21st Parliament · 1st Session
Mr. Speaker (Hon. Archie Cameron) took the chair at 3 p.m., and read prayers.
Mr. E. J. WARD, M.P.
Mr. SPEAKER. - I notice that the honorable member for East Sydney (Mr. Ward) is in the chamber.
Dr. Evatt. - Mr. Speaker-
Mr. SPEAKER.- Order!
Dr. Evatt. - I wish to raise a point of order.
Mr. SPEAKER.-No point of order is involved yet. On the 9th June, the honorable member for East Sydney was suspended for a week. I notified the House of my intention then. He is not entitled to be here now. He is not entitled to be here until after 12.45 p.m. to-morrow. I rule accordingly.
Dr. EVATT (Barton- Leader of the
That the ruling be dissented from.
– The honorable member for East Sydney will leave the chamber while the matter is under discussion.
– On a point of order-
– Order ! The honorable member for East Sydney should not have come into the chamber.
– You invited me to be present. I got your invitation to be here to-day.
– Under the circumstances, Mr. Speaker, do you think the honorable member should wait until the matter has been determined by the House ?
– The customary procedure is for an honorable member whose conduct is under discussion to retire from thechamber.
– I submit that it will be for the House to determine whether the period mentioned by you has lapsed. That will be the point to determine. If the House confirms that the period has elapsed, it will mean that the honorable member is entitled to be here.
– To bring matters to a head, I now rule that the honorable member for East Sydney must retire until the matter has been decided.
Mr. Ward thereupon retired from the chamber.
– I have moved that your ruling be dissented from.
– Which ruling?
– The ruling given by Mr. Speaker, under Standing Order 302, on the 9th June. That standing order provides-
If any Member be suspended under the foregoing Order, his suspension on the first occasion shall be for 24 hours-
Not for 24 hours of sitting, but for the precise period of the day, as measured by the full 24 hours. No less, but no more. The standing order continues- ou the second occasion during the same year-
That is the case in regard to the honorable member for East Sydney– for seven days excluding the day of suspension; and on the third or any subsequent occasion during the same year, for 28 days excluding the day of suspension: Provided that any suspension in a previous Session shall be disregarded.
That proviso has no application to this case. This is the first time that this matter has arisen for decision by the House under the new Standing Orders. I submit that Standing Order 302 clearly means that the term of suspension on the first occasion shall be fixed by hours - 24 hours. It does not mean that the House has to be sitting during the whole of that period. It means that if the moment of suspension is 3 p.m. on one day, the period of suspension terminates at 3 p.m. on the next day, on the expiry of 24 hours. The standing order states that, for a second suspension during the same year, the period of suspension shall be for seven days, excluding the day of suspension. Seven days means the extent of a week, just as 24 hours means the full extent of a day, and 28 days means the full extent of a lunar month. That is the tenor of the Standing Orders. That is made clear by referring to other standing orders. When the House regards “ sitting days “ as distinct from “ days “, it says so.
Standing Order 39 refers to the next sitting day, distinguishing a sitting day from a day. Similarly, Standing Order 42 gives power to the Speaker, and refers to an adjournment to the next sitting day. Standing Orders 43 and 44 make similar provisions. Therefore, Standing Orders 39, 42, 43 and 44 support my contention. I submit that the purpose of those standing orders is to ensure thai the period of suspension involved shall be definitely known by the honorable member against whom such punishment is inflicted, at the time that the House so acts. If sitting days means that those days are added up from one week to another, the period of suspension involved may extend over a number of weeks, particularly if the House should sit on only one day of a week. Unless the period of suspension is definitely measured by days, it may run into two. three or more weeks.
The seven days have elapsed long since the honorable member for East Sydney was suspended. That is a fair reading of the Standing Orders and should, I submit, be given effect to. As the honorable member for East Sydney has satisfied the order made by you, I have therefore moved “ That your ruling be dissented from “. This is the first occasion on which this matter has arisen, and I thinkthat in a case like this you should lean in favour of the interpretation which is the less rigorous. Under the other rule, seven days’ suspension could extend over a considerable period, according to the number of days of sitting.
Dr. Evatt having submitted his objection to the ruling in writing!
,.- I second the motion. The honorable member for East Sydney was excluded by a vote of the House. You ruled. Mr. Speaker, that he was excluded for seven sitting days. If that was your intention when you imposed the sentence, obviously the honorable member for East Sydney would not be eligible to come into this Parliament until next week, the week after, or the week after that. To-dar however, you have decided - I was agreeably surprised to hear your ruling - that the honorable member could come into the House after 12.45 p.m. tomorrow, so, in fact, he could enter the House at 2.15 p.m. to-morrow when the sitting is resumed after suspension for lunch. If you have changed your view in regard to your original ruling, Mr. Speaker, I suggest that you modify it even further by allowing the honorable member for East Sydney to resume his seat in this House forthwith. The reasons that have been advanced by the Leader of the Opposition (Dr. Evatt) are potent ones. 1. suggest, with deference, that the Leader of the Opposition has argued, in effect, in support of the practice of the Chair in regard to such matters over all the years that this House has functioned since federation. The case that the Leader of the Opposition made out is unanswerable. His arguments are incontrovertible. If the honorable member for East Sydney is not admitted to the House to-day by a vote of the House, I submit that justice will not be done.
– I hesitate a little, thinking that no reply is needed to so utterly unconvincing a case. The honorable member for Melbourne (Mr. Calwell), whose state of mind one can appreciate, seemed to me to be making an application for mercy; but the Leader of the Opposition (Dr. Evatt) has put forward an argument which, if I did not know him to be a thoroughly serious man, I should regard as being put forward humorously. Let us look at Standing Order 302. It states-
If any Member be suspended under the foregoing Order, his suspension on the first occasion shall be for twenty-four hours . . .
On the view put forward by the Leader of the Opposition, an honorable member who desires or determines to be disorderly or scandalous or otherwise to misbehave himself has only to do so a few minutes before the House rises for the week-end. That would give rise to a sort of week-end merriment on the part of those who desired to violate the rules. Having been suspended five minutes before the House adjourned for the weekend, and removed from the House, such an honorable member could be hack on the next sitting day as large as life, and twice as natural, having served, in some mysterious fashion, 24 hours’ suspension back in his electorate in common with all other members of the Parliament who would have been back in their electorates. Tn other words, he would not have been suspended, except for five minutes. That, I think, would be a rather remarkable state of affairs.
Let us now consider the next bracket of the standing order which, perhaps, is more material now. It states -
If the contention of the Leader of the Opposition is right, an honorable member has only to develop these strange practices on the last day of the sitting and he may serve his seven days’ suspension in the most complete comfort. He would be suspended from the House, but so would all the rest of us, because the House would not be sitting. To describe a man as being suspended from the service of the House when the House is not meeting seems to me to be the height of oddity. For the third offence, the. period of suspension is 28 days. When the House goes into recess, it commonly does so for periods much longer than 28 days. If the contention of the Leader of the Opposition were right, the third offence, if the timing were good, would produce a suspension which dragged its slow length along during the parliamentary recess. In other words, the right honorable gentleman is arguing for an interpretation of Standing Order 302 which could, and would, in appropriate circumstances, lead to a suspension of five minutes being the penalty for the first offence, a suspension of five minutes being the penalty for the second offence, and a penalty of five minutes’ actual suspension from the House being the penalty for the third offence. I know that there are people outside who think that we are a very odd lot, but I cannot believe that we are so odd as to produce standing orders so remarkable as those that have been suggested.
– I should like the House to consider the followingmatters which I think deal very definitely with the situation that has arisen. I find that we fashion our Standing Orders and our procedures largely upon the precedents that have been set for us by rulings of the House of Commons in relation to matters to which reference is made in May’s Parliamentary Practice, but I wish to point out the very definite difference between the wording of Standing Order 302 and the wording of a similar standing order that governs the House of Commons. I refer to Standing Order 22 of the House of Commons which states -
If any Member be suspended under this Order, his suspension on the first occasion shall continue until the fifth day, and on the second occasion until the twentieth day on which the House shall sit after the day on which he was suspended . . .
Therefore, the practice of the House of Commons is governed by the sitting days. Those who framed the Standing Orders of this House had the advantage of knowing the conditions laid down in the Standing Orders of the House of Commons, but they purposely excluded from the provisions of Standing Order 302, which governs our proceedings, those words that have reference to sitting days. That reference has actually been excluded from Standing Order 302 of our own standing orders. That being so, I say that the omission was made with the very definite purpose in mind that this provision should not apply during sitting days only. I assert that the seven days that have been mentioned here should be counted from the time when the breach of the standing order was committed. That being so, I consider that the action of the Leader of the Opposition in submitting a motion of disagreement from your ruling, Mr. Speaker, is perfectly correct.
Let me now interpret the statement of the Prime Minister (Mr. Menzies). He has indicated that the argument advanced by the Leader of the Opposition is not tenable; but I point out that the suspension of the honorable member for East Sydney was not for a period of 24 sitting hours but for a period of seven days. The manner of calculating the period of time must be consistent. In the case of a period involving hours, it is current time and the member is readmitted 24 hours after that time. In those circumstances, I claim that the rest of the relevant standing order must be read in a similar spirit. The period of 24 hours applies whether the House is sitting or not. The period of seven days must be considered in exactly the same way. Any other interpretation would be inconsistent with Standing Order 302.
That standing order was revised as late as the 21st March, 1950, and the only alteration that was made to it at that time was made for the purpose of adding an extra day to the penalty. The revision of the standing order did not in any respect alter the basis upon which that penalty should be calculated in time. I consider that the suspension of the honorable member for East Sydney for longer than the period of seven days from the day on which the breach was committed is not in accordance with the spirit and the letter of the Standing Orders.
– I only rise in order to correct one or two misunderstandings which seem to have occurred in regard to this matter. The honorable member for Melbourne (Mr. Calwell) said, Mr. Speaker, that you gave a ruling in which you suspended the honorable memberfor East Sydney for seven sitting days. If the honorable member consults Hansard, he will find that his statement is not correct. No mention is made in Hansard of “seven sitting days “. Your ruling, Mr. Speaker, mentioned a period of seven days. Because of that fact, I shall now go behind the words to the intention of the Standing Orders Committee and the intention of the House when this standing order was drafted. I think that the House will agree with me when I say that the standing order was designed to penalize an honorable member who had been named for gross disorderliness. Therefore, if the penalty was to be imposed, it could be imposed to have effect only during the session, when the House was actually sitting, and not through the recess. If the House fails to accept that interpretation it must go back to the case as stated by the Prime Minister, in which he said that, in the ultimate, if properly designed and timed, it would resolve itself into a penalty of five minutes for the whole of the three offences involving suspension of 24 hours, 7 days, and28 days. If that is accepted, we come to the position that the penalty imposed must, in my opinion, and according to the intention of the House and of the Standing Orders Committee, have effect during the session of the House. If that is so - and I believe that it is so - then the only fault that I can find with your ruling, Mr. Speaker, is that you have been far too generous. Let us take the particular case in point. The honorable member for East Sydney was suspended on a Thursday at lunch-time. On the following day the House went into recess. That meant that the honorable member for East Sydney had already served a small part of the period of his suspension by the time the House went into recess. I contend that the House did not again come into session until to-day, and that any period between its rising for the recess and its resumption of the session to-day is a period within the recess period of the House, and does not operate as part of the period of suspension, according to the sense of the Standing Order which was accepted by the House. In my opinion you, sir, have been lenient in altering your ruling in order to give the honorable member for East Sydney the right to resume his seat in the chamber to-morrow. My interpretation would mean that, having discharged a short portion of his suspension before the House went into recess, the remainder of the period of suspension must date from the time that the House resumes its sitting; that is, it must date from to-day, and therefore the honorable member is not entitled to take his place in the House until nest Tuesday. You have ruled otherwise, and I do not propose to contest your ruling.
I give that as my considered opinion and, having given it, I want to say that I can see no case that can be established, and can stand, on the argument put by the Leader of the Opposition. I find even less of merit in the case advanced by the right honorable gentleman’s deputy, the honorable member for Melbourne (Mr. Calwell), and I simply cannot understand the argument advanced by the honorable member for Sturt (Mr. Makin) in connexion with this matter.
I do not think that it is necessary for anything more to be said than has already been said on the matter by the Prime Minister, and accordingly, I move that the question be now put.
Motion (by Sir Eric Harrison) put -
That the question be now put.
The House divided. (Mr. Speaker - Hon. Archie Cameron.)
Majority . . 8
Question so resolved in the affirmative.
Question put -
That the ruling be dissented from.
The House divided. (Mr. Speaker -Hon. Archie Cameron.)
Majority . . . . 20
Question so resolved in the negative.
-(Hon. Archie Cameron). - I have to inform the House that, consequent upon the retirement of Mr. Green, the following promotions of officers at the table have been made: - Clerk of the House, Mr. Tregear; ClerkAssistant, Mr. Turner; and Second Clerk-Assistant, Mr. Parkes.
Mr. POLLARD presented a petition concerning the prohibition of the use and testing of atomic and other weapons, the peaceful use of atomic energy, the reduction in armed forces and the settlement of disputes by peaceful means.
Petition received and read.
Petitions in relation to pensions were presented as follows : -
By Mr. KEON from certain electors of the Division of Yarra, Victoria.
By Mr. LUCHETTI from certain electors of the Division of Macquarie. New South Wales.
Petitions received and read.
– Some time ago,the Prime Minister foreshadowed the establishment of a joint committee to discuss certain urgent questions arising under the Australian Constitution. I should like to know whether he has any statement to make on that matter to the House now.
– I am in a position to have a useful conversation with the right honorable gentleman himself about this matter. If we can arrange to have it to-morrow at a convenient time for him. I shall be glad.
– I ask the Minister for Immigration whether itis the policy of the Department of Immigration to seek the entry into this country of single young men in such numbers as to exclude married couples with young children, or single young women. If this is so, on purely economic grounds, will the Minister give earnest consideration to the social need of encouraging young men to establish a home and family by permitting a proper proportion of young women to enter this country? Will the Minister at an early date make a considered statement onthis subject for the benefit of the House?
– I shall be glad to prepare a statement covering the matters raised by the honorable member, but I can tell him at this stage that it is not the policy of the Government to encourage a preponderance of any one sex amongst the immigrants. We aim at balanced immigration. We aim, not only at a balance of people from various countries, but also at a balance of the sexes. It is quite natural that in any immigration programme, there will be a tendency for the male breadwinner, whether married or single, to come out in advance and try to establish himself here, and then, if he be a married man, to arrange for his wife and family to follow him or, if he be a single man, to arrange for his fiancee to join him here. As our programme had been running for several years, I felt some concern lest there should be developing a preponderance of the male sex, because social problems could arise from that which could not be reasonably controlled. I had a survey made by the department, and I can assure the House that the position is not such as to give any cause for real concern. Indeed, rather strangely, the proportion of masculinity, or the disproportion between the two sexes, revealed by the 1954 census, after seven years of quite substantial immigration, was less than that shown by any other census in the history of our federation, with the exception of that taken in 1947. The proportion was 102 males to 100 females. When the position was further analysed, we found that births of male children in Australia exceeded those of females to the extent that, of the 110,000 surplus males in Australia, some 65,000 were made up of Australianborn male children under the age of fifteen years. So it will be seen from those figures that there is not the serious social problem which, perhaps, some people have contemplated. However, we are going into the position quite thoroughly with a view to avoiding the development of a social problem that none nf us wishes to see.
– Is it a fact that the Prime Minister has refused to receive a deputation of age and invalid pensioners from Melbourne and Sydney at present in Canberra? If so, will he state the reasons for his refusal?
