection, leave is granted. (The document read as follows)-

Dr KLUGMAN:

-That table deals with the increase in the number of pharmaceutical benefits prescribed during the first 9 months of this financial year compared with the first 9 months of the previous financial year. The table is broken down into specific groups of drugs. An earlier table- table A- shows that there has been an increase of 1 5 per cent in the total cost of combined general and pensioner benefits. There was a 15.6 per cent variation in the first 9 months of the last financial year, but the prescription volume increased by 1 1.4 per cent. That is the point

I wish to raise. The honourable member for Petrie, when referring to another table which appears in the 1973-74 annual report of the Director-General of Health quite correctly referred to an increase in prescriptions a large proportion of which were due to bringing the oral contraceptives, anovulants on to the pharmaceutical benefits list. But if we look at the list this time we see that this is no longer the case. In fact on this list, anovulants have increased by only 10.8 per cent. But preparations for bronchospasm are referred to. Surely there has been no increase in the number of people suffering from conditions that require these preparations, yet the number of prescriptions has increased by 28.3 per cent. Prescriptions for analgesics I find it difficult to believe that people need more pain killers- have increased by 20.5 percent.

Mr Lloyd:

– It is this Labor Government.

Dr KLUGMAN:

– Well, I used to say that the number of tranquillisers used increased under the previous Government, and I was not surprised, because the previous Government made it almost obligatory to use tranquillisers. In fact there is a fair bit of talking of tranquillisers at present m the community. If we look at the figure for tranquillisers we find that the number of prescriptions has increased by 4.4 per cent only. This figure is the only single figure increase of all the increases in all the drugs. The increase in prescriptions for drugs acting on the heart is 27 per cent. The percentage of prescriptions of sulphonamides is 30 per cent. These are huge increases in prescriptions.

Mr Nixon:

– Heart drugs are understandable under Labor.

Dr KLUGMAN:

-The honourable member for Gippsland usually is not very accurate or relevant in his speeches. One would not expect him to be very relevant in his interjections. The point I wish to raise is, why those huge increases? I am sure that some of them can be explained because a particular new drug has been added to the armamentarium of the medical profession as far as pharmaceutical benefits are concerned. In other cases it may be explained because the number of tablets which one can prescribe on any one prescription has been reduced, and therefore the number of prescriptions has increased. Those are possible explanations, but I cannot believe that they apply to all the points that are raised. I think it is important for all honourable members of this House, as minders of the public purse, and I think in some ways more importantly as minders of the population at large, not to encourage such huge increases in the consumption of all kinds of drugs in the community. I think that is the important point. We ought to look at the situation. Why is this happening?

Mr Kelly:

– Because we are giving it to them.

Dr KLUGMAN:

-I think then it is possibly a good thing that we are increasing the prescription rate from $1 to $1.50.1 do not know whether this will have that sort of benefit. In fact the increase in average cost per prescription during that same period of 9 months has increased by only about 4 per cent, which is a very low increase from one year to the next. As the honourable member for Petrie pointed out, it is much lower than other indicators in the community. To have increases of over 20 per cent and up to 30 per cent in numbers of prescriptions for certain preparations is certainly disturbing as far as I am concerned. I should like to cite the figures contained in one more table. For some reason, they seem to show a sudden increase, a sudden jump. Last year, that is the 1973-74 financial year, there was an increase of 16 per cent in prescriptions, which seems to be lower than this year, when one considers that in 1973 anovulants were first put on the prescription list. This appears in Table 47 of the annual report of the Director-General of Health. Table 45 in the same report makes the same point. The cost of pharmaceutical benefits is of course important to us as a part of the Budget which we are about to deal with. There have been sudden big increases. In 1973 the Australian Government payments totalled $177m. In the previous year they had totalled $173m; so the increase was only $4m in a year. Then the figure suddenly jumped to $2 18m in 1974. Looking at only the first 9 months of the last financial year, it would appear that there has been an increase of another 15.6 per cent or nearly $27m, which is a huge increase.

I was in medical practice for many years before I came into this House. I realise that there is a lot of pressure on medical practitioners to prescribe drugs. It is an easy way out Many patients expect it. It is much easier than trying to explain to someone that he will have a certain condition for three or four days no matter what he takes. So the doctor ends up giving him a prescription and saying ‘You are going to get better in 4 days’ instead of having the guts to say: ‘I do not think there is anything I can do about this. You are going to get better in 4 days ‘. I think that this is a failure on the part of the medical profession. I seek leave to have incorporated in Hansard

Table 1 of the Annual Report of the DirectorGeneral of Health 1973-74, which is a table of life expectancy for the Australian population.

Mr DEPUTY SPEAKER (Mr Keith

Johnson)- Is leave granted? There being no objection, leave is granted. (The table read as follows)-

Dr KLUGMAN:

– It is interesting to note from the table that there has been a huge increase in life expectancy for males at birth between 1881-1890 and now- an increase of 21 years, from 47 years to 68 years. All kinds of factors are involved in that. One must remember that most of the drugs we are talking about are for elderly people prescribed for chronic patients for whom really nothing can be done. The life expectancy at 60 years- there are more prescriptions for this age group than for any other- has increased by only 1.6 years between 1881 and 1972, despite all the new drugs that have been brought out and despite all the advances in operations, x-ray equipment, pathology, and so on. Admittedly, the life expectancy is higher in the case of females at age 60.I do not know the explanation for that. There has been a minimal increase in the case of elderly males compared with the huge increase in the ability to save lives in the perinatal period and at other times when people have acute infections.

I draw the attention of the House to this important point: Obviously we are wasting a terrific number of drugs when we claim that we are improving the condition of a patient’s heart, his mental state or the condition of his kidneys or liver. In fact, over the last 95 years we have increased the life expectancy of a person at 60 years of age by less than 2 years. I draw this point to the attention of the House and also to the attention of the medical profession. I myself was not aware of this fact. I thought that we had done much more for elderly people and for people who suffer from some major condition, but apparently we have not done very much at all for them when one thinks of all the new drugs that have been brought out. The life expectancy at age sixty decreased by 0.15 of a year between 1960 and 1973, despite all the wonder drugs that have been brought out for elderly people.

Mr Kelly:

– Keep going.

Dr KLUGMAN:

– I cannot keep going because I have been handed a little chit. I am trying to be serious because I think that this is a very important matter- even more important than the actual cost involved. We members of the medical profession are conning the population at large into believing that we can do all kinds of things for them when certain things are inevitable once they reach a certain age. We are doing it and we are defending it, because we have been put on the defensive. It is up to the medical profession and those who are training the new doctors to instil into members of the medical profession a little more honesty so that they will be prepared to tell their patients that certain things in this life are pretty well inevitable and they must be prepared to put up with them.

Dr GUN:
Kingston

-First of all, I want to comment on some of the remarks made by the honourable member for Murray (Mr Lloyd). I take it that he was criticising the Government for being rather niggardly in the increased dispensing fees which have been handed out to the pharmacy profession. If that is the case, if anything I would criticise what has happened for precisely the opposite reason. I think that we have been over-generous towards the pharmacy profession and I would like greater consideration to be given to the fact that since the introduction of Medibank a fee fo 50c a claim is being given to pharmacists for submitting claims to Medibank. In addition, there seems to be a large increase in the number of claims per patient compared with the number before the introduction of Medibank. In other words, there is some suggestion that pharmacists are encouraging patients to make a separate claim for each individual medical item because they make 50c on each claim. So if there is any criticism to be made it is that the Government has been too generous. I hope that when the time comes to examine the next increase in dispensing fees some regard will be given to the fact that this 50c is paid for each Medibank claim.

Superficially, the question we are discussing today is whether we should raise the charges for prescriptions in order to recoup the extra cost in the dispensing fee which is being paid to pharmacists. But I think that much more basic questions have to be considered, such as whether our community is much too oriented towards and hooked on the taking of pills, and whether the best way to do something about that is by increasing the charge. I believe that if we weigh the good against the bad overall the community will be well served by the increase in the prescription charge which is being made. The honourable member for Prospect (Dr Klugman) suggested that an increase in the prescription charge might lead to a reduction in the number of prescriptions. If he and the House look at the volume of prescriptions prescribed after the prescription charge was increased from 50c to $1 in 1971 they will find that there was a plateau. Before that, each year the volume of prescriptions written under the national health scheme had risen steadily, but after the charge was increased from 50c to $1 the volume formed a plateau for some 12 months and then started to rise again. I think that probably we will find that now there will be a reduction- certainly a reduction in the rate of increase- in the number of prescriptions which are given by doctors and which are dispensed. I agree with my colleague the honourable member for Prospect that this will do much more good than harm.

We are reaching the stage where the increased use of drugs starts to show diminishing returns. Obviously one cannot gainsay many of the tremendous improvements that have been made, particularly the very great advances in the treatment of tropical diseases with the development of some of the anti-helminthics and other drugs for treating parasite-caused tropical diseases. However, in an industrialised community such as ours we have to look at whether there are diminishing returns from increased drug use. As the honourable member for Prospect suggested, we may even be reaching a point of negative marginal return for additional prescriptions. I was a member of the House of Representatives select committee which reported on pharmaceutical benefits. It was a good report and I commend it to honourable members. I especially commend the report by a minority of one at the back of the main report.

Mr Lloyd:

– Who was it?

Dr GUN:

– Modesty prevents me from saying who was the author of die minority report. Needless to say, it commanded the usual sized minority that my suggestions do. Nonetheless, when the Committee was reporting I drew attention to the fact that over the 1960s the drugs which had the greatest volume of increase were the drugs for treating bronchospasm- that is asthma- the anticholinergic drugs, used mainly for duodenal ulcers, and tranquillisers. It seems to me not without some significance that all these drugs are used to treat conditions which have a very high psychosomatic content. I believe that we cannot abstract the importance of this aspect from the type of society in which we live. If some of the enormous amount of money being spent on drugs treating various conditions that are part of the way of life of industrialised society were spent on research into the type of environment which is producing those conditions, and if social and political action were taken to rectify that climate, the funds might be very much better spent.

However, I believe that what we are faced with in the present Bill- an increase in the prescription charges- will probably cause a reduction in the number of prescriptions. That will be good. The only problem, of course, is that there are some people on low incomes with chronic diseases who might be faced with a very large bill which they cannot handle. This is always the problem. It is very difficult to reconcile the problem of these people and the object of the increase in the prescription charges. I think we ought to have a look at alternative systems of trying to deter doctors, chemists and patients from the over-use of drugs. I think that as an expedient the increase in the prescription charge is necessary, but We must try to find better ways of achieving our aim so that we do not penalise people who genuinely have a chronic illness and who can get great symptomatic relief from drugs which are expensive because they require a large number of them and have to pay $1.50 for each prescription.

Some of the things we could look at include a selective rebate system. Perhaps we could require all patients to pay a certain proportion of their annual drug bill but vary the proportion according to a person’s income. I think we should have a look at the proposal of health maintenance organisations for a pre-paid health insurance scheme under which a fixed amount is paid and there is an incentive on the part of the people providing the service to keep the costs of the scheme down. Medical, hospital and pharmaceutical costs are kept at a minimum and benefits could be paid as a dividend to the provider of the service or perhaps as a rebate to those people who contribute to the scheme. All of this proposition is perfectly feasible under Medibank, but that really is a separate issue.

However, as a temporary expedient, I believe that the proposed increase in prescription charges is a highly desirable thing. I support the Bill, but I ask the Minister for Health (Dr Everingham) and the Government to start looking around for more effective ways of deterring the over-use of drugs than financial penalties which can selectively hit low income earners with chronic illnesses or with large families.

Dr EVERINGHAM:
Minister for Health · Capricornia · ALP

– in reply- I thank speakers on both sides of the House for their contributions. They were mostly constructive. I am going to answer briefly the main points raised as far as I can in the short time available. The proposition that the rise in prescription fees contradicts Australian Labor Party policy- the honourable member for La Trobe (Mr Lamb) referred to this- is simply answered by the fact that no party undertakes in its first term in office to implement every policy item in its platform. During neither of the last 2 election campaigns after which Labor was returned to office did we undertake to abolish prescription fees in the first Parliament. Obviously things must have their priorities according to the funds available.

Mr Lloyd:

– It is still your intention, is it?

Dr EVERINGHAM:

-The honourable member interjects and asks whether it is our intention to abolish these charges. Basically this was best answered by the honourable member for Kingston (Dr Gun), who said that we have to look for better deterrents to over-prescribing than just putting the charge on the patient. We are moving in many directions to do that, particularly with prescriber information and prescriber education programs, which I have described in detail at another time and which I will not go into at the moment.

Let me answer the question that the honourable member for Murray (Mr Lloyd) keeps raising, particularly by interjection. He asks: ‘If you put a charge on for drugs, why don’t you put one on for doctors?’ It has been shown in Canadaand elsewhere- in the various provinces that have tried both systems that if you put a socalled deterrent charge on the consultation and charge a patient for seeing a doctor, according to the doctors’ own estimates, you reduce overusage, wrongful usage, unnecessary usage, usage by people who just want a sympathetic ear or who are in some way misusing the doctor, by something like Vi per cent, but you are inclined to deter people who really should go to the doctor but who are not particularly motivated to go to the doctor and would rather save their money, and in fact you are deterring something like Vh per cent. In other words, you have to steer that line between deterring over-treatment and deterring under-treatment. We think that the balance comes down on the side of enabling people to go for a free service if they choose it, giving them that chance, that opportunity, that choice of the 2 systems, which has been done in Queensland, as I keep pointing out, for 30 years. So a charge on doctors is not strictly comparable with a charge on drugs. Even those countries which have not imposed for many years now a charge on doctors have reimposed charges on prescriptions. Britain and the Soviet Union are 2 countries where people pay a modicum for prescriptions which were formerly free because authorities have not yet evolved a more efficient way of deterring the over-use of drugs. Although these countries think that the system of the charges is imperfect and that, as the honourable member for Kingston said, we have to look for better methods, they have not been prepared to abolish it yet, although they have abolished the charge for doctors.

It was said that the Pharmacy Guild of Australia has been betrayed. This matter is rather peripheral to the Bill, of course, but for just a few minutes I want to deal with this issue. The Minister for Health in 1972, Sir Kenneth Anderson, undertook that if there were substantial differences between the negotiating partiesthe Government on the one hand and the retail chemists, dispensers, on the other- either side could ask for arbitration. The Guild has written to me asking for arbitration but it has not specified on which issues. I replied some time ago to Mr Russell, the President of the Guild, and I hope that he will indicate whether he wishes arbitration on the question of goodwill being counted for the purposes of calculating prices or whether he wants the calculation to take into account the issue of economic pharmacies as against all pharmacies. On the matter of whether calculations should be based on all pharmacies, as the Guild wants it to be and as the Chairman of the Joint Committee on Pharmaceutical Benefits Pricing Arrangements, Sir Walter Scott, wanted it to be, or based only on economic pharmacies, as the Cabinet has determined it should be, my legal advice is that it is in fact outside the terms of reference of Sir Walter Scott. His commission is to work out the facts on which a fair formula shall be based, but it is not for him to determine a policy matter, and whether all pharmacies are considered in the calculation or whether only economic pharmacies are considered is a policy matter. This is a fine legal point, and as things stand at the moment this is the issue to be determined.

I come to the question of the isolated pharmacies, which will be penalised under the formula being adopted. I agree that they will be, and the Guild agrees that they will be, although the Pharmacy Guild did not make any exception of these pharmacies in the present pricing negotiations. It has not put up a firm proposition as yet. I think it should. I have suggested that in further pricing negotiations to take effect this financial year it should do so. I think the people who run the isolated pharmacies have a good case for up-dating the consideration of factors to do with the isolation of their pharmacies giving a service which, on the face of it, is uneconomic but which, when looked at from the point of view of social surroundings, the environmental situation and their geographical placing deserves special recognition. That is an issue separate from the question of whether we should look at economic pharmacies only or whether we should look at all pharmacies.

Let me stress that the concept of economic pharmacies is not one that the Government raised but is one that the Guild raised. It asked the Government to reduce the number of pharmacies. I submit that if there is one way which is fairer than any other to decide which pharmacies should go out of business, bearing in mind that it was the Guild which asked the Government to reduce the number of pharmacies, it is the free enterprise way which both speakers from the other side of the House said ought to be protected. The free enterprise way is that a business that is uneconomic and cannot make a go of it is the one which should go. This formula is the fairest one available to us at this time. Certainly some of the most economic pharmacies were making a profit even on the old figures, and even before they got any of these retrospective payments they were still making at least a 4c profitand that applied to quite a slice of them. Most of those in the top stratum of the 6 strata were making a profit and would have even continued to do so even if we had granted no increase as a result of the tribunal’s findings. We have to draw a line somewhere.

What is the suggestion of the Opposition for a way to weed out pharmacies which are not economic? The Government thinks that the method it is adopting is the fair and just way and that Sir Walter Scott exceeded his brief in suggesting that we should ignore what the Guild put up to us and should look at the cost of prescribing for every pharmacy as though we should support any industry no matter how inefficient it is. We do not accept that formula. I have not time to go into all the matters raised but if any honourable member would like to raise a particular point with me individually I would be happy to give him an answer to the best of my ability.

Question resolved in the affirmative.

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

page 508

QUESTION

PORTUGUESE TIMOR

Ministerial Statement Debate resumed.

Mr PEACOCK:
Kooyong

-The Prime Minister (Mr Whitlam) in the House this afternoon made a statement of the Government’s attitude to events in Portuguese Timor. The Opposition does not come into the House now with any magic formula to solve the tragedy in Timor. It does, however, come in with a preparedness to put forward proposals that may well assist. The Prime Minister’s statement was not only bereft of idealism, but was also completely denuded of realism. It offered nothing. The Prime Minister’s statement illustrates more clearly than anything I could say this afternoon the current bankruptcy of Australia’s foreign policy. After all the brave words about initiatives, after all the brave words about independence, when an ugly and dangerous situation erupts on our own doorstep this Government can do no more than courageously and independently wash its hands of the whole question. The Prime Minister announced that there will be no use of Australian forces in Timor. Of course there will not.

Mr Lloyd:

– We have not got any.

Mr PEACOCK:

– The question of the use of force by Australia in Timor or anywhere else is currently a non-question. It could be said in response to the interjection that after 3 years of neglect of our defence forces we have nothing significant to deploy without dangerously denuding our forces at home. The question of the desirability of the use of forces, therefore, does not arise. It is not an option open to us.

The Opposition recognises the basis of genuine concern on the part of Indonesia in terms of the turmoil in Portugal itself, in Angola and now in East Timor which forms part of the island archipelago of Indonesia, as well as in terms of the Soviet presence in the Indian Ocean and the Sino-Soviet rivalry in South East Asia. Who could but acknowledge the legitimate concern of the Indonesians and of the other countries of the region. Some may wish to pass over those realities but they are the harsh realities of international affairs today. What can Australia do? Do we in the Opposition go along with this sedulous washing of hands of 2 hours ago? We do not. Firstly, there is an organisation in being in the region, namely the Association of South East Asian Nations. We are not members of it although we are closely associated with it. It is widely considered that the central concern of ASEAN is to prevent outside interference and the kind of internal situation which would justify such interference in internal affairs. Is this then not the kind of situation where ASEAN could play an effective role, a role made even more effective by its close knowledge of the region, an advantage which the United Nations lacks? Have we made approaches to ASEAN to see what co-ordinated efforts could be made? No.

What then of the UN itself? To use the phrase in the editorial of the Age newspaper today: ‘It has burnt its fingers up to its elbows in peace keeping forces at the present moment’. Regrettably also its recent record in this regard is not reassuring. Nevertheless, on this second front, should Portugal take the matter to the United Nations we would support it. I will go on with third and fourth matters on a humanitarian basis in a moment, but think now of the opportunities missed by the Labor Government over the last 12 months, particularly since the removal of the right wing Government from Portugal, a government that had policies of colonialism, a government that one could have assumed would have been administering Portuguese Timor for quite some time. That changed. Left wing forces and divisive elements in Portugal took its place. This may be a bad thing, it may be a good thing. It is not for us to comment in the field of foreign relations on the internal affairs of another country. The reality is that we should have been commenting, if only amongst ourselves, on the changes this would have wrought in Portuguese Timor, on a policy of decolonisation, a policy shown in Angola and Mozambique and soon to be shown in East Timor. What did we do? We did nothing.

Surely this is a classic example of how events thousands of miles away can have a direct effect so close to our own area. Again we were myopic and closed our eyes to this. We could have returned the consulate. Some could say that a Liberal-Country Party government removed the consulate but again the reality was that that consulate was removed under a Portuguese government that saw fit to pursue a policy of colonialism, of remaining in charge of East Timor and not setting a program or schedule for any transfer or movement to self-determination. That changed when the nature of the government and its policies in Portugal changed. A consulate there could have predicted the events. Perhaps we do not want to bother about the facts, but the reality is that if there is a conflict between opinion and facts this Government forgets about the facts. Here it says: ‘Do not involve ourselves with a consulate in Timor; do not acknowledge the movements that are taking place elsewhere’. Furthermore, had that consulate been there it might have been able to co-operate in the field with the Indonesians much earlier. I acknowledge that at this moment we might well have been evacuating Australians if we had been so involved but earlier on it would have been a positive force for co-operative efforts in Timor itself at a time when circumstances were changing. Again there was no action, which mirrors the no effective words and no action of the statement today.

