House of Representatives
19 September 1952

20th Parliament · 1st Session

Mr. Speaker (Hon. Archie Cameron) took the chair at 10.30 a.m., and read prayers.

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– On Wednesday last, the honorable member for Fremantle (Mr. Beazley). addressed to me four ques tions concerning the relationships between myself and the Auditor-General. I. apologize to the honorable gentleman for not having had the time, owing to the sittings of the House, to prepare a typewritten statement, but I think I might as well give the facts.

The honorable gentleman asked me -

What authority, if any, has the AuditorGeneral. over officers of this House?

My answer is -

Absolutely no authority whatever, except when the Parliament delegates such authority and, as far as my knowledge goes, the Parliament has not yet delegated any authority.

The honorable member then asked -

Has he any authority to act independently of the Speaker in relation to any expenditure incidental to the running of the Parliament?

Again I say -

He has not.

The honorable member’s next question, was -

Has the Auditor-General in any way failed to adopt proper procedure in his official dealings with officers of this House?

The answer to that question is “ Yes” Certain losses were discovered in this building, not by any action on the part of the Auditor-General, but by means of the normal, supervision that is exercised by men holding responsible office, namely, the President and myself. As a result of our suspicions, a detective was called in, and certain things were discovered to be missing, principally some butter, which was delivered to this building during a shortage last year. It arrived at night, and it was’ gone in the morning. Somebody signed for it, but apparently nobody took proper care to see that it was locked’ up for the night. The efforts of the detective failed to discover where the butter went to, andI do not think that the Auditor-General would be likely to succeed where the detective failed.

Arising out of that and other matters, certain reports were furnished to the President and myself. The Secretary of the Joint House Department was required by the Auditor-General to furnish to him certain things which I considered were the property of the President and Mr. Speaker. I gave instructions that they should not be furnished. Instead of complying with the Audit Act, which lays it down that where the AuditorGeneral encounters any difficulty with an officer he shall report the circumstances to the Treasurer, the Auditor-General saw fit to write a threatening letter to the Secretary of the Joint House Department, in which he threatened that officer with the penalties of thelaw if he did not obey instructions from the AuditorGeneral, in other words, if he did not disobey the instructions of myself. The Auditor-General admitted to me, on the only occasion on which I have ever met him, that he had not complied with the act, in that he had not furnished such a report to the Treasurer. Therefore, on his own showing, he was guilty of a breach of the Audit Act. Further, in threatening an officer of this Parliament over whom he has no control whatever, he committed a breach of privilege.

The honorable gentleman asked me -

Will you prepare a statement clarifying the whole relationship of the Auditor-Generalwith this Parliament?

I have one ortwo observations to make on that, and I hope that the House will bear with me while I do so. First, this Parliament is not a government department. Secondly, section 9 of the Public Service Act - I have the act before me, and honorable members may inspect it if they wish to do so - in no way takes away the privileges of the Parliament. Indeed, the act declares that the Public Service Board- shall have no authority whatsoever- inside this building, but shall, if required - but only if required - by the President and Mr. Speaker, render to them such advice in regard to staff matters as the President and Mr. Speaker either jointly or severally shall require. The act further provides that, for the purposes- of the running of this building and its staff, the President and Mr. Speaker shall be considered, to exercise all the powers of a Minister, and, incidentally, all the powers of the Public Service Board as well. I searched the Audit Act, and I asked the Auditor-General whether he could point to any section of it that showed that the Parliament had destroyed or impaired, its privileges, and had handed over the staff and myself to him. He was not able to do so.

I come now to the matter of property. As members of the Library Committee are well aware, the President and Mr. Speaker are responsible for tens of thousands of pounds worth of property in this building that is not the property of the Crown or of the Commonwealth, and I suggest to the House that the Auditor-General has no control over it. That control is solely in the hands of the President and Mr. Speaker.

The Audit Act does not make any reference to the Parliament, its officers or its privileges, and makes no attempt to cancel those privileges. I suggest that, had it been the intention of the Parliament to destroy its own privileges, it would have so declared.

I also point to section 13 of the Audit Act, which confers upon the AuditorGeneral the right of search in any government building. If the AuditorGeneral wants to try to search this place, that is a matter for him; but I will resist any attempt at. search in this building by the Auditor-General or any other authority.

Mr Ward:

– Will you let me know when the fight is to be on?


– Order ! The Standing Orders provide that Mr. Speaker shall be heard in silence. I remind the House that we are dealing with rather serious matters.

A House that is careless of its own privileges will not long serve to guard the privileges of the people who elect it. That is my view. I have dealt with the loss of some butter. I shall now refer to some matters in the Auditor-General’s report which I consider to be worthy of mention. Under the title of “ Parliament “ the Auditor-General charges to the Parliament certain things that are not shown in the Estimates against the Parliament. I shall particularize. Provision is made under the Constitution for the salaries of Ministers. They are not one of the charges against -the Parliament in the Estimates that I have before me. “State Funerals” and “Ex-Members of Parliament or their dependants - annual allowances “ are a charge against the Prime Minister’s Department. The “Electoral Office” and “Commonwealth Elections and Referendum “ are charges against the Department of the Interior. I should be most interested to know what authority the Auditor-General has to transfer the accounts from one department to another when he is reporting to this House.

I further point out, as I pointed out to the Auditor-General when I met him,, that he bears a special relationship to this Parliament. He is appointed by the Governor-General. But he does not report to the Governor-General, to the Prime Minister - although he is attached to the Prime Minister’s Department - or to the Treasurer, who has to submit statements to him. His report is to the Parliament in the first instance, and! therefore he is a special servant of the Parliament. The matter of parliamentary privilege is one that arises every now and again. Possibly I am. in error in not having reported to the Parliament matters such as this one in relation to the Secretary of the Joint House Department, but that matter is not one that stands alone. Every now and again,. I have been obliged to take a stand in regard to privilege. I shall mention a few instances. Last year a law case was proceeding in Victoria. I found it necessary to give instructions that officers of

Hansard and the proofs of Hansard were not to be produced at that court. They are privileged documents and privileged officers, and cannot be called into question in any court in this country. Last year -and I must state that I did not report

I his to the House - I was served with a summons by a conciliation commissioner to appear in a court in the Australian Capital Territory. I refused to act on that summons. I say that no conciliation commissioner has authority to serve a summons on the Speaker of this House. The officers and employees in this building are placed under the Speaker and the President by the Public Service Act, and [ believe honorable gentlemen will agree that present conditions are such that nobody in it has had any cause to complain.

As the Auditor-General is the officer at present under discussion, I mention that [ have before me an original instruction from the Auditor-General which I discovered only on the fourth of this month because something went amiss in the parliamentary refreshment rooms. The document is dated the 13th May, 1948. It constitutes a gratuitous interference with the working of this place and was signed by the present Auditor-General when he was an assistant secretary to the Treasury. I gave prompt directions that that instruction from the Treasury was no longer to be acted upon. Those instructions were given in writing. Quite a few things are done in this place for visiting members of the Public Service. There are some things that are not going to be done and that covered by this instruction is one of them.

I suggest to the House that certain rather important issues have been raised by the Auditor-General’s report. They are issues which should not remain dormant. They should be referred to the proper body to deal with them, that is, the Committee of Privileges. At the moment, I do not wish to say anything further about the matter.

Prime Minister · Kooyong · LP

by leave - The statement that you have just made, Mr. Speaker, is quite obviously a very important one on a very important matter. I myself and, I am sure, my colleagues, would desire an opportunity of considering the statement and. of forming some view on the very important questions you have raised. I do not know what future procedure may be involved; but, no doubt, as a result of the consideration that will be given to it, some proper step may be taken to elicit the opinion of the House.

Leader of the Opposition · Barton

by leave - There is no doubt about the importance of what you have said, Mr. Speaker. I suggest that, in the first instance, the Prime Minister (Mr. Menzies) or the Treasurer (Sir Arthur Fadden) might forward the statement to the Auditor-General for his comments. Then the two statements might, on a suitable occasion, be the subject of debate in the House without referring the matter in the first instance to the Committee of Privileges. I regard the AuditorGeneral as the servant of the Parliament, not a member of the Public Service in the ordinary sense. He is just as much an officer of the Parliament as is anybody else. The present Auditor-General is a very distinguished public servant. I am not expressing any view concerning the correctness or otherwise of what you have, said, but I believe that the AuditorGeneral should have an opportunity to put his view on these matters, which cover a very wide field, before the House on a suitable occasion.



– I ask you, Mr. Speaker, whether, in view of the constitutional significance of the matter that you have raised, you will consider the desirability of supplying to honorable members a printer’s “ pull “ not only of your remarks but also of those of the Prime Minister and the Leader of the Opposition, so that they may have ready access to the statements made?


– I shall arrange to do so.


– I address to you, Mr. Speaker, a question which is slightly relevant to the preliminary statement that you have made. First, can you tell me in whose custody are vested the physical attributes of this Parliament, such as the goods, chattels and equipment generally, in the dining-room and elsewhere? “Who is ultimately responsible, for the ccontrol and distribution of all the articles in the building? Secondly, if you are the legal custodian, can you enlighten the House on the whereabouts of that masterpiece, which I have not yet seen, called “The Bondi Bathers”?


– Order ! The custody of everything in this House rests in the hands of the President and the Speaker for the time being in office, who are. assisted by what is known as the Joint House Committee, which represents both Houses and all parties.

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– I wish to direct a question to the Minister for External Affairs. Is it a fact that non-official Dutch sources in Indonesia are now urging that the Netherlands Government should yield to Indonesia on the western New Guinea issue? If this be a fact, will the Minister indicate to The Netherlands Government that Australia views any contemplated move of this nature with the greatest mistrust and perturbation ?


-Order! There is too much noise. The Minister cannot hear the honorable member’s question, as usual. The honorable member will please repeat his question.


– Is it a fact that nonofficial Dutch sources in Indonesia are now urging that the Dutch Government should yield to Indonesia on the western New Guinea issue? If this be a fact, will the Minister indicate to the Netherlands Government that Australia views any contemplated move of this nature with the greatest mistrust and perturbation?

Minister for External Affairs · LP

– There have been many stories, rumours and speculations with regard to the future of western New Guinea. I take no notice of most of them. I have no knowledge of any recent advice in respect of the matter to which the honorable member has referred. The question of western New Guinea is one of considerable interest to the Commonwealth of Australia. The Government is keeping in the closest possible touch with the situation and I can assure the honorable member that the interests of Australia are being watched very carefully indeed.

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– Can the Minister acting ffor the Minister for Immigration inform the House whether any members of the delegation to the so-called peace conference in Peking have left Australia ? Is it true that a substantial number of members of the delegation are now sojourning at a well-known holiday resort in the Barrier Reef? Are they conducting a peace conference there? If they arc, is it for the purpose of reconciling differences among themselves? Can the Minister give to the House some information as to the general progress of this delegation ?

Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

– I understand that two members of the delegation are on their way to Peking, travelling on British passports in respect of which the Government did not take any action. I believe that the rest of the delegation is still in Australia, although there has been a certain trek northward. My present information is that some are in Townsville and some in Cairns, but, as far as I know, none has left Australia. When the matter becomes clarified I shall give to the honorable member any further information I have.


– As the British Navy successfully smuggled Great Britain’s most valued cows from Jersey Island during the war, will the Australian Navy guard against a similar evacuation by Russian submarines from Hayman Island and, if the evacuation be successful, will the constitutional powers of the Commonwealth be fully utilized to ensure that the future of this exploit will end, so far as Australia is concerned, not with Hayman but with amen?

Minister for Air · LOWE, NEW SOUTH WALES · LP

– The subject to which the honorable member has referred is not within the jurisdiction of my department. I shall refer it, however, to the Minister for Immigration, who has control of such matters, and get him to supply an answer to the honorable member. I can assure the honorable, member that the Government is not unaware of this problem, and will take strong action to see that its views shall be carried into effect.

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– I ask the Prime Minister whether the Government has received a request from the New South Wales Government that the Australian Government should take over the construction of the Blowering Dam, which, it has been estimated, will cost £ 11,000,000? In view of the importance to national development of this project and its value in the campaign for increased primary production, will the Prime Minister assure the House and the nation that the Government will accept the responsibility for its completion?


– I read some reference to this matter in the newspapers this morning. I am not aware of having received a communication about it from the Premier of New South Wales, but if one has been received I shall inform the honorable member.

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– Will the Minister for the Interior inform the House whether there has been a reluctance on the part of the Commonwealth Electoral. Officer to take action against people qualified to vote who have not voted at general elections? If this be not correct, has the Minister any idea of the number of penalties that have been imposed for failure to vote during the last general election ?


-HUGHES. - I am not aware of any alteration of the procedure observed by the electoral officers with regard to people who have not voted at recent general elections. I believe the law provides for a fine of not less than 10s. and not more than £2 for offences of this kind. I think that after the last general election fines of a total of about £1,700 were imposed upon about 3,000 people. Naturally, I cannot state the precise figures offhand, but I shall be pleased to supply them to the honorable member, if he so desires.


– Sometimes a satisfactory explanation of failure to vote is given.


– Some people have good reasons for not voting in an election, but when the reasons are not good or sufficient, action is taken.

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– Yesterday, the Prime Minister referred to certain legal and constitutional opinions in connexion with Commonwealth Oil Refineries Limited. Will he make those opinions available to honorable members?


– I shall consider the request, and shall advise the right honorable gentleman of my decision.

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– My question is addressed to the Treasurer. It is based upon an urgent telegram that I have received, which reads as follows: -

How does the Government expect greater production when Coonamble shire main roads grant is reduced from £18,000 to £4,000?


– Order ! The honorable gentleman is referring to a matter over which the Commonwealth has no control.


– I wished to read the telegram only in order to explain my question. I now ask whether this Government has any control over the internal distribution of roads grants-


– Order ! I can tell the honorable gentleman that it has not.

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– Will the Minister for the Interior state whether any plan has been prepared for precautionary or protective burning off in the mountain areas of the Australian Capital Territory, and possibly in the adjoining areas of New South Wales, during the late spring months, before the fire risk increases?


– I appreciate the interest of the honorable gentleman in this matter, which, after the events of last summer, is also of great interest to all citizens of Canberra. It was unfortunate that, last year, we had some of the worst bush fires that Canberra has ever known, although a number of extra precautions against fire had been taken. I understand that, already, some precautions of the nature suggested by the honorable member have been taken, and that definite plans have been prepared which will, as far as possible, provide for the safety of the Australian Capital Territory. We have been in continuous contact with the appropriate authorities in New South Wales upon this matter. They have certain laws and regulations over which we have no control. They do not conflict with our regulations, except An relation to burning off on railways. In January of last year, the New South Wales authorities wanted to engage in burning off on railways in this Territory, and we took the responsibility for refusing their request very definitely. However, I do not expect that there will be any difficulty in this matter. In general, we have worked in the closest co-operation- with New South Wales in the boundary areas.

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– My question is directed to the Minister for External Affairs. How many countries have been helped by Australia under the Colombo plan? What are the principal forms of aid that have been given? Is an extension of the plan contemplated to include countries that at present do not participate in it? Would it be correct to say that more friendly relations and greater understanding have developed between subscribing nations as a result of the implementation of the plan ?


– Assistance has been either given or offered to a wide range of countries to our north-west, including India, Pakistan, Ceylon, Nepal, Burma, Malaya, Singapore, the British colonies in north-west Borneo, Indonesia, Thailand, Vietnam, Laos, Cambodia and the Philippines. Not all of those countries are formal adherents to the Colombo plan, but I hope that all of them will join before very long. Up to the present, a total of 400 fellowships and scholarships has been offered to the countries in different proportions, to enable persons nominated by their governments to undergo special courses of instruction in Australia. In addition, there are special seminars totalling 86 persons, who have come to Australia for instruction. Certain Australian specialists have gone to several countries of South-East Asia at the request of their governments to deal with a variety of matters upon which we have been asked for assistance. Australia has also supplied technical goods and equipment to assist developmental programmes in several countries. In several other directions, also, Australia has found itself able to help those countries which have asked for help of one kind or another. As for the second part of the honorable member’s question, I certainly believe that the .Colombo plan, although it has been in existence for only about eighteen months, has enabled valuable contacts to be made, and has provided Australia with an opportunity to assist countries in South-East Asia in ways which were possible for us, and needed by them. The plan has served a very good purpose, and I hope that it will continue in the years ahead to serve an increasingly useful purpose.

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PARTY Meetings.


– I ask for your guidance, Mr. Speaker, on a matter of privilege with a view to considering whether I am entitled to take certain action. I refer to an article in the Melbourne Age of the 18th of this month, a copy of which I produce, in which is prominently displayed a report of certain alleged incidents at a meeting of my party on the previous day. I want to know whether meetings of parties held in this building on parliamentary business are privileged, and, if so, whether you can refer me to authorities which I might examine over the week-end.


– The honorable member has raised an important and ticklish question. The two best cases to which I can refer the honorable member occurred in the House of Commons a few years ago. There were certain leakages of information from the ministerial party, which was then the Labour party. A committee of privileges sat on the ease, which came to be known as the Garry Alleghan case, and the member concerned was expelled from the Parliament. Another committee sat on the Evelyn Walkenden case, and a member of the same party, who was found to be guilty of the same offence, was reprimanded by the Speaker from his place in the House. I shall look up the record, because I know that important opinions were given by the Attorney-General and the SolicitorGeneral of Great Britain. If, after reading the reports again, I have anything further to add I shall do so next Tuesday.

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– Has the Minister acting for the Minister for Labour and National Service noted the staggering increase of the number of unemployed people registered with his department at the end of last month ? Considering that unemployment is starting to get out of hand-


– Order ! The honorable gentleman is now making a statement, Will lie please ask his question?


