House of Representatives
21 March 1956

22nd Parliament · 1st Session

Mr. Deputy Speaker (Mt. C. F. Adermann) took the chair at 2:30 p.m., and read prayers.

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– My question is directed to the Prime Minister. Further to my previous representations to the Prime Minister’s Department, is the Government now in a position to give to Australian Victoria Cross winners and their nextofkin details of its intention to assist them to comply with the request of Her Majesty Queen Elizabeth the Second to be in attendance in London as her guests in June of this year? If so, will the right honorable gentleman make a statement about the Government’s intention as expeditiously as possible to enable transport and other arrangements to be made, a» the time factor is now one of urgency?

Prime Minister · KOOYONG, VICTORIA · LP

– The honorable member was good enough to tell me that he thought that this matter ought to be made clear and I therefore had the facts relating to it put together with some degree of precision. I should like to inform honorable members that, in addition to making financial provision for all Victoria Cross winners and their wives to attend the centenary of the institution of the Victoria Cross in June of this year, the Government will assist the widow or mother of a deceased Victoria Cross winner and, in the case of. a Victoria Cross awarded posthumously, the person to whom the medal was awarded, being either the widow, mother or child of the winner. The Australian Government will be responsible for transport to and from the United Kingdom, and will make a suitable contribution towards other expenses. The Commonwealth, because it traditionally cares for the exserviceman and his dependants, will not be asking the States to share these costs. I have discussed the Government’s’ decision with the federal president of the Returned Sailors, Soldiers and Airmen’s Imperial League of Australia, and we have agreed that the league will accept the responsibility of receiving . applications, and will assist the Australian Go vernment in making’ the necessary arrangements for those eligible, in terms of the Government’s decision, and wishing to attend. I have also been advised that the United Kingdom Government proposes to celebrate the centenary as follows: First, there will be a service in Westminster Abbey on the afternoon of the 25th June, 1956 ; there will a review in Hyde Park by Her Majesty the Queen of all holders of the Victoria Cross on the morning of the 26th June, and a garden party at Marlborough House on the afternoon of the 26th June.

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– I preface a question, addressed to the Treasurer, by stating that the present taxation laws require the deduction of income tax at the time of payment of wages. The laws governing workers’ compensation do not make such provision regarding tax payable on compensation payments. I ask the Trea-surer whether he is willing to initiate legislation to amend the taxation laws, so as to provide that injured workers receiving compensation shall have their tax deducted at the time compensation is paid to them.


– I shall be very pleased to consider the matter raised by the honorable member.

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– Is the Minister for Primary Industry aware that this Parliament has, during a period of 50 years, taken an active interest in the settlement of the north-eastern seaboard of Australia by the development of the cane sugar industry? Is he aware of this Government’s recent activity in obtaining expanding overseas markets for sugar? Is he also aware of consequential largescale developments of sugar cane areas in Queensland, where very recently a disastrous cyclone has devastated the cane-fields north of Townsville? “Will the Minister arrange for a visit to the cane-growing areas, from Ingham to Cairns, so that the Department of Primary Industry and this Parliament can have first-hand information regarding the destruction caused by the hurricane winds that accompanied the cyclone?

Minister for Primary Industry · LOWE, NEW SOUTH WALES · LP

– I am well aware of the progress that has taken place in the development of north-eastern Queensland during the last six years ; that is, during the time that the Menzies Government has been in office.

Opposition members interjecting,


– Order !


– I think the honorable member for “Wide Bay would be the first person to admit that the incentives given to primary producers in Queensland have given them the inducements to do better, and that they have done splendid work for this country. A few weeks ago, I had the good fortune to attend a conference of cane-growers in Queensland, and I was then asked whether I would have a look at some of the sugar-producing country between Cairns and Ingham. T have a notion that I shall be going up there during the next parliamentary recess for three or four days. I hope to be accompanied, for some portion of the trip, by the honorable member who has asked the question. If I have the good fortune to make this visit I can assure the honorable member that I shall look at those areas, or parts of them, that have been affected by the cyclone.

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– I desire to make a personal explanation. Yesterday, when T was on my way out of this chamber, I had not heard the honorable member for East Sydney call attention to the state of the House. I was still proceeding out of the House, Mr. Deputy Speaker, when the. honorable member for Shortland drew my attention to the fact that you had spoken to me. I did not hear you say that I could not go - out of the House. Furthermore, according to what is published in Hansard, I swore at you. I had no intention of doing this whatsoever. The honorable member for Mallee stated that I had called for a quorum. I said that I had not, and I put emphasis on that. Therefore, I just desire to say that what is published in Hansard is entirely wrong because the emphasis to which I have referred was intended, not for you, but for him. I wish to clarify this matter because I have not come in conflict with the Chair for many years. I have always respected the authority of the Chair and I do think, Mr. Deputy Speaker, that you should see that Hansard does correct that report. I admit that there was noise here, but I was not making it. I am a very quiet fellow. Probably, Hansard could not hear the interjection from the honorable member for Mallee. However, I must say that the way in which the matter has been reported in Hansard is an insult to me, and also reflects upon you.


– I think, as I have been brought into this matter, that I should explain what happened. The honorable member for Hunter went to walk out of the House and I drew attention to his action because, as he has been in the House for many years he should know that a member cannot leave after a quorum has been called. When he walked back just near me I said, “ As you walked out you said to a colleague, Come on out. He wants to call a quorum ‘.” - referring to the honorable member for East Sydney. The honorable member for Hunter does not deny that. He used the word with emphasis when I said that. I did not accuse the honorable member for Hunter of the intention of calling a quorum. I accused him of walking out and saying, “ He wants to call a quorum “, indicating the honorable member for East Sydney.

Mr Ward:

– He did nothing of the sort.


– He did. Ask him.

Mr Menzies:

– May I suggest that the matter be brought to an honorable conclusion, Mr. Deputy Speaker, by your directing Hansard to omit the offending word and substitute “sanguinary”?

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– My question is addressed to the Minister for Social Services, who administers the War Service Homes Division. Is the Minister aware that, due to the increased cost of building materials, the standard of war service homes has been reduced? The cost of these homes was £2,750, but it is now £3,100. Is it the intention of the Minister to increase the amount of the loan to £3,100, which is the actual cost at present in order to avoid the building of inferior homes for ex-servicemen ?

Minister for Social Services · RIVERINA, NEW SOUTH WALES · CP

– It is not true to say that there has been any reduction in the standard set by the War Service Homes Division. Indeed, and in fact, the standard has been maintained to a high level and that will continue. With regard to the latter part of the question, the honorable member should remember that it was this Government that lifted the maximum advance to £2,750. I have no doubt that, in the fullness of time, that figure will receive the consideration that is its due and the Government itself will determine what the maximum figure shall be in the future.

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– I ask the Minister for Immigration whether his attention has been drawn to the condition of lifeboats and lifeboat equipment on certain immigrant ships which have arrived at Fremantle during the last five weeks. Has the Commonwealth any jurisdiction over these matters, or any means whereby it can act under international law? Does the Minister propose taking any action to see that this cannot occur again?


– My attention was directed to the reports to which the honorable member refers. The Australian Government has no control over vessels registered outside Australia until they enter Australian ports, but, of course, we do take an interest in the conditions which apply in any ships that are bringing immigrants to this country. Two vessels, Skaugum and Cyrenia, are privately owned and operated by foreign companies, but they are chartered by the Inter-governmental Committee for European Migration for the carriage of migrants to Australia. We do make an inspection of these foreign vessels on arrival and recently the Department of Shipping and Transport drew attention to certain defects in the equipment of some of them. The ‘Department of Immigration immediately made representations to the intergovernmental committee in order that appropriate action might be taken before the vessels were re-chartered. The third vessel, Sydney, is a regular passenger ship, sailing under the Italian Hag, and I understand that the necessary action is being taken by the appropriate authorities here in Australia in relation to that. We are fully conscious of the possible repercussions and danger to life if a passenger vessel has inferior equipment and I believe that, as a result of the action recently taken, these possibilities will be reduced to a minimum.

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– I wish to ask the Prime Minister a question in relation to his economic statement. Will the right honorable gentleman say whether an agreement has been reached with the trading banks that no increase in interest rates shall be charged to primary producers on their overdrafts or that no increase above 5-J per cent, shall be charged ? What is the nature of any agreement that has been reached with the trading banks in relation to these overdrafts?


– As to the terms of any agreement, I would ask to be allowed to treat that as a question on notice, because I know that my colleague the Treasurer has had some discussions on this point. But speaking in the broad - and this is not a substitute for what we may put on subsequently - our decision was that the average overdraft rate should rise to 5i per cent. As the honorable member will realize, that would mean that if the true average were to be 5£ per cent, there would be some at the maximum of 6 per cent., some below that, but, above 5 per cent., some below 5-^ per cent., and some, no doubt, as low as 5 per cent.

Mr Ward:

– What check will there be ?


– Order ! The honorable member .for East Sydney is interjecting during almost every answer. He must remain silent.


– We have indicated that we expect that the lower rates in that bracket will be accorded export industries and the higher rates, in a counterinflationary sense-

Mr Pollard:

– Is it only an expectation?


– I am surprised. For the first time in my experience of the honorable member for Lalor, which goes back over 25 years, he is impetuous. If he had not been impetuous, he would have lasted long enough to hear me say that there will be, quite frequently, checks on the overdraft provision, because we want to remain in control of the average rate. The honorable member for Yarra, who originally put this question to me, will be happy to know that all the necessary steps will be taken to see that this average is achieved. Perhaps it would be of interest if I added that not only will we take mechanical steps to see that the average is achieved, but I have stated in my place in this House that this particular provision for the overdraft rate, and a larger provision for the deposit rate, are not intended to provide extra profits for the trading banks. I want to repeat-

Mr Ward:

– Not much!


– All right. Of course, the honorable member for East Sydney knows better than I do, but T happen to be what the honorable member is not - a highly responsible person in this House - and I therefore want to say, even to the honorable member for East Sydney, whose responsibility is not notorious, that this is not going to be an occasion of extra profit for the trading banks, and the representatives of the trading banks entirely accept that that should be so.

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– I ask the Prime Minister, in view of the fact that very revealing denunciations of the late Stalinist regime in Russia are at present issuing from certain leading Soviet officials, whether he can inform the House, first, whether most of those Soviet officials were, in fact, ‘ active supporters of that regime; secondly, whether there is any record of any one of them having said anything derogatory of the old regime at the time ; and, thirdly, whether it is not a fact that, almost without exception, they were active participants in the loathsome crimes of Stalinism which they now profess to denounce. Can the Prime Minister have compiled, for the information of the House, a list of the present leading Soviet officials, showing which of them have, in fact, been active participants in Stalinism? In addition, does not their history throw some light upon their present sincerity?


– The matter to which the honorable member refers is one that I have noted for discussion with micolleague, the Minister for External Affairs, who is now in Australia, and who will be in Canberra quite soon. No doubt the honorable member is quite right in saying that many people to-day find that they were opposed to Stalin, though they did not say so at the time.

Mr Ward:

– What did the honorable member for Mackellar say about you a few years ago ?


– Well, I have forgotten. Whatever the honorable member for Mackellar said about me was nothing to what you, the honorable member for East Sydney, have said about me, or what I, the Prime Minister, have thought about you; and therefore it does not matter very much. But, I think, in answer to the question asked by the honorable member for Mackellar, that we are witnessing, even, or perhaps particularly, in a totalitarian country, a demonstration of the truth of the old proverb that, under current circumstances, it is better to be a live dog than a dead lion.

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– Will the Minister for Works confirm information that I have received from the vice-president of the Australian Capital Territory Trades and Labour Council that 50 daylabour employees of the Department of Works have either been dismissed or have received notices of dismissal? Can the Minister explain why this action has been taken at a time when maintenance work of all descriptions has become more urgent because of recent rain and storm damage, and when new works, which are very necessary in this Territory, are lacking? Can the Minister say whether his efforts to secure a supplementary vote for the continuation of construction work in the Australian Capital Territory for the balance of the financial year have been successful?

Minister for the Interior · PATERSON, NEW SOUTH WALES · LP

– As I pointed out in the House the other day, the difficulty with the works programme for this year is that, due to the greater availability of men and materials, the rate of expenditure, particularly on contract work, has been much, higher than the rate for which we budgeted originally. 11 we do not want to find ourselves seriously overspent, there must be somewhere along the line - that is now - a curtailment of the rate of work, particularly as applied to day labour. I think the honorable gentleman is right in suggesting that 50 men will be released from the service of the Department of “Works in Canberra this week or in the near future. But he will find that that will not have the effect on maintenance work that he fears. The general works programme both in Canberra and throughout Australia is at present under review. I hope to have some sound information on it in the course of the next day or two.

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– “Will the Minister for Territories give me any available information about the progress of the production of coffee and cocoa in New Guinea ?

Minister for Territories · CURTIN, WESTERN AUSTRALIA · LP

– In the programmes for food production which have been discussed in the Australian Agricultural Council, the Territories have accepted the task of trying to increase the production of those products which Australia at present draws from overseas, from tropical areas, thus involving the use of overseas exchange. The principal commodities to which we have directed our attention are coffee, cocoa and rubber. I do not carry in my mind at the present time the latest figures for cocoa. As regards coffee, the present position is that whereas about five years ago the total production of coffee was 40 tons, in the current year the production will be about 170 tons - a four-fold increase in about five years. “When the current plantings of coffee trees come into full bearing in the next three or four years, that production, at present 170 tons, will rise to 700 tons. Let me give an idea of what that means in exchange. When we are exporting to Australia 700 tons, we shall be saving Australia, at current prices, approximately £500,000 in exchange. I shall obtain the exact figures for cocoa for the honorable member, but they are of the same order as those that I have quoted for coffee.

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– My question to the Prime Minister follows on earlier questions’ that I have asked about the further payments to be made to former Australian prisoners of war of .the Japanese and the advice I then received, indicating that Indonesia and the Philippines had not submitted lists. Can the Prime Minister say whether the lists have now been finalized? Has the Red Cross formulated the basis upon which an equitable distribution of the moneys will be made? When is it expected that the amounts will be distributed?


– A few days ago, I. answered a question by the honorable member for Franklin in which I expressed my dissatisfaction that finality had not been reached in this matter. I said that it was not entirely within our control. I promised at that time that, as soon as 1 could, I would say whatever further was to be said. I regret that I cannot add anything at the present time.

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– Has the Minister for Health any knowledge of a report that British doctors are to test a new German drug which, taken in tablet form, will replace insulin injections for the treatment of diabetes ? If so, can the Minister inform the House whether the tests have yet been concluded? If the tests are successful, will sup plies of the drug be available to Australian sufferers from diabetes ?


– I have no knowledge of any particularly recent drug of the nature mentioned by the honorable gentleman. Some time ago, a German drug was produced which had the effect of lowering the blood sugar in diabetes. That, of course, is the effect of insulin. The drug was tested, but it was discovered that it exerted its action by depressing liver functions. As this is thought to be a very bad thing, the drug has not come into use. I should say that I think it seems unlikely, on general principles, that a drug which can be taken by month to replace insulin will be discovered. However, I can assure the honorable gentleman that, if such a drug should be tested, we in Australia will, of course, do our utmost to investigate it and, if it is satisfactory, to bring it into use. But the process of testing drugs is a very long one. Many, such as the one that I have just mentioned, have not only beneficial therapeutical effects but also very deleterious effects, and frequently a process of years of use and experiment is necessary before any definite statement about them can be made. If the honorable gentleman will give me the name of the drug to which he refers, I shall have further investigations made and shall inform him about it.

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– I address a question to the Minister for Civil Aviation in reference to a question on the noticepaper in the name of my colleague the honorable member for Kingsford-Smith, who has asked amongst other things what compensation will be paid or what payment as an act of grace will be made to the relatives of the pilot and two nurses killed in the recent crash of a flying doctor aircraft. Has the Minister any information to give the House yet?

Minister for Air · DENISON, TASMANIA · LP

– No, I have not the information yet. The right honorable gentleman may recall that the series of questions asked by the honorable member for Kingsford-Smith was rather complicated and covered a lot of ground, not only in relation to the pilot and other people concerned in the accident and their relatives, but also the operations of the Royal Flying Doctor Service and a number of allied matters, all of which take quite a lot of inquiring into.

Dr Evatt:

– The urgent question is the matter of payment as an act of grace.


– That is only one question in a long series.

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– Does the Minister for Labour and National Service know that, in the financial year 1947-48, the Victorian Government informed the leaders of the coal-miners in New South Wales that it was willing t& enter into a contract for 2,000,000 tons of black coal a year from New South Wales for twenty years at standard market prices, provided the New South Wales miners and the Joint Coal Board would guarantee to produce the coal for shipment? Does the Minister know also that, as a result of the miners’ leaders indicating that they were not prepared to discuss such a contract, the Victorian Government was forced to (a) buy coal overseas, (&) try to open up the Callide coal-field in Queensland as a temporary measure, and (c) proceed immediately with the new Morwell open cut and produce gas from brown coal in order to free Victoria from the affliction of fuel shortages ?


– I have some knowledge of the events to which the honorable member refers and, of course, I recall the offer made by the Prime Minister in his policy speech for the 1949 general elections to enter into a long-term arrangement for the purchase of coal provided regular production was assured. These and many other episodes that one could mention all are indications of an unhappy series of wasted opportunities in the coal industry. I understand that some coal-miners are staging a demonstration here to-day. My colleague the Minister for National Development and I have agreed to receive a deputation, limited in number, from them later this afternoon. If the industry is to survive in prosperity and strength, it will have to recognize that it has obligations not only to its regular customers but also to the community as a whole. The instance given by the honorable member indicates that, had useful opportunities been taken at the time, there would not be the serious predicament in the industry that we find to-day.

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– I address a question to the Minister for Supply. It has been announced that the company that will develop the world-famous uranium lease known as the Mary Kathleen, on the Cloncurry field in Queensland, will establish a mine on the lease provided a satisfactory sales contract can be arranged with the appropriate authorities. Repre.sentatives of the Australian Atomic Energy Commission and the United Kingdom atomic energy authorities, when in Australia last year, visited the Mary Kathleen lease. As the only hope for the establishment on this field of a uranium treatment plant and ore-buying centre lies in the establishment by the owners of a mine on this lease, and as this will be in the interests of the development of the uranium field in north-west Queensland, I ask the Minister whether the company has secured a satisfactory sales contract, whether the Government is helping the company to secure such a contract, or whether the Government proposes to refrain from doing anything, as it has generally refrained in regard to Queensland development.

Minister for Supply · PARRAMATTA, NEW SOUTH WALES · LP

– I think the honorable member’s information is a little out of date, because an announcement was made, I think in this Parliament, and certainly in the public press a couple of weeks ago, to the effect that with the permission of the Australian Government, and indeed with its active assistance, a contract worth more than £40,000,000 had been entered into between the Bio Tinto-Mary Kathleen company and the British atomic energy authority.

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– -I ask the Minister for Air whether he will consider further extending the interchange of Air Force officers between the United States of America, the United Kingdom, and Australia, which I advocated some time ago in this House and which is now an actuality, to include exchanges of aviation medical officers, as it is well known that there are problems associated with jet flying and high altitude which are extremely important to the Air Force of this country.


– It is quite true that a long time ago the honorable member raised this matter of interchanging of Air Force officers of the United Kingdom, the United States of America and Australia. His advice was taken and acted upon, and I am bound to say the scheme has been very successful. A branch of aviation medicine was opened at Point Cook a little while ago, and it is in close contact with medical officers in the United Kingdom and America. Medical officers of the RoYal Australian Air Force have been to the United States and it may well be most desirable to have the same sort of interchangeability of officers as exists between other branches of the Air Force. I shall be pleased to discuss the matter with the Chief of the Air Staff and obtain his reactions to it.

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– I direct a question to the Minister for Customs and Excise. In view of the fact that many industries are unable to obtain quotas for replacement machinery and essential raw materials for manufacture, will the Government cancel all quotas and re-allot them on a just basis? I am prompted to ask this question by information I have received of trafficking in quotas which is being allowed by the Government. I cite the example of the firm of Birds, which has gone insolvent and is selling to the Myer organization a quota fixed on a base year quota of £700,000, and is transferring an accumulated loss of £443,000, which will be used by the purchasing company to evade future taxation.

Minister for Customs and Excise · EVANS, NEW SOUTH WALES · LP

– The question of reconsideration of import licences is under constant examination in the department, and I have had long discussions with the Comptroller-General of Customs on the subject. It would not be practicable to adopt the suggestion that all quotas should be cancelled and re-allotted because the time and physical labour involved in doing this would cause such delays that the process of trade and commerce would be entirely held up. Referring to the particular company which the honorable member mentioned, he may be interested to know that where a company’s undertaking is sold, the existing import quotas which that company holds are not transferable as of right to the purchaser of the company. Each case is investigated on its merits, and, in fact, in the particular case he mentioned, the quotas have been reviewed and very considerably reduced.

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– By way of preface to my question to the Treasurer, I should like to say that tax agents throughout the nation face annually an almost insurmountable problem in their attempts to give adequate checking to the operations of their clients and to complete and submit taxation returns by the final due date. Can the Treasurer inform the House, first; whether there is a current proposal for the submission of taxation returns to be spread over the year or, secondly, if this is not contemplated, could an additional extension of time - say three months - be approved for tax agents to overcome the problem?


– 1 can assure the honorable member that the Taxation Branch is very sympathetic about the granting of an extension of time when the merits of the case warrant such an extension. I also want to take this opportunity to say that there are very many tax agents in Australia who impose on the generosity of the department to such an extent that the CO lumissioner of Taxation is having a conference next month to see what can be done in order to distinguish between those who have meritorious claims and those who are imposing upon the extension of time that has been granted to them.

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– I ask the Minister for Civil Aviation whether it is a fact that the Trans-Australia Airlines airliner Kennedy, a DCS aircraft, scheduled for the 7 a.m. service from Sydney to Canberra yesterday, had, immediately following a take-off from Mascot aerodrome, to return because of mechanical defects. Is it a fact that this is only one of many incidents over the past few months where Trans-Australia Airlines aircraft have had to be withdrawn from service or delayed for temporary repair because of mechanical faults developing? Is it a. fact that the former efficiency displayed by the organization in the servicing of its aircraft has been seriously impaired by lack of sufficient staff? Is this position due to what the Government regards as an economy measure, but which other people would consider to be a deliberate net of sabotage of a highly successful community enterprise by a LiberalAustralian Country party government? Will the Minister have a statement prepared showing the number and age of aircraft possessed in each year by Trans-Australia Airlines, and the number of maintenance personnel employed in each like period since this organization commenced operations? Will the Minister include in histatement details regarding the frequency with which inspection of aircraft is undertaken and how often a complete overhaul of aircraft is made? Finally, has the practice been the same since TransAustralia Airlines was established, and if not, when, and in what respect, has it been varied ?


– I think it will be agreed that it is very difficult to give a reply to such a long series of questions. I have no knowledge of any aircraft turning back yesterday, but that is something which is domestic to the company. When the monthly report and returns come in, there will no doubt be some reference to it, if it is of consequence. I am bound to say that Trans-Australia Airlines has a magnificent record for safety and for running to schedule. I think that between 97 per cent, and 98 per cent, of its services have been completed according to schedule. Aircraft are rather temperamental things at times; they get their little troubles, like certain members of Parliament; but there is one overriding rule with commercial airlines. That rule is that if there is the slightest danger of anything going wrong, even if it may be only a slight rise in oil temperature or something of that kind, the aircraft turns back. Safety must always be the first consideration. The honorable member has referred to the maintenance schedules of Trans-Australia Airlines. This is not something which is left to the discretion of the company. All aircraft have to be submitted to certain routine inspections. These routines are laid down by the Department of Civil Aviation, which controls the extent of the maintenance that is carried out and the frequency of overhauls. Mr. Watkins, the engineermanager of Trans-Australia Airlines, is one of the finest engineers not only in Australia but in the world, and I have the utmost confidence in all that he does in relation to the aircraft under his control.