Furthermore the Government, following these non-events, as a deliberate act of policy has decided on its own behalf to opt out of any helpful role, as it did with the consulate and as it did with the change of government in Portugal. It was simply hoping that the matter would change, that it might go away. It should be remembered that my saying that the Australian Government ought to be operating at least on the premise of preparedness is not just the attitude taken by an Opposition spokesman now. It must be borne in mind that requests for assistance from Australia have been made by the Portuguese Government and by the Timorese people themselves. It is not the view of the Opposition being imposed on Portugal and being imposed on Timor; there have been requests and they have been virtually turned down.

What else can we do in the field of humanitarian aid? Obviously there is now a minimum number of doctors in Portuguese Timor. We could offer medical teams. It is the end of the dry season, and therefore there will be food supply shortages. So we could offer food. We hear nothing of that from the Prime Minister. In the short time remaining to me I shall deal with elements of the Prime Minister’s statement. In his first paragraph the Prime Minister says:

In our view, the program mapped out at Macao -

He says that all the leaders were in Macao, but I doubt whether the Fretilin Party was participating actively there- providing for steady forward movement towards decolonisation . . . , went a long way towards the objectives we support for the territory.

The reality is that this Government had 2 policies in relation to Timor and those policies were mutually exclusive. Either one or the other had to apply, but both could not apply. The Prime Minister had a policy of allowing the Timorese people to be incorporated into Indonesia, which many people would support. On the other hand, the Minister for Foreign Affairs (Senator Willesee) had a policy of self determination. The Government could not have both policies, but it sought to have a bob each way, as is frequently the case. Secondly, the Prime Minister says on page 2 of his statement:

We have been, however, and we remain opposed to Australian military involvement.

I dealt with that matter earlier on. He then says:

One of the first policy decisions of the Government, on assuming office in December 1972, was to determine that Australia would not intervene again in land wars in SouthEast Asia.

So the Prime Minister is saying: ‘Irrespective of circumstances, irrespective of the changing nature of international relations, irrespective of what is transpiring in the Indian Ocean, irrespective of the balance of forces and the opportunities for others to compete for influence- irrespective of those moves- we will turn our back’. The

Government says: ‘We will stick by the decision made in 1972, no matter what changes occur in the years ahead, never to offer any assistance ‘.

Dr Gun:

– Are you advocating intervention?

Mr PEACOCK:

-Does the honourable member support the Five Power Agreement? The honourable member refuses to answer whether he supports the Five Power Agreement. The reality is that the Five Power Agreement still operates. We are still members of an arrangement which involves members of the Services in the Five Power Agreement. If something occurs are those governments involved in that Agreement to take it that this Government’s decision taken in 1972 means that there will be no cooperation with them whatsoever? What is the worth of the Five Power Agreement? I hope that the honourable member who interjected will go on record later and elaborate on his distinctively different views from the Opposition on this point.

Dr Gun:

– Do you advocate military intervention in Timor?

Mr PEACOCK:

-I have already ruled that out. I will try to spell it out in words of one syllable, if the honourable member would like. No, I am not; but the honourable member ought to have been able to gather that from my earlier remarks. What I am pointing to is the inconsistency and the utter denuding of a policy approach on this occasion by the Prime Minister. His statement is one of double negatives throughout. It is a statement which says that we will not offer any contributions or assistance to the people of Timor, to the people of Indonesia, to the region. It is a policy lacking in concern. As the Prime Minister says on page 5 of his statement, Portugal cannot simply wash its hands of Portuguese Timor. I say that Australia cannot simply wash its hands of events in Portuguese Timor. As I said, if anything happens in Portuguese Timor it could have an effect on us because of its closeness to our shores. That again is ignored by the Prime Minister. On page 6 of his statement the Prime Minister says:

It is a responsibility that cannot be shrugged off on to others such as Australia.

Neither can it be shrugged off by Australia. For better or worse, we are in the region. We ought to be concerning ourselves along the lines that I have suggested. Those suggestions point not merely to the bankruptcy of the Government’s foreign policy but also to the fact that on a critical occasion such as this, when there is bloodshed and terrorism, we are not prepared either to act in conjunction with ASEAN, to act in conjunction with the United Nations, or to suggest some form of mediation. The Opposition does not come before the Parliament with a few words, waving a wand that will solve the situation, but it does not stand before the Australian Parliament opting out of a difficult conflict. It has shown in the past its capacity for facing realities in international relations. The Government has shown that it is continuing to run away from these realities. As I said, it is courageously and independently washing its hands of the whole question. It must be condemned for the statement made by the Prime Minister. It must be condemned for not offering more humanitarian aid. It must be condemned for not facing the facts of life. I have put these views on behalf of the Opposition as a stark contrast to what was offered the House this afternoon.

Debate (on motion by Mr Nicholls) adjourned.

page 511

RAILWAYS AGREEMENT (SOUTH AUSTRALIA) BILL 1975

Second Reading

Debate resumed from 20 August on motion by Mr Charles Jones:

That the Bill be now read a second time.

Mr NIXON:
Gippsland

-We are debating the Railways Agreement (South Australia) Bill 1975, the purpose of which is to approve the transfer of the non-metropolitan section of the South Australian Railways to the Australian Government. The Railways (South Australia) Bill was presented in late May, along with the Railways (Tasmania) Bill, and debated in this House on 2 June 1975. It passed through this House and then through the Senate. During the previous debate I pointed out the Opposition’s attitude to the Bill. I said at the time that the matter involved an agreement between 2 sovereign governments and therefore it ought to be left to the State Parliament of South Australia to ratify the agreement brought down by the sovereign government if it so desired. History shows what happened to the Bill dealing with this matter in South Australia. The South Australian people went to an election on the issue and, in point of fact, the South Australian Government lost 3 country seats, if I am not mistaken.

Mr Kelly:

-That is right.

Mr NIXON:

– Three country seats were lost over the Bill, which rather says to me that certainly no mandate was given to the Federal Government on this matter. When the Bill was last debated I pointed out that the Opposition would not impede the passage of the Bill at that time for the reason that it had been a matter of agreement between 2 sovereign governments. I explained perfectly plainly our attitude towards the Bill.

The first point I make is that we believe that the $200m that this legislation and the Tasmanian Railways Bill will cost the taxpayers would be far better invested in improving the State’s railway system. I cannot understand what the South Australian people think they are going to get out of this, apart from it giving a bit of relief to the South Australian Premier’s budgeting problems. It certainly will not lead to a better

Tail service in South Australia. The Australian taxpayer, who is funding this proposal, certainly will not see any benefit for the $202m-odd- I understand that the amount involved is in excess of that- which will be invested. I said previously that more equitable decisions should be made at the local level in respect of the railway systems. I hold the view very strongly- I repeat this- that centralised control will not improve the railway system of South Australia. I said at the time- I repeat it- that the Federal Minister for Transport, the Australian Government, or indeed any future Minister, would be unable to do anything in South Australia, even if they wanted to, because there is a veto clause in the agreement which gives the South Australian Minister for Transport or the South Australian Government the right to veto any measure which may be proposed by the Australian Government. So, no savings can be made without the approval of the South Australian Government.

Let me take the first point: One would have thought that some rationalisation and, indeed, prompt savings would have been achieved by the takeover of South Australian railways under this measure. For example, let me refer to the position in regard to staff. There can be no reductions in staff. Any proposals to reduce the levels of staff are specifically excluded by the measure itself. So, there can be no savings in that area. One would have thought that some rationalisation would have followed the merger of the Australian National Railways and the South Australian railways into one system. But, again, clause 9 of the Bill specifically prevents any change to the status quo in respect of the railway system in South Australia without the approval of the State Minister. What chance has the Federal Minister for Transport (Mr Charles Jones) of rationalising a railway system when there would be all the political hoo-ha should there be a close-down or threatened close-down or threatened change of any of the services in South Australia? Clause 8 prevents any rationalisation of the fare structure or the freight structure of the railway system. No relative advantage presently given to any South Australian industry can be altered without the approval of the South Australian Minister. So, there is very little that the Federal Minister for Transport can do to improve the South Australian railways system. On 26 May 1975 the Minister gave reasons to justify the transfer of South Australian railways to the Australian National railways system. He made a number of fine statements, one of which was as follows:

One may ask why the Government does not just provide the States with sufficient funds to bring their railways up to an acceptable standard. I must admit this solution has an elementary plausibility, in that it would appease the States. But it would be a denial of our responsibility to the railways and the people of Australia- that awesome responsibility that accompanies the spending of public money. We cannot, and will not, divorce the responsibility for raising funds from the spending of them.

That principle seems to be somewhat ambiguous. He applied that principle importantly to the non-metropolitan railway system of South Australia; but he does not apply it to the metropolitan system of South Australia. In fact, he was unable to secure agreement with the Premier of South Australia on the takeover of the metropolitan section of that State ‘s railway system. Apparently he was able to secure such an agreement in Tasmania but not in South Australia. So, the fine principle that he lays down as being a fundamental reason for taking over this railway system’ falls to the ground in his first experience. One is led to the conclusion that the Minister has failed to prove any gain for the Australian taxpayer, for the rail user or for the nation.

As I have said, this Bill and the Railways (Tasmania) Bill will cost the taxpayers in excess of $200m. The method of financing is quite extraordinary. I notice that in the Sixth Schedule attached to the back of this new Bill the Minister sets out how this money is to be paid. We are entering the hire purchase business. We are buying these railway systems on hire purchase. I know that the funds of the Commonwealth are pretty sketchy at the moment- I heard the Treasurer (Mr Hayden) tell us this last weekbut an extraordinary situation is outlined on the back page of the Bill. The Australian Government will pay an interest rate of 8.2 per cent for the first year of operation of the Agreement up to 1977 on the money that it will repay. From then on, the interest rate varies and the amount of repayment varies. The interest rate varies from 8.2 per cent down to 5.9 per cent in July 1977. It then drops to 5 per cent, increases to 6.8 per cent and again drops to 5.7 per cent. For the next year the interest rate is 5.4 per cent, and then it increases to 8.3 per cent for the repayment to be made in 1983. The Australian Government finally pays off this railways debt in the year 2005.

Mr Kelly:

– Where is this?

Mr NIXON:

– I am citing the figures which appear in the Sixth Schedule on page 15 of the new Bill. I do not understand what has happened. It looks as though the Government put its fingers into the lottery barrel and drew out a figure for what the interest rate should be. It also looks as though the Government put its fingers into the lottery barrel to decide what annual sums ought to be repaid. Again, the Sixth Schedule to the Bill shows that the amount of the payment jumps from $5m in one year to $6m in the next, then goes down to $4m in the next year, increases to $6m in the next, and then goes to $ 10m, $3m and $ 17m in the following years. We must be in for a flush year in 1983. In October 1 983 the debt repayment to be made by the Australian Government totals $20m. In the next year it drops to $ 1 5m. I point out to the nation that we are in for a lousy year in 1989 because in that year we can afford to repay only $3m to South Australia. And so the figures go on. The whole thing lacks consistency. There is no explanation from the Government of the variation in interest rates. There is no explanation by the Government of the variation in the repayments that are to be made.

I have made the point and I make it again: I believe that this vast sum of money would be much better expended if it were to be spent on capital works in the railway system. No one would deny that all the Australian railway systems need capital injection. Yet under this legislation we are placed in the extraordinary position of spending $200m of the taxpayers’ funds to gain nothing apart from a transfer of ownership. We gain no rationalisation and no savings. I think that this has been done merely to satisfy the ego of the Prime Minister (Mr Whitlam). It seems to me that he launched this whole matter in the first place.

Mr McVeigh:

– You would never satisfy his ego at all.

Mr NIXON:

– I agree that it would be very difficult. He has a very deep ego. When I look at what other countries have done in respect of capital investment in railways, I just wonder what this $200m could do in respect of fully automated railway yards for a start. I notice that railways such as the Austrian Federal Railways, the British Railways, the Canadian Pacific Railways and the French National Railways all have fully automated railway yards. The French

National Railways has 7 automated railway yards, the German Federal Railways has 3 fully automated yards, the Italian State Railways has 3 automated yards, the Japanese National Railways has 7 such yards and even the tiny state of Luxembourg has an automated railway yard. South Africa has 2 automated yards, Sweden has one and Switzerland has four. They are very expensive, but they are very good in terms of cost saving. Then we come to Australia. Apparently, in its wisdom, the Western Australian Government has established one automated yard. I suggest to the House that the $200m set aside for expenditure under this legislation would do much more for the railway systems of Australia if it were invested in automatic railway yards in South Australia, Victoria and New South Wales. It is true that the Premier of South Australia will relieve his Budget situation as a result of this Bill. But this Government should not have the responsibility of solving the Budget problems of only the Premier of South Australia. He has broad enough shoulders to solve his own difficulties.

I turn now to the user pays principle that is so much espoused by the Prime Minister and also heavily espoused by the Minister for Transport. We can see the user pays principle being put into operation in the general aviation industry throughout Australia. I ask honourable members to look at the position in which the general aviation system has been placed by the adoption of that principle. The user pays principle has almost wrecked the general aviation industry throughout Australia. The Minister for Transport is adamant that the user must pay. He claims this in almost every speech he makes. Yet I see no evidence of him saying that the railway users must pay the full cost of operating the railways; nor do I see any studies to show what the costs might be. The Minister fails to recognise that the railways traditionally have been a service to the people of Australia from one end of the country to the other. The people look upon the railways as a service. If he starts adopting the principle that the user must pay in respect of the railways, there will be some tremendous shocks in South Australia when the Government finally manages to screw up the fares and the freight rates.

I am inclined to ask: Why is it that we are taking over this railway system? I remember that the Prime Minister made this promise as a policy speech pronouncement in 1972. I think that at that time he was fond of using the phrase ‘comparable countries’. The Prime Minister claimed at the time that almost every country with a federal system comparable to that in Australia had a unitary rail system. But he has misled the Parliament and the Australian people on this point.

Mr Lucock:

– Not for the first time.

Mr NIXON:

-It might not be for the first time, but he certainly has done it on this occasion. The Prime Minister cited the position in Canada. The simple fact is that there is a mixed system of railway ownership in Canada. There is a system owned by the Canadian Government and there is a great variety of privately owned railways. In the United States of America there is the same mix of privately-owned and public railway systems. Let me cite the case of Switzerland. It is about the size of Tasmania. It may well be wise for us to consider the proposition of one government owning one railway in a State the size of Tasmania. The Tasmanian Government owned the Tasmanian railway until big brother stepped in and decided that he would like to take it over. West Germany might be the size of Victoria. It is probably sensible for a small country like West Germany to have one railway system owned by one government. But the simple fact is that the Prime Minister has misled the Australian people on this matter. I pay tribute to John O’Hara for an article which he wrote for the Sydney Morning Herald of 5 August this year. I read it to the House because I think it tells us what is in the Prime Minister’s mind more accurately than I or the Minister for Housing and Construction (Mr Riordan), who is sitting at the table, can do. It states:

A month spent in search of the Whitlam Government’s prepared case for a takeover of the States’ railways system has established, literally, that there is none. The grandiose scheme, which could involve the Federal Government in a total commitment of some $3,000-$4,000m -

The Prime Minister might have to go to the Arabs to try to raise another loan- or more in the long term -

Or even more money than that- turns out to be the personal hobbyhorse of none other than the Master himself- the Prime Minister, Mr Whitlam.

I could have written this myself. The article continues:

As such, and in keeping with his preference for governing by edict rather than consultation and justification, Mr Whitlam has foisted the proposition on his Transport Minister, Mr Jones, and has left Mr Jones to make a plausible case for it as he goes along.

I am afraid that poor Mr Jones has failed dismally to do that.

Mr Mc McVeigh:

– Dr Cairns?

Mr NIXON:

-Dr Cairns has gone. The article states:

Ostensibly Mr Jones’s department has been in the throes of making out a prepared case since being asked for it a month ago, but so far the opus has not emerged.

This is not to say that there may be no good grounds for a takeover. Certainly it would relieve the State Governments of most, if not all, of their immediate budgetary problems if they could get the same kind of deal South Australia’s Dunstan Government got, although its benefits to travellers remain obscure.

I think that puts the matter completely in a proper nutshell. No studies have been made by this Government. No studies were made by the Bureau of Transport Economics. No cost benefit analysis was made of the value of taking over a project such as the South Australian railway system. The Prime Minister has introduced this as a grandiose scheme to resolve the transport difficulties of Australia. The fact is that it is a complete nothing. For example, it cannot be compared with the standardisation of the Australian railway system which we managed over a period of years when we were in government. Every mainland State capital from Perth to Brisbane was joined by standardised rail. There is no comparison.

No gains can be made in this project. It is a pointless and thoughtless political proposal which will cost the taxpayers a great deal of money and, in the end, lead to very little good result. One or two other points need to be made. I am told that the BTE is to carry out an evaluation. The Minister has reaffirmed this in his speech. South Australians ought to be aware of it. If they are of any mind that they will get some gains out of this takeover I ask them to look at the Minister’s second reading speech. He states:

Long overdue improvements and economies can be made- our first task will be to prepare a program of improvements for the South Australian region of ANR- a program that will be carefully evaluated by the Bureau of Transport Economics to ensure that maximum benefits are obtained from the finances that will be provided.

No BTE study was made in the first instance about the value of taking over the South Australian railways. That was a political decision. No benefit can be shown. Yet for every dollar which we spend now the BTE will be asked to make a study to see that there is a proper and reasonable yield from that investment. That might be fine. One may not be able to argue against the need for BTE studies, but why was not a BTE study made in the first place, published and laid on the table in accordance with the great open government policy which we have? Why did the Government not have a BTE study made and tell us the truth about the gains which could be made?

Now every dollar which will be spent in South Australia will be subjected to a BTE study. I would like to know how some of the remote country freight lines which have a heavy yield and traffic only in the wheat season, with very little for the rest of the year, can demonstrate a real yield which will satisfy the BTE that money ought to be spent. I would like to know how the low passenger traffic on some of these lines can cause the BTE to bring down a report which will encourage investment. I think South Australia will get a raw deal out of the whole matter. I say one thing about the Minister’s speech. I have been at him ever since he became a Minister on this subject. For the first time it is noted for its lack of length. It is brief. I congratulate him on it. It is about the briefest speech he has made since he became a Minister. But, more importantly, for the first time a second reading speech does not carry the political dogma which his speeches normally do. The Minister has refrained at long last. He has learnt the lesson that second, reading speeches should not be a bible, taken from the sayings of chairman Gough, from Labor Party meetings and annual conferences, or from platform and policy.

For the first time he made a technical speech which sets out the facts in relation to the case and does not contain political dogma. I congratulate the Minister on having learnt a hard lesson the hard way. I have been nearly 3 years training him but I am gradually getting him to the point. He is gradually understanding what this Parliament is about and that when he makes a speech it ought to be a speech of fact and nothing else. Now that he has come into the House I congratulate him again on that point. There are a couple of questions I would like him to answer, if he is able to do so. Concern has been expressed to me by farmer organisations in South Australia about what will happen to the silos which are built on railway territory. No answer has been given in relation to those silos. The farmers would like to know whether they will retain control of the silos. They provided funds for them. They would like to know the answer to that question.

As the Minister was not in the House earlier, I shall repeat a question. Can he explain the sixth schedule which causes South Australia to repay at different interest rates every year? There are different repayments in terms of millions of dollars each year. This schedule is found at the back of the Bill. What causes the interest rate to run from 8.2 per cent per annum to 5.9 per cent, then back to 1 per cent and so on? Why is there a change? The final question I have through you, Mr Deputy Speaker, is: Will the Minister assure the House that the amendment we moved to the

Australian National Railways Bill will be followed in spirit and that the Australian Government will not set up road transport operators to run all over the place in competition with the private road operators wherever rationalisation of the railway system takes place? Concern has been expressed to me in South Australia because there is great fear about what the Australian Government might do. I remind the Minister of the amendment which he accepted. I trust he will follow the spirit of that amendment. I have set out the Opposition’s view to this Bill. We do not like it. We would not have a bar of it if we were in government. We think there is a better way of spending $200m than paying off South Australia’s debts. It should be responsible for its own bad management over the years. We could do a lot better with the $200m which is to be spent to upgrade the South Australian railway system. I repeat that we will let the Bill go through. It is an agreement between 2 sovereign governments. As the South Australian Parliament has had an election on the issue the Bill has the right to pass.

Mr WALLIS:
Grey

-I shall pick up a few points in relation to the speech made by the honourable member for Gippsland (Mr Nixon). In the first place he mentioned that the Railways Agreement (South Australian) Bill will provide Don Dunstan with help so that he can overcome his deficit. When one sees the deficit which exists in the various States governed by the Liberal Party one thinks that no doubt such governments would like to get their hands on this money. Another point which the former Minister made was when he criticised the present Minister for Transport (Mr Charles Jones). The honourable member said that the powers which the Commonwealth has do not mean a thing because the State can veto anything that takes place. That was rather a contradiction by the honourable member for Gippsland. When we were discussing the roads legislation in this place not so long ago the honourable member said that the State Minister was required to furnish programs and so forth to the Federal Minister to get finance, and he said that the Federal Minister would become a dictator. The Federal Minister can discuss with the State Minister rationally over the table in a give and take situation. They may decide that if they do not reach agreement they can go to arbitration.