– .Will the Minister inform the House whether the Government has formulated plans for a public works programme to attempt to halt the race towards the conditions that prevailed in the disastrous 1930’s?

Question not answered.

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– Has the Prime Minister seen a report to the effect that extensive building operations that were proceeding at the Royal Newcastle Hospital have ceased, and that many tradesmen and labourers have been laid off work as a result ? Is the right honorable gentleman, aware that a total of more than £150,000, is owed to the creditors of the institution? Does he know also that many people await treatment in the hospital, but are unable to obtain it because of lack of accommodation? Is he further aware that both the man-power and the material necessary to enable building operations to be continued are plentiful, and that the only drawback is finance? Is he either able to assist in making available finance to complete this work or prepared to recommend ways and means whereby finance may be specially raised for the purpose?


– I have not seen the report to which the honorable gentleman has referred, and I am not aware of the situation to which he has adverted. T gather, however, from the honorable gentleman’s statement, that the matter is a State matter. I do not know that the Commonwealth is in any way connected with a public hospital in a State. It 13 a very great illusion, which is fomented by members of the parliamentary Labour party when they are in Opposition, that whatever may be going on in Australia, whether local or individual, is in some way the financial responsibility of the Australian Government. I wish to make it perfectly clear that Australia lives under a system of divided power, in which the Commonwealth has some powers and the States have others, and, within and under the States, municipalities and semi-governmental- authorities have still others. The notion that all financial responsibility belongs to the Commonwealth, although the matters that the Commonwealth may deal with are limited, is therefore fantastic, and the sooner it is discouraged by members of this House the sooner shall we be able to return to a state of affairs in which those who have the power will accept the responsibility.

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– I direct to the Minister for the Navy a question supplementary to that asked by the honorable member for Wide Bay. Will the Minister say whether the Government has received any more reports of strange submarines off our northern coast, and, if so, are they believed to be Soviet submarines ?


– I cannot see the relationship between the honorable member’s question and that asked by the honorable member for Wide Bay.

Mr Jeff Bate:

– The delegates are up there.

Mr Curtin:

– What will the Minister do with the submarines if he finds them?


– I shall give one to the honorable member for Watson as a wedding present. However, I am afraid the honorable member will not be receiving a wedding present from me. We have not discovered any submarines, and have received no further reports about such craft.

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Second Reading

Debate resumed from the 18th September (vide page 1468), on motion by Mr. Casey -

That the bill lie now read a second time.

Leader of the Opposition · Barton

.- The effect of this bill, which is of some importance, has been considered by the Opposition. Although the Opposition supports the measure, there are certain aspects of diplomatic immunity which, in our view, require careful consideration by the Government, particularly on the general level of diplomatic immunity and apart from the precise provisions of this bill. The measure proposes, in effect, to extend to the representatives of the British Commonwealth, and to some degree to units of the British Empire outside the British Commonwealth, rights which are similar to and correspond with the rights of representatives of foreign or alien governments in this country. That is an extraordinary development when one looks back to the position that existed a generation ago. At that time, such a development would have been considered impossible. After all, the representatives of all sections of the British Commonwealth owe allegiance to the same Sovereign, and. therefore this question, as between members of the British Commonwealth, could never have arisen in the ordinary way. The position, however, has been subjected to a gradual change. Australia, in common with other members of the British Commonwealth, now has a status which involves not only full selfgovernment internally, but also full external powers. In other words, Australia is a member of the family of nations, although still an integral part of the British Commonwealth.

The working out of the consequences of that general principle, which has been accepted by all sections of the Commonwealth and, indeed, extended to new members such as India, Pakistan and Ceylon, is a matter of some difficulty. That is to say, the practical application of the principle to which I have referred is always a matter which requires, to some degree, executive or legislative action. The Government considers that legislative action is required in this instance, and 1 believe that that view is correct. The civil rights and the ordinary law of this country are affected by claims of immunity or privilege which may be raised by representatives of foreign powers. Therefore, there must be some legislation on the subject. By way of illustration, I refer to the Statute of Westminster, which merely gave to Australia, when it adopted the statute, the precise legislative powers that could be exercisable within the United Kingdom by the Parliament at Westminster. The old doctrine that the statutes of the Parliament at Westminster could override those of any part of the British Empire, including a dominion, was abrogated by the Statute of Westminster, which this Parliament adopted in 1942. That statute merely brought our internal law into conformity with this broad principle, and this measure is a further application of the same principle. It means, in effect, that the representatives of the British Commonwealth as between themselves and in the area of the British Commonwealth are entitled broadly to be treated in the same way as are representatives of foreign, or alien, nations. We cannot resist that principle. It is a correct and inevitable application of the broader principle of the status of nations like Australia, Canada, South Africa, New Zealand and the three new members of the British Commonwealth. What this bill does, and I think that it does it in a correct way, is to assert and apply that principle. Clause 4 states the principle as follows: -

A chief representative is entitled to the immunity from suit and legal process, and to the inviolability of residence, official premises and official archives, to which he would be entitled if he %vere an envoy.

The bill goes further to provide, correctly, that if reciprocity is not being given to Australian representatives the benefits given under the measure may be qualified, or withdrawn. The bill also limits the application of the principle in respect of Australian citizens who are members of the staffs of representatives to which clause 4 refers.

There are one or two questions that are associated with diplomatic immunity which the Government should consider in relation to, not only representatives of the British Commonwealth, but also those of foreign powers. My colleague, the honorable member for Fawkner (Mr. W. M. Bourke), has directed my attention to a report that was recently made in England by an inter-departmental committee on State immunities. The summary of conclusions of that committee, whose report was presented by the Secretary for Foreign Affairs to the British Parliament this year, as follows : -

  1. That the Foreign Secretary should in future refuse to accept any local national as holding any position in a foreign embassy in this country including the position of a “ domestic servant “, except on the condition that such person shall not enjoy a personal diplomatic immunity.
  2. Subject to (1), the immunities at present granted are either certainly or probably, required by International Law and we recommend no change.
  3. That consideration should be given to the question whether there should be legislation empowering Her Majesty’s Government by appropriate procedure to reduce the immunities at present accorded to the embassy or mission of any foreign country so that they shall correspond with the immunities granted by that foreign country to our own embassies and missions.

Those three principles appear to me to be completely sound. As this tremendously important privilege is based upon mutuality, I believe that should there be a failure to grant reciprocity in these matters the Government should be armed with power to reduce the privileges that it grants so that they will conform to those that are accorded by the nation concerned to representatives of this country. That objective is substantially achieved under this measure.

Mr Morgan:

– Does immunity from suit and legal process, provided for in clause 4, relate to all laws?


– Yes. Let me take the ordinary example of criminal law. The principle is the same except that diplomatic envoys are just as sacrosanct as heads of missions. On this subject, Oppenheim’s International Law states -

As regards the exemption of diplomatic envoys from criminal jurisdiction the theory and practice of International Law agree nowadays that the receiving States have no right under any circumstances whatever, to prosecute and punish diplomatic envoys. But among writers on International Law the question is not settled with the commands and injunctions of the laws of the receiving States concerning diplomatic envoys at all, so that they must comply with them although it is admitted that they cun never be .prosecuted and punished for any broach.

That is a tremendous privilege. We are dealing with immunity not only from Commonwealth laws but also from State laws and the laws of the Territories of the Commonwealth. In many respects it is difficult to accept such a broad immunity without some qualification in modern times.

I wish now to refer to one aspect of this measure to which certain honorable members on this side of the chamber directed attention when the hill was under consideration by the party. I shall read again from the British White Paper from which I have already quoted. It states -

There is one other matter which may be of great importance to individuals, namely, claims in respect of injuries by motor vehicles. It has been the rule in the United Kingdom since 1931 (as laid down in circulars to diplomatic missions ) that ‘ every person [possessing diplomatic immunity must be insured against third-party risks. The working of this procedure, which has been accepted by diplomatic missions, can be seen in Dickinson v. Del Solar (1930) K.B. 376, where the court rejected a defence based on diplomatic immunity put up by the insurance company when the Head of the Foreign Mission concerned bad waived immunity. The procedure involves a formal waiver of immunity if the matter cannot be settled out of court, but there is every indication that such waiver will be forthcoming, as in the Del Solar case.

Let us put that more simply. In Australia there is compulsory’ third party insurance in all States, and I think in all Commonwealth Territories. Certainly it is so in the Australian Capital Territory. Let us suppose that a diplomat or a member of his staff is concerned in an incident in which serious injury is suffered by a citizen. How can the citizen claim, compensation for injury if the accident has been due to negligence on the part of the driver of the diplomatic car? I recall one such case very clearly. A member of a foreign mission - not a British Commonwealth mission - was concerned in a serious motor car accident. When a claim was made he did not waive diplomatic immunity, but relied upon it. The legal advisers of the Australian citizen concerned had to face up to the fact that the immunity was an effective part of the law. Instead of the claim being settled speedily in the normal course of proceedings in a court, eighteen months or two years elapsed before the matter was finalized. I submit to the Minister for consideration that such immunity is not only not necessary for the rational protection of diplomatic relations between Australia and other countries, but may actually impede and injure the good relationship with other powers which is the very object of granting any immunity at all. I realize that this measure merely provides that British Commonwealth representatives shall be placed in the same position as the representatives of foreign countries, but the privilege is very wide indeed. It extends not only to the representatives themselves and their assistants or deputies, but also to their families and staffs, with the exception, of course, of Australian citizens, as is provided for in the bill. The practical suggestion that I put to the Minister, and I should like him to consider it and later reply to it, is that there should be in Australia an inquiry of the nature of that which was held in England, so that some plan could be decided upon and enforced in cases such as this. With regard to the incidents mentioned in the report concerning third party insurance, I consider it to be bad in principle that there should he any possibility of the existence of diplomatic privilege that would make it necessary for Commonwealth representatives to waive their immunity. I consider that in Australia, in specific cases where the law involved is the general law of the land, the diplomatic representative should accept it. I cannot imagine any country refusing to accept it if the matter is properly presented to it. I agree that any such arrangement would have to be on a reciprocal basis, because the importance of diplomatic immunity resides in the fact that our representatives have similar immunity not only in foreign countries but also in the countries of the British Commonwealth. However, there is a limit to such immunity, and it must be remembered that in modern times Australia has taken the lead in legislation concerning civil liability.

In Australia the Crown has been put into the same position as that occupied by ordinary citizens so far as civil liability is concerned. If a servant of the Crown in Australia should be proved guilty of negligence, the Crown must meet the liability involved under the Judiciary Act if the offence be committed in Australian Commonwealth territory, and under the various laws of the States if the offence be committed in areas under State jurisdiction. The legal head of the State is the Sovereign, and the -Sovereign is subject to ordinary law in cases of civil liability, such as negligence involved in motor collisions and the like. Therefore, if overseas nations who send representatives to Australia accepted the onus imposed by our laws in this respect, they would do not only what is courteous but also what is necessary if they are to be put in the same position in this country as that occupied by the .Sovereign. Such action could not be taken by amending this measure because it involves not. merely the representatives of the nations of the Commonwealth but also those of foreign powers together with their families and staffs who reside in this country. I suggest to the Minister that perhaps this matter could* be taken up either depart- mentally or by means of a committee of the Parliament. Great scandal was caused by the case that I mentioned, of the foreign representative who would not face up to a legitimate claim. It was a bad case because serious injury had been inflicted on a person. I suggest that we might hit upon a means of bringing the law on this matter up to date and of according immunity not merely to representatives of the British Commonwealth but also to representatives of other countries.

The final point that I desire to make concerns the most important matter covered by this bill. There is no reason why British Commonwealth representatives - that is, representatives from Canada, South Africa, New Zealand, India, Pakistan and Ceylon - should not have, when in Australia, the same rights in this matter as the representatives of countries such as. France, Russia, the United States of America and the many other nations that have accredited representatives in Australia. This is simply a necessary machinery measure to amend the Australian law so as to extend to the diplomatic representatives of British Commonwealth countries the status which they enjoy in other countries, and which Australian diplomatic representatives enjoy, not only in the countries of the British Commonwealth but also throughout the world. On behalf of the Opposition I make these suggestions for the consideration of the Minister. The Opposition will accept the bill.


.- This is a simple bill and not one of Very great importance. Its purpose is to afford to the chief representatives in Australia of British Commonwealth countries, immunity from civil process and to guarantee to them inviolability of premises, placing them in those respects on a basis similar to that enjoyed by the envoys of foreign countries. These privileges have been enjoyed by diplomatic representatives from time immemorial. They are enjoyed in Australia, as in other parts of the world, by the representatives of foreign nations. As the Minister for External Affairs (Mr. Casey) and the Leader of the Opposition (Dr. Evatt) have dealt in detail with the provisions0 of the bill nothing could be gained by my repeating them. From the Australian standpoint this is a necessary measure. We have to pass it in order to fall into line with the action already taken, or to be taken shortly, by other British Commonwealth countries, which was initiated by Great Britain. Australia has merely one voice in the affairs of the British Commonwealth. It cannot alone determine British Commonwealth policy. In a matter such as this a decision having been taken by the others, we have little choice but to follow suit.

I was impressed with the qualifications suggested by the Leader of the Opposition. I am inclined to believe that, in modern times, diplomatic immunity from civil processes is outmoded. Why should a diplomatic representative who drives a motor car, simply because he is a representative of a foreign government in Australia, be relieved from all liability for injuries he may cause to an Australian citizen, more particularly if the unfortunate citizen is deprived thereby of the benefits of the law relating to third party insurance? The time has come when the results of such privileges should be examined. But as the Leader of the Opposition has said, that matter cannot be dealt with by this Parliament, in a bill of this kind. It is a matter for arrangement between the States and the Commonwealth in negotiation with the powers concerned.

There is another aspect of the bill which should receive attention. I observe with regret that it marks still one more step in what might be described as the dissolution of the Empire as we knew it. In the lifetime of everybody present in this House we belonged to an Empire which had one nationality, one citizenship and, in theory, one overriding law. In our time we have seen, first, the Statute of Westminster, which removed the overriding law of the central government in Great Britain. The next legal step in the process was the enactment of the Nationality and Citizenship Act, which provided for different citizenship status for the peoples of different parts of the Commonwealth and which left, as our only common bond with the other countries of the Commonwealth, our allegiance to the Crown. Now we are asked to pass this bill, which will confer on British representatives in Australia and other countries in the Commonwealth the same privileges as are enjoyed by the representatives of foreign countries. These privileges arose in the first place from conflicts between nations, not from common bonds. They had their origin in the necessity to protect diplomatic representatives when quarrels occurred between the nation they represented and the one to which they were accredited. It seems to me to be somewhat anomalous and inconsistent with the idea of the Commonwealth that the diploma tic representatives exchanged by its member States should be accorded privileges which had their origin in conflict, not in unity.

This may be a somewhat antiquarian view, and, perhaps, it has little application at this time. However, I do not think that the bill should be passed without the expression of regret at its necessity.” It seems to me to be odd that the processes of dissolution of the external bonds of the British Commonwealth always originate in Great Britain itself. The British Government is always the first to take these steps and it seems, for some curious reason, to take a special pride in doing so. That is an attitude of mind that I do not understand. For the reasons that I have stated, I think it is useless to oppose the passage of the bill and the apparently inevitable results of the development of the British Commonwealth. Therefore, I support it, but I do so with regret.


– The tone of regret that tinged the comments of the honorable member for Evans (Mr. Osborne) on this desirable bill astonished me. The honorable gentleman remarked that his attitude was perhaps antiquarian, and said that the hill represented one more step towards the dissolution of the British Commonwealth of Nations. I consider, on the contrary, that the bill represents a step in the opposite direction. Surely the honorable member does not wish to return to the days of colonialism, when we had an empire with head-quarters in London in which the nations that are now great self-governing dominions were regarded as mere appendages of a central body! The development of the self-governing dominions within the British Commonwealth is one of the great romances of modern history. Bather than regret that development, one should express great pleasure and satisfaction that it has proceeded successfully. The British Commonwealth of Nations is undoubtedly unique in history, and we should be very happy with the developments that have taken place, in which Australia has played a leading part. The British Commonwealth, since the enactment of the Statute of Westminster, can best be described as an association of free and equal partners. The partnership embraces Great Britain, the great selfgoverning dominions of Canada, Australia, New Zealand and South Africa, and also, to our delight, the three new Asiatic dominions of India, Pakistan and Ceylon, which are now on a basis of full equality with other member nations. I cannot see any cause for regret in those developments. In fact, they have made the British Commonwealth of Nations a stronger body. It is now a union of nations which is able to exercise its powerful influence in the councils of the world with much greater effect than was possible previously. The tone of regret in the speech of the honorable member for Evans, therefore, seemed to me to be completely out of place.

The bill will extend to the representatives of members of the British Commonwealth the diplomatic immunities that now apply to the representatives of foreign nations in other countries. That will not be a retrograde step. It will merely give practical recognition to the fact that the various members of the Commonwealth have, indeed, acquired the full status of adult nationhood. They will enjoy all the rights, privileges and prerogatives of adulthood. Surely the fact that our family of nations has grown up should be a matter for celebration, not for regret as the honorable member for Evans has suggested ! As the Leader of the Opposition (Dr. Evatt) has already said, honorable members on this side of the House support the measure. The constituent nations of the British Commonwealth are now regarded as legal entities, in every sense of the word, and are full partners in the great British Commonwealth of Nations, in which they have acquired full status, and their representatives should have all the privileges that representatives of other nations have. The bill is really a codification of the international law, to provide that representatives of the British Commonwealth shall be accorded the same privileges and immunities as are enjoyed by the envoys of other nations.

