Message from the Governor-General transmitting particulars of proposed expenditure and recommending appropriation announced.
Bill presented by Mr Nairn, and read a first time.
I move:
That this bill be now read a second time.
It is a pleasure to introduce Appropriation Bill (No. 3) 2005-2006.
There are two additional estimates bills this year: Appropriation Bill (No. 3) and Appropriation Bill (No. 4). I shall introduce the latter bill shortly.
The additional estimates bills follow on from the appropriation bills that were introduced into the House on the occasion of the 2005-06 budget. They seek appropriation authority from parliament for the additional expenditure of money from the consolidated revenue fund, in order to meet requirements that have arisen since the last budget.
The total appropriation being sought through the additional estimates bills this year is almost $2.63 billion, which is partially offset by expected savings in appropriations of around $603.9 million. Taking savings into account, the expected net increase in expenditure arising from additional estimates bills is approximately $2 billion, or about 3.5 per cent of total annual appropriations. These savings are described in the document accompanying the bills, the ‘Statement of savings expected in annual appropriations’, which I will table shortly.
The total appropriation being sought in Appropriation Bill (No. 3) this year is around $1.26 billion. This proposed appropriation arises from changes in the estimates of program expenditure, due to variations in the timing of the payments and forecast increases in costs, reclassifications and policy decisions taken by the government since the last budget, most of which have been described in the Mid-Year Economic and Fiscal Outlook document published in December last year.
The major items of expenditure in the bill include:
I note here the importance of this particular package for many parts of Australia, but particularly for my electorate, where fishing is a major industry. The fishermen of my electorate, particularly those out of Eden and Bermagui, have certainly been looking for this sort of assistance to restructure the industry and ensure that they have a sustainable industry for the future. There have really been too many fishermen chasing too few fish. Nobody is making any money, and certainly this package will make a huge difference to them, certainly to those who want to exit the industry with some assistance so that they can do other things, and therefore leave an industry restructured and able to continue into the future.
Also within the Department of Agriculture, Fisheries and Forestry area there is this additional funding:
Further major items of expenditure in the bill include:
The remaining amount in Appropriation Bill (No. 3)—around $577.8 million—relates to estimates variations and other measures.
I table the ‘Statement of Savings Expected in Annual Appropriations’, and I commend the bill to the House.
Debate (on motion by Mr Crean) adjourned.
Message from the Governor-General transmitting particulars of proposed expenditure and recommending appropriation announced.
Bill presented by Mr Nairn, and read a first time.
I move:
That this bill be now read a second time.
Appropriation Bill (No. 4) provides additional funding to agencies for:
The total additional appropriation being sought in Appropriation Bill (No. 4) 2005-06 is almost $1.37 billion.
The principal factors contributing to the additional requirement since the 2005-06 budget include $744.4 million in additional payments to the states and territories, such as:
Bill 4 also proposes $333.8 million in additional appropriation for non-operating expenses, including:
Finally, $290.5 million has been re-appropriated to the Department of Transport and Regional Services as a new administered expense for the Roads to Recovery program to facilitate the direct payment of these funds to local councils. I commend the bill to the House.
Debate (on motion by Mr Crean) adjourned.
Debate resumed from 7 February, on motion by Mr Costello:
That this bill be now read a second time.
upon which Mr Tanner moved by way of amendment:
That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House is of the view that:
I rise to speak on the second reading of the Future Fund Bill 2005 and the amendment moved by the member for Melbourne. As members would know, the idea of the Future Fund seemed to emerge out of thin air. Whether it was a thought bubble within the bureaucracy or a thought bubble within the Treasurer’s office or a thought bubble of the Treasurer’s, we still do not know. But it was an idea that came seemingly out of nowhere and, when it arrived, very little detail was attached to it. Politics, it is said, is a contest of ideas. As a consequence we have an idea that is now before us as proposed legislation. Our duty as opposition members is to consider the idea embodied in this proposed legislation.
It is worth while to go back in history and review the circumstances and the statements that were made at the time the Treasurer brought the Future Fund to us. On 10 September 2004 the Future Fund policy was announced by the Treasurer. He claimed that its mandate was ‘to increase national savings, offset unfunded super liabilities and maximise the government’s net worth’. Particular emphasis was given at the time to the notion that the offsetting of unfunded super liabilities for public servants was a primary reason for the creation of a Future Fund. The Treasurer additionally called this ‘the most dramatic response to the Intergenerational report’—the Intergenerational report that he commissioned on ageing—‘that the government had produced.’ It is hard to see how a proposal to deal with a shortfall in superannuation liabilities within the Public Service was a response to the Intergenerational report, which in effect dealt with the problems we will face as the baby boomer generation reaches retirement age. Nevertheless, that was the Treasurer’s rhetoric at the time.
In 2004 the government contemplated the full privatisation of Telstra. It needed a means or a method of dealing with both the financial governance and political issues that attached to the issue of the remaining privatisation of Telstra. Interestingly enough at the time, the Australian Chamber of Commerce and Industry responded to the Treasurer’s proposal but mainly by way of criticism. The chamber identified that the proposal would have a limited effect on national savings and that the dollars that were intended to go into the fund were not available for current worthwhile reforms. As all of us in this House who receive emails on a regular basis from the ACCI know, that would include worthwhile reforms such as tax reform. The chamber also pointed out that the issue of the superannuation liabilities of public servants was not critical. It has been pretty much solved by the switch to an accumulation scheme. It could have been met in the future by government borrowing. The government could have simply topped up, over time, existing public sector superannuation funds which have a satisfactory rate of return. Politically, perhaps, this would have been difficult seeing as union representatives make up at least half the boards on the two public sector super funds.
The chamber went on to point out that the dollars could be diverted to uneconomic investments and so on. Clearly, some of the issues that were addressed by the ACCI the opposition have taken up. Other views were expressed in the debate at the time by the Treasury and its officials, names well known in Canberra—Mr Evans and Mr Henry. Mr Evans asked: why is it good policy to hand over tax, worth billions of dollars, to fund managers who will simply take high commissions on funds? Should we not be looking at tax reform? Should we not be funding research and development? Should we not be looking at measures which boost productivity? Mr Henry asked: how much will be invested overseas? And then there is the question of what national interests and ethical considerations will apply. This goes to the heart of one of the questions we are raising about the Future Fund. How will the Future Fund apply such considerations?
The Future Fund has a size component into the future which means that there is an inexorable logic that its investment decisions will be subject to the greatest scrutiny and the greatest pressure, both within the market and the political environment. Indeed, it is estimated that in the vicinity of $80 billion to $90 billion could be available within four to five years. This depends on the future of the remaining privatisation of Telstra, but the fund will be a huge player—notwithstanding the fact that under the existing legislation there are measures in place; in part, at least—to ensure that the fund is able to discharge its responsibilities in a way which is consistent with best market performance.
A number of issues that I, and I am sure other speakers, will raise today show that the government really has not thought this through as well as it should. Other commentators said that the government was simply hiding the budget surplus, that the fund was about keeping the budget surplus away from spurious cabinet spending submissions and from the National Party, notorious pork-barrellers since Federation. In regard to the first observation all we can say is that it is up to the cabinet ministers, when they go into the cabinet, to put good views for their submissions, which will rise and fall on their merits—in part, at least. On the second observation we can say plenty. It has been said before in this House, particularly given the recent defection from The Nationals to the Liberal Party of a leading National Party member, that we are witnessing the increasing political presence of Independents in what were formally National seats.
The Nationals are becoming a desperate and strained political party, and in desperate and strained circumstances desperate political measures are sought. The ghost of McEwen is gazing down on this House as he watches The Nationals rushing about trying to claim a new mandate for themselves. But what mandate can they claim if people are not voting for them and if their own members are deserting them? The only one that they can claim is that they can deliver from the bush and they can deliver disproportionately to their own political influence or representation within the coalition. I will come back to this a little later on, but there is no question that what was agrarian socialism has simply become pork-barrelling. We had much evidence of this in the House last year in the ‘regional rorts’ program and Roads to Recovery. It is a travesty really that we sit here in the House and watch millions of dollars after millions of dollars go into roads in regional areas which are mainly in Liberal and National Party electorates.
There are clearly consequences that attach to the government making a decision of this sort, but on the concerns that those in the National Party have about the possible use of funds I want to address the issue of the state of the natural and economic environment that they inhabit. A simple figure of $60 billion has been arrived at by research done by the Australian Conservation Foundation and the National Farmers Federation as the investment required from the Commonwealth, states and private bodies to repair natural landscapes. These are productive landscapes that our rural producers effectively rely on to continue to produce food to be able to export to other countries around the world—to have clean water flowing through the rivers. I do not hear The Nationals talking about the necessary investment that is required to actually repair the natural and productive landscapes of the bush, but I wish I did.
In the midst of all this there is a debate about infrastructure. One of the arguments we are putting strongly to the House is that at the very least consideration ought to be given for investment opportunities which would include infrastructure investments to be made out of a fund of this kind. Indeed, Labor would establish a Building Australia Fund to do just that.
It might be worth while reviewing briefly the infrastructure debate, because it needs to happen in the context of our discussion about the Future Fund. The most important point—and it was made again by the member for Melbourne yesterday—is that investment in public infrastructure is linked directly to productivity growth and economic prosperity. It is that linkage which will be the key to our future capacity to grow in a sustainable fashion. We would assert here very strongly that the government has a primary and direct role in providing infrastructure and investment in infrastructure—or the means for investment in infrastructure, as would happen under the proposed fund. There are many reasons to do this for the public good, because in some instances infrastructure investment would be in the nature of a natural monopoly. Infrastructure has other attributes. I think the most important one is that it deals with the vexed issue that political parties and policymakers in the parliament have, and that is of absenting themselves from their political day-to-day considerations and considering the national interest into the longer term; in other words, investing for intergenerational equity. Very clearly that is what infrastructure investment is all about. It is long-term investment—it goes to those matters within the economic framework of Australia which are used or affected by all Australians.
The point that the member for Melbourne made in an earlier speech was that we are quickly approaching the point where, if appropriate decisions are not taken, there will be a crisis in infrastructure. Engineers Australia, amongst others, have made similar comments. For example, Australia’s stormwater infrastructure needs to be renewed. There is a vigorous debate in New South Wales and certainly amongst my constituents about water. But we cannot have any debate at all about water unless we have the confidence that our water infrastructure, and particularly our stormwater infrastructure, including stormwater infrastructure that is suitable for the increasingly difficult challenges we face with water shortages in the cities, is improved. That requires a massive investment right across the country, because the issue needs to be addressed in most of our capital cities. There is also upgrading required for the Melbourne-Sydney-Brisbane rail line, the rolling out of broadband and so on. Whilst the figures do show that the involvement by the states and the federal government in investment in infrastructure is not at the total crisis stage at this point in time, because there is stable activity across both the sectors, it is very clear that crunch time is just around the corner. This is being considered by the Productivity Commission at present and we await the government’s response with real interest.
Much of the government’s touted economic success has come on the back of asset sales and also a bit of dividend stripping in the case of Telstra. Since the change in accounting arrangements with the introduction of the GST, it is a little more difficult for us to see what the figures of government expenditure as a percentage of GDP are but they are basically equivalent to the figures of the 1989-90 period—around 24 per cent or 25 per cent. The last five years for the Howard government I think would see government expenditure as a percentage of GDP in the range of 23 to 24 per cent.
At the same time something interesting is happening in that we have had ever-increasing tax revenues and a commodity price boom. But now we face the situation of baby boomers coming out of the workforce within the next 10 to 15 years and a decline in working age Australians becoming a very real issue for the government to address. This has not been taken up in the discussions around the Future Fund. Neither has the question of the decline in manufacturing and the huge need for us to increase our performance in that area. Without tourism in particular, our services exports figures are very poor. The investment necessary in medical research, in innovative technologies and in culture have all diminished over time under the Howard government. Yet, again, when you look at long-term policy considerations, this has not been addressed in the discussion about the Future Fund.
Government members who spoke in this debate last night made much about the alleged sins and omissions of previous Labor governments, but I simply put it to members opposite that it is time for them to think about the future and stop harping, in their own particular way, on the long gone past. When they think about the future, they need to think and speak about the purpose of and the extent to which the decisions that they as a government make—that the Treasurer and cabinet make—are going to be put to good use and for the benefit of all Australians. A lot of energy has been expended here attacking the political and fiscal sins of previous governments but nothing of substance has been said to address the issues that we have raised in here about the Future Fund.
There are real challenges in train and Labor has something to offer with respect to those challenges. In relation to the Future Fund, Labor offers a specific and simple proposition, which is that the fund income stream ought to be applied for infrastructure purposes. There are many purposes that people are well aware of in this House. I have only made brief reference to three of them—stormwater infrastructure, rail infrastructure and natural, ecological infrastructure. The second reading amendment proposes that the Future Fund invest on a prudent commercial basis and manage and administer funds consistent with a number of criteria. It is clear that it ought to be best practice portfolio management—there would be no argument with that; achieve desired returns without undue risk—no argument about that either; and enhance Australia’s reputation as a responsible, ethical investor. That seems to me to go to the very heart of the approach and the amendment that we are putting forward in the House. If through a fund of enormous size such as this Australia is not going to be able to declare what its ethical responsibilities are, then we are abrogating our responsibility on both sides of the House. Finally, the fund’s purpose is to build productive capacity in the Australian community.
There are many concerns that have been raised in the House about the governance arrangements in relation to the Future Fund and particularly in relation to the wide level of ministerial discretion. I hope that the government will listen and take some of those concerns on board. I am also aware of the fact that there is a Senate Economics Legislation Committee inquiry due to report on this bill in a couple of weeks. In our own policy process, our Building Australia Fund has addressed many of the issues that are raised in consideration of what the Future Fund may or may not look like and what its actual purpose ought to be. I commend some of those deliberations, including the policy work that has been done by Labor, to members opposite and ask that they might look at them with an unprejudiced eye.
There is a vision that we need to applaud when governments or policymakers actually come up with things which will benefit all of the country in a real and profound way into the long term. To that extent, the Future Fund or, as Labor will call it, the Building Australia Fund has that potential. But the pitfalls are many. Strict governance and a capacity to invest in those aspects of infrastructure which go to national importance, national resilience, dare I say, economic, ecological and social in the long run, will be critical to the determinations that are made in this House. I commend the amendment to the House.
I rise today also to speak on the Future Fund Bill 2005. I welcome a group of young people arriving in the gallery because it is their future we should be thinking about and not the future of a whole lot of public servants. I do not mean in any way to denigrate public servants, having been one myself. I know them to be a great bunch of human beings who work very hard and deserve to retire on decent super. But putting aside the hard-won surpluses that these young people’s taxes are paying for to meet our future liability to public servants is a complete waste of that money; it should be going to the future of those young people in the gallery. It should be going towards education, it should be going to research and development and it should be ensuring that their future is guaranteed, not the future of a bunch of public servants who will retire and be paid out their liabilities without any difficulty. The current requirement on the budget is being easily met for current Public Service liabilities. So to create a fund that will fund Public Service liabilities seems to be very short-sighted. It seems to be a waste of a resource.
We on this side of the House have been championing for some time the ability to put aside the wins of today to grow a fund for the future. Indeed, the shadow minister at the table, the member for Hotham, moved that in an amendment in a budget-in-reply speech some time ago, at which time the Treasurer ridiculed it loudly and clearly and said it was a waste of money. Twelve or 18 months later, he proposed his own Future Fund, but it is a very narrowly defined fund and the boundaries around it are very narrow indeed. This is meant to be a locked box. Indeed, it will not be a locked box and those Nationals over there, who are very good at grasping money, will be able to grasp this very easily.
I ask why we need to establish a fund to secure super future liabilities when those liabilities can be easily met and they are declining because all defined benefit schemes have been shut off. There will no longer be a drain on the public purse for these liabilities over the next few years. We can very easily ascertain that now. You can do the actuarial calculations and say, ‘This is the amount we need,’ and you can project how you will use the budget to bring it down. It reminds me very much of the days when Jeff Kennett came into power in Victoria shouting that it was a terrible state that we had all these unfunded superannuation liabilities. But it was only ever going to be a problem if everybody retired on the very same day and required the entire amount of their fund to be paid out. Funnily enough, that was never going to happen. But it was amazing that the press and everybody seemed to swallow it as a terrible economic disaster that was going to befall us. It is not a disaster.
We on this side of the House are the champions of super. It is the Labor Party who have ensured that everybody has access to super. Super is something that can be funded easily and it should be up to the funds to invest wisely so that they can cover liabilities and so that the government can easily use their surpluses to meet these liabilities. Having said that, I do not deny the need for a Future Fund. We should be pursuing it, but not to pay future super liabilities. There are far more important things to put this money towards.
The cost of a separate board is calculated at $30 million over four years. While the bill quite clearly says that this money will come from the earnings of the fund, why not put those earnings back into paying for services instead of paying for a board and paying fund managers who are providing investment advice, with investors paying fees and charges for that advice? I am sure David Murray is a very good appointment but the shareholders of the Commonwealth Bank can tell you that David Murray does not come cheap. I am sure he will be getting a fair reward for this position, and I do not deny that that should be the case. But why should we be spending money on that when those taxes could be going somewhere far more beneficial?
As I said, existing funds should be far more aggressive in how they use their money. Current government super schemes have not been earning very well over the last few years. In fact, many of the funds have experienced record declines in their investments. So I certainly hope that when we set up this fund it is actually going to make money, not lose money. There is no guarantee that you will make money by investing. It is one of those things. It is like playing the stock market—there is no guarantee that you will earn money. I hope there are checks and balances in place so that the funds from asset sales go towards increasing revenue.
All of us would have a large stack of cash if we sold our house to pay out our mortgage, but where would we all live? At the end of the day, asset sales are fantastic things; they sell down and pay off debt. But we no longer have that asset to earn us an income. So while the Treasurer can say he has delivered this boom economy, it has all been through fire sales. There has been no long-term reform from this government. This government should remember they have been in government for 10 years. They should stop looking to the past. They are the past. They have been here for 10 years. They should be doing something about the future, and this Future Fund will not do it.
As the previous speaker, the member for Kingsford Smith, rightly pointed out, many in industry have slammed this fund. The ACCI has slammed it most comprehensively, and I quote from the Australian Financial Review:
Australia’s largest business group has slammed the federal government’s proposed Future Fund as a “tax increase” and dismissed Treasurer Peter Costello’s claim that the fund would increase Australia’s saving as “paternalistic”.
In its June Review released today, the Australian Chamber of Commerce and Industry has launched business’s first comprehensive attack on the coalition’s election promise to put aside budget surpluses to pay for the retirement of public servants, which is expected to cost $140 billion by 2040.
The report dismisses Mr Costello’s claim that the fund would “increase national savings, offset unfunded superannuation liabilities and maximise the government’s net worth”.
Instead, the chamber argues that the Future Fund will effectively amount to a “tax increase or a foregone tax reduction”.
It will have a “limited effect” on national saving, and the money would be better spent on other reforms, particularly to the tax system, the report says. Superannuation is less of a problem for future budgets, it says, than is the funding of pharmaceutical benefits.
In addition, the report says there is a risk that the fund will be invested in “uneconomic investments”, and it says that international experience shows a limited need for such a fund.
“It is paternalistic of the government to suggest that individuals spend their money poorly and that they need to be forced to save”, the report says. “If there are taxes or regulations that restrict saving, these barriers should be removed, rather than creating another distortion [higher taxes] to increase saving.”
The ACCI says it expects the cost of pharmaceutical benefits to increase by 2.8 per cent of gross domestic product by 2042, compared with an expected 0.3 per cent of GDP fall in the cost of public service super. The national cost of aged-care is expected to increase by 1.1 per cent of GDP and the cost of age pensions is expected to rise by 1.7 per cent of GDP by 2042.
Clearly, the largest business groups are out there saying that this Future Fund is misdirected. The Treasurer commissioned his own Intergenerational report back in 2001. Where is the next chapter to that report? How is the money from the Future Fund going to benefit future generations? This fund will do nothing in that regard. As this article clearly points out, the issues of aged care and pharmaceutical benefits have not been addressed. Where is the money going to come from to fund those into the future? This fund will do nothing to alleviate that problem.
The Treasurer’s mantra at the time was that all people nearing retirement should stay in the workforce for as long as they can: ‘Work till you drop.’ As many people realise, that is a wonderful thing as long as you have a job you can keep working in. My mother is a great example: at 68, she is still teaching. I think she is mad! But she loves going to work every day and she is lucky because she has been in an environment that will maintain her, that will keep her on, that will happily still employ her. There are a lot of people out there who are not as lucky. In my previous life at the Finance Sector Union, I saw literally hundreds of thousands of people between the ages of 45 and 50 thrown out of work—many of them by the very same David Murray who is going to be heading up this Future Fund. They would have loved to have stayed in the workforce, but there was a raft of redundancies and they were all axed. Those people found it virtually impossible to get back into the workforce because their age was an impediment. The Treasurer has done nothing to ensure future generations are secure. He has done nothing to ensure that when we get to 2020, with the scenario of fewer people in the workforce than out of it, there will be a tax base to ensure that basic services can be provided to all, not just in the area of aged care but in education, research and development, and infrastructure.
Labor believe that, instead of creating a fund whose purpose is dubious at best, we should be creating a fund for nation building. If there are surpluses available, they should be put towards infrastructure. This government has let infrastructure slide over the last 10 years and all it can do is blame the state governments. It points the finger at the state governments. It has created slush fund after slush fund that it says is about nation building, but all it is about is holding onto individual seats. The amount of money that went into the federal seat of McEwen at the last election was phenomenal. It was horrendous to see the amount of money that went into that seat through various dubious programs. It was incredible. And it was not even one of The Nationals’ seats, where much more money went over time.
Where is the accountability for securing our future? There is not any. It is alarming that people within the industry have been horrified—their own word is ‘flabbergasted’—by the lack of information about how this money is to be invested, how this money is to be used. Again I want to quote from the Australian Financial Review:
Money managers jostling to become the asset consultant to the first $16 billion invested in the Future Fund have been “flabbergasted” by the brevity of the government’s tender document, saying it failed to outline what the investment objectives are.
Treasury officials will meet prospective tenderers in Sydney this Friday for a “briefing session” on the one-page tender document that has worried some asset consultants with its lack of detail.
… … …
The major concern among the tenderers was the government’s lack of investment objectives that they hoped to become clearer by the time the tender closes on June 2005.
… … …
At only 340 words, Treasury’s tender brief on the $16 billion project represents $45 million a word ...
So one little tender document has gone out to the investment market and there are no objectives as to how this money is to be invested. The only objective in the bill is that of national interest. But, funnily enough, the bill has not defined what the national interest is. Our experience of what the national interest is for the government is for them to be re-elected and the money spent in any way, shape, size or form to ensure that that outcome is achieved. It will not be spent wisely; it will not be spent well.
The government say that the fund is a locked box, that there are guarantees for how the money will be used and that, instead creating a board of directors, they will create a board of guarantors. You might change the name but you will not change the outcome, because the guarantors will be allowed to solicit advice only from external sources. They will be directed by the minister on where the money can be invested.
So the guarantors will be there in name only, whereas usually people who are trustees on boards of superannuation funds go through rigorous election processes. Some trustees are appointed, but many go through rigorous election processes to demonstrate that they will be the best people to look after the money of individuals. The guarantors will be handpicked, and there are no guidelines. The one glaring admission in this bill about these people is that they will not even have to pass a fit and proper test. These individuals will be in charge of the vast bulk of Australian taxpayers’ dollars and windfalls from asset sales, yet they do not even have to pass a fit and proper test. It is a sham, it is a disgrace and it is a glaring admission in this bill.
The Labor Party believe that such a fund should be established but that it should be used in a much more strategic way. It should be used for nation building. It should be used for putting back infrastructure in our port system. Where is the discussion about our ports that are failing us at the moment? Where is the discussion about roads? Where is the discussion about rail? Where is the discussion about water quality, about air quality and about the long-term viability of our environment through the creation of electricity? How are we going to do that? There is nothing in this bill about ensuring the future of our nation.
The government have called it a future fund, but it is a limited fund. It has many flaws. If Labor win the next election—and I sincerely hope that we do, and I believe that we will—we will get hold of this fund and make it appropriate for the nation so that it can deliver to all and not to a few handpicked individuals who might misdirect where the money will be spent. It is on a very limited basis that this fund is to finance a super liability that can be easily met out of the current Treasury coffers.
We on this side of the House will be supporting the bill and the amendment moved by the member for Melbourne. I hope that our future is protected and not just whitewashed as the government has done in this bill.
Like the member for Chisholm, I support the second reading amendment moved by the member for Melbourne to the Future Fund Bill 2005. I also support the idea of a Future Fund. In fact, I supported the idea when the Treasurer did not. With the member for Hotham, I was advocating what we were calling the ‘intergenerational fund’ when the Treasurer was mocking the idea. I remember him saying: ‘Fancy that! They want to cut taxes, have a surplus and an intergenerational fund. What a silly idea.’ Things which we were then advocating and which he was ridiculing are things he has now done. Unfortunately, he has done it rather poorly, but we all remember the hyperbole.
One of the problems with the judgment that is made about the current Treasurer is that people never look back at what he said in the past. He is quite capable of saying within weeks entirely contradictory things with equal gravity, enthusiasm and certainty when both positions cannot be held simultaneously. He ridiculed the idea of a Future Fund when we proposed it. Now he has come up with a Clayton’s version. If you compare it with what was being advocated earlier in Australia by the member for Hotham, me and others, and in an excellent paper by the Chifley Research Foundation, or compare it with the very substantial initiative taken by Michael Cullen, the Deputy Prime Minister and finance minister in New Zealand, this is a very pathetic effort. This is typical of Peter Costello as Treasurer: big talk but with no reform at all.
It reminds me of a story—which I am sure has been embellished over time—when I was living in Western Australia back in the sixties. A play, which some will remember, called Equus was being performed. There was a male nude scene in Equus and the overzealous Western Australian police charged the young male actor who was in the full frontal male nude scene with indecent exposure. The young actress in the show was called as a witness and was asked her reaction. She said, ‘I thought it was a very big fuss about a very small thing.’ I rather think that describes much of the rhetoric about this legislation. It is probably not as interesting as Equus but it is a rather large fuss about a very small thing, because there is no fiscal policy reform, no effective financial investment reform and no investment infrastructure—none of those things that my colleagues have spoken about.
What we are talking about here is simply a very slight and inevitable revision of the Commonwealth’s asset management. If you are selling a massive number of assets, you start with low debt. Australia has always had low debt. Put aside the hyperbole: Australia, at every stage, including when this government came to office, has had very low public sector debt by international standards. We were never outside what, for example, were the Maastricht guidelines for European Union countries, even at the peak of our debt. If you are selling assets, you start with low debt. You are taking in record amounts of revenue because you are the highest taxing government in history. Therefore, you can spend profligately and still deliver a surplus. You must run up deposits at the bank or pay off debt.
The member for Hotham and I came to the conclusion—when the Treasurer was equivocal at best—that there was a need to keep a bond market in this country. I believe it is an important institution that needs to be retained. Eventually the Treasurer came to that view, too. Initially, he did not seem to have the slightest understanding of what we were talking about, but eventually Treasury educated him. If you are going to keep a bond market, you need to have some bonds out there—you cannot use the surpluses and the proceeds of asset sales for soaking up bonds—then you wind up with deposits. You have two choices: you have deposits at the Reserve Bank, simply earning a rate, or you set up a fund to invest it more effectively. Research by Ric Simes and Nick Gruen show that cautious risk-weighted management should deliver you a two per cent better return on an investment fund than on deposit at the Reserve Bank. That is all we are doing. All the rest is hyperbole.
During the debate on this bill last evening, I heard the member for Perth say that Senator Minchin, the Minister for Finance and Administration, said that the target for this fund is to match the rate that would be received on deposit at the Reserve Bank. I believe the member for Perth—he is an honest man—but it cannot be true. That is so stupid. It is unbelievable that someone like Senator Minchin would say that. It is just so crass and stupid. We must have a target rate for this fund that is at least two per cent above that rate, or why are we not leaving it at the RBA on deposit?
This argument that we are using the money to fund Commonwealth superannuation obligations is a farce. Other than as an accounting truism that an asset offsets a liability on your balance sheet—and that would be equally true if the money was at the Reserve Bank or held in any other form of asset—there is absolutely no need for all this grandiloquent advocacy and great structure to meet Commonwealth superannuation liabilities when they have been met safely, securely and easily out of Commonwealth recurrent expenditures since Federation and when they are likely to decline as a percentage of GDP, not increase.
It is just an accounting truism turned into a rhetorical flourish with no substance. A properly structured intergenerational fund, or a future fund like that in New Zealand, would bring about some reform of our fiscal policy. That is necessary, because I fear that we are about to repeat one of the two great economic management mistakes of the last 30 years. Everybody is obsessed with avoiding one of them, which is the fear of high interest rates. We are so focused on that that we are losing sight of the fact that, through sloth and profligacy, we are about to repeat the mistake that John Howard made as Treasurer in the late seventies and early eighties, which was to fritter away the resources boom. This resources boom will not go on forever. The enormous revenue surge that is paid to this government will not go on forever. We are incurring recurrent liabilities, some of which have been outlined by the member for Melbourne—and we just heard the member for Chisholm—which will escalate over time because they are poorly targeted. They will particularly escalate because they are most likely to flow to people on high incomes and slightly older people. Therefore, with the ageing population, the Commonwealth outlay structure will get worse, not better.
There is no possibility that the Commonwealth will have trouble meeting their superannuation liabilities. What the Treasurer and the minister for finance should be focusing on are those other, untargeted or poorly targeted expenditures. I call for the government to have an intergenerational analysis of their proposed outlay measures when they are introduced, and those over recent years, some of which I suggest will blow out. We need some rigour here. The superannuation tax cut argument that Senator Minchin raised had some capacity to deliver some of that rigour.
That was our idea.
Exactly. It was a very good idea. It should be done. We have been advocating it for years and took such a proposal to the last election. Unfortunately, the Treasurer overruled it. I only hope that the Prime Minister overrules the Treasurer. But the Prime Minister’s track record in this area is appalling. He was the architect last time when we frittered away the proceeds of a resources boom, and I think he is likely to do it again.
I do not want to speak at length on this matter. I simply want to say that I support a Future Fund. It is a pity there is no genuine fiscal reform in this proposal and no enhanced fiscal discipline. Outlays are still exploding. The risk to our fiscal future is still substantial. I support the second reading amendment moved by the member for Melbourne. I hope we can use this Future Fund, once it is established, as a basis for better policy in the future.
I rise with pleasure to follow the member for Fraser, with whom I did a lot of work in the last term on advocating the notion behind this bill, to support the Future Fund Bill 2005 but to point to its deficiencies—hence the need for the second reading amendment moved by the member for Melbourne and spoken on today by the member for Chisholm and the member for Kingsford Smith. The reason that Labor supports the Future Fund is that it was Labor’s initiative. But the form of the fund proposed in this bill does not go far enough.
There are two basic concerns with this bill. The first relates to the governance of the Future Fund. It does not have independence from government and it will be subject to direction from and possible abuse by the government. We have seen that abuse in the ‘regional rorts’ program, and I will come to that in a minute. The second is that the aims and investment policy associated with this fund are too narrow. Essentially it seeks to apply the proceeds of the fund only to the unfunded superannuation liability of public servants. Dealing with it in normal budgetary terms, this is an issue which itself has not been a problem to date but, significantly, it is now a diminishing problem for the future because of the move to close the defined benefit schemes associated with the public sector and to introduce accumulation accounts for all future public servants.
But the real question that has to be asked here is this: if we are to set up a Future Fund—in other words, to take the proceeds of the nation’s prosperity and put them aside to be invested in productive investments that make better returns than simply putting them in the bank—if that concept is right and we support and advocate it, why should the proceeds only go to public servants in Canberra? Why shouldn’t the notion be used to advance the interests of all of the nation? Why shouldn’t the proceeds be used to advance the nation-building agenda that this country so desperately needs, which has been so deficient in the last 10 years of this government’s tenure?
That is the reason we move the second reading amendment, not to oppose the concept but to strengthen it. If you are going to adopt Labor’s policy, adopt it in full. Do not just go about it in a piecemeal way: have the courage of your convictions, admit it is a good idea, but do it properly—not this half-baked, piecemeal approach that will only benefit one section of the community. And, most importantly, it is their government as employer that gets the benefit from this—why not the whole of the nation?
I do welcome the fact that the Treasurer and the government are finally doing something about the intergenerational challenges facing this nation. The House will recall that the Treasurer issued the so-called Intergenerational report back in 2002. He thought his job was done—he had commissioned the report; he had received it—and he did it all with great fanfare but, as always, he did not have a clue about what the policy implications were and what sort of public policy he should be putting in place. It is useful also to remind the House that, 17 years ago, a Labor government introduced the most significant intergenerational policy of our generation: compulsory superannuation. We did it in cooperation with the workforce in the country, an agreement whereby workers in this nation agreed to forgo present income—cuts to wages, if you like, or not as big an increase as they otherwise would have been seeking—to secure future income. It was a sensible trade-off. It was underpinned by government legislation guaranteeing compulsory superannuation. That is the scheme that we have today. It is lauded around the world as being one of the great initiatives of a government addressing an intergenerational challenge.
Sure, there are still issues to be dealt with in it: the member for Fraser has talked about the taxation issue, the contribution tax, and Labor went to the last election proposing an initiative. Why, if we are talking about tax cuts and the ability to deliver tax cuts because of the surplus, should we just be looking at tax cuts on present income and not on superannuation income? Of course it should be looked at in both directions. Tax, after all, influences disposable income: it either increases your take-home pay if you get a tax cut on present income, or it increases your accumulation account if there is less being taken out of the contributions going in. This, of course, was an initiative that finance minister Nick Minchin took up some weeks ago—again embracing a Labor policy—but he was slapped down immediately by the Treasurer, who is incapable of thinking about comprehensive policy solutions.
So here we have the great intergenerational challenge being responded to in a positive way when we were in government, having established superannuation, but this government has done nothing to advance that issue in its 10-year reign. Everything that exists of compulsory superannuation today happened because of a program put in place by a Labor government. All this government did was introduce a new tax on superannuation, which it recently abolished, but it has not advanced the basic adequacy of superannuation in this country. Going into the 1996 election, Labor had in place a co-contribution policy. It had introduced it into the parliament: three per cent from the employee matched by three per cent from the government. It would have taken the nine per cent to 15 per cent. The Howard opposition went to the election promising to keep that co-contribution, and effectively scrapped that promise in its first budget. That is Honest John for you, but it is also a wasted opportunity.
Had that policy been implemented, we would have been in a greater adequacy frame in terms of superannuation in this country today. But whose policy was it? It was Labor’s. Just as Labor has consistently been the party of the pensioner, it is the only party for the superannuant in this country, the only party that has taken the initiatives necessary to underpin secure retirement incomes in this country. If you want it to be advanced, you will have to elect another Labor government, because we are the only ones who have ever done anything in that regard.
The intergenerational challenges that we face today are still about superannuation and individuals, but they are much more. What we need today is a policy response that is tackled with a coherent strategy that puts aside savings today to address tomorrow’s problems. So when you have surpluses you are putting them aside to deal with problems that come up in the future. Secondly, we need to make investments today that reduce the fiscal problems of tomorrow. I think there is a fairly simple proposition involved in this concept: if you have a surplus, why would you put it in the bank if you can get a better rate of return by investing it and at the same time securing the future of the nation? As the member for Fraser has pointed out, the work that the Labor Party had commissioned in its previous term—work by Ric Simes and David Gruen—demonstrated that there could be a greater return for the nation by investing the proceeds wisely rather than just squirrelling it away and putting it in the bank.
Our ability to front up to these sorts of issues is a test of our willingness to provide for the future. As a nation, it is clear that we are not saving or investing enough. That is the great challenge to us as a nation. But, just as Labor introduced compulsory superannuation for workers, budgets too have got to reflect that principle. Budgets should put aside funds to deal with future pressures. If you like, it is superannuation for the nation. The policy imperative is then to invest in the drivers of economic growth—in education, in skills, in a strong competition regime, in research and development and in our infrastructure. These are the things that will drive and sustain this economy much more strongly. The reason that we are not doing them is not that we cannot afford to do them; it is that the government has different priorities, and they are the wrong priorities. But the nation is held back as a consequence. It is essentially wasted opportunity.
Back in 2004 when I responded to the Treasurer’s 2004 budget I said that some action was required, that the government should make provision for the future and that it should establish a fund and invest for the future. As the member for Fraser has already pointed out, when I made that announcement the Treasurer, Peter Costello, ridiculed it. He said the money was not there, dismissed it out of hand and said it could not be done. He said that this was stupid, that it was the magic pudding approach to policy. Not only how wrong has he been proven; but how inconsistent has he become? The very thing that he ridiculed he now embraces as his own and says: ‘It’s the great solution. It’s the great way forward.’
I know that people understand that both sides of politics keep having a go at each other, but I think it is important that when good ideas occur it does not matter where they come from—they should be acknowledged. There should be a preparedness to work together to try and implement it in the best possible way. Not only did the Treasurer not even acknowledge the inconsistency and the backflip in his position; he did not have the good sense to try and work with us to get bipartisan support to achieve the best possible outcome in relation to this fund. He was actually even more cynical than that. He announced his commitment to the fund during the election campaign on the day that it had been agreed there would be an embargo on new policy announcements. It happened just after the Jakarta bombings. The Treasurer dropped his initiative on the Future Fund when the Leader of the Opposition and the Prime Minister had agreed there should be no policy announcements. So not only has he been hypocritical; he exploits all of the wrong opportunities to make the point.
The Treasurer said in his second reading speech that the bill would ‘put in place arrangements for future generations to allow them to deal with the massive changes that the ageing of the population will bring’. There is no doubt that the ageing of the population will bring massive changes to our health and education systems, to our workforce and to the very structure of our society. People are living longer because we have better health systems. People are retiring earlier because they have more disposable income and they are developing a financial capacity to retire because of the superannuation scheme we put in place. This is going to require us to meet big challenges in not just the economic infrastructure that takes us forward but the social infrastructure—the affordability of it, the availability of decent health and education to look after us individually but also to collectively advance us as a nation. We should be investing now and we should be planning now for these changes, yet all this bill does is to make provision to fund the unfunded superannuation liability of Commonwealth public servants. It is a deficient response of a Treasurer who has proven himself on the policy front to be deficient on policy initiatives, to be visionary and to develop a strategy forward for this nation.
I have a great passion for unleashing the potential of our regions. I have responsibility for this shadow portfolio and firmly believe that the Commonwealth government must play an active role in regional development. Our government of the day says there is no constitutional role for regional economic development. I disagree most strongly. All governments have a responsibility to work with regions to give them better access to the range of programs at federal, state and local government levels and to tap into the leadership, the direction and the strategic approach that leaders in the community have developed.
When I was Minister for Employment, Education and Training I established a structure of area consultative committees around the country. They still exist and they exist because people of goodwill and vision are prepared to give of their time voluntarily. What they need is access to resources to make things happen in a way that responds to their regional needs—not someone in Canberra thinking they know what is best for a region but the region itself saying, ‘These are our priorities; this is what we need.’ It is what I would call location responsive government policies: having to respond to the needs that the region identifies. We have to tap into these structures.
I and other members of the Labor caucus on our Regional Development Committee have been travelling the country and talking with these bodies to identify their priorities and looking, in turn, at the raft of government proposals and programs. It does not necessarily need more money; what it does need is for those regions to have access and know they have access to the range of programs—and for their word to be taken sensibly, not as this government has done through its so-called Regional Partnerships program, which just became a rort that saw $5 million going to a steam train that ran out of steam and $1 million going to an ethanol plant that has not even produced one litre of ethanol. That is the government’s approach to regional development: pork-barrel when an election comes up rather than be strategic about it. I believe if we get this future fund concept right and widen its scope, it will be another source through which the regions can be helped to realise their potential. That is why I want to see the policy behind this Future Fund really developed fully.
The final point I would make about the Future Fund goes to the question of governance. I have talked already of the rorts and the pork-barrelling that this government has perpetrated around election time. If the provisions of the bill, which I outlined earlier, are to ensure that we get a better rate of return by investing the money than by simply banking it, that has to be subject to independent analysis and recommendation. It has to be an arms-length recommendation so pork-barrelling cannot occur. That is the other deficiency in relation to this Future Fund: independence from government and the ability of the government to direct certain uses of the fund at the last minute. We have seen where it directs funds: to its own political survival. That sort of decision making has to be taken out of it. We cannot allow the Future Fund to become another cache for the National Party pork-barrel or to prop up Liberal members in marginal seats.
That is why, when we argue for the widening of the scope of what the Future Fund can be used for, we also argue for strengthening the governance procedures to stop the pork-barrelling. This has the potential to be a great thing to help us build the nation. I want to make sure that it is available not just for the infrastructure and skills that we have talked about but also to unleash the potential of our regions, because if the regions are helped to grow it does not just benefit them; it benefits the nation as a whole. Here is an opportunity which could get bipartisan support. It is a pity the government has embraced just the name that Labor proposed and not the concept behind it. I urge the government to adopt our amendment.
Before I discuss the main points around this very important bill, the Future Fund Bill 2005, I would like to touch on some of the technical aspects of it. What is clear is that the Future Fund is anything but what its name suggests. This Future Fund is not about securing the nation’s future; it is more about securing the Treasurer’s future and the government’s future. In principle, though, Labor does support without reservation the concept and principle of a future fund but to build the nation rather than the aspirations of a few individuals within government.
Rather than answering questions, this bill leaves many questions unanswered. What is clear is that the open-ended mandate setting and the board appointment processes leave the Treasurer and the Minister for Finance and Administration ample opportunity to favour their own people and get approval for their pet projects. Ministers will set and change the investment mandate and direct the board as they choose. This is not an arms-length arrangement; it opens up avenues for political interference and rorting—and, as many speakers on this debate have said, including the member for Hotham, we have seen it time and time again, not just at election time but at any time that the government decides.
If you are looking for models where this can be done properly without rorts or interference, you do not have to look much further than New Zealand. The New Zealand model is much tighter and provides for much better governance. In New Zealand, the board of the future fund must invest on a prudent commercial basis. For example, the New Zealand finance minister may give directions to the guardians regarding the government’s expectations as to the fund’s performance but must not give any direction that is inconsistent with the duty to invest the fund on a prudent commercial basis. Later I will discuss why I raise these issues. The performance of the board in New Zealand is also subject to five-yearly reviews. An important point about this relates to Telstra: it is obvious that the government intends to dump the proceeds of Telstra into the Future Fund. The midyear review has set an unrealistic share price of $4.13 and assumes that all sale proceeds—that is, $26.6 billion—would be booked in 2006-07.
Anybody examining this would find it extremely hard to believe. The government needs to set out the process for transferring Telstra proceeds to the fund, if that is its intention—when it is going to do it, how it is going to do it and how many shares will be affected. This is another level of government interference not only in the way Telstra operates but also in the way a Future Fund would operate. In particular, the bill reveals that the government is anxious to control the transfer of financial assets. In respect of ministerial directions on the transfer of financial assets, the explanatory memorandum to the bill states:
Such directions allow the Government to appropriately manage any interaction between such transfers and policy priorities.
The fund will not be able to meet its objective of paying Public Service superannuation for some time. If the principal course of this fund were to do that, it would not be able to achieve that for some time—until the fund equals the superannuation liability. With current settings, even when fund earnings pass superannuation payouts in 2007-08, the budget will get no relief from the Future Fund at that point. Superannuation payments will still have to be met from the budget over the forward estimates—that is, $2.4 billion in 2005-06, rising to $2.6 billion in 2008-09. As we heard from the member for Melbourne on this very issue, it just does not make sense. Why would the government set up a fund to pay for a future liability? As the member for Melbourne explained, it is equivalent to a household investing a massive capital sum in a bank account and using the interest to pay their rates on a yearly basis. Why would it have all that equity sitting in a fund doing nothing and only use the interest for recurring payments such as council rates? It just does not make sense. This fund is poorly designed and too narrowly focused.
Labor believes investment returns would be better applied to critical infrastructure. The point is that if the government were serious about a Future Fund they would start to direct it to the nation’s future and not their own futures. Labor’s Building Australia Fund and Infrastructure Australia Fund can provide for such investment and enhance the fund’s viability in the process. While I today give my support to the second reading amendment moved by the member for Melbourne, I also give in-principle support to the bill and the government’s intention to at least create a savings fund for future generations of Australians. After all, what we are talking about is a Labor Party policy that was proposed some years back. But, as several speakers before me have indicated, we have many reservations about the process on which the government has embarked, the way the fund will be structured and, in particular, the way it will be administered in this vitally important public policy area. And it is these reservations that I want to draw people’s attention to in the time available to me.
Labor supports the broad concept of a Future Fund, but we question the need to create a Future Fund to cover the increasing government liability that is accruing in respect of public sector superannuation. It will continue to increase gradually over the next 20 to 30 years and then start to decline. And that is the important part. If you look at the liability and how it is structured, you could make a comparison to a mortgage. When you have a mortgage you run-up a huge debt, but in return you have a massive asset which can carry you well into the future. I think ordinary people can understand that having a mortgage is a good thing, not a bad thing, because it gives you a home. In a sense, the liability we are talking about is similar to that. There is no need for the government to set up a fund to deal exclusively with this liability over the next 20 years.
There are much more pressing needs which the government needs to address. In this regard, the government’s motives surrounding the Future Fund are very questionable indeed. We have been told that the Future Fund is a locked box. We heard that from the Treasurer himself. But I think we all know that the locked box has two sets of keys, one of which will be held by the National Party—although, given current events, maybe the Liberal Party will try to get those keys back. However, the locked-box theory is ridiculous; it is ludicrous. Why would any government want to lock up tens of billions of dollars in a fund and not properly set about using those funds to build Australia’s future?
We have a crisis in our serious shortage of skills and training. We have a crisis in our infrastructure—our roads and port facilities. We have heard a litany of charges against this government, on most of which they are very culpable, on infrastructure. We do need a Future Fund, but we do not need a locked box. We need a Future Fund that is open for investment, open to growing the economy and open to ensuring that future generations of Australians enjoy the same opportunities that this generation has enjoyed through the investments of past generations and through the foresight, the vision and the investments of past Labor governments which saw the need for massive reforms of the financial sector, the banking industry and taxation—the sorts of reforms that are desperately needed today. This is where the government’s energies and a Future Fund should be directed.
There is a discretion within this legislation that would allow the Treasurer and the Minister for Finance and Administration to issue directives for investment on matters of national interest and national importance. Of course, the question everybody would ask is: how do you define ‘national interest’ and ‘national importance’, and who specifically decides that? Simply stated, this is not a locked box. In much harsher language, it is a slush fund—and it will be raided unequivocally and unashamedly by the National Party, who will wear it as a badge of honour. They will walk into this place and tell you they will do it. They will go to their electorates and tell everybody that there is nothing wrong with this because it is going to be money coming directly back to their electorates. This is a slush fund for a handful of elites while ordinary Australians will miss out. Ordinary Australians need a Future Fund for infrastructure and training and to make sure that we invest in the future. This is about National Party interests. It is not about nation building. It should be about nation building; that should be the focus of government. There is a lot of concern about how tensions within the coalition at the moment might spill over into the structure of a Future Fund and the way it will be used. I have grave reservations about that.
I have said many times in this place that Australia needs to invest in the future of our country, not just in our physical assets but in our people. We need to invest in people, and Labor knows that all too well. In fact we are the only political party in this country that is prepared to highlight the problems that presently exist and to outline our intentions to address them in both the short and the long term. Labor believes in investing in the national interest, not in the political interest. Labor will invest in priorities set by the experts and not by party machine men, not by a few elites on the front benches of government.
Labor knows that infrastructure is at the core of this debate. It is a national asset, a national priority, and it must be treated not as a cost but as an investment that will provide returns to this country in spades. Labor believes that dividends from a Future Fund should be invested in infrastructure first and that superannuation liabilities for Commonwealth bureaucrats can be funded in many other ways, and it will do so regardless of this proposed fund. Labor believes that, to grow our economy, this nation must invest in Australia. We must not do that by cutting wages. We will never win the global race with bottom of the barrel wages. We are innovators. Australia has always had to compete on a global platform. Australia invented free and fair trade before they became buzz words, because we have always had to compete and we have always had to punch well above our weight. We will continue to do that but not on lower wages. We will continue to do that with our skills, training, innovation and expertise. That is where our strengths lie.
If we do not have a strategy to invest in skills and infrastructure, then we do not have a strategy at all. We do not have a strategy for the economy and we do not have a strategy for the national interest. In short, Labor will invest in Australia and will do so in a number of ways: through greater skills and education for our workforce and through greater investment and attention given to our crumbling, creaking infrastructure across the nation. We will provide real national leadership on the issues when the country needs it most.
I want to touch quickly on skills. A Beazley Labor government will introduce a skills account, which will remove TAFE fees for apprentices in traditional trades. This is the right investment. This is the way to go. Let us make it easier for young people to train themselves; let us give them the opportunities. Right now our policy is to make an initial contribution of $800 per year for up to four years to an apprentice’s skills account. This would get rid of the up-front TAFE fees for up to 60,000 traditional apprentices who commence their training each year. Labor’s new system of skills accounts will invest in young people and will help them complete their traditional apprenticeships. Under Labor’s plan, an additional 13,000 qualified tradespeople would enter our workforce every year. That is doing something positive today, right now, about the skills crisis. It is not just coming up with an alternative, pseudo, mirror structure called the Australian technical colleges, which is just a different name for another TAFE system and a doubling up of the bureaucracy, from which you will not turn out your first graduate until 2011. That is the wrong way to go.
Labor is determined to build Australia into the future and to build a better future for all our kids. Labor is the only political force in Australia developing new policies to tackle the massive skills shortage in this country. Over 10 long years the Howard government has neglected the training of skilled tradesworkers, and, as a result, the economy and the community are starting to suffer. You do not need to look too far to see the impact this is having. Businesses and industry that are growing at incredible rates cannot get the skilled labour they need. They cannot get the workers, because we simply do not have them. While the government may gloat about low unemployment rates and about how strong the economy is, the reality is that this has happened despite this government. It is the global trends and the economic levers and patterns around the globe that affect what happens in Australia. The old cliche that if the US sneezes Australia catches a cold has never been more true.
Our economy is reliant on our trading partners, on the United States, Japan and China, and we compete with those countries in our ability to provide resources, expertise and skills. These are our strengths. I am very concerned that, once we go down the path that not only the proposed Future Fund will take us down but this government is taking us down—that of a low-skilled, low-wage country—we will have to compete on wages, which is a competition we can never win. It is a race we can never win because we will never be able to do what those other countries do. We will never be able to survive on the wages that people in China survive on. So we need to focus on our strengths and on where we can best invest.
There is no doubt in my mind that a Future Fund is essential. It is essential for the prosperity of this country and for our young people. It is essential that we do it and that we get it right the first time. Forget about what this government says when it talks about locked boxes. All you have to do is turn your mind to the AusLink proposals and the funding for AusLink, which has huge discretionary funds available for the minister to personally intervene in so-called national interest infrastructure. But when we examine where that national interest infrastructure is, why does it invariably happen to be in National Party or Liberal Party seats, or in very marginal Labor seats where maybe the government is starting to focus its attentions?
Have a look at the landmass and the areas we cover.
The member at the table says, ‘Have a look at the landmass and the areas we cover.’ I would say to the member, ‘Have a look at where the national interest needs are. Forget about landmass.’ That is an argument of the 1940s. Move into the 21st century and have a look at where the needs are, at the priorities for the nation, not at priorities based on who has the most land: the ‘my block’s bigger than your block’ theory. It has nothing to do with how big the block is. It is about where the needs are. It is about state and federal government relations and investment in the future. The member is shaking his head; I think he is agreeing with me because that is right: we should not look at the size of the block of land. We should look at where the most important parts of infrastructure are.
Mr Ciobo interjecting
I think Tumbi Creek was an interesting one, if the member really wants to know.
Opposition members interjecting—
No, it was under another rorts account. While I do appreciate some of the views and interjections of others, I draw back to some of the important points about why we need a Future Fund. As I said, it is to take out the rorting. It is to start putting priorities in place. Let us have an ‘infrastructure Australia’ type body, a peak body that reports back to COAG, which does these things properly and sets an agenda for this nation—not an agenda for the National Party, not an agenda for the Liberal Party, not an agenda for the Labor Party but an agenda for the nation. There are projects screaming out for this government to fund and they need to be prioritised. But they do not get a look-in because they are just not on the biggest block in town. That is a concern to everybody.
Labor’s initial contribution to the skills account would cost in the vicinity of $170 million per year when fully operational. Everyone, from the Reserve Bank to the OECD, is shouting warnings about our shortage of skilled workers. If the government has not heard the noise and has not heard the calls for this, then it is truly blind and deaf to the issues happening within the community.
Home owners are also feeling the impact as the cost of building and renovating the family home increases. While there was a slowdown in the housing market, we can see it picking up again. I read yesterday that one of the Liberal backbenchers, in trying to get himself on the front page of a paper, decided he would call for a doubling of the First Home Owners Scheme. That sounds great on the surface but it further distorts the housing market and puts more pressure on people trying to enter the market. Rather than being an advantage and a bonus, it actually distorts the market. Housing prices go up on the back of these things. Rather than properly targeting how to best help people into housing, this government uses these crude, blunt instruments. Do you know why they are crude, blunt instruments and why the government prefers to use them? Because they look good. It is like giving everybody a $600 cheque before an election—stuff what it adds up to, what it costs and what it actually delivers; it looks good and feels good to give people a big cash payout just before an election. It will feel good for the government—stuff the economy; stuff that it is going to make public housing and housing generally more difficult to get into. It will just sound good if somebody on the Liberal side advocates more money going into the pockets of first home owners. Yes, let us do something for first home owners. Let us have a Future Fund for them. Let us look at ways to get people into their own homes. But let us not do it by fuelling price rises and growth in the housing market to the point where people can no longer afford them at all, no matter how much first home owners grant is available.
So there are real flaws and chinks in the government’s thinking, in the processes and in the way they apply themselves not only to housing and skills but also, particularly in relation to this bill, to a Future Fund. The reality is we do need a Future Fund, but the reality is we need the right Future Fund, one that invests in Australia, one that will invest in the priorities of this nation’s needs and one that will deliver for a long time into the future for future generations, not a Future Fund that is all about the Treasurer and his making himself look good to his backbench to garner the particular votes that he is seeking. Let us get it right. Let us do it right. Let us invest in Australia’s infrastructure. Let us get some of the pork-barrelling out of funding. Let us not have a discretionary fund for ministers which is just another slush fund of the most obvious kind where the minister directs things to a steam rail that never actually takes place. Let us get it right. It is for Australia’s future. (Time expired)
Before I call the member for Charlton, can I say to the member for Oxley I am not sure whether a couple of the ways he expressed himself towards the end of that speech were exactly in accordance with standard parliamentary practice. He might want to reflect on that for the future. The question is that the words proposed to be omitted stand part of the question.
I will, Mr Deputy Speaker.
Labor will be supporting the Future Fund Bill 2005 in this parliament. However, there are areas where we believe the Future Fund can be further strengthened and protected, particularly from political interference. I will be exploring shortly the issues that other speakers from this side have outlined. The Future Fund is established from the government’s 2004 election commitment. The government has said it is to meet unfunded Commonwealth superannuation liabilities. The government will be providing seed capital of $18 billion. Currently, public sector superannuation is said by the government to be unfunded, and last year the Commonwealth’s public sector superannuation bill was about $90 billion. The Treasurer has stated that the liabilities are forecast to increase to around $140 billion by 2020. What the Future Fund is supposed to do is reduce the impact on future governments’ budgets of the superannuation liabilities.
The Future Fund of course needs to grow. The government has said it will add to it the proceeds of any future assets sales. Under these arrangements, all fund earnings are to be reinvested. The fund will be governed by the Future Fund Board of Guardians. This board will be appointed by the government but can also be dismissed by the ministers responsible. Labor has a concern that the board may not be totally immune from political interference. Indeed, we would prefer to see an amendment to this bill which would tighten up the governance of the fund. For example, the New Zealand model, one of the overseas models on which the Future Fund is based, includes a specific mandate that binds the board to invest the fund on a prudent commercial basis. The New Zealand Minister of Finance can direct New Zealand’s superannuation fund’s guardians to realise the government’s expectations as to the fund’s performance but cannot under the legislation give any direction that is not consistent with the duty to invest the fund on a prudent commercial basis.
The members of the Future Fund board will decide how the fund is to be invested. It is outlined in Bills Digest that the fund:
It is also possible that the proceeds from the sale of Telstra could be transferred to the fund. It is also possible that government-held unsold shares of Telstra could be transferred to the fund. As the Treasurer said in December:
We expect either Telstra will be sold or if the full sale of Telstra does not go ahead it may well be that the Future Fund will hold Telstra shares and in those circumstances the earnings from those shares will be allocated to the Fund rather than the budget ...
It is not feasible for the government to sell its Telstra shares in the foreseeable future. I heard on the radio this morning that the shares are valued at just over $4, at $4.03, and still dropping. If this remains the case until 2020, we may well see Commonwealth retirees being paid out their superannuation in worthless Telstra shares. Labor has moved an amendment to the motion for this second reading, stating:
That all words after “That” be omitted with a view to substituting the following words:“Whilst not declining to give the bill a second reading the House is of the view that:
Indeed, the Treasurer said in his second reading speech:
Notably New Zealand, Ireland, France and Canada all have similar strategies in place and in none of those national funds are the returns on investment allowed to be siphoned off to fund pet projects of the government of the day. This will also be the case of the Future Fund.
