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Wednesday, 27 March 1985
Page: 918

Senator JESSOP(6.23) —First of all, I wish to join my colleagues who have spoken in the Address-in-Reply debate by congratulating the new senators who were elected in December. I have noted several of their speeches and I believe they have contributed extremely well. There are seven new senators from the Liberal Party of Australia and the National Party of Australia, including Senator Parer who replaced the then Senator Martin, now Mrs Sullivan, who was elected from Queensland to the House of Representatives, five new senators from the Australian Labor Party and one new Australian Democrat senator. I particularly compliment Senator Vanstone, who made her maiden speech today and demonstrated her interest as the youngest senator in the chamber, as she described herself, in matters relating to young people. I am sure that Senator Harradine's speech will attract her attention because she shares his concern, and our concern, for the problems of unemployed youth in our community.

Of course, the Hawke Government had an unprecedented honeymoon for 20 months leading up to the election in December. During that period the Prime Minister (Mr Hawke) and his Government followed the economic path determined by the Fraser Government with respect to the wage pause and successfully brought inflation down, which was the objective of the Fraser Government when that concept was initiated. The Government was also assisted last year by the breaking of the drought, with the consequent economic benefits that this had on the rural community. Of course, when the rural community starts to smile, the rest of the community also has a psychological fillip as a result. This has always been the case.

For some reason or other-I have not yet worked out how-Mr Hawke also managed to fly in the face of Caucus on many of the decisions he made. However, in spite of all this, his euphoric dreams did not come to anything. He suggested that the Government would have a 50-seat majority at the election last year. The people of Australia certainly proved that to be somewhat of a nightmare because he has only a 16-seat majority in the House of Representatives. The honeymoon for him is now over. It has been demonstrated on occasions since the election that he has been confronted by his Caucus, which I believe is his Achilles heel, and has been reprimanded and informed that the Caucus must be consulted. Consensus decisions-that seems to be the popular expression these days-as far as the Caucus is concerned must apply. The Caucus is slowly but surely plucking Hawke's tail-feathers. In the eyes of the public he is a deflated shadow of his former self. He does not know what his right wing or left wing will do or say, or what the Centre Left will do either.

During the election campaign much was made of the tax summit concept, to discuss the much vexed and argued question of restructuring the tax system of Australia. This has been an ongoing problem since 1970 when the first committee that I am aware of was formed to deal with that. I refer to the Asprey Taxation Review Committee, from which certain recommendations flowed. But not much has happened. I am critical of successive governments in this respect. It seems that the tax summit may be in trouble already because rumblings are coming from the Australian Council of Trade Unions and other parts of the community. Nevertheless, I hope that some constructive suggestions may flow from those discussions and that we can see some positive direction in tax measures introduced for the benefit of the people of Australia.

Of course, during the election campaign we heard of the proposition of capital gains taxes, so-called wealth taxes, which I prefer to refer to as taxes on savings because that is exactly what they are. Capital gains tax is not a wealth tax; it is not a tax that would affect wealthy people in the community. It would affect the average wage earner and so it is a tax on savings. We also heard of the possible reintroduction of death duties. Here again, that is a retrograde double-dipping sort of taxation which affects not the wealthy of the community-far from it.

Senator Walsh —Why is that? Why is it double-dipping?

Senator JESSOP —Well, the people have paid taxes all their lives and have put money aside-

Senator Walsh —But the people you represent do not pay taxes.

Senator JESSOP —Just a moment. I suggest that the honourable senator be careful about what he says. The truth about the death duty measure in South Australia when it existed was that over 95 per cent of the revenue so derived came from estates of $50,000 or less. If we are dealing with wealthy people, we are looking at three to five per cent of the population being in that category of leaving an estate of over $50,000. We, as an Opposition, warned of the detrimental effects of these tax measures.

Senator Walsh —Tell us what you said about the wine tax.

Senator JESSOP —The Government put a 10 per cent tax on wine and so government revenue has gone up, but lots of consequences are flowing from that decision. I do not believe the Government has been totally honest in that matter. I will remind it about that in due course. But talking about the capital gains tax, in November last year I wrote a letter to the editor of the Australian, which newspaper was kind enough to head it up in this way: 'A tax that gains and gains'. My letter read:

It appears that there is a significant body of opinion among the A.L.P. and the ACTU favouring a capital gains tax, the latest support coming from the Australian Democrats who say such a tax is ''essential''.

It is being said that Australia is the only country in the OECD which does not have a capital gains tax.

I drew attention to the history of this tax in the United States of America when, in the late 1960s, President Johnson required more finance for the Vietnam War. He lifted the capital gains tax from 25 per cent to 48 per cent. My letter continued:

The result of this was that the inflow of new capital dropped from $171 million in 1960 to $97 million the next year and continued down to a low of just $17 million in 1976.

Similarly, the number of new small companies floated on the stockmarket slumped from about 900 in 1969 to none in 1971.