It is worth considering whether these immunities and privileges accorded to envoys of other nations can be justified in the modern world, and whether they fit into the realities of a modern state. Clause 4 provides that a chief representative shall be entitled to immunity from suit and legal process, and to the inviolability of residence, official premises, and official archives, but it does not refer to exemption from taxation and customs laws. Diplomatic representatives are able to obtain cigarettes and other articles free of customs duty. That is a rather important concession, which seems to be based on reciprocity between the nations rather than on international law. The immunities specified by the clause seem clearly to be necessary to enable the representatives of other countries to carry out their tasks in this country in a proper manner. As they are essential to the proper performance of the duties of the office to which they apply, no exception can be taken to them. But the matter of. immunity from suits and legal process, which was dealt with by the Leader of the Opposition, is something that should be examined. However, before I express my views on that provision I shall continue to examine the bill.

Clause 5 provides for an extension of the immunities that I have mentioned not only to the members of the family of a chief representative, but also to the members of his staff, and each member of the family of a member of his official staff. This raises another point in our consideration of how far diplomatic immunities should be extended. We should clarify their actual scope. Should they apply only to a chief representative and the senior officers of his service, or also to other officials and clerical officers of his staff? The Report on Diplomatic Immunity that was furnished by the British interdepartmental committee points out that as we go down the scale we must consider the status of domestic servants in the residences of. these officials, and whether they are entitled to diplomatic immunities. Clearly, this matter should be clarified. Sub-clause (2.) of clause 5 provides that a national of the country in which the diplomat resides shall not be accorded the same degree of immunity as a national of the country that the diplomat represents. This may be the basis of a sensible rationalization of the general position of diplomatic representatives in this country. The sub-clause reads - (2.) Where a person who is a member of the staff of a chief representative is an Australian citizen . . -

  1. that person is entitled to immunity under this Act only in respect of things done or omitted to be done in the course of the performance of his duties as a member of that staff;

This seems to establish the important principle that the immunity of an Australian citizen who is employed on the staff of a chief representative in this country shall extend only to things done or omitted to be done in the course and performance of his duty. He will not enjoy complete exemption from civil and criminal jurisdiction of the courts of this country. In relation to the basis of diplomatic immunity we must consider whether we should grant to members of the staff of a diplomat only such immunities as are necessary to enable them to carry out their duties. I consider that such immunities should appertain only to the work they do, not to the person.

It might be worth while for us to reflect on the historical origin of these immunities in order to see how they fail to fit ‘in with the realities of life in the modern State. Prom the beginning of organized society it was necessary that there should be some form of diplomatic intercourse between organized groups. In the beginning certain immunities were established to enable couriers or heralds to try to negotiate a truce between groups. As society developed and we reached the stage of the organized State, the monarchical form of government developed. The monarch, as the embodiment of the sovereignty of the State, enjoyed a particularly exalted position, and was above the law of his own country. The representatives abroad of the State were regarded as personal representatives of the monarch, and therefore enjoyed many of the privileges and immunities that attached to the monarch in his own country. The legal fiction of extra-territoriality emerged, under which the representatives of a monarch in another country were regarded as not living in the territory of that country, but in a part of the territory of the country from which they came. The officer himself, his staff, his residence, and hisoffice were all above and not subject in any way to the laws of the country in which he carried out his duties. We tend in the modern world to try to rationalize most of these things. In many ways, it is a good thing that we retain tradition and many of the ancient forms and principles in our modern life. Although the legal fiction that I have outlined is no longer recognized, some of the traditions that were based on it have been carried over into the modern world.

In my opinion, international law on the matter of diplomatic immmunities still goes far beyond what is necessary to enable diplomats and members of their staffs to carry out their duties. We are still bound too tightly to those traditions which have this interesting historical background but which do not have any reality to the basis of modern life. I cite only one instance to illustrate the contention of the Leader of the Opposition, who has drawn attention to the intolerable state of affairs whereby immunity from suit and legal process means that if a member of the family or of the staff of a diplomat is involved in accident, the aggrieved party actually has no remedy unless the diplomatic immunity is waived. The case Price v. Griffin, which occurred in England a couple of years ago is an illustration of how diplomatic immunity can inflict intolerable injustice and hardship upon citizens of a country. A viceconsul for a foreign country in London was sued for damages arising out of an alleged breach of promise of marriage. The various preliminary proceedings were completed, and the case was called on for hearing. At that stage, a letter was produced from the Foreign Office in which it was stated that the defendant was a vice consul for a foreign country, and was entitled to diplomatic immunity. Upon the receipt of that letter, the judge said that he could not go any further in the matter, and refused to hear any argument. Later, the immunity was waived.

However, that procedure seems to me to be the wrong way in which to handle such a matter. The report on diplomatic immunity by the British Interdepartmental Committee on State Immunities, dated the 13th July, 1951, appears to me, in many respects to attempt to justify an unjustifiable state of affairs. The report sets out the present position, which is that these immunities do exist, and that immunity is given from suit and legal process. However, immunity has been waived many times following representatives by the Foreign Office. But, is not that attitude merely an acceptance of a position which has developed over the years? As the Leader of the Opposition has stated, we should go beyond that point. Why should we accept this intolerable position? We recognize an immunity which inflicts an injustice, vet we say that the only way in which we can overcome the difficulty is to ask that the immunity be waived. Surely it would be much more logical to diminish the scope of the immunity, and rationalize it, so that the position of having it waived in specific cases should not arise. Instead of granting this blanket immunity, we should say that the whole matter of international law on this subject should be altered, so that only those immunities will be accorded which are necessary for the proper performance of the duties of the diplomat-

Dr Evatt:

– And no more!


-I agree with the Leader of the Opposition. These blanket immunities should be reduced. I had hoped that the position would have been brought to a head and action taken upon it when the United Nations began to function, because that occasion raised the whole matter of diplomatic immunities. The United Nations is an international body that has its own territory, offices and staff. Delegates from many countries attend meetings of the organization. Unfortunately, the United Nations seems to have merely accepted the general position of international law regarding diplomatic immunities, and the same immunities which generally apply to diplomats have been applied to the staff of the United Nations and the. delegates who attend its various activities. It is regrettable that an opportunity has not been taken to raise this matter at the United Nations, because that would be a most convenient way in which to alter the international law on the general subject, and place the whole matter of the immunity of diplomats on a sound basis.

I support the plea of the Leader of the Opposition that we should make the matter of diplomatic immunity sensible, and protect the rights of our citizens, so that persons who come to this country as diplomats, or the families of diplomats, and the staffs of diplomatic offices will be subject to the laws of this country in the same way as our citizens are subject to its laws, and diplomats, their families and their staffs will be exempt from our laws only to the degree that such exemption is necessary to enable them to carry on their duties as the representatives of other countries. I support that contention of the Leader of the Opposition, and, at the same time, I support this measure not with any regret, such as was expressed by the honorable member for Evans, but with pleasure, as this bill indicates another step forward in the attainment of the status of full adulthood of the various members of the British Commonwealth of Nations.


– I trust that the Minister for External Affairs (Mr. Casey) will give further consideration to this matter in the light of the submissions made by the Leader of the Opposition (Dr. Evatt), the honorable member for Evans (Mr. Osborne), and the honorable member for Fawkner (Mr. W. M. Bourke), in order to ensure that the rights of the ordinary citizens in our community will be preserved, particularly in relation to civil process, and will not be completely submerged in relation to the rights of diplomatic representatives. Diplomats, their families and their staffs should not be granted greater privileges than are possessed by the Crown. There used to be an axiom to the effect that the Crown could do no wrong. That theory has been modified, as the operations of the Crown have extended into many activities in the community. If the privileges of the Crown have been modified in accordance with modern developments, surely the rights of. the diplomatic representatives of overseas countries, their families and their staffs should also be modified, particularly in relation to the actions of their servants.

The purpose of this bill is to give diplomatic immunity, not only to the chief representatives of overseas countries in Australia, but also to the members of their families and of their staffs. Such a proposal is important to citizens, particularly in these times when members of diplomatic staffs drive cars of the diplomatic corps. Many of these cars are the latest imported models, and are capable of travelling at high speeds. It is a common sight to see them charging through the crowded streets of our cities. This bill does not give any protection to Australian citizens against injury or loss caused by motor cars of the diplomatic corps. The laws of the - States provide that a person must pass a driving test before he is permitted to take charge of a motor vehicle, but this bill docs not stipulate that a person in charge of a diplomatic car must possess a driver’s licence, and fulfil a qualification in respect of age. Lads of seventeen or eighteen years of age can be in charge of diplomatic cars, and a citizen who is injured by one of them has no legal protection. In war time, young servicemen were in charge of high-powered vehicles, including army trucks, and were involved in some shocking accidents when they were tearing through the streets of our cities. In many cases the victims of the accidents, or their dependants, had no redress. The drivers of the service vehicles were tempted to disregard precautions because they felt that they would have the support of the authorities. A similar position has arisen in respect of young persons who drive cars of the diplomatic corps. Diplomatic privilege may be waived in certain instances by the person with diplomatic immunity or the insurance company which is conducting the case on his behalf. Most of the owners of cars in the States are covered by compulsory third party insurance. When they are sued, the matter of defence is entirely in the hands of insurance companies. It is the policy of the insurance companies not to negotiate a claim involving a car owner unless legal processes are issuing. They regard a letter from a solicitor as bluff and they will not take action to settle a claim until a writ is issued and is before the court. This bill will give an additional lever to the insurance companies. It will place an unfair advantage in the hands of the companies and those who are being sued. An insurance company could drag litigation on from year to year until finally the plaintiff had to accept possibly much less than he would have accepted if he had been able to take the claim through the ordinary legal processes. The law relating to claims against the Crown has been modified in the various States. It provides that the Crown is in no different position from any person in the community when it is being sued for alleged civil negligence. Some formula should be framed to protect citizens, and I hope that the Minister will consider the matter carefully. Perhaps an independent committee, including representatives of the diplomatic corps, or an arbitrator could determine claims of a civil nature. Such an authority could have claims speedily determined and could protect the rights of ordinary citizens. Otherwise this measure may defeat the purpose for which it is intended and, perhaps, endanger relations between Australia and other countries.


– I shall not speak on this matter with legal knowledge, but I support the suggestion of the Leader of the Opposition (Dr. Evatt) that there should be an investigation of diplomatic immunity as it relates to civil processes with a view to its clarification or limitation. Although it has never been clearly established that diplomatic immunity extends to traffic laws, breaches of which often lead to the civil actions in which immunity is claimed, it has always been assumed that it does. That point should be clarified. In Canberra and the Australian Capital Territory, a relatively high proportion of the motor vehicles on the roads are owned by diplomatic missions and are operated by employees or relatives of the diplomatic envoys. In many cases, breaches of the traffic laws in which they have been involved have been noted, but the persons concerned have not “been the subject of specific action. Not all drivers of diplomatic cars are at fault. Indeed, I suggest that the majority of them comply with the traffic laws of the territory and of the States where they journey, but glaring breaches of the traffic laws of the Australian Capital Territory by the drivers of diplomatic cars continue to occur. Cases are known of children, much younger than the age at which licences to drive cars are granted, being in charge of highpowered vehicles in this Territory to the danger of people using the roads. Some drivers of diplomatic cars no doubt enhance their reputations as racing motorists by speeding along the streets and avenues of the Territory. I believe that representatives of other countries in the Australian Capital Territory should be subject to our traffic laws. It is no comfort to people who may be injured as a result of carelessness, negligence or sheer bad driving to know that they have been struck and injured by the car of a diplomat. I believe that the clarification sought by the Leader of the Opposition should be made, and that the limitation suggested should be imposed. The drivers and operators of cars bearing diplomatic corps plates should be subject by law or by agreement, to the traffic laws.

Minister for External Affairs · La Trobe · LP

in reply - I have listened with great interest to the statement of the Leader of the Opposition (Dr. Evatt) and to the thoughful speeches that have been made by the honorable member for Evans (Mr. Osborne), the honorable member for Fawkner (Mr. W. M. Bourke), the honorable member for Reid (Mr. Morgan) and the honorable member for the Australian Capital Territory (Mr. J. E. Fraser). I appreciate greatly the restraint of honorable members in making no reference to any individual diplomatic representatives in Australia. I have noted the point that was made by the Leader of the Opposition with regard to the departmental investigation that was held in Great Britain recently, and the thoughtful inquiry that has been directed to the question of diplomatic immunity generally in respect of those who are entitled to it and, in particular, in respect of third party insurance. In the first place, I shall have those matters carefully examined by officers of my own department in association with legal officers of the AttorneyGeneral’s Department, and shall endeavour to see whether it is necessary, advisable or expedient . to suggest to the Government that something be done in that regard. This matter has to be approached with some caution because reciprocity is the order of the day. We have to think of our own missions overseas, which are now very numerous. Honorable members will realize that those missions live under a wide variety of conditions overseas. In the past, I have been the head of Australian missions overseas, and I know how greatly one appreciates the diplomatic immunity, in all its fields, that one is privileged to have. By way of parenthesis, I may say that when I was the head of an Australian diplomatic mission overseas, I told the members of my staff that they were not to take advantage of diplomatic immunity in respect of motor car traffic offences. That was an attitude which appeared to me to be right, andI do not attempt to draw any parallel or lesson from it.

The honorable member for Evans expressed some rather nostalgic regret at the need for this bill and threw his mind back to the past when certain things were in the course of evolving to the stage that they have reached to-day. The point was taken up by the honorable member for Fawkner, who, I think, exaggerated it a little and made it appear that the honorable member for Evans was regretting the passing away of the colonial days. I do not believe that he was doing that. We have had a satisfactory experience in Australia over the generations. Australia has provided one of the many British examples of a country that has evolved through a period of colonialism that was not, at the same time, a period of exploitation. In fact, I think that the British story is one of successful and benevolent colonialization without exploitation. We have been through all the phases of colonialism to self-government, although even selfgovernment has been a matter of relativity and degree. Now, having passed through that period of empire, we have reached a period of Commonwealth. The British countries now form a federation of dominions. Technically, we are a Commonwealth of Nations. I cannot find myself regretting this. I have something of the same nostalgic feeling of looking back over one’s shoulder as has the honorable member for Evans. But times does not stand still and the past is merely a prelude to the present and the future. I appreciate very much the Opposition’s support of this measure. This debate has been a fine example of a discussion of a measure of some consequence without any introduction of party politics.

Question resolved in the affirmative.

Bill read a second time.

In committee:

The bill. [Quorum formed.]

Bill agreed to.

Bill reported without amendment; report adopted.

Bill - by leave - read a third time.

page 1796


Second Reading

Debate resumed from 28th August (vide page 703), on motion by Sir Arthur Fadden -

That the bill he now read a second time.


.- Mr . Speaker, this bill is viewed with mixed feelings by members of the Opposition, and, I have no doubt, by many people in this country. There is something in it commendable and there is also something retrogressive in it. The bill provides for the expenditure of 50,000,000 dollars which have been borrowed from the International Bank for Reconstruction and Development, in addition to the 100,000,000 dollars borrowed under another measure which was passed two years ago. These borrowings have been stated to be for the purpose of assisting essential development in this country. Of the 100,000,000 dollars that we borrowed two years ago, 33,000,000 dollars have not been spent. Why the Government has not been able to spend this money, the borrowing of which it said was both urgent and essential, has not been satisfactorily explained. It is regrettable that this country has to pay the commitment charge of £ per cent, on that- portion of the money which has not yet been drawn from the bank. Under the terms of the loan the Government had to pay % per cent, interest from the time that it committed itself to borrow the money and interest at the rate of 4£ per cent, annually on money actually withdrawn from the bank. There is a difference between this bill and the bill that was passed two years ago in that it was stated in the schedule to the previous bill that the purpose of the loan was development whereas in the bill now before the House it is provided that the money shall be spent in accordance with a specific programme which is set forth. Presumably, in the case of this loan, if the money is not spent for a specified purpose, it cannot be spent for any other purpose.

If this hill will help Australia to produce more goods for sale in the dollar area there is a justification for it. However, a lot of people believe that this legislation will not enable Australia to sell more goods in the dollar area. It is very hard to sell goods in the dollar area. The United States of America has tariff walls of extraordinary height. It has had a tariff wall for many years against the importation of raw Australian wool. I think that the tariff payable was then 17 cents per lb., and I believe it may be still in force. It was only with difficulty that the Congress of the United States of America was persuaded to accept a discretionary power to lower that tariff. So it is by no means certain, even if we spend these dollars in the way that the Government desires and .produce additional goods, that we shall make any very considerable contribution to the British Commonwealth’s pool of dollars. There is a growing feeling in this country that if all Australian products which are sold to the United States of America indirectly through other countries were exchanged directly for dollars we should have more dollars available for ourselves than we have at present. As the Minister for Defence (Mr. McBride) knows, some buyers shipped our wool to Holland, Belgium and other countries, whence it was sent to the

United States of America, where it earned dollars for those countries. The Australian Government had to take certain steps to stop that practice. There is a common dollar pool which is used by all members of the British Commonwealth. Many people consider that Australia does not receive its fair share of dollars from that fund. If we were able to use all the dollars that we earn, directly and indirectly, we might not have to obtain loans of this kind.