In light of this statement, the Treasurer and the government should be agreeing to Labor’s amendment relating to stronger governance arrangements.
While Labor is supporting the Future Fund, we have committed to converting the Future Fund to a Building Australia Fund and to delivering infrastructure through Infrastructure Australia. Labor in government would direct the board to consider a full range of investment opportunities suitable to the return and risk objectives of the fund. We believe that this would include investments that would enhance the productive capacity of the Australian economy and could include direct infrastructure assets.
Labor has a long and proud history of commitment to building the infrastructure required for Australia’s long-term economic and social needs. Labor’s nation-building projects have included the massive Snowy Mountains Hydro Electric Scheme, commenced by Prime Minister Ben Chifley in 1949. Ben Chifley also established the Commonwealth Housing Commission to work with state governments so that, while the states undertook urban planning, the Commonwealth funded new housing and infrastructure for returned servicemen. This had followed on from John Curtin setting up the Commonwealth reconstruction and training scheme in 1944, which gave more than 300,000 Australian servicemen and servicewomen careers in areas like medicine, engineering, dentistry, science, agriculture and veterinary science. Gough Whitlam built on the Curtin-Chifley legacy by providing Commonwealth leadership in addressing infrastructure gaps faced by growing families in the sprawling suburbs, like inadequate sewerage and hospital facilities. Later, Prime Minister Paul Keating saw to the completion of the standardisation of rail track gauges in 1995.
Labor’s Building Australia Fund would be guided by Infrastructure Australia, which will be set up under a Beazley Labor government. Infrastructure Australia will have the responsibility to develop a strategic blueprint for our infrastructure needs in facilitating its implementation with the states, territories, local government and the private sector. Infrastructure Australia will be an independent statutory body that will report to the Commonwealth minister for infrastructure. It will present regular reports to COAG as part of our plan to have infrastructure a standing item on the COAG agenda.
Infrastructure Australia will receive input from the three tiers of government, the private sector and the general public to identify infrastructure projects of national importance. A Labor government’s Infrastructure Australia will be a coordinated and objective approach to the long-term planning of nationally significant infrastructure. Kim Beazley has said that our Labor government would conduct a national infrastructure audit; establish a national infrastructure priority list; establish a political free zone; create Infrastructure Australia—a Commonwealth body to drive rebuilding; design the right funding structure for investment; and put in place the right competition policy framework.
However, to do this there are many things that we need to consider. We need to consider the scope for governments to invest directly in public infrastructure, the scope and conditions for private sector involvement in the provision of public infrastructure, including through appropriate public-private partnerships, and the most equitable, cost-effective and fair methods of finance. We need to consider ways to maximise effective public ownership, management and maintenance of public infrastructure. We need to improve accountability and transparency of infrastructure financing. We need to look at the most effective method of reducing financial risk to government and minimising the levels of fees and charges. We need to consider ways of ensuring that financing is compatible with skills development and quality employment, and whether risk transfer arrangements are appropriate. We also need to consider the potential role of the private superannuation industry in financing public infrastructure.
In conclusion, while we have stated that we will support this bill, we encourage the government to support our amendment. We remain committed to maintaining the existing assets of the government’s Future Fund in Labor’s Building Australia Fund. We will add to the Building Australia Fund through future asset sales, and Labor in government will apply part or all of our Building Australia Fund income to productive investments, including infrastructure through Infrastructure Australia. This is the way that the fund should be used to enhance the productive capacity of our economy.
I have been looking at some interesting figures on profits before income tax. I think income tax in the case of the Future Fund versus a government Telstra should be included in the profits. My reason for saying that is that we in the mining industry have found that, even though the price for metal has doubled and the price for coal has more than doubled, we do not see very much increased tax revenue. This would indicate very effective price transfer mechanisms are operating within all of these companies. The profit margins in the mining companies should have gone up manyfold, because if your cost structure stays the same and the price of your product doubles that does not double your net profit—it quintuples it or even increases it tenfold. With all due respect to the honourable spokesman, I do not think there has been a tenfold increase in the income tax paid by the mining companies.
I do not criticise those people; I criticise the government that allows them to get away with blue murder. If Telstra is put on the market, I do not care what assurances we get from this House—those assurances are not worth a tinker’s damn. A large proportion of the companies that have been privatised are effectively in foreign hands. When I say that, they may be owned by a superannuation company where the majority of shareholding in that company is now held overseas. One of the reasons is that the massive increase—a 100 per cent increase—in income from hard-rock mining and coal has not been reflected in the current account deficit. It has worsened dramatically in that time. That is simply because all of that extra money has been taken and moved overseas. Our seven major mining companies were all Australian owned some eight years ago; now they are all foreign owned.
I want to speak of the late, great John McEwen. We hear people in the media continuously making fools of themselves by saying that the National Party is an effective force or that it is a force at all—in fact, that it actually exists in any way. My first speech in the joint party room referred to John McEwen. Someone yelled out at me, ‘Oh no! McEwen! Back in the dungeons!’ I said, ‘Yes, it would be terrible to go back to that period, wouldn’t it? Two per cent unemployment and a current account surplus.’ I reeled off the figures and a number of people roared with laughter because they realised that what I was saying about these sorts of policies was true.
John McEwen took the profits—and the moneys in certain cases—from the government and put them into the Commonwealth Development Bank and such institutions. He set up the AIDC to buy back the farm, which basically meant the mining companies. He succeeded in doing it very successfully. For example, Mount Isa Mines had been foreign owned until after McEwen had put in place what he wanted to. Indeed, at that time the much-maligned RFX Connor—I thought he was a numbskull at the time but, on reading the history books and finding out in detail what he had done, I realised that it was the media which had portrayed him that way; he most certainly was not a numbskull and appeared to me anyway to be a great and patriotic Australian—was fairly effective but became bull-headed in the end.
What we are saying here in the Future Fund Bill 2005 is that this money can be used for the purpose of owning Australia’s assets—our mining companies. Ten years ago, all of the seven major companies were Australian owned. This government and the preceding government have presided over all of those giant owners of our resources falling into the hands of foreigners. The only people who can be blamed and who must bear the brunt of that are those people who served in government under Mr Hawke and Mr Keating and those people who have served in the current government—and I am ashamed to say I was one of them.
It is proposed that this money would be routed into a fund through an investment agency. If there is one thing in this country that is not needed, it is another investment company. One of the more successful German governments in the days before the Second World War went to the people on the basis of no predatory capital and no speculative capital. I would to heaven that some governments in Australia would say this, but they have done just the opposite: they have moved Australia’s very small savings funds into investment funds that have done nothing but speculate and predate.
Let us talk about predatory behaviour for a moment. The fair trading inquiry conducted by this House—many called it the Bruce Baird inquiry—delineated how Woolworths and Coles, two giant retailers, moved from 51 per cent in 1991 or 1992 up to 68 per cent of the market in about 1998. According to their own figures, they are now on 82 per cent of the market. That is predation. They have taken the nation’s riches and used them to make themselves richer and more powerful. They are so powerful in the economy that they secured the deregulation of the dairy industry, which took 30 per cent of farmers’ incomes. That is a figure that anyone in this House can verify. They then put the price of milk for consumers up by nearly 40 per cent. This delivered to the retailers of Australia over $1 billion a year in extra profit. That is predation. This money is going to be used to fuel that engine of predation.
My chief of staff pointed out to me that the graph from the latest economic publication put out by the Parliamentary Library, which is a graph on house affordability, shows house affordability to have decreased sharply. Is this something for the government to be proud of? They have given $7,000 as a gift to everybody but affordability has gone down. I am no friend of Mr Turnbull’s, but Mr Turnbull and another gentleman, an Oxford don who is an Australian, did a report on housing in Australia. They said that instead of the government encouraging demand—which puts the price up through speculation and inflationary pressure in the housing sector—they should increase supply. That is something that we were in the process of doing in Queensland. We were building high-speed highways. This is the centre of what I am saying will happen if that $18 billion is used in an investment agency for predation and speculation, which have driven the price of housing out of the reach of almost everybody in this country so that they can no longer afford a house. Just pick up the library’s publication if you question me on that, Mr Deputy Speaker McMullan!
When the government fell in Queensland in 1990 we were in the process of creating four major high-speed spoke roads allowing a speed of 120 kilometres per hour right into the centre of the city, along with two ring roads. We were doing that so people could live 60 kilometres from town and arrive within 20 minutes at their place of work. It was very satisfying to me to realise that at least Mr Turnbull and this Oxford don have said the same thing in their report. I might add that they did not say it as well as we said it and that their programs were not as good as the programs we were offering.
People could live on two or three acres in a very civilised way. They could recycle their water, which was part of the program. You can recycle water if you are on two acres. It is very difficult to do that if you are in a city; health problems and other sorts of problems arise from grey water usage. So we could deliver land at negligible cost. Mr Turnbull and the other gentleman’s report also said that council and government inefficiencies had not only created a huge cost for land but also created a logjam which people could not get through. The provision of infrastructure would bring the price of houses down so that more Australians could buy those houses more cheaply, taking the heat out of the speculative boom. But this approach is doing the very opposite. This will look after the big end of town. The big end of town will have more of our money to play around with, to play their Monopoly games with each other.
This has reached its zenith many times in the last three or four decades when we have moved away from McEwenism in the economy and the sort of approach used not only by Joh Bjelke-Peterson but by Henry Bolte in Victoria, by Thomas Playford, by Charles Court—enormously successful governments—and in my own state of Queensland, of course, the legendary governments of the Labor Party before the war, which were probably the grandest and greatest governments in Australian history. But that was where all of these enormously successful governments saw the public money going. This government is expert in just the opposite field—of putting the money into the field where it will manifest itself in fuelling speculation throughout the entire economy.
There was a wonderful article in the Bulletin magazine by Maxine McKew. The heading read that the Australian economy is in an artificial boom fuelled by property speculation financed by overseas borrowings. I suppose there will not be so much overseas borrowing, but the rest of it will stay in place, and it is a true statement. That bubble will burst. For people that do not know anything about economic history, there was a wonderful statement published recently in the Australian. It said that the American economy and share prices are buoyant but that they have hit a permanently high plateau now and will remain on that plateau indefinitely into the future. Things are good. That was in October 1929. After the crash, share prices went to one-tenth of what they were when Professor Irving Fisher, a leading American economist, made that statement. We have a lot of economists and we have the Treasurer telling us the same things now, but there is not an intelligent commentator in the country who does not realise that we are floating on a speculative boom which will be fuelled by another $18,000 million if the government gets its way.
I represent an area called the Gulf of Carpentaria, known as the Gulf Country. The Gulf Country, the mid-west and the central west of Queensland—if you like, all of outback Queensland—is a huge black soil plain, the richest soil on earth. Except for three or four farmers, a plough has never been put into any part of that magical landscape. I think most people in this place are aware that half of Australia’s agricultural production comes from the Murray-Darling Basin. It comes off a tiny 22 million megalitres of water. We have 126 million megalitres of water flowing over Queensland’s inland plain. It is so flat that you can easily bring the water back to irrigate the whole of that plain. That is just the plain; there is more land available. It is a thousand kilometres long and 600 kilometres wide. On the experience of the Murray-Darling Basin, you can feed a population of 70, 80 or possibly 100 million people. It can grow you ethanol to fuel your motor cars.
We could fill up our motor cars at a price of 70c. The price at the bowser in Brazil for ethanol, as I speak, is between 68c and 72c a litre. They are filling up their cars right now for 70c a litre. I have not got time to go into why, but the Australian government gets more money out of an untaxed ethanol industry than it does out of a taxed petrol industry. By the way, this country is running out of fuel, but our supplies are quite safe: they come from Indonesia and the Middle East. You can get the figures from ABARE or Geoscience Australia, the old BMR, and you will see that over the next four or five years we will drop down to about 30 per cent self-sufficiency—we have to date been on about 95 per cent self-sufficiency. This will be one of the most oil-poor countries on earth, and there is not one single program being undertaken by the federal government to address this looming crisis in Australia. In fact, we are paying $1.20 at the bowsers now, which is almost twice what Brazil is paying, and all we get from people on the government side of the House is a thousand reasons why they cannot mandate ethanol. Don’t they look criminally stupid now!
Last week President Bush said that 75 per cent of America’s fuel will come from ethanol. He also mentioned electricity, but I will not go into the reasons why electric powered motor cars have very limited usage. Seventy-five per cent ethanol is what the President of the United States said. How stupid do these people look! We hear the National Party saying that they are in favour of ethanol. I am in favour of motherhood too. What they do not realise is that such comments just anger the people. They are the government. The reason Mr Beattie is collapsing and has at this stage no hope whatsoever of winning the next election in Queensland is that he keeps saying, ‘I’m going to fix this up.’ We are not interested in him saying, ‘I’ll fix this up.’ All we know is that we have a law that allows us turn our taps on for two hours a day to water our lawns. We have no water. We know that our power is flicking on and off. They cannot deliver electricity, they cannot deliver water and they cannot deliver doctors in hospitals.
With a tiny bit of that money—a thousand million dollars—and some legislative effort by the state and federal governments we can deliver to you just in the Gulf alone an ethanol supply. But I am sure that the member for New England is going to tell us rightly about how ethanol can be produced in his areas. Whether it is produced in his areas or our areas, it is now absolutely naive to talk about 10 per cent ethanol—we are now talking about 50 or 60 per cent ethanol. The Americans are talking about 75 per cent, and they have a limited resource. They cannot go into the Gulf Country and open up half a million or a million hectares of land to irrigation. They have irrigated everything they can irrigate in the United States.
For those in this place who are of a Greens bent, what are we doing with that huge plain in inland Queensland? All of western Queensland is in a huge black soil plain. I will tell you what we are doing with it. We are growing the prickly acacia tree—a weed. The prickly acacia tree has taken over six million hectares of that plain. It has destroyed all native flora and all native fauna, and of course it has also destroyed any chance we had of making a quid out of that land from cattle or sheep. Those trees stand as a monument of shame and disgrace not to the people of this nation but to the way this nation has been governed.
We could build a hundred patrol boats. We are a tiny little country. We are Europeans. We live in an area where people call themselves Asians and they are very reluctant to accept us as Asians. Let us face it: we look different. In the last war we believed that the British would come and save us if we got into trouble, if we got attacked by the Japanese. Their contribution was 12 fighter planes. To put that in perspective, the British were producing 2,000 combat planes a month and they gave us 12 when the Japanese were at Kokoda.
We can build a hundred patrol boats with guided missile capacity, with interception capacity, with helicopters with radar, and we can defend our country, we can defend our island. We can also by so doing deliver to Australia a manufacturing industry, and to hell with free trade agreements—the Americans treat them like dirt. Those boats should be built in this country and create for Australia secondary and tertiary industry, which we also desperately need. That is what that money could and should be doing. We do not want to sell Telstra. The most important thing is that it stays in government and Australian hands. (Time expired)
It is great to see the member for Kennedy back in the parliament in full health and firing on all chambers. I am delighted to speak to the Future Fund Bill 2005. I am pleased to see the member for Goldstein at the table. The member for Kennedy made a number of comments in relation to agriculture, alternative energies, the use of land and water resources et cetera. The Parliamentary Secretary to the Minister for Immigration and Multicultural Affairs, the member for Goldstein, should be able to make some positive contribution on those topics drawing on some of his former lives. I congratulate him on his appointment as a parliamentary secretary and wish him well.
There are a number of comments I would like to make on this legislation, particularly on the word ‘future’. The member for Kennedy talked about some alternative uses for the money from the Future Fund to guarantee the future of this nation. A lot of the debate has been predicated on some of the issues that have been raised, not the least of which being the ageing population, raised by the Treasurer, Peter Costello. They are very real issues that policy areas should look at. I congratulate the two previous ministers for ageing, Julie Bishop and Kevin Andrews, for the work that they have done, particularly in recognising some of the regional problems with ageing and health care through the multipurpose service models and other models. I hope the new minister embraces some of the logic they were adopting in relation to our current ageing people. Obviously the debate of the future is how we are going to fund a lot of those things.
It strikes me that the Future Fund may be one of those things that was dreamt up in a bit of a rush when there was a policy vacuum. It is a bit like the alternative TAFE arrangements that have been put in place. It sounded like a good idea at the time and now we are developing the infrastructure and the reasons for having it. I hope that is not the case. If you look at the logic of the Future Fund, the object of the legislation, as I understand it, is to strengthen the Commonwealth’s position in the provision of Public Service superannuation in the future. That sounds well meaning and, in most cases, seems quite prudent; but, if you look behind that, what is it going to cost us? There are estimates of it costing $90 billion over a long period of time. On an annualised basis it is going to cost us something like $4 billion, which is a relatively minor proportion of the overall budget—about two per cent.
The explanatory memorandum contains a lot on the potential to lift this fund above $18 billion. If the sale of Telstra goes through, there is talk about transferring a portion or all of the funds from that sale into the Future Fund. When you look at those two things together, the information that I have been able to glean—and it is no secret to anybody else—is that the annual earnings from Telstra are in the vicinity of $4 billion. The reason behind creating the Future Fund is that our annual pay-out is in the vicinity of $4 billion. I guess the member for Goldstein or someone else will inform me later on that there is an escalating platform there and that it could get out to about $7 billion on an annualised basis. We can all argue about the figures. But it seems to me that we are really debating a reason to park the funds of Telstra. That is what this debate is about. It is dressed up as the Future Fund. I do not condemn the government for wanting to put away money for the future. A lot of what they are talking about is how we develop infrastructure into the future. I would like to spend some time talking about how some of this money should be spent, as the member for Kennedy did.
When you predicate it on the sale of an asset, telecommunications, that is the most important piece of infrastructure in this century, particularly in a country of this geographic size, with the need for regional and rural people to be able to access that telecommunications and with the positive implications that that can have in the education of these people, the delivery of health services to them and the delivery of parity in their being able to compete with our city cousins and internationally, it becomes very important that we do not sell Telstra.
I believe that a political path could be adopted, even at this stage, to reverse the legislation for Telstra’s sale. Many people in the National Party, particularly Senator Nash, have been saying in recent weeks—since the defection of dear Julian—that they are going to reconsider how they vote on coalition issues. It is obvious to me that here is a classic example. If these people are saying that they are representative of regional and rural Australia, that they are their voice, that they represent seven million people and that they are required because one party will not do it—you need the National Party—here is a classic opportunity for that party to stand up for these people. All the surveys done on this issue indicated that over 90 per cent of country people and over 70 per cent of city people were against the sale of Telstra.
If this party has any reason for being, it should introduce and/or support legislation in the Senate to reverse the sale of this piece of infrastructure. If the argument is that we need the money for unfunded liability et cetera, just look at the earnings of this business. Even if you want to forget about the future contribution of this infrastructure to the nation by way of the parity factors that I talked about earlier, you cannot deny that it gives people the one thing that negates distance as a disadvantage when they are living in country Australia.
If this government or any other government believes that a fully privatised operation such as Telstra is going to care about people who are not in the profit band of their business, they are kidding themselves. The government says, ‘We’ve put in place certain guarantees.’ The President of the National Farmers Federation and the next National Party candidate for the seat of Gwydir, Peter Corish, said very strongly that the National Farmers Federation had been given—and the member for Goldstein, who is seated at the table, should have access to some of this material because he would have some very close links with the NFF, given his past with it—an assurance in legislation that on the sale of Telstra there would be parity of access and price with telephone and broadband services for country people.
No-one in this parliament—from the Prime Minister down, including the minister responsible for this legislation in the Senate—can give that assurance. Maybe the minister who is replying to this legislation can. Show us where it is in the legislation. Where is the legislative guarantee that future services such as telephone broadband and other services to country people will be guaranteed in a fully privatised telecommunications operation? It is not there. Twice in this parliament I have asked the Prime Minister and other ministers about this. They are ducking and weaving on giving that assurance. I will be pleased to hear that assurance today, because whoever is replying to the bill will have time to do so.
The other issue that comes up about the Future Fund is that it seems that the market will not accept the product of the full sale of Telstra in one hit; it may not even accept it at all. The government’s view has been to create this future fund and have somewhere to park it so that it would look as though they had not rejected their own policy drive for the last decade. The government would argue—I would argue it anyway—that under the current arrangements they and the taxpayer have some leverage through the political process and because of the way in which the board of Telstra is put together. Theoretically that exists as long as the government retain over 15 per cent of the company, but in practice having it parked in a future fund and valued as such will remove part of the political leverage that Australian people would have with various issues that might arise in telecommunications. There is no need to sell Telstra for its proceeds to become part of this fund. There is no need to create a future fund as a parking bay for a piece of infrastructure that the government are just head over heels in wanting to sell.
There are a number of other issues. I want to follow on a comment that the member for Kennedy made about our future and how we fund our future energy needs. The other day the ‘President of Australia’, George Bush, made some very pertinent comments about the energy needs of the United States, those other states. The comments he made—
You mean that the bush rules Australia?
That is a pertinent comment from the member for Kennedy. It means that the bush will rule Australia. Politically, it could have a much greater say than it is having under the current auspices of the party that purports to represent seven million Australians. We will not go there at the moment.
President Bush made the comment the other day, from memory, suggesting that, by 2025, the American people would have to wean themselves off their overreliance on imported oil, particularly from the Middle East but not only from the Middle East, and that they would be driving towards 75 per cent self-sufficiency, looking at other energy sources. Ethanol, biodiesel et cetera were some of those energy sources that were mentioned.
The Americans have woken up to our future. The Brazilians have woken up to our future. They are using other sources to develop fuel—the sugar industry. There is no need to wipe out the sugar industry and those communities. The same industry, the same efficient farmers, could be used to generate ethanol and other forms of fuel. Our farming community could be revolutionised rather than dumped as it has been in recent years by all forms of government. I am not just blaming this government. There has been an assumption out there that over time the farming community in Australia will disintegrate and we will get our food from somewhere else. We may get our food from somewhere else, but we may not get our energy.
This government has to recognise that the current policy is not sufficient to guarantee those energy needs in the future. It is almost errant in its legislative arrangements when it says that 0.83 of one per cent of our petrol and diesel needs is to be provided over a 10-year period, from 2001 through to 2010. That is the renewable energy target that this government has put in place. It is less than one per cent of our fuel needs.
The Americans are looking—over a longer period of time, I admit—at 75 per cent over the next 19 or 20 years. Where are we? The Brazilians are increasing their ethanol production at the rate of one Australian sugar industry a year. We are looking at ways and means of subsidising our sugar farms out of existence, and there will be consequences and social implications on those communities. There are enormous opportunities for our future, and Australia should examine what it can do for itself, rather than have this overreliance on these endless free trade negotiations.
You only have to look at what is happening with the Australian Wheat Board. Look at the tragedy of what is occurring there. I am a supporter of the single desk, and I will support Mark Vaile on the maintenance of the single desk arrangements for the export of grain. We should look at the tragedy of what is happening there and ask ourselves: does this need to happen? Australia produces surplus grain. That is a fact. Because our economy is based on 20 per cent of our agricultural production being used at home and 80 per cent offshore, we have to find alternative ways of disposing of that grain. That is a fact. We have to deal on a corrupt world market. That has always been a fact. The Wheat Board has been dealing on a corrupt world market. It is complicated to the extent that it has also been dealing on that market when our government has been signatory to a United Nations sanctions arrangement. That is a fact, so there is a certain complication there. But the underlying problem is that the Wheat Board has had to deal in a marketplace which is in fact corrupt—and the Americans are as corrupt as anybody else in that marketplace—and everybody knows those facts.
How do you get around that? Obviously, you keep being corrupt and deal in a corrupt market and try to get the best deal, albeit the most corrupt, within the market so you can sell the product for the Australian farmer. Or do you look at alternatives for that use—alternative markets, if they are not available because you are not corrupt enough to access them? That is a problem. What else could you do? I wonder whether you could look at alternative uses for that grain. What could you do with that grain? What are other countries doing with that grain, instead of exporting it on the food market? Some of them are converting it into energy.
On average, we export about 16 million tonnes of wheat a year. That is a significant problem and it needs significant marketing. Ten per cent ethanol in our fuel—in theory, at least, because it would not all come from wheat—would take half of that. Fifty per cent of our exports of grain that we have to sell on this corrupt market and then buy on another corrupt market—both of which are controlled offshore—could be used to produce energy for 10 per cent usage in our fuels. Then you get into the biodiesel arguments, issues et cetera and a whole range of other energy arrangements, including wind and water. If we went to 20 per cent, there would be no need to take this grain offshore. There would be no need to ruin the sugar industry.
These are government policy decisions that can be made at home about our future, about how we are going to fund the lifestyles of all Australians, particularly regional Australians. We seem so preoccupied with having to produce something, take it out into the world market, take what they give us and then say ‘thank you’. Australia should be looking further than that, in my view. Country Australia can lead the charge on those issues. We have some very pathetic people who argue in the Senate, as they do, that 0.83 of one per cent as a renewable energy target over 10 years is acceptable and in their words ‘will generate an industry’. They are dreaming. I think that the castle is one of the great Australian dreams. If they believe that 0.83 of one per cent is a renewable energy target that they should be proud of, they are absolutely dreaming.
One other issue is taxation. It is very important to our future. Sustainability of water resources is very important to our future. What is happening with the Namoi ground water issue at the moment? The member for Goldstein will be well aware of this. To their credit, the Commonwealth government, the state government and the water users of that ground water area that has been overallocated are moving to a sustainable arrangement. An adjustment fund was put in place. It was funded three ways: Commonwealth, $50 million; the state, $50 million; and the industry, $50 million. It is a very worthy project with laudable future objectives of sustainability and compensating those who are impacted by the change in the short term.
The Commonwealth government and the Prime Minister have written to me recently and have said that the Commonwealth will be taxing the state contribution, the Commonwealth contribution and any contribution made by the growers that can be assessed in relation to that issue. It will be assessed as income. Compensation to bring an environmental oversight from the past into a sustainable future is going to be taxed. I think that is a disgraceful thing that this government has done. (Time expired)
It is my pleasure to sum up the debate on the Future Fund Bill 2005. It may be worth while reminding the House, given some of the subject areas that we have just heard about, that this bill is actually about the Future Fund. I think it is standing order No. 76 that goes to relevance of debate in the chamber, and that is focusing on the bill before the chamber.
The government’s Future Fund policy is a fundamental part of the government’s sound economic and budget management. We have been able to take a decision to create an asset fund which will alleviate part of the burden on future generations. This has come about because we have done the hard yards getting the budget into surplus and paying down the massive debt that we inherited from Labor. It is easy to be complacent about this achievement, but it is worth bearing in mind that the reduction in public debt has freed up over $5 billion per year in interest payments, which we have been able to redirect to higher priority areas such as health, national security and education.
In much the same vein, the creation of a Future Fund is a further strengthening of the government’s balance sheet. By building an asset and allowing it to grow over time, we will be able to better meet the challenges of an ageing population without putting the budget into deficit. There is no lessening of budget flexibility, since contributions to the fund will be made from realised surpluses. All the Australian states, as well as a number of other national governments, have taken steps to fund their unfunded superannuation liabilities. It is therefore quite interesting to hear opposition members claim that we should not be worried about funding our liability. Having reduced debt, it is entirely logical to focus our attention on the largest liability on the government’s balance sheet.
The proposed amendment from the member for Melbourne seeks to take the proposed governance arrangements for the Future Fund but have the earnings of the fund used to fund infrastructure. This proposal ignores the fact that the governance arrangements for the Future Fund have been particularly designed with the purpose of the Future Fund in mind. The bill creates an independent board who will be fully responsible for investing the fund to maximise long-term financial returns. It will do this without intervention from government about its investment decisions. By contrast, under the proposed amendment, the board will be hit up for money on an ad hoc basis to fund as yet unnamed projects. How could it be expected to run a sensible investment strategy under such a scenario? Who would want to be on such a board? The proposed amendment attempts to have a bob each way with ill-conceived governance arrangements and will still leave us with an unfunded superannuation liability of $140 billion in 2020.
The bill contains sound governance arrangements which have been modelled on those in other pieces of legislation, such as the Corporations Law. The Future Fund Board of Guardians will be statutorily responsible for one thing only: to maximise long-term returns consistent with international best practice for institutional investment. They will be guided by an investment mandate from the responsible ministers, which addresses the key issues of risk and return. Beyond this high-level guidance, which is a hallmark of any investment arrangement, there is no intervention by the government.
The board will be fully accountable for the investment arrangements and the performance of the fund. The accountability arrangements for the board will be of the highest order. They will be subject to full parliamentary scrutiny and be open to inquiry by the Australian National Audit Office and there are provisions in the bill which go further. For instance, under section 24 of the bill, the board will be required to formulate a range of policies which they will have to make public. They will provide up-front assurance about how the board will operate.
Unlike in the proposed amendment from the member for Melbourne, which would see the fund open to intervention, the Future Fund will be a locked box. The bill makes it very clear that the fund can be used only for a particular purpose and only once an independent actuary has verified that funds can be withdrawn. The fund will be safeguarded, since the bill says that no money can be drawn from the fund until 2020 or when the liability has been fully funded. This safeguarding means that a future government cannot get its hands on the fund without abolishing the legislation. This is the same arrangement that has been adopted in other countries, such as New Zealand and Ireland.
In conclusion, the Future Fund represents a sensible approach to dealing with future fiscal pressures. The proposed arrangements are soundly based and will withstand the test of time. I thank honourable members for their contribution to the debate, and I commend the bill to the House.
The original question was that this bill be now read a second time. To this the honourable member for Melbourne has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.
Question agreed to.
Original question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Debate resumed from 8 December 2005, on motion by Ms Julie Bishop:
That this bill be now read a second time.
The essential purpose of the Aged Care (Bond Security) Bill 2005 and cognate bills is to strengthen the prudential requirements and enhance the protections available to residents in aged care facilities who have paid accommodation bonds. These bonds are paid upon entry by non-concessional residents of low-care facilities, previously called hostels, and also by residents in high-care facilities, formerly called nursing homes, which have ‘extra service’ status, as well as by some residents in multipurpose service facilities. When residents exit an aged care facility, they or their family may be eligible for a refund of part of the accommodation bond paid previously. Under current arrangements, if a residential care facility provider becomes bankrupt or insolvent, residents are not guaranteed that they will get their relevant accommodation bond amount refunded. These bills are designed to ensure that residents will, in all cases, be refunded the amount of accommodation bond that they are owed.
This was recommended by Professor Warren Hogan in his 2004 Review of pricing arrangements in residential aged care. In making the recommendation that prudential arrangements be established to ensure the protection of residents’ bonds, Professor Hogan noted that bonds do not qualify as preferential debts under the Corporations Act 2001. Currently, approximately $4.3 billion is held by residential aged care providers as bonds, with an average bond of $127,600. Sadly, this has been the only response the government has made to the Hogan report. We are still waiting for the government’s response to the long-term proposals that Hogan recommended. It has taken the government longer to respond to that report than it allowed Hogan himself to undertake the entire inquiry.
The Aged Care (Bond Security) Bill 2005 establishes a scheme to guarantee the repayment of aged care residents’ bond balances if the approved provider of a residential aged care service or a flexible care service becomes insolvent—a default event—and is unable to meet their financial obligation to repay residents’ bond balances. The Aged Care (Bond Security) Levy Bill 2005 will enable the Commonwealth to impose a levy on approved providers of aged care if it needs to recover its costs, including administrative costs, after repaying accommodation bonds to aged care residents whose approved providers become insolvent and default. A levy can be imposed on approved providers of aged care once a cost recoupment determination is made by the minister. Such a determination is made when the Commonwealth has not recouped money it has paid out in compensation to aged care residents entitled to bond refunds from a defaulting approved provider or when the Commonwealth wants to recover associated administrative costs. The bill does not actually impose a levy. Instead, the rate of any levy will be determined by regulation. The rate cannot exceed the cost recoupment determination amount in any particular case. While any levy imposed may apply different rates to different classes of approved provider, it cannot discriminate between providers on the basis of their location in a particular state or part of a state.
The Aged Care Amendment (2005 Measures No. 1) Bill 2005 contains a number of measures and includes the aims of ensuring that residents of flexible care services are afforded the same protections as residents in residential aged care services, putting in place a set of prudential standards, ensuring that interest is repaid to the estate of a resident for the period between the death of the resident and the repayment of the bond, changing the time frame for repayment of a bond to the estate of a deceased resident and, finally, reducing the time frame in which a bond must be refunded in the event of a resident leaving a facility or if the resident dies. This bill will enable the strengthening of existing prudential requirements related to accommodation bonds, especially in relation to liquidity, record keeping and disclosure. These new prudential requirements will be developed over time and will be subject to review.
While Labor will support these bills, we are concerned at the way in which the Howard government has chosen to manage—or mismanage—aged care. This is evidenced in the comments made by Professor Hogan that Australia’s aged care system is stuck in a Stalinist time warp. I can say from my own experience that Professor Hogan is not one for extreme language, yet he has publicly stated that the government’s system for administering nursing homes has its basis in Moscow’s planning offices of the 1920s. Professor Hogan has called for ‘a comprehensive revision of aged care legislation’. The Minister for Ageing must acknowledge Professor Hogan’s and the sector’s concerns and get on with the job of ensuring the sector’s future. The aged care industry and the community have been saying for years that the government’s quick fix policies are putting enormous financial pressure on the aged care system, yet the former minister has refused time and time again to acknowledge the problems in administration and accommodation.
The Howard government is failing to deliver the aged care services needed for our ageing population, with a shortage of over 9,000 aged care beds across the country. There are thousands of frail elderly who cannot find a nursing home bed because of the Howard government’s failure to ensure promised aged care beds are actually built. After 10 long years, the Howard government has not faced up to the aged care bed crisis in Australia. Every week we hear from families desperate to access an aged care bed for their loved one and the waiting lists, especially for high care, are getting longer and longer. When the Howard government came into office there was a target of 90 residential aged care beds for every 1,000 people aged 70 years and over. As at June 2005, there was a shortage of 9,275 aged care beds against this target—a target the government set. Instead of fixing the problem and meeting this target last year, the Howard government quietly lowered the target to 88 residential aged care beds for every 1,000 people. It lowered the target—I do not think that is a new solution to the problem. Even against its own reduced target, there is still a shortage of 5,500 aged care beds across the nation.
The Productivity Commission reported that, in 2005, 30 per cent of people requiring nursing home care had to wait more than three months to get a bed, which was up from 15 per cent in 2000—in other words, the problem had doubled. The national shortage of 9,275 aged care beds understates the severe shortages in some regions. The Productivity Commission’s recently released report Australia’s health workforce highlights the significant shortage of nurses and care workers in aged care. The report noted:
There have been longstanding concerns about the size, skill mix and availability of aged care workers—particularly in regard to nursing staff. A number of recent reports have reinforced these concerns. For example, the Senate Community Affairs Committee Inquiry into Nursing identified aged care as the area of nursing in greatest crisis, with the acute shortage of nurses having led to increased use of unregulated workers, to the detriment of quality of care.
The recently released unanimous report of the Senate Community Affairs References Committee Quality and equity in aged care also noted that delivery of quality care was under threat from the retreat of both registered nurses and enrolled nurses from the aged care sector. The Productivity Commission report comes on top of myriad other reports that highlight the workforce crisis in aged care, and the Minister for Ageing has yet to engage with the sector to come up with serious solutions.
The government must provide the community with confidence that their loved ones are being cared for by sufficient and appropriately qualified care staff who are happy to work in the aged care sector. In the 2002-03 budget, the Howard government increased residential aged care subsidies by $211 million over four years to assist employers of aged care workers to provide for increases in wages and improved workplace conditions. In 2002 the wages gap between nurses working in residential aged care and those working in the public sector was $84.48 per week nationally—a significant difference. In the 2004-05 budget, the Minister for Ageing announced an extra $877.8 million over four years through a conditional adjustment payment to improve the financial position of aged care providers and allow them to pay more competitive wages to staff. The wages gap in 2005 was $191.83 a week. The problem is that there was no mechanism to ensure that this funding of nearly $900 million was actually passed on in wages so that we can recruit and retain nurses and care workers in an area that is struggling to keep them. Most of this money has gone not to nursing staff but to the providers themselves.
If this government were really serious about the provision of quality care for older Australians, it would make a commitment to increase the number of undergraduate nursing places. There are plenty of people wanting to undertake nursing but patently insufficient places for them. Figures from the Australian Vice-Chancellors Committee showed that 2,716 eligible nursing applicants missed out on an undergraduate nursing place last year. That represents 20 per cent of those interested in getting into the sector.
With the release of yet another workforce report highlighting the significant shortages in aged care, it is now time for this government to take immediate action so that older people in Australia receive the care they deserve. And when we speak of immediate action we are not saying that the government’s current method of importing skilled staff and undermining the nursing education systems and the availability of nurses in Third World countries is a solution—that is precisely not the solution.
In 10 years the Howard government has failed the grade in aged care. There is a major lack of infrastructure and long-term workforce planning, and the government’s lack of investment in future needs and, most critically, its inability to collaborate with state and territory governments have led to this crisis. Every day sees thousands of frail elderly in acute hospital beds because there are no places for them in residential care. The states and territories bear the cost, people who need hospital treatments must wait and the elderly themselves do not get the type of care and environment they need and deserve. This is an issue Labor has consistently raised. It was one of the key drivers of Medicare Gold, which offered a real solution to the problem.
This issue of what is called ‘bed block’ is so central to the problems confronting our hospital system that it was addressed head-on in the Podger review. We understand that Andrew Podger’s solution was very similar to Medicare Gold, which presumably explains why his report has been condemned to the backblocks. However, as a consequence, the issue of bed block and the need for the Howard government to meet its responsibilities and provide more aged care beds to get the frail elderly out of hospital can no longer be ignored by the Prime Minister, the Minister for Health and Ageing and the Minister for Ageing—or even the Treasurer and the Minister for Finance and Administration. So it will be on the table to be addressed at the COAG meeting next week. We await the outcome of COAG’s deliberations, as do anxious families of those elderly patients around the country who have been unable to find suitable accommodation.
Labor will support sensible proposals which are fair and which seek to relieve the pressure on the aged care system through access, quality, affordability and sustainability. As such we will support this legislation. However, we believe that legislation of this impact should be properly examined and scrutinised, and so we will move in the Senate to have these bills referred to committee for consideration.
The Aged Care (Bond Security) Bill 2005 and cognate bills aim to secure accommodation deposits by surrounding them with some accountability and prudential requirements. The way it works is that, in the unfortunate event that a nursing home was to become insolvent, the Commonwealth would step in and ensure that the accommodation deposits were refunded to the families of the residents. That is a welcome move because it does provide greater security for those deposits, and it is a reflection of the report prepared by Professor Warren Hogan, Review of pricing arrangements in aged care.
Professor Hogan dealt with the issue in a broader context, however. That context is his support for accommodation deposits for high-care residential accommodation. I, too, support accommodation deposits for high-care residential care, subject to a number of qualifications that I will spell out. There have been very long and acrimonious debates about this matter in the past. I think we need to move on and look again at the question of accommodation deposits for high-care residential care because, as is so often the case, under the current arrangements it is the poor who are disadvantaged by the absence of such arrangements.
However, to put the entire debate into context it is worth looking at the Intergenerational report prepared by Treasury in 2002 and also the Productivity Commission’s major report on the economic implications of the ageing of the population. Both of those reports show that we have a very substantial problem on our hands in terms of the economic impact of the ageing of the population of this country. It is projected that by the mid-2040s Australia will have an extra four million people over the age of 65, yet just a few hundred thousand extra young people. So the profile of our population will definitely be greying. That presents major challenges for Australia, which need to be addressed now, before we get to an absolute crisis. I assert that we are already in crisis on aged care accommodation.
To give perspective to the dimension of the problem in aged care, in these reports it is projected that government spending on aged care as a share of gross domestic product will more than double in the coming 40 years. Furthermore, it is projected that the number of older Australians in high-care residential aged care alone will increase from fewer than 100,000 in 2003 to 337,000 in 40 years time. That gives us an idea of the size of the challenge. But the government is not preparing us for the challenge. It is finding the whole area of aged care too hard—almost too hot to handle. As a consequence, we are confronted with the reality, as laid out by the shadow minister, Julia Gillard, of cost-shifting from the Commonwealth to the states. Instead of taking its responsibilities for aged care seriously and accommodating older people who need high-care accommodation in such facilities, the Commonwealth is leaving people who should be in aged care facilities in hospitals, which takes up very scarce acute-care beds in our hospitals. That might be all right for the Commonwealth, because it shifts much of the cost onto the states. But it is not any good at all for older Australians themselves, it is not good for the system and it reflects the fact that we do not have in place in this country a comprehensive and fair aged care system which anticipates the very real problem of the ageing of the population.
What is happening is that queues are forming. Again, the shadow minister pointed to the size of the queues. This problem has doubled in just the last few years. Whenever we have a situation of queues, whether in aged care, health care or just about any other walk of life, if you examine who is in the queues you find that, most often, it is not the wealthy. Poor people occupy queues, because wealthy people have the capacity to buy their way out of a queue or jump to the front of the queue. Labor in particular should be very concerned about queueing. Of course, the coalition should be concerned too, but, because it is often the poor who are in queues, we find that the coalition is less concerned about that. We should be concerned about the formation of ever-lengthening queues and take remedial measures.
I would like to provide a bit of background about the current arrangements. My professor of old—I will not call him an old professor—Warren Hogan at the University of Sydney alludes to a heavily centrally-planned aged care system. It is ironic that another eminent economist, Professor Max Corden of the ANU, described our university regulatory system as ‘Moscow on the Molonglo’. So we have two eminent professors describing government systems for aged care and education as ‘central planning at its worst’. And I have to agree. That might seem a little odd coming from a Labor member of parliament, but it is true. This government feels that it has to centrally control the provision of aged care and our university system. The government does not let the market play a role in creating the fairer and more affordable system that could prevail if it were to let go of the controls at least a little.
Under the current very complex system, there are two types of charges in residential aged care facilities: accommodation payments and daily care fees. Accommodation payments are designed to help provide a stream of capital for operators to build and maintain aged care facilities, while the daily care fees are a contribution to the running costs of these facilities. Accommodation payments can take the form of deposits—formerly known as bonds—for low-care places but, as a result of government legislation, they are banned for high-care places. In high-care facilities, where accommodation payments are banned, accommodation charges can apply, but they are limited to a maximum charge of just $16.25 a day. So it does not take too much thinking to work out that there is a shortage of funding for the accommodation part of high-care residential aged care. The running costs are covered by daily care fees. Whilst there are limits on those fees, the limits are higher, and therefore there is less of a problem with the running of the facilities but a big problem with the construction and maintenance of high-care residential aged care facilities. There are exceptions to these rules in two circumstances: firstly, up to 15 per cent of high-care residential places can be what are called ‘extra service places’, for which accommodation payments are allowed; and, secondly, when someone enters a low-care facility and pays an accommodation deposit—where they are allowed by law to do so—and then moves to high-care residential aged care, they can carry the accommodation deposit with them.
I think people who are listening to this contribution will begin to understand the absurdity of the situation. There cannot be any philosophical basis for banning accommodation deposits in high-care facilities when they are allowed in low-care residential aged care and in extra service places. I would be interested in hearing the government explain what the philosophical basis for this prohibition is, because there cannot be such a philosophical basis.
The accommodation deposits being provided for low-care residential facilities are being used to cross-subsidise the construction and maintenance of high-care facilities. People who enter low-care residential aged care are effectively subsidising those in high-care accommodation, including people on low incomes in low-care residential facilities cross-subsidising people on high incomes in high-care facilities. So we have the ludicrous situation where, under the current arrangements for residential aged care, the poor are subsidising the wealthy.
Around 65 per cent of residents in residential aged care have high-care needs, yet the Commonwealth has been approving almost twice as many low-care beds as high-care places. So it is beginning to become clear that there is something stuck, and that is a result of this central-planning approach of the Commonwealth. The needs are in high-care residential care, yet the government has been approving twice as many low-care places. The reason for that is the prohibition on accommodation deposits in high-care residential aged care.
There was a big debate about this between 1996 and 1998. The argument used in that debate against accommodation deposits for high-care places was that moving into a high-care residential facility from a low-care facility is traumatic enough without being required to sell your home. That was in the days when low-care facilities were really hostels, and they did not have much of an aged care component to them. They were really like secured premises with not a lot of aged care services provided. Now, several years later, much more commonplace is the situation where low-care and high-care services and facilities are provided on the same site. That is why it is permissible for people who enter a low-care facility to be able to carry their accommodation deposit into a high-care facility. So it is not as if there is this huge traumatic disruption as they move from one facility to another, because commonly now the facilities are on the same site. They may move from one building to another, or they may move even move from one room to another. So the arguments that were carried back in that period have been overtaken by a change in the way that aged care accommodation is provided in this country.
There are already protections in place in relation to the argument about the added trauma of selling the family home in moving from low-care to high-care accommodation. For example, accommodation deposits cannot be levied where the resident has a spouse, relative or other carer living in the resident’s former home. Also, there is an asset limit such that people who are very poor cannot be forced to pay accommodation deposits. These restrictions are designed to ensure that a prospective resident in an aged care facility is not forced to sell a home where it is occupied by a spouse, relative or friend who has been providing care in recent years.
So we have this situation where the Commonwealth of Australia is saying, ‘We are applying by law a limit to the quality of aged care that high-income earners can buy.’ Imagine the furore if the Commonwealth government passed legislation banning the provision of five-star hotel accommodation in Australia on the basis that it is unfair to allow people who have the income, who have the wealth, to buy five-star hotel accommodation in Australia. People would regard that as absolutely absurd. Yet that is exactly the situation that applies in residential aged care, where the Commonwealth bans the use of accommodation deposits.
Baby boomers are beginning to retire. Many of those baby boomers are very wealthy and many of those baby boomers are willing and able to pay for high-quality aged care accommodation but are prohibited by law from doing so. Is this truly 21st century Australia?
As I pointed out, the people who really lose from this limitation on the quality of aged care accommodation that can be purchased by high-income earners are not the high-income earners but the low-income earners: either they are in low-care accommodation and are cross-subsidising high-income earners in high-care accommodation or there are not enough high-care accommodation places because this limitation means that the industry is unable to build sufficient capacity to accommodate residents in high-care accommodation. The ones who miss out are not the wealthy. The ones who miss out are the poor. So we need to look afresh at accommodation deposits.
I do not assert that allowing accommodation deposits in high-care residential aged care will fix all the problems in the aged care sector. I do not assert that, but it is absurd that those restrictions are in place. They should be eased, but subject to a number of caveats. One of those caveats is of course that people should not be forced to sell their homes where they have a relative or someone who has been caring for them for some time living in that home.
A very important caveat is that the proceeds of this extra funding coming from wealthy people going into high-care residential aged care should be used to cross-subsidise the poor, to help those poor people who are sitting in the queues trying to get decent quality aged care to get off the queues and into high-care residential aged care. That seems to me to be a fairly obvious reform that should be contemplated. The reason we are debating this legislation is that Professor Hogan effectively recommended those changes in his report and, as an interim step or as one step along the way, he wanted to provide greater security around accommodation deposits in the event of the collapse of a residential aged care facility. As I understand it, there has not been any great prevalence of such collapses, but it is a prudent measure to provide that protection. But we should then be taking the next big step and look afresh at aged care accommodation deposits for high-care residential aged care places.
When the Minister for Education, Science and Training, who is at the table, was the aged care minister, she floated some other related proposals which are worth debating. They included allocating dollars to the person rather than to the facility. I have one qualification about that: I would prefer to see that occur such that people who are in high need or on low incomes have more dollars attached to them than very wealthy people, so I think consideration could be given to that. The minister further suggested that, in doing this, people who could be in receipt of that funding could include those associated with personal care by a spouse, relative or friend. That does raise some questions about the quality of care, but that does not mean that the issue could not be debated and considered. But there is, in my view, a flaw in the argument. That is that, as a result of the proposals that the minister put up, it is likely that people will stay in their homes longer—that is fine; that is one of the objectives—but then they would move into high-care accommodation. Unless we solve the problem of the costs of high-care accommodation, ultimately that will exacerbate the situation, not improve it—and I see the minister is, in her own inimitable way, acknowledging this point. The minister’s solution is worth debating. It is worth considering but it must be considered within the broader context of the adequacy of funding of high-care residential aged care. If people are willing and able to pay more, why would a government that purports to be in support of self-reliance prevent them from doing so? The Labor Party should consider these proposals because, as I said, it is the poor who lose out, we have a responsibility to the poor and we have a responsibility to all Australians. This debate should continue in earnest.
I welcome the Aged Care (Bond Security) Bill 2005 and cognate bills for providing a commonsense and effective solution to the issue of accommodation bond security that will bring increased peace of mind to many residents of aged care facilities and their families. It is important to note that there have been no reported cases of a bond balance not being refunded as a result of an insolvency or a bankruptcy. However, it is right that we should not rely on this state of affairs to continue and should instead provide further safeguards. In such an event, one can imagine the anxiety of those residents and their relatives faced with the prospect of finding a new home. One would not want it to be compounded by doubts about the safety of the accommodation bond, which might be crucial to their financial arrangements. Indeed, it would be a grave injustice if such bonds were to be subsumed in the assets of an insolvent company. This potential injustice would be compounded by the growth in the value of bonds, the average value having increased from some $26,000 in 1996-97 to $127,000 in 2004-05. The total value of bonds held in 2004-05 was some $4.3 billion.
Electorates like my electorate of Cowper are becoming increasingly the destination of retirees, many of whom will eventually need the benefit of some form of aged care. I shall come shortly to the very welcome measures that have been taken to help many of these retirees to live in a secure and caring environment or to stay in their homes with appropriate help. However, the fact remains that demand is growing and the government needs to do what it can to encourage providers to invest to meet the needs of that demand. The measures in these bills go some way towards achieving that end.
It is entirely right, as the Hogan review pointed out, that the government has an obligation to ensure that the funds invested in accommodation bonds are not exposed to risk. Hogan went on to recommend that a levy be raised from care providers to establish a guarantee fund held by the government. While this approach clearly provides the security required, it has the disadvantage of tying up funds that could be used to help meet that growing demand. That is why I welcome the commonsense approach proposed in these bills. The fact that the government will act as a guarantor of the bond balances in the first instance and will reimburse residents affected by a bankruptcy should provide residents with much-needed peace of mind. They need not fear that payments will be delayed while negotiations take place in connection with the bankruptcy. The fact that a levy will only be imposed when required will avoid the necessity of tying up providers’ capital, capital which could be put to better use in providing more facilities.
When money is held on behalf of others, particularly those members of our community who may be frail, it is essential that those holding the bonds should manage the funds safely, effectively and openly. I therefore welcome the strengthening of existing prudential measures which set standards with regard to liquidity, record keeping and disclosure. The Aged Care Amendment (2005 Measures No. 1) Bill 2005 will require more information about the way that these funds are being managed—hence more security—and lessen the risk of a provider becoming insolvent or bankrupt.
These measures affect a sizeable proportion of my constituents. In Cowper the percentage of people aged over 65 is double the New South Wales average. Such a statistic reflects the increasing number of people who are relocating from major metropolitan cities and from other regional areas, seeking a coastal lifestyle and retirement—a lifestyle in the most beautiful area of Australia. Of course, the sea change phenomenon is not something that has just happened over night. For years Australians have been migrating to coastal areas to enjoy their retirement. However, in regions such as my own electorate on the New South Wales North Coast the real difference over the past 10 to 15 years has been the volume of people who have been moving to the coast from the cities and western country areas.
This demographic migration has naturally lead to an increase in the demand for aged care services, as I noted earlier. This is where the coalition government sets itself apart from the members on the other side of the chamber. In 1996, when the coalition was elected to government, the recurrent aged care spending in my electorate was just $13.5 million per annum. When this government came to office, local aged care facilities were struggling to find beds to meet the demand for their services. There were no community aged care packages which provided elderly people with the choice of remaining in their own homes rather than going into a formal aged care facility. Similarly, there were no extended aged care at home places. Under 13 years of Labor, aged care was put on the backburner and many Australians struggled to access appropriate care in their retirement years.
This is an important point because the legislation which is before the House today is an extension of the coalition government’s commitment to providing peace of mind for older Australians. If you ask most older Australians what makes them comfortable, they will tell you that access to health care and their personal security are of paramount importance. These two factors are vital to retirees enjoying their senior years.
I will now turn to some of the achievements in aged care in my electorate as a result of the coalition government working closely together with the aged care sector. Since I was elected as local member in 2001, the Cowper electorate has enjoyed a very close association with two excellent aged care ministers: Minister Andrews and Minister Julie Bishop, who is at the table today. My constituents welcomed both ministers to the electorate during their tenure. The aged care providers appreciated the time made available by those ministers to meet with them and discuss their concerns.
The additional investment which the coalition has made in aged care is evident right across the region. For example, in Yamba we have seen the Caroona Hostel aged care facility expanded to cope with the increase in allocation of beds. A $1 million extension is currently under construction and plans are already under way for a further $5 million expansion after a further allocation of beds this year. In Maclean, the Mareeba Nursing Home is also planning extensions and the Clarence Valley Council is providing an unprecedented number of aged care services in the homes of local residents, funded by the federal government.
This expansion has been mirrored along the Coffs Coast where extensions have been completed at the Woolgoolga and District Retirement Village, at Bellingen’s Bellorana and at the Coffs Harbour Nursing Centre. We have also seen new facilities opened by the Churches of Christ at Coffs Haven, by the masons at the Coffs Harbour Masonic Village, plus the expansion of aged care services in the home, where Mid North Coast Community Care Options are doing a fine job.
In the Nambucca area the good news continues. On 22 December I was able to announce that, as a result of the allocation of 60 low-care places, the Uniting Church would construct a $6.5 million aged care facility in Nambucca Heads. This facility will provide some 70 new jobs in the Nambucca shire. Just under a month later the finishing touches were put on the Riverside Gardens Aged Care Centre, also in Nambucca Heads. This $5 million facility, which was the vision of Nambucca Valley Care, is in addition to the existing Riverside Gardens Retirement Village and hostel, which is one of the biggest employers in the town. I would like to recognise the commitment of Jan Foster, her staff and volunteers at Nambucca Valley Care who are very focused on providing the very best possible aged care services in the Nambucca shire.
A quick snapshot of the Cowper electorate highlights what aged care achievements are being delivered in areas of need in my electorate. However, I would like to note that the coalition recognises that there is a need for work to continue. As we know from the Intergenerational report, it is estimated that by 2042 the number of Australians aged over 65 will double. Many of these people aged over 65 are moving to coastal areas. I therefore welcome the coalition government’s commitment to continue the roll out of aged care beds. We have increased the target number of aged care places per thousand over the age of 70 from 100 to 108 by the end of 2008, and we are on track to meet that target. Since 1996 more than 68,600 new places have been allocated. Over the next three years the coalition has committed to allocate a further 26,600 new aged care places. This is in addition to the measures announced in the last budget providing some $321 million for sufferers of dementia and their carers and the tax-free payments of $1,000 and $600 for those receiving the carer payment and the carer allowance respectively.
There remain some areas in my own electorate where I believe more beds should be targeted. Without doubt the most important and most urgent area of need is in South West Rocks. South West Rocks has experienced huge growth over the last five to 10 years and many of the new residents moving to South West Rocks are retirees. Although the town’s aged care needs are accessed through neighbouring towns such as Kempsey, the demand for aged care services, both in the home and in aged care facilities, is obvious for the people of South West Rocks.
There is a new multimillion dollar facility planned for nearby Frederickton which borders my electorate and is in the electorate of the Deputy Prime Minister and member for Lyne, Mark Vaile. Whilst the Frederickton facility will service residents in both electorates, I believe it should not be used as a justification for withholding an allocation of aged care beds for a stand-alone facility at South West Rocks. South West Rocks is at least 30 minutes drive from the nearest existing aged care facility and approximately 20 minutes drive from Frederickton, which places a great strain on spouses when they wish to visit their partners who are residents in formal care. With little public transport available, many elderly residents are finding it difficult to visit their partners each day. With many of the partners having restricted drivers licences, it makes it a very difficult family situation when being unable to regularly visit your partner of many years in care some 20 or 30 minutes away. The latest round of aged care places increased the number of beds available in the Kempsey shire, but I believe within the shire it is essential that there is a greater focus on South West Rocks. I have welcomed the cooperation and support of the South West Rocks community, and I will continue to work with them to address the aged care needs within the town.
The coalition government is absolutely committed to providing quality aged care for senior Australians. It has been working very hard to address the 13 years of neglect which occurred under Labor. The Commonwealth is currently investing more than $50 million in aged care places in my electorate every year in recurrent funding. That is $50 million these days as opposed to $13.5 million just 10 years ago. The sector is now not only a deliverer of services but also a major driver of the economies in many smaller towns, further highlighting why this legislation is so important to the residents who live in rural and regional Australia and particularly along the North Coast of New South Wales. I commend the bills to the House.
The Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and theAged Care Amendment (2005 Measures No. 1) Bill are designed to protect accommodation bonds held by residential aged care providers in the case of a provider becoming insolvent. The bonds are paid on entry to low-care facilities by non-concessional residents and by some ‘extra service’ residents in high-care facilities. When residents exit an aged care facility they, or their families, may be eligible for a refund of part of the accommodation bond paid. Currently, this refund cannot be guaranteed should a residential care facility provider become bankrupt or insolvent. These bills will ensure that residents will be refunded any of the accommodation bond they are owed.