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Minister forSocial Services · Riverina · CP

by leave -I am gratefulto the House for giving me leave to make a short statement in relation to a press article which criticized the Department of Social Services. Yesterday, the Sun newspaper, which is published in Sydney, printed an article under the heading “Fighting 2 losing battles”. The article can he described as being good journalese, hut, factually, it can be described only as being arrant rubbish. It concerns a person who applied to the Department of Social Services for a sickness benefit, and reads, inter alia -

The bureaucratic machine grinds out the same old stereotyped notices without an ounce of humanity and without a flicker of urgency, just as though a man with lung cancer has time on his hands.

The person in question, Mr. George McGregor, applied in the middle of February for a sickness benefit. His eligibility was investigated, and the sickness benefits branch of the Department of Social Services considered that, on the evidence available, he was eligible for an invalid pension. The Commonwealth’s medical referee supported that view. The applicant was then advised by the sickness benefits branch to apply for an invalid pension, which he did. Mr. McGregor was declared eligible for an invalid pension at the maximum rate of £4 a week with retrospective effect to the 16th February, the granting of retrospecti vity being the customary practice of the department. A cheque covering that period was posted to him on the 20th March. There is necessarily some delay in granting invalid pensions because of the necessity for the applicant to undergo a medical examination, and for his eligibility under the means test to be checked. Mr. McGregor’s war pension income had to be checked with the Repatriation Department, and that led to an additional delay of several days. In all cases in which eligibility is established, the benefit of the pension is made retrospective to the date of application.

Mr Morgan:

– Will the Minister move that the statement be printed? I think it is a matter that should be debated. This is not an isolated case.


– Order ! The Minister is not bound to so move.

Mr Morgan:

– I ask the Minister to more that the statement be printed, because I think it should be debated. The manner in which claims for social services benefits are dealt with seems to form part of the Government’s economic policy.


– Order ! Apparently, the Minister has not accepted the honorable member’s suggestion.

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Debate resumed from the 20th March (vide page 949), on motion by Mr. Menzies -

That the following paper be printed -

National Economy - Economic Measures - Ministerial Statement

Upon which Mr. Crean had moved by way of amendment -

That all words after “ paper “ be omitted with a view to inserting the following words in place thereof: - “so far as it discloses a policy of increasing interest rates on bank overdrafts is injurious to the large majority of the people of Australia and should be rejected “.


.- Mr. Deputy Speaker, the debate, as far as I have been able to follow it, has revealed that there is little dispute about the necessity to take certain action to meet the situation with which we are confronted. The only argument seems to be about the kind of action that should be taken. 1 have listened attentively to honorable members opposite, but, with the possible exception of one or two suggestions that were made by my friend, the honorable member for Melbourne Ports (Mr. Crean), little attempt has been made to analyse the statement or to submit any constructive proposals. Most of the statements that have been made were designed more to achieve a political purpose than to benefit the economy. It seems to me that, in whatever light we consider the proposals that have been placed before the House by the Prime Minister (Mr. Menzies), we must agree that something should be done to improve the state of the economy. So far, the Opposition has not advanced any alternatives to those proposals. In the absence of any reasonable alternatives, it is logical to assume that it is accepted that the proposals that have been submitted are the only concrete proposals that could be put forward.

I wish to address myself more to the background of the proposals than to the proposals themselves. It seems to me that the scope of members of the Parliament, whether they are supporters of the Government or are in Opposition, is limited, and that the working, or the failure to work, of the 50-year-old Constitution has frequently obscured fundamental issues in their minds and those of the people generally. The problem with which we are confronted is not an isolated problem ; rather is it a variety of problems. We can deal with an emergency situation only by adopting emergency measures, and I have no doubt in my mind that the proposals submitted by the Prime Minister will meet the present emergency. The existing, or similar, conditions are likely to recur until the Commonwealth and the States attempt to solve the real problem, which seems to me to lie in the failure of the Constitution to meet circumstances that have arisen over the years. I have often referred, and I do so again, to what I believe to be the basic problem which must be dealt with when considering financial proposals - the unfortunate system of uniform taxation which was introduced, without serious challenge, as a war measure and which tas been carried forward into an era of peace. I doubt whether uniform taxation is seriously challenged even to-day. Under this system, there is one collecting authority, but there are seven spending authorities. The distribution of the revenue, which is collected by a central authority, is in the hands of seven different authorities. As a consequence, all governments, whether State or Federal, are limited in their activities, and, in my opinion, are unable to meet the rapidly changing conditions of to-day. I remind honorable members, although they should need no reminder, of the equally disturbing fact that of the seven distributing or spending authorities, six have no responsibility whatsoever for raising the money that they spend. Such a practice is unfair, unjust, and is opposed to any principle that I know of democratic government.

Mr Edmonds:

– But they have the responsibility of spending money.


– As my friend rightly reminds me, they have a responsibility to spend money. The point is, I think, that any government having a responsibility to spend money should accept the responsibility of raising it. As individuals, we should all like to be in the happy position of accepting no responsibility for raising the money that we spend.

Mr Edmonds:

Mr. Edmonds interjecting,


– I am prepared to indulge my loquacious friend, the honorable member for Herbert (Mr. Edmonds) to a certain extent, but after that I think I should be allowed to proceed with my remarks. I now wish to make a few remarks about the Australian Loan Council. That peculiar institution was brought into existence some years ago because of the conditions that then existed, which were so different from the conditions of to-day that they might have prevailed centuries and not decades ago. Without endeavouring to analyse in detail the theoretical functioning of the Australian Loan Council, I may say that it undertakes, or attempts to undertake, a national task without any national plan or national responsibility. In plain terms, which will be intelligible to the honorable member for Herbert and to every one else, in the Australian Loan Council an undignified squabble takes place between the representatives of six States to obtain from the Australian Government money that that Government raises by taxation. The title “ Australian Loan Council “ is, to a large and most important degree, a misnomer. It is evident, and has been so for years, that the Australian Loan Council cannot raise the money that it is expected to raise. Any honorable member who cares to examine the activities of the Australian Loan Council over the years will realize that if all the requests made initially by the State governments had been met, hundreds of millions of pounds more than had actually been raised would have had to be provided either by loans or by taxes collected by the Commonwealth and handed over to the States for works which should be financed from loan moneys. As an organization carrying out the functions envisaged by those who formed it, the

Australian Loan Council no longer exists. It can no longer carry out those functions efficiently and adequately. That is not a matter of argument; it is beyond dispute. A result of the activities of the Australian Loan Council is that, apart from the limited amount of loan money which has been and is available, there is a large amount of money raised by taxation which is spent throughout Australia by seven different authorities without any common plan or common priority. Australian Loan Council operations have also resulted, and will continue to result, in unbalanced and uneconomic development, a fact which clouds any governmental consideration of problems which of necessity are basically financial.

The Australian Government cannot carry out the functions that it is expected to discharge, because of the limitations that I have mentioned, and others that perhaps should not be introduced into this discussion. There is one further matter, however, that I think should be mentioned, because it bears on these considerations. We have in Australia an arbitration system which, over the years, has proved its worth. However, there is a variety of arbitration authorities, which differ in their responsibilities and in their findings. To a very substantial degree, the action or inaction of some of those authorities is responsible for our unsatisfactory rate of production.

The Prime Minister, during his speech, spoke of the motor car industry in Australia. We all know the measures that the Government has taken to raise funds from that industry, in the form of sales tax on motor vehicles and the petrol tax. It is true that these were legitimate sources of revenue, and I believe the Government to be, in the circumstances, perfectly justified in taking such action. But, whether we like it or not, the motor car industry has developed to a substantial degree during the last few years and is here to stay. In other words, we must face the fact that motor registrations will continue to increase in number, until the time comes when saturation point is reached - whenever that may be - and action taken to meet an emergency situation cannot be regarded as permanent action. It cannot be treated as a long- range solution to the problem. As an illustration of that, I may mention that it is proposed to raise an amount of approximately £12,000,000 by the increase of the petrol tax. Of that amount, £fc,000,000 will go in additional grants to States for road maintenance and construction. If we accept that as a permanent feature of our economy, then we must accept, as a permanent feature, the unsatisfactory condition of roads throughout Australia. I agree with the Government’s action as an emergency measure, but we shall have to correct our thinking on this matter before we can produce a long-range solution. We must by some means - and I confess that I cannot suggest them at the moment - provide money for road maintenance from some source other than a tax on petrol. If we do not do so, in order to finance effective maintenance and necessary CODstruction, the petrol tax will be made so high that the price of petrol in Australia will be comparable to its price in England. I hope that by the time the next budget is introduced a long-range approach to this problem will be possible.

The economic proposals put forward by the Prime Minister are, by and large, sound in view of the circumstances. I believe that they will largely achieve the ends for which they are designed. My criticism is directed not so much to the things that have been done as to the things I believe should have been done. It is true that the power of this Government to take action such as I have suggested is limited. There is, however, one concrete and positive step that the Government might have taken. The Prime Minister referred to it, I think, only in passing, and not in detail. I refer to a reduction in the number of immigrants coming to Australia. To me, it seems that if we are trying to slow down the pressure on our economy, and, if we are trying to dampen down purchasing power and consumption power, here is one positive concrete action that the Government could take. I do not dispute the fact that immigrants have made a very great contribution to our development, but I believe that the moment is long overdue for the reduction of immigration, because we cannot afford to allow the continuance of the inflationary impact on our economy caused by something like 100,000 immigrants a year.

There is a great deal of argument about this, as there is about other points. But the facts are there. There is no question that the introduction of 100,000 immigrants a year into a country has an immediate inflationary impact on the economy. There is no doubt, also, that .after a period of years, the benefits which come from immigration outweigh the immediate disadvantages of the inflationary impact. Up to that point, I do not think that there is any question. But in my opinion, in the present state of the economy, we cannot afford further to hamper the country in the hope of future gain, and I believe that substantial reductions should be made in the immigration programme.

The last point that I want to make is this : The Prime Minister indicated in his statement to this House that he intended to appoint a committee to consider the Constitution, and constitutional difficulties. If there is any substance in the view that the Constitution imposes limitations on the Government, I suggest that now is the time to take action, and that a committee should be appointed as soon as possible. I believe this to be one of the major problems, and until we find a solution for it, we will not find a solution to the problems which arise from it. Until we do that, and get understanding among the governments of Australia, we shall not be able to reduce government expenditure on a great number of things. It is true that the Commonwealth has reduced governmental expenditure to some extent. It is only Commonwealth action that has effectively reduced expenditure by the six sovereign States. That point is too often overlooked, and it should not bc overlooked when we are to deal with a problem such as this, which can no longer afford to be disregarded. On these grounds, I believe that it is extremely desirable to appoint this committee, and that the committee commence its deliberations as quickly as possible.


.- We are dealing wilh a paper relating to the national economy, and I should like to say, at the outset, that I deplore the phrase that has- been used in the course of the debate when it has been stated that we are dealing with an economic crisis. lc seems to me that the appropriate approach to this matter is to regard it as an economic problem. We are, in fact, dealing with a period of very great prosperity in this country. That should be recollected at the outset, and kept in view throughout the debate.

It is a curious thing that prosperity seems to sow the seeds of its own destruction. Frequent periods of prosperity, periods of boom, are followed by periods of burst. The Government has had it well in mind throughout its term of office that it must, first of all, obtain prosperity, and then it must keep prosperity. Having come into office during a time when the economic position was very bad indeed, the Government has succeeded in bringing about a period of prosperity. The present measures which it has in hand are designed to retain that period of prosperity, preventing any seeds of destruction which have been sown from coming to fruition.

One of the welcome things in the statement of the Prime Minister (Mr. Menzies) was the announcement that, as a result of the steps which were taken by the Government in September last, the overseas position will be adjusted by the date which he mentioned, the 30th June this year, and our overseas balances no longer will go further and further down. As a result of the import restrictions procedure, we will be able to meet the overseas position, and our exports will balance our imports. That indicates that the Government has taken the right steps, and has succeeded in carrying out its policy ; in other words, that its judgment has been correct. It indicates, further, that the electors, when they returned th, Prime Minister and his Government in December last, were correct in relying upon the judgment of the Government. That might make us feel that, in supporting the policy that has been put forward by the Prime Minister, not only have we his past record over a long period of years to justify us in supporting his judgment, but that even in the time through which we have just passed we have seen, once again, that his judgment has proved to be correct.

Another pleasant feature of the Prune Minister’s statement was that whilst, for the time being, it will be necessary co retain the existing import restrictions, it is not necessary further to increase those restrictions. It was also a very fine feature of his speech when he pointed out that we now have a greater tonnage of exports available in this country than we have ever had before. That does indicate that the effect of the Government’s policy in appointing two Minister* especially to deal with trade and primary industry is beginning to be felt, and we can rely .upon there being greater productivity and, in particular, upon there being greater productivity for the purpose of export than we have had before.

I desire to say this in regard to the Prime Minister’s speech : This statement was prepared after very careful consideration; after a great deal of discussion; after he had obtained advice from many sources; and then, after a full discussion with his own party and his Cabinet. As a result of all that discussion, the Prime Minister has produced this very careful and very full statement as to the economic position. I contrast that with the position last night, when the Leader of the Opposition (Dr. Evatt) made his speech on this subject. I do not hesitate to say that that speech can be described as being of a stale variety. One would have thought, if t:here were anything fundamentally wrong with the statement that the Prime Minister made in this House last week, that the Opposition would have come out within 24 hours and told the country what was wrong with it. But, instead of that, the Opposition had to go away for days to think over what its spokesmen were to say, and how they were to say it. Then Opposition members had their party meeting beforehand; and the Leader of the Opposition came into the House with a jumble of papers amongst which, through out his speech, he was searching to find the views of the honorable member for this and the honorable member for that.

The appropriate way of describing the speech of the Leader of the Opposition, which I have already described as a jumble, was that it was a hopeless thing of shreds and patches. The Leader of the Opposition had a shred from the honorable member for Yarra (Mr. Cairns) ; and a patch was put on by the honorable member for East Sydney (Mr. Ward). It was obvious that they were searching around all the time to try to find an adequate answer, and were unable to do so. It was stale ; it was unprofitable. The economic paper produced by the Prime Minister showed that the two main problems which we have to meet at the moment are the economic problem of inflation and a budgetary problem. Those two matters should not be confused. “We have to find, with respect to State debts for public works, the sum of £61.000,000. and we have to find it very soon. We have also, within the next fifteen months, to find the sum of £253,000,000 for loan redemption.

It has not been contested in this debate, and, indeed, it cannot be contested, that it is impossible to find that sum of £253,000,000 and the extra £61,000.000 from the loan market as it is to-day. We have to be realistic and ask where else we can find it. There are only two ways of finding it. One is by taxation and the other is by the issue of treasury-bills. While I agree that taxation is inflationary, the issue of treasury -bills is far more so. A great amount of money - in this case many millions - would be injected into the economy and we would1 have inflation on a wholesale basis. I hear murmurs of dissent, but if we have something like £200,000,000 worth of extra treasury-bills floating around we shall have inflation on a wholesale basis. Consequently, much as one dislikes additional taxation, one has to put up with a certain amount of it in order to meet what is primarily a budgetary requirement.

The real anti-inflationary measures that the Government has in mind are the raising of the bank rate and also the continuance of its existing. policy with regard to credit control. It is known that for some time there has been a policy of stringent credit control. The whole reason for the existence of a central banking system is that it may be able to deal with credit and. in accordance with the needs of the community and the circumstances at any particular time, allow credit to flow more freely, or restrict it. The present circumstances are such that it is necessary that credit be restricted, and that is essentially an anti-inflationary measure.

The alteration of the bank rate is a normal anti-inflationary measure. It has been adopted recently in England and has been accepted there without any difficulty at all. To suggest that it is the outcome of some pact with the banks is worthy only of the source from which the suggestion comes. The word “ pact “, of course, is just an alternative for the word “ conspiracy “. There is in this House one gentleman who, whenever anything happens, says that some conspiracy is at the root of it. It would have been an entirely new type of speech for him if he had not said something of that sortHe is like the character in Dickens, for whom King Charles’s head became an obsession. I do not think that very much notice will be taken of those charges. I seem to recall that’, in the course of his speech, the Leader of the Opposition referred to certain figures which he said that the honorable member for Melbourne Ports (Mr. Crean) had been able to extract. As I remember the speech of the honorable member for Melbourne Ports, he made no attempt whatever to produce those figures and to show how he worked them out.

Let us turn to the taxation measures which have been adopted by this Government, really for budgetary reasons, because we have to find this money at the present moment and within the next fifteen months. There has been no increase in personal income tax. It is essential that the development of this country should continue and. in order that we should have more and more development, it is equally essential that there should be an incentive for people to work and to produce. The greatest deterrent to incentive is the personal income tax. The Government, therefore, was very wise indeed not to raise this tax.

Company tax has been raised slightly. This increase will be of worth from the budgetary point of view, but is not so great as to affect enterprise or cause business concerns to “ pull in their horns “ unduly. It will still leave them sufficient incentive to expand, or to go into fresh fields of business. It was. therefore, ft very wise move to limit the increase of company tax.

True it is that this proposal was attacked by the Leader of the Opposition. True it is that he said a gross tax should be placed upon companies; but what would be the result of that? The first thing that happens when company tax becomes excessive is that they are unable to pay out the profits that they are making. Two things then happen. They do not expand, and they proceed to throw people out of employment because they have not the degree of profit which an expanding business requires to keep people in employment. The result of imposing heavy taxes on those who give work to the citizens of this country is considerable unemployment.

During this debate there has not, so far as I can recollect, been any serious suggestion that the Government’s taxation measures will result in decreased employment. As to whether the Leader of the Opposition was sincere in his statement that heavier company taxes should be imposed, I am reminded that when he went to the country in 1954, one of the planks of his policy was that he would give considerable taxation concessions to great companies, and in that way encourage them to make the profits which he now says are so outrageous. In other words, he is prepared to adopt any policy which at the moment will suit him politically, quite apart from whether he is sincere and believes it to be economically sound.

The other part of the Government’s taxation policy relates to what may be described as a luxury tax. It is an increase of sales tax on goods which are mainly luxury goods - goods of the more expensive variety - and certain other goods which do not require the exercise of very great self -discipline and in respect of which no real hardship is involved to buy a little less of these. It cannot be said that much of a kick will come from people with regard to that, particularly when one recalls that demands for increased ex penditure in various directions are continually being made upon ! lie Commonwealth through the Stales, or directly. Indeed, demands are continually being made by honorable members on the Opposition benches for further money to be spent by the Government - for money to be found for this, for that, and for all sorts of expansion and development. These suE gestions are put forward with some sincerity. They are put forward on the factual basis that this money is really needed for those well worth-while plans. A time of prosperity is not the time to stop development, and to-day we are in a period of very great prosperity. A time of very great prosperity is not the time to stop immigration. This is the time when we must press forward with our development and our immigration policies.

I have only a short time left at my disposal, sir, and therefore I merely summarize what I have to say. The Prime Minister said that this economic plan was merely a short-term policy which he was giving to the Parliament and the country. He referred to productivity and to savings. Both of those are extremely important. The Government apparently has those matters well in mind. The need for greater productivity was referred to in a report that the Prime Minister said was produced by the Ministry of Labour Advisory Committee, and if one turns to that report one will see that a great deal is said there with regard to the need for improvement in management. There is also there a reference to the importance of incentive payments. The other feature that I shall mention is the need for saving. I have already dealt with that subject this session. I merely emphasize at this stage that those matters, to which I have referred previously, I still have well in mind - that it is necessary to have greater public investment made possible by alteration of the present bond basis, and also that savings must be made worth while, which means that the means test must be abolished, not merely from a social or humanitarian point of view, but as a matter of economic policy. That must come. Another way in which savings could be increased is by an increase of allowable tax deductions in respect of superannuation and life assurance. This would be a means of helping considerably the self-employed person.

I could say a great deal more on these various matters, Mr. Acting Deputy Speaker, but my time is about to expire. As I see it, this statement made by the Prime Minister deals merely with the position as it stands. That does not mean that the Government has not well in mind ways in which the present position can be adjusted in the future, particularly in relation to the bringing back of the bond market to a basis on which we will not need to use tax revenue to provide for State works programmes, which should be financed from loans, and not from revenue.


.- I wish we on this side of the House had the same confidence in the efficacy of the measures now before us as the honorable member for Balaclava (Mr. Joske) has displayed. We have come to expect that every five or six months the Government will place before us either a new economic policy, or a statement on taxation, or some other such interim measure. The necessity for the Gover.nment to announce periodical changes in policy is that it has no long-term policy. It has been working on a short-term basis ever since it came into office, and that is one of the troubles of this country to-day. The Government has operated by fits and starts. It has given the nation’s troubles a boom and bust type of treatment. Therefore, if the Government intends to go on in this way, we can be sure that it will find no real answer to the problems that face us. The torrent of words that we had from the Prime Minister (Mr. Menzies) last week, and the enabling legislation which is to be placed before us for our approval in order that the Government’s new policy may be implemented, will not even check, let alone cure, the roaring inflation by which the Australian fi is being afflicted to-day. As an economic doctor heading a panel of economic doctors the Prime Minister, I am afraid, is in the quack class. The patient receives Bates salve plasters instead of castor oil.

What is inflation? Briefly, it is the economic malady that is brought about when too much spending power chases too few goods and services - not that thousands of Australian families have too much to spend! The contrary is rather the case, as a result of everspiralling costs. But, overall, there is a surplus of spending power over availability of goods. This malady is by no means confined to Australia. It afflicts all the Western democracies to-day. It is the grim aftermath of war-time economics. The simplest approach to an answer to thi3 intiation is twofold. First, we can draw off, or out of circulation, spending power now in the hands of the public, and put it safely away in a reserve account, or some such account; or secondly, we can produce more goods to meet the demand - and the demand, after all, is the result of the availability of income or credit in the hands of the people; or, alternatively, we can use both methods of tackling inflation, drawing off spending power and increasing production of goods at the same time. If increased value is to be restored to the fi such methods of treatment must be carried through to their logical conclusion. That is not an easy thing to do, and halfhearted measures will not be sufficient. In the end, although the treatment might be painful, the result would be worth while. No good Australian would object to any just and equitable method of withdrawing purchasing power, which creates the demand for goods and services, if he could be shown that such a method of treating the malady of inflation was an effective one, any more than I would object to painful treatment of an illness provided I know that it was the right treatment, and that it would restore my health. But the Government’s answer to inflation in this document will not fool anybody. It is merely a palliative. It is a half-hearted attempt to treat the illness; It is also unjust. And it is weak medicine ! It is a quack cure. Moreover, it is a fraud, because the contents of the bottle are not as described on the label. The medicine being given to Australia is not the medicine advertised. In that sense it is a colossal misrepresentation. The Government proposes antiinflationary measures when, at the very heart of this document, is the revelation that the Government’s action is purely and simply designed to increase revenue. Therefore, it is obvious that the Prime Minister has tried to fool the people.


– As a doctor he is a good dentist.


– That would be a good way of putting it. He would have the patient screaming with pain most of the time. The Government proposes to in crease sales taxes on a range that covers both essential and non-essential goods. The existing sales tax on ordinary motor cars is to be increased from 16§- per cent, to 80 per cent., which is an effective increase of 80 per cent, on the existing rate. Sales tax on commercial vehicles is to be increased from 12^ per cent, to 16$ per cent. We do not quarrel with the increases of sales tax on luxury goods. The excise on petrol is to be increased by 3d. a gallon. We are to have increased sales taxes on beer,, tobacco and cigarettes. Company taxation is to be increased by ls. in the £1. Altogether, an extra £115,000,000 is to be taken from the people by those four or five methods. For instance, the increased yield from sales tax will be £30,000,000. There will be an additional income of £12,000,000 from the increased excise on petrol. There will be an additional income of £29,300,000 from the increased duties on beer and spirits. There will be an increase of £12,000,000 in the income from excise duties on tobacco and cigarettes. The increase of the company tax by ls. in the £1 will yield an additional £30,000,000. The total increased yield will be £115,000,000. That proves to us that this is a revenue-creating measure. I want to emphasize that that is the underlying motive. This is not an anti-inflationary measure at all. It is purely a revenue-creating measure. The Prime Minister, in his statement, said -

These are the broad considerations which we face in trying to form a judgment of what additional resources in the shape of revenue we may require if we are to preserve a condition of balance in our public accounts in terms of cash receipts and outlay. Our carefully considered judgment has been that the amount we require will be somewhere between £100,000,000 and £120,000.000 the details of which I have set before you.