I want to stress the traditional feeling of the Labour party about oversea borrowings. Despite statements that have been made in the course of other debates in this .chamber about the development of Australia, we feel that, over the years, Australia has paid very heavily for the money that it has received by way of loans from both England and America. The ambition of the Chifley Government was to reduce our overseas indebtedness as quickly as possible. It is true that other governments, especially the Lyons Government and the Scullin Government, tried to secure a reduction of the interest rates on overseas loans, and also on the sums still owing, but let me say in passing that, during the lifetime of the Chifley Government, Australian indebtedness in New York in respect of both the Commonwealth and the States, was reduced from £43,000,000 to £40,000,000, and in London from £478,000,000 to £369,000,000. We reduced our indebtedness per capita from £6 2s. to £4 18s. 2d. in New York, and from £67 5s. 6d. to £45 3s. 5d. in London. This loan and the other loan that was negotiated before it has increased our indebtedness to America by £66,000,000. When the Chifley Government left office, our indebtedness to America was £40,000,000, but now it is £106,000,000- the highest, it has ever reached. Many people in this country feel that the amount is far too large, and that it is not desirable to mortgage our future in the way in which it is being mortgaged, especially in the country in which it is very difficult for us to sell our products.

The International Bank for Reconstruction and Development is a governmental bank established to assist the development of backward countries. It cannot be said that this is a backward country, and we are not certain that the proper purposes of the bank are being served by investments in countries such as Australia. Under the terms of the agreement, contained as a schedule in this bill, Australia will be free to use its dollars to finance imports, not only from the United States of America but also from the United Kingdom. We shall be able to buy in any part of the sterling area or of the dollar area. If Britain can tender competitively for the capital goods that we need, the result of our operations will be an accretion of the gold reserves of the sterling area. That will have its disabilities. We have borrowed this money, and we have incurred the debt; but, to the degree that we use the dollars to make purchases inside the British Commonwealth, we shall help other Commonwealth countries to buy goods from inside the dollar area. That will not commend itself to too many people in this country.

Minister for Defence · WAKEFIELD, SOUTH AUSTRALIA · LP

– Does the honorable gentleman really think that that will happen?


– It might happen. I have a feeling that if this Government had waited for twelve months longer than it did, it might not have needed to borrow 100,000,000 dollars to finance its programme, because twelve months after the money was borrowed, British heavy industry was in a position to offer us, at any rate some of the equipment we have bought from America.


– Tell Mr. Cahill that.


– If we were not debited for goods that we have purchased in the dollar area, the Premier of New South Wales might be able to get assistance from this Government to purchase the generating plant which he says is so very necessary for the development of that State. Even the honorable member for Bennelong (Mr, Cramer) would be glad to see fewer black-outs in New South Wales. That would occur if the New South Wales Government were able to purchase the generating plant which is the subject of correspondence between itself and this Government.

The programme set out in the bill provides for the purchase, amongst other things, of agricultural machinery. The Treasurer, in his second-reading speech, specified the projects upon which expenditure will be incurred. Agriculture and land settlement will take 17,000,000 dollars; coal-mining, 8,000,000 dollars; iron and steel, 1,000,000 dollars ; electrical power, 4,000,000 dollars; railways, 2,000,000 dollars ; road transport 7,000,000 dollars; non-ferrous metals and industrial minerals, 2,000,000 dollars ; and industrial development, 9,000,000 dollars. If that programme could be implemented and if, consequently, Australia were able to earn more dollars which would enable it to discharge its indebtedness satisfactorily without imposing added burdens on the community at a later stage, the loan would be justified. But we feel that, in devious ways, and under headings such as industrial development, dollars that ought, to be used for the purchase of capital equipment are being used for the purchase of consumer goods. A number of honorable members on this side of the chamber fear that, because this Government has negotiated dollar loans, newsprint, in quantities far beyond what is reasonable, when all things are considered, is being purchased from current dollar earnings. We believe that many of the things that are being purchased with this loan should be purchased from current dollar earnings. That would leave fewer dollars from those earnings available for the purchase of some of the consumer goods that are benefiting, we feel quite improperly, because of these loans.

The Treasurer said in his secondreading speech -

The Government embarked upon this programme of dollar borrowing primarily to obtain additional dollars for purchasing vital types of equipment for developmental purposes in Australia.

I hope that the right honorable gentleman, if he has an opportunity to reply to the debate - and he may not have one - will tell us why, if this equipment was so vital two years ago, 33,000,000 dollars of the first loan are still unexpended. I hope he will tell us also that this Government will not try to commit Australia in respect of any more overseas loans. We cannot borrow in London. The British people are engaged in a tremendous struggle for survival and revival, and they have no money to lend to us. The only place in which we can borrow is the dollar area, and for Britain and for ourselves that is the toughest area. We should like an assurance that there will be no more borrowing,, and that the dollars that we have already borrowed will be expended most carefully. Having said that much, and having in mind the discussion that took place in connexion with the first loan, I shall leave the matter without further remark.


.- I tried to detect an intelligent course of thought in the remarks of the honorable member for Melbourne (Mr. Calwell). I was looking for something that I might get my teeth into when I replied to his speech. However, he merely rambled all over the place. Nothing concrete emerged from his remarks except that the Labour party is opposed to overseas borrowing. I was glad to learn where the Labour party stands on this question. As a matter of fact, it has adopted a ridiculous attitude. Surely the Labour party realizes that Australia, which is a young country still in need of development, must have capital equipment, and that the equipment must be obtained from overseas. W e need to produce more goods for export to sterling and dollar areas, but in order to increase our production we must get more capital equipment, and in order to get the equipment we must borrow overseas.

The purpose of this bill is to ratify an arrangement for the borrowing by Australia of 50,000,000 dollars from the International Bank for Reconstruction and Development. That arrangement represents a personal triumph for the Prime Minister (Mr. Menzies), because no loan of that kind has ever before been made without a detailed examination of the security offered. There has been no particular investigation of Australian assets in this instance, and no specific assets have been pledged. Certainly, the president of the bank visited Australia, and saw for himself certain national undertakings, but no close and meticulous investigation was made into the purposes of the loan, as has happened in other cases. That such a condition was not insisted upon in our case may be taken as a tribute to the standing of the Prime Minister in the United States of America.

In spite of what the honorable member for Melbourne may say, the fact remains that dollars represent the most precious currency in the world to-day. They are of vital importance to Australia for defensive and developmental purposes. They are also necessary to many other countries in the world. I hate to think what would happen to the world were it not for the productive capacity of America, and its readiness to supply much-needed commodities to other countries. The demand for dollars is great throughout the world because there is a great demand for the goods which America produces. The United States of America is doing a magnificent job on behalf of civilization and democracy, and should be applauded for it.

It is true that our economy is closely linked with sterling, and that most of our trade is done with sterling countries, but if we are to increase our productive capacity it is necessary for us to get dollars in order to buy capital equipment. We must raise a dollar loan now in order to buy equipment which is not available outside the United States of America. It is particularly important for Australia, because of its geographical situation, to maintain good relations with the people of that country. We must be very careful how we spend the dollars that we borrow, because it is important that our credit should stand high in America. I have no doubt that it will be necessary later to borrow more dollars on the ordinary domestic money market in America, and the rate at which we can borrow will depend upon our credit standing. I have had some little experience in these matters, because some time ago I visited the United States of America to borrow £8,500,000 on behalf of the Sydney County Council. It is an independent undertaking, not associated with the State government or with the Australian Government. I found in the United States of America much ignorance of the development that had taken place in Australia, but I also found a great interest in this country, and an eagerness to learn as much about it as possible. There is no other country in the world for which the people of the United States of America have so friendly a feeling as they have for Australia, and we should do all we can to strengthen that feeling. It is important that we should convince the American people of the economic soundness of Australia. In the United States of America, they have what are called rating authorities, of which Moody’s is a principal, which advise investors about the investment value of bonds that are offered to the public for purchase.

I was in close touch with the Chifley Government at that time, because it was necessary to obtain government sanction for the raising of the money, and I found that little was being done through government circles to improve the credit rating of Australian securities in the United States of America. There is no reason why Australian securities should not rank higher than those of any other country except, perhaps, those of Canada. Unfortunately, their rating was not as high as it should have been. I conferred with various rating authorities, and was able to induce them to rate the bonds offered, by the Sydney County Council at a parity with those of the Australian Government itself. By working independently of Australian official organizations in the United States of America, and by making direct contact with individual brokers, I was able to raise money at a lower rate of interest than would otherwise have been possible. The loan was floated at a much lower rate than the Government would have been able to float it. There is a great need to conserve dollars and it is all very well to talk about borrowing a mere 50,000,000 dollars. That amount will not go very far in view of the cost of the equipment that is required. The honorable member for Melbourne mentioned an amount of 33,000,000 dollars that has not yet been expended from the loan. That amount must be regarded as having been expended, because commitments have been made in relation to it. The Government knows exactly what it intends to do with that amount and also with the further amount now sought.

We cannot afford to waste dollars. It would be a simple matter to borrow an amount of 50,000,000 dollars and then waste it on unessential goods or goods that can be obtained from the sterling area. The International Bank for Reconstruction and Development is not a limitless source from which we can continue to obtain dollars, and it is at present impossible to borrow on the domestic market. We need this loan in order to buy machinery and equipment related to our defence preparations and equipment that the States and private industry require but cannot obtain from the sterling area. It is sometimes forgotten that governments have a duty to assist private industry to obtain the capital equipment necessary for its development. Governments are all too prone to think in terms of government needs and commitments only, and to forget that the greater part of our economy is based on private industry, and that therefore dollars have to he provided to meet the essential needs of private industry.

The responsibility for the conservation of dollars rests equally on all governments in Australia, because dollar borrowings are on a Commonwealth basis, as the schedules to the bill show, and are made to assist the States as well as the Commonwealth and private industry. About 13,000,000 dollars of the last 100,000,000 dollar loan was made available to New South Wales as a result of representations made by the Government of that State, for the purchase of package units for electricity production. That fact is disclosed in the correspondence between the Prime Minister and the New South Wales Premier that was tabled yesterday. New South Wales expended that amount of 13,000,000 dollars on the purchase of 20 or 21 package units, but so far only two of those units are in operation, notwithstanding the fact that at the time the representations were made the New South Wales Premier announced that the units would be producing electricity by August, 1951. We were given to understand, by means of certain press publicity, that those units would run on our coal, but the fact is that not one of them, as far as I know, is fitted to run on coal. They are fitted to run on oil only. Many people are unaware of that fact. I do not know what would happen if, as a result of an international emergency, we were cut off from our oil supplies. Proper care has not been exercised in relation to these matters. At present, an inter-government argument is proceeding regarding the amount of 10,000,000 dollars desired by New South Wales for the purchase of a 75,000-kilowatt unit. Power requirements are referred to in the schedule to the bill which sets out in some detail proposals regarding the expansion of power production. It is amazing that for several years until recently developments in relation to electricity production in New South Wales did not include any mention of the need to have dollars with which to buy American electricity equipment for that State. Usually American electrical equipment is manufactured on a different basis from that of such equipment manufactured in Australia. It generally runs on 60 kilowatt cycles as against our 50 kilowatt cycles. I have had my doubts at all. times on this matter. I know that certain things have happened behind the scenes, and that when these package units were being sought in the United States of America, Mr. Condé. the New South Wales Electricity Commissioner, went there and tried to obtain urgent delivery of them. He got his urgent delivery and, if I am any judge, an investigation would show that Mr. Conde committed himself to purchase the 75,000-kilowatt machine in the United States of America as a quid pro quo for the supply of the package units, which are not yet in service in this country. It is because of that commitment that Mr. Cahill has been making a great effort to obtain the dollars for the 75,000-kilowatt machine.

The Government and the Prime Minister were given to believe that this equipment could be obtained only in the United States of America. It is a most extraordinary fact that as recently as 1948 or 194!9 Mr. Cahill himself refused to give permission for the placing of an order for the supply, by United Kingdom manufacturers, of two machines that would have produced 100,000 kilowatts. The tenders for the supply of those machines had already been received by the Sydney County Council. The position regarding the requirements of power plant in New South Wales is extraordinary. This year, apart from the package units, which produce about 60,000 or 80,000 kilowatts, two machines to produce between them 100,000 kilowatts will be installed in New South Wales. Next year plant to generate 100,000-kilowatts is to be installed. Those machines are now on order. Machines to produce 130,000 kilowatts are on order for delivery in 1954. For 1955, which is the date mentioned by Mr. Cahill for delivery from America. Machines to produce another 460,000 kilowatts are on order, or in the course of delivery from the United Kingdom.

Mr Costa:

– I rise to order, Mr. Speaker. Does a discussion of the power position in New South Wales come within the scope of the bill?


– I understand that the bill concerns dollars and the use to which they will be put. Certainly this Parliament has no control over the New South Wales Government, but I think that the honorable member for Bennelong (Mr. Cramer) is, so far, in order.


– I point out to the honorable gentleman that I am discussing matters that are dealt with in the first schedule to the bill. Among the New South Wales power stations mentioned in that schedule are Balmain, Pyrmont, White Bay, Bunnerong, Lake Macquarie, Wallerawang, and Tallawarra. The machinery that I have mentioned is on order, or in course of delivery, and will produce a total, apart from the package units, of 790,000 kilowatts. So all this press publicity about this matter is complete eyewash. It is wrong to say that the equipment required in 1955 for the generation of electricity in New South Wales cannot be obtained from sterling sources. I emphasize that, because the statements that have been made about the sources from which plant may be obtained are not consistent with the facts. I repeat that, in 1949 Mr. Cahill refused permission to the Sydney County Council to order sterling area plant to produce 100,000 kilowatts, which was intended for installation at Lugarno. He also refused the Balmain company’s electricity undertaking, before it had been taken over by the State Government, permission to order a 50,000 kilowatt machine from the United Kingdom in 1948 or 1949. The machines for the purchase of which he refused permission would have produced 150,000 kilowatts. Yet, after having refused permission for the purchase of that machinery from the United Kingdom only a few years ago, he now contends that such machinery is not available from a sterling source.

Mr Costa:

– It cannot be obtained quickly enough.


– Not quickly enough !

Sitting suspended from 1245 to 2.15 p.m.


– Notwithstanding the frequent statements that the United States of America is up to date in the deliveries of power equipment and that it is therefore a good market from which to order the 75,000-kilowatt machine, it is true that delivery of the package units to which I have referred is behind schedule. It is also a fact that the New South “Wales Government is behind with its schedule for the installation of such units. When one examines closely the proposed expenditure of 13,000,000 dollars on package units, and the panic in New .South Wales which led to the order being placed, it will be found that a great waste of dollars has occurred. I hope that this Government will not make a second error in this connexion. In my opinion, dollars have been wasted because package unit plant is not efficient from the point of view of the cost of production of electricity by it. As I have already stated, this plant is not equipped to burn coal; it uses oil at the present time. New South Wales will be burdened with such plant for many years.

If the New .South Wales Government’s handling of electricity matters is investigated, I suggest that highly suspicious circumstances will be found to exist. The correspondence tabled in the House yesterday by the Prime Minister discloses that the first request by the New South Wales Government was for twenty million dollars for the purchase of two machines from the United States of America. It is not generally known - I do not think that even this Government is aware of the fact - that one of those plants was destined to be erected at the works of the Balmain Electric Light Company in Sydney. That is the company which the New South Wales Government is in the process of purchasing, by means of an act of parliament which was passed when that Government set out to socialize electricity undertakings in that State. I have spoken of this subject previously in other places. In my opinion, the whole transaction is highly suspicious. There is no doubt that one reason for the proposed installation of an American unit in the Balmain company’s works was the desire to build up the asset value of the company before the New South Wales Government acquired it. The question of the price which should be paid in accordance with the act passed by the New South Wales Parliament was referred for decision to Mr. Justice Sugerman, of the Land and Valuation Court. Strangely enough, Mr. Justice Sugerman is not now proceeding with that matter, although no explanation has been given of the discontinuance. I think investigations should be made concerning the identity of the principal shareholders in the Balmain company. There is no doubt that Mr. Conde, who is now the New South Wales electricity commissioner, was the general manager of the company and resigned from that position under public pressure because he was playing the dual role of general manager of the company and electricity commissioner. I do not wish it to be taken from my words that I am casting aspersions on Mr. Conde personally, for whom I have a high regard. I merely contend that certain aspects of this matter are highly suspicious.

The Premier of New South Wales, Mr. Cahill, has stated that he wishes to purchase plant from the United States of America on a “ turn key “ basis, which means that he desires to import not only the equipment but also the labour and materials. That seems to me to be most inconsistent with the frequent assertion of the Australian Labour party that there is a great deal of unemployment in this country. I cannot see why, in those circumstances, a Labour government should wish to import labourers and other people into this country, and to pay them in dollars. I should like Mr. Cahill to inform this Government, when it is considering the New South Wales Government’s application for dollars, of the reason for his cancellation of orders which had been placed in the United Kingdom for machinery for the installation of which the Sydney County Council had made preparations at a cost of £20,000.

Mr Haylen:

– I rise to order. This bill concerns a dollar loan. The honorable member for Bennelong (Mr. Cramer) has consistently discussed the circumstances in which a particular application for dollars has been made. Whilst the scope of the bill is extremely wide, I submit that the honorable gentleman is out of order in doing so.


– Order ! Every honorable member is entitled to discuss this matter in his own way. As long as the honorable member for Bennelong discusses the way in which dollars may be expended, he will be in order. Any other honorable member who has a particular person or instrumentality in mind will he equally in order.

Mr Haylen:

– Am I in order, Mr. Speaker, in rising to a point of order because of the honorable member’s tedious repetition?


– Not at the moment, but I shall bear the honorable gentleman’s suggestion in mind.


– It is true that I discussed this matter generally prior to the suspension of the sitting, but I wish now to deal with a particular aspect of it. Honorable members may remember that I was prevented from doing so when the Estimates were being discussed.


– Order ! The honorable gentleman cannot discuss the Estimates, which were dealt with in committee, when I was not present.