The bills provide that the government will repay any outstanding accommodation bond balances in the case of an aged care provider defaulting. The levy bill will then allow the Commonwealth to impose a levy on aged care providers to the extent that it is necessary for the Commonwealth to recoup the amounts it has not been able to obtain from defaulting providers. Labor will support this legislation, as far as it goes.
However, these bills go only a small way towards addressing the critical issues confronting Australia’s ageing population. The government is only now coming to the table in dealing with these matters. The Hogan Review of Pricing Arrangements in Residential Aged Care was concluded in 2004. The Senate Community Affairs References Committee tabled their report Quality and equity in aged care on 23 June 2005. I note that that report was unanimous. Both these documents contained numerous recommendations for action this government could take in reforming the aged care system in this country. Yet all we see is this paltry attempt to deal with what is rapidly becoming a national crisis. The government cannot claim to be underinformed of the issues facing this sector, yet has chosen to do little about it.
The Hogan review identified a series of demand drivers. Perhaps the most critical were the demographic changes due to the increased health expectancy of older people and changes in older people’s living arrangements, along with their access to informal care. The review states on page 22:
Over the next four decades the number of older people will almost triple. Moreover, the older population will grow twice as fast as the total population during that period.
There can be no doubt that there will be an increasing demand for aged care services. That demand will have to be met. Given the Hogan review’s projections in table 3.1 on page 24, which state that over the next 40 years the total cost of supplying aged care services will more than double in real terms, it will grow by 113.1 per cent. The Hogan review provides 20 key recommendations. The Senate committee report outlines 51 recommendations. This legislation before the House today deals with only one aspect of the matters in those reports.
Consider for a moment the number of aged care beds. When this government came to office there was a target of 90 residential beds for every 1,000 people over 70 years of age. As at June 2005, there was a shortfall of 9,275 aged care beds against this target. This target has since been lowered to 88 residential aged care beds for every 1,000 people aged 70 and over. Even against this target, there is still a shortage of 5,500 aged care beds. Recommendation No.1 of the Hogan review stated that the government should commit to sustaining a rate of 108 places for every 1,000 people over 70. My colleague Senator McLucas noted in her media statement of 21 November 2005 that it was interesting to consider exactly wherethe shortfall occurred. For example, there was a shortfall in south-eastern Sydney of 1,496 beds yet there was an oversupply in northern Sydney—and there are no surprises for guessing which electorates are in northern Sydney.
I would like to outline briefly some of the areas Warren Hogan noted in his review as requiring immediate change. I do this to provide a clear statement of what the government could and should be doing in relation to aged care. I have already dealt with planning arrangements. Further recommendations were made in relation to greater flexibility in allocations; increased support for aged care assessment; aged care assessment teams’ role in reassessment of existing residents; the resident classification scale; funding supplements; the Aged Care Standards and Accreditation Agency; the aged care workforce; financial assessment on entry; the guarantee fund; viability supplement; targeted capital assistance; conditional incentive supplement; comprehensive data repository; and corporate information. There are an additional five recommendations focused on medium-term reform. Only one of those recommendations—the guarantee fund—is currently being dealt with by this House in the form of the bills today. This is an appalling state of affairs.
I would now like to turn to the key recommendations proposed by the Senate Community Affairs References Committee. This report, by the way, was tabled after the Hogan review and was unanimously supported by committee members. This is a continuing saga of so much to do, and so little done, so many opportunities lost. For example, in recommendation No. 1, the committee welcomed the allocation by the government of an extra 400 nursing places at universities in the 2004-05 budget. Unhappily, this is short of the 1,000 places recommended by the Hogan review. One of the key issues raised by both the review and the committee was the need for increased numbers of trained aged care workers.
The committee made seven recommendations to deal with the issue of lack of appropriately trained staff for the aged care sector. There are 11 recommendations dealing with the accreditation agency, accreditation standards and complaints resolution. There are nine recommendations to improve documentation and technology in the aged care sector. In terms of funding for aged care residents with special needs, the committee detailed nine recommendations. One of these was recommendation 32, which read:
That the Commonwealth establish a funding supplement for residents in residential aged care who have additional needs arising from mental illness.
What I find so inexcusable is the fact that there is no such supplement now. Surely, it is evident that people with special needs require additional funding. There are another 11 recommendations dealing with community care programs. The committee acknowledged the recent funding increases in the Home and Community Care program. It further noted, however, the need for more comprehensive levels of care and the need to ensure sufficient funding growth to meet new demand.
The committee directed several recommendations to the particular needs of some specific groups. Recommendation 39, for example, focused on people from culturally and linguistically diverse backgrounds, Aboriginal and Torres Strait Islanders, people with dementia, financially disadvantaged people and people living in remote or isolated areas. Recommendation 40 recognised the special needs of homeless people or people at risk of becoming homeless as they age. Recommendation 41 dealt with the costs of providing community care services in regional, rural and remote areas. Finally, recommendations 48 to 51 dealt with matters of transitional care.
So there we have it, a total of 20 recommendations from the Hogan review and 51 recommendations from the Senate Community Affairs References Committee inquiry; yet this government appears to take only one of those matters so seriously that it has introduced legislation to address a matter of national significance. I can speak of this subject with some personal knowledge—my own constituents raise these matters with my office on a regular basis. One recent example is an elderly man with emphysema who is unable to find a place locally for his wife. He is forced to travel to Croydon, some kilometres away, to visit her. Pensioner couples are very concerned over the low threshold of the assets test. One woman is very concerned that her savings will not last. She is required to pay an extra $16.63 per day for her husband, who has dementia. With the daily care fee of $28.62, this is a total of $316.75 per week in addition to the extra costs of pharmaceuticals, ancillary health and personal items. For a pensioner couple, the assets test is $61,000. This obviously does not last long at almost $320 per week in extras.
I doubt that I am the only member of parliament who, in the normal course of a day, has concerns raised with him or her on the matter of aged care. Yet we are dealing with three pieces of legislation which deal only with the matter of prudential requirements. I acknowledge that this is a necessary part of the reform process. The Labor Party will of course support these bills. But, to coin a phrase, this is very much the tip of the iceberg. There is so much more to be done in this area and this government has had more than enough time and input to take action to ensure that our ageing population will be cared for in the manner most appropriate to their needs. I commend the government on the start it has made in introducing this legislation. I can only continue to urge that now is the time for the transformation of aged care.
It is with great pleasure that I rise today to support the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005 in the House. I am very pleased to see that the former Minister for Ageing is sitting in the chamber. It is very fitting; these were her pieces of legislation—and what a fantastic Minister for Ageing she was. We think that she has done more for the benefit of our residents in aged care facilities and their families than any other minister has done in a long time. I congratulate her for all that she has done, and these are true and genuine congratulations to the former minister for having undertaken her role as a minister for aged care in such a professional and profoundly competent way.
These bills aim to continue the government’s goals to ensure that the protection of aged care residents is paramount when it comes to accommodation bonds. Already this government has made provision for people with dementia and improved training for aged care workers, and the number of aged care places continues to increase throughout my electorate of Riverina and across the nation as a whole. We have put in place a whole host of measures and accreditation to ensure that, when our loved ones have to enter into an aged care facility, the treatment and the service they get is of a high standard. Aged care workers are a dedicated group of people who are entirely committed to the residents of aged care homes. This government has sought to put them in a position whereby their quality assurance and protection along with the protection of the residents is highly valued. I congratulate all of those workers in the industry who are absolutely committed and dedicated to the care of our ageing and elderly Australians who have given much to this nation over their lives.
The Aged Care (Bond Security) Bill 2005 will guarantee the repayment of aged care residents’ bond balances in the event an approved provider is unable to repay residents’ bonds. Under the Aged Care Act 1997, an accommodation bond is an initial payment that an approved provider may charge a resident of aged care services for entry to low-level residential aged care or to high-level residential aged care in an extra service facility. Some aged care residents in multipurpose services may also be charged accommodation bonds. The balance of a bond that is paid to a provider when a resident enters a facility, minus certain deductions and any investment returns retained by the provider, is refunded to the resident on their exit from the facility. They may decide to exit for many different reasons.
With about 74 per cent of aged care services requiring a levy bond to be paid, the effect of the security that comes with the introduction of this bill will assist many older people and in particular their families. Often it is difficult enough for an aged person to adapt to the prospect of having to live in a residence and to be cared for, often far away from family members and friends. Then, perhaps, they may also face losing a huge proportion of their life savings, which they have used for accommodation bonds, by not being repaid when they need the money to move into other levels of care. It certainly will be hugely reassuring to have a guarantee of this kind that their bonds will be repaid due to this legislation currently before the House.
If an aged care facility in a small community closes, it is very difficult not only for family members, who face the task of finding new accommodation for their aged parent, relative or loved one, but also for aged residents, particularly when they are quite ill or frail, who are sometimes sent elsewhere. Not being able to immediately obtain much needed finances to secure other accommodation is a problem that has a great impact on aged people and their families. The majority of aged care providers are absolutely committed to their residents—so much so that they may keep their doors open long after they perhaps should have taken a decision to close in the interests of financial viability. They may continually use up all of their assets and risk their financial viability trying to come up with a way in which to continue to provide their residents with services and a facility. This is why aged care bonds become a casualty and it is how they sometimes get caught up in these issues. Of course there are some unscrupulous operators, but in the main providers of aged care services are absolutely committed, along with their staff. Many aged people require care because they have fallen ill or have had an accident or because their families have had to move away for job reasons and they are not able to be relocated. But to then be told that money that is rightfully theirs has gone because a provider has become insolvent would be absolutely devastating news. That certainly will not occur once this bill becomes law.
Many families find it difficult enough coping with their own daily pressures, let alone trying to recoup lost accommodation bonds and finding more money for a bond at another aged care facility. With an increasing average value of bonds of $127,600 in 2004-05, up from an average value of $26,000 in 1996-97, this bill is welcomed as a valuable protection when bonds need to be recovered after a resident, for any reason, leaves an aged care facility. Currently, if a provider becomes bankrupt or insolvent, the resident is not guaranteed the return of the balance, because they are considered an unsecured creditor under the corporations and bankruptcy law.
If an aged care facility in the Riverina were to become insolvent, a resident would find it very difficult to find alternative accommodation within the region. I think this measure is long overdue. We have a long waiting list for hostel places in my region and it is a difficulty that we have been overcoming. With the help of the former minister and the government, we have been able to overcome many of those issues. I might add that when I first became the member for Riverina the major issue confronting me at almost every constituent interview was the lack of places in hostel care and aged care. Thankfully, due to the efforts of the government in overcoming the bed shortage that was inherited from the previous government, I now find that this is no longer one of the most pressing issues in my region. I certainly thank the minister and the government for the number of beds that have been allocated to our region to assist with our ageing population.
The distance between aged care facilities is greater in rural areas and this places added stress on families already struggling to deal with the daily running of their households and then perhaps also being forced to find alternative accommodation for family members. The introduction of this bill by the government is welcomed because, with 100 per cent of bond moneys owing having to be repaid in full, the loss of a bond is a potential burden that families and residents no longer have to face. There is a feeling of security. People will take the risk of perhaps going into smaller facilities and they will not be concerned that if something happens they might lose their bond. They do not have that risk. They have the security of knowing that they will have their bond refunded in full, aside from some agreed administrative costs, and that is part of all aged care provision.
The aged population of Australia is increasing. It is anticipated that by 2040 those aged over 65 will represent 25 per cent of the total population and there will be one million people over the age of 85. These bills will ensure security on accommodation bonds not only today but in future years, as the need is only going to become greater.
The Aged Care (Bond Security) Levy Bill is part of the government’s guarantee scheme in which the Australian government will pay 100 per cent of the bond balance to residents with interest in the event of a provider becoming insolvent or bankrupt and being unable to meet its financial obligations. This bill will mean the government is able to recover the total amount to be repaid to residents plus the administrative costs associated with the refund and the attempt to recover from the insolvent provider.
In 2004 there were 2,493 services and 1,309 providers in Australia, which included private incorporated bodies, community based organisations, religious organisations, state and territory government organisations, charitable organisations and local government bodies. About 57 per cent of the more than 1,300 providers received bond money, indicating the wide use of accommodation bonds.
The Aged Care Amendment (2005 Measures No. 1) Bill is designed to ensure greater responsibility is taken by individual providers to appropriately manage and secure residents’ accommodation bonds, provide certain information to residents and prospective residents about the financial viability of the provider and better inform residents, prospective residents and their representatives. So we will give effect to the establishment of new prudential regulatory arrangements to improve the management of residents’ accommodation bonds and entry contributions. These new regulations will apply to all services holding bonds, whether they are residential care services or flexible care services.
A significant change included in this bill will be to the arrangements following the death of a resident. The current 60-day provision is problematic for providers if the legal beneficiary has not been firmly established. Under the new provisions, a provider must refund the accommodation bond balance within 14 days of being shown probate or letters of administration. This will be widely welcomed by families who have the unpleasant and unenviable task of trying to settle and determine estates as trustees and executors.
In early 2005, the government announced that lump sum accommodation bonds paid by residents in aged care facilities would be exempt from the social security and veterans’ affairs assets test. From 1 July last year, an aged care resident who pays an accommodation bond wholly or partly by periodic payment is able to rent out their former home without the value of the home or the rental income affecting their pension. These exemptions apply to bonds paid by existing and new residents in aged care, regardless of when the bond was paid. For some existing residents in aged care, these changes may result in an increase in their rate of pension or their becoming eligible to receive a pension.
This legislation aims to continue this government’s goals and commitments to ensure the protection of aged care residents when it comes to accommodation bonds. It is a welcome change to the current regulations. I commend the legislation to the House. It will provide a very fine form of security for aged care residents, those who are considering entering into a facility, and their families when they are asked to pay a bond. The legislation provides greater security and greater peace of mind for all the people in that position.
The Aged Care (Bond Security) Bill 2005 and related bills comes as a welcome assurance to many older Australians. You could say that we have been fortunate not to have seen any reported cases where bonds held on behalf of aged care residents have been lost due to an aged care facility going broke. But there has always been a risk that it could happen, with dire consequences for residents who have paid a bond. With most low-care residents being required to pay a bond, the failure of a provider could leave those residents without the means to seek alternative accommodation.
As we have seen with the collapse of firms such as HIH Insurance, it is left to the government of the day to compensate those who have lost out as a result of the commercial failure of a firm. I would think that, had a low-care provider become insolvent before this time, the government would have come to the aid of residents who had lost their bond—but not before those residents had suffered considerable anguish at the prospect of having lost the greater part of their life savings
This legislation must come as a welcome relief to all aged care residents who have paid a bond. I think most members would be well aware of the anxiety of older people when it comes to money. When their hard-earned life savings are seen to be at risk, it can be a very worrying experience. For many residents, meeting the bond payment has meant the sale of the family home or, in other cases, other family members have made sacrifices to meet the bond payment. So it is not surprising that the security of the bond is one of the major concerns of low-care residents.
Can I say from the start that I support the concept of bonds for people in need of a low level of care. I know that some would expect that care should be provided without the payment of a bond. But, as we are all aware, with an ageing population and an increasing demand for all levels of care, the contribution to the capital cost of providing care by way of a bond is not unreasonable in cases where the resident has assets over a set amount. In many cases, the former family home is no longer occupied and, depending on the circumstances of a person and their need to enter a low-care facility, it is unlikely that the resident will be returning to the family home. So it is fair that a resident contribute part of the capital cost of a low-care facility by way of a bond.
What also concerns me is that some low-care facilities provide less than the required number of beds for people below the asset threshold at which they would be required to pay a bond. I know that for some new low-care facilities in my electorate of Fowler, bonds provide a significant amount of the capital cost. For not-for-profit community based organisations, access to bond money enables the completion of facilities earlier than would otherwise be the case. There is a temptation to maximise bond funds at the expense of residents not required to pay a bond.
For many families of European and Asian origin, caring for elderly relatives is a serious obligation. In some cases, families have insisted on caring for their relatives in the home rather than placing them in a care facility. Increasingly, these families see their obligation as securing a place for their relative and supporting the facility that provides their care. These arrangements represent an important cultural change, but one that is seen as being in the best interests of an ageing relative.
In and around my electorate of Fowler are a number of low- to high-care facilities sponsored by ethnic communities. Most notable are the Italian, Chinese, Russian and Croatian communities. The facilities they have built are among the best examples of low-care residences for frail, aged people in our area. In every case, the community contributed generously to buy the land and construct the facility. With bonds, government subsidies and residents’ contributions, these communities have developed high-standard facilities, catering to the special needs of people of their own origin, as well as a number of people from other communities.
Within the Fowler electorate we have the Cardinal Stepinac Village, a Croatian low-care facility. The manager, Matt Smolcic, and his fantastic staff have built more than an aged care home. They have built a community and should be congratulated. The residents celebrate events in a distinctly Croatian way and for some it is like being back in their childhood home. But the residents are also very much part of the Australian community. Each year the village raises funds for charity. In past years, the village has given tens of thousands of dollars to causes such as the Canberra bushfires and the South Asian tsunami.
Facilities run by the Australian Chinese and Descendants Mutual Association and the Australian Chinese Buddhist Society provide similar links so important for older people. Just outside the Fowler electorate, we have the new Sydney West Italian Associations Hostel. We also have the longstanding Scalabrini Village facilities at Austral and Moorebank. All of these facilities provide high standards of care and all have been sponsored by community groups. They have relied heavily on the generous support of those communities. But I would not want to give the impression that these facilities are highly profitable. It is quite the opposite. Rising costs such as workers compensation premiums have led to thin margins. The facilities need the capital funding provided through bonds to expand and offer places to others in the community.
There are also privately funded facilities, such as the Blue Hills Village in the neighbouring electorate of Werriwa. In every case, as we look to expand the number of aged care places, we can expect community based facilities, as well as private facilities, to depend on bonds to fund this expansion. As bonds are turned over, their value has increased from an average of $26,000 in 1996-97 to $127,000 in 2004-05. We now have in excess of $4.3 billion held across the industry. As I said earlier, we can think ourselves lucky that so far we have not had an insolvency which has led to residents losing their bond. The consequences of such an event, when today residents are paying as much as $250,000 or more, would be disastrous. The Commonwealth, as the authority responsible for regulating aged care bonds, would have no alternative but to make good those losses. As we have heard, the Hogan review concluded:
There is an obligation on the government to ensure these funds are not exposed to any risk of loss.
Essentially, this legislation reduces—if not totally removes—the risk of loss in the event of an insolvency. The method chosen in this legislation is a post-payment model where the Commonwealth guarantees the bond balances and has the option to levy the sector to recoup any default payments paid. The government will also meet the cost of the first three years of operation of the new framework. This arrangement offers the greatest security to residents paying a bond and, at the same time, is the most economical scheme for providers holding resident accommodation bonds. It remains to be seen if any part of the sector represents a greater risk.
For prudent providers, some parts of the aged care sector may appear to be a greater risk. However, the history of the industry so far suggests that any defaults would be rare and that the amount of levy imposed on the whole sector would reduce the amount of the levy to a point which would be manageable by all providers. But it must be said that the risk and the amount of any potential levy has not been spelt out and this uncertainty is a cause of concern to all involved in the industry. At any rate, the government would still provide a fallback to guarantee the funds of those people paying bonds.
Of course, even an ironclad guarantee is worthless without strict rules applying to the repayment of bonds in all circumstances. This legislation clearly spells out the obligations of providers to repay bonds within certain time limits. I would expect this aspect of the legislation to be strictly enforced. People in aged care are one of the most vulnerable groups in our community. They deserve the full protection of the law when it comes to what for many is their most precious asset: their aged care bond. Aged care bonds are an important consideration in the capital planning for low-level aged care ventures. What presents the greatest risk, as we have seen, is that the value of bonds rises dramatically, and they have risen dramatically in recent years. The increase from $26,000 in 1996 to $127,600 last year represents a 500 per cent increase. Clearly, the sector is becoming more reliant on bonds for capital funding. That in itself definitely represents a risk. Strong prudential standards will also be a necessary part of the administration of the sector.
My concern also is that the industry will become dependent on bonds and, as we have seen with a 500 per cent increase over the past 10 years, further increases can be expected. With increased demand for aged care, for those fortunate enough to own their own home in one of the major cities, we might expect the value of bonds to continue to rise. This can only exclude more and more people from much needed care. It will definitely exclude people within my electorate.
While I agree that low-care bonds are essential, we should be looking at the upper limits of what is demanded by the sector. Where the family home cannot be sold to meet the cost of the bond, many families will need to share the high cost of meeting any debt incurred to pay a bond. In one case I came across recently, the bond asked for in a new facility just outside my electorate in the seat of Prospect was $240,000. That is a lot of money for a family to find and often they have no choice but to pay.
The situation in the aged care sector is changing rapidly, and we will continue to face pressures in the years ahead. This legislation sets a firm foundation for the security of aged care bonds. We now face getting the right balance between the bond, the government subsidy and the resident’s contribution. As the sector grows, these pressures will definitely need to be monitored, and we will need to constantly review the funding for all parts of the aged care sector.
I am very pleased to take this opportunity today to speak in support of the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005excellent measures to address the ageing of the population; a constructive, well set out policy direction for the government under the previous Minister for Ageing. Before I turn to the substance of these bills, I would like to congratulate the former Minister for Ageing, the Hon. Julie Bishop MP—a fellow West Australian—for her hard work and foresight in bringing these bills to parliament and to congratulate her upon her promotion to cabinet.
These bills will form the legislative framework of a comprehensive new system to safeguard the accommodation bonds of residents of aged care facilities. This new system will provide peace of mind for residents and their families. This peace of mind will be appreciated by many residents and families in the electorate of Hasluck. These bills are a striking example of the Howard government’s commitment to the welfare and dignity of senior Australians—a growing group, of which we will all eventually be members.
The bond security bill will allow the Commonwealth government to compensate residents when their bond cannot be repaid due to the bankruptcy or insolvency of their approved aged care service provider. The levy bill allows for the subsequent recovery of those moneys, either from the defaulting provider or by way of a levy on all bond-holding providers. Perhaps most importantly, the measures bill sets out new prudential regulatory arrangements to minimise the risk of approved aged care providers becoming bankrupt or insolvent in the first place.
The decision to strengthen the protection of accommodation bonds has not come about as a result of a breakdown of the existing system. In fact, to date there has not been a single instance of a bond not being repaid due to bankruptcy or insolvency of an aged care service provider. However, as the value of accommodation bonds has increased, the Howard government, residents and aged care service providers have identified the need to strengthen these bond safeguards. The average new bond paid has increased from $26,000 in 1996-97 to $127,600 in 2004-05. This is a substantial increase, and current figures represent a significant proportion of the life savings of residents.
In light of this, the Howard government has taken the very prudent action of strengthening the safeguards provided under the Aged Care Act 1997. While these existing safeguards have proved adequate thus far, the changes we are debating today recognise that residents and their families should be confident that their bond balances will be paid, even if a provider becomes bankrupt or insolvent and the provider is, therefore, unable to pay in full bond balances owed to residents. Currently residents are classified as unsecured creditors and would have little expectation of recovering their accommodation bond should their aged care service provider become bankrupt or insolvent.
The Aged Care (Bond Security) Bill will offer far greater protection to residents in the future. In the unlikely event of an approved aged care service provider becoming bankrupt or insolvent and, therefore, unable to repay residents’ accommodation bonds, the Commonwealth government will pay these amounts. This will ensure that residents are paid in a timely fashion and are not caught up in protracted battles for the return of their money. The resident will then assign their right to recovery to the Commonwealth, allowing the government to act directly against the defaulting provider to recover the money.
The levy bill allows the Commonwealth government, in circumstances where the amount of the accommodation bond is not able to be recovered from the defaulting service provider, to levy other bond-holding aged care service providers in order to recover the funds required. The new prudential regulatory arrangements introduced by the measures bill provide for improved management of bond holdings by approved providers and an increase in the level of information available to residents about the security of their bonds. Providers will initially be required to comply with three prudential standards relating to liquidity, record keeping and disclosure. Compliance with these prudential standards will be monitored by the Department of Health and Ageing.
While protection of the individual resident is the overriding aim of this package of bills, the new prudential regulatory arrangements also recognise the growing impact of aged care services on our economy. An estimated 74 per cent of aged care services, including multipurpose services, held accommodation bonds at some time during 2003-04. The total value of bonds held in 2004-05 is estimated to be around $4.3 billion. This already significant sum of money will only increase, as the baby boomer generation begins to demand aged care services. Improved financial management and performance of this enormous resource is vital to the viability of our aged care industry into the future and, over time, may allow government and industry to explore alternatives to the guarantee scheme offered in the package of the bills we are debating here today.
Indeed, investment in the sector will also be encouraged as a result of the new prudential regulatory arrangements. On 13 December last year, Ms Robyn Baker, a partner in the Melbourne office of Clayton Utz and a former adviser to the government in the area of health, said:
The Federal Government’s new three-pronged legislative approach would not only strengthen the prudential regime under which aged care providers operated but would also give greater certainty to aged care residents as well as investors in the sector.
Ms Baker went on to say:
The proposals are to be welcomed as improving the regulatory environment in a sector that will be increasingly critical to Australia’s economic and social wellbeing.
The sector is really coming of age. However to encourage ongoing investment, prudential reform as the Government has proposed is drastically needed.
The Howard government has allocated $8.5 million over three years to introduce the new prudential regulatory arrangements in the industry. After this time it is expected that the cost of administration will be met by industry.
I was pleased to hear these measures have been developed with extensive input from the residential aged care sector over the past year. Once again, the Howard government has demonstrated that, by working with industry and consulting with residents and other stakeholders, standards can be improved without prohibitive costs or inconvenience. Indeed, I have spoken to aged care providers in my electorate of Hasluck and they are happy with this legislation. They are keen to see this program of reform continue to ensure the sustainability of their industry and allow them to maintain the very high standards that the government holds them to.
This new legislation demonstrates the Howard government’s commitment to provide Australians with a world-class aged care system. By 2040 one-quarter of the population will be over the age of 65, with over one million people over the age of 85. Constant reform and improvement of our aged care system is vital if we are to meet the challenges posed by our ageing population. The Aged Care (Bond Security) Bill 2005 is just one plank of a comprehensive approach by the Howard government to review and reform the aged care sector to ensure that the industry is viable, self-reliant and responsive to consumer needs well into the future. Providing high quality, affordable and accessible services which meet the individual needs and choices of older Australians is a priority for the Howard government. I am pleased to say that the Aged Care (Bond Security) Bill 2005 and associated bills do just that. I commend these bills to the House.
I also rise to speak on the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005. These bills are welcome and long overdue. The industry has been asking for some action in regard to prudential security for quite some time now. Sadly, having had some residents in my area affected by the loss of their bond when a nursing home changed location, I know that certain residents and their families in my neck of the woods will be very happy to see this bill introduced. The Aged Care (Bond Security) Bill 2005 and the Aged Care (Bond Security) Levy Bill 2005 aim to protect accommodation bonds held by residential aged care providers in the case of a provider becoming insolvent.
The Aged Care Amendment (2005 Measures No. 1) Bill 2005 is designed to give residents of flexible care services the same protections as residents in residential aged care services; establish a set of prudential standards; ensure that interest is repaid to the estate of a resident for the period between the death of the resident and the repayment of the bond; change the timeframe for repayment of a bond to the estate of a deceased resident; and reduce the timeframe in which a bond must be refunded in the event of a resident leaving a facility or if the resident dies.
Labor supports these bills, subject to legislative committee inquiry, because it is vital to protect aged care residents who have paid accommodation bonds. Accommodation bonds have become increasingly necessary within the low-care sector to ensure that there is capital to build necessary accommodation. We do not, however, see that there is a need to increase bonds beyond the low-care area. Unfortunately, whilst these bills are welcome and do good things in the prudential area, they do not do anything to reverse 10 years of Howard government incompetence in the area of aged care.
Whilst over that time certain things have been achieved, especially when Madam Deputy Speaker Bishop was in that role, I will look with interest at the new Minister for Ageing, Senator Santo Santoro, who has been appointed to this area. Let us hope that when he is not crusading against Australia’s beloved ABC, getting involved in factional brawls and verbally abusing the whip’s clerk in the Senate, he can find the time to do something in respect of aged care. But sadly, judging from Senator Santoro’s previous political achievements—namely, losing the once-safe seat of Clayfield and making preference deals with One Nation—my expectations are not very high. However, having said that, I am waiting with bated breath to hear back from the senator. I did write to him in his very first week as I have a pressing problem in the aged care area.
One of my respectable providers is having his licences taken over by his leaseholder because in his lease there was a statement that said that, if he did not sign a new lease, then the leaseholder could acquire his licences. The poor owner of the licences is a bit befuddled by this, thinking that it was the Commonwealth department’s decision as to who gets the licences. But now that the department has licensed his landlord and made him an aged care provider, it has all become quite murky. The nursing home that is home to 30 people and the oldest resident in Australia has become quite concerned about the future of the institution and the licences. So I do hope that Senator Santoro can look into this issue. I know the member for Deakin, in whose electorate the facility is located, has also approached Senator Santoro. I hope that we can have this matter resolved, as I am sure we do not want the oldest resident in Australia, the oldest living person in Australia, to suddenly find herself evicted and on the street with no place to live.
It is a shame that my expectations of Senator Santoro are not high, because the Howard government’s neglect of aged care has led to a crisis which is causing unimaginable grief and frustration for families across Australia. There is a shortage of 9,275 aged care beds across the country. Thousands of Australia’s most frail and elderly citizens cannot find a nursing home bed. Certain regions are being particularly hard hit. In southern Melbourne there are 730 bed shortages; in south-east Sydney there are 1,496 bed shortages; on the Sunshine Coast there are 585 bed shortages; in southern Adelaide there are 275 bed shortages; in south-west Perth there are 640 bed shortages and in Canberra there are 386 bed shortages. In contrast, there is a huge oversupply of over 1,000 beds in two aged care planning regions: northern Sydney and metropolitan east in Adelaide. Interestingly, they cover the coalition held seats of Bennelong, Berowra, Bradfield, Mackellar, North Sydney and Warringah. Again, the issue of politics seems to get involved in where aged care facilities go.
The Productivity Commission’s Report on Government Services 2006 reveals the extent of the Howard government’s incompetence and negligence in aged care. According to the report, there are now 85.2 operational residential aged care beds per 1,000 people aged over 70 years. In 1995, when Labor was in power, the ratio was 92 residential aged care beds per 1,000 people aged over 70 years. This is a massive decrease and as a result some of Australia’s most frail and elderly men and women have nowhere to go. They cannot get the care they need. After 10 long years, the Howard government cannot even meet its own benchmark of 88 residential aged care beds per 1,000 people aged over 70 years—which it lowered, in a typically sneaky fashion, from 90 in 2004. That is right—instead of fixing the problem, the Howard government simply lowered its target. What a disgrace!
To make matters worse, waiting times to get into residential aged care have increased significantly. Over 28 per cent of people wait three months or more to get into a place, compared with 15 per cent in 2002. It is not uncommon for my electorate office to get at least one or two, perhaps more, phone calls per week from individuals who have been told by the hospital that mum, nanna or their great aunt can no longer stay: ‘We think she needs to be assessed. Here’s a list of nursing homes; off you go.’ It is a very daunting task for individuals to undertake; they are at the mercy of a system which they do not understand and which is very hard to negotiate around.
In my area of metropolitan Melbourne, where we are fairly landlocked, it is virtually impossible to build new facilities. So, unless you are in a facility, you will not get one that is close to home; you will have to go off quite a distance, so relatives cannot meet—people whom you have been friendly with for years cannot come and visit. So it is a screaming issue within my electorate. That has been compounded, obviously, with the sale of Inala Village by the Salvation Army, which is across the road from my electorate in Deakin but which is home to over 600 residents. Whilst the building has been sold to TriCare, who I believe will be undertaking to do the best they can, there is still a great deal of concern amongst the residents and their families about whether they will have a facility into the future. Because of the Salvation Army’s philosophy, the fees and the bonds were very reasonable, so a lot of families are very concerned about the future of all those families and what will happen. The Salvation Army’s moving out of aged care within Victoria has left a gaping hole, especially for low-income earners.
For current operators within my area who operate small family-run facilities, having to be compliant by 2008 is giving them a great deal of concern, and a lot of families are very concerned about what will happen into the future. You are not about to build an aged care facility within the boundaries of Chisholm; you just could not afford the land costs. So it does mean hiking a fairly large distance.
I want to put on record my congratulations to the Chinese social services within my area, who are in the process of building and almost completing the first ethno-specific Chinese nursing home. Again, that will not be in my electorate; it will be in Donvale, but it will certainly service a high proportion of my Chinese community. It has been a phenomenal effort on their behalf. I thank the government for its support—but, again, there is never enough money and the Chinese community are on the fundraising trail. I went to a fantastic concert on Saturday and enjoyed a lot of Chinese opera to ensure that they will raise the money to get beds to facilitate the opening of this nursing home. So there are a lot of good things happening, but a lot more needs to be done. A lot of this is going back onto the communities to fundraise. I find it slightly disturbing that I am having to go to fundraisers to support aged care facilities.
Community care is worse, with over 36 per cent of assessed people waiting more than three months to receive a community aged care package during 2004-05. Again, this is a really disturbing area. It is still only about seven per cent of people who go into residential aged care. Most of them would like to stay in their own home but, if they cannot get the support and facilities to stay there, their families are under increasing pressure to find aged care facilities for them. Respite care is almost non-existent.
Senior citizens who can find an aged care place cannot feel entirely at ease. Disturbingly, more than 41,000 residents of aged care facilities are at risk of fire. Why? Because the Howard government refused to enforce its own nursing home fire safety standards. According to recently released figures on the government’s own website, over one-quarter of homes have failed to comply—791, or 27 per cent, of aged care facilities across Australia do not meet the home fire safety standard. Once again, the government’s financial mismanagement is to blame.
In June last year, the coalition gave more than $500 million to providers to spend on necessary capital improvements to meet the new fire safety standard, but it has done nothing to ensure that these providers are complying with the safety standards. It is doing nothing to enforce its requirements for nursing home providers to install sprinklers, fire doors and other necessary fire safety equipment. There is also a severe shortage of nurses and care workers. According to the Productivity Commission’s report, Australia’s Health Workforce, released this year:
There have been longstanding concerns about the size, skill mix and availability of aged care workers—particularly in regard to nursing staff. A number of recent reports have reinforced these concerns. For example, the Senate Community Affairs Committee Inquiry into Nursing identified aged care as the area of nursing in greatest crisis, with the acute shortage of nurses having led to increased use of unregulated workers, to the detriment of quality of care.
Unfortunately, the fact that there is a wage gap of $191.83 per week between nurses working in residential aged care and those working in the public sector does not help this problem.
Apart from addressing the wage gap, the government must also invest more in education to increase the number of undergraduate nurse places. Last year 2,716 eligible nurse applicants were turned away—that is around 20 per cent of applicants. Labor believes in investing in aged care because Labor believes that Australia’s senior citizens deserve to be treated with respect. It is often said amongst my Chinese community that a society is judged by how it treats its senior citizens. On this score the Liberal government does not have a great account. Whilst we welcome the bills and the increase to prudential regulation, there is a lot more that can be done within the aged care sector to ensure that we protect those people who have gone to wars and fought off depressions to ensure that they are cared for when they most need it.
I rise to speak on the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005. In doing so I will begin by concurring with the remarks made by the member for Chisholm, the speaker immediately before me, particularly when she made the point about the need for some balanced appropriations towards aged care generally. These bills do what should have been done years ago. The Howard government has had nine years to get aged care right. It has taken nine years for this government to protect the hard-earned money—sometimes hundreds of thousands of dollars—that some elderly Australians pay when they go to live in an aged care facility.
The legislation being debated here today is, in my opinion, good legislation. It does three important things. Firstly, it provides a scheme whereby the Commonwealth government will repay an outstanding accommodation bond balance in cases of aged care provider default—for example, if an aged care provider becomes insolvent and cannot repay the accommodation bond it owes to an aged care recipient. I am aware of cases where, for a short time, there was uncertainty about the ability of an aged care provider to repay an outstanding accommodation bond balance. This caused great stress to the residents of those facilities.
The example of a family who had a relative in Villa Lombardia in Victoria demonstrates how dangerous the current legislation is. After Villa Lombardia went into receivership in 2003, the relative in this facility of whom I am speaking passed away. The receivers told the family that moneys could not be found and that the family was considered an unsecured creditor. Thankfully, this turned out to be incorrect; nevertheless, the family had to wait until the facility was sold to be able to receive the remainder of the bond. I am sure we would all agree that this situation is far from acceptable. As shadow minister for ageing at the time, I said at an aged care industry conference, the ANHECA conference of 28 October 2003:
I’m aware that the aged care industry is working closely with the minister to resolve this issue, and I look forward to an outcome in the near future so that other families won’t have to go through the stress of the families with residents in Villa Lombardia.
It took another three years for this government to fix the problem. I do not find that acceptable—far from it. Labor has been calling on the government for years to address this problem and, thankfully, the government has finally responded.
The second major change in this legislation is that the Commonwealth government will be able to impose a levy on all aged care providers to recover the funds it has spent and has not been able to obtain from defaulting aged care providers. I am very pleased that the aged care industry has found it possible to support this measure. The third element of this legislation is to strengthen existing prudential requirements related to accommodation bonds, especially in relation to liquidity, record-keeping and disclosure. It is about time. It took the Howard government nine years to protect the hard-earned money of elderly aged care residents. I find that to be a disgrace.
One of the important changes is in schedule 4 of the Aged Care Act 1997, ‘Refunding of accommodation bond balances’. The legislation before us now forces aged care providers to refund accommodation bond balances with interest. Currently, if there are legal complications—or simply any undue delay—and an aged care provider retains the accommodation bond after a resident leaves or dies, they only have to repay the bond balance without interest.
I know of a case where a family estate had not received the bond balance after several years, and were not entitled to receive any interest when they eventually received the balance. This we would all agree is extremely unfair, when you consider that residents can be charged interest on the bond they owe to the facility from the day the resident enters a service until the day they pay that bond. That is the current provision in the act. I am pleased that, where people are leaving or passing away and no longer need accommodation at the facility, we can now have this particular issue addressed at the end of the process. It is a pity that it took so long, but I am pleased to see that it has finally been addressed.
I do not truly believe that this government fully understands how difficult it is for people to save to buy their own homes and then have this uncertainty that many of them feel, if they are in the position of having to pay a bond when they enter into an aged care facility. There are still many areas in aged care that need fixing but, after nine years, I do not think I will be holding my breath waiting to see them fixed.
One major problem is aged care shortages. I particularly want to refer to my electorate of Canberra. A Productivity Commission report into government services released last week found that, compared to the rest of Australia, the ACT has the lowest number of residential aged care places, the longest waiting list for aged care places, and the highest level of complaints for aged care services. The current aged care planning ratio is 88 residential aged care places for every 1,000 people aged 70 years and over. That is the government’s own target. The Productivity Commission report showed that in the ACT there are 72 beds per thousand people, rather than 88. I think that is a bit of a disgrace, particularly when we know the demographics in Canberra; they are pretty undeniable. We do have an increasing ageing population in this town.
The Productivity Commission report also showed that it took up to one month for 24 per cent of Canberrans seeking an aged care place to enter into an aged care facility, compared with 49 per cent of people in New South Wales. Furthermore, it took three months for 51 per cent of such Canberrans to enter a facility, compared with 75 per cent of people in New South Wales. Canberrans have to wait longer to get into an aged care facility, and that is not good enough. Elderly and frail people who need to go into an aged care facility should have access when they need it. The government has failed Canberrans, I believe, on this issue.
Even if the government was meeting its own target, I am not sure that all of the people who need an aged care bed would have access. Labor has been arguing for years that the ratio should have been subject to regular review over the past seven years. The Howard government did change the ratio, by increasing the number of community care places—and I am very pleased about that. But what the government does not tell people, and does not make very clear in its publications, is that it actually reduced the ratio of aged care beds. The Howard government has made it harder for people to get into an aged care facility.
I want to make a couple of comments about an aged care facility versus community care at home. At-home care is a very good thing and something I am very supportive of. However, families and individuals must be able to make that choice—between at-home care and facility care—confidently and considering all of their circumstances. I am concerned to see that the ratio for aged care beds has come down, even though—granted—we are seeing an increase in community care places. I want to know why that is the case.
There will be some people out there, I am sure, who will make the right decision for all the right reasons, but there will be circumstances—and we all know them—where community at-home care may not work for that particular family or individual. And we need to make sure, in any of the changes that occur in relation to the allocation of these places, that we really think very carefully about the impact those numbers and those changes might have on people’s ability to make those choices.
I know that there are many families out there who are really struggling, even though they are doing what they believe is the right thing in their hearts in caring for and assisting in the care of a relative at home. But I want to make sure that the decision that they are making is being made on the basis of that confidence I spoke of and on the basis that they do know that they have choices.
The Howard government has not reviewed the ratio adequately since it came into power. I do not understand how the government can continue to allocate beds on an old ratio, considering the changing demographics in our society. Our population is ageing and people are living longer and are healthier until much later on in life. The ratio for the target population—that is, people aged 70 years and over—should be reviewed, as should the balance between high- and low-care places and Community Aged Care Packages—that is, at-home care. That ratio should also take into consideration the growing need for dementia-specific and ethnic-specific care services. People in the community are crying out about the shortage of both community and residential places. Labor figures show that, based on the government’s ratio, there is a shortage of 386 beds in Canberra and 9,275 residential places in Australia. We can safely assume that is an underestimate of the shortage in terms of real needs.
Let us not forget the impact of the increasing prevalence of dementia in our society, sadly, which will have a major impact on aged care services in the future. It will also, as I have just said, have a major impact on the ability of people to care for their loved ones at home. It is not an easy thing to do. In many cases I do not know how people manage to do it, but they do. With the increasing prevalence of dementia come all of the stresses and the pressures we are talking about when we talk about choice, confidence in choice and access.
Another important issue I want to talk about today is the shortage of aged care nurses. Unfortunately, since coming into power, I do not believe this government has done anything significant except increase the burden for nurses in the aged care sector. Nearly $900 million of taxpayers’ money, which was given to aged care providers to pay nurses and care workers decent wages, is being spent, but we do not know exactly how, because the government refuses to mandate that that money is actually passed on to the nurses. In the 2002-03 budget, according to the budget statement, the Howard government increased residential aged care subsidies:
... by $211 million over four years to assist employers of aged care workers provide for increases in wages and improved workforce conditions.
In 2002 the wages gap between nurses working in residential aged care and those working in the public sector was $84.48 per week nationally. In the 2004-05 budget, Minister Julie Bishop announced through the budget statement:
An extra $877.8 million over four years through a Conditional Adjustment Payment to improve the financial position of aged care providers and allow them to pay more competitive wages to staff.
The wages gap in 2005 is now $191.83 per week across Australia. It has gone from $84.48 in 2002 to $191.83 in 2005. Minister Bishop is no longer the minister—she has now moved on to another area. It is time for the new minister to develop a mechanism so that this funding is actually passed on in wages so we can recruit and retain nurses in an area that is struggling to keep them. This is in the interest of not only nurses and care workers but also providers, so that they can attract and retain quality staff.
The recently released unanimous Senate Community Affairs References Committee report Quality and equity in aged care noted that delivery of quality care was under threat from the retreat of qualified nurses, both registered and enrolled nurses, from the aged care sector. The report also noted that there had been 34 reviews of nursing in seven years. You wonder who reads these reviews in government. If this government were really serious about the provision of quality care for older Australians they would have made a commitment to seriously increasing the number of undergraduate nursing places and closing that wages gap between nurses working in aged care and those working in the public sector. We have a serious aged care nursing shortage now and the Howard government needs to take immediate action to prevent this crisis getting even worse.
I would like to refer to a young constituent of mine who came into my office just eight or nine days ago. She is a mother of five who is taking herself off to full-time university to study nursing—something I was particularly pleased to hear. She told me that she decided she would get some extra work over the Christmas holiday break to help the family budget—her husband is sick at the moment and she has five children. She got a job as a personal carer in an aged care facility here in Canberra—something that we would all applaud. It is interesting: she is training to be a nurse, and we need those desperately; she tried to do work as a personal carer in an aged care facility over the holiday period, something we need desperately, but she had to stop after two or three weeks because it was financially so much to her detriment to undertake that work. The wage was so low and the impact on the family finances so great, thanks to the way the government has created these structures, that it was actually costing her money to go out and do that work. The whole thing is just a puzzle to me, and it is something that needs some serious attention.
On a more positive note, there are some really good things happening in aged care in the ACT. I want to mention one of them in particular. Goodwin Aged Care Services in Farrer in my electorate has commenced construction of 19 new independent living units. These units are an example, considering our rapidly ageing population, of what we need to be doing. The Goodwin aged care independent living units have been designed to comply with or exceed the adaptable housing code. This means that residents will be able to remain in those homes much longer and receive more care as they age and/or become frail. It will delay or remove the need for many of those older people to enter into those aged care facilities, given the facility that has been constructed for them now.
The units have more space for residents, who may need wheelchairs, and for their carers. There will be a call system with around-the-clock monitoring in case of emergency. The bathrooms are designed for easy adaptation as the care needs increase, and the bedrooms allow for a mechanical lifter. I commend Goodwin Aged Care Services for this initiative. The Goodwin people have a longstanding excellent reputation in this town. I have been interested in adaptable housing for several years now—it is particularly interesting when we are talking about housing accommodation for older Australians. I believe it is the only way that we can ensure that we look after our ageing population into the future. I have a view that wherever possible the adaptable housing code should apply to any aged care facility or independent aged housing for older folk. In fact, we should almost be mandating it, if we were strong enough to take it that far.
We had an exhibition house built in a housing development on the north side of Canberra. It was completely and absolutely adaptable. It was built in a normal housing display village, just to show people that you can construct houses with easily removable walls, lift-up or drop-down cupboard levels and all sorts of things. I think the more we move towards this model of specialised housing for older people, should it suit them, the more we will help people and alleviate the need for people to move on.
In conclusion, I support this legislation being debated here today. I wish it had been here a little while ago, but we have it today and I am pleased to be able to support it. I know that older Australians out there who are in the position of requiring that security in a prudential fashion for their bond payments will feel all the better knowing that these positions have now been adopted by the government.
It gives me great pleasure to participate in this debate here in the chamber today on the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005, because aged care is an issue of serious concern to my constituents. The overall objective of this legislation is one that Labor supports, and Labor will be supporting the passage of these bills through the House.
As I said, the overall objective of the legislation is one that we support—that is, to provide greater legislative security for bonds that receivers of aged care services are required to provide in order to access care. Bonds constitute the initial payment that residents often pay approved providers in order to access a service and are usually refundable when they leave the service. Because bonds often constitute a significant proportion of a resident’s life savings, it is extremely important that adequate and comprehensive protection arrangements are put in place to secure the bond payment. I believe there is bipartisan support from both sides of the House for these measures; and the sooner these provisions are implemented, the better for residents and their families.
Australia does face the ageing of its population. That has huge implications for policy in a number of important areas, particularly aged care, health and housing. For example, by 2040, 25 per cent of the population will be over the age of 65. In the Geelong area—and that is the area encompassed by my electorate—we have certain pressures that are contributing to the growth of the aged care industry in our region. We have the internal population demographics; we have movements from the Western District to Geelong and the coast, and we have the sea change effect where people are moving from major metropolitan areas to the coastal regions in the Geelong area. That simply means that the ageing of the population in the Geelong region is going to be a very important factor that will have to be factored into the policies that are developed at the local council level and at state and federal government level to accommodate these changing demographics in this particular part of Australia.
The City of Greater Geelong has a statistic that persons over 65 years of age constitute 15.2 per cent of the population. When compared with the statistics for Victoria, we see that that is a higher figure, as the statistic for Victoria for people over the age of 65 is 13.3 per cent of the population. So the situation is already there in a structural sense, and the demographics are moving in such a way that there will be a significant demand for aged care services in the future.
This has been recognised in the economic development documents that have been produced in Geelong over the time that I have been the member for Corio. The Kelty taskforce report, way back in the early 1990s, indicated this particular trend and the importance for Geelong and its region to start planning now to accommodate an increase in the number of aged care residents and, in effect, to make it an important pillar of Geelong’s economic development into the future.
As I understand it, well over 70 per cent of aged care providers levy bonds on residents. This situation is reflected in the enormous growth of bond contributions in recent years. For example, in 1996 we had around half a billion dollars going into bonds but by 2004-05 that had risen to some $4.3 billion—quite a staggering growth over that period. Correspondingly, there has been a growth in the average bond figure that has been paid by residents. In 1996-97, that stood at some $26,000, and by 2004-05 that had risen to $127,000. That particular bond payment forms a very important part of a person’s long-term savings, and it is appropriate that governments and oppositions support measures that are designed specifically to improve the security of the bond moneys paid by residents.
There is a very simple reason why this legislation is necessary. Under existing arrangements, there is not 100 per cent security for people who pay over these particular bonds. As the Minister for Ageing stated in her second reading speech:
... if a provider becomes bankrupt or insolvent, the resident is not guaranteed the return of their bond balance, because the resident ranks as an unsecured creditor under corporations and bankruptcy law.
Stripped back, that simply means that there is not 100 per cent security for people who put up bond money in the case of a situation where a provider goes bankrupt or insolvent. So it is important that we close off this situation so that all Australians can have 100 per cent security in this matter. I know that in my electorate there are providers who would welcome this piece of legislation, and, for aged care residents and their families across the board in the community, this adds a new dimension to the security that is provided for their bonds. On their behalf, I reflect here in this chamber their support for this piece of legislation. The objectives of the legislation are laid out very clearly in the minister’s second reading speech. The minister said:
... the government’s key objectives are: to improve the efficiency and sustainability of the aged care sector and to strengthen the management of bond moneys to reduce the likelihood of providers becoming insolvent or bankrupt and being unable to repay bond balances; to strike a balance between the added security for residents that is provided by this strengthening and the financial impact of the new arrangements on the sector’s viability and its standing with the capital markets, including its ability to construct and maintain aged care homes and pressures that might flow onto subsidies, user charges and the quality and continuity of care; and last ... to ensure that all residents who pay bonds receive their full entitlement to the balance of the bonds that they have paid in the event that the provider becomes insolvent or bankrupt.
This piece of legislation will pay 100 per cent of the bond balance owed to residents with interest in the event that a provider becomes insolvent or bankrupt and is unable to meet its financial obligations to residents. I do not think there would be any member on either side of the House who would have any objection to a piece of legislation that had those objectives in it.
The aged care sector is a growing sector in the Australian economy, and many people might be interested to know that it is currently the ninth largest employer in Australia and a significant employer in my electorate of Corio in the Geelong region. I have mentioned before that Australia’s population is ageing and in another, say, 45 years people aged 65 and over will represent one-quarter of our population. That changing demographic will, as I have said before, exert quite significant pressures on the national economy and in various other policy areas such as health and housing.
An interesting statistic has been provided by Aged and Community Services Australia. Their budget submission states that approximately one-half of older women and over one-third of older men will use residential aged care at some time during their life and many more will access community care services. I guess all of us at some stage are going to have to confront this situation and decide what sort of care we are going to access in our latter years. I have a particular philosophy—I have had it for a long time—that you run with the ball and die with your boots on! It may well be that I am one of the fortunate ones who will drop over playing ‘super Rules’ football or some other activity—but maybe not; maybe I will be like the honourable member for Paterson, and we may even occupy the same aged care home if I decide to go interstate and live out my days. But, be that as it may, whether or not we access these services, there are plenty of people now who access them and who need the security—and certainly in the future.
Aged and Community Services Australia have listed the key areas for investment that the current government must look at in the budget they are going to present in May. We know that the Treasurer has been raiding the pockets of working people for well nigh on a decade. That is why we have a surplus that is in the billions, and it is incumbent on the government to start investing in the sorts of areas that Aged and Community Services Australia have identified in their submission. Those areas for investment are: service availability, particularly community care and services for clients with high-care needs; meeting the increasing costs of high-quality service delivery; a sustainable capital raising system; the planning regime, which is a very important one that I will speak a little more about; support for rural and remote service delivery; recruitment and retention of an appropriately skilled workforce; and enhancing the efficiency and effectiveness of government expenditure on aged and community care through streamlined administration.
I do not think there would be a member on either side of the House who would have any problem with that set of objectives and those areas for investment that have been articulated by Aged and Community Services Australia in their prebudget submission. Indeed, they do so on behalf of the many community aged care providers and not-for-profit organisations in my electorate, such as St Laurence services and the multicultural aged care hostel which has been built under the auspices of the Geelong Ethnic Communities Council, just to name two. It is very important that the government take on board these objectives, because they do reflect off the floor the concerns of the general community about future investment and the need for it in this very important sector.
In their prebudget submission, Aged and Community Services Australia mention the planning regime, and this is where local government is extremely important to the planning of aged care services at the local government level. My plea goes out to the City of Greater Geelong to make this area a very important priority in their planning schemes. We must have land allocated to the purpose. I have said on other occasions that there are parcels of land in Geelong that are now in what would be considered to be inappropriate inner city use, and they could be turned over to the aged care sector to make state-of-the-art precincts where residents can access appropriate aged care services.
I have spoken in this House before on this matter, as far back as 2 and 3 December 2002, when I raised particular concerns about a nursing home development not far from where I live. This was the Glenburn nursing home proposal. Two quite extraordinary things happened. The Commonwealth health department allocated an extra 30 beds to this facility. At the same time, the City of Greater Geelong gave planning approval for the expansion of the facility. The important thing to recognise about the Glenburn instance was that this was an inappropriate planning development for the location of the particular nursing home. I had this to say at the time:
Given that the current facility is located in a residential area, subject to heritage overlay provisions and near the base of a railway overpass on an extremely busy thoroughfare, handling thousands of vehicular movements per day, how was council officer approval given for an expanded nursing home involving the demolition of residential properties and the construction of a two-storey commercial operation in this residential heritage area?
I went on to say that there were two central questions surrounding the Commonwealth health department approval and the local government planning approval. I said:
These are two central questions which spawn a myriad of ancillary questions relating to council approval processes, planning considerations, VCAT deliberations, care and safety of the aged at Glenburn, residents’ rights and appropriate nursing home developments in the whole Geelong region.
The interesting thing about this development was that the doctors who serviced the facility had extreme concerns about their duty of care and their liabilities under medical indemnity insurance. And the Country Fire Authority had even stated that the facility would pose a huge risk in the case of fire.
I note the presence of the honourable member for Corangamite in the chamber today. At that time, he joined me in a bipartisan approach to the minister, questioning the allocation of these 30 beds, on behalf of residents, and trying to get this matter addressed and the situation changed. The honourable member for Corangamite, in true bipartisan fashion, facilitated my access to the minister on behalf of my constituents. We put the case. We did not have any success in that, but the questions that we raised were valid ones. I understand that the proprietor has now on-sold the beds and that the future of the facility at this location is in doubt.
This once again highlights the importance of local government planning in the provision of aged care in this country, and particularly in the Geelong region. As I said, I note the presence of the honourable member for Corangamite in the House today. In Geelong today there is a scandal about local government and the planning processes. There are real questions being asked about this matter, and no doubt they will be asked on the floor of this parliament in the future.
Having said that, let me say that the matter of the Glenburn nursing home may well be a matter—and we will examine this—that could be referred to the municipal investigator, who is looking at these matters at the local level in the Corio electorate. The need for local government to get the planning right and the need for greater coordination between state and federal governments in the provision of aged care services are a very important issue for Geelong residents. With the march of time—and the honourable member for Corangamite will no doubt echo these sentiments—all of us might be looking down the barrel of spending a stint in these nursing homes. Some of us will reach that destination earlier than others, with all due respect to the honourable members who are in the House at this time.
But be that as it may. The sorts of protections that are given to residents all along the line and the planning that takes place are very important. In this bill we have enshrined a set of measures that will no doubt give greater security to my constituents in the electorate of Corio to ensure that they get good, high-quality aged care services provided in the best locations where they can access other services. I will be supporting the legislation.
The Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005 will strengthen prudential requirements and further protect the contribution of aged care residents through their accommodation bonds.
The bond security bill sets up a scheme through which the government will be able to repay outstanding accommodation bond balances to an aged care consumer or their estate in situations where an aged care provider defaults on such repayment as is required under the aged care legislation. Such bonds, it will be remembered, are an investment vehicle for aged care providers to enable the building up of sufficient funds to provide the urgently needed capital spending requirements of the sector that were identified more than a decade ago in the Gregory inquiry and were introduced by the government in its aged care reforms of 1997 and later.
Under the provisions of this bill, the Commonwealth carries the risk for attempting to recover the outstanding balance of the bond from the defaulting aged care provider. The bill also contains administrative steps that must be taken so that a levy on all aged care providers can be imposed under the levy bill. The levy bill itself will enable the Commonwealth to impose a levy on aged care providers so as to recover amounts it cannot obtain from those defaulters. The amendment bill strengthens existing prudential requirements related to accommodation bonds, especially in relation to liquidity, record keeping and disclosure.
There is no doubt that the aged care sector is far better resourced than it was in 1996 when I entered this place. Many years of neglect had seen the standard of aged care facilities slip alarmingly, with poor care facilities and many older people located in country hospitals, for example, who by any standard were nursing home patients, not hospital patients. Thankfully, that situation is gradually, though not entirely, being turned around.