There it is in a nutshell! This is a revenue-creating measure, not an antiinflationary measure. For that reason, we say that it is a fraud. It is not what it pretends to be. The fact that the raising of additional revenue is the real motive for this policy was highlighted in the next paragraph of the Prime Minister’s speech. He said -

May I deal, briefly, with the argument that increased taxes merely transfer spending power from private persons to governments. and that private persons can spend their money more prudently and effectively than governments tan *

What the Prime Minister will do, in effect, is to take money from the public and give it to the Government. The Government will spend the money. Therefore, as an anti-inflationary measure, this is an absolute fraud. We could argue that the private people of Australia can spend their money more wisely than can the Government. Indeed, the Prime Minister is not prepared to argue that point. He says, in effect, “ We are going to take £115,000,000 from the private people of Australia and transfer it to Consolidated Revenue, so that it can be spent on the various services of the Commonwealth “. Therefore, the money will again go into circulation. As an anti-inflationary measure, this is an absolute fraud.

Mr Bowden:

– I think the honorable member is using the word “ fraud “ a bit too much.


– As a matter of fact, under the pretext of healing a man, “ Dr. “ Menzies picks the patient’s pocket. That is my summing up of this so-called economic statement. What will the effect of these measures really be? I do not think there will be much of a reduction in smoking or drinking as a result of these increases. There will be a great deal of criticism for a month or two, but then, as always happens, the increases will be absorbed into the general spending of the people. The Prime Minister, as he has done so often before, will impose these extra taxes, only to take them off just before the next election. Then the people will say, “ My word, the Prime Minister has reduced taxation ! “ - forgetting that he had increased it previously. When the time comes, we shall remind the people of Australia of this little trick.

There is to be a. savage onslaught on the motor industry. It has been selected for a special attack. British cars will be hit hardest. The importation of British cars has been reduced already as a result of import restrictions. In the newspapers we see photographs of long lines of motor cars awaiting export from England. There is no one to purchase those cars. The result of the Government’s policy will be to cause a further piling up of the motor cars awaiting export from Great Britain. Already thousands of men in British industry have lost their employment because of measures like this. In 1952 this Government hit the textile, industry of Great Britain a smashing blow by the savage import restrictions of that year. I was in Britain at that time. You said then, Mr. Deputy Speaker, that you were an Australian only with bated breath, or in a whisper somewhere in a corner. We hit the British textile industry so hard that 40,000 people, I think, lost their jobs. Thousands of other people in Britain will lose their jobs as a result of this 80 per cent, increase of the sales tax on motor cars. No impost since the war has been more savage than that. When one of the Ministers of this Government was overseas recently, he cried out against the British Government for not purchasing Australian goods, but now the Government is dealing a smashing blow at the British motor industry. No wonder Britain thinks twice about dealing with the Government that is in office here at present.

Mr Bird:

– Our own motor car industry , will be affected also.


– I was coming to the position of our own motor car industry. It will be hit also. The price of new cars will rise by an average of £123. The average increase in the price of second-hand cars will be from £60 to £70. That is the way in which the Government is treating the people of this country, i The family man deserves a private car. j He has as much right to own a private I car as has the Prime Minister, the head ; of a big firm or, for that matter, a ; member of Parliament. We have a high ‘ standard of living here. The private motor car is a part of our standard of living, but this increase of the sales tax will prevent many people from owning j even a “ bomb “, as we call an old second- ! hand car. 1

Mr Bowden:

– The honorable member I will not convince many people with that I argument. I


– I have been talking ,: t.> the people during the week-end and I am telling the House what they are think- , ing. A motor car should no longer bp : regarded as a luxury, but this Government will make ownership of a motor car a luxury. That is a blow at the family unit in this country. Wealthy people can afford to pay the increased sales tax, but the , wage-earners cannot. The increase is unfair and ruthless. Despite its savageness, it will hardly dent inflation in this country. Let me read a letter that a man wrote to the Sydney Daily Telegraph on the 16th March. In the letter, he said -

Is the Prime Minister not somewhat naive when he states : “ I would not have it thought that we are in any sense hostile to the motor vehicle industry “ 1

It seems as though he is hostile, because he proposes to increase the sales tax on motor vehicles by 80 per cent. The letter continues -

Mr. Menzies tries to justify this absurd impost by pointing out that registrations of new motor vehicles have risen from 15o.!)!)(i in 1952-53 to 245,271 in 1954-55. The industry is proud of its expansion, and oilers 7io apology for its expansion.

We agree with that. The increased excise duty on petrol will bring in an additional £12,000,000. Of that sum, £4,000,000 will be spent on rural roads. We do not mind that. Why should not the whole £12,000,000 be spent on roads? We are screaming for money for roads. We need a national outlook on roads and a national plan for roads. But the Government will take £8,000,000 of the £12,000,000 raised by the increase of the duty on petrol and will pay that money into Consolidated Revenue. The motorists and the farmers would not mind paying more for their petrol if they thought that, by so doing, they were helping to solve the colossal roads problem of this country. We need money for the road widening, road building and road modernizing that is necessary.

The primary producer will be hit in three ways. He will have to pay more sales tax on his motor vehicles, he will have to pay an increased tax on the petrol that he uses and he will have to pay more for an overdraft with his bank. Thi farmer, the man whom this Government is supposed to be protecting, will be hit in these three ways.

We say that direct taxation is the only fair and just method of drawing off purchasing power from the people. But the

Government is not game to increase direct taxation. That form of taxation falls most heavily on the people who can well afford to pay it, but the sales tax, for instance, is an inhuman tax. Both the wage-earner and the £5,000 a year executive pay the same amount of sales tax on a packet of cigarettes, a glass of liquor, a car, a refrigerator, a sewing machine, an electric razor or an electric stove. The sales tax is a vicious and inhuman method of reducing the spending power of the public. It is thieving by stealth. This Government has not had the courage to face the situation and use direct taxation to solve its problems. It will never solve them by the method it has adopted. Because direct taxation is the most equitable form of taxation, Labour governments obtained 65 per cent, of taxation revenue from direct taxation and only 35 per cent, from indirect taxation. Before World War II., the position was exactly the reverse.

Increased interest rates on overdrafts will hit home-builders, businessmen, primary producers, municipal councils and applicants for war service homes viciously. The whole sorry story can be summed up by saying that we are dealing with the inevitable excesses of an unplanned, uncoordinated and uncontrolled national economy, which is in the hands of a conservative government that still believes in the outmoded laisser-faire philosophy, “ Let it go ; the lid is off “. This Government still refuses to make use of economic controls or financial flexibility. It encourages unrestrained profit-dominated private enterprise, which can never conduct a war successfully and should never be permitted to manage the peace unrestrainedly, as it has done since 1945.

In conclusion, I turn to overseas trade. We must find new markets and develop old markets for our products. We have been badly left in the race for markets in Asia and in the Union of Soviet Socialist Republics. Russia and the countries of Asia are fighting an ideological war with their trade. We are afraid to trade with them because we have no ideology of our own. We shall be outsmarted and outgeneralled by these people of whom we are afraid. The Government has at last decided to send a trade mission to Peking to ascertain whether we can build up more trade with. China. New Zealand, Israel and a host of other countries have sent trade missions to China to develop trade with that country. We do not agree with the philosophy of China. Indeed, we are violently opposed to it. However, trade is a two-way process, and we have a chance to approach our trade throughout the world ideologically, as the Communist countries are doing. China recently sent to Japan a trade delegation of 25 experts who had been trained for five years in the Japanese arts, literature, customs and the like. They worked with ideological weapons as well as with trade. Japan, of course, was awake to their tactics. By methods such as this the Communist countries spread their philosophy and ideology throughout the world. It is up to us to take effective counter action by adapting our trading methods.

Mr. Lawrence

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


– I support the statement made by the Prime Minister (Mr. Menzies) on Wednesday evening of last week and the economic measures envisaged by him, although I do not do so uncritically. However, I hope my criticism will not be of the illogical and insincere kind that we have heard from the Opposition, which is endeavouring to make political capital out of the present situation without advancing any constructive ideas to remedy it. We on this side of the House support the Government’s proposals, because the economy at present needs a certain degree of slowing down. We must ask ourselves two things. First, we must ask ourselves why these short-term measures are necessary. Why is it that the economy has developed in a way that requires these short-term measures? Secondly, we must ask ourselves whether the proposed measures are right for the present circumstances. I propose to deal with the second question first. Are these the right measures? In general, I think they are, but I shall mention three matters about which something more should, perhaps, have been done. I shall criticize sins of omission, perhaps, rather than sins of commission. The first of these three matters concerns the petrol tax. It is wrong that the whole of the proceeds of the new impost on petrol will not be devoted to road works. That circumstance, I think, is a definite blemish on the Government’s plans.

Mr Turnbull:

– Queensland and Western Australia cannot spend all the money they receive now for that purpose.


– I know that. We do not want too much inflationary expenditure. I know that, at the present time, it is not always possible to spend effectively this month, next month, or the month after, all the money available. But, if we had a larger general flow of money for road works, perhaps later this year, or certainly at some time next year, we could envisage a higher rate of expenditure at a time when the effect would not necessarily be inflationary. We have been told that, over the next ten years, there will be a considerable increase of the amount spent on roads, and it seems to me that the Government would lose nothing, and would gain much, by adopting the principle that the whole of the proceeds of the additional petrol tax should be allocated to road works. Although it might not be possible to spend the full amount month by month as it becomes available, taking the longterm view, we should be making provision for much-needed expenditure on roads, and this would not, in the final analysis, be inflationary.

The second point I make is that we should not have increased bond interest rates without, concurrently, improving the position of the holders of existing low-interest bonds. I know that, because of the pressure of international moneys, which tend to flow from countries where the interest rate is low to countries where it is high, it has been necessary to increase interest rates in order to make credit available in Australia. If we had not increased interest rates, we should have found our liquid reserves bleeding away overseas where yields are more attractive. But - and this is the important “but” - while we are increasing interest rates, we must give thought to the holders of existing bonds whose capital has been eroded by rising interest rates, which cause a fall of the capital value of existing bonds.

We should have provided for voluntary conversion in order to protect at least the smaller bondholders. It is all very well for the Prime Minister or the Treasurer (Sir Arthur Fadden), to say, in effect, “ They signed contracts. They knew what they were signing. They should have taken short-term bonds “. That is not the point. From the country’s standpoint, we have ruined the bond market. This is an imprudent thing to do at a time when the Treasurer faces the necessity to raise new loans and, at the same time, convert an old loan of, I think, £200,000,000 or £250,000,000, which will fall due in the next year or so. Quite apart from what might be written in the letter of the bond, we should have adopted measures to protect the interests of existing bondholders at a time when interest rates were increasing, as it was inevitable they would do. It is of no use for us to say that we could have kept interest rates down. That could not have been done except in a socialized economy. However, we could have done more to protect the interests of those who have taken up government bonds and who we hope will continue to invest in them in the future. If we had been thinking sensibly and practically about the loan market, we would not have adopted measures that have brought it to a point at which there is really no net yield of new loans.

The third point I wish to make is that, over the short term, we should have done more to review the works and services of the Commonwealth, not necessarily in order to curtail them, but in order to assign correct priorities and to ensure that works were undertaken more efficiently. The size of the programme could have remained unaltered without imposing any strain on the economy, and, perhaps, even if net monetary expenditure were reduced. We should have reviewed our works and services programme more constructively as part of this short-range policy. These are all immediate problems. Let me pass from them to the second class of problems that I mentioned, namely the long-term problems. We must ask ourselves why a programme of this character has become necessary, and the Government might undertake a little honest self-examination in this regard. The Australian economy has become something which has been described as a kangaroo economy; we hop from point to point, instead of making regular progress. To some extent, of course, this is bound up with the position of Australia as an exporter, of products whose prices on the world market vary quite considerably in ways which we cannot control. Although that is not a sufficient explanation, I think it will be part of any reasonable approach to this subject.

Our difficulties have not been of depression but of peak prosperity over and above the norm. During the last six or seven years, we have had a run of seasons better than any one has had any right to expect, and certainly better than any on whose continuance we can rely. We have had good prices overesas, not uniformly peak prices, but good prices all the time. Our terms of trade, which is the best measure of these things, that is, the ratio in which our exports exchange for our imports, have been favorable all along, judged by their pre-war standards. The exchange rate between the goods that we export and the goods that we import has been in our favour consistently during the last six years, although the degree to which it has been in our favour has varied from time to time. We have had everything on our side, but still we find that we must have recourse to shortterm measures of this character. I am afraid that this does reveal a good deal of procrastination on the Government’s part in meeting some of these long-term problems. We have put them aside, hoping that they would not occur. We have been looking always at the daytoday problems, to which we must have regard, but forgetting that behind those day-to-day problems there are other matters to which we should have paid more timely attention. I fear that there has been a tendency to think that when a speech is made the matter is settled in words and nothing more need be done. That is not good enough, and I am afraid that our procrastination has been responsible for the conditions which now need the emergency measures which are indicated in the Prime Minister’s statement.

I shall not have time to examine this question in any detail, but let me just indicate some of the general lines which I think we should perhaps have followed. These are matters which I have covered in greater detail in the House at various times over the last few years. I think we should have done more about altering the basis of income tax assessment so as to make better provision for saving and for the family man, who should have been receiving more concessions than he has received. The burden of taxation has been inequitable on him. We should have done something about it, and, if we had done it sooner, perhaps we would not have been faced with this chronic savings crisis which lies at the root of all our other economic troubles. We should have done something more about the means test. We should not have allowed the means test to continue in its present form. I believe that to do so has been a piece of financial imprudence and that, as a result of this and other things, we now face a ruined bond market, because the habit of savings has been eradicated by our policy and that of the preceding Labour Government on the means test. [Quorum formed.]

I was saying that if we were to maintain the bond market we should have done something more about the means test, and that our policy, quite obviously, has been rather imprudent financially. We should have done more about having a reasonable loans policy and about the loan market as a whole, providing more reasonable support or, perhaps, the opportunity of voluntary conversion. I suggest to the Treasurer that when he issues f uture loans he should make it a condition that they carry an option of conversion at par into any new loan which may be issued, say, in the following five years. Such a course would, to some extent, cure that particular trouble. 1 am not trying to blame the Government particularly in regard to this matter. We have failed to reverse in time some of the policies of the Opposition. We have continued their imprudence and have not been sufficiently vigilant of our own principles in regard to these matters.

It is high time that we had a reasonable transport plan. I know that this is a matter for the States rather than for the

Commonwealth, and that the prime responsibility lies with them rather than with us. Nevertheless, we should be giving a lead, because transport is so much a part of the whole cost structure. We should have been doing more with the Australian Loan Council. Our handling of it has not been particularly skilful. There should be a priority system for works throughout Australia. I know that the States can be very difficult. I have been a State officer on the Australian Loan Council, and I am not oblivious of the difficulties that occur there, but we must do more, in the interests of Australia, about introducing some reasonable system of priorities which would ensure the best spending of our money.

We must have more practical plans for increasing productivity in industry, in such a way that there is no conflict between employer and employee, because both should be advantaged by a rise in productivity and a corresponding rise in real wages. I fear that one of the matters which will be brought to our notice is our failure to deal adequately with the Communist danger, which is at present likely to erupt in planned industrial trouble directed at the sabotage of the Australian economy and a reduction in the Australian standard of living, with consequent discontent. That is a plank of the Communist platform, and the Communists will try to cash in on every situation as it emerges with the object of bringing about a lowering of Australian standards. It is a deliberate action on their part, and I feel that our weakness towards the Communist party has rather exposed the Australian worker to a reduction in living standards, which is something that I do not want, and nobody else should want.

These are matters which time has compelled me to mention without analysing. I should have liked to speak on each one of those points at some considerable length. The position adds up to this: We are not an ageing or elderly country. We are a young and developing country, and one would feel perhaps that, quite apart from what may or may not be in the Prime Minister’s statement, there has been a rather too elderly approach to some of our economic problems on the part of the Government. The approach has lost a little of the dynamic which should infuse the Government’s policy, because I believe, as I think all honorable members in this House believe, that Australia is a dynamic and developing country. I do not think it is good enough just to regulate and to do no more.

I am not suggesting, as some honorable members opposite have suggested, that regulation in itself is wrong. Regulation may be necessary, and when it is necessary, it is right, but it is never enough. Apart from, and in addition to any function of regulation which the Government may have - and that is one of its real responsibilities - there is also the responsibility of keeping up and continuing physical and moral development and keeping up the dynamic of the whole Australian industrial and political structure. It may be that this will be done in the future by the Government. It was certainly not done by honorable members opposite when they were the government. In those days, there was an air of age about the whole of the Government’s socialistic approach to our problems. No real growth could have been possible then, and if one criticizes the Government today, it is on the ground that it has followed perhaps too much the elderly approach.

Mr. ACTING DEPUTY SPEAKER (Mr. McLeay). - Order! The honorable member’s time has expired.


.- At the moment, we are considering the statement by the Prime Minister (Mr. Menzies) on the position of the Australian economy, and the amendment that ha3 been moved by the honorable member for Melbourne Ports (Mr. Crean) to the motion for the printing of the paper. The amendment is to the effect that the Prime Minister’s statement -

So far as it discloses a policy of increasing interest rates on hank overdrafts is injurious to the large majority of the people of Australia and should be rejected.

I agree entirely with that wording, and I shall certainly support the amendment. In his statement, the Prime Minister has given us no clear or sufficient reason why he should expect this House to accept the view that certain economic difficulties have arisen and that, because of them, the conditions he proposes should be imposed upon us in this time of alleged prosperity. The ordinary member of the community cannot possibly follow the Government’s reasoning when it suggests that, in a period of prosperity, it is faced with financial and economic difficulties. What the average man does understand only too well is that although he is supposed to be enjoying a standard of living far higher than any he experienced previously, he is actually denied any advantage of higher wages because of the great increase in costs. The position is even more acute for the man who has a large family. In those circumstances, it is difficult to persuade the people on the lower strata of our community life that we are enjoying unprecedented prosperity, as some honorable members would have us believe.

Ever since the freezing of the basic wage, the working people of the community have been suffering a grave injustice. Although the basic wage was pegged, no curb was placed upon prices. Manufacturers and others were allowed to go unbridled in imposing higher charges upon the community, while the consumer had no opportunity whatever of passing these additional charges on to any one else. For this reason, the community cannot feel that the Government’s position is anywhere near so acute as his.

The Prime Minister has admitted that the present position did not develop overnight. That being so, one may be pardoned for asking why the Government did not give some explanation of it to the people during the election campaign, which was held only four months ago.

Mr Bowden:

– There was.


– There was no adequate explanation of what was likely to be the position, or what remedies were likely to be applied. The Government merely suggested at that time that we were enjoying a period of prosperity. That suggestion has proved the Prime Minister’s recent declaration to be seriously at fault. Had an adequate explanation been given during the election campaign, I feel confident that the result of the election would have been vastly different from what it was. I agree entirely with the Leader of the Opposition (Dr. Evatt) when he says that the Prime Minister’s statement to the effect that the Government’s measures are anti-inflationary is an absolutely bogus declaration. There is every justification for the opinion expressed by the Leader of the Opposition in his assessment of the reliability of the Prime Minister’s statement. There is more in the Government’3 proposals than has been revealed to us. 1 feel that this is one of a series of steps that the Government proposes to take with a view to shifting the burden of the present economic position from the shoulders of those who really ought to bear it - the wealthier sections - on to the shoulders of the poorer sections of the community.

Mr. Chifley, when he was in control of the Treasury, sought to distribute as widely as possible the prosperity that existed during his term of office by applying a graduated scale of direct taxation, and by requiring the wealthier sections of the community to make a greater contribution to the common well-being. He also stabilized the price level by paying subsidies on the production of essential commodities and by curbing, as far as the powers of the Commonwealth permitted, the prices of those goods that formed part of the ordinary living requirements of the community. But since this Government assumed office in 1949, it has sought to remove whatever curbs had been placed upon profits and prices. It has sought to withdraw subsidies that were introduced for the purpose of stabilizing the price level, and it has resorted to indirect taxation rather than direct taxation. As a result, the wealthy sections of the community have been progressively relieved of part of the responsibility that was rightly theirs to bear, and it has now been placed upon the ordinary members of the community. That latter section has suffered also because of a reduction of the value of wages. The value of the Australian fi is now 8s. less than it was when this Government assumed office.

Mr Bowden:

– Where does the honorable member buy his goods ?


– I got that information from a statistician.

Mr Bowden:

– I asked the honorable member where he bought his goods.


– The honorable gentleman will have an opportunity to correct my figures. I hope that, if he finds that they are correct, he will inform the House to that effect. The Government has stated that the proposals outlined by the Prime Minister will not affect existing prosperity, but let me tell honorable member? opposite that it has been estimated that those proposals will take between 8s. and 10s. a week from the purse of the average wage-earner. That is a heavy burden to place upon the average wage-earner, and upon pensioners and other persons who are obliged to live on fixed incomes.

The Government’s proposals have been drafted in an effort to meet another situation also. The Prime Minister has discovered that the loan market is not now quite so willing to supply the needs of the Government to enable it to undertake certain public works. The action of the Government in issuing bonds at higher interest rates has, as was stated by the honorable member for Mackellar (Mr. Wentworth) only a moment or two ago, depreciated the value of money that was invested in earlier loans, particularly those bearing an interest rate of 3£ per cent. As a result, many people have lost confidence in the loan market, and are not prepared to take the risk of investing their money in bonds and eventually being obliged to sell at a discount of from 10 per cent, to 15 per cent. To place persons who loyally lent their money during the war period in such a difficulty is outrageous. I feel that that situation should be corrected. The Prime Minister expects that, following the imposition of heavier taxes, the Government will obtain sufficient revenue to enable it to bridge the gap between the revenue for which it has already budgeted and its commitments. It seems, therefore, that the Government has undertaken a form of supplementary budgeting which is very unscientific, which is totally uneconomic in character, and which, rather than effect an improvement of the economy, is likely to create further inflation. In every respect, the Government is called into question for the action that it has taken. It has not. curbed profits or prices. As the Leader of the Opposition has stated, the present condition is one of profiteering inflation. In recent times, we have been subjected, by persons engaged in manufacturing and commercial activities, to one of the most grievous forms of profiteering that this country has ever known.

Moreover, I believe that the Government has been obliged to take the present course of action in order to satisfy demands for higher interest rates that have been made upon it by some of its principal patrons - the financial corporations - with a view to further supplementing their incomes. I believe that the community generally is feeling a sense of resentment against the Government’s action in increasing interest rates. That added levy will only weigh down the economy. It does not resolve any of our problems, and is merely an added impost upon all sections of the community. I fail to see how any direct or indirect advantage is conferred upon the community by an increase in the interest rates. It is a further burden weighing down our efforts at development. It is a repressive and restraining hand on all our progress, and I feel that I must make an earnest pr oteri against the action of the Government in this regard. Some of the Government’s proposals show a more savage and severe attack upon our economy than others. The action of the Government in singling out the motor industry for an excessive increase in sales tax calls for a most earnest expression of protest. This affects imported vehicles as well as those of Australian manufacture. Australia is a country of long distances, and the opportunity to travel from place to place should not be restricted in any way. Transport by motor car has become an accepted feature of community life amongst all sections of our people, but, evidently, the Government wishes to restrict motor transport to a limited section of the community, denying it to others. In the name of all those who are employed in an industry which is of such importance in our Australian economy, I must register a protest against the Government’s proposals.