I think it is agreed that most State railway lines cannot be closed without the agreement of the State. I think that is quite reasonable. In part of my electorate the Commonwealth railway system carries the coal down to serve the power houses in the northern Spencer Gulf region. There must be some way of ensuring that the railway is kept open. It is vital to South Australia. This was a point of argument previously between the Commonwealth and the State. Another point I would like to mention in talking about the States offering their railway systems to the Commonwealth is that the first two premiers to make this offer were the Premier of Victoria, Sir Henry Bolte, and the Premier of New South Wales, Sir Robert Askin, both of whom had problems with their railway systems. Both States have massive deficits and the railways are in a hopeless situation. The only way to solve the problems to my way of thinking, is by a centralised approach to railway systems so that we can get the maximum amount of use out of our railway systems.

I would like to touch on a few other matters connected with the Bill. We all know what happened with this Bill. It was introduced into this House and passed. Enabling legislation was introduced in the South Australian Parliament where it was passed in the Lower House and was rejected in the Upper House. As a result the Premier of South Australia decided to hold an election on this issue. We all know the result. People can say that Labor lost seats in South Australia. We certainly lost 2 country seats and also one provincial seat, but nobody can tell me that the people of Port Pirie did not vote for the takeover of the railway system. What about the members of the Liberal Movement, and the people who supported the Liberal Movement which was in favour of the amalgamation of the railway systems. I think that Don Dunstan on being returned to office can say that he has a clear mandate from the South Australian people to go ahead with the Agreement. The result is that the Bill has passed the Lower House and the Upper House in South Australia and the Agreement comes back to this House today for our ratification. I am sure that this legislation will pass both Houses of this Parliament.

I would like to raise a few other matters with the Minister. My electorate has quite a number of railwaymen. It has part of the present South Australian railway system and contains about 1000 miles of the old Commonwealth Railways system. We realise that it will take some time for the procedures for combining the 2 systems to be worked out. It could possibly take 12 months. Of course there will be problems. I notice that the Minister spoke in his second reading speech of proclaiming a date for amalgamation some time hence after the procedures have been worked out.

One thing is causing some concern in the area. I realise there are always people who back away from change. They are frightened that change will bring some alteration to their position and that they possibly will be disadvantaged by it. It is a fact that both the State Minister for Transport and the Australian Minister for Transport have given assurances to the employees of both railways systems that they certainly will not be disadvantaged by what takes place. Of course this has not allayed the fears of quite a number of people. It is a fact that anybody who knows the Commonwealth Railway system appreciates the terrific amount of capital investment that Commonwealth Railways has in the Port Augusta area, with its workshops, administrative offices and so forth. It is quite unlikely that any alteration to railway procedures will drastically affect that area. The installations there will not close right up. Too much is involved.

The Minister has stated he looked upon Port Augusta as possibly the Chicago of Australia. We certainly hope that some development along those lines takes place. It is obvious that the Government will ensure that the facilities- they are quite modern and include probably the most modern diesel electric locomotive maintenance shop in Australia- will be utilised. There is still concern by some of the Commonwealth Railways employees about what the future holds, not so much as to whether they will have a job but rather as to whether their lines of promotion will be preserved and whether they will be required to move from, say, Port Augusta to Adelaide or wherever the headquarters of the Australian National Railways are to be located. We certainly hope that once the Commission has been set up- 7 people will be appointed to the Commissionpositive and clear decisions can be given so that those railway people will know where they are going.

One other problem that arises is the question of Port Pirie. Port Pirie has to face 2 problems. One is the effect, if any, that the takeover will have on the railway employees in Port Pirie. What effect will the takeover have on the job opportunities of employees of the Australian National Railways or former employees of the South Australian railways? Also there is the question of the standardisation of the railway line from Adelaide to Crystal Brook. I feel that 2 problems face the people of Port Pirie and they are causing some concern to the local people and to the local member of Parliament. He recently took a deputation down to see the State Minister for Transport. Certain discussions took place and certain suggestions were made. I understand that the State Minister is suggesting that a committee be set up representing the Australian National Railways and various people in the area and so on, to ensure that, if any move takes place in the area, the jobs of people there at present, many of whom own homes, are protected.

As to the Australian National Railways employees in the area, people are concerned at the possible effect the amalgamation will have on the dining car facilities which are now serviced out of Port Pirie. My understanding is that neither the Minister not the Commonwealth Railways Commissioner has indicated at any time that any alteration will be made to the existing services at Port Pirie. Port Pirie services dining car crews on the east-west line and also on the north-south line to Alice Springs. As I said, these are a few of the things to which I would like the Minister to give some attention. Some people, not without good reason, are possibly getting a little apprehensive. I feel that the only way this can be overcome is by the Minister coming out with some forthright statements as to what the future holds for these people.

One matter I intended raising was mentioned by the honourable member for Gippsland. I refer to the question of ownership of the co-operative bulk handling facilities following the amalgamation. I have noted quite recently that this seems to be causing some concern in the rural areas. It is causing concern in the Port Lincoln division of my electorate where there are quite a number of silos which, to the best of my knowledge, are all on railway property. Apparently they have been built with money provided through the co-operatives. I would like the Minister, if he would, to have a look at this question to see whether we can give these organisations a positive answer as to how their co-operative bulk handling facilities will fare in the takeover.

Mr McVeigh:

– They own them. They are entitled to them.

Mr WALLIS:

– That is all right. I am sure the Minister will give us an answer. Do not get concerned. I am sure quite a number of points which the honourable member for Gippsland has raised will be ably answered by the Minister. The people of South Australia support the Bill. It is a step in the right direction, as was the takeover of the Tasmanian railways. I am sure that as time goes on it will be like Medibank. Everybody kept out of Medibank until they saw the scheme probably would succeed. We hope that in the future the other States which are now so adamant about not coming into a national railway system will change their minds and come in and join the Australian National Railways. I fully support the Bill.

Mr KELLY:
Wakefield

-The honourable member for Gippsland (Mr Nixon) set out with crystal clarity the Opposition point of view. Briefly, as he said in his inimitable way, we would not have a bar of the scheme and the only reason that we are supporting it is that it is an agreement between 2 governments. For that reason and that reason only we are not opposing the Bill. I think the honourable member for Grey (Mr Wallis) ought to be more careful about the way he speaks about the mandate of the South Australian Government. As you would know, Mr Deputy Speaker, Labor lost 3 seats in the last election in South Australia, all of them in the country. Port Pirie was certainly looked upon as the bluest of blue Labor seats which just could not be lost. That was won by an independent. Two other seats, Millicent and Mount Gambier, were lost directly as a result of the concern of the country people over this railway agreement. I know that this is a fact and I am certain that the honourable member for Grey admits it also.

The South Australian Parliament agreed to the proposal because the Australian Government holds the money. I can understand this. It is a clear example of the power of the purse. The South Australian Parliament was bought. It agreed to the proposal to get rid of its deficit. It was in some trouble. The Dunstan Government has been very lavish with expenditure. The mass of public relations people on the staff of the South Australian Ministers is only a sample of its profligate use of money. Because of this South Australia’s deficit was getting large and the South Australian Parliament grasped the opportunity to unload its financial problems on the rest of Australia. It is quite clear that there will be no advantage from this agreement. The railways will not run any better. They will probably be run worse- some would have said, even worse. They will have the same people running them. But what is more, the Australian Government has imposed on them a system which the Minister for Transport (Mr Charles Jones), if he were frank with us, would admit just could not work or, if it does work, will work with immense difficulty.

He will put the South Australian railway system in hobbles. Railways do not run well in hobbles. A lot of people would say that they do not run well anyhow. But put them in hobbles by having a metropolitan and a country system both running over the same lines and there will be an administrative mess that, if it is not impossible to work, will work very difficultly. So the proposal will make it unlikely- I would say impossiblethat the system will work any better. My own judgment is that because of this problem of division of direction between the country and metropolitan sections the system will not work so well. So we will probably have a total cost that is bigger than that proposed and it will have to be met not by South Australia but by the taxpayers in other areas. The Government will use this proposal as a reason for other States to be treated in the same way. Then we will have a picture in which the increased deficit on railways will be met by taxpayers in other States. I suppose then South Australia will have to pay for the other people’s losses.

There are other problems. The honourable member for Grey mentioned the problem of the co-operative bulk handling. I hope the Minister can answer this. I know it was pursued relentlessly in the Lower House in South Australia and, I think, in the Upper House where the members could not have inserted into the legislation a clause which forbade the taking over of the CBH facilities. I have always said that no government- even our present Governmentwould be stupid enough to do this, but I should like an assurance from the Minister that it is not likely. The question that has been raised on this legislation which makes my blood run cold, as was mentioned in the previous debate on the Bill, is in relation to clause 13 of the schedule, which states in part:

Nothing in this clause shall operate to restrict the introduction of new freight or passenger road services-

It states further:

Australia or the Commission shall not be liable to pay any fees, taxes or other charges in respect of such services -

This provision gives the opportunity for the Commonwealth Government to come in and just put road transport operators out of business. I hope the Minister will give us an assurance that this is not his intention. I am glad to see the honourable member for Gippsland pressing the Minister on this point. This is the real reason why the people in the south east of South Australia turned savagely on the State Government in Mount Gambier and Millicent. There is a genuine fear that the Commonwealth now has the opportunity to choke the private industry road transport. I have yet to hear the Minister explain why this provision is deliberately included in this legislation giving the Commonwealth Government the opportunity to break the private sector.

I want to raise another point of principle, that is, that this legislation is another example of the erosion of the State functions. I do not say this process altogether started with the present Labor Government. We were in it too. Legislation in regard to universities was probably the first example. We came in with our superior money power and took over the responsibility for tertiary, secondary and primary education, and we went on to assume responsibility for roads. Under this Government responsibility has been assumed for local government and health. Now this legislation proposes to assume responsibility for railways in South Australia. It will not be long before members of the State Government do not have any real responsibilities except opening things. There may not be any functions left for them. Members of the Australian Labor Party- I give them credit- are quite open about the fact that this is their aim. They want to get rid of the State governments.

The Opposition has to admit that by agreeing to this proposal it is putting another nail into the coffin of the federal system. I repeat that the Australian Labor Party will be glad about this. It would like the federal system to be replaced by a unity system. On our side of politics I think we ought to be more aware than we are- than we generally are, anyhow- about what we are doing by acceding to the South Australian Government’s plea for its railways system to be taken over. It is being taken over because the Commonwealth has the money. That is the only reason for it. It is another nail in the coffin of the federal system which the Australian Government will drive in with enthusiasm and which I see driven in with real regret.

Mr CHARLES JONES:
Minister for Transport · Newcastle · ALP

– in reply- I wish to reply to just a few points raised by the honourable member for Gippsland (Mr Nixon). He asked a number of questions which I shall endeavour to answer. The first one that he was concerned about was in relation to wheat silos. Naturally in the agreement we take over all existing conditions, contracts, assets and liabilities. The South Australian Railways had an agreement with the owners of the wheat silos; that agreement will transfer to the Australian Government. Clauses 6 and 7 make the Agreement retrospective; so the situation is that the owners of the silos are fully protected. I do not know whether the point at issue is whether they want an Australian Government landlord or a South Australian Government landlord, but they are fully protected.

Mr Nixon:

– They will continue under the same terms?

Mr CHARLES JONES:

-Yes, of course. From our point of view, their assets and rights are fully protected. The honourable member referred to the Sixth Schedule and to the variations in interest rates therein. When the honourable member asked about the period of the loans involved I tried to obtain the information, but it was not possible to do so immediately. If the honourable member wants the information I can obtain it from the Treasury. That information is not readily available. There are fluctuations in the interest rates and these fluctuations occur because of the commencing dates of the loans. We know the maturity dates, but we do not know whether the loans are for periods of 20, 30 or 50 years.

Mr Nixon:

– This will be a take over of South Australian loans?

Mr CHARLES JONES:

-Yes, loans that the South Australian Railways has negotiated. The honourable member referred also to the closure of lines. That situation is protected under the terms of the Agreement in respect of the closure of lines and reductions in services. I refer the honourable member to Part II of the Schedule and to section 9 in particular. It reads:

  1. The Australian Minister will obtain the prior agreement of the State Minister to-

    1. any proposal for the closure of a railway line of the non-metropolitan railways; or
    2. the reduction in the level of effectively demanded services on the non-metropolitan railways, and failing agreement on any of these matters the dispute shall be determined by arbitration.

  2. The arbitrator shall, in addition to the factors referred to in sub-clause (2) of clause 23, take into account the level of public demand and the need for the railway line and services referred to in sub-clause ( 1 ) of this clause.

In reality the position is quite clear. Before we can close a line we must secure the agreement of the State Minister. If we cannot get agreement, the matter goes to arbitration and the matters to be taken into consideration there are clearly spelt out.

The honourable member for Gippsland was concerned about proposals with respect to roads. He referred to the Australian National Railways Act. I point out that the Government accepted a provision which he and I negotiated. That provision is contained in the Act in words that he and I accepted. We agreed to amend the former Act so as to meet the Opposition’s requirements. I have no intention of welching on that agreement.

Mr Kelly:

– Will that apply to this agreement?

Mr CHARLES JONES:

-Of course. Once the Australian National Railways takes over the non-metropolitan section of the South Australian Railways it will become part and parcel of the Australian National Railways.

Mr Kelly:

– Why is that not stated in the Schedule?

Mr CHARLES JONES:

-It is in the Australian National Railways Act, which is the important thing. It is a section which the honourable member for Gippsland and I negotiated, he on behalf of his Party and I on behalf of the Government. The conditions that will apply are clear. It says that we can operate road services incidental to the operation of a railway. In fact we believe that the system of road transport from Melbourne to Port Augusta for the transport of cars for car manufacturers was carried out illegally. The same applies with respect to coordinated road and rail transport to Alice Springs and northwards. This is now being provided for legally under terms which the Opposition’s shadow Minister and I agreed. I do not propose to welch on that agreement. I think I have dealt with the points that were raised in the debate by the honourable member for Gippsland.

My colleague the honourable member for Grey (Mr Wallis) raised the matter of the future of people now employed by the South Australian Railways. An amalgamation is taking place. Men already employed by the Australian National Railways, formerly the Commonwealth Railways, have their conditions prescribed. There will be an amalgamation of the various systems which will all become part of the Australian National Railways. The conditions of employees of the South Australian Railways are adequately protected. They have been negotiated with the trade union movement. The Government has said to those trade unions whose members are employees of the South Australian Railways: ‘These are the conditions in the South Australian Railways and these are the conditions in the Australian National Railways. You can take your pick. After you take your pick, all new employees coming into the service will come in under Australian National Railways conditions. Those coming over can take their pick’. In my lifetime I have seen many transfers of employees which have involved trade unions as well as rearrangement as a result of amalgamations. It is surprising how quickly difficulties are worked out of the system. People leave and people retire from an industry, and before long everything is settled and there is no longer any problem. I think that situation will apply in this instance.

Question resolved in the affirmative.

Bill read a second time.

Third Reading

Leave granted for third reading to be moved forthwith.

Bill (on motion by Mr Charles Jones) read a third time.

Sitting suspended from 5.52 to 8 p.m.

APPROPRIATION BILL (No. 1) 1975-76 Second Reading (Budget Debate)

Debate resumed from 19 August, on motion by Mr Hay den:

That the Bill be now read a second time.

Mr MALCOLM FRASER:
WANNON, VICTORIA · LP

– At the outset I should like to compliment the Treasurer (Mr Hayden) for the work that he has put into presenting his Budget. He has obviously devoted a great deal of energy to it. There are many aspects of it with which we do not agree, so I do not compliment him on the quality of all of it by any means. But it is his first Budget and in view of other problems that he and his colleagues have had he has obviously done some work in relation to it.

The current crisis in Australia is however much more severe than the Government or the Treasurer admits. It is a crisis evidenced by the highest prolonged inflation in Australia’s history and by the highest unemployment since the great depression of the 1930s. It is a crisis which eats away at the security of every Australian, at our confidence and at our way of life. The principal source of this crisis has been the immense growth in Government spending since 1972. Government spending has risen by $9,405m in 2 years -an 80 per cent increase. Despite the claims of the Government that overseas factors have been a significant cause of the current crisis, the International Monetary Fund in its July report, the report of the Organisation for Economic Cooperation and Development released last week and the Treasury in Budget Statement No. 2 all deny the claim and point straight to the domestic activities of the Government as being responsible for our problem.

Government spending has been funded by higher and higher taxes. Since Labor came to power taxes have taken a 25 per cent bigger proportion of his wages from the man on average weekly earnings. This in turn has been a major factor in the explosion of wage and salary demands which have depressed company profits to the point where there are no longer sufficient funds to expand production and investment and create jobs. The principal job of this Budget should be to combat inflation. To do that it must restrain Government spending, provide a sound foundation for wage restraint, give relief to individuals from the rising tax burden and create conditions under which companies have both the funds and the incentives to expand production and job opportunities. There is a heavy duty on the Government to ensure that it uses the instrument of the Budget to meet these needs most effectively and not be diverted for narrow political ends. There is equally a duty on the Opposition to assess a budget responsibly and with care- particularly one brought down under present circumstances. The interests of Australia would not be well served if the Opposition simply took a negative and destructive approach to whatever Budget the Government presentedrefusing to concede merit where it was due and finding fault with every petty detail. If this crisis continues or gets worse, as I believe it well may, we shall all suffer- the Government, the Opposition and more important than either of us, the people of Australia.

Today I propose to discuss the Opposition’s view of the nature and seriousness of the present crisis and to set before the nation the measures we believe are necessary to get Australia out of that crisis. In our view the Budget does not meet the problems Australia faces. It does not adequately restrain Government spending. It does not give real and enduring tax relief to wage and salary earners under conditions of inflation as now exist. It does not provide a sound basis for wage and salary restraint. It does not ease, and in fact worsens, the cost burden on industry and does nothing to stimulate production and the expansion of job opportunities. It will not solve, but rather worsen, unemployment. In our view the Budget strategy has been wrecked on the philosophy of the Government. In one of the most serious crises in our history the Government has preferred redistribution to production, Government spending to jobs.

Some have hailed this Budget as responsible. There appear to be 3 main reasons for this. The Treasurer has accurately identified some of the major problems, though he seriously underestimates the gravity of the situation. Inflation is the most serious problem Australia faces. There is no choice between inflation and unemployment. Unless inflation is cured, unemployment will be far worse. Government restraints, tax relief and business incentives are required. There is an appearance of restraint in the Budget which unfortunately does not stand examination. The

Treasurer has stated that his tax reforms mean genuine tax relief. The reality has been obscured by the presentation, the substance by the rhetoric. None of these so-called ‘responsible’ elements of the Budget stand close examination. The Treasurer’s identification of the problems would carry more conviction if we had not heard before- on a number of occasions- almost identical statements from former Treasurers and from the Prime Minister (Mr Whitlam). On each occasion we have been presented with what purports to be a sober assessment followed by an expression of faith and hope for the future. In July last year, for example, the then Treasurer- 2 Treasurers ago, I believe- warned that ‘inflation cannot be beaten without severe costs. The plain fact is that we no longer have any real choice, the Australian economy now faces a highly dangerous situation. . . . Public expenditure must be restrained.’ That warning was made 2 Treasurers ago. That remark was followed by the most irresponsible spending spree in the history of Australia in a year in which a planned deficit increase of 32 per cent became an actual increase in Government spending of 46 per cent.

The Prime Minister periodically assures us, as he did before the May 1974 election, that things are turning up- even though this remark is always followed by another downturn. In April this year this modern Micawber once again assured the nation: ‘We are now beginning to see the upturn we have sought so earnestly.’ The only things that turned up were unemployment and inflation. This record should be a warning not to be satisfied with words but to look very hard at the performance of this Government. We must look to the substance of this Budget, not to its concealing blanket of words. The claim that there has been restraint in Government spending cannot be matched against the facts. How restrained is a Budget in which the pay as you earn tax take increases by 43 per cent while wages are projected to rise by only 22 per cent? How restrained is a Budget in which Government spending rises by $4,000m in one year? How restrained is a Budget which involves a $53m program for embassies abroad while halving expenditure on medical research? How restrained is a Budget which will further increase the Government’s share of national resources if its very dubious projections for economic growth are not realised? How restrained is a Budget in which the sum of all the changes in taxes it undertakes results in a bigger tax take than if no tax changes at all had been made? How restrained is a Budget which plans a larger deficit than the actual record deficit of the year just past? The belief that the Government has been restrained shows the extraordinary success of a public relations exercise which hinted that the deficit might be $5,000m and then asks us to be relieved that it approaches only $3,000m. If we had been presented with such a deficit without the public relations exercise people would have thrown up their hands in horror.

I shall show shortly how further reductions in Government spending could have been achieved within a framework of a policy really designed to meet Australia’s present problems. But while on the deficit, the question must be raised, in the light of last year’s experience: Can the deficit be held? Where will it end up? In the first month of this financial year- the month just passed- the deficit was $700m, which is higher than the deficit planned in last year’s Budget for the whole year. Dr Cairns, Mr Hawke and Mr Dunstan- who would deny any of them, although the Treasurer sought to do so todayhave already hinted at a supplementary Budget.

When unemployment starts to climb because of this Budget does anyone seriously imagine that this Government can hold the line? The Deputy Prime Minister (Mr Crean)- 2 Treasurers ago- is already reported in this morning’s Press as saying that further expenditures may be necessary to relieve unemployment. In its first week the Budget deficit is already looking very unstable. The Treasurer has also refused to state how he will fund that deficit. It appears that he projects a continued high rate of expansion in the money supply, with all that that implies. So much for restraint: Rhetoric, without substance. The tax reforms, sold as tax relief, are apparently the third reason why this Budget has been hailed as responsible. On Budget night, I branded those reforms as a hoax.