Figures from 1995-96 and 2005-06 show that the contribution from the Commonwealth has increased from $3 billion to $7.3 billion. There is no doubt that the reforms and changes to the contribution regime from aged care residents in low-, medium- and high-care facilities has helped enormously to rectify the formerly sad state of aged care accommodation in this country.
However, there is a long way to go. While the current structure and funding model with its mix of public and user-pays has helped lift aged care standards, I fear and know there will be a logjam of demand for high-care places in not too many years. The success of community care packages enabling older people to stay at home longer will create future demand not for hostel or low-care but for medium- and in particular high-care places—and I know the bricks and mortar are just not there. While the increase in the number of community care packages certainly met a need in recent years to accommodate those 90 per cent or thereabouts of older people who want to stay at home, I believe we run a risk of supporting this most economic of aged care options while ignoring the increasing build-up of need for high care, the most expensive option.
Currently the formula for allocation of aged care places is 108 services per 1,000 people over the age of 70. There are many arguments about how fair this formula is and how applicable it is across the board—compare a high retirement area with a high mortgage belt area and a younger demographic outer metropolitan area, for example. However, that is the formula that we have to deal with, with just 40 of those places available for high-care residents. I am told that figure has not changed since 1984. I ask the minister whether the demand for high-care places vis-a-vis low-care and community packages has not changed, or why it has not changed, over that time. Indeed, is that ratio still the same? I doubt it very much. Forty-eight of those 108 places are available for low-care and hostel places, while 20 places are allocated to community care packages.
My point is that we need to urgently review that figure of 40-odd high-care places, with many people cared for by community packages reaching a point where they really need high care. They are in their place with Meals on Wheels, a visit from a nurse or a volunteer carer, perhaps, or a weekly home and community care package visit. I believe—and I have thought this for a long time—that these packages, while providing the quantity of services, really lack the increasing level of quality required. I would like to see those community care packages in the short term be at least a ‘bed and breakfast’ option where a community care nurse gets the person mobile or comfortable in the morning and ensures that they are looked after as they go to bed at night. That is not an ideal circumstance, as we all know of people in their own homes who are alone for those long hours of a night. In many and an increasing number of places and cases, I think that they are fast reaching the age where they will need not low-care but high-care nursing home accommodation.
Where will those high-care places be if we keep the formula carve-up as it has been for the past 22 years? Surely we know there has been an increase in the proportion of aged in our population, and it is going to reach significant proportions—I cannot quite remember the figure, but in the order of 25 per cent of people over the age of 65—by the year 2025.
Despite the fact that we are going to have a shortage of the resources to build these places, we do not require an accommodation bond for high-care places. That accommodation question has been a political rather than a rational policy issue, in my book. That political decision—and I see Deputy Speaker Barresi nodding his head—will lead us to a funding crisis. We do not have the resources to build the high-care places unless we look at the bond option. No-one, I would suggest, is looking at taxpayers providing all this capital in the years ahead, given the looming figures for the ageing proportion of our population. We cannot expect the young income earners of the next 20 or 25 years to provide all of the care for the aged by way of an extension of the aged care sector as part of our hospital process, given the enormity of the problem we are facing in upgrading our hospital care and, as I will mention in a moment, our need to care better for our disabled.
So let us not go down the emotive road we travelled in 1997 when the family home was said to be threatened. The family home perhaps should be the equity against which a bond is raised in many situations—except the most obvious hardship circumstances—with draw down limits on bonds and the interest receipts used to build new care places. I cannot see any other funding option, given the call on our tax resources in the years ahead and notwithstanding the fact that at the moment we happen to have a pretty attractive sort of a surplus. Let us look at our hospital and education options as well. If we do not go there in providing high-care aged places, we will be in real strife.
There are other aged care issues in my electorate that are pertinent to this debate. Indeed, in Oberon, another aged care model—the multipurpose service model—is largely funded by the state health department, but the aged care component is the responsibility of the Commonwealth health department. I hope the health minister, who has received a letter on the Oberon situation from me on two occasions, is able to find a staff member to return the calls in the next day or two so I can report back to that Oberon community about their statistics, which show that the population projections for that area have rapidly overtaken the projections from the official figures.
Although a new deal has been signed up to on this MPS for the next three years, these new figures show that those provisions will be far short of the requirement for an area that, like many around Australia, is enjoying in many economic respects the benefit of the tree change phenomenon, with many people retiring to just west of the mountains as a lifestyle choice. But I think we are going to find that the realities are overtaking the official census figures. It will be interesting to see how this year’s census figures stack up in many parts of this state, particularly in my electorate, compared with the last one. I suspect there is a big sea change under way in areas that were regarded as sleepy rural communities in years past.
I think we have to revisit the issue of accommodation bonds for high-care nursing homes if we are to provide the capital required to meet the surge in bricks and mortar infrastructure that we are going to need over the next two decades. I think the superannuation industry could not find a more secure guaranteed investment than aged care, and surely the super funds of today providing the wherewithal for the funding of aged care tomorrow is a more than satisfying scenario.
Getting back to these bills, the Hogan report in 2004 noted the large amounts of money being held in accommodation bonds and pointed out that there was little protection available. Rather than establishing a guaranteed fund via a levy on industry, the Commonwealth will act as guarantor for the bond balances. However, it will then levy the industry on a needs basis. The industry supports this ‘good guys’ arrangement whereby good providers bail out the defaulters. The industry’s argument is that such a system does not lock up potentially large amounts of bond money that could otherwise be used by the providers for capital expenditure. I must say that I was staggered to note from the Bills Digest that the average accommodation bond being levied on new residents in 2004-05 was $127,618. I had not familiarised myself with these bond figures for the last year or so, and on checking that figure with the library I was told that there has been a quantum leap almost from $90,000 or thereabouts to $120,000 in the space of a couple of years.
While market forces can dictate what bonds are charged in many areas, while people are happy to pay for five-star accommodation and the extra provision of services and so on and while bonds can only be levied on residents who have assets in excess of $30,500, it seems to me that the enormity of the cost of aged care infrastructure is dramatically illustrated by this average bond figure. Perhaps it is the lack of a cap. It shows the funding challenge we face in providing aged care accommodation into the future.
It is not as if all this money is available to the aged care sector. They can only draw down a legislated amount. They can derive the benefits of the interest at the bond rate of about eight per cent, but if the fund of bond money increases then obviously the interest returned increases, and I wonder whether we are creating a huge bowl of public assets in these bonds which is serving no greater purpose than delivering an interest component and tying up an enormous amount of money. Given that the cost of a high-care bed must be heading towards $100,000 per annum now—it was about $60,000 10 years ago—it suggests to me that it is an enormous cost that we are looking at here, and we are not going to be able to solve this unless we get very creative and non-political about the way that we access the resources needed.
Catholic Health Australia and the industry have supported this process and I do commend the government for this bill and for its contribution to aged care over the past 10 years. There is no doubt we faced a crisis by the middle of the 1990s, and successive coalition aged care ministers have each made a strong contribution to the sector, but I suggest we will face another crisis in the near future unless some tough economic and political decisions are made. Dementia care is one issue in particular that needs addressing, as is the viability of low- and intermediate-care accommodation providers in smaller rural communities and those multipurpose services who are catering for the aged care as well as the health needs of more and more smaller communities. I do not know that we have quite got the funding figure right there yet.
Another area that is tacked on to this whole issue is that of the severely disabled younger and middle-aged members of our community. Even in the rare circumstance of nursing home care being available, an aged care facility is not suitable for the young or the middle-aged disabled. This, along with mental health care, is also an area of almost hidden care, particularly in country areas. We need far more care places, and respite care in particular, for those many thousands of carers who devote their lives and their own health in saving this country many billions by caring for disabled people in their own homes. We owe these people the very best of care facilities for the disabled, particularly for those who are getting 24/7 care from their loved ones, much to cost of the health of many of those carers. We owe these people as much attention as we have given aged care in the last decade and we owe much more attention to that build-up of high-care aged in our community whose families are going to be knocking on the door for places that just will not be there if the current funding formula continues to apply.
Before getting into the substance of the Aged Care (Bond Security) Bill 2005 and cognate bills, there are a couple of issues I would like to mention. Firstly, I would like to congratulate the former Minister for Aged Care on her conduct in this ministry and the minister prior to her, Kevin Andrews. In his contribution the member for Calare made a few comments that I agree with. Given the circumstances of the mid-nineties, the circumstances that surround aged people today and the demographics of aged care, the government has made substantial changes and substantial gains in an effort to come to grips with current aged care problems and the problems we will be facing in coming years. That is not to say that everything has been fixed and there are no challenges, but I do think that the government does deserve some congratulations on the way it has handled this portfolio in particular.
I still have some concerns that from time to time the amount of paperwork involved in the administration of aged care facilities consumes quite a lot of the finances that are channelled into those facilities. The broader community may well have to make some decisions further down the track. I am told that the administrative costs are up to 30 per cent of the operating costs, and some expectations of the broader community should be adjusted to take account of those costs. There is no doubt in my mind that, due to the burden of administration, some of our aged people do not have accommodation because the money is going into administration rather than accommodation.
I also recognise the government’s efforts in the way the multipurpose service model has been developed—and I am sure government members here today would be fully aware of this. I pay credit to a predecessor of mine, Ian Sinclair, who, after retiring from parliament, became involved in a committee that looked at the needs of regional communities, particularly smaller communities, in relation to health and aged care and the models that could be developed. Some years back there was great concern and fear about the multipurpose service model—or MPS, as it is called, though I think they should rename it. I am pleased to say that, in my electorate at least and I think in most country electorates, that fear has been alleviated.
The model is an outstanding success that does have some benefits for the costs of running an operation and also delivers to smaller communities an aged care facility which is run together with a health care facility. During the mid-nineties there was a risk that the smaller hospitals would be closed and that aged people would not be able to live out their twilight years in the community whence they came. I am pleased to say that in New England there are a number of multipurpose services that have been approved and constructed or are under construction at the moment. They include Emmaville, Guyra, Walcha, Bingara, Barraba, Bundarra and Tingha. They have been embraced by the community, and by the health service too, which is state run. For those in the gallery, the MPS model is one where state and federal governments work together, which is quite strange, but it does happen from time to time. The state government provides the health service part of the structure and the federal government provides the aged care beds. As I said, it is working very well in those smaller communities, which were—in their own minds, at least, and in the minds of others—at risk of losing their facilities.
I am reminded of a lady from a little town called Emmaville in the north of my electorate. Emmaville is one of those smaller communities that was campaigning not to lose its hospital. An MPS was established with aged care beds as well as hospital beds as most people would think of them. I visited that town for a public meeting and this lady said to me, ‘We need more beds. You’re the federal member; go and get them.’ I guess all members of parliament have heard that from time to time. Of course you have to explain that there is a formula and that, within our electorate, we are not doing too badly under the formula et cetera. But that was not sufficient: ‘We need more beds.’ I mentioned that it had not been open for long. She said, ‘Well, it’s full.’ Then she made a comment that really hit home to me—one of those comments that make it worth while being a member of parliament. She said, ‘We need more beds because people who left Emmaville to go to the coast or the city want to come back because there is now an aged care facility for them to be in.’
That said to me that, in terms of infrastructure, aged care—and also telecommunications, but I will not mix the debates—is absolutely critical if we are to turn around the loss of population from regional areas. There are cost-effective models now like the MPS that send signals to people before they leave, whereas in my story those people have responded to that signal and want to go back and live out their later years in the community where they made a contribution. I think it is a significant message that should not be missed. There has been a failing in the past, but I think that model is having a significant impact on the decisions people make about their futures. If you know that there is nowhere you can be looked after when you are older, you will leave when you are younger. Obviously we then lose all those advantages of country communities such as the extended family and so on. So I pay credit to the government, which perhaps is a shock to some of the government members, for the work it has put in.
Another issue I would like to raise—which the Prime Minister has been involved in, and on which the former minister had a keen ear—is young people in nursing homes. There are something like 6,000 young people in nursing homes at the moment. For a whole range of reasons—including the facilities they need, the various treatments they may need access to and the general atmosphere of being a young person in an old-person’s home—they are inappropriately housed. I know that the Prime Minister has elevated that issue to COAG, and I am hopeful that the states and the Commonwealth will debate it at the upcoming COAG conference.
In my electorate of New England, the community came together about 12 months ago under the leadership of Challenge Armidale. We have been working on a submission which presents a regional model. The former minister has that submission and I am sure the new minister has it as well. This submission looks at a model which not only is appropriate for young people in nursing homes but which fits into regional communities, and we believe the costing is reasonable enough to be given due consideration by the new minister, the Treasurer and the government. I ask the parliamentary secretary to take that model on board. You may well have seen it before, but have a good look at it, because a lot of work has gone into it by a whole range of health and aged care professionals.
I visited your electorate and had a look at them.
That is right; you did too. But that was prior to this model being developed, and we believe there is some significant detail in the submission which should be considered, particularly if this issue is to go before the COAG conference.
There is one other issue I would like to address, which is from time to time described to me as ‘double dipping’ by aged care homes. I do not mean that in a derogatory sense. Aged care homes are expensive operations to run. I am sure that from time to time some members of parliament have had aged parents go through the aged care assessment process—I believe that assessment is open for 12 months—be admitted to an aged care facility as a low-care patient and, within weeks of admittance, be reassessed as a high-care patient. Being admitted as a low-care patient allows the accommodation bond to be formulated and charged, and reassessment as a high-care patient allows a degree of double dipping. That area needs to be revisited in terms of the way that is happening.
I ask the parliamentary secretary to look at the way the aged care assessment teams are doing their assessments and the occasions on which the change in the assessment from low care to high care takes place very quickly and allows the homes to access funding additional to the accommodation bond. It seems to be a problem that is developing. I am hearing anecdotal evidence—I am searching for proof at the moment—that there may be instances where the community care people are removing their services from people who have essentially been assessed as low-care patients so that they are pushed towards admittance to aged care facilities and then, once admitted, reassessed as high-care patients, which allows this double dipping to occur. I ask the parliamentary secretary to take that on board.
I will be supporting the legislation. I ask that at the COAG conference these young people who are inappropriately housed in nursing homes be given due consideration and that we do not develop a model in which country people miss out because the scale of the operation makes it uneconomic. In terms of the MPS process that I mentioned earlier, the government has been a partner with the state governments to construct a model which is not only cost-effective but which delivers services to country people. I ask the Prime Minister to follow through on his commitment on young people in nursing homes and bite the bullet on this issue. The real measure of a society is how we treat our elderly and those who are afflicted by disabilities through no fault of their own. Given the nation’s economic circumstances, this is the time when we should bite the bullet for those young people who need extra care.
I intend to address the issues that this legislation covers, but I also want to comment on some of the problems which exist in aged care—problems which this government has constantly failed to address. It is an area where the consumers, the providers and everybody connected with the industry and the services is very upset and concerned about the government’s performance. Essentially, the purpose of the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005 is to enhance the protection available to residents of aged care facilities who have paid accommodation bonds which are paid on entry by non-concessional residents of low-care facilities, by residents of high-care facilities with ‘extra service’ status and by some residents in multipurpose services. I would like to join with the member for New England in emphasising just how effective multipurpose centres are. If there is a model that can be taken on board by this government, it is to go further down the track of multipurpose centres and to work with the states to see if we can deliver better services to people in rural communities. Currently, I am under the impression that the government is more concerned about utilising state governments to—
Order! It being 2.30 pm, the debate is interrupted in accordance with the resolution agreed to yesterday. The debate may be resumed at a later hour and the member will have leave to continue speaking when the debate is resumed.
My question is to the Deputy Prime Minister and Minister for Trade. I refer to his statement in this place yesterday that ‘The contracts were not with Saddam Hussein; the contracts were with the United Nations oil for food program.’ Why did the Deputy Prime Minister make this claim when these two contracts, dated 16 July 2002 and 14 December 2002, clearly list the Director-General of the Grain Board of Iraq and AWB Ltd as the contracting parties, and not the UN as he claimed?
I made that comment yesterday on the basis that the contracts were clearly negotiated with the Iraq program people at the United Nations.
My question is to the Prime Minister. Would the Prime Minister advise the House of the key issues to be discussed this Friday at the Council of Australian Governments meeting? In particular, will the Prime Minister advise whether progress will be made in finding practical solutions in areas such as health and training, which will improve the lives of Australians?
This Friday’s meeting between the premiers and chief ministers and me will be a special opportunity for the governments of this country to make a number of important practical decisions that will improve the lives of Australians, not least Australians who live in Far North Queensland.
The two most important issues to be discussed on Friday are areas of improved cooperation and investment in health, and also measures that are designed to break down absurd and outdated barriers in relation to skills, training and qualifications. I would call our health care and skills development the meat and potatoes proposals of this week’s COAG meeting.
The health reform package will have a number of very important elements in it, including better management of chronic disease, more support for cancer patients, better care for older patients in hospitals, measures to reduce the number of younger people with disabilities in nursing homes and better tailoring of rural health and community care programs to local needs.
The Commonwealth will go to this meeting in absolute good faith, and I am optimistic that the states will reciprocate. In many of the health areas the Commonwealth is prepared to make a significant financial contribution, even in one area—that is, caring for younger people with disabilities—where the overwhelming responsibility, under agreements negotiated during the lifetime of the former federal government, lies with the states.
As will be revealed on Friday, the Commonwealth is prepared to invest significant additional funds in all of these areas. We are prepared to address issues relating to nursing home type patients remaining in public hospitals, which has been a matter of continued criticism and concern from the states, justified or not. We will expect the states in return to match their responsibilities in a number of areas. The approach that I will be taking to Friday’s meeting is simply this: it is not a question of apportioning blame or fault; it is a question of the two levels of government working together. That is what I hope will happen.
Friday will not be a test, or a contest of wallets. It will be a test of goodwill on the part of the governments of Australia. Can I say in that context that there is no issue more absurd, particularly for people who live in Far North Queensland, for example, that we continue to have in Australia these ridiculous rail gauge problems when it comes to the recognition of trade qualifications across state boundaries. For example, I understand that you can get a hairdressing qualification in Western Australia and that you can carry on that occupation in England, but you cannot carry it on in some of the other states of Australia. I am pleased to tell the House that at an officials level there has been a great responses from the states to some practical proposals of the Commonwealth, and I am very optimistic that we are going to make progress.
The final thing I want to say is that issues relating to longer term economic reform will also be on the agenda. I welcome the support, particularly of the Victorian Premier, Mr Bracks, that has been expressed for longer term economic reform. Can I say in relation to that that I have noticed in the media some suggestions coming from some of the states that the states will only be prepared to move further on economic reform if the Commonwealth pays them in advance for doing it. That is not a tenable proposition. The idea that any government should reform areas of their responsibility only if they are paid in advance to do it is of course an absurd proposition. If there are economic reforms in Australia, it is true that there are increased revenues for both the Commonwealth and the states. The increase in the Commonwealth revenues may be greater than that of the states—may be greater—but I remind the House that, when you look at the aggregate expenditures for the future, the liabilities of the Commonwealth are in turn also greater. It is therefore only logical that the gains from revenue should be proportionate to those greater responsibilities.
I believe that with goodwill on both sides—and I will certainly take goodwill from the Commonwealth to this meeting—we can make some practical progress and that, out of this meeting at the end of this week, there will be real gains in areas that are of ongoing daily interest to the people of Australia.
I inform the House that we have present in the gallery this afternoon the Rt. Hon. Helen Clark, the Prime Minister of New Zealand, accompanied by Her Excellency Ms Kate Lackey, the New Zealand High Commissioner. On behalf of all members I extend to our visitors a very warm welcome.
Hear, hear!
My question is to the Deputy Prime Minister, and I refer again to the answer he provided yesterday and indeed again to my first question. Why did the Deputy Prime Minister claim that AWB contracts with Iraq were certified by the United Nations and that the Australian government only issued export permits, when this simply is not true? Has the Deputy Prime Minister actually seen these contracts, in particular section 2 where it requests ‘certifying signature and official seal’? Deputy Prime Minister, is the seal attached to the AWB contract the seal of the United Nations or the seal of the Australian government?
The Leader of the Opposition knows that these contracts are conducted under the auspices of the UN. The UN had to agree to the terms of the contracts and they had to agree to the payment being made out of the escrow account that they controlled.
On a point of relevance, Mr Speaker: this is the Australian government seal. It is your responsibility.
The Leader of the Opposition does not have the call. Has the Deputy Prime Minister completed his answer?
Yes.
My question is addressed to the Minister for Foreign Affairs. Would the minister inform the House of US congressional interest in the Cole inquiry and its impact on our bilateral relations.
I thank the honourable member for Pearce for her question—and for a serious question about this issue. Let me make it clear that the relationship between Australia and the United States, which has been in the past ridiculed by the opposition, is a very strong and a very successful relationship. The Australian Ambassador to the United States, Dennis Richardson, met overnight with Senator Norm Coleman. The ambassador told Senator Coleman that Michael Thawley—Ambassador Richardson’s predecessor—had made representations last year to Senator Coleman in good faith, and that he and Michael Thawley, the Australian government and indeed many others had at that time considered AWB Ltd to be an organisation of repute and integrity. There was no evidence to suggest wrongdoing at that time, as even the United States Wheat Associates had conceded in June 2003, and AWB Ltd had privately and publicly strenuously denied any allegations of wrongdoing. Indeed, Mr Richardson had received a similar message himself, as he told Senator Coleman, from AWB Ltd when he met them before taking up his post in June 2005.
Senator Coleman subsequently issued a statement following the meeting. He said that Mr Richardson had addressed his concerns and reassured him on several counts, including that the Cole inquiry will be completely unfettered in its efforts to determine the truth behind the allegations that AWB Ltd paid illegal kickbacks to the Saddam Hussein regime, that the Australian government would cooperate fully with the Cole inquiry and that after the Cole inquiry was completed its evidence would be turned over to relevant law enforcement entities as appropriate. Senator Coleman finished up by saying that he was hopeful that this would strengthen the already strong US-Australian relationship.
Some people, and I think we all know who they are here, think that Australia’s reputation has been trashed in the United States and that our strong response is inadequate. As a matter of fact, some 66 countries were mentioned in the Volcker inquiry. Over 2,000 companies were found by Volcker to have been involved in paying kickbacks from 66 different countries. To the best of my knowledge, this is the only country of the 66 countries to have set up an inquiry of this kind. So I would have thought that the opposition, which has made some of the most preposterous allegations I have heard in 21 years, including the Leader of the Opposition claiming the Australian government is responsible for the killing of American soldiers—
Mr Beazley interjecting
I would expect the Leader of the Opposition and the opposition more generally—
Mr Beazley interjecting
And he defends that! The public will not thank you for making that type of a claim. The opposition should respect the Cole inquiry and let it go about its work in the normal way, instead of constantly prejudging the government, prejudging AWB Ltd and indeed making a series of comments which are utterly ill-informed.
My question is to the Deputy Prime Minister and Minister for Trade. I refer to his answer to my question yesterday when he stated:
The structure of contracts was purely a matter between AWB and the United Nations.
Does the Deputy Prime Minister also recall telling this parliament exactly the reverse when he said ‘the certification that DFAT did on the contracts was in the structure of the contracts’? Was the responsibility to approve the contract structure the UN’s, as you told us yesterday, or the Australian government’s, as you told us last year?
As I continue to say, the contracts were conducted under the auspices of the United Nations, the United Nations had to approve the terms of the contracts and the United Nations approved payments on the contracts. They were operated through that escrow account that was operated by the United Nations.
My question is to the Treasurer. Would the Treasurer outline to the House the latest consumer sentiment survey and progress made on implementing the OECD’s report Economic policy reforms: going for growth?
I thank the honourable member for Hasluck for his question. I can inform the House that the consumer sentiment index released for the month of February showed a rise in consumer confidence of 1.8 per cent and that consumer sentiment now stands higher than it has since August last year, although at a more moderate level than in 2003-04. That is consistent with some slowing in consumer demand but a welcome adjustment in the most recent months to price increases such as the extraordinary increase in petrol prices with which Australian motorists have been afflicted. It is clear that strong consumer sentiment is underpinned by low unemployment, low inflation and stable and low interest rates. If we can keep inflation under control in the Australian economy, particularly if we can prevent second-round effects flowing from petrol prices, there are prospects to continue strong and steady growth throughout the course of the year. In its most recent survey on Australia, the OECD noted as follows:
In the last decade of the 20th century, Australia became a model for other OECD countries in two respects: first, the tenacity and thoroughness with which deep structural reforms were proposed ... and second, the adoption of fiscal and monetary frameworks that emphasised transparency and accountability.
The most recent Economic policy reforms: going for growth OECD report noted the progress that Australia has made even in the last year—progress in promoting employment of the low skilled, progress in reforming disability benefit schemes, progress in strengthening vocational education, progress in reducing marginal effective tax rates for low-income earners and progress in accelerating reforms in electricity, rail, gas and water industries. That was from the release overnight of the OECD report Economic policy reforms: going for growth. It showed that we are making progress in many of those areas where the Australian Labor Party is trying to block reforms, such as labour markets, disability pensions and the like. I must re-emphasise to the House and re-emphasise to the Australian public the importance of continuing the reform program. It is the reform program that got Australia to where it is today. It is the reform program of today which will get us to where we want to be tomorrow. These deep-seated reforms are what will drive jobs and productivity in the future, and that is why this government is committed to continuing with them.
My question is to the Deputy Prime Minister and Minister for Trade. After the AWB and the Iraqi Grain Board agreed in Baghdad in July 1999 to change their contract arrangements to include an extra fee of $12 per metric ton, when did your officials first meet with the AWB after that, whom did they meet and what did they discuss—
And what are their names and addresses?
Prime Minister, you think this is just a joke, do you? You just think this is a joke. We are trying to establish some facts.
The member for Griffith will come to his question or resume his seat.
This is when this scandal began, Alex; I thought you would be interested. When did your officials first meet with the AWB after that, whom did they meet and what did they discuss about these new contract arrangements with Sadaam’s regime?
I thank the member for Griffith for his question. I will have to check the records and check with my departmental officials to see who, if anybody, met with them and when it was discussed and what was discussed.
I inform the House that we have present in the gallery this afternoon a group of young people who are winners of the Heywire competition, an ABC radio award scheme for regional and rural youth. On behalf of the House, I extend to them a very warm welcome.
Hear, hear!
My question is addressed to the Deputy Prime Minister and Minister for Trade. Will the Deputy Prime Minister update the House on the World Trade Organisation’s latest ministerial meeting? How has the Australian government helped to level the playing field for my farmers and exporters in the Riverina and also those farmers and exporters right across Australia?
I thank the member for Riverina for her question on what is a very important issue not just to Australia’s farmers but also to all Australia’s exporters, including Australia’s manufacturing exporters. At the end of last year we represented Australia at the Hong Kong ministerial meeting of the WTO, which includes the 150 member countries of the WTO. It was a very important meeting because the outcome was quite significant. The most important aspect of the outcome—and I know the member for Riverina is very keen to see this enacted—was a commitment by the European Union to end export subsidies by the year 2013. This outcome has been pursued by Australia, the Cairns Group and all the agricultural free-trading countries across the world for over 50 years. To achieve that commitment from the European Union is quite significant in ending what are the worst of all agricultural subsidies—that is, export subsidies and the way they distort in such a terrible way the markets of the world, not just affecting economies like Australia’s but also dramatically affecting the developing countries of the world. It is very important to recognise that all the developing countries of the world are very interested in improving their market access to some of the wealthier countries.
A classic example of the damage that export subsidies cause was the resultant outcome of a case that we took in the WTO over the last couple years on sugar export subsidies. Of course, we are seeing quite a buoyant market as far as the sugar industry across the world is concerned at the moment. That is very important, because for many years Australia’s sugar producers have suffered greatly. We won this case against the European Union in the WTO. The result was that they had to take their export subsidies off four million tonnes of sugar. It is very important to our industry and our nation.
We have set a timetable this year to agree the final outcomes in the round in terms of time frames and the formula for when other domestic support elements and other tariffs should be removed not just from agricultural products but from industrial goods and services. The meeting was very successful. Australia played a key role as a member of what is loosely called the G6—a group of countries that are trying to lead the way to conclude this round. They are the United States, the European Union, India, Japan, Brazil and Australia. We continue to work through the course of this year to try and achieve an outcome, which we expect to do by the end of this year. But we should remember that Australia has led the debate on many of these issues for over 50 years, through governments of both political persuasions. To achieve the outcome that we did in Hong Kong was very good, and to get a commitment from the European Union to end export subsidies by 2013 was warmly welcomed not just by Australia’s farmers or our exporters across the country but also by the Australian Labor Party.
My question is to the Deputy Prime Minister and Minister for Trade. I refer the minister to his non-answer to my last question. I refer the minister to the statement of the then Chief Executive of the AWB, Mr Rogers, that the July 1999 changes in the contracts with Iraq were discussed ‘with DFAT in Canberra before we proceeded’. Given that this statement by Mr Rogers was made more than three weeks ago, the Volcker inquiry has been ongoing for about two years and that the contract changes that we are talking about were at the very beginning of what was to become a five-year long $300 million scandal, how on earth can you stand up in the parliament today and evade answering the question? Will you report back to parliament by the end of the day on the question I just asked? When did the meeting happen, who was there and what was discussed?
Order! The member for Griffith will rephrase the second part of that question.
Will the minister report back to parliament by the end of today on the answers to questions concerning: when did his officials first meet with the AWB in Canberra after the July contract changes with the Iraqis, who were those officials and who did they meet from the AWB and what was discussed? These are serious matters.
The first point is that we have established the Cole commission of inquiry to investigate all of these matters. As the Minister for Foreign Affairs has outlined, we are the only country out of about 66 countries—
Mr Speaker, on a point of order: there is nothing in Mr Cole’s terms of reference which goes to the question of the government’s competence in its management of the oil for food program.
The Deputy Prime Minister is in order.
I say again that all these matters are being canvassed within the Cole commission of inquiry.
Mr Speaker, on a point of order: the Deputy Prime Minister is seeking to use the cover of the Cole royal commission, which has no powers to investigate this matter—
The member for Griffith will resume his seat. The Deputy Prime Minister has barely begun to answer the question, and he is in order.
The Labor Party keeps interrupting when I am trying to answer the question. I will state again that the Cole commission of inquiry has been established to get to the facts of the matter of this whole issue. That is currently part heard. We should be allowing the Cole commission of inquiry to complete its work and deliver its conclusions. As to the issue in the last part of the member for Griffith’s question, I indicated before that it was quite a complex question on whom, where, when and what dates and what information. I said I would find out for him and I will find out for him and bring it back.
My question is to the Treasurer. Can the Treasurer inform the House what steps the government is taking to bolster enforcement of Australia’s tax and financial laws against cross-border exploitation?
I thank the honourable member for Blair for his question. Today, the government has announced that it will allocate another $305 million over the next six years to a multi-agency operation directed at bolstering enforcement of Australia’s tax and financial laws against cross-border exploitation. The money will proceed under the codename Operation Wickenby. This cross-agency cooperation plan will involve the Taxation Office, the Australian Crime Commission, the Australian Federal Police, the Commonwealth Director of Public Prosecutions and the Australian Securities and Investment Commission.
I am advised by the Commissioner of Taxation that, as a result of a joint investigation between the Taxation Office and the Australian Crime Commission, including the execution of search warrants and unannounced access visits in June 2005, information has been obtained about the promotion of and participation in tailored international tax schemes. These arrangements are alleged to have had at their heart attempts to create fictitious deductions or to conceal income.
Operation Wickenby will be directed at enforcing a number of Australian laws. A wide range of sanctions will be applied, including confiscation of assets using proceeds of crime, criminal and summary prosecutions, actions for breaches of taxation laws and tax assessments. Where breaches of other laws are identified under Operation Wickenby, matters will be referred under law to the relevant agencies. I indicate that this additional funding of $305 million—a very substantive sum over a period of six years—is in addition to the normal funding for these agencies in relation to international matters and it indicates the seriousness with which the Commonwealth law enforcement agencies take this conduct. The resources will be directed at investigating and bringing it to an end and this indicates the seriousness with which it is viewed by the Australian government.
My question is again to the Deputy Prime Minister and the Minister for Trade and goes to the important question of how this corruption scandal began. Can the Deputy Prime Minister confirm other evidence from Mr Rogers, the then CEO of the AWB, to the Cole inquiry that AWB officials met with DFAT officers in the second half of 1999 and is he aware that Mr Rogers told the commission: ‘If there was any change in any contract we were obliged to pass it through Canberra’? What action did the Deputy Prime Minister take to ensure that these new contract arrangements complied with UN sanctions?
I say again the contract conditions, in their compliance with UN sanctions, were the responsibility ultimately of the United Nations in approving the contracts. That is quite simple. Ultimately, if they approved the conditions then they complied with the sanctions—obviously.
My question is addressed to the Minister for Employment and Workplace Relations. Would the minister update the House on the forecasts for likely growth in wages and pensions in Australia?
I thank the member for Canning for his question. I can inform him and the House that real wages in Australia under the Howard government have grown by some 15.6 per cent—
15.6 per cent!
15.6 per cent, Prime Minister, which compares with only 1.2 per cent when the Labor Party was in government—15.6 per cent compared to a miserly 1.2 per cent. This government, for the first time, has indexed pensions, including the old age pension and the sole parent pension, to male total average weekly earnings, so as real wages in Australia have increased so too have pensions.
The member for Canning asked me a question about whether I was aware of any forecasts for growth in wages and pensions. In this context, I note a letter which was written by the Leader of the Opposition to pensioners in his electorate of Brand. It is a letter, written in November 2005, in which the Leader of the Opposition said, ‘The Howard government’s industrial relations changes will lead to lower increases in the minimum wage which will in turn bring down the male total average weekly earnings, thereby directly hitting the hip pockets of pensioners.’
Yes.
He says yes. This is the letter which the Leader of the Opposition wrote to his pensioner constituents last year and which he confirms here in question time today. As I said at the time, this was just a scare tactic from Mr Beazley, the Leader of the Opposition, and the Australian Labor Party. I came across another forecast recently about wages and pensions in Australia. It was one that, unlike the Leader of the Opposition’s letter, does rely on some economic modelling and that modelling is very interesting. What this forecast shows is that the wages growth, which is predicted in terms of weekly earnings over the next three years, for 2006-07 is 4.7 per cent; for 2007-08, 4.7 per cent; and for 2008-09, 4.7 per cent. Indeed, this document goes on and says:
In a continued tight labour market with acute skill shortages, average weekly earnings will be dragged upwards ...
Upwards. Then it concludes:
This will drag the sole parent pension up with it.
Who do you think was responsible for this economic modelling? Was it Treasury? No, it was not the Treasury. This is a document released on 6 January this year by none other than the member for Rankin, Dr Emerson. Talk about letting the cat out of the bag. This document was released by a man on the opposition benches who I believe has some economic expertise, at least more than the Leader of the Opposition. This confirms what I have said that the letter sent by the Leader of the Opposition last year was just a scare campaign. That has been proven by what the member for Rankin has said in this document. The thing that will be most important in the future, as it has been in the last 10 years, in terms of wages for ordinary Australians, and indeed pensions for those in receipt of pensions, is a strong economy in this country. Part of continuing a strong economy in this country is to ensure that we have a modern workplace relations system. That is what this government is about and that is what the opposition is objecting to. We will do what is needed to ensure that the Australian economy remains strong. The same cannot be said for the opposition.
My question is to the Deputy Prime Minister and Minister for Trade. I refer to DFAT’s statement issued yesterday, which reportedly does not deny the department’s involvement in the Tigris matter.
Oh!
You find this a huge joke, don’t you, Alex?
You’re the joke.
Oh, Prime Minister! That’s a $300 million joke, Prime Minister. I refer to DFAT’s—
Government members interjecting—
Mr Speaker, the Prime Minister and the foreign minister are interrupting.
The member for Griffith will get to his question.
I refer to DFAT’s statement issued yesterday which reportedly does not deny the department’s involvement in the Tigris matter. I quote from correspondence from AWB executive Charles Stott which says, ‘Our friends at DFAT are interested in the outcome of the discussions to recover the obligation.’ Minister, did your office or your department at any stage help the AWB, BHP or Tigris in Tigris’s efforts to recover money from Iraq?
Obviously the member for Griffith has not seen the statement from DFAT yesterday, so I will read it to him. The statement from DFAT yesterday said very clearly:
DFAT did not approve the Tigris donation/debt repayment deal. DFAT’s advice has been clear and consistent with the UN sanctions regime.
That is in the statement from DFAT.
Mr Speaker, I raise a point of order. The question went much further than that. It wanted to get at the character of the discussions that they have had on this Tigris matter with DFAT. What were they?
The Leader of the Opposition is well aware that the chair is not obliged to dictate the answers to questions. The chair follows one standing order on the answers to questions.
My question is addressed to the Prime Minister. Has the Prime Minister’s attention been drawn to recent reactions to evidence given at the Cole inquiry? What is the government’s reaction?
I say to the member for Fairfax that there has been a lot of reaction to evidence given before the Cole inquiry, but one reaction that came from a Western Australian politician whose Christian name is Kim did catch my eye. It did not come from the better-known Western Australian politician with the Christian name Kim; it came from none other than the Western Australian Minister for Agriculture, Forestry and Fisheries, Kim Chance, in the Western Australian Labor government—bearing in mind that he is agriculture minister in the largest wheat-exporting state of Australia. I think what he had to say is a piece of very good advice to everybody on both sides of the House. I will read what he had to say:
If there has been corruption in the West Australian or in the Australian wheat industry and its marketing then I would be very disturbed—
nobody can argue with that proposition—
but let’s wait until we hear from the Cole inquiry about what the situation really is rather than commenting on bits and pieces of evidence as they fall out of the inquiry.
The reality is that the level of investigation and the measure of transparency displayed by the Australian government is greater than that of any government in the world. This government has subjected itself to an inquiry that no other government, according to my advice, has been willing to do. We have had these indignant comments from the Leader of the Opposition and from the member for Griffith that Cole cannot investigate these matters. That is wrong. It is wrong with a capital W.
Mr Rudd interjecting
If the member for Griffith takes pause for a moment and listens, I will read something that Mr Cole had to say in his statement last Friday. I invite everybody in this House to read this statement. This is what he had to say at paragraph 8:
This means that this Inquiry will address and make findings regarding, at least, the following:
In other words, Cole is looking at the behaviour of DFAT. Is any other government around the world doing that? No. Cole is looking at the role of DFAT. But let me go on.
Opposition members interjecting—
I see the fingers pointing. I knew they would, and they did.
Mr Tanner interjecting
The member for Melbourne is warned!
Cole then goes on to say:
He uses the generic expression ‘the Commonwealth’. He does not confine it to DFAT. He does not confine it to officials. He uses the generic expression ‘the Commonwealth’. He goes on to say:
in other words, he is talking generally about every arm of the Commonwealth, including, of course, ministers—
was informed of any knowledge AWB may be found to have had, regarding comments made by AWB to Alia.
Why don’t you appear?
The member for Corio is warned!
He then goes on to say in paragraph 14—and I commend a reading of this to everybody in the House and others who are interested in these proceedings:
Accordingly, if, during the course of my inquiry, it appears to me that there might have been a breach of any Commonwealth, State or Territory law by the Commonwealth or any officer of the Commonwealth related to the subject matter of the terms of reference, I will approach the Attorney-General seeking a widening of the terms of reference to permit me to make such a finding.
He then goes on to say this:
That position has not been reached.
In other words, this man is looking at everything and, unlike the opposition, unlike the government, Mr Cole has access at a level nobody else has. He has not only DFAT’s documents. They went to DFAT when this inquiry started and copied all the documents that they wanted. This is the cover-up! We were accused by the Labor Party of covering up. That was their first charge. How are you covering up when you invite them into the bowels of DFAT and you give them all the documents? That is some cover-up! Not only has he done that but he has also got the relevant documents from my department. More importantly than his getting our documents, he has also got AWB’s documents. We do not have AWB’s documents. The only documents of AWB that we have are those of correspondence.
In other words, you have the situation of an outstanding Australian lawyer, a person who had a very high reputation at the Sydney bar before he became a judge of the Supreme Court of New South Wales, who then served on the Court of Appeal in New South Wales, which arguably after the High Court of Australia is the most prestigious court in this country—he has all of those qualifications—who is acting completely independently of the government. He has access to everything and he is examining everything.
In those circumstances, I think the Leader of the Opposition and those behind him ought to take the advice of their mate Kim Chance in Western Australia. He is a man of great stature and respect in the Australian community. He is a person who is highly regarded in the Australian Labor Party. I know they will not take his advice, because they cannot help themselves. But I think out there the Australian people will respond to this proposition. If you have an eminent lawyer who has all the documents, all the independence in the world and all the integrity in the world looking at them, I think the Australian people are more likely to believe him than the member for Griffith.
Prime Minister, then give him the power to make those findings now. If that is your view, give it now, or end this rubbish that you have given him a full, clean slate. In the meantime, you and your ministers have to answer some questions here.
Order! The Leader of the Opposition will resume his seat!
Mr Speaker, I rise on a point of order. I refer to standing order 91, which concerns disorderly conduct. You have ruled on preambles by the Leader of the Opposition before. I ask you to enforce your ruling.
I thank the member for Canning. The Leader of the Opposition will come to his question.
My question is to the Deputy Prime Minister. He still has to answer questions in this place, no matter how much the Prime Minister might like to shut him down.
Order! The Leader of the Opposition will come to his question!
My question to him follows the question he did not answer last time. Minister, did your office or your department at any stage help the AWB, BHP or Tigris in any efforts to recover the Tigris money from Iraq?
I thank the Leader of the Opposition for his question. Again, this is a matter that is being dealt with by the commission—and you know that. It has just been very clearly outlined. Commissioner Cole indicated quite clearly last Friday that he intends pursuing the matter.
I refer the Leader of the Opposition, again, to the statement by DFAT yesterday where they said:
DFAT did not approve the Tigris donation/debt repayment deal. DFAT’s advice has been clear and consistent with the UN Sanctions regime.
Mr Speaker, I rise on a point of order which goes to relevance. It related to him, his office, as well as his department. It was not a question of approval; it was help.
The Deputy Prime Minister is answering the question.
Further to the question and to the statement by DFAT yesterday, I have been advised that, having searched the files, DFAT has no record of any knowledge of the complicated arrangements to inflate wheat contract prices to enable the repayment of the Tigris debt and wheat compensation payments. I am advised that it was aware in 1995 that BHP had funded a shipment of AWB wheat as a humanitarian donation. However, when BHP and AWB proposed that the donation be repaid under a credit agreement, DFAT advised this would violate sanctions. DFAT also emphasised that any changes to the original UN agreement would require sanctions committee approval. This fact has been reported to the Cole inquiry—the point that we continue to make to the Leader of the Opposition. DFAT’s advice was clear and consistent with the UN sanctions regime, and DFAT has no record or any knowledge that the Tigris, BHP, AWB deal actually went ahead.
My question is addressed to the Minister for Foreign Affairs. Would the minister update the House on developments regarding the allocation of natural resources between Australia and East Timor?
I thank the member for Solomon for his question. He has shown a lot of interest in this issue, and he has been a lot of help, too, to the Australian government in making this possible. I know that the people of Darwin appreciate the excellent work that he has done, or they should do. It is called the Treaty on Certain Maritime Arrangements in the Timor Sea. That treaty was signed by me and Jose Ramos-Horta, the East Timorese foreign minister, on 12 January in Sydney in the presence of the Prime Minister of Australia and the Prime Minister of East Timor, Mari Alkatiri.
This is a good agreement for Australia, and this is a good agreement for East Timor. With the 2003 International Unitisation Agreement, this creates a legal and fiscal regime which will underpin the development of the Greater Sunrise gas and oil field. It splits the upstream revenue derived from Greater Sunrise equally between Australia and East Timor, raising East Timor’s share of the revenues from 18 per cent to 50 per cent, which could lead to additional revenue of up to $5 billion for East Timor over the life of the project. From Australia’s point of view, it suspends maritime claims in the Timor Sea for 50 years.
I think this very clearly reflects a commitment by Australia to promote the development and economic prosperity of one of our closest neighbours, but it also supports Australia’s interests. As Prime Minister Alkatiri said at the signing ceremony, ‘The agreement is a very positive agreement for East Timor,’ and of course I say the agreement is a very positive one for Australia.
At the last election the then member for Werriwa, Mark Latham, said that, if he was elected—and the opposition of course asked the Australian people to elect Mark Latham as the Prime Minister—he would recommence the negotiating process. Labor wanted to unscramble the whole of this process and start all over again. It might not be the most important reason for people re-electing this government at the last election—there may be a range of other issues—but it simply illustrates the point that they made a very wise decision.
My question is to the Deputy Prime Minister. Does the Deputy Prime Minister agree with the statement of US congressman Henry Hyde: ‘Saddam paid $US25,000 rewards to the families of Palestinian suicide bombers, through the Iraqi Ambassador to Jordan, out of the accounts in the Rafidain Bank in Amman which held kickback money Saddam demanded from suppliers to his regime’?
Mr Cameron Thompson interjecting
The member for Blair!
Is the Deputy Prime Minister also aware of comments by Ratib al-Amleh of the Arab Liberation Front, and the organiser of that scheme, who said he could not deny—
Order! The Leader of the Opposition will resume his seat. The member for Blair is warned!
He could not deny that the source of that funding given to these families by Saddam Hussein may have been Australia. What investigations has the government undertaken to ensure that none of AWB’s payments into the Rafidain Bank were used to pay the families of Palestinian suicide bombers or were used in any other way to support military efforts in the region? What investigations have you done?
In answer to the Leader of the Opposition’s question, I am not aware of some of those comments that he referred to. There is no evidence that any Australian money has gone in that direction and, if the Labor Party had their way, Saddam Hussein would still be in power.
My question is addressed to the Minister for Health and Ageing. Would the minister inform the House what steps the government has taken to support health call centres, including GP Assist, in Tasmania?
I can assure the member for Braddon that, while members opposite engage in an endless scandal hunt and fishing expeditions, the Howard government is delivering better health services for the people of Australia. The government believes that health call centres are useful and important supplements to existing health services. I want to make it very clear that these are an addition to existing services, not a substitute for them. Health call centres mean that worried people can receive expert advice round the clock on whether they need to attend an emergency department, whether they should see their doctor or whether they can seek other forms of treatment. The centres can provide up-to-date information on where these services are available.
So far, the government has provided $9 million to support Tasmanian GP Assist, which includes a health call centre. We have provided $21 million to the Hunter after-hours service, which also includes a health call centre. We have provided $3 million to help set up the state-wide Western Australia health call centre, which has been operating since 2001. This week the Council of Australian Governments will consider whether there should be a national health call centre, whether a particular model should be adopted and whether all existing call centres can continue to operate concurrently with a national centre. The member for Lalor greeted this announcement with her usual carping negativity. But the Howard government is prepared to work constructively with the states on this matter, which just goes to show that the Australian people trust the Howard government with their health, and it shows that the Howard government remains, most assuredly, the best friend that Medicare has ever had.
My question is to the Minister for Health and Ageing. The minister would be aware that three of every four Queenslanders live outside Brisbane. The manning levels at five major hospitals in these areas are now officially unsafe. A further three are officially critical and possibly unsafe. This leaves nearly one-third of the state in deep crisis. Is the minister aware how infinitely worse the situation is in the northern half of Queensland, where there is now only one doctor per 1,026 people, whilst the Australian average is one doctor per 358 people? Is the minister further aware that his predecessor, Minister Wooldridge, stated publicly that in Egypt alone there are thousands of doctors, Coptic Christians, who would come to Queensland tomorrow if a job and visa were offered to them? Would the minister not agree that the substantive action taken by Premier Beattie to address the collapse of the system is (1) to have a talkfest; (2) to increase by 20 the medical school places—
Honourable members interjecting—
This is a most serious matter, and I really would appreciate the serious nature of this matter being taken—
Order! The member for Kennedy will come back to his question.
Would the minister not agree that the substantive action taken by Premier Beattie to address the collapse of the system is (1) to have a talkfest; (2) to increase by 20 the medical school places in Brisbane universities, universities servicing arguably the most doctor-overserviced area in Australia; and (3) to launch a multimillion dollar advertising campaign to blame the federal government? Finally, could the minister assure the House that he will refrain from the temptation of similarly playing politics and immediately address the request to increase the number of graduates at JCU—the only non-metropolitan university in Australia and geographically at the epicentre of the problem—a request involving an increase from 60 to the urgently needed level of 150 graduates per year?
Order! In calling the Minister for Health and Ageing, I think he will have difficulty in answering the whole of that question. I invite him to keep his answer reasonably short.
I do appreciate the question that the member for Kennedy has asked. I think he makes a number of very telling points about the behaviour of the Beattie government. I do commend the concerns that he has—concerns which he shares with the member for Leichhardt, the member for Herbert and many others in this place—about improving health services and medical services in North Queensland. I can inform him that, under this government, the James Cook University medical school was established. Under this government, in 2004, the numbers of medical students at James Cook were increased. I was delighted just recently to go to the graduation of the first class of medical students from that fine school at that fine university.
I take on board the points which the member for Kennedy has made. I think I can assure him and other people concerned about this issue that this government is always looking at ways to increase our medical workforce. Certainly his representations—as well as the representations by the members for Leichhardt and Herbert—will be taken into account as long as the government continues to make decisions in respect of the medical workforce to the great benefit of the people of Far North Queensland.
Mr Speaker, I ask that further questions be placed on the Notice Paper.
On indulgence, we have two anniversaries this week of people in our ranks who have served 20 years in parliament: one in this parliament for the entirety of those 20 years and the other for 20 years in two parliaments. Carmen Lawrence has served 20 years in the parliament of Western Australia and in this parliament, and Harry Jenkins has served 20 years in the federal parliament. Both have been, over the time, superb representatives of the people and superb representatives of the Labor Party. They have enjoyed senior positions: in the case of Carmen Lawrence, that of Premier and then that of a senior minister in the federal government; in the case of Harry Jenkins, that of a longstanding presiding officer in this place. I am sure all members of parliament will wish them well and join with me in my congratulations on their achievement.
Can I, also on indulgence, join the Leader of the Opposition in congratulating the member for Fremantle and also the member for Scullin. I recollect trying very hard 20 years ago, as a rather struggling Leader of the Opposition, to stop the member for Scullin succeeding his father in this place. I meandered through, I think, the Ford motor factory and I did not get a very friendly reception, I have got to say, but things looked up a bit later! He inherited and has maintained a very healthy margin in that seat.
Apart from personal good wishes to the two members, can I say that I do think it is important, whatever our political differences are, to take opportunities to remind both ourselves and the Australian public of the importance of public service in political life. There is a tendency sometimes, even for us, to sort of accept and endorse the ritualistic denigration of political service. I think that is a huge mistake. I think the profession of politics is enormously important, and most people who come into this place do so with good motives, with good intentions and with goodwill to the Australian people. I include in that the member for Fremantle and also the member for Scullin. I wish both of them well. I do not think either of them will face any serious opposition from this side of politics, given the character of their seats. So, in the context of their own parties as well as the ongoing political struggle, I wish them well. I also wish the member for Hotham well, and I hope the member for Maribyrnong does not have his political career shortened.
Mr Speaker, I ask that you write to the Minister for Transport and Regional Services to seek an answer to question No. 2405, lodged on the Notice Paper on 10 October 2005, which previously appeared as question No. 3652, lodged on 16 June 2004, as it now relates to the shortfall of almost $1 million payable to the City of Belmont by Westralia Airports Corporation in lieu of rates.
I thank the member for Swan for his question and I will follow up on his request.
Documents are tabled as listed in the schedule circulated to honourable members earlier today. Details of the documents will be recorded in the
I have received a letter from the honourable member for Griffith proposing that a definite matter of public importance be submitted to the House for discussion, namely:
The failure of the government to discharge its obligations in relation to the national security and trade interests of Australia.
I call upon those members who approve of the proposed discussion to rise in their places.
More than the number of members required by the standing orders having risen in their places—
Today the parliament of Australia was visited with the full skills and repertoire of the Inspector Clouseau of the Howard government, to borrow a phrase which was used in today’s newspaper. I thought it was overegging the pudding a bit when I saw it this morning, but it was completely confirmed in the performance by the minister in question time today. The function of the parliament is to hold the executive accountable. How do we do that? We ask the executive questions.
Government member interjecting—
Thanks, Twinkletoes. You just go back and slide into your hole. That was the Minister for Foreign Affairs I was referring to. The function of the parliament is to hold the executive accountable. Today we asked a series of most specific questions. They go to an entirely untold chapter in this saga of the $300 million wheat for weapons scandal. They go to key events of the year 1999. These are critical events, because it is when this scandal begins—and you know that, Minister Downer. You know it very well.
The member for Griffith will direct his statements through the chair.
You know it because the Volcker inquiry has been running for a couple of years now, from the beginning of 2004. You have had teams of bureaucrats throughout DFAT raking through the files, finding everything it is possible to find, and still today we have ministers at the dispatch box thinking it is a fair and reasonable thing to evade the question. These are critical questions. The events of 1999 date from when this scandal began.
We also asked the Minister for Trade questions concerning the Tigris matter. I would have thought that a Deputy Prime Minister of Australia would come into this parliament somewhat better briefed than this one was today. Twice he was asked, first by me, then by the Leader of the Opposition, a very simple and basic question: did you, your office or your department provide any assistance to the AWB, BHP or Tigris to recover moneys from Saddam Hussein’s regime? It is a very simple and direct question of the type that is often asked here. This minister, the Deputy Prime Minister of Australia, could not answer that straight. He evaded, and if he thinks that the people watching question time today missed the point that he evaded it completely he is sadly mistaken.
This saga in the scandal—that is, what happened in the events of 1999—is critical. Had the Howard government, had the Minister for Foreign Affairs and had the trade minister been doing the job that they are paid to do, then the subsequent five-year-long, $300 million scandal would not have happened. It could have been nipped in the bud right back then. So far in the parliament in the last 24 hours we have looked at the powers and responsibilities which had this government’s name attached to them, entrenched by UN Security Council resolution 661, requiring national governments—nobody else—to ensure that none of their corporations or individuals were going to provide funding or illicit goods to Saddam Hussein’s regime.
In this place yesterday we ran through the seven sets of warnings this government has been presented with over the last several years about what the AWB was up to in Iraq. There were the UN’s warnings in early 2000, Canadian warnings prior to that, more UN warnings in March 2000, following up again with a report by the US Government Accountability Office in April 2002, before the Iraq war. Then after the Iraq war we saw warnings from the coalition provisional authority in June 2003, seven senators writing publicly to the United States administration in October 2003 and, to cap it all off, the CIA’s own report in 2004 about what had happened with the rorts on the oil for food program. These were all warnings which these ministers chose deliberately to ignore.
We have also dealt in this parliament so far with what happened to the money afterwards. I know, Minister Vaile, you find that a difficult question to answer, because if I were in your position I would be humiliated by that question. Because of your own failure to discharge your responsibilities, who knows where the $300 million ended up? We know for a fact from the CIA that some of it went off to fund weapons. The unanswered question is what happened in the bank in Amman, in Jordan. That is where Alia’s money was coughed into and that is where the money was coughed out to the families of Palestinian suicide bombers. It is a pretty basic question.
Mr Danby interjecting
The member for Melbourne Ports is in a difficult position just there.
It is a very basic question for us to put to the government: have you investigated what happened to the money? You are all outraged by this question. Well you might be. You have often stood up here in this place and paraded yourselves as the world’s best friends of Israel. When it comes to this act of monumental national security policy incompetence, allowing $300 million to go through to Saddam’s slush fund, knowing at the time that Saddam was funding suicide bombers, it frankly leaves people in this country speechless as to how you can stand in this parliament and attempt to hold your head up high.
When it comes to this most recent matter for debate, however, it is important that the parliament focus on these new developments. What happened in the critical events of 1999? I would draw the attention of honourable members to this fact: the AWB was privatised as of 1 July 1999. This entire debate has been conducted in terms which suggest that a problem only arose with the AWB once it had been off there in the private sector. You are wrong. Evidence has already been presented to the Cole inquiry in Sydney that, when the AWB was still fully owned by the Howard government, there was email traffic between AWB staff about how the first set of kickbacks could be arranged. This is while it was wholly owned by the mob opposite, the Howard government. If you disbelieve me on this, I will read you one short extract from one email. This dates from 24 June 1999, referring to an earlier visit to Iraq. Here you have an AWB representative, in a part of the email headed ‘Contract terms and conditions’, writing as follows:
IGB—
that is, the Iraqi Grains Board—
have requested that the offers are submitted CIF—
with insurance and freight—
free in truck, Iraq. The cost of this will be USD12 per tonne which the supplier adds to their offer.
Interesting—
Hence this part is not an issue.
I am not sure about that—
The problem which still needs to be resolved is the payment mechanism, as all Iraq accounts are frozen. IGB have stated that we will be required to pay the maritime agents, and one possible way would be to pay this to an Iraq bank in Amman. IGB will provide details of the banks we can pay this through.
That has already been provided by way of evidence to the Cole inquiry. The critical thing, though, for the attention of the parliament and the nation is this: that transaction occurred within the AWB while the Howard government still owned the AWB. It relates to a visit to Iraq by AWB representatives while you mob still owned them.