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

New England

– “We have listened to two statements made by the leaders of the two parties in this Parliament. The first was that delivered by the Prime Minister (Mr. Menzies), when he put before the

House a statement regarding economic conditions in the country and the remedies which he considered would be necessary to correct certain inflationary tendencies that were evident in our economy. It seems clear to me that the Prime Minister cannot be charged with ill faith, as he has been by members of the Opposition, simply because, not long after the general election, it became necessary for him to review the economic situation. I say that deliberately, because one must have regard to the speed at which changes occur in world economic conditions. World economy is dependent not upon the policy of this country, but upon the policies followed by all countries. International economy has very wide ramifications, and economic trends in Australia are influenced by a multitude of international transactions. Adjustments must be made from time to time to meet the impact of international influences upon our economy. *

The other statement to which we have listened was made by the Leader of the Opposition (Dr. Evatt). I am sure that we all waited with bated breath, as it were, to hear what that distinguished gentleman had to say. While I have always admired ‘ his great legal brain, and while I have always listened with respect to his legal pronouncements and his dissection of constitutional and like problems, I must say that in financial matters I find him singularly and completely disappointing. I should have thought and hoped, as, I am sure, would all those who listened to the broadcast of his speech, that the Leader of the Opposition would have brought forward some suggestions of a constructive nature, even if they emanated from a different stand-point, or a different social or economic theory. I expected some suggestions of a concrete nature, and some reasons why there should be a modification of the policy adopted by the Prime Minister. No such reasoned statement was made by the right honorable gentleman. I noticed that, most of the time with his back to Mr. Deputy Speaker, he lectured members of his own party at great length. He scarcely ever looked at members of the Government parties. I do not know whether that action was impelled by a fear of a stab in the back.

I do not know why it was that he would not turn his back upon his own supporters, but it was most disquieting to see the general leading his army without facing the enemy. Apart from one statement made by the Leader of the Opposition, which I thought was a real contribution to the debate, I could not find anything that suggested a constructive approach to the problems with which we are confronted. The one statement which L° thought contained a great deal of substance was that in which he chided the Prime Minister and the Government for having taken certain action to control banking by adjusting the rate of interest, or the deposit rate, while at the same time taking no steps to have action initiated by the States in the field over which they have exclusive jurisdiction. The right honorable gentleman made a rather nebulous reference to a sort of reserve of constitutional power, but I do not think he did justice to his great legal knowledge when he failed to indicate how the necessary power could be obtained by the Commonwealth. The Commonwealth can control only that aspect of the problem that deals with banking and taxation, and honorable members should give some thought to the possibility of concerted action by the Commonwealth and the States, which control the other aspects of the problem. I shall not dwell on that matter. I mentioned it because it has a most important bearing on the subject, and it is likely to have an important bearing upon the success or failure of the policies that, have been outlined by the Prime Minister. If the States do not play ball in regard to this, if they do not act with a sense of responsibility in regard to the necessity for curtailing the unbridled interest rates and flow of hire purchase, then it will be exceedingly difficult for this or any government that is here to handle the situation. If federation is a contract, surely the two parties should carry out the terms of that contract.

I want to make some comment on the proposals of the Government. If the present approach to governmental control of the national economy is accepted as inevitable, I find little reason or ground for complaint as to the action taken. Tn other words, if the premise is sound, then the proposition which follows also is sound. I am assuming that the premises are sound in approaching the problem in the way in which the Government has approached it, because the items that have been taxed by the Government under its proposals mainly do not impact seriously on the cost of living. If any one should say that any tax, in a general way, does not sooner or later, especially in respect of certain items, impact on the cost of living, he fails to take into consideration those factors which inevitably cause people, particularly those in the wages group, to ask for more money to cover their cost of living.

I do not think any complaint can arise, if the premise is sound, because the relief given to the primary producer in matters such as depreciation and special depreciation is quite real and valuable. This assistance comes at a time when rising costs are affecting him in inverse ratio to the fall in the price of his product.

There is one thing I want to say, and I hope that this matter eventually gets to the Treasurer (Sir Arthur Fadden). I have little objection, at the present time to the high rate of sales tax upon cars. I hope it is only a temporary measure. In the present circumstances, I think it is one of the least objectionable taxes. But I do say to those who are in government that I should like them to consider the impact upon people who work on the land and who must have a car. The day of the buggy and the horse has gone. Unfortunately, the day of the horse, a beautiful animal, is going very fast indeed. The man who is employed by the owner of a property must get his wife and i family to places where he can obtain the j requirements of persons who live in a civilized community - places where his j family can make purchases, and have a ; certain amount of pleasure, and that sort ; of thing. To these men, a car is not a j luxury. They have not a train running i past the door. The majority of them I have not a train within a reasonable dis- jtance. There is no regular bus service i or anything of that kind. Many of them j live 20, 30, 40, or 50 miles out in the country. They require a car, and it is ! just as much a working implement for them as anything else. That factor . probably was not taken into consideration when the Government was determining the general application of sales tas to motor cars compared with utilities. It may be said that the employee on a property can take his wife and family to town in the utility. That is all right. But if he has two or three children, a utility is not much of a vehicle in which to take his family about. I think that the application of the sales tax on motor cars should be reconsidered in the light of the requirement of country employees who require a conveyance.

Assuming, once again, that the controls adopted by the Government are sound, [ believe that the adjustment of the interest rate has been effected in a way that is least harmful. Nobody is more sorry than I am to see the interest rate increased. Nevertheless, the factors which have compelled the increase of that rate are inherent in the economic and financial approach which has characterized the basis of thinking of economists, not only those advising this Government but those advising the previous Government. Economists have considered that taxation is an instrument which should be used for controlling certain trends within the community. I have said that, assuming the premises are sound, I find no point of disagreement, generally, with the action which has been taken. I make that statement because I think, on the whole, the action has been thought out with the idea that it shall have the least possible detrimental effect on the cost of living. At the same time, I have found no alternative in the proposals put forward by the Leader of the Opposition.

The real doubt in my mind - and it is an honest one - is whether the action taken really tackles the factors which affect the high cost of living. The honorable member for Mackellar (Mr. Wentworth) voiced the thought that this action is more likely to prove a palliative than a real attack on the problem of stabilizing or reducing the cost of living. Since we are debating this matter, it is not my intention to raise a paean of unlimited praise of the Government. I am here as a member to dissect the proposals, as far as my ability will permit, and to present, not only my own views, but also the views of the people who send me to this Parliament. I have an honest doubt as to whether the present approach is the one which really will solve the problem with which we are confronted. That problem is to keep the cost of living from rising, and, indeed, to produce a marked downward trend of the cost of living. Unless we can contain our costs within more reasonable limits, obviously our marketing problems overseas will become more and more difficult.

I should like to refer, now, to some of the factors which, in my opinion, do affect the cost of living. Let us consider the pay-roll tax. The receipts from this tax spiral every time the cost of living goes up, and every time the basic wage goes up. If the basic wage rises, obviously, more is collected from the tax on a bigger pay-roll.

I should like to see a more careful analysis of the deficit finance of some of our States from the point of view of its impact upon the big undertakings which they control. That is one of the factors which undoubtedly increase the cost of living. If the basic wage goes lip for any reason then, obviously, this Government benefits by reason of the larger collection of taxes. May I say that the Government has at least attempted to mitigate some of the effects of this by raising the lower limit at which taxation can be imposed on employers. This has reduced a great deal of the work of the smaller employer.

I pass now to another factor - that of transport costs. The transport costs of the primary industries are a tremendously important factor in the high cost of living. In New South Wales the Premier and Treasurer has recently announced that the transport system will lose £10,000,000 this year and that £6,000,000 of that loss will be sustained by the railways. Before the State election, he calculated that the railways would lose something like £3,356,000, but he now finds that they will lose £6,000,000, despite the fact that within the last twelve months there have been increases in railway freights and fares ranging from 12^ per cent, to 25 per cent. I do not wish to enter into a dissection of the financial ability, or otherwise, of the New South Wales- Government. I am dissecting these transport costs for an entirely different reason - to show, in a few words, and in the limited time at my disposal, their impact upon the cost of living. Another rise in freights and fares is being seriously discussed, but 1 would point out that since 1941, when I went out of office as a member of a New South Wales government and the Labour party took over the treasury benches, the total rise in freight charges on goods and live-stock - excluding the recent rise of 12^ per cent, to 25 per cent. - has been 350 per cent.

Mr. ACTING DEPUTY SPEAKER (Mr. Bowden). - Order! The honorable member’s time has expired.

Port Adelaide

– This debate shows very clearly, to people who may be listening to the speeches from both sides of the House, the really fundamental difference between the policy of the Government and that of the Labour party. We have always held that a government is responsible for implementing a policy that will react to the advantage and the benefit of the community as a whole. Now we have before us a statement made by the Prime Minister (Mr. Menzies). No one is in any doubt as to the necessity to do something to rectify the economic drift, particularly in connexion with our trade balance. I think that every one has been aware for quite a considerable time that action would have to be taken to deal with this matter.. My contention is that the actions taken by this Government from 1949 onward have led up to the present position.

After the 1949 election, in which the Chifley Labour Government was defeated, a Government led by the present Prime Minister took office. That Government - and especially the Treasurer (Sir Arthur Fadden) - said that it would do away with all the controls on capital issues that were in existence at that time. The Treasurer said that that was one of the first things that he would do. The result of that is seen to-day in the hirepurchase system. The great complaint now is that one of the reasons why we cannot fill government loans is that people are investing where they can get a bigger return. To-day one of the best fields of investment for short-dated or medium short-dated loans is the corporations which finance hire purchase. Investors are at liberty to put their money into these organizations simply because the Government parties believe that freedom in all matters of finance and business will produce competition that will be in the best interests of the people. I believe in competition, but I do not believe in the unrestrained power of financial institutions to control the destiny of this country. I shall endeavour to show, in the few minutes that I have, how these people are in fact controlling the destinies of this country.

The Prime Minister, and other Ministers, have told us how we may increase exports. We have been told very definitely that if we are to do so we must be able to sell in competition with the exports of other countries. The only Australian export that is not really affected by the exports of other countries is our major export of wool. It is recognized throughout the world that Australia is virtually the leading wool-producing country. We get a high price for our wool, not as a result of competition with other countries, but as a result of the demand for our wool in far-distant countries. The volume of our other exports, however, is bound up in the cost of production. If costs are so high that we cannot compete with other countries, we shall have not merely a recession but a repetition of the calamities of the thirties. Government supporters, and particularly Australian Country party supporters, will remember, even if they did not experience, the tribulations of the thirties, when wheat was so difficult to sell. As one who was intensely interested in the well-being of the farmer I recall the effect that those times had on people. We could not sell our wheat at a figure anywhere near the cost of production, and later we could hardly sell it at all.

T come back now to what we are going to do with our economy. We find the Government supporting the continuance nf the present immigration scheme. I have always supported that scheme and I still do so. I do not wish to cite a great mass of figures in this connexion, but I shall compare the position ten years ago, when our population was much smaller than it is now, with the present position. At that time, the number of people engaged in primary production, which is responsible for the greater part of our exports, was greater, by many thousands, than the number so engaged to-day.

Mr Jeff Bate:

– The same thing has happened in America.


– It does not matter whether or not the same thing has happened in America. I am dealing with the position in this country.

Mr Jeff Bate:

– But we have more primary production now.


– More production, the honorable member says. I remember the days when I had to get up at 5 o’clock in the morning and clean eight horses to make them ready for ploughing. I remember the time when I had to go out and cut chaff at nights, if I had nobody to do it for me. The point the honorable member has overlooked is that we have more production to-day, not because we have more people on the land, but because of technical improvements. People nowadays do not have to work at night in order to get enough chaff cut for their horses. The tractor has altered the position. I should say that, at a conservative estimate, one man on a farm with the proper mechanical equipment can do as much work to-day as five men could do in the same time in the past. But the point is that, although our production is increasing, our population also is increasing rapidly.

Another important point is that ten years ago our primary production was able to provide us with the means to pay for our imports, hut that is not the case now. Our population has increased, and we are becoming more industrialized. We know that America became a highly industrialized nation, but we must realize that when a nation like Australia becomes highly industrialized the time comes when it will not be able to find a market for its goods at a price that will cover the cost of production. We had an example of that recently in relation to a Melbourne factory which manufactured alarm clocks. It employed many Australians. After a time, the factory had made enough clocks to saturate the Australian market, and was forced to seek markets overseas.

What happened ? It found that it .could not market its clocks overseas at an economic price that would compete with similar products from other countries, because the cost of production of its clocks had been forced up by inflation. Consequently, the firm was forced to cease its operations in Australia and go overseas. Thereafter, it sent clocks made overseas on to the Australian market. That shows how necessary it is that we should be able to produce goods at prices that will be competitive with those of similar goods produced overseas.

On previous occasions, I have spoken about the relinquishment of control over investment. The Government abolished capital issues control, which had been exercised under the Labour Government. After a couple of years or so, the Treasurer found that he had made a mistake in lifting the controls, and he reimposed some of them. I do not know whether any such controls are still in operation, but I know that the Government is opposed to that form of control. It believes in complete freedom in that regard-

There is a vital difference between the import policy of the present Government and that of the Labour Government. Whereas the Labour Government believes that our overseas balances should be used for the purchase .of goods overseas that would meet the real needs of the people and the nation, this Government allows the expenditure of our export earnings on the importation of luxuries. When I use the term “ real needs “, I do not mean that people who wish to buy some luxury article that they feel they must have will be allowed to buy it at any old price. About two months ago my wife, who had been visiting a friend who lives a few miles away from my home, told me that at her friend’s home she had eaten some lovely orange marmalade made in England. I told her that Australia sent sugar to England at special rates, and went to all sorts of trouble to ensure that England bought our fruit. Yet we are bringing in English marmalade which is selling here -at higher prices than are obtained for Australian marmalade. I say now that if we want to control imports properly we should get down to the Labour principle of controlling unnecessary imports. I told my wife that I would, if T had the power, prevent luxury imports. It is remarkable that,’ within the last 24 hours, I was told about this same English marmalade by a person to whom I was speaking in Canberra. I think it was said that the retail price of it was 3s. 4d. a jar. The Government has to take a tumble to itself, as it were.

Mr Hulme:

– It did not take a tumble at the last general election.


– Well, it must take two tumbles. The second of them will be given to it by the electors, when they have an opportunity. But it should first take a tumble to itself. It should realize that we must have a sensible system of regulating imports. That system may be operated by issuing licences, perhaps in two categories, A and B, and it must ensure that our overseas earnings are expended on goods that will be useful to the community as a whole.

Another matter which concerns me is the increase of interest rates on bank overdrafts. I am very pleased to see that we on the Labour side have made this the focal point of our attention in this debate. The honorable member for Melbourne Ports (Mr. Crean) has moved an amendment to the motion that the paper be printed, which reads -

That all words after “ paper “ be omitted with a view to inserting the following words in place thereof: - “so far as it discloses a policy of increasing interest rates on bank overdrafts is injurious to the large majority cf the people of Australia and should be rejected ‘’.

To-day, if I wanted to make money by investing in a short-dated loan, I would not buy bonds issued at 4£ per cent. One has only to look at the newspapers in order to see what is happening. It seems clear from the Prime Minister’s statement that bank overdraft rates will be increased, on an average, by one-half of 1 per cent, to 5$ per cent. Go back to the newspapers of two months ago, and look at the figures published there in connexion with Commonwealth loans. Details were given of the dates of maturity and of the interest rates. The newspapers also showed what a purchaser of those bonds would gain in interest if he kept them to the date of maturity. I found, on looking at the newspapers two months ago, that details were given which were worked out on the basis that if a purchaser paid £90 or £95 for a certain loan issue, the interest, over the full period of the currency of the loan, would be approximately 4^ per cent. The longer the term of the loan the less the investor would have to pay for it.

Look at the same newspapers to-day, since the Commonwealth decided that it would not continue to be a steadying influence on the bond market. The Prime Minister has told us that the Government is still supporting the investment market, but is not purchasing bonds in order to steady the bond market. What is the Government gaining by the decrease of the value of bonds? It is gaining immensely. If the Government had wished to buy certain bonds only a little time ago it would have had to pay £95 for each £100 bond, but now it can purchase the same bonds for much less, and therefore liquidate its debts for that much less. T should say that the Government is profiting to a very great degree in this regard. I wish to say before I conclude that the increase of one-half of 1 per cent, in bank overdraft rates is an indicator of what is going to happen in relation to future loans in this country. We know that the interest rate on government loans is determined by the Australian Loan Council. We are told that the Government cannot decide what the rate shall be, but we know that in the past the; Commonwealth Treasurer has been able to exert a great deal of influence on the determination of the interest rate. The Prime Minister has told us that the rate of interest charged on overdrafts will rise, on an average, by per cent. We know that the return on current Commonwealth bonds bought at a reduced price has, for the new owners, gone up by per cent. In those circumstances, how could the Government expect to fill a loan issued at the present interest rate? I do not believe in making forecasts, but I say very definitely that what has happened is a fair indication to me that the interest rate on future loans will go up by at least $ per cent.

A conference is to be held to-morrow and on Friday to consider loans for housing. I am inclined to think that the conference will not decide on a definite interest rate, but will want to have something in reserve, so to speak. If the rate of interest on government loans is raised, the rate of interest on money lent for housing purposes will rise also. If the rate rises by per cent., I do not know what people will do who have to borrow £2,750 to purchase a house.


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


– The honorable member for Port Adelaide (Mr. Thompson) began to develop an argument based on the fact that fewer people are working on the land. I do not know where he wanted to get with that argument. It is clear to everybody that there are fewer people on the land now, not only in this country, but also in other countries, including America. However, with the aid of mechanization, there has been a tremendous increase of production. We are proud to be able to say that, by using better methods in rural industries, we have been able to cut down costs - at any rate up to the point when products leave the farm. A greater quantity of goods is being produced by fewer people. We have been able to supply our markets overseas in abundance. Indeed, we have reached the point at which it might be dangerous for us to supply them with more goods.

The honorable member for Port Adelaide may have intended to reprove the Government for the fact that there are now fewer people on the land. When I interjected, he retired behind statements about what he used to do when he was a boy. Nobody in the Australian Country party or the Liberal party desires to see a return to the conditions that prevailed when the honorable member was a boy. We want to use better methods of production. We want more tractors, more hay-balers, more milking machines and other equipment, so that we can work more intelligently, with better methods.

Mr Thompson:

– Surely the honorable gentleman does not think that I am silly enough to want to go back to the conditions that obtained in the old days?


– I did not know what purpose the honorable member had in mind when he said there were fewer people on the land. With fewer people, we have a greater production than previously. Surely the honorable member does not suggest that we should not use machines in rural industries. The Egyptians are working in that way, and God knows where they have got to!

Mr Thompson:

– Do not put words into my mouth. I said no such thing.


– We still have not found out what the honorable member intended to prove when he said there were fewer people on the land. I think he intended to criticize us, but ‘we cannot be criticized justly on that score, because production has increased. If we doubled the number of people working on the land and increased production still more, that might adversely affect the prices that we get for our primary products. In most primary industries, except the wool industry, the wheat industry, and perhaps the meat industry, we are already selling at a loss, because of high costs.

The Government proposes to ask the people for about another £100,000,000. This Parliament must always scrutinize carefully any request by the Government for more money. We want to know where the money will go, and whether it will be spent wisely. I am concerned particularly with one aspect of the matter. We are told that we must find £300,000,000 for the States each year- £220,000,000 in tax reimbursements and £60,000,000 or £70,000,000 to pad loans that are not filled - the loans to which the honorable member for Port Adelaide referred. When I tried to discuss this matter some time ago, Mr. Keon, who was then the member for Yarra, raised a point of order and argued that I should not be permitted to discuss what the States were spending. Fortunately for me, the House upheld a motion of dissent from the Speaker’s ruling that we ought not to discuss what the States were spending, how they were spending it, and whether it was being spent wisely.

The concern and anxiety of this Parliament about raising extra money is not shared by the Premiers and the governments of the States. The Premiers can snore peacefully in their beds while we are trying to raise money for the States. The money goes to the States in a lump sum, but we have to extract it from individual taxpayers by imposing duties on cigarettes, beer and other things. It is a pretty bad state of affairs in a democracy when one parliament raises money and other parliaments spend it. This Parliament has the responsibility for raising the money. It has to bear the odium, but the States have the privilege and joy of scattering the money. In those circumstances, there is less responsibility on the part of the States than would otherwise be the case. Prior to the last meeting of the Australian Loan Council, the New South Wales Government boosted its spending by £3,000,000 a month. It wanted to get rid of the money that it had so that it could make a raid on the Commonwealth Treasury.

We have to raise more money for the States now. If the States were joining with us in an attack on inflation, the position would be more satisfactory than it is, but I do not believe they are joining with us for that purpose. I referred a few minutes ago to the use of better technological methods in rural industries. In New South Wales, the universities are producing only one-tenth of the technical men and scientific men required in that State. The number of students and the training facilities available are inadequate, so the technical men are not coming forward. In that field, the States are not making an attack on costs. The New South Wales Department of Agriculture - I suppose this is true also of other States - has not got the number of agricultural instructors and other trained people that we require to help us on our farms by disseminating the fruits of research. I have been told that the New South Wales Department of Agriculture is very reluctant to release news of new developments, because it has not got the staff necessary to instruct farmers in them. We have not gone far enough ahead since the days about which the honorable member for Port Adelaide told us. We ought to have more agricultural instructors.

The honorable member for New England (Mr. Drummond) pointed out that, as we all know, we are very backward in transport. Between 40 per cent, and 50 per cent, of the cost of a bushel of Australian wheat landed in London is accounted for by transport charges between the time the wheat leaves the siding in, say, New South Wales and when it arrives in London. Some of our Australian railways are considerably out of date. Transport by rail is very costly. We have crippled our interstate sea transport services by putting out of action the small coastal steamers that used to ply round our coasts. Those steamers have gone. Hoad transport is being used, but the cost is up to 3s. a ton mile, which is absurd.

We want to combat inflation, but how on earth can we do it when only one parliament in Australia is charged with the task of raising money? We raise the money, and then we hand it over to other parliaments to spend. The other parliaments do not have the anguish and worry of raising the money. While we have the system of uniform taxation, there never will be a proper division of responsibility for financial matters in Australia. I do not care whether the Labour party is in favour of uniform taxation. I do not care whether it is said that this Government is prolonging the life of the system. I say that it is wrong, and that it ought to be abandoned as soon as possible. If we do not change the present system, we shall be involved in a financial crisis. It is clear, from the attention I am receiving, that honorable members are aware of this situation. It has always been recognized in democracies that those who spend the money should bear the onus and odium of raising it. We cannot attack inflation effectively, because we have an unfortunate system under which, every year, the States come to the Australian Loan Council and stage an unseemly contest for the available money. At the same time, the press in each State attacks the Commonwealth. There is no national press in this country, but merely a provincial press, as it were, in each State. Each of the Premiers has the full support of the press of his own State in the annual raid on the Commonwealth Treasury. The Commonwealth is now in the unfortunate position of trying to raise enough money to be ready for the raid on the Commonwealth Treasury that will be made after the 30th June next.

I would go so far as to say that the situation is ludicrous, because the States have a vested interest in increasing prices and refusing to combat inflation. By that, I mean that there is a sort of costplus system operating to the advantage of the Si,ai,t;s. Honorable members all know very well that when the revenues of a shire council increase, the shire clerk and the shire engineer receive higher remuneration. Likewise, the more a State spends, under the present cost-plus system, the more State public servants and members of the State parliaments receive. Members of the New South Wales Parliament are paid more than members of this Parliament are paid. Of course, that is because New South Wales has more money to spend than the Commonwealth has. The States have a vested interest in keeping up costs. It is impossible for the Commonwealth to attack inflation effectively, because it will have to redeem some £200,000,000 or £300,000,000 of loans next financial year, and must find £220,000,000 for tax reimbursements to the States, and bolster loans for State public works by £67,000,000. A total of almost £300,000,000 must be found for the States. The figure will increase steadily because the States deliberately work to produce a situation in which they can obtain more and more. And they seem to be supported by every one in the community owing to the influence of the press. I protest at this situation that we have created.