In 1978 the tax rate was cut back to 28 per cent and the new venture capital raised went from $39 million in 1977 to more than $4000 million last year, with the tax rate now being 20 per cent.

A capital gains tax would have a marked effect on the incentive of local and overseas companies to invest in Australia, not to mention the disastrous effect it would have on our rural and mining industries.

The question I posed at that time was:

. . . if ''consensus'' achieved the introduction of a capital gains tax under a Labor Government, what assurances can be given to small business, farmers, companies and the community in general that the decision makers of this country will not progressively increase the rate of such a tax as further means of gathering revenue?

I suggested that history shows that Australia cannot afford to take that chance. I noticed that not long ago, in Los Angeles, Mr Hawke addressed a dinner meeting or a luncheon meeting of the Australian-American Chamber of Commerce which, I might add, was the brainchild of the Hon. John McLeay when he was our Consul-General in Los Angeles and which met with a lot of success. After 18 months or two years of effort, he was able to attract some 300 or more business people to join that association. Since that association was established significant speakers have addressed its meetings, including the former Prime Minister, Mr Malcolm Fraser, and the most recent one being Mr Hawke, the Labor Prime Minister of Australia. I heard an extract from that speech on AM or one of the Australian Broadcasting Corporation programs. He said that Australia welcomed the introduction of foreign investment in this country. I remember when I first became a member of the House of Representatives in 1966 the Labor Party deplored the introduction of foreign investment in Australia. So I am glad at least to see that the present incumbent Prime Minister recognises that Australia cannot develop our resources effectively without the assistance of foreign investment. I hope that the Government will have a very close look at the effect that a capital gains tax had on the influx of capital into the United States of America, as I have just illustrated in the reference to the letter which I wrote last year.

Primary industry is in a state of chaos at the moment. The Minister for Finance (Senator Walsh) said that a cyclical factor is involved in the rural communities and that from time to time they suffer a depression. That is quite true. My question today recognised that the cost of rural production has increased by an average of 41 per cent since 1980-81. I wanted to know what the Government intended to do about it, because it is clear that something needs to be done if we are to continue to rely upon our rural industry to attract export income. I note a Press release that was attributed to the National Farmers Federation. Mr McLachlan said in that statement that the NFF's submission had not asked the Government for handouts or special concessions, but to get its heavy foot off farmers' necks. The statement said:

We gave Mr Hawke a plan of action and a timetable to implement major changes which will enable agriculture to further develop its huge resources.

Mr Hawke gave NFF an undertaking to consider four major points raised by the farm costs submission:

A commitment to consider a short-term IAC enquiry on the scope for some reduction in tariff levels in view of the Government's concern to see the gains of devaluation retained and not swallowed up in inflationary increases.

The National Farmers Federation gave a balance-sheet to Mr Hawke which showed that every Australian farmer was penalised by more than $16,000 a year as a result of domestic subsidies, including unjustified components such as tariffs, wages, interest rates and transport costs. The second undertaking that Mr Hawke gave was to consider speaking to State Premiers on the possibility of some combined approach on State issues affecting farm costs, including transport regulations, public borrowings and State taxes on fuels. I will talk a little more about public borrowings in a moment. The third undertaking was that the Government would seriously consider, as a part of Budget formulation, the removal of various tariffs, taxes and excises on vital inputs used in agriculture. The fourth was an agreement to get the Industries Assistance Commission, the Bureau of Agricultural Economics, the Treasury and the National Farmers Federation to establish the statistical underpinning to the cost of tariff protection.

I said that I would mention public borrowings. In last year's Budget $5.6 billion, $5,600m, was the cost of servicing interest on the public debt. It is a very important area to give consideration to and, therefore, this makes export industries, such as the agricultural and rural industries, quite important. Senator Bjelke-Petersen the other day referred to the penalties that the rural community and other industries pay for irresponsible strike action. Last year in New South Wales members of the Transport Union went on strike because they did not agree with the way the handling facilities were being administered. From memory, it was a demarcation dispute. The strike cost Australia dearly in export income and export credibility. They are vital to the economic progress of our country if we are to get our balance of payments into proper perspective.

The other strike involved the loading of wheat. This was estimated to have cost the Australian Wheatgrowers' Federation millions of dollars. It involved an objection by the unions concerned to the introduction of another shift which would provide jobs for other people desperately in need. The unions adopted a selfish, irresponsible attitude on that occasion, resulting in a cost of millions of dollars to the wheat industry

It is about time that we made the irresponsible trade unions aware of their importance in providing jobs for fellow Australians who are in need of employment. They have to recognise their responsibility to the Government and to the community at large and the importance of their trying to restore the credibility of Australia as a reliable trading partner in the eyes of the world. One only has to go overseas and talk to people who want to buy our coal and our other natural resources to find that they are turning elsewhere, to countries such as Brazil, Argentina, Canada and South Africa, all of which are reliable producers and are reliable with respect to the delivery of goods. But at present our credibility is suffering because of the matters to which I have referred.