I put this to you: around this country for the last decade or so we have seen multiple royal commissions and commissions of inquiry into allegations—some substantiated, others not—of malfeasance by various corporations owned by state governments around Australia such as the Labor governments of Western Australia, Victoria and South Australia. They included the State Bank inquiry and so on. If this matter was unearthed in relation to any state Labor government concerning a corporation owned by that state Labor government, you would be howling them out of office. This scam, this rort, which became a $300 million cross-subsidisation exercise for the Saddam Hussein military machine, began when you owned the AWB. It was yours. I do not hear any statements of denial from those opposite. The evidence is clear-cut. No wonder you hang your heads in shame when you know that, this time, there is no excuse. You actually ran the show; it was 100 per cent in your possession.
The clock rolls on to the events later in 1999. It is important to piece these critical events together. There is a mission to Iraq in June 1999 by AWB officials when AWB is still owned by the government. In July 1999 there seems to be another mission, and that is when the first corrupt contracts are signed or agreed. There is a further AWB mission to Iraq in about October or November. The payments actually start flowing in October or November 1999 and, interestingly, it is one month later in December 1999 that this mob get the warning from the government of Canada. It only took a month, and do you know why? I suspect the Iraqis, having got the AWB on board, went off to the Canadians and said, ‘Look, the Australians are on board with this, Bob’s your uncle!’—sorry, Saddam’s your uncle—‘and you can be in on the joke as well.’
Except the government of Canada did something different. They actually went to the United Nations and asked, ‘Is this okay?’ That was the right thing to do; something you mob have never done. They were told unequivocally that this was a problem. Furthermore, the United Nations then raised it with this government. They did it in January and March of 2000, and, in a continuing exercise of negligence in the discharge of your national security responsibilities, you dismissed those concerns—it is as clear as day that that is what happened.
There is one key event, however, in the early stage of this unfolding saga which we must focus on, because this minister refused to focus on it in question time today. After the AWB came back from Iraq in about July of 1999, we have evidence from the Cole commission of inquiry that they then went to Canberra. They went to Canberra for discussions with whom? With this minister’s department: DFAT. And by this stage it was this minister’s department, because by then he had become the trade minister. We know from evidence presented to the Cole commission of inquiry that this was not just an ordinary visit. In fact, if I look at some of the evidence which has been presented at the inquiry, there are multiple references to this event occurring and its significance. For example, there is a clear reference in the testimony of Mr Rogers, who was then the CEO of the AWB, that AWB representatives went to DFAT to talk to them about what had gone on in their recent visit to Iraq. Furthermore, there was a reference in the inquiry evidence that, in fact, this was necessary so that ‘people with DFAT in Canberra could be consulted before we, the AWB, proceeded’—that is, with these new contract arrangements.
There was evidence presented to the inquiry that there were folk going to Canberra from the AWB to dialogue with the Department of Foreign Affairs and Trade to ‘ensure that things were correct’. Furthermore, Mr Rogers said: ‘I think, if my memory serves me correctly, if there was a change to any contracts we were obligated to pass that through Canberra.’
I draw the attention of all members to the fact that this was at the very beginning of this saga. This meeting between the AWB and the department for which this minister is responsible occurred in the second half of 1999 and before the first corrupt payments were made. They did not start flowing until November of that year. This was the core opportunity for this minister and the Minister for Foreign Affairs, who was very keen that we directed all questions to the Minister for Trade in question time today. This minister and his partner, the Minister for Foreign Affairs, had at that stage a clear-cut opportunity to ensure that this scandal went no further.
However, in question time today I asked this minister on at least three occasions to give us some details about the meeting. When did it occur? Who was there from the Department of Foreign Affairs and Trade? Who was there from the AWB? What was discussed about these new contract arrangements? These are critical questions when it comes to this point: at the end of the day, how do we establish whether you in any faint respect discharged your national security obligations, given to you by resolution 661 of the Security Council? Had you done your job, five years later we would not be having this debate; it would be a debate being had in some other country where corruption is something which happens on an almost daily or weekly basis. The reason it is so stunning here though, Minister, is that the magnitude of it simply takes our breath away. Because the government failed to act at this critical juncture, $300 million flowed and we then had five years over which the kickbacks simply went from one level to the next—from $12 a metric tonne to $25 a metric tonne to $44.50 a metric tonne, and then they added an after-sales service fee.
Minister, if you respond to this MPI today, use the opportunity to explain in clear-cut terms every detail, not the select version, of what transpired in that critical meeting in the second half of 1999 between the AWB and your agency. Therein lies the core exchange where this entire sorry saga of $300 million going to buy guns, bombs and bullets for Saddam Hussein’s regime could have been stopped. You, Minister, failed to stop it.
The member for Griffith continues to use the word ‘you’, which it is desirable not to use in a debate such as this.
In responding to this MPI, I would like to make a couple of points right at the outset with regard to the allegations that are being raised by the Australian Labor Party over this issue: firstly, the allegation that the government did absolutely nothing insofar as the so-called warning bells are concerned; and, secondly, that Australian money has gone to fund weapons and suicide bombers. There is no evidence at all that Australian money has gone to fund suicide bombers, and we absolutely refute the allegation. With regard to the allegation about what the government did and did not do, there has been no evidence produced that government officials knew about or were complicit in the payment of kickbacks to Saddam’s regime. The government has established the Cole inquiry. I know that the Labor Party has dismissed the fact that we have established a commission of inquiry with wide-ranging powers. It was clearly and publicly stated last Friday by Commissioner Cole himself that it was adequate for him to investigate the entire matter. He asked for an expansion of the terms of reference to look at the Tigris issue, and that is going to be forthcoming. Of the 66 countries which had companies providing products through the oil for food program, as the Minister for Foreign Affairs indicated today, only Australia—and the Australian government—is having a full, open and public inquiry into the actions of the Australian companies that were involved in the oil for food program.
I will now go to some of the issues that have consistently been raised by the member for Griffith in this MPI, in his public comments and in his questions during question time. Firstly, the allegations of 2000 were without any substantiation—no evidence was provided in that regard—and the responses given were to the satisfaction of the UN. We continue to go back to the point—not accepted by the Labor Party—that these contractual arrangements were overseen and dispensed with by the UN under the provisions of the 661 sanctions committee, that they controlled the escrow account and that they approved the contract. We could not issue export permits until they were approved—and that approval indicated that those contracts cleared the sanctions issues.
Further allegations were raised in 2003 by a commercial competitor, US Wheat Associates, and those allegations were made public. On both occasions, AWB, which at that time had an outstanding reputation as a corporate operator both in Australia and internationally—and nobody can dispute the fact of AWB’s reputation at the time—strenuously denied those claims. That information was gained and dealt with. Again, the UN Security Council sanctions committee continued to approve the contracts put before them for the sale of wheat to Iraq. So on those two occasions, if there had been enough evidence of wrongdoing, the UN would not have approved those contracts and they would not have paid the money out of the escrow account.
While I am on this subject, there are a lot of urban myths floating around on this issue which I want to take this opportunity to debunk. The public comment on the UN oil for food program in the aftermath of the Volcker report and the Cole inquiry has often been inaccurate and misleading. There has been a concerted effort to attack the government on the basis of so-called facts—and they are not facts. There is a range of false and often-repeated assertions about the government’s role in and knowledge about problems in the oil for food program which have assumed the status of articles of faith. They are basically urban myths. The first urban myth is that the terms of reference are too narrow to investigate the government’s role in the oil for food program. The government took the proper and appropriate step of establishing the Cole commission of inquiry to examine the activities of three Australian companies about which concerns were expressed in the report by the UN’s independent inquiry on the oil for food program. The terms of reference for the inquiry were entirely appropriate given the nature of the UN inquiry report’s findings.
As Commissioner Cole and his counsel have highlighted, DFAT’s role in the oil for food program is being examined by the inquiry. DFAT staff have been interviewed and relevant documents have been examined by the inquiry. Full cooperation is being provided to the inquiry. On 3 February, Commissioner Cole said in a statement that the inquiry will address and make findings on the role of DFAT, including DFAT’s knowledge about contracts, what AWB told DFAT about wheat contracts and what DFAT knew about Alia. Commissioner Cole also said that if there was any breach of law by the Commonwealth or any officer of the Commonwealth, he would recommend widening the terms of reference. He has made a public and independent statement about his ability to investigate fully this whole issue. So much, then, for the claim that the terms of reference are too narrow. Commissioner Cole last week asked for an expansion of the terms of reference with regard to one aspect of the operations of AWB. He said quite clearly—and I state it again—that, if there was any breach of law by the Commonwealth or any officer of the Commonwealth, he would recommend widening the terms of reference. I think that point has not been reached yet. So there is a full investigation taking place.
The next myth being peddled, particularly by the Labor Party, is that the government was aware that AWB was paying kickbacks to the Saddam Hussein regime. At no stage during the oil for food program did the Australian government have evidence to suggest that the AWB or other Australian companies paid kickbacks. Of concern are the repeated efforts by some to infer that DFAT officials were implicit in sanctions rorting. This is an outrageous allegation. A case in point was the inquiry’s examination of advice provided to the AWB on methods to repay damages arising from wheat contamination in 2002. DFAT provided advice to AWB, which the inquiry’s counsel found was appropriate and proper. This advice was faithfully reflected in an internal AWB email. However, one commentator chose to infer that there must have been some deeper conspiracy, apparently saying he wanted to see additional information on the issue before he would exonerate the DFAT staff involved. This case is also interesting in that it shows clearly that the inquiry is examining the role of DFAT and the actions of DFAT staff, whose advice was found to be appropriate and proper.
So can I say again that, out of the 66-odd countries who had companies operating within the oil for food program, we in Australia have established the most transparent and publicly open inquiry, to get to the bottom of the facts of the operations of three companies within the oil for food program. That has been acknowledged in the United States. There was a question in the House yesterday about Senator Coleman. Senator Coleman has publicly acknowledged and welcomed the move by the Australian government to establish this inquiry so that the facts can be uncovered and brought into public awareness.
The next myth that is being peddled around relates to the involvement of DFAT—or DFAT allegedly approving AWB contracts. DFAT did not approve AWB contracts. That was the role of the UN. The United Nations was running the oil for food program. If you read the transcripts, the evidence and the conclusions of the Volcker inquiry, Volcker highlighted exactly the same point. Volcker also highlighted the point that the UN engaged Customs officials to check the veracity of those contracts and to check the price and the value of what was being traded. So the UN’s 661 sanctions committee and the UN Office of the Iraq Program were responsible for contract approvals. Again I say this fact was highlighted by the Volcker report, the report that preceded what we are doing in Australia as far as the Cole inquiry is concerned. The Office of the Iraq Program was established to manage the oil for food program contract approval process. DFAT or the Australian government could not approve a contract for AWB to send products into Iraq. It had to go through the UN. It was being paid for out of the escrow account established under that section 661 committee. That is where the payment came from. That is where the arrangements were made. That is where the approval went through. The UN therefore ran the oil for food program and employed Customs experts, as I indicated a second ago, to examine and approve the contracts. It was not DFAT but the UN that approved the contracts—it was not DFAT.
The next urban myth that is being peddled around, with just enough information being left to trail the bait, if you like, is that DFAT approved AWB’s use of Alia. DFAT did not approve AWB’s use of Alia, despite any claims to the contrary. AWB’s use of Alia was not in AWB contracts, as Volcker and Cole have highlighted already. AWB never advised the UN it was making payments to Alia for inland transport. It is also important to note that the AWB had apparently been using Alia for around a year prior to its 30 October 2000 letter to DFAT in which AWB made a general inquiry about using Jordanian trucking companies. This letter did not mention Alia. DFAT has no record of ever being asked by AWB to conduct due diligence of Alia or to approve its use of Alia. The department made this very clear in the statement it issued yesterday—and, obviously, in what has been submitted to the Cole inquiry. We are aware that there will be further evidence given in this regard to the Cole inquiry. It is very important to note that because I know that there are other views being expressed on this—and also there are allegations and insinuations being left out there on this matter by the Australian Labor Party.
The next urban myth is that DFAT staff travelled with AWB to Iraq in August 2002—again totally untrue. Despite repeated claims in the media, DFAT has no record of any DFAT staff ever travelling with AWB to Iraq, from the start of the oil for food program in December of 1996 until the end of Saddam Hussein’s regime. It is a good opportunity to get some of those details on the record. Some of them have already been put on the public record as part of the evidence that has been delivered to the Cole commission of inquiry. They are the facts with regard to the involvement of the Department of Foreign Affairs and Trade in terms of discharging their responsibilities.
In the time remaining can I just reiterate some of the history here. Australian wheat growers—and I said this in the House yesterday—are of prime concern and interest to the government. Wheat is one of our major export industries.
Mr Rudd interjecting
The member for Griffith!
Interestingly, the Minister for Agriculture and Food from Western Australia—
Mr Rudd interjecting
The member for Griffith!
takes the same view.
Mr Rudd interjecting
The member for Griffith is warned!
He believes it is too early to reach any conclusions about wheat exporter AWB and its role in the Iraqi oil for food scandal. Mr Chance says it is best to wait until the inquiry has concluded before making a judgment—and it is. That is why the Labor Party demanded an inquiry. That is why you wanted an inquiry. That is why the government acted so quickly at the end of last year to establish an inquiry—so that there was an independent and transparent process being run to find out the facts and the details of what has happened as far as Australian domestic law is concerned in terms of the oil for food contract.
We all recall the debate that took place in late 2002 and early 2003 with regard to the coalition of the willing moving into Iraq. The Australian Labor Party opposed that move every inch of the way. We all know that if the Australian Labor Party had had their way Saddam Hussein would still be in power in Iraq, perpetrating the atrocities that he did during the 25 years of the operation of his murderous regime in Iraq. The Australian Labor Party wanted to keep him there. We should let the Cole commission of inquiry finish its work. (Time expired)
I do not know who wrote that speech for the Minister for Trade, but whoever it was did him no service, because he did not answer the key questions. It was quite clear that at any time he went to facts he was reading somebody else’s words and each time he adlibbed he fluffed it, as he did in question time continuously—and I will come back to that in a moment.
However, in all these matters, for publicly elected officials the key question comes back to that which was posed in the Nixon impeachment hearings of 1974: what did you know and when did you know it? We now find out that the minister’s argument is that he never knew anything. That is not what I would call a great advocacy of ministerial responsibility and success because, as has been detailed on many occasions—and I will go back to some of them—on very many occasions the minister should and, by any credible explanation, must have known.
I do not want to refer too much to that rather pathetic set of contributions that were written for the minister, which he just read into the Hansard, but I do want to refer to two points. Firstly, he repeated the point that the Prime Minister made: that the Cole inquiry’s powers are sufficiently broad because the commissioner has made it clear that, if there is any breach of law by a Commonwealth official, he will either seek broader terms of reference or act upon it. But we all know that most, if not all, of the major findings that have been made, for example, leading to royal commissions causing the resignation of ministers, have not referred to breach of laws; they have referred to impropriety—to people failing to discharge their responsibility and not acting properly. These are serious allegations and the evidence raised so far suggests that they do apply—and I do not make those allegations against the officials at DFAT. I have worked with that department and it is a fine department. If there are serious problems in a department that go to questions of impropriety on this scale, with this level of public awareness, the responsibility lies with ministers.
The second point I want to make is that the minister continues to say, ‘This must all be okay because the UN accepted our assurances.’ One of the strengths and weaknesses of the UN system is that the UN does not have the capacity to go behind the word of member countries. If a member country says, ‘No, there’s nothing to look at here,’ until the Volcker inquiry was set up, the UN had no capacity independently to assess that. The minister says, ‘We must be okay because the UN said so.’ The UN said so because Australia advised it so. This is one of those circular arguments that says, ‘We must be okay because we said we are and we got someone to verify it independently who had no capacity to verify it independently.’
Today we saw again from the Minister for Trade, for the second day in a row, an incredible, unbelievable attempt to defend the indefensible and the deliberate avoidance of serious questions in question time. For example, yesterday we asked who gave instructions to the ambassador for his visit to US Senator Coleman. There was no answer. Today we had questions about contracts and meetings, which were met with either refusal to answer, avoidance or ignorance.
We are confronted here with a scandal of the highest order and a failure of proper administration, which endanger Australia’s reputation and interests. Like many other people in this place, I have spent a lot of time trying to work internationally to enhance Australia’s standing, its reputation and its interests. I do not take lightly the fact that incompetence, maladministration and culpable negligence have undermined some of that good work.
Let us have a look at what we know. Firstly, we know in this matter that $300 million was funnelled to Saddam Hussein’s regime by the Australian Wheat Board in a process that began when the Australian Wheat Board was wholly owned by the Australian government. Secondly, we know that the Australian government was concerned about abuse of the oil for food program to fund weapons purchases—because two or three years ago the Prime Minister said so. We know that the Canadians were concerned that the Australian Wheat Board was paying this money and they raised it in a manner that came to the attention of the Australian government in 1999, more than five years ago. We know that the United Nations was concerned and that it raised it with the Australian government. We know that the New York Times reported concerns in March 2001 and we know that the Weekly Times reported concerns in Australia in August 2002.
If nobody else was looking at this, what was ONA, the Office of National Assessments, doing? We know from the ‘children overboard’ affair that ONA scans newspapers and provides reports to the Prime Minister. I would have thought it should do more than that. But, if that is all it does, it should have known in March 2001 that the New York Times was reporting concerns and in August 2002 that the Weekly Times was reporting concerns and drawn it to the attention of the Prime Minister—and I find it very hard to believe that it did not.
In the ‘children overboard’ affair, the Prime Minister was prepared to release ONA advice, in an unprecedented manner—a manner I thought perhaps he should not have done—to support his political interests. Therefore, I would like to know and see what ONA reported to the Prime Minister, to the Minister for Trade and to the Minister for Foreign Affairs about this matter.
I would also be very interested to know—the Australian Financial Review referred to it this morning—what the Australian security services were doing for 5½ years not to find out that an Australian company was funnelling money to Saddam Hussein—the biggest security concern of international security agencies, which work cooperatively. The security agencies of the United States, the UK, Canada, Australia and New Zealand work together and it is incredible that none of them knew that an Australian government agency had commenced and an Australian privatised company had continued to funnel this money to Saddam Hussein—the biggest fear of those agencies. We are told that none of them knew and, even if they knew, none of them told the government.
If it is true that ministers did not know, it must have been extremely difficult for them to arrange not to know. They must have gone to great lengths to arrange not to know, because it was public knowledge. It was raised with Australia by the Canadian government, it was raised with Australia by the United Nations, it was reported in international newspapers, it was reported in Australian newspapers and yet nobody knew. How could they not know? They must have gone to extraordinary lengths to make sure that they did not know. There is precedent for Australian government ministers going to extraordinary lengths not to know, but this is more damaging than just some internal political game at the expense of the Labor Party. This is serious stuff causing serious damage to Australia’s national interest.
There have been a lot of references to a letter of November 2000, where DFAT gave approval for arrangements with a trucking company, and to how, clearly, the AWB’s letter had not referred to Alia. That is right—read on its face, there is no problem. But we know that the United Nations had raised concerns about the role of Alia before that, generally. When that matter came to such an efficient department as DFAT, it is incredible that nobody associated the fact that the United Nations was raising generic concerns about the use of a particular trucking company to funnel funds to Iraq and that nobody asked whether that was the trucking company being used here—they did not want to know, therefore they did not ask.
We have always had the allegation until today that the AWB went into Iraq accompanied by DFAT. I heard the minister refute that today. I am very surprised that DFAT would allow them to go in without accompaniment. They would not have in the time I was minister. People who went into Iraq in that period were accompanied by DFAT officials, or at least by Austrade officials, so I would be very surprised if that is the case. I cannot prove that it is not so—the minister has asserted it is not so, but I am very surprised and it should be investigated.
What we are saying here is that we have a trade minister who has been culpably negligent—incompetent beyond belief. It has created a scandal and a farce that embarrasses Australia. It is incompetence at best. It is probably culpable negligence, and the government does not deserve to survive. This Minister for Trade does not deserve to survive. It is clear that being leader of The Nationals, he has spent too much time trying to solve the problems of his party and not enough time taking care of the problems of Australia. (Time expired)
I find the ALP’s approach to this issue both offensive and hypocritical.
On what basis?
I am going to explain that to you right now. Yesterday and today the Labor Party attempted in this House—
Order! I remind the member for Wills that he has been warned.
to link the coalition government, this administration, to Palestinian suicide bombers, in a disgraceful attempt to attack this government and link it to something that they know we would never have any truck with. Their actions are both hypocritical and offensive.
Mr Deputy Speaker, I seek leave to table the Herald Sun of 7 February containing exact evidence that wheat money was used to fund Palestinian suicide bombers.
Leave not granted.
The reason the ALP’s actions are hypocritical is that the ALP’s record on Israel, in comparison with the government’s, does not bear close study. The government’s record on the support for Israel and its opposition to things like Palestinian suicide bombers and terrorism is peerless in the history of this Federation. People like the Prime Minister, the Treasurer, the member for Casey and I have spent a career supporting the right of Israel to exist and the right of Palestine to have its own separate state and live peacefully with Israel. For us to be linked to Palestinian suicide bombers by this opposition—by the member for Griffith—is utterly offensive. The ALP’s record on Israel, however, is at best ambiguous. In the last few years they have attempted to walk both sides of the street with respect to Israel. They have attempted to appeal both to the Palestinian—
Mr Deputy Speaker, I rise on a point of order. The comments being made by the parliamentary secretary bear no relationship to the terms in which this debate has been listed.
There is no point of order.
If the member for Throsby cared to read the matter of public importance she would find that it says:
The failure of the government to discharge its obligations in relation to the national security and trade interests of Australia.
It could not be more broad. I am commenting with respect to the national security of Australia, because the security of Israel, our support for Israel and our opposition to terrorism are all about the national security of Australia.
The ALP’s record on national security is at best ambiguous and at worst disgraceful. The member for Fowler in this place only last year referred to the actions of Israel as creating a ghetto-like walled compound around the West Bank and Gaza. She also referred to concentration camps in relation to the state of Israel, which is deeply offensive to the Jewish people, given the history of the Jewish people and the Shoah during the Second World War. She also has referred in previous debates in this House in a most offensive way to Israel—
Mr Deputy Speaker, I rise on a point of order. I again wish to pursue the issue of relevance. I think these comments might be relevant in a debate about the respective positions of both political parties vis-a-vis the Middle East situation. They certainly are not relevant—
Order! I think I have the gist of the point of order. But I think if the member for Throsby reads the MPI she will see that it says ‘the failure of the government to discharge its obligations in relation to the national security and trade interests of Australia.’ So it is a fairly broad statement. The parliamentary secretary is in order.
It is a very broad statement. I point out to the member for Throsby that it was the member for Griffith who today and yesterday accused this government of aiding and abetting Palestinian suicide bombers in Israel. I am responding to that because I am deeply offended as a person who in this House has stood up for the rights of Israel and has opposed terrorism for 13 years in a very public way. I took deep offence and chose not to take a point of order during question time because I knew I would have the chance to speak on this MPI later today.
The member for Fowler also in her speech last year referred to the state of Israel as being involved in ethnic cleansing against the Palestinian people. The member for Sydney in this place has referred to Ariel Sharon—a man who, by removing settlements from Gaza and bringing peace to the West Bank area, has done more for peace in the Middle East than many other people in Israel in the last 10 years and who today lies ill in a coma—as a war criminal. The member for Sydney has referred to Israel as a rogue state. The member for Grayndler, Mr Albanese, has given succour and support to the member for Fowler and the member for Sydney.
My point is that on this side of the House there has never been any ambiguity about our opposition to terrorism, our opposition to Palestinian suicide bombers and our support for the state of Israel. For the Labor Party to try in the last two days to link us to Palestinian suicide bombers is deeply offensive. They should hang their heads in shame for doing that and they should apologise to this side of the House.
The second reason I find this MPI utterly hypocritical is because of the hypocrisy of the Labor Party trying to clothe itself as the party which supports national security. It was only at the end of 2004 that the Labor Party—most members on the other side of the House today—supported Mark Latham to become the Prime Minister of Australia; a man that they knew, the member for Griffith must have known and the current Leader of the Opposition must have known did not support the United States alliance.
The most important touchstone of Australia’s national security is ANZUS, our alliance with the United States: the knowledge that the United States and Australia support each other in the event of ever facing a conflagration—which we hope will never happen—at some stage in the future. It has given us an alliance with the most important nation in the world today, the only behemoth in world political affairs. We are in the fortunate position of being closely allied to that country.
The Leader of the Opposition in the previous parliament did not support that alliance. The former Leader of the Opposition abused the President of the United States, George Bush. He called him a dangerous man. He said, in fact, that the alliance was the last manifestation of the White Australia Policy. He said the US alliance is a funnel that draws us into unnecessary wars, first Vietnam and then Iraq. In his diaries, he makes it perfectly clear that if he had become Prime Minister the US alliance would have been put seriously at risk. He makes it clear in his diaries, in terms of national security, that he did not regard the US alliance as being as important as this side of the House did. So for this MPI to suggest that this side of the House has put national security and our trade interests at risk is deeply offensive to me and is obviously hypocritical. The Labor Party stands condemned for it.
The member for Griffith and the Leader of the Opposition supported the member for Werriwa, as he was then, in the election to become Prime Minister. They knew that he did not support the US alliance. They might have backed themselves in the vain hope that, if he were elected, they might have been able to control him. But, as various cameramen and others have found in recent years, the former member for Werriwa is not easily controlled. As the Treasurer said yesterday about what the former member for Werriwa would have done to the economy, as he did to a camera, we can say that he would have done the same thing to the US alliance if he had been elected as Prime Minister.
This side of the House can never stand condemned for putting our national interests at risk. This side of the House has fought the war on terror, enthusiastically tried to defeat terror wherever it finds it around the world. This side of the House supports liberty. It supports freedom. It supports democracy. It is trying to make a difference in Iraq. That is why we went into the war in Iraq: to try and bring about a change in world affairs, to defeat terrorism, to create democracy, to give people in the Middle East an opportunity to see that democracy can work in their nations and to embrace it, because democracies tend not to go to war against each other.
The other side of the House, the Labor Party’s side of the House, did not support the war in Iraq. They made it very clear. In fact, the Leader of the Opposition said he would withdraw the troops from Iraq before the job was done. So for the member for Griffith to stand up here and clothe himself in the hypocrisy of this MPI in an attempt to make the coalition side of the House the side that does not support national security is a farce and a mockery. The Australian public would know that to their very bones.
The Australian public know that on national security, on the economy, it is the coalition that will deliver good government. The public know that, when it comes to national security, the Labor Party is a risk. It was a risk in the sixties, it was a risk in the seventies and it would have been a risk again in the war on terror across the world. For the ALP to lecture this government on national security is akin to General Pinochet lecturing the Chilean people about freedom of speech. It is akin to Henry VIII lecturing the English people about the sanctity of marriage and the importance of families.
What we have really seen here in this debate and for the last two days is the member for Griffith’s audition for the Labor Party leadership, which is going slightly off the rails for him because he knows he is not going to get a scalp because there is nothing for us to be ashamed of. He wanted to replace Simon Crean. He talked about it, and he held various press conferences outside his home in Brisbane. He wanted to replace Mark Latham. He did his Hamlet act: ‘Will I? Won’t I? No, I’ll stand aside for Kim Beazley.’ We all know that he did not have any voters in the Labor Party caucus. The member for Throsby knows that he had no votes in the Labor Party caucus. But it was a brilliant show business line and it got him a lot of publicity. He is now out to get Kim Beazley. He is more Macbeth today than he was Hamlet back in those days. And this is all an audition for his desire, his ambition, to lead the Labor Party—nothing more. (Time expired)
Before speaking to the general thrust of the matter of public importance, I want to note my interest in some of the comments that the member for Sturt made, particularly in relation to the reasons for entry into the war in Iraq. I think, using the logic that he expressed, one would have to ask why military forces from Australia are not currently in Zimbabwe. The atrocities that are happening in Zimbabwe at the moment—the deaths and the inhumanity—surely have to be regarded by this government as being of some significance. There are similar circumstances: a despot and a lack of food in that nation, but regrettably there is no oil. I think that says something in itself.
My major reason for rising today is not to try and pre-empt the Cole inquiry. I agree with a number of speakers who have said that the Cole inquiry should take its course and that, if there are some political adjudications to take place, they should take place then. But there are a number of issues that I think people are raising to try and create illusions in relation to the wheat industry. I do not think there has been a member of parliament who actually grows wheat or has been associated with the wheat industry at an agropolitical level who has spoken in this debate. There are a lot of people making decisions in relation to what they believe the wheat industry is saying.
I am a grain grower myself, a former member of the Grains Council of Australia and the grains committee of the New South Wales Farmers Association, and one who does have wheat growers within his electorate. Wheat growers are not saying to me what a number of members of the opposition have been saying, particularly during question time today—that is, that they are happy to see access to these markets through any means at all. Wheat growers are not happy to see bribes being used to access markets. Wheat growers do not want this sort of behaviour to continue, because it is very obvious that, if we are in negotiations in relation to free trade, as our trade minister is, and we give an image that our grain growers are comfortable with access at any price, we put not only them in a position that they do not hold but also any future negotiations in relation to trade, the level playing field, those against subsidisation and those who want open access to marketplaces at risk.
The wheat growers who have spoken to me are most concerned about the conduct of the Australian Wheat Board—in fact they are shocked. They do not know whether the government did or did not know of certain circumstances that occurred. But the Prime Minister made the point a few days ago—and I would hope that all members of the government and anybody who knows anything about this take heed of what he said; I hope he himself takes heed of it—people should tell the truth in relation to this issue. Because if we do not and the information is hidden there will be an impact on our trading credibility, and the very wheat growers that everybody is trying to make a position for are the ones who will suffer.
The future of the wheat industry has been raised. There is conjecture within the coalition about the future of the Australian Wheat Board and the single desk arrangements. Wheat growers who have spoken to me, and I am sure to other country members of the parliament, are most concerned that this issue is being used within the government, outside the government and internationally as a reason to destroy the single desk export arrangements. I made it very plain that I support Mark Vaile in his stand to maintain the single desk arrangements for wheat exports from this nation. If people in the coalition are going to plead, ‘Let’s wait until the Cole inquiry is over before we make judgments on the outcome of the inquiry and on who did what in terms of the corruption process and who knew what,’ they must also hold back from using the Cole inquiry as the very excuse to destroy the single desk arrangements that currently exist.
If there are people within the Australian Wheat Board, and it seems there are, who have been involved in corrupt activity they should be rooted out and should face the full penalty of the law. If there are ministers of this government who may through that inquiry or other inquiries be found wanting in terms of what they told parliament and the truth of the matter, they should be made accountable for their actions as well. To all sides I make this plea: don’t throw the baby out with the bathwater. Do not use old political rivalries as a platform to remove the single desk at this point in time.
The broader issue that we are dealing with here, and the assumption that some have used, is that we have a problem in terms of trade. Just putting aside the United Nations sanctions at the moment and this peculiar problem with Iraq, we have a problem with trade. We export 80 per cent of what we grow, so we need to export. Therefore, access to export markets is paramount. We know we are dealing in a corrupt world market. If you are going to deal in a corrupt world market there is almost an acceptance amongst some—Senator Joyce made some appalling statements the other day, implying that bribes are acceptable to gain access to the market. There are people who say, ‘If you don’t do that it’s a zero gain. You do not sell any of the product.’ I do not agree with that, and I am surprised that the National Farmers Federation has not condemned those very words. When a nation that has been at the forefront of trying to free up trade and has been antisubsidisation is silent—in the case of Senator Joyce, a member of the government, and others who are implying quietly that the wheat growers would accept such behaviour—it is implying that a bribe not a subsidy is okay. That in itself is corruption. We should not stand by and allow that sort of activity to happen.
Assuming that we do have problems with the surplus that we produce within agriculture, what are we going to do about that? I made some comments in relation to that this morning. We export 16 million tonnes of grain, on average, from this nation. If this government removed itself from dealing in two corrupt markets—everybody is saying that the wheat market is corrupt, and everybody has always said that the oil market is corrupt—and looked at the policy initiatives that it could put in place for renewable energy, for instance, and some of that grain could be transferred out of food production into energy production, which is right on the issue that this MPI is about, national security—energy is a very important part of national security. The Americans have woken up; President Bush has woken up to that and is moving down a different line, so maybe our own Prime Minister will follow the president on this issue.
For this parliament to say that, in terms of renewable energy targets, 0.83 of one per cent of our energy needs is going to be achieved by renewable energy—not a mandatory target but a voluntary target—over the 10 years from 2001 to 2010 and that that is an acceptable path to take is to me a demeaning statement for those involved not only in the energy industry but also in the farming industry. If this government mandated a 10 per cent use of ethanol in our cars, that would remove half the amount of grain that we currently export, some eight million tonnes. So rather than endorsing corrupt behaviour as part of the world market and something that we just have to accept, surely we have to start looking at other ways and means. If people do not want to pay anything for our food, let us look at producing our own energy, because we have to pay their price for energy. An ethanol level of 20 per cent, and there are other permutations and combinations, would remove the need to export grain at all or to enter those corrupt world markets. I make this plea: let us look at some of the alternatives for grain before we look at destroying the single desk arrangements.
Order! The time for consideration of the matter of public importance has expired.
Bill received from the Senate, and read a first time.
Ordered that the second reading be made an order of the day for the next sitting.
Bill returned from Main Committee without amendment; certified copy of the bill presented.
Ordered that this bill be considered immediately.
Bill agreed to.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Bill returned from Main Committee without amendment, appropriation message having been reported; certified copy of the bill presented.
Ordered that this bill be considered immediately.
Bill agreed to.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
by leave—I move:
That the Financial Framework Legislation Amendment Bill (No. 2) 2005 be referred to the Main Committee for further consideration.
Question agreed to.
I move:
That orders of the day Nos 3 and 4, government business, be postponed until a later hour this day.
Question agreed to.
Before I call the Special Minister of State I will congratulate him. It is the first time I have had a chance to congratulate my neighbour on his new promotion.
Thank you, Mr Deputy Speaker. While this motion is not specifically to do with your electorate, it is in the neck of the woods, so to speak, so it would be of interest to a member in the ACT.
True.
I move:
That, in accordance with the provisions of the Public Works Committee Act 1969, the following proposed work be referred to the Parliamentary Standing Committee on Public Works for consideration and report: Proposed fitout of new leased premises for Centrelink at Greenway, ACT.
Centrelink proposes to undertake a fit-out, at a cost of $40.9 million, of new leased premises for its National Support Office at Greenway in the Australian Capital Territory. The proposed fit-out will provide a work environment which integrates flexible workspace design with easily reconfigured ceiling and subfloor services, thereby reducing the cost of organisational and technological change. Construction of the office complex began in September 2005, and the building is scheduled for delivery in August 2007. Subject to parliamentary approval, the fit-out procurement process could begin in June 2006, with the fit-out elements being manufactured between November 2006 and August 2007, for installation in the new building between August and November 2007. Centrelink plans to occupy the building progressively in November and December 2007. I commend the motion to the House.
Question agreed to.
Debate resumed.
As I was saying before question time interrupted my contribution to this debate on the Aged Care (Bond Security) Bill 2005 and cognate bills, this legislation enhances protections available for residents of aged care facilities. At that particular time I was reflecting on residents that utilise multipurpose services, MPS. I was making the point that these services are a very valuable innovation in the delivery of aged care services and was noting the importance of this government entering into an agreement with the states. MPS allow for the effective delivery of services to communities where both health and aged care services are at risk, under threat or non-existent. So I think that this is a very good avenue for the government to actually work in partnerships with the states. It should be used as a model to get away from the blame game of one arm of government blaming the other arm of government for problems that exist.
Under the current arrangements, if a residential care facility provider becomes bankrupt or insolvent, the resident is not guaranteed that they will get the relevant accommodation bond amount refunded. That is not good enough, and I believe that this legislation is essential to address that problem. The bond security bill provides for a scheme whereby the Commonwealth will repay outstanding accommodation bond balances to relevant aged care recipients in cases where aged care providers default. The Commonwealth can then attempt to recover the balance amount from the defaulting aged care provider.
Also contained are administrative steps that must be taken so that a levy on aged care providers can be imposed under the levy bill. The levy bill will enable the Commonwealth to impose a levy on approved providers of aged care if it needs to recover its costs after repaying accommodation bonds to aged care residents whose approved provider becomes insolvent and defaults. The bill will enable the Commonwealth to impose a levy on aged care providers to the extent necessary to recover the amounts that it has not been able to obtain from defaulting providers and disclosure. This new prudential requirement will be developed over time and will be subject to review. The Aged Care (Bond Security) Levy Bill will enable the Commonwealth to impose a levy on approved providers of aged care if it needs to recover its costs after repaying accommodation bonds to aged care residents whose approved providers become insolvent and default.
Levies can be imposed on approved providers of aged care once a cost recoupment determination is made by the minister. The determination is made when the Commonwealth has not recouped money it has paid out in compensation to aged care residents entitled to bond refunds from a defaulting approved provider or when the Commonwealth wants to recover associated administrative costs. The bond security bill provides for the making of cost recoupment determinations and contains the process by which defaulting approved providers are identified and arrangements are made for the Commonwealth to compensate affected aged care residents and recoup its costs. This bill does not actually impose a levy. The rate of any levy will be determined by regulation and cannot exceed the cost recoupment determination amount in any particular case. While any levy imposed may apply different rates to different classes of approved providers, it cannot discriminate between providers on the basis of their location in a particular state or part of a state.
Whilst we are discussing this legislation, I believe that it is imperative that I bring to the attention of the House some of the issues that have been of real concern to both providers of aged care and those people who utilise aged care services. Unfortunately, the provision of aged care has been flawed. The government spruiks its innovations and the exciting things that it has done in aged care but, unfortunately, they are not working on the ground. The providers of aged care services find that the true cost of effective models of residential and community care are not being funded and that they should be indexed adequately. They are particularly concerned about the quality of services that are available to meet the needs of older people and younger Australians.
The issue I think the government needs to address is the Commonwealth own purpose outlays—COPOs. It is currently at 1.86 per cent and is linked to the minimum wage. My question to the government is: what will happen to the COPO indexation now that minimum wages are to change and that the Fair Pay Commission is to be considering wage increases? I see this having the potential to impact on the provision of aged care services and the potential to impact on the viability of residential aged care facilities. I know that residential aged care facilities believe that they are underfunded and that the COPO payment should be somewhere between four and six per cent as it currently does not meet the costs that are associated with the index.
The government is constantly telling us that we have an ageing population and that in 2011 the baby boomers of the world will begin to reach the age of 65. This is a crisis and something that we must address immediately. We have had the Treasurer’s Intergenerational report and last night and earlier today we debated the Future Fund, but I still do not believe that the government has in place the proper legislation to address these needs.
I will quickly mention that aged care providers in both residential and community aged care services since 1997—which puts it right in the government’s court—have experienced costs rising faster than their income. This is because when the government fixes the subsidies that the providers will be paying it does not look at things like workers compensation, wages, utility payments, general insurance, professional indemnity insurance and many other fixed costs that do not come into the formula. This is not good enough. Whilst this legislation will improve the situation for residents of aged care facilities and their families in relation to aged care bond security, I do not think it addresses any of the issues that I have touched on so far.
In addition to that, we have the existing chronic bed shortage. I know that within the Shortland electorate that I represent in this parliament there is an enormous waiting time for both assessment by the aged care assessment teams, particularly in the Hunter area of the Shortland electorate, and the delivery of services—be they in the community or actually accessing a bed in a residential care facility. Part of the problem is dealt with by the states absorbing the problem. Those people who are waiting for a residential bed are being housed or cared for in an acute bed in a hospital. This is not the optimal outcome for those people awaiting a placement in the residential aged care facility and also creates a problem for acute care hospitals.
These are some of the issues that need to be addressed in addition to looking at the aged care bond security. I would add to that the fact that we have a chronic workforce shortage within the health system. There is a chronic shortage of nurses within the acute care system and, more particularly, within the aged care system. This government has failed to address that. There are many more vacancies for assistance in nursing and nurses in the aged care facilities than there are people to fill them. I fear that that may increase as the government’s new industrial relations legislation kicks in and those people’s wages will become even lower than they are today.
Back in the 40th Parliament there was an inquiry into the future ageing needs of Australia. It enquired into long-term strategies to address the ageing of the Australian population over the next 40 years. Unfortunately, that inquiry went through the whole of the 40th Parliament and at the end of that parliament a draft report was produced. To me, that says that the government is not serious about aged care. It looked at the recommendations of Hogan, who expressed concerns about the workforce issues. He linked that in one respect to the disparity of wages between the acute sector and the aged care industry. This inquiry highlighted a number of problems. I will highlight the broad themes that were identified by that inquiry. There was an inadequate focus on services aimed at maintaining healthy functions such as physiotherapy, podiatry, nutrition, speech, oral health and the diversity of settings—the availability and quality of care for people with dementia or mental health problems and needing respite. Respite came up time and time again, on a daily basis and from the perspective of residential aged care. There was confusion about multicommunity care services and issues around the quality of community care services. You could have a number of organisations competing within the one area with a duplication of services and still people in the community could not access those services. This has not been dealt with. These are real issues that are affecting people on a daily basis.
One of the other issues that are having an enormous impact on residential aged care and older people in the community is the chronic doctor shortage. People are being denied beds in residential care facilities simply because this government has not ensured that there are enough doctors to go into those residential care facilities and make sure that those people can get the services they need. I recommend that all members of the House read this document on the future ageing of Australia. I recommend that the government thinks very carefully about its commitment to older people, because if it cannot even develop a full report to this parliament that addresses the needs of older Australians then it has a big problem. It really does show a lack of commitment in the area of aged care.
I reiterate that issues such as the shortage of aged care beds, the inordinate amount of time that people have to wait for a place in a residential aged care facility, the lengthy time that people have to wait to actually be assessed by ACAT and then access services in the community are a real problem for our ageing population.
The Aged Care Amendment (2005 Measures No. 1) Bill 2005 will enable the strengthening of the existing prudential requirements relating to accommodation bonds, especially in relation to liquidity, record keeping and disclosure. The new prudential requirements will be developed over time and will be subject to review. Flexible care services are those that are provided outside the normal residential and community care system. Multipurpose services—MPSs, as I mentioned earlier—provide a much more flexible model because they have aged care and health care services combined. They are particularly useful in smaller communities. I was fortunate enough to visit Tullamore and see them operating in that community. I reiterate what I said earlier and recommend them to this government. Each should be extended. They operate very effectively. They allow people to stay in their own home and get the high-level care that they would receive in a residential care facility.
Entry contributions are amended in schedule 2. That means that all rules applying to approved providers of residential care services and flexible care services that hold accommodation bonds will also apply to approved providers that hold entry contributions paid before October 1997. Schedule 3 provides that approved providers will comply with the prudential requirements if they comply with the new prudential standards that will be imposed under proposed new section 57(4). User rights principles may be set out in prudential standards, and these are defined as standards providing for the protection of accommodation bonds and entry contributions, balances of care recipients, sound financial management of approved providers and the provision of financial management.
Three standards are intended: liquidity standards, records standards and information standards. Implementation of the last two standards will assist with the operation of the guarantee and the recoupment schemes provided for under the Aged Care (Bond Security) Levy Bill 2005. Records standards will mean that approved providers holding bonds will establish and maintain independent audited records and ensure refunds of accommodation bonds.
Once again, I would like to reiterate that there is more to aged care and more to providing services than the government has here. I do not oppose what is in these bills, but I think there is a long way to go and a lot of issues that this government needs to look at. We need to ensure that services are out there in the community for our frail aged Australians. We need to ensure that the aged care facilities are properly funded, that the services provided in the community are provided in the best possible way, that we do not have duplication of services and that we actually provide the best service available to those people who need those services.
I would like to thank the House for the opportunity to sum up these important bills in the aged care sector: the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005. I would also like to apologise to the member for Shortland for trying to cut her off before question time, not realising that the speakers list had moved around a little. I would also like to thank the member for Shortland and the opposition generally for their support for the bills. I would like to thank the members for Reid, Rankin, Cowper, Banks, Riverina, Fowler, Hasluck, Chisholm, Canberra and Calare for their contributions.
That is very courteous.
The member for Throsby says I am being very courteous, but when the opposition and the government are in furious agreement about important changes it is worth while being courteous. It does not happen as often as it should. I thank the government for putting these bills forward and the opposition for supporting them. The government has presented three very important bills which guarantee the repayment of bonds to residents in the event of an approved provider becoming bankrupt or insolvent. The bills also ensure improved prudential arrangements in aged care services holding bonds. The government is delighted with the support that it has received, and I will happily sum up the debate.
The Aged Care (Bond Security) Bill 2005 enables the Australian government to repay residents’ bond balances with interest in accordance with the amendments in the measures bill if the residents’ approved provider of aged care becomes bankrupt or insolvent. This means that every resident who has paid or, in the future, will pay an accommodation bond is guaranteed to have their money repaid even if their approved provider becomes bankrupt or insolvent. The legislation protects all pre-1997 entry contributions for entry to Commonwealth funded services. The legislation also protects bonds paid by aged care residents in flexible care services known as multipurpose services. Without this new government guarantee, a resident would continue to rank as an unsecured creditor to an insolvent or bankrupt approved provider and may have to wait months or even years to have their bond balance repaid and still not be sure of recovering all of the money owed to them. Under the arrangements set out in the bill the government will repay the bond balance owing to the resident and in exchange any rights the resident had to recover the amount from the approved provider will be transferred to the Commonwealth. The government will then stand in the shoes of the resident and seek to recover the money paid by pursuing the defaulting provider. If necessary, through the provisions set out in the Aged Care (Bond Security) Levy Bill 2005 the government will levy all aged care providers who hold bonds to recover any amount owing.
Existing protections under the Aged Care Act 1997 have worked well, as is shown by the fact there has not been an instance where a resident’s bonds balance has not been repaid because of the bankruptcy or insolvency of a provider. The government believes, however, that these additional protections are timely. The average new bond was valued at $26,000 in 1996-97 and was $127,600 in 2004-05. Bonds can represent a significant proportion of a resident’s life savings and, understandably, residents and their families expect secure arrangements for their bonds and reassurance that their bond balances will be repaid when the resident leaves the home.
This legislation reflects the government’s three objectives. The first objective is to improve the efficiency and sustainability of the aged care sector and strengthen the management of bond moneys to reduce the likelihood of providers becoming insolvent or bankrupt and being unable to pay bond balances. The second objective is to strike a balance between the added security for residents that is provided by this strengthening and the financial impact of the new arrangements on the sector’s viability and its standing with the capital markets, including its ability to construct and maintain aged care homes. The final objective is to ensure that all residents who pay bonds receive their full entitlement to the balance of the bonds that they have paid in the event that a provider becomes insolvent or bankrupt.
The new arrangements set out in the three bills will improve both the security of bonds and the management of bonds by the sector. They will complement the $877 million conditional adjustment payment which was implemented in 2004 and which requires approved providers to prepare audited general purpose financial reports. These are two government initiatives which over time will assist to make the residential aged care industry more financially mature and more sustainable. The introduction of these protections demonstrates the coalition government’s commitment to a world-class system of aged care that provides high-quality, affordable and accessible services to meet the individual needs and choices of older Australians. With that, I commend the three bills to the House.
Question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Debate resumed from 8 December 2005, on motion by Ms Julie Bishop:
That this bill be now read a second time.
Question agreed to.
Bill read a second time.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Debate resumed from 8 December 2005, on motion by Ms Julie Bishop:
That this bill be now read a second time.
Question agreed to.
Bill read a second time.
by leave—I move:
That this bill be now read a third time.
Question agreed to.
Bill read a third time.
Debate resumed from 8 December 2005, on motion by Mr Pearce:
That this bill be now read a second time.
upon which Mr Fitzgibbon moved by way of amendment:
That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House condemns the Government for:
The Trade Practices Amendment (National Access Regime) Bill 2005 makes amendments to the Trade Practices Act 1974 that will implement the government’s response to the Productivity Commission’s report No. 17, Review of the national access regime. The review supported the retention of the regime but made 33 recommendations seeking to improve the regime’s operation, including changes to clarify the regime’s objectives and scope, encourage efficient investment in new infrastructure, strengthen incentives for commercial negotiation and improve the certainty and transparency for regulatory processes. The majority of these recommendations were endorsed by the government.
These changes aim to provide a balance between ensuring a means for business to gain access to nationally significant infrastructure while providing incentives for new investment. The changes are also designed to provide access seekers and investors with greater confidence and certainty about the regulatory framework to enable them to make well-informed decisions.
The national access regime comprises two components—a legislative framework contained in part IIIA of the Trade Practices Act 1974, and clause 6 of the 1995 Competition Principles Agreement negotiated between the Commonwealth, state and territory governments. Under part IIIA, business can seek access to strategically important infrastructure services on reasonable terms and conditions. This access can be sought in cases where replicating the infrastructure concerned would not be economically feasible and where commercial negotiations with the infrastructure owner or operator has failed. This is to ensure that facilities with natural monopolies do not create barriers to competition.
The national access regime establishes three pathways available for an access seeker to gain access to a strategically important infrastructure service under part IIIA. The parties seeking access may apply to the National Competition Council to have the service declared. Declaration gives the access seeker a right to negotiate with a service provider, with provision for arbitration by the Australian Competition and Consumer Commission if these negotiations are unsuccessful. Declaration of a service under part IIIA establishes a right for access seekers to negotiate terms and conditions of access with facility owners. If negotiation is unsuccessful, part IIIA establishes an enforceable right to dispute resolution through arbitration by either a private arbitrator or the Australian Competition and Consumer Commission.
While part IIIA does not preclude private negotiation between an access seeker and a facility owner, declaration of a service shifts the negotiating balance. The fact that negotiations for declared services are underpinned by the threat of arbitration will inevitably condition those negotiations. Negotiation between access seekers and access providers can also be affected by imbalances in information available to the parties. A service provider’s greater appreciation of the cost and price structures for the services in question, their technical operation and the degree of spare capacity weakens the bargaining position of the access seeker. Under the declaration process, access is provided only to services produced by the infrastructure facility and not to the facility itself.
Section 44B provides clarification that the term ‘service’ includes the use of an infrastructure facility such as a road or railway line, handling or transporting things such as goods or people, and a communications service or similar service but that it excludes the supply of goods, the use of intellectual property or the production process, except to the extent that it is an integral or subsidiary part of the service. Further, declaration is only possible if the infrastructure facility by which the services are being provided is of national significance having regard to the size of the facility, the importance of the facility to constitutional trade or commerce or the importance of the facility to the national economy. In addition, it must also be uneconomical for anyone to develop another facility to provide the service.
As a consequence, the service providers in this context either own or operate a facility of national significance, duplication of which must be uneconomical, that is used or is to be used to provide a service subject to declaration. Such facilities traditionally tend to be in public ownership due in part to the significant capital required to develop a facility. Since the mid-nineties, however, many of these previously government owned vertically integrated entities such as electricity, rail, gas and port sectors have been privatised or corporatised and have been subjected to vertical separation.
Infrastructure service providers will now be either a vertically integrated provider, such as a provider of an infrastructure service that also provides services in an upstream or downstream market—for example, an electricity authority responsible for generation, transmission and distribution—or a non-integrated provider, such as a provider of an infrastructure service that is not involved in providing services in upstream or downstream markets. As the services provided by these natural monopoly facilities have been subjected to varying forms of contestability, third party access seekers could include participants from a wide range of sectors motivated to compete on reasonable terms and conditions with service providers.
A party may also seek access through an ‘effective’ access regime. Where an effective access regime already exists, declaration is not available and an access seeker must use the effective regime. In the case of a state or territory access regime, the question of effectiveness can be pre-determined through the process of ‘certification’. An access regime can be certified as effective by the Commonwealth minister following the council’s recommendation that the regime satisfies the clause 6(4) criteria contained in the competition principles agreement.
A party may also seek access under the provisions of an access undertaking. Part IIIA allows service providers to submit a voluntary access undertaking to the commission for approval. An undertaking sets out the terms and conditions under which access to the service or services will be provided. An undertaking may be submitted in relation to existing or proposed infrastructure and can either apply to an individual service or provide the basis for an industry access code.
Services covered by undertakings cannot be declared. I must add here that, while I generally support the principles of third party access—such as power generation utilities feeding into a grid that gives better competition—there are, however, certain circumstances where I do not support third party access. The best example that I can give is the rail infrastructure in the iron ore industry in the north-west of Western Australia.
Effectively, the whole rail and loco activity is deemed to be part of the same process. Indeed, when the diesel fuel rebate did not apply to locomotives in the rail industry, it could be claimed by the iron ore industry because the locomotives were deemed to be part of the total mining operation process. The entire process is about the management, scheduling and coordination of the rail network and rolling stock. The success of the north-west operation is that one entity coordinates the entire operation over all managed sites.
The iron ore companies operate their fleets so that they can extract different grade orders from different mines to get the material to their blending operations at the port, and they make highly efficient use of their infrastructure to complete the process to meet growing export demands. Therefore, one of the challenges with third party access is the adverse impact on existing operators. The mine-to-rail-to-port activity is an integrated logistics chain and is considered to be one complete process that does not lend itself well to interruptions and to being shared with third parties.
Third party access could be accommodated, in my view, provided a single entity controlled the operation to ensure that there was minimal disruption to the mining infrastructure and that there was no reduction in production outputs. Third party access would have to be compatible and assimilate with current operations and procedures. If giving third party access to rail infrastructure in the mining sector in Western Australia had the effect of lowering production efficiency and increasing the cost base, in this instance I would not support third party access to existing infrastructure.
The major changes proposed in the bill give effect to the government response and include the insertion of a new objectives clause in part IIIA to provide for greater certainty for infrastructure owners, access seekers, investors and other interested parties. The bill also requires decision makers under part IIIA to have regard to the objectives clause when making their respective decisions. The objectives clause emphasises the need for part IIIA decisions to promote competition by promoting the economically efficient operations and use of investment in infrastructure.
It also recognises the role of the national access regime in establishing a framework to promote a consistent approach to access regulation in industry-specific access regimes. The implementation of the objectives clause will promote consistency and provide guidance to decision makers in the application of part IIIA. This will enhance regulatory accountability and ensure certainty for all stakeholders, as well as contribute to greater investor confidence in investing in infrastructure facilities.
The national access regime seeks to promote competition in the economy by promoting the efficient investment in, and use of, infrastructure facilities of national significance and it provides an avenue by which firms can seek access to services provided through infrastructure facilities owned and operated by others. To this end, the bill will encourage efficient investment by the introduction of pricing principles that will provide additional certainty to regulated firms and access seekers and will help to address concerns that a regulator’s own values will unduly influence decisions relating to the terms and conditions of access. The pricing principles will assist in ensuring consistent and transparent regulatory outcomes. They will also enhance certainty for investors and access seekers and facilitate commercial negotiations between parties.
Changes are also proposed to the declaration threshold. The government has agreed to amend the ‘promote competition’ declaration criteria contained in paragraph 44G(2)(a) to ensure that access declarations are only granted where the expected increase in competition in an upstream or downstream market is not trivial. A number of criteria must be met before a service provided by means of an infrastructure facility can be declared under part IIIA, thereby giving third parties the right to negotiate access with the service provider. These include: access to a service would promote competition in at least one market, other than the market for the service; the infrastructure facility is of national significance; and access, or increased access, to the service would not be contrary to the public interest.
The bill amends the criteria so that declarations of service cannot be recommended unless access to a particular service would promote a material increase in at least one market, other than the market for the service. This should help reduce any uncertainty for access providers and lessen the perceived regulatory risk of the regime for prospective investors in significant infrastructure.
A number of changes are proposed under the existing arbitration requirements in part IIIA. The ACCC will be given discretion to conduct multilateral hearings in arbitrations, following notification to parties in a dispute. Such processes will allow the commission to consider the service in its entirety and could streamline administrative requirements and reduce costs. The arbitration provisions will be amended to make it explicit that, when arbitrating a dispute, the ACCC can require a service provider to permit interconnection to its facilities by the access seeker.
In the absence of any developed case law on this issue, the government is taking the opportunity to provide clear guidance in this area to access seekers and service providers. It is also proposed to finetune the provisions relating to arbitration of disputes over access to declared services to facilitate timely decision making and to ensure that the arbitration process is not used as a strategy to delay the provision of access to services.
The bill also applies a number of non-binding target time limits to various decisions under part IIIA. While the time limits are not binding on the decision makers concerned, they oblige the decision makers to publish a notice of any extension beyond the target time limit, thereby providing regulatory transparency, as well as increasing incentives for timely decision making.
The bill also introduces legislative provisions for public input on declaration and certification applications and proposed access undertakings where it is reasonable and practical for the National Competition Council or the ACCC, as the case may be, to undertake such consultation. This will provide for more informed decision making, particularly when assessing the public interest in each case. The bill places additional obligations on ministers, the council and the commission to publish reasons for their decisions or recommendations.
This will enhance procedural transparency and regulatory accountability and will facilitate informed consideration of whether there are grounds to challenge a decision by merit review before the tribunal or judicial review by the courts. The commission will also be required to publish reports on completed arbitrations for services declared under part IIIA. The bill sets out a range of minimum requirements to be included in the reports, but the specification of minimum requirements will not preclude the commission from reporting on a matter relevant to an arbitration, subject to the exclusion of confidential commercial information. Publication of arbitration reports will enhance regulatory transparency and may provide guidance for future cases.
In addition to encouraging efficient investment in infrastructure facilities, the bill also includes measures to enhance the incentives for commercial negotiation between access providers and access seekers. One such important measure is to allow access providers to lodge an undertaking after a service has been declared. Post-declaration undertakings will reduce the need to determine terms and conditions of access through arbitration procedures. This will improve certainty for service providers and access seekers and will facilitate commercial negotiations between them.