The second matter to which I wish to address myself is immigration. Of course we need immigrants. Every one knows that we must populate this country as quickly as possible. But we cannot absorb more than about 100,000 immigrants a year. The honorable member for Petrie (Mr. Hulme) has told us that, in the current financial year, we shall take in 125,000 immigrants. We . understand that it costs about £2,000 to settle each newcomer in this country. Therefore, itwill cost the Commonwealth approximately £250,000,000 - almost as much as the States will receive from it - to bring in the quota of immigrants for the current financial year. We are aware that we must slacken the pace at which we are undertaking new commitments, and that we must reduce the flow of immigrants. An annual intake of 125,000 is too great at this stage, because it entails an expenditure of £250,000,000. I want the Govern ment to consider that problem at the same time as it asks for more money for the immigration programme, among other things. The expenditure on settling an immigrant in Australia is not made to him direct, although he may receive small incidental payments for one thing or another. But, in the aggregate, it is paid by the entire community for the immigrants as a whole.

I shall now discuss banking for a moment, because the co-operation and trust of all of our banks are essential to the success of the Government’s efforts to combat inflation. The honorable member for Parkes (Mr. Haylen) stated last evening that the Commonwealth Trading Bank of Australia has withdrawn from the fields of hire purchase and industrial advances.

Mr Haylen:

– The Industrial Finance Department of the bank, which was concerned with finance of that type, has been abolished.


– The honorable member stated that the hank has abandoned industrial advances and hirepuTchase transactions and is not pressing housing loans. In other words, the credit available for housing is being restricted. The remarks of the honorable member for Parkes were very timely. The Commonwealth Bank is a people’s bank and wa? instituted to serve the people’s needs. The sooner it gets on with the job, the better it will be. It seems to me that, at the present time, the Commonwealth Trading Bank, which, I believe, should not be associated with the central bank, is looking for big business.

Mr Haylen:

– That is true.


– It seems to be true. The bank is competing with the private banks for big accounts! As the people’s bank, it should do business with the people who have small accounts. The Government should give urgent attention to the activities of the bank. At the same time, it should separate the central bank completely from any part of the Commonwealth Bank. This is a proposal that is dear to my heart and, I am sure, to the hearts of a number of Government supporters. In the present situation, the governor of the bank and the other members of the Commonwealth

Bank Board administer the central bank and also a sort of protege, the Commonwealth Trading Bank. As administrators of the central bank, they receive confidential information which they can use unfairly to the advantage of the Commonwealth Trading Bank in their administration of it. In the present circumstances, we cannot win the trust of the private banking institutions, which are an integral part of the banking system. Not only should the central bank be separated entirely from the Commonwealth Trading Bank, but also its head office should be moved to Canberra, which is the proper place for the head offices of all Commonwealth organizations. At the same time, the Government should act to ensure that the Commonwealth Trading Bank will do the job for which it was instituted, particularly by making housing loans. It seems that, at the present time, the banks do not want small accounts, but are looking for big accounts. The remarks of the honorable member for Parkes about the Commonwealth Trading Bank were important, and they should receive due consideration.

I turu now to the effects of communism on the Australian economy. One of the greatest burdens on the economy is the Communist union leader who damages the interests of the workers, the Australian Labour party, and the entire community for his own ends, principally as an instrument of the foreign policy of Mr. Khrushchev, the Russian leader, who stated the other day that his people throughout the world are taking part in the cold war. Communist influence is gnawing at the Australian economy. This Government solemnly undertook to fight the Communists. It is of no use merely to make a couple of attempts at the job and then abandon it. We must do the job properly. There are plenty of ways in which we could fight the Communists. The findings of the Royal Commission on Espionage in Australia - often popularly known as the Petrov commission - show that there is plenty of evidence that the Russian espionage organization known as the M.V.D., working through the Soviet Embassy, was able to use the Australian Communist party, or, more particularly, its members for its own ends. “Klod” Clayton and the rest of the Communists concerned disappeared and could not be found. The royal commission was expensive, and we should make the expenditure on it worthwhile by immediately taking note of its findings and fighting the Communists in accordance with the Government’s original undertaking. There is no doubt that individual Communists - we cannot, establish which” ones - are carrying out the wishes of Mr. Khrushchev and are trying to damage the Australian economy. While they are allowed to continue their efforts, we cannot hope to halt inflation.

The demands of the States, the large intake of immigrants, and the waterfront situation, which must be dealt with urgently - all those things are making it impossible for the primary producers, of whom the honorable member for Port Adelaide spoke, to export goods and turn the balance of payments in our favour. It is of no use to tell farmers and others to produce goods for export if there is a bottleneck on the wharfs, owing directly to the efforts of the Communists. It is of no use for Opposition members to assert that the waterside workers are not getting a fair wage. They know very well that any waterside worker will push himself forward and say, except during a strike, that he has the best paid and the easiest job in Australia. A waterside worker told me that he received £18 10s. a week to Friday afternoon, £3 10s. for Saturday morning and £8 10s. for Sunday, and boasted that he was paid from when he put his foot on the boat to go up the harbour and that he had a very easy job. However, during a strike, he claims that he is the worst-treated worker in the country.

Mr Haylen:

– The average wage on the waterfront is £16 a week.


– I have seen coalminers at work, and I think they work very hard.

Mr Haylen:

– The honorable member says that only because large numbers of miners are in Canberra to-day.


– The miners work underground. It cannot be said that the watersiders are pulling their weight. The Communists have created a serious bottleneck on the wharfs in an attempt to strangle the Australian economy by interrupting our trade. “We cannot achieve a favorable balance of payments while the waterside workers, at the behest of a man like Healy, interfere with the flow of our exports. Luckily, there was a good market for butter this year in the United Kingdom, but we cannot operate in that market because our butter is lying in Australian cold stores. About £110,000 worth of it was burnt in a fire in a Sydney cold store a few days ago. While our products are held in Australia we cannot correct our adverse balance of payments overseas. Waterside workers to whom I have spoken have said that they have a wonderful job, that they receive £18 10s. for a week ending on Friday, with a further £3 10s. for Saturday and £8 10s. for Sunday. They receive payment from the moment they set foot in the launch. Perhaps not knowing my identity, they have said, “ This job will do me “. It is a racket for them to be trying to obtain more money. We agree to the Government’s proposals, but we want it to know that we feel concern and anxiety. The Government’s job is to meet this situation. The Communist menace must be overcome, and the Government must deal satisfactorily with payments to the States, and with immigration and banking. If these matters are dealt with effectively, a step will be taken towards halting inflation in this country.

Sitting suspended from 5.57 to 8 p.m.


.- The Prime Minister (Mr. Menzies) in the statement he made last week, said that the purpose of his economic measures was to preserve and consolidate the high measure of prosperity which we now enjoy. I am sure there are very many persons who could seriously doubt, and with justification, the veracity of that statement. I refer to those men who are working under federal awards and who are receiving 16s. a week less than their workmates who are perhaps on the same bench but work under State awards. I refer also to those unfortunate people in my own State who, at the hands of a satellite or prototype Liberal-Australian Country party government likewise are suffering the incidence of increases in rents, increases in train and tram fares, increases in electric light tariffs, increases in third party insurance premiums, and so on.

It is apparent, therefore, from what has already been said, and it will be apparent for the few reasons that I hope to give in the short time available to me, that the whole object of the Prime Minister’s statement and the sole design of the measures which he forecasts, are purely to bolster a decaying economy for which he can alone be responsible.

If drastic measures have to be employed, and if firm steps have to be taken to rectify a fundamentally unsound economy, then there are two broad principles to be observed. First, the measures proposed should be directed at the very causes of the inflation and at the causes of the upset to the national economy. Secondly, if sacrifices are to be borne, they must be borne equitably by all sections of the community, and not by any one section in particular. It is my opinion that the proposals of the Prime Minister achieve neither of these objects. It can be said, with justification, that when the first principle is applied, the Prime Minister’s statement is a gross understatement and that when we look at the second principle, the Prime Minister’s statement is a gross misstatement.

One of the greatest factors contributing to the upset of our economy at the moment is the failure of the Government to attract capital investment. We are only a young nation, which has only a relatively small amount of investment capital available. That being so, that capital must be rationed out to the essential industries as opposed to the non-essential industries. I include essential secondary industries and essential primary industries in the essential industries category. Private investment in luxury industries has been permitted a freedom which has amounted virtually to a licence in our economy. Private investment has been permitted to seek the highest return, as it normally will do if left uncontrolled. By allowing grossly excessive profits to be made from the less essential and non-essential aspects of our economy, this Government has permitted, as I have said, the major part of available investment capital to flow to where it will receive the greatest reward. Of course, the reluctance of the investor to lay out capital on such public works as housing, schools, hospitals and the like at, shall we say, 4 per cent, or 4^ per cent, can well be understood when there is an attractive turnover of 22 per cent, on the average for its investment in less essential avenues.

Then we have the manipulation of the interest rate on bonds, an example of which we saw quite recently. In thin particular line of investment, the Government has again undermined its own chances of obtaining essential loan funds for the works which are to be carried out by the States and the Commonwealth. For instance, in Victoria, the cumulative effects of this policy of neglect are to be seen already in semi-governmental loans. The loan programme of the Melbourne and Metropolitan Board of Works, which supplies water and sewerage services and which provides for the health requirements of a fast expanding local economy, has been approved by the Australian Loan Council, but is under-subscribed to date by £2,000,000. The loan programme for the State Electricity Commission is £5,000,000 under-subscribed ; and that for the Gas Corporation, which displays a picture of the Liberal Premier of that State on all its advertisements, is £400,000 under-subscribed.

The question one might well ask now is: Will the measures outlined by the Prime Minister be effective (a) in preventing inflation, and (b) in attracting capital into the essential channels necessary for the rehabilitation of our economy? The inflationary aspect of the proposals outlined by the Prime Minister has been dealt with adequately by honorable members on this side, and to date their arguments have not been contradicted by members on the Government side. It would appear, therefore, that the main concern of the Prime Minister is not the immediate rectification or abolition of the basic causes of the adverse economic position but purely and simply the raising of additional revenue to cover up the latent defects or cracks which are now apparent in the economy as erected by him.

Let us deal briefly with the incidence of sales tax. Will the increased sales tax have the effect of diverting capital from non-essential industries into more essen tial enterprises ? I say that it will not do so. We on this side look upon sales tax as a most unsatisfactory tax. It is true that sales tax has its uses and that, in certain circumstances, it should be used to carry out the essential programme of the party which happens to be in government at any particular time. To be used correctly, sales tax should be levied on a highly selective basis so as to benefit the community as a whole. What do we find when we make a brief study of the way in which sales tax affects the individual? Who bears the incidence of this tax in the main? Having regard to the second requirement, namely, that the contribution should be spread equitably over the whole of the community, we find that it is the small man, the fixed salary or wage earner, who is affected by these revenueraising measures. Take the increased tax of 3d. a gallon on petrol as an example. If 3d. a gallon is a fair tax on the man earning £20 a week, what should the man who is earning £80 a week pay? He should pay a tax of ls. a gallon for his petrol if the incidence of tax is to be proportionate and just. The same applies to all other commodities to which sales tax has been applied by this Government. While we know it is not possible to graduate sales tax, it certainly is possible to graduate other taxes so as to make the contribution more equitable and so as to prevent their incidence from falling too heavily on that one section of the community which, strangely enough, is the section which has so consistently voted against this Government.

Another thing which is unfair in its incidence to the great majority of the people is the increase of interest rates. Who in the main will bear the brunt of this imposition? Again, it will be the small man, the man who is not in a position to pass on the additional cost.

I refer once more to the fixed salary or wage earner and .to the primary producer. Is the Australian Country party happy about the prospect of increased interest rates for soldier settlers and other young settlers who have bought in at the peak?

Mr Mackinnon:

– Leave them out. They are not in it.


– I thought I might awaken the honorable member for Corangamite. As I was saying, those people have bought in at the peak and have paid highly inflated prices for their land and for stock. If the Government intends to impose the increased interest rate on those young settlers, it will not affect the honorable member, who is an established grazier, or the established wheat-grower. The brunt of the rise will be borne by the young settler and the soldier settler. If the Government does not impose increased interest rates on those persons whom the Australian Country party allegedly represents in this House, and who comprise 24 per cent, of the total number of persons to whom advances are made, the only inference that we can draw is that the full amount of the increased rate will be borne by the essential housing industry, because, in my opinion, it is not possible for the banking institutions to average 5 per cent, and at the same time maintain a lower interest rate on advances for housing and primary production. Will the increased interest rate divert the already scarce amount of investment capital into loan funds ? I submit that it will not. While capital invested in less essential industries is returning a profit of 22 per cent., will a rise in the interest rate of one-half per cent, make any difference? Will it make any more money available for housing? I submit that it will not. On the other hand, if we take into account the class of people who have to pay for houses, there is every reason to believe that the effect of the increased interest rate will be a reduction of the demand for houses. Figures published by the Commonwealth Statistician in the last issue of the Financial Review show that the number of houses under construction for the quarter ended December, 1955, was the lowest on record since 1950, and that the number of houses commenced was the lowest since 1950 with the exception of the significantly dark period of depression in 1951-52. Those figures indicate a decline in the building industry which, again significantly, is the first industry to reflect a decline in the general economy. We hope that history is not repeating itself. We look in vain in this interim or supplementary budget for measures that are designed to rectify the present situation.

Let us consider the effect of increased interest rates on the activities of the respective housing commissions. This Government has referred to the States for their consideration draft terms of a proposed new Commonwealth and State Housing Agreement to replace the existing agreement. The proposed agreement provides that advances made by the Commonwealth to the States will be based on the long-term interest rate applicable at the time that those advances are made. If the existing rate of 4$ per cent,, which is three-quarters per cent, above the old rate, is raised, we can expect it to rise to at least 4 per cent. That would have the effect, in relation to a house costing £3,000, of adding a further burden of 12s. a week to the already punch happy tenant in Victoria who has suffered other bashings at the hands of the satellite Liberal Government of Victoria.

I now quote a typical family budget which has been prepared by the tenants’ committee of West Heidelberg, in the electorate of Darebin. In that electorate are two of the biggest housing commission areas in the State - West Heidelberg and Reservoir. In addition to the increases that have already been heaped upon those people by the State Government is the prospect of a further rise of 12s. in interest charges on new tenancies. The particular budget to which I refer relates to a municipal employee who is married and has a family of four young children, and has been checked and verified. His gross income is £16 3s. a week, comprising wages amounting to £14 8s. and child endowment amounting to £1 15s. His expenditure on fixed charges is as follows: - Income tax, 5s. 6d.; superannuation, 10s. 6d.; union dues, 9d; insurance, 7s.; rent, at the old rate. £2 10s. 6d; fares, 14s.; time payment, os.; ambulance subscription, 3£d.; a total of £4 13s. 6£d. Expenditure in the home is as follows: - Groceries, £2 10s., which for a family of six is not too bad; meat, £1 16s., which is below what it should be; fruit and vegetables, £2 ls. 0£d. ; gas and light, £1 ; ice and fuel, 10s; and milk and eggs, £1 17s. 3d. If he buys six bottles of milk a day at 9d. a bottle, that sum is just about cut out without, paying for eggs. He also pays 8a. 2d. for bread and 15s. for lunches, and, in addition, an unfortunate recurrent expenditure of 12s. a week for chemist’s supplies. In addition to all that expenditure, which amount to £16 3s., is an increase of rent amounting to £1 Os. 6d., an increase of fares amounting to 3s., and a cost of living increase of 6s., a total of £1 9s. 6d., which can only come off the table. The Brotherhood of St. Lawrence has made a survey, and estimates that the nutritional value of the diet in this area is already sub-standard; yet it is now proposed that a further burden of 12s. a week will be added under the terms of the proposed new Commonwealth and State Housing Agreement! Not one more house will be built. Indeed, fewer will be built. The Government proposes, moreover, to run away from the rebate system on the economic rent, and we can only assume that the Government of Victoria, being a bird of the same political colour, will do likewise. This means that in Victoria - and I am sure the position in the other States will be similar - another 12s. at least will be added to family expenditure without any compensation, with consequent further malnutrition.


– No allowance was made for amusements and recreation.


– No, no allowance was made for amusements. Some families are able to make allowance for amusements only because there are two breadwinners in the family. If honorable members wish to verify the facts that I have stated, I invite them to peruse the report of the Brotherhood of St. Lawrence in regard to housing.

We can sum up the situation by saying that not one extra penny will be made available for loan funds for housing. If interest on advances to primary producers is to remain at the lower rate, and if an average interest rate of 5^ per cent, is to be maintained, there is no possibility of cheap money being made available for housing. If the Government is sincere in its desire to implement some direct form of capital control such as capital issues control, which we believe would be the answer to the problem, it should make greater use of the variable interest rate by varying the rates, par- ticularly in relation to housing and primary production, downwards and not upwards. But the Government will not do so, because it would mean amending the Commonwealth Bank Act to ensure adequate supervision of the variable interest rate. The policy of those groups that provide the sinews of war for the Liberal party just would not permit such far-sighted and sensible action as that being taken.


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


.- The honorable member for Darebin (Mr. R. W. Holt) has argued that the measures brought forward by the Prime Minister may well be ineffective, and that in any case his proposals are socially unjust. As to their efficacy, though we can take into account various relevant considerations, it is plain that in the course of time we shall know with certainty whether or not they have been effective. There are those who, in 1952, said that the economic measures taken then were harsh, that they were dreadful, and that they would be ineffective. Nevertheless, they did in large measure succeed in their purpose.

I should like to say a few words on the subject of social justice, which was mentioned by the honorable member for Darebin. I think I shall be able sufficiently to answer the various points raised by the honorable gentleman as I proceed with my speech. On Friday last, I happened to be at lunch with some people who might be thought to be better informed than most in the community. One of them asked whether there was in fact any inflation, and another said, “If there is, what does it matter?” I want to say a few words on the consequences of inflation, even though the matter is so elementary. I am speaking now about, social justice. Whom does inflation hurt? First, it hurts people on fixed money incomes. I mean, for example, superannuated public servants and other people living on superannuation. That class may include a widow receiving a pension from an organization which had employed her deceased husband.

Mr Ward:

– This is elementary, is it not? .,..*!


– It is so elementary that many people do not understand it. There are other people who are living on fixed incomes from investment, in particular widows living on the proceeds of government stock and so-called trustee securities. There are age pensioners. It is true that, from time to time, the pensioners catch up in the race, when there is an increase in their pensions, but in the meantime they lag behind as inflation rushes on. The honorable member for Darebin also referred to housing. There are small landlords who are receiving the same rents as they did in 1939. No section of the community has had less social justice than those people. Again, there are the professional classes who cannot readily increase their fees. An example would be the clergy. There are those who hold property in money form, bondholders, those who have money in savings banks or on fixed deposit, those who have life assurance policies, who, to insure their lives, have paid good money which, when drawn by them or their widows, is found to be worth much less than they expected it to be. Of course, there are some who gain in this situation, such as people who buy and sell goods, agents, middle men, and, to some extent, primary producers. However, as inflation marches on less than social justice is done to the substantial numbers of people in the sections of the community that I have mentioned.

Now let us turn to the self interest of the rest of the community. If we let inflation continue, if our economy becomes unstable, we shall find that there is a flight of overseas capital from this country, precipitating an economic disaster. We shall find that overseas capital will not flow into this country, which needs overseas capital, and which must have it if the nation is to prosper, or indeed to survive.

I can well recall visiting Germany in 1947 and finding that inflation had been so rapid in that country that the people had lost confidence in their currency. The reichmark that they had to-day might be worth half as much, or even nothing, to-morrow. They were using a cigarette currency. The only thing that had value was a cigarette, worth about 2s. It could not be inflated or deflated. I believe that inflation in Germany after World War I. produced the irreparable disaster of Hitler and a second world war. The social disruption caused by inflation in Germany at that time was the very food on which the people who supported Hitler fed. I need say no more in order to indicate that the halting of inflation is a matter of extreme and grave consequence to the people of this country. Let us have social justice for those classes of people who have suffered from this inflation. It is mainly the old who have suffered, and it is the young and vigorous, the men who are powerfully regimented in their unions and other organizations, who are relatively well off. It is they to whom a transfer of goods and services has been made because of the forced economy in which the other classes of people whom I have mentioned have had to live. It is possible cynically and callously to ignore all this. But when we understand what is involved, we see the spectacle of young and vigorous people in hobnailed boots trampling upon the weak, the old and the defenceless in the community. It is they for whom I make my plea, and the measures that the Government has introduced have been wholeheartedly designed to prevent the sort of injustice that I have described, and to prevent the country and the economy from rushing to the brink of disaster and falling over the precipice of economic ruin.

I should now like to say a few words in criticism of the critics. I refer, first, to the* sections of the press that have made exaggerated charges against the Government, that have indicted the Government for all kinds of crimes, suggesting that the Government’s representatives exult with sadistic delight in imposing hardships on the community. Those sections of the press have referred to the increased taxes as being “ savage “ and “ vicious “. When in their editorial columns they take upon themselves the position of defender of the people, and of upholder of the rights of the people, and in the remaining pages of their journals pander to all that is most demoralizing and weakest in human nature, I am reminded of the picture of a holy man in the streets of Cairo selling filthy postcards.

Opposition members interjecting,


– Honorable members will know what I mean. I refer also to professional spokesmen for various interests, who make their usual synthetic shrieks, and ingeminate their usual phoney groans, whenever taxation is mentioned. The best that can be said about them is that those whom they purport to represent, but in fact misrepresent, are many times better than they are themselves. I do not believe that those whom these people purport to represent are as dishonest or as lacking in sense of public responsibility as the spokesmen would have us believe. I refer also in this connexion to the State governments. I do not include them all, but some of them, and particularly do I refer to the Premier of New South Wales, who, failing- to co-operate in any way with the Federal Government, unwilling to do anything about hire purchase, unwilling to impose any system of priority in public works, nevertheless seek to gain political kudos by attacking this Government for increasing taxation to provide money for State public works. The fate of these people, I believe, is, in the present, contempt, and, in the future, oblivion, because they have no statesmanship, because they have no honour, because they are petty men who have no national spirit.

Mr Ward:

– I cannot understand why they are returned.


– I have some understanding of their methods. One, of course, expects the Opposition to execute its usual war dance under the leadership of the financial witch-doctor, the right honorable member for Barton (Dr. Evatt). One expects him, of course, to beat the old war drums of class hate and bear aloft the usual bogies. That is what oppositions do, and I do not object to that. They have rather a difficult job.


– Cheer up.


– I was trying to cheer up the Opposition.

Before I pass on to some of the more substantia] criticisms, let me clear the ground of unsubstantial ones. I have looked down the list of those items upon which an additional tax is imposed with some anxiety. I am sure that when I read them out, the House will be horrified, because of all these dreadful hardships that have been imposed on the community. I know it is a hardship for a man who has been in the habit of having a Jaguar annually to have to forgo that this year. There are other people who buy cars for whom I have a great deal of sympathy, but there are some for whom I have no sympathy. Looking at the list of sales tax increases, I find that a bookie will have to pay more for his bag. The punter will have to pay more for his field glasses. The fisherman will have to pay more for his basket. But the Treasurer has some kindness in his heart, because babies’ bassinets, another form of basketware, are not included. Members of Parliament will have to pay more for their watch chains. Bureaucrats will have to pay more for their brief cases. A girl will have to pay more for her eyebrow brush. A young man will have to pay more for an engagement ring but, as a matter of public policy, wedding rings will bear the old rate of tax. I am sorry for an opposition that has to weep crocodile tears over such hardships. I have the utmost sympathy for those small people who want to buy a car for the convenience and pleasure of themselves and their wives and families. I can enjoy a pot of beer with anybody, and smoke a cigarette in a leisure moment. I am not insensitive to the fact that there are hardships, but truly they are of a moderate kind.

Let us pass on to some of the more serious criticisms. It has been said by the Opposition that the increases in sales tax are regressive, that is that they bear just as harshly on the poor man us on the rich. That is true. In the days when tax was imposed upon people’s food, in the days of the Corn Laws when people were barely able to subsist, such taxes, being regressive, were cruel, unjust and wrong ; and everything bad that might be said about them would be true. But one has to remember that these taxes which have been imposed on motor cars, beer and cigarettes and eyebrow brushes are hardly to be put in the same category. They are things which a man can avoid buying if he wishes. It has been said by the honorable member for Melbourne Ports (Mr. Crean) that the Government appears to anticipate that people will pay more for these things, and will not consume less. The fact remains that any individual, if he wishes, any man who is thrifty and who feels that there are better things upon which to spend his money, can do so; and in that respect he is not entirely defenceless. There is something that he can do to avoid the increased taxation, whereas the increases, if applied to income tax which falls on everybody, would affect those people in the middle rants of life who have the heavy burden of families upon them and have no means of avoiding the tax. The same people in the case of a tax on luxuries, can do something to help themselves; and so it should be.