– As the budget is to be opened at 8 o’clock to-night, and as its contents have been settled by Cabinet for at least the last fortnight, I do not feel disposed to waste other people’s time, or my own time, in considering what ought to be in it. I am sure that reason will commend itself just as much to my honorable friend as it does to me.
– My question is addressed to the Minister for the Navy. In recent months, announcements have been made of a sweeping change in the selection and education of this country’s future naval officers, in that cadets will enter the Royal Australian Naval College at the age of fifteen years, instead of thirteen years, as hitherto. Will the Minister table the reports of the naval or Public Service committees on whose advice this sensible and necessary change has been made? I point out to the Minister that questions of security cannot possibly be involved in this matter, and that it is of great interest to every one concerned with the welfare of the Navy.
– The decision to which the honorable gentleman has referred was made by the Naval Board and myself and is related to the practice adopted in the United Kingdom. There was no investigation of the character to which he has referred.
– I preface my question, which is addressed to the Prime Minister, with the statement that yesterday I presented to the right honorable gentleman a petition addressed to him, duly signed by 7,043 citizens in the Brisbane and South Coast districts of Queensland, praying that the Parliament legislate, as from the 1st July, 1955, for an increase, to a level equal to -50 per cent, of the basic wage, of the pensions paid to all pensioners, with the pension and permissible income equal to the basic wage. In view of the serious plight in which pensioners find themselves to-day, and following on the petition which I presented to the Prime Minister yesterday, I ask him whether he proposes to give effect to the prayers of the many thousands of citizens who signed the petition.
– I have received the petition which was presented by my honorable friend from Brisbane and I have read it ; but I put it to him, as a man who has been a member of this Parliament for a long time, that he does not seriously believe that any government which has prepared its budget and is on the very eve of delivering it, will pretend to a lot of people that it has not made up its mind about what is to be in the budget. That would be a monstrous piece of pretence, and I shall not engage in anything of the kind. We are very conscious of the position of the pensioners, and we have the proud record of having done more for them than any other government in this country.
– Will the Minister for Labour and National Service say whether the special committee set up to report on the shipping industry has completed the taking “of evidence ? When can the report of the committee be expected?
– I received only yesterday a letter from the chairman of the committee, covering the progress already made by the committee and indicating the course of action it intended to follow over the period ahead. The letter covered the matter quite fully. I have had a number of roneo copies prepared so that honorable members who are interested in the problem can read for themselves what the chairman has written. I think the most significant feature of the letter is an indication from the chairman that the committee hopes to he able to make some announcement within a few weeks on the aspect which would he regarded by most honorable members as fundamental to our consideration of the question as a parliament. I refer to the method of- the organization of the industry.
– Has the Minister for Commerce and Agriculture received from the Australian Dried Fruits Association a plan for the stabilization of the dried fruits industry? If so, has he yet perused it? Will he, as early as possible, inform the industry whether the plan is acceptable to the Government? If the plan submitted is not acceptable, will he soon let the industry know what amendments or general changes of it will be necessary, as the industry is in dire and urgent need of stabilization?
– I have received from the industry a proposal which embraces a plan for its stabilization. The industry has been in communication with me on this general issue for perhaps a year. I have offered the industry the advice and the good offices of experienced officers of the Department of Commerce and Agriculture to aid it in its thinking. With that aid, the industry, less than four weeks ago, finalized its proposals and submitted them to me. They have been under careful study by the specialist officers of the department during the last few weeks. It is only during the last 48 hours that I have been in a position to study the industry’s proposals, with the benefit of the departmental examination of them.. I might say that the industry is still adhering to a request on which I expressed my views many months ago in this House and directly to industry deputations. I said that people who engage in the production of the three dried fruits - currants, sultanas and lexias - could not be separately offered a stabilized price for each of them irrespective of the profitability or unprofitability of their total operations. The industry is, as I said, nevertheless adhering to its original ideas on this point. The acceptance by the Government of the plan proposed by the industry could lead to a state of affairs in which a grower of dried fruits who made a profit on his year’s activities would be entitled to a payment from the Treasury in respect of a loss incurred in relation to one aspect of his production. I am bound to say that, in the public interest, that proposal would not be acceptable. At the same time, I assure those engaged in the industry that their problems will receive sympathetic, bona fide and prompt consideration by the Government, but they must understand that the Government can only consider proposals which can be justified to the taxpayers of this country who would be called upon to bear any cost arising from a Government commitment.
– The question that I address to the Minister for Commerce and Agriculture is supplementary to the question asked by the honorable member for Mallee. Does the Minister realize how serious is the plight of many dried fruit-growers, particularly on ‘ the Murray irrigation areas, who require initial Government assistance? “Will the Government, therefore, treat the whole matter of the stabilization of the industry, and of assistance to these people as urgent, in order to save the industry from continued serious financial embarrassment, which undoubtedly now exists ?
– The honorable member for Angas, as well as the honorable member for Mallee and other honorable members, can be assured that I understand fully the serious problems with which the dried fruits industry ia confronted. I hope that neither the honorable members nor the members of the industry are tinder any misapprehension about the Government’s willingness to endeavour to help the industry in its problems. There are what might be described as two separate problems. The first is profitability, and the second liquidity, which deals with the delay which the producers experience in receiving full payment for their produce. My reply to the honorable member for Mallee dealt with the general aspect of profitability and the proposed’ stabilization scheme. I am sure that it will be generally realized that it would not be tolerable for the Government to ask the Parliament to approve of legislation which would impose on the taxpayers, or the Treasury, an obligation to pay a subvention to a person who has shown a profit over the , year. That is implicit in the proposal that has been twice submitted by the industry. I told the members of the industry about fourteen months ago that I would be glad to submit to the Government a proposal which would enable an early maximum advance on the year’s production to be made to the industry, as is done in con nexion with wheat, egg and dairy production. But there was one prerequisite to that, which was itself a banking proposal, and that was that there should be in the hands of the Government a security over a commodity for the year’s production before it would be justified in making an advance. Although I have made that clear to the industry over a period of approximately fifteen months, it is apparently still unwilling to put the Government in the position of holding a security over its production as a prerequisite to an early and maximum advance to growers. Quite frankly, although I and other members of the Government have every sympathy with the worthy people in this industry because of their problems, they must face the realities of these simple facts that I now expose to the Parliament before I can really come to grips with the issue and submit explicit proposals to the Government.
– I shall address a series of questions to the Minister for the Navy. Is it not a fact that the Naval Board has consistently, over a period of eight years, refused to negotiate with the trade unions of men employed by the board? Is it true that the Department of the Navy is the only Commonwealth department that has not adjusted the marginal rates of pay of its employees in accordance with the formula approved by the Commonwealth Court of Conciliation and Arbitration? Is it also a fact that representatives of the Australian Council of Trades Unions, acting on the advice of the Public Service Arbitrator, called a. conference of all relevant unions so that their claims could be considered by the Naval Board? Is it true that, due to the uncompromising attitude of the Naval Board, and its refusal to negotiate, the proposed conference did not take place? Will the Minister ensure that emphasis will be placed on conciliation rather than on the adoption of arbitrary methods by the Naval Board ? Does the Minister intend to receive a deputation including representatives of the Australian Council of Trades Unions in order that wage justice shall be given to men who are employed at the naval dockyards?
– I assure the honorable member that, at all times, the Government has considered the claims that have been advanced by trade union representatives for increased wages and improved conditions in industry. Negotiations have been undertaken by officers of the Departmet of the Navy and the Department of Labour and National Service in an effort to conciliate in respect of claims made by trade unions covering conditions of employment in naval dockyards. As a result of conferences that were held from time to time, finality was reached in respect of a number of representations, but a limited number of matters is still in dispute. It was decided to discuss those outstanding matters with the men’s representatives, but the men went on strike at 12 o’clock noon on the day before the arbitrator intended to hear their case. Until they resume work, those matters cannot be considered any further. That is the Government’s policy in relation to industrial unrest, and the representatives of the trade unions have been informed accordingly. The departmental officers had a number of discussions on those matters with representatives of the Australian Council of Trades Unions. Indeed, there were discussions almost weekly. After the men went on strike the arbitrator told them quite distinctly that both the Department of the Navy and the Naval Board had given every consideration to their claims, and they were urged to resume work. They were told that if they did so, the arbitrator would hear their case immediately. That is how the matter stands at present. I regret very much that the men were misled. It has been suggested that the representatives of the trade unions were told that if they cared to ask Mr. Monk to request me to receive a deputation I would do so. That statement is incorrect. At no time have I arranged to receive a deputation of representatives of the trade unions involved in the naval dockyards dispute, and neither the honorable member for East Sydney nor anybody else had any right to tell the men that I would receive such a deputation. The policy of the Government in this connexion has been indicated by the officers of the Department of the Navy and the Department of Labour and National Service to the mem bers of the trade unions and the Australian Council of Trades Unions. The honorable member for East Sydney asked me to receive a deputation yesterday whilst a meeting to endeavour to settle the dispute was in progress. I made it quite clear that it would be necessary for a conference to settle the dispute. No other action could be taken while this conference was dealing with the matter. I hope that no one will urge these men to continue their strike, because they have been engaged in repair and maintenance work in order to keep our naval vessels in fighting order. Our home fleet had a very strenuous year, during which it engaged in exercises in South-East Asian waters. Due to this dispute, necessary overhauls cannot be carried out. I make it clear that after 99 per cent, of the men’s requests had been acceded to, they submitted an absolutely new claim. However, it has been indicated that this claim would also bo considered. As this Government favours arbitration, I informed the men’s representatives that if they returned to work, their claim would be considered by the court.
– I ask the Minister for Commerce and Agriculture whether it is true that the rise of 4d. per lb. in the price of butter has not meant a rise to farmers, but has been accompanied by a fall to them of 4d. per lb. Is it a fact that the widening gap between farmer and housewife is due to a fall in returns for overseas butter and cheese sales, and not to a fall in subsidy? I ask whether these unhappy developments in food prices are made more difficult by ever-rising costs of production in Australia and falling prices overseas, neither of which is under the control of the farmer.
– It is unhappily true that there is a trend towards increased production costs in Australia, over which the farmers have little or no control, but, also unhappily, that condition is not peculiar to the farming community. The position in relation to a subsidy and returns to dairy farmers, and the cost of butter to housewives, is rather too complex to lend itself to a simple explanation, but I should like one or two pertinent points to be made clear and understood. What the Government has done recently in respect of discharging the stabilization obligations to the dairying industry is more than a full observance of the obligations that have been imposed upon the Government by the legislation that has been passed by the Parliament. That legislation embodied in exact terms an arrangement for stabilization of the industry which I negotiated with its representatives. That arrangement was presented to the Parliament with the full knowledge and approval of the industry. The truth of the matter is that overseas prices for dairy products have fallen very sharply. That that should result in reduced returns to dairy farmers is completely inescapable. Dairy farmers have been led to feel aggrieved, but I really think that, if they all understood the position, they would realize not only that they are receiving almost precisely their demonstrated cost of production for the whole of the butter and cheese consumed in Australia, but, in addition, that they will receive this year, in respect of 24,000 tons of butter, between1s. 4d. and 2s. perlb. more than the price for which it will sell overseas. That is a very substantial contribution which the Government and the taxpaying public of Australia are making to the stabilization of this great and worthy industry. The Government feels that it represents a fair holding of the balance between the interests of this great industry and the interests of the taxpaying community of Australia.
– I rise to order. In answering questions asked by members of the party to which the Minister for Commerce and Agriculture belongs that honorable gentleman takes an inordinate length of time. His statements are certainly very complete. Perhaps, as a member of the Australian Country party has stated, the Minister wants to make certain that honorable members understand his answers. Therefore, I suppose, he has to go into detail and use very simple terms.
– Order ! What is the point of order?
– I submit that there is no occasion for the Minister to make a statement in answer to a question, and that is what he is doing. He is not giving an answer to the question. In answers to pre-arranged questions asked by members of his own party he makes statements about various primary industries.
– I submit that the reason why the Minister for Commerce and Agriculture gives longer answers to questions asked by some honorable members on this side of the House is that those questions are more responsible.
– Order ! Questions addressed to Ministers should be brief, direct, and to the point, and I think it is very desirable that the answers should follow that pattern, too.
– I should like to make it clear that dairy farmers are paid week by week what their butter is estimated to yield over the year. This is the first year since 1939 in which the value of our principal bulk of exports has not been known, because this is the first time since that year when there has not been a bulk contract. So, dairy farmers are being paid at the present time not on a known export figure, but on an estimated export figure. I believe that, when the year’s transactions are concluded, it will be discovered that dairy farmers will be entitled to a further deferred payment. That is a condition that was historic in the dairying industry before all the years during which I have had any experience of it, and until the outbreak of World War II. It is a situation that dairy farmers tend to forget.
– Is leave granted?
– Leave is either granted or not granted.
– I would have no objection to the honorable member giving notice that he would move to-morrow, but I think that, having regard to other business that is before us, we should not grant leave to move now.
– Then the right honorable gentleman refuses leave, I take it?
Leave not granted.
– Mr. Speaker, has the time for giving notice of motion passed?
– That time was passed long ago.
– Iwould not object to the honorable member getting leave to give notice of motion.
– That would be the subject of a separate request.
– I shall give notice to-morrow.
– I rise to order. Surely there is nothing to prevent the honorable member for Eden-Monaro from giving notice to-day if he wishes to do so ?
– He has to get leave to do it, because the time for giving notice of motions has passed.
– The time for giving notice of motions has passed?
– Yes. That was the second item that I called - after petitions.
– But it is not unknown, in this chamber, that when an honorable member just loses the call for the time being, the House gives him another opportunity.
– I said that the honorable member could ask for leave to give notice of a motion, but he did not take that opportunity.
– I regard this matter as one of urgency, which should be raised at the earliest possible moment. I again ask for leave to move a motion for the release from custody of Raymond Edward Fitzpatrick and Frank Courtney Browne.
– If the VicePresident of the Executive Council himself is eager to proceed along the lines indicated by the honorable member for EdenMonaro, I suggest that he, as the Leader of the House, should propose the motion.
– I rise to order. I think that this matter should he made perfectly clear. The honorable member for Eden-Monaro had an opportunity, when notices of motion were called by Mr. Speaker, to give notice that to-morrow he would submit this motion. The honorable member refrained from doing so. The Leader of the Opposition (Dr. Evatt), the honorable member for Melbourne (Mr. Calwell), and the honorable member for Eden-Monaro are aware that you have received a letter, Mr. Speaker, requesting that the House should have an opportunity of considering a subject as a matter of urgent importance. It seems to me that the object of the honorable member for Eden-Monaro is to cut across the established procedure of this House, first, by failing to take advantage of the known form in relation to notices of motion and, secondly, by seeking to have his motion debated in the teeth of action by another honorable member, who has conformed to the procedures of the House.
– I rise to order. I have no ulterior motive of the kind that the Vice-President of the Executive Council has attributed to me. I have only one motive, and that is that the House should, at the earliest possible moment, reconsider and rectify what is, in my opinion, an injustice.
– Order ! The honorable member may not debate the matter.
– I am not debating it. The reason I asked for leave, instead of giving notice of motion, was that I wished to have the matter considered a day earlier than would otherwise have been possible. I still wish to bring this matter before the House to-day, or at the earliest moment that the House will allow.