– I should like Mr. Cahill to explain why orders for equipment were cancelled after the Sydney County Council had expended £20,000 on preparatory work for the installation of a new power plant at Lugarno, on George’s River. I should also like him to explain why he has asked certain people in the United Kingdom, from whom power machinery has been ordered, to delay delivery of such machinery; Despite that request, he now asks this Government, as a matter of urgency, to allocate to the New South Wales Government 10,000,000 dollars for the purchase of power machinery in the United States of America.

Mr Haylen:

– From what State does the honorable member come?


– This electricity business is a “ hot “ subject in New South Wales. In fact, I myself have incurred a little blame in connexion with it.

Mr Haylen:

– The plant was not very hot when the honorable gentleman was in charge of it.


– Order! I shall he willing to hear the honorable member for Parkes (Mr. Haylen) at a later stage.


– I, personally, have had nothing to do with this subject in New South Wales f or the last three years and during that period the Government of that State has had plenty of time to deal with the problem of the provision of electric power. The facts with respect to power plant in that State make interesting reading in the light of the request that the New South Wales Premier has just made to the Australian Government. Four units, each with a capacity of 50.000 kilowatts, were ordered from the United Kingdom for the Pyrmont power station in Sydney. The first unit has just been put into operation. The second machine, the installation of which was held up by the State Government for fifteen months after the order for it had been placed, was due to he put into operation in August, or September, of this year. The third machine, practically the whole of which has arrived in Australia, is expected to be installed by December, 1953.


– Order ! The honorable member’s time has expired.

East Sydney

.- The honorable member for Bennelong (Mr. Cramer) devoted the whole of his time to an explanation of what the Premier of New South Wales, Mr. Cahill, has done to overcome power difficulties in that State, and the relationship between dollar expenditure and the acquisition of power plant. If the honorable gentleman had delved a little more deeply into the history of the subject, he would have been obliged to admit that the present difficulties in that State have arisen because of his own ineptitude when he was chairman of the Sydney County Council. In that capacity, he had not sufficient foresight to make provision for the State’s future requirements of power plant. It is due to his failure to plan ahead that the New South Wales Premier is now confronted’ with the difficulties that he mentioned. The honorable member never misses an opportunity to raise this subject in the House. If he had not done so on this occasion, he would not have had anything to speak about, because it is obvious that he does not know very much about the International Monetary Fund or the International Bank for Reconstruction and Development. In his opening remarks, he said that we needed dollars for developmental works and also for war preparations. If he knew anything about the stated objectives of the bank he would know that it has expressly determined that dollars that it makes available shall be used not for purposes of war preparations or defence activities, but must be devoted exclusively to financing development in backward countries.

The fears that I expressed in this House some years ago with respect to the agreement under which Australia became a member of the International Monetary Fund are now materializing. This is not an ordinary loan. The Australian Labour party is opposed to overseas borrowing; but, at the same time, it recognizes that in certain special circumstances equipment required for developmental works might have to be procured from overseas and that it would be necessary to establish credits, either by trade or by way of loans, in order to pay for it and thus ensure that such works could be proceeded with. In the past, when the Australian Government sought a loan overseas, the money was made available by investors to Australia as a country that they considered to be creditworthy and the Government had the right to determine how the money should be expended. But that is not what will happen under this measure. The title of the International Monetary Bank for Reconstruction and Development is a misnomer. It may be true that many nations have contributed to the capital of the International Bank. Nevertheless, the bank is just as much an instrument of Wall-street as if its title were the United States Bank, because the United States of America dominates it. Financial interests in that country determine what the bank shall do and in which fields it shall operate. Whilst I am in general opposed to borrowing overseas unless it is absolutely impossible to avoid taking such a cause, I am prepared to support such a proposal. However, I strenuously object to the aim of the bank which is to determine our internal affairs and to control the economy of this country. That is what the bank really aims to do and, unfortunately, Government supporters refuse to face up to that fact. Judging by the remarks that the honorable member for Bennelong has just made, any one would imagine that dollars that are made available to the Australian Government are used exclusively for the purpose of financing our essential developmental requirements, but as a matter of fact the Government is unable to produce any evidence that dollars which Australia has earned by trade or which it has obtained by loan have been used exclusively for those purposes. Recently, I asked the Treasurer (Sir Arthur Fadden)- what proportion of the advances made from the International Monetary Fund and the International Bank for Reconstruction and Development had been utilized for the purpose of meeting the essential requirements of this country. I was not surprised when I received the following reply: -

The dollars purchased from the international monetary fund are merged with other dollar receipts and it is not possible to identify the .particular items of expenditure met by dollars drawn from the fund.

Where is the evidence that dollars are being used exclusively for essential developmental works? Members of the

Opposition have addressed numerous questions to the Government on this matter, but have so far been unable to elicit such information.

Let us look at some of » the amazing provisions that are contained in this measure. What the overseas financial interests are aiming to do through the International Bank for Reconstruction and Development is to dominate the internal affairs and economy of this country. This is not the first occasion on which such interests have made an attempt of that kind. As far back as 1930 we had a visit from the international financier, Sir Otto Niemeyer. The right honorable member for Bradfield (Mr. Hughes) will recall that occasion, because he published a pamphlet entitled “ Bond or Free “, in which he dealt with the objectives of the international financial group and showed how it was trying to dictate to the Australian Government the kind of economy that should be established in this country. Evidently those interests learned a lesson from that experience because, to-day, they are attempting to achieve their objectives not openly but by resorting to subterfuge. They are now using different methods from those they used in 3930. Some little time ago, the Government set up the National Security Resources Board, which is supposed to advise it on what industries should be permitted to expand and what industries should be completely eliminated. However, the Parliament is never informed of what that board is doing and is never given any information about the recommendations that it makes to the Government. Through capital issues control the Government has the power to determine that certain industries shall be permitted to continue and that others shall be eliminated. Whilst members of the Opposition object strongly to the Government’s financial policy and take every opportunity to indicate the dangers of that policy from the point of view of the community, at the same time we recognize that the decisions are made and implemented by an Australian Government and, therefore, may be reversed in the future. What we strongly criticize, however, is that this Government is quite apparently being used as the mouthpiece of overseas interests to carry out the desires of the latter and not to implement policy that the Government itself determines.

There are to be many dollar loans, and this measure deals with only the second of them. The loans are to be made avail-able over a period of five years and, possibly, that period may be extended. The more we borrow overseas the’ more we sacrifice the independence of Australia and the right of this nation to act independently, because the more we get into the hands of overseas financial interests the greater will be their power to control our domestic policy. The Treasurer said that we had the capacity to meet these repayments and all charges arising from the loan. That may be so, but if we continue to borrow dollars, an unusually heavy strain will be placed upon our financial resources which will eventually jeopardize our ability to repay the loans and meet the interest charges upon them. As the honorable member for Melbourne (Mr. Calwell) has pointed out, the United States of America does not encourage trade with other countries. It is continually placing obstacles in the way of nations desirous of sending goods to the United States of America for sale. The Minister for Commerce and Agriculture (Mr. McEwen) told us recently that an experimental shipment of Australian meat had been sent to the United States of America, but that the scheme had failed. The results were not what the Government had. expected. The Minister said that it would be necessary now to turn back to the United Kingdom as our main outlet for our surplus primary products. So that we may be sure of being able to repay this loan and the interest charges upon it, the Government should be seeking from the United States of America a guarantee that that country will be prepared to accept certain quotas of our surplus primary products so that we may earn dollars. The Government has not obtained any such guarantee. The position that we may ultimately have to face is that if we are unable to meet our commitments except by sacrificing 01.1.r uranium deposits to the United States of America, which no doubt is most keen to secure control of them, that country eventually will control a commodity which, in addition to being a prolific earner of dollars, is in my opinion, vital to our future.

Let us examine the Government’s claims. We are told that the use of dollars will be restricted to the importation of essential equipment that is not manufactured in Australia and is unprocurable in the sterling area. I read in the press recently that a Victorian factory engaged in the manufacture of tractors had been compelled to close because of a lack of orders; yet listed amongst the equipment that may be purchased with dollar funds are agricultural tractors!

Mr McMahon:

– Of a different kind.


– I have yet to be satisfied on that point. I am very much afraid that the Government is aiming, by facilitating the purchase overseas of equipment that can be produced in Australia and so destroying or restricting our secondary industries, to turn Australia into an agrarian nation. Perhaps the Minister for Air (Mr. McMahon) can tell me what kind of plough it is that cannot be manufactured in this country, and may be imported. This is merely a device to get the Australian public to accept the Government’s claim that a dollar loan is absolutely essential.

When I claimed that the International Bank for Reconstruction and Development wanted to exercise influence over our internal economy, dissenting interjections came from the Government benches. I invite honorable members opposite to turu to the first schedule to the bill and to give us their interpretation of Article VI., which begins -

If any event specified in paragraph (o) or (6) of Section 5.02 of the Loan Regulations should occur and continue ….

The article proceeds to say that, in such circumstances, the bank may decide whether it shall demand immediate repayment of the bonds that are to be issued under this loan. That is a power that could be exercised over the Australian Government. Section 5.02 of the loan regulations sets out a series of events, one of which is - (<Z) an extraordinary situation shall have arisen which shall make it improbable that the Borrower will be able to perform its obligations under the Loan Agreement.

One can understand action being taken if a government defaults in the repayment of a loan or in meeting interest charges, but the provision that I have quoted will enable the bank to act if it considers it to be improbable that a borrower will be able to meet its obligations. In such circumstances the bank may demand immediate repayment of its advances. There is no need for me to stress how that great power could be exercised over the Australian Government. The measure does not specify what is meant by “extraordinary situation but the president of the bank, Mr. Eugene Black, could decide, for instance, that if the Australian Government were to increase its expenditure on social services, it would probably be unable to meet the interest payments on its dollar loan. He could argue that an extraordinary situation had arisen which was likely to endanger the ability of the Australian Government to meet its commitments to the bank. It is clear, therefore, that under this measure the bank will possess very great power to influence the internal economy of Australia.

Prior to becoming president of theInternational Bank for Reconstruction and Development, Mr. Black was associated with a Wall-street bank. He. was also associated with the United States Federal Reserve Bank scheme throughout its history. He is just as much an instrument of Wall-street to-day as he was when he occupied his former position and it is clear from what he has said that the International Bank for Reconstruction and Development interests itself not merely in whether a country is credit worthy, but also in the internal, financial and economic policy that is being pursued in that country. Not long ago, Mr. Black said that two British Commonwealth countries were living beyond their means. In his opinion they were doing much more in the field of social services than their economies could stand. Although he did not name those countries, he was clearly referring to Australia and New Zealand, both of which at that time had Labour governments. If he was merely a banker whose only interest was in making advances to credit-worthy nations for developmental works, our internal economy was none of his business, and he had no right to concern himself with what we were doing in the field of social services. Honorable members opposite who differ with me on this issue clearly believe that there is nothing wrong with putting the International Bank in a position to exercise influence over Australian affairs. But let us examine another provision of the bill in which I am sure the Australian public will be interested. Here is another example of interference with the internal working of Australia’s economy. Article V. of the first schedule states, under the heading “ Particular Covenants “ -

  1. The Borrower shall, within the limits of its constitutional powers, cause the carrying out of the Programs to proceed with due diligence and efficiency and in conformity with sound engineering and financial practices.

Can honorable members opposite tell me how the manner in which the Australian Government proposes to finance its own developmental works can possibly be regarded as the business of any authority other than the Australian Government itself? Quite obviously Mr. Black would regard as sound financial practice only adherence to the system under which banking is in the hands of private enterprise. If a Labour government were to decide to use some treasury-bill finance in its national works programme, no doubt, according to Mr. Black that would be unsound financial practice, and the International Bank for Reconstruction and Development would express its disapproval to the Australian Government. There are many directions, therefore, in which the international bank proposes to interfere with the administration of the Australian Government. It, for instance, specifies the works upon which loan funds, are to be expended. In my opinion, if we have truly responsible government in this country such decisions should be made by the Australian Government.

Mr Bowden:

– So they are.


– Indeed ! Let us examine that statement. Let me turn, for the purpose of testing the honorable member’s theory, to page 7 of the bill. There we find that the bill provides that the development of the Callide open-cut coalfield shall be by private operators. What right has the International Bank for Reconstruction and Development to dictate to Australian governments that Callide coal shall be developed by private operators? The method of developing our coal-fields is a matter to be decided in this country, and it certainly should not be a matter for decision by the International Bank for Reconstruction and Development or Mr. Eugene Black. If the Queensland Government needs financial assistance to develop the open-cut coal-fields at Callide as a purely government undertaking, the decisions as to whether it should get finance is purely one for the proper authorities in this country. We should not commit Australia to the development of these deposits of coal by private operators.

We are expected to advise the international bank of our internal financial and economic conditions at any time. In the past, many loans have been raised in the United Kingdom and in other countries, and they have helped to develop Australia. But never before has there been any evidence of an organization of international financiers coming out into the open and demanding, as its right, to be furnished periodically with reports as to the internal financial and economic condition of Australia. If these financiers want to examine whether this country is credit-worthy, they have other means of doing so. It has been said that this loan could he used to purchase goods in the sterling area as well as in the dollar area. But, and this is the important point, it could be so used only with the approval of the international bank. That is because the bill provides for the advance of dollars to Australia, and money can be advanced in currencies other than American only with the approval of the bank. In any case, if we are able to secure much of our required equipment from the sterling area, why is there any necessity for a dollar loan of such dimensions? Within the sterling area Australia has ample credits to provide itself with all the equipment that it needs and can secure from such a source.

The honorable member for Bennelong (Mr. Cramer) spent most of his allotted speaking time in castigating the Premier of New South Wales. He argued that Mr. Cahill’s request for dollars was quite unnecessary because the plant that he required could be obtained in Prance. If that is so, why is it necessary to provide by this measure that dollars shall be advanced for the purpose of securing the equipment necessary to produce further quantities of electric power if that equipment can be obtained in Prance or the United Kingdom ? Why do we not secure it from the sources where we have no financial difficulties similar to those that we face in dollar markets? The honorable member for Bennelong supports a measure to provide dollars to secure necessary generating equipment from the United States of America, but when the Premier of New South Wales logically says that as plant is urgently required in that State, dollars much be provided for its purchase, the honorable member opposes the application for the dollars and argues that the plant can he purchased in France. 1 suggest that the honorable member’s argument is quite inconsistent. Australia is required to pay in dollars the interest and charges on this loan. If the bank should approve of Australia drawing currencies other than dollars so that it can buy equipment in non-dollar areas, when the time for repayment of the loan falls due it will have to be repaid in the same currencies as those in which it was issued. When Australia decided to repay such a loan to the international bank it would not be able to repay it at the existing exchange rates, because the conditions of repayment are laid down specifically. Any such loan must be repaid in the same currency as the original advance. Moreover, the value of the currency at the time of repayment is to he determined by the International hank. Also, should the Australian Government discover that it can secure certain equipment in its own territory, it would be proscribed from drawing on this loan for such equipment. What effect will this loan have on Australian industries? Great secondary industries have been built up in this country, and even the Minister was compelled to admit that our industries had expanded tremendously. He said -

Apart from labour and materials, Australia now manufactures a (rood deal of its own requirements of capital equipment. The range of Australian production is, however, far from complete, and must be supplemented by imports of capital goods from overseas. Much of the equipment required to be imported can be obtained from non-dollar sources.

So even the Minister is compelled to admit thai there are still great possibilities of expansion of our capital equipment industries to meet our commitments for works programmes inside Australia. But I. have no doubt that the Government is setting out, at the instigation of the International Bank for Reconstruction and Development, to alter that position. Surely the honorable members do not imagine that Mr. Eugene Black and his officers visited Australia some few months ago for the good of their health. When we tried to question the Prime Minister (Mr. Menzies) about the discussions that the Government had with the international bank’s officers, the decisions that were reached and whether any records of the discussions and decisions had been kept, the Prime Minister admitted that notes were taken of the interviews that Australian Ministers had had with the bank’s officers, but he refused to make them available to the Parliament. He will not even tell us the subjects of discussion or the decisions that were made, because he is afraid that if such decisions were made known to the people they would be so shocked and astounded that they would not wait for the next general election but would cast this Government out of office .immediately. The Government has set out to destroy Australian secondary industries, and it is proposing to bring to this country, by means of these various overseas commitments, a large quantity of equipment and other materials that could be produced if not immediately, then in the future, by Australian industry. This Government has decided in a policy to make Australia an agrarian country. The Government wants it to be not a great industrial country but a , dependent country - dependent on manufacturing sources overseas and on the international financial ring. I noted that amongst the equipment that the Government proposes to bring to this cOUntry is that designed to increase our capacity for petrol refining. Yet, while the Government claims that it is necessary to extend our refining plant for the production of petroleum, it pro poses to sacrifice Australia’s interest in Commonwealth Oil Refineries Limited, which gives us some power at least over this important matter. Because the Standing Orders permit me to speak for only half an hour, I must conclude my speech very shortly. Therefore, I say finally that in 1947 when this Parliament quite foolishly ratified the Bretton Woods Agreement, entered the International Monetary Fund, and became a partner in the International Bank for Reconstruction and Development, I expressed the belief that the Australian people would live to regret that decision. I am convinced that they will. Whether we are Liberal party, Australian Country party. Labour party or Communist party supporters, every Australian of any consequence, every decent Australian, believes that any decision affecting our economy or livelihood should be made in this country by whatever government is in power and that we should not sacrifice our independence to any group of international financiers. So that the Government’s policy shall not proceed very far, I hope that the time is not far distant when a general election will be held and the people will get an opportunity to deliver judgment on the Government’s actions. I am satisfied that when that time arrives the people will declare for n free Australia and will reject the Government that is sacrificing our independence.