Mr Killen:

– They are a hoax.

Mr MALCOLM FRASER:

– They are a hoax; I am indebted to my colleague. Despite them, inflation means that there will be an increase in the tax burden for every taxpayer in Australia earning over $5,000. They offer no significant relief. The impact of the tax measures is a tragic flaw in the Budget strategy. They in no way meet the overwhelming need for a reduction in the personal tax burden. They do not protect taxpayers in any substantial way against the unlegislated increases in tax brought about by inflation. These are the problems identified by the Mathews Committee and by the Arbitration Commission in its 1975 wage decision. These are the problems which have led to excessive wage demands and the squeeze on productive investment.

Despite the tax reforms, the tax burden on individuals is greater this year than last year. Sales taxes will rise $ 1 9 per head this year. Excise taxes will rise $48 per head this year. Payasyouearn tax for the average Australian will rise $ 1 86 per head this year. The Mathews report said:

There are compelling arguments in favour of the Government implementing a scheme of personal indexation no later than in the 1 975 Budget.

The Mathews recommendation and the requests of the trade union movement for indexation as part of a wage restraint package have been ignored. The Treasurer’s claim in an interview in the National Times on Sunday that his proposals amounted to ‘effective indexation’ is false. Not only are the income tax proposals an effective tax increase, but also combined with other tax measures they amount to a quite major increase in the personal tax burden.

In all his statements the Treasurer has concentrated on changes in the marginal rate of tax. If we look instead at the important figure of the average tax rate a very different picture emerges, and the Treasurer knows it well. The family man with a wife and 2 children on average earnings last year paid 12 per cent of his income in tax. This year he will pay 1 5 per cent. The tax burden on the man on average earnings increases by 25 per cent under the new scheme. If this person were buying a house and had a mortgage of $10,000 the increase would be from 8.6 per cent of his income to 12.2 per cent- a 42 per cent increase in his tax burden. If this man were paying off a house his position would be even worse. As inflation pushes up money income, the proportion of mortgage interest that can be claimed as a deduction is reduced. This deduction is worth less and less as his income rises and cuts out at $14,000. Inflation ensures that his income will rise, his deductions will not.

Three hundred and sixty million dollars of the claimed $395m relief is simply over collection. The reduction in the tax-take compared to the old scheme in real terms this year is only $30m. With present inflation both old and new schemes mean an effective tax increase this year. It would be ungracious not to acknowledge that reduction in the marginal tax rate by itself would be a good thing. But at no time has the Treasurer mentioned the far more significant fact that the overall tax burden on the average Australian has been increased, not reduced, by the Budget. This is precisely the opposite of the action which ought to have been taken. It is precisely the opposite of the action recommended by an expert committee of inquiry, by the Arbitration Commission and by the trade union movement. It is precisely the opposite of the action needed to halt the wage-price spiral and end the battle over incomes.

How then can this extraordinary decision be explained? The answer, I fear, is to be found in the Treasurer’s claim that the tax restructuring effects a significant redistribution of income. A close examination of the new tax system reveals a number of features which are obnoxious to the philosophy of the Liberal and National Country parties and, I believe, to that of most Australians. The new tax system creates conditions under which people are encouraged to become more and more dependent on government provided services controlled by politicians and civil servants. As the Treasurer said at the National Press Club, the Government would like to have government services regarded as incomes, even though the Government and not the wage earner decides how this part of his income is spent.

I turn now to particular aspects of the tax changes. The Opposition is not opposed to rebates as such. However, it is opposed to the way in which they have been implemented in this Budget. The new rebate of $540 for everyone is paid regardless of whether there is an actual expenditure on education, insurance or rates. That had to be done because tax scales, taken by themselves, were going to operate much too harshly on the lower income people. The system of rebates, as it has been implemented, amounts to a cancellation of deductions for health and dental expenses, school fees and so forth for taxpayers who claim less than $1,350. The deductions were originally designed to encourage people to provide for themselves and their children, and that is a proper objective of government. The rebate system, as it has been implemented, is designed to encourage taxpayers to leave it to the state, and that is the objective of the Australian Labor Party. The failure to adjust the deduction for interest on home mortgages works the same way. It has been the philosophy of this Government to pay as much money to those who do not work as to those who do. This scheme carries through that same philosophy.

When the impact of the rebates is added to the impact of inflation on the tax burden it is clear that this Budget is one more instrument to implement the Prime Minister’s philosophy of making everyone dependent on government for basic services such as health, education and retirement. Moreover, the impact of the exemptions of 500 000 people from income tax is unclear. The Coombs report in item 95 notes with respect to an earlier change of similar magnitude in 1972-73 when 600 000 taxpayers were freed from tax that very few sole breadwinners were included. How many of the Government’s 500 000 are sole breadwinners? Inflation will soon bring them back into the tax field under this Government. The question arises whether the measures are in any real sense a significant reform. Unlike Britain, Australia’s tax system in the past has encouraged and rewarded saving and investment. Instead, this Budget encourages living for today and dependence on government for basic services. We all know only too well where this leads. I believe that Australians will reject it.

The discouragement of savings may well have another and profound effect by discouraging insurance and forward planning. The Budget may well weaken a major source of funds for the private sector through insurance companies. Having failed in its bid to lay the basis for nationalising insurance companies, the Budget appears to seek the same end through discouraging private saving through insurance and channelling more and more money through the Government.

Mr Keating:

– In other words, we have stopped fiddles for the wealthy.

Mr MALCOLM FRASER:

– Tell that to the thousands of people around Australia who have life policies. The great majority of people who have life insurance policies have modest policies for modest purposes. This Government would deny the people it once claimed to represent. Just as it has failed in the area of direct relief to individuals, the Budget also tragically fails in the critical area of relief and assistance to productive enterprise whose revival is essential if employment is to be improved, if unemployment is to be held back. It underestimates the seriousness of the present situation for the majority of businesses. It fails to offer any incentive or encouragement of substance. Business in Australia is now in a desperate situation as a result of taxation and wage costs and the cash crisis. It is not just that the present is difficult; the future is being placed in jeopardy by lack of effective government policies. Business as a whole in Australia, in real terms, is making a loss. To meet its wage and tax bills, it is now depleting its capital base. Job openings are becoming fewer, even though Australia needs 500 000 new jobs in the next 5 years, if the Borrie report is accurate.

One of the most serious hindrances to the recovery of business is the tax system and the levels of taxation on companies when combined with inflation. Because stocks and depreciation are undervalued, businesses are paying taxation on profits which in most cases are quite fictitious. Private businesses last year were paying tax at a rate of 129 per cent on real profits. To pay these taxes, they have to let their capital run down. The Mathews Committee of Inquiry into Taxation and Inflation summed up the true gravity of the situation. It said:

Without wishing to over-dramatise the situation, the Committee believes that the taxing, accounting and pricing policies which have traditionally been adopted in relation to business enterprises, when combined with the rates of inflation which have recently been experienced in Australia are incompatible with the continued existence of the private sector.

Is that why this Budget does nothing really to combat inflation? Is that why the underlying assumption is that inflation will continue at the present rate? Last year company income fell by $1.3 billion. There is a major cash crisis. Many businesses have cut back where possible but they are running out of options. Small businesses and farms, whose economic problems are very similar, are undergoing tremendous pressure.

In the face of this crisis the Budget had a major task to revive business confidence, increase investment, production and job opportunities. The Budget fails to offer any substantial basis for a revival of business confidence. The Budget rejects the measures proposed by the Mathews Committee, which would have brought $ 1 ,200m relief. In its place it offers a platry 2Vi per cent reduction in company tax which will give of itself a $120m relief- one-tenth of the Mathews proposals and less than one-tenth of the $ 1.3 billion fall in company income last year. This is a totally insignificant sum in the circumstances and is offset immediately by the impact of the crude oil levy, which would have imposed at least a $ 100m cost on industry. How could a 2lA per cent tax reduction possibly help in the present situation? It did not work last December and company income has continued its drastic fall. The depreciation allowances merely continue a policy which has had no great effect because there is no long term guarantee that those policies will endure. This Government still does not understand that businesses have to plan ahead. It makes that impossible. There are no incentives for mining and exploration. Many major projects remain deferred. Confidence cannot be built on air. It must be based on orders, demands, funds. There is no indication in the Budget that these are to develop.

The Treasurer claims to have detected a fragile recovery in the economy. His view depends largely on the meaning of the recent national income estimates, which indicated an increase of 3. 1 per cent in gross non-farm product in the June quarter. The Opposition believes that this apparent revival is not solidly grounded. In July there was a marked deterioration in production trends for raw steel, electricity, electric motors and woollen cloth. There was an increase of 17 500 in seasonally adjusted unemployment in July. Taking into account special employment relief schemes, underlying unemployment increased each month from 294 000 in April to 327 000 in July and more rapidly towards the end of this period. The trend is very disturbing. The Minister for Housing and Construction (Mr Riordan) who in this chamber represents the Minister for Labor and Immigration (Senator James McClelland) says that the Government has provided only 150 000 more unemployed than under previous circumstances. Only 150 000 more! Tell that to the blokes in your unions and to other people around Australia.

The apparent increase in private fixed business investment in the June quarter is unlikely to be maintained in the September quarter. Budget statement No. 2, written by the Treasury and not the Treasurer, anticipates a decline in business investment at least to the middle of 1976. What confidence can business have when the Treasury itself is so uncertain about the situation that it says in that Budget statement: ‘It would hardly be surprising then if the broad picture outlined here were to prove in retrospect an inaccurate picture of 1975-76’? They are hardly the words of a Treasury showing confidence in the policies of this Government. The Treasurer tells us not to weaken business confidence by criticising his Budget. If he is so worried by this he cannot have much faith in that Budget. Already he seems to be preparing an alibi for its failure.

I repeat that confidence will revive by genuine and substantial proposals to revive the private sector. This Budget does little and offers no analysis which would have this effect. Indeed, when there is a profitable area of business the Government imposes a special tax, as on coal exports, just to make sure that nobody looks for more minerals or more coal. It socks the one area that was making a few profits. The indirect taxes and Budget levies on beer, spirits and cigarettes will take another $600m from taxpayers. They will be reflected in the consumer price index, and since this is the basis on which wages are indexed they will automatically flow through into wage costs. Post Office charges add further to costs.

Post Office charges would add much more to the costs of the average person than would the relief in income tax. The increased cost of beer would take from him more than the relief he will get from income tax in this Budget. The Government will take $274m more in beer tax this year and provide $30m relief from income tax. Not only does the Budget fail to offer any sound basis for a business recovery, it has also failed to face up to the problem of rising costs, which must be central to any attack on inflation. It is in fact adding to rising costs.

Mr Keating:

– You want a clap for each sentence.

Mr MALCOLM FRASER:

-Why not go home to your house in Italy? I indicated at the outset that we would present our view of the policies required to meet the present crises. I now come to that alternative. We believe that there must be a wholehearted effort to reduce the rate of inflation. If inflation is to be cut back, the overexpanded demands of government must be cut back. This requires further reduction of government spending.

Government supporters- Where?

Mr MALCOLM FRASER:

-You are too eager. I suggest that you wait. It requires the provision of real tax relief to reduce excessive income claims and monetary growth at a rate which will not accommodate continuing high rates of price increases. Secondly, we are firm in the view that action must be taken now to revive production and investment. Without this there will be no genuine basis for expanding employment opportunities. Who could have believed that in the post-war era there could be any government so unconcerned with employment as this Government is? Every act it takes makes it harder for jobs to be created and for opportunities to be provided for people who believed that this Labor Party was going to represent them.

Thirdly, we believe this year’s Budget strategy should be set within the framework of a 3-year program with clearly indicated objectives to be achieved. The Government must set an example as an essential precondition for curbing inflationary expectations which have spiralled, out of control during the past nearly 3 years. This is an unambiguous approach which would rely on substance and not a fragile psychology to revive the economy and get unemployment down. There is now an overriding obligation to tell the Australian people the truth about the budgetary situation.

The failure to recognise and deal with problems as they have arisen has made the immediate task of economic management enormously difficult. There is less flexibility this year than there was last year because the crisis is worse, but we do not accept that the cumulative impact of past policies has so reduced flexibility as to prevent a major change of direction from commencing now. The economy will not be brought under control by a policy of economic neutrality. Inflation will not be controlled unless pressure for wage and salary increases is lightened The proposed 43 per cent increase in PAYE income tax collections represents a direct threat to the objective of wage and salary restraint, and the Treasurer well knows it.

We therefore believe that an additional $500m should be set aside for reductions in income tax receipts during 1975-76.

Mr Armitage:

– What about the Budget deficits?

Mr MALCOLM FRASER:

-Do not be too eager. Have a little patience. The changes we would seek to make would be designed to give the maximum chance of achieving wage restraint. The only way in our view that a Government can reasonably ask for restraint and responsibility is to be resolute about its own expenditure. As evidence of our unambiguous determination to do this we have decided to adopt the recommendations of the Mathews Committee Report for individuals and companies and apply that fully over a 3-year period. Discussions with the ACTU, which supports indexation, would be desirable and necessary.

We would introduce over a period of 3 years personal income tax indexation as recommended in the Mathews Report. We would expect the President of the ACTU and the ACTU and the trade union leadership to play a national role in arguing for wage and salary restraint in the interests of both their members and all Australians. The Mathews Committee emphasised the need for a proper adjustment of the income tax scales. We would structure the tax scales so as to assist families- especially single income families. We would want a system of rebates or concessional deductions which encouraged people to look after their own future. Our income policy would be introduced not only as a part of the program to control inflation but also to provide greater equity as between taxpayers and to restore the incentive to work and to save which has been so eroded in the past 2 1/2 years.

Our policy is tangible evidence of our longterm objective to return a greater degree of choice and independence to individuals and to families. In our view we must ensure that the system of personal income tax is free from the distortion and enforced disincentive produced by inflation on an unadjusted and progressive tax scale. Tax indexation provides the solution to this dilemma. It would prevent future governments from using the silent tax of inflation to transfer resources from individuals to the government sector, and that is the one reason the Labor Party will never adopt it.

Two important objectives would be advanced by our income tax proposals. The first is incomes restraint. Unless a POliCy of incomes restraint is successfully pursued, the damaging rise of costs throughout Australia will continue. The wage determination procedures chosen by the Conciliation and Arbitration Commission must be supported. The erosion of the after-tax benefits of indexation must be minimised. Without the additional measures we propose, the necessary reduction of wage cost pressures will not be achieved. The second objective of the tax cuts is to stimulate demand for goods and services. We believe that without the support of additional incentives, consumer spending at an economically desirable level will not be sustained.

I turn now to the second major thrust of our budgetary proposals, the regeneration of investment and the creation of jobs which were ignored by the Government. We have decided to endorse the most far-reaching reform of the company taxation system since its introduction. A Liberal-National Country Party Government would implement the recommendations of the Mathews Committee on company taxation. We believe that this should be done in three separate stages, beginning immediately. We consider that the stock valuation adjustment proposals of the Mathews Report should be introduced for company tax payable in 1975-76 at 50 per cent of the recommended rate for stock valuation. The company tax rate during this period should be held at last year’s rate of 45 per cent as recommended by the Mathews Committee. The company taxation reforms, beginning this year, would provide a solid basis for the restoration of business confidence. The second and third stages of the Mathews reforms should be implemented within the 3 years. This is a significant decision. It reflects our fundamental commitment to the restoration of a healthy private sector and to the right of every Australian to work, a right which the Labor Party has long since abandoned.

But we believe that further measures are warranted this year. We would introduce a 40 per cent investment allowance to supersede the accelerated depreciation allowance. This would be available for plant and equipment installed before June 1977. It would be continued at a rate of 20 per cent for a further 5-year period. We would suspend for the period of the present crisis the present system in which company tax is paid on a quarterly basis. Specific incentives are clearly demanded for the primary industry sector. We believe that the beef export levy should be suspended and the superphosphate bounty reintroduced. In addition we believe that beef producers, like any other section of the community which has lost its means of livelihood, should be eligible for welfare payments, which even this Government denies them.

Finally, we believe that there is room to make a start on adjustments to the problems created for private companies and small business by the taxation of retained earnings. The small business sector must be assisted through its immediate difficulties if investment and employment are to be stimulated. In full, these expenditure proposals for the private sector- that is, businesseswould amount to $500m during 1975-76, which is the same as the cost of our income tax relief proposals.

Together with the major ongoing reforms which we would implement during a 3-year period, this program represents the most decisive and soundly based commitment given to the private sector in the post-war period. We believe that it provides the basis for a return to growth, stability, responsibility and sanity in the nation’s affairs.

In conjunction with the program of incomes restraint, we believe that this year’s Budget should be accompanied by a responsible program of monetary control. The erratic monetary strategies pursued since the earliest days of the Labor Government have been important elements of the economic breakdown which we now face.

Our program is based on no increase in the deficit, and this will be made possible by a reduced rate of government expenditure. Government spending is not accelerating at the mad rate of last year, but the rate of increase is still far too fast for the Australian economy. It is always harder for an opposition than for a government to demonstrate in detail its expenditure proposals, but our indications will be adequate to indicate a resolve in this matter. We believe that the rate of spending can be reduced down towards the Government’s projected rate of inflation to achieve additional funds of $1 billion, which would be spent in the way I have outlined. This means that government spending would be held back by 5 per cent from its planned level. This would hold it constant in real terms. If there were to be a large scale tax relief and incentives to the job creating productive sector there would have to be substantial cuts in government spending. Many programs for worthy and worthwhile ends would have to be cut back or deferred. They would be cut back or deferred for one reason only: Australia is not rich enough to afford all the good and desirable programs we would all like. There are simply not enough money resources to go around for all the worthy goals we want. At some stage we have to make choices, and the Government cannot make choices. We would choose job opportunities, a return to real improvement in Australia’s wealth, and real choice back in the hands of individual consumers.

Let me be plain. We choose this course at the expense of some desirable government programs because we place first priority on restoring Australia’s health. If we do not beat the monster of inflation stalking across Australia, we can forget all the desirable government funded programs we would one day be able to afford. We would go the way of unluckier countries we could all name. We would tell the Australian people that, and I believe the Australian people would support us. I believe that they would rather fund real productive jobs and choice for themselves than many of the programs which are still being funded by this present Government. Spending can be reduced further.

Mr Armitage:

– Where?

Mr MALCOLM FRASER:

– The honourable member is very eager. After Labor’s first 3 Budgets, Federal spending will have increased by nearly $ 12 billion in 3 years. In 3 years Labor will have doubled total government expenditure. In 3 years it has doubled the expenditure which Australia has built up in all the years since Federation, and that is the nature of the spendthrift Government that we have at the moment. The programs administered by the Department of Urban and Regional Development have increased by almost 200 per cent in just 2 years. Expenditure on basic services in the Australian Capital Territory has virtually doubled in the same 2 years. No government, no business undertaking, can expect to expand major programs at this rate without waste.

Let me now illustrate what we would have done to reduce expenditure if we had been drawing up this Budget. We would have stopped the build-up of public servants in Canberra by imposing a zero growth limit on the Public Service. Why should Australian taxpayers support an extra 504 employees in the Taxation Office and a further 1 124 employees on the staff of the Minister for Social Security? The growth limit would have provided a saving in wages and salaries and associated administrative expenditures. We would have made special administrative economies in the Department of Minerals and Energy and the Department of Urban and Regional Development, which is after an extra 1318 staff this year. We would have abolished the Department of the Media, as was announced earlier, the Prices Justification Tribunal, the Aus.tralian Legal Aid Office and the Australia Police This could have been done while maintaining grants to the States and to Aborigines for legal aid and while maintaining the existing numerical and equipment strength of the police forces. These first 2 economies would have led to a wind-back of this year’s capital works programs, which include government offices, even though there is surplus office space in Melbourne and Sydney, overseas embassies, and so on.

Mr Katter:

– What about the pictures of Gough?

Mr MALCOLM FRASER:

– We will get rid of them too. They are made of self-destruct material. This policy, therefore, has 3 phasesthe zero growth limit, special administrative economies, and the wind-back in capital works. In total our program to halt the growth of the Government’s bureaucratic apparatus would save $150m this year. We would have renegotiated the sale of the Pipeline Authority project. That would have brought additional revenue from the value of work already completed of about $130m. It would also have resulted in forgone expenditure this year amounting to $67m. In total we would have saved about $200m by this approach.

We would have suspended the Australian Industry Development Corporation’s capital advance of $25m and its access to the loans raised by this Government. This would have saved $75m. We make no apology for that. Until such time as secrecy about the AIDC’s public investments is removed, no effective assessment of its performance can be made. Secrecy in this area is part of the secrecy of this Government. We would have suspended the special advance to the Australian Housing Corporation. This would have saved S20m and would not have interfered with the $25m advanced last year but not drawn upon by the Corporation. We would have cut this year’s Advance to the Treasurer to save $75m.

All told these economies amount to more than half of the $ 1 billion reduction in spending which we believe is necessary this year. There is in excess of a further $500m which could have been carved off public spending. As evidence of this I give the following examples: We would have abandoned the uranium exploration of the Australian Atomic Energy Commission. We would have suspended the growth centre expenditures and made special economies in the urban rehabilitation and area improvement programs. What is the point of growth centres when there is no growth? In the growth centre of Geelong, which you represent, Mr Speaker, nearly 10 per cent of the work force is unemployed. Geelong is one of the growth centres, but the Government first destroyed the industries in Geelong. We would want to have those industries working and operating and unemployment removed, and we would achieve it. The suspension of the growth centre expenditures and the making of special economies in the urban rehabilitation and area improvement programs would have saved millions of dollars and would not have interfered with expenditure on land commissions, urban flood mitigation, the sewerage program, and the development of Aboriginal community amenities.