I pass to company tax. The Opposition is in a dilemma about company tax. In one breath, it says that if company tax is increased inflation is increased, because companies will add so much more to the price of the goods that they sell or the services that they render. In the next breath, the Opposition says that if taxation is to be increased, company tax is excellent for the purpose because everybody knows that the big -companies are just like big millionaires. Of course the Opposition ignores the fact that they are made up of many small shareholders. The Opposition regards them as excellent people to tax, because, as lawyers say, companies have neither a body to be kicked nor a soul to be saved. The real purpose of this increase of company tax. is to check capital expenditure, which, in the last couple of years, has become excessive and which is imposing such great demands on the limited supply of capital goods and is causing inflation. Whether or not company tax is passed on depends on whether the demand for the goods which the company produces is flexible or not. I am sure that a great deal of the additional company tax will he absorbed by the companies and will not, in fact, be passed on, in large measure, to the public. But, in any case, there would otherwise be an inflationary effect as far as capital equipment is concerned.

Will this tax increase inflation? Let us take the case of motor vehicles. Will this increase of sales tax be inflationary? It is true that the sales tax on motor cars has been increased from 16§ per cent, to 30 per cent. That is a considerable increase. What is it designed to do? It is designed to cut down on our importation of motor cars, the biggest single item of our imports, simply because our overseas reserves are running down. The world will not give us an adequate return for our exports to balance the cost of our imports, and therefore we had to cut them down. Can anybody suggest any better way in which we can cut down than on this large item of passenger cars? Of course, we would like to have them, but if we cannot have everything and have to cut down on something, can anybody suggest something better? The sales tax on commercial vehicles has been increased from 12J per cent, to 16 per cent. A utility that cost £1,250 before the increase will now co«t another £50, but I do not think that that increase is likely to be handed on.. I do not think that it will produce a great increase in the cost of transportation.

The petrol tax is designed to cut down on the demand for that very substantial import, petrol. Unfortunately, this tax hits both the private motorist, who can, without undue hardship, cut down on purchases to an extent, as well as the users of commercial motor vehicles. The trouble is that one cannot discriminate between the two.

I come now to the tax on beer and tobacco. I find that the consumption of beer in this community is 30 gallons a year for each adult person - that is leaving children out of the calculation. Considering that a large number of women do not drink at all, and that there are some men who do not drink, I think that one can say, as the Prime Minister has said, that the total is rather staggering, and the hardship involved in cutting down a little bit will not be very great.

A great deal has been said about the higher interest rate. I have not time to say what I would like to have said about that matter, but I will say this, that this is not some novel torture that has been invented by the Menzies Government. It is the classical way of dealing with an inflationary situation.

Mr Ward:

– It is old stuff.


– Ye3, it is an old device and has been used over the years. It is true that in the post-war era of

Keynesian economics, and so forth, it ha3 not been used until, once again, still more recently, in England, the old weapon was brought out again and has been found to have a very great effect. A socialist government would like always to ration the rain drops whereas the far better thing to do is to try to control the economic weather.


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


.- The honorable member for Bradfield (Mr. Turner) has reassured me. If a person does not drink, or if he does drink and only drinks brandy, and if he does not smoke, and if he walks to work and just potters around the garden and does the messages himself, he will not be a penny out of pocket over this supplementary budget. Furthermore, if a member of the community is already well housed, and is already comfortably established in a business which does not depend on imports, he will not feel the impact of this supplementary budget. If he lives in an area where all community services such as schools, hospitals, sewerage, paved streets, transport and power are modern and abundant he will not even suffer any irritation. Better still, if he lives on shares in private banks, or on debentures issued by hire purchase companies, he will applaud the supplementary budget. And since there are so many of the last class in the division of Bradfield I can well understand their paladin putting forward his apologia.

We might see, however, a slightly different attitude on the part of the speaker, who, I anticipate, will follow me, the gallant and honorable member for Hume, (Mr. Anderson), who has already had experience of the vagaries which have been brought about in the economy by this Government which he supports. I shall he interested to hear him support a £12,000,000 per annum increase in the petrol tax, of which one-third, and onethird only, will be spent on roads. I shall be interested to hear him support an increase of 4 per cent, or more in the sales tax on commercial vehicles. I shall be interested to hear him support an increase of an average of one-half of 1 per cent., and a maximum of 1 per cent., in bank overdraft rates. I shall be interested to hear him support a step which will automatically increase the cost of all our imports and depreciate the value of all our exports, so leaving us weaker, and our economy poorer.

Many features of the statement of the Prime Minister (Mr. Menzies), are, of course, admirable from the purely political point of view. The timing shows that he has lost none of his old skill. It was just after a double dissolution in 1951 - not having once mentioned during the election campaign the steps that he proposed to take - that he got a majority in both houses. He has done the trick again, and fortified by the forgetfulness and the supineness of the Australian public, I suppose that he anticipates that he will be able to get away with it again. Also, one can admire his forbearance, his sense of timing, in waiting until after the elections in New South Wales and South Australia before taking these “ urgent “ steps. It is a pity, of course, about his party in Western Australia and Queensland. They will have to spend another term in opposition. Further, one can admire his sense of timing in the three steps that he takes in implementing, once again, a horror budget. In his supplementary statement last September he announced import restrictions. Their effect, of course, as he said at the time, would not be felt fully until the 1st April. Such effect as was already being felt earlier this year was blamed on the Waterside Workers Federation.

Mr Calwell:

– Or the Communist party.


– That has served for four elections, but I doubt whether it can be resurrected again. On the present occasion, the steps which are being taken are purely by way of indirect taxation, which can be passed on by other persons who will bear the blame instead of the Government. And if it is necessary as the eight economists say - and among them are the’ Prime Minister’s closest advisers - to impose direct taxation in the budget, the Prime Minister at least will not usurp the function of the Treasurer (Sir Arthur Fadden) on that occasion. The Treasurer himself will then take the glory, and the blame for that. Again, in the purely political sense, one must admire the Prime Minister’s loyalty to his supporters. He has restricted the expansion of all companies which do not already have capital to spare. He has restricted the development of individuals who are improving their businesses or housing, but those who are already well supplied and are able to contribute to party funds are spared. He has, in short, speeded the trend to monopoly among those who are already established. Lastly, one can admire the Prime Minister’s evasive skill because these steps which were enunciated by him last week will be implemented by the banks, the State governments, the building societies, or shopkeepers. In no respect does a Commonwealth instrumentality have to take the step, or take the blame.

Whenever the Opposition has sought to bring up any discussion of the Government’s actions, which so far have been done by executive fiat - never as a result of discussion in this House - honorable members have been nimbly side-tracked. First, let- us go back to October last when I moved the adjournment of the House to discuss the forthcoming launching of two private savings banks. The Prime Minister said then -

If an opportunity presents itself the views of the Government will he presented to the House in due course. I should have thought that that would have been the time for honorable members to discuss the application, if a discussion were thought to be necessary.

We were never given the opportunity to discuss it. The licences were granted once the elections were over.

Again, on the 6th of this month, the Leader of the Opposition (Dr. Evatt) asked about the withdrawal of support from the loan market and received a thoroughly evasive reply from the Treasurer. Again, on the 13th of this month, the honorable member for Parkes (Mr. Haylen) sought to discuss banking policy because the Commonwealth Bank has withdrawn from some of its activities and the private banks have been altering their policies. Discussion was immediately stifled by no less a gentleman than the Vice-President of the Executive Council (Sir Eric Harrison). Lastly, on the loth of this month - the Ides of March - I asked the Prime Minister a question about the increase in the rates of interest charged by banks to building societies. He said very blandly - “I do not profess to have analysed every individual case that can occur “. That was a surprising admission because the rate of interest to building societies was explicitly and separately fixed in 1951-52 when the rates last went up for that and every other form of lending.

In all these regards the Government faithfully follows the advice of the private banks. On the 25th November last, the doyen of private banks, the Bank of New South Wales, through its mouthpiece, Sir Leslie Morshead, said -

Continued reluctance to allow the use of the interest rate weapon to diminish the pressure of demand on financial resources can be ascribed only to fear for the Government’s own borrowing programme, yet the Central Bank itself is pursuing an inflationary policy in supporting the bond market.

Sure enough, before three months is up, the central bank ceases to support the bond market, and interest rates do go up. Do not let it be thought, despite the Prime Minister’s reassurance, that banks will not profit abundantly from these alterations. In ‘January of this year, as the Statistician’s Monthly Bulletin of Banking Statistics discloses, the average advances of private trading banks were £784,241,000. If there is an increased interest rate of one-half of 1 per cent, on those advances, it will mean an additional annual income to the banks of £3,921,205. In the same month, the average interest-bearing deposits with the banks amounted to £261,313,000, and since they will have to pay an additional 1 per cent, interest on these deposits, they will lose £2,613,130. The difference of £1,308,075 will be profit for the banks - a net increase in their incomes. On the 7th July of last year the Financial Review stated that the net profit of nine private banks in this country was 9.4 per cent, of their total capital in 1953-54. I do not know what it was in 1954-55, but last month the Financial Revieu; said that the profits of all the banks had risen in that year.

Mr Calwell:

– It was £4,054,000.


– I do not know what percentage that sum represented of their subscribed capital. Last September all the major finance companies agreed to peg their balances for the present financial year at the amount outstanding at the 30th September last, plus 10 per cent. At that date, their outstanding balances were £195,089,000. At the 31st December, those balances had already increased to £207,881,000, an increase of 7 per cent. They then had 3 per cent, to play with in the remaining six months of this financial year. By contrast, the Industrial Finance Department of the Commonwealth Bank, two-thirds of whose advances were for hire purchase, has ceased to lend money for the purchase of motor vehicles, which was the cream of the hire-purchase business and accounts for 70 per cent, of the business of most finance companies. The department is gradually reducing its total advances. Now, by comparison with that, Esanda, which is totally owned by the English, Scottish and Australia Bank Limited, Custom Credit Corporation Limited, which is mostly owned by the National Bank of Australasia Limited, and the Finance Corporation of Australia Limited, 40 per cent, of whose shares are held by the Bank of Adelaide, are continuing in this field. The Industrial Finance Department of the Commonwealth Bank charges an interest rate of 4f per cent. In contrast to that, one learns, from an answer given by the Treasurer to the Leader of the Opposition yesterday, that the effective interest charge made by the private finance companies for advances for the purchase of a new motor car is about 12 per cent., and that the charge for domestic appliances like radios and washing machines works out at between 16 per cent, and 18-J per cent.

Now I turn to housing. One can see from the building statistics issued by the Commonwealth Statistician last month that in the December quarter of 1955 fewer houses were commenced than in any December quarter since 1952, fewer houses were completed than in any December quarter since 1950 ; and fewer houses were, under construction than in any

December quarter since 1949. The effect of the increases of interest rates on building societies was well shown last Friday, the day after I asked the Prime Minister a question which he found himself unable specifically to answer, when the general secretary of the New South Wales group of co-operative building societies said -

If the mortgage rate increases by I per cent., as seems likely, it will mean sharp rises in loan repayments. The increase on a loan of £2,000 will be fi 13s. 4d. a month; on £3,000 £2 10s. and on £4,000 £3 0s. 8d.

The increase in interest rates will not affect only those persons who are buying their homes through building societies. It will also affect those who are tenants, or purchasers of, housing commission homes. Under the Commonwealth” and State Housing Agreement the present tenants, and their successors, will, over a period of 53 years, pay the whole capital cost of the home, and the increase of interest rates will add to that capital cost. The interest rate under the expiring agreement was Hi per cent., and under the proposed agreement it will be 43- per cent, from July next.

Now I turn to the purchase of houses. Here again restriction of credit is acknowledged by all persons dealing in this field to have affected the position. At the end of last year L. J. Hooker Limited, who are Sydney’s biggest vendors of houses, told the Sydney Morning Herald -

It is . . . necessary that some method of financing should be developed as a national responsibility. . . . Any one who is prepared to save even 20 per cent, of the price of a home should be able to purchase one.

Willmore and Randell said -

Lack of finance has again proved a serious obstacle to the home buyer. People anxious to buy homes, who have a sum which normally would be quite sufficient as a deposit on a home, now find it impossible to obtain the finance to meet the balance.

Richard Stanton and Sons Proprietary Limited said -

There was a slackening off in home purchase during the last three months owing to the restriction of finance.

Raine and Home Proprietary Limited said -

Tn the latter half of the year it has been found nearly impossible to obtain finance for home purchasers though they are ready and willing to enter into mortgages bearing interest at a rate of up to 7 per cent.

Wherever one looks in the field of homepurchasing and home-building one finds that, whatever the source of the capital required, the building or buying of a home has become more expensive - and “this has come about by stealth and by administrative action. All persons in this community, and particularly those whom we should encourage most, the people who are setting up homes or extending homes, are finding it difficult to obtain financial accommodation.

Now I turn to public investment. Gross private investment in this country has risen, in the last two financial years, from £467,000,000 to £953,000,000. Expenditure by the States in the same period went from £190,000,000 to £180,000,000; by local government activities from £127,000,000 to £90,000,000; and for public housing from £30,000,000 in the four States concerned at that time, to £28,400,000. Therefore, whatever way one looks at it, public investment is declining. We have largely to rely on the bond market for public investment. There the Government has ensured that only institutions which can hold bonds for their full term will invest in bonds hereafter. The private investor cannot afford to invest in bonds. On the 1st February, 3^ per cent, bonds maturing in 1959 were sold in Sydney at £96 for each £100 bond. This price has receded to £94, and in all other cases there has been a fall of £2, £3, or £4 in each £100 bond. That also applies to the 4i per cent. bond. On the 1st February, for instance, 4£ per cent, bonds were bringing £100 in every case. Now they are bringing as low as £96 ls. 3d.

I pass now to the one alleviation in the new policy, which is that one-third of the £12,000,000 increase of revenue derived from the tax on petrol will be expended on roads. A statement was presented by the Minister for Shipping and Transport (Senator Paltridge) to the Australian Transport Advisory Council in Hobart a month ago which showed that estimated capital works expenditure necessary for the next ten years in the six States on primary roads - not secondary roads - was £557,598,000. The anticipated funds available for capital, works from State taxation, Commonwealth aid roads grants and loan funds amounted to £256,586,000. Thus a deficit of £301,002,000 must be found in the next ten years. The contribution that this Government is making in the full financial year is £4,000,000, which will mean that it will have provided an extra- £40,000,000 in the ten years towards a deficit of £301,000,000.

The position in which the Government finds itself was well known to it before it obtained the dissolution, well before the time it presented what it called its policy speech at the general election. It was known at the end of September that the revenue for the months from July to September was £300,000 less than in the corresponding quarter of the preceding financial year, and that the expenditure was £36,100,000 greater. It was quite obvious, therefore, that the Government knew that it would have to raise extra income. The Government either bungled or concealed the position, and on either score it has forfeited the confidence of the Australian people.

The Prime Minister’s economic statement was made, as I have said, on the eve of the Ides of March, incidentally the 2,000th anniversary of the celebrated Ides of March on which Julius Caesar was assassinated in another place in Rome. I celebrated the occasion by reading the latest life of that very successful and similarly unscrupulous politician written by Alfred Duggan. I believe the last paragraph of the work is appropriate to the present occasion. It reads -

He had one weakness, a contempt for the self-respect of his fellow men. Intellectual pride brought him to a squalid and untimely end. It is still the most dangerous temptation of successful politicians.


– I was very flattered when the honorable member for Werriwa (Mr. Whitlam) said that he would listen with interest to my views on certain points of the Government’s financial policy. He said that he wanted to know whether, in view of the position in 1951, 1 supported that policy. All that I can say about that is that when this Government came into office the national income was £1,937,000,000 a year. As a result of the financial policy practised by the Menzies-Fadden Administration, six years later our national income was £4,033,000,000, or more than two and a half times greater. So it is only natural that I should support the Government.

Then the honorable member said that he wanted to know what were my views, as a member of the Australian Country party, on the question of the increase of interest rates. Both he and the honorable member for Darebin (Mr. R. W. Holt) wanted to know the views of the Australian Country party on the rate of h per cent. So I asked my experienced political mentor, the honorable member foi1 Gippsland (Mr, Bowden), “Is that right?” He asked, “What did they say”? When I told him, he said, “If they said that, you may be certain that it is not true”. He advised me that anything they said should be treated very circumspectly.

Yesterday we witnessed the spectacle of the Leader of the Opposition (Dr. Evatt) dealing with this very important question. T think that even his best friends must’ admit that he has a great weakness m economic matters. In fact, I am inclined to believe that he learned his economics mostly from correspondence courses. During his speech, he turned round continually to face the members of his party. Every time he made a point, they raised a cheer. That roused a certain nostalgia in me. Honorable members may be aware that I have been a sheep-farmer. You know, Mr. Acting Deputy Speaker, that if you put a lot of wethers in the yard overnight, the noise that they make in the morning is exactly like the noise of the cheers that came from the member? of the Opposition.

How has the Labour party approached this problem ? The Leader of the Opposition naturally determines the line of the attack that is to be made on the Government’s financial policy. The approach of Labour to this problem is the same old approach, tinged with doctrinaire bias. Naturally, honorable members opposite have attacked the Government on the question of profits. The whole theme of their argument is profits. Their great economic brain, of course, is the honorable member for Yarra (Mr. Cairns). He has established to his own satisfaction that tha present inflation is a profit inflation. The Leader of the Opposition took his cue from that. But profit is a very much-maligned thing. I should like to read a very short extract from a book published by the Institute of Public Affairs - a book from which the Leader of the Opposition quoted extensively. The extract is as follows : -

The Institute feels that a simple explanation of company profits to the public is long’ overdue. There is nothing about which more nonsense is spoken and written even by highly educated people holding important positions in the community.

The Labour party does not like profits, because it knows that profits are the mainspring of the Australian way of life and of the capitalist system, or the free enterprise system. Honorable members opposite can never rid themselves of their doctrinaire bias against profits. On every possible occasion, they accuse this. Government of being a high-profit low-wage government. That is extremely illogical reasoning. Before profits can be made, there must be purchasing power in the hands of the public. Profits cannot be made out of thin air. There must be a consuming public, with money in its pockets, before profits can be made. How can profits possibly be made if wages are low or there is unemployment? The arguments advanced by the members of the Opposition do not make sense. Time and time again they use the same spurious arguments, based on illogical reasoning and stupid thinking - that if, if they think at all. They always accuse us of trying to make profits by grinding the poor into the ground, creating unemployment and paying low wages. How could profits be made in conditions such as those? Profits are the mainspring of all progress.

It is a great pity that the Labour party is dominated and led by the trade union movement. Let me refer honorable members opposite to the views of the present big thinker of the American trade union movement, Mr. Meany. He has said that the greatest damage that the employer can do to the worker is not to make a profit. The Americans realize the advantage of profits, and they encourage large profits. In fact, an American will not work for a company that does not make profits. Profits are an incentive to companies to raise efficiency, reduce costs and supply more and better goods to the public. .

Members of the Opposition always criticize their own countrymen, but let ns look at the latest figures that I can find on which to compare the average profits made by companies in the United States, Canada, the United Kingdom and Australia. The figures are available to honorable members opposite in the library. Taking the percentage of profit on shareholders’ funds after payment of tax, the figure in the United States is 12 per cent. ; in Canada, 14 per cent. ; in the United Kingdom, 8 per cent.; and in Australia, 8 per cent. Those figures are available to members of the Opposition. They can read the book in which the figures appear.

What is the influence of profits on prices? I have some simple statistics on that subject. Let us suppose that- a company is making a profit of 6 per cent. If the profit were reduced to 4£ per cent., which is the rate of interest on Commonwealth bonds, the difference in the celling price of the article would be less than 2d. in the £1. All this talk about profits by honorable members opposite is a part of their scheme to advance the dreadful ideology of socialism. There is no conflict between profits and high living standards. In North America, where the rate of profit is the highest in the world, the rate of real wages is also the highest in the world.

An important point is that a large proportion of profits should be ploughed back into the industry concerned. The Australian worker has two and a half times less equipment at his disposal than has the American worker. If we increase production, we increase standards of living. In India, where the production per man is so low, standards of living are low. The more we increase production, the higher our living standards will be. American companies plough back into their businesses 60 per ‘cent, of their profits, but Australia ploughs back only 25 per cent. In many cases. Australian companies are not making enough profit to enable them to plough money back inro their businesses in order to provide modern equipment and plant so that the workpeople will be able to produce more. The more that is produced, the greater will be the amount of wealth available for division. That is where the public interest lies. The more we produce, th, more there will be to divide.

The Labour party always hurls back into our teeth our promise to put value back into the £1. Let me ask this question : Is a trade union such as the bricklayers’ union doing anything to put value back into the £1 when it puts a limit on the number of bricks that a member of the union can lay in a day? Is the -trade union movement doing anything to put value back into the £1 by indulging in restrictive practices? Let me give an example. There is a darg in the coalmining industry. We saw to-day the tragedy of men who follow Communist leadership. We saw the stark tragedy facing fine men and women who have risked the loss of a chance to earn their livelihoods at the trades they know, because they have followed Communist leadership. We know what Communist leadership has brought them to. Anybody who attacks our system and tries to break it down will bring this country to a similar state ultimately. The restrictive practices indulged in by trade unions are factors that are preventing us from putting value back into the £1.

We heard the honorable member for Darebin make a very moderate anl reasoned speech. He is one of the few people on’ the other side to whom 1 care to listen. He made out a very strong case for a reduction of the cost of building homes. The most important cause of the high cost of home building is the restrictive practices of carpenters, bricklayers and plumbers as a result of the work of the trade unions. They are bludging on their own people.

Before I was diverted from my theme, I was about to say that the speech of the Prime Minister (Mr. Menzies) pointed, to three tasks to which we must give attention in dealing with the present economic situation. The first, and the main task, is the correction of the unbalance in our economy. The second is the raising of additional revenue. The third is the curtailment of imports. Tl-.o Leader of the Opposition and several other members of the Opposition have criticized the Government’s withdrawal of its support of the loan market. The honorable member for Werriwa’ pointed to the alleged influence of the Bank of New South Wales on the Government. How was the loan market supported by the Government? It was supported by purchases of bonds by the central bank. Let us analyse what that means. Let us suppose a loan was raised to finance the works programme of the States. To the extent that the proceeds of the loan were spent on productive goods and services, the expenditure would be deflationary. When that money was circulating in the community, before it was absorbed by loans, it would have been inflationary. When the central bank bought back the bonds from those who had invested in them, it would inject into the economy new money, which would go straight into hire-purchase finance and would become highly inflationary. The more the market was supported, the more new money would be injected into the economy. That new money would be inflationary. Yet not one Opposition member has criticized that process of increasing the inflationary pressure! Opposition members criticize only the Government’s withdrawal of its support of the loan market. Why do they not support the Government’s action? They refuse to do so only because they allege that thousands of bondholders are losing as a result of it, and they hope to win votes by their refusal. They are only seeking votes, and they would let the economy go to blazes. As I have explained, the effect of purchases of bonds in the market by the central bank is highly inflationary.

Last evening, we heard a long tirade from the Leader of the Opposition, who boasted that the Labour Government, during and after World War II., was able to maintain low interest rates on bonds. With wages and prices pegged, with rationing and every other sort of economic disease, and with no profitable investments for capital available, of course the Labour Government was able to maintain low interest rates. How could it ha%re hoped to keep interest rates down had the economy been expanding and had profitable investments for capital been offering? By what law could it have done so? The honorable member for Darebin suggested that capital issues control is the answer to the problem. The Commonwealth has adopted capital issues control only in time of war. Opposition members criticize the Government, but do not make one constructive suggestion for the improvement of the economic position. It is the Opposition’s job to make constructive suggestions.