In conclusion, this bill significantly enhances the national access regime by introducing improvements that will further encourage efficient investment in and use of important infrastructure facilities in Australia. Importantly, the regime is not intended to replace commercial negotiations between access seekers and providers and seeks to support the legitimate interests of essential infrastructure owners.
The changes being proposed by the government provide a balance between ensuring a means for business to gain access to infrastructure, while providing incentives for new investment in essential infrastructure. The changes are also designed to provide access seekers and investors with confidence and certainty about the regulatory framework so they are able to make well-informed decisions. I commend the original bill to the House.
Debate (on motion by Mr Stephen Smith) adjourned.
I present the report of the Selection Committee relating to the consideration of committee and delegation reports and private members’ business on Monday, 13 February 2006. The report will be printed in today’s Hansard and the items accorded priority for debate will be published in the Notice Paper for the next sitting.
The report read as follows—
Report relating to the consideration of committee and delegation reports and private Members’ business on Monday, 13 February 2006
Pursuant to standing order 222, the Selection Committee has determined the order of precedence and times to be allotted for consideration of committee and delegation reports and private Members’ business on Monday, 13 February 2006. The order of precedence and the allotments of time determined by the Committee are as follows:
COMMITTEE AND DELEGATION REPORTS
Presentation and statements
Statutory oversight of the Australian Securities and Investments Commission
The Committee determined that statements on the report may be made — all statements to conclude by 12:35 p.m.
Speech time limits —
Each Member — 5 minutes.
[Minimum number of proposed Members speaking = 1 x 5 mins]
Digital TV — Who’s buying it ?
The Committee determined that statements on the report may be made — all statements to conclude by 12:45 p.m.
Speech time limits —
Each Member — 5 minutes.
[Minimum number of proposed Members speaking = 2 x 5 mins]
PRIVATE MEMBERS’ BUSINESS
Order of precedence
Notices
1 Mr Griffin to move:
That this House:
Time allotted — 30 minutes.
Speech time limits —
Mover of motion — 5 minutes.
First Government Member speaking — 5 minutes.
Other Members — 5 minutes each.
[Minimum number of proposed Members speaking = 6 x 5 mins]
The Committee determined that consideration of this matter should continue on a future day.
2 Mr Baird to move:
That this House:
Time allotted — remaining private Members’ business time prior to 1.45 p.m..
Speech time limits —
Mover of motion — 5 minutes.
First Opposition Member speaking — 5 minutes.
Other Members — 5 minutes each.
[Minimum number of proposed Members speaking = 6 x 5 mins]
The Committee determined that consideration of this matter should continue on a future day.
3 Mr Tanner to move:
That this House:
Time allotted — 30 minutes.
Speech time limits —
Mover of motion — 5 minutes.
First Government Member speaking — 5 minutes.
Other Members — 5 minutes each.
[Minimum number of proposed Members speaking = 6 x 5 mins]
The Committee determined that consideration of this matter should continue on a future day.
4 Mrs B. K. Bishop to move:
That this House:
Time allotted — remaining private Members’ business time.
Speech time limits —
Mover of motion — 5 minutes.
First Opposition Member speaking — 5 minutes.
Other Members — 5 minutes each.
[Minimum number of proposed Members speaking = 6 x 5 mins]
The Committee determined that consideration of this matter should continue on a future day.
Debate resumed.
The Trade Practices Amendment (National Access Regime) Bill 2005 follows on from the findings of the Productivity Commission’s review of the national access regime. The bill amends the Trade Practices Act 1974 to enable implementation of most of the recommendations made by the Productivity Commission in that review.
This bill is of great importance to the future of Australia’s national infrastructure needs and comes at a time of ongoing neglect of our national infrastructure by the Howard-Costello government. The bill follows call after call by industry, the states and federal Labor for the government to actively work to address our national infrastructure needs.
Since May 2001, on at least 11 separate occasions, the Reserve Bank has referred to infrastructure capacity constraints impacting negatively on our national economy. As recently as its May 2005 quarterly statement on monetary policy, the RBA warned the government that capacity constraints were stifling economic growth. Most galling in failing to address our national economic infrastructure needs was the Treasurer’s 10th budget, which ignored the fact that, when interest rates increased by 25 basis points in March 2005, capacity constraints were cited as half the reason by the Reserve Bank.
In addition to the Reserve Bank’s warnings, over the last 12 months the Australian Competition and Consumer Commission, the OECD and CEDA have all voiced their dissatisfaction with the government’s complacency in this area. Since 1997, public sector investment, including in infrastructure, slumped to around 2.2 per cent of GDP, the sixth lowest of all OECD countries. An analysis by the Business Council of Australia shows a $90 billion shortfall in Australia’s infrastructure. The BCA estimates substantive infrastructure reform could lift the level of our GDP by two per cent or $16 billion annually.
Most recently, Hugh Morgan, the past president of the BCA, summed up the collective frustration of the business community when he said:
There’s really no strategy, there’s no plan for Australia’s infrastructure needs.
The Howard-Costello government’s response over the past year or so has been to commission no fewer than eight separate ad hoc infrastructure inquiries, including the Prime Minister’s own so-called Exports and Infrastructure Taskforce. One overriding factor relating to all of these inquiries is a complex regulatory regime and a lack of coordination of national interest priorities so far as infrastructure is concerned. On 1 June 2005 the Prime Minister’s taskforce issued its formal report. Even the Prime Minister’s own handpicked Exports and Infrastructure Taskforce, led by his old mate Max Moore-Wilton—and labelled by Hugh Morgan as ‘a committee to protect Sir Humphrey’—found there were ‘underlying weaknesses’ in Australia’s export infrastructure which must be addressed to prevent further capacity constraints and bottlenecks developing in export industries.
Labor’s view is that all levels of government, particularly the Commonwealth government, need an ongoing source of independent expert advice on the extent of infrastructure problems, how to fix them and how we plan for the roads, railways, ports and communications networks of the future. Consistent with Labor’s view, and despite its shortfalls as a political fix to a policy problem, the Prime Minister’s taskforce report noted that the greatest impediment to the development of necessary infrastructure is the way in which the current economic regulatory framework is structured and administered. The taskforce called for a simplified regulatory test, suggesting that regulators base decisions on whether proposals by the infrastructure owner are reasonable in the commercial circumstances and in light of statutory objectives. This recommendation reflects the fact that the crux of the complaints made by asset owners is that regulators are overly concerned with keeping down the prices that monopoly infrastructure operators charge over the short term, leaving providers with insufficient incentives to make much-needed investment in necessary infrastructure expansion.
That background brings us to the bill. Labor’s attitude to the bill is reflected by the second reading amendment, circulated and moved in the name of Mr Fitzgibbon, the shadow assistant Treasurer, shadow minister for revenue and member for Hunter. That second reading amendment reads:
“whilst not declining to give the Bill a second reading, the House condemns the Government for:
The second reading amendment refers to the absence of pricing principles in the bill, to be addressed by an amendment to be moved in the committee stage by the member for Hunter, which has been circulated in his name.
The bill remains timely—if not overdue, given the fact that it was introduced last year and sat on the Notice Paper for a considerable time. It is timely that a bill addressing infrastructure access issues is being considered at the present time. The government might pretend that it is timely, but it is also massively overdue. Our current national infrastructure difficulties could well have been averted had the government not been complacent and acted much earlier to provide certainty to investors and to access seekers.
The bill before us is the government’s formal response to the Productivity Commission’s review, which had its genesis 10 years ago when Labor was in government. Many will recall the Hilmer committee’s report on national competition policy which made a number of recommendations on a national approach to competition policy, the outcome of which in 1995 was agreement by the states and territories to implement national competition policy. The fundamental premise of national competition policy was increasing competition throughout the economy in order to build economic capacity and more effective national economic performance.
The national access regime was included as part of the 1995 national competition policy. There are two aspects to the national access regime, one of which is dealt with in the bill today. The first is clause 6 of the 1995 competition principles agreement which was negotiated between the federal, state and territory governments. That agreement set out the principles for assessing third party access to nationally significant infrastructure. The second is the legislative framework found in part IIIA of the Trade Practices Act 1974, which seeks to ensure that infrastructure with natural monopoly characteristics does not become a barrier to competition. Under part IIIA of the act, access to nationally significant infrastructure can be made available to businesses in situations where duplicating it would not be economically feasible or, in other words, where it would be an inefficient use of capital and where commercial negotiation has failed to see agreement on access arrangements.
There are three ways in which an access seeker can currently gain access to such natural monopoly infrastructure. Firstly, they can do so by applying to the National Competition Council to have the service declared—a mechanism that establishes a right to negotiate terms and conditions of access with the service provider. In the event that negotiations fail, declaration also gives an access seeker the right to seek binding arbitration by the ACCC. Secondly, they can do so by seeking access through an ‘effective’ access regime, meaning that it satisfies certain agreed criteria. Thirdly, they can do so by seeking access under the provisions of an access undertaking from the service provider which has been approved by the ACCC.
In October 2000, the government commissioned the Productivity Commission to undertake a review of that regime. That report was delivered on 28 September 2001 but not released until 17 September 2002, together with the government’s interim response. But it was not until February 2004—over 2½ years from the delivery of the review—that the government finally responded to the Productivity Commission’s findings. The delay from September 2001 to February 2004 on a matter of such fundamental importance to our national economic efficiency, productivity and international competitiveness is obviously unacceptable.
To compound that delay, it has taken nearly two years following the government’s formal response for the legislation to finally be dealt with by the House. It is five years since the commissioning of the original Productivity Commission review into national access and four years after the Productivity Commission delivered its report to the federal government, and only now do we see the legislation formally being debated in the House. That is five long years of uncertainty for third party access seekers to nationally significant infrastructure—five long years that have seen hurt done to the Australian economy.
The government’s overdue response contains a number of changes to the national access regime that Labor supports. Two recommendations are worth mentioning today because they go to the heart of building a competitive environment that also guarantees certainty for consumers and investors alike. The first is the introduction of a new public policy objects clause. The objects clause is intended to promote the economically efficient operation of, use of and investment in infrastructure so as to effect competition in both upstream and downstream markets and, importantly, to ‘provide a framework and guiding principles to encourage a consistent approach to access regulation in each industry’. Labor supports this approach. It is a sensible measure because it provides guidance on the intent and purpose of part IIIA of the act.
The second relates to pricing principles contained within the legislation. In its 2002 report, the Productivity Commission recommended that pricing principles ‘with specific application to arbitration for declared services, assessments of undertakings and evaluations of whether existing access regimes are effective should be included in part IIIA of the Trade Practices Act’. In its formal response to the Productivity Commission’s report, the government in 2004 agreed that statutory pricing principles should be established in relation to part IIIA to provide guidance for pricing decisions. I support the government’s logic that such an approach would contribute to consistent and transparent regulatory outcomes over time as well as provide commercial certainty for both investors and access seekers. Accordingly, the government’s formal response stated that it would include specific pricing principles in part IIIA, including that regulated access prices should:
As well, the government agreed that any access price structures should:
Given that this was the government’s formal response to the Productivity Commission’s recommendations, it would not have been unreasonable to see these principles somewhere in the legislation. The government had, after all, gone so far as to draft the appropriate principles with the specific reference that:
The Government agrees to include the following pricing principles in Part IIIA.
However, an initial review of the legislation revealed that any such pricing principles were to be excluded from the body of the legislation and included only in the regulations, to be specified by the Treasurer. This would have been a significant watering down of the previous position taken by the government. The government’s decision to move pricing principles into regulations was done without any adequate explanation, even with the benefit of a Senate inquiry.
This was a point neatly put in the public hearings of the Senate Economics Legislation Committee on 11 August, when the Energy Network Association said:
We think it could potentially have a chilling effect on new infrastructure development because … you—
an investor—
may make a different sort of risk-reward assessment investment decision on the basis of whether or not these pricing principles are within ministerial determination or the statute.
It is extraordinary that at the first opportunity the government had to demonstrate that it was actually capable of doing something to rectify our national infrastructure problems—after eight infrastructure inquiries as well as numerous bodies calling for urgent work by government to alleviate our national infrastructure difficulties—it stumbled on the detail with a flawed policy implementation.
Not including the pricing principles in part IIIA could have had two adverse consequences. Firstly, it would have diminished the certainty that investors and access seekers have been seeking for both existing infrastructure and future infrastructure investment. Secondly, part IIIA acts as a model access regime for industry specific access regimes. Removing pricing principles from part IIIA would have promoted greater divergence across industry specific access regimes rather than a consistent, certain national approach. This runs directly counter to the intent of the objects clause itself.
Regardless of the contents of any pricing principles, leaving them as a matter for the discretion of the Treasurer of the day is poor policy. It will not foster the certainty and transparency that pricing principles enshrined in legislation would do. It will not achieve the certainty needed to ensure that commercial operators invest in our nationally significant infrastructure into the future. It would have meant that investors and potential investors in infrastructure subject to part IIIA of the Trade Practices Act would have had no idea what pricing rules might apply, other than the fact that they would be beholden to whatever pricing principles the Treasurer decides to promulgate following their investment. As such, the pricing principle regulations may have turned out to be somewhat different from investor expectations and may well have undermined the basis of that investment decision.
Labor is glad to see that the government has finally seen the sense of enshrining the pricing principles into the body of the legislation rather than allowing it to be determined through ministerial determination. Labor believes that the guiding principles for the pricing of access charges for nationally significant infrastructure must underpin the certainty investors and users both need. It is only by enshrining these principles in the legislation that the level of certainty investors and users both need can be guaranteed over time. It is certainty for investors and users alike that will underpin future investment and growth in our nationally significant infrastructure, one of the fundamental underpinnings of our future economic productive capacity.
That is why Labor believes that regulated access prices should (1) be set so as to generate expected revenue for a regulated service or services that is sufficient to meet the efficient costs of providing access to the regulated service or services, and (2) include a return on investment commensurate with the commercial risks involved. That is also why Labor believes that the access price structures should, firstly, allow multi-part pricing and price discrimination when it aids efficiency; secondly, not allow a vertically integrated access provider to set terms and conditions that discriminate in favour of its downstream operations, except to the extent that the cost of providing access to other operators is higher; and, thirdly, provide incentives to reduce costs or otherwise improve productivity. Labor does not believe that the government has gone far enough to ensure a competitive environment for infrastructure development in our nation, and that is why Labor will move its own amendment to the pricing principles to further ensure a robust, competitive environment for infrastructure development. That is reflected by the committee stage amendment circulated in the name of my colleague the member for Hunter.
Australia needs to simplify the provision of nationally significant infrastructure if we are to take Australia to the next level of productivity improvement. This government has failed dismally to take Australia to that next level. The government has failed to invest in our future national prosperity, instead complacently taking five long years to get us to this point and have the content and detail worked out correctly. Current and future investors require both timely and certain outcomes to make the right investment decisions and they require an environment that encourages further investment. Australia’s economic and productivity performance depends on certainty—both regulatory certainty and legislative certainty. While Labor supports this bill for the greater economic good of our nation, we take exception to the flawed implementation of this legislation. We call on the government to support Labor’s amendment to ensure an appropriately competitive environment of certainty for infrastructure investment and development. I commend the second reading amendment and the detailed committee stage amendment circulated in the name of the member for Hunter to the House.
Before I call the member for Moncrieff, I would like to acknowledge the new Minister for Workforce Participation, who is at the table. I congratulate her on her well-deserved elevation to higher office.
Mr Deputy Speaker, I join with you and associate myself with your remarks. I am pleased to speak today to the Trade Practices Amendment (National Access Regime) Bill 2005, and I will comment about the remarks that the member for Perth made in his contribution to this debate. It is important to recognise that the national access regime plays a crucial role in our national economy. Many years ago, the roll-out of cable and broadband which took place, most notably across the suburbs of Sydney and Melbourne, saw a duplication of the type of infrastructure that, potentially, we could be talking about with respect to this bill.
Whilst a competitive environment in an open economy such as Australia is something to be cherished and fostered because it typically leads to the most optimal economic outcomes, it can also be said that an overly competitive environment, especially where economic efficiencies can be gained from natural or near natural monopolies, would result in suboptimal economic outcomes. Recognising this, the principle of a national access regime was introduced as part of the Hilmer recommendations in the early to mid-1990s.
Various speakers in this debate have highlighted those principles contained in the competition principles agreement that was reached between the federal and state governments at COAG. At that point, it was generally regarded that a national access regime would provide the kind of framework that would lead to good economic outcomes that were in consumers’ interests where natural monopolies existed or natural monopoly characteristics existed in a particular market. The key, of course, is to differentiate between those markets in which it is important to protect a natural monopoly because it provides optimal economic outcomes and those markets in which monopolies ought not be protected because they lead to, for example, price gouging or other economic inefficiencies leading to suboptimal economic outcomes.
In that regard, I am pleased that the government is taking steps to address some of the features that have emerged as a consequence of a number of reviews of the operation of the national access regime. We know that the Trade Practices Act is designed to promote competition in markets—that is a positive thing. Part IIIA of the Trade Practices Act puts in place a legal regime to facilitate user access to services provided by essential facilities that operate as natural monopolies—for example, railway lines, gas pipelines and electricity and water infrastructure.
My constituents may wonder what is the benefit and purpose of a national access regime. How does it apply to their daily lives? For all Australians the efficient utilisation of not only capital but, importantly, the goods or services produced in natural monopoly markets does have an impact, for example, on the prices that we pay for some of these services. Electricity, water and gas are all common services and it is important that we regulate them correctly.
In recent years, we have also seen the great economic stock that Australia has as a result of being the world’s best producer in primary industry and energy markets. In particular, in Australia’s west, in Queensland and in parts of Central Australia we see very large amounts of our natural resources being successfully exploited and sold to foreign markets, all of which has helped to contribute to the long period of economic growth and sunshine that Australia has enjoyed. When one considers that there are many billions of dollars worth of capital tied up in sunk costs to exploit this type of energy and these natural resources, it is absolutely crucial that the respective governments of the day, Commonwealth and state, have the correct policy settings if they are to continue to provide the incentive necessary to create a commercial return for those companies that sink those billions of dollars of capital.
I heard the member for Perth making various comments about his concern over what he alleges are delays by the government in the introduction of this bill. I also heard him speak of a lack of a uniform approach with respect to access, as well as a number of other aspersions that he cast on the operation of this bill. In fact, I think the line that the member for Perth used was that, after five long years of hurt being felt by the national economy, he was pleased to see this bill before the House. I am fascinated that apparently five long years of harm has been done to the national economy, because the last time I looked at the figures the Australian economy was in better shape than it has been for decades. Under the stewardship of the Treasurer, Peter Costello, we have seen the Australian economy continue to move forward with the investment of record amounts of capital in new infrastructure projects. We have seen record prices achieved overseas for Australia’s natural resources. This has been done under the existing access regime—an access regime, I might add, which was introduced by the Australian Labor Party.
In stark contrast, I turn the parliament’s attention to the operation in Queensland of a separate, state based access regime, which operates under the Queensland Competition Authority Act. In particular, the Queensland Competition Authority, for a period of slightly less than two years, was looking at the issue of how to deal with a coal port in Queensland at which we were getting an exceptionally poor level of service. This is the kind of infrastructure that is crucial to our national economy, crucial to maintaining export growth and crucial to generating wealth for this country. Yet, under a state Labor government, we saw that infrastructure bogged down because the Queensland Competition Authority was unable expeditiously to make an informed decision which would lead to the kind of certainty that was required by the companies involved.
It is important that governments act, but it is also important that governments get the policy settings right, and this bill does get those settings right. In September 2005, the Senate Economics Legislation Committee recommended that the bill be amended so that the pricing principles would be included in the bill itself rather than implemented through a subordinate legislative instrument. The government has accepted this recommendation, and I too am pleased that this took place. Effectively, the amendments as a result of the acceptance of this recommendation are that a minister must, by legislative instrument, determine principles relating to the price of access to a service and that the bill should set out the pricing principles relating to the price of access to a service. The ACCC will be required to have regard to the pricing principles when making an arbitration determination and when deciding whether to accept an access undertaking or access code. The fact that the pricing principles are contained in the statute rather than in subordinate legislation is, as I said, a step in the right direction, and I am pleased that the Australian Labor Party acknowledges that.
Access regimes, by their very nature, are complex. An access regime typically involves the utilisation of infrastructure worth hundreds of millions of dollars, if not billions of dollars, and the companies involved are playing a high-stakes game. In that regard, it is little wonder that many of the existing infrastructure projects that the Australian economy is enjoying the use of are subject to often protracted negotiations between the various parties when it comes to an access regime. It almost goes without saying that it is in the interests of the parties to achieve as expeditious a resolution on an access regime as possible. It goes without saying that, where there is clearly a benefit to be gained through the utilisation of existing or forward-looking infrastructure that is to be introduced into Australia, and where there is capacity that allows for one or more companies to utilise that infrastructure, there is something to be gained by companies working together.
It has been my observation that this has occurred on many occasions. In fact, there have been a number of instances in which the national access regime has worked very well. There are, of course, those instances in which, when it comes to the national access regime, a stakeholder does not wish to see access granted to its infrastructure. And it is typically in these instances that we see the protracted kinds of negotiations and indeed the protracted arbitration that often takes place. Where an effective access regime can be put in place, or access undertakings provided, we have seen that utilised. But we are now dealing with, for example, infrastructure under a declared service. That declared service, as others have mentioned in this debate, provides for negotiation and subsequently arbitration by the ACCC where resolution cannot be achieved. It is these most difficult aspects of negotiations on access regimes for the piece of infrastructure concerned that often capture the media headlines and the interest of the business community, because any big business with a piece of infrastructure that is potentially subject to being a declared service places a lot of stock in the judgments made and decisions taken by the ACCC as part of the arbitration process.
The fact that we see the incorporation of pricing principles into legislation that is not necessarily industry specific makes an important contribution and provides indicators to the various stakeholders and potential new market entrants as to the kinds of considerations that the ACCC will take into account with respect to that piece of infrastructure or indeed to a piece of infrastructure that may potentially be subject to being a declared service. In this regard, pricing principles must be transparent. I am pleased that, through the amendments the government has agreed to, we will see that transparency contained in the bill.
Pricing principles are important also because it is very clear that, for those who are engaged in industry, the economic powerhouse that drives this country and creates wealth—the infrastructure that we see particularly in Western Australia, Central Australia and along the eastern seaboard—is the kind of infrastructure for which owners want to know that a commercial return will be supplied. Owners are of course seeking optimal economic result for the kind of capital that is sunk into major infrastructure projects. In this regard, the incorporation of the pricing principles helps to provide the certainty that is required.
In many respects, despite the protests of the member for Perth and other members opposite, many aspects of access undertakings have proved to be very successful. Access undertakings and effective access regimes do work effectively, and we have seen that on many occasions. So it is a bit false for members opposite to claim that where you have protracted negotiations under a declared service it is somehow an indication of the inappropriateness of the national access regime—principally because, by virtue of the fact that if an effective access regime were not put in place or if access undertakings were not provided, it almost goes without saying that that particular piece of infrastructure was always going to be the subject of negotiation and indeed arbitration. So in that respect, this bill is a positive step forward. The pricing principles are included in the legislation, and that is a positive step forward. I am very pleased to commend the bill to the House today.
I want to support Labor’s amendment to the Trade Practices Amendment (National Access Regime) Bill 2005. I think we need to make sure that we have as strong a competition regime as we can, and I think there are risks inherent in the bill presented to the House that that regime will be diminished. Frankly, this is a government that does not support the competition policy and the various small business protections that were put in place by Labor governments during the 1980s and 1990s. It is a government which has, in a variety of ways, sought to damage small business, effectively preventing them from collective bargaining. Labor remains the sober advocate of fairness and protection for small business from monopolistic behaviour, and indeed the protection of all workers to collectively negotiate.
This bill changes the regime under which a service provider can obtain access to an infrastructure facility. The purpose of the regulation is to seek to ensure access to infrastructure where elements of natural monopoly exist and to enhance competition and restrain monopolistic behaviour while encouraging investment in infrastructure. The Productivity Commission reviewed the regime back in 2001, and this bill is the government’s response to the Productivity Commission’s recommendations. The bill changes the existing regime by including a new objects clause that decision makers will need to have regard to when setting access pricing arrangements. Secondly, it introduces for the first time pricing principles which the Productivity Commission has recommended be embodied in part IIIA of the Trade Practices Act.
I am concerned that a consequence of some of the measures in the legislation is that, under cover of the current infrastructure debate, the Howard government will unravel important competition principles in favour of private monopolies at the cost of competition and, therefore, at the cost of the Australian economy and the consumer. Indeed it is instructive to look at how the government uses its friends to solicit advice and third-party reinforcements. Take, for example, the case of the Prime Minister’s former head of the Public Service, former key adviser, tactician and confidant of the Prime Minister, Max Moore-Wilton, who was also a former head of the Wheat Board which has become a matter of some controversy in recent times. In his role as CEO of Sydney Airport Corporation he is the chief executive of the monopoly provider of Australia’s largest air gateway. This makes Mr Moore-Wilton one of the most powerful figures in transport infrastructure in this country, leading a major private sector operator with the ear of the government.
Last year he was appointed by the Prime Minister to serve on the taskforce to advise on export infrastructure. Apart from the head of the Australian Bureau of Agricultural and Resource Economics, Brian Fischer, the other member of the taskforce was Henry Ergas, an economist well known for advising private infrastructure monopolies. Mr Moore-Wilton presides over a deregulated industry in which he is able to set the access fees, and indeed Sydney airport fees have gone through the roof. Not surprisingly, there have been some claims that Mr Moore-Wilton is abusing his monopoly power and that Sydney airport should be re-regulated. To fend off the criticism, Sydney Airport Corporation produced work by Network Economics, which turns out to be none other than the company of Mr Henry Ergas, that other member of the Prime Minister’s infrastructure taskforce.
So it is little wonder that some in the industry were bemused by the appointment of Mr Moore-Wilton to a taskforce to look at whether other private monopolies, such as ports, should be exempt from price controls. The executive director of the Board of Airline Representatives of Australia, BARA, Warren Bennett, had this to say in a report in the Financial Review of 22 April last year:
The airlines see that as being rather strange—that an operator of a private monopoly should be involved in determining government policy about whether private monopolies should be regulated. You can bet your bottom dollar that if a favourable outcome is determined in the case of marine ports–that they are allowed to be privately developed with no regulation—then all of the airport operators will be clamouring for the same sort of treatment.
Cathay Pacific’s Australian general manager said:
It certainly sits oddly. He’s not going to be impartial, is he? The chaps who are paying him—
that is, Macquarie Bank—
are going to be paying him to toe one particular line.
A spokesman for the former Deputy Prime Minister, Mr Anderson, was reported in the same article. He said:
I can’t see Max has any conflict of interest. The infrastructure taskforce is looking at blockages and I don’t think anyone sees Sydney Airport as a major infrastructure blockage.
But when the report came out it had precious little to say about physical infrastructure blockages. Guess what? It was all about regulation! But before we come to the report, it is instructive to look at what else the former Deputy Prime Minister’s spokesperson had to say about the question of Sydney airport’s predatory pricing practices. He was reported, again in the Financial Review, as saying:
... before privatisation, prices had been artificially held down and were now simply moving towards more real levels.
Of course, what is a real level is in the eye of the beholder. BARA’s Warren Bennet points out that deals with other airports have been completed smoothly but that negotiations were stuck with Sydney airport because they were trying to push through much bigger increases. He said:
You get the feeling you’re dealing with a monopoly. They have the market power and we’re fighting an uphill battle.
An uphill battle indeed. In a letter to Max Moore-Wilton dated 31 May 2005, Mr Bennett laments:
At the meeting on 20 May, the airline representatives were very disappointed when the Sydney Airport Corporation Limited resorted to threat-based negotiations to progress outstanding issues. Specifically, the airlines were informed that ‘superior economists’ are available to SACL who would discredit the airlines’ arguments in any arbitrated process. On this basis, the airlines should be prepared to accept an outcome close to the SACL offer.
The process of negotiation is supposed to involve the tabling of proposals or offers for consideration. Not surprisingly, SACL’s tactic of threats and demands generated little progress on the outstanding issues between SACL and the airlines.
There is no doubt that Max Moore-Wilton was playing hard ball and would not want any pesky ACCCs or National Competition Councils to get in his way. And the ACCC has had things to say about airport monopolists. Commissioner John Martin was quoted in the Australian Financial Review as saying:
... airports are a monopoly and there should be some control ... lt’s fair to say that the commission took the view when the government was looking at this that price capping was justified.
But of course the decision about these matters was not one for the ACCC. It also proved to be a vexed issue for the National Competition Council when Virgin Blue applied in late 2002 to have Sydney airport reregulated. The National Competition Council issued a draft determination in favour of the airline but generated an avalanche of media attacks and lobbying from Mr Moore-Wilton. Then, in an about-turn, the National Competition Council, under new leadership a year later, issued a final recommendation that Sydney airport should not be reregulated. In January 2004, the then Parliamentary Secretary to the Treasurer, Ross Cameron, signed the final decision to leave the airport unregulated. When he lost his seat at the federal election a few months later, he was almost immediately employed by—you guessed it—Macquarie Bank, owners of Sydney airport. This is all too characteristic of the Howard government: decisions which favour particular private business interests followed by a return of the favour further down the track.
The matter was still appealed to the Australian Competition Tribunal, but the Prime Minister went ahead anyway and appointed his old friend to the taskforce on export infrastructure. Given the live issues before the Australian Competition Tribunal, this was not an appropriate appointment. Mr Moore-Wilton had more than a minor conflict of interest. It raises real questions about this government’s intentions in relation to the appropriate regulation of monopolies, particularly with the prospect we now have of the full privatisation of Telstra.
So what did Mr Moore-Wilton and Mr Ergas find in their taskforce report? There was just a fleeting reference to physical infrastructure blockages or looming blockages—in particular to land based congestion at the Port of Melbourne, Port Botany, the Port of Brisbane, Fremantle, Adelaide and Portland—and a finding that detailed analysis was required to determine port access constraints over the next 10 years. But virtually all of the rest of the report was devoted to a discussion of regulation—no mention of how the government’s pork barrelling and political game playing was diverting vital dollars from important export infrastructure such as roads and rail. The report did note that:
During the course of the taskforce’s inquiries there was a strong, clear and consistent call from industry for the Australian Government to take a leadership role in facilitating efficient investment in infrastructure, especially key transport infrastructure ...
Despite noting that, the report proceeded to ignore the whole question of investment in infrastructure, especially key transport infrastructure. Its recommendations dealt solely with process issues—regulation, planning and coordination—so we had a single national regulator; simplifying and streamlining the regulatory process and ‘light-handed’ regulatory approaches, in particular ‘a presumption that issues to do with export oriented infrastructure will be resolved by commercial negotiation between the infrastructure provider and users’; improved time lines for decisions by regulatory agencies; joint planning processes for ports; industry coordination of logistics chains; regulatory agencies to consider the whole of the logistics chain; and an infrastructure audit, this last one being the ultimate cop-out by a lazy government in office for 10 years that responds to an infrastructure crisis with report after report after report. What a surprise that the government conjectured on the findings of this particular taskforce report even before it was released, given its composition. No doubt its findings were music to the ears of private monopolies. The report said:
If our problem in earlier years was at times profligate investment by government owned monopolies, the risk today is that efficient, commercial investment will be delayed or even deterred by inappropriate policy settings. Simpler, more transparent, predictable and accountable regulation is of key importance in this respect.
Macquarie Bank could not have said it better themselves. Indeed, I suppose the report was them talking.
There were a number of useful suggestions in the taskforce report, but I do highlight Mr Moore-Wilton’s conflict of interest to make a point about monopolies. We must take great care when utilising ‘light-handed’ regulation to ensure that we do not hand to monopolies a cash cow and hold other businesses which must deal with them to ransom. If this government is seeking to change the playing field and amend the competition policy reforms put in place by the previous Labor government, we must examine its motives and the fine print and keep it accountable.
This bill changes the regime under which a service provider can obtain access to an infrastructure facility. The purpose of the regulation is to seek to ensure access to infrastructure, where elements of natural monopoly exist, to enhance competition and restrain monopoly behaviour while encouraging investment in infrastructure. The bill, as I indicated earlier, amends part IIIA of the Trade Practices Act, which deals with access to monopoly infrastructure, allowing pricing principles to be determined by the Commonwealth minister. It includes a new objects clause that decision makers will need to have regard to. Labor’s view is that the objects clause should have mentioned restraint on monopoly behaviour and included much stronger procompetitive language.
The threshold for the application of the regime is raised to include only projects of national significance. New arbitration arrangements and appeal procedures are provided for, but rejected by the government was the Productivity Commission recommendation that the arbitration provisions of part IIIA be amended to provide for two-sided information disclosure requirements involving both the access provider and the access seeker. The access seeker should be required to provide sufficient information, including technical and commercial requirements, to enable the access provider to respond to the request for access. The provider of the declared service should be required to provide sufficient information to an access seeker to facilitate effective negotiation on the terms and conditions of access. Access to the federal regime is restricted to cases in which no effective state access regime exists, immunity from the regime is provided where a government service is provided by competitive tendering, and the bill introduces new target time limits, procedures for consultation and reporting of decisions.
One thing that the government party room had a bit of an argument about I understand was the provision in this bill to substantially reduce the powers of the ACCC to stop anticompetitive conduct that involves providing a good or service on the condition that goods or services are purchased from a third party, which is known as third-line forcing. I believe that the amendment which has been moved by my colleague the member for Hunter goes in the right direction and will ensure that this legislation does not have a detrimental impact on competition and does not tilt the balance overly in favour of monopolies. Therefore, I would urge the House to support the amendment.
Debate interrupted.
Mr Speaker, I seek the indulgence of the chair to add to an answer.
Indulgence is granted.
I wish to add to an answer I gave earlier today to the member for Griffith concerning claims of a meeting between the AWB and the Department of Foreign Affairs and Trade in mid-1999 on oil for food program contracts. I can advise the House that, upon checking, DFAT has no record of any DFAT-AWB meeting in that period in which the mid-1999 changes made to the contracts were discussed. I am also advised that, in response to Mr Rogers’s claim at the Cole inquiry in which he said Mr Eamons would have had discussions with DFAT on this issue, Mr Eamons later said in evidence that he did not discuss contract arrangements with DFAT. Therefore, the premise of the question by the member for Griffith is completely accurate.
Debate resumed.
I refer to the previous speaker, the member for Wills, and make the observation that his discussion revolved around the infrastructure of airports which historically were publicly owned and moved to the private sector. My discussion will revolve around private sector investment, where investors place their money at risk in the Pilbara region, and the quite major impact this bill will have, depending on the outcome.
However, I am very pleased to contribute to the important debate on the Trade Practices Amendment (National Access Regime) Bill 2005. The Howard government is acting to improve the workings of the national access regime arrangements instituted in part IIIA of the Trade Practices Act 1974 to provide investors and access seekers with greater confidence and certainty over the regulatory environment and to encourage investment in infrastructure. The national access regime is a complex regulatory mechanism, as most members would be aware. The challenge for government is to protect the property rights of businesses to ensure private enterprise has the incentive to invest in infrastructure while enhancing national productivity and wealth creation.
The provisions for a national access regime are intended to assist the private sector in maximising utilisation of essential publicly owned infrastructure and supporting competition. The national access regime is not intended to strengthen opportunities for a socialist state to interfere in private business affairs. In this regard governments have a responsibility to carefully consider the powers proposed to be delegated to regulators and to curb those to allow wherever possible for businesses—asset providers and access seekers—to negotiate the use of facilities on a commercial basis. This simple position is that the national access regime was proposed to allow private enterprise to compete against state government owned and regulated monopoly services. Prior to the national competition policy reforms of the 1990s, these state owned services—water, power and transport—were generally inefficient and held back Australian industry, retarded economic growth, distorted investment and hamstrung our export industries—agriculture, resource and manufacturing—making vibrant Australian business and industry less competitive in the international market.
The national access regime was not meant to undermine private businesses which had invested in privately owned and operated infrastructure. Private infrastructure owners should expect to be able to determine access arrangements commercially without undue interference from government and on a basis that is suitable to them. To illustrate this point with a contemporary example, I cite the case between Fortescue Metals Group Ltd and BHP Billiton. In this case Fortescue, a private company, is seeking legal access to the private railway infrastructure of another private company, BHP Billiton, at the company’s Mount Newman railway system located in the Pilbara region. Fortescue Metals Group has applied to the National Competition Council to have the BHP railway infrastructure declared under the Trade Practices Act and the NCC’s draft recommendations released in November 2004 supported declaration.
Declaration of the private rail infrastructure would not necessarily mean that Fortescue Metals Group, or another smaller company, would automatically gain access to the railway but it would provide ‘a legally enforceable right to negotiate access to the Mount Newman rail line’. I quote again:
A decision to declare the Mt Newman service will not automatically result in FMG gaining access.
A decision by the Minister to declare the Mt Newman service will entitle FMG to seek access either through an agreement negotiated with BHP Billiton or, in the absence of an agreement, through arbitration by the Australian Competition and Consumer Commission (ACCC). The ACCC has the power to impose access terms ...
The source of these quotes is an NCC media release, ‘draft recommendation’, 4 November 2005.
An agreement could be negotiated with BHP Billiton or, failing that, access could be arbitrated by the Australian Consumer and Competition Commission, which could impose conditions on BHP Billiton over the use of its own private infrastructure. Such an outcome would undermine the confidence in private investment. That is the key argument that I put forward in this contribution.
This bill introduces amendments to part IIIA as the government’s response to the recommendations of the Productivity Commission’s inquiry report Review of the National Access Regime, September 2001. The bill’s provisions are consistent with the findings of the Prime Minister’s Exports and Infrastructure Taskforce, which reported in May 2005. The taskforce made important findings in relation to the national access regime. The national access regime was established coming out of the national competition policy reforms recommended by the report of the Hilmer committee on national competition policy. The Hilmer report discussed the impact on national competitiveness and on business access to, and investment in, ‘essential services’ that represent ‘essential facilities’ for businesses. The report stated:
... the term ‘natural monopoly’, electricity transmission grid, telecommunication networks, rail tracks, major pipelines, ports and airports are often given as examples. Some facilities ... occupy strategic positions in an industry, and are thus ‘essential facilities’ in the sense that access to the facility is required if a business is to be able to compete effectively ...
The source of that quote is the report by the Independent Committee of Inquiry into national competition policy from 1993.
The matter of access to such facilities includes not only the matter of obtaining access to the ‘essential facility’ but also the pricing and conditions attached to the access. The Commonwealth and state and territory governments considered the Hilmer report and agreed to implement the national competition policy package of reforms. The national access regime was an important element of these reforms, allowing third parties to seek access, on reasonable terms and conditions, to the services of essential infrastructure facilities. Principles for a national access regime were established under clause 6 of the Competition Principles Agreement between the Commonwealth, states and territories, and the legislative framework was established, as I mentioned earlier, under part IIIA of the Trade Practices Act 1974.
So the philosophical question is: who has a right of access to infrastructure facilities in Australia where it is not practical or economical to duplicate the infrastructure? That is the key question I wish to address. We see these questions on the debate on Telstra with regard to who should own the Telstra network and who, under regulation, should have access to that infrastructure. There are debates concerning who owns the port facilities—the member for Wills alluded to that—and who has access to these services; who owns the free-to-air television spectrum and who has access to purchase the licences; ownership of electricity networks and the cost of accessing these networks for energy retailers; and who owns the road network and who should contribute to road maintenance and upgrade. The answer to these questions is becoming more difficult with the changing ownership arrangements following corporatisation and privatisation of what were originally government owned facilities and services and because of private-public partnerships. The national access regime has been reviewed many times since the introduction of national competition policy.
I was pleased to be a member of the House of Representatives Standing Committee on Communications, Transport and Microeconomic Reform inquiry into the role of rail in the national transport network. The committee reported in July 1998 and the report was entitled Tracking Australia. This was a very good report which considered the effectiveness of the national access regime as it applied to utilisation of Australia’s rail infrastructure. The committee was asked to consider Rio Tinto’s iron ore rail operations for its wholly owned subsidiary, Hamersley Iron, in the Pilbara. The case is different in the Pilbara because, unlike the eastern seaboard, where we are talking about rail infrastructure built by Australian taxpayers, Rio Tinto’s rail network is independently owned and operated and has been purpose-built to support its own operations and paid for by their own shareholders. Rio Tinto explained the difference in the circumstances in its 1998 submission to the Productivity Commission’s inquiry into progress in rail reform:
Privately owned rail systems in the west were designed from the start to be fully integrated into the production systems of which they are part. This is a pattern of development quite different to that experienced earlier in the eastern States, where State governments played the major role in providing ‘common carrier’ infrastructure services across the region and it was not open to the coal companies to develop their own rail systems. In designing policy to enhance community welfare, it is vital that these differences be recognised. Failure to do so risks very substantial damage. The reform process, as it has been experienced to date, has impacted very differently on the privately owned systems in the west and the State-owned monopolies in the east. Both sets of impacts need to be carefully considered in assessing the progress of reform and recommending measures to enhance the flow of benefits.
The committee considered the potential disruption to Rio Tinto’s highly integrated operations through third party access to the mine to port rail haulage operations and the risk to private investment in the development of infrastructure facilities. The fundamental question is: who has the right to determine access to privately owned and constructed infrastructure facilities such as the Rio Tinto iron ore rail? On this matter, the Tracking Australia report makes the following comment in paragraph 4.54:
The committee recognises the potential national benefits of granting third party access to privately owned infrastructure of economic significance, such as the Pilbara iron ore railways. However, it also recognises the enormous difficulties in providing for that access without interfering with the property rights and/or material interests of the infrastructure owner. The committee considers that, in general, the benefits to costs ratio of providing for third party access to rail infrastructure, private or public, is unlikely to be positive where that rail infrastructure forms part of a highly utilised, integrated production process (such as mining or milling).
I personally observed these operations and support that recommendation very strongly. In a briefing to parliamentarians last year, Rio Tinto argued that the company’s ability to respond to market opportunities for increased demand from China is directly related to the single user nature of its privately owned rail infrastructure. Rio Tinto’s export capacity will have expanded by 75 million tonnes per annum between 2002 and 2006, ‘adding $3.75 billion to Australia’s export earnings’. Rio Tinto have also argued:
Allowing third party access to the Pilbara infrastructure will inevitably mean that the inefficiencies of the east coast multi-user facilities will be transported to the Pilbara.
This is a sobering argument. The Productivity Commission was asked to review the national access regime and reported in September 2001, which report I mentioned earlier. The government’s response to this report underpins the amendments in this bill.
Dr Alan Moran, from the Institute of Public Affairs, made an important submission to the Productivity Commission inquiry in December 2000, and it is worth mentioning in this debate. The submission addresses the question of access to private infrastructure. It is a fairly long quote, but it should be on the public record. The IPA wrote:
Ostensibly, the Hilmer Report itself did not differentiate between private and publicly provided essential facilities. It was however aware of the harm that could be visited on private property rights generally by regulatory seizure of some of those rights. Hence ... the report understood the deleterious investment implications of regulation. Indeed, the authors said they were, ‘conscious of the need to carefully limit the circumstances in which one business is required by law to make its facilities available to another’ (p.250). The Hilmer Report returned many times to emphasise the need to avoid undermining property rights and, hence, investment incentives, (e.g. p. 256, 258). Hilmer added ‘While it is difficult to define precisely the nature of the facilities and industries likely to meet these requirements, a frequent feature is the traditional involvement of government in these industries, either as owner or extensive regulator.’
In reality the impetus for the Hilmer report was to redress the competitive restraining effects of state government owned or controlled monopolies. In Australia in the early 1990s the only “essential facilities” were those businesses which enjoyed government support or protection from competition.
This is an important element to recognise when considering the extent to which the national access regime should impact on private infrastructure.
More recently, the impact of the national access regime on Australia’s exports and infrastructure was considered by the Prime Minister’s Exports and Infrastructure Taskforce, which reported in May 2005 and which the member for Wills referred to in his speech. The taskforce was chaired by Dr Brian Fisher and its members were Max Moore-Wilton and Henry Ergas. It was a high-powered taskforce with intellectual depth and considerable experience in this area. The taskforce addressed the conflict that exists under the national access regime between the objective of promoting competition and the need for government to step out of the way of successful Australian businesses operating on the highly competitive international market. It said:
... Australia has a strong interest in the efficiency of export oriented infrastructure. However, it is important to remember that export industries operate in competitive world markets. Producers have little ability to increase price above the competitive level, as they are largely price takers ...
As a farmer, I agree with that entirely. It also said:
... the view of the taskforce is that regulation should be sparingly applied to infrastructure used by export industries.
It also said:
... third party access to a vertically integrated, tightly managed, logistics chain may promote competition, but undermine the efficiency with which that chain is operated and managed.
Currently, there is no clear mechanism allowing an ‘efficiency override’—
and I emphasise that comment—
for applications for declaration of export related facilities under Part IIIA or its associated regimes. Part IIIA lacks any authorisation mechanism, based on efficiency, that could be used to limit the scope of access. While there is a public benefit limb to the Part IIIA tests, its phrasing significantly narrows its impact. Finally, while there is an exemption provided for ‘production processes’, that term is not defined, nor is any guidance given as to the purpose and scope of the exemption.
Even if efficiency considerations were not explicitly included in Part IIIA, the taskforce believes it would be desirable to clarify the ‘production process’ exemption. More specifically, it should be made clear that the purpose of the exemption is to prevent the imposing of third party access in vertically integrated, tightly managed, logistics chains, especially those related to our export industries. This would minimise the risk that access regimes would disrupt and undermine the very areas of the economy that have performed best in the management of export related infrastructure.
That is from the May 2005 publication Australia’s export infrastructure: report to the Prime Minister by the Exports and Infrastructure Taskforce. I note that Rio Tinto, which I mentioned earlier, have strongly endorsed the implementation of the taskforce’s ‘efficiency override’ consideration into part IIIA of the Trade Practices Act. The taskforce also reported:
In our view, there should be a presumption that issues associated with export oriented infrastructure will be resolved by commercial negotiation between the infrastructure provider and users. We accept that this will often be imperfect, but it is still likely to be preferable to intrusive regulation.
Again I support that point of view. The infrastructure taskforce recommended the Council of Australian Governments simplify and streamline the regulatory process applying to export oriented infrastructure by:
... providing a presumption that issues to do with export oriented infrastructure will be resolved by commercial negotiation between the infrastructure provider and users.
I welcome the taskforce report. The infrastructure taskforce and the IPA have reflected my own views on the application of the national access regime. I apologise to members of the House for the technical nature of this bill and the explanation, but it is a very complex legal argument which does reflect a final decision in the case of BHP, Rio Tinto and those companies that have made investments of shareholders’ money in infrastructure.
The national access regime is important to allow competition to state government regulated services, to maximise the utilisation of and investment in infrastructure to support the economic prosperity of the country. By introducing the ‘efficiency override’ provision, as recommended by the Prime Minister’s infrastructure taskforce, regulators would consider the individual circumstances of each case and, where private infrastructure assets were in question, the competition objective would be offset by the need to support the efficiency of successful existing operations, such as Rio Tinto Iron Ore at Hamersley Iron in the Pilbara.
I commend the bill. I have some sympathy with the amendment put forward by the opposition and some of the points of view that I have read in the press. It is a complex issue. It is one that I have looked at quite carefully in terms of the railway access. If we have the current railway arrangements for freight in Australia where access regimes are being negotiated quite equitably on the one hand and where private sector investment in the north-west has made absolutely huge investments in rolling stock and railway track on the other hand, those investments should be protected and not overridden by some very fine legal interpretation of part IIIA of the access regime. It would be my hope that these amendments in the bill would clarify some of these very technical arguments and that investors in future could be assured that their billions of dollars of investment into infrastructure projects would not be at risk by legal interpretations of the act, both in spirit and in the legal content.
I commend the general debate on competition policy. I think both governments have done an excellent job in promoting the competition concept. I think it is part of Australia’s current prosperity that we have taken away the bottlenecks of those non-competitive activities of state governments in the last 15 years so Australia is at the forefront of those infrastructure activities which are generally undertaken by state governments and local councils in other countries. I think we lead the world. I hope that this bill will lead the world in providing clear, absolute guidelines that will protect private investors so that they can invest with confidence in the future because of these considerations. I commend the bill to the House.
I rise to support the amendment moved by the member for Hunter on behalf of the Australian Labor Party. I say at the outset that Labor do support the recommendations of the Productivity Commission which form the basis of the Trade Practices Amendment (National Access Regime) Bill 2005. We also support the bill’s intention of improving the operation of the national access regime. This regime aims to ensure access to infrastructure where elements of a natural monopoly exist so that we do enhance competition, despite that natural monopoly, and we restrain that monopoly behaviour while at the same time not putting up a barrier to investment, which I think was the point the member for Corangamite was making towards the end of his speech. I am sure he made it at the beginning too, but that is the bit that I heard.
The bill moves to change the act in the following ways. It includes a new objects clause. It includes pricing principles. It provides for the regime to include only projects of national significance. The bill contains new arbitration and appeal procedures. There is restriction of access to the national regime where there is an effective state regime, there is immunity from the regime where a government service is provided by competitive tendering and there are new target time limits and procedures for consultation and reporting of decisions. So this has some important and comprehensive elements attached to it.
In particular, we support the inclusion of pricing principles in the act, as originally recommended by the Productivity Commission but not originally embraced by this government when it first brought the bill into the House. I will come to that in a minute. The point I want to make at this stage is that we urge the government to accept the amendment proposed by the member for Hunter which allows consideration of regulatory risk but does not necessarily mandate that that consideration occur. The government, on the other hand, proposes to mandate the consideration of regulatory risk.
Over recent years we have seen the privatisation of many formerly publicly owned infrastructure facilities. Given that trend, it is essential that we ensure that users have fair and reasonable access to those facilities and that exorbitant monopoly rents are not extracted which will be passed on to consumers or which will make our exports more expensive on world markets. What Labor have concern with is the way the principles are proposed to be worded. It in effect tips the balance too far in favour of the owners, who may well set exorbitantly high prices at the expense of users and consumers. We accept that regulatory risk is and can be a pricing factor for providers and has to be subject to regulatory control. The real issue is: how do we take account of that regulatory risk? In some cases, it may be appropriate to take account of it, in others not. What the government’s amendments do is essentially mandate that in all cases it is taken account of. That means that the owner will be able to pump up prices for what they assert to be that regulatory risk and insist that it has to be taken account of because the act as is proposed requires it. Our amendment effectively provides discretion to the regulator. It would leave it to the discretion of the regulator, and we believe that is the sensible course of action to take.
It is interesting to note—and I said this earlier—that when this bill first came into the House there were no pricing principles included in it. We argued at the time that there needed to be pricing principles. Again, the member for Hunter, on our behalf, put forward a set of those principles. The government has now accepted that pricing principles have to be included and has proposed by way of an amendment to include them, but not to the full extent that we were suggesting. This bill gives an opportunity for greater certainty for both investors and users, and these are the two vital components when it comes to the provision of these services.
In the second reading speech the Parliamentary Secretary to the Treasurer quite rightly listed the reasons why statutory principles are important. Those opposite were late converters to this cause; nevertheless, they have been converted and we welcome it. What we ask is: why don’t they go to the full extent that we have been suggesting? The Productivity Commission recommended statutory pricing principles be established. The parliamentary secretary said that they will provide guidance on the broad objectives of access regimes and how these will be applied, they will provide greater certainty to regulated firms and access users, they will provide guidance for approaches in particular industries and they will help to address the concerns that a regulator will unduly impose its own values.
The government, having thought long and hard over four years, and having brought this bill into the House with no pricing principles included, caved in on the day debate on this bill was first scheduled. That was some time ago, because debate on this bill has been a long time coming, as all members who are prepared for it would know. Whilst the government has adopted Labor’s amendment and suggestions for pricing to a large extent, it has not gone the full extent and this legislation does come to us in a weaker form. Labor’s amendment will strengthen it.
The basic purpose of the Trade Practices Act is to promote competition and to protect users and consumers. The national access regime which this bill amends is a legal regime in the Trade Practices Act to facilitate user access to services provided by essential facilities—essential facilities that operate as natural monopolies such as rail lines, gas pipelines, electricity and water infrastructure. It does not make sense to build duplicate railway lines, roads, electricity grids and so on. We do accept that you need only one of the carriageways, a physical structure, in the forms that I have identified. But, given that we acknowledge that point, putting those monopoly facilities in private hands demands that we ensure that provisions are in place to prevent them from extorting monopoly rent from the natural monopoly they have come to own.
Telecommunications is obviously another vital piece of infrastructure, particularly for the regions—and I will come to that in a minute. It is not dealt with in this legislation; it is dealt with separately. The provision of telecommunications services throughout the nation and particularly in the less populated and less profitable rural and regional areas is of great concern. It is the great enabler for our regions. Without affordable access to fast broadband internet connection, the regions will be left behind. If we want them to participate in the information economy and to establish small businesses in their homes or in their remote communities, they need to have affordable access to this infrastructure. It is the great challenge. It is a debate that we will have, particularly associated with the further sale of Telstra, if the government proceeds down its intended path.
In the context of the national access regime, the principles inherent in it and the access to it, it is interesting to remind ourselves that the pricing of Telstra’s last mile infrastructure, which is in effect a natural monopoly, also presents the same sorts of challenges to the provider of it, unless we also ensure access to users at affordable rates. One of the reasons that we as a nation have failed to properly utilise broadband is the lack of effective last mile access. This is an issue that is going to be debated seriously.
Whilst Telstra is not dealt with in this bill, I think you can see that the sorts of principles that apply to a national access regime also have relevance to this other vital piece of infrastructure. Everywhere that I travel in regional Australia, the need is always raised with me for affordable broadband access. It was underpinned in the recent State of the regions report. In essence, it found that the regions that have good access are doing well; those that do not are left behind.
Labor are committed to fighting for the provision of affordable broadband access throughout the nation. In my view, it is probably the greatest infrastructure challenge that this nation faces. Just as access to the standard telephone was the clarion call of the past, access to fast broadband is the new one. It is about how we link the regions; it is about how we empower them. It is the fundamental issue that regional development will hinge on. Labor believe that the best way to do that is to keep Telstra in government ownership, and to the extent to which there are market failures—and there are many, otherwise we would not be talking about the problem—to fund that market access through a component of the ongoing dividend stream. Labor have always argued that in the past. If anyone doubts the significance of it, we proposed this back in 1998. I got the library to do the calculation. At that stage we proposed a 35 per cent component of Telstra’s dividend stream being applied to a fund to connect the nation. The library has indicated that, had that policy been put in place, there would have been in excess of $5 billion in that fund. That would have taken us a very long way to the connectivity challenge that I have talked of and, in particular, to fund the market failure, which is inherent in the more remote and regional areas of our country.
Our view is that the government’s solution will not work, because they are going to sell it, they are going to get a one-off payment, but they are not allocating sufficient from that payment to meet the task. The National Party have gone along with this—once were Nationals, I might say, Mr Deputy Speaker Causley. I know your allegiances. In our view, they are now just a paid-up branch of the Liberal Party. The defection of Senator Julian McGauran is an example of it. I seriously think that the way in which the sell-out by the Democrats saw their demise as a political party because they ratted on a fundamental commitment to the electorate, so too will the sell-out of Telstra by the National Party herald their demise. We are already seeing the fracturing within that party structure. It has a terribly important political component attached to it, quite apart from this very fundamental issue as to how we connect the nation.
Labor do not just oppose the sale for the sake of it. We oppose the sale because, if we are going to try and address a regulatory regime or control to ensure affordable access, one of the best ways to do it is to have government ownership, but also access to the dividend stream in perpetuity to fund the necessary expenditures.
The ACCC and this parliament, through legislation like this bill, have to ensure that in most cases the monopoly telecommunications providers—certainly at the moment that means Telstra—have to provide competitive access to the networks for other providers or direct access to consumers. This is a debate that is going to run hot. It will be interesting to see next week in Senate estimates how Telstra responds to this. Labor will be taking a very keen interest, but it will also be interesting to see what sorts of questions the National Party will be asking on this crucial issue for the reasons that I have just outlined.
It is my contention that we do need sound principles underpinning an access regime. We all accept the way in which what were monopolies perhaps under government statutory bodies and under government control in the past have moved in different directions, in many cases in the hands of private providers. If we are going to go that way—and we have supported that direction—it is essential that we underpin competitive pressures and opportunities in the community through an effective access regime.
This government has been soft on competition policy. I was interested to note that the Treasurer is calling upon COAG this week to back his plans through greater competitive pressures to start addressing our bottleneck issues. This government has been very poor in supporting a competitive environment. It has failed to allow small businesses access to collective bargaining. It has failed to allow the ACCC to continue to make decisions on mergers. It has failed to reform the Trade Practices Act to constrain abusive market power, especially against small businesses. It has refused to introduce cease and desist orders, which we think are terribly important, where people are exploiting their monopoly or duopoly position, and it has tried to water down third line forcing laws, but we forced it to back down.
There is a deficiency factor in the so-called clarion call of the Treasurer in urging greater competition. Whilst we do support greater competition and regimes that support it, it will count for nought unless the government is prepared to invest in the nation’s ailing infrastructure. That was an issue that I spoke about earlier today in another debate—a debate associated with the Future Fund—a means by which we take the proceeds of a nation’s prosperity and reinvest it in social and economic infrastructure that makes a better return than simply putting the money in the bank.