We would have sold the pharmaceutical corporation, which this Government would only run at a loss at the cost of the taxpayer. We would have means tested the employment training schemes. Why should somebody earning $20,000 a year receive at the expense of the average Australian training for which he is paid $ 100 a week as well as having his fees paid? We would have cut back the proposed new works of the National Capital Development Commission. There would have been still further economies in our program which would arise from our abolition of the planned Australian Government Insurance Corporation and the Overseas Trading Corporation two more devices to lose more of the taxpayers’ funds. I have clearly set down the way in which we would have made substantial economies in Government spending. It can be done by a Government that has the will. This Government has no will.

With detailed departmental advice and our fundamental determination to slow down the expansion of the government sector, we would have had no difficulty in achieving our overall target. But the present Government has not adopted this course of action and we must accept the continuing high growth of government spending at the expense of the real welfare of the people of Australia. The reality of the Government’s Budget is that it will lead Australia closer and closer to the British disease. The deadly philosophy which has brought Britain downthat redistribution is more important than achievement- is now enthroned in Canberra. The disease is not incurable, but to cure it requires a fundamentally different approach from that of this Government. Ours is an approach that will put choice back in the hands of individuals, get private enterprise moving, create jobs, and encourage initiative and achievement. It is an approach that will encourage the best energies of the Australian people. The Government’s approach continues its philosophy that the Government is wise and the people are foolish in spending their own incomes. The Government ‘s approach will fail. The Treasurer’s statement of the problem has not been matched by performance. I deeply regret that Australia will continue to pay the price for Labor’s failure to face up squarely to economic responsibility and reality. Economic mismanagement will be the epitaph of this Government. I therefore move:

That all words after ‘ that ‘ be omitted with a view to inserting the following words in place thereof:

The House condemns the Budget because it does not provide an adequate program to defeat inflation and relieve unemployment nor does it restore confidence in the private sector of the economy.

Mr SPEAKER:

-Is the amendment seconded?

Mr Anthony:

- Mr Speaker, I second the amendment and reserve my right to speak at a later stage.

Mr BEAZLEY:
Minister for Education · Fremantle · ALP

– I suppose that I should begin my address by thanking the Leader of the Opposition (Mr Malcolm Fraser) for having mercy on my Department, the Department of Education. I listened very carefully to all his statements and I did not hear that he proposed any heavy cuts in expenditure on education. He made certain general observations about the lack of opportunities in education and he did that, of course, by ignoring reality. If people have lost their power to choose, how does it happen that there are 608 000 people undertaking technical education now compared with 400 000 people undertaking technical education when we came into office? Did those additional 208 000 people have a freedom of choice to undertake technical education as a result of the increased opportunities? Although the honourable gentleman suggests that the only way to give opportunities in education is by a form of tax concession which gives greater concessions to those in receipt of greater incomes, he failed to explain why making education free would not be a way of giving many people opportunities.

When the honourable gentleman was referring to the amount of $1,350 which is the taxation exemption granted to all taxpayers and which reduces their taxation by $540, he stated that most people’s education expenditure would be within that $1,350 and therefore there was no gain to them. This reminds me of the parable in the New Testament. It deals with the man who was engaged at 12 o’clock and who worked through the heat of the day and other man who was engaged late in the evening. The person whose education expenditure comes within the $1,350 exemption has not lost anything by the exemption of $1,350 being granted. The upper middle-class people for whom the honourable gentleman normally speaks would have the full $1,350 taken up in insurance, superannuation and matters like that. Then their educational expenditure would start to be taken into consideration.

The honourable gentleman failed also honestly to admit that in granting a $200 concession instead of $150 concession for every young person in every form of education from kindergarten age through to the age of 25 years, the rebate from tax was increased from $150 to $200. So to begin with there is an actual $50 cut from tax. I want to congratulate the Leader of the Opposition for not repeating his normal story about a confidence trick in taxation. A taxation rebate is the reverse of a confidence trick. I have only to look at the sort of tax form with which we have been provided for years to see the position. When it deals with a statement of deductions for a spouse or for children, it says this: ‘Maximum deduction for each dependant’. It goes on to state that that deduction is $364 for a spouse, $260 for a first child and $208 for a second child. During all the years in which I have spoken at trade union meetings I have found that when people have claimed the $364 deduction or the $208 deduction, they imagined that $364 or $208 was cut from their taxation. In point of fact, it may have been that some people were cutting from their taxation 364 times 5c, others 364 times 10c and still others 364 times 65c. That was the confidence trick. I do not say that governments introduced that as a confidence trick but it acted in that way. Most taxpayers misread it. Now when they claim $400 for a wife or $200 for a child they will receive the full $400 or $200 off their taxation. It will be a rebate. It will not be a rebate for one person of 364 times 65c and for another person 364 times 10c.

I invite honourable gentlemen and particularly lady members of the Parliament to read very carefully the speech of the Leader of the Opposition because it contains an interesting passage. When he dealt with the $1,350 rebate which is allowed to all taxpayers, it could be imagined from what he said that that was the end of it; that is, that the deduction of $400 for the wife and $200 for each child were not entirely outside of the $1,350 rebate. Of course, it is quite easy to say that the Budget will solve inflation and to deal in futures. It is quite easy for the Leader of the Opposition to say that the Budget will not solve inflation and also to deal in futures. What was weak in the honourable gentleman’s speech was the complete lack of analysis of the new taxation proposals. While professing that he had all sorts of cuts in expenditure to offer, making no comment on how small they were in relation to a $23,000m expenditure he was not willing to face the fact that the acceptance of the Matthews proposals would mean a $2.7 billion loss to revenue. That is the reason why in the careful study of these proposals the present Government did not adopt them.

I think that the saddest part of the honourable gentleman’s speech was his reference to the coal situation. If there is anything which represents irresponsibility it is the whole arrangement made by the Queensland Government in relation to coal. There is a complete failure on the part of that Government in its royalties policy to recognise that with the booming of the price of oil there has been an enormous increase in the value of coal. The royalties which it obtains from coal are minimal. The profits which are passing out of the country to overseas owners are very great indeed. The tax proposed by the Australian Government on the export of coal is in point of fact the exaction of a reasonable royalty for the benefit of the Australian community which we can do only through the imposition of an export tax but which the Queensland State Government could do through its royalties.

The careful evasion by the Leader of the Opposition when talking about increases in Government expenditure and when talking about a spendthrift Government completely ignored every utterance that he has made when State governments have been pressing for increased expenditure. If they were Liberal Party State governments he supported them. The reimbursement to the State governments of Australia will rise from about $2.4 billion to $3.2 billion, an increase of about $800m. This makes possible their expenditure programs. It has some kind of a relationship to the employment levels because it was found that when State governments expenditures were cut or blocked unduly there was a rise in unemployment. There is a strange procedure on the part of the Leader of the Opposition. He puts Governments expenditure into some sort of a position as if it stayed, somehow or other, in the pocket of the Commonwealth Treasurer. If $406m of welfare housing or $306m of educational building is engaged in, as is provided for in this Budget, are there no private builders who are employed in these constructions? Do they not make any profit out of this? Does this have no relationship to their business activities? Is there not a transference of resources in any way at all to the private sector? Of course there is.

The question which arises is: Are these expenditures justified? The matters upon which the Leader of the Opposition concentrated were, I suspect, not the matters upon which he would really concentrate if in power. He avoided speaking about cuts in any field where he felt there would be a backlash because the expenditure was popular. There was nothing about health. There was nothing about social services. There was nothing about the Liberal promise of abolishing the means test. There was nothing whatever about cuts in education. The Leader of the Opposition, on various occasions, such as during the speech which he made at the National Press Club luncheon, he has said some very mysterious and interesting things. He has said that a Liberal government would abolish compulsory equality in education. What on earth is the meaning of ‘compulsory equality in education’?

There are 2 philosophic spokesmen for the Liberal Party. At least, they attend Liberal Party conferences and make utterances on education. I refer to Professor James McAuley and Professor Leonie Kramer. Both are professors of English and Australian literature. Nobody knows of thenentry into Australian schools but they make utterances to Liberal Party conferences about what is happening in schools. But they make these statements and I suspect that that they are among the formulators of the policy of the Leader of the Opposition. But the interesting thing about their statements, like this statement about ending compulsory equality in education, is that they are purely literary statements. As I say, both of these people are professors in the literary field. The get hold of the Schools Commission report. They take two or three sentences in the Schools Commission report which are entirely egalitarian. Then, because as professors of literature they are very much at the mercy of the written word, they imagine that all over

Australia in State departments of education and in schools people are poring over the report, looking at every little sentence and applying it. Canberra Grammar, for instance, has had $500,000 in capital and something like that amount in recurring grants over the last couple of years. Do honourable members imagine that people at that school spend all their time poring over the Schools Commission report and saying: ‘That is our philosophy’? The Catholic education authorities who have received very substantial grants over the last couple of years- perhaps in excess of $220m- presumably run their schools on an essentially Catholic philosophy. At least Professor James McAuley had the logic to lash out at certain New South Wales Government proposals and actions, with ‘Hear, hears’ from the Liberal Party which, in this context, was forgetting that it was a State Liberal government to which the professor was referring. The grants which the Commonwealth makes remind me of the text in the Bible which states that the sun shines on the just and the unjust. I imagine that the Catholic schools continue with their philosophy and that each State government continues substantially with its philosophy. What we are making possible is the upgrading of defective educational facilities.

I invite honourable members of the Liberal Party who have had these geniuses at their conferences to go through these speeches and see whether they have yet discovered that technical education exists, that technical faculties in their own universities exist, and whether the child with these sorts of gifts has a right to an education. I respect very much what these people say about scholarship, but not every child in education is going in for what one would call the kind of classical scholarship to which they are referring. Yet all these sorts of things are being advanced in an attempt, on the fringes, to belittle the Government’s efforts in education, which are attempts to make possible the best of the thinking of the State governments and of the nongovernment sectors and also to encourage in the new Budget the educational expenditure of parents.

As I have said, outside the amount of $1,350 there is an educational component in the allowance for every child except the first. In the educational allowances we have ended the old system of a differential whereby if the educational concession were $250, as is proposed in the Budget, somebody would get back 250 times 10c but somebody else would get back 250 times 65c. ‘To him that hath more shall be given; from him that hath not shall be taken even that which he hath’ was meant to be a spiritual principle, not a financial one. But the concessional system of deductions has made it a financial one. I congratulate the Treasurer on abolishing that by establishing a flat rate of 40c in the dollar concession on educational expenses for those whose educational expenditure is outside the amount of $1,350 which has been allowed for.

The Leader of the Opposition attacked Government expenditure with generalisations. He burnt his fingers once over Medibank so it was like a ball flying outside the off stump- he shouldered arms and let it fly past. But in one of his radio announcements not so very long ago he said that Medibank at $ 1,400m was half the deficit, quite forgetting that he was thereby suggesting that, at the moment, health expenditure was nil and that Medibank came in and added $ 1,400m. Health expenditure at the moment is $ 1,000m and if he wants to use arguments against Medibank in relation to the deficit he has only $400m to play with and not $ 1 ,400m.

There were the usual magnificent generalisations. The Leader of the Opposition was going to encourage the trade unions to do this, that and the other. There are of course something to be said about psychology. I think much of economics is dependent simply on the degree of discipline in the community. In that respect I agree with him. During the war, for instance, the Allied Works Council got all sorts of people working in Darwin without great additional wage incentives for them to move there. They were prepared to accept that discipline because there was a common concern about the prospect of invasion. But we will not get anybody to move to Darwin at the present time to work for the Darwin Reconstruction Commission because there is no comparable factor which would lead a person to go there unless induced by all sorts of incentives. It is quite clear, therefore, that it is the psychology or, if you like, the discipline in the community which makes certain things possible.

After all, there is a miraculous cure of inflation to be seen in history. It is a quite remarkable thing. If we like to look at Weimar Germany back in the 1920s we find that the mark had reached the rate of 130 billion to the United States dollar. Within 3 months the German Government had got it to 4.2- not 4.2 billion but 4.2 units of the German mark to the United States dollar which was the pre-1914 situation. Of course there was complete annihilation of the existing currency. It was the concern that was felt in the community that caused such drastic action to be taken. Again I come back to the point that it was the degree of discipline in the German community which made so amazing a transformation possible in a short time, just as I think one can argue that between 1921 and 1923- in the post war collapse- it was the degree of indiscipline of the psychology of the community that put the mark to the rate of 130 billion to the dollar.

Nothing in the Leader of the Opposition’s speech- it was very largely a rodomontadewould induce the unity or discipline in the Aus.tralian community to solve anything. There were all sorts of partisan statements. There was a miraculous cutting of expenditure with very little of it defined, and the amount that was defined was comparatively insignificant. There were just postulates of vast confidence in the private sector, and the honourable gentleman had the total cooperation of the trade union movement instantly in wage restraint. All this is depicting everything happening as nicely as it is possible to happen. The speech passed as an analysis of the Budget. At least it got the Leader of the Opposition out of the difficulties of explaining the difference between concessional deductions and straight out rebates. That would have been one of the most interesting parts of his speech. He vaguely finally suggested that there was some support on the part of the Opposition to rebates.

Mr DEPUTY SPEAKER (Dr Jenkins)Order! The Minister’s time has expired.

Mr GARLAND:
Curtin

-The Minister for Education (Mr Beazley) has a reputation as a speaker and has a number of admirers, but I think really what we have discovered from listening to him tonight is that he can find very little that he is able to grapple with or indeed rebut in the speech that was made by the Leader of the Opposition (Mr Malcolm Fraser). I think perhaps that indicates the difficulty the Government Party will have in answering the many points made and the many specific proposals outlined by the Leader of the Opposition. I say to the Minister, since he raised the question of education, that surely the most important aspect of his present position must be that he is the first Minister for Education to have rejected these reports which have been presented to him and by him to the Parliament. He has asked for these further reports to be made to him by March 1976. They are to begin in January 1977. I use the word ‘rejected’ in relation to reports because if he envisages this matter goint on so far it is obvious that the present reports on education made to him have been canned by him and by the Government. It also shows that the Government has been prepared to make some cuts in education. When he criticises the cuts suggested by the Leader of the Opposition he is regarding education expenditure as less important than the cuts proposed and mentioned by the Leader of the Opposition.

The Minister mentioned the position of the coal excise put on by the Government. Surely the major issue in relation to coal is that it will cause direct unemployment in many companies. That, surely, is an example of desperation budgeting by the Government. I believe we do not have to argue for long about that situation. We will find in very short order what will be the results of what I believe is a reckless policy. We will find out whether the much vaunted Minister for Minerals and Energy (Mr Connor) understands as much about this subject as he thinks. Lastly, the Minister referred to the Leader of the Opposition making generalisations in his speech. He must surely have written that note before he heard the speech of the Leader of the Opposition. The points made were all too specific for him and I believe for many others in the community. The fact was that the Leader of the Opposition dealt with his cuts and further promises very specifically, giving both the detail and the principle behind them. After all, why would he not do so? Of course the Leader of the Opposition and many of his colleagues are former Ministers who understand the need in government to look at these things in more detail. They understand what is involved.

The Minister talks about discipline making things possible and German history. Goodness me! Surely what is notable about the conduct of this Government since it was elected in 1972 and what we see exemplified in this Budget is the maladministration, the wasting, the extravagance and the many programs which were ill planned and impractical. The truth is that almost all the problems faced by the Budget are the making of the present Labor Government. The Budget has great deficiencies and it fails to deal adequately with 2 major problems facing the economy. Firstly, the Government has done practically nothing to encourage the private sector. The private sector is still the employer of three-quarters of the workforce in Australia and is the only sector in the economy with the capacity to create full employment.

Most industries have for some time adopted a survival strategy. Profits are low, taxation is extremely heavy, and inflation and taxation have removed reasonable certainty and hence confidence from their operations. In such conditions, with the continuance of the private sector itself under challenge, the dropping of company tax by 2V4 per cent and a double depreciation allowance for one year only are puny concessions. They have resulted in a reaction of despair from industry leaders which will lead to a worsening situation. Apart from the survival of the private sector the level of unemployment of jobs is involved. It is notable that the Treasury Statement No. 2 attached to the Budget Speech indicates an increase in existing unemployment: It is conditional in so many ways that one wonders whether the result can be as good as even it indicates. For if firms and employers are pushed to the wall, even higher unemployment must take place.

Secondly, nothing has been done or said to indicate that the Government has been prepared to face up to the problems of industrial turmoil and excessive wage claims by some unions which create hardships for trade unions and for others alike. The concept of income tax indexation and the recommendations of the Committee of Inquiry into Inflation and Taxation, appointed by this Government and chaired by Professor Mathews- a representative of the Australian Council of Trade Unions is on the Committeehave been rejected by this Government. The Leader of the Opposition on behalf of the Opposition has tonight announced the great recognition we take of those recommendations and the importance we place upon them. The Mathews Committee report is of great importance because the Australian Council of Trade Unions representative is a signatory to it. Furthermore its recommendations are important in equity. I repeat, it is important politically in getting some sort of meeting of the minds. Trade unionists are demanding taxation reform and the new proposals in this Budget just do not answer that demand. When these workers understand the effect on their rising wages their protests will be loud and clear.

The present scale of tax deductions each week or fortnight will continue at their present very high level until the end of December- months off. Wage indexation was intended as a policy to allow the rejection of other wage rises, but that policy has all but collapsed. In the Budget the Government proposes to exclude from the consumer price index its new cost rises. Probably the Conciliation and Arbitration Court will not agree to that by January, even if the CPI is down as it may well be in the September quarter. Either way it will result in turmoil and could well make matters worse. I think those comments indicate the difficulties that the Government has got itself into as a result of 2V4 years of economic irresponsibility. As one commentator said, the Government has painted itself into a corner. On the general economic forecasts, the Treasury economic statement No. 2 is far more cautious than the speech of the Treasurer (Mr Hayden). Indeed, the little optimism displayed in that statement is so qualified that it emerges with an almost alarmist tone overall. The criticisms by the Organisation for Economic Co-operation and Development- that prestigious international economic body- of the Australian economy released about 2 weeks ago, of course, were based on information supplied by our own Treasury. This was endorsed by the Treasurer in his Press statement No. 53 which states:

Announcing the release the Treasurer recalled that the Survey was based largely on discussions and consultations which took place earlier this year. The OECD mission had visited Canberra in March 1975 and the formal consultation with the Economic and Development Review Committee of the Organisation took place in Paris on 1 3 June 1 975.

Politically, in spite of the views of a number of commentators, I believe that the Government’s Budget will quickly fail. Firstly, the private sector is in bad trouble and it has told the Government already, since last Tuesday night’s announcement, in no uncertain terms what it thinks and, in particular, what it thinks of the value of its socalled encouragement. Secondly, the trade union movement is shaken by high taxation, insecurity and turmoil. The rank and file trade unionist is exerting himself to a greater extent against the trade union leadership. The Government’s measures will aggravate the position in an area in which it has allowed a situation of no law to develop. The Government has destroyed relativities between the unskilled, the skilled and the semi-skilled and destroyed with them the will to work in every corner of this land- work which is needed to produce what we all need to live well on.

Thirdly, the income tax restructuring is of arguable value and is intended to replace tax indexation. Further, its effect will not be felt until January 1976. We are living in a volatile period in which long term is almost tomorrow morning. The high increases in indirect taxes on beer, cigarettes, petrol, etc., have immediate effect. All the bad aspects of this Budget have immediate effect; the alleviations are deferred for five or six months. The present high pay-as-you-earn tax scale will continue for the rest of this calendar year. On radio and elsewhere the Prime Minister (Mr Whitlam) has been telling us of the marvels of this new income tax scheme. I refer to the Budget figure which shows that the amount of the reduction of income tax will be $205m out of a

Budget of $23,000m. That $205m is less than the rise in taxation on beer alone. So who will pay for all these remarkable advantages which are to be given to people? Somebody will pay for them. It is a little difficult from the mass of statistics in a few days to identify who will pay, but let us not be under any misapprehension- somebody will pay to offset the reductions that take place and in many cases that will be the individual taxpayer.

The tax rise will go on inexorably in Australia. Whatever is the tax rate today, it will be more and more as wages must rise in order to meet price rises. So, whatever the existing rate is, it will be higher soon as wages and salaries necessarily rise. The Government has failed to face up to the fact that the pay rises which must be granted because of cost of living rises will go more and more into the payment of income tax so that the Government can decide how it will spend a person’s money for him. Fourthly, government spending is still continuing at an extremely high level. Expenditure in this Budget is to rise by 23 per cent. Much of it will be wasted and spent on badly conceived and maladministered programs. I believe that increasing discontent with these matters, increasing unemployment and high inflation rates will soon show to all the failure of the 1975-76 Budget as an instrument to improve the security and the wellbeing of Australians.