– I wish to speak to the point of order. It is undesirable that there should be any obscurity about this matter. We are not willing to permit the honorable member for Eden-Monaro (Mr. Allan Fraser) to sidetrack the normal procedures, and at once proceed to a debate on these matters which certainly could not be dealt with, with any satisfaction, by the House in the time that would elapse between now and the presentation of the budget. If the honorable member wishes to obtain leave now to give notice that to-morrow he will move his motion, then we shall grant leave. The time has passed for giving notice of a motion, but that does not matter. I want to make it abundantly clear that we do not seek to avoid any debate on this subject. But, if there is to be a debate, to-morrow is the earliest practicable time at which it ‘can occur. If the honorable member now asks for leave to give notice that he will move his motion to-morrow, we shall grant leave.
– I must be guided by you, Mr. Speaker. “Will you allow me to seek leave of the House, out of time, to give notice that I shall move this motion to-morrow?
– Is leave granted?
Opposition members interjecting,
– I give notice that to-morrow I will move-
-Is there any objection to the granting of leave?
– The objection is from the Opposition side.
– Order ! The honorable member for Eden-Monaro is out of order.
Assent to the following bills reported : -
Appropriation (No. 2) Bill 1054-55. Appropriation ( Works and Services) (No.
Bill 1955. Cocos (Keeling) Islands Bill 1955. Defence Forces Retirement Benefits Bill 1955. Judges’ Remuneration Bill 1955. Judiciary Bill 1955. Marriage (Overseas) Bill 1955. Matrimonial Causes Bill 1955. Meat Agreement (Deficiency Payments)
Meat Export (Additional Charge) Bill 1955. Parliamentary Retiring Allowances Bill 1955. Salaries Adjustment Bill 1033. States Grants (Universities) Bill 1955. Superannuation Bill 19.55. Supplementary Appropriation Bill 1953-54. Supplementary Appropriation (Works and
Services) Bill 1953-54. Supply (No. 1) Bill 1955-5G. Supply (Works and Services) (No. 1)
Bill 1955-50. Trade Marks Bill 1955.
Motion (by Sir Eric Harrison) agreed to-
That the House, at its rising, adjourn to to-morrow at 2.30 p.m.
- (Hon. Archie Cameron). I have received from the honorable member for Ballarat (Mr. Joshua) an intimation that he desires to submit a, definite matter of urgent public importance to the House for discussion, namely -
The proposal of the Government to lift interest rates on housing loans under the Commonwealth-States Housing Agreement, which action it is claimed by the Victorian Housing Minister will force heavy increases in Housing Commission rents.
Is the proposal supported?
Eight honorable members having risen in support of the proposal,
.- This is a matter of the most urgent public importance, which has disturbed the peace of mind of many respectable citizens in this community. A cruel proposal has been put forward by the Government which is completely devoid of any consideration for the public, and for the economic position of the Commonwealth. It represents a blow against the States, and it will cause much hardship in the community. What has caused this position? It has been caused by statements appearing in the newspapers during the past week. So that every one will be completely informed on the subject, I shall read from the Age of last Thursday, the 18th August, which published the following article: -
Rents for new Housing Commission homes will rise by about 17/6 a week to about ?4/12/- if proposals by the Federal Government to lift interest rates on housing loans to the States are accepted. Federal Cabinet is believed to have agreed in Canberra yesterday to submit to State Premiers a proposal to raise the interest rate to 4i%. . . . The Minister of Housing for Victoria, Mr. Petty, said last night the higher interest rate would mean that rents for new Comission homes which cost about ?3,000 would have to be raised by about 17/6 per week. Under the Commonwealth -States Housing Agreement tenants were entitled to a rebate when their rental exceeded 20% of family income. The rental increase would add to the cost of the rebate grants made by thu State Government. No date has been fixed for a Commonwealth-State Conference to revise the Housing agreement.
This is a proposal which should be dealt with. Obviously, the newspaper reports have been printed in order to soften up the people, and prepare them for what is to come. I am glad of this opportunity to bring this subject before the House. This proposal completely ignores the present serious economic position of the Commonwealth. In nearly every State, the cost of living is the basis of wage policy. It is the basis upon which wages are calculated. Trade unions which have State awards, and State governments, apply the cost-of-living figures for the purpose of making quarterly adjustments to wages. Rent occupies a most important place in the cost of living. The Government itself admits that rent represents 20 per cent, of the family expenditure, and it has, therefore, made certain rules, which provide that where the rent exceeds that proportion a reduction will be made. It cannot be denied that rent is probably the most important item in the family budget to-day. Now we find that the rent is to be raised. Every one knows that that will cause a rise of wages throughout the Commonwealth. If wages are raised in one place, then there is a flow of labour from other places in order to enjoy the higher rates of pay. This proposal will raise the wages of the community, and it will increase the amount of inflation in the community. That is a very serious matter, in view of the mounting inflation which exists at present. Our wages policy is most important at the present time. When a lead is necessary, and when stability is so hard to achieve, I find it impossible to comprehend why the Government should put forward a proposal of this sort. I hope that what I have to say to-day will so arouse the public that it will prevent the Government from going ahead with this useless proposal. The increase of wages will be a very serious embarrassment to the Government, on top of its present embarrassment.
The second thing I have to say about this proposal is that it is a blow at the
States, because there is a provision in the housing agreement to the effect that the rent payable on a house must not exceed 20 per cent, of the tenant’s income. It is obvious that when rents are raised to something like £4 12s. a week, every person receiving a wage of less than £23 a week must have his rent adjusted. The proposal, if given effect, would create a most extraordinary position. There might be a row of houses, all of the same kind, for which different rents are being paid. The State governments are paying interest at the rate of 4 per cent, to the Australian Government on the capital cost of those houses, and they will then not be able to recover that amount of interest from the tenants of the houses. They will, therefore, have to provide the money from their own State budgets, which will increase their difficulties. From the point of view of the States it is a very poor proposal, and I hope that the Government will not continue with it.
I think, however, that the worst feature of the proposal is the very cruel and inconsiderate attitude of the Government towards the tenants of the houses. Those people represent a section of the community which deserves the utmost consideration. It will be noticed from the newspaper report that it is intended tha? new applicants for housing commission homes will be subjected to this higher rate of interest, but there is no mention of the old occupants of housing commission homes being subjected to the increase in rent. If they are to be so subjected, and if this proposal is merely the beginning of an all-round increase in the rates of interest, then it will be a very serious thing for every person in the community who occupies a housing commission home. But it is even worse, in a sense, if it applies only to the new applicants for housing commission homes. They are the people who, in many cases, have waited the longest. They are people with young families who are trying to set up a home. Probably they have extra furnishings to purchase, and they already have heavy financial burdens on their shoulders. They are people who are raising young families, and who ought to receive a great deal of consideration, but they are the ones who are singled out to pay this increased rate of interest. For that reason, I find this proposal absolutely shocking. These people have waited a long time for houses, through no fault of their own, and now they will be forced to pay higher interest. This is a matter that should exercise the mind of the Government. Why should people who have waited a long time for a house, and finally get one, find that they have to pay rents between £4 and £5 a week?
I know that the situation calls for deep consideration, and perhaps for a departure from the ordinary rules of economic procedure. It calls for the type of thinking which gives consideration and sympathy to people who are setting up a home. I appeal to the Government to give it that consideration, and not to deal with the matter in the manner of a harsh businessman who says, “ Up with the rents, because we thereby make more profits “ ; or, “ Up with the rents because the rules of economics tell us that that should be done”. Governments are supposed to consider these matters in a proper, humane and sympathetic way. T feel that the Government is not meeting the situation as it should. There is no doubt at all that the most pressing need in the community at present is for more houses. That need is increased by our rate of immigration, and by the increasing number of our own people.
The Government is making no effort at all to curb the great demands being made, quite irresponsibly, on labour, materials and money, by the erection of buildings which are quite unnecessary. In every town and suburb one may see a row of onebrand petrol stations, every one of which has used sufficient materials and labour to provide a couple of houses in the district. No one says anything about that, ft does not matter that the people need houses - these one-brand petrol stations must be erected. Enormous demands on labour and materials are also made by the expensive “ face lifts “ which many big city buildings have received. That is quite unnecessary in our present difficult position, but no attention is given to such matters by the Government. Instead, we have this proposal put forward to throw a greater burden on the people who are setting up homes. This Government is merely increasing the difficulties of the State Government, and it is creating worse confusion in the whole housing situation. There is a great variation in rents, due to the different capital value of houses put up at various times, and it is extremely difficult for one tenant to understand why his rent is so much more than the rent paid by some one else. That is quite beyond the. comprehension of tenants, and this proposal will put the matter even further beyond their comprehension. They will not be able to understand why their rents are as high as is proposed.
The Government should shelve this proposal. Such matters as this can be sorted out when we do not labour under our present difficulties, and v.’hen the people who need houses have got them. Obviously, the proper thing to do is to build more and more houses. If an adequate number of houses is provided, then we can better consider what is to be done about the rents. If people then do not like the rent of a house, they will be able to go and obtain a house at a suitable rent. At present, they cannot do that, because in many cases there is nowhere else for them to go. The whole housing problem .is very difficult at present, because young people without families, who are as much entitled to a home as other people, are not even considered by housing commissions. That is the case in my own State of Victoria. The same applies to old couples without children. They cannot be provided with houses until people with families are housed. It is a deplorable state of affairs, which calls for the greatest efforts on the part of the Government. f submit that the proposal is a cruel one, and that it should not be continued with, and I hope that what I have said will cause the Government to think about the matter again, and postpone the proposal until some other time.
– I am a little puzzled by all this. My friend, the Leader of the Anti-Communist Labour party (Mr. Joshua), has sought to castigate the Government in very vigorous and energetic terms, on the basis, on the honorable gentleman’s own admission, of a newspaper rumour.
– The statement was made by the Minister of Housing in Victoria.
– The Minister of Housing in Victoria also has been misled and has quoted a rumour. That rumour has been taken up by my friend from Ballarat, the Leader of the AntiCommunist Labour party. But he has gone even further. He has staged, as far as he could, a full-scale attack on the Government on a basis of a newspaper rumour. I firmly believe that that has been done from perfectly genuine motives, but it makes it necessary for me, for the sake of clarity, truth and the Government’s record, to give the facts of the situation to the House.
Those facts are, that the Commonwealth and State Housing Agreement was entered into by a Labour Federal Government, with the State governments, in 1945-46. A separate agreement was entered into with each State, and the dates of the various agreements differed. The agreements between the Common-
Wealth and the various States, therefore, were to run out at different dates during the present financial year. This matter was discussed at the last Conference of Commonwealth and State Ministers, when the Prime Minister (Mr. Menzies) gave notice to the Premiers that the Government proposed, in any revised and new Commonwealth and State housing agreement, to make provision for a percentage of houses built under the agreement to be available for purchase by the public, in addition to the houses that were intended normally for renting under the agreement. Those are all the facts at the moment, other than that the Prime Minister told the Premiers at the last conference of Commonwealth and State Ministers that the Commonwealth would crystallize its ideas about the revised form of a Commonwealth and State housing agreement and that, when that revised form had been considered by the Government, its proposals would he submitted to the States at a conference with the Premiers, and that the Premiers would then have an opportunity to criticize the proposal and advance their own views. That is in hand. Cabinet has had its first look at a set of proposals for a new agreement; but no decisions whatsoever have been made in respect of an increase of the interest rate or anything else. The matter is still under what I think I might call an “intense investigation “. Further discussion will take place in the relevant department, and then in Cabinet. After that, the proposal will be submitted to the Premiers, and, subsequently, to this House for debate and ratification. That is the situation. There has been no proposal of any validity concerning the Government’s intentions regarding the interest rate to operate under the new agreement when it eventually takes shape.
– Rents are not referred to in the new agreement, but only purchase prices.
– The new agreement, when framed, will, of course, be enshrined in federal legislation, which will be submitted to this House. It will deal with all aspects that should properly be dealt with from the Commonwealth’s point of view. It will be presented to the States, after which there must be quae quoque State legislation.
– “Will the Minister guarantee that the interest rate will not be decreased ?
– I have not the least idea whether it will be increased or decreased. All I know is that, I think, all the Labour Premiers at the last conference of Commonwealth and State Ministers agreed to an increase of the interest rate to 4^ per cent, for houses for sale, not for rental. It occurs to me that that is probably the basis of this rumour on which the honorable member for Ballarat has based his remarks. The interest was to be raised to the current long-term bond rate of 4^ per cent. Speaking from memory, that was not put forward by the Commonwealth. I think that it came up - I do not want to be definite about this - on the instigation of one of the Premiers, and was agreed to with not very much debate. His suggestion was that houses for sale should be financed at the rate of 4$ per cent.
I cannot deal with this matter in very great detail because of the limited time available to me, but there are certain aspect” of it on which T wish the House to be clear. The 3 per cent, interest rate has been current for ten years. That rate of interest might have b»en a reasonable rate ten years ago but to-day, as we know, it is li per cent, below the long-term rate at which the Commonwealth can borrow. Therefore, the Commonwealth i3 losing heavily in respect of the many millions of pounds it make3 available to the State governments for houses built under the Commonwealth and State Housing Agreement. The State governments, of course, can, if they please, let those houses for lower rentals than what is known as the economic rental, based on the 3 per cent, interest rate, financing the difference out of their own resources. The Victorian Government led by Mr. Cain did that. Over the last three financial years the Cain Government, successively in each year, allowed rebates from the economic rental for Commonwealth and State Housing Agreement houses, to the extent of, I think, an average of about £100,000 a year. That situation, which was created by the Cain Labour Government, has been inherited by the Bolte Liberal-Country party Government which succeeded the Cain Government. For all I know, the Bolte Government wants to move that burden from its budget. It may very well be that the rumours of which I have spoken have been based on the fact that the present Liberal-Country party in Victoria proposed to stop that financial drain on its revenue and bring the rents of houses back to what is, after all, a very low economic rental based on the 3 per cent, interest rate that it is now paying for the money that it borrows. The Commonwealth could not, even if it wished to do so, increase the rate of interest for rental houses built under the agreement, during the currency of the agreement, which is ten years, and in relation to which there is an agreed and uniform terminal date. That terminal date is the 30th June, 1956. Therefore, the Commonwealth could not increase the interest rate above 3 per cent, in relation to houses for rental, before the end of this financial year. That is one fact which, above all others, squashes at birth the rumour that I have mentioned.
There are some figures in connexion with the cost of building houses, publication of which may do some good. The rent charged for a house that cost £3,000 to build which, I suppose nowadays is something like a ten-square house, would be £3 10s. 6d. a week under the Commonwealth and State Housing Agreement, based on the interest rate of 3 per cent. One cannot give these figures with cold precision, of course. I should like to remind the House that the rent for a privately built house of the same size, type and approximately the same construction cost, would be £5 5s. a week, as opposed to £3 10s. 6d. a week. That comparison shows the benefit that occupiers of houses rented under the Commonwealth and State Housing Agreement receive. Therefore, if there is any outcry about the rents of those houses it is wholly unjustified. I do not blame the honorable member for Ballarat for bringing this matter up. It is a means of castigating the Government, but I suggest that it is based on very slender premises. It is also a means by which the honorable gentleman has been able to display his natural and, I am quite sure, his genuine concern and sympathy for those on the lower income levels who have to pay out an appreciable proportion of their income in rent. Also, from what I might describe as perhaps a political point of view, his raising of this matter is legitimate. But I think that the honorable gentleman’s resolution is based on no real foundation whatsoever. I am making no predictions as to what the interest rate will be. I say only that the 3 per cent, rate is, to-day, a highly concessional rate. The new rate has to be argued out, and agreement reached on it with the State governments, a number of which are Labour governments, in the course of this financial year. Until that happens I have not the least idea as to what the interest rate will, in fact, turn out to be. There are also concession rates under the agreement for those on the basic wage. A man on the basic wage in Victoria to-day - and there are very few men who earn only the basic wage - gets a house for a rent of £2 7s. a week under the agreement. People on the basic wage, who are getting this very great bargain, represent only 5 per cent, or 5£ per cent, of all occupiers of Commonwealth and State Housing Agreement houses. The very fact of the great generosity of the Commonwealth and State Housing Agreement, the fact that people are able to obtain houses for very much less than they can from any other organization, with the possible exception of the War Service Homes Division, has had a dampening effect on the private building industry. People are discouraged from building, and the private building industry has been almost destroyed. That is one of the minus or bad effects of this extreme generosity.