We have the opportunity to create an environment to better build this nation, to better build it by stronger competition arrangements. This bill forms part of that, but it is deficient in that it does not go far enough on the pricing principles and also on the question of a government being prepared to invest sensibly in the nation’s infrastructure. We need a national infrastructure audit. We need a national strategy involving state and federal governments, and that is what COAG should be addressing and turning its mind to on Friday. How do we identify the infrastructure imperatives for this nation and how do we work together to achieve them?
People are sick of the buck-passing. They do not want to see the unseemly brawls that always come out of these conferences about whose responsibility it is. People want the problem fixed. They want their roads, their ports, their electricity, their gas pipelines and telecommunications infrastructure. Governments have a responsibility to lead. This government is not leading. This bill is deficient on the pricing principles. I urge the government to take a more responsive, cooperative and leadership role at COAG to address the infrastructure needs of this country. (Time expired)
I appreciate the opportunity to speak on the Trade Practices Amendment (National Access Regime) Bill 2005. I note the comments of the honourable member for Hotham. I would like to add and point out to him—and I am sure he is very much aware of this—that a government entity does not have to own an organisation or an entity to control it. We are the legislators, and we can determine the size of the ballpark and the activity by our regulations and legislation. However, this particular bill—the purpose of which is to make practical amendments to the Trade Practices Act 1974—will implement many of the recommendations that were made by the Productivity Commission in its review of the national access regime. A national access regime that promotes competition is essential for Australia’s infrastructure facilities such as natural gas pipelines, the electricity grid and the rail track, all of which play a key role in Australia’s economic and social development.
A separate regime, part XIC of the Trade Practices Act, applies to the telecommunications sector. The efficient use of and continued investment in facilities such as these is of strategic importance to our country. Accordingly, the government’s policy is to assist realising the potential contribution of such services to economic growth and the improved wellbeing of all Australians. An important element of national competition policy reforms was the establishment of a national access regime, allowing third parties to seek access to the services of certain essential infrastructure facilities on reasonable terms and conditions, if commercial negotiations fail. This ensures that facilities with natural monopoly characteristics do not create barriers to competition. This promotes competition in upstream and downstream markets, which is essential for sustaining strong economic growth and job creation, and contributes significantly to efficiency and innovation. Importantly, the national access regime is not intended to replace commercial negotiations between access seekers and providers but seeks to support the legitimate interests of essential infrastructure owners.
The national access regime was introduced following the Hilmer report’s recommendations. The Commonwealth, state and territory governments proceeded to implement the reform measures. All became signatories to the competition principles agreement, and the Commonwealth inserted part IIIA into the Trade Practices Act. Clause 6 of the competition principles agreement sets down the operating principles for the national access regime. It specifies for the Commonwealth to establish a generic access regime, and part IIIA of the Trade Practices Act puts this generic access regime in place. It also makes provision for state and territory access regimes to operate alongside the Commonwealth regime so that, where a state or territory regime has been certified as operating in accordance with the principles of clause 6 of the competition principles agreement, access to this regime cannot be sought under part IIIA of the Trade Practices Act.
So, with access regimes operating at both the Commonwealth and the state and territory level, access seekers may have to rely on accessing a facility under part IIIA of the Trade Practices Act, through a state and territory based industry scheme which may or may not have the support of legislation, or through a Commonwealth scheme that falls outside the scope of part IIIA of the Trade Practices Act—such as the telecommunications scheme in part 11C of the Trade Practices Act or the airport scheme in the Airports Act 1996.
The amendments contained in this bill all relate to part IIIA of the Trade Practices Act. The provisions of part IIIA give individuals and businesses the opportunity to seek access to services supplied by certain publicly and privately owned infrastructure facilities on reasonable terms and conditions and fair prices. Part IIIA provides three paths to gaining access to an eligible infrastructure service: (1) having a service declared; (2) using an existing access regime which has been deemed to be effective; and (3) seeking access under the terms and conditions specified in an undertaking given by the service provider and accepted by the Australian Competition and Consumer Commission.
Access through declaration of a service can occur where an individual or business has been denied access to a facility and they apply to have the National Competition Council declare the service. The National Competition Council makes a recommendation to the minister on whether or not the service should be declared. In making its recommendation, the National Competition Council must consider whether it would be economical for anyone to develop another facility that could provide part of the service. The National Competition Council must not recommend declaration of a service unless access or increased access to the service would promote competition in at least one market other than the market for the service; it would be uneconomical for anyone to develop another facility to provide the service; the facility is of national significance; access to the service can be provided without undue risk to human health and safety; access to the service is not already the subject of an effective access regime; or access or increased access to the service would not be contrary to the public interest.
Once the National Competition Council has made a recommendation to the minister regarding the declaration, the minister must then make a decision on whether the infrastructure should be declared. The minister must make and publish that decision within 60 days of receiving the National Competition Council’s recommendation. Importantly, at the same time, the minister must notify the applicant and the infrastructure owner of the decision and provide both parties with a statement of reasons. There have been only two declarations to date, both covering cargo handling services at Sydney and Melbourne airports. The Productivity Commission report notes that, even though there have been few declarations, the threat of declaration has helped shape the access regime at state and territory level. Once a declaration has been made, the applicant who has applied for access has a legal right to negotiate on the terms and conditions of access and, if those negotiations are unsuccessful, the parties can seek to have the matter arbitrated by the Australian Competition and Consumer Commission.
Section 44M-44Q of the Trade Practices Act sets out a process whereby an access regime can be certified as ‘effective’. A party cannot seek access to a facility through part IIIA if the facility is an effective access regime. The only regimes that can be certified as ‘effective’ are state and territory government access regimes. The Trade Practices Act does not provide a certification process for Commonwealth government and non-government access regimes. For a regime to be certified, the minister in the responsible state or territory must apply to the National Competition Council for a recommendation about whether the regime is effective. The council must make a recommendation to the designated Commonwealth minister. Section 44M provides that the minister must then decide whether to certify the state or territory access regime as effective. The minister’s certification decision is reviewable by the National Competition Tribunal. If a facility has been certified ‘effective’, the party seeking access to the facility must use the state or territory access regime. If the facility has not been certified ‘effective’, the access seeker may either rely upon the state or territory access regime or apply for the facility to be declared and access negotiated under part IIIA.
Certification provides all parties with certainty about how access will be regulated. While this benefits access seekers, it is also crucial for infrastructure operators and developers, particularly in relation to new investment. It is noteworthy that certification can only be used by state and territory governments. Other entities wishing to achieve certainty in the status of their access regime must lodge an undertaking with the Australian Competition and Consumer Commission.
A new objects clause is inserted into part IIIA to provide for greater certainty for infrastructure owners, access seekers, investors and other interested parties. The bill also requires decision makers under part IIIA to have regard to the objects clause when making their respective decisions. This will help promote consistency and provide guidance in relation to each decision maker’s approach, thereby enhancing regulatory accountability. The government has also agreed that statutory pricing principles should be established in relation to part IIIA to provide guidance for pricing decisions and to contribute to consistent and transparent regulatory outcomes over time as well as certainty for investors and access seekers. This bill enables pricing principles to be determined by the Commonwealth minister.
The Australian Competition and Consumer Commission will be required to take into account those principles when making a final determination on an access dispute, when assessing a proposed new access undertaking access code and when considering whether to vary the terms of or extend the expiry date of an existing access undertaking or access code. The commission may also take such principles into account when making an interim determination on an access dispute. On review, the Australian Competition Tribunal will also be required to take the pricing principles into account where the tribunal is required to reconsider a decision of the Australian Competition and Consumer Commission. To ensure consistency in all three access routes under part IIIA, the Australian government will also work with participating jurisdictions to include the same pricing principles in clause 6 of the competition principles agreement for the purposes of assessing certification applications.
A number of changes will be made to the existing arbitration requirements in part IIIA. The Australian Competition and Consumer Commission will be given the discretion to conduct multilateral hearings in arbitrations following notification to the parties to the dispute. Such processes will allow the commission to consider the service in its entirety and could streamline administrative requirements and reduce costs. Provisions to allow parties to safeguard commercially confidential information and to require the commission to explain its reasons for conducting multilateral hearings against the wishes of the parties will enhance regulatory transparency and provide guidance for future multilateral arbitration hearings.
Consistent with provisions contained in the telecommunications access regime in part XIC of the Trade Practices Act, the Australian Competition and Consumer Commission will also be given the discretion to grant interim arbitration determinations. This change will ensure that appropriate outcomes, including the access seeker gaining access to the service, can be realised in the period leading up to the final determination by preventing an access provider from using the arbitration process as a strategy to delay providing access or to delay providing access on fair terms and conditions.
In another improvement, this bill enables access providers to lodge access undertakings and access codes with the Australian Competition and Consumer Commission after a service has been declared, which will provide a means for achieving certainty on access terms and conditions, thereby facilitating negotiations between access providers and access seekers. By increasing the incentive to negotiate for both parties, post-declaration undertakings should reduce recourse to arbitration, thereby reducing the burden on the regulator and the industry.
This bill also applies a number of non-binding target time limits to various decisions under part IIIA. While the time limits are not binding on the decision maker concerned, they oblige the decision maker to publish a notice of any extension beyond the target time limit, thereby providing regulatory transparency as well as increasing incentives for timely decision making. The new target time limits are: four months for the National Competition Council to assess an application and to make a recommendation to the designated minister that the service be declared or not be declared; 60 days for a ministerial decision to revoke a declaration; six months for the National Competition Council to assess an application and to make a recommendation to the Commonwealth minister that a state or territory regime for access to a service or proposed services is or is not an effective access regime or that the period for which a decision is in force be extended; 60 days for the Commonwealth minister to decide that a state or territory regime for access to a service or proposed service is or is not an effective access regime or that the period for which a decision is in force be extended; six months for the Australian Competition and Consumer Commission to assess a new access undertaking or access code or an application to vary, extend or withdraw an access undertaking or access code or an application to approve a tender process as a competitive tender process; six months for a final arbitration determination for a declared service by the Australian Competition and Consumer Commission; and four months for the processing of an appeal by the Australian Competition Tribunal.
This bill will also place additional obligations on ministers, the National Competition Council and the Australian Competition and Consumer Commission to publish reasons for their decisions or recommendations. This will enhance procedural transparency and regulatory accountability and will facilitate informed consideration of whether there are grounds to challenge a decision by way of merit review before the Australian Competition Tribunal or judicial review by the courts. The Australian Competition and Consumer Commission will also be required to publish reports on completed arbitrations for services declared under part IIIA. This bill sets out a range of minimum requirements to be included in the reports, but the specification of minimum requirements will not preclude the commission from reporting on a matter relevant to an arbitration, subject to the exclusion of confidential commercial information. Publication of arbitration reports will enhance regulatory transparency and may provide guidance for future cases.
As the government’s key adviser on the National Access Regime, the National Competition Council will be required to report annually on the operation and effects of the regimes, including on specific matters identified in this bill. The Australian Competition and Consumer Commission will also be required to include information in its annual report regarding the time it took to make certain decisions and to include information about decisions made under the new provisions in existing public registers.
In conclusion, this bill will improve the operation of the national access regime. Whilst many of the amendments are procedural in nature, they have scope to make the decision making process more efficient and effective. Many of the procedures will bring greater certainty and clarity to both access seekers and access providers, especially those initiatives dealing with the determination of access prices. Opportunities for delaying access through delaying techniques will also be curtailed by the imposition of time limits on certain decisions. This is a practical amendment which seeks to provide practical outcomes. I commend this bill to the House.
I rise to support the opposition’s second reading amendment to the Trade Practices Amendment (National Access Regime) Bill 2005. Despite the victory of commonsense over pig-headedness when the government backflipped on the inclusion of pricing principles in this legislation, which has been the consistent position of the opposition, the government have nevertheless still been caught short. While they have reluctantly been dragged along in the debate and did finally concede that some pricing principles should be enshrined in this legislation, the government have been caught short because, quite frankly, they have squibbed on the bill. They have rushed to introduce some pricing principles and some parts of Labor’s position, but they did not have the stomach for the whole deal. Instead of accepting Labor’s amendment, the government have placed some principles in the bill but have certainly retained an escape clause. Granted, the escape clause is a little more difficult to use than leaving everything to the Treasurer’s discretion through a set of regulations; nevertheless, there is an escape clause.
In yet another example of the opposition leading the government on issues of national economic significance, some semblance of competition will finally be introduced in this bill. After four years of hand wringing about how it might respond to the report of the Productivity Commission, the government has come through with another half-baked effort. The importance of investment in infrastructure has received considerable attention of late as the Australian economy now starts to reach capacity restraints. Infrastructure is the veins and arteries of our economy. It is the roads, ports, railways, airports, powerlines, pipes and wires that allow people, goods, commodities, inputs and information to move efficiently between economic agents. Infrastructure is a critical source of our economic competitiveness. It represents the basic building blocks of our economy, and the efficient management of our infrastructure is critical to the long-term success of our economic progress.
But, Mr Deputy Speaker, you would not know the importance of infrastructure from the way this government treats it. Labor realises the importance of sound investment in infrastructure. We on this side of the House have realised that if you do not have the basics in place—if the building blocks are not right—you really are starting from behind. The Hawke and Keating governments realised the importance of efficient access to significant economic assets. The reforms of a decade ago were critical to boosting the competitiveness of the Australian economy, boosting economic growth and increasing the living standards of all Australians.
When I started my career I worked for Sydney Water. Of course, back then it was known as the Metropolitan Water, Sewerage and Drainage Board. It was set up as a monopoly and operated as one. During my time there nobody would have thought it possible for someone else to be able to use its network as part of their own business rather than simply using water provided by the network. At that time, natural monopolies were just that—monopolies.
Times have certainly changed and so has technology. The network businesses that were previously thought to be natural monopolies are now at a stage where more than one retailer can use the existing distribution network to deliver their product. The technological chains that allow access to network monopolies prompted the development of national competition policy and the Competition Principles Agreement. They led to the development of access regimes so that distribution businesses previously thought to be natural monopolies could become subject to competition. This led to cost reductions for businesses’ inputs and certainly cost reductions to residential consumers.
I do not remember the exact figures, but not too long ago I recall reading that small businesses in New South Wales had experienced a real reduction in their electricity costs in the order of 20 per cent. A similar reduction was experienced in port charges. Furthermore, there was about a 40 per cent reduction in rail freight charges. This is not to mention the impact that national competition policy has had on the cost of water, sewerage and gas. Not only is it business customers who benefit from these significant cost reductions but also domestic consumers benefit through lower prices for goods and services, and the Australian economy benefited as it became increasingly competitive on the world stage.
A significant proportion of the economic growth that we are experiencing today can be attributed to the micro-economic reforms introduced in the 1980s, of which competition policy was among the most significant. Fundamental to the reforms were the sound underpinnings of the Trade Practices Act and the Competition Principles Agreement. While it is important when setting about such reforms that businesses seek access to significant infrastructure assets and owners and operators of those assets have some certainty about how access arrangements will be developed and implemented, even more important, and critical to access decisions, is price. Pricing arrangements are the key determinant of the economic viability of a project. Access arrangements live and die by the pricing arrangements. Owners seek to maximise their revenue and return while those seeking access look to minimise their costs—a natural economic balance.
Price is critical to access arrangements, yet the government has not taken the issue seriously enough to introduce some real competition principles into this bill. While it will claim that its changes to the bill are a great achievement and are pivotal to the future of the economy, the truth is that it is selling the infrastructure short.
In the amendments to its own bill which the opposition has forced on the government, the government has left an escape hatch to be used in times of emergency—an escape hatch that will allow monopolists to dodge the rules and continue to extract monopoly rents and impose deadweight losses on our economy. The escape clause I refer to is in the government’s decision to include regulatory risk in its pricing principles. Regulatory risk is an interesting concept. It is often cited by those seeking to increase their prices to a level slightly above what would be regarded as economically efficient. Regulatory risk is used by companies to defend bloated pricing proposals by using the concept to pump values that are used in the calculation of appropriate rates of regulatory return.
Labor considers regulatory risk to be a concept that can be included in the pricing principles, while the government believes that regulatory risk must be included in the pricing principles. I am confident that over the coming years, because of the unwillingness of this government to truly commit itself to implementing full and proper pricing principles, we are sure to hear many debates about the level of regulatory risk associated with an investment. Monopolists will claim that they have a higher degree of risk for their entire investment and will use that argument in a false effort to boost the beta values, which will become so important in the calculation of rates of return. The argument they will use to boost the beta values used to calculate the required economic return will feed through to the final price and be passed on to consumers.
Regulatory risk should be included as only a subclass of commercial risk and not a separate class of risk. The government has not had the courage of its alleged competition convictions on this, and that is why the Labor amendment should be adopted. I find it particularly concerning that these amendments introduce potential for the granting of immunity from declarations. Under these amendments, immunity may be granted to new infrastructure projects that have been developed through competitive tendering processes. The minister noted in his second reading speech that this is because competitive tendering processes are likely to see the removal of the potential to extract monopoly rents. While I agree that it is likely that the potential to extract monopoly rents from these projects will be minimised through the use of competitive tendering, it assumes that infrastructure is tendered for and built in a highly competitive market. However, if the market is not highly competitive, the potential for the successful tenderer to extract monopoly rents remains. It may be somewhat reduced, but nevertheless it remains.
While the amendments in this bill are cause for concern, I cannot help but wonder how these changes will mesh with the recent decision of the Council of Australian Governments and the findings of the Prime Minister’s Exports and Infrastructure Taskforce. Any examination of such issues must necessarily examine the effectiveness of current regulatory arrangements. The taskforce report makes interesting reading. It says that regulators have been too focused on removing monopoly rents. I find that extraordinary because, as I understand it, part of the purpose of the regulation of monopolies is to reduce the scope to extract monopoly rents. Continuing to allow the extraction of monopoly rents is in direct conflict with trying to produce a competitive and efficient economy. It seems that, in the interests of speed rather than getting the process right and having inefficiencies removed, it is better to settle for reasonable access arrangements than to settle for ‘near enough is good enough’.
Based on the previous statement of the government, I would have thought that entering into reasonable access arrangements, which would no doubt include reasonable pricing arrangements, would result in some monopoly rents continuing to be extracted and would accordingly result in an artificially inflated input cost. Hence, exporters in this country would be left at a competitive disadvantage. I find it odd that the Prime Minister’s taskforce would recommend an approach which would result in exporters being less competitive, which flies in the face of the government’s objective of doubling the number of exporters by this year.
The minister’s second reading speech claims that this bill is consistent with the recommendations of the taskforce. However, they certainly cannot be considered to be consistent with the findings of the COAG review of national competition policy. That is likely to be a hot topic for debate when the Prime Minister meets the premiers, possibly later this week. Importantly, after considering the issues surrounding infrastructure, COAG last year at least acknowledged that the process of reform must continue. It said:
It is important not to be complacent about the continued performance of the Australian economy. Resting on the achievements of the last decade will cost the Australian community opportunities for greater prosperity.
Australia’s productivity performance is under threat, with further reform essential if the economic expansion of the last 14 years is to continue.
So while the collaborative efforts between the states, the territories and the Commonwealth are being developed, we stand here today debating amendments to a system of rules that govern access arrangements without reference to or knowledge of the findings of that COAG review.
Debate interrupted.
Order! It being 7.30 pm, I propose the question:
That the House do now adjourn.
Just over 12 months ago the suburb of Macquarie Fields experienced four nights of rioting. The scenes televised on the news each night were not pleasant, and the events of those nights have had a lasting effect on the residents of Macquarie Fields and the surrounding suburbs. Unlike the more recent riots in suburbs like Cronulla, which have been put down to racial tensions, it seems to everyone—parents, grandparents, children, community workers and certainly the police—in the community of Macquarie Fields that, putting aside the trigger for the events, those few nights of violence and disorder were the product of frustration.
Unlike recent riots in beachside suburbs, things have not returned to normal nearly as quickly in Macquarie Fields. The physical signs of the events have long gone but the social impacts on members of the community continue. Sadly, all too regularly I hear reports of young people who are applying for jobs being faced with comments about the riots, just because they happen to live in or around Macquarie Fields. Some have even gone so far as to put down different addresses, outside the postcode area, just for an opportunity to get through the first cull of job applicants.
You would be hard pressed to find any local who believes that life is easy in the public housing estates of Macquarie Fields, Ingleburn or Minto. It is not. Many residents rely on the support services provided by government to help them manage their daily lives. In the main the residents of these areas are great people, and I am proud to be their representative in this place. The residents of public housing estates in suburbs like Macquarie Fields face some fundamental disadvantages in life, but they are supported by a number of organisations that seek to overcome this disadvantage through the delivery of excellent support services.
There is no doubt that the residents of these areas have been consistently ignored by this government. While they are battlers, they are not the Howard battlers living in marginal seats. Rather they are the victims of this government’s neglect when it comes to funding for public housing, which has experienced a real reduction of 30 per cent since 1996. They are the victims of the government’s obsession with the lowest priced delivery of government funded support services.
The key to improving areas of substantial disadvantage is consistency and relations building between service providers and those needing the support services. A model of government funding that simply seeks to give grants to providers by way of a competitive tender often does not result in the level of consistency required to achieve outcomes. Today I have written to the Minister for Families, Community Services and Indigenous Affairs, proposing the adoption of an affirmative action plan for Macquarie Fields. Under this plan, competitive tendering for federal government grants for the provision of social services would cease for a period of five years with a view to allowing consistent service provision in areas of fundamental disadvantage. This plan will shift the focus off the cost of services and put it back onto what is being delivered.
No longer will the federal government’s responsibility be considered to be discharged simply through the provision of funding, rather it will shift the focus to the delivery of real solutions. The plan does not propose that competitive tendering for these services be scrapped altogether but that it be suspended for a period of time. Rather than seeking the cheapest provider, the government would shift its focus to performance management in small and highly targeted areas to achieve some positive outcomes in communities that are in considerable need. The plan may allow service providers to come together, possibly to pool funds and establish programs with a whole-of-community focus rather than have a model for programs delivered in isolation due to funding constraints.
A coordinated approach has had some success with young people in the Macarthur region, through the Macarthur Youth Commitment. The Macarthur Youth Commitment, which may lose its funding later this year, is an organisation that has established a network to inform strategic planning and actions to build partnerships in the area, and it has had some very significant success.
I encourage the minister to seriously consider this plan so that action may be taken to break the cycle of unemployment, crime, drug and alcohol abuse, domestic violence and child neglect that has come to characterise some areas within our community. A small-scale, sensible and targeted affirmative action strategy can only have a positive impact. (Time expired)
The Centennial Park Cemetery is a well-known part of my electorate. It was established in 1936, and most residents in my electorate would have relatives who are buried there and may also have been to funeral services conducted there. I rise on the issue of war graves, which is of importance to my electorate, especially to veterans, RSL groups and veterans’ families.
Currently there are three types of graves for veterans. The Australian government pays tenure for the graves of war dead from World War I and World War II and from Korea and Vietnam. The second category is for the graves of those who have died post war from war related injuries. In this case the tenure is the responsibility of the next of kin, and the Australian government provides a plaque. The third category is for veterans who die post war but not from war related injuries.
One of the problems we have in South Australia is that we have limited tenure for grave sites. Leases are held for only 50 years. What has happened is that the leases in Derrick Gardens, which was established in Centennial Park in 1952, started to come up in 2002, and signs were placed on the graves asking relatives to renew their leases. This occurs only in South Australia and Western Australia, where there is limited tenure. In other states, graves are there in perpetuity.
Many families believed that the graves of veterans did have perpetual tenure. In 2002 the previous Minister for Veterans’ Affairs, Danna Vale, wrote to the South Australian Premier, Mike Rann, asking for a legislative change to remove limited tenure from the graves of our war dead. A South Australian parliamentary select committee was established to look at the whole issue of the tenure of graves. The Office of Australian War Graves made a submission and appeared before the committee. It requested that Commonwealth war dead be excluded from laws relating to tenure. However, the report tabled on 24 November 2003 by the select committee did not address this issue. This issue has been raised with me by veterans groups, continuing from 2002 to the present day.
In response to some of the pressure, yesterday the South Australian state government announced that they would be saving the expired leases with a $75,000 maintenance deal for two cemeteries, Centennial Park in my electorate and Enfield Cemetery in the north of Adelaide. The problem with this is it does not address the wider issue. What is actually required is a change in South Australian law allowing for Commonwealth war graves to have tenure in perpetuity. I understand the South Australian Attorney-General is opposed to this on the basis that it means less money for the different cemetery trusts. But the relative number of veterans’ graves is not so large that it would have a significant impact on cemeteries. I also note that the shadow Attorney-General, the Hon. Robert Lawson, has announced that it will be the Liberal opposition’s policy to have perpetual leases for all war veterans, to rest in peace. This is the solution that is required. It does require a change in South Australian legislation, and I will be fighting to ensure that the graves of all veterans are held in perpetuity and do not come up every 50 years.
On Australia Day, while many Victorians were with their families enjoying a barbecue and watching the cricket, thousands of Country Fire Authority firefighters and support staff were fighting in blistering heat the bushfires that overtook much of Victoria. The member for Wannon, who as the Speaker does not have the same opportunity as I do to speak in this place, and I would like to offer our personal thanks for their extraordinary effort. To give you some idea of the enormity of the Grampians bushfires, 50 per cent of the Grampians National Park and a total of 34,250 hectares of farming land have been wiped out. In Anakie 100,000 hectares were scorched, with three homes, a community hall, sheds and vehicles being destroyed. It is estimated that the Anakie fire alone has caused $20 million worth of damage. Willaura and Moyston have been ravaged, with some 60,000 sheep lost, while many alternative farming enterprises producing crops such as olives, lavender, grapes and cut flowers through the Moyston and Pomonal corridor have been badly affected.
Communities are still counting the costs of the fires. The families of the three people who died—Trevor Day from Campbells Creek CFA and Malcolm and Zeke Wilson—have faced a terrible loss. Many CFA crews within my own electorate left their homes and even today are away supporting these communities. I would like to individually recognise the contributions of CFA crews in my electorate. They are the brigade crews of Bacchus Marsh, Ballan, Ballarat, Ballarat City, Creswick, Coimadai, Daylesford, Kingston, Miners Rest, Napoleons-Enfield, Sebastopol, Trentham and Wendouree. They fought fires in the Grampians and at Anakie and the fires on our doorstep at Creswick and Mount Misery. Your bravery, selflessness and professionalism is a credit to the CFA and our communities.
The electorate of Wannon, Speaker Hawker’s electorate, and the electorate of Mallee bore much of the brunt of these fires, and I know that the members concerned would like to recognise the hard work of the local CFA crews. I want to name the CFA brigades for the Hansard record: Halls Gap, Amphitheatre, Beaufort, Bochara, Bookaar, Bornes Hill, Buangor and Middle Creek, Buckley Swamp, Bulart, Callawadda, Carpendeit-South Purrumbete, Carranballac, Cavendish, Chatsworth, Cross Roads, Crowlands, Croxton East, Cudgee, Dadswells Bridge, Dundonnell, Dunkeld, Duverney, Elmhurst, Glenorchy and Riahella, Glenthompson, Grange, Great Western, Gringe, Hawkesdale, Hensley Park, Hexham, Joel Joel, Karabeal, Kennedy’s Creek, Laang, Lahrum, Langi Logan, Linlithgow, Lubeck, Melville Forest, Minhamite, Mirranatwa, Mortlake, Moyston, Naringal, Narrapumelap South, Natimuk, Nerrin Nerrin, Noorat and District, North Balmoral, North Hamilton, Panmure, Penshurst, Pura Pura, Redbank, Simpson, Smythesdale, Snake Valley and District, Stawell, Stoneleigh, Tarrayoukan, Tarrington, Victoria Valley, Warrak, Warrayure-Moutajup, Willatook and District, Willaura, and Woodford and Woodhouse.
It must be remembered that on the worst day of the fire there were 60 other fires across the state. The CFA had 528 men and women on the Grampians fire front on this day. To all the other members of emergency services and the DSE and private volunteers directly involved in fighting the fires: thank you on a job well done. I would also like to thank the many ancillary personnel who gave freely of their time and expertise in support.
In the member for Wannon’s electorate the four shires affected—Northern Grampians, Ararat Rural City, Southern Grampians and Horsham Rural City—are working together to coordinate a relief appeal. I understand David Hawker is assisting them by seeking tax deductibility status for the appeal through the tax office. Advice from Ararat Rural City is that they expect the appeal to be set up by the end of this week. I encourage Victorian members to donate to that appeal.
The member for Wannon and I would like to thank ABC and ACE Radio network for their regular updates, warnings and excellent coverage of the fires. Thanks also go to the Red Cross and the SES for providing support and food to the volunteers and firefighters. Full credit goes to the DPI for their efforts in the recovery process. Thanks go to local businesses for their support. Baker’s Delight in Ararat was baking around the clock to keep up bread supplies to the firefighters. Thanks go to the local farmers helping to dispose of the huge numbers of livestock burnt in the fires. So far 110 semitrailer loads of hay have been donated to the affected farms, with this effort being coordinated by the Victorian Farmers Federation. It has been a whole community effort. Whilst the immediate danger has passed, we need to recognise that the task of rebuilding and restoring the infrastructure will take time. In fact, this recovery effort will take many months and in some cases many years to complete. I and the member for Wannon commend the enormous efforts made by local communities in fighting the Victorian bushfires and we offer every assistance in the recovery process.
Before calling the next speaker, I commend the member for Ballarat and thank her for what she was saying. I fully endorse what she said.
In the parliament today, I want to take the opportunity to place on record very strongly and unequivocally my personal condemnation of the recent acts of violence that appear to have engulfed many parts of the Muslim world—acts of violence and rage directed at the missions of foreign countries. I do this in my capacity as the federal member for Ryan and in my capacity as a citizen of this country. I want to condemn absolutely the sheer rage, threats of violence and the commission of terrorist acts against Western nations, Western interests and businesses in English-speaking countries.
My understanding is that the violence and threats to commit violence have erupted following the publication of cartoons in Danish newspapers that depict the prophet Mohammed in a manner most offensive to Muslims and believers of the Islam faith. Many of my constituents have emailed and called me to express their views, which are consistent with my own. I have also had the opportunity of reading in print in newspapers across this country the views of my fellow Australians. My sense is that the overwhelming majority share the view that I state here this evening.
I want to state at the outset that I personally reject the judgment of the publishers in their decision to put into the community the cartoons as they were depicted and drawn. It served little purpose and had little value. It is of great and deep regret that the cartoons were published. While I do not condone the cartoons published by Danish newspapers, or other European newspapers equally, I say in the strongest language in the House of Representatives of the Australian parliament that there can never be any excuse for the extent and nature of the sheer, raw violence and rage we have seen in the last few days, especially in Lebanon.
To hear of Christian churches being stoned and foreign embassies being attacked and set upon physically is very distressing to me as a citizen of this country who shares and holds certain beliefs and who aspires to certain values in this country. To hear of threats by those protesting in sheer rage that the response of the Muslim community will be acts of violence and terror on a scale similar to the 9-11 tragedy is absolutely unacceptable. Such sentiment cannot be tolerated in this country or in any like-minded civil community and law-abiding society. Indeed, free speech is a cornerstone of this country; it is a cornerstone of our democratic nation.
The right to protest and to free speech are of equally precious value and must be guarded by all of us with every ounce of energy. We must respect the right to speak freely and to publish freely, as we must respect the right to protest peacefully. That is the key point—to protest with absolute conviction but, equally, with absolute peace. Raw and uncontrollable violence by anyone is never a legitimate form of protest. I condemn it here as the member for Ryan; I condemn it as Michael Johnson, a citizen of this country. It places many people in great danger and those who advocate such acts of violence should not be given any leeway.
The undercurrents that seem to be placing the Muslim world against the Judeo-Christian world are very disturbing to me. Whether or not I am correct, I personally sense a clash of views and beliefs brewing in the world at large—almost a clash of civilisation, if I can use that phrase, to give credence to the words of Harvard professor Samuel Huntington. More frequently than I would like, there seems to be a report every day and every week of new, real and physical outbreaks of violence or attacks that pit the Muslim world against the non-Muslim world; faith against faith. This is of deep regret to me and I am sure that all members of this parliament would share that deep regret.
Alternatively, there seems to be reports that hatred, violence and intolerance are the product of the Muslim world alone. That is not the case. Indeed, the overwhelming number of Muslims that I know personally are not of the view that hatred, violence and intolerance are of their faith. I might be misguided, but I suspect that many of my fellow Australians would share the same view. Communities and individuals alike in this country must never permit what we have seen to take root in any enduring manner in this country. (Time expired)
I rise to tell a story of this government’s complacency, ineptitude, arrogance and utter disdain for the welfare of the battling families and small businesses in the city of Belmont in my electorate. The facts are simple. In 1996 the federal government privatised Australia’s major airports. That was a good thing, in that it facilitated new investment, infrastructure and better facilities for travellers and local communities and, in so doing, created jobs. Perth Airport was leased to Westralia Airports Corporation. The terms of the lease clearly and unambiguously specified that the Westralia Airports Corporation should pay the equivalent of local government rates to the relevant local authority, in this case the City of Belmont. The rationale for this is clear and correct: businesses, whether they exist on federal land or not, should all be subject to the same taxation regime. This principle is known as competitive neutrality and is at the heart of the national competition policy which was introduced by the former Labor government and fully endorsed and embraced by the Howard government.
Since 1996, the City of Belmont has sought payment from the Westralia Airports Corporation of equivalent local government rates. Until this financial year, the Westralia Airports Corporation fully complied with this requirement and made the payments in full. However, about two years ago, despite the lease being clear and unequivocal, the Westralia Airports Corporation started to agitate and informed the City of Belmont that it was paying more than was appropriate. On the basis of the City of Belmont’s concerns, in June 2004 I put a question on the Notice Paper seeking federal government confirmation that Westralia Airports Corporation, like all airport corporations around the country, should be paying a fee equivalent to local government rates. The then Minister for Transport and Regional Services, the member for Gwydir, with typical disdain, failed to respond to my question. He flagrantly ignored his constitutional requirements to be accountable to this House.
When Minister Truss assumed the portfolio, I resubmitted the questions thinking, perhaps naively, that he would be more assiduous than his predecessor and that he would be concerned about the principles involved in this matter. Of course, I was wrong. There has been not a yelp from this National Party minister. So last month I wrote to the minister seeking his urgent confirmation that Westralia Airports Corporation should rightly pay its due. Of course, he has not responded again, despite repeated contact from me and my office. I was concerned—and remain so—that the families and small businesses in the Belmont area would end up carrying the can while this multimillion dollar business shirked its legitimate responsibilities. Sadly, it seems that my concern was well placed. Despite having paid what was due in each and every year since 1996, this financial year Westralia Airports Corporation has refused to pay the City of Belmont almost $1 million in rates.
Mr Speaker, you may well ask on what basis has the corporation so acted. It seems that, although he refuses to answer my questions on this matter, the Minister for Transport and Regional Services has provided written advice to Westralia Airports Corporation that it need not pay its full share. As a result, the city and people of Belmont have been short-changed. The reality is that this cruel and arrogant act has been perpetrated by the minister’s direct complicity.
As I mentioned before, the principle of competitive neutrality is integral to national competition policy and tax policy. National competition policy is overseen by the National Competition Council, the NCC. The current Acting President of the National Competition Council is Mr David Crawford. Mr Crawford’s professional qualifications make him well suited to this role. But here is the real nub of what is wrong with this arrogant and complacent government: would you believe that Mr David Crawford is the chairman of the very same Westralia Airports Corporation which is acting so blatantly against the principle of competitive neutrality which the National Competition Council is charged with upholding?
Once again, this sorry episode of grossly inappropriate corporate practice can be sheeted home to the man who made the appointment of Mr Crawford to the NCC—of course, I am talking about the Treasurer of Australia. Not content with foisting his Liberal Party mate Robert Gerard onto the board of the Reserve Bank in flagrant disregard of Treasury advice, this Treasurer has allowed another business mate to be unambiguously and clearly conflicted. So what should happen now? First, the Minister for Transport and Regional Services must do his job and ensure that the Westralian Airports Corporation pays its equivalent of local government taxes, just like everybody else. Secondly, the Treasurer must act immediately to eliminate this conflict and ask Mr Crawford to remove himself from the National Competition Council. To do anything else would simply prove again to the families and businesses in Belmont that under this inept and complacent government there is one rule for big business and another one for everybody else.
At the beginning of our parliamentary year in 2006, as we come up to the 10th year of the coalition government and the prime ministership of John Howard, it is worth while recalling some of the achievements of this government. We inherited record debt, high interest rates and high unemployment and many of our welfare benefits—our welfare system—were struggling under the weight of an ineffective economic system and under ineffective economic management. There will always be those who will want, to put it as politely as I can, to be distracted from the main game—that is, the best possible interest rates, the lowest possible inflation rate, lower unemployment, encouragement of enterprise, and making sure that our young people are being educated, trained and maximised in apprenticeships and traineeships so that our enterprise system can thrive.
The fact that we had to have a Charter of Budget Honesty when we first came into office was in itself quite an indictment of those who sit in opposition. We were struggling internationally with our reputation. We were not maximising our exports. As I said, our welfare, health and education systems were struggling under the weight of inefficiency. Interest rates came down from nine per cent and 10 per cent to six per cent and seven per cent. The inflation rate is well under control. The unemployment rate is down from one million unemployed and is heading towards the five per cent rate. Apprenticeships have trebled. There have been record exports. These are the things on which nations are built. That is the legacy of the past 10 years. The fact that we are able to provide one of the most effective welfare, health and education systems in the world is testament to our private enterprise system.
The other thing that the Howard government has brought to Australia, as I suggested earlier, in the international field is a far greater sense of self-respect. We have become much more self-assured as a nation, and so we should have. There will always be work for government to improve what we do—we can never be complacent—but I find respect for Australia around the world. I think those who observe us as a small- to medium-sized country are somewhat incredulous at what we have been able to achieve over the last couple of hundred years.
As I said, there are many challenges in front of us. It is important that we respect what these achievements have been built on. I would like to conclude by acknowledging the efforts of all of my colleagues, not just the executive, as we head towards 10 years of coalition government. Those achievements have developed Australia and its people to the standard, the quality and the spirit that we now enjoy.
Order! It being 8.00 pm, the debate is interrupted.
The following notices were given:
to move:
Other Members, who are not Members of the committee, may be admitted when a committee or subcommittee is examining a witness, or gathering information in other proceedings. Other Members must leave when the committee or subcommittee is deliberating, or hearing witnesses in private, or if the committee or subcommittee resolves that they leave.
Committee and delegation reports on Mondays
in the House Each Member in the Main Committee Each Member (standing orders 39, 40, 192(b)) | 10 mins maximum, as allotted by the Selection Committee 10 mins |
Dissent motion Whole debate Mover Seconder Member next speaking Any other Member (standing order 87) | 30 mins 10 mins 5 mins 10 mins 5 mins |
(e) Any subsequent action against a Member under standing order 94 (sanctions against disorderly conduct) may only be taken in the House.
(F) Standing order 190 be amended to read:
The following general rules apply to meetings of the Main Committee:
That the Committee do now adjourn .
Figure 4 Main Committee order of business
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The sitting times of the Main Committee are set by the Deputy Speaker and are subject to change. Additional sittings may be scheduled if required. Adjournment debates can occur on days other than Thursdays by agreement between the whips.
If the Main Committee meets before 10 am the first item of business shall be statements by Members. The Deputy Speaker may call a Member, including a Parliamentary Secretary but not a Minister, to make a statement for no longer than three minutes. The period for Members’ statements may continue for 30 minutes, irrespective of suspensions for divisions in the House.
to move:
That this House:
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That this House condemns the Federal Government for:
In answer to a question from the member for Corio on 10 November 2005, (Hansard, page 104) on the subject of the oil for food program, I referred to advice provided by Mr Tim Besley, Chairman of the Wheat Export Authority, to the Senate Rural and Regional Affairs and Transport Committee of 1 November 2005. Mr Besley has since written to the Chairman of the Committee, indicating that his answer was ‘factually incomplete’ and provided additional information.
The letter is reproduced below to supplement the answer of 10 November 2005.
7 February 2006
Senator Bill Heffernan
Chairman
Senate Rural and Regional Affairs and
Transport Committee
Department of the Senate
Parliament House
Canberra ACT 2600
Dear Senator Heffernan
At the Committee Additional Estimates hearings on 1 November 2005 and in the context of a discussion around the Wheat Export Authority’s (WEA) review of AWB(I) contracts I was asked the following question by Senator Siewert:
“were you aware that the AWB had entered into commercial arrangements with the Jordanian trucking company?”
To which at the time I replied “No”.
And subsequently in the context of the same question I replied:
“there was no indication of it at all on the documents we saw”.
Having considered my responses to the committee I have since conducted a further review and I would like to inform the committee that my answer was factually incomplete. The WEA was made aware in mid 2004 from material in its possession that AWB(I) was supplying wheat into Iraq under an arrangement that included over land transport by a Jordanian trucking company.
Consistent with its function of reporting on the outcomes of the export performance of the national pool and in response to public allegations of AWB(I)/AWB Ltd paying “kick backs” in Iraq the WEA undertook to address the issue in its 2004 performance monitoring activities,
AWB(I) provided WEA access to a sample of 17 contracts for wheat sales to Iraq under the UN oil for food program. WEA staff reviewed these contracts to verify whether the pool FOB data provided to WEA was consistent with those contracts. The details of the contracts were consistent with data provided by AWB(I) to WEA.
When questioned specifically by WEA staff over the provision of “kickbacks” in Iraq AWB(I) denied any wrong. AWB(I) staff pointed to the unique circumstances of Iraq sales (eg: that sales were to include delivery of wheat over land and payment is not made until the wheat is delivered) to explain why it was necessary to pay a Jordanian trucking company and why prices may appear above global benchmarks.
Part of the WEA’s 2004 performance monitoring activity included examination of the Corporate Governance procedures within AWB(I) including a review of the AWB(I) Corporate Code of Ethics and Code of Conduct Policy that had been approved by its Board. This policy dealt with agency facilitation payments. WEA’s review found that there were no payments recorded for Iraq wheat sales.
WEA’s performance monitoring activities are undertaken from the perspective that WEA is not a regulator of AWB(I)’s performance. Responsibility for the manner in which AWB(I) conducts its business resides with the Board which is governed by a constitution and established corporate governance framework.
The WEA’s role is to report retrospectively on the outcomes of AWB(I)’s management of the national pool and the resulting benefits to growers. This is generally a high level assessment undertaken by WEA on an annual basis.
I regret that my answer was not complete.
Yours sincerely
MA (Tim) Besley
Chairman
08/02/2006 161Wednesday, 8 February 2006
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The DEPUTY SPEAKER (Hon. IR Causley) took the chair at 9.30 am.
I rise today to acknowledge the passing of my friend Terry Raper on 19 January this year. Terry was the second oldest of the nine Raper boys. He is survived by his wife, Jean, and his sons, Andrew, David and Grant, their wives and his five grandchildren. He cherished his large extended family, including his brothers and sisters-in-law. One of his brothers commented that the family had lost a brother, a friend, a lovable bloke and a lovable father. The booklet produced for the requiem mass for Terry has a photo on the front, also used by the local paper. That photo encapsulates Terry: warm, outgoing, gregarious and giving.
Terry was a much loved and respected member of the community. Much more than that, he was a genuine and committed man, who continued until the last months of his life to serve that community. He often visited my electorate office and had a joke to share with us, more often than not a little blue. He did have a wicked sense of humour, which only he could get away with.
Terry worked hard all his life. He worked at the Bankstown Torch and then successfully ran his own safety training company business. His commitment to work was only outmatched by his commitment to his family. He was a tireless voluntary worker and a dyed-in-the-wool member of the Labor Party. The Revesby branch relied on him to organise all the polling booths in the area as well as working one of the booths during the day. Revesby will not be the same without him when the next election is called.
When Terry was diagnosed with melanoma he was not given a long time to survive. Terry exceeded that time by many months. Terry redefined the word ‘fighter’. He was passionately committed to the game of rugby league and, according to his brother, Johnny, loved the St George jumper. On the front of the requiem mass booklet the family had the following words included:
Some people come into our lives and quietly go.
Some leave a footprint on our hearts and we are never the same.
Terry Raper has left a footprint on many hearts in his community, and we will never be the same. He has left a wonderful legacy in his children and his grandchildren. We will all remember and celebrate the life of Terry Raper.
More than 1,000 people attended the church service and over 400 people attended the wake at Revesby Workers Club. Those sorts of numbers were testimony to the life that Terry lived. He was very well regarded in his local community, to which he contributed a lot. I have been to a lot of funerals over the years, but very few funerals have matched that amount of people, both at church service and at wake. A lot more would have come had time allowed. My condolences to his wife and to his family.
The Australian transplant cricket team is heading off to England in July to compete in a three-week cricket tour. The tour comprises two test matches and three one-day cricket internationals for the David Hookes memorial shield. The squad includes liver, heart, bone marrow, lung and no fewer than 11 kidney transplant recipients from all over Australia. Who else could boast a team full of legitimate steroid users? At least half of the team have used the high-performance drug known as EPO—legally, of course—for treatment of chronic kidney disease.
The team’s aim is to raise public awareness of the benefits of and need for organ and tissue donation. With that in mind, arrangements are currently being made for our team to attend certain public functions, including a formal introduction to members of the UK parliament, who will then escort the team members on a tour of the houses of parliament.
Following the death of David Hookes, there was a spike in organ donor registrations when it emerged that David and his family had agreed to donate his organs. Nevertheless, Australia has one of the lowest organ donation rates per capita of any country in the Western world. Mr Deputy Speaker, I repeat: the tour is to raise awareness of organ donation. With Australian Organ Donor Awareness Week running from 17 to 25 February, I urge Australians to sign onto the register and to let their families know of their wishes.
I will be watching the David Hookes memorial shield closely, as we on the Gold Coast are immensely proud to be having one of our own playing in the series. Chris Wills, from the Gold Coast’s beautiful hinterland, received his heart and lungs last year. Chris, an all-rounder, is right up there in his grade for batting and bowling. After Australia losing the Ashes in both men’s and women’s to the pesky English, he is keen to get things back on track. I have no doubt that we will retain the David Hookes memorial shield, and Chris is emphatic that he will not be returning to Australia without it. I wish the team all the very best on their upcoming tour.
Yesterday, during question time, the Minister for Health and Ageing was asked a question relating to the current doctor shortage that Australia faces. This brought me to once again reflect on the situation in my own electorate.
Last November, I addressed this parliament on the current medical crisis caused by the shortage of GPs. I spoke about how this shortage was having a detrimental impact on the health of communities within Adelaide. I particularly spoke about the Nailsworth surgery, which, in 2003, lost two practising GPs and has been unable to attract replacement practitioners due to the shortage.
After years of unsuccessfully searching for replacement doctors, the Nailsworth surgery finally sourced a doctor who was willing and enthusiastic to join the surgery. I outlined how the surgery, desperate and overworked, was denied the opportunity of employing this doctor under the government’s Health Insurance Act, as the doctor in question, Dr Tedders, was trained overseas and had completed only six years of rural service and was therefore unable to attract the necessary provider number.
In recognising the surgery’s plight, I supported their application for an exemption under section 19AB of the Health Insurance Act to allow the doctor to join the surgery. I personally wrote to the minister for health, appealing for an exemption to be granted, and in parliament I called on Minister Abbott to grant an exemption to a surgery that is facing possible closure. Unfortunately, just like the pleas and petitions this government received from the communities in and around Nailsworth, my pleas have also fallen on deaf ears. It is just not good enough. The people of Adelaide want to know when the government will be willing to work on serious, long-term solutions designed to address the shortage of GPs and ease the pressure.
Currently, we have a government whose medical policies and guidelines simply do not match what is happening in our communities. Whilst Nailsworth is repeatedly told that it is not ‘an area of shortage’, it has currently reached full capacity and can no longer accept new patients. The two remaining doctors face immense pressure, as they are left to service approximately 7,000 to 8,000 patients and can rarely take holidays due to the problems of locating replacement GPs.
Early cuts to medical training places have led to a situation where we are not self-sufficient in supplying the demand for health professionals. We are relying on overseas trained doctors who are only able to access provider numbers in restricted areas and at restricted times. Perplexingly, Dr Tedders has been granted a provider number to work after hours and in two local nursing homes, but this alone does not meet the needs of the communities surrounding Nailsworth.
There is a serious shortage of GPs, and our inner and outer metropolitan communities are also feeling it. Nailsworth is just one of many surgeries experiencing the problems caused by a short-sighted government. The government should have our country’s health high on its list of priorities. Instead, it is happy to deny Australians access to adequate GP services. I again call on the government and the minister for health to act for the Nailsworth surgery and for the people in the communities in my electorate of Adelaide.
Today I rise to pay tribute to a worthy benefactor and local business that has jumped in to assist two local charities for cancer patients. The generosity of their gesture needs to be acknowledged, and what better way than by recording the fact in Hansard? But, first, I have some background. The two Shoalhaven charities are the committee raising funds to have a linear accelerator installed in the Shoalhaven Hospital to assist South Coast cancer patients and the Milton cancer outpatients appeal committee, raising funds for an outpatients wing at the Milton Hospital.
Both these committees have had their fundraising boosted through the generosity of Corban, Nowra, who donated a new car to be used especially to assist the effort. The car will be raffled and the proceeds distributed between the two charities. The car will be drawn at a ball at the end of March or at the beginning of April. The principals of Corban, Nowra, Cameron Blake and Alan Pace, were approached by a number of people seeking a significant donation. But, as Alan Pace explains it, Corban was not prepared to come to the party unless the community benefited. Both Cameron and he came from Sydney, and as he said to me, ‘City people don’t appreciate how well off they are, because country people do it tough.’ So they resolved to assist in this way, and I want to reinforce their generosity by saying that these are the types of businesses I want to support.
They were approached by Mrs Betty Berg OAM, who has done a lot of fundraising locally and who is a well-known local identity. She negotiated with Corban, and they agreed to help. They supported the community by donating a Suzuki vehicle, and all they ask is that the community in turn support them to some degree. You cannot ask for more than that. Their generosity stands as a reminder that local businesses are as much part of the community as are other organisations. They rely on the community for their living, and it is only right that they participate equally as responsible corporate citizens.
Corban, Nowra, is to be congratulated on its generosity of spirit and its involvement in the social issues of the Shoalhaven. I would like to lay down a challenge to the other car dealers in town to match what Corban has done: rise to the challenge and help the community that puts money in your pockets. Whilst many of our businesses are very active in fundraising, particularly in local events, there is always more that can be done by both businesses and, in return, the community.
I would also like to also mention that Jim and Niki Kladis of Kladis Winery at Wandandian, just up the road, have donated a 22 carat gold ruby necklace and matching earrings as second prize. I would love to go on and thank everyone who has contributed so far, but that is for another day when both facilities are realised. For now, may I extend on behalf of the Shoalhaven area our utmost gratitude for Corban’s compassionate and generous gesture. These are the types of businesses that are welcome in the Shoalhaven.
On Sunday it was my honour to attend a service that marked the second anniversary of the Australian ex-prisoner of war memorial, where 269 additional names were added to the granite wall. The memorial pays tribute to over 35,000 Australian ex-POWs, 8,000 of whom died overseas whilst in captivity—the remainder came home bearing the scars of their experiences. One of the names on the memorial wall is the man that the Prime Minister, the Leader of the Opposition and the Minister for Foreign Affairs paid their respects to yesterday: the Hon. Sir Reginald Swartz, a former member of this place and a former POW. Peter Blizzard OAM, who has recently received his OAM, largely for his work on the memorial, designed the wonderful granite wall that contains over 35,000 names.
It is important to note that the Australian ex-POW memorial, whilst it is located in Ballarat, is of national significance. It contains all 35,000 names. A large amount of research was undertaken to get all the names. The current Changi Chapel, which exists within the parliamentary precinct, is unfortunately the only place that is recognised as a national memorial for ex-POWs. Whilst I do not want to detract from the significance of the Changi Chapel, it really is not the national ex-POW memorial. The government has failed to recognise that, despite the fact that the memorial in Ballarat has not been funded solely by the Commonwealth government—it has been funded by state, private enterprise and the efforts of many ex-POWs—it speaks to many POWs and their families far more than the Changi Chapel. I have called previously, and will be calling again, on the new Minister for Veterans’ Affairs to recognise the national significance of the Australian ex-POW memorial in Ballarat, because it contains 35,000 names.
On any weekend you can see the masses of poppies along the wall. Families are visiting from all across Australia to see their family member’s name on the wall. It is a memorial of national significance. It does not require any legislative change in order to be recognised as such; it requires the will of the government to recognise that this memorial has emerged from the Australian ex-POW community. It speaks far more as a national memorial than any of the memorials the government has so far endorsed. I again call on the government to recognise that the Australian ex-prisoner of war memorial in Ballarat is one of national significance.
Every year since 2000 I have hosted the Fisher community Australia Day awards. On 26 January this year some 35 local citizens who dedicated time and effort for the benefit of the local community were recognised at a ceremony attended by approximately 300 people. The individual award recipients are: Mrs Jane Bright for her contribution to the protection of abandoned dogs and cats; Mr Gary Phillips for services to the Sunshine Coast war veterans and the Sunshine Coast Concert Band, particularly for the work he did with respect to Victory in the Pacific Day; Mrs Laurel Asimus for ongoing volunteering efforts in the community, particularly in relation to seniors and Lifeline; Mr Frank Beattie OAM for dedicated community service to the hinterland, particularly the Maleny RSL; Mrs Patricia Blake for more than 20 years of voluntary charity work, including work for the St Vincent de Paul Society; Mr Bill Close for assistance to struggling rural and outback families and Christian support through his Care Outreach organisation; Allan Lawley and Hendrik ‘Hank’ Drent for dedicated fundraising activities in support of the hinterland’s elderly residents; Mr John Edwards for services to education, particularly school based sport; Mrs Gwen Greenwood for services to the community through the Lionesses clubs of both Buderim and Mooloolaba; Mrs Lorrie Housman for more than 20 years of local charity work, including work with the St Vincent de Paul Society; Mr Edward ‘Ted’ Hyde for dedicated fundraising on the Sunshine Coast for cancer research; Mrs Sheree Lyons for her hard work and dedication to the Sippy Downs community—in particular, she is now president of the community association; Mrs Adele MacDonald for dedicated service to the sport of lawn bowls on the Sunshine Coast; Mr Casey McGuire for services to the community through sport; Mr James ‘Jim’ McBrien for his long-term dedication as a Lifeline volunteer; Mrs Gloria McEwan for services to the community—she has been involved in Inner Wheel, QCWA, Legacy and Friendship Force; Mr Cec Munns AM for services to education; Mrs Janet Scott for services to the community; Mrs Rita Rynne for dedicated services to various Sunshine Coast community support organisations, including work for leukaemia and also the Association of Independent Retirees; Mr Hans Van Roy for services to the Buderim community—he has been president of the chamber of commerce; Ms Lucy Cradduck for services to the community, in particular the Buderim War Memorial Community Association; Mr Peter Shadforth for services to sporting clubs and community organisations; Mr Bill and Mrs Margot Lind-Hansen for services to the Kawana Ambulance Committee; and Mrs Nancy Moule for her contribution to the arts.
There was also a highly commended award given to the Suncoast Social Dancers. The community service award went to Telstra Country Wide. Also, there were awards to Mr Des Dwyer, former Caloundra mayor; Councillor Andrew Champion; and Mr Steve and Mrs Terri Irwin. The Des Scanlon Shield was given to Angel Flight, a wonderful organisation that helps so many people in need. I thank the House. (Time expired)
Honourable members may be aware that a young 16-year-old, Joel Exner, who lived in my electorate was killed on a building site last year. Sadly, not in my electorate but in the city of Blacktown, Paul Hughes, 41, a father of a young family of three, died falling from a building site. I congratulate Andrew Ferguson, the secretary of the relevant union; the board of management; and all the members of that union for the way they supported the family in such a tragedy and brought down Paul’s mum and dad from Queensland so that they could visit the site of his death and be at his funeral. You would expect nothing less, I guess, of the union, but again I record my appreciation for it.
I thought I should quote to the House some of the thoughts of Paul’s father. He said:
Every man’s birthright is to come home from his job.
and, I might add, to his family—
Paul did not deserve to die like this, and there is nothing worse for us than knowing we outlived our son because our government has not made workplace safety enough of a priority.
I agree with that very much. I say to all honourable members that it is an issue that we need to take up. People should have the right to go to work and earn a fair day’s pay but, most importantly, come home to their families of an evening.
The issue of criminal negligence in relation to workplace sites has been frustrating in the sense that there has been so little progress, in my mind, about protecting workers from unfortunate death during work. I disagree with Louise Markus when she says that occupational health and safety is a state matter. In fact it is very hard, with the new industrial legislation that has passed through the House, to work out just what role the Commonwealth now plays—it did not play a very big part previously, I must admit—in occupational health and safety matters. But we must have a system, and we must allow trade unions to inspect sites—as they have so rigorously done previously—to oversee those sites and to ensure proper safety measures are taken with no short cuts and no money saved at the cost of the lives of workers. Tragically, under the new industrial legislation this is not possible. (Time expired)
In the House today I raise a matter of great concern in my electorate—that is, the Bonville Deviation, a stretch of the Pacific Highway running through the area of Pine Creek. It has been the scene of no fewer than 13 deaths since 2001. The Pacific Highway, of course, is a New South Wales state government road, designed, built, owned and maintained by the New South Wales government. It does receive substantial funding under AusLink, and I was delighted to be able to announce, with the then Deputy Prime Minister, John Anderson, that some $960 million is to be spent on the Pacific Highway for the years 2006-09. But we have been waiting many years for work to begin in Pine Creek.
