Senator O'BRIEN(7.24 p.m.) —I noted that Senator Harradine was in the chamber earlier for the purpose of speaking to this report. I do not know whether he is able to return but perhaps he will take the cue if he can. I can imagine the sort of lustre that he would want to give to the report. He would, however, know that Labor thought his idea was, and I say this respect, somewhat of a goofy one in relation to the sale of one-third of Telstra.

The aspect that I wanted to touch on, arising from this report, was what happens with the money raised in this fashion. The government has acted like some sort of supercilious snake oil peddler in this policy area, particularly having regard to the article which is published in today's Age by Kenneth Davidson. It relates to the government's 1996 election campaign promise. Kenneth Davidson says:

The piece de resistance of the coalition's 1996 election campaign was John Howard's promise that he would set aside $1.1 billion from the sale of one-third of Telstra to set up the trust and that the money would be spent on the environment over five years.

What I understood that promise to mean, and I think everybody else understood the promise to mean, was that there would be just over $200 million a year extra available for environmental projects.

I do not think that is an unreasonable reflection of the public understanding of the coalition's policies leading into the last election—that is, that they would spend more on the environment as a result of raising money from the one-third sale of Telstra. Mr Davidson goes on:

So what has happened? According to the Budget papers, expenditure on the environment fell from $338 million in 1995-96—the last year of the Keating Government—to $259 million in 1996-97—the first full year of the Howard Government.

On a conservative estimate, the Howard Government cut $79 million or 23 per cent from environment-related programs in its first full financial year in office. It cut $170 million or 41 per cent from environmental programs, broadly defined to include urban and regional programs.

The magnitude of that cut is contrasted against proposals, which, I think, again, are fairly described, which would have led electors to believe that there would be additional spending on the environment—not somewhere between a 23 and a 41 per cent cut in the funding of the environment. However the sale of Telstra was to proceed, the feeling of the electorate was that there would be more money in the funding of the environment—not less. Later in the article, Kenneth Davidson refers to the Natural Heritage Trust. He says:

The National Heritage Trust is established and expenditures of $1.1 billion announced. The figures look impressive—$187 million in 1997-98, rising to $290 million over the following couple of years before tapering off in 2001.

But the National Heritage Trust is the thimble. The pea is the forward estimates of expenditure on environment-related programs.

And that is why I used the expression `supercilious snake oil peddler' in relation to the coalition's policy on funding, because what the public is getting is not what they believed they were getting. Mr Davidson goes on:

Labor spent $338 million on the environment in 1995-96, which, if maintained over the subsequent five years, would have amounted to expenditure of $1.7 billion.

By comparison, the actual environment-related expenditure of the Howard Government in its first year and its forward estimates of the following four years is only $1.5 billion according to the Budget papers.

The Howard Government is spending less on the environment than the Keating Government and far from some of the Telstra partial privatisation program being spent on the environment, savings from cuts to environmental spending are being used to prop up non-environmental programs that have a higher priority with the Howard Government.

In other words, the public have been persuaded to accept, by electing the coalition, a one-third sale of Telstra. But they also accepted that the government would fund additional programs; that it would put additional money into the protection and the rehabilitation of the Australian environment.

The budget papers demonstrate that that will not be the case and, by Mr Davidson's estimate, over the forward estimates for the next four years there will be a reduction of $200 million—not an increase of $1.1 billion, as people might have believed, but a reduction of $200 million.

I think the `thimble and pea' terminology that is used in this article is most appropriate and the public is entitled to get what they paid for, as it were, in the election. If the government says, as it has many times, that it had a mandate to sell one-third of Telstra, that mandate had conditions attached to it. The government's mandate was that it would put more money into the environment—not that it would put this money in but take more out. But the forward estimates show that more money will be taken out of funding for the environment than that which is put into it over the period of the forward estimates.

We can argue about whether Senator Harradine's view on the redeemable preference shares is viable. As I said earlier, Labor never thought that that was a viable option; neither did the government. Everybody knew that that option would not be supported upon inquiry. That has been the result. We have come out of the exercise with precisely what Labor said at the start: the sale of Telstra but with, at the same time, a reduction in the funding of environmental programs by this government, and the transfer of funds that Labor was putting into the environment to other programs that this government believes are more important.

The public needs to take note of how they have been misled in relation to this matter. Naturally, the vein in which I approach this report may be somewhat different from that of Senator Harradine, who has a different view on the issue.