– That is because of the unavailability of loan money.
– It would take a very long time to go into that matter. I am merely saying that no amount of loan money would encourage people to build houses and to compete with the Commonwealth and State Housing Agreement projects. It is the competition provided by the building of houses under the Commonwealth and State Housing Agreement mid the War Service Homes legislation that has almost completely stopped private building. That is why, I expect, so many people in Australia to-day are building their own houses with their own hands, with such technical aids as they are able to employ. Such houses represent something like a third of all the houses in Australia to-day.
– A good thing!
– Indeed, but I think that the drying up of private building is an outcome of the generosity of this scheme.
We all remember, a lot of us with a good deal of discomfort, Mr. Dedman’s Statement, presumably on behalf of his party, since he made it as a responsible Minister, concerning the making of “ little capitalists “. He said that the Labour Government of the day was not in favour of building houses to be purchased; it. was in favour of people renting their houses. The answer to that has been given by the statistics of to-day, which show that SO per cent, of the houses in Australia are being built by owners to live in. Only 20 per cent, of the houses being built in Australia to-day are being built for rental. That includes houses built under the Commonwealth and State Housing Agreement.
– What is wrong with that?
– Nothing, but it gives s complete denial to the policy of the Australian Labour party of only a few years ago, which was against people owning their houses, because it was thought that if they did so they would become little capitalists. Those are the simple facts of this situation.
Under the new Commonwealth and State Housing Agreement proposal, it will be seen that the Government is going to encourage the canalizing of finance into building societies and other approved instrumentalities. The wide variety of building societies that exist in Australia have been most successful and have clone a great deal of good. Some of them get their money at 44 per cent., but, of course, many of them get it at more than 4) per cent. Briefly summarizing the position, the simple fact is that there is no basis whatever for the rumour, the story, on which the Leader of the AntiCommunist Labour party has based his attempted castigation of the Government. I have tried to give the simple facts, which cannot be denied. I have made a factual speech without any politics in it, as opposed to the speech of the honorable gentleman, which, I am afraid, was a political speech without any facts in it.
.- The subject of housing is of great significance, and there is every reason why honorable members of this House should take a direct interest in the future of housing within the Commonwealth. It is indeed reassuring to hear the Minister for External Affairs (Mr. Casey) say that this debate is based on rumour. I hope that the basis remains one of rumour. So that I should not be misled in relation to this matter, I referred to the 1955 agreement between the Commonwealth and the States, and I also had a look at clause 14(3.)(c), to which the Minister referred. I found that that clause of the schedule to the act refers only to the. purchase of a property. Subclause (3.) (c) states clearly and explicitly that the rate of interest to be charged to a purchaser, in respect of any purchase money owing to a State, shall be £4 10s. per cent, per annum, or such other rate as may be agreed from time to time between the Treasurer of the Commonwealth and the Treasurer of the State concerned.
The report upon which this debate has been based appeared in a number of newspapers on or about the 18th of this month. The Melbourne Herald stated -
At present the Commonwealth charges interest on these loans at the rate of 3%. lt is proposed to increase it to The Minister for Housing (Mr. Petty) said last night this would mean that rents for new commission homes, which cost about £3,000, would have to be increased by about 17/6d « week.
He made the whole thing much clearer by going on to say -
Under the Commonwealth-States housing agreement, tenants were entitled to a rebate when their rental exceeded 20% of family income.
He emphasized the point by saying -
The rental increase would add to the cost if the rebate grants made by the State Government. lt seems to me that the statement of the Victorian Minister for Housing is quite unequivocal. However, as the Minister for External Affairs has assured us that that statement was based ou rumour, I am happy to accept his assurance. I think it would be very cruel to look for party political advantage in connexion with a subject of this nature, particularly if only rumours were involved. This matter is of great importance to thousands of people who are renting housing commission homes.
I suppose that the division which I represent, and for which I propose to stand at the next general election, contains more housing commission homes than possibly any other division in Australia. In that area, there is a good deal of understandable agitation. I am informed that last Sunday a number of people gathered together and held impromptu meetings with the object of making protests in the right quarter against the proposed increase of the interest rate, which would have the effect of also increasing their rents considerably. I think it is a great pity that all Australians cannot own their own homes. We should consider seriously making more loan money available to cooperative building societies with that object in view. People have not been able to secure homes in recent years largely because costs have risen almost beyond control. In addition, shortages of building materials have been an important factor. Shortage of labour also has caused a considerable slowing down in the rate of home-building. As I have said, the difficulty in obtaining loan money has given much cause for concern. All of these things have brought the housing agreement between the Commonwealth and the States into great prominance.
Because of the inflationary condition in which we find ourselves to-day, it is doubtful whether a person could think about securing a home for himself unless he had at least half the purchase price. That is a very great obstacle in the way of people who have been recently married. Of course, the necessity to have half the purchase price before commencing to build is only a part of the problem associated with obtaining a home. There are all kinds of things which must go inside the house, and I suggest that it would be necessary for a young couple to have two- thirds of the total cost of the home before commencing on the venture.
As is well known, from time to time we are faced with great difficulties concerning the availability of building supplies. At one time bricks will be short, at another, cement, whilst there is the almost continual vexed problem concerning the difficulty of obtaining sufficient supplies of galvanized iron, which is so essential for almost any type of building. These matters have not only slowed down the rate of home building but also have increased the cost of getting into a home. The general shortage of labour, and the other factors to which I have referred, have made home-ownership something that can be thought about only by a very favoured few. I have already referred to the difficulty of obtaining the loan moneys necessary for building. The position of the co-operative building societies is absolute proof that the Minister for External Affairs wrongly stated the position. Thousands of people in Australia are most eager to build and own their own homes. It is not true that because they can get housing commission homes at rents of £2 10s. or £3 a week, or whatever the case might be, they prefer not to own their own homes.
– I said nothing to the reverse effect.
– I understood the Minister to say that there was great competition for housing commission homes because the people know that they can get them at such low rents.
– Tenants of housing commission homes may buy those houses.
– I have the honour to be a director of three co-operative building societies in my district. The people who administer those societies have been greatly worried about the large number of. applicants for advances whose needs the societies have been unable to satisfy. It is most remarkable that the only thing preventing a great many people from buying a home is the lack of funds which rnakes it impossible for the co-operative building societies to accept any more members. This matter should be emphasized in any discussion on the subject of housing.
I wish now to mention a very significant matter. I hope that the Minister for External Affairs is correct when he states that there is no truth in the rumour that rents are to be increased, and that the suggestion will remain a rumour. Increased rents will merely impose a greater strain on the people with the largest families, who always carry the biggest burden. In the main, housing commission homes in Victoria are allocated to applicants on the basis of the size of the family. The bigger the family, the easier it is to obtain a housing commission dwelling. I venture to say that it is almost impossible for a couple without a family to obtain a housing commission home. Any person who has obtained the tenancy of a three-bedroom home from the housing commission in Victoria has done so only because his family is large enough to satisfy the conditions imposed by the commission. Obviously, a three-bedroom dwelling is dearer than a smaller house. If the rent of a £2,000 two-bedroom house will be increased by 17s. 6d. a week, the burden on a tenant of a three-bedroom home, who has a larger family, will be even greater. If it is suggested that rents be increased, the responsible authorities must not forget who will suffer the greatest penalty by such action. The tenants of housing commission homes are people with families, and they are the people who are of the most value to the community and who occupy a most worthy place in it. If any suggestion is made that housing commission rents be increased, those people should receive the first consideration, and I trust that the Government will take their claims into consideration before anything further is heard of the proposal to increase housing commission rents. Naturally, there have been protest meetings about this matter.
– Order! The honorable gentleman’s time has expired.
.- The honorable member for Darebin (Mr. Andrews) has disclosed the reason why he supports the proposal for discussion, and in the light of his disclosure his support is understandable. He informed us that there are more housing commission homes in his electorate than in any other electorate in Australia. That is a Very sound reason why he should support the proposal. However, I was glad to hear him say that he wholeheartedly supported the encouragement of homeownership through co-operative building societies. The honorable member’s remarks indicated clearly that he believes much more firmly in home-ownership than in encouraging a renting community. I agree with him, and I am sure that all other honorable members agree with him.
I am at a loss to understand why the honorable member for Ballarat (Mr. Joshua), the Leader of the AntiCommunist Labour party, submitted the proposal for the discussion, of this matter. The members of that party usually act logically, but there is a serious lack of logic in this proposal. No honorable member suggests, and I am sure none wishes to suggest, that rents should be increased. It is essential that we adjust our economy so as to enable the people to obtain homes and accommodation on the easiest possible terms, but we must face the facts. Every one must face the facts, but the proposal of the honorable member for Ballarat ignores them.
I should hate to think that homeless and defenceless people were exploited for party political propaganda purposes, but this proposal is tinged with a hint of such a purpose. The honorable member for Ballarat did not, in the slightest degree, suggest how we should overcome the tragic inability of many people to obtain homes. His proposal for discussion relates merely to a specific circumstance of one section of the community. The Minister for External Affairs (Mr. Casey) rightly stated that the suggestion of the honorable member for Ballarat was utterly false. There is no’ proposal before this House to increase rents and the Government has made no official statement to the effect that the interest rate under the Commonwealth and State Housing Agreement shall be fixed at 4£ per cent.
– Then where did the Victorian Government obtain the information ?
– The Victorian Government did not state that the rate would be 4£ per cent. . As the Minister has stated, the existing agreement expires on the 30th June, 1956, on an understanding reached between the Prime Minister and Premiers of the States at a recent conference. The terms of any new agreement that might be made have not yet been decided and are not the subject of discussion in this House. I charge honorable members opposite with insincerity in this matter. They are a section of the Labour movement and they must know that the Australian Labour party was the architect of the housing agreement. We have seen how ill-informed honorable members opposite are about their own agreement, which was made by a Labour government in the financial year 1945-56. In the agreement it was stipulated that each advance should bear interest at a rate not exceeding the rate payable in respect of long-term Commonwealth public loans. At the time the agreement was made that rate was 3 per cent. The present long-term interest rate is 4£ per cent., and if Labour were now in office the interest rate would be fixed at 4rJ per cent, under the agreement.
– It would not be fixed at that rate.
– What I have stated is the truth. It is only because this Government has been decent enough to allow the agreement to run its full tenyear term and to pay the difference between 3 per cent, and the rate that it has had to incur on the money advanced to the States that housing funds are being made available at an interest rate of 3 per cent. It is wrong for honorable members opposite to state that this Government is not aware of the need for cheaper homes. The Australian Labour party, in the housing agreement that it sponsored, showed no indication that it wished interest rates to be kept down.
I point out to honorable members who , support the proposal for discussion that the interest rate constitutes only a minor part of the rent and not the whole of it as they seem to imply. The rent formula provided in this agreement is perfectly clear. It lays down that the rent shall be arrived at by an annual amortization allowance to provide for the interest and the retirement of the capital cost of the house built, over a period of 53 years. In addition, the cost of maintenance and replacement must be included, which normally amounts to 2 per cent, of the capital cost of the building. Rates and taxes, insurance and similar outgoings have to be added also. The fact is that the interest itself is only a minor part of the figure representing the rent.
The real problem to be faced - which honorable members of the AntiCommunist Labour party have never mentioned in their arguments in favour of housing commission homes - is the cost of building the house. I am all in favour of interest being kept as low as is economically possible, but it is of no use harping about interest rates if the cost is allowed to soar to the sky, and occupiers cannot possibly meet the rent which is to be based on that cost. It is not possible to reduce the cost of building a house if some of the methods advocated by the Labour party are followed. Costs will never be reduced so long as a campaign is conducted all over Australia by certain sections of the Labour party encouraging strikes. I have in my hand a pamphlet entitled “ Strikes Raise Living Standards “. In other words, Labour advocates strikes. Copies of it are being circulated everywhere. That kind of thing will not contribute to a lowering of the cost structure ; neither will a “ go-slow “ policy. In some States, such as New South “Wales, an increase of the royalties payable on timber produced in that State has a great effect on the cost of houses built by the Housing Commission. That is also true of the increase of freight charges in New South “Wales. These factors have a greater effect on costs, and therefore of rent, than has the interest rate.
Any one in Australia who knows anything about government administration is aware that governments cannot economically build houses or manufacture anything. In government housing undertakings in New South Wales and Victoria, high overhead administration charges and all the other factors involved in the cost of building a house raise costs far above what could be achieved by private industry. Governments cannot build houses economically, and that is where the Liberal party differs from the Labour party. The Labour party is “playing up “ to only one section of the community. Do members of the Labour party suggest that people occupying housing commission homes should be given preferential treatment over those who borrow money to buy their homes? Is it suggested that housing commission tenants are a select group? Frequently commission homes are used for the purpose of political appeasement.
-Order! The honorable member’s time has expired.
.- Despite the assurance which the right honorable Minister for External Affairs (Mr. Casey) sought to give, there is a very imminent and real threat of an increase of interest rates for persons who rent housing commission houses under the agreement which will have to be made when the present agreement expires wine time during this financial year. This agreement between the Commonwealth and the States, agreed to by Labour and Liberal governments in all States ten years ago, expires this year.
Consequently, a new agreement will definitely be concluded. It is to be hoped that the interest rate provided in the new agreement will not be above that in the old one.
I have said that this is a real threat, because one has only to examine the record of the present Government in other matters concerning interest rates to realize the overwhelming likelihood that the interest rates in a new housing agreement will be increased also. The present agreement between the Commonwealth and States refers to an interest rate not exceeding that on long-term public loans. When this Government came into office, the interest rate on longterm public loans was 3^ per cent. In August, 1951, the rate was raised to 3? per cent. In November, 1952, it was raised again to 4£ per cent., at which it now remains. Honorable members are well aware that this is a higher interest rate than is paid by any other British Commonwealth country on long-term loans.
Secondly I invite the attention of honorable members to the interest rate on overdrafts. When this Government came into office, the overdraft interest rate charged by private banks was 4^ per cent. In July, 1952, the rate was raised to 5 per cent., at which it now remains. As a third example I give the interest rate charged by the Commonwealth Bank on the loans it makes to building societies. This is particularly important in connexion with housing, because the Commonwealth Bank advances £9 out of every £10 received by the building societies. When this Government came into office, the Commonwealth Bank was making advances to building societies at an interest rate of 3* per cent. In July. 1952, that rate was raised to 4$ per cent.
In each of those three cases the Australian Government was responsible for the increase. It is well known that the Australian Government exercises a predominant influence in the Loan Council, which fixes the rate of interest on longterm loans. The Australian Government is empowered also to direct the policy of the Central Bank, which fixes the overdraft interest rate. The Australian Government determines also the policy of the Commonwealth Bank, which makes nine-tenths of the advances to building societies. In all three cases, therefore, it is impossible for this Government to evade responsibility for the very large increases in interest rates which have occurred.