As long ago as 1998, the state government announced that it would fully fund the improvement of the Bonville Deviation through Pine Creek, with a completion date of 2003. We are still waiting for work to commence. The state government also withdrew its commitment to fully fund the scheme. As recently as 13 July 2004, Bob Carr was on the radio decrying the fact that the reason the Bonville Deviation had not commenced was a lack of federal government funding. Later that day, on ABC radio, I pointed out to the listeners that the RTA’s own website noted the fact that the Pine Creek deviation was to be fully funded by the New South Wales state government. What happened? The website, all of a sudden, moments later, disappeared. It disappeared from view and reappeared later in the afternoon with a revised wording that removed the fact that the New South Wales state government was responsible for the Bonville Deviation. The new wording basically indicated that the state government was only responsible for planning.
We have finally advanced beyond that. We have seen tenders called for the project. Tenderers were given 13 weeks to place their tenders. But regrettably the delays still continue. Mr Joe Tripodi, the state Minister for Roads, the minister for excuses, is still allowing his department some six months to assess tenders, when the tenderers were only given 13 weeks to put in their tenders. We have named Mr Tripodi ‘Slow Joe’, and the message coming from my electorate is: ‘Slow Joe must go.’
It is time for Morris Iemma to show some leadership and get rid of Slow Joe, the minister who would rather whinge than work, the minister who carries with him a grab bag of excuses. It is time for Slow Joe to pick up his swag and move on. We want to see a minister committed to the Pacific Highway. We want to see a minister committed to making things happen—not just whingeing. Slow Joe must go. It is time for Iemma to act, not react—he doesn’t act too often; he reacts quite a bit. It is time for Iemma to act. It is time for the Bonville Deviation to start now. (Time expired)
The Australian Chinese, Vietnamese and Korean communities are celebrating lunar new year at the moment, between 23 January and 12 February. Lunar new year, for one quarter of the world’s population, is the most important holiday of the year. This year it marks the end of the Year of the Rooster and the beginning of the Year of the Dog. In this last week, I have celebrated with Australian Chinese Buddhists at the Nan Tien Temple in Parramatta, with the wider Chinese community in Parramatta Chinatown and with the Australian Vietnamese community at the Tet Festival at Warwick Farm, an event that attracts around 60,000 people each year and is organised by an organisation representing the Vietnamese community in Australia at large.
I have great affection for these communities and, more than that, I am amazed by them. They are so strongly Australian—and proudly so—and such extraordinary contributors to the Australia that is common to us all, yet they have also retained such a strong cultural base and maintained that base through generations of Australians. How privileged we are in this place to be invited, as representatives of the people, into these little slices of Australia and to be given a front row seat to see the lion and dragon dances, to hear the music and the language, to eat the food and to catch a glimpse of other philosophies, other religions and other belief systems that flourish so well within the Australian context.
It was also a privilege for me to hear the wisdom of the Abbess of the Fo Guang Shan Nan Tien Temple, the Venerable Man Chien, a woman of extraordinary wisdom and grace. She was kind enough give the politicians at the Buddhist ceremony last week crystal lotus flowers to remind us, in the Buddhist way, that even though lotus flowers grow in the mud they retain their beauty and purity—a fitting metaphor, she thought, for politicians. Several of us are carrying them around with us in our handbags as a reminder. It is quite a beautiful concept.
As we celebrate with these three successful communities we should remind ourselves that we did not always open our arms to these new arrivals. At times we were quite tough, particularly on our Chinese and Vietnamese Australians, but how lucky we are as a nation that we do not just have the world at our door to experience it from afar but have it within us, in our own population. The traditional lunar new year wish is for health, wealth and prosperity, and these three communities have given those things to us. It is fitting at this most important time of the year for them that we wish them the same—health, wealth and prosperity and a happy lunar new year and Year of the Dog.
I rise today to talk about the ongoing problems with Queensland Health. I rise to be an advocate for those constituents in my community who have been so adversely affected by the intransigence, the lack of action and the bumbling of the Beattie state Labor government in Queensland. I rise because those MPs who are charged with the responsibility of representing the people of the Gold Coast in Queensland’s state parliament, the parliament that is accountable for the lack of action when it comes to Queensland Health, have remained eerily silent. My concern is that Gold Coasters are forced to accept suboptimal outcomes when it comes to their health because the Queensland state Labor Premier, Peter Beattie, and the Queensland state Labor government seem unable or unwilling to do anything to fix the health crisis in Queensland.
Over the course of the past week we have seen on the Gold Coast a complete blow-out in waiting lists for operations at our public hospitals. This blow-out is all the more concerning when you consider that for a patient to be eligible to have an operation in Queensland there is a secret waiting list to get onto the waiting list. So there is a blow-out in the official waiting lists, and I can only shudder to think what the lead time just to get on the waiting list is for those constituents who are on the secret waiting list. That the Labor premier says this is all a consequence of federal government policy just highlights the fact that the Queensland state Labor government has become so arrogant and out of touch that the people of Queensland are ready to take the baton to it. We saw that in two by-elections.
I stand in this parliament to say that the Howard government will continue to channel record amounts of money into the Queensland state Labor government’s coffers in an attempt to play a meaningful role when it comes to addressing the issues of Queensland Health. Over $11 billion per annum is flowing to the Queensland state Labor government through GST and financial assistance grants. As part of this as well, the Howard government contributed $8 billion to Queensland Health over five years. That funds 50 per cent of the hospital system. Despite this, Peter Beattie and his state Labor members are contributing a miserly $440 per head of population to public hospitals. This is less than any other state government contributes to its public hospital system. It is an indictment of the Labor government in Queensland, and the fact that the Labor MPs from that state have been silent on this is completely unacceptable.
I will continue to highlight the inaction of the state Labor government, I will continue to highlight the way in which the Commonwealth government is pouring record amounts of money into Queensland and I will continue to ask, ‘Why?’ (Time expired)
Order! In accordance with sessional order 193 the time for members’ statements has concluded.
Debate resumed from 7 December 2005, on motion by Mr Andrews:
That this bill be now read a second time.
I rise to speak on the Australian Sports Anti-Doping Authority Bill 2005 and the Australian Sports Anti-Doping Authority (Consequential and Transitional Provisions) Bill 2005. The Australian Labor Party are proud to have introduced the original antidoping legislation in 1990, which resulted in the Australian Sports Drug Agency. We are equally proud that even from opposition Labor have been able to bring to account the Howard government and ensure Australia continues to build on a drug-free sporting legacy.
Labor’s goal in establishing ASDA was to ensure that Australian athletes were able to perform and compete in an environment untainted by banned substances. This goal was met, with ongoing revision and adaptation of our antidoping legislation. To move forward in antidoping in Australia, it is essential that there be a platform for national and international collaboration, regulation and development. Australia’s antidoping systems are robust and thorough and are managed by an authority that can adapt to ever-changing doping technologies and that has fair and transparent measures in place to investigate allegations of antidoping violations.
The Australian Sports Anti-Doping Authority Bill 2005 establishes the Australian Sports Anti-Doping Authority. Australia is internationally renowned as one of the leaders in antidoping. Drug testing programs commenced in Australia in the early 1980s. In 1989, the Council of Europe Anti-Doping Convention was signed, in recognition of sports organisations developing an internationally coordinated approach to drugs in sport. It took effect in Australia in 1994.
The World Anti-Doping Agency was established in 1999, with the aim of continuing to coordinate and harmonise antidoping efforts across sport at an international level. In March 2003, WADA released the World Anti-Doping Code. The WADA code provides a framework for international and national sporting organisations and public authorities to establish antidoping policies, rules and regulations. This code has been accepted by all Olympic committees and Commonwealth Games associations, 68 national antidoping organisations, 159 of the 161 national paralympic committees, 10 major games associations, all Australian national sporting organisations—through government funding obligations, and other international sporting organisations.
Australia’s commitment to the international antidoping effort was ratified most recently in October 2005, when UNESCO adopted the International Convention Against Doping in Sport, a binding agreement to implement the WADA code. Australia is a signatory to this convention, which will take effect once 30 member nations sign on to the treaty.
While Australia has a strong reputation for its antidoping efforts, gaps in the current ASDA powers were exposed during the handling of an alleged doping violation in December 2003. A plastic bucket of syringes, vitamin B and C vials, Equigen vials, other injecting material and an empty box of Testicomp were found in the room of cyclist Mark French at the Australian Institute of Sport facility in Del Monte in South Australia. A preliminary investigation took place. Allegations were made that there was a clandestine drug culture among elite cyclists and that the AIS was turning a blind eye to the drugs culture at the AIS facility at Del Monte. Following this preliminary investigation, the Australian Sports Commission and Cycling Australia instigated an independent investigation of the incident. Allegations were again made that there was drug use by unknown members of the AIS cycling team and that there was a culture of permissiveness in respect of doping at the Del Monte facility. In May 2004, in evidence to the court, Mr French named five other cyclists who had allegedly participated in group injecting sessions at the Del Monte facility. The court found Mr French guilty of antidoping offences. Mr French was banned from competition for two years and fined $1,000. There was no further investigation into the allegations surrounding the five named cyclists.
On 18 June 2004, it was the Labor opposition that raised this issue in parliament. Senator John Faulkner criticised the government for the mismanagement of investigations into allegations of antidoping violations. Senator Faulkner called for the establishment of an investigation and determination process independent of the Australian Sports Commission. Senator Faulkner also highlighted concerns that there had been no further investigation of the other named alleged offenders involved in the case. This case was of utmost sensitivity given that some of the alleged offenders were considered potential gold medallists at the upcoming Athens Olympics.
After Labor raised these concerns, the Hon. Robert Anderson QC was appointed by the Australian Sports Commission and Cycling Australia to investigate the alleged claims of doping within the AIS track sprint cycling program and to assess the effectiveness of actions taken by the ASC and Cycling Australia following the discovery of injecting material. From this inquiry Justice Anderson made a number of observations. In short: the preliminary investigation tried to do too much, given its objective was only to determine whether Mr French’s scholarship should be suspended; the follow-up investigation was conducted with due expedience; the case should have been taken to the ASC as urgent, given that Mr French may have had a case to answer and that the further allegations may have impacted on Olympic selections, which were only a few months away; and Cycling Australia and the ASC should have instructed their solicitors to proceed with the case more urgently.
The key recommendation that Anderson made from the inquiry was that there should be a body—a body which is quite independent of the AIS, the Australian Sports Commission and the sporting bodies themselves—with the power and duty to investigate suspected infractions, such as substance abuse, and to carry the prosecution of persons against whom evidence is obtained. Throughout the French track cycling case, ASDA did not have the power to investigate, present the case or intervene in any way. The ASDA Act was amended in 2004 in order to comply with the WADA code. However, while the responsibilities are mapped out for the sporting body and athletes in the WADA code, ASDA currently does not have the power to examine all antidoping rule violations in the code.
This legislation provides two additional powers: the power to investigate doping allegations and the power to present antidoping violation cases of hearings of CAS or other sports tribunals. Sporting bodies who made submissions to the Senate inquiry into the legislation concurred that this type of body was required. These additional powers will enable ASADA to examine all eight antidoping violations contained in the WADA code—namely, the presence of a prohibited substance or its metabolites or markers in an athlete’s body or specimen; use or attempted use of a prohibited substance or a prohibited method; refusing or failing, without compelling justification, to submit to sample collection after notification, as authorised in the applicable antidoping rules, or otherwise evading sample collection; violation of applicable requirements regarding athlete availability for out-of-competition testing, including failure to provide required whereabouts information and having missed tests, which are declared based on reasonable rules; tampering or attempting to tamper with any part of doping control; possession of prohibited substance and methods; trafficking in any prohibited substance or prohibited method; administration or attempted administration of a prohibited substance or prohibited method to any athlete; and assisting, encouraging, aiding, abetting, covering up or any other type of complicity involving an antidoping rule violation or any attempted violation.
ASADA will maintain the existing drug testing, education and advocacy functions of ASDA and will also carry out additional functions in relation to the investigation of potential additional sports doping violations; the presentation at hearings conducted by the International Court of Arbitration for Sport and other sports tribunals of cases against an athlete or support person alleged to have committed an antidoping rule violation; determining mandatory antidoping rules to be included in ASC funding agreements with sports; and advising the ASC of the performance of sports in observing these requirements.
ASADA will carry out these functions within the context of the National Anti-Doping Scheme, or NAD Scheme, which is also established by the ASADA Bill. Detailed protocols and procedures for the exercise of ASADA’s functions will be contained in the NAD Scheme, which will be a legislative instrument, developed alongside the ASADA Bill, to be tabled in parliament. The National Anti-Doping Scheme will be consistent with the mandatory provisions of the World Anti-Doping Code and will implement the UNESCO convention, once ratified. The bill acts as the broad legislative umbrella for ASADA, and the NAD Scheme will contain much of the detail that will directly affect the athletes and sporting bodies.
The Senate committee inquiry into this bill has been told that the NAD Scheme will contain antidoping rules applicable to athletes and support personnel, including details of antidoping rule violations and the consequences of infractions; protocols for ASADA drug-testing procedures; protocols and procedures governing ASADA investigations; protocols for ASADA to establish a register of its findings and to advise sporting organisations and athletes of its findings; and protocols for ASADA’s presentation of doping cases at sports tribunal hearings. Under the scheme, it is the responsibility of Australia’s sporting organisations to promote athlete compliance with the scheme, refer violations of the scheme to ASADA, assist ASADA in the course of its investigations and take action in response to ASADA finding that a violation has occurred. The scheme also authorises ASADA to monitor the compliance of sports and sports administration bodies, including the ASC, with these obligations; notify the Australian Sports Commission in regard to such compliance; and publish reports about the extent of compliance.
The NAD Scheme has not yet been produced. This is a key concern of Labor along with sporting bodies and players’ groups. National sporting bodies, athletes and players, not to mention the parliamentarians, have to trust this government that the regulations attached to this bill are consistent with the WADA code and UNESCO convention. They have to trust this government that the NAD Scheme regulations do not contain provisions that will affect them in a negative way. There are also valid concerns, both from Labor’s point of view and that of the sporting bodies, with regard to delays that would be caused by the need to disallow the regulations. While amendments to the NAD Scheme are required to go through a public consultation process, this is not the case for the initial regulations. This is certainly not ideal.
In the Senate committee hearings on this bill the government gave a guarantee that all interested sporting and players associations would be contacted and consulted regarding the detail of the NAD Scheme. Australian sport has a lot riding on the proper establishment of effective antidoping regulations. This consultation is vital. The Australian Olympic Committee characterised some additional concerns in relation to these bills. They argued that the ASADA Bill does not separate the ASADA functions and powers relating to policy making, administration, investigation and prosecution; does not outline the reasons for or status of the register of findings; does not provide ASADA with the necessary and appropriate powers of investigation; and has adopted definitions at variance with those in the World Anti-Doping Code and the UNESCO antidoping convention. These are all valid concerns. The management of ASDA believes that the powers will be separated through good management practices. This remains to be seen. Without seeing the actual NAD Scheme it is difficult to look any further into their concerns.
Labor, as they have done throughout their term in opposition, will hold the government to account on their commitment to the national sporting bodies and their commitment to athletes to ensure that this legislation will offer positive benefits to sport and not incur any additional cost or risk associated with the NAD Scheme.
I should also note before I close that the rush we are in to get this legislation through parliament is not really acceptable. While not wanting to hold this legislation up any longer—it has been on the government’s agenda since mid last year—the government should have had this legislation on the table long before now. We should have seen the regulations before now. This would have allowed the parliament to assess the real impact and would have allowed for an efficient and effective antidoping body with additional powers to be well and truly in place by the Commonwealth Games.
Labor has always been committed to, and the leaders in, Australia’s push to eradicate drugs in sport. Labor created ASDA in 1990 and it was Labor who pushed for the Anderson inquiry, which recommended this legislation. Labor supports the passage of the Australian Sports Anti-Doping Authority Bill 2005. Whilst we have several concerns with this legislation, they are not significant enough to amend the bill. As such, the government should accept this as an act of good faith on behalf of the Labor Party and the opposition will closely monitor its implementation. I commend the bill to the House.
I am very pleased to support the Australian Sports Anti-Doping Authority Bill 2005 and to commend the minister, Senator Rod Kemp, who is doing an outstanding job as Minister for the Arts and Sport, and his officers and members of the Sports Commission. I think all of us are very proud of Australia’s sporting achievements, including at the Olympic level. When we think of the outstanding performance of the Australian team at the last Olympics, in Athens, which I had the good fortune to attend, it is something of which we are very proud. We had a record haul of medals. We are very proud of the way in which women have come to the fore, particularly in swimming, achieving incredible results, breaking world records.
I think we can look forward to the Commonwealth Games as a time at which we will again see an incredible result for Australian athletes. I do not think any of us will be surprised if we end up with the largest share of medals at the forthcoming games in Melbourne. This promises to be a wonderful games, and Melbourne has done an outstanding job in this area.
There is no doubt that, essential to ensuring Australia’s image as a great sporting nation is that we not only take great results from the likes of the Ian Thorpes of the world but also prove to the world that our athletes are drug free, that we run a clean environment in the training of our athletes and that we do not have any high-profile scandals.
I remember the great tragedy for the Greeks when two of their top athletes were caught with drugs. They were devastated by it. I personally believe one of the reasons why the attendance numbers in the first week of the Athens Olympic Games were down was that they were so shocked by those results. So it is important to national pride that we do address the questions of drugs, and this is what this bill is all about.
The ASADA Bill creates the Australian Sports Anti-Doping Authority. We have taken a balanced Tough on Drugs in Sport approach which is appropriate and which is achieving results. It is about having a fair treatment system ensuring that athletes’ rights are protected, because that is also essential. Last year, Minister Rod Kemp announced that the government would establish a new Australian Sports Anti-Doping Authority to take on the advocacy functions of the Australian Sports Drug Agency.
The ASADA Bill will allow the organisation to investigate all antidoping outlined in the World Anti-Doping Code. Specifically the bill provides for ASADA to undertake antidoping testing, determine mandatory antidoping provisions and advise the Australian Sports Commission of progress on the work being carried out. It provides for education for Australian athletes and support personnel. I am sure that is going to be an absolute key. I am sure young people are often tempted to take supplements to lift their performance just a notch higher. It encourages antidoping initiatives by the states and territories, provides antidoping and other services under contract and makes resources available to the Australian Sports Drug Medical Advisory Committee for the performance of its functions.
In the event of serious allegations of doping infractions, Australia will have in place an integrated system—from collecting, preserving and analysis of evidence to making educated recommendations on its findings and carrying a case to a tribunal if required. This is going to enhance our compliance with the World Anti-Doping Code and will also implement the UNESCO International Convention Against Doping in Sport, once ratified by Australia.
The ASADA Bill sets out the broad requirements under which ASADA will operate. The National Anti-Doping Scheme will reflect the provisions of the two major international instruments that I have mentioned. The scheme will contain antidoping rules, protocols for ASADA drug-testing procedures, protocols for establishing a register of its findings and protocols for presentation of doping cases at sporting tribunals. The scheme will set out obligations for Australian sporting organisations such as promoting athlete compliance, referring violations to ASADA, assisting ASADA in the course of its investigations, taking action in response to ASADA finding that a violation has occurred and assisting in hearings. The scheme will authorise ASADA to monitor the compliance of sports and sports administration bodies, notify the Australian Sports Commission in regard to such compliance and publish reports about the extent of compliance.
There is obviously a whole laundry list of things that they are responsible for, but it is a practical way for an antidoping authority to be involved in all the machinations—from first apprehensions, through all the procedures when somebody is caught to assisting with cases et cetera. They will be involved in the transfer of information to the Australian Federal Police. The bill will also contain the rights of the athlete, which I think is important.
The ASADA Bill attaches strict conditions to receipt and disclosure of sensitive information from Customs, the Australian Federal Police and other law enforcement bodies. For example, disclosure must not contravene the terms of Customs initial disclosure to ASADA, and sports in receipt of such information must give an undertaking that any use of the information on its part must be for antidoping purposes and will not occur in a way prejudicial to the subject of the information. Athletes will have access to established external review mechanisms in relation to ASADA investigation, including the Commonwealth Ombudsman, the Administrative Appeals Tribunal and the Federal Court or the Federal Magistrates Court under the Administrative Decisions (Judicial Review) Act 1977.
All that is important because we have had quite a lot of controversy—for example, in the use of coffee, coffee supplements and NoDoz tablets, which I was familiar with as a student but have not used in the sporting field. It is unlikely: I had no great sporting field in which to test it. When some of our young athletes have been accused of a case—you can just imagine—it has been referred to the Australian Federal Police and then gone out to the media. We saw that occur in the cycling area, where information was suddenly broadcast to the media. The devastation in and impact on young athletes of such a provision is unconscionable. By all means, if they are found to be guilty of infractions and have been taking illegal supplements, additives or drugs of any form, they should be held accountable not only by the legal process but also in the court of opinion. If they are using unfair means to gain advantage to win medals, it is against the whole Australian ideal of the athlete and the Australian ideal of a fair go. We want a fair go: if they have achieved the best result they should not have someone else take the medal away from them because that person has been into drugs or supplements. We all want to support that. I am very pleased to see that the rights of the individual are going to be preserved.
The establishment of ASADA represents a significant enhancement to the Tough on Drugs strategy, which is already a world leader. We within government are very proud of that. ASADA will ensure that Australia remains the leader in the international fight against drugs in sport. Mr Deputy Speaker Barresi, I know that you personally will be very interested, coming from the city that is very proud to be hosting the Commonwealth Games, which will put us at the forefront of international sport. We can expect to see many world records broken at this event. We want to ensure that we have not only the finest athletes who do their best and perform to their ultimate but also drug testing done on a fair and appropriate basis, that any cheats are weeded out, appropriate testing is carried out, appropriate procedures are followed and that the athletes’ rights are protected.
I commend the minister, his staff and the Sports Commission. Bringing this bill forward is an important step forward. I believe it is going to add to Australia’s reputation in producing not only fine sportsmen but also a drug-free sport environment. I commend the bill to the House.
I am pleased to speak on the important Australian Sports Anti-Doping Authority Bill 2005 in the parliament of Australia. I am particularly pleased—indeed honoured—to speak after my good friend and senior colleague in the parliament the member for Cook, who I know has a very strong interest and reputation in the world of sport. He played a very significant role in the very successful Sydney Olympic Games of 2000. This bill is important for our sporting community and for the overall reputation of the Australian nation.
We all know what illicit and unprescribed drugs can do to people’s health and wellbeing. When an Australian athlete in particular takes drugs that are illegal or illicit and unprescribed by medical professionals, the cost is very significant. It costs athletes their health, with the side effects of performance-enhancing drugs very well documented. It costs the Australian sporting fraternity its international reputation as an honest and fair competitor. It costs the faith of the Australian public, who have continually ranked sport as something special and unique to the Australian character—something which defines Australianness. In fact, 62 per cent of the adult population of this country do participate in some kind of physical activity for recreation each year, and over half of those do so through organised community sporting associations, clubs and the like.
There is also an economic cost to Australian businesses. Successful sporting events attract businesspeople from around the world and create a wealth of opportunities for Australian businesses and industries. One such example is Austrade’s Business Club of Australia. This has come to be an important mechanism for Australian businesses to piggy-back off major competition in Australia and to network with significant corporate and business figures from around the world who come to Australia, not only to enjoy high-level sporting competition but also to do business. Bolstered by $800,000 in funding from the Howard government in 2004-05, the Business Club of Australia is set to hold more than 25 business networking events across the 12 days of the Melbourne Commonwealth Games. Previous networking events held by the club during the Sydney Olympics and during the Rugby World Cup in 2003 are widely seen as having been very successful, netting this country’s businesses hundreds of millions of dollars worth of business transactions. Over 190 Australian businesses have achieved an international sale as a direct result of the club’s activities during these major sporting events.
Why is this important? Because of the place that sport has in the fabric of Australian society, we can leverage off sport to further our country’s economic success. Therefore, the use of drugs by Australian elite athletes does have an economic impact. It directly impacts on businesses and mars their opportunity to leverage off major sporting events, and it tarnishes the profile of Australia as a clean and fair sporting country.
Despite all these costs, some athletes nevertheless continue to bow to the pressures placed on them by their coaches and by the public for them to do well and, in particular, to the pressure they place on themselves and turn to performance-enhancing and recreational drugs. Australia has a reputation for placing enormous pressure on its elite athletes to perform at their very best. We idolise our sporting heroes—the Bradmans, and the Pat Rafters and Ian Thorpes of today’s world. Successful sportsmen are beacons to the 1.6 million young Australians aged between five and 14 who participate in organised sports every year. At the same time, the Bradmans, the Rafters and the Thorpes stand as shining examples of sportsmanship and of Australians who have performed at an elite level and have become the best in the world without taking drugs or performance-enhancing substances. So it can be done. It is important to portray the message to young Australians who might see themselves as having great potential in the sporting arena that they can be the very best in the world, that they can be champions, without taking performance-enhancing drugs.
On behalf of the people of Ryan, whom I have the great privilege of representing in this parliament, and as a member of the government who supports this bill very strongly let me make it clear that the use of drugs in sports by a small minority of sportspeople sullies our image. Unfortunately, the fact that drugs are used by only a minority of sportspeople does not take away the fact that the impact of their use is substantial indeed.
I want to comment on the matter of obesity. An estimated 1.5 million people under the age of 18 are overweight or obese. One in 10 children under 16 is obese. One in five children under 15 is categorised as being fat or overweight. These figures are too high for us to accept as a nation. One way to try to make an impact on these figures and reduce the level of obesity is through sport. Successful sporting figures figure strongly in this country as role models. There is a role here for our sports men and women. Young Australians look up to our elite athletes as role models. If they see the reputations of their role models being tarnished in the community and in the media, if they see their role models being criticised by public figures for taking performance-enhancing drugs, that is not going to do them any good whatsoever. Kids who are overweight should be encouraged to take up sport as a way of reducing their weight. I want to say very strongly in the parliament today that what this bill is trying to do is very important. It tries to address the issue of the use of drugs and illegal substances in sport at the elite level.
As we all know, the Howard government is very committed to ensuring a level playing field for all athletes and to upholding the good name of the Australian sporting fraternity by eliminating drugs from sport. In order to achieve this, the government has introduced the Australian Sports Anti-Doping Authority Bill 2005. In formulating this bill, the government has taken into account its obligations under international treaties and conventions, as well as the recommendations of the 2004 Anderson inquiry. The government has delivered a scheme which is tough on drug cheats but respectful of the rights of athletes.
In 1999, in an effort to coordinate and harmonise antidoping efforts across the globe, the World Anti-Doping Agency, known as WADA, was established. Subsequently, in 2003, WADA released the World Anti-Doping Code. The code is a benchmark for international antidoping authorities and sets out eight doping violations. WADA is also responsible for the creation and revision of a list of prohibited substances, the use of any of which qualifies as a doping offence. In the 2004 election campaign, subsequent to the release of the code, the government committed to ensuring that sport in Australia was as drug free as humanly possible. As part of this commitment, the government now requires all of Australia’s sporting codes to enact antidoping regulations in line with the WADA code. As of July 2005, all major Australian sporting organisations are code compliant.
The government also amended the Australian Sports Drug Agency Act in 2004 in order that it comply with the code. However, the structure of ASDA meant that amendments alone could not bring it fully in line with the code. The government acknowledges that ASDA was created by the Labor Party when it was in office in 1989, under former Prime Minister Hawke—a good example of the Labor Party doing something right, which is more the exception than the rule. However, this meant that antidoping investigations lacked both independence and neutrality—a situation that was highlighted in the 2004 investigation into Australian Olympic cyclist Mark French and in the subsequent 2004 Anderson report. In that case there was a concern that issues raised by Mr French, including claims that there was a systemic culture of doping among his fellow cyclists within the Australian Institute of Sport, were not appropriately investigated.
An inquiry, chaired by Mr Robert Anderson QC and commissioned by the Australian Sports Commission and Cycling Australia, investigated the effectiveness of their investigations into Mr French’s claims. In his recommendations, Mr Anderson QC called for an independent body with the power to investigate and carry out prosecutions of persons suspected of infractions of the antidoping code. In October 2005, Australia adopted the International Convention Against Doping in Sport, which was put forward by UNESCO. As a signatory to this agreement, Australia entered into a binding agreement to implement the WADA code. Following Australia’s formal and binding agreement to implement the WADA code, and in recognition of the findings of Mr Anderson QC, this bill will create a new authority, the Australian Sports Anti-Doping Authority, ASADA, and a new scheme, the National Anti-Doping Scheme.
In the time I have remaining, I will make some brief comments on ASADA. ASADA will assume the functions of ASDA, including retaining the role of the Australian Sports Medical Advisory Committee, created by ASDA, to provide expert medical advice. Along with its inability to investigate doping allegations, ASDA also suffered under definitions which were imposed by the Labor government, forcing it to have even more unnecessary constraints on its functions. Specifically, the ASDA Act defined ‘competitor’ as ‘any international and national athletes, or younger athletes who may become international or national level athletes’. The ASADA Bill will replace references to ‘competitor’ with the word ‘athlete’, defined as ‘any participant in sporting activity’. This gives ASADA jurisdiction over all levels of sport in Australia, to aid it in the goal of ensuring Australian sport is completely drug free. In other words, this provides more of a blanket coverage. This piece of legislation provides a wider net and brings into it Australian sports men and women across the country, which is a very important distinction.
While the ASDA Act recognised the role of persons other than competitors in the use of drugs in sport, the ASADA Bill specifically gives the power to enforce antidoping provisions against a new category of people, in addition to athletes. This new category is classified as ‘support people’. Support people are defined as being the coaches, the trainers, the managers, the agents, the team staff members, the officials and the medical or paramedical practitioners—a group of people who might place undue pressure on a young athlete. This extension of powers is designed to address the kind of systemic doping culture identified in the case of Mark French, which I touched on earlier.
ASADA’s primary functions will relate to sports drugs and safety matters. These include advising the Australian Sports Commission on sports drugs and on safety matters to be included in funding agreements with sporting organisations. It will include promoting the education of sports men and women and support personnel about sports drugs and safety matters. It also has an important role to play in the area of general support and encouragement, of course, as well as in conducting research. ASADA will also carry out the functions conferred on it and authorised by the NAD Scheme. The ASADA Bill ensures that it has the correct balance of powers to ensure that it can perform its duties without becoming a coercive body against the primary interest of athletes and support personnel—which is, of course, that athletes perform at their peak in the sporting arena.
The only limitations on the powers of ASADA are as follows: it cannot acquire or hold real property and it cannot enter into contracts or transactions or lease land and/or buildings and other like infrastructure. ASADA is also prevented from coercing any athlete or any support person into giving testimony. Although the government has been criticised by some for not giving ASADA the power to compel testimony, the government believes that this is an important limitation to ensure that athletes see ASADA not as a witch-hunting body intent on dragging the good name of athletes through unwarranted investigations but as an organisation that is there to help them—to benefit their interests by ensuring that drugs do not become rife within their sport.
We in the parliament know that when our name is put in print or in the media in a very negative way it does leave a connotation which is quite unhelpful, even though it might be completely unjustified. This also applies to athletes. When their names are on television sets in living rooms across the country, there is a connotation and an inference that they might have done something wrong, when in fact they may have done nothing wrong at all. That is a very important constraint that this bill imports into this organisation.
There is of course much more that I could say when talking about a piece of legislation introduced by the Howard government—all very positive stuff and, in this case, all in the interests of the Australian sporting fraternity—but I will conclude with some general remarks about Australia’s reputation in the sporting world. We are known around the world as a great sporting nation. We compete with the very best. Indeed, we punch well above our weight as a small nation of some 20 million people. We win world titles and Olympic gold medals in the spirit of fair competition and high sportsmanship. Equally, we lead the world in antidoping administration technology and in our very strong moral commitment to taking drugs and illegal substances out of sports and competition.
Our efforts are second to none. For the first time at an Olympic Games athletes competing in Sydney in 2000 were not just tested after their events; they were also subject to pre-Olympic and out-of-competition testing. This, combined with a new test for the previously undetectable performance-enhancing drug Erythropoietin, made the Sydney Olympics one of the most drug free Olympics ever—and a triumph for Australia in promoting our commitment to drug-free sporting events. In the weeks ahead Melbourne, the capital of Victoria, will host the Commonwealth Games. This will no doubt showcase Melbourne to the world, and it will also showcase Australia. It will showcase the very best of Australian sporting success. As well, it will showcase how very strong this country’s commitment is to fair competition and strong sportsmanship.
As the member for Ryan, and as someone who played a little bit of sport in my younger days, I hope very much that I can continue my good work in the local Ryan community, to interact with young people, with the sporting kids at the various schools in my wonderful electorate, and to convey to them the very strong and important message that there is absolutely no place in sport—or, indeed, in their lives—for drugs. Drugs damage lives and damage circles of friendships. They are no good whatsoever to sporting kids. I will take this opportunity to say that I want to continue to encourage the educators, the parents and those who hold public positions in the Ryan community—and the wider circle of friends and relatives of young people—to continue to speak very strongly about health issues with kids and grandkids and to speak very strongly about living a very healthy lifestyle, being active and saying absolutely no, no, no to drugs. Drugs are not something that we want to see infecting or contaminating the young lives of Australians in this wonderful country.
I am proud and pleased today to speak in support of the Australian Sports Anti-Doping Authority Bill 2005 and the Australian Sports Anti-Doping Authority (Consequential and Transitional Provisions) Bill 2005. These bills signal a new era in Australia’s already strong commitment to eliminating performance-enhancing drugs in all forms and at all levels of sport. Australia has long been recognised as a world leader and as a nation with firm principles on drugs in sport. The Sydney 2000 Olympic Games brought with them some of the toughest antidoping measures ever adopted. The previous speaker, the member for Ryan, said the conduct of the Sydney Olympics was a triumph for Australia not just in competition on the field but because of our tough antidoping measures. I endorse all of what he had to say.
I have a keen interest in these antidoping bills, having been involved in competitive sport of one form or another for most of my life—including swimming, running, triathlons and rugby. Indeed, for me over many years rugby union was a way of life. Rugby union, as they say, is the sport played in heaven. It starts this Friday night, in Western Australia, when the Western Force take on the Brumbies in the new Super 14 format. Rugby, like many other sports, is a sport built on the principles of honour, fairness, sacrifice, discipline and sportsmanship. These same principles have been the backbone of Australian sport of all kinds for generations. The use of performance-enhancing drugs—indeed, any drugs—flies in the face of these principles, undermining everything which makes sport such an important part of the social fabric of this country.
On any weekend across the country we see hundreds of thousands of young Australian kids, youths and adults playing sport of one kind or another. We need to encourage and increase this level of participation in all our communities and promote our ideals of sportsmanship. It is this interaction, this social fabric in our communities, that is important and, coupled with the admiration we have for our sporting stars, it makes it so vital that the issue of drugs in sport be treated seriously.
I noted with interest the comments in yesterday’s Australian newspaper regarding this very issue. It seems that the National Rugby League is unhappy that the Howard government is taking a strong stance against the use of so-called recreational drugs by our sports men and women. Their argument, which is flimsy at best, is that the proposed ASADA should focus only on performance-enhancing drugs and that the use of other drugs should be dealt with by the various sporting bodies such as the NRL. This is, frankly, a nonsensical position for anyone to take. While Mr Gallop, the head of the NRL, says that the rationale for the introduction of ASADA is to stop cheating, I believe, and I think most Australians would agree, that ASADA has a wider role—that is, to set standards with respect to all drug use in sport. Surely the use by athletes of illegal drugs, whether or not we call them recreational, is just as damaging to them, their sport and our country’s reputation as the use of performance-enhancing drugs. All sports men and women and their sporting organisations must take a strong leadership role in this.
In Australia, our young people hold their sporting heroes in awe. The example set by athletes has a profound effect on the youth of our nation. I for one am pleased that ASADA will be taking an active role in ensuring that athletes using illegal drugs will be shown to be a poor example for our children. I am surprised that the NRL has not welcomed the Howard government’s move to eliminate the use of all illegal drugs in sport. I am also surprised and disappointed that the NRL, amongst others, believes that the proposed ASADA has too much power to investigate and prosecute drug use in sport. Mr Gallop’s suggestion that the NRL tribunal should continue to investigate and prosecute drug cheats seems to ignore the principles of arms-length investigation and fails to recognise the need for stringent, consistent, nationwide standards with regard to drug use in sport.
The Howard government recognises the importance of sport in Australia and the need for Australian sports men and women to compete fairly in domestic and international sporting competitions. The Australian Sports Anti-Doping Authority Bill provides for the creation of a body—the Australian Sports Anti-Doping Authority—which will replace the current Australian Sports Drug Agency. The new ASADA will perform all the functions of the old ASDA in relation to drug testing, education and advocacy. But it will also carry out important additional functions, such as investigating potential sports doping violations; presenting cases against an athlete or support person alleged to have committed an antidoping rule violation, at hearings conducted by the international Court of Arbitration for Sport and other sports tribunals; determining mandatory antidoping rules to be included in Australian Sports Commission funding agreements with sports; and advising the Australian Sports Commission of the performance of sports in observing these requirements.
ASADA will also incorporate the current Australian Sports Drug Medical Advisory Committee. ASADA will be governed by a board consisting of a chair, a deputy chair and from one to five members. A quorum will consist of the chair and two other members. The chair is the head of the agency and will exercise some of the corporate governance functions independently of the board. The board will have a decision making role in relation to ASADA’s regulatory function—it will decide on matters regarding ASADA’s testing investigations and hearings functions. ASADA will be responsible for overseeing the National Anti-Doping Scheme, which will initially be outlined in regulations developed alongside the ASADA Bill. The National Anti-Doping Scheme will thereafter be further developed and refined by ASADA in consultation with stakeholders in the sporting community.
The National Anti-Doping Scheme will set out the specific processes and protocols to be employed in implementing the World Anti-Doping Code and the UNESCO International Convention Against Doping in Sport. ASADA will be responsible for monitoring the compliance of sports bodies and sports administration bodies with their obligations under the NAD scheme. ASADA will notify the Australian Sports Commission of the extent of compliance by sports bodies and will publish reports on the same. Failure to comply is not dealt with in the ASADA Bill but, rather, will be set out in the Australian Sports Commission funding agreements.
ASADA will also have access to Customs information in certain prescribed circumstances. This is similar to previous amendments to the Australian Sports Commission Act 1989. ASADA may also authorise the disclosure of that information to sporting organisations, under a prescribed set of circumstances. The ASADA Bill specifies permitted antidoping purposes for which disclosures may occur. The disclosures must be in the course of investigating possible doping breaches; determining whether to take action over such breaches, and the consequences of such breaches; or taking action, or participating in proceedings, in response to such breaches.
The ASADA Bill specifies trusted persons, generally ASADA members and staff and designated associates, who may receive information. It also specifies penalties of up to two years imprisonment for the improper disclosure of protected information.
The ASADA Bill also allows ASADA to disclose information to the Australian Federal Police under appropriate circumstances. The Australian Federal Police disclosure to ASADA is facilitated through its own act, the Australian Federal Police Act 1979.
The ASADA Bill contains specific and detailed provisions protecting athlete’s rights and carries over existing safeguards under the ASDA Act. It provides for appeals by athletes to the Administrative Appeals Tribunal and for complaints by athletes to be brought to the attention of the Ombudsman.
Importantly, there is strong support among sporting organisations for the creation of ASADA. This was emphasised in submissions to the government’s discussion paper. I repeat: the issue of drugs in sport must be treated seriously, given the public recognition, admiration and community profile many of our sporting stars receive. Indeed, many of our top-flight sporting stars are hero-worshipped by the young and the youth of our great country. They must comply with society’s expectation of our sporting elite.
Within the electorate of Hasluck, I think it is very important that we set the benchmarks and appreciate the need to encourage and support young people in sport in our schools and through our different sporting associations, whatever that sport may be—whether it be rugby union, Australian rules football, hockey, tennis, athletics, swimming, netball or basketball. We must not be seen to be supporting the use of drugs. Illegal drugs in any form are just not acceptable, and performance-enhancing drugs are not fair in competition. We must ensure we continue to recognise those issues in our sporting endeavours.
Sport is built on the principles of honour, fairness, sacrifice, discipline and sportsmanship, as I said earlier. Those principles must be fundamental to the way we encourage our young people into sporting activities and commitment to those sports. In a competitive environment the challenge is for people who are highly motivated and wish to win. We must make sure that that is balanced with the need for them to be fit and committed to the healthy pursuit of their sport in an appropriate way and not encourage—and make sure we are not seen to be encouraging—people to take performance-enhancing drugs or any other drugs to improve performance. The use of performance-enhancing drugs, indeed any drugs, flies in the face of these principles and is totally unacceptable.
These bills, and the Howard government’s policy on doping in sport, have been developed with the full involvement of sporting organisations and athletes in Australia. The Australian Sports Anti-Doping Authority bills reflect the Howard government’s commitment, domestically and internationally, to eliminating doping and drug use in sport. I commend the bills to the House.
On behalf of the Minister for Arts and Sport I thank those who have contributed to the debate on the Australian Sports Anti-Doping Authority Bill 2005 and the Australian Sports Anti-Doping Authority (Consequential and Transitional Provisions) Bill 2005the members for Bruce, for Cook, for Ryan and, most recently, for Hasluck.
These bills establish the Australian Sports Anti-Doping Authority as the single organisational focal point for Australia’s antidoping activities. Testing, investigation, research and education functions will reinforce each other in presenting a unified, integrated response to doping in sport. The creation of ASADA balances a tough on drugs approach, ensuring that all athletes are treated fairly and that athletes’ rights are protected. The bills before the House enhance an Australian antidoping framework that is already world leading. They add more robust arrangements for the investigation and hearing of antidoping violations to the government’s existing drug testing, education and advocacy activities.
The creation of ASADA represents a comprehensive response to Australia’s obligations under the WADA code and the UNESCO International Convention Against Doping in Sport. ASADA will enhance Australia’s compliance with the World Anti-Doping Code and will strategically implement the UNESCO International Convention Against Doping in Sport, to be ratified by Australia, once it enters into force.
There is strong support among sporting organisations for the creation of ASADA, which was emphasised in submissions to the government’s 2004 discussion paper on the proposed creation of a sports doping investigations board. The establishment of ASADA will mean that sports, athletes and the public can have complete confidence that doping allegations will be investigated and pursued in an independent, robust and transparent way. It represents a tough response to doping in sport and a response that treats all athletes fairly.
The ASADA bill sets out the broad requirements under which ASADA will exercise its functions. Detailed protocols and procedures for the exercise of ASADA’s functions will be contained in the National Anti-Doping Scheme, which will be a legislative instrument to be tabled in parliament. The scheme will contain the core functions of ASADA to enable the new authority to operate efficiently and effectively from commencement. It will also carry over and consolidate into a single document the existing regulations and orders relating to ASADA’s current testing functions.
As a condition of any funding from the government, sports will be required to adopt the scheme as part of their antidoping policies, which will include submitting to the antidoping jurisdiction of ASADA. As a condition of the scheme, sports will be required to ensure that their athletes and support personnel cooperate with ASADA officials in carrying out its testing, investigations and presentations at hearings functions. Sports will also be required to accept any findings by ASADA that an individual has committed a doping offence, and issue appropriate infraction notices to athletes.
The bill also contains specific and detailed provisions protecting athletes’ rights and carries over existing safeguards under the ASDA Act. The bill includes provisions facilitating the exchange of sensitive information between ASADA, the Australian Customs Service and the Australian Federal Police in regard to the use and importation of prohibited substances. These provisions, along with the obligations imposed on sports through the contractual arrangements with the government, will put in place a system that will provide ASADA with the powers and ability to carry out its functions effectively and systematically.
The World Anti-Doping Agency, the body responsible for coordinating the international effort against doping in sport, has welcomed the entry of ASADA as the new linchpin in Australia’s antidoping framework. Australia, as host of the Commonwealth Games in Melbourne next month, now has an opportunity, through the creation of ASADA, to underscore to the international sporting community its absolute commitment to fighting against drugs in any sport.
Question agreed to.
Bill read a second time.
Ordered that the bill be reported to the House without amendment.
Debate resumed from 7 December 2005, on motion by Mr Andrews:
That this bill be now read a second time.
Question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.
Ordered that the bill be reported to the House without amendment.
Debate resumed from 7 December 2005, on motion by Mr Abbott:
That the House take note of the documents.
I want to make a few brief comments on these two particular reports: National road safety—Eyes on the road ahead and Train illumination: inquiry into some measures proposed to improve train visibility and reduce level crossing accidents. Firstly, I want to deal with Train illumination. This report was presented to the House in June 2004. The government’s response was tabled in the House in December the following year. I will not go into all the detail, but I want to briefly say that the committee reported with only five recommendations but they were good ones. The government supported one recommendation in full, one recommendation in part and one recommendation in principle and did not support two of the recommendations.
The report focuses on a very narrow aspect—as you would expect with only five recommendations—of community safety at level crossings. It is very specific and something that I am sure is a concern to all members. I am pleased the government supported at least some recommendations, particularly the adoption of a scoring system which is similar to that which is in place in Queensland. This will provide uniformity across the country. I am also pleased that the government will undertake further studies to ensure maximum safety for the public at level crossings to make sure that is achieved.
I want to highlight, for the benefit of the House, members and the public, that fatalities at level crossings are a serious matter. While they have decreased over recent years, which indicates that there has been an improvement in safety standards and illumination and a whole range of other issues about visibility, there are still too many people who die at our rail crossings each year and there is always more that we can do. I do not think any of us lives in a perfect world, a perfect system, where we expect there to be no fatalities, but I strongly believe that governments should continue to work harder together—particularly in areas where the federal and state governments can work together to bring about uniform signage and uniform policies and procedures across what are national issues. I just wanted to make those comments in relation to the Train illumination report.
I want to also make some brief comments on the national road safety report called Eyes on the road ahead. This report was also presented to the House in June 2004, and the government’s response was tabled in the House in December the following year. The committee reported with 38 recommendations. The government supported only three of those in full. It supported 13 recommendations in principle and noted one, but it did not support 21 of those recommendations. Obviously there is an extensive number of recommendations because of the scope of the work of the House of Representatives Standing Committee on Transport and Regional Services and the importance of national road safety. Just as important as safety at rail crossings is national road safety.
This is a national issue and one where the federal government could do more work on better partnering with the states, not saying, as is the case in the government’s response that was tabled in December 2005, that many of these issues were out of the scope of the federal government. In fact, the principal reason the government did not support the recommendations of the committee is that the federal government believed that many of the recommendations were overreaching the federal government’s responsibilities. That may be the case, but where that is the case there is scope for the government and the minister to pay particular attention to working with the state authorities and using good recommendations, not just rejecting them out of hand.
Such safety recommendations may be out of the scope of the federal government, but it should work with the states in trying to put them in place. It seems obvious to me, as I am sure it would to ordinary people out on the street, that if you have a good recommendation, a good policy—something that could be done to save lives—you will do everything you can to enact it, if you have the power to do so. To simply say, ‘Well, it’s not my responsibility; I’ll just let somebody else worry about it,’ I do not think is a good enough response.
I also want to mention that I think, while some were very good, some of the committee’s recommendations were not so very good. Committees, in themselves, are not infallible. They do make recommendations that I do not always agree with. I want to note one in particular. The committee recommended some absurd special licensing category for four-wheel drive owners. While this debate rears its ugly head from time to time, I think it is just as silly as anything could possibly be. The government rejected it—and I am glad that it did. I am sure that this debate will pop up again and I will not go into the detail of why I believe this is a silly approach to licensing or safety. If we really want to look at road safety, before moving on to any sort of licensing there are many things that the federal and state governments could do simply about the condition of our roads, to start with. Very rarely with somebody’s death is it a case of just a licence issue. It is usually a combination of two, three or four things, not the least being poor road conditions. Often it is people speeding or being under the influence of some drug. Just with those few comments, I note both of those reports.
I rise to take this opportunity to comment on what I believe is a very important report, National road safety—Eyes on the road ahead, and the government’s response to it. First, I thank the chairman, Paul Neville, and all the members of the committee for the work they put into this important report. The government does take it seriously; it certainly has supported a number of the recommendations. As the previous speaker said, many of the 21 recommendations that were not supported do not come under the jurisdiction of the Australian government, and we must continue to work very closely with the state and territory governments on this very complex issue. Road safety is important to all of us in Australia. Every single Australian would love to see the death toll and accident trauma on our roads reduced, and we are making significant progress in that area.
In 1995, there were 2,017 deaths on Australian roads and the population fatality rate stood at 11.2 deaths per 100,000 people. In the following 10 years, we saw a substantial improvement in national road safety. Statistically, the annual fatality numbers have decreased by 19 per cent and the rate per population has dropped by 28 per cent. The Australian government has contributed to this achievement through its ongoing work on improved vehicle safety standards and our strategic investment in the nation’s roads, particularly with the new $12.7 billion AusLink program and our continuing commitment to the highly successful national black spot program. Under that program, each year from 2005 to 2008, a total of $45 million will be spent on the AusLink black spot program, which will fund work on addressing some 370 dangerous black spots throughout Australia.
In the late 1990s, we led the development of the current 10-year National Road Safety Strategy, which has a very ambitious target of a 40 per cent reduction in the population road fatality rate by the year 2010. That strategy was formally endorsed by all ministers of the Australian Transport Council in November 2000. Up until the end of 2004, Australia was well on track to achieving that 2010 fatality reduction target. However, sadly, 2005 was a disappointing year for road safety, with 1,635 people being killed on our nation’s roads. That is an increase of 52 on the previous year’s figure for fatalities, and it was the first time the annual road toll had increased since the year 2000.
Road safety is a collective responsibility involving all governments at all levels, industry groups, community organisations and each and every one of us as individuals. The Australian government will continue to work closely with these groups to find new solutions that can drastically cut the trauma on our roads. But, ultimately, no matter how much you spend on roads, no matter how much you upgrade the roads and no matter how much you improve the technology of the vehicles, road safety depends on the actions of individuals—each and every one of us who uses the roads, and that is virtually everyone in Australia, whether as a driver, a rider or a pedestrian.
I was extremely disappointed at the significant increase in the Christmas-New Year holiday toll recently. I was reflecting the other day on the fact that I had put forward a road safety message prior to the Christmas-New Year holiday period. That was broadcast widely around Australia, and I wondered how many of the 78 people who died on our roads over the Christmas-New Year period actually heard my message about being safe on our roads over Christmas and, like all of us, thought, ‘Yeah, that’s right; we’ll be safe, and it won’t happen to us,’ when in fact it did happen to those 78 people.
While significant progress has been made in reducing our road toll, that rate of reduction has slowed. Many experts have tried to single out one specific cause for the increase. I guess that is one of the difficulties with road safety—we are all experts, because we are all users, we are all consumers, of road safety in one form or another, so we all have an opinion and we all think we know what the answer is. The preliminary analysis of these deaths that occurred over Christmas showed that most of these tragedies occurred on country roads, and involved motorists losing control, hitting trees, overturning or crossing into the path of oncoming traffic.
Reducing the deaths and injuries on our roads certainly remains my highest priority as minister for roads and, I know, the Australian government’s highest priority, because every single death on our roads is a tragedy for the families, for the communities and for the friends, and it is a national tragedy. The potential that we lose on our roads every year is something that we should all be very concerned about.
I am positive that with better roads, safer cars and better drivers we can all work together to keep this road toll as low as possible. One of the important initiatives that the Australian government has implemented is the novice driver education program. Whilst driving training and licensing in Australia is primarily a state and territory responsibility, the Australian government is particularly concerned about the vulnerability of young, newly licensed and inexperienced drivers. We are currently working with the states and territories to introduce a national, compulsory education scheme for all provisional licence holders. But in the first instance it is important that we have a trial of an innovative driver education program in New South Wales and Victoria, which I hope will commence later this year. This will be delivered to novice drivers, aged 17 to 21 in New South Wales and 18 to 22 in Victoria, when they first obtain their provisional licence. The program is based on learning methods that will help young drivers gain true insight into their own limitations and the risks they face on the roads, leading to safer and better driver behaviour.
This Young Driver Safety Forum was announced in December 2004. It was sponsored by the Australian government and chaired by former minister and Deputy Prime Minister John Anderson, who I would like to pay tribute to because he was very much a driving force in establishing the Young Driver Safety Forum.
The initial cost of this novice driver education scheme was estimated at around $5 million, but this has substantially increased in the light of detailed development of the curriculum and expert advice on the methodology aspects of the trial, particularly relating to the potential course dropout rates. The budget has now been estimated and actually capped at $10 million.
I am pleased to say that we have confirmed funding contributions currently that amount to $8.6 million. The Australian government has increased its offer from $1 million to $3 million. We have $1 million from the Federal Chamber of Automotive Industries; $2.5 million from the New South Wales Roads and Traffic Authority, basically the New South Wales government; half a million dollars from IAG, the Insurance Australia Group; $1.4 million from the Victorian government; $1 million from VicRoads; $0.4 million from the Transport Accident Commission; and $0.2 million from the RACV. We are still waiting for an increased offer from the Victorian government, and they have agreed to provide an additional $1.4 million, subject to certain conditions. We are still discussing those conditions with the Victorian government. I certainly urge Minister Batchelor to look very favourably on our request for an increased contribution from the Victorian government, so that this trial can get under way as quickly as possible.
It is important that we have this trial, because we want to ensure that any novice driver training scheme is not something that encourages young drivers to think—even more than they do now—that they are bulletproof, that they have been trained as expert drivers. In fact, it may increase the potential for speeding or accidents for young drivers, so it is very important that we get this trial right and ensure that it is an effective prototype before we start discussing the roll-out of a compulsory driver training scheme with the states and territories. So I look forward to that happening later this year. I will continue to push forward, working with my senior minister, Warren Truss, on this novice driver training trial.
The Australian government is not just working on increased driver education. As I said, we are building better and safer roads around Australia. I am very pleased to be able to work with my senior minister in implementing the AusLink program over the next five years. It is an innovative and significant step forward in road funding in Australia—some $12.7 billion, the vast majority of that going on road construction. It includes $1.2 billion in Roads to Recovery money, which goes directly to councils. Many of our accidents happen in country areas, on roads that are controlled by local councils. Local councils struggle to maintain their roads and the safety aspect of many of their roads. This is new money. It is additional money, and I know that it is extremely welcomed by local councils throughout Australia.
In addition to that, we provide $1.6 billion every single year to councils right around Australia, directly from the Australian government. That is money that they can also use on their roads to upgrade the condition and improve the safety of those roads. We have $250 million in the Roads to Recovery strategic fund. That is an important addition to the Roads to Recovery program. I am very pleased that I was recently able to secure an additional $100 million for that fund from cabinet. That again will increase the safety of many of our local roads.
Overall there is $178 million in black spot funding. As I mentioned earlier, that is a very important program which specifically targets areas with high rates of accident or injury or high death tolls. It has been a magnificent program, which the Australian government reintroduced when it came to government 10 years ago in 1996.
All the states and territories around Australia are receiving significant increases, despite some of the claims by some of the state and territory roads ministers that their funding has actually been cut. Nothing could be further from the truth. Under AusLink, New South Wales is receiving $3,778.6 million. That is a 77.7 per cent increase in construction funding. Victoria is receiving $2,374.2 million, a 105 per cent increase over the previous five years construction funding; Queensland is receiving $2,734.4 million, an increase of 87.1 per cent; Western Australia is receiving $1,306.2 million, an increase of 110 per cent on the previous five years construction funding; South Australia is receiving $793.6 million, a massive increase of 111.8 per cent; Tasmania is receiving $372.2 million, an increase of 52.9 per cent; the Northern Territory is receiving $264.5 million, an increase of 47.4 per cent; and the ACT is receiving $113.4 million.
You can see that every state and territory in Australia is receiving a significant increase in their construction funding for roads. We have expanded the network. The AusLink network now takes in many more roads than the national highway network did, and we are working in partnership with the states and territories. I think that is an important point to make. The Australian government do not actually build roads. We do not have the legislative authority to move the services, to resume the land or to provide the EIS studies that are necessary for major road construction. We fund the New South Wales and other state governments, we fund the territories and we fund the councils, but we need to rely on them to work in partnership. I would encourage the states to continue to work with the Australian government in partnership so that we can roll out a better and safer road network around Australia.
One project we are working on at the moment is the Pacific Highway. That is probably one of the most high-profile roads in Australia. Far too many people have died on the Pacific Highway. But over the past 10 years the Australian government have contributed some $656 million to that road. We will have duplicated some 44 per cent once we finish the projects that are under construction at the moment. We are making significant progress. We are providing another $160 million per year over the next three years, working in conjunction with the New South Wales government. We have the F3 Freeway widening. In Victoria we have made a commitment to duplicate the Hume Highway by 2012. We have added additional resources to the Deer Park section and the Goulburn Valley Highway and $107 million to the Calder Highway. In Queensland we have committed $120 million to the Tugun bypass and $556 million to the Ipswich Motorway. So you can see that all around Australia we are committed to better and safer roads. We are committed to reducing the road toll. I am very pleased to have had the opportunity to put forward what the Australian government is doing to reduce death and injury on our roads. Again, I thank the committee for their work on the report.
Debate (on motion by Mr Georgiou) adjourned.