Apart from the need to encourage and develop our rural exports, there are other areas that we have to develop. One of them is our uranium. There is a lot of emotive argument about uranium mining and the nuclear fuel cycle generally. As an environmentalist I am concerned that we recognise the scientific, environmental and engineering facts associated with the production of energy through uranium. In our region, countries such as South Korea, Taiwan and China are embarking on an expanding program of nuclear power development. Australia has to recognise this now. I am glad that the Minister for Resources and Energy (Senator Gareth Evans) has come into the chamber. I am sure that he recognises the need for Australia to get into the international market that is available and will increasingly become more available and more profitable to us, which should be important to the people of Australia. It will help in creating jobs, balancing our trade and reducing the interest on our public debt.

I am sure the Minister recognises that the Asia-Pacific region offers Australia tremendous opportunities in view of our natural resources and our rural products and the fact that there are two billion people in that part of the world. Many of them are looking to Australia, small though we are in the eyes of the world, as an ally in trade and with some admiration because of our technological initiatives. The Government must have a very close look at the future of Australia with respect to the Asia-Pacific region. It is very important for us to develop some sort of an economic community arrangement in our part of the world for the benefit of Australians in the future.

I was in Europe last year. The object of my visit was to examine the problem of the disposal of high level nuclear wastes, which worries a lot of people. I found that people in France, Britain and Germany who are using waste disposal technology involving the vitrification process are quite satisfied with that form of disposal. The object of the borosilicate glassification process is to cool the highly radioactive, extremely hot residue from nuclear power stations. The introduction of borosilicate amalgamates the waste with glass. After a cooling period, this is able to be buried at depths of about 500 metres in geologically stable land or under the sea. This is environmentally satisfactory overseas.

The second generation storage facility will be of tremendous interest to Australia. The synroc process, I am informed, will be regarded overseas as a second generation storage facility in 10 to 15 years' time. This technique is interesting. In the Gabon region of West Africa two billion years ago, six nuclear reactors commenced operation naturally in a concentrated deposit of uranium ore. The nuclear chain reaction, started spontaneously by the presence of water, continued for hundreds of thousands of years and finally ceased. During the long reaction, fission products, together with trans-uranium-that is, elements heavier than uranium, such as plutonium-were formed inside the ore body. The radioactive products of these naturally occurring reactors have long since decayed into stable elements. These ultimate wastes have been discovered inside the ore deposit. Because of their location it is known that there was little, if any, movement of radioactive wastes during and after the nuclear reaction. These rocks, which have been stored for two billion years in the presence of water, these high level waste elements such as plutonium-which has a half-life of about 24,000 years, I believe-are the basis of the synroc ceramic rock storage technology which was invented by Professor Ringwood at the Australian National University. He has synthesised this ceramic rock which has been so successful in nature and this will certainly mean a lot for Australia in the future.

This technique is now being developed at Lucas Heights. The plant to produce this substance is almost finished. As we have no high level radioactive material here to check it out industrially, the Government and the departments concerned are working with Japan and the United Kingdom so that they can test this facility. This will be quite important to Australia in the future. The advantage of this process over the glassification technology, according to Professor Ringwood, is that high level waste can be permanently disposed of in the form of synroc in a fifth of the time at a depth of four kilometres in one metre diameter drill holes. It can withstand temperatures of over 200 degrees centigrade and has a much greater storage capacity, storing up to about four or five times more than the present process.

One need not worry about the recovery of plutonium for the making of bombs. The type of plutonium that is derived from domestic power stations is not the type that is used in the manufacture of nuclear weapons. That is a special process, requiring, I think uranium 239, which can be more economically produced in a far smaller reactor than the ones that are used for domestic power stations. Because of the depth at which it is buried, it would be quite difficult to retrieve and use. It is buried four kilometres below the surface. At the moment, technology is advancing so rapidly that the nuclear waste of today will be the nuclear fuel of tomorrow, with fewer environmental problems.

Another environmental point that could be made for the benefit of those people who are concerned about environmental matters associated with the nuclear fuel cycle is that at Biblis, which is about 50 or 60 kilometres from Frankfurt, there are two nuclear power facilities, which I visited. One has a capacity of 1146 megawatts and the other 1240 megawatts. These units use for cooling purposes the waters of the River Rhine. For years it had not been possible to catch a fish in the River Rhine. The inhabitants of the area were fascinated because, due to the oxygenation of the water being used in the cooling process, the waters of the Rhine have now been purified to the extent that for the first time in many years people in that area are now catching fish. That is a fringe benefit that is very important to any environmental consideration of the problem.

In Australia today we should give serious consideration to the future. We should look at desalinating sea water and the brackish waters of Australia. I believe that by the year 2050 our water resources will be fully committed and we will have to look at new technology, such as the high-temperature nuclear fission technology using thorium and uranium, which has been developed in Germany and which I believe will be able to be utilised in the form of waste heat for the desalination of water. We have to make some far-reaching decisions about this question very quickly.

Debate interrupted.