In order to make a purely factual and non-partisan speech on this matter, as the right honorable Minister for External Affairs claimed to do, one must admit that there is a real threat that in this remaining matter the Commonwealth will insist on a higher interest rate in the housing agreement which it will make with the States this financial year. Itwill have a predominating influence because it will have to find the money. Consequently, it will say to the States, as it has said hitherto in connexion with this agreement, “ You will have to take what we give you, and you will pay what interest we decide “.
It is of great importance to realize the effect of the interest rate on the amount of repayment. It may be said that the tenants of commission houses are not repaying the amount of the cost of their houses. That is not so. As the honorable member for Bennelong (Mr. Cramer) has pointed out, the agreement itself provides that over a period of 53 years the cost of building a housing commission dwelling will have been repaid together with interest. The tenant will make the repayments. He, or his descendants, or his successors may not own the house; hut whoever they are, they will have paid off the whole cost of the house. In 53 years the Government will have been completely repaid the whole amount that was originally advanced to build that housing commission dwelling. Therefore, whether a tenant of a housing commission house remains only the tenant, or enters into an agreement to purchase the house, he is in fact affected by the question of interest rates. If he agrees to pay the house off over a period of 30 years, which is a good aver- age period, and if he borrows or has to pay off £2,500 in that period of 30 years, lie will pay £2 9s. a week by way of repayment, if the interest rate is 3 percent He will pay £2 16s. a week if the interest rate is 4 per cent. He will pay £3 2s. 6d. a week if it is 5 per cent. The interest rate is far from being a minor portion of the payments. It can amount to 50 per cent, of the payments over a period of 30 years. If the interest, rate is 5 per cent., the person who is paying it, either as tenant or as mortgagor, will pay twice as much as the amount borrowed.
– Who is talking about 5 per cent.?
– If the honorable gentleman had been following the debate, he would have learned that 5 per cent, is already the rate to which his Government lias increased the interest on bank overdrafts under which many people buy houses. It is already the rate charged by building societies, through which mam other people buy their houses.
– What does the honorable member suggest in order to get that rate down ?
– I suggest that housing is one of the most essential social services in this country. It is a social service which has been lamentably neglected by this Government in the nearly six years that it has been in office.
– The honorable member cannot ignore statistical facts.
– Whether one looks at the record of the War Service Homes Division, where only half the applicants in every year receive the advances for which they apply, whether one looks at the record of the housing commissions of the States, which receive only two-thirds of the amount for which they apply and to which they are entitled, or whether one looks at the record in regard to building societies, where the waiting period for applicants is at least two years, one will see that this Government has fallen down on its job in relation to housing.
Opposition Members. - Hear, hear!
– No more houses are being built in this country now-
– Order ! The honorable gentleman may not discuss the whole subject of housing. He must get back to the subject-mutter of the debate.
– No more houses are being built now in Australia than were being built four years ago. The rate of home building in this country is static.
The only thing concerning home building which has increased in the last four years is the interest rate. There is every reason to believe that in connexion with housing commission homes, as has already been the case in connexion with homes built through building societies and on bank overdraft, there will be an increase in the interest rate before the year is out. The threat is real; the threat is imminent. I am asked what we would do about it. I merely say this: In regard to housing commission houses, as in regard to all other avenues for building homes, we would subsidize the interest rate, if it is not possible to get people to subscribe to loans at the prevailing rates. We would also guarantee at least 95 per cent, of the amount required to build or purchase homes.
– Order ! The honorable gentleman’s time has expired.
.- As the honorable member for Werriwa (Mr. Whitlam) made certain comments towards the end of his speech, I want to mention just two figures. One represents the total number of homes that were completed by this Government in the year ended the 31st March last, no less a number than 79,1’73. This figure, Mr. Deputy Speaker, excludes war service homes provided, a total of 12,786. I think that any person who looks at those figures will realize that that is an exceptional performance under present-day conditions and a complete refutation of the statements made by the honorable member for Werriwa. Having said that, might I deal with the question which is before the House? First, it has been stated that trie interest rate under the Commonwealth and State Housing Agreement is to be raised to 4^ per cent. The Minister for External Affairs (Mr. Casey) raised the question of whether this was a statement of fact or a surmise on the part of the Leader of the AntiCommunist Labour party (Mr. Joshua). I think that the Minister made it quite clear that no statement has been made by any Minister of the Government to indicate that the rate will be increased to 4i per cent. Therefore, this matter comes before the House, supposedly on the basis of being of great public importance, when in fact we are dealing only with something which is a surmise and not something which is actual. It is a pity to waste the time of the House in discussing a matter which is based purely on conjecture. However, it is being discussed, and therefore I want to make one or two points in connexion with it.
– Will the honorable member deny the assertion that the interest rate is to be increased?
– I must deny it, because no authoritative statement has been made on the subject. I think that sufficient has been said in relation to that matter.
The second point I want to make is one which was made by the honorable member for Bennelong (Mr. Cramer). It is that, strange as it may be, the only criticism offered at the present time is in relation to this one component of the rent of these homes. No question has been raised of their increasing cost, of the reasons why these costs have been rising, or of what can be done by the Government and by the community at large to reduce costs so that rents may be reduced. The only component of rent which is mentioned is interest. The honorable member who raised this subject did so, in my opinion, only for purely political purposes, because he believed it to be a matter upon which the Government may be subjected to some type of criticism. I think that if the honorable member for Ballarat had given his attention to some of the other elements of the real cost of homes, and helped us to find a solution to that particular problem, he would have made a much greater contribution to the consideration of the matter which we are discussing. He has said nothing about the inefficiency of State governments. Let me inform the House that, in Queensland, for every two persons who are occupied in the construction of these homes, there is one administrative officer. How many builders could remain in existence if they were keeping an administrative officer for every two persons employed on actual construction? That is, I believe, a criticism which should be brought before the public, to indicate why the cost of these homes is so great. I have not the time to dwell further on that particular aspect.
The fundamental criticism is in relation to the rise in the interest rate. Why has it risen? I think that we must accept, and every reasonable member will accept, the fact that money is a commodity. I think that money is just as subject to the law of supply and demand as is any other commodity in the community. When it is plentiful, interest rates are low; when it is scarce, interest rates are high. Let us go back to 1949, when the present Government came into office, and see the conditions that existed then, and why money was plentiful. Honorable members will recall that, at that time, all sorts of restrictions were in force. We had rationing, and controls of a great many commodities and aspects of our life. There were shortages of goods which the people required, and that led to some black marketing. Those were the conditions which made money plentiful in the community. Because there was plenty of money, the people subscribed to Commonwealth loans, even though the rate of interest was low. In addition to the restrictions which I have mentioned, there was also capital issues control. That meant that the savings of the people were not directed into channels which would tend to develop industries. There were no avenues readily available to the people for the investment of their money, and so they subscribed to Commonwealth loans. Fortunately, for a number of years we have enjoyed a much freer economy.
There have been difficulties in loan raisings. Honorable members know that all Commonwealth capital expenditure is being met from revenue, and that the Australian Government has to subsidize the States in relation to their capital expenditure. Although all the money that can be obtained from the people has been gathered in, it is not sufficient to meet the works programmes of the States. In 1950, when the interest rate was 3£ per cent., the loan raisings amounted to £124,000,000. In 1952-53, when the interest rate was increased to 4i per cent., loan raisings were only £63,200,000. In my opinion, it is clear that the people were not subscribing to Commonwealth loans because they did not receive what they regarded as an adequate interest return. In the two years which followed, because of the higher interest rates prevailing, the loan raisings were £11S,200,000 in 1953-54 and £127,400,000 in 1954-55. Those figures, 1 maintain, bear out what I have said.
The Government has met the problem in the most practical way. I do not think we should run away from the fact that there was a demand for higher interest rates, or argue that the higher rates should not be carried to those who actually use the money. That would imply that the higher rates should not be carried to those who rent homes. Some one has to pay, and if persons who rent homes do not pay the full 4£ per cent, interest, but pay only 3 per cent.., or some other rate below 4^ per cent., the difference must be borne by the general taxpayer.. If some other person, who has been provident, decides to build his own home, and is prepared to pay 5 per cent, interest to a bank for money to enable him to do so, the Labour party says that, in addition to that 5 per cent., he must contribute something towards the interest payable on homes occupied by other people who pay rent for them. I cannot believe that any member of this chamber would regard that as a fair basis for the distribution of interest payments.
– We would subsidize all home-builders.
– If we are to go into all those aspects of the economics of home-building, we shall be here for a long time.
– The honorable member’s time has expired.
.- I have listened with interest to the debate which has arisen out of the proposal which the honorable member for Ballarat (Mr. Joshua) has submitted for discussion. The matter has been raised as a result of rumours that it is likely that the interest rates payable in respect of housing commission homes are likely to rise in the near future. The Minister in charge of the House has denied that interest rates have already risen, but he has not forthrightly denied that there is a possibility of interest rates rising in the near future. Some honorable members opposite have shown clearly that since the Government which they support came into office interest rates on public loans have risen. Some of them have gone further, and have emphasized that the costs associated with homebuilding have risen. Unfortunately, that is true, but honorable members supporting the Government have not told us that prior to the election which placed the present Government in office its supporters, knowing the powers possessed by the Commonwealth Government, had, without equivocation, told the electors, who included home-builders and potential home-builders, that a Liberal government would put value back into the £1. [f it is true that there has been a rise in interest rates, as well as in the costs of materials, whether as the result of higher wages or higher margins, or greater royalties paid to State forestry commissions, or following extravagant administration by State governments, or from any other cause whatsoever, it is clear that the Government which made those promises misled the electors. It may claim that factors over which the Government had no control, such as the fall in the prices of export commodities, have changed the situation, but I remind the House that the promise was made without limitation or qualification. In effect, supporters of the present Government told the electors that, if returned to office, they would see that every £1 received on pay day, whether received as interest, or as wages to workers in industry, or as salary to those engaged in professions, and even the £1 received by the invalid or age pensioner, would have greater value than that of the £1 when the Chifley Labour Government was in office. No supporter of the Menzies Government can deny that, whereas in 1949 certain quantities of sugar, or numbers . of loaves of bread-
– Order ! We are discussing interest charges under the housing agreement.
– I point out with respect. Mr. Deputy Speaker, that I am discussing a matter to which the honorable member for Bennelong (Mr. Cramer) referred at some length. The honorable member pointed out that the cost of building homes has risen because of certain factors, such as increased wages and higher costs of materials, as well as higher interest rates. I am pointing out that, if that is true, a great fraud has been perpetrated on the people of Australia. It is of no use for the Government and its supporters to say now that it has failed to honour its promise because something has happened that it did not think would happen when it promised to do certain things if given the reins of government in 1949. It is true that for a time the economy remained fairly steady, but soon prices began to run riot. Interest rates rose. Although, as I have said, there was a measure of stability for a time, the homeowner, or the purchaser of commodities, soon found that he was worse off than he was in 1949. Now we find ourselves in the regrettable position that we art again experiencing an inflationary trend, with the result that the value of the £l is falling lower and lower. The Government tries to evade its responsibility and to delude the electors into believing that it can solve the problems facing Australia. The plain fact is that if it had used the powers given to it in the Constitution, or sought them from the people as previous Labour administrations did. this deplorable state of affairs would have been avoided.
.- Perhaps I should begin by directing the attention of the House to the matter that is being debated. The honorable member for Lalor (Mr. Pollard) rather wandered away from it. The matter, which has been put forward as being of urgent public importance, is the suggestion that this Government proposes to increase the interest rates on housing loans made under the Commonwealth and State Housing Agreement. The debate has revealed that the Government has no such proposal in mind, therefore the motion does not deal with reality. Even if it did, we would be entitled to ask how this becomes a matter of urgent public importance. I submit that that position arises only when one considers the whole housing policy, and the effect that the raising of interest rates would have on both individuals and the community. Therefore, we might look at what one could call the broad objectives of a housing policy.
I agree with the honorable member for Werriwa (Mr. Whitlam) that housing is a most essential social service. The only way to build up a sound community is to provide houses for its members. I go further and say that a substantial proportion of the people should own the homes in which they live. The stated objectives of the present agreement are, first, slum abolition, secondly - though this is not precisely stated - financial assistance to those who cannot afford to pay a normal rent and, thirdly, the creation of conditions under which building can be maintained at a level sufficient to meet the needs of the community. I do not think that many honorable members will disagree with me when I say that the present agreement has failed to achieve any of those objectives. On other occasions I have quoted authorities who have a complete knowledge of slum abolition as stating that the slums to-day are worse than they were when the agreement was drawn up. That alone is a damning indictment of the agreement, which was put before this House with a great metaphorical flourish of trumpets.
The second objective is more closely related to the idea behind this debate. Eas the present agreement, in fact, given financial assistance to those who need help in paying a normal rental? Again, any one who has had a close association with housing will know that in this respect also the agreement has failed. Certainly there has been some compensation, and some adjustments have been made to meet the problem but generally, this objective has not been attained. Lastly, every honorable member will agree that conditions under which building may proceed at a pace sufficient to meet the needs of the community have not been created.
What steps should any parliament take to meet these problems? The first is to do something effective and real about slum abolition. Secondly, and here again I find myself strangely in agreement with the honorable member for Werriwa, financial assistance towards the payment of normal rents should be made by direct subsidy so that at least Parliament and the people will know how much money is involved, where it is being 3pent and why it is being spent. So far as I can find out, very few people inside or outside of this Parliament have that information. Circumstances favorable to continuous and normal building have not been created because, in giving effect to the agreement, we have diverted huge sums - last year the figure was about ?30,000,000 - to the erection of houses for rental purposes only. We must share with the States some of. the blame for this. We have put into these homes, as tenants, people who want to own their homes. They have no chance of doing that. So long as this agreement continues to operate we shall continue to deny these people the right to achieve the basic: security which they need in this unsettled world. I support the honorable member for Petrie (Mr. Hulme) in his suggestion that if the Commonwealth and State governments are to subsidize rents in housing commission areas they should face reality and say how much it will cost. Let us be frank, and let us say to the majority of the members of the community that the Australian Government intends to tax them in order to distribute a proportion of the money so raised to the other members of the community who are at present occupying governmentbuilt homes. It is quite apparent that the arguments advanced by the Opposition destroy themselves. The propositions that they have put forward are not just, nor would they achieve the purpose that they are supposed to achieve.
I now desire to refer honorable members to the annual report for 1952-53 of the Victorian Housing Commission. At the end of the financial year 1952-53, 20,503 houses had been built in Victoria by the commission. Out of that total the magnificent number of 96 had been sold.
- (Hon. Archie Cameron). Order ! The honorable member’s time has expired.
.- The Minister for External Affairs (Mr. Casey) and other speakers from the Government side of the House have suggested that this proposal of the Opposition is based on surmise and rumour. The honorable member for Deakin (Mr. Davis) said that there were no concrete arguments in the views put forward by honorable members from this side of the
House. I have a clear recollection that during the last sessional period of this Parliament the Government introduced a measure to increase the rate of interest on housing loans. The Government provided that loans of up to £2,750 should be made available to tenants at 4£ per cent, interest. It is because of that action that the Opposition has claimed that the Government is in favour of increased interest rates. Moreover, the terms of the sale laid down by this Government will not be of much benefit to the tenants of governmentbuilt houses who wish to buy their dwellings. They are required to put down a 10 per cent, deposit, and pay off the remaining portion of the purchase price over a period of 45 years. I suggest that those terms could be easier.