I remind honourable members that the Budget is an estimate. On the record of this Government, it will be greatly departed from in the reality. Last year the deficit was announced at a relatively moderate sum. It ended at a gigantic sum. The increase in expenditure last year was 46 per cent. It is only because that rise was so massive and irresponsible that one can look at a 23 per cent increase with any sort of optimism. The fact of the matter is that the Budget will create hardship. At question time today in respect of his Budget the Treasurer said: ‘Every effort will be made to maintain the economic strategy which has been outlined in the Budget’. How weak can one get? How weak can a statement of confidence be about a proposal not yet cold after being delivered at this very table? Can we really believe that the Regional Employment Development scheme, to name one large item of expenditure, is to be put to rest in the way that is suggested? The only question can be whether the program will be re-enlarged next week or in two, three, four or five weeks? It is not a question of the scheme being put to an end. So, expenditure will rise even more than 23 per cent. Does anyone believe that at the end of June next the deficit will be restricted even to the vast amount which is proposed in this Budget?

The State budgets, about to be announced, also will have a tremendous impact on the taxpayers and citizens of Australia. I think it is not realised in the hue and cry that goes on how hard was the bargain against the Premiers when they sat in this chamber not very long ago. But we will find that out when we see State charges increased enormously very soon. There is a tendency by the Government to regard its money, Australian Government money, as its own. But I just make the point -

Mr Cadman:

– Where does the money come from?

Mr GARLAND:

– Indeed. As my honourable member friend suggests, it comes from the taxpayers. It is not the Government’s money. It is not its generosity. Most of those taxpayers live in States. They are citizens of a State and under a State government as much as under a Federal government. So, it is right that a certain amount of their taxation money should go to the States to provide State services. I point to one matter to which not much attention has been drawn, namely, the diminution of the amount to be made available to the building industry. This is a large industry in Australia and it is bound up with growth. It is not some will-o’-the-wisp enterprise. Many people are employed in the industry. In this Budget as it is framed there is to be a great reduction in expenditure in this industry and there must be consequential unemployment. As the Leader of the Opposition has said, the deficit of $2,800m is too high and yet -

Mr Kelly:

-That seems a lot.

Mr GARLAND:

– It certainly does seem a lot. It is not some economic will-o’-the-wisp. It represents expenditure exceeding the amount that is to be recovered. I seek leave to incorporate in Hansard a table of the deficit to the end of July. The deficit for the first 4 weeks of this financial year was no less than $756m- a quarter of the budgeted deficit. This table is an official Treasury document.

Mr DEPUTY SPEAKER (Dr Jenkins:

-Is leave granted? There being no objection, leave is granted. (The table read as follows)-

page 534

BILLHAYDEN

Treasurer

page 534

F. H. WHEELER

Secretary to the Treasury 18 August 1975

Mr GARLAND:

– I thank the House. I point out that, although July may be not entirely a typical month, the indication is that we are headed towards an even greater deficit. This, of course, is why the Opposition is demanding some indication from the Treasurer as to how that deficit is to be financed. More will be said about this in the debate on the Loans Bill because it involves the interest rate policy in this country and it involves the money supply in respect of which the Treasurer has announced some sort of policy. We see, from a statement the Treasurer issued tonight, that the last loan raised $68 lm, but when we get down to it we find that $400m of that is required for repayments so the net gain is $28 1 m. That will not go far in the figures that we are talking about. We are not asking the Treasurer to be exact or precise but we are asking for a policy statement on it. I think it is clear that we are headed for an interest rate rise.

One could go on pointing out contradictions that appear in ‘Economic Outlook’ and all the details involved but I conclude by saying that economic conditions in Australia are harsh, are causing hardship to Australians and are getting worse. It is not necessary in a country that has as many advantages as Australia has, and it has to be the result of gross mismanagement and incompetence, which is another way of saying that this present Labor Government is unfit to govern. The Budget will not help decisively because it fails to recognise the extent of the difficulties facing the people of Australia and the sensible measures that are necessary. I have much pleasure in supporting the amendment of the Leader of the Opposition.

Mr MATHEWS:
Casey

-In his Budget Speech a week ago the Treasurer (Mr Hayden) announced a responsible blueprint for lasting economic recovery. The Treasurer identified clearly the elements for an historic compromise around which all Australians can unite. He buried decisively the issues which have been the source of all our recent divisions.

The measures that the Treasurer proposed overwhelmingly meet the criteria for sound economic management which have been laid down over many months not only by the Government and its economic advisers but also by Opposition spokesmen, university economists, industry, unions and the media. There has been a consensus that the rate of expansion in Government expenditure should be reduced and the Treasurer has slashed that expansion by half, from 46 per cent to 23 per cent. There has been a consensus that a deficit of between $2, 500m and $3,000m is needed to bring down inflation without precipitating catastrophic unemployment, and the Treasurer has budgeted for a total deficit of $2,798m or a domestic deficit of $2,068m.

There has been a consensus that either income tax should be indexed or the income tax scale should be reformed in the interests of reducing pressure on the purchasing power of wages and salaries, and the Treasurer has brought down a completely new system of income tax which combines the advantages of tax scale reform and tax indexation. There has been a consensus that benefits should be provided for the private sector of the economy, and the Treasurer has reduced company tax by 2Vi per cent or $120m and extended and expanded the double depreciation allowance while, as the Melbourne Age pointed out in Thursday’s leading article:

The large concessions which Mr Hayden has given to the poor under the new tax concessions must help the private sector recovery. These people have virtually no choice but to spend the additions to their incomes through the tax system and most of this additional spending will be on goods produced by the private sector.

There has been a consensus that confidence is needed as the basis for an expansion of economic activity, and the Treasurer has made available the ingredients for confidence in the form not only of his specific Budget proposals but also of the economic expertise and authority of his Budget Speech.

Tonight the ball passed from the court of the Treasurer and the Government to the court of the Australian community as a whole. Tonight the success of the Budget strategy, and through it the health of the economy as a whole, rests with the groups the Treasurer addressed last Tuesday when he said:

With a community appreciation of the need for restraint we can make a real start on getting inflation under control and further raising real standards for everybody.

The Treasurer has presented a blueprint for overcoming inflation and unemployment which is clearly in conformity with the pre-Budget consensus. It remains to be seen whether the Opposition spokesmen, university economists, the business interests, the unions and the media who all involved themselves in the Budget-making process will now involve themselves equally in the process of making this Budget a success.

There are times for confrontation and there are times for co-operation. There are times for putting first the party interest and times for putting first public interest. There are times to divide and times to unite. When Neville Chamberlain spoke to the House of Commons after the fall of France, Julian Amery called out to him: ‘Speak for England ‘. There is a responsibility on the part of every member of this Parliament to speak for Australia here in this Budget debate. Last week Britain’s Conservative Party Opposition pledged itself not to seek Party advantage from the economic measures Britain’s Labour Government is taking to overcome inflation and unemployment. The Acting Opposition Leader, Mr William Whitelaw, said:

We shall stand by Mr Wilson if his policy is challenged, and encourage him and his Ministers to stand firm in the battle.

He said:

Anyone from any quarter who seeks by any’ method to break the Government’s counter-inflation policy will receive neither comfort nor encouragement from the Conservative Party

Is there any less that Australians should expect from this Parliament? Is there any less that Australians should expect from the universities, industry, the unions or the media? Is there any less that Parliament and all the nation’s other opinion makers should wish to give?

Last week we saw an exhibition of the sort of old-fashioned politics of abuse, exaggeration and assault on public confidence we are simply unable to afford in this new world economic environment. We saw the Budget confidence, which has been recognised overwhelmingly as the key to economic growth and prosperity, attacked by the Leader of the Opposition (Mr Malcolm Eraser) on a basis which the Canberra commentator of the Melbourne Age has described as ‘facile’ and ‘evidence that he had not correctly read and understood’ the Budget. We saw the Budget itself exposed to a process of quite cynical misrepresentation by sections of the media which had made up their minds in advance to divide the nation against its Government and against itself. In his Budget Speech the Treasurer acknowledged that:

The course charted has its risks, and the possibility of temporary reverses cannot be ruled out.

He said:

If there is an equal commitment in the community to play its part in steering the economy back to a firmer footing we shall be able to overcome any such temporary problems.

In a free society such as our own there can be no room for a holding back of alternatives to particular policies or courses of action, but equally in the present circumstances there is no room for the sort of self-seeking negative criticism which forestalls economic recovery by destroying the confidence on which recovery feeds. There is room for the Leader of the Opposition to say, as he said tonight, that instead of raising indirect taxes along the lines proposed by the Treasurer he would reduce Government spending by a further $1 billion but there is no room for him to say, as he did a week ago and as he has done again tonight:

The Budget does not attack the main problems of Australia, the problems of rising prices, high and rising unemployment and increasing costs, and in particular it does not attack the problems of a revival of business confidence.

There is room for the Leader of the Opposition to say that instead of raising indirect taxes along the lines proposed by the Treasurer, he would either budget for a higher deficit or forgo the Budget reductions in company tax and personal income tax, but there is not room for him to say, inaccurately and destructively, as he did last Thursday, that:

The Budget will not cure inflation, it will give no real incentive to the business world so that it can invest and provide jobs, and basically the income tax proposals are a fraud.

Basically comments of the sort that the Leader of the Opposition made on Tuesday, on Thursday and again tonight are designed to be selffulfilling prophecies. They are designed to produce the sort of results that they pretend to deplore. On Thursday- and I remind the House again- the Leader of the Opposition said: ‘Basically the income tax proposals are a fraud’. Let us examine the proposals which have drawn so outspoken a criticism from Mr Fraser. Let us examine these proposals which the Leader of the Opposition feels he must condemn even if it means bringing down the economy around the ears of the entire Australian community. Under the tax proposals which Mr Fraser condemns the number of tax brackets in the tax scale has been reduced from fourteen to seven, and the marginal tax rate for many taxpayers with annual incomes between $5,000 and $10,000 has been reduced from 45c in the dollar to 35c in the dollar. This amounts in practice to effective tax indexation for an overwhelming majority of low and middle income earners, who will be able to accept any foreseeable increase in average weekly earnings without finding themselves lifted into higher tax tables. Under the Budget tax proposals which Mr Fraser condemns half a million taxpayers with incomes up to $2,520 in the case of single people and up to $5,229 in the case of the average family, will pay no tax whatsoever. Under the tax proposals which Mr Fraser condemns every taxpayer, irrespective of his income, will receive back the first $540 of tax for which he is liable, or the equivalent of $1,350 of allowable rebate at the rate of 40c in the dollar. Under the tax proposals which Mr Fraser condemns every taxpayer, irrespective of his income, will receive back a further 40c in the dollar of allowable rebates in excess of $1,350. Under the tax proposals which Mr Fraser condemns 100 000 single parents raising children on thenown will become entitled to a new $200 solo parent rebate, and the education tax deducation of $150 will be replaced by an education rebate of $250. I ask permission to incorporate in Hansard tables setting out the implications of the new tax measures for single taxpayers and for taxpayers with families of various sizes.

Mr DEPUTY SPEAKER (Mr Drury:
RYAN, QUEENSLAND

-Is leave granted? There being no objection, leave is granted. (The tables read as follows)-

TABLE 1

Mr MATHEWS:

– I ask the honourable members to compare and contrast these fair and socially beneficial arrangements with the system of tax deductions Mr Fraser favours. Note how the deduction system Mr Fraser has defended tonight and consistently advocates gives less to low and middle income earners so that it can give more to those who are encomparably better off. Under this system of tax deductions favoured by Mr Fraser a taxpayer who saves $1,200 in life insurance on a $9,000 salary receives back from the Government about $540. A taxpayer who saves the same amount on a $20,000 salary gets back from the Government about $780. Under the system of tax deductions favoured by Mr Fraser a taxpayer on a salary of $9,000 gets back from the Government about 45c in every dollar up to a statutory limit for outlays of a wife, children, medical attention, education and other allowable items. A taxpayer on a salary of $20,000 gets back more than 60c in every dollar on the same outlays. What Mr Fraser condemns as ‘a massive incentive to be spendthrift’ amounts on closer inspection as the Australian Financial Review pointed out this morning to : . . . shifting the taxation burden away from the married couple with young school-age family to young single taxpayers and affluent mature taxpayers who are exploiting tax avoidance techniques.

While Mr Fraser claims that the Budget: penalises those families that do save, through life or superannuation policies for their old age, and that want to provide a different kind of education for their children - the economics writer for the National Times and the Sydney Morning Herald, Mr Alan Wood, has pointed out that in reality:

The Budget does not penalise those who save through life or superannuation policies. It merely removes a socially unjustified and economically costly privilege they formerly enjoyed at the expense of their fellow citizens.

As the Melbourne Age and Sunday Press columnist, Mr Claude Forell has pointed out:

If in all fairness you compare what Mr Fraser says with what Mr Hayden proposes, you will soon realise which is the hoaxer who does nothing to solve our economic problems.

The destruction of Budget confidence to which the Leader of the Opposition turned his hand last week would have been less significant if it had not been echoed and amplified by important sections of the Australian media. The Sydney Daily Mirror contributed nothing to the confidence building process when it headlined Wednesday’s post Budget edition ‘Budget Ripoff’. The Sydney Sun contributed nothing when in its same edition it used the headline ‘Budget Trap’ and the subheading ‘Cruel Hoax on Workers’. I ask leave to incorporate in Hansard leading articles from the Daily Mirror and the Sun so that honourable members can see for themselves how badly a nation is served by newspapers which have malice for their motivatim and misrepresentation for their method. The Budget is a blueprint not only for economic recovery but for social purpose. In pointing the way ahead economically, the Budget preserves and consolidates the great strides forward which have been taken over the last 3 years. It catalogues achievements in which each and every one of us is entitled to take a continuing pride.

Mr DEPUTY SPEAKER:

-Order! My attention was momentarily distracted. Is the honourable member for Berowra (Dr Edwards) willing to grant leave for that subsequent material to be incorporated in Hansard!

Dr Edwards:

– Again, Mr Deputy Speaker, if the honourable member for Casey would do me the courtesy of showing me the material -

Mr MATHEWS:

-Mr Deputy Speaker, I raised the material with the honourable member for Curtin (Mr Garland) who was previously at the table and he agreed that it should be incorporated.

Mr DEPUTY SPEAKER:

– If that is the case, I take it that leave is granted. (The documents read as follows)-

MIRRORVIEW

It’s a give and take affair- we give, they take

What a carrot and stick Budget that turned out to be!

First Mr Hayden gives you the carrot of more money in your pocket from income tax cuts. (Wait until next year, though.)

And just as you’re beginning to think how sweet it is he whacks you over the head with the stick of indirect taxes and grabs it back again.

Mr Hayden ‘s stated aim was an anti-inflationary Budget. So what did he do?

He thumped up the levy on crude oil- and you 11 now have to pay at least 6c and possibly 10c a gallon more for your petrol.

The cost of transport will go up as a result- and again, because businesses will pass on their increased costs to you, you ‘11 be forking out more for consumer goods.

What’s anti-inflationary about that?

Then there ‘s the increased excise duty on your smokes and grog- cigarettes up 6c a packet (with a likely retail rise of 8c), beer up 4c a middy and 1 0c a bottle.

It won’t hurt the millionaire, of course. But can’t you see all YOUR lovely tax concessions (wait until next year, though) disappearing very quickly?

Mr Hayden concedes it is vitally important to get the private sector moving again. Yet all he spares it is a measley 2.S per cent cut in company tax-barely enough to get it even stirring in the sluggish depths where Labor has forced it

He says- as if we didn’t ‘t already know- that inflation is the greatest problem facing the nation. Yet he tacitily admits his Budget presupposes an inflation rate of 20 per cent.

His fiscal sleight-of-hand doesn’t fool anybody- and doesn’t benefit anybody, either. Because with costs going up 20 per cent and wage demands attempting to leapfrog them we 11 all be paying higher tax in the end, anyway!

It is obvious that, with its tax reforms, the Government has tried to do away with the iniquities that have existed since the early ’50s- and it is a tragedy that, because of its indirect taxes, it has failed.

Its moves to cut its own spending are politically courageous- but the Daily Mirror does not believe they go far enough.

Mr Hayden has asked for critics to be specific. We will be. The arts have done extraordinarily well out of Labor since 1 972. This year they could have been given a rest. And while we don’t question the eventual need for an ABC network of Stereo-FM stations- is it really necessary for the Government to spend a massive $ 132m on it in THIS economically ailing year?

The Mirror earnestly hopes Mr Hayden ‘s Budget, with all its subtleties and what the economisits are calling ‘gentle pressures’, will work in controlling and bringing down inflation.

But it needs the goodwill and co-operation of the nationand that includes the unions- to do so. And unfortunately those are the two very things on which this Government is almost bankrupt!

page 547

THE SCALES OF INJUSTICE

The great danger of the new income tax system is that it will be accepted as a reform.

It is nothing of the sort.

In the context of the Government’s necessary self-denial it is a mere juggling with figures.

It is claimed to give people in weekly instalments roughly what they received until now in yearly tax refunds.

But by boiling down the benefits of concessional deductions the Government will give some people something for nothing.

And it will penalise those who work longer, more successfully or with more initiative.

The new scale must be recognised for what it is- a socialist document supported by clap-trap socialist phrases about redistributing income.

It says nothing about redistributing national effort.

And in that lies its greatest danger.

It seeks to foster a reliance on government.

Reliance on self, work and initiative is discouraged.

The strong and the willing are to be reduced to size.

Anything brilliantly different, better than dull, average grey, is clobbered.

That is not the kind of Budget weapon that builds enterprising nations.

Rather it points to a conformist prison- under the guise of a national holiday camp for all.

Mr MATHEWS:

– I for one have pride in the increased extent to which retired Australians now share the prosperity for which their eftorts laid the foundations. In December 1972, when the previous Government was first elected, the pension for aged, widowed and invalid Australians was $20 a week or 20 per cent of average weekly earnings. Today that pension is $56, or 24 per cent of average weekly earnings. On the first pay day in November it will rise to $38.75, or 25 per cent of average weekly earnings. In December 1972 the pension was subject to the means test. Today the pension is means test free for all Australians 70 years of age and over. From 1 July 1976 the pension will be means test free for all Australians 69 years of age and over. In December 1972 the pensioner medical service allowed pensioners to visit the general practitioner of their choice but not the specialist of their choice. Today Medibank allows pensioners a free choice of both general practitioners and specialists on the same basis as other sections of the community. In December 1972 the pensioner medical services provided pensioners with free public ward hospital care but made no contribution whatsoever towards the cost of their care in private or intermediate wards. Today Medibank provides a choice of free public ward care or an $18 daily contribution towards private or intermediate ward costs. Since December 1972 prices have risen by 41 per cent and average weekly earnings have risen by 52 per cent but the pension has risen by 80 per cent. According to the economics writer of the Bulletin, Mr Peter Samuel- no friend of this Government- the purchasing power of pensioners has been lifted by 25 per cent over a period of less than 3 years.

I have a pride, too, in new educational opportunities opened up for children from isolated areas, children who have physical or mental handicaps, children from homes where if English is spoken at all it is as a second language, Aboriginal children, children with socio-economic disadvantages and just ordinary children whose need for teaching staff, accommodation and equipment has simply never been met by the state or systemic education authorities which are responsible for them. Above all I have a pride in Vincent Lingiari, old man of the Gurindji tribe, receiving a handful of earth from the Prime Minister of Australia 2 weeks ago. The Prime Minister said:

I want to give back to you formally in Aboriginal and Australian law ownership of the land of your fathers.

Vincent Lingiari replied at length in his own language and then he said in English:

We are all right now. We all friendly. We all mates.

All of us have something to learn from those words spoken as they were with dignity and simplicity at what was arguably the most important ceremony ever conducted jointly by Australians of European origin and Australians of Aboriginal origin. The Budget holds out for us as never before a clear picture of what we can make of ourselves as a nation on the basis of cooperation. Equally, the Budget demonstrates the anarchy into which we can be plunged if major community groups each pursue to the bitter end their separate and sectional interests, irrespective of whether these interests are higher wages, higher profits or public projects where the costs exceed the capacity of the public purse.

Mr DEPUTY SPEAKER (Mr Drury:

-Order! The honourable member’s time has expired. I must now refer back to the request made by the honourable member for Casey for the incorporation in Hansard of certain Budget tables. I ask the honourable member to clarify his request. Does he want the whole of those tables that he has handed to the honourable member for Berowra to be incorporated, or only part of them?

Mr Mathews:

– The whole of them.

Dr Edwards:

- Mr Deputy Speaker, was the matter of incorporating these tables also canvassed with the honourable member for Curtin?

Mr Mathews:

– Yes.

Mr DEPUTY SPEAKER:

-Were they cleared for incorporation by the honourable member for Curtin?

Mr Mathews:

– He said that it would be all right.

Dr Edwards:

– If an undertaking has been given, that is the end of the matter.

Mr DEPUTY SPEAKER:

– I must add that there is a considerable volume to be incorporated in Hansard and I think that leave should be granted on the understanding that it will be so incorporated subject to technical difficulties that might arise.

Mr HEWSON:
McMillan

-In this Budget debate I have the privilege to be the first speaker for the National Country Party and I want to congratulate the Leader of the Opposition (Mr Malcolm Fraser) for the very comprehensive and constructive approach which he made in his contribution to the debate. Australia is at present showing all the symptoms of the English disease. We had hoped that the disease would have been checked by the presentation of the 1 975-76 Budget, but the Treasurer (Mr Hayden) stood firm on the socialist course which will now allow the disease to progress with no cure or end in sight except an authoritarian state. The symptoms of the English disease are runaway inflation, poor productivity, unemployment, chronic industrial strife, the progressive expansion of government, the progressive strangulation of the private sector and private enterprise, and heavier and heavier taxes. How familiar those terms are to us since Australia gained a socialist Government.