Minister for External Affairs · La Trobe · LP

.- This bill seeks the approval of the Parliament for the borrowing of 50,000,000 dollars from the International Bank for Reconstruction and Development. Its fate will not depend upon, nor will the cause of honorable members on either side, of the House be served by, loud-mouthed, street-corner ranting on strictly party political lines. The matter that we have to decide is whether a loan of this type, and of this size, is in the interests of the Australian economy and the people.- Such a matter cannot be decided by party political speeches delivered in a loud voice.; it can be decided only on the basis of an analysis of the needs of Australia for overseas money. Figures relating to the savings and spendings of this country are available to us. In order to decide whether outside borrowing is necessary or useful we must examine those figures which are readily available to us in the Department of the Treasury and at the office of the Commonwealth Statistician. If I am permitted simply and briefly to analyse the Australian economic situation from the developmental stand-point I shall do so by pointing out, first, that national savings constitute a single pool from which all the operations of the private and public sectors of the economy are financed. They may be described broadly as the difference between the day-to-day expenditure of the Australian people and the amount they earn during the year. Figures relating to these matters have been compiled by Commonwealth Statisticians for many years. I shall not cite the figures for this year, or for previous years, because they are available in the office of the Commonwealth Statistician. Great reliance is placed upon them. They reflect the total savings of individuals and companies throughout Australia. The total varies from year to year. National spendings on developmental matters are also calculated and recorded after the close of each financial year.

There are two sectors of our economy, the private and the public sectors. In the private sector, developmental moneys are handled by every farmer, every pastoralist, every company and every person in charge of an industry in Australia. Broad figures relating to expenditure on nongovernmental housing, on motor cars and trucks for business purposes, on the expansion of farms and the extension of factories, and on the purchase of equipment, are calculated, recorded and published each year, as also are figures relating to national spending on the private sector of the economy. Expenditure on the governmental or public sector of the economy, is calculated from the records of government loan money spending. When loan moneys are expended by the Commonwealth - no such expenditure is at present being incurred - by the State governments and by semi-government institutions and the like, the relevant figures are channelled through the Australian Loan Council and become known to the Treasury and the Commonwealth Statistician.

Evidence of the fact that Australia is now short of developmental moneys is to be seen all round us. Because of lack of loan funds, hospitals are unable to carry out much needed extensions and semigovernment bodies cannot carry out their activities. “We all know from the reports published in the press that in spite of the large amounts of developmental moneys made available to the State governments by the Australian Government, they are in difficulties. “We know, for instance, that work on the Eildon “Weir has had to be curtailed and that work on other government projects in Victoria and the other States, has been held up. There is a very simple reason for that. Australia’s national savings are totally inadequate to meet requirements. I could substantiate that statement by citing the relevant figures, but it should not be necessary for me to do so in a debate of this kind. I assure honorable members that there is a gap of several hundred millions of pounds between the purposes for which moneys are needed in Australia to-day and the pool of savings, which is the only pool from which such spendings can be financed. If the State governments were given all the moneys they require for developmental purposes, and if private industry, or what I have described as the private sector of the economy, obtained all the money that it required, the gap would run into several hundred millions of pounds.

Such a state of affairs is not uncommon in a country that is still in the developmental stage. Australia, which is still in that stage, has always been capital-hungry, as, indeed, every country which is still in the developmental stage must be. That is true of New Zealand, Brazil, India, Pakistan, Burma and a great many other countries the economies of which are not static, but whose natural resources enable their economies to expand. Australia is, par excellence, a country in the developmental stage and is equally a country that has always been capital-hungry. In past years this capital-hungriness, this need for developmental moneys in excess of our national savings, has been satisfied by the proceeds of government’ loans floated overseas, and by the influx of private enterprise money for investment in primary and secondary industries. Prom these sources money has come to Australia in past years at the rate of tens of millions of pounds a year - sometimes at the rate of hundreds of millions of pounds a year - thus closing the gap between national savings and the legitimate developmental purposes on which savings have been expended. But at this time, for obvious reasons, we are not obtaining a normal flow of loan money or private enterprise money from abroad. The Mother Country is economically in a difficult situation. It has not the capital to spare in these early 1950’s as it had in the 1930’s, or in the years before World War I., when out of its vast resources it financed onehalf of the developmental projects of the world. Unfortunately, those times have passed and to-day Great Britain cannot, except to a relatively small degree, help Australia with developmental moneys, either loan or private enterprise moneys, All the great democracies are re-arming for the “ lick of their lives “. Their rearmament programmes are vastly expensive. The United States of America is spending on its rearmament programme the equivalent of thousands of millions of pounds a year. Money from the United States of America, Canada and Great Britain is not available to Australia, except in relatively small amounts. While the great world rearmament programme is in full swing we are not likely to obtain developmental or other loan moneys on a large scale from abroad. If we wish to fill the gap between savings and developmental expenditure we must seek the requisite money from the few sources from which it can be obtained. Two or three years ago, the Prime Minister (Mr. Menzies), to his very great credit, obtained for us 100,000,000 dollars from the International Bank for Reconstruction and Development. On this occasion he has been successful in obtaining for us from the same source an additional amount of 50,000,000 dollars. We are now debating the question whether such n loan is good or bad for Australia as a whole. I unhesitatingly say, “ Thank heaven for it “. It is not a large amount ; it will not go far to fill the gap between savings and necessary developmental expenditure, but it will go some part of the way, and for that fact, thank heaven! Those who say that we should manage without resort to overseas borrowings have not taken the elementary trouble to have even one juvenile look at the Australian economy and our developmental needs. Thank heaven for this additional loan, even though it be but a fleabite compared with our real requirements! “We can spend hundreds of millions of dollars a year fruitfully in this country. There is no more effective fertilizer in the world than money well expended in a country like Australia that has vast undeveloped natural resources. I could substantiate my statements by presenting detailed figures, but I am sure that honorable members will take for granted the fact that they are strictly in accordance with the figures that have been supplied to me by the Treasury and the Commonwealth Statistician.

The honorable member for East Sydney (Mr. Ward) launched his usual diatribe against the United States of America. I do not believe for a moment that some of his statements will be reported in that country because, fortunately, they will be assessed at their true value by the international press agencies. The honorable gentleman is gravely mistaken if he believes that he does a service to Australia when he makes crude, untruthful and insulting statements about the United States of America and its senior public servants in the International Bank for Reconstruction and Development. In fact, he does Australia a very grave disservice. I shall not bother to analyse his entire speech, because it was so full of calculated misstatements that it is not worth discussing. However, I shall deal with his comments on the subject of tractors. He affected to believe that we could make all the tractors that we need in Australia. We can, of course, produce all the small and medium tractors that we require. I should think that every child in the street must be aware of that. But surely the honorable gentleman knows that tractors of 45 horsepower and over are not made in Australia and cannot be manufactured here economically. A large market must be available before the production of such tractors can be carried on profitably. Those are the .tractors that we are ob taining from the United States of America, which is practically the only source of supply available to us. In fact, the proposed 50,000,000 dollar loan will be used entirely for the purchase from the United States of America of goods and equipment that cannot be obtained from other countries. The Government will continue to obtain uss much equipment as possible from Great Britain and other soft currency countries. Even with the help of the proposed loan, our dollar situation- will remain critical. We shall have to continue to exercise the utmost possible economy iri the expenditure of the dollars. That is an obvious necessity.

Is there any alternative to the borrowing of this money? It may be said that the Government can resort to central bank finance. I need not discuss the merits or demerits of the raising of funds by the issue of treasury-bills. We are forced to make use of treasury-bills in war-time to the amount of hundreds of millions of pounds because the force of circumstances then obliges us to manufacture money without any solid backing, which, of course, leads to inflation. But, in times of so-called peace, central bank finance should be used only with the greatest possible caution. The Government is using treasury-bills now, but to a limited degree only. If it sought to compensate for the deficiencies of the loan market and taxation revenue by issuing treasury-bills, it would merely add fuel to the flames of inflation. Therefore, we cannot solve our problems by resorting to central bank finance. Taxation cannot provide us with sufficient money for developmental purposes. I think it is generally agreed that tax rates are already at such high levels that it would be most unwise to raise them further. The proceeds of loan raisings in Australia, as we know, are unequal to the task of financing developmental works for the simple reason that the savings of the people are insufficient to enable them to provide funds for private developmental undertakings as well as to contribute generously to loans raised for the purpose of financing ‘ public undertakings. We cannot force the people to subscribe to loans if they do not wish to do so. Therefore, w,e cannot provide sufficient funds for development by means of taxation, public loans, or the use of treasury-bills. There are no other domestic sources from which we can obtain money. Therefore, overseas borrowing is the only method that we can adopt for the purpose of financing legitimate developmental projects. These propositions, which have been well stated already by the Treasurer (Sir Arthur Fadden), are incontrovertible. Therefore, I believe that the Opposition has engaged in criticism of the bill solely for party political purposes.

I shall refer briefly to the International Bank for Reconstruction and Development. This bank is not an American institution. I say that at once for the enlightenment of certain honorable members opposite who appear to be labouring under a misapprehension. It is an international bank in the true sense. Australia, New Zealand, Canada, Great Britain, and a host of other countries, as well as the United States of America, have subscribed its capital. It happens that the United States of America, as the biggest and most powerful country in the world, has subscribed a large proportion of that capital. I have considerableknowledge of the activities of the bank in India, Pakistan, Ceylon, Thailand, Brazil, and many other countries to which Australia is linked by ties of common interest. The hank has contributed greatly to the peaceful resurgence of the economies of the democracies as a result of the lending policy that it has adopted during the last few years. It has enabled countries that could not have obtained capita] for developmental purposes without its assistance to strengthen their economies and to carry out vast water supply and irrigation, transport and harbour works. Every request for assistance that is made to the bank is closely examined in order to ensure that the proposed works are of an economic character.

The International Bank for Reconstruction and Development is not an eleemosynary institution. It is managed on business-like lines, and every proposition that is submitted to it is carefully examined, to ensure not only that it is sound, but also that the applicant country will be able to service the loan and repay it in due course. Thus, each loan is strictly a business transaction. Many great developmental works Iia ve been undertaken with the aid of the bank. Under the leadership of Mr. Eugene Black, who has been subjected to such a tongue-lashing by the honorable member for East Sydney, the bank is doing a great service to the world. Australia is a member of the sterling group of countries, and honorable members know that the sterling area is fighting for its very existence at present. They are aware of the state of its resources of gold and dollars. Every effort is being made by each member of the group, including Australia, to conserve dollars and to earn- dollars. Our efforts help not only our developmental projects but also our fellow members of the sterling group. The raising of the proposed loan will represent the addition of 50,000,000 dollars to the dollar resources of the sterling area as a whole. It is obvious to anybody who has given an hour’s thought to this matter that if the bill is considered on its merits, and not made the subject of political catch-cries and cat-calls, this loan is in the interests of Australia’s future economy. We have heard some loud-mouthed street-corner talk, but I do not ‘believe that there can be any intelligent opposition to the measure, and I hope that it will be given a speedy passage by the House.


– The Minister for External Affairs (Mr. Casey) has not made clear one or two of the probable effects of the proposed loan. If I interpreted his remarks correctly, he attempted to dissect the public and private sectors of the Australian economy. In the first place, the proposed loan differs from the ordinary loans that are negotiated by a government. As a rule, a loan that is negotiated by a government is used exclusively for governmental purposes. Although the proposed loan has been negotiated by the Australian Government, a portion of it will be available for private expenditure by individuals on undertakings that are deemed to be of national importance. I join issue with the Minister about the probable effect of the proposed loan on the Australian economy, and the manner in which it has been negotiated. It is extraordinary, in that the method of its flotation differs very much from the methods that were applied by Australia when borrowing money from overseas 30 or 40 years ago. Ostensibly, there is to be a borrowing of 50,000,000 dollars, although the full amount will not be borrowed immediately. As dollars are drawn, an equivalent amount of Australian currency will be taken out of the Australian spending stream and placed in the National Debt Sinking Fund. Depending on what will be done, or not done, with the Australian currency there will be an inflationary or deflationary effect on that currency. The Treasurer (Sir Arthur Fadden) has stated that an automatic sinking fund will be established by placing in the National Debt Sinking Fund an amount of Australian currency equivalent to the dollars that have been drawn. Therefore there will not be a new influx of capital into Australia as a result of the proposed loan. The Treasurer stated during his speech on the motion for the second reading of the bill-

As each drawing against the loan is made .

I repeat, that the 50,000,000 dollars will not immediately become available. I remind honorable members that about 30,000,000 dollars of the loan of 100,000,000 dollars that was negotiated in October, 1950, have not been drawn.

Mr Casey:

– But all the dollars have been allocated.


– Although import licences have been allocated up to the full amount of that loan, about 30,000,000 dollars has not yet been expended. J” shall make some further comment about the method by which dollars will be drawn under the proposed loan, because I consider the schedules to the bill to be somewhat mysterious. The Treasurer dealt only with the substance of the bill. He made no reference to the schedules.

Mr Ward:

– Perhaps the right honorable gentleman has not read them.


– The Treasurer continued - the Consul-General- presumably in the United States of America - will arrange for the remittance of the funds to the credit of the Australian Government with the head office of the Commonwealth Bank in Sydney. In effect, this will mean that the dollars would be transferred by the Government to the Commonwealth Bank, in exchange for a credit in Australia of an equivalent amount in Australian currency. Thus, the dollar holding of the Commonwealth Bank, which will initially have been depleted by the payments made from loan goods, will be replenished periodically.

I consider that this aspect of the matter should be clarified. Letus assume that Australia wished to draw the first 5,000,000 dollars. Apparently we should not receive those dollars until we had earned 5,000,000 dollars in the normal course of trade. Then, because we had in fact earned the dollars, the International Bank would advance to us an equivalent amount. In other words, the rate at which our drawings will be made from the proposed loan will be determined by Australia’s trade with America. This appears to be a very convenient arrangement to tie Australia’s trade to the American economy for a number of years. That may be either a good thing or a bad thing.

I shall refer now to the somewhat mysterious references to bonds in the schedules. Section 4.01 of Article IV. of the first schedule reads -

The Borrower- meaning the Australian Government, directly or indirectly - shall execute and deliver Bonds representing the principal amount of the Loan as provided in the Loan Regulations.

Article III. of the second schedule, relating to loan regulations, contains a definition of the currencies in which the loan may be withdrawn. Section 3.01 of that Article provides -

  1. . For the purposes of this Article, a Loan denominated in a specified currency or the equivalent in other currencies shall he deemed to be denominated in such specified currency.

It is very difficult to understand these various provisions. I turn now to Article VI. of the second schedule, Section 6.01 of which reads -

Delivery of Bonds. - The Borrower shall execute and deliver Bonds- again, the Borrower is the Australian Government - representing the principal amount of the Loan as hereinafter in this Article provided.

Section (5.02 refers to repayment. Section 6.03 reads -

Time of Delivery of Bonds. - If and as the Bank shall from time to time request, the Borrower shall, within sixty days after the date of the request, execute and deliver to or on the order of the Bank Bonds in the aggregate principal amount specified in such request, not exceeding, however, the aggregate principal amount of the Loan which shall have been withdrawn and shall be outstanding at the time of such request and for which Bonds shall not theretofore have been so delivered or requested.

Section 6.05 reads -

Currency in Which Bonds are Payable. - The Bonds shall be payable as to principal and interest in the several currencies in which the Loan is repayable. . . .

We have to refer to the earlier definition of “ several currencies “, which apparently simply means dollars. This is all very mysterious. The Treasurer has not explained to honorable members the provisions of the schedules in relation to bonds. If Australia is required to lodge the equivalent in dollars of the amount that is to be borrowed, why is it necessary to borrow? I may have misinterpreted the position, but at least some explanation of this matter should be given. Evidently, the slow progress of the last loan is simply related to these onerous terms, and the definition of “ bonds “, which appear in the schedule to the bill. The Treasurer will probably assert that the House may not amend the schedule in any way, because the agreement has already been signed between the Australian Government and the Directors of the International Bank for Reconstruction and Development. Even so, the right honorable gentleman should throw a little more light than he has thrown upon this matter. He has made only the vague suggestion that the dollar holdings of the Commonwealth Bank, which will be initially depleted by the payments made from them, will be periodically replenished. According to the Treasurer, the speed with which the holdings are replenished is the whole basis of this scheme. Australia, he says, requires the dollars, or the equivalent in goods, as quickly as possible.

The United States of America is the strongest nation economically in the world. Its strength may be gleaned from the monthly bulletin of the Empire Industries Association and British Common- wealth League, for August, 1952. This organization is concerned with trade between members of the British Commonwealth. This bulletin includes a review entitled “Raw Material Resources,” which is a condensation of the report of the Materials Policy Commission - known as the Paley report - appointed by President Truman to investigate the long-term aspects of the supply of materials likely to be required by the United States of America in the 25 years ending 1975. This review in the bulletin is a summary of those findings which, I understand, occupy several large volumes. The report points out that the United States of America, with less than 10 per cent, of the population of the free world and only S per cent, of its area, consumed in 1950 more than one-half of such fundamental materials as petroleum, rubber, iron ore, manganese and zinc. Over the last 100 years the total output of goods and services of the United States of America - in other words, the gross national production - has increased al an average of 3 per cent, per annum compounded. Those facts serve to give an indication, at any rate, of the gigantic strength of the economy of the United States of America compared with that of the rest of the world. America, although it has only 10 per cent, of the population of the free world, consumed in 1950 more than 50 per cent, of the basic materials that play such an important part in world trade. It is in that kind of context that we need to examine our prospects of repaying dollar loans.