The honorable member for Bennelong (Mr. Cramer) said that the Opposition had not shown what it had in mind in regard to this matter of housing. Surely he recalls the policy speech of the Leader of the Opposition (Dr. Evatt), which was delivered just before the last general election. That speech laid down a much better plan for home-ownership than the scheme which was ultimately introduced by this Government. At that time, the Leader of the Opposition suggested that if the Australian Labour party were returned to office it would make housing loans of £3,500 available to those who wished to own their own homes, at an interest rate of 3 per cent. That is our policy, and that is the policy that we shall put before the people at the next general election. The honorable member for Petrie (Mr. Hulme) spoke about the high costs of administering the government housing scheme in New South Wales. He based his charges on the costs of administration of one year, and not on the administrative costs spread over the whole period of operation of the New South Wales Housing Commission. In New South Wales, the Housing Commission has built more than 30,000 houses. The great majority of those are let to tenants on a rental basis, and, consequently, heavy administrative costs are involved in collecting rents and in maintaining dwellings. It “is quite evident that the honorable member for Petrie was merely trying to mislead this House, and the people, by maintaining that the cost of administration is too high, because he based his argument on the present cost of administration.
Honorable members opposite have again mentioned the cost structure, but the honorable member for Lalor (Mr. Pollard) effectively answered their arguments in regard to that important matter. This Government promised the people, before it assumed office, that if elected it would put value back in the £1 ; and the members of the present Government opposed and ridiculed the Australian Labour party’s policy of seeking additional constitutional powers to keep down costs. There is no doubt that the last Labour government was very successful in keeping costs at a reasonable level, because general costs in Australia were at that time lower than the costs in any other part of the world. In spite of that evident fact, the present Prime Minister (Mr. Menzies) ridiculed our policy, and stated that price controls were quite useless and that if a non-Labour government assumed office it would put a better policy into effect to keep prices down and further decrease all costs of production. It is common knowledge now, that since the present Government assumed office the cost of everything, including houses, has more than doubled.
While the Curtin and Chifley Labour Governments were in office, the interest rate in this country was the lowest rate that we have ever had. Before the last Labour Government assumed office the interest rate was 6 per cent, and 7 per cent., but at the end of its regime the general rate of interest was 3J per cent., and the rate of interest on housing loans was 3 per cent. Surely this Government’s record and the record of the Australian Labour party in regard to costs and interest rates indicate which policy is more beneficial to the people of Australia. This Government has yielded to financial pressure groups, and has allowed the interest rate to continue to increase until now that rate is beginning to have a serious effect on our general economy. Therefore, the contention of honorable members on the Government side that the arguments of Opposition members are based on rumour and surmise is quite incorrect. Our argu- ments are founded on very good premises, because there is ample evidence that this Government believes in high interest rates.
Sitting suspended from 5.52 to 8 p.m.
Messages from the Governor-General reported transmitting Estimates of Revenue and Expenditure and Estimates of Expenditure for Additions, New Works and Other Services involving Capital Expenditure for the year ending the 30th June, 1956, and recommending appropriations accordingly.
Ordered to be printed, and referred to Committee of Supply forthwith.
– My formal duty tonight is to lay before the House estimates of revenue and expenditure for the financial year 1955-56. I shall at the same time explain a number of financial proposals which are related to these estimates.
The State of the Economy.
The budget always is, and ought to be, an occasion for stocktaking on the economic side of our national affairs. This year, I believe, circumstances are such that we must perform that stocktaking with particular diligence, candour and thoroughness.
For several years past, Australia has enjoyed substantial and increasing prosperity. I emphasize that it has been substantial prosperity and not the illusory kind that goes with mere abundance of money. Seasons have been good. Employment and earnings have been high. Production in many industries has increased. Supplies of most kinds of goods have been adequate. Until recent months prices generally have been stable.
Throughout last financial year, 1954-55, this remarkable run of good times continued unbroken. Total employment rose by 83,000 to record heights. National income was £191,000,000 or 5 per cent. greater than the year before. Output improved further in various branches of both agriculture and manufacturing.
Spending on consumer goods and services was 9 per cent. higher than the previous year - a year itself considered excellent by former standards. High profits were made by many businesses and some very large dividends were paid.
Yet, thriving though it was on all these counts, the year 1954-55 brought gathering signs of strain in the economy and a movement away from the balance which had been achieved in the two preceding years. Labour shortages became general, and in some fields acute, and this caused a slowing down in various works and industries. Wages and other elements in costs began to rise again and this in turn led to upward pressure on prices. The deficit in our external trade, which had already appeared before the financial year began, widened rapidly and our overseas exchange reserves ran down. By the end of the financial year we had around us the unmistakable signs of active inflation.
It is, to be sure, still a mild and incipient form of inflation if compared with our experience in the period up to 1952. Although costs and prices have started to rise again they have not yet gone very far. Nor is there anything yet to compare with the bottlenecks in industry and the acute shortages of supplies which typified that earlier period. There have been some minor and local shortages, but nothing more than that, whilst in some quarters it appears that stocks have actually been increased.
We would, however, be unwise to lean too heavily upon that kind of consideration. Inflation is a malady that takes hold quickly and strikes its roots deep. Once the cost-price spiral begins it tends to accelerate and then it becomes very difficult to halt. As to the supply position the truth is that, if we have so far had no major shortages, it is only because we have been importing heavily from abroad - much more heavily than our overseas earnings can justify. To pay for the additional imports we have been drawing down our overseas exchange reserves.
This weakening in our balance of payments situation probably shows up more clearly than anything else the nature and origin of the current stresses in our economy. During 1954-55 the cost of imports, including freight, exceeded the value of our exports by £173,000,000. When net payments abroad for other items such as interest, dividends, remittances and the like are reckoned in, we had a deficit on current, as distinct from capital, account of no less than £256,000,000. Various loans and other capital transactions, including some private capital inflow, offset this deficit to the extent of £114,000,000 so that the . net deficiency on the whole of our external transactions for the year was £142,000,000 and this was the extent to which our international reserves were reduced. At the 30th June last those reserves stood at £428,000,000.
When we look for the causes of this deterioration we find, it is true, that exports were £49,000,000 less than in the previous year, mainly because the average price of greasy wool fell by about lid. per lb. But total export income was still £763,000,000, which is quite a good level of income by comparison with most earlier years. The dominating factor in the situation was undoubtedly the rise in imports, which, on an f.o.b. basis, reached £846,000,000 as compared with £6S3,000,000 in 1953-54, an increase of £163,000,000. If freight is included, as it must be to get an accurate comparison, the additional cost of imports last year was some £184,000,000.
It should be borne in mind that throughout the whole year a considerable part of our imports - all those from dollar sources and some from non-dollar sources - were under strict licensing control. Up till October last a. fairly large class of imports had been for some time on a no quota restriction basis, but from the beginning of October these also were brought back to quotas. What these facts signify is, of course, that, large though the rise in imports was, it would have been much larger had restrictions not applied.
This great rise in the demand for imports is a clear pointer to the trend of things within our economy. It shows that the current internal demand for goods and for resources with which to produce goods is greater than available supplies and this excess demand is spilling over into the field of imports.
What the external trade situation thus demonstrates, however, does no more than confirm what other indicators have suggested. It had been obvious for sonic time past that something of a boom was getting under way, a boom chiefly in consumer spending and in private investment. I have mentioned already thai personal, spending on goods and service? rose last year by £268,000,000 or 9 per cent, and that came on top of a rise of £297,000,000 or 12 per cent, in the year before. On the investment side it is estimated that expenditure on capita) equipment was £10S,000,000 or 15 per cent, greater than in 1953-54. This also followed upon a large increase in the previous year. There have been, as we all know, some great industrial project? in train, such as the oil refinery programmes and extensions of the iron and steel mills. There have also been some smaller plants established in various centres and numerous existing plants have been extended. Home building has been running at a high level - about 75,000 houses per year. The most conspicuous growth, however, has been in purchases of motor vehicles, particularly cars, and in commercial and industrial buildings. Purchases of motor vehicles rose from 15,000 per month in 1953-54 to an average of 19,200 per month last year - an increase of 28 per cent. - and in theJune quarter the average per month was 20,S00. Expenditure on commercial and industrial buildings rose from £80,000,000 in 1953-54 to £100,000,000 in 1954-55, « rise of 25 per cent.
These few facts do no more than suggest features of an expansion which, in reality, has been many-sided and has doubtless had a variety of motives and origins. It appeared to begin as an effort to step up production within existing capacity. Then, as employment and incomes rose and demand grew with them, industry naturally endeavoured to increase its equipment and staff so as to meet this increased demand. Some industrial projects have, of course, been undertaken with an eye to meeting not merely the immediate demand but the needs of a larger community in the future. Again, many of the buildings now in progress were probably delayed in earlier year? by restrictions or by scarcity of materials and labour. In all cases, however, the effect has been to increase progressively the demand for labour, materials and equipment and this in turn has given rise to greater spending and a further stimulus to industrial investment.
On the other hand, expenditure on public works has been relatively stable during recent years. Last year it rose by £15,000,000 but that should be compared with the increase of £108,000,000 in private capital expenditure on plant, equipment, buildings and other forms of construction. Similarly, public expenditure as a whole remained stable until a year ago; but during 1954-55 it rose appreciably, so adding in its own field to the demand for goods and services.
In the main, however, the expansion has occurred on the side of private expenditure. During the past two years the annual rate of expenditure on personal consumption and private investment, taken together, has increased by some £760,000,000. Besides this, it is known that some sections of business have spent heavily on adding to their stocks in order to keep pace with larger turnovers. This most formidable upsurge of spending has been facilitated by a far too generous expansion of credit on the part of the banking system together with the rapid growth nf hire-purchase finance.
Here unquestionably is the chief reason for the tensions and pressures in our economy that will, unless corrected, produce open inflation. Demand has thrust ahead much too fast for the growth of our resources. Our resources have in fact grown during this period quite rapidly, as is shown for example by the increase in our labour force. We were not far from full employment in June, 1953, which is roughly the time at which the expansion began, but, since then, the total number in employment has increased by 178,000. There have also been notable gains in technical productivity and it is clear that we are now reaping the fruits of much new and modern equipment installed in earlier years. Yet these advances, gratifying though they are, could not possibly have matched a. rise in demand as swift and large as that of the past two years and so we have, on the one hand, labour shortages and rising costs and, on the other hand, excessive pressure to obtain supplies from overseas.
Let us not be thought to decry the enterprise, the constructive energy and the foresight that lie behind much of the expansion that has taken place. These things stand for progress in the finest and most substantial sense. In many directions Australia is presently making good headway. We are absorbing migrants at a rapid rate - and very fine migrants at that. Great basic industries are being established or extended. The opening up of resources and the search for new resources are being vigorously pursued. Steadily but surely we are making up the leeway in social requirements such a? housing, hospitals, schools and civic amenities. Equally, however, let us not deny that much of the excess demand that is causing our present difficulties springs from an effort to reach and maintain standards beyond our limited resources - certainly far beyond those resources if national objectives acknowledged by all of us are to have their due priority.
In Australia to-day we are attempting to build up a many-sided modern economy, to enlarge our population and to carry through extensive preparations for defence - all this at a forced pace. Such objectives require a large share of our resources to be applied to activities which either do not serve ordinary private needs at all. as with defence, or do not serve them immediately, as with a great deal of development. In the meantime, however, under the conditions of a free economy, there is intense competition for resources to satisfy the ordinary and immediate demands of the community at rising standards. When, as must happen if this competition is pushed too far, the limit of available resources is reached, one set of objectives or the other must go to the wall and, as like as not, it will be the national objectives of defence and development rather than those of everyday enjoyments. That has all too clearly been happening in recent times. The main reason why the defence programme has been lagging and the armed forces have been losing strength instead of gaining it. is that man-power and supplies have been drawn away by the competition of other activities.
If this situation is to go on - and there is no real sign yet of any faltering in the trends I have described - we must expect increasing difficulty in carrying out basic projects for defence and development and in maintaining the strength of the armed services. Competition for labour, materials and equipment will become more severe, with resources going to those enterprises which have least need to trouble about costs. “Wage costs will rise further and, through them, costs generally. The spiralling of prices and costs can be expected to go forward in real earnest.
What are the responsibilities of a government in a situation of this kind? Views naturally differ on this, though chiefly as to how far action by the Government should extend. It would be agreed that the Government should say what it thinks of the situation and what it considers should be done about it. On behalf of the Government I am doing that in terms which, I trust, few will fail to understand. Further, it would be generally agreed that the Government should so conduct its own business and shape its policies as to point the right course for the rest of the economy. Some, however, would go much farther and say that the Government should intervene to control the economy and its workings, both directly and indirectly, through whatever powers and devices it may possess. My colleagues and I do not share this view. We do not propose to get back into the business of controls, as some State governments are doing. We believe that, on all past experience, controls are, at the best, largely futile and, at the worst, extremely harmful and unjust. There may be situations in which controls are inescapable - for example, import controls to deal with a balance of payments deficiency. Even then, however, they are not, in our view, to be. regarded as other than expedients to be dropped at the earliest opportunity.
There is, however, another course a government can take. Its operations are, in the aggregate, very large and they pervade every section of the economy. According to the bias it gives to those operations they will influence the general trend of the economy one way or the other. If it tends towards expansiveness the effect on the economy will be expansive. If it tends towards restraint the effect will be restraint. The path of wisdom is to avoid extremes in one direction or the other and to combine the pursuit of growth and development with the preservation of stability which is fundamental to real developmental achievement.
For several years past the steady policy of the Government has been to keep a firm hand on the public sector of the economy. It has endeavoured to prevent public expenditure from rising unduly - such expenditure has in fact been kept relatively stable for the last four years. It has sought in particular to maintain a stable, though adequate, rate of spending on public works, an element which, through its sudden steep increase in the years 1949 to 1952, did much to accentuate the difficulties of that period.
By this policy the Government has kept to a minimum the additional calls made by the public sector upon the available resources of the economy. It has done this with the conscious object of providing a counter-balance in a time when rapid expansion was going on elsewhere. Between 1951-52 and last year, net expenditure on goods and services by public authorities in Australia, as estimated by the Acting Commonwealth Statistician, increased by less than 7 per cent. Over the same period the rate of private expenditure on goods and services increased by no less than 27 per cent.
Concurrently, through a balancing of its policies on expenditure and revenue, the Government has ensured that the whole of its commitments have been met from current receipts, so that its operations have made no net additions to the spending power of the community. In fact, during the past two years it has been able to redeem treasury-bills amounting to £65,000,000, thus providing an offset to the growth of spending power originating in other quarters.
As and when additional revenue and other resources have become available, the Government has reduced taxation, step by step. It has succeeded so far in this policy that the burden of taxation on the community is now substantially lighter than it was before the Government took office. In making these reductions, however, it has been careful to ensure, especially in the last two years when tho pressure of demand was rising, that it did not run itself short of resources and so make necessary a call on central bank credit. To do that would have been to nullify the general counter-inflationary effect of its policy as a whole.
If this broad policy of restraint and careful husbanding of resources has been justified in the years just past it must be doubly justified under the circumstances now confronting us. On the expenditure side this means that the demands on resources to be made by the Government - and, for that matter, by any public authorities - should be kept down to absolute bedrock. Some increases in expenditure are, no doubt, inescapable where ordinary services must expand to meet the needs of a fast-growing community or where people eligible for existing benefits increase in number. We have our obligation also to assist the position of civil and war pensioners and others and we must make some contribution to the’ increasing needs of the State governments. Beyond these matters, however, there can be no justification for embarking on new forms of expenditure and the most searching economy must be practised over the whole field of expenditures already established.