Mr Bryant:

– We thought it was the Government’s job.


– The Government is doing its job. We have heard some discussion of company taxation during this debate. The Leader of the Opposition stated that the Government’s proposals to counter inflation are a mockery. Let us analyse his reasoning. Why are company taxes being increased? One reason is to raise money. Another is that companies are fairly profitable and that, therefore, the increased tax will not hurt them very much. A third reason is to bring company dividends into closer relation with the bond interest rate, and thereby improve the bond market. But these reasons are completely rejected by the Opposition. Why? It is either because Opposition members do not want to accept them or because on principle they do not want to support the Government’s policy. The Opposition says, in effect, “ If company taxes are increased by ls. in the £1, the companies will increase the prices of their goods accordingly”. They overlook the fact that companies may be honest and may refuse to increase prices although their profits will be reduced. Opposition members always argue that there should be a tax on excess profits. Why should not the same reasoning apply to such a tax? Why would the companies not increase their prices to make allowance for it? The Opposition does not seem to have any logic in its reasoning, or else it is merely advancing socialist methods of defeating private enterprise.

We have heard much about the problem of hire purchase. We all know that it has been of deep concern to the Government. However, the Commonwealth hae no constitutional power to deal with hire purchase. Therefore, the Government has appealed to the States to take action. But the States have refused to accept their responsibilities. Why does not Mr. Cahill, the New South Wales Premier, take action on the hire-purchase problem?

We have been told that hire purchase is necessary to enable wage-earners to improve the amenities of their homes. Opposition members admit that. They say also - and this is the one point on which they agree with the Government - that hire-purchase interest rates are too high. Yet Mr; Cahill, a Labour Premier, who has power to control hire-purchase interest rates, will not do so! He controls the prices of a number of commodities, and he could easily prevent all the trouble over hire purchase by the exercise of the constitutional powers of the New South Wales Government, but he will not do so.


– Why does Mr. Bolte not control hire-purchase interest rates?


- Mr. Bolte does not matter for the moment. Let us talk not about him but about the people whom the honorable member knows and under whose government I suffer. The New South Wales Government has power to control hire-purchase interest rates. Why will it not exercise it?

Reference has been made from this side of the House to the impost on cars, and I should like to mention one or two additional points. As honorable members are aware, motor cars are one of the largest elements of our imports, and also one of the largest elements of hire purchase. The import of cars has great side effects. It lessens our overseas balances and encourages the inflationary work of the hire-purchase system. An enormous increase of motor vehicle registrations has highly inflationary effects. With more cars on the road, more garages and service stations are opened. As a result, more man-power is drawn off from productive work into a service which, although in a way, is not inflationary, nevertheless is unproductive. Skilled artisans are attracted away from productive manufacturing occupations that would produce more wealth. If this happens at a time when labour is short in productive industries, the effect is inflationary. Recently, garages and service stations have sprung up like mushrooms all over the country. This construction work has drawn off money that would have been better invested in more productive enterprises. Honorable members will see, therefore, that the increase of the sales tax on motor vehicles will do the economy a great deal of good.

I turn now to the petrol tax. I quite agree that from the viewpoint of the primary producer, the increased impost will not be welcome. It will add to the burdens of those who have increased production more, and with a smaller increase of man-power, than any one else in Australia. They are the people whom the Australian Country party represents. They are the backbone of the national economy. I am afraid that they will be adversely affected by the increase of the petrol tax. I agree with the honorable member for Mackellar (Mr. Wentworth) that all the additional £12,000,000 to be obtained by the increase of the petrol tax should be spent on road works.

Mr Duthie:

– That is Labour’s policy.


– No. I support this Government’s policy, because it has enabled primary production to make enormous strides. Before I conclude, I should like to warn the public about the attackmade by the Australian Labour party on the private banks. At every opportunity. Labour members try to arouse hate of the private banks. This is a deliberate policy so that, if ever the country is unfortunate enough to have Labour in office again, the public will be conditioned to hate private banks and Labour will be in a better position to nationalize banking in accordance with the policy of Lenin, who, in his attempt to bring socialization to Russia, held that the nationalization nf banking was the first requirement.


.- Despite the pathetic attempts made by successive speakers on the Government side to justify this supplementary budget, the plain fact is, of course, that the people are disgusted by its severity and unfairness. The statement made last week by the Prime Minister (Mr. Menzies) completely vindicates the attitude of the Labour party during the last election campaign, when we said that the election for the House of Representatives was being held eighteen months and the election for the Senate at least five months before they were necessary, because the Government realized that, as the result of it? mismanagement over the previous six years, it would have to implement stern economic measures in an attempt to remedy the economic position. Its idea

Has to get the election over first, and there would then be three years for the people to recover from the effects of the Government’s maladministration after the proposed enactments had been made. During the campaign we advanced that explanation, but the Liberal party spokesmen” throughout the length and breadth of the Commonwealth emphatically denied the truth of the assertion. When, on a number of occasions, the Prime Minister was asked at his meetings whether the Government intended to increase taxation rates very shortly, he said, “ I do not know. It is not possible to know what will be necessary in five or six months’ time ‘”. That was sheer sophistry, because the Prime Minister knew, as did every Labour party candidate, that early this year increased taxes would have to be levied on the people of the Commonwealth. We said so, and we were derided and abused, but, as usual, time has proved that the Labour party was right.

Every member of the Federal Parliament realizes the seriousness of the economic position and knows that there is a pressing need to halt the inflationary spiral, but that is the only matter in the Prime Minister’s statement on which we all agree. To say the least, it was a very Gilbertian statement indeed. It was supposed to contain particulars of proposed measures which were anti-inflationary in their influence, but from every angle those measures will have an inflationary influence. Instead of curbing inflation, they will accelerate it. A sensible antiinflationary policy begins by making goods cheaper and not dearer. Surely no honorable member on the Government side will contend that these proposals will reduce the price of goods. The honorable member for Bradfield (Mr. Turner) made an heroic but ineffectual attempt to show that the increase in the petrol tax and other charges would have no effect on the cost of living. Evidently he had not read this item in this morning’s Argus, under the heading “ Cartage prices go up “ -

More than G5,000 heavy carriers will increase charges by ls. 3d. a ton from April 1. Mr.

U. Talbot, Victorian Road Transport Association goods secretary, said last night that sharp rises in costs had made higher charges necessary. Alain factors were the 3d. a gallon rise in petrol tax and increased sales tax on new vehicles and spare parts, announced by Mr. Menzies last week.

It can thus be seen that the so-called anti-inflationary policy of the Government will materially increase the cost of living all round.

When the effects of the policy are felt by the public through prices rises, there will be one inescapable result. Trade unions, immediately and quite legitimately, will be forced to apply for higher wages for their members, from which will flow a further increase in prices. It is generally agreed that one basic factor that will help to curb inflation is an increase in production. I think that even Government supporters will agree with that statement, but increased production is one end that the Government’s policy will not achieve. Every line of it foreshadows a stultification of production processes. Let us examine the flat rate of increase of ls. in the fi in company tax. It is most unfair in its impact on small companies. Many small undertakings which in recent months have sought increased working capital have been disappointed because of the restriction of bank credit now being enforced under the Government’s instructions. On top of this imposition, additional company taxation will be an added burden for small companies and will certainly retard expansion and development. The Prime Minister stated ad nauseam that it was the Government’s intention, through the implementation of its economic policy, to draw off the surplus spending power of the community. Surely he should know that there are large sections of the community which have never enjoyed any surplus spending power. Many persons on fixed incomes, for whom the honorable member for Bradfield wept copious crocodile tears to-night, have no surplus spending power. They cannot supplement their incomes by working overtime or making big profits. They have to carry on with only a fixed income. The expressions of solicitude for them voiced by the honorable member for Bradfield do not ring true.

While it is difficult for the Government to justify the imposition of a flat rate increase in company tax, instead of a sliding scale based on excess profits, it is infinitely more difficult for it to explain why further indirect taxes have been imposed. I can well remember reading, before I came to this Parliament, reports in Hansard of debates on sales tax legislation. The Chifley Government recognized that sales tax was very unfair in its incidence, and its policy included progressive reductions year by year. Government supporters, who were then in Opposition, decried sales tax, saying that it was a most iniquitous form of taxation and that when a Liberal government was in office the provision for sales tax would be struck from the statutebook. The pages of Hansard are literally studded with such declarations of policy by supporters of the present Government between 1941 and 1949, but during the last six years they have revealed that they are staunch supporters of the imposition of higher sales tax rates. It is interesting to recall that sales tax was intended originally as an emergency measure, but it has tended to become a permanent source of revenue. Its great defect is that it involves an inequitable apportionment of the tax burden. The Labour party recognizes the truth of this proposition, and after the war it implemented a policy of progressive reduction of this form of tax, but despite the protestations in those days of supporters of the present Government, they have certainly failed to continue Labour’s policy in this regard.

Sales tax fails to meet the requirements of equitable taxation, because it involves an increase of the proportion of the workers’ total income spent, and a decrease of the proportion saved. It is easier for a man on a large income to meet the imposition of sales tax, but, as compared with a richer man, the worker has to pay out a larger percentage of his income in living costs. No account is taken of the purchaser’s economic position. The millionaire and the pauper pay the same sales tax on a packet of razor blades. The purchaser’s capacity to pay is not taken into consideration. An increase in the prices of many articles which are recognized as vital to our everyday existence unduly penalizes the poorer section of the community, and it is incontrovertible that numerous items in the range of articles on which the sales tax has been increased from 16§ per cent, to 25 per cent, are essential to our everyday existence. In an endeavour to bolster an indefensible position, the Government naively asserts that the increases are essential in order to draw off portion of the spending power of the community so that the Government may spend it, and the Prime Minister made no secret of the fact that this was the Government’s intention. If the inflationary effects of such spending are measured against the hardships that will be inflicted upon a deserving section of the community by the incidence of additional taxation, the weakness of the Prime Minister’s argument becomes most apparent. If the Government is really serious about tackling inflationary problems - I do not think it is. because it hi” not a clue - it, should get down to fundamentals. The Government should not put, forward proposals that are of un value- whatsoever, and the net result of which can only be widespread resentment and partial unemployment in some sections of industry. Yet heavy taxation is being imposed ostensibly for the purpose of combating inflation and, paradoxically, the immediate and ultimate result will be an acceleration of the very evil that heavy taxation is supposed to diminish.

No solution has been put forward, by this Government which will give any semblance of stability to the price level. If we are to win the battle against inflation, the first thing we must do is to ensure a stable and permanent price level, but this Government does not appear to realize that this is necessary. Under its legislation, prices will continue to rise while the Government stubbornly refuses to tackle the basic problems that are undeniably allied to inflation. For example, it has singled out the motor industry for unfair discrimination. The increase in sales tax will place a tremendously unfair impost on one section of industry alone. It is high time the Government recognized that the motor industry is no longer a luxury industry. Only this morning, the following statement by the Chamber of Automotive Industries of Australia was published in the Melbourne press: -

Australia has’ more commercial motor vehicles per head of population - one to every fourteen people - than any other country . . .

In 1953-54, £790,000,000, or one-fifth of the national income was spent on road transport, according to figures just released . . .

Road transport accounted for 03 per cent, of all passenger miles, 20 per cent, of freight ton-miles, and 76 per cent, of all freights carried in Australia.

This is an industry that is vital to Australia’s economy in every respect. It is probably more vital to our economy than is any other industry, yet for some strange reason, this Government has singled it out for treatment which is the reverse of that which should be accorded an industry of this nature. “What will be one of the effects of the proposed policy of imposing increased sales tax upon motor cars? The hirepurchase companies, the evil of which this Government recognizes yet claims it has no legal power to combat, will now have to seek additional capital to finance the purchase of motor cars, because the price* of motor cars will be increased by anything from £100 to £200. Whilst the Government decries the evil of hire-purchase, it will, by increasing the price of motor cars, accelerate that evil. The Government claims it has no power to deal with the evil, although it professes that it would like to do so. In other words, the Government’s policy has gone completely haywire.

With other honorable members, including honorable members on the Government side, I take the strongest exception to the increase in petrol tax. The increased public demand for the Commonwealth ta accept some responsibility for our national roads system has borne some fruit over the last three or four years. This has been due to the fact that all political parties realize that the state of roads in Australia is such as to demand action upon a national scale. The State governments’ exchequers are not equal to the task of looking after the roads. It is safe to say that the national roads system of Australia, relatively speaking, is now the worst in the world. This is supported by the statement issued by the Government’s Transport Advisory Council, which has been quoted by the honorable member for Werriwa (Mr. Whitlam). According to that statement, there is no prospect of our having a reasonable road system unless a terrific amount of money is spent on it during the next few years. This Government recognizes the truth of the statement, but gives only lip service to the need for action in this field.

With the additional money that it intends to collect by way of increased petrol tax, the Government has an excellent opportunity to prove its sincerity in connexion with our roads. If the Government was sincere, it would spend these increased funds on the purpose for which they are alleged to be collected. According to the budget adopted by the Parliament last October, the Government expects to collect £34,000,000 by way of petrol tax this year. Of this sum, £26,500,000 will be handed to the States. It is expected that the proposed increase in petrol tax will return an additional £8,000,000 to this Government. This amount, together with the £7,500,000 remaining from the £34,000,000, leaves the Government with £15,500,000 that ought to be spent on the reconstruction of old roads and the construction of new roads throughout Australia.

Mr Hulme:

– Where would you get the labour?


– All I can say is that the Victorian Country Roads Board has ample labour available, and ample supplies of the most up-to-date machinery in the Commonwealth. If additional machinery is needed, ample supplies are available for purchase in Victoria. The only thing lacking in that State is ample funds. If money is made available to the Victorian Government to hand over to the Victorian Country Roads Board, I can assure the honorable member that it will be spent most judiciously. It is high time the Commonwealth Government recognized its responsibility to the municipalities in connexion with roads, especially arterial roads. In Melbourne, the suburban municipalities are expected to look after the arterial roads which carry the through traffic. They have no hope in the world of meeting the cost of maintenance and reconstruction out of their receipts from municipal rates. I am certain that every honorable member from Victoria, even those on the Liberal side, will concede that fact. If the Government claims that the money cannot be spent on country roads, I can assure it that the municipalities of Melbourne can spend every penny that the Government can give them from the petrol tax. It is idle for the Government to say that it will not give the £15,500,000 to the States and municipalities because they cannot spend it. I suggest that the money will be spent, and spent advantageously, if the Government will make it available to those bodies which are responsible for the road system but which are unable, because of lack of funds, to provide an effective road system.

I should like to speak on many matters, but for the moment I wish to refer to the effects the increased petrol tax will have on matters other than road construction. For example, we have been told in Melbourne that the fares charged by private bus proprietors are. to be increased because of the higher cost of petrol. This’ will mean the infliction of added hardship on people who are already paying 5d. for one section. In my own municipality, the people are paying 5d. for a section for which they paid only Id. before the war. The bus proprietors on this route intend to increase the price to 6d. a section because of the increased cost of petrol. The Government shows slight solicitude for the welfare of the people when it proposes to increase the price of petrol to those who are rendering commendable service to the community.

The increase in interest rates will inflict great hardship upon semigovernmental bodies that wish to carry out developmental works. The municipality with which I happen to be associated in Melbourne has a bank overdraft. It has been told by the bank manager that as from one day next week, or the week after, the rate of interest on the overdraft will go up in accordance with the Government’s policy. This means that next year we shall have no option but to increase the rates charged to our ratepayers in order to pay the added interest burden imposed upon us by this Government’s policy.

In conclusion, 1 suggest that the Government’s policy must stand roundly condemned for the following reasons: - First, because it is sectional in its incidence; secondly, because it is a negative and timid approach to inflation; thirdly, because the adoption of the proposals will mean higher and higher prices and consequently no diminution of the inflationary spiral; fourthly, because the taxation proposals will undeniably result in the retarding of production at a time when increased production is desirable; and fifthly, because the greatest burden will fall upon the backs of the workers. I suggest that in this statement, the Government has failed to face up to the realities of the situation, and it would be well advised, even at this late juncture, to recast its proposals and eliminate the many repugnant features of them.


.- It is very much easier to heap criticism upon a proposal that is made than to bring forward constructive ideas. The House has been debating the economic statement delivered by the Prime Minister (Mr. Menzies) last “Wednesday night. The Opposition has only criticized the measures that have been submitted to the House, and has in no way brought forward any constructive ideas or suggested what would be its policy if it found itself in government.

The honorable member for Batman (Mr. Bird) said, amongst other things, that prior to the last general election, the Government did not tell the people what measures would be adopted to deal with the economic situation. His colleagues, including the Leader of the Opposition (Dr. Evatt) when opening the debate on behalf of the Opposition, made similar statements. But what are the facts? During the election campaign, the Prime Minister, and supporters of the Government, continually referred to the economic problems with which we as a nation were confronted, and continually stated that it would be necessary to take certain action to deal with them. We further stated that we would take action as the need for it arose but that we would not rush into economic controls at the appear.ance of the first excuse as do the socialists. Of course, it is the policy of the socialists to introduce extra controls upon the appearance of the first excuse. It can be said that they are control happy. Indeed, that is almost the only matter about which they could be happy, because they are not happy amongst themselves, they are not happy with their leader, and they are not happy about being in opposition.

The Government’s approach to its responsibilities is exactly the. reverse. The Government recognizes the fact that under certain conditions it must act in the national interest, and that is what it is doing now. When the Prime Minister made his statement, we realized that it would be criticized, but we hoped that, when criticism was forthcoming, it would be made by persons both inside and outside the House who had given some study to the problems and to the right honorable gentleman’s statement. Having listened to the criticisms that have been offered, I find it difficult to believe that honorable members opposite have studied the Prime Minister’s statement to any great degree. It is not possible for me to make a complete summary of what the right honorable gentleman said, but I shall refer to a few of his points. He said that the objective of the Government was to restore Australia’s balance of payments by the end of June this year. That is a statement of policy and of fact, but at no time during the debate have I heard any member of the Opposition disagree with it, nor have I heard any Opposition member say how the Opposition would cope with that particular problem. The Prime Minister also said that there was every reason to suppose that this objective of balancing our external account by the middle of this year would be achieved. I have not heard any Opposition members disagree with that statement.

That leads one to ask: What are the main criticisms that have been levelled by the Opposition and by certain persons outside the House? The first criticism to which I refer - one which has been made by the Leader of the Opposition and many of his colleagues - relates to what they describe as the high taxes that are to he imposed upon the public. Th« Leader of the Opposition went so far as to say that only one section of the com munity would be hit by the additional taxes, and he referred to each member of that section as being the little man. But is that a true statement of the situation? The Prime Minister went to great lengths to explain that it was necessary for the Commonwealth to have extra cash within a short space of time, and he outlined the reasons. I think it is right to say that all honorable members realize that, in relation to the trading section of the Commonwealth accounts, it seems more than likely that the budget will be balanced. Indeed, there may even be a surplus. As far as actual cash is concerned, however, there will be a deficit, because it has been necessary for the Commonwealth to subsidize loan moneys allocated to the States. It is well known that the Australian Loan Council sets a target figure for loan raisings, and that for a number of years that target has not been achieved. However, the Commonwealth has passed to the States the equivalent of the target figure for loan raisings. In other words, it has been paying, by way of subsidy, the difference between the actual moneys raised by loans and the target figure. Cash is now required for that purpose. It is well known, moreover, that within a short period of time the Commonwealth will be required to redeem certain loans or bonds that will fall due. Unless extra measures are adopted, the Commonwealth will be faced with a cash deficit, and for that reason it is necessary, as I have stated, for it to obtain cash within a short space of time. At no stage during the debate have I heard any member of the Opposition offer any solution of that problem.

The honorable member for Batman summed up the attitude of the Opposition by saying that, the Prime Minister’s statement was negative in its approach, and that he ‘thought it should be recast. But neither he nor any other honorable member opposite said in what way the Opposition considered that the proposals should be recast. Another criticism that has been levelled against the right honorable gentleman’s statement is that it did not sufficiently outline action that was to he taken in relation to hire-purchase finance. The Opposition knows full well that the power of the Commonwealth to deal with hire-purchase finance is limited by the Constitution. The States have full responsibility in that field, including, amongst other things, capital issues control. When the Commonwealth did act, it was in time of war or shortly afterwards, and it was able to do so under its defence powers. A great deal of private capital is being invested in hire-purchase companies and similar financial institutions, with the result that the private investor is not investing his money in Government bonds or in the companies and banking institutions with which he used to place his savings. I refer to the banking institutions and insurance companies, because, under the existing circumstances, they cannot offer the attractive rates of interest that the hirepurchase companies are offering to investors. That is one of the main reasons why Commonwealth loans are not being fully subscribed, and why money is not being invested in Commonwealth bonds.

As I pointed out a few moments ago, the Commonwealth is responsible for providing money for the States to carry out their public works, and, when loans are under-subscribed, the Commonwealth, to use a colloquial phrase, cops it both ways. The State Premiers are taking advantage of this situation. They are taking advantage of the fact that they do not have to accept any of the odium that is bestowed on a tax-raiser, but they have the great privilege of spending the moneyraised by the Commonwealth. Now, after the Prime Minister has made his economic statement, the State Premiers are criticizing him for taking steps that will, to a great extent, benefit them and their governments. I suggest that it is time this Government took a firmer stand in the matter and said to the State Premiers, “ The Commonwealh will no longer provide for your public works the extra money required above the amounts raised by loans, unless you co-operate by enacting legislation complementary to that enacted by the Australian Government, so as to assist in the present economic situation, especially regarding the hire purchase problem”. I think that would be very fair. I notice that the Prime Minister has forecast, in his economic statement, that certain actions may well be taken in conjunction with the States, and I hope that this is one that he has in mind.

I should like to make a further remark while on the subject of hire purchase. The Commonwealth has taken action in one field in which it has power. It has, in the face of objections from members of the Opposition, increased sales tax on motor cars, particularly passenger cars. While 1 can quite realize the reason for some individual objections to this course of action, the fact remains that motor cars constitute the largest single item in the hire-purchase field. I shall digress at this point in order to ask a question, because there is an important difference between what is called a passenger car and what is a commercial vehicle. Does the definition of a passenger car include a motor car of passenger-car design which is used by its owner for commercial purposes and for the purpose of earning his living? An example of such an owner would be a commercial traveller. Does a. commercial traveller who purchases a car and uses it for commercial reasons pay the higher or the lower rate of tax? A.s far as I know, the Government has not made that point clear. There are many classes of people, besides commercial travellers, who would be affected by that definition.

I also wish to make reference to the Prime Minister’s announcement of intention to increase overdraft interest rates. The right honorable gentleman stated that the average rate of interest would be 5£ per cent., with a maximum of 6 per cent., and on several occasions he has explained that the Government’s intention is that those concerns that might be considered as contributing to the inflationary condition of the economy shall be charged 6 per cent. It is evidently the Government’s intention that those people shall pay more than the average of 5£ per cent., and those who shall be charged a rate of 5 per cent, are those connected with primary and secondary industries assisting in Australia’s export trade, or producing goods whose consumption in Australia tended towards a reduction of imports. I therefore ask a second question. In which category does the Government intend to place the small-acreage farmer? Although these farmers operate on small properties, their importance is far from small, because they are the men who supply a great deal of the food consumed in Australia, and quite a lot of our exportable food products. Many of them are engaged in the fruit industry, producing dried fruits, citrus fruits and canning fruits. There are also the dairy farmers and the poultry farmers. They are primary producers of the type to which I refer. It is well known that for h number of years those people have faced a number of problems. Some of the problems were common to most of those primary industries, while others related to individual industries. One of the common problems concerned the overdrafts on which the majority of the farmers are operating, and, to put it mildly, they will face great difficulties if their overdraft rates are increased. While 1 take it that the Government intends that those who produce exportable products shall continue to pay the lower rate of interest, I am not clear as to the Government’s intention regarding those who are producing foodstuffs which are consumed within Australia. Their problems are just as pressing as are those of the men who produce exportable products.