I said that they were the symptoms of the English disease. Anyone would know that they are now the Australian disease, which this socialist Budget will only make much worse and which could eventually kill Australian enterprise. The cure of the disease lies in revitalising the attitudes of employers and employees, to give incentives, to encourage the decent, responsible majority of people towards self-respect, good workmanship and self-dependence, with less dependence on government. But of course it is the hope of this socialist Government that we will all become dependent on the Government. God help us if we ever submit to that totalitarian state. What we need is acceptance of the need for reasonable profits and productivity as well as the immediate reduction in the expenses of the government sector or the public sector.

This Budget has been designed to hoodwink the Australian public. They will get a real shock when the realities of it become clear. The Budget has been formulated without common sense and without any sign that the Treasurer or the Prime Minister (Mr Whitlam) has any business management or economic knowhow. The lack of business understanding has been demonstrated clearly by many Ministers of this Government. The policies designed to kill private enterprise have readily been agreed to by the Cabinet. The decision to flood Australia with imported goods was disastrous for the manufacturers. Policies to rectify that were propagandised through every available medium. Promises of financial assistance did not eventuate, except in some conspicuous circumstances, but mostly the assistance was almost at the point of being paid when the company which had been hanging on the brink of a financial precipice let go and disappeared from our productive sector into oblivion.

I ask you Mr Deputy Speaker Would any responsible government with any business sense at all allow the productive sector of its industrial enterprise to die? Of course it would not. But what do we see in this Budget by way of incentive assistance or recognition of the role of the private sector? We see a 2Vi per cent reduction in company tax. It will not create a ripple. How ridiculous it is! During the life of this Government I have seen business after business fold up under the economic pressures created by destructive Government policies. Any member of Parliament who could stand idly by and watch private enterprise collapse would not be human. He would not be in his right mind if he accepted the statement of the Treasurer when he commenced to present his famous Budget by stating naively ‘that there were signs that the private sector was recovering’. What absurdity! He ought to come up to my electorate and say that to the chambers of commerce and manufacturing industries there. It is not bad management that is crippling the industries in my electorate and causing them to lay off hundreds of workers; it is bad economic policies by an incompetent Government. The Treasurer and the Prime Minister know very well that the symptoms of the English disease are well established. They are those symptoms which I described earlier as the scourge of our Australian society.

What we expected in the Budget was some consolidation and restraint of Government spending. The bureaucratic force is now like an enlarged heart in a diseased body- too big for the weakened body to respond to, pumping blood to everywhere but the right place and certainly not the brain. Sure, the Treasurer gallantly championed the private sector. He said that he now recognises the chaotic situation in which it finds itself- What a shallow statement that is. It is like holding out one’s finger for a calf to suck. The poor creature gets nothing for its trouble. Fancy acknowledging the value of private enterprise and not offering some incentive assistance to succour it and keep it viable. I venture to say that private enterprise industries today have demonstrated that they are the greatest bulwark against socialism and totalitarism hence this Government’s complete disregard for their survival.

I expected the Prime Minister to be a little apprehensive of his position and, as a last chance to rescue Australia from serious economic trouble, even if it meant a setback in the socialisation process, to present a budget of restraint and purpose. Instead he and the Treasurer have produced a budget that amounts to a cruel deception, because unfortunately it is the average working Australian and private enterprise who will suffer the most. When all the window dressing and the Prime Minister’s froth and bubble have disappeared, Australians will realise that they will be paying 34 per cent more taxation, the Government will be spending 23 per cent more than last year and we will be paying $950m more in indirect taxation.

Nowhere is there any real encouragement to reduce unemployment. For instance, private industry employs 75 per cent of the Australian work force, or it did; yet government assistance or encouragement to help pull industry out of its worse recession since the depression amounts to less than one-seventh of the total cost of Medibank. Certainly the Government has given some relief to a small section of the work force, particularly those in the low income range, but this relief is immediately taken away in heavy indirect taxation. Of course we must not make the mistake the Government is hoping we will make of not relating to this Budget the increase in postal charges and telephone rentals and charges, along with so many other day to day living costs that inevitably must rise as a result of this swindling Budget.

The Treasurer’s claim that in this Budget he has reduced income tax is not merely misleading; it is the direct opposite of the truth. Not only has he budgeted for an increase in total pay as you earn receipts; he has budgeted also for a sharp increase in the average rate of tax. To illustrate that, in 1972-73 the pay as you earn take as a percentage of wages and salaries was 14.1 per cent, but in 1975-76 it will be 19.8 per cent. The Treasurer is thus budgeting this year not only for an extra $2,6 12m in pay as you earn tax but also for the most savage increase in average tax rates which has ever been experienced in Australia outside war emergency. Yet he boasted that he has eased the income tax burden. Just how has this fiddle been worked? Basically the Treasurer has resorted to 2 tricks. First he has continued to exploit inflation, which increases money wages without increasing their purchasing power. The Budget papers reveal that he expects wages to rise by 22 per cent, edging taxpayers into higher tax brackets. He has not adjusted his income tax rates accordingly. It is essential that tax rates should be made subject to indexation. In these times of inflation anything less than this is unfair to the taxpayer. Secondly, he has fiddled the new tax rebates. He quotes tax payable after deducting the universal $540 rebate and compares it with the previous tax on income before the concessional deductions.

It is only fair to mention that the Budget now absorbs some of the payments previously made to health insurance funds. This can be put against part of the increase in income tax, but it can only account for a small part of the increase. Again an argument can be made out for some of the adjustments made by the new rebate system of tax assessment, but against this the new system introduces some new inequities and some quite dangerous features. For example, the Budget takes what can only be described as an underhand sideswipe at all life assurance and independent schools. It does this by giving to most taxpayers the same treatment, whether or not they have life assurance policies or pay school fees. In this way people are to be financially discouraged from looking after themselves. The long term consequences of this favouring of improvidence could be very serious indeed. It is hard to believe that this is not a policy deliberately framed by a socialist government for the purpose of socialisation.

Let me turn to the small businesses. I take up the cause of the thousands of men and women who work for themselves in small businesses like the corner shop, the garage, the family farm and so on, and the people who work for and with them. These men and women are the great productive strength of Australia. They provide the goods and services that keep the nation moving. They provide jobs for 42 per cent of Australians. In other words, almost half of our nation’s work force is employed by small one-man and family business operations.

Mr McVeigh:

– Private industry.

Mr HEWSON:

-Private industry, private enterprise and initiative. These businesses are the backbone of Australia’s private enterprise system. They provide the economic base for most country cities and towns across the nation. Yet the Federal Government systematically has dismantled the means of economic support for these small businesses. Consequently, owing to inflation and the Government’s destructive economic policies, 200 000 small businesses across Australia today face severe economic hardship. A master plan is being developed by socialists and socialising forces within the Government for a well-organised socialist system which dismantles private enterprise and smaller businesses because they are the hardest to control of all national enterprises under a socialist state. The Federal Government’s economic mismanagement is seriously damaging small businesses. Experts are not overlooking the proposition that the Federal Government’s reluctance to help small businesses fits in with Labor and socialist philosophies of undermining the entire private enterprise system.

Now let me turn to another of the most notorious swindles ever put over on Australian municipalities. I could name a number of other swindles, but let me take the Regional Employment Development scheme and leave aside the regionalisation blackmail for the time being. In a recent survey I made of my municipalities I found some of the grossest injustices ever committed on rural communities- the RED scheme. What did it do for municipalities? There were some glaring inconsistencies and some glaring anomalies in a society labouring under the difficulties of an economic recession. Does the Minister for Labor and Immigration (Senator James McClelland) realise that within one electorate there were some shires which did not get one allocation of RED money and yet the Commonwealth Employment Service office covered several who did. Who foots the bill for all the additional administrative costs in preparing the specifications of the plans for approval under the RED scheme? In many cases architects had to be employed and engineers had to increase their staff for the preparation of the plans in time for consideration. In my own shire I have served as a councillor so I know from experience the work involved over and above the normal shire day to day activities.

The shire of Warragul submitted 7 projects, all in the interests of the community’s benefit, all properly costed, specified and architecturally designed to an estimated cost of $348,000. There were no approvals. The criteria of the unemployment were not sufficient, but nobody could convince the Minister and his Department that many of the retrenched work force were of highly skilled trades and returned to the metropolitan area or to other States whence they came. They could not wait around for the Government to see the wood through the trees. So the statement ‘not sufficient unemployed’ blocked all those projects in an electorate whose neighbours did enjoy some approvals but where the economic climate was identical. So the Warragul ratepayers will have to foot the bill for all the additional preparation and planning costs of the projects not approved.

The same story can be told of the Buln Buln and Bass shires. It is a disgrace and an indictment of this socialist Government and its Ministers. In the shire of Korumburra 10 projects were submitted at a total cost of $362,000. There were 4 projects approved at a total cost of $59,000. The cost of one project was later reduced by a quarter of the amount approved, and to date the shire has received only $7,000 towards the $59,000 promised.

Mr McVeigh:

– They are not paying it then?

Mr HEWSON They are not paying it. In this case I am appealing for reason and common sense to be applied; otherwise this will be another shire where the ratepayers again will have to foot the bill. The whole scheme has been designed to keep the community on a course of expectancy but not to give money. It has been deceitful and it is a fraud. I could go on. Some municipalities have had no money; others have had some of the projects nearly completed and there is uncertainty as to whether the money will be forthcoming to complete them.

I was hopeful that some measures would be taken to create productivity, to create employment and gradually to reduce the inflationary pressures on the economy. The beef industry should have received some real consideration, not a continuation of the high interest money which is beyond its capacity to accept. The beef levy ought to have been abandoned and there should be a royal commission into the industry. This Budget has no place in a private enterprise country because it is a socialist measure and will inflame the chronic disease now besetting Australia. The deficit funding of the Budget is something which causes great concern. Last year the deficit was estimated to be $5 80m. It finished up at something like $2, 800m.

Mr Cadman:

– How much was that?

Mr HEWSON:

-$2,800m. The figure is so incredible that one has to stop and look at it because when one says it from memory it sounds too big. This situation has been brought about by the incompetence of the Government which works on an elastic type of estimate so that it wants to please people it can pull something out of the bag. It does not matter to the Government whether the deficit is $5 80m or $2,800m. The Government proposes a deficit of $2,800m this year; so what can we expect next year?

Mr McVeigh:

– The sky.

Mr HE HEWSON:
MCMILLAN, VICTORIA

– Of course. I think I have said sufficient to convince this House that this Budget should be rejected. I support the amendment so ably moved by the Leader of the Opposition in the following terms:

That all words after ‘That’ be omitted with a view to substituting the following words: ‘the’ House condemns the Budget because it does not provide an adequate program to defeat inflation and relieve unemployment nor does it restore confidence in the private sector of the economy’.

Mr THORBURN:
Cook

-Certainly the previous speaker, the honourable member for McMillan (Mr Hewson), did not say enough to convince me that the Budget ought to be rejected or that any of the procrastinations proposed by the Opposition ought to be adopted. We have been treated tonight to probably the vaguest speeches ever heard in this House in reply to any Budget. We asked when we presented the Budget that the Leader of the Opposition (Mr Malcolm Fraser) be specific. We heard the honourable member for McMillan describe a deficit of the size proposed by the Government as tragic. He said that it ought to be reduced. By how much do members of the Opposition intend to reduce it; or do they intend to reduce it at all?

Mr Lusher:

-By $ 1 ,000m.

Mr THORBURN:

-The amount of $ 1000m has been quoted by the honourable member for Hume. Let me deal with this suggestion. It is ridiculous to say that the deficit ought to be reduced by $ 1000m, thus causing a proportionate reduction in the availability of money to industry. It would mean that $ 1,000m would be taken away from the money market to support the small businesses that the Opposition is saying need tremendous support, support which it would give to them. It is true that Australia is experiencing economic problems, as are the rest of the major countries. We are bedevilled by inflation coupled with unemployment, and the Government has been faced with the task of bringing down a budget which is responsible, which is framed not to produce further unemployment, which will sow the seeds for a gradual reduction of inflation and a recovery in the private sector, and which by the injection of funds will provide the necessary stimulus without forsaking the gains made in the public sector for which this Government can rightly claim credit.

Let me talk for a minute about the continual claim from the other side to the effect that Australia is isolated from the rest of the world and that the total economic problems which bedevil this country at present are of our own making and are not affected in any way by problems overseas. One great Labor supporter writes:

Many current characteristics of the Australian economy are very similar to those present in most Western type economies and to a considerable degree our present economic situation has been directly or indirectly influenced by international factors.

That great Australian Labor Party supporter is none other than Dr Harold Bell, Bachelor of Arts, Master of Commerce, Doctor of Philosophy and the economic adviser to the Australian Mutual Provident Society. Yet continually from the other side of the House it is contended that inflation is simply a problem that bedevils this country and that Australia is not affected by overseas influences.

I turn now to some of the matters that have been raised. I heard the Leader of the Opposition say in his contribution that under a LiberalCountry Party government the Pipeline Authority would be given back to private enterprise. This great national service to this country, which will provide natural gas to some of the country areas that honourable members opposite represent, would never be provided if private enterprise were to run the system and pay for it. It can be properly administered only by a national government, and this Government was not hesitant about stepping in and taking it over so that we could provide this service.

I heard the last speaker talk about local government. What did his Government do for local government during the 23 years it was in power? I can answer that As a member of the Local Government Association of New South Wales and a former president of my shire, I can say that it did absolutely nothing for local government while it was in office. Yet the honourable member criticises what this Government has done, the great programs we have introduced. I have just led a parliamentary committee around some of the shires in New South Wales. Any hesitation in obtaining money from the Australian Government has been purely because shires have not stepped in and made proper application for it. The municipalities we visited have benefited greatly from the programs of the Australian Government. My own shire, within 5 days of receiving $350,000 under the Regional Employment Development scheme, had projects approved for the whole of the money it had been allocated. The projects had been presented to the appropriate committee and the committee had considered them and approved them. So any inability on the part of some municipalities to gain money does not arise from any lack of effort on the part of the Australian Government but is simply due to the inability of those municipalities to make out their cases.

Let me talk now about the Australian life insurance industry. America epitomises the life insurance industry. There is absolutely no tax deductibility for life insurance premiums in America. Life insurance in America is sold purely on the basis of the needs of the individual for insurance. The American insurance salesman is able to acquit himself extremely well without any of the incentives that have been given in this country over the years. He is able to sell life insurance to those people who require it and who can use it the best. He is not hesitant about going out and selling it. There is absolutely no reason why the Australian life insurance salesman should not be as good as the American salesman, and there is no reason why he would not compete equally as well as his American counterpart.

Mr Hewson:

– Of course he can.

Mr THORBURN:

-That is right. He does not need the additional incentive that has been given over the years in this one sector of business. It is marvellous how these great fighters for private enterprise suddenly become socialists when things get tough. It is marvellous how they come rushing to the Government for assistance. That that is so was shown during the years when the National Country Party of Australia had some influence on the Government. It is reflected in all of the incentives that were given to rural industry. But we did not find the same incentives given to the local grocer on the street corner who found that competition was too great and that he could not compete. Those incentives were not given to the pharmacist who, having set up business in a town, found that there were too many pharmacists for him to compete successfully. But every time rural industry got into some trouble the Government of the day did not try to rationalise the industry, as it should have done with the beef industry. The beef industry was left alone, but then a subsidy was wanted from the Government to get it out of trouble. It is a fact that when beef prices were high, when people were receiving good prices for their beef- before United States of America had its economic problems and the other countries could not buy our beefthe farmers switched from growing grain and cereal crops to beef production. Everybody produced beef. There could be only one logical conclusion to that situation, and that is that we would be over supplied with beef. But we did not hear the National Country Party saying: ‘Let us rationalise the industry’.

We have had to rationalise nearly every sector of rural industry because of the complex situation created by having thousands upon thousands of individuals involved in the industry. Rarely have we heard anything constructive from the National Country Party about beef production. All we have heard is that we should be giving further assistance to the industry to get it out of trouble. Supporters of the National Country Party become great socialists when they are in trouble; they are not socialists when they are out of trouble, and they do not want any socialism then. The same situation applies to all the great industries we have in Australia. When things are tough the people engaged in these industries find that those have to come to the Government for rationalisation, for assistance, for help.

Right from the time of the inception of this great nation we have had our economic ups and downs. It has been a common thing with this country, and we are now trying to get ourselves out of one of the worst recessions that we have ever faced, a recession which was commenced when honourable members opposite were in government. No less an economist than Milton Freedman, who certainly was not a supporter of this Government, said on the television program Monday Conference that the problems being experienced by Australia today were started in 1972 when a government of the political complexion of honourable members opposite allowed the huge inflow of overseas moneys. There was an increase of no less than 26 per cent, the highest that had ever been experienced up until that time in Australia’s history. When that huge inflow of money was allowed into the economy the rot started. Unemployment started; inflation started. Certainly the rate of increase has accelerated. Today’s Australian Financial Review carries an article on the housing industry. This Government set out very early in its time in office to try to control the rapidly accelerating inflationary problems that existed in relation to building materials. We took those steps, and today the headlines of the Australian Financial Review indicate that at last the price of building materials is going down. Many builders have been in severe financial trouble because they were not able to buy materials with which to build houses and so to fulfil contracts. I could instance many cases of builders in my electorate who almost went broke because of the grave shortages of building materials. But what did previous Liberal-Country Party governments do about the situation? They did not do one thing about it. They let the situation develop. They let it remain. They did not know what to do. The speeches made tonight by honourable members opposite indicate that they are floundering around in the dark. One honourable member opposite said that the Opposition in government would reduce the Budget deficit by $ 1 billion.

Why did not the Leader of the Opposition (Mr Malcolm Fraser) give clear indications of the areas in which it would be reduced? Has he accepted Medibank? He did not mention Medibank in his speech. Has the Opposition accepted Medibank totally so that the allocation of funds to Medibank will not be reduced in any way? Not one mention was made of that. Yet Medibank was one of the great planks adopted by the Opposition in the Senate. The Senate refused to pass the legislation which sought to impose a levy to finance Medibank. The Opposition said that it did not want Medibank. Even though it has been in operation for 3 months in the first major economic speech that is made by the Leader of the Opposition not one mention is made or one word is said about Medibank. What is wrong with the Opposition?

Has not the Opposition an economic policy? The Australian Industry Development Corporation was set up to help industry in Australia The Opposition opposed and rejected on 3 occasions without proposing an amendment the legislation which sought to set up the Corporation. On the last occasion on which the legislation was put before the Parliament the Opposition let it go through without any opposition at all. What is wrong with the Opposition? Has it not got any economic policy at all? Tonight the Leader of the Opposition did not have one inkling. He said: ‘We will adopt the Mathews report in total’. Many finer economists than the people opposite have costed this report and all the valuable suggestions it contains, and they have found that it is absolutely impossible to adopt. So what is the Opposition going to do? Does it intend to run this country into complete economic ruin? Does it not know which way it is going? We had hoped tonight that from the Leader of the Opposition- we did not expect it from the other back runners- we would have got at least some insight into the Opposition’s policies. We did expect at least the Leader of the Opposition to give us a clear and concise statement on how he would run the economy if honourable members opposite were in government. He could not even do that. The other day the Treasurer (Mr Hayden) asked members of the Opposition to be concise in their contributions to the debate. Have they been concise? Not one little bit.

Mr Bourchier:

– You did not listen.

Mr THORBURN:

– I did listen, and a lot of other people listened, and none of them could get conclusively from Opposition members the areas in which they intend to make these savings. The Leader of the Opposition indicated a policy of zero growth in the Public Service. We heard a few other vague innuendos about what the Opposition would do, but apart from that we heard absolutely nothing at all.

Let me return to the topic of local government. By means of one system we have given the council in my electorate nearly $2m since this Government has been in power. Under the present chairmanship of the Grants Commission my council has received $460,000 and $600,000. What did that council get out of Liberal-Country Party governments? Absolutely nothing at all. Honourable members opposite have the hide to stand up and criticise because they think that the shires in their electorates are not able to squeeze enough money out of the Government. LiberalCountry Party governments never introduced one program to help the Aboriginal people who are disadvantaged and never introduced one program to help in local government. They did not do one dung. But the special works projects, the Regional Employment Development scheme and the Grants Commission have been responsible for giving local government breathing space. It is this Government that has been inventive. In all the years that honourable members opposite were in power they did little enough that was inventive. The status quo remained. They were not prepared to take any steps; they were not prepared to make any mistakes. They are still not prepared to come out and say what they would do if they were in government. They are still not prepared to make any really constructive criticism of the Budget which was brought down last week.

Debate (on motion by Dr Edwards) adjourned.

page 554

CONSTITUTIONAL CONVENTION

Mr SPEAKER:

– I have received advice from the Prime Minister (Mr Whitlam) that in accordance with the resolution of the House of Representatives of 1 August 1974, as amended on 21 August 1975, and of the Senate of 12 June 1975, and the nominations of Party leaders, the delegation to represent the Australian Parliament at the forthcoming meetings of the Australian Constitutional Convention will be as follows:

House of Representatives: Australian Labor Party:

The Honourable E. G. Whitlam, Q.C

The Honourable G.G.D. Scholes

The Honourable K. E. Enderby, Q.C

Dr R. T. Gun

Mr R. Jacobi

Liberal Party of Australia: The Honourable J. M. Fraser. Mr R. J. Ellicott, Q.C The Honourable D. J. Killen

National Country Party of Australia: The Right Honourable J. D. Anthony. The Honourable I. McC. Sinclair.