Some doubt has been voiced by Opposition members about the essentiality and availability of some goods that are specified as obtainable only from the dollar area. The Treasurer has provided no tangible refutation of the contention that certain machinery, such as tractors and earth-moving equipment, can be obtained here or from the sterling area. The right honorable gentleman has been vague about that matter. Conceding, for the time being, the point that these dollars may be beneficial to the Australian economy in the next few years, I proceed to the next question that should be asked in relation to the repayment of the loan. It will not be long before the repayment of the dollars, in some form, will be required.

In addition to the International Bank for Reconstruction and Development, there is the International Monetary Fund, which makes available short-term loans. The preceding Labour Government borrowed 20,000,000 dollars from the International Monetary Fund about four years ago, and the present Government has drawn 30,000,000 dollars from it. However, the fund makes only short-term loans, and the amount of 50,000,000 dollars will have to be repaid within the next four or five years. About the same time, repayment of the first instalment of the 100,000,000 dollars loan will become due. Australia can make the repayment to America only in dollars, if the present unfavorable trade balance between the two countries is not substantially redressed in the meantime. That raises an important question, which must be considered simultaneously with the shortterm aspect. “We must look broadly into the future. What are the prospects of the repayment of the loan when it becomes duo? A great obligation and responsibility devolve upon this economic colossus, America, to adopt the right role in respect of the repayment of loans. Two hundred years ago, the English statesman, Canning, described the results of his trade discussions with the Dutch in the following couplet: - [n matters of commerce the fault of the Dutch.

Is giving too little and asking too much.

A similar comment may be made of the United States of America. Australia has not sought dollar loans because it has not the capacity, resources and in a sense, the capital, required for its development. There are certain goods and services which at the moment, can be obtained only from the dollar area. But the United States of America is virtually selfsufficient. The monthly bulletin of the Empire Industries Association and British Empire League,, to which I referred a few minutes ago, indicates the difference between the policy of America, as the principal economic unit in the world, and the role that Great Britain occupied historically before World War I. Great Britain threw its doors wide open to every kind of import, primary and secondary, whilst America is concerned only with the acquisition of raw materials, and admits secondary products in comparatively minute quantities with great reluctance.

America proposes to draw its requirements of raw materials from countries that are eager to increase their industrialization, and may find an equal reluctance on their part to receive payments for their primary products in the form of American manufactured goods. Such an attitude may well hinder the production of what America needs. One idea that has gained general acceptation is that the world, for trade purposes, is one unit. In other words, the various countries have to co-operate with one another in matters of trade. But that theory glosses over many realities. There are still vast disparities between aggregations of population in certain areas, and the economic development of those areas. It may well be that instead of a country like Australia borrowing dollars from America, that economic colossus should lend dollars to some of the primitive communities. When I make that statement I use the word “ primitive “ in a restrictive sense. Dollars should be supplied to countries that are primitive economically, such as India, Pakistan, Ceylon and the Asian countries, which, in turn, would buy out of their increased production the kind of goods that Australia produces in abundance. It may well be that, for economic and physical reasons, the possibilities of trade between Australia and the United States of America are not great. 1 am only hypothecating that; the point is probably debatable. However, that is one of the principal reasons for the dollar shortage. The simple fact is that other countries want to buy goods which the United States of America can produce, but because the American economy is virtually self-sufficient the United States of America, has no need to buy from them. Consequently, the normal pattern of trade is disturbed. But there are vast areas in the world with large aggregations of population - human beings under the sun like ourselves who are entitled to the same standards as we have - and those whose economy is strong have an obligation to succour and help those whose economy is weak. That is the principal problem that, faces the world in the five to ten years that lie immediately ahead. Higher living standards can be given to the poorer countries only by pouring capital equipment into them, thus enabling them to develop their agricultural resources and feed their populations more adequately. The nations are expending huge sums on armaments, but a greater and wider conception of defence would be to strengthen the weaker nations. Australia, with other countries, has recognized that obligation to some degree by the small measure of assistance it is providing to Asian countries under the Colombo plan. We are borrowing capital from one country - the United States of America - and we are sending capital and goods in another way to India, Pakistan and Ceylon, through the medium of the Colombo plan. That is recognition, on a small scale, of the kind of action that is required to help to redress the unbalance that exists in the world and also to raise the standards of those whom we, as christian people, see as human beings, who are entitled to the same good things as we desire.

But it seems that in the agencies to which we give support - and the International Monetary Fund and the International Bank for Reconstruction and Development are two of them - too much emphasis is being placed on financial considerations rather than on physical considerations. Here I pause to remark in passing that I noted several converts to the latter viewpoint on the Government side yesterday during the debate on the National Welfare Fund ; but it seems that, so far as international finance agencies are concerned, too much emphasis is being placed, on strictly financial considerations. The suggestion has been made seriously that the world would find one way out of its economic troubles if the United States of America were to say overnight, “We shall pay 50 dollars an ounce for gold instead of 35 dollars, which is the rate we have fixed since 1932-33 “. It would not make any difference physically to the volume of goods and services available in the world, but the suggestion is that somehow, mysteriously, it would increase the resources of the countries that are fortunate enough to have gold. In order to indicate that that sort of thinking is predicted, I direct the attention of honorable members to a document that was issued recently by the Department of Economic Affairs of the United Nations entitled Measures for International Economic Stability. It contains a report by a group of experts who were appointed by the Secretary-General of the United Nations.

Paragraph . 117, at page 34 of that report, states -

One method would be to raise the price of gold uniformly in terms of all currencies, as provided for in the Articles of Agreement of the Fund. Measured in dollars, the official price of gold is no higher than before the war, while prices in international trade have doubled. The effectiveness of a given gold reserve as a buffer against trade fluctuations, has been halved. Increases of 25, 50 or 100 per cent, in the gold price would raise the reserves of countries other than the United States by some 3,000, 0,000 or 12,000 million dollars.

In effect, the assumption is that an artificial adjustment of that kind would give the stimulus that is needed by the world to-day. Apparently there are still people who think in terms of financial rather than physical considerations. I suppose that some honorable members of this House believe that an increase of the price of gold would be beneficial. No doubt they include honorable members from Western Australia. If we still had that kind of monetary system, and it still required that stimulus, the cure would be comparatively easy to administer, but I suggest that Australia and other nations, particularly that great democracy the United States of America, should not be thinking only in terms of finance. The honorable member for Wannon (Mr. McLeod) has suggested that the main consideration should be not simply obtaining a loan of 50,000,000 dollars, but how many tractors, reapers and binders, and trucks are required for human welfare. Those are the terms in which we should be thinking. These financial institutions were set up with the avowed purpose of facilitating a free flow of trade between the nations, but we have to go further than that if we are to correct the fundamental disequilibrium that exists not between currencies, but primarily between physical resources on the one hand and the distribution of population on the other.


– We have heard three Opposition speakers in this debate. First we heard the honorable member for Melbourne (Mr. Calwell). Then we heard what I might call the heavy artillery firing -a loud series of blanks, and finally, tho honorable member for Melbourne Ports (Mr. Crean). So far as I know, none of those speakers indicated to the House whether he intended to support the bill or not.

Mr Haylen:

– The honorable member must wait.


– Perhaps they have not made up their minds.

Mr Haylen:

– Be patient a ad all will be revealed.


– It may be that they have not yet received instruction from a. higher power. In any case, they have left the House in doubt about their intentions. The honorable member for Melbourne Ports advanced some technical criticism of the bill, but I could detect no criticism o:l any substance. Towards the end of his speech he seemed to be trying to have a bit both ways because he was telling us that we should be thinking in terms of goods rather than in terms of money. I agree with him on that point, and I shall return to it later. That is one of the main reasons why we are raising this loan.

I direct my attention new to the statements that were madu by the honorable member for Melbourne because he is the Deputy Leader of the Opposition, and I assume that he was speaking for the Opposition although it is not always easy to be certain of that. He spoke of the loan as though its purpose was chiefly to increase Australian exports to dollar currency countries. Of course, the purpose of the loan is much wider than that. The loan is essentially for national development, without particular reference to any country to which we may export our products, and if honorable members study the schedules to the bill they wi.l see how widely distributed that development is to be. I am pleased to see in the schedules some reference to the development of the coal resources in the West Moreton district in my own elec torate. I have referred previously in the House to the importance of this field. The honorable member for Melbourne went on to refer to what he called Labour’s “ traditional “ opposition to foreign loans. I want to make this point: In fact, we shall borrow this money from the International Bank for Reconstruction and Development, of which we are one of the members. We shall not borrow from the United States of America. It is true that we shall borrow dollars, but I suggest that even the Labour party might move with the times, modernize its thinking, and abandon its traditional opposition to. foreign loans.

I should ask the honorable member for Melbourne, if he were here, whether he has overlooked the connexion between investment and employment. Surely the two are related and the greater our investment the greater will be the possibilities for employment. It is obvious that there is insufficient finance available in Australia and the more we have the greater will he our possibilities of expansion. Especially is this true at the present time, when our total national income has fallen with the fall of the value of wool and the weakening of export markets. Any action that will increase our national resources must be to our advantage. We shall increase those resources in this instance by external borrowing. I have pointed out on a previous occasion that real wages are directly related to the volume of goods and resources in a community. It is possible to maintain the money level of wages by different means, but the level of real wages cannot be maintained unless we maintain the level of our resources. The borrowing of this money will increase our total resources. Therefore it will increase our total’ production capacity, our wages, and our standard of living. It will, moreover, be well within our power to make the repayments required under the terms of this loan. They will not be a great burden on us. I invite the attention of the House to the Treasurer’s second-reading speech, in which he said -

Repayments of principal do not begin until after a deferment period of five years, the first principal repayment falling due on the 1st June, 1957.

Once the full amount of this loan has been drawn from the bank, interest payments during the deferment period will amount to only a little over £1,000,000 a year; and from 1957 onwards, the annual payments of interest and principal combined will be only a little over £2,000,000 annually. In view of the fact that the Government’s budgets now amount to hundreds of millions of pounds, this will be a perfectly easy sum for us to find. The repayments on both this and our other loan of iO0,O00,0O0 dollars will, at their height, total only £5,300,000 annually. We shall have obtained two great loans but we shall be committed to very small annual repayments. Surely the honorable member for Melbourne wants our resources to bc increased. Surely this is one of the obvious ways in which our industrial capacity, both primary and secondary, can be increased. As honorable members will realize from a perusal of the schedules to the bill, the proceeds of the loan will be devoted to both sides of industry.

The International Bank for Reconstruction and Development was not established for the sole purpose of making loans to backward countries as the honorable member for Melbourne suggested. The emphasis in the establishment of the bank was on the development of countries that were not necessarily backward but which required assistance. “With the possible exception of the United States of America, there is no country in the world that is not in need of assistance from some external source. I believe that the Labour party wishes to improve conditions in Australia. I do not think that it genuinely believes that overseas borrowing is contrary to the welfare of the country. The only possible reason for Opposition members’ objections to overseas borrowing is timidity in approaching the great problem of Australian national development.

Opposition members have referred to the £33,000,000 of the last dollar loan that, remains unexpended. That fact is that that sum represents good3 which we shall receive. Of course, as the honorable member for Melbourne Ports said, we should think in terms of goods rather than in terms of money. It is goods and resources that really matter. But in order to secure goods and resources wemust be parties to a financial transaction. We can increase our supply of goods by increasing productive capacity, by importing them, or by borrowing money which is a potential producer of goods.. Of course we should think in terms of goods because all real resources exist in that form. But as we cannot buy thegoods that we need to increase our wealth, we must make some financial arrangement for procuring them, which is what the Government has proposed to do in this bill.

I should like the House to consider the full meaning of the word “wealth” - not “ wealth “ in the narrow sense of “ money “, but in its fuller connotation. An increase of wealth implies more goods, full employment, and a higher standard of living. The money that we shall, borrow from the International Bank will be used for the purpose of achieving those objectives. As we have not the financial resources to buy goods direct from dollar ai-eas we must take advantage of the resources that have been made available by the many nations, of which we were one, which established the International Bank for Reconstruction and Development. What could be more reasonable and what could be more helpful to our national economy? Of course, we must eventually repay the loan to the bank, but I have already pointed out that this should not be a matter of any great financial difficulty. Certainly it should not cause us, through doubt, timidity or what has been called “ traditional “ policy, to hold back from a body to which we can apply to increase our wealth and well-being, and which we helped to establish.

I believe this measure will commend itself to all parties. I do not believe that the Opposition, which has criticized it, will vote against it. It must appeal to all of us as a common-sense and workmanlike bill, designed to make a very good arrangement to increase our reserves and raise our standard of living.


.- The honorable member for Oxley (Dr. Donald Cameron) has asked what the Opposition intends to do on this bill. If he will be patient, that will be revealed to him when the vote is taken. Some of the honorable gentleman’s observations were sound. My view of the dollar borrowings of this country is that it would be the height of imbecility to establish and foster, together with other countries of the United Nations, an organization by means of which some nations can purchase the currencies of. other nations, and not make use of it. As far as I know, that view has never been contested by Ihe Labour party, and I do not think it should ever be contested. The whole purpose of the establishment of the International Bank for Reconstruction anc! Development was to break down, if I may use a frightening economic term, fundamental disequilibrium. Whatever tha-; term may mean in the English language, we know what it means in terms of hari cash. If a country needs certain things for which dollars are required but does n lt have the necessary dollars, it must borrow them. Perhaps that is the simplest way in which to express the idea.

The International Bank for Reconstruction and Development, which began as a monetary fund, is an outcrop of the spiritual values inherent in the Charter of the United Nations. The nations of the world, believing that wars were caused by, among other things, tensions in monetary and developmental affairs, tried to do something about the matter. The monetary situation was taken out of the hands of what are referred to as Wallstreet and Threadneedle-street. As far as their use to the community is concerned, I say, “ Montague and Capulet, a curse on both your houses ! “ The development of the bank is being watched with interest. We have found that the interchange of credit or of currencies between countries has been narrowed down to purchases or borrowings of dollars, because most of thi* things that the world requires at the moment are produced by v,he United States of America - a country with high productivity and industrial know-how. Although, occasionally, there may be demands for Swiss dollars or Swedish money, the principal operations of the bank relate to the currency of the United States of America, because that currency is needed by nations such a3 this to buy the things that they need to enable them to survive and develop. The concept has been narrowed by purely economic circumstances.

The Labour party takes the view that the borrowing of dollars is not, of itself, a crime, because we planned to do that kind of thing. We hoped that the exchange of currencies would be developed to such a degree as to break down the fundamental disequilibrium to which I have referred. The question is not whether dollars should be borrowed, but how many dollars should be borrowed and how they should be expended. When borrowed money reaches a country, it is easy to indulge in rosy dreams, to talk glibly of the development of resources that can be undertaken, and to speak about the employment to which the money will give rise. But, as certainly as night follows day, there will have to be a settlement. The bill provides for a sinking fund, so this loan is not so dangerous as are other loans, provision for the repayment of which has to he made in various ways, mostly by extractions from Consolidated Revenue.

I want to concentrate my remarks upon the international aspect of dollar borrowing. Any country that has a good prospect of becoming solvent or of remaining solvent can obtain dollars from this bank, from Marshall Aid sources and in other ways. Dollar loans from the bank provide a smooth and easy way of obtaining finance for all the things we want. I agree with the Minister for External Affairs (Mr. Casey) that this country has always been short of money for development. It is not an easy country to develop. The developmental work is hard and long, and large sums must be poured into it before production begins to roll in. It is a big money country. When closer settlement has been completed, the wider fields of first settlement will require our attention. They will involve the expenditure of a great deal of money. The development of our mineral resources and mines are also big money projects. Money must come into this country. I believe that most Australians agree that a young country must, as it were, go . into the “ red “, with caution, so that it may develop and go on to the destiny that it believes lies ahead of it.

The second-reading speech of the Treasurer (Sir Arthur Fadden) on this aspect deserves some consideration. He said -

Honorable members will notice that the preamble to the loan agreement formally records the willingness in principle of the International Bank to continue its participation in financing the development of the Australian economy over a five-year period, and puts the present loan in its perspective as one of a series designed to provide the dollar component in Australia’s capital goods requirements as they arise year after year.

The Opposition voices the warning that, from the stand-point of short-term borrowing, this loan is not a bad scheme, but we shall run into trouble if we make it a habit to seek easy dollars and do not look to the sources from which we can earn money. There has been wrangle after wrangle about what happened to our London reserves. Let me say, first, that most of our extraordinarily high London reserves can be called blood money from the war. In the years before the war, our average overseas balance was, speaking from memory, between £ S7,000,000 and £100,000,000. It rose to the fantastic figure of £900,000,000, because Great Britain poured everything that it had into the war. Great Britain could not sell to us even a teacup, because it was fighting the battle for democracy. We were sending to Great Britain, upon a rationed economy, everything that we could grow or produce. Out of those circumstances grew the state of disequilibrium which made our balances in London reach such a fantastic height. That was recognized by the Prime Minister and the Treasurer of the day, and we made ex gratia payments to the British people of £25,000,000 and £10,000,000. Doubtless, we should have given more if we had been able to do so, as an indication that the condition of equilibrium was caused, not by genuine trade, but by Great Britain’s efforts to achieve victory in Europe.