It should, however, be said frankly that the need for restraint under present conditions is not confined to public authorities alone but extends to every element in the economy. Obviously, such restraining influence as government policy can exert will easily be overborne if the private sector continues on a headlong expansive course. The current need is for restraint on the part of the banking system, on the part of business, on the part of every one who has money to spend. There is no other way to slacken the current pressure on local resources and supplies and reduce the excessive demand for imports which is causing our balance of payments deficit. But within the terms of a free economy the restraint has to be voluntary. The only other alternative is the enforcement of restraint upon the economy through the medium of controls which we as a government believe the Australian public desire to avoid.
To urge restraint in this fashion is not to say that plans should be abandoned or that enterprise should be throttled back but simply that the limitations and difficulties of our position should be recognized by all concerned and that, by common consent, the things which, collectively and individually, we are trying to do should be brought within the compass of our practical capacity for doing them.
It has repeatedly been said that our central pre-occupation in Australia should be the level of costs in our industries. That view is unquestionably right. As a nation in the world economy we advance or fall behind according to the degree of our competitive power. Let us therefore pause to note a highly significant fact - during recent times, when our level of costs has started to rise again, costs and prices in many of the major countries abroad have been stable and in some cases they have even been tending to fall.
Why has this been happening? There is one main answer to that question. It is that in this country we have had this element of excessive competition for labour and materials. Firms, industries, and works projects have been competing one against the other, each trying to get a greater share in a fund of resources known to be too small to meet all demands. But of what use can it be for firms to install new techniques, modernize their plant and follow out efficiency systems - all with a view to reducing costs - if the result of what they do in other directions’ is to force up the costs of the factors of production they need to use in their plant? Of what use can it be for governments to provide incentives for investment or to spend millions on providing basic facilities for industry if the whole gain, and more than the whole gain, in terms of costs is to be nullified by the driving up of other costs in a process of cut-throat competition? Let it never be forgotten that once costs are raised high they are likely to remain high for a very long time.
On one other phase of the situation, I have spoken of the prevailing tendency to try to achieve living standards beyond our current resources. This tendency has found expression in the rapid building up of a structure of time payment or hire purchase credit.
The Government has been greatly concerned at this development and its effects upon the economy. The matter was discussed with the State Premiers at the last Loan Council meeting and a joint statement was issued calling attention to the adverse effects which the high rates of interest being paid by hire purchase companies were having on the raising of funds for vital developmental works. The banking system has subsequently been asked to curtail finance for hire purchase business and the Government has been considering ways of dealing with the position within the limits of its own constitutional powers.
In part, no doubt, the problem is one for the community itself to determine and I earnestly suggest that members of the public should ask themselves how far they should support a system which not only involves them in mortgaging their own future but carries a threat to the economic stability in which they have so great a stake.
In the very broadest terms we confront to-day, in yet another of its ever-varying forms, the problem of preserving stability in our economy. It is the economy .of a young country, vast and rich but highly changeful, dependent to an extreme degree upon world trends which affect its trade, but influenced at least as much, and perhaps increasingly, by internal forces generated in the effort to build up its population, its defences and its industries at an urgent pace. Sometimes it is instability abroad that shakes our own stability. It is not so much that factor now, though it is not entirely absent. Our difficulties to-day are preponderantly of local origin and that is a vitally important fact. If our present troubles are of our own causing then the remedies must be of our own devising. We know from our experience in the period after 1952 what a boon stability of economic conditions can be. We have also learnt that we can achieve and maintain stability if we are determined to do so. Now that stability is under challenge again it is up to us to decide whether we shall retain or lose its gifts.
In estimating revenue from income tax on individuals this year we can count upon a somewhat higher level of employment than last year and a considerably higher level of earnings. This will, of course, benefit collections from payasyouearn instalments. On the other hand, the lower rates of tax introduced in last year’s budget will this year apply for a full twelve months as compared with nine months in 1954-55. Fairly heavy refunds will also have to be made.
Primary producers’ incomes were lower last year than in the year before and this, together with the reduction in tax rates, will reduce the revenue from that source. Business and professional incomes earned during 1954-55 and subject to assessment this year were, however, substantially higher than the year before. Companies, again, had a good year in 1954-55 and revenue will benefit accordingly.
A point of some importance is that arrears of income taxation, which were very large at an earlier stage, have sine* been progressively overtaken. No additional revenue can be expected this year from a further reduction of arrears.
Taking these and various other considerations into account total revenue from income tax in 1955-56 is estimated at £577,000,000, which represents an increase of £44,000,000 or 8.3 per cent, over revenue in 1954-55.
The import restrictions imposed last April will begin to take full effect later in this financial year and this will tend to reduce customs revenue. A further factor is the reduced quantity of refined petrol, subject to customs duties, now being imported. Revenue from custom* is therefore estimated at £S8,000,000. which is £13,000,000 less than last year.
Consumption of beer, which last year reached the heroic total of 219,000,000 gallons, is expected to increase still further in 1955-56. Sales of tobacco and cigarettes are also likely to increase. The output of locally-refined petrol subject to excise will be greater this year. Revenue from excise is therefore estimated at £159,000,000, which is £16,000,000 greater than revenue from this source in 1954-55.
Further heavy spending can be expected on goods subject to sales tax. even though the spectacular increases recorded last year for such items as motor cars may not be repeated. Sales tax is estimated at £106,000,000 which is approximately £5,500,000 above last year. It should be borne in mind that the reductions made in the 1954-55 budget will this year apply for a full twelve months.
With a higher level of employment and of salary and wage payments, pay-roll tax will yield more. The revenue from this tax is estimated at £46,500,000, which is £5,000,000 greater than in 1954- 55.
All told, revenue from taxation is estimated to be £988,500,000, which represents an increase of £58,000,000 or 6.2 per cent. over revenue last year.
Miscellaneous revenue is estimated at £37,000,000. This is £9,000,000 less than last year, the chief reason being that last year £8,200,000 was transferred from surplus balances of certain trust accounts. No transfers of that kind are available this year.
Revenue from the Post Officeis expected to be nearly £6,000,000 greater than in 1954-55 and revenue from the Commonwealth Railways to be some £850,000 greater.
Total revenue from all sources in 1955- 56 is estimated to be £1,114,775,000, an amount greater than last year’s revenue by some £56,000,000.
Further details of the revenue and expenditure estimates for 1955-56 are given in statement No. 2 attached to this speech and details of actual revenue and expenditure for 1954-55 are set out in statement No. 1. With the concurrence of honorable members, I shall have these and other statements referred to in my speech incorporated in H ansard.
In 1954-55 expenditure on defence services was £185,500,000. This amount, however, included £8,000,000 which was paid to the Defence Equipment and Supplies Trust Account so that actual cash expenditure on defence was £177,500,000, a short-fall of £22,500,000 on the original budget estimate. At this stage it is only realistic to suppose that the man-power and supply difficulties which caused the lag in spending last year will continue to prevail, at least for the time being. At the same time every effort is being made to build up the strength of the services and to push on with defence projects. Some important new projects have been undertaken - such as the filling factory at St. Mary’s - and it is necessary to make provision for the Australian component of the Commonwealth strategic reserve in Malaya. The Government has therefore decided to provide a total amount of £190,000,000 in the budget for expenditure on the defence services in 1955-56. If in the course of the financial year the Government should find it necessary to obtain further resources for the defence services it will be able to call upon one or more of the trust accounts already established for defence purposes.
The Government proposes to increase war and service pensions and certain other repatriation benefits. The special rate war pension for cases of total and permanent incapacity will be increased by 10s. a week, making the pension £9 15s. a week; the 100 per cent. general rate war pension will be increased by 5s. a week with proportionate increases for pensioners in receipt of a partial general rate pension; and the service pension will be increased by 10s. a week to £4 a week. Similarly, war widows’ pensions will be increased by 10s. to £4 10s. a week. This increase will apply both to those war widows who receive a domestic allowance in addition to a war pension, and to those widows, of whom there are about 2,000, who are not eligible to receive a domestic allowance.
The Government has also decided to repeal section 91a of the Repatriation Act to remove entirely what are known as the “ ceiling limits “ on the amount of service pension which may be received by a person in addition to a war pension. These limits, which were introduced in 1948, are in all cases lower than the total amount which may be received by service pensioners who have income from sources other than war pension. In future, amounts received as war pension will merely rank as other income in assessing eligibility for service pensions. Similar amendments will be made to the Social Services Act. The new rates will be paid from the first pension pay-day after the necessary legislation has been passed. It is estimated that these and certain minor proposals will involve an additional expenditure of £2,337,000 in a full year and £1,753,000 in 1955-56.
Age and invalid pensions will be increased by 10s. a week to a new maximum of £4 a week. The same increase will be granted in widows’ pensions, so raising the pension for widows who have one or more children to £4 5s. a week and for other classes of widows to £3 7s. 6d. a week. The maximum permissible income, inclusive of pension, will thus rise from £7 to £7 10s. a week for a single pensioner and from £14 to £15 a week for a married couple. There will be a corresponding increase in the maximum permissible income, inclusive of pension, for all classes of widow pensioners. Allowances payable to single and married sufferers from tuberculosis will be increased by 10s. a week to £6 2s. 6d. and £9 12s. 6d. a week respectively. These pension increases will become payable on the first pension pay-day after the amending legislation is passed.
In addition to the other repatriation benefits already mentioned, the Government proposes to repeal sections 28, 33 and 63 of the Social Services Act to remove the ceiling limits on the total amount which may be received by way of age, invalid or widows’ pension in addition to a war pension. The increases in rates that I have just mentioned are expected to cost £14,933,000 for a full year and £11,200,000 this year. Taking into account these amounts and making provision for the normal growth in the numbers of social service beneficiaries, the expansion of national health services and the making of five quarterly payments of child endowment this year, the total outlay from the National Welfare Fund is expected to reach £218,000,000, which is £29,000,000 more than actual expenditure last year. Details of the National Welfare Fund are contained in statement No. 3.
Payments to the States.
Payments to the States this year are estimated at £220,000,000 or £21,000,000 more than the amount provided under this head in the Budget last year. As already announced, the Commonwealth proposes to supplement the grant of approximately £140,800,000 payable to the States under the tax reimbursement formula by the payment of a special financial assistance grant sufficient to bring the total tax reimbursement payments in 1955-56 to £157,000,000 or £7,000,000 more than last year. Of this special financial assistance grant of £16,200,000, it is proposed to distribute £14,200,000 among the States in the same way as the formula grant, whilst the remaining £2,000,000 will be paid to New South Wales in recognition of the special needs of that State arising from extensive flood damage. It is proposed to introduce legislation shortly to authorize the payment of this grant.
An amount of £18,500,000 has been included in the estimates for special grants to South Australia, Western Australia and Tasmania. This amount, which is £6,200,000 more than last year, has been recommended by the Commonwealth Grants Commission. It is proposed in due course to introduce legislation to authorize these special grants..
Payments under the new Commonwealth Aid Roads legislation which was introduced last year are estimated at £26,500,000. An amount of £22,360,000 was provided from Consolidated Revenue for this purpose last year. In addition, an amount of £1,882,000 was paid from the Commonwealth Aid Roads Supplementary Trust Account in the early months of 1954-55 to ensure that the States received, as from the 1st July, 1954, the benefit of the increased payments envisaged in the new legislation which was passed in October, 1954.
This year, provision is being made for the first time for Commonwealth financial assistance towards the capital expenditure incurred by the States on mental institutions. The Commonwealth has offered to provide up to £10,000,000 for this purpose provided the States expend £2 for every £1 provided by the Commonwealth.
An amount of £1,000,000 has been included in the Estimates this year for this purpose.
Total expenditure of the business undertakings is expected to rise by £7,873,000 in 1955-56. Of this amount £7,019,000 is being provided for the Postal Department, £482,000 for broadcasting services and £372,000 for the railways. The increase is due mainly to additional labour costs arising from the full year effect of marginal salary adjustments and from the employment of further staffto handle the greater volume of business in the Postal Department and the railways.
The estimate for ordinary services in the territories is £15,090,000 compared with actual expenditure of £12,971,000 in 1954-55. Provision has been made for an increase of £1,622,000 in the grant to the Administration of Papua and New Guinea where the capital works programme is being expanded and health and other services are being extended. Increased expenditure is also envisaged in. the Northern Territory.
The estimates for capital works and services this year amount to £104,000,000 compared with an appropriation last year of £104,633,000 and actual expenditure of £95,676,000.
The estimate of expenditure on the Snowy Mountains scheme is £14,600,000 compared with expenditure last year of £13,200,000. The large contracts which have been let for some sections of the scheme are well under way and substantial payments will have to be made under these contracts.
Total expenditure on post office works and equipment is estimated at £30,069,000 as compared with actual expenditure of £25,839,000 in 1954-55.
Departmental expenditure is estimated at £50,532,000, an increase of £945,000 over last year. Expenditure last year, however, included an amount of £3,543,000 representing payments to air mail contractors which are being made direct this year by the Post Office. Departmental expenditure in 1955-56 will reflect the full year cost of the marginal salary and wages increases granted to Commonwealth employees last December. Largely as a result of the increased margins, departmental expenditure on salaries and wages is expected to increase by £3,647,000 in 1955-56.
Expenditure on bounties and subsidies is expected to fall by £4,279,000 in 1955-56. The main savings relate to the tea subsidy and the dairy products bounty. Provision is being made for increased expenditure in respect of sulphuric acid, rayon yarn, flax fibre and assistance for the gold-mining industry.
Expenditure on immigration is ex pected to rise by £1,523,000 in 1955-56. This increase reflects the higher immigration target of 125,000 adopted for the current year.
The amount provided for international development and relief in 1955-56 is £5,500,000 compared with actual expenditure in 1954-55 of £3,429,000. Expenditure under the Colombo plan is expected to total £4,890,000. Provision has again been made for Australia’s contributions to United Nations agencies such as the Children’s Fund.
The estimates of expenditure so far given relate to items ordinarily charged to the ConsolidatedRevenue Fund. There are, however, a number of other items of Commonwealth expenditure not regularly charged to ConsolidatedRevenue for which finance will have to be provided. These include war service land settlement, for which an amount estimated at £8,500,000 will be required this year and the redemption of war savings certificates estimated at £3,000,000.
Besides these items, there is an indeterminate but potentially quite large commitment to assist the Loan Council programme for 1955-56 from Commonwealth resources.
At the Loan Council meeting in June, a borrowing programme of £193,500,000 for the year was approved. This amount was regarded as being about sufficient, but no more than sufficient, to finance the carrying on of State works and housing programmes at approximately the level of the previous year. An amount of £3,500,000 was included to enable the Commonwealth to provide finance for emergency wheat storage.
It was, however, recognized that the amount of money capable of being borrowed during this year, either on the Australian market or from overseas sources, was likely to fall considerably short of the amount required for the full programme.
The Commonwealth indicated that it was not prepared to underwrite or guarantee the borrowing programme as it had done in some earlier years. It did, however, say that, subject to certain important conditions being fulfilled by the State governments, including the placing of a firm ceiling on borrowingsby semigovernmental and local authorities, it was prepared to assist in certain ways.
It undertook to make no call for its own requirements upon the proceeds of public loans raised in Australia. It similarly undertook to make available to the States the Australian currency proceeds obtained during the year under International Bank loans, estimated this year at about £20,000,000, and also the proceeds of any other overseas loans raised during the year and not associated with re-financing operations.
Since it was known that some of the States had carried over from the previous year only negligible amounts of loan money and since it was uncertain how much money could be raised in the first half of the financial year or when it could be raised, the Commonwealth agreed to make monthly advances to the States for the first six months at the annual rate of £190,000,000. At the end of that period the whole position is to be reviewed.