The Senate:

Australian Labor Party: Senator the Honourable J. R. McClelland. Senator A. T. Gietzelt (Senator D. M. Devitt as alternative).

Senator R. E. McAuliffe.

Liberal Party of Australia: Senator R. G. Withers

Senator the Honourable I. J. Greenwood, Q.C.

National Country Party of Australia: Senator J. J. Webster

page 554

PROPOSED JOINT STANDING COMMITTEE ON THE NEW AND PERMANENT PARLIAMENT HOUSE

Message received from the Senate intimating that it does not insist upon its modifications to the resolution agreed to by the House of Representatives.

page 554

FOREIGN TAKEOVERS BILL 1975

Bill returned from the Senate without amendment.

page 554

ADJOURNMENT

Industries Assistance Commission-Coal Industry- Ministerial Administration

Mr SPEAKER:

-Order! It being 10.30 p.m. in accordance with the sessional order of the House of 1 1 July 1 974, 1 propose the question:

That the House do now adjourn.

Mr KING:
Wimmera

– I rise tonight to draw to the attention of the House what I believe is a very serious situation in which the Government has placed one of its commissions, the Industries Assistance Commission. I refer to the future of the Industries Assistance Commission. Mr Speaker, you will recall that this Commission was established some 2 years ago by the present Government. We were informed that this could be the answer to all our ills and to all our problems. I have vivid recollections of the Prime Minister (Mr Whitlam) on numerous occasions virtually refusing to answer questions in the House on the ground that the Government had placed the problem about which a question was being asked before the Industries Assistance Commission, and saying that he would not take any further action on the matter until the Commission had reported. One would have expected the Government to take immediate action when the LAC made a report, but this does not appear to have been done. It appears that the Government is prepared to ignore absolutely some of the submissions of the IAC. This is not the answer that we on this side of the House thought we would receive. I have vivid recollections of the time when the legislation to establish the Commission passed through the House, and how members of the then Country Party of Australia opposed it somewhat strongly on the ground that it would break down. However, we did not win the day and the Government had the numbers. So the legislation was passed through the Parliament and now we find a situation in which the Government is no doubt somewhat sorry that it did not listen to members of the National Country Party on that occasion because it is now ignoring these recommendations from the Commission. The newspaper Stock and Land of Thursday 21 August 1975 contains a few comments from various industry leaders who, more or less, have been thinking along the same lines that I have been speaking about. The article reads as follows:

Mr J. P. Heffernan, State president of the Victorian Farmers’ Union, said the Budget ‘made a mockery of the Industries Assistance Commission recommendations on aid to the rural sector’.

It is strange for Mr Heffernan to say that because he is chairman of the Rural Advisory Committee to the Minister for Agriculture (Senator Wriedt). But these are the comments of only one individual. Mr S. W. G. Burston, President of the Graziers’ Association of Victoria, made a statement and was reported in these terms: ‘Relegation of rural industries to such a low position on the Budget list reflects the Federal Government’s complete disregard for the importance of the national economy,’ he said.

Mr Burston said ‘it was a bitter blow to farmers that the Government had failed to act on the recommendations of the Industries Assistance Commission’.

If other honourable members like to read other articles, they will find similar suggestions coming from industry leaders. I thought that possibly I could be biased on these matters, so I looked into the matter a little further and found that a very senior Cabinet Minister is now showing concern in regard to what has taken place. Senator Wriedt, the Minister for Agriculture had something to say, and in that newspaper article he was reported as follows:

The most important item not included in the Budget was income equaliser. ‘I think we could probably do more for the rural section with such a scheme than with any other single measure. ‘But it was unfortunate that the report by the IAC on income equalisation came from the Government at such a difficult time, ‘ he said.

Because of this the question had been deferred until next year.

I ask: What is the advantage of having a Commission if even Cabinet Ministers are going to ignore its recommendations? I put this suggestion to the House tonight: If honourable members look at the Age newspaper of Tuesday, 26 August they will find a very good article by Mr Phillip McCarthy which is headed, ‘ “Super” sprouts trouble again’. If honourable members analyse this article they will find some rather interesting material. I have not got time to quote the whole article, but it refers to the fact that the Government looks at the report from the Industries Assistance Commission and then it decided to put it aside for a period. What this means no one knows. But we also know that the Government referred it to some of the departmental heads. It is rather interesting to see the reaction because some of those departments that will be examining the matter have a very clear-cut issue as to whether they will either support or reject the recommendations. I ask: Why have a dog and bark too? Has the Government got itself into a position in which it will choose to classify the Industries Assistance Commission as a sort of second rate commission and use it only when it suits it? That is what it appears to be doing at the present time.

Mr Cadman:

– The too hard basket.

Mr KING:

-I think that that probably would answer the question. It is being relegated to the too hard basket. The Prime Minister was somewhat upset when he received the report from the Commission on the restoration of the superphosphate bounty. The newspaper article in the Restates:

The Prime Minister (Mr Whitlam), who clearly expected the IAC to vindicate his opposition to the bounty, recognised the extreme delicacy of the situation last week by agreeing in Cabinet to a deferment of the debate.

I repeat the words ‘to a deferment of the debate ‘. Because the condition laid down originally was that the Commission was to report on 1 July in ample time for a decision to be made and included in the Budget one would have thought the Government would have done something about the matter, but it did not. It has completely ignored the recommendation. When one sees that there are divisions within the Departments, one starts to wonder for what good purposes we are retaining the Commission. Either the Government has to accept the bulk of the recommendations it makes or disband it and go back to the original situation of the Tariff Board. I am not making any recommendations to the Government but I want somebody on the Government side to give a very clear indication of the position. I think that perhaps this question might be answered by the Prime Minister himself. After all, he was the one who was so proud.

I want to refer to the big problem associated with one matter, and that is the reference that the IAC received in regard to superphosphate. As you are well aware, Mr Speaker, primary industries today are going through a very delicate period. I suppose that it would be the greatest crisis in which primary industry has ever found itself. I will not spell out all the problems with which primary industries are faced, but I think of the position in the meat industry, in the dairying industry and in the wool industry. No doubt, there are plenty of other primary industries which are facing problems similar to those being faced in those 3 industries. It is all very well for the Treasurer (Mr Hayden) to say that he is easing taxation. These people are not interested in taxation. They will not be paying any taxation for a long time unless we do one of 2 things, to replace the Government and follow that up with good, sound policies to develop and assist the rural industries. There has been a lot of criticism by members of the Government in relation to aid to primary industries. I know we are not allowed to talk about the Budget. I do not intend to do so. But it is a pity that the Government does not give more consideration to this matter. Let us go back to the question of superphosphate. When this Government took office some 2V4 or nearly 3 years ago the price of superphosphate, bulk, in Victoria was $14.16 per tonne. On 1 January 1975 it was $54.78 per tonne. Today the price has risen to something like $58 per tonne.

Mr Lusher:

– Ex works.

Mr KING:

– Ex works, yes, bulk. That is what the grower or the user has to pay. He certainly has a lot of costs after that. Again I appeal to the Government- to anyone from the Prime Minister down- to answer some of the questions which I have put forward in relation to the future of the Industries Assistance Commission. If it is worth having an organisation such as this Commission then I believe it is up to the Government to reconsider its recommendations.

Mr SPEAKER:

-Order! The honourable member’s time has expired.

Mr CONNOLLY:
Bradfield

– I wish to make some comments on the condition of the coal industry in Australia at the present time with special reference to New South Wales. The imposition by the Government of an export levy will have a major effect upon the present coal industry, which is one of the few Australian exporting industries which still remains viable despite 2lA years of chaotic and disastrous mismanagement of the economy of this country. The coal industry anticipates export earnings in 1975-76 of $650m. This is to attract a revenue of some $ 120m in addition to normal company and dividend taxation provisions. I emphasise that I do not wish to criticise directly the principle of taxation upon export income but rather the manner in which it has been applied and the Government ‘s lack of consultation with the industry before the decisions were made.

Mr SPEAKER:

-Order! The honourable gentleman is out of order in discussing the Budget on the motion that the House do now adjourn. I advise him that if he continues on that line I shall have to sit him down.

Mr CONNOLLY:

-Thank you, Mr Speaker. Coal pricing is a very sensitive aspect of the industry, especially when prices relate to the carbon content of the coal. There is some doubt that the Government appreciates this. For example, there may be a price difference of some $3 or $4 per tonne between coal with a carbon content of 82 per cent to 83 per cent and coal with a carbon content of 85 per cent or more. One would presume that the Minister for Minerals and Energy (Mr Connor), who has a considerable amount of coal and a large number of coal mines in his electorate, would have a deep knowledge of the coal industry. But there are reasons to suggest that he has not given the Government the benefit of the knowledge or the experience which allegedly he has. The major difficulty which industry is facing is not simply the militant industrial action which is taking place at the present time in a number of collieries on the New South Wales south coast; it involves also the future of coal sales and specifically export sales. It is in this context, therefore, that all forms of taxation are of consideragle relevance.

In my opinion the best way in which taxation can be applied to an export industry such as the coal industry is by a differential profit tax or a super company tax on coal exports rather than a tax on mere volume of output. I submit that a tax on volume of output is intrinsically inequitable, especially as it would apply to different qualities of coal. The impostion of all forms of taxation on the industry can have and has had a very serious effect, especially on the coal producers on the south coast of New South Wales. I submit that the Minister for Minerals and Energy has failed to appreciate the implications of his policies in this regard. For example, let us compare the operating costs of 2 companies, one in Queensland and one in New South Wales. The operating costs of the Bellambi Coal Co. Ltd and Utah Development are the 2 examples I wish to draw on.

In 1974-75 Bellambi ‘s operating costs were approximately $24.50 per tonne. In 1973-74 the costs were approximately $16.25 per tonne, which was significantly less. Utah Development’s costs for 1974-75 were approximately $1 1.50 to $12.50 per tonne compared with $8.40 during the previous year, 1973-74. All these figures exclude interest, depreciation and other provisions, which of course are very relevant in coming to a final figure for net profitability. In addition to that, Utah’s figures also exclude export taxes.

I submit that the Government has failed to realise that the cost of production is a crucial element in all aspects of profitability, especially in an industry such as the coal industry, which is subject to so many variables. If one examines the earning estimates of the Bellambi Coal Co. Pty Ltd, the effect of any form of tax can be calculated on the basis of sales to Japan of washed coal which in the forthcoming financial year are expected to be some 600 000 to 900 000 tonnes. It is difficult to be more precise because of extensive industrial unrest, which we are all aware is presently inhibiting production at the South Bulli Colliery. Therefore, any form of taxation in the coming year will be applicable to some $3m to $4.5m, depending on the volume of sales. In 1974-75, exports were responsible for taxation of approximately $200,000. Operating costs are expected to rise, however, in the forthcorning financial year to over $29 per tonne. Therefore the impact of any form of additional taxation will be to convert a net loss of $ 120,000 to an excessive loss of $1.3m. I should like to repeat that authoritative projections show that this company’s profits could be negative during 1976.

I should like to draw the attention of the House to the effect of coal company closures on the industrial situation and also the effect of reduced scales of operation on the South Coast. The Bellambi Coal Co. employs approximately 890 people. It is also examining the feasibility of establishing another colliery at West Bulli. Kembla Coal and Coke Pty Ltd also employs approximately 850 people in the same area and has been examining the prospect of setting up a new colliery at West Cliff, while Clutha Development Pty Ltd employs approximately 1 100 personnel. There are 2 smaller producers of high quality export coal, Austen and Butta Ltd, and in addition there is the Electricity Commission of New South Wales. The export tonnages of those companies, although of high quality coal, are much smaller and therefore they are less affected by taxation problems.

I wish to emphasise, therefore, that up to 2800 people could well lose their means of livelihood if there are any further additional costs involved in the production of coal, especially on the South Coast of New South Wales. In addition to that, there are other associated industries such as the haulage and service industries which must suffer if coal companies either cease or scale down their activities in any way. Therefore, additional employment opportunities will be lost because new collieries will not be opened by the companies which will be in a position where they have little alternative but to struggle to survive. I seek leave to incorporate in Hansard a table setting out the details of those South Coast coal companies which will be affected in the way I have outlined.

Mr SPEAKER:

-Is leave granted? There being no objection, leave is granted. (The document read as follows)-

Mr CONNOLLY:

-I thank the House. I will also provide details of further costs to the House if it would assist the Government to understand the problems facing the coal industry at the present time. Queensland producers, on the other hand, who produce a much higher quality coal on the whole, have been presumed by the Government to be able to pay any additional costs which might be applied to them. The difficulty is that there is no equality of production quality in the coal industry and what applies to Queensland does not necessarily apply to New South Wales. Regrettably, the Government seems to have entirely missed that fact. The situation today is so bad that at present companies face three rather unpalatable alternatives. They may ask the Japanese to pay additional costs. However, in view of the depressed steel market in Japan at present it is unlikely that they will be prepared to do so. The companies can ask the Government for additional assistance and lower taxation. The only other alternative is to close down the mines as uneconomic ventures. In view of the very serious employment situation throughout Australia and especially in areas of the south coast, I urge the Government to reexamine immediately all aspects of its policy towards the coal industry, especially as it applies to underground mines, before jobs are lost and companies cease to operate.

Mr RIORDAN:
Minister for Housing and Construction · Phillip · ALP

– I rise in this debate this evening to answer some of the inaccurate and inappropriate remarks made by the honourable member for Curtin (Mr Garland) during the Grievance Day debate on Thursday last. It is becoming typical for there to be Liberal misrepresentation of the Government’s position. I note that earlier today the Leader of the Opposition (Mr Malcolm Fraser) saw fit to represent completely an answer I gave to a question in this House on Tuesday last. I take the matter no further than to brand bis reference to my reply as a complete misrepresentation of what I said.

The honourable member for Curtin complained about a number of things involving the administration of the Department of Labor and Immigration. But, of course, he has a short memory. He complained about the long delay in Ministers answering questions on notice. I remind him that this is not the first time that complaints about this matter have been made. My attention was drawn to a complaint made on 17 August 1972. The complaint was made about the long delays of the then Minister for Education and Science and now Leader of the Opposition in answering questions. The Leader of the Opposition’s answer is on pages 435 and 436 of the Hansard of that time. He made no bones about it. He said that it was too expensive to answer these questions. He did not make much apology for the long and inordinate delays that were occasioned in bis answering questions put on the notice paper by members of Parliament. How times change. How standards are varied by honourable gentlemen opposite to suit the circumstances of the day.

Let me turn specifically to some of the objections and some of the criticism made by the honourable member for Curtin. He raised questions about the operation of the National Employment and Training scheme. The rapidity with which new applications for assistance under NEAT are being determined is in fact a tribute to the dedication, the efficiency and the very hard work of officers of the Department of Labor and Immigration. Although the time of processing will vary according to the type and level of training which is sought and the need to seek further information from applicants, most new applicants now receive an indication of eligibility within a few weeks of their applications being received. When NEAT was introduced in October last year the Department was virtually flooded with applications for assistance. It showed a great community response, a great community interest and a tremendous community need. An amount of $96.80 a week, which is taxable, is paid to full-time trainees. That is a complete contrast to the miserable apology for a scheme which the Liberals had in operation during their period of office- a scheme of which people could not afford to take advantage. In the first months of operation of this scheme applications were received at the rate of 7000 a month. Since October last year 18 631 people have either completed or been approved for training. The number actually in training at the end of July was 14 654. It should be remembered that the NEAT scheme is confined to industries or occupations in which there is or will be a demand for labour.

I do not want to mention the specific cases raised by the honourable gentleman, but I will mention them by case number if he likes. The first one he raised was rejected for assistance under the NEAT scheme and a reply was sent to the honourable gentleman on 1 August this year. Another applicant was rejected for assistance under the NEAT scheme but currently is pursuing a course of training with assistance under the tertiary education allowances scheme. Does the honourable gentleman want that person to be paid twice? The third case the honourable gentleman raised involves a person in respect of a State education department bonded studentship with a small income from part-time work. She was also rejected for assistance under the NEAT scheme, but there is in fact no record of correspondence from the honourable gentleman supporting the woman’s application.

Another case which he raised has been fully reviewed by the Department of Labor and Immigration but also has been rejected on the ground that the person involved had voluntarily left employment to undertake training for an occupation for which there is a low labour market demand. If the honourable gentleman wants further details, they are available and I will supply them to him. The honourable member objected to the RED scheme. He said that certain organisations had actually received approval from the then Minister and advice has now been given that the project has been cancelled. I deny that. No projects at this stage have been cancelled. All organisations have been informed that the matter has been suspended and that they should not undertake new expenditure pending matters being reviewed. The suspension of commencement of RED projects is Australia - wide and extends to all electorates. It is inappropriate for the honourable member for Curtin to say: ‘We cannot get any reply of an urgent nature out of the Government’. The only advice that can be given at this stage is that all the projects are under review and that the review is being carried out with the utmost despatch. The Minister for Labor and Immigration (Senator James McClelland) has advised that the Department has virtually completed the review and it is hoped to provide project sponsors with firm details regarding the future of their projects by the end of this week.

The honourable member also raised an immigration complaint. He should realise that the Minister receives approximately 65 000 representations per annum in respect of immigration matters. The case he raised is an interesting one. He claimed that he had received no information and no substantive reply from the Minister. I remind him that I have shown him a letter which he acknowledges having received. The letter is dated 12 May 1975. 1 seek leave to have it incorporated in Hansard.

Mr SPEAKER:

-Is leave granted? There being no objection, leave is granted. (The document read as follows)-

Minister for Labor and Immigration 12 May 1975

The Honourable R. V. Garland MP Australian Parliament Offices P.O. Box 258 Perth, W.A. 6001

Dear Mr Garland

I refer to your representations on behalf of Miss Eleanora Carnevali of 460 Cambridge Street, Floreat Park W.A. 6014 whose brother-in-law Mr Angelo Gismondi and family applied unsuccessfully for entry to Australia from Italy.

Enquiries made have indicated that a nomination in favour of Mr Gismondi and family was accepted early in 1974 and forwarded overseas for assessment. However, when it was found that Mr Gismondi who is an Army Officer did not fall within the occupational categories presently being accepted under the immigration programs, his application was quite correctly refused by the Chief Migration Officer, Rome.

I note that Mr Gismondi is said to have professional qualifications and also a specific offer of employment on arrival in Western Australia. Whilst I am not in a position to indicate that a favourable result can be expected I am prepared to review the matter in the light of this information.

To this end Mr Gismondi and his family will be invited to attend for interview and a full assessment will be made of his case including the acceptability of any professional qualifications held by him and employment opportunities here.

I shall let you know as soon as it has been possible to reach a decision.

Yours sincerely

page 559

CLYDE R. CAMERON

Mr RIORDAN:
ALP

-The facts of this case are quite simple. The man’s name is Mr Angelo Gis.mondi That gentleman has failed to appear for an interview and medical examination at the Australian Embassy in Rome. Mr Gismondi was sponsored by his mother-in-law in February of last year for migration to Australia. The nomination was sent to the chief immigration officer in Rome in the usual way. Had the gentleman been able to meet the normal conditions for migrant entry he would have been accepted, but he did not meet those conditions. The fact is that Mr Gismondi was an army officer in the country of which he is a citizen and as we are not seeking army officers as migrants at present he did not meet the occupational conditions for migrant entry. Mr Gismondi was said to be a qualified civil engineer. That was also taken in account. However, Australia is not recruiting civil engineers from overseas. On those grounds his application was not accepted. The previous Minister for Labor and Immigration reviewed the case in May of this year and confirmed the decision taken by officers of his Department. The honourable member was so advised in May this year and was given an assurance that, although there was no change in the circumstance which had led to the decision which was confirmed by the previous Minister, the case would be re-examined.

The case could be approached in one of two ways. The previous facts could be gone over again but that would have meant almost inevitably that the decision would have been confirmed. That was not done. The action taken was to advise the Australian immigration officials at the Australian Embassy in Rome to review the case further. In November of last year the overseas post was asked to state the reason for the rejection of Mr Gismond: ‘s application. After examination by the appropriate authorities in Australia the immigration officials in Rome were advised to undertake a further examination, to seek a further review and to make a report. The second report was received in April. Mr Gismondi ‘s professional skills were checked and it was found that there was no demand for such qualifications. The honourable member was so advised, not only by the letter in May which I had incorporated but also by a telegram in July, that inquiries were not complete and the Department was still waiting.

Mr Garland:

– Three months ago.

Mr RIORDAN:

– I have advised the honourable member that the basic reason for the rejection of the appllication is that the person about whom he is concerned so far has failed to attend for a medical interview and that is holding up further investigation of the matter. The allegations made by the honourable gentleman are without foundation. He has been most unreasonable and the accusation that he has made against the Minister for Labour and Immigration, whom

I have the privilege to represent in this place, was completely unjustified. Having received the facts I would expect the honourable gentleman at the first opportunity available to him to do the decent and proper thing and to withdraw the allegations.

Mr Garland:

– I raise a point of order. The honourable member deliberately took the only time available this evening. I deliberately did not stand and the time -

Mr SPEAKER:

– That is not a point of order.

Question resolved in the affirmative.

House adjourned at 11 p.m.

Cite as: Australia, House of Representatives, Debates, 26 August 1975, viewed 22 October 2017, <http://historichansard.net/hofreps/1975/19750826_reps_29_hor96/>.

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