The criticism we make of this Government is that it was too careless in its handling of the overseas balances that remained when it assumed office. It tipped the bottle over carelessly, and it let the reserves run out. Consequently, our balances in Great Britain are not large enough to enable us to buy from Great Britain and other countries in the sterling bloc all the equipment that we need. We have turned to the United States of America for the essential things that we cannot get from anywhere else, but we must remember that our greatest customers are the United Kingdom and, because of Empire preferences, other countries within the British Commonwealth. From the financial and economic viewpoint, borrowing, irrespective of whether or not the loans are raised from an international organization, is not a matter to treat lightly. We must buy from the same people who buy our products. Britain is still our best customer, and we should be very careful to use most judiciously and sparingly the dollars we borrow. The Treasurer should’ be careful to yield to no request for dollars that, cannot be fully supported. The Treasurer indicated broadly the manner in which the borrowed money would be expended, but everybody in the Parliament knows the weight of pressure groups, and how they are some times able to receive consideration beyond their deserts. The Opposition makes the charge that there has been in the past carelessness in the guardianship by the Government of our London trade balances. In the circumstances, therefore, we are justified in fearing that there may be laxity in the allocation of the proceeds of a dollar loan. Let it not be forgotten that this money will have to be repaid, and its repayment may fall due at a time when the economy of Australia is less buoyant that it is now, and when there is more unemployment. Whatever may be the economic condition of the country when the loan falls due, we must either repay it or repudiate it.

The Opposition does not object to the raising of a dollar loan from the organization that was set up by international agreement. We say, however, that the amount to be borrowed should be very carefully considered, and that the Government should view with scepticism this sudden desire to develop assets that have been left lying round uncared for during the last 150 years. Wild cats must be locked up, and get-rich-quick schemes must be most carefully scrutinized. Let ttc Treasurer watch these dollars as carefully as Shylock watched his ducats. I do not think he will be found lacking in this regard.

There are few productive processes in which dollars are not a component and the Treasurer, in his eagerness to stimulate production, should not blind himself to the wisdom of playing the game with Great Britain. It teems to me that many of the capital goods we need could be brought from Britain immediately or on forward order. If that were done it would promote , t be stability of the sterling bloc. Then, we should explore the possibility of making in Australia as much as we can. I agree that some of our secondary industries were teetering to a breakdown because of mismanagement, and because of tie difficulty of replacing equipment, and that there is still room for increasing Australian production of essential goods. Of course, the items of equipment that wo need are waiting ready made in the United States of America, but they could be obtained, maybe after some delay, from Great Britain, or could he produced here in Australia.

These borrowed dollars should be used as a powerful drug to stimulate the patient, not as a narcotic to destroy him or to send him to sleep. We should pull up our socks and try to provide for ourselves as many as possible o:: the things we need. During the war, we did not find ourselves short of dollars because the equipment we needed was available under the lend-lease arrangement. That situation no longer exists and we should therefore exercise judgment’ and common sense in the management of our economic affairs. We continue to use our money in the purchase of useless things, and it may be that our standard of living is being lowered by our own extravagance. I have here a table which shows how a large part of the. national income is expended -

I must myself confess to an addiction to three at least of the evil habits that are indulged by the expenditure of that money, but I recognize that the expenditure is wasteful, nevertheless. The little that I know about finance I learned from our late leader, Mr. Chifley, who used to say that so long as- the economy of the country wag sound, and our accounts were balanced, we could do pretty much what we liked. Danger arises only when a nation is improvident. There seems to be a plan behind the Government’s proposals, and I am not terror-stricken at the prospect of borrowing dollars. The Opposition contents itself with issuing a warning that we must remember other things besides the glamour of dollars.

We must remember Empire responsibility. We must remember that, in our interests, it is necessary to stabilize the economy of Britain, whose people have passed from one crisis to another, and are still immersed in economic and fiscal difficulties. We, who have had so much from Great Britain^ should not forget that we have an obligation to that country. Our first duty is to huy from Great Britain, which provides a market for our exports. From economic motives, if not from patriotism, we must continue to develop our import and export trade with Great Britain. For the financial year 1951-52, we had an adverse trade balance with the United States of America of 72,000,000 dollars. Something must be done to increase our exports to the United States of America if we are to be in a position to borrow from that country. We require oil, newsprint, techniques, &c, from the United States of America, but they cost money. Those are delightful things to have, and their possession makes for better living, but how are we to pay for them? We cannot hope to pay for all of them by exporting lobster tails, eucalyptus oil, and a little scoured wool. We have nothing that we can sell in large quantities to the United States of America. Perhaps if uranium can be produced in quantity in Australia, the repayment of this loan may seem to be a mere bagatelle; but, in the meantime, our trade with the United States of America is out of balance.

Trade treaties have been negotiated on an international basis, and there have been discussions about the granting of concessions on this and that item. There have been pathetic references to turpentine oil and minerals, but the total of our exports to the United States of America is infinitesimal compared “with the torrent of our imports from that country. There remains a fundamental disequilibrium in our trade relations that cannot be permanently rectified by borrowing dollars. The position can be improved only by producing more goods that are acceptable in the United States of America. The borrowed dollars represent an injection of strength designed to help us to produce those goods, but unless the physicists can tell us where to get more minerals to sell to the United States of America we cannot greatly increase the volume of our exports to that country. They have not a bit of interest in our wheat, wool, gold or silver, but they are interested in certain minerals that are to be found in the Northern Territory. It is admitted that this loan will be extremely useful if it stimulates us into developing our potential in relation to those minerals.

I shall conclude by summarizing the points that I. have made. The first point is that I do not think that any sane Australian considers that there is any grave danger in borrowing dollars at this particular time, especially when the developmental programme for which they are to be used lies so well exposed to our view, and the documents concerning the transaction indicate so clearly where the money is to go without indicating the persons or firms who are to have the use of it. The second point is that it is necessary to sustain the level of employment which is now falling. I issue two warnings. The first is that hard-won dollars must not be wasted, and permission to expend them must not be given too easily. Do not let us forget that for all the dollars that roll into this country pounds roll out of it to pay for them. We should remember, too, that whatever our present view of this loan may be, if there is to be any adjustment of the exchange rate we shall have an entirely different view to express.

The immediate value of .the loan will be an increase of the community’s purchasing power and the country’s rate of development and employment level. The second warning is that there must be no extravagance in the spending of this loan. I gave a warning to the Government on a previous occasion about the feelings of many people, not necessarily members of the Labour party, about the dismaying drop in our sterling balances in London The Government should take a lesson from that happening and keep a tighter grip on the economic processes of running the country.

The third point I make is that in our haste to get dollars we must not forget our responsibility to the people of Britain, who are the main purchasers of our goods. Let us also make sure that this loan does not lead us into leaving our own secondary industries in the lurch. . Let us buy know-how rather than raw material. We must also ensure that in our associations with Britain we get full dual reciprocity. We should be careful not to forget to keep our nation nourished by its own energy and industry. Money as such is a secondary consideration in relation to the potentialities of a nation. We should aim to achieve economic solidity and a degree of self-reliance. Borrowing is a luxury, and we borrow only against the national potential. There is in the Labour party a great fear of borrowing overseas, because experience has shown that when the tune is called the price is disastrous. When Mr. Scullin was thrashing around in his anguish for money to try to avoid the sharpest swords of the depression, he found himself in the room of Mr. Montagu Norman, the Governor of the Bank of England, who refused to lend him the few paltry millions that Australia needed. The reason given for the refusal was that Australia was in a state of fundamental economic disequilibrium, although that phrase was not then in use. In the old days we used to borrow from Great Britain. Every time we wanted money we could get another cut from the “ old man “. When the bubble burst all over the world, it brought the tragedy of depression, which bruised so many lives, changed so many points of view, and created so many Communists. That is the background of the fear df overseas borrowing that many members of the Labour party feel. There is a feeling abroad that I should not like to see carried farther. I refer to criticism of the United States of America as a money-lender. The money we are to obtain by means of this lean is not American money as such. T; is money from a ‘ fund created by the United Nations and its instrumentalities, which were supported by the Labour Government and are supported by the present Government. Criticism of Wall -street does not apply to this loan. If it did, we should be on to it like a shot. This is a time for action.

Having examined the bill thoroughly, I find that the loan has in it an element of real sanity thai; one cannot find in any such transactions in the past. It has some of the elements of decency of the United Nations itself. The warnings that I issue are not in respect of the borrowing of the money but are directed to the methods by which it is expended. We must be careful that we get real value from it. After all, this money is only a blood transfusion. Faith in our own nation enables us to go into the red now in order to be able to pay for the development that will later enable us to get out of the red again. I issue these warnings with nome degree * of feeling, because I consider that the Government shares my view in relation to this matter.

The Opposition will watch with great interest the allocations made of these dollars and we shall want “o know, at another time, what has happened to the reservoir of £33,000,000 left over from the last dollar loan. We shall be interested to know the amount that is allocated for the purchase of such commodities as oil and newsprint as well as other things that are necessary but not absolutely essential to thu point of extravagance. The most important and most stable of our funds consists of our sterling earnings. The funds that will run out most quietly are those that have been won most easily. I refer to loan funds. The money 1hat we earn in the sterling area for our exports, and that is gained through the machinations and activities of the sterling pool, is the most durable of our sources of wealth. If the Government keeps these things in view it will watch with the careful eye of the custodian of the country’s wealth which it is for the time being, that the money we need for development is not wasted. The care that it exercises should be even miserly, when necessary.


– I do not intend to keep the House long, because I myself have been caught up in this web of tension that the Labour party has so cleverly woven. We are anxious to see where members of ohe Opposition stand, and I do not intend to keep the House on tenterhooks any longer by delaying a division on the bill. We had the honorable member for East Sydney (Mr. Ward) denouncing this loan, then we had the honorable member for Melbourne Ports (Mr. Crean) putting on a little each way. The honorable member for Parkes (Mr. Haylen) gave me the impression that we ought to put on a little more each way, because he issued more warnings than did any of his colleagues, but at the same time he praised more than they did the advantages of the loan.


– He said that no sane man would object to it, but the honorable member for East Sydney objected to it.


– Honorable members opposite know that this is a good bill, but they have been casting around to find something to say ‘against it, in the grudging way that all Oppositions have. There is also a. kind of contest between the embryo Treasurers opposite, who, perhaps, will not come to maturity. We have had the honorable member for Parkes, the honorable member for Melbourne Ports, and the honorable member for Melbourne (Mr. Calwell), and perhaps, in another debate we shall have the honorable member for Eden-Monaro (Mr. Allan Fraser), all going along like a group” of queen bees who have just come out of their cells and know that they have to sting one another to death. The reason for their vacillation is that there is a very real cleavage of opinion between the left and right wings of the Australian Labour party, It appears that honorable members opposite are so confused that they do not know whether they are right or left. For instance, we find the honorable member for East Sydney saying that this is a terrible Wall-street plot. Then the honorable member for Parkes who, as far as I can remember, has always sided with the honorable member for East Sydney, splits with him on this issue and says that this is not a Wall-street plot at all. These comings and goings in the Australian Labour party, the little manoeuvres and almost feminine bickerings between the members of the party, indicate their difficulty in putting on a united front. [Quorum formed.] I am sorry that I stung the honorable member for East Sydney into calling for a quorum. I had not meant to hurt his delicate feelings. However, it is somewhat extraordinary that whilst he denounces this loan, his almost ever-faithful friend, the honorable member for Parkes, states that nobody but a madman would reject or denounce it. I can understand that the honorable member for East Sydney must be feeling somewhat sensitive because his erstwhile allies have turned on him.

I have no hesitation in voting for this bill. It is a good measure and provides for the raising of a necessary loan. As the Minister for External Affairs (Mr. Casey) has already pointed out, this loan will help Great Britain at the same time as it helps Australia, because it will add to the dollar pool of the British Commonwealth. That, I think, was a fair answer to the honorable member for East Sydney, who on this occasion - and in this respect also this has been a day of surprises - deserted his traditional role and for once in his life, waved the red, white and blue flag. I believe in the progress of this country. I think that it has a future, and that investment in Australia will pay greater dividends, in terms of real things, than will investment in practically any other country of the world. This is a good country and a country with a future. If honorable members study the schedules to the bill they will see that, in effect, this measure is a blueprint for the Australia we desire to see. Money is to be provided to increase agricultural production, land settlement, the production of coal, iron and steel, which is the foundation of our coming industrialization; electric power projects, railway and road transport programmes, and industrial development. As I have said, the bill represents a blueprint for the Australia we want and which honorable members on this side of the House will try to bring into being. In doing so, we hope to have the support of honorable members opposite instead of the kind of grudging half opposition such as we have had this afternoon from some of them who know that the bill is right and proper and are merely trying to invent things to say against it.


.- Mr. Speaker-

Motion (by Mr. Eric J. Harrison) put -

That the question be now put.

The House divided. (Mr. Speaker - Hon. Archie Cameron.)

AYES: 40

NOES: 24

Majority . . 16



Question so resolved in the affirmative.

Original question resolved in the affirmative.

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

page 1825


The following papers were presented : -

Defence Act, Naval Defence Act and Air Force Act - Regulations - Statutory Rules 1952, No. 73.

Lands Acquisition Act - Land acquired for - Department of Civil Aviation purposes - Temora, New South Wales.

Postal purposes - Menai, New South Wales.

House adjourned at 4.39 p.m.

page 1825


The following answers to questions were circulated: -

Capital Issues

Mr Daly:

y asked the Minister repre senting the Attorney-General, upon notice -

Willhe make available to honorable members the full text of the submissions to the High Court in support of the Government’s case on capital issues control

Mr Menzies:

– The Attorney-General has furnished the following reply to the honorable member’s question ; -

The Government’s submissions in the capital issues case consist in part of a statement by the Treasurer which was filed in court in pursuance of regulation 17 of the Defence Preparations (Capital Issues) Regulations, and in part of submissions made in the course of oral argument, the only record of which is the official transcript of proceedings. ‘These documents together occupy some 319 pages, and the labour and expense of making copies would not be justified. I shall, however, make a copy available for perusal by the honorable member, or other honorable members, if it is desired.

Sodium Silicate.

Mr.Cremean asked the Minister for Supply, upon notice -

  1. Is it a fact that teachers are unable to obtain supplies of sodium silicate for demonstrationpurposes?
  2. If so, will he take action to enable adequate quantities to be made available to education authorities for the use ofstudents taking leaving certificate and Matriculation chemistry ?
  3. Willhe investigate the report that a wellknown emporium in Melbourne has this material available under the name “Magic Rocks’”, together with certain crystals, for sale tothose who wish to use it for entertainment purposes?
  4. Will hesee that money-makers are not allowed to corner supplies of sodium and other silicates, which are to a largeextent the basis of geological and metallurgical study, for the purpose of making big, quick profits!
Mr Beale:

e. - The answers to the honorable member’s questions are as follows : - 1 and 2. It is not a fact that teachers are unable to obtain supplies of sodium silicate for demonstration purposes. I understand that there was a temporary delay in executing some orders for the Victorian Education Department, but this was caused by an accident in the contractor’s premises. Sodium silicate is made in Australia from indigenous materials and is freely available from a number of suppliers. 3 and 4. It is true that an emporium in Melbourne is selling an article known as “ Magic Rocks “, which uses a solution of sodium silicate with some crystals, but the use of sodium silicate for this purpose would be negligible as compared with the total consumption in Australia. Sodium silicate is used extensively in industry as an adhesive for cardboard cartons, for waterproofing masonry, in soap-making, as an egg preservative, and for many other commercial purposes. Itis not correct to suggest that one firm has cornered supplies for profit-making purposes.

Department or Supply.

Mr Ward:

d asked the Minister for

Supply, upon notice -

  1. What was the cost to the Common wealth of (a) hire of private cars, and (b) hire of private transport for carriage of equipment, stores, &c., during each of the years 1949-50 and 1950-51, and in the expired portion of 1951-52?
  2. Are tenders invited from those desirous of providing these services?
  3. If not, what procedure is followed in allocating this work?
Mr Beale:

– The answers to the honorable member’s questions are as follows : -

You will note that these figures are different from those given by me to an earlier question asked by you in the House on the29thMay. The reason for the variations is that the details now given are in respect of financial . years, whereas the earlierreply given covered the two calendar years terminating the 31st December, 1960, and the 31st December, 1951. 2 and 3. The department calls tenders and arranges contracts {or goods transport in all States - and for car transport in all States except New South Wales. In the latter State it is the practice of the department- to operate under contract arranged by the State Government Contract Board


D asked the Minister for Supply, upon notice -

  1. . Has it been his practice since he assumed office to direct as much government transport work ag possible to private concerns in preference to using vehicles from the government transport pool?
  2. What is the amount by which expenditure upon the hire of private cars has increased since the Government came to office in 1949?
  3. What is the cost per mile charged to the Commonwealth for the hire of private cars in the various capital cities?

– The answers to the honorable member’s questions are as follows :-

  1. No. It is the practice to place all government transport work with the Store? and Transport Section, Department of Supply, up to the limits of the capacity of the existing personnel and fleet. Any demands in excess must naturally be placed with the private emergency contractors. This was also the practice of the previous government.
  2. The expenditure upon hire of private cars during the years 1949 to 1951 was as follows: - 1949, £ 10,17(1; 1950, £34,726; 1951, £55,871. The increases during 1950 and 1951 are due mainly to the heavier demands of government departments, and, to some extent, to an increase in hire rates. If these increased services could have been carried out by the department’s transport pool, the costs would have been somewhat greater, mainly owing to the better conditions of employment enjoyed by the department’s own staff, including such items as recreation leave, sick leave and holiday pay.
  3. The following are the mileage rates for capital cities - garage to garage :- Sydney, ls. 2d. a mile plus 10 per cent.; Melbourne, ls. 3d. a mile plus 10 per cent.; Brisbane, ls. Od. flag fall - ls. 4d. a mile; Adelaide, ls. a mile;. Perth, ls. a mile: Hobart, ls. a mile.

Cite as: Australia, House of Representatives, Debates, 19 September 1952, viewed 22 October 2017, <>.