To what extent these arrangements may involve the Commonwealth inproviding finance from its own resources is as yet highly uncertain. It obviously depends in large measure upon the amountthat can be borrowed during the year either locally or’ overseas. Last year we succeeded in raising £123,000,000 in public loans on the local market and that must be regarded as a fairly good result. Under present conditions of strong competition for investible funds it would be hazardous to say we will do as well in 1955-56. As to overseas borrowings, the Government has for some time past been exploring a number of potential sources but it has to be said that there can be little expectation of raising more than relatively small amounts of money anywhere. It is certainly a wrong idea that there exists overseas a great fund of loanable money waiting to be tapped by countries like ourselves.
Details of loan transactions in 1954-55 and 1955-56 are given in statements Nos. 4 and 5 respectively.
The several main elements in the problem of this year’s budget can now be brought together. Total estimated revenue for 1955-56 amounts to £1,114,775,000 and total estimated expenditure on items ordinarily charged to the Consolidated Revenue Fund amounts to £1,066,105,000. There would thus be an apparent excess of revenue over expenditure in the Consolidated Revenue Fund - traditionally called the budget - amounting to £48,670,000.
I have pointed out, however, that outside the budget proper, there are some other Commonwealth expenditures to meet and there is also an obligation to provide assistance for the Loan Council programme.
In practical terms the finance to meet these commitments could come only from one of two sources. It could come from central bank credit against the issue of treasury bills. I mention that source only to dismiss it as unthinkable under present circumstances. The other source is the budget, and it is plain that this is the only practicable source.
We know that we have to provide some £8,500,000 for war service land settlement, £3,000,000 for redemption of war savings certificates and £3,500,000 for emergency wheat storage. We do not know precisely what will be required by way of assistance to the Loan Council programme. The borrowing programme for State works and housing programmes is, however, £190,000,000 and the Commonwealth has undertaken to make advances on that basis for the first six months, arrangements for the rest of the year to be determined thereafter. We have in sight some £20,000,000 from the International Bank but for the rest it depends on what we can borrow either overseas - at best a minor sum - or on the local market and there, as I have already said, the amount is much more likely to be under than over the £123,000,000 we raised last year.
If we are to be in a position to meet these commitments as and when they occur, then we must make provision now for doing so. If we are to regard ourselves as covering our potential requirements then we must in all honesty appropriate for the purpose such a sum as we now believe will be needed.
That, in effect, is what the Government proposes to do. It will appropriate an amount of £48,500,000 from the Consolidated Revenue Fund to a trust account to be named the Loan Consolidation and Investment Reserve. Legislation will be brought down later in the session to establish this trust account and define its purposes.
The amount so appropriated to the reserve will be available there as a source of funds for the Commonwealth items of expenditure I have mentioned such as war service land settlement. Investments will also be made from the reserve in loans to assist the Loan Council programme.
After this appropriation has been made there will remain a small surplus in Consolidated Revenue of £170,000.
It is clear from the foregoing that the budget for this year not only calls for no .increase of spending power in the private sector of the economy but that it offers no scope for reductions in rates of taxation or other concessions which would involve a reduction of revenue in this financial year. In any case, even if tax reductions were possible, it would not be in the best interests of the economy under prevailing economic conditions to make them. Tax reductions would add to current spending power and there is already a spending boom in progress. Similarly, tax concessions of certain kinds would give a further stimulus to investment which is already making demands upon available labour and materials greater than can be fulfilled.
It is primarily from this standpoint that the Government has had to consider the question of allowances for depreciation under the income tax law. Following the budget last year, the Commonwealth Committee on Rates of Depreciation under the chairmanship of the honorable member for Petrie (Mr. Hulme), was appointed to study this question. In the course of the year the committee produced a most able report containing recommendations which, I believe, have gained a very wide measure of support. These recommendations propose solutions for a number of the main issues in this very difficult field and the Government has considered them with a view to adoption in this year’s budget.
Apart, however, from the technical merits of the proposals, which are considerable, the Government has had to consider the possible impact upon the” economy of a major move on depreciation at this juncture. This can, of course, be done without implying any criticism of the proposals which have, indeed, the merit of combining in a skilful way a number of diverse requirements. One of the dominating facts confronting us is that the rate of expenditure on plant, machinery and buildings is already running so high as to overstrain the resources of the economy. I have already pointed out that total expenditure on capital equipment in 1954-55 was £108,000,000 or 15 per cent, greater than in the year before. Within that total, expenditure on general capital equipment, other than motor vehicles and buildings, was £22,000,000 greater than the year before and £51,000,000 greater than the year before that. Expenditure on motor vehicles, a considerable proportion of which would come under the proposals, was £46,000,000 greater than the year before. Expenditure on commercial and industrial buildings was £20,000,000 or 25per cent. higher than the previous year .
The cost of the proposals,intermsof revenue foregone, would be considerable - it is estimated to be something approaching £40,000,000 a year on current levels of investment and rates of taxation. Although the main revenue effect would not be felt until some time later, the economic impact of the proposals would be immediate in so far as investors and the business world generally would be able to anticipate the benefits of a change amounting to a very large tax reduction of a special character. The question of timing therefore assumes a very great importance and if, as is clearly evident, investment in plant, buildings and the like is at present running at levels too high for general stability, the wisest course is to defer action at this time.
I began by saying that, for several years past, Australia has enjoyed sub stantial and increasing prosperity. I have since traversed the problems which now beset us and I have indicated the broad course of policy and action which the Government believes must be followed if these problems are to be overcome. Let me sum it all up by saying briefly that the main task before us is to hold our prosperity. For surely it is something worth holding. It is a real and genuine prosperity. We bemoan our living costs, our lack of amenities and refinements but is there in fact any country with higher general living standards or greater opportunities for a secure and spacious life than ours? Is there any country where prosperity is more widely shared? We still have this prosperity and we can hold it if we are disposed to make the effort and do the things necessary to be done. The Government is happy to think that in its term of office such a state of general well-being has been achieved. It desires nothing so much as to ensure that, for the future, our prosperity will not be thrown away in the pursuit of short-term policies of greater superficial attractiveness.
Taxation revenue amounted to £930,463,000 or £28,607,000 more than the Budget estimate. Mainly because of the transfer of certain Trust Account balances to Consolidated Revenue, other revenue exceeded the Budget estimate by £15,502,000.
The relaxation of import restrictions during 1953-54 together with the high level of demand in Australia throughout 1954-55 caused a substantial rise in the volume of imports during the year. As a result, Customs collections exceeded the Budget estimate by £5,254,000. Excise revenue, on the other hand, fell short of the estimate by £1,451,000. Excise collections from manufactured tobacco were lower than estimated although this was partly offset by higher revenue from cigarettes.
Revenue from Sales Tax was £8,338,000 more than estimated because of an unexpectedly large increase in the sales of goods subject to Sales Tax - especially motor vehicles.
Collections from income tax on individuals were close to the budget estimate, actual collections amounting to £361,425,000 as compared with the estimate of £357,300,000. Collections from income tax on companies exceeded the Budget estimate by £12,491,000 - mainly because the proportion of assessments issued and paid by the end of the financial year exceeded expectations. The amount of tax outstanding at 30th June, 1955, in respect of both individuals and companies, was substantially lower than at 30th June, 1954.
Miscellaneous revenue exceeded the estimate by £14,427,000. Repayment of advances by the Joint Coal Board from the sale of surplus equipment exceeded the estimate by £1,750,000 whilst Defence receipts (mainly receipts from disposals, rents, charges, &c.) were £1,273,000 more than estimated. The main increase in miscellaneous revenue, however, was due to the transfer to revenue of certain Trust Account balances which, during the course of the year, were found to be in excess of the needs for which the Accounts had been established. These balances amounted to £10,899,000. Of this amount, capital moneys amounting to £2,662,000 which were held in the Public Trustee and Custodian Trust Account were paid into the National Debt Sinking Fund, thus reducing the payment into the Fund from revenue by a corresponding amount. The remaining £8,237,000 was credited to Miscellaneous Revenue, the main balances transferred being £3,000,000 from Works Suspense Account, £1,000,000 from the Defence Clothing Material Account and £930,000 from the Liquid Fuel Equalization Account.
After transferring an amount of £8,000,000 to the Defence Equipment and Supplies Reserve, defence expenditure for the year amounted to £185,534,000 or £14,466,000 less than the Budget estimate. The short-fall was due primarily to shortages of man-power and materials which led to difficulties in recruiting for the Services and to delays in defence works and in the procurement of defence supplies.
Expenditure on War and Repatriation Services exceeded the estimate by £2,312,000. As provided in the Additional Estimates brought clown last May, Savings Certificates totalling £3,694,000 were redeemed from Consolidated Revenue instead of from Loan Fund. Expenditure on War and Service Pensions exceeded the estimate by £2,418,000. These increases, however, were offset in part by lower expenditure on Reconstruction and Rehabilitation and on Interest and Sinking Fund Payments. The reduction in the payments from Consolidated Revenue to the Sinking Fund was made possible by the transfer to the Sinking Fund of £2,002,000, representing 1914-18 war reparations, from the Public Trustee and Custodian Trust Account.
Payments from the National Welfare Fund were £4,053,000 less than the estimate, thus reducing correspondingly the transfer to the Fund from Consolidated Revenue. The number of pensioners did not increase to the extent expected and this resulted in savings of £3,544,000 in Age and Invalid Pensions and of £488,000 in Widows’ Pensions. Unemployment ami Sickness Benefits cost £010,000 less than the estimate because of the very high level of employment, which obtained throughout the year. National Health Services cost £759,000 more than estimated mainly because of the growth in the number of persons participating in the medical and hospital benefits payable to members of registered organizations.
Departmental expenditure was £414,000 above the estimate. Economies in expenditure in many Departments were more than offset by the marginal wage and salary increases grantor! to the Public Service in December, 1954.
Expenditure on Bounties and Subsidies was £1 ,039,000 greater than the estimate. The subsidy on tea was £577,000 above the estimate owing to a substantial increase in the overseas price of tea during the first six months of the financial year. Subsidies on dairy products’ exceeded the estimate by £150,000. The introduction of four new bounties and subsidies in legislation subsequent to the Budget in creased expenditure by £420,000 ‘ of which the Sulphuric Acid bounty cost £300,000. The Tractor bounty was £118,000 less than the estimate.
Miscellaneous expenditure was £2,025,0011 below the estimate. The main short-falls were in International Development and Relief and in expenditure on homes for the aged. Expenditure under the Colombo Plan was les> than expected because of difficulties in obtaining supplies. The Commonwealth provided in the estimates an amount of £1,500,000 for subsidizing, pound for pound, private expenditure on the provision of homes for the aged but waionly called upon to provide £430,000.
Post Office expenditure exceeded the estimate by £598,000 largely because of marginal salary and wage increases.
Payments to the States amounted tn £ 1 99,020,000 or £355,000 more than the Budget estimate. Payments under the Commonwealth Aid Roads Act exceeded the estimate bv £301,000.
Expenditure on Capital Works and Service? was £8,957,000 below the Budget estimate. The main reductions were in respect of Territories (£1,017,000), Civil Aviation (£1,493.000), Post Office (£1,420,000), Stirling North-Brachina-Marree Railway (£1,022,000). Snowy Mountains Hydro-Electric Authority (£1,000,000), Ship Construction (£874.000-) and Repatriation (£312,000).
After taking these various factors into account, collections from income tax on individuals are estimated at £390,000,000 in 1955-50 or £28,575,000 more than last year.
Income tax collections from companies in any year depend largely on the level of company incomes in the previous year. There is reason to believe that a considerable increase occurred in 1954-55 in the incomes of companies both in the wholesale and retail trade and in secondary industry generally. Although collections from arrears are expected to be smaller than last year, it is estimated that income tax collections from companies will increase by £15,509,000 in 1055-56.
Item No. 5.- Pat-roll Tax.
Pay-roll tax collections are estimated at £46,500,000 in 1955-50 or £5,045,000 more than last year. This increase is based on the expectation that in 1955-50 total employment will continue to expand and that, with higher average earnings, a substantial increase will occur in the total wages and salaries bill. The estimate allows for the full year effect in 1955-50 of raising, as from 1st September, 1954, the annual exemption for pay-roll tax from £4,100 to £0,240.
Other tax collections in 1955-56 are estimated at £12,060,000 or £817,000 more than last year. These other taxes levied by the Commonwealth are now7 confined to estate duty and gift duty. With the increase in value of estates, collections of estate duty are expected to rise by £086,000 in 1955-56 whilst gift duty is estimated to yield £132,000 more than last year.
The Commonwealth vacated the field of land tax as from 1st July, 1952, and the field of entertainment tax as from 1st October, 1953. Arrears of land tax amounting to some £10,000 may be received in 1955-56 hut no further receipts from entertainment tax are expected.
Miscellaneous Revenue in 1955-56 is estimated at £37,072,000 or £9,045,000 less than in 1954-55. The main items are as follows: -
Defence - Disposals, rents. &c. - Revenue under this item is expected to fall by £1,066,000 in 1955-56 mainly because of smaller receipts from disposals.
Civil Aviation. - Receipts are expected to fall by £3,692,000 principally because of a change in procedure, whereby the Post Office will pay for the carriage of air mail direct to the air lines instead of making payments through the Department of Civil Aviation.
Profit from Note Issue. - Higher interest earnings on investments in London of the Note
Issue Department account for most of the expected rise of £1,984,000 in the profit from the note issue.
Interest - General Trust Fund. - The investments of the Fund increased during 1954-55. In addition, some securities were converted to a higher rate of interest.
Other Jntere-‘t. - This is in respect nf advances made to Joint Coal Board. War Service Land Settlement loans, War Service Homes loans, Agricultural re-establishment loans, &c.
Repayments - Joint Goal Board. - The estimated decline of £1,!)50,000 in 1955-50 reflects a fall in proceeds from the disposal of surplus equipment. These disposals are now virtually complete.
Australian Shipping Board. - This amount of £3,000,000 which is to be transferred to Consolidated Revenue in 1955-56 is an accumulated surplus of cash arising from the operations of the Australian Shipping Board. These moneys represent amounts set aside by the Board to provide for depreciation, insurance, interest, &c.
Balances of Trust Accounts. - In 1954-55 Trust Account balances totalling £8,237,000 which had been appropriated from revenue in previous years and which were found to be in excess of the requirements of those accounts were transferred to Revenue.
Other Miscellaneous Revenue. - Included under this head are rt^ayments of sundry advances, fees, fines, sale of property, disposals,
Item No. 8. - Business Undertakings. Railway revenue is expected to rise by £854,000 to £4,364,000 largely because of increased carriage of Leigh Creek coa] and a further increase in traffic on the TransAustralian Railway.
Post Office receipts are estimated at £7S,725,000 in 1955-56 or £5,900,000 more than last year. Most of the increase expected in Post Office revenue relates to collections from telephone and postal services. Post Office revenue in 1955-56, however, will also include an amount of £975,000 representing moneys received by the Post Office for handling in Australia mails originating overseas. These moneys were formerly paid into a Trust Account.
Estimated revenue from Territories in 1955-50 amounts to £2,054,000 or £305,000 less than actual revenue in 1954-55. The reason for the decrease is that revenue from the electricity undertaking in the Australian Capital Territory (amounting to £511,000 in 1954-55) is to be paid this year into the Australian Capital Territory Electricity Supply Trust Account. The expansion of other services to meet the growth of population in the Australian Capital Territory and the Northern Territory will be reflected in increased revenue fom these services.
Cite as: Australia, House of Representatives, Debates, 24 August 1955, viewed 22 October 2017, <http://historichansard.net/hofreps/1955/19550824_reps_21_hor7/>.