For those reasons I ask the Government to give due consideration to the difficulties of the kind of primary producer 1 have described. I do not think this is the time or the place to give detailed descriptions of the individual problems which confront so many of these people. The Minister for Primary Industry (Mr. McMahon) knows of them. He was good enough to visit my electorate a few weeks ago, shortly after he was appointed to his present office, and he became acquainted with the problems of the small farmers. I suggest that the Government should give every consideration to extending the lower interest rate to these people.

I shall summarize what I, as a Government supporter, think of the economic statement that has been made by the Prime Minister by saying, first, that the proposed measures are completely necessary. The charges made by the Opposition, that no warning of these measures was given to the Australian people, are completely untrue. It was said during the election campaign, not only by the Prime Minister, but also by all Government candidates, that the Government would have to take action to correct the economic position. The point that the Opposition has entirely forgotten is that, after the Government candidates told the people that they would take the action that became necessary as the situation developed, the people trusted the Menzies Government and voted it back into office with an increased majority.


.- The Government, in introducing its supplementary budget, has betrayed and let down all deserving sections of the community, including many that were deluded into supporting the Government at the recent election. Those sections are now called upon to make further sacrifices - they are the real producers of wealth - for the benefit of the non-producer, the financiers, the profiteers and even the blackmarketeers who have exploited this country in war-time and who are now seeking to get their greedy paws on the people’s alleged prosperity. They are not satisfied with a fair return, even on their ill-gotten gains. They want to extract their pound of flesh at usurious rates of interest on an investment in peace-time activity or in financial institutions and hire-purchase concerns. These are the only ones that will benefit from this new proposal. It is quite clear that this is a bankers’ plan, and that the Government has brought it in under pressure. That is made clear from reports that we have had during the past two years. The matter was referred to recently in a report from Adelaide, published in the Sydney Daily Telegraph on the 27th February last. It is as follows : -

The Australian Bankers’ Association wanted higher interest rates for fixed deposits, Mr. A. A. West said to-day.

Mr. West is chairman of the Associated Banks in South Australia.

He said bank interest rates were out of line with the present economy.

The association had been asking the Commonwealth Bank for two years for a review of the interest rate structure.

The Commonwealth Bank had entire control of bank interest rates, he said.

The association also wanted an interest rate ranging up to Ci per cent, on overdrafts - according to the security offered and the use given for the advance.

Higher rates would encourage savings and discourage borrowers.

Then again, in the 97th annual report of the National Bank of Australasia Limited for 1955, we have this interesting item. The chairman addressed the annual meeting at which he said -

page 1014



During the year, public reference has been made to the approach by the Trading Banks to the Commonwealth Government with respect to the existing banking legislation. The proposals put forward are vitally important and, we believe, should be accepted if our banking structure is to be adjusted to conform with the present-day needs of our economy.

So it is clear, now, who is preparing the Government’s legislation. It is obvious that the Government is under pressure, and that, this is the first step in the implementation of the plan. No doubt, more will follow. We shall find that the people’s bank will no longer be the people’s bank, but a bankers’ bank. A plan was brought forward by professors and economists. The very day after the Treasurer (Sir Arthur Fadden) issued one, of the bulletins which I understand will be prepared regularly by the Treasury, the professors and economists brought down that plan, of which this is the first phase. No doubt further aspects of it will follow later in the year with the increase in income tax that they proposed.

In considering the various sections of the community that have been called upon, under this proposal, to make further sacrifices, I shall first take the exservicemen. They made great sacrifices during the war years. Many of them had been looking forward to having homes for themselves and their families, and to having equipment to place in those homes. Many of them had been looking forward to going on the- land. It is interesting to know where the Australian Country party stands in this regard. It is quite clear from the speeches that have already come from the corner of the chamber that they stand, as they have always stood, for the big graziers, just as the Liberal party stands for the big business interests of the city.

The workers in industry had to keep the wheels of industry going, turning out munitions during the war years. They were prepared for restrictions during the war years. Many of the young people who are coming along to-day have had no facilities provided for them and thousands are waiting to get into their own homes. A survey that was recently made by the Daily Telegraph was referred to in a special article in that paper on the 18th January last. The article appeared under the headlines - “ A dream is still a dream. Door to home finance is practically closed “. The special reporter who wrote the article stated -

Unless State or Federal Government release more finance for house purchase the dream home of Australians with limited capital will remain a dream. Inquiries among the main sources of house finance - banks, insurance companies, and building societies - show this.

So it is quite clear that many thousands in the community are bitterly disappointed at the lack of provision of homes by this Government, especially in view of this further impost which will be placed on those who seek home finance as well as on those who have already received it; because the rate of interest will go up on overdrafts, and on advances, not only on homes erected in the future, but also on existing homes. Yet money is being diverted to hire-purchase companies which are making huge profits. Young people are being encouraged to buy cars and go joy riding around the country. Many of the vehicles end up at the second-hand dealers that we see every few hundred yards along the main streets of the cities. The dealers are trying to get rid of these cars which come back into their hands because these young people who have been induced to purchase them, find they are beyond their means. They have to sacrifice them by re-selling them to the dealers. Hire purchase is all right if it relates to essential commodities, but when diverted into avenues of this nature, it can be anti-social. The Commonwealth Bank could have competed with these concerns at reasonable rates of interest but this Government, has withdrawn that institution from that’ avenue of investment.

It is clear from the Baily Telegraph that the private banks are not playing their part in regard to the provision of home finance. They are not really interested in it. Most of these banks are interested in placing their money in hirepurchase concerns or in financing imports and discounting bills - transactions which bring a much higher rate of profit than they would receive from homebuilding finance. That was made very clear to a builder friend of mine who went to a high executive of one of the trading banks which is controlled from London. The executive told this builder, who was building homes for people and who wanted further accommodation, “ “We are not interested in financing homes “. He said, quite bluntly, “ I remember when this bank was getting up to 15 per cent, in dividends for its shareholders. My main concern is profits and dividends for the shareholders.” Obviously, when the bank can get a much higher rate of return from hire-purchase companies and from discounting bills for imports they will not worry about home-building finance. That .bank, in the last financial year, earned a dividend of 12 per cent. Obviously, it is not interested in providing finance at 4 per cent, and 5 per cent, for intending homebuilders.

The man on the land who helped to produce foodstuffs during the war, and many of his workers on the farms who were man-powered into industry, will have to make sacrifices because of the impost on his overdraft on his farm or station. Sacrifices will have to be made by the small businessman who also, in many cases, was man-powered into the fighting services or the Allied Works Council. The rise in the interest rate will apply not only to future overdrafts but also to existing overdrafts. A bank manager, who is a decent person, told me recently that he is opposed to this sort of thing. It is a breach of faith. How will it curb inflation if the interest rate is to be increased on existing overdrafts in regard to buildings that have already been constructed? How will that divert labour and materials into other avenues, or curb inflation?

The small bondholders, whose investment runs into hundreds of millions of pounds, were exhorted during the war years to buy more victory bonds, security bonds and so on. They are to be left to the mercy of the speculators on the stock market. They wil] suffer an actual capital loss. There is a very interesting feature of the increase that is being given to the private financial institutions. A case came to my notice the other day of a bank customer who wished to transfer some of the money in credit in his current account. His bank manager - it was one of the banks that have recently set up savings bank branches - advised him to put his money into fixed deposit for 24 months at 3 per cent, interest. The customer said, “ Suppose I want to take it out to pay my income tax?” and the bank manager replied - “You can have it on ten minutes’ notice. If it has been in for six months, you will get the interest rate that you would have received if you had left it with the bank for that period”. Such people will not only get an interest return on their fixed deposit, but they will have a great advantage over Government bondholders. Holders of 3 per cent, bonds will show an actual capital loss of 10 per cent, or 15 per cent. All these sections of the community will make a Roman holiday for those who profited during the war years. Other sections of the community will suffer under various aspects of the Government’s policy. I refer, for instance, to ex-servicemen, who are suffering as a result of the Government’s niggardly pension policy.

It must be remembered that many of the organizations that are now making large profits were very materially assisted during the war years in regard to both capital and equipment. I have in mind the machinery that was set up in many of the munition annexes. Also, they have been assisted in the post-war years by the extra migrant labour that ha? been brought into the country at the expense of the remainder of the community. These advantages have enabled them to make huge profits, yet the Government, despite the virtual promise” that the Prime Minister made, has not attempted to tax excess profits. It is quite blatant about not attempting to tax the recipients of unearned increment, the war profiteers and so on. The Govern-, ment merely makes its claims upon the muscle, nerve and sinew of the real producers of the wealth of the community - the industrial workers, the primary producers and so on. Where are the real champions of the farmers on the other side of the House now? It is entirely anomalous that the most deserving section - the producers - should be taxed in the way that the Government proposes, while the others are to go scot-free and the financial institutions, whose coffers are already swollen as a result of wartime profits will actually benefit.

Already, as I have said, the reserves of the private banks have been swollen by the war years, because of the savings of service men, business people and so on. The private financial institutions found that they had excess investible funds amounting to hundreds of millions of pounds. The ordinary avenues for investment were not available and, as a result, their reserves were passed over to the Commonwealth Bank, which looked after them and actually paid them 10s. per cent, or 15s. per cent, interest upon them. The Government, since coming into office, has returned to the private banks a substantial portion of these special deposits or reserve funds. But the banks have not played their part, especially in regard to homes. Ex-servicemen, business people and workers in industry who placed their savings with the private banks were naturally looking forward to the day when they could purchase a home. They expected the banks to provide the necessary financial accommodation. Instead the banks have entered other more profitable avenues. Their funds have been devoted to the financing of non-essential goods, luxury lines and so on which, at one stage, actually drained away a considerable portion of our overseas reserves. Some of the banks were almost caught flatfooted. One bank, which was financing importers, had such a run on its funds that it was threatened with bankruptcy. The Government came to its assistance just as it came to the assistance of the big retailers and the importers who are, of course, its main supporters.

One had only to look at the shelves of the importers and retailers in the hig cities to realize that they were chock-tul as a result of the flood of imports. The Government came to the rescue by imposing import restrictions. It pulled the bankers, the importers and the retailers out of the fire, but what did this artificial depression do to the workers and the manufacturers of this country? Many industries had to close, or partially close, down. At the peak period of unemployment 160,000 workers were out of work.

That was the first plan that the Government brought forward to solve the so-called inflationary position. We were told on that occasion that because of under-production here we had to purchase more goods from overseas. The Government resorted to what was virtually a free-trade policy instead of a protectionist policy. This see-sawing between free trade and protection has been going on down through the years. It is really a matter of history repeating itself. Honorable members will recall the days of the Bruce-Page Government. Stanley Bruce represented the importers of Flinders-lane and Sir Earle Page represented the Australian Country party, which believed in free trade. That combination actually plunged the country into a great depression. The position was rectified to some extent when the Scullin Government revived the protectionist policy.

The Government is, after all, only tinkering with the real situation. The trouble has all arisen from muddled thinking and the proposals now before us will not curb inflation. One is reminded of the Minister in the first war-time government - the Menzies-Fadden Government - who advocated that the public drink more beer and smoke more tobacco to help finance the war. The Government is appealing for more production, but its economic measures are purely negative. The economic whip is being flourished at the real producers of the community’s wealth. That will not give us more production. If anything, it will strike at the morale of workers in industry and primary producers, and will further curtail production. It might even drive the people to drink. As the Prime Minister said, quite frankly, he does not think that these measures will mean less drinking or less smoking. All that he is concerned with is swelling the revenue. The Government’s measures will not give us more production. The labour advisory committee, which was set up by the Government, suggested that there should be a newer and more positive approach to the problems of industry.


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

Debate (on motion by Mr. Wilson) adjourned.

page 1017


The following bills were returned from the Senate: -

Without requests -

Meat Export (Additional Charge) Bill 1956.

Without amendment -

Meat Agreement (Deficiency Payments) Bill 1956.

Fisheries Bill1956.

page 1017


Telephone Services

Motion (by Sir Eric Harrison) pro posed -

That the House do now adjourn.


.-I am sorry to keep the House at this late hour, but I have been trying for three weeks for an opportunity to say what I am about to say now.

Mr Lawrence:

– Why does not the honorable member use the opportunity provided on “Grievance Day”?


– Other honorable members used “ Grievance Day “ to deal with wool. The matter that I wish to raise concerns the night service in telephone exchanges throughout the Commonwealth. We know that from 7 a.m. until about 10.30 p.m. our smaller telephone exchanges are staffed by highly trained girls, who do a magnificent job; but at 10.30 p.m. the highly trained and efficient staff hand over the full responsibility of manning telephone exchanges to junior staff which is absolutely untrained except possibly for meagre knowledge gained within a few hours of engagement for such duty. Unfortunately, the matter that I am raising to-night concerns every exchange of a certain status throughout Australia, and not only in Tasmania, the Statefromwhich I come. In this respect, the Postmaster-General’s Department is giving the community a cheap, uneconomic service in the important hours from 10.30 p.m. to 7 a.m. The remuneration that the Commonwealth pays to night telephone operators is the princely sum of £2 a week, although there is provision for an additional payment of £1 in cases of extreme emergency, when staff cannot be obtained at the usual rate of pay. As a comparison, it may be pointed out to the House that the minimum payment to cleaners for cleaning offices of a grade similar to those telephone exchanges is about 7s. 2d. an hour, and in most cases a minimum of twenty hours weekly is paid for. Is it considered more important to obtain efficiency in cleaning than efficiency in the work of keeping telephone communications open at night? Does the Postmaster-General (Mr. Davidson) consider it more important to have well cleaned offices than to have efficient telephone communications?

The irresponsibility of juniors doing this important job of keeping telephone communications open at night is notorious, and remains one of the weakest links in the Commonwealth’s telephone network which, in all other respects, is of a high standard. It is common, in fact almost routine, for junior attendants to oversleep and to be dilatory in connecting alarm and emergency calls, and so on. It is most rare that a junior obtained for this work is really conscientious, and it is certain that in all cases the junior night staff would be inadequate to meet any unusual pressure of traffic, such as might occur in the case of floods, fires, hydro-electric power failures and so on. Early in the war years, night attendance was entrusted to juniors. As a result of failures to give adequate service in the organization of mock air raids, staffing thereafter was mostly covered by efficiently trained females who worked at least two to a switch-board. This system was introduced in order to give telephone subscribers the benefit of an efficient service during war-time, but it would seem that an efficient telephone service in peace-time is a. horse of a different colour.

Now let us consider the financial aspect. Immediately after the war juniors were placed on this important duty at therates

I have mentioned. In 1945, juniors were employed on night work at telephone exchanges for a payment of £2 a week, or £3 in special cases. The telephone network in Australia has more than doubled its number of subscribers since that time, and, in addition, the department has increased rates and charges considerably in order to meet the huge costs of installations and of highly valuable material and equipment. But the remuneration paid to night attendants has not been increased by one farthing in that space of eleven years. It seems odd that the Postmaster-General’s Department spares no expense to provide adequate telephone services in the daytime, yet refrains from paying even a moderate remuneration for night attendance. My remarks apply to most rural exchanges, but, naturally, not to automatic exchanges. The low grade of service given to the primary producers in the early hours of the day is most uncomplimentary to the Government’s administration of the telephone services, which is otherwise so efficient.

T wish to make two constructive suggestions for overcoming this serious deficiency. One is that tenders be called from male adults to contract for work in each exchange. The other is to provide an adequate payment of at least £1 a shift to make it worth while for an adult to accept the position of night attendant, which would provide some assurance for the department that a replacement would not be so difficult to acquire. A friend of mine in Tasmania, who is a postmaster, has told me that at least one junior night attendant who was in default said that it did not worry him because, he could not be sacked anyway, as there was no one to replace him. Most postmasters have a tremendous job in replacing night attendants, if they leave for any reason, or are dismissed. This state of affairs is tolerated by the department in order to enable it to give a cheap service to subscribers whose lives may depend at times on the efficiency of night attendants. The period from io.30 p.m. to 7 a.m. is the critical period of the i night, when telephone calls are most ! likely to be of an emergency nature, such as calls for doctors, or calls in case of disasters or trouble of a very serious kind.

Yet it is in this period of the night that the telephone exchanges are manned by inexperienced . and irresponsible juniors who have never, had any training in the work other than what they have picked up while in the job. The department takes these boys almost off the street for this job. It is a very serious matter,, particularly in rural districts, that this position is allowed to continue, and I appeal to the Postmaster-General to give the whole matter his immediate attention. I have given two constructive suggestions for overcoming the deficiency. It is no use our growling at those boys for oversleeping and not answering telephone calls when some one is dying at 3 o’clock in the morning. But the department deserves criticism for allowing such a state of affairs to exist. As I have said, this position does not apply only to any one exchange in any one State. It concerns exchanges throughout the Commonwealth, so it is a problem on a national level which should be dealt with on that level. The Postmaster-General’s Department had a credit balance last year of, I think, £5,000,000, yet it continues to give this poor service in the critical emergency hours from 10.30 p.m. to 7 a.m.

Question resolved in the affirmative.

House adjourned at 10.20 p.m.

page 1018


The following answers to questions were circulated: -

Asian Students at UNIVERSITY

Mr Morgan:

n asked the Minister representing the Minister acting for the Minister for External Affairs, upon notice -

  1. Is it a fact that a large number of Asian students, some of whom came to this country at heavy expense to themselves or their families, has been declined admission to the medical faculty of Melbourne University?
  2. If so, what were the factors that led to these students coming to Australia believing they could bc admitted to the faculty!
  3. In order to avoid any unpleasant repercussions to this country from such incidents, will the Acting Minister take appropriate steps to ensure that, in future. Asians will be fully acquainted of their prospects of admission to university faculties before coming here ?
Mr Menzies:

– The Minister acting for the Minister for External Affairs has furnished the following replies to the honorable member’s questions: -

  1. The intake of first vear medical students at Melbourne University is limited to 255. There is a provision that preference should be given to Victorian students, but nonVictorian students to a total of 25 may be accepted if the full quota of 255 is not taken up by Victorian applicants. Initially, because of the large number of Victorian applicants, the University authorities believed that it would not be possible to admit any non-Victorian students either from abroad or other Australian States. However, on reconsideration it was found possible to admit nineteen Asian students to the medical course. The selection was based on the results of the matriculation examination. The remaining six Asian applicants have been admitted to the Science course with a possibility of a future transfer to Medicine. All the Asian students involved are. private students, and no students sponsored under the Colombo Plan are involved.
  2. All students who seek the advice of the University of Melbourne are warned that entry to the medical course cannot be guaranteed, but is subject to the numbers who apply at the time. Notwithstanding this warning a number of students elect to accept the risk involved in studying for matriculation at the University of Melbourne with a view to entering the faculty of medicine.
  3. Appropriate steps will be taken to ensure that, in future, Asians will be fully acquainted of their prospects of admission to university faculties before coming to Australia.

Bond Market

Mr Calwell:

l asked -the Treasurer, upon notice -

  1. What is the reason for the sharp fall in prices of Commonwealth bonds on the Sydney and Melbourne stock exchanges on the 5th March?
  2. Is it a fact that these falls were greater than the falls on some issues over the previous week, and that some such falls have amounted to 77s. on each £100 bond over the week?
  3. Is the disturbance in the bond market caused by the refusal of the Government to continue to support the market through Commonwealth Bank and Treasury purchases!
  4. If so, will he state whether the Government is deliberately depressing the bond market for the purpose of raising the bank interest rate and for other purposes associated with the nation’s present economic crisis, and whether, if the bond market is to be unpegged, as recommended by eight professors of economics recently, the Treasury is following this course in order to create fear and consternation in the minds of the people as a preliminary to the introduction of a budget similar to that of the year 1951-52 f
Sir ARTHUR Fadden:

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

  1. Sellers predominated in the bond markets at both the Melbourne and Sydney stock exchanges on Monday, the 5th March,. and the decline in bond prices, which had commenced during the previous week, was accentuated.
  2. Yes.
  3. and 4. These questions of policy were adequately dealt with by the Prime Minister in his statement on general economic policy made to this House on Wednesday, the 14th March. 1958.

Industrial Accidents.


t. - On the 13th March, the honorable member for Stirling (Mr. Webb) asked the following question : -

My question is directed to the Minister for Labour and National Service. I draw the attention of the right honorable gentleman to the fact that, in reply to a question asked during the last session of the previous Parliament, he informed me that the rate of industrial accidents in Australia was double that of the United States of America and Canada, and almost double that of Great Britain. He also stated that the time lost in Australia through industrial accidents wass more than three times that lost through industrial disputes. Will he now state the result of inquiries conducted by the Ministry of Labour Advisory Council into the high rate of industrial accidents; whether that body has received co-operation from the employers’ organizations; and whether the steps that have been taken have resulted in a reduction of that very high rate of industrial accidents in this country!

I now inform the honorable member an follows : -

As I pointed out to the honorable member for Stirling in my reply on the 28th October, 1!!55, to his question, asked on notice, accurate comparison of industrial accident rates in Australia and in other countries is impossible because of the incompleteness of data in Australia, differences in accident recording practices in the various countries and differences, as between one country and another, in the scale of injury compensation benefits, general economic conditions and other factors which may affect the number and kind of accidents reported.

The most useful industrial accident information in Australia derives from workers’ compensation insurance, but figures available in many of the States are far from complete and in certain respects are not founded on the same bases. Only a rough estimate can, therefore, be made of Australia’s industrial accident rate. Such an estimate, which was recently submitted for consideration by the Ministry of Labour Advisory Council, did compare most unfavorably with accident rates, derived from official sources, in respect of the United Kingdom, United States of America and Ontario Province, Canada. Even taking into account the possible influence of the factors mentioned earlier, it seemed apparent that the Australian rate was unduly high, and the council agreed that action to reduce industrial accidents in Australia was urgently needed.

The council is conscious that a solution to the problem will not be found overnight, and that any real lowering of the national accident rate will come only from long-term measures devised and applied through the co-operative effort of employers, employees, Commonwealth and State governments and other interests. At the request of the council, the departments of Labour Advisory Committee which comprises the permanent heads of the Commonwealth and State Departments of Labour has been examining means for promoting the collaboration of all these parties in a concerted drive to combat the accident problem. That committee reported that possession of more reliable statistical information was of prime importance and proposed certain other actions on the part of the Commonwealth and State departments preparatory to the development of plans for a nation-wide industrial accident campaign.

The Ministry of Labour Advisory Council, at its last meeting, reviewed the progress being made. The honorable member may be assured that the council and my department will continue their activities in the industrial safety field with the utmost despatch. While the preparatory work may take time, this work is vital to the success of any nation-wide drive to reduce the toll of industrial accidents.

I must add that it must not be inferred that a great deal of work to improve industrial safety is not at present being undertaken. In this, State departments, my own department and individual’ undertakings and very many others are playing a notable part. Moreover, all the agencies concerned (Commonwealth and State), the insurance interests and employer and trade union organizations are co-operating most enthusiastically in the preparatory work to which I have referred. It augurs well for the future.

Royal Australian Navy

Mr Swartz:

z asked the Minister representing the Minister for the Navy, upon notice -

  1. Were satisfactory results obtained last year from exercises carried out by the Royal Australian Navy in conjunction with the merchant marine!
  2. Is it intended to conduct similar joint exercises in the future!
Mr McMahon:

– The Minister for the Navy has provided the following answers : -

  1. Yes. The exercise in October last year was very successful and the results were most satisfactory.
  2. Yes. As in the past, similar exercises will be conducted at approximately two-yearly intervals.

Northern Territory

Mr Nelson:

n asked the Minister for Territories, upon notice -

  1. What was the number of applications made under the Northern Territory (Lessees’ Loans Guarantee) Act 1954 in respect of the (a) agricultural industry and (6) pastoral industry i
  2. What was (a) the amount applied for and (l>) the amount advanced in each case?
Mr Hasluck:

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

  1. The scheme provided for under the Northern Territory (Lessees’ Loans Guarantee) Act 1954 is not yet in operation because there have been legal difficulties in drafting the form of guarantee to be issued to the banks. It is expected that the scheme should be brought into operation shortly. Meanwhile the Northern Territory Administration has received several inquiries from intending applicants.
  2. See answer to 1.

Cite as: Australia, House of Representatives, Debates, 21 March 1956, viewed 22 October 2017, <>.